The Iberian Peninsula Needs up to €50 billion in Additional Cleantech Investments per Year

To reach the 2030 decarbonization targets and remain competitive in the European clean industrial transition, Spain and Portugal need up to €50 billion per year in additional public and private investment. This is according to the report, ‘Cleantech Investment Plan for the Iberian Peninsula’ by Cleantech for Iberia, which underscores that companies need greater financial support in the scaling phase to launch their projects.

Although the region benefits from substantial public capital, Cleantech for Iberia indicates that this financing mainly focuses on technologies in early-stage or more mature (and therefore bankable) phases of development. This creates a gap in the commercial scaling stage and in First-of-a-Kind (FOAK) projects, or technological initiatives implemented for the first time that sometimes fail to advance because they are not able to secure investments due to the risks and uncertainties around future revenue.

Compared to similar economies, the Iberian Peninsula needs to mobilize at least €4 billion in additional venture capital by 2030 across the public and private sectors. “A bottleneck persists in the advanced and first-of-a-kind (FOAK) roll-out stages, where projects struggle to reach the final investment decision (FID),” Bianca Dragomir, Director of Cleantech for Iberia. She also noted that “the challenge is not a lack of public financing, but the misalignment with the risk portfolios of clean technologies in the growth stage.”

Cleantech for Iberia feels that “the Iberian Peninsula is currently at a key moment for green industrialization” due to the manufacturing resurgence in Europe. This offers Spain and Portugal “a unique window to position the manufacturing and deployment of clean technologies at the center of their reindustrialization agendas.”

For the Director of Cleantech for Iberia, the coming months will determine whether Spain and Portugal “become a global hub for cleantech deployment or whether they lose projects and talent to other jurisdictions.”

Investment plan for cleantech in Spain and Portugal

Cleantech for Iberia suggests organizing existing tools to attract private capital and promote cleantech investment in the peninsula. The report points to four key solutions:

Bankable demand and revenue uncertainty: through instruments that turn policy aims into predictable, bankable cashflow. These include auction mechanisms such as contracts for difference (CfD) for hydrogen, renewable gases and storage when appropriate, as well as green public procurement that encourages actors to invest in clean technologies.
Capital in advanced stages and for FOAK projects: creating a joint platform, for example, or establishing other coordinated measures that provide minority anchor capital that is patient and risk-tolerant, helping implement first-of-a-kind projects and enabling commercial rollout. Always in line with timelines typical of hardware-intensive technologies.
Public financing and subordinated instruments: such as tailored public loans or subordinated debt. The idea is that these instruments sit between grants and pure equity and allow projects to progressively refinance with private senior debt as risks decrease.
Specific guarantees for clean technologies: mechanisms that cover residual risks, improve financing and allow banks and institutional investors to participate in earlier stages of the rollout curve, without penalizing projects for receiving public support in early stages.

Initiatives such as ‘Spain Grows,’ which will start with around €10.5 billion of public capital, or the Portugal Modernization Fund, are providing renewed momentum for cleantech financing in Europe. According to the report, “a shared desire to anchor industrial competitiveness to clean production and position the Iberian Peninsula as a central hub for low carbon European value chains,” ranging from steel and green chemical products to advanced ceramics, glass and sustainable fuel.