Photographer: Aris Messinis/AFP via Getty Images

This Greek Industry Unscathed by Crisis Still Blowing Strong

  • Up to 50 wind projects with 1.3 gigawatts are contracted
  • Cash from recapitalization being directed to ‘safe’ renewables

Wind power is blowing back against a fifth year of contracting Greek credit as banks keep funding renewable energy projects that deliver secure cash flows.

Greek banks are preparing to finance as much as 1.3 gigawatts of new wind power even as their lending to companies shrank for a 58th-straight month in April, according to Norton Rose Fulbright LLP, a law firm advising on deals. Even as the country’s debt crisis forced lenders to plug a 14.4 billion-euro ($16.1 billion) hole in their balance sheets, renewable wind energy has remained attractive for investment banks and developers.

“It’s the only sector that never suffered a slowdown even though we’ve had the difficulties,” said Ellie Kakoullou, head of structured finance at Alpha Bank AE in Athens. “The one sector that the banks have continually financed post-Lehman, through the Greek crisis and today as well, is the wind energy sector.”

Clean energy is being prioritized in Greece, where the economy shrank 0.4 percent in the first quarter and businesses are still groping for stability after six years of political and economic turmoil. The energy ministry has guaranteed renewable generators that all of the power they supply will be bought. Even as consumption slumped with the economy, clean energy plants are still running at full capacity.

“It was the first industry with a project finance structure so the banks know it and feel comfortable in this industry,” according to Dimitris Assimakis, partner at Norton Rose Fulbright. “There’s not so much else to do in Greece in terms of project finance. The banks want to earmark all the funds they got from the recapitalization to sectors of economy with a productive effect.”

Up to 50 wind projects with a combined capacity of 1.3 gigawatts are under development in Greece and have to be commissioned by March 2018 in order to lock in government contracted feed-in tariffs, according to Assimakis. It may cost as much as $2 billion if they are all built, according to Bloomberg New Energy Finance.

Alpha Bank, Eurobank Ergasias SA and the National Bank of Greece are financing Athens-based developer Terna Energy SA’s wind park with 120 million euros of debt to go along with 60 million euros of equity, according to Terna spokesman Konstantinos Lamprou. The St. George facility will have an installed capacity of 73 megawatts once complete in the third quarter.

There are three other wind projects with planned capacities over 100 megawatts expected to reach financial close by early next year, according to Alpha Bank’s Kakoullou, who said her lender has also allocated as much as 250 million euros for smaller-sized projects.

Source: Hellenic Wind Energy Association

“It’s one of the most attractive and safe sectors to finance. The risk profile is very strong, there’s good credit and large players,” Kakoullou said by phone. “It’s booming and will be for the next five to 10 years.”

Eurobank will probably lend around 100 million euros to wind projects in 2016, according to Yiannis Saratsis, head of project finance. He’s working on two to three “very big” deals that are expected to reach financial close before the end of the year.

It’s unlikely that developers will build all 1.3 gigawatts of contracted projects as loan maturities shrink and banks raise their expectations for equity participation to 30 percent from 20 percent, Saratsis said. “Getting finance now isn’t as easy as it was in 2010” for developers “with a wind capacity that is not excellent or a sponsor that doesn’t have that much equity to spend,” he said.

Source: Hellenic Wind Energy Association

Development banks such as the European Bank for Reconstruction and Development and the European Investment Bank are also getting involved in Greek clean energy deals.

“We understand that Greek banks are still actively financing renewables projects in Greece and we will also be happy to work alongside them,” said Sabina Dziurman, EBRD regional director. The London-based development bank started operating in Greece last February after a request from the authorities in Athens.

Greece’s government is also working on new guidelines that is likely to boost investment by shifting from feed-in tariffs to feed-in premiums set by competitive auctions, according to Assimakis, who expects the new program to be implemented by July. Projects that are already have power purchase agreements will be grandfathered from the previous program.

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