Burgeoning interests from banks

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Financial institutions are not only waking up to the potential business prospects of renewable energy, they are also hungry for projects to invest in. This was the main message of exhibitors on the Trading Floor of the World Sustainable Energy Trade Fair, held in Amsterdam in late May. The Trading Floor was an innovation of the fair's organisers to attract "leading financial institutions from all over the world" either involved or considering investment in renewable energy. It attracted four main exhibitors and more than a handful of representatives from the financial world.

"We have the money. Just come with the projects. That's our message to the wind industry," said Dennis Koromzay of the World Bank's International Finance Corporation (IFC). So keen is the IFC to drum up business that it was verbally transmitting this message to each and every wind turbine manufacturer exhibiting at the fair. The IFC is the largest international source of financing for private sector projects in the developing world and has made the environment one of its urgent priorities through the Global Environment Facility. As part of this policy, the IFC says it is seeking to expand its involvement in renewable energy. Already it has financed wind projects in India.

Other trade floor participants were only slightly less enthusiastic. All seemed impressed by what they could see of wind energy at the exhibition -- and some were clearly surprised at the large number of requests they had from potential wind project developers for a talk on financing. "I've had German farmers here with big ideas about developing wind projects overseas," said an impressed Ian Simm of Impax Capital Corporation in London. Impax offers "strategy and finance for environmental utilities."

"We are here to raise our profile and bring in business and secondly to learn which way the industry is headed and what options there are," continued Simm. "In the next five to six weeks we will be getting off the fence and getting finance for one or more of the development groups who have approached us." The role of Impax, he said, was to package a project in such a way that it was an acceptable financial risk for a money lender. Too often a developer does not have the necessary understanding of financing to successfully acquire a loan, he explained.

Referring to wind energy in northern Europe, he commented: "The way I see it, the people with the land are the people who hold the key to this." And he saw no reason why owners of land with good winds should not capitalise on their good fortune. In a far cry from just a few years ago, when financiers were wary of burning their fingers on wind projects, he said: "The technology is here and the market is here. It is just a question of packaging the risk." Impax is mainly interested in financing projects worth more than $5 million. "It has to be large enough to make it worth our while, small enough to contain the risk," concluded Simm.

High Street banks were also present, including the Netherlands' Ing Bank and Rabobank Nederland. Ing Bank is already showing interest in financing wind plants offshore (story page 22), while Rabobank explained that it was still is in a "learning process." Bart Jan Krouwel is manager of "strategic sustainable developments," a new area of interest at Rabobank Nederland. "What we are trying to do is get the bank to focus on renewables," with the aim of becoming a "sustainable bank," he said. As far as project risk is concerned he had "no problem with wind energy. There is enough experience already."

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