EXTREMADURA ALLOCATION GREEN ENERGY FL 2019-0811

Financing of seven solar photovoltaic (PV) farms in the Spanish region of Extremadura. Allocation under Framework Loan (FL) 2019-0811.

The operation will be key in order to increase electricity generation from renewable energy sources in Spain, in line with climate targets adopted for 2020, 2030 and 2050.

The project consists of a series of solar Photo-Voltaic (PV) farms to be developed by the Promoter in the Spanish region of Extremadura (convergence region). The project is an allocation under the Framework Loan IBERDROLA SPAIN GREEN ENERGY FRAMEWORK LOAN.The project increases renewable energy generation capacity in Spain and contributes to national and EU 2030 climate objectives. The financing of this project also contributes to the Bank's lending priority objectives in energy (renewable energy), climate action, and economic and social cohesion. Electricity is produced from low carbon sources (solar PV), addressing the market failure of negative climate and environmental externalities, through the reduction of carbon emissions and air pollution (compared to fossil-fuel generation).As it relies on revenues from the market (the wholesale market and unsubsidized commercial Power Purchase Agreements), in a sector characterised by incomplete markets, the project improves market efficiency and competition (limited forward/hedging, lack of scarcity and locational pricing). It is expected to yield very good quality and results due to excellent social benefits, fair employment creation and adequate governance system. With the appropriate conditions in place, the project is acceptable for financing in environmental and social terms.

EIB financing provides the promoter with financial flexibility and a product adapted to its financial needs, which is not readily available either on the capital markets or though commercial banks. Moreover, the promoter attaches strong value added to the EIB Green Energy Loan label, which it perceives as a mark of quality with regards to the sustainability of the investments, thus complementing its sustainable finance palette. Finally, the EIB's financial contribution has also catalysed co-financing for the operation from Instituto de Crédito Oficial (ICO), teh Spanish national promotional bank.

The project is included in Annex I of the EIA Directive (Directive 2014/52/EU amending the EIA Directive 2011/92/EU), requiring a full environmental impact assessment (EIA), including public consultation. The project received its environmental permit in April 2019, for both the plant and the transmission line with no reported complaints.

The Promoter has been assessed by the EIB as being a private company not subject to EU rules on public procurement or concessions. However, if after the project appraisal, the EIB were to conclude that the Promoter is after all subject to EU public procurement legislation Directive 2014/23/EU / 2014/24/EU / 2014/25/EU, where applicable, then the Bank would require the Promoter to ensure that contracts for the implementation of the project have been and will be tendered in accordance with the relevant applicable EU procurement legislation Directive 2014/23/EU 2014/24/EU / 2014/25/EU, where applicable, as well as Directive 92/13/EEC or Directive 89/665/EEC, as interpreted by the Court of Justice of the EU, with publication of tender notices in the Official Journal of the EU, as and where required.