EIG, InvestEU set bridge solution to support renewable energy in Europe
- On the occasion of COP27, Eiffel Investment Group (Eiffel) and the European Investment Fund (EIF) announce the launch of Eiffel Transition Infrastructure, an innovative fund designed to provide equity bridge financing for renewable energy infrastructure assets in Europe. The fund is managed by Eiffel, a Paris-based asset manager financing energy transition since 2009.
- The EIF is sponsoring the initiative committing €75 million to the new fund. Several top tier European institutional investors including AG2R LA MONDIALE, Abeille Assurances, Allianz and l’Auxiliaire have joined the first close. The fund is targeting up to €500 million.
- The agreement is supported by InvestEU which brings together all EU financial tools to support investment by making project financing simpler, more efficient and more flexible.
- The new fund expects to complete two inaugural investments before the end of the year.
- It will enable renewable energy developers to accelerate development of assets. This contributes to the European ambition to accelerate the deployment of clean energy in Europe, as reinforced by the RePowerEU plan.
An innovative equity bridge solution to accelerate the development of renewable energy projects
Ten years after structuring the first bridge financings for renewable energy assets, Eiffel is innovating again by introducing equity bridge financing for green infrastructure, a first in Europe.
Eiffel Transition Infrastructure provides equity or quasi-equity to finance the development phase of renewable energy infrastructure assets. Project development -i.e., securing the land, permits, environmental authorisations, grid connection, designing the project engineering and signing electricity offtake contracts- generally takes several years and is capital intensive.
This equity bridge solution is particularly relevant for renewable energy developers and independent power producers with large pipelines of new projects in development but without the capital to finance them all in parallel.
Equity bridge financing is also particularly relevant for merchant assets (i.e. renewable energy assets that plan to sell their electricity on the market rather than under regulated tariffs or long term PPAs[1] ) and for assets with new business models, such as combined generation and storage.
The EIF is sponsoring the initiative committing €75 million to the new fund. This agreement is backed by the InvestEU programme, which helps generate additional funding in key European priorities such as the green transition.
A natural extension of the debt bridge financings deployed by Eiffel for over 10 years
Eiffel Transition Infrastructure’s equity bridge is a natural extension of Eiffel’s debt bridge financing program, initially launched with the support of prominent investors among which the EIB and and the French government within the framework of the Future Investment Program, now integrated into France 2030, and operated by ADEME, the French environment and energy management Agency. Through this program called Eiffel Energy Transition, Eiffel has invested several hundreds of millions of euros per year and has executed more than 160 debt bridge transactions alongside more than 60 developers, thus financing 2,600 renewable energy assets.
A significant positive impact on CO2 emissions
With a target size of up to €500 million, the fund expects to accelerate the deployment of up to 7 GW of new renewable electricity capacity, thereby contributing to avoiding the emission of the equivalent of up to 4 million tons of CO2 per year[2].
Two inaugural transactions expected before year-end
Illustrating the relevance of the new fund’s strategy and the need for bridge capital, two inaugural transactions are expected to close in the coming weeks, with Green Genius and Pacifico Energy Partners, two developers with whom Eiffel has worked successfully in the past. In each case, Eiffel Transition Infrastructure will set up a joint venture with its partner to develop an initial portfolio of a few hundreds of MWs of PV projects.
Pierre-Antoine Machelon, head of Infrastructure at Eiffel, declares: “by providing much-needed equity alongside midsized independent renewable energy developers and power producers, the Eiffel Transition Infrastructure fund accelerates the development of new renewable energy capacities, helping Europe achieve energy sovereignty and generating a significant positive impact on greenhouse gas emissions and climate change.”
Michal Kurtyka, former Climate Minister of Poland and former President of COP24 and senior advisor at Eiffel, adds: “this new fund is another very tangible contribution by Eiffel and its investors, in particular the European Investment Fund, to reaching the objectives of the Paris Agreement, reasserted this week during COP27”.
Alessandro Tappi, chief investment officer of the European Investment Fund, comments: “Contributing to the EU’s green transition agenda is a top priority for the EIF. This has become even more important and urgent given the current energy crisis. We are therefore very glad to be doing our part and investing in a fund that will make real, tangible and meaningful steps in the direction of meeting the EU’s climate targets. Investing in climate funds is a key priority for us, and with the support of the new InvestEU programme, we are further strengthening our contribution to the EIB Group climate action agenda.”
Paolo Gentiloni, European Commissioner for Economy, said: “Developing the infrastructure needed to decarbonise our economies and safeguard our energy security will require significant and sustained investment. InvestEU is an innovative and powerful tool that is helping to harness this investment. I am delighted that, with this agreement, InvestEU is channelling the finance needed to accelerate the deployment of additional renewable energy capacity.”
