Pipeline Shutdown Shows Revolving Funding is Key

Across Europe, the continent’s overreliance on Russian gas has been a hot topic since relations with the country soured following its invasion of Ukraine earlier this year.

Earlier this month, G7 leaders agreed to impose a price cap on Russian oil in a bid to stem the flow of funds into the Kremlin’s war chests.

Immediately after the decision, Nord Stream 1, the world’s longest operational gas pipeline that runs under the Baltic Sea from Russia to Germany, was conveniently shut down by Russian oil and gas company Gazprom, citing a detected leak.

Days later, the Russian fossil fuel juggernaut said supplies through the pipeline, which can deliver up to 55 billion cubic meters of gas a year, would be cut off indefinitely.

With winter fast approaching, this can only be bad news for Europeans already facing the highest energy prices on record.

The then British Prime Minister, Boris Johnson, anticipated the challenge in a recent speech by drawing a direct link between Russia’s actions and the current cost of living crisis in Europe: “We know that the winter next will be tough and Putin will manipulate Russian energy supplies to try to torment households across Europe.

More on this: UK 10% inflation rates are stretching consumer paychecks and patience

But it looks like Portugal can help bring some relief.

Commenting on a potential pipeline linking the Iberian Peninsula to central Europe, the country’s prime minister, Antonio Costa, said in August that “Portugal can play an important role” in helping to make Europe “energy self-sufficient” vis -to Russia, explaining that Portugal and Spain could send a large part of the liquefied natural gas it receives from all over the world to other EU countries.

The problem, however, is that cross-border infrastructure projects typically take years to complete, and it will likely take some time for a continent-wide project to see the light of day.

For example, between the idea that took political flight in 1997 and the official inauguration of the Nord Stream 1 gas pipeline in 2011, more than a decade was spent negotiating, planning and obtaining the approximately 15 billion euros needed to fund the initiative.

Against this backdrop, investors will likely take note of the giant question mark currently hanging over another Russian-European pipeline, Nord Stream 2. That project, while theoretically ready to start pumping, has been mothballed since Germany withdrew its support two days before. the first Russian troops land in Ukraine.

Despite recent calls from Wolfgang Kubicki, the deputy speaker of the German parliament, to open Nord Stream 2 to avert a European energy crisis, the needle has barely moved. In fact, as it stands, the pipeline looks like a giant, expensive tombstone commemorating the death of post-Soviet collaboration between Russia and the EU.

Financing green energy in Europe

Compared to the multi-billion dollar budgets needed to pump gas across the continent, renewable energy sources offer an attractive alternative to Europe’s deepening energy crisis.

Wind and solar electricity can be produced on a much more affordable and accessible scale, which can range from a few solar panels that plug directly into household circuits to giant offshore wind farms capable of powering entire cities.

The way renewable energy initiatives are funded has also taken a different path than their fossil fuel counterparts. While big-budget gas projects require the highest level of political orchestration, the renewable energy landscape in Europe is characterized as much by bottom-up funding as by top-down government involvement.

Read more: Ostrom raises $5 million to go green

For example, several crowdfunding platforms have sprung up to meet the needs of Europeans looking to pay for their own clean energy. These platforms create new financing mechanisms for sustainable investments and provide stakeholders with access to clean electricity, thereby cutting their dependence on legacy energy companies burning fossil fuels.

Related: Crowdfunding Sites Funding Ukrainian Journalism

One of them is the Dutch company Windcentrale which has created an innovative energy solution allowing individuals to become shareholders of wind turbines.

Thanks to a collaboration with the energy company Greenchoice, Windcentrale uses the electricity produced by its wind turbines to supply the energy contracts of the owners. After an initial investment, shareholders pay as little as 15% of the current price of electricity for the life of the wind turbine.

While Windcentrale offers a non-traditional investment product that allows participants to reap dividends in the form of electricity, other European platforms such as Abundance Investment are pursuing a crowdfunding model that offers real monetary returns from renewable energy projects.

The UK company helps fund green initiatives ranging from building renewable infrastructure to funding sustainable technology companies, while helping private companies and local councils fund their green initiatives.

Related: HSBC Egypt offers financing options for green purchases

This means councils get an additional source of capital to fund investments in things like upgrading their housing stock and buying electric vehicles. And it also gives ordinary people exposure to a low-risk investment class otherwise reserved for institutional lenders.

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