The European Investment Bank is financing an important energy sector initiative in Portugal. The EU bank will provide a €650 million ($762.2 million) loan to Iberdrola to support a major hydro electrical project that will increase energy storage capacity in the EU, provide services to the Iberian grid operators and ultimately facilitate the increase of the renewable share of the Portuguese energy mix.
Courtesy of EIB
This investment is anticipated to reduce both the dependence of the Iberian market on fossil energy and CO2 emissions. Through this agreement with Iberdrola, the EIB is contributing to the construction of three new large dams and hydropower plants, including a pump storage plant, which will be located on the Tâmega and the Torno rivers, in northern Portugal. With an investment of around €1.5 billion ($1.7 billion) the infrastructure will have a total capacity of 1,158 MW and will start operating in 2023. To advance the project’s implementation, the EIB and Iberdrola signed a €500 million ($586 million) loan, the first tranche of the total €650 million ($762.2 million) in funds approved to finance this project.
By increasing generation and storage capacity, the new plants will provide more flexibility and security of energy supply on the Iberian electricity market.
The dams (Alto Tâmega, Daivões and Gouvães), located in the Douro River Basin, are projected to provide an average of 1,760 GWh per year to the Iberian market. Located in a European cohesion region, Iberdrola´s project will also foster economic activity and employment. The project is expected to require hiring up to 13,500 people, including direct and indirect jobs, during the entire construction phase and several hundred in operational phase.
The project is part of the Portuguese National Program for Dams with High Hydroelectric Potential (PNBEPH). The promoter, Iberdrola, won the concession of the project to design, build and operate the plants following a competitive tendering process.
At the event held in Madrid, attended by EIB Vice-President, Emma Navarro, and the Chairman and CEO of Iberdrola, Ignacio Galán, Navarro emphasised “the positive impact of this project to foster the development of clean energy and its contribution to economic growth and job creation in Portugal. This agreement represents a new step towards the implementation of the EU energy policy and climate action objectives.”
As the largest multilateral provider of climate finance worldwide and largest issuer of green bonds, the EIB is committing at least 25% of its investments to climate change mitigation and adaptation, supporting low-carbon and climate-resilient growth.