EIB Grants €50M to Iberdrola for Flood Recovery and Future-Proof Power Grid

In a major step toward climate resilience and energy transformation, the European Investment Bank (EIB) has signed two €25 million loans with Iberdrola to finance the reconstruction, redesign, and climate adaptation of the power distribution grid severely damaged during the torrential floods—known locally as DANA—that struck Valencia in October 2024. The €50 million funding package underscores Europe’s commitment to strengthening infrastructure in the face of climate-driven natural disasters while accelerating the energy transition.

Building Back Smarter: The il·lumina Project

The financing forms part of Iberdrola’s visionary il·lumina initiative—an ambitious program to rebuild the electricity network with an eye to the future. The project not only aims to repair flood-ravaged systems but also revolutionize the grid by introducing automation, digitalisation, and climate-adaptive technology. Core interventions include:

• Reconstructing and relocating overhead lines underground for better storm resistance

• Automating facilities and expanding digital network management

• Installing next-generation smart transformers to enhance electricity supply quality

• Renovating and scaling transformer substations to better manage loads

These efforts will impact more than 650,000 customers in Valencia, boosting the security and quality of electricity supply amid rising risks from extreme weather. Iberdrola’s approach is not just reactive; it is proactive, ensuring infrastructure resilience while integrating greater volumes of renewable energy into the grid.

Dual-Source Financing: EIB and Spain’s Regional Resilience Fund

Of the €50 million loan, half (€25 million) comes directly from the EIB’s own resources, while the other €25 million is sourced from Spain’s Regional Resilience Fund. This fund, part of the broader NextGenerationEU recovery plan, supports investments across eight strategic sectors including energy transition, urban renewal, water management, and SME competitiveness.

The fund is overseen by Spain’s Ministry of Economy, Trade and Enterprise, with the EIB Group acting as a strategic partner to deliver investment and project management expertise. This dual mechanism not only enables fast deployment of capital but also enhances alignment with both EU climate goals and national recovery efforts.

Advancing EU Climate and Energy Goals

The operation reinforces the EIB’s expanding role as Europe’s climate bank, as articulated in its 2024–2027 Strategic Roadmap. The roadmap identifies energy security and climate resilience as top priorities. The Iberdrola project is also closely aligned with REPowerEU, the EU’s action plan to reduce reliance on imported fossil fuels and fast-track the green energy transition.

In 2024, the EIB Group more than doubled its support for electricity grid and energy storage projects, directing €8.5 billion across its areas of operation. In Spain alone, EIB financing for such projects hit €1.5 billion, twice the figure in 2023. These investments are rapidly modernising Europe's energy infrastructure and enabling greater integration of renewable energy technologies such as wind and solar.

Post-Disaster Support for Valencia and Castilla-La Mancha

In response to the widespread damage caused by the October 2024 DANA floods, the EIB swiftly made available a €1.4 billion recovery package for the worst-hit regions—Valencia and Castilla-La Mancha. This fund supports critical reconstruction works, assists small and medium-sized enterprises (SMEs), and extends help to the most vulnerable populations.

In addition to infrastructure financing, the EIB has made direct contributions to humanitarian relief efforts through NGOs like Save the Children, SOS Aldeas Infantiles, and Casa Caridad, recognizing the need for a holistic recovery strategy that includes social support.

Iberdrola’s Commitment to Local Development

The il·lumina initiative is a flagship of Iberdrola’s broader commitment to climate adaptation and regional investment. The company has deployed a dedicated team of 35 experts solely focused on developing the construction blueprint for the “electricity network of the future.” Coordinating over 1,000 operators, many of whom are locally sourced, Iberdrola is helping drive job creation and economic recovery in tandem with grid modernization.

The renovation encompasses a wide spectrum of the electricity infrastructure—substations, transformer stations, and both medium- and low-voltage networks. The project prioritizes safety, efficiency, and climate compatibility, offering a replicable model for other regions in Europe vulnerable to extreme climate events.

A Blueprint for Climate-Resilient Infrastructure

This collaboration between the EIB and Iberdrola demonstrates the crucial role of strategic investment in addressing climate-related disasters while preparing Europe’s energy systems for the challenges ahead. With smarter infrastructure, increased renewable capacity, and empowered local communities, the partnership is lighting the path to a safer, greener, and more resilient future.