€300 Million IFC Loan For Iberdrola To Back Renewables Versus Coal

€300 Million IFC Loan For Iberdrola To Back Renewables Versus Coal

The World Bank’s private lending arm, the International Finance Corporation (IFC) has backed Spanish utility major Iberdrola with a €300 million (US$328.7 million) loan to support and develop renewable energy projects in coal-dependent countries, including Morocco, Vietnam and Poland.

According to Iberdrola,€170 million has already been committed to financing onshore wind projects in Poland, one of the biggest European users of coal-based power, which is finding it particularly tough to wean itself off. Iberdrola, by the end of 2022, had 38% of its investments directed to the EU, 25% to the US, 20% to Latam, 13% to the UK, and 4% to Australia and others. The network asset base increased by 19% compared to the same period of the previous year, reaching €39.2 billion in 2022. This asset base is evenly split between the US, with 31% of the total, the UK and Spain, with 24% each, and Brazil, with 21%. The firm has installed a renewable capacity of over 42 GW based on records till early 2023.

The loan encourages Iberdrola to reduce its absolute direct and indirect greenhouse gas emissions by more than 60% by 2030 from the 2020 baseline across all three scopes of emissions.

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A second objective is to double Iberdrola’s installed renewables capacity by 2030. As of the end of the third quarter of 2023, Iberdrola’s installed capacity reached 41.3 GW. According to its financial result announcement for Q3 2023, even though onshore wind and hydropower account for more than half of the current installed capacity, solar PV represented 5.4GW of all renewables capacity for the utility.

The backing from the IFC follows a conscious push by the institution and its associates to push renewable energy and place it at the center of efforts to reduce dependence on fossil fuels. The bank has already made it clear that many upcoming coal projects and thermal power stations will not get access to funding from it, directly or indirectly. That has sometimes worked to delay or even cancel these projects, although not in the case of countries like China and India, where domestic institutions have stepped in to fill the gap. However, the continued retreat of global financial institutions will eventually lead to a clear difference in financing costs and return metrics for power projects, which should eventually accelerate the transition from fossil fuels.

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