State bank increases onshore wind loans

GERMANY: Germany's development bank has more than doubled its maximum loan amounts for renewable projects.

A desire to support the use of larger wind turbines for onshore projects was one reason behind the move.

Starting from 2012, KfW will raise the amount available under its support programme from EUR10 million to EUR25 million.

Currently, the most commonly used turbines onshore in Germany are 2-3MW. "But there is a recognisable trend towards turbines of 5-7.5MW. The increase in maximum loan will support this process," a bank spokesman said.

Onshore wind is the renewable technology requiring the least support for expansion in Germany. Yet onshore wind installations fell to just 1.5GW in 2010, down 24% on the 1.9GW achieved in 2009.

KfW's move may help to get onshore wind back on track to meet the 2020 target of 35.8GW as set out in Germany's National Renewable Energy Action Plan. At the end of 2010, Germany's onshore total stood at 26.64GW, trailing behind the 27.5GW expected by then under the plan.

The KfW has long played a key role in German onshore wind-energy financing (see graphic). In the first half of 2011, KfW agreed loans for 26 repowering and 155 new onshore wind projects with loans adding up to EUR736 million.

KfW's programme provides loans for up to 20 years, on which a period of grace on interest payments may be allowed for up to the first three years. The interest rate is set taking into account capital-market developments and the creditworthiness of the company involved.

"With our low-interest loans, long loan maturities and assumption of risk, we create the necessary incentives for continuing investments in the energy sector," KfW's CEO Ulrich Schroeder explained.