EIB Finances the Largest Solar Project in Andalusia, Spain

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The European Investment Bank (EIB) is investing €43.5 million to finance the largest solar project in Andalusia and one of the most powerful in Spain. Despite the COVID-19-related lockdown in Spain, over 85% of the construction plan was successfully completed by May 2020. This investment, backed by the European Fund for Strategic Investments (EFSI), the main pillar of the Investment Plan for Europe, will contribute to Spain’s green recovery and will create around 350 jobs during the implementation phase in the transition region of Andalusia.

The Cabrera Solar Project includes the construction and operation of four 50MWp photovoltaic solar plants in Alcalá de Guadaira, Seville. The four plants will provide enough clean energy to supply nearly 145 000 households per year and will contribute to reducing CO2 emissions by 300 metric kilotons (kt) CO2-equivalent per year. It will have a significant impact on the Spanish renewable energy market, helping the country to meet the government’s objective of generating 20% of all the country’s energy needs from renewable sources by the end of this year. Moreover, the Cabrera Solar Project will contribute to meeting the European Commission’s target of ensuring that at least 32% of Europe’s final energy consumption comes from renewables by 2030.

Paolo Gentiloni, European Commissioner for the Economy, said: “With the EU’s financial support, almost 145,000 Spanish households stand to benefit from clean energy, drastically reducing the CO2 emissions of the Andalusia region. The project will also provide the construction and engineering sector with 350 jobs in the short term. With every investment of this kind, we take another step closer to our goal of making the European Union climate neutral by 2050.”

“As the EU climate bank, we are committed to investing in green recovery in Europe, building sustainable infrastructure while spurring the creation of green jobs. Spain is a market with huge potential for renewable energy and the EU bank is proud to support the investments needed to meet the country’s renewable energy targets,”said EIB Vice-President Emma Navarro, responsible for climate action at the Bank and for operations in Spain. “Despite the economic challenges caused by COVID-19, we should not forget that climate change still represents one of the biggest threats to our future.”

The project, sponsored by Encavis AG and developed by Solarcentury, secured senior debt facilities for an aggregate amount of €96 million from the EIB, Deutsche Bank and Rabobank, and reached financial close in June 2020. As for the construction and operation of the Talayuela solar plant, also financed by the EU bank, sponsored by Encavis AG and Solarcentury and developed by Solarcentury, also the Cabrera Solar Project is a greenfield renewable energy project financed without any form of government or public support and entirely relies on revenues from the sale of electricity. The Project entered into a Power Purchase Agreement (PPA) with Amazon.com Inc., which hedges the off-take price for a significant volume of the energy production. The EIB will contribute to the crowding-in of other investors and private lenders, while EFSI will provide the long-term non-recourse debt financing, crucial to ensuring the viability of the project.

Background information

The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States.

The EIB is the world’s largest multilateral provider of climate finance. Its goal is to be a leader in mobilising the finance needed to limit the average global temperature increase to 1.5°C compared to pre-industrial levels to meet the Paris Agreement objectives. On 14 November 2019, the EIB’s Board of Directors approved its new climate objectives and the new energy lending policy. The Bank will gradually increase its financing for climate and environmental objectives by up to 50% by 2025, to ensure that the EIB Group mobilises at least €1 trillion in the critical decade between 2021 and 2030 to promote investments helping to meet these objectives. It also announced its intention to align all EIB Group activities with the Paris Agreement. To this end, the EIB will cease financing fossil fuel-based projects from late 2021.

Over the past five years, the EU bank has provided around €62 billion to finance energy infrastructure. This included over €53 billion for renewable energy, energy efficiency and electricity grid projects in Europe and around the world.

The Investment Plan for Europe, known as the Juncker Plan, is one of the European Commission’s top priorities. It focuses on boosting investment to generate jobs and growth by making smarter use of financial resources, removing obstacles to investment, and providing visibility and technical assistance to investment projects.

The European Fund for Strategic Investments (EFSI) is the main pillar of the Juncker Plan and provides a guarantee that enables the EIB to invest in more projects that often come with greater additionality. The projects and agreements approved for financing under EFSI are expected to mobilise more than €450.6 billion in investment, including €49.5 billion in Spain, and support more than 1 million start-ups and SMEs in the EU Member States. Juncker Plwan-backed investments have increased EU gross domestic product by 0.9% and added 1.1 million jobs compared to the baseline scenario. By 2022, the Juncker Plan will have increased EU GDP by 1.8% and added 1.7 million jobs.

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