Expansion of Digital and Energy Network Infrastructures

"Without massive investment in a modern digital and energy network infrastructure, the single market - and thus a key source of Europe's future competitiveness - is at risk in the long term," says cep economist André Wolf, who co-authored the study with cep financial market expert Philipp Eckhardt at the request of Deutsche Glasfaser Holding GmbH. The macroeconomic environment, complex and unsteady regulation, technical barriers and obstacles to access to capital are slowing down expansion.

In particular, financing conditions for network investments need to be improved on a sustainable basis. Eckhardt advocates strengthening the role of risk-absorbing measures such as loan guarantees: These measures could cushion the risks associated with network expansion projects for potential lenders in the sense of "de-risking" and thus stimulate a "crowd-in" of private capital. If organised in the form of loan guarantees, for example, they would even be revenue-neutral for public budgets.

The partial assumption of such risks from lending banks by government institutions could help to increase the supply of private investors and banks in particular and motivate them to participate even more in network expansion projects in the future, within the economically necessary framework. "The cep study impressively shows how investments in network expansion can be stimulated and the financing of further expansion can be facilitated - without companies having to resort to special government funds or other subsidies," says Andreas Pfisterer, CEO of Deutsche Glasfaser Group. "From Deutsche Glasfaser's point of view, guarantees or corresponding sureties for the debt capital portion can be used to strengthen investments, especially in energy or digital infrastructure".

In addition to a stronger role for public risk absorption, further steps are needed to improve the investment climate. These include, in particular, an investment-friendly design of the regulatory framework for network operators and progress in establishing a capital markets union at EU level.

The right priorities should now be set both at EU level and in Germany at the start of the respective legislative periods. To this end, network expansion must finally be given the political status it deserves.

(Study in German only)