Summary sheet
Funded delinked risk sharing with Banco Santander, in respect of an existing portfolio of Project Finance loans in the renewable energy and infrastructure sectors. With the resources made available by the Bank, Santander will grant new loans to eligible renewable energy transactions across Europe.
The operation contributes to the EU-wide target of 32% of energy from renewable sources in gross final energy consumption (RES) for 2030 as set out in the EU RE Directive (Directive (EU) 2018/2001). It further contributes to the national renewable energy targets, including Spain's Integrated National Energy and Climate Plan (NECP). The latter foresees for 2030 a national target of 42% renewable energy in the final energy consumption (RES). It is envisaged for a number of projects to be located in EIB Cohesion Priority Regions. The project is therefore eligible under Article 309 (a) projects for developing less-developed regions and (c) common interest. The financing of this project would contribute to the EIB's lending priority policy on social cohesion, renewable energy and climate action.
The operation increases renewable energy generation in the EU (including solar PV plants, onshore and offshore wind farms), contributing to the EU 2030 climate objectives. As such, the operation is aligned with the Bank's lending priority objectives on Renewable Energy, Climate Action, Environmental Sustainability and Social and Economic Cohesion.
The operation addresses the market failure of negative climate and environmental externalities, through the reduction of carbon emissions and other air pollution (compared to fossil-fuel generation). Furthermore, the projects are expected to rely on revenues from the wholesale market, un-subsidized commercial PPAs, and revenues from competitive public support mechanisms (e.g. auctions). In a sector characterised by incomplete markets (e.g. limited forward/hedging), this operation thus results in improved market efficiency and competition.
The project quality and results for this operation are deemed to be very good, mainly due to the high social benefits of generating clean and renewable power at a lower cost compared to the fossil-fuel based alternatives. The project is also supported by the adequate governance and capabilities of the Promoter.
The Bank will provide a meaningful part of the total financing needs of the projects. This will enhance the financial viability of the projects, with improved financial terms on the debt structures. The exposure to merchant risk over an extended tenor implies the structuring of innovative and riskier financing structures, which deters many potential co-financiers. Thus, the EIB indirect participation through the Promoter will result in a crowding-in effect for other lenders into the financing structures.
The Bank's services will verify that the projects and associated transmission lines fall within Annex II of the EIA directive (Directive 2011/92/EU amended by the EIA Directive 2014/52/EU 2011/92/EU). All the projects shall be screened in by the competent authority and be subject to an environmental impact assessment (EIA) process, in order to obtain the required environmental permits. All the projects and associated infrastructure shall be located outside Natura 2000 sites or other protected areas. The authorisation procedure and compliance with the relevant EU directives, specifically Habitats and Birds Directives (92/43/EEC and 2009/147/EC respectively), will be further assessed at appraisal, in particular the potential cumulative impacts assessment and the impacts on protected flora and fauna, including Natura 2000 sites.
The expected final beneficiaries have been assessed by the EIB as being private companies not being subject to EU rules on public procurement or concessions. However, the Bank will require Santander to take all the requisite measures to ensure that the procurement procedures carried out by the final beneficiaries for the sub-projects comply with the relevant EU legislation and the applicable national legislation.