Summary sheet
The loan will finance the construction of a 200MW pumped-storage hydroelectric power station and associated desalination plant in the Gran Canaria.
The aim is to improve power quality, reliability and supply security as well as increase generation from renewable sources in Gran Canaria isolated grid. The project is connected to two existing reservoirs avoiding creation of new reservoir and optimising the usage of the existing ones. It will also provide water for irrigation and firefighting system of the island. During the peak hours, the project can provide 200MW to the grid during 16 hours i.e. 3.2GWh per cycle. It will contribute to mitigate the risk of electricity shortage, reduce fossil fuel import and smoothen electricity peak prices.
The Project contributes to increase energy storage in isolated systems with the construction of a 200MW pumped hydropower storage scheme connecting two existing reservoirs located in the island of Gran Canaria, Spain.
Through this Project, the EIB will contribute to (i) reduce the CO2 and other emissions from the power sector; (ii) enable the integration of high shares of wind and solar power; and (iii) improve power quality and support security of electricity supply, which has public goods attributes. In addition, the desalination will also provide water for irrigation and contribute to the firefighting system of the island thereby contributing to the adaptation of the island to climate change. The Project is developed under a concession and regulated framework.
The pumped-storage project is supporting the EU policy regarding energy storage as defined in the Clean Energy for All Package and the Electricity Directive (2019/944), and targets and the National Energy and Climate Plan, Spain's Integrated Plan for Energy and Climate (PNIEC) and Canaria's Energy Strategy 2015-2025. In line with the EU Taxonomy, pumped hydropower storage is deemed to provide substantial contribution to climate change mitigation. The Project contributes to the Bank's lending priority objectives on Energy as well as the transversal objectives on Climate Action, Environmental Sustainability and Social and Economic Cohesion.
On project quality, the project is supported by adequate capabilities / governance of the promoter. In terms of project results, the projects are expected to have a positive economic rate of return and is expected to generate a positive, broader social benefit.
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 under various dimensions (e.g. longer tenor, availability and grace periods, convertible or revisable rates). The Bank intervention will help the Borrower to diversify its funding sources and lengthen the average maturity of the company's debt.
The project falls under Annex I of the environmental impact assessment (EIA) Directive (2011/92/EU, as amended by 2014/52/EU). The EIA process included public consultation initiated in 2016. In 2020, following the latest amendments, the project has undergone an EIA, according to the national laws, including Appropriate Assessment. The process was completed in 2021 with the issuance of the environmental permit. The promoter will implement preventive and corrective measures to restore the Arguineguín Canyon affected by the construction of the reservoirs and improve the water bodies in this area. The project is covering 20ha of which more than 4ha of the Biosphere Reserve of Gran Canarias. The project covers the following four Natura 2000 areas: ZEC Macizo de Tauro II, ZEC El Nublo II y ZEC Franja Marina de Mogán and ZEPA Macizo de Tauro, with several other sites in the area of the project, as well as natural parks and natural monuments. The impact of salty water or the storage of soil due to excavation works have been addressed in the EIA. Where and if applicable, the EIA requirements, Birds Directive 2009/147/EC, Habitats Directive 92/43/EEC and the Water Framework Directive (WFD) 2000/60/EC will be verified during appraisal.
The concession was awarded in 2011 to Endesa/Unelco, a private entity. In 2013, the Gran Canaria authorities were required to transfer the concession to the transmission system operator as per Law 17/2013. In 2015, Endesa/Unelco transferred their right to the current promoter, the Spanish national transmission operator. The promoter has been assessed by the EIB as being a private company not being subject to EU rules on public procurement or concessions. However, if at the project appraisal, the EIB were to conclude that the promoter is subject to the EU public procurement legislation then the EIB will duly inform the European Commission and would require the promoter to apply those rules.