The Europe Investment Bank (EIB) has signed a EUR500 million (US$585.6 million) loan agreement, the first tranche of a total EUR650 million (US$761.3 million) funds approved, for a major hydropower project in Portugal being developed by Iberdola.
The project involves the construction of three new large dams and hydropower plants, including a pumped storage plant, which will be located on the Tâmega and the Torno rivers, in northern Portugal. The total generation capacity to be installed is 1,158 MW. The estimated total investment required is EUR1.5 billion (US$1.76 billion).
The dams (Alto Tâmega, Daivões and Gouvães) are located in the Douro River Basin and are expected to provide an average of 1,760 GWh per year to both Portuguese and Spanish electricity markets.
The project is part of the Portuguese National Programme for Dams with High Hydroelectric Potential. Iberdrola was awarded a concession contract to design, build and operate the plants following a competitive tendering process in 2008, though the contract was not signed until 2014.
Major construction contracts were awarded in 2016 and 2017, with the majority of construction works to be completed by 2020. The entire complex is scheduled to commence operations in 2023.
This investment follows several others by the EIB to reduce the dependence of the Iberian market on fossil fuels and the peninsula's CO2 emissions. Last month, Ellomay Capital disclosed that it was in the process of securing a EUR125 million (US$146.4 million) loan from the bank for a 300 MW solar photovoltaic project in Extremadura.
Furthermore, earlier this year the EIB approved a EUR50 million (US$58.6 million) loan for a wind project in Aragón. Similar to Iberdrola's hydropower project, it involves the construction of several wind farms, indicating an inclination of the bank towards larger, complex-style projects.