Soft loans going cheap, even small scale wind plant developers in Germany have easy access to toans through tried and tested channels

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A record volume of credit was made available to the wind energy sector in 1996 by the Deutsche Ausgleichs Bank (DtA). The money was channelled to wind energy from both the environment and energy saving programme of the European Recovery Programme (ERP) and the DtA's own environment programme.

Low interest credit of DEM 538.3 million went to wind energy projects from the ERP in 1996 and another DEM 209 million followed from the DtA programme. The total DEM 747.3 million represents 85% of the total credit granted under the two programmes for the whole of last year. In comparison, solar energy received a total of just DEM 25 million.

The ERP was first established under the Marshall Plan set up by the US for rebuilding Europe in the aftermath of the Second World War, but is now a development programme controlled by the federal economy ministry. The DtA bank programme is both a loan extension plan to "top up" ERP funds as well as an independent source of credit.

The two programmes have long been popular with wind plant investors as a source of cheap credit. Between 1990 and 1996 DEM 2.47 billion was been shelled out in loans to wind plant, 82% of all money loaned under the two programmes. About 75% of the around 4,330 wind turbines installed in Germany by the end of 1996 were financed with the help of cheap credit from these two sources alone.

The rates of interest charged change several times a year. Currently rates available under the ERP environment and energy saving programme are 4.75% (effective interest rate 4.84%) in eastern Germany (apart from west Berlin) for a 15 year loan up to a limit of DEM 2 million. In west Germany, the interest rate is currently 5.25% (effective 5.36%) for ten years on a limit of DEM 1 million.

Under the DtA's own programme, investors can obtain credit for ten years, with up to two years free of interest payments, at 4.5% (effective rate 5.38%) or for 20 years, with up to three free years at 5% (effective rate 5.71%). The pay-out on the credit sum is usually 96% and the maximum credit available generally DEM 10 million. This programme allows credit on up to 75% of the investment figure, for private households up to 100%. Household investors can borrow at just 2.75% interest (effective 3.97%) for up to six years with one free year.

The programmes are flexible in their approach. The investment limits under the ERP programme are soft and can be exceeded if the federal environment and economy ministries consider a project to be especially worthy of support. Wind energy projects usually seem to be given this status. The DtA quotes a DEM 9.6 million wind project consisting of eight turbines and financed through an ERP loan of DEM 4.8 million, complemented by a DtA loan of DEM 2.4 million, amounting to 75% financing by the DtA. A project developer is also free to apply for further aid under regional wind support programmes without any ill effect on the DtA loans.

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