Renewable energy looks set to benefit greatly from the European Union’s new €315 billion (£250 billion) investment plan, according to recent reports.
That plan — which was recently unveiled by European Commission President Jean-Claude Juncker — will see that mountain of cash spread out across a number of different areas, including renewable energy, power network repairs/upgrades, and transportation infrastructure.
At the center of the new investment plan is the €21 billion (£16.5 billion) European Fund for Strategic Investments (EFSI) — which will see money provided to “higher-risk projects” that could possibly fuel growth and aid in the creation of new jobs.
The plan is for this fund to diminish investor hesitance, building private-sector confidence by absorbing much of the risk of new projects — for every €1 invested by the Fund, the hope is for €15 of private sector capital to be invested, which would mean €315 billion of new investment between 2015 and 2017.
The commission is predicting that the plan could result in up to 1.3 million new jobs being created during the next three years (how many of these would be permanent and how many temporary is unclear).
“The Investment Plan we are putting forward today in close partnership with the European Investment Bank is an ambitious and new way of boosting investment without creating new debt,” Juncker noted in a statement. “Now is the time to invest in our future, in key strategic areas for Europe, such as energy, transport, broadband, education, research and innovation.”
Commenting on the new plan, deputy chief executive officer of the European Wind Energy Association, Justin Wilkes, noted the opportunity that it represented for his sector: “Juncker is extending an olive branch to investors that will spur confidence and reduce the cost of capital for high-stakes projects in southern Europe and breakthrough technologies in the northern seas such as the North Sea grid. By jumping first, the European Investment Bank is giving a nod to the markets to toss their money into the ring on renewable energy, particularly in developing wind farms and increasing interconnection.”
That all sounds well and good, but until the plan starts to bear fruits, its efficacy will remain an open question. Many such plans have been tried in the past with varying results — much depends on the broader economic and investor climate, so until results actually start to arrive, a sober outlook is probably the best one here.
Image: EU flag via Shutterstock
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