The Danish Financial Supervisory Authority has published a follow-up review of how a number of the largest Danish banks and mortgage credit institutions approach the financing of renewable energy production, such as wind turbines, solar installations and biogas plants. The review highlights that, as renewable generation expands and becomes a larger share of lending, institutions need to assess and manage the associated credit risks with particular care. The review points to the need for greater attention to how electricity price forecasts are used and to the stress levels applied to electricity prices. It also covers topics including fixed-price agreements, requirements for borrower equity funding, and requirements when financing district heating. The findings are intended to provide inspiration for other banks and mortgage credit institutions and follow a similar 2023 review, whose conclusions remain valid.
Danish Finanstilsynet 2025-06-19
Danish Financial Supervisory Authority follow-up review flags tighter handling of electricity price assumptions in renewable energy lending
The Danish Financial Supervisory Authority released a follow-up review on the financing of renewable energy by major Danish banks and mortgage credit institutions. The review emphasizes the need for careful credit risk management as renewable energy lending grows, with a focus on electricity price forecasts and stress levels. It also addresses fixed-price agreements, borrower equity funding, and district heating financing requirements.