Subtittleifneeded.IfnotMONTH2018PublishedinMonth2018FinancingandinvestmenttrendsTheEuropeanwindindustryin2021windeurope.orgTheEuropeanwindindustryin2021PublishedApril2022FinancingandinvestmenttrendsTEXTANDANALYSIS:WindEuropeBusinessIntelligenceGuyBrindley,WindEuropeEDITORS:RoryO’Sullivan,WindEuropeJérômeGuillet,WindEurope’sFinanceWorkingGroupvice-chairDESIGN:LinVandeVelde,DrukvormINVESTMENTDATA:CleanEnergyPipelineIJGlobalAllcurrencyconversionsmadeatEURGBP0.8596andEURUSD1.1827.Figuresincludeestimatesforundisclosedvalues.COVERPHOTO:©EnerconMOREINFORMATION:policy@windeurope.org+3222131868ThisreportsummarisesfinancingactivityacrosstheEuropeanwindenergysectorfrom1Januaryto31December2021.Unlessstatedotherwisethedataandanalysiscoversthe27EUMemberStatesandthefollowingcountries:BosniaandHerzegovina,theFaroeIslands,Kosovo,Montenegro,NorthMacedonia,Norway,Russia,Serbia,Turkey,theUKandUkraine.Thereportincludesinvestmentfiguresfortheconstructionofnewwindfarms,refinancingtransactionsforwindfarmsunderconstructionoroperationandprojectacquisitionactivity.Roundingoffiguresisatthediscretionoftheauthor.Newassetfiguresfor2020havebeenrestatedfromthepreviousreport.DISCLAIMERThispublicationcontainsinformationfromexternaldataproviders.NeitherWindEurope,noritsmembers,northeirrelatedentitiesare,bymeansofthispublication,renderingprofessionaladviceorservices.NeitherWindEuropenoritsmembersshallberesponsibleforanylosswhatsoeversustainedbyanypersonwhoreliesonthispublication.CONTENTSEXECUTIVESUMMARY....................................................................................................7WINDENERGYFINANCEBASICS................................................................................101.INVESTMENTNUMBERSIN2021..........................................................................141.1Windenergyinvestments..................................................................................141.2Newwindfarmfinancing...................................................................................151.3Newwindfarmfinancingpercountry............................................................202.SOURCESOFFINANCEIN2021............................................................................232.1Corporateandprojectfinance........................................................................232.2Projectfinanceddebt.........................................................................................272.3Projectacquisitions.............................................................................................292.4CorporaterenewablePPAs..............................................................................313.WINDENERGYFINANCEPOLICY........................................................................343.1REPowerEU...........................................................................................................343.2Revenuestability.................................................................................................353.3Marketdesign.......................................................................................................363.4Rulesforguaranteesoforigin..........................................................................363.5GuidanceforPPAs..............................................................................................37GLOSSARY...........................................................................................................................386Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEurope7Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeEXECUTIVESUMMARYEuropeinvested€41.4bninnewwindfarmsin2021.Althoughthiswaslessthan2020,theinvestmentsfinanced24.6GWofnewwindenergycapacity,morethananypreviousyear.IntheEU19GWofnewwindfarmcapacitywasfinanced-alsoarecord-butthisfallswellshortofthe30GWwhichneededtobeinstalledeachyearbetween2021and2030tomeettheEU’s40%renewableenergytarget.InstallationsintheEUin2021totalledjust11GW,meaningtherateofinstallationsneededfrom2022to2030hasrisento32GWperyeartomeettheexistingtargets.Therecordcapacityfinancedispartlytheresultofarelativegrowthinfinancedonshorewindcapacity.SinceonshorewindhaslowercapitalexpenditureperMWfinanced,morecapacitycanbefinancedwiththesameinvestment.Overthenextfiveyears,weexpectonshorewindtomakeup76%ofallnewinstallationsinEurope.Windenergyremainsanattractiveinvestment,andthereisplentyofcapitalavailabletofinanceit.ButitiscriticalthatGovernmentstackleexistingbottlenecksinprojectpipe-lines,byimprovingandsimplifyingpermittingprocedures,sothatEuropecanmeetitsclimatetargetsandreduceitsdependenceonimportedfossilfuelsfromRussiaandelsewhere.FIGURE1Newassetfinanceinwindenergy2012–2021(GWand€bn)Source:WindEuropeInvestment(€bn)CapacityFinanced(GW)Newcapacityfinanced(GW)Offshorenewassetsfinanced(€bn)Onshorenewassetsfinanced(€bn)18.018.218.123.525.015.417.117.318.824.82.87.212.912.522.16.19.76.627.716.611.613.214.116.420.211.516.013.321.624.6051015202530010203040506020122013201420152016201720182019202020218Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeExecutiveSummary2021highlights•Europeinvested€41.4bnintheconstructionofnewwindfarms.Thiswas11%lessthanthe€46.6bn1investedin2020.•The€41.4bncovered24.6GWofnewcapacity:19.8GWofonshorewindcapacity(arecordamount)and4.8GWofoffshorewindcapacity.•Investmentsinnewonshorewindprojectswereworth€24.8bn,thehighestamountonrecordsince2016.•Investmentsinnewoffshorewindfarmswereworth€16.6bn.•AveragecapitalexpenditurerequiredforeachMWofnewonshorewindenergycapacitywas€1.3m,thelowestonrecord.Foroffshorewind,thefigurewas€3.5m/MW.•Banksprovided€25.7bninnon-recoursedebtfortheconstructionandrefinancingofwindfarms.Thiscontinuesthegeneraltrendofincreasedlendingsince2013.•Non-recoursedebtaccountedfor26%ofallinvestmentinnewonshoreand56%ofallinvestmentinnewoffshorewindfarms,highlightingtheimportanceofbanksinwindenergyfinancing.•Foronshorewindfarmsusingprojectfinance,thedebt/equityratiowas89:11.Foroffshorewinditwas78:22.•Projectacquisitions,whereinvestorspurchaseashareofawindfarm(indevelopment,constructionoroperation),wereworthanestimated€15.6bn.Notethattheseinvestmentsareseparatetothe€41.4bninvestedinnewwindfarms.1.Figurerestatedfrom2020Countryhighlights•TheUKagaininvestedthemostinnewwindfarmsin2021,€9.4bn,followedbyGermany(€8bn)andFrance(€4.6bn).•Therewerealsorecordamountsinvestedinnewwindfarmsinfourothercountries;Sweden(€3.2bn),Finland(€2.8bn),Poland(€1.6bn),andLithuania(€0.4bn).•InSpaininvestmentsinnewwindfarmstotalled€3.2bn,thehighestamountsince2009.•OffshorewindinvestmentswereconcentratedintheUK(€8.8bn),Germany(€4.9bn),France(€2.2bn)andDenmark(€0.7bn).•NorthernandWesternEuropeaccountedfor€30.9bnoftheinvestmentsinnewwindfarms,approximately75%ofthetotal.Investmenttrends•Interestratesremainlowforthetimebeingbuttherehasbeenmarketturbulencecausedbysupplychainshortagesandhighenergyprices,resultinginrecordhighinflationratesinQ42021.•Russia’sinvasionofUkrainehasaddedtotheupwardpressureoninflationandmayweakengrowthbydisruptingtrade.MarketmovementssuggestthatinvestorsbelievethattheECBandothercentralbankswilltightenmonetarypoliciesmoreslowlythanpreviouslyanticipated.•Inthemediumterm,theconditionsforfinancingwindfarmsshouldremainfavourable.9Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEurope•46%ofthecapitalraisedfornewwindfarmswasonaprojectfinancebasis.Theother54%ofinvestmentsinnewwindfarmswereonacorporatefinancebasis.•Debtremainsinstrumentalinwindenergyfinancingwithnon-recoursedebtproviding38%ofallcapitalraisedfornewwindenergyprojects.•2021wasarecordyearforcorporaterenewablePPAs.ThecumulativecapacitycontractedbycorporatePPAsinEuroperoseby58%to18.8GW.•Therewere41newPPAssignedwithonshorewindfarmsand11withoffshorewindfarms,upfrom18and6in2020respectively.•Approximately10%ofnewwindfarmcapacitywassupportedbyacorporatePPAin2021.Todate,13GWofwindenergycapacityiscontractedunderaPPAinEurope.