Scottish Power has signed green loans totalling £1.36 billion ( US$1.82 billion ) to support the development and construction of smart electricity grids in the United Kingdom that comply with the taxonomy criteria set out in the green financing framework.

The National Wealth Fund ( NWF, formerly known as the UK Infrastructure Bank ), which operates as the UK government’s development bank, is providing £600 million. There is also a €900 million ( US$1.01 billion ) tranche.

CaixaBank, through its corporate and investment banking ( CIB ) division, led the syndicated financing, with a €400 million commitment. It acted as joint bookrunner, leading the structuring and negotiation of the financing on behalf of the financial institutions, and as green loan coordinator, responsible for the sustainable structuring of the financing and its green classification. Norton Rose Fulbright advised the NWF.

Scottish Power is a subsidiary of Spanish utility firm Iberdrola. The funding will support the delivery of seven priority transmission grid upgrade projects, designed to facilitate more renewable energy into the system, reduce congestion costs, and ultimately lower the cost of electricity for businesses and consumers across the country.

NWF’s investment will help finance ScottishPower’s development of the Eastern Green Link ( EGL ) projects 1 and 4, which aim to open up renewable energy reserves by increasing capacity to transport clean energy via interconnectors from Scotland to the northeast of England and Norfolk. The National Energy System Operator has identified EGL1 as a crucial project for the delivery of the government’s Clean Power 2030 ambitions.

The financing will also enable grid upgrades in five strategic locations across Scotland, including new substations, overhead line reconfiguration, and improvements to overhead transmission cables to increase capacity and resilience.

The loans are aligned with the company’s green financing framework, issued in December 2023, and received a second-party opinion from Moody’s under the smart grids category.

The deal has received support from the UK government through the NWF investment vehicle due to the critical nature of the assets being financed. The NWF aims to mobilize investment to drive clean energy industries and economic growth in the United Kingdom. The fund is designed to catalyze private sector investment by using flexible financial solutions that enable the government to take on additional risk and accelerate the development of key infrastructure and technologies.

Smart grids are capable of intelligently and dynamically integrating the actions of all users connected to them, i.e., those who generate energy, those who consume it, or those who do both. This type of network enables power supply to be delivered in an efficient, sustainable, affordable, and secure manner.