Iberdrola to Build 1,200 MW Alto Tamega Hydro Complex in Portugal

Monday, Jan 26, 2009

• The Company has earmarked €1.7bn to build four

• IBERDROLA underscores its commitment to clean electricity production technologies and to Portugal, where the initiative is expected to create over 13,500 direct and indirect jobs

• The contract was signed today by Ignacio Galan, IBERDROLA’s chairman, and the prime minister of Portugal, José Sócrates, at a ceremony in the Portuguese town of Chaves

IBERDROLA has today formalised a contract for the Alto Támega hydro complex in Portugal. Its nearly 1,200 megawatts (MW) of installed capacity make it one of the largest projects of its kind undertaken in Europe in the past 25 years.

The contract was confirmed by Ignacio Galan, IBERDROLA’s

chairman, and the prime minister of Portugal, Jóse Sócrates, in a ceremony held in the Portuguese town of Chaves, close to the site of the new hydro plant that will round off the development of the Duero Basin.

The Portuguese ministers of Economy and Innovation, Manuel Pinho, and of Environment, Territorial Planning and Regional Development, Francisco Nunes Correia, also attended the ceremony along with several Portuguese regional and local authorities.

IBERDROLA was additionally represented by Director of

Operations, Iberia and Latin America, Jose Luis San Pedro;

Director of Corporate Resources, Fernando Becker; Director of Liberalised Business in Spain and Portugal, Francisco Martínez Córcoles, and the chairman of the company in Portugal, Joaquim Pina Moures, as well as other directors.

mmunications

In his speech, Galán thanked the Portuguese authorities for “the trust placed in IBERDROLA” adding that “the project we are presenting today is one of the most important hydraulic undertakings in Portugal of the past 25 years; one of the latest great hydro developments in Europe; a project of which I am sure we will be proud.

The project, continued the chairman, “has strengthened our ties and commitment to Portugal, a country to which we feel particularly close. Here we want to be a driving force for development, assisting you in meeting your energy needs and, in so doing, cooperating in your economic and social development”. The project is expected to create 3,500 direct jobs and 10,000 indirect jobs.

Ignacio Galán stressed that the initiative “represents yet another example of our long-held commitment to clean energy, and a major contribution to the electricity market in Spain and Portugal. He added that “IBERDROLA will

bring to the project 100 years of experience in the construction of large hydro plants”.

Recalling that the Group currently has around 10,000 MW in hydro capacity worldwide, Galán stressed that, with the Alto Tamega complex, “we will continue to promote ecology and sustainability by avoiding the emission of

1.2 million tonnes of CO2 per year”.

IBERDROLA, whose industrial project was chosen over those of other electricity operators in Spain and Portugal, plans to earmark around €1.7 billion in 2012-2018 to build four new dams -Gouvães, Padroselos, Alto Támega y Daivões- which can be operated for 65 years.

The new plants, two with 900 MW of pumping capacity and two pure turbine facilities (234 MW), will be able to produce some 2,000 GWh a year, 3% of Portugal’s electricity consumption and enough to meet the annual needs of around one million people.

With this contract, IBERDROLA confirms its commitment to cleaner power generation technologies that reduce energy dependency. The Company also leverages over 100 years of experience and know-how in the design, development and management of large hydro developments.

Likewise, the company’s strategy in building the Alto Tamega complex is perfectly suited to current and future energy needs in the electricity market in Spain and Portugal. Its swift response in meeting peaks in demand and its contribution to the environmental objectives set for Europe for 2020 are also worth highlighting.

At the same time, given the new plant’s location close to Galicia, where the electricity interconnections between Spain and Portugal are due to be upgraded, and its proximity to the Spanish Duero and Sil facilities, IBERDROLA will be able to streamline its operating costs.

Communications

IBERDROLA’s commitment to hydro generation goes back to its beginnings.

Today, the Company has around 10,000 MW of hydraulic capacity installed worldwide. Spain –over 8,800 MW-, the UK –over 550 MW-, Brazil –over 450 MW-, Chile –around 125 MW- and the US –almost 120 MW-.

IBERDROLA’s interest in continuing to develop facilities of this nature shows in the fact that that it has begun to build 14 more plants with a joint capacity of more than 2,000 MW: three in Spain -La Muela II, San Esteban

II and San Pedro II, totalling 1,050 MW- and 11 in Brazil, through the Neoenergia company -Baguarí, Goiandira, Nova Aurora, Corumbá III, Pirapetinga, Pedra do Garrafao, Dardanelos, Sitio Grande, Jatobá, Alto Rio Grande and Baixo Iguazú, totalling 1,000 MW.

Source: Iberdrola