German savings banks are handing out more loans to renewable-energy projects as corporate rivals retreat from financing the world's biggest solar-panel market.

The 438 savings banks financed 45 percent of the 5.3 billion euros ($7 billion) invested in solar and wind power projects in 2008, while loans from major corporate lenders including Deutsche Bank AG shrank to 0.8 percent, according to figures by state-owned development bank KfW Group.

"We're seeing a clear trend change in the financing of bigger plants through local saving banks," Andreas Haenel, chief executive officer of solar-panel manufacturer Phoenix Solar AG, said from Sulzemoos, north of Munich. "Now they're willing to finance big projects themselves."

Local banks from Bavaria to Berlin have benefited from Germans squirreling away 11.5 percent of their annual disposable income, according to the Federal Statistics Office. That's given lenders the heft to eclipse their corporate rivals in an industry that guarantees a return on investment because prices for electricity generated by wind, sun and water are fixed by a federal law. Germany is pushing use of alternative energies to cut reliance on coal and phase out nuclear power by about 2021.

Feed-In Price

Legislation that forces utilities to pay guaranteed prices for power fed into their grids from home roofs and wind parks has made Germany the leading market for photovoltaics and the second-largest for installed wind-power capacity behind the U.S.

Smaller banks are increasing the size of their lending, filling a role ceded by the larger banks. Savings banks increased total lending for alternative energy projects to 2.4 billion euros from 1.5 billion euros in 2008, KfW figures show.

"It's a dream for an investor from the earnings side," said Klaus Knoerr, who runs a local bank in Fuerstenfeldbruck, a town of about 35,000 people west of Munich. The bank, which has installed solar panels on its own roof, has helped finance four solar projects with 16.5 million euros in loans and Knoerr said all are going "better than planned."

The savings bank in Fuerstenfeldbruck, a 13th-century town that's home to an air base where terrorists killed Israeli athletes during the 1972 Munich Olympic Games, employs 900 people at 26 branches in the region. That compares with more than 80,000 at Deutsche Bank, which operates globally.

Savings Survey

Saving banks are perceived as providing the highest security for savings, followed by cooperative banks, according to a survey by the German Institute of Provision for Old Age compiled by Muenster University in November 2008.

Major banks had accounted for 5.6 percent of the loans to alternative power sources in 2007, and the amount of their financing fell to 42 million euros last year from 246 million euros, according to KfW documents. The total number of renewable energy-financing projects rose to 422 from 150.

"We continue to finance good projects that meet our quality standards," said Wilhelm von Haller, a manager at Frankfurt-based Deutsche Bank's operations that look after business customers.

Access to financing for renewable energy projects is among the biggest hurdles for developers and producers of solar panels and wind turbines amid the economic recession and credit crisis. The main obstacle is that bigger banks are holding back their money, according to Charles Anton Milner, the CEO of Thalheim- based Q-Cells SE, Germany's largest solar company.

Finance Hurdle

"We could build projects more quickly than we are and the issue is financing," Milner said. "It's not the attractiveness of the returns, it's banks' ability to make the commitments."

Germany's 1,232 customer-owned banks, the so-called credit unions, provided the bulk of green-energy funds in each of the last two years. The country's renewable energy association says the share of total energy generated from renewable sources may rise to 47 percent of the total by 2020.

The guaranteed price for electricity generated from solar panels and fed into utilities' grids is as much as 43 cents per kilowatt hour, more than double the 20 cents consumers pay and helping to create safe returns for investors, according to Knoerr in Fuerstenfeldbruck. That and fixed prices for hydropower and electricity from wind and burning wood has boosted renewable energy's share of electricity production to about 15 percent from 5 percent a decade ago.

Consumption of electricity in Germany averages about 6,000 kilowatt hours a year per household. A kilowatt hour can run a vacuum cleaner for about an hour. Germany installed 1,500 megawatts of solar panels last year, up from 42 megawatts in 2000, according to the BSW German Solar Industry Association.

Government Awareness

The government, which is providing 82 billion euros in fiscal stimulus to combat a deepening recession, is aware of the financing restraints and made 100 billion euros in credit and loan guarantees available to German companies, including 40 billion euros from the KfW, government documents show.

Renewable energy companies can apply for those loans in addition to a KfW program which grants them financing of as much as 50 million euros, boosting their capital base.

"Last year was the best year for us ever," said Klaus Rave, a director at Landesbank Schleswig-Holstein, a regional bank in Germany's northernmost state, where wind turbines dot a pancake-flat landscape of cows and thatch-roof houses. "The savings banks and credit unions are here and ready to finance."