Banks are hesitant about renewable energy projects - financing expert explains reasons

Banks are hesitant about renewable energy projects - financing expert explains reasons

Banks and savings banks play a crucial role in financing renewable energy (RE) expansion projects. But these projects often fail due to a lack of know-how and hesitant lending on the part of financial institutions. Jonas Klose, financing expert, emphasizes the need for banks to invest in renewable energy skills to advance the energy transition.

According to an analysis in the climate barometer by the development bank KfW, around 34 billion euros must be invested in renewable energy expansion every year in order to achieve the politically set climate goals. However, financial institutions in Germany only allocate a small percentage of this amount to renewable energy projects. Just 1.2 percent of the banks' total amount could be enough to support the country's climate goals.

With regard to banks and savings banks, there are differences in the provision of funds and access to financing for RE projects. Cooperative banks and specialized institutions appear to act more pragmatically than savings banks, which may be due to differences in the institutional structures. Cooperative banks operate more self-sufficiently and can finance complex projects better.

An important bottleneck in the implementation of energy transition projects is a lack of specialist staff and inadequate audit processes in banks. It often takes months before a decision is made, which affects the success of the project. Banks therefore need to invest in internal skills to improve financing performance and accelerate the energy transition. Politicians should also create clear framework conditions to support the expansion of renewable energies and advance projects.