EIB finances new battery-powered regional trains to replace diesel in Germany

A zero-carbon future is on the horizon for regional trains between Berlin and the surrounding Brandenburg area. The railway company Niederbarnimer Eisenbahn (NEB) plans to replace diesel locomotives with the first battery-powered trains from December 2024. It has ordered 31 new Mireo Plus B trains from Siemens for the ten East Brandenburg lines between Berlin and the Polish border.

These trains will use the overhead contact lines on electrified sections of the route to charge the batteries and power the trains on non-electrified sections. They are therefore extremely energy efficient and do not generate air pollution, especially compared to the diesel trains currently in use. As soon as the railway’s electricity comes entirely from renewable sources, the trains will run on zero emissions.

The European Investment Bank (EIB) is financing the project with an investment loan of up to €95 million for the development and purchase of the trains. The European Commission is supporting the project with funds from the Connecting Europe Facility (CEF) for Transport and the NER programme.  

This railway project is one of the first operations to fully meet both the climate and sustainability goals of the EU promotional bank. The EIB funds will be pooled together with around €70 million from KfW IPEX-Bank and up to €34 million from NordLB into a special purpose vehicle under the umbrella of Alpha Trains.

Alpha Trains is a Luxembourg leasing company specialised in rolling stock that will also make an equity contribution. The special purpose vehicle will own the trains and lease these to Niederbarnimer Eisenbahn. NordLB will act as arranger and agent in the financing operation.

Under this leasing structure, the financing of the trains is not affected by the duration of the operating contract that was concluded between Niederbarnimer Eisenbahn and the transport association Verkehrsverbund Berlin-Brandenburg (VBB) in the summer for a period of 12 years starting in December 2024.

In Germany, regional rail transport is co-financed by the federal states. Public transport companies such as the VBB regularly hold Europe-wide calls for tender for contracts lasting between ten and 15 years to stimulate competition among suppliers.

The VBB may issue a new call for tender at the end of the service period. Whoever is awarded the contract can continue to use the lease agreement and the trains, which will be financed for 24 years. This significantly reduces the cost of capital for the bidders participating in the call for tender. As a result, the bid prices are lower, which is an advantage for the federal states.

Acting on behalf of the federal states of Berlin and Brandenburg, the VBB guarantees that the leasing costs will be covered by ticket revenues when the trains enter service in December 2024.