EIB signs €1.6bn in loans for Bay of Biscay interconnection
The parties signed at the EIB headquarters in Luxembourg. The event was attended by Nadia Calviño of the EIB Group, Commissioner Dan Jørgensen, Marc Ferracci, French minister of Industry and Energy, Miguel González Suela, Spanish deputy secretary of State – for Ecological Transition and the Demographic Challenge, Beatriz Corredor of Redeia, parent company of Red Eléctrica, and Thomas Veyrenc of RTE. Image courtesy EIB
The European Investment Bank (EIB) has pledged €1.6 billion ($1.9 billion) to finance the construction of the Bay of Biscay electricity interconnection between Spain and France.
The EIB financing for the Bay of Biscay project takes the form of loans to Spanish and French transmission-system operators (TSOs) Red Eléctrica and RTE Réseau de transport d’électricité (RTE).
Construction of the Bay of Biscay link is already under way by Inelfe, a joint venture by RTE and Red Eléctrica, and it is due to become operational in 2028.
It is co-funded by a Connecting Europe Facility (CEF) grant of €578 million ($667.6 million).
The Bay of Biscay interconnection
The connection will link two alternating current systems via a submarine direct current line. At each end of the connection, stations in Cubnezais in France and Gatika in Spain will convert the direct current into alternating current for connection to the transmission grids of Spain and France.
The High-Level Group on Interconnections in South-West Europe, established in 2015 between Spain, France, and Portugal with the support of the European Commission, played a critical role in advancing the Biscay Bay project.
Once operational, the project will almost double the electricity exchange capacity between France and Spain to 5,000MW.
Commenting in a release was Nadia Calviño, president of the EIB Group: “EIB support for the France-Spain electricity interconnection will be key to ensuring that the Iberian Peninsula is no longer an energy island. This agreement will lead to a major shift in energy integration, an important area for EU competitiveness and strategic autonomy.”
Said Dan Jørgensen, European Commissioner for Energy and Housing: “Europe needs more integrated and more interconnected energy systems and markets. This is crucial to ensure our citizens have access to clean and stable supplies, wherever they are. This is what a genuine Energy Union is about.
“I very much welcome the additional financial support offered by the EIB for a key project that will ultimately improve the lives of many across the Pyrenees and beyond.”
The Bay of Biscay project will strengthen the interconnection capacity between France and Spain, helping the Iberian peninsula’s progress towards the EU interconnection target for Member States of at least 15% of installed production capacity by 2030.
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Iberian interconnection capacity
The project, together with the underground project between Baixas-Santa Llogaia and the improvement of the existing Argia-Hernani infrastructure, will enhance the interconnection capacity between the Iberian Peninsula and the rest of Europe, while better integrating it within the EU energy market.
Strengthening this capacity is currently a core topic for operators in Europe, following the Iberian outage in April this year.
The outage hit parts of Spain, Portugal and France, highlighting the fragility of the power system and Spain’s status as an ‘energy island’.
Namely, a significant pain point was the Iberian peninsula’s structural isolation and that interconnection requires more attention.
The Iberian grid is connected to France via Spain’s 2.8GW electricity interconnector (2.6GW Spain-to-France) and via interconnection with Morocco of 900MW (700MW Spain-to-Morocco).
The support of this interconnection, as well as the black start ability of hydro power plants, enabled system operators to restore power at the time, but the question loomed of how much relief more interconnection may have provided.
Said Beatriz Corredor, chairwoman of Redeia: “Today, with the support of the EIB, we take another step forward in this project, a bridge between nations and key for European cohesion that will enable us to tackle the greatest challenge of our time: the energy transition. That is why both countries must continue to work together to strengthen our connections, also through the two new projects planned to cross the Pyrenees.”
On the day of the announcement, said Thomas Veyrenc, member of the Executive Board, director general for finance, strategy and economics of RTE: “Today is a major milestone for the Bay of Biscay project, which will increase the solidarity between France and Spain but will also contribute to the development of exchanges of low-carbon, competitive electricity throughout Europe.
“Along with EU institutions – such as EIB – and other European TSOs, RTE is committed to ensure that the French power grid is fit to play its role of a European electricity crossroads, including through major reinforcement projects to avoid internal constraints, as laid out in our recent grid development strategy.”
The Bay of Biscay interconnection is classified by the EU as a Project of Common Interest (PCI).
The operation is also part of the EIB’s action plan supporting REPowerEU, the programme to increase energy security and accelerate the energy transition by reducing the European Union’s dependence on fossil fuel imports.
