TITAN SOLAR PV GREEN FRAMEWORK LOAN

The project consists of the development of a portfolio of solar photovoltaic (PV) farms with a total installed capacity of around 2GW, located across Spain.

The project consists of the financing of renewable solar PV projects in Spain. The Promoter has submitted a preliminary pipeline of 20 utility scale renewable energy schemes, for a total capacity of ca. 2 GW. Schemes are located in various regions of Spain.

The project increases renewable energy generation capacity in Spain and contributes to national and EU 2030 climate objectives. The financing of this project also supports the Bank's lending priority objectives in energy (renewable energy), climate action, and economic and social cohesion. Electricity is produced from low carbon sources (solar PV), 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 unsubsidized commercial Power Purchase Agreements), in a sector characterised by incomplete markets, the project improves market efficiency and competition (limited forward/hedging possibility, lack of scarcity pricing and lack of locational pricing). The Project is expected to yield very good quality and results due to excellent social benefits, fair employment creation and adequate governance system. With the appropriate conditions in place, the project is acceptable for financing in environmental and social terms. All the schemes are expected to be located in cohesion regions.

Supporting this solar PV portfolio at an early stage and with a meaningful amount of financing will be instrumental in accelerating the implementation of the Project and in attracting commercial lenders to complement the participation of the EIB in the non-recourse financing tranche. The combination within a Framework Loan of a Corporate Loan and Project Finance Loan is innovative and provides the Promoter with flexibility and financial value added, which is deemed crucial mainly in the context of the ongoing Covid pandemic. The EIB, as a reference financier with the strictest standards in terms of sustainability and environmental protection, is expected to provide also an important signalling effect. Accordingly, EIB financing with a "Green Loan" label is expected to contribute to attract investors and co-financiers. This also helps Galp in the achievement of its emerging de-carbonisation strategy and clearly emphasises the role of EIB as the EU Climate Bank.

This operation is intended to generate environmental benefits by supporting renewable energy projects that help mitigate climate change. The schemes are expected to fall under Annex II of the EIA-Directive (2014/52/EU amending 2011/92/EU), requiring the competent authorities to determine whether an environmental impact assessment (EIA) is required. Aerial power lines for the interconnection to the grid included in the Annex I of the EIA Directive, if any, will be expected to be subject in all cases to an EIA process. It is expected that a few plants of the initial pipeline have already obtained their environmental license (Declaracion de Impacto Ambiental), and the rest of the processes are still ongoing or under preparation. The Bank will assess the capacity and procedures of the Promoter to ensure the schemes' compliance with the sector-relevant national and European environmental and biodiversity regulations. The EIA studies and the permitting process will be assessed during the appraisal of the individual schemes, in particular cumulative impacts and conformity with relevant EU Directives, including Habitats (92/43/EEC) and Birds (2009/147/EC).

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 EU public procurement legislation then the Bank would duly inform the Commission Services and would require the Promoter to apply those rules.