IBERDROLA EXTREMADURA HYDROPOWER UPGRADE

The project will fund the upgrade and retrofitting of the existing 313 MW reverse pumped-storage hydropower plant (the Torón-Valdecañas scheme), located in the Extremadura region.

The aim is to enhance the pumping capacity of the plant to enable the cyclical transfer of water between the two major reservoirs of Alcántara and Valdecañas. This improvement will significantly increase the energy storage capacity of the Tagus River cascade and the whole Spanish grid.

Through this upgrade pumped-storage hydro project, the European Investment Bank (EIB) will contribute to increasing the energy storage capacity and flexibility of the power system in Spain. The Project aims to support the integration of variable renewables. It will improve system reliability and contribute to security of supply.

The EIB's support addresses market failures related to public goods and climate change externality. This aligns with the EU policy on energy storage, as defined in the Electricity Directive (2019/944), REPowerEU targets, and the updated National Energy and Climate Plan (NECP) of Spain.

The financing of this storage project is a significant contribution to the EIB's lending priority on Energy and its transversal objectives on Climate Action, Environmental Sustainability, and Social and Economic Cohesion, especially since it is located a Less Developed EIB Cohesion Priority region.

The Project is expected to be financially sustainable and deliver positive economic benefits.

The EIB's financing provides an additional source of funding to the Promoter, which is currently one of the major operators in the renewable energy sector in Spain. The Bank's financial contribution is considered very good and valuable to the client, as the EIB's offering is more favourable than market alternatives and the "EIB Green Loan" label is deemed as a stamp of quality on the Promoter's investments.

The project has very low environmental impact, as the related works are limited to installation equipment within the existing powerhouse buildings or on the designated project land. Considering the location of the Valdecañas plant, the promoter has assessed whether the project significantly impact the Natura 2000 Network, either directly or indirectly. The appropriate assessment has determined that the project is unlikely to have significant effects on Natura 2000 sites, provided that the agreed-upon mitigation measures are implemented. The financing of this programme is in line with the transversal objectives on Climate Action (mitigation), Environmental Sustainability (Pollution Prevention Control). The environmental and social due diligence will focus on the promoter's capacity to comply with the EIB' s environmental and social standards and requirements.

The promoter shall ensure that the contracts for the project implementation have been tendered in accordance with the applicable EU procurement legislation, 2014/25/EU as well as Directive 92/13/EEC as interpreted by the Court of Justice of the EU, with publication of tender notices in the EU Official Journal, as and where required.