Reading view

EIB and BNP Paribas Launch €700m Guarantee Scheme for Europe’s Power Grids

30 September 2026 at 09:53

The European Investment Bank and BNP Paribas have agreed a €700 million guarantee programme designed to expand financing for European companies producing equipment for electricity grids.

The agreement targets a growing bottleneck in Europe’s energy system: manufacturers of transformers, cables, switchgear and other components are being asked to increase production while utilities and governments accelerate investment in transmission and distribution networks.

Under the deal, the EIB will provide up to €350 million in counter-guarantees, while BNP Paribas will commit an equivalent amount. The resulting €700 million portfolio of bank guarantees is expected to support companies investing in additional production capacity and supply contracts.

The European Investment Bank said the arrangement could stimulate as much as €2.8 billion in investment in the real economy.

The initiative is backed by the EU’s InvestEU programme and forms part of the EIB’s €1.5 billion Pan-EU Power Grid package. Guarantees are particularly important for infrastructure suppliers because large electricity projects often require manufacturers to provide financial guarantees before receiving contracts.

Those commitments can consume bank credit lines that companies might otherwise use to build factories, purchase machinery or finance working capital.

By sharing the risk with BNP Paribas, the EIB intends to increase the volume of guarantees available without requiring manufacturers to commit equivalent amounts of their own financing capacity.

The programme arrives as grid investment becomes one of the central constraints on European energy policy.

The EU is simultaneously attempting to expand renewable generation, electrify transport and industry, increase cross-border electricity trading and reduce dependence on imported fossil fuels.

All require additional transmission and distribution capacity. EU Today reported earlier this year that the EIB had approved almost €2 billion for clean energy and grid projects as part of a broader €10 billion financing package.

The latest BNP Paribas agreement concentrates specifically on the industrial supply chain needed to build those networks.

Grid investment is increasingly influenced by security concerns as well as electricity demand.

EU Today reported last week that Lithuania is designing part of the Harmony Link infrastructure to withstand drones, sabotage and vehicle attacks near the Russian exclave of Kaliningrad. Such requirements increase the cost and complexity of new electricity infrastructure while demand for conventional grid equipment is already rising.

European manufacturers face lengthy order books for some high-voltage equipment, particularly large transformers and specialised cables. Supply constraints can delay renewable projects and interconnectors even when planning permission and financing are available.

The EIB says its guarantee programme is intended to give manufacturers greater financial capacity to respond. The arrangement follows a similar partnership between the bank and BNP Paribas covering wind-energy manufacturing.

In February 2025, the two institutions agreed a €1 billion guarantee portfolio intended to support investment in the European wind industry. The EIB has subsequently expanded its focus from generation equipment to the networks required to transport electricity.

In 2025, the EIB Group invested €33 billion in energy projects worldwide, including €11.6 billion in grids and storage, according to the institution.

European energy policy has increasingly recognised that adding generating capacity without expanding grids can create congestion, delays and periods in which renewable electricity cannot reach consumers.

Political disagreements remain over how new infrastructure should be planned and financed.

In June, EU Today reported that member states had pushed back against stronger Brussels control over cross-border grid planning, preferring to preserve a significant role for national authorities.

Financing institutions are meanwhile moving ahead with programmes intended to expand the underlying industrial capacity.

For manufacturers, the EIB–BNP Paribas scheme does not provide €2.8 billion of direct public spending. Instead, public guarantees are being used to increase the volume of private financing available, with the EIB assuming part of the risk.

The distinction is central to InvestEU, which uses EU budget guarantees and EIB financing to attract additional private capital.

Europe’s electricity transition is increasingly dependent on this less visible part of the energy system. New wind farms, solar installations, nuclear reactors and industrial electrification projects ultimately require the same infrastructure: sufficient cables, substations, transformers and transmission capacity to move electricity from producers to users.

Spain, Portugal and Luxembourg Push EU for 2040 Renewables Target

https://eutoday.net

By: EUToday Correspondents

30 September 2026 at 08:57

Spain, Portugal and Luxembourg have called on the European Commission to establish a specific EU renewable-energy target for 2040 as Brussels prepares the next stage of the bloc’s climate and energy legislation.

The three governments have written to Energy Commissioner Dan Jørgensen arguing that a post-2030 renewables target would give investors greater certainty, accelerate deployment and reduce European dependence on imported fossil fuels.

Their intervention comes as the Commission prepares a new renewable-energy framework covering the decade after 2030.

The EU currently has a legally binding target requiring renewable sources to account for at least 42.5 per cent of final energy consumption by 2030, with an ambition to reach 45 per cent.

There is, however, no equivalent renewables target for 2040.

The European Commission says it is preparing a post-2030 renewable-energy framework for adoption before the end of this year. It is intended to complement the Union’s wider climate legislation and provide guidance for the next decade of energy investment.

Spain, Portugal and Luxembourg want that framework to contain a numerical target rather than rely solely on the EU’s overall greenhouse-gas reduction objective.

The proposal creates a policy divide with governments that want Brussels to use a broader definition of low-carbon or “clean” energy.

France, Sweden and Finland are among countries that have supported an approach allowing nuclear generation to contribute alongside renewable sources towards European decarbonisation targets.

France in particular operates the EU’s largest nuclear fleet and has repeatedly argued that European energy legislation should treat nuclear power according to its low carbon emissions rather than exclude it from frameworks designed specifically around renewable technologies.

Luxembourg, by contrast, has long opposed nuclear energy and has raised concerns about radioactive waste, safety and the financing of new reactors.

The argument is therefore not simply about the scale of the 2040 ambition. It concerns the structure of European energy investment over the next 15 years.

The Commission’s existing renewable-energy rules set the 2030 floor at 42.5 per cent, almost double the share recorded at the beginning of the decade.

Renewables accounted for 26.2 per cent of EU energy consumption in 2025, according to Commission figures.

Investment will have to increase substantially if the Union is to meet its existing target before any higher post-2030 requirement is introduced.

Grid capacity is another constraint. Wind and solar generation can be built faster than many traditional power stations, but projects increasingly depend on new transmission lines, interconnectors, storage and distribution infrastructure.

EU Today reported in June that member states were resisting greater Commission control over cross-border electricity-grid planning, illustrating the institutional difficulties surrounding an expansion of European electricity infrastructure.

The latest initiative also sits alongside the EU’s legally binding 2040 climate target.

In March, the Union formally approved legislation requiring net greenhouse-gas emissions to fall by 90 per cent from 1990 levels by 2040. EU Today reported on the final approval of the 2040 target, which is intended to bridge the gap between the bloc’s 2030 commitments and climate neutrality by 2050.

How that 90 per cent reduction is achieved is now moving to the centre of the policy debate.

For Spain and Portugal, greater renewable generation is also tied to their ambitions to expand electricity exports from the Iberian Peninsula into the rest of Europe. Limited interconnection capacity across the Pyrenees has historically restricted those flows.

The Commission’s post-2030 framework will therefore have consequences beyond environmental policy. It will influence investment decisions in power generation, grids, industrial electrification, hydrogen, storage and manufacturing.

The political question confronting the Commission is whether those decisions should be driven by a dedicated renewable-energy benchmark or by a technology-neutral emissions objective under which nuclear and renewable generation compete for investment.

With the 2040 climate target already fixed in law, the next dispute is increasingly about the energy system that will be built to reach it.