•PermittingcontinuestobethemainbottleneckforthefinancingandconstructionofonshorewindinEurope.Windenergywillnotbeabletodeliveritsshareofthe2030climatetargetsifthisproblemisnotaddressed.Policyhighlights•TheEUisnowcommittedtoclimateneutralityby2050anda55%reductioningreenhousegas(GHG)emissionsfrom1990levelsby2030.Thistranslatestoatargetof40%renewablesintheenergymixby2030.•Toachievethe55%target,theEUneedstoincreaseits2030renewableenergytargettoatleast40%.AndtoachievethelattertheEUneedstobuildatleast32GWofnewwindfarmseachyear.Asthingsstandwiththepermittingbottlenecks,weexpecttobuildonly18GWayearoverthenext5years.•REPowerEU,theEUCommission’sresponsetothecurrentcrisis,envisagestheexpansionofwindenergycapacityintheEUfrom190GWtodayto480GWby2030toreducetheEU’sdependenceonimportedfossilfuelsfromRussiaandelsewhere.•Clawbackmeasuresdesignedtoshieldconsumersfromhighenergypricesmustnotapplytoenergysoldthroughlong-term,fixed-pricecontracts.Theyshouldalsoavoidinterferingwithenergymarketdynamics,theyshouldbetime-limitedandshouldnotapplyretroactively.•PowersoldunderCfDsatfixedpricesbenefitsendconsumersbyprotectingthemfrompeaksinwholesalespotprices.Theselong-termfixedpricecontractshavetheextraadvantageofattractingcheaperfinancing,leadingtolowercostsoverall.•Theimportanceofcontracts-for-differenceunderpinningwindfarminvestmentscontinuestorisewithmoreandmorecountriesusingthemintheirauctionmodels.•AssumingGovernmentsdesigntheirwindenergyauctionsintherightway,thefinancingofnewprojectswillnotbeaproblem.Theproblemisthenumberofnewprojectscomingthrough.Tacklingpermittingdelaysisakeypriority.•Governmentsurgentlyneedtosimplifypermittingrulesandproceduresfornewwindfarms.Theyalsoneedtobooststaffinglevelsatthepermittingauthorities.•GuaranteesofOrigin(GOs)shouldbemadeavailableforallrenewableelectricity.IncaseswhereGovernmentswithholdGOstoavoiddoublecompensation,thisshouldonlyapplytosupportedelectricityproduction.ExecutiveSummary10Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeDebtandequityThetwomainsourcesofcapitalinEuropeanwindenergyfinancehavebeensponsorequityanddebt.Sponsorequityreferstoatraditionalequityinvestor,typicallytheowner(s)oftheprojectand/orthedeveloper.Equitycapitalfacesthehighestriskintheprojectbecausetheownersarethepartyresponsibleforbringingtheinitialconceptideathroughdevelopment,constructionandcommercialoper-ation.Inaddition,theownersarealsothelastinvestorstobeliquidatedincaseofaprojectdefault.Becauseofthetoughrequirementsthatequitycapitalfaces,thereturnsarealsohigher.Debtreferstoacontractually-arrangedloanthatmustberepaidbytheborrower.Thelenderhasnoownershipsharesinthecompanyorproject.However,ithassomecollateralcoverageasfinancialprotectioniftheprojectisunabletomeetthedebtrepaymentschedule.Inthecaseofprojectdefault,thelendersarethefirstpartytobeliquidated,beforeequity-typeinvestors.Assuch,debtisgenerallyconsideredalower-riskinvestmentandthereforecomeswithlower-costfinancingcomparedwithequity.Therearetwomajortypesofdebtinwindenergyfinance-constructiondebtandrefinancingdebt.Constructiondebtisraisedforthepurposeoffinancingnewassets.Refinancingdebtisraisedforthepurposeoffinancingconstructiondebtatalongermaturityand/orlowerinterestrate.CorporatefinanceandprojectfinanceTheproportionofdebtandequityinaproject,aswellasthewaytheyareused,willdeterminethecapitalorfinancialstructureoftheproject.Therearetwotypesoffinancialstructure:corporatefinanceandprojectfinance.Inacorporatefinancestructure,investmentsarecarriedoutonthebalancesheetoftheownersandprojectspon-sors.Debtisraisedatcorporatelevel,withthelendershavingrecoursetoalltheassetsofthecompanytoliqui-dateanon-performingproject.Theprojectmanagementandmanyofthecontractualobligationsareinternalisedwiththeownersandprojectsponsors.Corporatefinanceisthusquickerandusuallylessexpensivethanprojectfinance.Inaprojectfinancestructure,typicallycallednon-recoursefinance,theinvestmentiscarriedoffthebalancesheetoftheoriginalownersandprojectsponsors.Theinvest-mentortheprojectisturnedintoaseparatebusinessentitycalledaSpecialPurposeVehicle(SPV)withitsownmanagementteamandfinancialreporting,capableofraisingdebtonitsown.Becausedebtisraisedatprojectlevel,thelendersdonothaverecoursetothecompanyassetsoftheownersandprojectsponsorsincasesofprojectdefault.Duetoincreasedcontractualobligationsandamoresophisticatedriskmanagementstructure,projectfinancecanbemoreexpensiveandcantakelongertofinalisethancorporatefinance.WINDENERGYFINANCEBASICS11Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeWindEnergyFinanceBasicsFIGURE2CorporateFinancevs.ProjectFinanceSource:WindEuropeDebt-to-equityratiosinaprojectfinancetransactionmayvaryconsiderablydependingontheprojectspecifics,theavailabilityofcapitalandriskprofileoftheprojectowners.Forwindprojects,theyrangebetween70-80%debtand20-30%equity.Acompany’scapitalstructurewillbedeterminedbyitsparticularriskprofile,sizeandindustrysector.Powerproducersandutilitieswithalargebalancesheetwilltypi-callyoptforacorporatefinancestructureandbringtheprojectthroughconstructionasasingleplayer.Fundraisingwilloccuratcorporatelevelthroughdebtandequityvehi-clesalike.Unlikeutilities,independentpowerproducerswithsmallerbalancesheetsandcompanieswhoseprimarybusinessisnotwindenergyhavebetterprojectfinancecapabilities.Inaprojectfinancestructure,partnershipsarekeyfromaveryearlystage.Fundraisingwilloccuratprojectlevel,throughdebtandequityvehiclesalike.Projectownerswillneedtoformconsortiatoprovidetherequiredequitywhereaslenderswillcometogethertoprovidesyndicatedprojectloansonthedebtside.CORPORATEFINANCINGCORPORATEFINANCEPROJECTFINANCINGPROJECTFINANCEDEBTPROVIDERSPROJECTSPONSORSEQUITYPROJECTSPONSOREQUITYINVESTORDEBTPROVIDERSWINDENERGYPROJECTWINDENERGYPROJECTSPECIALPURPOSEVEHICLESPVCORPORATEFINANCE:EQUITYCORPORATEFINANCE:DEBTPROJECTFINANCE:EQUITYPROJECTFINANCE:DEBTNEWASSETINVESTMENTSINVESTMENTCASHFLOWSFINANCINGANALYSIS12Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeWindEnergyFinanceBasicsRaisingdebtandequityTheprojectownersandsponsorscanraisecapitalforprojectdevelopmentfromdifferentsources.Thesemayincludeown-balancesheetfinancing,externalprivateinvestors,fundingfromcommercialbanksandpubliccapitalmarkets.Thelastoftheseinparticularhasbecomemoreprominentforraisingbothdebtandequityinwindenergyfinancing.Debtcanberaisedeitherthroughloansprovidedbybanksoronpubliccapitalmarketsthroughtheissuanceofbonds.TypicallyinEurope,themostcommondebtinstru-menthasbeenloansfrombanksincontrasttotheUnitedStateswherebondissuancesarethemorecommonmethodforraisingdebt.Debtraisedthroughtheissuingofbondscanbeeitheratcorporateorprojectlevel.Whereabondisissuedatcorporatelevel,theproceedscanbeusedtowardsfinancingaportfolioofprojects.Thebondcancarrythe‘green’labelwhentheportfolioofprojectsitisfinancingismadeupexclusivelyofrenewableenergyinvestments.Wherethebondisissuedatprojectlevel,theproceedingsareusedforthespecificrenewableenergyprojectandarethere-fore‘green’.ProjectbondsareissuedonbehalfoftheSPVandareusuallypartofanon-recourse,projectfinancestructure.AbondisconsideredinvestmentgradeifitscreditratingisaminimumofBBBbyStandard&PoororaminimumofBaa3byMoody’s.Investmentgradebondsareconsideredbyratingagenciesaslikelytomeetpaymentobligationsforinvestors.CapitalavailabilityforwindpowerprojectsThefinancialmarketshavesupportedthegrowthofthewindsectorwithastrongliquidityonbothdebtandequity.Thefinancingconditionsoflowinterestrates,costimprove-mentsandincreasedtrustinthetechnologyallcontributetoahealthydealflowofprojects.Debtliquidityhasbeenavailablefromtheconstructionphasewithnewfinancingandrefinancingtransactionsinmajormarkets.Lendersincludearangeofbankandnon-bankinstitutionssuchasExportCreditAgencies(ECAs).MultilateralDevelopmentBanks(MDBs)andotherInternationalFinancialInstitutions(IFIs)haveprovideddebtliquiditywherecommercialbankfinancinghasnotbeenavailable.InternationalbankshavealsostrengthenedtheirpresenceintheEuropeanwindsectorandhaveintroducedmorecompetitiontothesector.Japanesebanks,drivenbyaprolongedlow-interestrateenvironmentintheirdomesticmarket,featureprominentlyinthetoplendinginstitutionsforEuropeanwindpowerprojects.Ontheequityside,institutionalinvestorsarealsobiddingmoreaggressivelyforwindassets.Interestinthetechnologyhaspickedupsignificantlybothfrominstitutionalandstra-tegicinvestorswhoarenowlookingatwindprojectsforsteady,predictablereturnstomeetlong-datedliabilities.Muchlikethebanks,investorappetiteforthetechnologyappliestobothgreenfieldandexistingassets.However,asconfidenceinwindgrowsandthepositivetrackrecordoftheindustrycontinues,investorsarealsotargetingmoregreenfieldprojectsearlierintheconstructionphase.SUMMARY•Projectscanbefinancedonthebalancesheetofacompany–corporatefinance•Capitalcanberaisedwithequity(issuingcompanyshares)ordebt(bondsissuedbythecompany),theproceedsofwhichcanbeusedtodevelopawindfarm•Projectscanalsobemadeintoa“company”intheirownrightwithaSpecialPurposeVehicle(SPV)structure–projectfinance•Capitalcanberaisedwithequity(issuingsharesintheproject)ordebt(bankslendtotheprojectonanon-recoursebasis),theproceedsofwhichcanbeusedtodevelopthewindfarm•Non-recoursedebtisonlyrepaidfromprojectrevenues.Iftheprojectfailstorepaythedebt,banksdonothaverecoursetotheprojectsponsors’assetsforcompensation,onlytheassetsoftheprojectitself13Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeWindEnergyFinanceBasics252MW€1.3bn31TurbinesWindEnergyCompanyCONSTRUCTIONVanOordVestasGRIDCONNECTIONTenneTOFFTAKERVattenfallO&MCONTRACTORSVestasWindSystemsLoanagreementsConstructioncontractShareholders’agreementPPAcontractGridconnectioncontractTurbinesandO&MservicespaymentforconstructionpaymentforcontractorspaymentforelectricityEQUITYINVESTORNorthlandPower25%ofprojectcost~€310mLENDERS10atfinancialclose75%ofprojectcost~€988mdebtfinancedebtrepaymentdividendsequityADVISORSFinancial,legal&technicalADVISORSFinancial,legal&technicalEXAMPLEOFFINANCINGSTRUCTUREFORTYPICALOFFSHOREWINDPROJECTSource:GreenGiraffeFIGURE3Exampleoffinancingstructurefortypicaloffshorewindfarm14Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEurope1.1WINDENERGYINVESTMENTSFIGURE4Europeanwindenergyinvestmentsin2021perassetclass(€bn)1.Figurediffersfrom2020reportaftertakingaccountofeventsrecordedafter31December2020.In2021€41.4bnwasinvestedinnewonshoreandoffshorewindfarms;therewas€15.6bnworthofinvestmentinsharesofwindprojectsatvariousstagesofdevelopmentandafurther€10.1bnworthofprojectfinancedebtwhichwasrefinanced.Overall,theamountofinvestmentactivitywassimilarto2020,withbothyearsseeingasignificantincreaseonpreviousyears.Investmentsinnewassetsin2020wereworth€46.8bn1.Thismeansthat2021sawa12%decreaseinnewwindfarminvestment.Refinancingand1.INVESTMENTNUMBERSIN2021InvestmentAmount(€bn)41.410.115.6051015202530354045NewassetfinancingRefinancingProjectacquisitionsSource:WindEurope15Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeprojectacquisitions-whereashareofawindfarmispurchased-increasedby55%and11%respectively.Importantlytheinvestmentsinnewwindfarmswillresultinalmost25GWofnewcapacitybeingaddedtothegridoverthenextfewyears.Andalthoughthisisthemostcapacityfinancedonrecordinasingleyear,itfallswellshortofwhatEuropeneedstobuildyearonyeartomeetitsownclimateandenergytargets.ThetragiceventsinUkrainehaveunderlinedtheneedforEuropetobecomemoreenergyindependentandEuropeanGovernmentsaretakingstepstoreducetheirdependenceonfossilfuelsfromRussiaandelsewhere.Therewillneedtobesignificantinvestmentingridinfra-structureandnewtechnologiestohelpintegratethehugeincreaseinrenewablesexpectedinEurope.OnlywiththisinplacecanGovernmentsaimtoprovideenergysecurityandtackleclimatechange.1.2NEWWINDFARMFINANCINGInvestmentinnewwindfarmstotalled€41.4bnin2021,financing24.6GWofnewcapacitywhichwillcomeontothegridoverthenextfewyears.ThecapacityfinancedisarecordinEurope-drivenbybothahigherproportionofonshorewind,whichhasalowercapitalexpenditure(CAPEX)perMWthanoffshore,andbyafallintheCAPEXperMWforonshoreinrecentyears.FIGURE5Investmentinnewwindfarms2012-2021(GWand€bn)Investmentsinnewonshorewindfarmstotalled€24.8bn.Thiswasequalinmonetarytermstothepreviouspeakin2016,whendevelopersrushedtogetprojectsfinancedbeforetheregulatoryuncertaintythatcameaboutafterthetransitiontoauctionsandfeed-inpremiumsin2017.Investmentsinnewoffshorewindfarmswereworth€16.6bn.Thiswasafteranotheryearwhereanumberofenormousprojectsreachedfinalinvestmentdecision(FID),includingSofia(1.4GW)andDoggerBankC(1.2GW)intheUKandBorkumRiffgrund3(900MW)inGermany.TheinvestmentandcapacityfinancedfiguresshowhowthewindindustryhasbeenabletocoperemarkablywellwithdisruptionsassociatedwithCOVID-19.Asitstands,itisvitalthatitcontinuestoattractinvestmenttodeliveronthe2030climateandenergysecurityobjectives.ThisisdiscussedfurtherinPart3.Investmentnumbersin2021Investment(€bn)CapacityFinanced(GW)Newcapacityfinanced(GW)Offshorenewassetsfinanced(€bn)Onshorenewassetsfinanced(€bn)18.018.218.123.525.015.417.117.318.824.82.87.212.912.522.16.19.76.627.716.611.613.214.116.420.211.516.013.321.624.605101520253001020304050602012201320142015201620172018201920202021Source:WindEurope16Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeFIGURE6InvestmentinnewwindfarmsintheEU2012-2021(GWand€bn)InEUcountries,investmentinnewwindfarmstotalled€29bnfinancing19GWofnewcapacity.InordertomeettheexistingEUtargetof40%renewablesinthefinalenergymixby2030,EUcountriesneedtoinstall32GWayearbetween2022and2030.Thecurrenttrajectoryispositiveand2021wasarecordyearforcapacityfinanced.Butalotmoreneedstobedone-fromstreamliningpermittingprocedures(withoutcompromisingonenvironmentalstandards)toensuringthatelectricitygridsaremodern-isedandequippedforahigherpenetrationofrenewablesintheelectricitymix.FIGURE7Investmentinnewonshorewindfarms2012-2021(GWand€bn)Investment(€bn)CapacityFinanced(GW)Newcapacityfinanced(GW)Offshorenewassetsfinanced(€bn)Onshorenewassetsfinanced(€bn)14.114.514.617.118.111.812.911.315.021.20.95.29.25.410.72.54.53.314.57.89.010.811.411.713.27.811.38.715.119.005101520253001020304050602012201320142015201620172018201920202021Investmentnumbersin2021Investment(€bn)CapacityFinanced(GW)Newcapacityfinanced(GW)Totalinvestments(€bn)18.018.218.123.525.015.417.117.318.824.811.111.710.812.313.99.512.111.814.019.80510152025051015202530354045502012201320142015201620172018201920202021Source:WindEuropeSource:WindEurope17Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeOnshorewindraisedaround€24.8bntofinancearecord19.8GWofnewcapacity.Thiswasmadepossiblebyfallingcosts,particularlysince2015when€10mworthofinvestmentinnewonshorewindwouldfinance6MWofnewcapacityonaverage.In2021aninvestmentof€10mfinanced8MWofnewcapacity.Itisagreatachievementthattheindustrycannowfinancemorewindfarmcapacityforthesameinvestment,asaresultofgrowingefficienciesandtechnologicaldevelop-ments.ButthereisalimittohowfarcostscanfallwhileensuringsupplychaincompetitivenessinEurope.Insomemarketsthatlimitmightbeonthehorizon,oritmaywellhavebeenreachedalready.Costsarelikelytobeimpactedbyhigherglobalpricesforrawmaterialsandinflationcausedbyrisingenergyprices.Financingdatagivesanindicationofwhatislikelytobebuiltoverthenextfewyears.WeestimatethetimefromFinalInvestmentDecision(FID)toawindfarm’sCommissioningDatetobeuptooneyearforonshorewindand2-3yearsforoffshorewind.Thewindenergyinstallationtargetof32GWperyearacrosstheEUbreaksdowntoapproximately25GWayearforonshorewindand7GWayearforoffshorewindrespectively.Thereforethereisagapofaround5GWbetweentheonshorewindcapacityfinancedin2021andtherequiredrateofinstalla-tionsforonshorewindbetween2022and2030.FIGURE8Investmentinnewoffshorewindfarms2012-2021(GWand€bn)Investmentsinnewoffshorewindtotalled€16.6bnaftersevenwindfarmsreachedFID-withanaverageCAPEXperMWof€3.5m.Offshorewindpatternshavebeendrivenbyauctionschedules,particularlybytheUK’sCfDrounds.In2016almost€10.5bnwasraisedforthreeoffshorewindfarmswhichwereawardedCfDsinUKauctionroundsin2014and2015(Beatrice,Hornsea1andEastAngliaOne).In2020€12.8bnofinvestmentsconcernedDoggerBankphasesA&BandSeagreenAlpha&BravofollowingtheawardofCfDsinthe2019auctionround.In2021twomoreprojectswhichweresuccessfulinthe2019auctionroundreachedFID:DoggerBankC(1.2GW)andSofia(1.4GW),raisingapproximately€8.8bn,morethan50%ofthetotalcapitalinvested.InGermany,BorkumRiffgrund3(900MW),ArcadisOst1(257MW)andGode3(242MW)reachedfinancialcloseraisingacombinedtotalof€4.9bn.InFrance,Courseulles-Sur-Mer(450MW)becamethefourthoffshorewindfarmtoreachFIDsincethefirstin2019.Finally,VesterhavNorthandSouthwindfarmsreachedfinancialcloseinDenmarkraisingcapitaltofinance344MWofcapacity.Investmentnumbersin2021Investment(€bn)CapacityFinanced(GW)Newcapacityfinanced(GW)Totalinvestments(€bn)0510152025300510152025302.87.212.912.522.16.19.76.627.716.60.51.52.42.56.32.03.91.47.64.82012201320142015201620172018201920202021Source:WindEurope18Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeInvestmentnumbersin2021CAPITALCOSTTRENDSFIGURE9CapitalexpenditureperMWfinancedinwindenergy2016-2021(€m/MW)CapitalexpenditureperMWfornewonshorewindfarmshasfallenonaveragesince2015,from€1.9mperMWdownto€1.3mperMWforonshorewindfarmsfinancedin2021.Giventhegrowingcostofrawmaterials,furthersupplychaindisruptionandinflationtriggeredbyhighenergyprices,weareunlikelytoseeanynotablecostdecreasesgoingforward.SpainandFinlandsawthecheapestonshorewindfarmsin2021withprojectsbeingfinancedwith€1.1mperMWonaverage.ThiswascloselyfollowedbySweden,theNetherlands,Poland,UkraineandPortugalwhichallsawaveragecapitalexpendituresof€1.2mperMWfinanced.Thesecountriesingeneralhavefewerlandconstraintsandcanbuildlargerwindfarms,benefitingfromeconomiesofscale.Countriesfacinggreaterpermittingissuesandlandconstraintstendtoseehighercapitalcosts.ThisisthecaseinGermanyandFrancewhichbothhadaveragecapitalexpendituresof€1.5mperMW.CapitalexpenditureperMWfornewoffshorewindfarmshasseenamajordecrease,fromaround€5.5mperMWin2012to€3.5mperMWin2020and2021.Inthemean-timethetechnologyhasmaturedandsupplychainshavebecomemoreefficientinmorematuremarkets.Butoverthelastfewyears,therehavebeennofurtherdecreases–foranumberofreasons.ThefourFrenchwindfarmsthathavereachedFIDsince2019havebeenfinancedwithhighercapitalexpenditures(€4.6m-€5mperMW),partlyduetosignificantdelaysinthepermittingoftheprojects.Thiswasalsoaresultofthe2011tenderwhichspecifiedthatwindturbinefactoriesfortheprojectshadtobebuiltonFrenchterritory.Otherprojectshavebeenfinancedwithhighercapitalexpendituresforavarietyofreasons,includingincreaseddistancefromshore,deeperwaters,orchallengingseabedconditions.Allthesefactorsaddtimetoconstructionschedulesand/orrequirespecialistvesselsorequipment,impactingcapitalcosts.Buttheseincreasedcapitalexpendituresareoffsettosomeextentbythesizeofthewindfarmsbeingfinanced,withverylargewindfarmsusingthelargestavailableturbinesbeingabletotakeadvantageofsignificantecon-omiesofscale.CAPEXperMW(€m/MW)OnshorewindOffshorewind01234562012201320142015201620172018201920202021Source:WindEurope19Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeFinally,thecountryanoffshorewindfarmislocatedinisimportantastheamountofsupportprovidedthroughthedevelopmentphaseshasabigimpactonthecapitalexpenditurerequiredatthepointofthefinalinvestmentdecision.ForexampleinDenmark(andtheNetherlands),theGovernmentpaysforthegridconnectionandsupportsallpre-developmentwork-windresourceassessment,seabedconditionanalysisandpermitting(includingenvi-ronmentalimpactassessments).Thisisreflectedintheiraveragecapitalexpenditures,andin2021,theVesterhavNorthandSouthwindfarmsinDenmarkwerefinancedat€2.1mperMW.Investmentnumbersin2021HISTORYOFOFFSHOREWINDFINANCEOffshorewindisincreasinglyseenasakeycompo-nentintheenergytransition,helpingtodecarbonisepowergeneration.Thesectorisespeciallyattractivetoutilities,investmentfundsand,increasingly,oil&gascompanies.Thetechnologyisalreadywell–demonstrated,projectstendtobeverylargeandallowthedeploymentoflargevolumesofcapitalinonetransaction.Thisfavoursthecomplexprojectmanagementskillsofthesecompanies.Twofactshaveputthisindustryinafavourablelightrecently:(i)anability,almostuniqueamongstlargeinfrastructureprojects,togetprojectsbuiltontimeandonbudget,and(ii)inparallel,anunprecedentedreduc-tioninthecostofgeneratingelectricityoverthelongterm,fromabove€150/MWhatthebeginningofthe2010stobelow€50/MWhtoday,makingitcompetitivewithtraditionalpowergenerationsources.Acorereasonforbothofthesefactshastodowiththewaytheindustrywasfinancedalmostfromthebegin-ning,through“projectfinance”or“non–recoursedebt”.Non-recoursedebtisprovidedtoprojectsandnottotheirowners,andisrepaidonlyfromtheproceedsgeneratedbythatproject,withoutrecoursetotheprojectownersincaseofanyproblems.Theresultofthisarrangementisthatlendersneedtheprojectstobebuiltonbudget,ontime,andtooperateattheirspec-ifiedoutputthroughouttheirfulllifetimeinorderforthedebttobefullyrepaid.Thisinvolvesdetailedandrigorouschecksonthetechnology,constructionmeth-odologyandplanning,themanagementteamandtheeconomicsoftheproject.Buildinganoffshorewindfarmisaninherentlycomplexendeavor.Workingatgreatheightswithheavycompo-nentsoutatseacarriescertainriskswhichneedtobeproperlyunderstoodandcarefullymanaged.Nopartyisusuallyresponsibleformorethan30-40%oftheoverallconstructioncosts,meaningthatnooneiswillingtotakeresponsibilityforthefullscopeoftheproject.Asaresulttheconstructionisdoneundera“multi-contracting”approach,withmanytechnicalandcommercialinterfaces.Thisisseenasinherentlyriskier.Despitethis,severalearlyprojectsneededbankdebttogetthefullgoahead,astheirownerscouldnotfinancetheminfulloutoftheirownpocket.Ahandfulofbanksagreedtolookintohowtotakeonconstructionriskinawaythatwouldbeacceptabletothemwhilestilleconomicforprojectowners.Thestructuresthatweredesignedfortheveryearlyprojects,EgmondannZee(originallyQ7)(2006)intheNetherlands,C-Power(2007)andBelwind(2009)inBelgiumprovidedaframeworkthatturnedouttobeverysuccessful.Thiswasthenadoptedformanyprojectsthereafter.Asacapital-intensivesector,offshorewindisverysensitivetothecostofcapital.Thisisaffectedbyhowinvestmentdecisionsaremadefornewprojects,whatrisksareinvolvedacrossthephasesofaproject,whotheinvestorsareineachphaseandwhatreturnstheyexpect.Thechiefrisksforoffshorewindare(i)thetraditionalinfrastructurerisk(politicalrisk,counterpartyrisk,merchantrisk),(ii)windsectorrisk(windresource,turbinetechnology),and(iii)specificoffshorewindrisks(construction,operation).20Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeTermsfordebtandequityhavebeensteadilyimprovingovertheyears.Thisisespeciallytrueastherisksarebetterunderstood-andhavebeenincreasinglywellmanagedbytheindustry.Wehaveseenregularimprovementacrossallfronts,includingdebtpricing,leverage(debt:equityratio),maturityandcontingencybudgets.Multipledifferentstructureshaveallowedthecapitalstructureofprojectstobeoptimised,andhavebroughtdownthecostofelectricityintheprocess.2.https://wfo-global.org/Everythingthathasbeenlearntfromfinancingfixedbottomoffshorewindcanalsobeappliedtofloatingoffshorewind,anditisverylikelythatthefloatingsectorwillseeasimilartrendofimprovedfinancingconditionsandlowercostsofproduction.ThisisasummaryofreportonfinancingoffshorewindwhichwillbepublishedbyWFO2andkindlyprovidedtoWindEuropebyJérômeGuillet,vice-chairofWindEurope’sFinanceWorkingGroup.1.3NEWWINDFARMFINANCINGPERCOUNTRY2021sawnewwindfarminvestmentsin28differentcoun-triesinEurope.Thetopthreeinvestorcountries–theUK,GermanyandFrance–wereresponsiblefor53%ofallcapitalraised.FIGURE10Investmentinnewwindfarmspercountryin2021(€bn)TheUKsawthemostcapitalraisedtofinancenewwindfarms,withmorethan90%ofthecapitaldestinedforoffshorewind.Thetotalfigureof€9.4bnraisedintheUKmakesup23%ofallcapitalraisedfornewwindfarmsinEurope.ElevencountriesinEuropeinvestedatleast€1bninnewwindfarms.IntheEUthemostcapitalfornewwindfarmswasraisedinGermanywith€3.1bnfornewonshorewindfarmsand€4.9bnfornewoffshorewindfarms.ThiswasfollowedbyFrancewith€2.4bnofnewonshorewindprojectsand€2.2bnforoffshore.Investmentnumbersin2021Investment(€bn)Offshorewind(€bn)Onshorewind(€bn)0.63.12.43.23.22.81.61.31.21.21.00.10.60.52.28.84.90.72.2012345678910UKGermanyFranceSpainSwedenFinlandPolandNetherlandsUkraineGreeceTurkeyDenmarkItalyPortugalOthersSource:WindEurope21Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeNorthwestEurope3stillseesthebulkofinvestmentswith75%ofthecapitalraisedfornewwindfarmsinEurope(€30.9bn).Thisislessthanthe85%shareofinvestmentsseeninnorthwestEuropein2020.InSouthEasternEurope4(SEE),880MWofnewprojectswerefinancedwithinvestmentstotalling€1.4bn,representing6%ofthenewonshorewindfarmsfinancedinEurope.InmanyEUmarketstherearenowindinvest-mentsatthemoment,despitesomeofthesecountrieshavingsignificantpotentialforafurtherexpansionofwindpower.Nationalenergypoliciesandthelackofa3.Belgium;Denmark;Finland;France;Germany;Iceland;Luxembourg;Netherlands;Norway;Sweden;UK4.Albania;Bosnia&Herzegovina;Bulgaria;Greece;Kosovo;NorthMacedonia;Montenegro;Romania;Serbia5.Szabo,J.,Bruckmann,R.,Menzies,C.,&delRío,P.Competitiondynamicsrevisited.stableregulatoryenvironmenthaveaffectedthelevelofinvestmentandfinancialcommitmentsacrosshalfoftheEUMemberStates,includingmanyintheSEEregion.Ofthe880MWoffinancedcapacity,685MWor78%wasinGreece.Ofthe€41.4bnoftotalcapitalraisedfornewwindfarms,€12.5bnwasinnon-EUcountries:theUK,Ukraine,Turkey,Norway,Russia,BosniaandHerzegovina,theFaroeIslands,NorthMacedoniaandSerbia.AftertheUK,Ukraineraisedthemostcapitaloutofthenon-EUcountrieswith€1.2bn,followedbyTurkeywith€1.0bnandRussia€0.4bn.FIGURE11Investmentinnewonshorewindfarmspercountryin2021(€bnandGW)InFigure11,thepoint’spositioninsidethebargivesanindicationofthecapitalexpenditureperMWfinanced.Ifthepointisattheverytopofthebar,windfarmshavebeenfinancedwith€1mperMWonaverage.Ifthepointishalfwaydownthebar,windfarmshavebeenfinancedwithanaverageof€2perMWetc.TheaverageonshoreCAPEXperMWin2021was€1.3mperMW.InGermany,FranceandGreece,theaverageCAPEXperMWwasclearlygreaterthan€1.3m.Thisislikelytheresultofextendeddelaystoprojectpermitswhichhavebeenparticularlynoticeableinthesethreecountries.ItisnotasurprisethatSpainwasthecountrywiththelargestinvestmentinnewonshorewindfarmsin2021.In2020,theSpanishGovernmentannouncedafive-yearauctionschedule(8.5GWavailabletowindenergy)withthefirstContract-for-Difference(CfD)supportroundtakingplaceinJanuary2021.Windenergywon1GWofsupport.Thehighvisibilityoffutureauctionroundsandstronginstallationtargetsareagreatsourceofcertainty,whichinturnattractsinvestors.TheCfDrevenuesupportcomplementsthecountry’smerchantprojectsandPPAsataportfoliolevel5.In2021,€3.2bnwasinvestedinnewassets,thehighestfiguresince2009.Investmentnumbersin2021(€bn)(GW)Investment(€bn)Newcapacityfinanced(GW)00.511.522.533.500.511.522.533.5SpainSwedenGermanyFinlandFrancePolandNetherlandsUkraineGreeceTurkeyItalyUKPortugalIrelandOthersSource:WindEurope22Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeInvestmentnumbersin2021Investment(€bn)Newcapacityfinanced(GW)(GW)(€bn)0246810121402468101214UKGermanyFranceDenmarkInvestmentsinnewwindfarmsinSwedenexceeded€3bn,arecordamountofcapitalraisedinasingleyear.Thisulti-matelyfinanced2.6GWofnewcapacity.InvestmentsinnewwindfarmsinFinlandalsoreachedrecordlevels,with€2.8bnraisedtofinancethesamecapacity.High-capacityfactorsinthesecountriesduetostrongwindresourcesandtheirabilitytoinstallthelatesttechnology,coupledwithlimitedGovernmentsupportandaliquidbalancingmarket,haveledtoliquidandmaturePPAmarkets.Developerscanofferutilitiesandcorporatescompetitivepricesforoff-takeagreements,allowingnewwindenergyprojectstobefinanced.InGermany2.1GWofnewwindfarmswerefinancedwith€3.1bn.Thishigherinvestmentfigurecomparedwithpreviousyearsreflectstheimprovingpermittingsituation.ThenewGovernmentissettostrengthenthisbyintroducingspecialplanningreformsaimedatboostingonshoreinstallationrates.Permittinghasbeenthemajorbottleneckinrecentyears.Andtogetherwiththebreakinprojectpipelines–followingpressuretogetprojectsoverthelinebeforethegenerousFeed-inTariff(FiT)supportwasreplacedin2017–investmentinnewonshorewindplummetedbetween2017and2019.ThereleaseofmanyblockedprojectsandtheclearscheduleofauctionsshouldrejuvenatethemarketandbringinvestorsbacktothelargestonshoremarketinEurope.Poland(€1.6bn)andLithuania(€0.4bn)alsohadrecordyearsforinvestmentsinnewonshorewindfarms,financingacombinedcapacityof1.6GW.FIGURE12Investmentinnewoffshorewindfarmspercountry(excludingadditionalgridinvestments)in2021(€bnandGW)TheUKsawthemostinvestmentinnewoffshorewindfarmsin2021,raising€8.8bnfinancingtwowindfarmswithacombinedcapacityof2.6GW.ThreeoffshorewindfarmsinGermanyreachedFID,raising€4.9bntofinance1.4GWofnewcapacity.FranceandDenmarkeachhadonewindfarmreachingFID.TheaverageCAPEXperMWforoffshorewindfarmsinEuropein2021was€3.5mperMW.VesterhavNorthandSydOffshorewindfarms(344MW)inDenmarkhadthelowestCAPEXperMWwith€2.1m,andCoursuelles-sur-MerinFrancethehighestat€4.8m.Thereasonsforthelargedifferencesarelaidoutabove.Photo:SaharaFrost/ShutterstockSource:WindEurope23Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEurope2.1CORPORATEANDPROJECTFINANCECorporatefinancetransactions-whereacompanyraisesthecapitaltobuildawindfarmonitsownbalancesheet-typicallyaccountsfor50-70%ofthecapitalraisedforonshorewind.In2021,71%ofthecapitalraisedforonshorewindfarmswasraisedonthebalancesheet.Thisisareturntothesortoflevelseenbefore2017whentheFeed-in-Tariffsupportsystemswerereplacedbycompet-itiveauctions.Sinceonshorewindhasseenevengreatercostreductionssince2016,2021wasarecordyearforcapacityfinanced.FIGURE13Onshorewindcorporateandprojectfinancing2012-2021(€bn)2.SOURCESOFFINANCEIN2021(€bn)CorporatefinanceProjectfinance11.414.810.216.917.98.19.39.612.117.66.63.47.96.67.17.37.77.86.77.20510152025302012201320142015201620172018201920202021Source:WindEurope24Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeItisusefultolookatthecapacityfinancedtobetterunder-standfinancingtrendssincethecapitalraiseddependson6.Szabo,J.,Bruckmann,R.,Menzies,C.,&delRío,P.Competitiondynamicsrevisited.thecostofnewprojectsandthecountrieswheretheyarefinanced.Figure14showsthecapacityfinancedinGW.FIGURE14Onshorewindcapacityfinanced:corporateandprojectfinancing2012-2021(GW)2021wasarecordyearfornewcapacityfinancedonshore.Weexpectgreatercapacitytobefinancedthroughouttherestofthedecade,especiallyascountriesprovidemorevisibilitybysettinglong-termdecarbonisationtargets.Governmentsthatsetoutaclearscheduleoffutureauctionswillcreatetheanairofcertaintythatwillbekeytoattractingfutureinvestmentsinwind.Itisalsopossiblethatthestrongonshorefinancingfiguresseenin2021aredueinparttoprojectswhichhadbeendelayedin2019and2020byCOVID-19.Theamountofcapacityfinancedonaprojectfinancebasishasgenerallycomeoutbetween4and6GWinrecentyears,howeverthedropincorporatefinancedcapacityin2017wasstark.InGermanythelargestmarketinEuropebyfar,thechangefromtheFeed-inTariffsupportsystemtotheauctionsystemhadaparticularlyprofoundeffect.Developersfast-trackedprojectssotheycouldbesubmittedbeforetheauctionssystemwasintroduced–attheexpenseoflessdevelopedprojects6.Thisledtoabreakintheprojectsupplyandacollapseintheprojectpipeline.From4.8GWofprojectsfinancedin2016,therewerejust900MWfinancedin2018.Inaddition,inGermanytherearerelativelyfewerwindfarmsfinancedonaprojectfinancebasiscomparedwiththeEuropeanaverage.Morethan90%ofprojectcapitalistypicallyraisedonacorporatefinancebasis.ThusthetankingoftheGermanprojectpipelinehadasignificanteffectontheoverallEuropeanpicture,accountingformorethan60%ofthedropincorporatefinancedcapacityin2017.Sourcesoffinancein2021(GW)CorporatefinanceProjectfinance20122013201420152016201720182019202020217.19.66.08.69.45.06.46.68.313.84.12.14.93.74.54.65.75.25.76.00510152025Source:WindEurope25Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeSourcesoffinancein2021FIGURE15Onshorewindprojectfinanceddebtandequity2012-2021(€bn)Debtratiosforprojectfinancedonshorewindprojectsareusuallyintheregionof80-90%reflectingthematurityofthetechnology.Morematuretechnologiescanraisemoredebtcapitalbecausebanksunderstandandcanpricetherisks,andaproventrackrecordofsuccessfulprojectsboostsconfidence.Asdebtisalowerriskinvestmentthanequity–sinceintheeventofbankruptcyitisrepaidfirst–itisacheaperformoffinancing.Usuallytherefore,thehigherthedebtratio,thelowerthecostofcapital.In2021,debtaccountedfor89%ofthecapitalraisedonaprojectfinancebasisfornewonshorewindfarms.FIGURE16Offshorewindcorporateandprojectfinancing2012-2021(€bn)(€bn)ProjectfinancedebtProjectfinanceequity5.53.06.45.96.26.66.86.66.16.41.10.41.50.70.90.70.91.20.60.801234567892012201320142015201620172018201920202021(€bn)3.22.73.17.65.31.00.56.14.72.84.010.29.414.60.88.66.121.611.90510152025302012201320142015201620172018201920202021CorporatefinanceProjectfinanceSource:WindEuropeSource:WindEurope26Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeOffshorewindprojectstendtobemuchlargerthanonshoreprojectsandoftenlendthemselvestoprojectfinancestructures–sinceveryfewdeveloperscanraisethenecessaryfundsfortheselargeprojectsontheirownbalancesheets.In2021,€11.9bnwasraisedonaprojectfinancebasis,makingup72%ofthetotal.FIGURE17Offshorewindprojectfinanceddebtandequity2012-2021(€bn)Oftheprojectfinancetransactions,debtmadeup78%ofthecapitalraised,with€9.2bnofcapitalloanedbybankstofiveprojectsintheUK,GermanyandFrance.Sourcesoffinancein2021(€bn)2.03.07.77.210.90.67.85.015.49.20.81.02.52.23.60.20.81.16.32.705101520252012201320142015201620172018201920202021ProjectfinancedebtProjectfinanceequitySource:WindEurope27Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEurope2.2PROJECTFINANCEDDEBTProjectfinanceddebt(non-recoursedebt)hasbecomemoreimportantinfinancingrecentwindenergyprojects.Newbusinessandownershipmodelshavediversifiedthepoolofinvestorsinwindenergyandareunlockingthepotentialforlong-termsourcesoffinancefrombanks,institutionallendersandExportCreditAgencies(ECAs).Thishasledtoalargeamountofaffordabledebt,particu-larlyintheformofnon-recoursefinancing.FIGURE18Projectfinancedebt:newinvestmentsandrefinancing2012-2021(€bn)In2021€15.6bnofdebtwereraisedtofinancenewwindfarmsonaprojectfinancebasis.Therewasalsoanaddi-tional€10.1bnofnon-recoursedebtrefinancing.Thetotal€25.7bnofnon-recoursedebttransactionskeepsupthestrongpatternofactivitywehavewitnessedinrecentyearsandunderlinestheimportanceofbanksinfinancingwindenergy.Whenawindenergyprojectiscommissioned,itsriskprofilechangessignificantly.Therisksduringconstructionarereplacedbyoperationalrisks.Thisaffectstheproba-bilityofrepayinglenders.Inaddition,lendersspecialiseinpricingrisksatvariousstagesofprojectdevelopment.Itisthereforecommonforaprojecttorestructureitsdebtsoncecompleted.Banksforexamplemightprovidedebttocovertheconstructionofawindfarm,whichusuallytakes1-2yearsforonshoreprojectsand2-3yearsforoffshorewindprojects.Duringthisperiodthewindprojectdoesn’tproduceanyrevenue.Thereareotherrisksaswell,suchaslossesfromaccidentsordelaysinconstruction–duetobadweather,forexample.Oncethewindfarmhasbeencommissioned,therisksofconstructionaretransferredtooperation.Sincetherearefewerpotentiallossesandrisksforopera-tionalwindfarms,theycanattractbetterinterestrates.Therestructuringofdebtinthiswayisknownasrefinancing.Sourcesoffinancein2021(€bn)ProjectfinanceddebtfornewinvestmentsRefinancedprojectfinanceddebt7.46.014.113.117.17.114.611.621.415.63.03.41.82.56.96.911.19.36.510.10510152025302012201320142015201620172018201920202021Source:WindEurope28Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeFIGURE19Marketshareofbanksinwindenergyfinancingin2021Thedebtmarketshavesupportedconstructionactivityonattractiveterms.Thisshowsthatthemaindriversforinterestratepremiumsaretechnologicalmaturityandlong-termprojectrisksandcharacteristics.Fornow,thelowinterestrateenvironmentstillprovideswindenergyprojectswithcompetitivepricingandlowfinancingcosts.Butinrecentmonthstherehasbeengrowingmarketturbulencefollowingonfromsupplychainshortagesandhighenergyprices.ThisledtorecordhighinflationratesinQ42021.TheEuropeanCentralBank(ECB)expectedthistodeclinetowardsitstargetof2%overthecourseoftheyear,buttheoutlookforinflationandtheoveralleconomydependsonhowthesituationdevelopsinUkraine.Theriskpremiumchargedbylendershasfallenconsist-entlyaswindenergymarketsmatureandlendersbecomemorecomfortablewiththerisksinthewakeofthetech-nology’spositivetrackrecord.Over96lenderswereactivein2021,upsignificantlyfromthe67presentin2020.Theselendersincludemultilateralfinancialinstitutions,exportcreditagenciesandcommer-cialbanks.Sourcesoffinancein2021UniCredit4.8%INGGroup4.3%CreditAgricoleGroup3.9%BNPParibas3.8%SocieteGenerale3.6%Rabobank3.2%NatWest3.0%NordLB2.8%SkandinaviskaEnskildaBanken2.8%BancoSabadell2.3%CaixaBank2.2%GroupeBPCE2.2%KfW2.1%MitsubishiUFJFinancialGroup2%Others52%96BANKSACTIVEINWINDENERGYFINANCINGIN2021Santander5.1%Source:WindEurope29Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEurope2.3PROJECTACQUISITIONSFIGURE20Projectacquisitionsbycountryin2021(€bn)Inaprojectacquisitionaninvestorpurchasesawindfarmorashareofit.Windenergyprojectscanbeacquiredatanystage,frompre-development,throughdevelopmentandconstruction,tooperation.Thevaryingrisksandchar-acteristicsofthedifferentstagesattractawiderangeofinvestors.TheUKmarketsawthegreatestacquisitionactivityinmonetaryterms(€2.9bn)with1.4GWofcapacityacquired.IntheNetherlandstherewas€2.6bnofprojectacquisi-tionactivity,and2.3GWofcapacitychangedownership.Polandsawthemostonshorewindacquisitionactivityoutofanymarket,with€1.9bnofwindprojectequityinvest-mentinvolving3.8GW.TheamountofcapacitychanginghandsinPolandsuggeststhatinvestorsaretargetingprojectsearlierindevelopment.Indeedprojectacquisitionactivityin2021totalled€15.6bn–includingtheacquisitionofoffshoregridinfrastructure.Thisissimilartothefigurefor2020(€14.1bn)andlessthantheprevioustwoyears(€17.5bnand€19.6bnin2019and2018respectively).Howeverintermsofcapacityacquired,2021saw17.3GWofwindfarmownershipchanginghands,morethaninpreviousyears(14.1GW,14.9GWand15.5GWin2018,2019and2020respec-tively).ThissuggeststhatinvestorsarenotjustactivelytargetingearlierinvestmentsinPoland,butacrossEuropeasawhole.Whetherthisistotryandincreasereturnsinacompetitivefieldbytakingonmoreearly-stagerisk,ortogainmarketshare,investorshaveclearlyhadtobecomemoresophisticatedtobeabletoenterintoprojectsatearlierstages.Sourcesoffinancein2021(€bn)OffshorewindOnshorewind0.50.31.51.10.80.80.70.50.60.50.40.00.10.10.22.42.30.00.51.01.52.02.53.03.5UKNetherlandsPolandFinlandGermanyRomaniaFranceSwedenSpainUkraineGreeceIrelandLithuaniaBulgariaOthersSource:WindEurope30Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeFIGURE21Capacityacquiredbywindfarmphasein2020and2021(GW)In2020and2021,investorsacquired4.4and4.7GWofoperationalwindfarmsrespectively.Butprojectacquisi-tionsintheconstructionphasedoubledfrom2to4GWandprojectcapacityacquiredinthedevelopmentphasegrewby33%from6GWto8GW.Therelativevalueofawindfarmdependsonitsstageofdevelopment.Windfarmsgainvaluethroughdevelop-mentstages.Thisisfollowedbyalargeincreaseinvalueduringconstructionastangibleassetsareinstalled.Awindfarmisatitsmostvaluableonceitiscommissioned,afterwhichthereisslowdepreciation.SincePolandsawsomeofthehighestacquisitionactivityincapacitytermsbutonly€1.9bnintransactions,wecanassumethatmostoftheseacquisitionswereforearly-stageprojects–duringdevelopmentandconstruction.FIGURE22Capacityacquiredinwindenergyprojectsbycountryin2021(GW)Poland3.8GWOthers3.7GWFinland1.5GWNetherlands2.3GWSweden2.2GWRomania1.4GWUK1.4GWIreland1.0GWSourcesoffinancein2021(GW)0246810121416182020202021PredevelopmentIndevelopmentConstructionOperationSource:WindEuropeSource:WindEurope31Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEurope2.4CORPORATERENEWABLEPPAS7.BayWar.e.EnergyReport2019,publishedinpartnershipwiththeRE-SourcePlatform.Availablehere:https://www.baywa-re.de/en/energy-report-2019/ThecorporatesourcingofrenewableelectricitythroughPowerPurchaseAgreements(PPAs)hasbeengrowingsteadilysince2015.Corporateshaveavarietyofmotivestosourcepowerfromrenewables,butthepotentialtolowerandfixelectricitycostsisabigpartoftherationaleforthesedeals.Arecentsurveyof1,200companiesacrosssixcountriesshowedthatamongthosesourcingrenewables,92%ofthemaredoingittocutdownonenergycosts7.2021wasanotherrecordyearinEuropeforvolumesofrenewableelectricitycontractedthroughcorporatePPAs-with6.9GWinwind,solarandotherrenewableprojects.Itwasalsoarecordforthenumberofdealsfinalisedinayearwith97overall,including52signedforwindenergy–ofwhich11wereforoffshorewind–and33forsolar.Until2018windaccountedfor90%ofthecontractedcapacityinEurope.ButthelastfewyearshaveseenarapidexpansioninsolarPPAs,whichhasreallyhelpeddrivemarketgrowth.In2021windaccountedforalmost60%ofthecontractedcapacity,andcumulatively,windmakesuptwothirdsofcontractedcapacityinEurope,around13GW.Windenergyisverywellplacedtoaccommodatecorporates’needsforrenewableelectricitybecauseofitsmodularscale,cost-competitivenessandlowriskprofile.Approximately10%ofnewwindfarmcapacityfinancedin2021wassupportedbyacorporatePPA.FIGURE23RenewableenergycorporatesourcingthroughPPAs(GW)CorporaterenewablePPAsalsocomewithbenefitsforgenerators.Pricevisibilityoveralongperiodoftimeandaguaranteedoff-takerareimportantincuttingthecostoffinancing.Lenderswouldtypicallyneeddownsideprotec-tion–afloor–inprojectrevenuestoensurethatdebtrepaymentobligationsaremet.Assuchtheytendtopreferlowerrevenueoveralongperiodoftime–matchingtheloanterm–ratherthanhigherbutmoreuncertainrevenue.Therewere11offshorewindPPAssignedin2021withacombinedcapacityof1.4GW.ThiscontinuesthetrendseeninthedevelopmentofoffshorewindPPAs–fromthefirstsignedin2018,toatleast25dealswith16offshorewindfarmstodateintheNetherlands,Belgium,Germany,DenmarkandtheUK.Thereisnowmorethan2.4GWofoffshorecapacitycontractedthroughcorporatePPAsinEurope.AnnualVolume(GW)OnshorewindOffshorewindSolarRenewablesportfolio012345678201320142015201620172018201920202021Sourcesoffinancein2021Source:WindEurope32Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeOffshoredeveloperslooktocorporatePPAsforrevenuestability.Theyallowthemtofreeupriskcapital–iftheyarefinancingprojectsontheirbalancesheet–ortofinancemorecostswithcheapdebt.Thelargesizeofoffshorewindfarmsmakesthemsuitableforcorporateswithlargedemand,anditistheenergyintensivesectorwhichhasbeendrivinggrowthinoffshorePPAs.Almost50%ofthecapacityhasbeencontractedbylargeICTconglomerateswithanother20%contractedbychemicalsandindustrialgascompanies.FIGURE24RenewableenergycorporatesourcingthroughPPAs(GW)TheNordiccountries,followedbytheUKandtheNetherlandshavegenerallybeenthebiggestmarketsforcorporatePPAs.In2020and2021however,bothSpainandGermanysawsignificantvolumesofPPAssigned.Spaininparticularcontractedmorethan2.3GWin2021aloneincluding1.2GWofsolarandover500MWofwindPPAs.PPAsarebeingsignedbymorecompanies,acrossanincreasingnumberofsectorsandcountries.Goingforwardtheywillplayanincreasinglyimportantroleinmeetingcorporatedemandforrenewableelectricity,aswellassupportingthefinanceandbuild-outofrenewableenergyinEurope.20202021201320142015201620172018201905001,0001,5002,0002,5003,0003,5004,0004,500SwitzerlandBelgiumItalyPolandIrelandDenmarkFranceNetherlandsFinlandUKGermanyNorwaySwedenSpainContractedcapacity(MW)Sourcesoffinancein2021Source:WindEurope33Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeFIGURE25TotalrenewableenergycapacitycontractedthroughcorporatePPAsbysector(MW)Demandforrenewableelectricitycomesfromawiderangeofindustrialsectors.Indeedtherehasbeenadiversifica-tioninoff-takerssigningPPAsinrecentyears.Asitstands,heavyindustryandICThavecontractedthemajorityofcorporaterenewablePPAsinEurope.In2021Amazonwasonceagainthelargestcorporatebuyerofrenewableelectricity,contractingafurther2.3GW(intheNetherlands,Germany,Sweden,Italy,Spain,FinlandandtheUK).Thismeanstheyhavenowcontracted3.7GWofrenewableelectricityinEurope,2GWmorethanthenextlargestbuyer.Butitisn’tjustthebiggestcompaniesthataresigningPPAs.Todatemorethan140companieshavesignedrenewablePPAsand40companieshavecontractedover100MWfromrenewableelectricitygeneratorsinEurope.Thechemicalsindustryhasstartedtofullyengagewiththerenewablessectorandarelookingforrenewableprojectstopartnerwith.In2021,BASFwasthesecondlargestbuyer,contractingmorethan500MWofwindenergyinGermanyandSpain.Decarbonisingenergyintensiveindus-triesiskeytodecarbonisingtheEuropeaneconomyasawholeanditisgreattoseetheprogressbeingmade.AnumberofothersectorssawsignificantvolumesofcontractedPPAcapacityin2021.Thetelecommunicationssectorcontractedanother466MWofrenewablepowercapacity,takingitstotalcontractedcapacityinEuropetomorethan1GW.Furthermore,thefoodanddrinksandautomotivesectorscontracted363MWand323MWrespectively,significantlyboostingtheirmarketsize.Thegreatestvolumesin2021weresignedbytheICT(3GW)andheavyindustrysectors(1.3GW).ICT36%Heavyindustry25%Transport7%Others13%Pharmaceuticals6%Telecoms6%Consumergoods4%Retail3%Sourcesoffinancein2021Source:WindEurope34Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEurope3.WINDENERGYFINANCEPOLICY3.1REPowerEUInOctober2021theEuropeanCommissionpublishedatoolboxforMemberStatestotacklethehighelectricitypricesseenacrossEurope–drivenbyhighgasprices–andtobuildupresilienceagainstfutureshocks.TheRussianinvasionofUkrainehasnotonlyexacerbatedhighgaspricesbutithasalsounderlinedtheimpor-tanceofenergysecurity.Inresponse,inMarch2022theCommissionpublishedtheREPowerEUcommunicationsettingouttheEU’splantoendRussianfossilfuelimportsaheadof2030.Theproposalaimstokick-starttheelectrificationofEurope’sindustry,buildingsandtransportbyrampingupthedeploymentofelectricheatpumps,EVchargingpoints,electricitystorageandrenewablehydrogen.Italsoproposesamassivescaleupofrenewables.The2030targetforwindenergyintheEUhasbeenrevisedupfrom453GW–intheCommission’smostambitiouspreviousscenario–to480GW.Thiscomesatatimewhenwearenotyetfinancingthenumbersweneedtomeetexistingtargets.Atthesametime,rawmaterialpricesarerising,inflationisexpectedtoincreasefurtherandmate-rialshortagesareputtingpressureonsupplychains.Butthesetargetscanbemetiftherightpoliciesareputinplace,andaboveall,ifpermittingproceduresareimprovedacrossEurope.35Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEurope3.2REVENUESTABILITYThecurrentsituationwithhighelectricitypricesandhighuncertaintyonfuturepricesmakesthebenefitstosocietyof2-sidedcontracts-for-difference(CfD)veryclear.Sincewindfarmcostsareknownup-front,generatorscancommittoafixedpriceformanyyearstocome,sothatwhenenergypricesdospike,windenergycontinuestoprovideelectricityatanagreedstrikeprice.AnyexcessrevenueisreturnedtotheNationalGovernment.Revenuestabilityisimportantinprovidingwindenergyatthelowestpossiblecost.Windfarmshavehighupfrontcostsbutthegenerationcostismostlyfixed(therepay-mentoftheinitialinvestment)andvariablecosts–suchasoperationandmaintenance–areverylow.Thismakesthefinancingcostahighproportionoftheoverallcostofwindenergyproduction.Debtisthecheapestformofcapitalandsoitismoreeffi-cienttofinancewindfarmswithhighproportionsofdebt.Butitneedstobepaidbackinregularfixedpayments,regardlessofthevolumesofenergybeingproducedandthepriceatwhichtheelectricityissold.Thismeansthatevenifwindenergyischeaperonaveragethanthermalgeneration,awindfarm’soperationisputatriskifitfailstomakealoanrepaymentatanypoint,astheownerscouldhavetheirassetsseized.FIGURE26Revenuestabilisationfromtwo-sidedCfDIntheexampleabove,thewindfarmdeveloper,orwindfarminaspecialpurposevehicle(SPV)structure,issupportedbyatwo-sidedCfDwithastrikepriceof€50perMWh.ForeveryMWhproducedbythewindfarm,thedeveloperwillreceive€50regardlessoftheelectricitymarketprice.Theresultingstablepricemakesinvestmentsinrenewableenergypossibleandmoreefficient.Italsoallowswindfarmstoattractcheapercapitalandachievealowercostofelectricityproduction.Ifthetwo-sidedCfDisawardedthroughacompetitivetender,theresultingpricecanbeconsideredthelong-termmarketpriceofelectricity.Thisissomethingthatotherwisecan’texistinthemarketbeyondmorethanfiveyears.TheimportanceofCfDsunderpinningwindfarminvest-mentscontinuestorisewithmoreandmorecountriesusingthemintheirauctionmodels.Asmentionedabove,corporatePPAsareanotherwaythatprojectscanachievesomelevelofpricestability,aswellasanoff-takerforthetenorofthedebt.Insomemarketswherethereisnocentralrevenuesupport,corporatePPAsarethemainrevenuestabilisationmechanism.Theywillbecrucialindecarbonisingtheindustrialsectorandhavealargeroletoplayintheenergytransition.ButcorporatePPAsintroducecreditriskandsotheyarelimitedtosomeextentbythepoolofcorporateswhicharelargeandcred-itworthyenoughtomakeaPPAbankable(i.e.toattractdebtfrombanks).60504030100908070ElectricityPrice€/MWhElectricitypriceStrikepricePaymenttogovernmentPaymentfromgovernmentWindenergyfinancepolicySource:WindEurope36Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeWindenergyfinancepolicyIfGovernmentswanttoensurethatenoughwindenergyprojectsareproperlyfinanced,theyneedtoenablerevenuestabilisationmechanismsthrough2-sidedcontracts-for-difference.Theyshouldalsoremovebarriers8.20220412-WindEurope-position-paper-on-electricity-market-design.pdftocorporatePPAs.Thiswouldgivewindfarmsadditionalrevenuestabilisationoptionsandwouldensurethatindus-triescoulddecarbonisetheirownoperations.3.3MARKETDESIGNTheREPowerEUproposalallowsMemberStatestoapplytemporarytaxestoprotectconsumersfromhighenergyprices.Itisvitalthatanyclaw-backmeasures–orwindfalltaxes–whichGovernmentsapplyshouldacknowledgethatmostwindenergyissoldunderlong-term,fixed-pricecontractsforthereasonsmentionedabove.Projectsthatsellelectricityontrulyfixed-pricecontracts,forexampletwo-sidedCfDs,donotmakeundueprofitsfromhighwholesaleelectricityprices.Onthatbasis,theseprojectsshouldnotbeaffectedbyclawbackmeasures.Applyinganinappropriateextraordinarytaxontheirrevenuewouldnotonlyrenderawindenergyprojectunviableintheshort-term,butcouldalsoseriouslyimpactinvestorconfidenceforyearstocome.Itcouldpotentiallyleadtoprojectpipelinedisruptionandwouldseriouslyunder-minenationaleffortstomeetclimatetargets.Notethatthisisnotthecaseforothersupportmechanismssuchaspremiummechanismsorone-sidedCfDs.TheREPowerEUplanproposesthattheclawbackmeas-uresshouldnottaxrevenuefromthesaleofelectricityinlong-term,fixed-pricecontracts.Taxesshouldalsobetime-limited,shouldnotimpactthedynamicsoftheenergymarketandshouldnotapplyretroactively.Theseconditionsaregoodbutaren’tlegallybinding,andcoun-triesthatdonotapplythemcouldriskunderminingconfidenceintheirenergymarkets.Withtheneedforgreaterelectrificationandarampupofrenewabledeployment,severalcountriesinEuropearenowlookingattheirlong-termenergymarketdesign.InApril2020,WindEuropepublishedapositionpaperontheenergymarketdesign8,lookingatwhatadjustmentswereneeded.Thesechangeswouldsendtherightinvestmentsignalsneededtodeploymorewind,guaranteeenergysecurityandensureacost-effectivemanagementofafullydecarbonisedenergysystem.3.4RULESFORGUARANTEESOFORIGINGuaranteesofOrigin(GOs)arecrucialforcorporatebuyerstodemonstratetheuseofrenewableelectricity.CorporatePPAscannotbesignedwithouttheissuanceandcancellationofGOs,toprovethelinkbetweenrenewableelectricityproductionandconsumption.SomeMemberStatescontinuetoretainGOsfromrenew-ableprojectsbenefitingfromStateAid,evenwhentheStateAidonlyappliestoapartoftheproject.Ofcourseitisvitaltoavoidanysortofdoublecompensation,andtoensurethatcorporatesarenotundulybenefitingfromrenewableelectricitysupportedbythetaxpayer.GuaranteesofOriginshouldthusbemadeavailabletorenewablegeneratorstosellortradeforallunsupportedrenewableelectricitygeneration.WhererenewablegenerationbenefitsfromStateAid,MemberStatesshouldhavetherighttocancelrelatedGOsonbehalfofthegenerator,ortosellrelatedGOsinacentralauction.CurrentsystemsliketheseexistinCroatia,France,Germany,Italy,Luxembourg,Portugal,andSlovakia.ButthisshouldonlyapplyforGOsrepresentingrenewableelectricitywhichhasreceivedpublicsupport.37Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEurope3.5GUIDANCEFORPPASInlinewith‘betterregulation’principles,theCommissionhaslaunchedapublicconsultation.Thepurposeofthisistogatherstakeholderviewsongoodpracticeswhichaccel-eratepermit-relatedproceduresforrenewableenergyprojectsandfacilitatePowerPurchaseAgreements.NationalpolicymakersshouldfavourmeasureswhichsupportbusinesseswhowanttoenterintoPPAs,suchastheschemesdevelopedinNorwayandSpainwhichprovidecredit-riskguaranteestoenergyintensiveindus-tries.Inthemeantime,theyshouldcontinuetoremoveadministrativebarriers.Finally,toensureahealthypipelineofprojects,Governmentsshouldliftpermittingbarriersandacceleratethebuildoutoftheelectricitygridtosupportagreaterpenetrationofrenewables.Windenergyfinancepolicy38Financingandinvestmenttrends–TheEuropeanwindindustryin2021WindEuropeGLOSSARY•Windfarmfinance:coversallinfrastructureinvestmentsinonshoreandoffshorewindfarms,includingrefinancingtransactions.•Newwindfarmfinance:includesallinfrastructureinvestmentsintheconstructionofnewonshoreandoffshorewindfarms,excludingrefinancingtransactions.•FinalInvestmentDecision(FID):forprojectfinance,thefinaldecisiontogoaheadwithaprojectoncethepermittingandfinancialarrangementsareinplace.•Financialclose:forcorporatefinance,thefinaldecisiontogoaheadwithaprojectoncethepermittingandfinancialarrangementsareinplace.•Capitalmarkets:referstoactivitiesthatgatherfundsfromtheissuanceofsharesandbonds.•Corporatefinance/on-balancesheetfinancing:includesallinvestmentsinwindpowergenerationandtransmissionassets,financedeitherthroughtheequityofprojectownersorthroughdebtraisedatcorporatelevel.•Projectfinance/off-balancesheetfinancing:includesallinvestmentsinwindpowergenerationandtransmissionassetswheretheprojectdebtandequityusedtofinancetheprojectarepaidbackfromthecashflowgeneratedbytheproject(asopposedtothebalancesheetofprojectowners).Tothisend,projectsarespun-offasaseparateentity.•Non-recoursedebt:debtraisedinprojectfinancetransactions.•Syndicatedloan:aloanprovidedandstructuredbyagroupoflenders.•Greenbond:acorporatebond,theproceedingsofwhichareusedtofinanceaportfolioofrenewableenergyprojects.Unlessspecified,theuseofmoneyisoftenunallocated.•NorthwestEurope:thegeographicalregionofEuropeincludingBelgium,Denmark,Finland,France,Germany,Iceland,Luxembourg,theNetherlands,Norway,SwedenandtheUK.•SouthEastEurope(SEE):thegeographicalregionofEuropeincludingAlbania,BosniaandHerzegovina,Bulgaria,Croatia,Greece,Kosovo,Montenegro,NorthMacedonia,Romania,SerbiaandSlovenia.•Projectbond:includesbondsissuedatprojectlevel,theproceedingsofwhichareusedtofinanceaspecificproject.•Corporaterenewablepowerpurchaseagreement(PPA):along-termbilateralagreementforthepurchaseofpowerfromaspecificrenewableenergyproject,wherethepoweroff-takerisacorporateasopposedtoapowerproducer.•WeightedAverageCostofCapital(WACC):theWACCiscalculatedastheweightedaverageofthecostofdebt(theinterestratechargedbylenders),thecostofequity(compensationrequiredbyshareholdersforbearingriskofownership)andthecostofanyothercategoryofcapital(preferredstock,long-termdebtetc.).Itrepresentsthecosttoabusinessofraisingcapital,andisameasureusedtoassesswhetherornottoinvestinanewproject.WindEuropeisthevoiceofthewindindustry,activelypromotingwindpowerinEuropeandworldwide.Ithasover400memberswithheadquartersinmorethan35countries,includingtheleadingwindturbinemanufacturers,componentsuppliers,researchinsti-tutes,nationalwindenergyassociations,developers,contractors,electricityproviders,financialinstitutions,insurancecompaniesandconsultants.ThiscombinedstrengthmakesWindEuropeEurope’slargestandmostpowerfulwindenergynetwork.windeurope.orgRueBelliard40,1040Brussels,BelgiumT+3222131811·F+3222131890