Renewable Energy Finance: Iberdrola took $561 million loan from EIB to develop 1.8GW in Spain.

updated on 27 November 2022

The loan by the European Investment Bank (EIB) will be deployed towards the construction of solar PV and onshore wind projects primarily in rural areas, including Castilla y León and Extremadura. These regions are termed as ‘Cohesion regions’ by the EU, which have been demarcated for economic improvement through disbursement for funds. The aim of this policy is to reduce economic disparities within the bloc. Iberdrola will utilise the funding for projects including the 200 MW Tagus PV project. 80 MW Almaraz PV plants and the 50 MW Valdemoro wind farm. Total investment to develop the 1.8 GW portfolio is estimated at over $1.12 billion.

Spanish utility Iberdrola currently holds more than $44 billion in signed financial commitments, of which more than $25 billion corresponds to green financing and ~$19 billion comes from credit lines, loans or commercial paper programmes. In Apr '22, Iberdrola secured its largest green loan in the amount of ~$1.2 billion from Banco Santander. The 15-year loan is backed by an export credit agency and will be deployed to finance turbine orders for onshore and offshore wind farms in Spain, Poland, Greece, Germany and the UK. The company has ~38 GW of installed renewable energy capacity and more than 70 GW in its development pipeline, which is estimated to require investments of $97 billion to develop. Iberdrola’s financial exposure comprises a blend of fixed-rate and variable-rate debt. The company seeks to balance an increase in its leverage with cash inflows from new investments. The company’s debt structure is in line with its business profile, which is primarily backed by regulated revenues.

The EIB has been one of the most active multilateral lenders for renewable energy projects in Spain, driven by commitments under its Climate bank Roadmap. In 2019, the bank announced that it would stop assessing new financing for unabated, fossil-fuel energy projects, including gas, from the end of 2021. Most recently, the institution participated in a $356 million financing deal for Opdenergy, with BBVA. The loan, which has a tenor of 18-18.5 years, will support the construction of 605 MW of solar PV capacity in Spain. Further, in late-2021, the EIB provided $356 million to Galp to build out ~2 GW of solar PV projects in Spain, and $255 million to Enel subsidiary Endesa, to fund construction of 645 MW of solar PV and onshore wind farms in Spain.

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.

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