Nortegas: up to EUR 80 million of financing for biomethane plants in Spain

The Spanish group Nortegas announced on 29 November 2024 that it had obtained financing of up to EUR 80 million for the development of biomethane plants. The funds come from the InvestEU programme implemented with the European Investment Bank. Although headlines spoke of a "grant", the description points to framework financing, that is a debt instrument, not a subsidy.

Details of the financing

The money will go to the company Nortegas Renovables, which is to build biomethane installations, mainly medium-sized, and launch a digital operations centre. The first phase of the strategy covers projects leading to the production of up to 3.5 TWh of biomethane a year by 2030. The feedstock is to be primarily slurry from nearby farms, supplemented by by-products of the agri-food industry and vegetable waste. The gas produced will be injected into the existing gas grid after upgrading. The description did not state the number of installations or their locations.

Why this matters

A gas grid operator that builds biomethane plants is a model different from the Polish one, where grid operators are mainly concerned with connections. In its national energy and climate plan (PNIEC, 2024 update) Spain has a target of 20 TWh of biogas and biomethane in 2030 and makes broad use of EIB and InvestEU instruments, which lower the cost of capital. Framework funds make it possible to speed up investment decisions, because financing is not negotiated separately for each installation.

Significance for the industry in Poland

In Poland, development banks and financial institutions are only beginning to take an interest in the biogas and biomethane sector. The Nortegas case shows that for the sector to develop faster, the following are needed: (1) guarantee instruments reducing the risk for banks, (2) standardisation of medium-sized projects, (3) certainty about connections. For Polish investors it is also relevant that in Spain the basic feedstock is slurry – as in Polish agricultural projects, for example near Ostrów Mazowiecka.

What next

Delivery of the plan depends on the availability of feedstocks, permits and arrangements with operators. The results will be shown by biomethane production statistics in Spain in the coming years. Market observers should watch whether EIB and InvestEU framework instruments will also be used in other countries, including Poland, where access to debt capital for biomethane plants remains a challenge.