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The project will finance the implementation and operation of a very large-scale, grid-connected electrolyser (100 MW) producing renewable hydrogen to be supplied to a refinery.
The aim is to support the EU and national climate, renewable and hydrogen targets for 2030, in line with the National Energy and Climate Plan, by producing electrolytic hydrogen based on renewable energy to be used in transport.
The project concerns the development, implementation and operation of a large-scale hydrogen production plant in Sines, south of Portugal.
The project contributes to the Bank's lending priority objectives on Energy (Renewable Energy), the transversal objectives on Climate Action (mitigation) and Economic and Social Cohesion. The project will displace fossil fuel-based hydrogen by hydrogen from electrolysis based on existing renewable electricity capacity aiming to align with the EU Taxonomy requirements. It contributes to meeting national and EU renewable energy targets in transport as well as to the objectives of the Portuguese National Integrated Energy and Climate Plan (NECP) 2030 as regards electrolyser capacity, with a target of 5.5 GW. The project underpins the goals of the national and EU Hydrogen Strategies and the RePowerEU plan objectives.
The project will thus address the market failure of negative climate and environmental externalities, through the reduction of carbon emissions. Further, the project could be considered to marginally contribute to knowledge externalities with the scale-up of the electrolyser's supply chain, implementing one of the currently largest electrolyser units being realised in the EU.
The project is considered of strategic interest for Portugal within the framework of the EU's Renewable Energy Directive (RED II), the National Energy and Climate Plan (PNEC 2030) and the national Roadmap for Carbon Neutrality (RNC 2050). The project is located in a Less Developed Region of Portugal (Alentejo), thus supporting the Bank's priority policy on Economic and Social Cohesion.
The Bank's financial contribution is considered valuable to the client, as the EIB's offering is more favourable than other market alternatives under various dimensions (e.g. longer tenor, availability and grace periods, convertible or revisable rates). The EIB loan will further contribute to the diversification of the Borrower's financing sources from commercial sources as well as the capital markets.
Hydrogen (H2) modules of the project fall under Annex II of the Environmental Impact Assessment (EIA) directive and are subject to the Seveso Directive (lower-tier). H2 production needs to be aligned with the sustainability of relevant EU directives and regulations, incl. the threshold for substantial contribution to climate mitigation, set by the EU Taxonomy, and the EU criteria for additionality, renewability, and the temporal, geographical correlation of the electricity supply to the H2 electrolyser.
The project will be operating without exclusive or special rights within the meaning of the EU Utilities Directive 2004/17/EC c.q. 2014/25/EU hence private sector procurement procedures will apply. Equipment and works are expected to be purchased through several contracts for installation and infrastructure of components.