Iberdrola commits to economic recovery with €75B investment plan to 2025


Iberdrola has launched a historic investment plan worth €75 billion for the period 2020-2025, with the aim of anticipating and taking advantage of the opportunities created by the energy revolution facing the world’s economies.

90% of this investment volume – €68 billion – will be organic and will be aimed at consolidating its business model, based on more renewable energy, more networks, more storage and more intelligent solutions for its customers.

The rest, €7 billion, corresponds to the recently announced acquisition of American company PNM Resources. This unprecedented rate of expenditure will represent an average investment of €10 billion per year between 2020 and 2022, and €13 billion per year in the period 2023-2025.

Iberdrola’s investment strategy -together with its efficiency policy- will continue to deliver profitable growth during the period, while maintaining its financial strength and shareholder remuneration.

Iberdrola’s investment programme for the next six years, the largest by a Spanish company, will contribute to boosting the industrial fabric and job creation in the countries where the group operates.

Iberdrola will maintain the social market economy and the United Nations’ Agenda 2030 as the cornerstones of its activity. Investments and procurement of goods and services from its more than 22,000 suppliers will contribute to sustaining up to 500,000 jobs worldwide by 2025.

Also, nearly 20,000 new recruits will join the group during the period (more than 10,000 recruits and 30,000 jobs created by 2022).

The company, which in 2019 alone contributed €8.2 billion in taxes to the countries where it operates, expects its fiscal effort to rise to €12 billion in 2025, with the annual average for the period [2020-2025] being €10.3 billion, a direct consequence of the greater activity required to deliver the plan.

Iberdrola’s historic investment plan for the 2020-2025 period will be mainly aimed at renewables – representing more than half (51%) of organic investments, some €34.68 billion – and networks, which will account for 40%, approximately €27.2 billion. The customer area will receive 9%.

Investments are focused on countries with climate ambitions and an A rating. Investments amounting to €14.35 billion will be allocated to Spain, representing a 60% increase over the previous plan and 21% of the group’s total. In this market, more than €7 billion will go to renewables and more than €4.5 billion to networks.

The United States and the United Kingdom, for their part, account for €34 billion investment, 50% of the total. Other international areas are also being prioritized, with investments of more than €11 billion.

83% of total investment is aimed at countries with an A rating, in line with the company’s strategy of investing in this type of market.

Investments in renewables will enable Iberdrola to reach 60 gigawatts (GW) installed capacity in 2025, after hitting 44 GW in 2022. This will mean doubling current capacity while giving a major boost to offshore wind technology, with 4 GW at the end of the period. Offshore wind provides 5 times the EBITDA/MW compared to solar photovoltaic and 3 times that of onshore wind.

The plan will also allow Iberdrola to grow in solar photovoltaic, with a forecast of 16 GW installed at the end of the period, and to reinforce its leadership in onshore wind and hydroelectric, with 26 GW and 14 GW installed in 2025, respectively.

Energy networks continue to be considered by the group as a key factor in the electrification of the economy and the reinvigoration of the territories. Thus, together with renewables, Iberdrola’s model and strategy will continue to give weight to regulated assets.

The company will allocate 40% of its organic investments to networks (€27 billion), bringing the group’s regulated asset base to €47 billion by 2025, 1.5 times its current value. This figure includes investments in transmission, which will reach €4 billion.

Iberdrola will continue to digitise its networks as a key element of smart grids that will ensure the massive incorporation of renewables. By the end of the period, Iberdrola will have installed more than 21 million smart meters and 83% of its assets will be in countries with an A rating.

The progressive electrification of energy uses will allow Iberdrola to increase its customer base. By the end of 2025, the company will have 60 million supply contracts worldwide.

In line with European recovery programmes, the company plans to install 600 MW by 2025 (800 MW by 2027, together with Fertiberia) and produce 15,000 tons of renewable hydrogen. The first projects in Spain -in 2021 there will already be some capacity installed- will be completed with more initiatives in other countries, leading the development of a supply chain to support the implementation of new electrolyzer manufacturers while promoting alliances with other industrial groups.

In the presentation of the operational and financial outlook for the period 2000-2025 and, in line with the climate objectives in its key markets, the company has a ten-year horizon to 2030 by which it would increase its installed renewable capacity to 95 GW -multiplying its current onshore and solar wind capacity by 2.5 and offshore by 4.5- and its regulated assets to €60 billion at the end of this period, with its client base growing to 70 million contracts and green hydrogen production to 85,000 tons.

With CO2/kWh emissions already two thirds lower than the European average, the investment strategy in clean energy and networks will lead Iberdrola to become a “carbon neutral” company in Europe by 2030 and to reduce its global CO2 emissions by 86%, to 50g/kWh, by the end of the decade (70g/kWh by the end of 2025). As an additional contribution, the company will plant 20 million trees by 2030 (8 million trees until 2025).

Along with the continued reduction of carbon emissions, the company’s ambition embraces other areas, such as investment in R&D, which will amount to €400 million per year in 2025, compared to €330 million per year in 2022 and €280 million in 2019.

Iberdrola will maintain its commitment to the creation of quality jobs and skills, increasing training hours per employee, which is already 4 times above the European average. It will also reinforce other commitments, such as gender equality – it raises its target to 30% of female managers from 20% today – and a pay gap of less than 2% by 2025.

Iberdrola will continue to implement best corporate governance practices, reinforce its cyber security actions and ensure that at least 75% of its suppliers have sustainability policies in place by 2025.

Anela Dokso

Highview Power and Carlton Power partner on CRYOBattery energy storage facility

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