Cheap loans key success factor

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Two sources of government controlled low interest credit, each of which play a vital a role in Germany's wind energy boom, were recently highlighted by federal environment minister Jürgen Trittin. He reports that EUR 1.8 billion in soft loans was made available to the wind sector in 2001, nearly 17% more than the previous year.

Both funds are administered by the state-owned Deutsche Ausgleichsbank under its environment program and from the environment and energy saving program of the European Recovery Program (ERP). ERP taps into funds created under the Marshall Plan for Germany's recovery after the Second World War.

ERP loans are available for up to 50% of the cost of a wind project, provided it is undertaken by small companies with an annual turnover of up to EUR 250 million, self employed people or public-private partnerships. In western Germany, up to ten year loans are available (15 years for construction projects) with up to two years of grace on repayments. The nominal interest rate is currently 5.25%.

Loans in the east are for 15 and 20 years, respectively, with up to five years grace before repayments. The nominal interest rate is currently 5%. The loan limit is EUR 0.5 million in western Germany and EUR 1 million in the east, although these limits can be exceeded for "environmental projects particularly worthy of support."

Under the Deutsche Ausgleichsbank's own environment fund, loans are available over ten, 15 and 20 years at interest rates of 5.15%, 5.5% and 5.35%, respectively, for up to 75% of the capital investment, or 100% for small and medium-sized companies.

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