IBERDROLA DISTRIBUTION NETWORKS GREEN LOAN

The project concerns the modernisation and expansion of the electricity distribution network in Spain over the period 2024-2026.

The project is expected to support the efficient operation of the electricity distribution network in Spain, contribute to the integration of Renewable Energy Sources (RES), and cater for the connection of new customers.

The Project concerns standard electricity network investments in a regulated natural monopoly. The EIB intervention is justified by the presence of certain market failures that may result in sub-optimal investment. The Project will enable the Promoter to meet the increase in demand and the requests for new connections while maintaining or improving the reliability and quality of the distribution network. Investments contribute to maintaining security of supply, a public good. They also contribute to the integration of renewable generation, which results in lower carbon and air pollution externalities.

The Project also supports the planned electrification of the heating and mobility sectors set out in the Spanish National Energy and Climate Plan.

The Project is partly located in EIB cohesion priority regions.

The investment programme will maintain current standards of service, as well as enable the connection of new users, improve the reliability of supply and support further decarbonisation of the Spanish power mix. The investments will also support the increase in electrification of the heating and mobility sector, in line with the targets of the National Energy and Climate Plan of Spain. The programme's overall economic viability is deemed good, and above the financial rate of return, thereby resulting in a good broader social benefit.

The Promoter is an experienced utility operator of electricity distribution networks and is setting best practices in the power sector. It applies sound technical and economic criteria for the selection of each investment component. The Promoter has the necessary experience and capacity to manage the implementation of the programme and operate the assets over the term of the loan. With the appropriate conditions in place (see ESDS), the Project is acceptable for financing in environmental and social terms. The employment impact of the programme is rated "very good".

The Bank's financial contribution is considered very good and valuable to the client, as the EIB's offering is more favourable than market alternatives (e.g. longer tenor and grace period, length of possible fixed interest rate period). Financing with an "EIB Green Loan" label is deemed as a stamp of quality on the Promoter's investments and environmental-related procedures.

The programme comprises several electricity distribution schemes with voltages ranging from 0.4 kV up to 132 kV. Some of these schemes may fall under Annex II of environmental impact assessment (EIA) Directive 2011/92/EU as amended by Directive 2014/52/EU, which requires the competent national authority to determine the need for an EIA. Where, and if applicable, the requirements of Birds Directive 2009/147/EC and Habitats Directive 92/43/EEC will be verified during appraisal. The environmental and social due diligence will focus on the Promoter's capacity to implement the programme in line with the EIB environmental and social standards and requirements. The project is expected to contribute to climate action and environmental sustainability (CA&ES) objectives, in particular to climate mitigation.

The promoter has to ensure that contracts for the implementation of the project are tendered in accordance with the applicable EU procurement legislation, Directive 2014/25/EU as well as Directive 92/13/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.