KfW in talks to fund German offshore grid projects

"High level" of interest in bank's offshore wind funds

German offshore wind developers continue to show a "high level" of interest in securing funds from leading renewable energy investor, KfW Banking Group. However, the German development bank has not yet agreed to finance any offshore wind project planned for German waters this year.

Releasing its first half (H1) year results, KfW cites delays in the installation of offshore grid connections as a primary factor influencing its failure to back any German offshore wind projects during 2012. "Given the delays… further projects have been postponed for the time being," states the bank.

Beyond German borders, KfW's international arm, KfW-Ipex, committed to providing €60m to the developers of the Belgian Northwind offshore wind farm, in a complex financing deal announced on 29 June. The €60m from KfW-Ipex will not come from the banking group's dedicated offshore wind energy programme, a KfW spokesperson confirmed with Windpower Offshore today.

Instead of backing future German offshore wind farms, KfW is exploring options to finance offshore grid projects. This could see the bank supporting, perhaps indirectly, under-capitalised transmission system operator, TenneT. In its H1 results summary, the bank refers to involvement in "considerations aimed at improving the financing situation of offshore project grid connection and further grid expansion".

TenneT has been unable to install offshore cable arrays rapidly enough to keep pace with the construction of offshore wind farms. Solving this problem has become the German offshore wind industry’s most pressing priority and a politically sensitive issue, prompting the federal finance and environment ministries to propose new rules regulating offshore grid development.

During H1, KfW lent €4.9bn as part of its "environmental protection" programme. More than three quarters (77.6%) of this went to renewable energy projects. KfW has committed to loaning €100bn to renewable energy and energy efficiency projects over the next five years.

KfW has provided financing for several offshore wind farms, including Baltic 1 and Global Tech 1, both in German waters.

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