RED ELECTRICA GREEN FINANCE FRAMEWORK

The operation concerns the purchase of Green Bonds and /or Green Hybrid Bonds to finance newly built electricity transmission schemes included in the Spanish 2021-2026 Electricity Transmission Grid Development Plan.

The bonds will be issued under Redeia's green finance framework and will follow the Green Bond Principles (GBPs) of the International Capital Market Association (ICMA). The use of proceeds is described in Redeia's green finance framework and will include both new and refinanced assets. By the end of the allocation period, the issuer will have allocated a portion of the funds to an agreed amount of new eligible investments. The underlying projects will be located in Spain.

The set of investments to be supported by the issuance of the green bonds is integral part of Spain's 2021-2026 Electricity Transmission Network Development Plan. This identifies the investments required to enable Spain to progress on its national climate and energy objectives, in particular by supporting the rapid expansion of renewable electricity generation capacity and by enhancing the still limited interconnection with neighbouring countries (France, in particular) or with insular areas of the country. Overall, the quality of the project is rated good by virtue of a very good economic rate of return and social benefit, and good governance arrangements.

The investments are fully in line with national and EU climate and energy objectives. They comply with EIB sector eligibilities, are consistent with the EIB and EU Taxonomy rules on climate-friendly infrastructure (Climate Action) and most of them are carried out in Cohesion Regions.

The Bank intervention will help the borrower to diversify its funding sources and have access to long-term financing through the capital markets. Furthermore, the Bank will improve the borrower's capital base through the hybrid bonds structure (as it is partially considered as equity) and will give a strong signal to the other financiers on the soundness of the borrower's investment plans.

The operation is expected to yield very good quality and results, thanks to avoided GHG emissions, very good employment creation and EIB contribution in financial terms.

Most of the projects underlying the operation will fall under Annex I of the EIA-Directive 2014/52/EU, amending 2011/92/EU, requiring an Environmental Impact Assessment (EIA). The remainder of the projects (mainly in extra-peninsular power systems) are expected to fall under Annex II of the EIA-Directive2011/92/EU, as amended by 2014/52/EU, requiring the competent authorities to determine whether an Environmental Impact Assessment is required. The EIB will assess the capacity of the promoter to ensure compliance of the projects with the sector relevant national and European environmental and biodiversity regulations based mostly on publicly available information. Environmental and social due diligence will focus on the capacity of the Promoter to identify, assess, manage and monitor environmental, climate and social impacts and risks, and to ensure that the underlying schemes comply with national and EU legislation.

The promoter has to ensure that contracts for implementation of the projects under this operation will be tendered in accordance with the applicable EU procurement legislation, Directive2014/23/EU / 2014/24/EU / 2014/25/EU as well as Directive 92/13/EEC or Directive 89/665/EEC as interpreted by the Court of Justice of the EU, with publication of tender notices in the EU Official Journal, as and where required.