BRAZILIAN RENEWABLE PORTFOLIO (NEOENERGIA FL II)

The project consists of two clusters of onshore wind farms between 14 and 49 MW each. The first wind cluster is located in the Brazilian State of Paraiba in the northeast of the country, and is composed of eight sub-projects for a total installed capacity of 232 MW. The second wind cluster is located in the Brazilian States of Piaui and Bahia in the northeast of the country, and is composed of four sub-projects for a total installed capacity of 192 MW. The aggregate installed capacity is of 424 MW. The operation consists of an allocation under Framework Loan Neoenergia Green Renewable Energy Generation FL (2021-0506).

The project is expected to contribute to the External Lending Mandate 2014-2020 and Climate Action and Environmental Facility objectives including climate change mitigation. The operation is well aligned with the United Nations Sustainable Development Goals 7 (Affordable and Clean Energy) and 13 (Climate Action) and, by mainstreaming job creation, empowerment of woman entrepreneurship and gender equality (as per the Promoter's mother company's current policies and future plans), addresses goal 5 (Gender Equality). The operation will also contribute to the EIB's priority objectives for energy sector lending related to renewable energy sources, in line with the EIB's Energy Lending Criteria and its Climate Action objectives, and in particular with the Green Deal Team Europe-Brazil Initiative (in particular the Sub-Initiative on Sustainable and Smart Cities).

This 100% Climate Action operation aims at partially financing wind parks in several Brazilian States by Neoenergia, a leading energy provider in Brazil and part of the Iberdrola Group.

This project addresses the Bank's priority objectives by promoting Renewable Energy and Climate Action. It contributes to Brazil's Intended Nationally Determined Contribution (NDC) and supports the provision of affordable energy, ensuring clean energy at a lower price than that from fossil sources.

The operation is fully in line with national and EU priorities. Climate change and investments in environmental technologies are key priorities of the EU-LAC relations. In accordance with the Green Deal Team Europe-Brazil Initiative (in particular the Sub-Initiative on Sustainable and Smart Cities), it promotes electricity from a renewable source (onshore wind), addressing the market failure of negative climate and environmental externalities, through the reduction of carbon emissions and air pollution (compared to the avoided fossil fuel based generation).

Neoenergia benefits from flexible financing conditions, such as a long tenor and disbursement in either EUR or USD with a fixed and floating interest rate. The EIB's participation ensures high standards of social and environmental due diligence and fair procurement procedures, improving bankability with its expertise on the financing structure.

If the plants were located within the EU, they would fall under Annex II of the Environmental Impact Assessment (EIA) Directive (2014/52/EU amending the 2011/92/EU), requiring the competent authorities to determine whether an EIA is required. A number of gaps were identified with respect to compliance with EIB's Environmental and Social Standards for projects subject to a comprehensive environmental and social assessment. All such gaps are being addressed by the Promoter. The Promoter's capability to implement the projects in compliance with the EIB's Environmental and Social Standards is deemed acceptable.

It is required from the Promoter to ensure that implementation of the project will be done in accordance with the EIB's Guide to Procurement. The EIB will not finance plants for which the procurement process is impacted by local content requirements non-compliant with the above mentioned Guide to Procurement.

This operation is covered by the ELM Political Risk Guarantee.