Germany: EIB-Group and Enpal boost residential solar market

• The EIB-Group supports Europe's first public solar ABS transaction with €100 million
• With the participation of the EIB Group, German green tech unicorn Enpal will refinance residential solar loans offered to customers buying renewable energy solutions
• The transaction establishes a new securitisation asset class in Europe, fostering the EU's Capital Markets Union for securitisation

The European Investment Bank (EIB) together with its subsidiary, the European Investment Fund (EIF), has backed the German energy company Enpal in creating Europe`s first public solar securitisation, worth €100 million.

Enpal, a German unicorn, runs a one-stop-shop offering an integrated renewable energy solution, consisting of solar- and battery-equipment, electric vehicle chargers, heat pumps and a smart energy manager. Customers can also conclude maintenance and financing contracts with the company. EIB and EIF together form the EIB Group.

As of today, high acquisition costs still prevent many European homeowners from switching to solar energy. Enpal, together with the EIB Group, wants to change this and has launched an innovative financing instrument for private solar systems on the capital market.

Similar to how the securitisation of loans once enabled the financing of cars for the general public, this model now opens up a new asset class for private solar systems, making clean energy affordable.

In this transaction, the EIB acted as an anchor investor with €50 million. The EIF provided an embedded guarantee of additional €50 million.

The advantages of this transaction are as follows: The EIB Group`s engagement supports Enpal in attracting private investors on the capital market. By this, the EIB-Group also encourages the establishment of a European green securitisation market which will make renewable energy solutions more accessible to private households.

Homeowners will also benefit: The interest rates paid to the EIB, will partly be returned to Enpal, which allows Enpal to structure an even more attractive financing solution to its clients.

The overall financial structure is an asset backed securities (ABS) transaction: Enpal sold €240 million of its claims against customers, generated by selling 8.500 PV-systems to households, to a Special Purpose Vehicle (SVP). The SPV placed these €240 million on the capital markets in form of the first residential solar ABS-bond in Europe. The participation of the EIB and the EIF has backed Enpal to refinance its sold PV systems.

Solar-ABS transactions are already quite common in the US to mobilise financing for the installation of solar energy, but not yet in Europe. By acting as an anchor investor in this first European solar ABS- transaction, the EIB-Group encourages the establishment of a European green securitisation market which will make renewable energy solutions more accessible to private households.

"Small scale renewable energy solutions in private homes can make a big difference on our way to a net-zero economy. The EIB-Group is therefore proud of creating innovative financial products that boost investment for this purpose across Germany and the EU", EIB Vice-President Nicola Beer said. "We are glad to have found an ideal partner in Enpal to bring this financial innovation to life, helping to set up the foundation for similar financial products for the European Capital Markets Union."

"This securitisation transaction with Enpal underscores our commitment to support the swift roll-out of renewable energy technologies to residential homes in Germany, ultimately fostering climate action and environmental sustainability as we navigate the green transition. At the same time, this is a great example of how securitisation operations can contribute tangibly to the drive towards a greener future," said EIF Chief Executive Marjut Falkstedt.

"Having the EIB and EIF on board is of tremendous value in marketing this first-of-its-kind deal in Europe. It is a strong signal to the market, underlining the quality of this innovative financial instrument and our assets. We are very proud of the result and hope that, together with the EIB-Group, we have paved the way for our entire industry to boost the adoption of renewable energy in European households," added Viktor Wingert, Co-Founder and Chief Investment Officer of Enpal

The EIB directly invests €50 million in part of the senior tranches, by this creating trust into the transaction on the capital markets, while the EIF provides a supranational wrap on another senior tranche. Such embedded guarantee effectively transforms the underlying ABS notes into a quasi-European Safe Asset rated as AAA, with an enhanced liquidity and transferability. Such structures are an integral part of a securitisation platform that aims at increasing the appeal of securitisation instruments and improving the well-functioning of the European capital markets union.

Background information

The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. It finances sound investments that contribute to EU policy objectives. EIB projects bolster competitiveness, drive innovation, promote sustainable development, enhance social and territorial cohesion, and support a just and swift transition to climate neutrality. The EIB Group, which also includes the European Investment Fund (EIF), signed a total of €88 billion in new financing for over 900 projects in 2023. These commitments are expected to mobilise around €320 billion in investment, supporting 400 000 companies and 5.4 million jobs. All projects financed by the EIB Group are in line with the Paris Climate Accord. The EIB Group does not fund investments in fossil fuels. We are on track to deliver on our commitment to support €1 trillion in climate and environmental sustainability investment in the decade to 2030 as pledged in our Climate Bank Roadmap. Over half of the EIB Group's annual financing supports projects directly contributing to climate change mitigation, adaptation, and a healthier environment.

The European Investment Fund (EIF) is part of the European Investment Bank (EIB) Group. Its central mission is to support Europe's micro, small and medium-sized enterprises (SMEs) by helping them to access finance. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments that specifically target this market segment and acts as EIB Group's center of expertise for securitisation investments. In this role, the EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth and employment.

Enpal, the greentech unicorn in Germany, offers an integrated solution for renewable energy and is a pioneer in Germany's energy transition. As a leading provider of solar and heat pump systems, the company has already integrated ca. 250,000 Distributed Energy Resources (DER) into the Enpal system. The PV system is part of an integrated energy ecosystem consisting of a battery storage system, an EV-charging station, a heat pump and the Enpal energy manager Enpal.One, an intelligent combination of hardware and software. Founded in 2017, Enpal has digitized and revolutionized the purchase of green energy for a fossil-free home with its rental model and flexible, no-down-payment purchase option. More than 80,000 Enpal-equipped households already make up our climate-friendly renewable energy community. Enpal's investors include some of the world's largest impact and technology investors, such as TPG Rise Climate, The Westly Group, Activate Capital, Softbank Vision Fund II, Princeville Climate Technologies, HV Capital, Team Europe, and Picus Capital.

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