Iberdrola accelerates in the ‘green race’ with the aim of doubling its power generation power through renewable energy in the next six years. The group that leads Ignacio Galán today presented an investment plan for 75,000 million euros aimed at achieving this goal. This figure implies going from investing 7,000 million a year in 2019 to 13,000 million in 2025.
The strategy is based on three pillars: decarbonization, innovation and electrification of demand. Half of the investment plan will target the installation of new renewable energies, mainly photovoltaic and wind. The rest will focus on the empowerment of the networks to face the challenge posed by the integration of the new ‘green’ power and the self-consumption of companies and households.
Iberdrola highlights as one of its main strengths that 81% of the investment will be made in countries with a credit rating A, that is, considered solvent by the rating agency Standard & Poors. Spain will absorb a fifth of the plan, only behind the United Kingdom.
Gone are those strategic plans, such as the one for 2014-2016, in which Spain concentrated a minimum part of the investment planned by the group. In this case, the country where the group is based will concentrate more than 14,000 million euros of the planned investments.
The strategy focuses the bulk of its investments -68,000 million- in organic growth, that is, in the construction and management of new facilities. The other 7,000 million will go to finance the latest acquisition of the North American power company PNM Resources.
The growth plan will be accompanied by an efficiency plan that seeks to reduce costs and save a total of 1,500 million euros between the years 2020-2025.
If growth and savings forecasts are met, Iberdrola aspires to achieve a annual growth of 7% of your gross profit in the next five years. This would mean going from 10,100 million euros obtained in 2019 to 15,000 million in 2025. The net profit will go from 3,500 to 5,000 million with a growth of 47%, according to the estimates presented by the group.
“It is the largest plan presented by a Spanish company in such a short period of time. Investing is carried out from crises. We are going to leave the next generations a huge debt, it is our obligation to also leave them a better planet”, Galán explained during his presentation to investors.
Regarding shareholder remuneration, it will increase in line with the results and a growing floor of between 0.40-0.44 euros per share is established by 2025. The dividend policy is maintained and places the ‘pay out ‘- the part of the profit that it dedicates to the dividend – between 65% and 75%.
Iberdrola has committed to making 20,000 new hires in the next five years, although it has not specified how the workforce figure will evolve, which currently stands at 35,000 employees. The company recently presented to the unions a surplus of 1,500 positions in Spain in order to negotiate the new collective agreement.
60 gigawatts in 2025
The imposed investor in renewables will allow Iberdrola to reach 60 gigawatts (GW) in 2025, after reaching 44 GW of installed capacity in 2022. This will mean doubling its current power, with a great boost to wind technology marine, with 4 GW at the end of the period, a technology that provides five times the Ebitda / MW compared to photovoltaic solar energy and three times compared to onshore wind energy.
Likewise, the group will grow prominently in solar photovoltaic, with a forecast of 16 GW installed at the end of the period and will reinforce its leadership in onshore wind and hydroelectric, with 26 GW and 14 GW installed in 2025, respectively.
To carry out the plan, Iberdrola has a portfolio in renewables for a total of 70.5 GW distributed throughout its traditional areas – reinforced this year and with new markets such as Australia, Japan and Sweden. By technology, 30.7 GW are photovoltaic; 20.2 GW, offshore wind and 16.3 GW, onshore. Currently, the company is progressing with 7 GW construction and would have up to 11 GW under execution by 2025.
With regard to networks, the company will allocate 40% of these organic investments -a figure of more than 27,000 million- with which it will place the group’s regulated asset base at 47,000 million euros in 2025, 1.5 times its current value. This figure includes investments in transmission, which will reach 4,000 million. In addition, it plans to increase its customer base in the world to 60 million, compared to 42 million at the end of 2019.
The group will also convert green hydrogen into a strategic vector for the industrial segment. In this sense, and in line with European recovery plans, the company foresees the installation of 600 MW by 2025 – it will be 800 MW by 2027, together with Fertiberia – and it will produce 15,000 tons of renewable hydrogen.
In presenting the operational and financial forecasts to 2025 and, in line with the climate objectives of its main markets, the company has also advanced a horizon of ten years, in which it would raise its installed renewable capacity -after multiplying by 2.5 its onshore and solar wind power and by 4.5 the offshore power- and by two its regulated assets up to 60,000 million euros by 2030. At the end of this period, the base of its contracts with customers it would grow to 70 million and to 85,000 tons of green hydrogen.
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