Introduction
The evolution of European Union energy policy over the past three decades demonstrates a clear and consistent trajectory to a decarbonized energy system based in renewable energy, including wind power. To achieve these objectives, an architecture of policies and contractual frameworks for wind energy has been developed. Both the public and private sectors are expected to play a central role in making wind energy projects viable.
However, given the high capital expenditure required for such projects, establishing mutual trust between these actors is essential to ensure investment, reduce risk, and ultimately guarantee their bankability. The EU has identified the need for substantial investments of 800 € billions to meet its climate and energy targets, as well as the increase in installed wind capacity from approximately 204 GW in 2022 to more than 500 GW by 2030. Trust, in this context, refers to the creation of stable legal, financial, and institutional frameworks that can reduce uncertainty, mobilizing capital, and ensuring long-term predictability.
Within a liberalized energy market, this structure of trust and bankability rests on two interdependent pillars: (I) EU regulatory measures that create a predictable and investment-friendly environment, and (II) the development of robust contractual schemes that allocate risks and secure revenues at the project level.
EU Regulatory Measures: Building a Predictable and Integrated Framework.
The EU’s regulatory approach to wind energy has progressively developed through successive legislative and policy frameworks. The concept of the Energy Union has been shaped and build the European energy system in accordance with the Paris Agreement and the consideration of non-economic factors such as social partners and consumer organizations, which are allowed to participate in public consultations as authorized by article 19 of RED III.
A decisive step in this evolution was the Clean Energy for All Europeans Package introduced in 2016, which established a comprehensive framework for integrating renewable energy into the internal market. This was followed by a series of complementary initiatives, including the Offshore Renewable Energy Strategy in 2020, REPowerEU in 2022, the Wind Power Package in 2023, comprising the European Wind Charter and the EU Wind Power Action Plan, the Fit for 55 packages adopted in 2024, and the Clean Industrial Deal in 2025. Together, these measures demonstrate a coherent policy direction towards strengthening the role of renewable sources.
At the core of this framework lies the Renewable Energy Directive, progressively revised to reflect increasing energy necessity. The RED III, establishes strengthened targets and embeds renewable energy firmly within the EU’s legal obligations up to 42. % of renewable energy share by 2030 and wind energy over 550 GW EU-27 capacity. In order to achieve these goals, the EU has unlocked private investment and scaling up financial instruments such as the Innovation Fund. The European Investment Bank counter guarantees five billions of euros facility supporting turbine manufacturer bonds and operates in the critical role of guarantee financial re-risking mechanisms making wind energy bankable and attracting private participation.
Beyond generation capacity, a major focus of EU regulatory measures concerns the resilience and competitiveness of the wind energy supply chain. The European Wind Power Action Plan considers as structural challenges the supply chain bottlenecks, dependency on imported raw materials, and increasing global competition.
However, even with the finance sponsors and a guaranteed supply chain due to production planning, permitting procedures still represented one of the most significant obstacles to the development of wind energy projects. Under RED III, wind energy projects benefit from a presumption of “overriding public interest,” which facilitates and prioritized environmental and administrative assessments at national law level, shortening project timelines. In addition, the establishment of one-stop shops for permitting enables centralized coordination of all necessary approvals, including environmental impact assessments, grid connection authorizations, and land-use permissions. In practical terms, this one-stop is a digital window for licenses and permitting, enhancing efficiency and improved communication between stakeholders.
In the next stage, in order to use wind energy, the project also requires significant investment in grid infrastructure and system integration. The Trans-European Networks for Energy (TEN-E Regulation) provides a framework for the development of cross-border infrastructure through the designation of Projects of Common Interest (PCIs). These projects benefit from binding permitting deadlines, coordinated procedures, and eligibility for EU funding. The Connecting Europe Facility for Energy (CEF-E) supports these initiatives, including through dedicated calls for proposals aimed at accelerating implementation.
