EU allocates funds to AGUAYO II reversible pumped-storage hydro plant

By Global Infrastructure Sherpa · Feb 3, 2026

Financing Hydro announced Spain Feb 3, 2026

USD213M

Deal Value

AGUAYO II reversible pumped-storage hydro plant

Project

The European Commission will provide $213 M to Spain’s AGUAYO II reversible pumped-storage hydro plant, which improves renewable energy generation without expanding existing water reservoirs.

Deal Analysis

The European Commission's allocation of $213 million to Spain's AGUAYO II reversible pumped-storage hydro plant represents a significant investment in renewable energy infrastructure. This financing aims to enhance renewable energy generation capabilities without requiring the expansion of existing water reservoirs, potentially minimizing environmental impact. The involvement of both the European Commission as a lender and E energija as an investor underscores the project's importance in the EU's broader energy transition strategy. This deal is notable for its focus on pumped-storage hydro, a technology that provides crucial grid stability and energy storage solutions to support the increasing penetration of intermittent renewable sources like solar and wind. The project's location in Spain, a country actively pursuing renewable energy targets, further highlights its strategic importance. The financing commitment from the European Commission signals confidence in the project's viability and its contribution to the EU's climate goals.

European Commission provides $213 million in financing.
Project focuses on reversible pumped-storage hydro technology.
E energija involved as an investor, indicating private sector confidence.
Located in Spain, a key market for renewable energy development.

Market Context: The renewable energy sector, particularly hydro power, is experiencing renewed interest as countries strive to meet ambitious climate targets and ensure grid stability. Pumped-storage hydro is a critical technology for balancing intermittent renewable energy sources and providing reliable energy storage.

Source Intelligence

KEY DETAILS

The European Commission will provide nearly $768 M (€650 M) in grants from the Connecting Europe Facility (CEF) to finance 14 cross-border energy infrastructure projects. These include six electricity projects and eight hydrogen initiatives, aimed at improving EU energy security, integrating renewables, and enhancing system resilience. For electricity infrastructure, almost $555 M (€470 M) is allocated. Hydrogen projects will receive over $208 M (€176 M) . The grants mark the first time CEF funding supports hydrogen works projects and infrastructure protection. Selected projects have been designated as Projects of Common Interest (PCIs) and Projects of Mutual Interest (PMIs), enhancing cross-border connectivity, climate-neutral energy integration, and Europe’s competitiveness. The formal adoption of grant agreements will follow, with the next CEF call for energy infrastructure proposals planned for Q2 2026.

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Deal Size

The largest grant of $213 M (€180 M) will support Spain’s AGUAYO II reversible pumped-storage hydro plant

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Location

Spain’s AGUAYO II reversible pumped-storage hydro plant

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Announcement

February 3, 2026

PARTIES MENTIONED IN SOURCE

European Commission investor

"The European Commission grants $768 M to 14 cross-border electricity and hydrogen projects to strengthen grids, resilience, and renewable integration."

high quality Enriched Feb 19, 2026