(Bloomberg) -- Investment in new wind farms slumped to the lowest in more than a decade in Europe last year, hit by rising costs and red tape that threaten to undermine the region’s energy security and climate targets.
The €17 billion ($18 billion) spending was less than half the amount in 2021 and the least since 2009, according to a report by WindEurope. Investors only funded 10 gigawatts of new capacity in the European Union last year, far short of the annual 31 gigawatts that the group says is needed to meet the bloc’s environmental goals.
“The EU must urgently restore investor confidence and channel money into its wind energy supply chain if it wants to reach” the objectives, said Giles Dickson, chief executive officer for WindEurope. These include ending its dependence on Russian fossil fuels following a deep energy crisis that at one time threatened to bring shortages and blackouts.
The dropoff comes just as the EU looks to rapidly scale up renewables to meet its green goals. The bloc’s negotiators reached a deal Thursday to scale up renewables to 42.5% of energy consumption by the end of the decade, from a previous goal of 32%.
Investors across the economy are facing rising interest rates as central banks keep up the fight against price rises. The euro area’s core inflation is expected to reach a record high in March, keeping up the pressure on borrowing costs. On top of that, politicians slapped windfall taxes on renewable-power producers as part of efforts to deal with the energy crisis. An ongoing banking turmoil isn’t helping either.
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As a result, the cost for producing a wind turbine in Europe has increased by more than 40% over the past two years, according to WindEurope. It called for governments to urgently ensure that all auctions of renewables capacity are fully index-linked to reflect the surge in input costs.
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