Examples of successful implementations are Baltic Energy Market Interconnection Plan as well as the Central and Southeastern European Gas connectivity group, the South West Europe, Northern Seas and the African Renewable Energy Initiative.
At the same time, to highlight the EUs industrial competitiveness and supply chain resilience, integral to wind energy development. The European Wind Power Action Plan and the Wind Charter emphasize the need to strengthen the domestic manufacturing base, secure access to critical raw materials, and address global competitive pressures, particularly from China. The dependence on imported raw materials such as rare earth elements, steel, and copper introduces vulnerabilities that can affect both costs and project timelines.
To provide short-term support, the Clean Industrial Deal of 2025 foresees the mobilization of over €100 billion to improve the business case for clean manufacturing within the EU, including an additional one billion of euros in guarantees under the current Multiannual Financial Framework. At the national level, support mechanisms, such as State aid and tax incentives, play a crucial role in advancing decarbonization and circular economy objectives by providing financial backing and reducing investment barriers and attracting private sector participation.
A key conclusion from this regulatory evolution is that the EU’s approach is in constant consideration of bankability. Rather than relying on isolated instruments, it integrates regulatory, financial, and infrastructural measures into a coherent regulation, essential for structuring trust and ensuring that wind energy projects can attract the necessary investment.
Contractual Schemes: Allocating Risk and Ensuring Bankability
Complementing the regulatory framework, the contractual structure of wind energy projects plays a decisive role in allocating risks and securing investment. These projects involve a broad range of actors, including developers, public authorities, suppliers, contractors, operators, lenders, and off-takers. Given the complexity and long lifecycle of wind installations, a comprehensive network of contracts is required.
Key components of this contractual architecture include Turbine Supply Contracts, Balance of Plant Contracts, and EPC Contracts, which govern the construction phase. A Grid Connection Agreement ensures access to the network, while an Operation and Maintenance Agreement regulates long-term performance. Financing Agreements, supported by due diligence conducted by a Lender’s Engineer, provide access to capital. Additional instruments include Planning Obligations and Land Agreements, as well as supporting studies and supply chain evaluations.
Despite this sophisticated structure, projects remain exposed to significant risks, including price volatility and performance uncertainty. To address these challenges, the EU has promoted two central contractual mechanisms: two-way Contracts for Difference (2w-CfDs) and Power Purchase Agreements (PPAs). The industry has also developed contractual clauses to liquidated damages considering the alea assumed by the parties involved in EPC contracts and Operation and Maintenance Contract.
The 2w-CfDs are concluded between a generator and a public counterparty, provide both a minimum remuneration guarantee and a cap on excess revenues. Both parties agreed in a Kw price, in case of the price exceeds the agreed amount the State entity would be entitled of the difference, same way if the offer is low and the price is cheaper that the agreed amount, the State has to guarantee the price stablished in this contract. Is a shared risk which gives certainty of revenue face to a volatile market.
On the other hand, PPAs represent a complementary market-based instrument. These long-term contracts provide predictable revenue streams for developers and price stability for off-takers. They can take various forms, including pay-as-produced and baseload models, and may be structured as physical or financial agreements. A PPA is often concluded between the producer and the private consumer at a guaranteed price and availability of energy, outside the public energy market.
Finally, specific risk allocation clauses such as Liquidated Damages and Performance guarantee in construction and operation and maintenance contracts, are a key element of the contractual structure of those projects. The first clause compensates for late completion or commissioning. The second type of clause address operational shortfalls. These pre-agreed mechanisms provide legal certainty and enhance lenders confidence.
Conclusion:
Structuring trust in wind energy under EU law requires the alignment of regulatory stability and contractual sophistication. The EU has developed an integrated framework that combines legal certainty, financial support, industrial strategy, and risk allocation mechanisms. Bankability is achieved not through a single instrument but through the cumulative effect of these coordinated measures. As the EU continues its transition toward climate neutrality, maintaining this architecture of trust will be essential to ensuring the continued expansion of wind energy across Europe.
(Photo: Sophia Sideri)
