TAGUS ALLOCATION GREEN ENERGY FL 2022-0085

Financing of the Tagus (200 MW) and Almaraz (80 MW) solar photovoltaic (PV) projects in Extremadura and of the Valdemoro onshore wind farm (50 MW) in Castile-León. Allocation under the framework loan (FL) 2022-0085 IBERDROLA GREEN ENERGY FRAMEWORK LOAN II.

The project contributes to the European Renewable Energy (RE) target for 2030 of 32% in final energy consumption that has been established in the Recast Renewable Energy Directive (2018/2001/EU). The European Commission has recently proposed as part of its REPowerEU plan to increase such a target to a level of 45%. It will further support the Spanish RE target for 2030 of 42% (final energy consumption) as set out in its Integrated National Energy and Climate Plan (NECP). In addition, the project is located in cohesion regions. The financing of this project is in line with the Bank's priority energy lending related to renewable energy and climate action.

The project increases renewable energy generation capacity in Spain and contributes to national and EU 2030 climate objectives. The financing of this project also contributes to Bank's lending priority objectives on Energy (Renewable Energy) as well as on climate action (transversal), and on economic and social cohesion (transversal). The project produces electricity from low carbon sources (solar PV and onshore wind), addressing the market failure of negative climate and environmental externalities, through the reduction of carbon emissions and air pollution (compared to fossil-fuel generation). As the schemes are expected to rely (at least partially) on revenues from the market (the wholesale market and/or unsubsidized commercial Power Purchase Agreements), in a sector characterised by incomplete markets (limited forward/hedging, lack of scarcity and locational pricing), the project improves market efficiency and competition. The schemes are entirely located in EIB Cohesion Priority regions.

The project Quality and Results is rated Very Good. The project has an excellent economic return and the current electricity market prices are not fully reflecting the value of electricity. Besides, the promoter has a recognised in-house design and project management capacity with a significant track record of international energy projects.

EIB's Contribution is rated Very Good. The EIB's offering is more favourable than market alternatives under various dimensions. The promoter deems financing with an "EIB Green Loan" label as a stamp of quality on its investments and environment-related procedures, which helps attract investors. The Bank will monitor the operation on an annual basis (annual Project Progress Report).

All the PV plants, the wind plant and grid interconnection infrastructure are included in the Annex II of the EIA Directive (Directive 2011/92/EU amended by the EIA Directive 2014/52/EU) and have been screened in by the competent authority. All plants and associated infrastructure underwent an environmental impact assessment (EIA) process, including public consultation. The plants and associated infrastructure obtained their environmental permits ("Declaración de Impacto Ambiental" - DIA) between February 2020 and March 2022. 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 assessed at appraisal, in particular the potential cumulative impacts assessment and the impacts on protected flora and fauna, including Natura 2000 sites.

The Promoter has been assessed by the EIB as being a private company not 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 Bank would duly inform the Commission Services and would require the Promoter to apply those rules.