EU Unveils Plans to Enhance Investment in Energy Infrastructure

EU's Strategy for Energy Infrastructure Investment

By Kate Abnett

Funding Facilities Overview

BRUSSELS, Feb 12 (Reuters) - The European Union and its lending arm, the European Investment Bank, are preparing a suite of new funding facilities to support energy infrastructure investments, a draft document seen by Reuters showed.

Loan Securitisation Scheme

The plans are being developed as EU leaders face pressure to reduce energy costs for households and European industries who say hefty bills mean they cannot compete globally.

Off-Balance Sheet Financing

A draft European Commission strategy, seen by Reuters, outlined plans for the EIB to mobilise more private investment in the energy sector - where investments in power grids and energy-saving renovations fall short of levels needed to meet EU climate and energy goals.

EIB Guarantees for Small Operators

Under a planned loan securitisation scheme, the EIB would facilitate the transfer of existing loans from banks' balance sheets - freeing up lending capacity for new loans. Currently, some banks' concentration limits prevent them from lending more to power grid operators, the document said.

A second facility would provide off-balance sheet financing by turning the value of grid operators' future revenue streams into upfront cash, so they can access more finance for large infrastructure upgrades.

"Many operators frequently face liquidity constraints and limited room for traditional debt," the draft said.

Another scheme would increase EIB guarantees to banks so they can lend to small energy distribution grid operators. It would also help small operators club together to form joint ventures, to standardise financing terms that are usually off-limits to small players.

The draft document did not specify the size of the new facilities, which could change before the Commission is due to publish the plan in March, with some facilities expected to be implemented this year and others next year.

A spokesperson for the EIB declined to comment on the document, but said: “The EIB stands ready to work closely with the European Commission to accelerate investments in Europe's energy security and green transition."

A Commission spokesperson declined to comment.

The EIB invested 33 billion euros in energy projects in Europe last year, a record high.

(Reporting by Kate Abnett; editing by Philippa Fletcher)