ALCO SOLAR PV GREEN ENERGY LOAN

Promoter – Financial Intermediary

GALP ENERGIA SGPS SA

Location

• Portugal

Description

Construction and operation of four photovoltaic power generation plants in Portugal with an installed capacity of 144 MWp.

Additionality and Impact

The solar PV project produces renewable electricity and reduce carbon and air pollution, an externality. It contributes to meet the EU 2030 energy and climate targets and the NECP of Portugal. The financing of this project is in line with the Bank's lending priority objectives on Energy (Renewable Energy) as well as the transversal objectives on Climate Action (mitigation), Environmental Sustainability (Pollution Prevention Control) and Social and Economic Cohesion. The project is one of the first projects developed without any form of government support in Portugal, solely relying on wholesale market revenues without any form of government support. It thereby contributes to the policy objective to support the market integration of renewable energy projects, as set out in the EIB's Energy Lending Policy. The project has an economic return thanks to the quality of the solar resource in Southern Portugal and the decreasing cost of the technology. Moreover, the wholesale electricity market prices are not fully reflecting the value of the electricity (not factoring in fully the positive externalities, such as the reduction of greenhouse gas emissions and local air pollutants), resulting in a social benefit. EIB support contributes to demonstrate the quality of the project and financial viability of this business model in Europe. EIB financing will contribute to diversify the company's funding sources and lengthen the average maturity of the company's debt.

Objectives

The operation will contribute to EU climate and energy objectives. In particular, it supports the EU-wide target of reaching 32% of energy from renewable sources in gross final energy consumption by 2030, as set out in the RE Directive (EU 2018/2001). It also contributes to the national renewable energy targets as laid out in Portugal's National Energy and Climate Plan (NECP). The financing of this project is in line with the Bank's priority energy lending related to renewable energy and climate action. In addition, the investments will be located in a cohesion region.

Sector(s)

• Energy - Electricity, gas, steam and air conditioning supply

Proposed EIB finance (Approximate amount)

EUR 40 million

Total cost (Approximate amount)

EUR 80 million

Environmental aspects

The plants and the interconnection infrastructure falls within Annex II of the EIA directive (Directive 2014/52/EU amending the EIA Directive 2011/92/EU). The plants will connect to a new common substation 30/150kV through 30kv overhead lines. From there, the energy of the four plants will be evacuated through a common 150kv overhead line of ca. 17kms to reach an existing substation where a new position will be installed. According to the Promoter's information, the plants have been screened out by the competent authority, while the transmission line was screened in for an environmental impact assessment (EIA) process. The Promoter prepared an EIA study for the transmission line and the substation, and the environmental consent was issued in February 2020 (Declaracaode Impacto Ambiental). The plants and transmission line are located 3 to 6kms from their closest Natura 2000 sites (SCI and SPA Caldeirão, SCI Guadiana and SPA Vale do Guadiana).

Procurement

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.

Status

Signed - 21/10/2021