The Iberian Peninsula needs to invest an additional €250 billion in clean technologies by 2030, according to Cleantech for Iberia

The Cleantech for Iberia analysis indicates that the investment gap could slow down the green transition. Among the key factors to reach the additional €250 billion in investment, which would cover everything from investing in power generation to grid infrastructure, the report also stresses the importance of venture capital. Considering the GDP, population and emissions, the region would need at least an additional €4 billion in venture capital financing between 2025 and 2030 to reach levels comparable to countries such as Germany (€2.46 billion) and the U.S. (€16.6 billion).

“Mobilizing €250 billion to commercialize cleantech at an industrial scale is the

Iberian Peninsula’s passport to leadership in innovation, competitiveness and green employment in Europe,” said Bianca Dragomir, Head of Cleantech for Iberia. Although support for early-stage cleantech projects has increased through subsidies and financing, it is in the growth and scale-up phase when the investment gap widens. “The region lacks sufficient instruments to finance ‘First-of-a-kind (FOAK)’ projects, scale manufacturing capacity and support commercial deployment,” she explained. According to the report, this situation could lead to the threat of innovation moving away from the Peninsula, and delay industrial decarbonization in the region.

The diagnosis by Cleantech for Iberia regarding the need to finance innovation in Europe as the key driver for a more sustainable, reindustrialized continent coincides with BBVA Research analysis. Specifically, in a joint study with BeAbleCapital, it underscores the importance of developing what is known as ‘deep science’ (disruptive innovation in tangible, non-digital technologies, such as advanced materials, nanotechnology, biotechnology and photonics) to achieve the EU’s strategic targets, especially those related to environmental sustainability. “There is a lack of public financing to support innovations from the outset, and especially in the intermediate stages of development, until they become real, economically viable innovations,” said Julián Cubero, BBVA Research economist, who also noted that “Europe is the leader in basic research, but not in startups that turn this research into applied, marketable innovation. There is a shortage of both sufficient volume and appropriate instruments.”

Challenges facing cleantech investment in Spain and Portugal

While the Iberian Peninsula has considerable potential when it comes to innovation, Cleantech for Iberia has identified a number of obstacles that must first be overcome to foster investment in clean technologies through financing:

• Bureaucratic burden: slows the deployment of funds, delays the growth of innovative projects, and discourages international investors.
• Lack of dedicated cleantech instruments: ground-breaking projects (FOAK – First of a Kind) often fail to obtain the financing they need.
• Fragmented funding sources and limited coordination among existing instruments: while Spain and Portugal have a diversified set of financing mechanisms, these often operate in isolation, with limited coordination between public and private investors, thus creating barriers for companies seeking comprehensive financing solutions.
• Restrictive eligibility criteria for public support programs: to be eligible, in some cases companies must not have already received other aid, or must have obtained less than a certain amount of private venture capital.
• Regulatory uncertainty and lack of long-term policies.
• Absence of blended finance mechanisms.
• Lack of patient capital: According to the report, “Institutional investment from family offices, pension funds, and other actors willing to take higher risk and provide patient capital is crucial for emerging cleantech.”

Five key priorities for closing the cleantech investment gap in the Iberian Peninsula

Looking at the obstacles to be overcome, the report Capital Cleantech in Iberia: Mapping the Landscape, Mobilizing Investments recommends the following to boost investment in clean technologies:

1. Set clear policies, with compelling measures to drive demand, enabling large-scale private financing.
2. Streamline procedures, by reducing bureaucratic sticking points and creating a one-stop shop for cleantech financing under the principle of prioritizing public interest.
3. Champion policy coordination, by aligning national instruments within a coherent industrial decarbonization agenda.
4. Expand and diversify public financing, through a balanced capital structure that combines grants, equity, and blended finance; increase public guarantees, concessional loans, and co-investment platforms to reduce the risk of high-risk projects.
5. Mobilize private capital, by attracting global institutional investors with credible portfolios and stable policies; improve financing for later growth stages; provide dedicated instruments for FOAK projects; support manufacturing scale-up; and enable closer links between innovators, investors, and industry.

Cleantech moving beyond renewable energy

Cleantech for Iberia notes that while renewable energy remains the backbone of the energy transition in the Iberian Peninsula, investment is also needed in technologies such as green hydrogen, smart grids, and energy storage.

When it comes to power grids, the organization stresses the importance of a ‘Grid Deal’ to enable a “faster transition from passive, underutilized, capital-intensive networks to dynamic, flexible, efficient, and digitally operated networks in Europe.” This is essential in order to meet the rising electricity demand from transport, industry, and data centers. In Spain, according to the latest data from the Association of Electricity Companies (Aelec), capacity maps show that over 83 percent of the distribution grid is saturated, illustrating the need for additional investment to meet prevailing demand.