Full steam ahead on renewables lending, despite cloudier outlook

The forecast for the world’s clean energy sector has turned more uncertain in recent months, with the policies of President Donald Trump in the US and amplified concerns in Europe about energy costs and security of supply.

However, at ING, we are confidently maintaining our course towards a target to provide EUR 7.5 billion of new finance for renewables and batteries in 2025 – three times the figure of the target set out in 2022.

Our judgement is that, despite the unsettled background, the logic of the shift to cleaner electricity remains intact for the five years into the 2030s, and that there are plenty of opportunities on both sides of the Atlantic, and in APAC, for investors.

The new Trump administration has stressed its commitment to increasing oil and gas extraction, reviving the slogan “drill, baby, drill”, and has pledged to withdraw the US from the Paris Agreement on reducing emissions. It has also said it will “pause the disbursement of funds” under former President Joe Biden’s Inflation Reduction Act, which introduced incentives for a range of decarbonisation technologies from electric vehicles to renewables.

Then, in early April, Trump announced swingeing tariffs on virtually every US trading partner, ranging from 10% to 145% (in the case of China). If these remain in place, or those paused are reinstated, they would raise the cost of clean energy equipment imported into America, and affect the economic viability of new projects.

US offshore wind, already hit by project cancellations during the Biden years, faces a new obstacle. Trump announced in his first week in office that he was “pausing offshore wind leasing on the US Outer Continental Shelf and mandating a review of the federal government’s leasing and permitting practices for wind projects”.

The European energy sector will not be able to avoid some impact from the political turbulence in the US. In debt markets, for instance, there was volatility in Germany’s 10-year bond yield in March after its government responded to White House statements on Nato and Ukraine by relaxing fiscal rules to accommodate a jump in defence spending. Any increase in German yields feeds through to a higher cost of capital for renewable energy and other infrastructure projects.

Meanwhile, Europe’s reliance on imported liquified natural gas, or LNG, to replace Russian pipeline gas during the Ukraine war has exerted upward pressure on energy costs on the continent and in the UK. This has fuelled the public’s unhappiness about energy bills. But it has not added much to the momentum for low-cost wind and solar, partly because of grid constraints preventing the connection of new renewables capacity.

The next few years may see the revision of some ambitious European renewable energy targets, in light of these issues. These could include the European Union’s binding 42.5% goal for renewables as a proportion of total energy by 2030, up from 23% in 2022, and the UK’s target for all electricity to be low-carbon by 2035.

Several key companies in renewable energy development in Europe have cut back on their offshore wind project pipelines in recent months, from Norway-based Equinor to BP and Shell, and even Ørsted, one of the world’s leading offshore wind developers.

In the US, the central issue facing the electricity sector has been rising demand, with sales of electricity to all sectors up 2.3% in 2024.Opens in a new tab[1] This reflected strong economic growth generally, and specifically the escalating power needs of data centres and artificial intelligence research establishments. Data centres consumed 4.4% of US electricity in 2023, but forecasts (made before April’s financial market gyrations) are that this could soar to between 6.7% and 12% by 2028.Opens in a new tab[2]

That extra demand could be met, in theory, by several different generation options – coal, nuclear, gas, wind or solar. However, solar projects are the quickest to build and – in many sunny states – produce electricity just as cheaply as gas plants do.

For solar projects backed up by their own battery storage, the pipeline is still enormous, often in ‘red’ states such as Texas and Arizona. Some of that reflects power purchase agreements signed by companies that are big energy users – a total of 183 deals for clean power were signed in the US in 2024, nearly double the number of PPAs in the prior year.Opens in a new tab[3]

Turning to Europe, political backing for renewables remains strong in most places, but there is an element of indigestion after the years of build-out that have taken renewables to high percentages of electricity generation (more than 50% for the UK in 2024, for instance).Opens a pdf[4] Network operators will have to invest heavily in grids and balancing technologies before renewables can get back anywhere near to boom conditions. The signs are that they are ramping up their efforts to do that.

Big-ticket offshore wind financing and construction will continue this year in European countries such as the UK, the Netherlands and Poland. Meanwhile, there will also be activity in some onshore wind markets – including the UK (after a long pause), Germany, Ireland and Portugal.

A key driver of the expansion of renewable power in all of the markets ING addresses (the US, Europe and Australia) is cost-competitiveness, and here the news continues to be encouraging. The global benchmark cost for battery storage projects is estimated to have declined by a third in 2024 to $104 per megawatt-hour, while the cost of a typical fixed-axis solar farm fell by 21%.Opens in a new tab[5]

ING’s new financing for renewables has risen rapidly in recent years, from the target of EUR 2.5 billion set in 2022, to EUR 4.2 billion in 2023, and EUR 7 billion in 2024. Recent months have illustrated the geographical and sector range: ING has acted as a mandated lead arranger for the refinancing of a 1.1GW portfolio of Sonnedix in Spain, Italy and FranceOpens in a new tab[6], and financed the 250MW EOS Investment Management Group solar portfolio in Italy and Spain.Opens in a new tab[7] It was also one of the lead arrangers for $950 million in financing to support the acquisition, construction, and operation of Greenbacker Renewable Energy’s 674MW Cider PV plant, the largest solar project in the state of New York.Opens in a new tab[8]

ING’s target of EUR 7.5 billion of finance in 2025 for renewable energy (including battery storage) compares to global investment in renewables and storage in 2024 of a record $782 billion, up 10% year-on-year, as measured by BloombergNEF.Opens in a new tab[9] ING’s increased financing volume is one element of a much larger effort by a multiplicity of developers and investors around the world. Building up a sustainable future and ensuring a systems change requires concerted effort.

Society is transitioning to a low-carbon economy. So are our clients, and so is ING. We finance a lot of sustainable activities, but we still finance more that’s not. See how we’re progressing on Opens in a new tabour climate approach.

[1] https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=table_5_01
[2] https://www.energy.gov/articles/doe-releases-new-report-evaluating-increase-electricity-demand-data-centers
[3] https://about.bnef.com/blog/new-study-shows-american-sustainable-energy-technologies-are-ready-to-meet-increasing-energy-demand/#:~:text=The%20increasing%20energy%20demand%20on,PPAs%20in%20the%20prior%20year
[4] Opens a pdfhttps://assets.publishing.service.gov.uk/media/677bbf0c99c93b7286a396d0/Energy_Trends_December_2024.pdf
[5] https://about.bnef.com/blog/global-cost-of-renewables-to-continue-falling-in-2025-as-china-extends-manufacturing-lead-bloombergnef/
[6] https://www.sonnedix.com/news/sonnedix-secures-eur3.25-billion-in-record-refinancings-to-scale-its-european-portfolio
[7] https://www.eosimgroup.com/eos-investment-management-group-and-ing-italia-eur-108-million-cross-border-green-loan-holdco
[8] Opens in a new tabhttps://www.energyglobal.com/solar/28012025/greenbacker-secures-financing-to-support-new-yorks-largest-solar-project/
[9] https://about.bnef.com/energy-transition-investment/