- Iberdrola and the European Investment Bank (EIB) sign a EUR 70 million green loan agreement to boost renewable energy in Portugal
- The loan will finance the construction of 188 MW of solar PV plants in various locations, most of them in rural areas.
- The projects will contribute to the European Union's security of energy supply, climate action and social cohesion plans.
The European Investment Bank (EIB) and Iberdrola have signed a new agreement to accelerate Portugal's energy transition via the development of new renewable energy plants. The EU bank will provide a €70 million green loan for the construction of a portfolio of projects with a total capacity of around 188 megawatts (MW). These new facilities, awarded at auctions in 2019, will produce green and competitive energy equivalent to the average consumption of more than 65,000 households. These solar projects will receive a total investment of more than €150 million.
The EIB will finance five solar PV plants and their connections to the grid, located in the Portuguese regions of Algarve, Centro, Alentejo and Lisbon. These projects are mainly located in rural areas, which are considered cohesion regions by the European Union.
The financing will go to the following projects: Montechoro I and II (37 MWp), Alcochete I and II (46 MWp), Algeruz II (27 MWp), Conde (14 MWp) and Carregado (64 MWp). The financing will also include ancillary infrastructure such as access roads, substations and interconnections.
The investments will boost economic growth and employment in these regions. Overall, the new infrastructure will create around 1,000 direct jobs during the construction phase, in addition to those generated in the wider supply chain.
EIB Vice-President Ricardo Mourinho Félix said: "The agreement signed today demonstrates the Bank’s commitment to support Europe in achieving its climate targets. We are pleased to collaborate with Iberdrola in the development of its first ever solar power plants in Portugal which will generate economic growth and jobs in cohesion regions. This project is an excellent example of the strategic cooperation between the EIB – the EU’s climate bank - and Iberdrola - a global leader in renewables, united in supporting the green and economic recovery, the green transition and Europe’s energy security."
José Sainz, Iberdrola's Chief Financial Officer, explained that: "This collaboration with the EIB is a boost for Iberdrola's projects in Portugal. This comes at a critical time for the energy transition, as more renewables is the only way to reduce our dependence on fossil fuels". The financing signed with the EIB is also in line with "Iberdrola's commitment to support the energy transition in Portugal, where we intend to triple our solar capacity by 2023," said Sainz.
This is the second time that the EIB has provided financing for Iberdrola's projects in Portugal, following a previous loan of 650 million euros for the Tâmega gigabattery hydro project.
Portugal, a strategic country for energy transition
Recently, Iberdrola's executive chairman, Ignacio Galán, reinforced the company's plans to support the energy transition in Portugal. By the end of 2023, the group's investments in Portugal will have exceed 2 billion euros. The company plans to allocate an additional 3 billion euros in the coming years for new solar, wind and storage projects, as well as new solutions such as green hydrogen.
Iberdrola operates the Tâmega gigabattery in Portugal, the largest clean energy initiative in the country's history with an investment of more than 1.5 billion euros, three dams and three power plants (Gouvães, Daivões and Alto Tâmega). In total the project has a storage capacity of 40 million kWh, equivalent to the average daily energy consumption of 11 million people.
In addition, Iberdrola already operates 92 MW of wind power in Portugal, across three wind farms. These include Catefica, in the municipality of Torres Vedras, with 18 MW; Alto do Monção, in Mortágua and Tondela, with 32 MW; and Serra do Alvão, in Ribeira de Pena, with 42 MW. Together, these plants produce 200 GWh per year, equivalent to the electricity used by 35,000 households.
EIB and energy security
Over the past decade, the European Investment Bank Group has channelled almost €100 billion into the EU’s energy sector. These timely investments are now helping Europe weather the crisis triggered by the abrupt cut in Russian gas supplies. In the first nine months of this year alone, the EIB has signed financial support totalling more than €8.3 billion for projects in energy efficiency, renewables, electricity and storage inside the EU, thus helping strengthen the resilience of the European economy.
In October, the EIB’s Board decided to raise the Group’s clean energy financing volumes to unprecedented levels in support of the REPowerEU objective of ending Europe’s dependency on Russian fossil-fuel imports. An additional €30 billion will be invested over the next five years, on top of the EIB’s already robust support for the energy sector in the EU. It is estimated that the dedicated REPowerEU package will mobilize an additional €115 billion in additional investment by 2027, thus making a substantial contribution to Europe’s energy independence and the EIB Group’s target to mobilize €1 trillion this decade in climate financing.
Find out more about the EIB’s energy support here and the latest energy projects we financed here.
Iberdrola, extending its financing channels
At the end of September 2022, Iberdrola’s green financing, or financing linked to sustainability criteria, amounted to close to 45 billion euros, of which almost 16 billion euros relates to green bonds.
This financing strategy is supporting the company’s record investment plan, which will see investments of 47 billion euros globally by the end of 2025, aimed at increasing its renewable capacity to 52,000 MW and enhancing the value of its network assets to 56 billion euros.
As outlined at the company’s recent Capital Markets Day, Iberdrola is diversifying its sources of financing. In addition to traditional sources of finance, the group now also collaborates with Export Credit Agencies, development banks and multilateral agencies, with which it aims to raise up to €11 billion by 2025.
The new investments planned for the 2023-2025 period allow Iberdrola to forecast gross operating profit (EBITDA) of between €16.5-17 billion by 2025, representing average annual growth of between 8% and 9%. In addition, the company estimates that net profit will increase to between 5.2 and 5.4 billion euros by 2025, representing average annual growth of between 8% and 10%.
