EIB and Iberdrola Sign €108M Green Loan to Boost Valdecañas Hydro Storage

The European Investment Bank (EIB) has entered into two green loan agreements with Iberdrola for a total of €108 million to finance modernization at the Valdecañas hydroelectric facility in Spain. The package of financing comprises a €50 million loan from EIB's own resources and a further €58 million from the Regional Resilience Fund (FRA), backed by the NextGenerationEU initiative.

Increasing Renewable Storage and Energy Security

The main intention of the operation at the Valdecañas complex, consisting of the Torrejón and Valdecañas power stations on the Tajo River, is to increase pumping capacity and energy storage. The facility will have an upgraded 225 MW installed capacity, a 15 MW hybrid battery with 7.5 MWh storage, and rising pumping capacity to 313 MW.

Furthermore, the plant will increase energy storage in the Tajo system to 210 GWh, enhancing capacity and efficiency for sustainable energy production.

Improvements will be achieved utilizing current infrastructure without modifying water reservoir levels, thus preserving the environment.

Supporting Climate and Regional Development Goals

The investment is aligned with both climate action and regional development objectives, two pillars of the EIB’s 2024–2027 Strategic Roadmap. It will create approximately 165 direct jobs and 500 indirect jobs, particularly in a cohesion region, areas with GDP per capita below the EU average helping to stimulate skilled employment and economic growth.

The project also supports Spain's Recovery, Transformation and Resilience Plan via the Regional Resilience Fund, which supports environmental and social initiatives at regional and local levels.

This project is included in the EIB's action plan under the REPowerEU strategy to boost the EU's energy independence and curb its dependence on imported fossil fuels. Through increased storage of hydroelectric power, the project allows for increased flexibility and integration of intermittently available renewable energy sources like wind and solar.

Also read: EIB Group and BBVA Launch €93 Million Green Financing Initiative for Sustainable Housing in Spain

How the Pumped-Storage System Works

The Valdecañas complex is used as a reversible pumped-storage facility to store and release energy depending on grid demand. Water is pumped to a higher reservoir using surplus electricity and then released to generate electricity during peak demand. This closed-loop system enhances grid reliability and maximizes the use of renewable energy, independent of rain, and provides long operating lifetimes.