The European Investment Bank (EIB) has committed €108 million to upgrades at a pumped hydro energy storage (PHES) project in Extremadura, Spain.
The European Union (EU) long-term lending institution owned by the EU’s Member States has signed two green loans with Iberdrola, the Spanish multinational electric utility announced on Monday (14 April).
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The money will be used for upgrades to increase the efficiency and pumping capacity of Valdecañas, a pumped storage hydroelectric complex in Cáceres, a city in the Extremadura region about 300km southwest of Madrid.
The plant, on the Tagus River near Spain’s border with Portugal, utilises natural topographical features and two large reservoirs to enable water to be released from above to run through turbines and generate power.
The upgrades include the addition of a hybrid short-duration 7.5MW/15MWh battery energy storage system (BESS) and an increase in the PHES facility’s output to 225MW.
Together the upgrades will enable the Valdecañas complex to reach a maximum pumping capacity of 313MW and 210GWh of long-duration energy storage (LDES) capacity.
After receiving government approval for the plans, Iberdrola installed the first turbines in February this year. At that time, the company said the project would have a relatively low environmental impact as the upgrades comprised electrical works and no civil engineering would be undertaken.
The loans comprise €50 million of the EIB’s funds and €58 million from the Regional Resilience Fund, or Fondo de Resiliencia Autonómica (FRA) in Spanish.
FRA supports access to financing for Spain’s autonomous regions and is part of the Recovery and Resilience Facility, the EU programme to make Member States more sustainable and address economic challenges.
Iberdrola already operates Europe’s largest PHES facility, La Muella II, which is also in Spain, with a total installed capacity of 1,767MW, built in stages. In 2022, the company inaugurated a new 880MW/40GWh PHES plant, Tamega, in Portugal.
The EIB, meanwhile, has pledged funding to other PHES plants in the past couple of years, including a €300 million financing for Salto de Chira, a project in the Spanish Canary Islands territory off the coast of Africa proposed by Red Electrica de Espana and €105 million for the expansion of Kruonis, a pumped hydro plant in Lithuania.
The bank’s energy transition-aligned investments include support for the RePowerEU plan. Between 2015 and 2024, the EIB invested close to €147 billion in the EU’s energy sector, including €33.44 billion for grids and energy storage, €60.15 billion for renewable energy and €53.28 billion for energy efficiency projects. It does not invest in fossil fuel projects.
