Spain secures major EU grant for 1 GW pumped storage project

The European Commission has awarded nearly €650 million from the Connecting Europe Facility (CEF) to 14 cross-border energy infrastructure projects aimed at strengthening security of supply, boosting renewable energy integration, and improving the interconnection of Europe’s electricity systems. The call for proposals – linked to the first list of Projects of Common Interest (PCIs) and Projects of Mutual Interest – exceeded the initial €600 million budget.

Of the total funding, approximately €470 million has been allocated to six electricity infrastructure projects, including smart grid initiatives.

The largest single grant has been awarded to Spain: €180 million for the Aguayo II project, a pumped-storage hydroelectric plant designed to increase energy storage capacity and support renewable energy integration.

Repsol will develop the project as an expansion of the existing San Miguel de Aguayo facility in Cantabria. The project includes the construction of new underground water pipelines and the installation of four reversible turbine units, each with a capacity of 250 MW. The plant itself will be built underground, inside a mountain, and will make use of existing reservoirs.

According to Repsol, Aguayo II will become the second-largest hydroelectric plant in Spain and the third-largest in Europe. With an additional 1 GW of capacity, the facility’s total installed capacity will reach 1.4 GW, with an estimated annual production of 2,000 GWh. The project requires an investment of €900 million and is scheduled to begin operations by the end of 2030.

Other projects

Other electricity projects receiving funding include €104 million for the digitization and modernization of electricity networks between Bulgaria and Romania, and €63 million for the modernization of the Čierny Váh pumped-storage plant in Slovakia, which will combine large-scale hydropower with battery storage. A further €113 million has been allocated to strengthen the physical and cyber resilience of critical electricity infrastructure in the Baltic region, in support of synchronizing the power systems of Estonia, Latvia, and Lithuania with the continental European grid.

In the hydrogen sector, more than €176 million will support eight projects – primarily in the study phase – focused on developing cross-border hydrogen infrastructure. Notably, €120 million has been earmarked for an underground hydrogen storage facility in Gronau, Germany. This marks the first hydrogen infrastructure project funded by the European Commission and aims to facilitate the integration of renewable hydrogen while strengthening security of supply in northwestern Europe.

The funding decision was endorsed by Member States in January 2026 and will be formalized shortly. Grant agreements will be managed by the European Climate, Infrastructure and Environment Executive Agency (ECIEA). A new CEF call for energy infrastructure proposals is planned for the second quarter of 2026.