LINES OF BUSINESS

A business model based on Iberdrola's commitment to renewables, smart grids and innovative customer solutions

The Iberdrola group moves forward with its historic €75 billion investment programme in the run up to 2025, of which 90 % will be organic. This €68 billion of organic investment will be shared between the three lines of business: 51 % to Renewables, 40 % to Networks and 9 % to Generation and Retail. In addition the company is raising its investment to €150 billion by 2030, to triple its renewable capacity (95GW), double its network assets (€60 billion) and increase its customer base to 70 million contracts. A total of 90 % of the group's long-term plan is aligned with the European Union green taxonomy.

A SUCCESSFUL BUSINESS MODEL

 Results Presentation 2020 [PDF]     2020 Results

Current energy sector trends — the energy transition, the decarbonisation and electrification of the economy, technological innovation and improved customer connectivity — reinforce the focus of these three global businesses.

 

Renewables business.

The Renewable Energy area of the Iberdrola group — Iberdrola Renovables Energía, Iberdrola Renovables Internacional, ScottishPower Renewable Energy, Avangrid Renewables, the Renewables business of Neoenergia and Iberdrola Renovables México — is responsible for generating and marketing electrical power using renewable sources: wind (onshore and offshore), hydro, photovoltaic, biomass, etc. Nowadays, Iberdrola is a leader in clean energy — it is the top renewable energy producer amongst energy providers in Europe and the US —.

The Iberdrola group continues to make progress in its €75 billion investment programme for the period 2020-2025. 51 % of this organic investment — over €34 billion — will be earmarked for Renewables, which will reach 60 GW of installed capacity by the end of the period, as opposed to the more than 35 GW current capacity. Similarly, the company's estimates for the 2030 horizon show an increase in installed renewable capacity to 95 GW, having multiplied its onshore wind and solar power by 2.5, and offshore by 4.5.

This commitment will enable the group to give a major boost to offshore wind technology (to reach 4 GW installed by 2025), to grow in solar photovoltaic (to reach 16 GW installed by 2025) and to strengthen its leadership in onshore wind and hydroelectric (to reach 26 GW and 14 GW installed by 2025 respectively).

And to do so, the company is continuing to bolster the foundations for its future growth by increasing its renewable energy projects pipeline by 25 GW in 2020, and at the close of the First Half 2021, is currently building 8.5 GW: 2,750 MW in the United States, 2,860 MW in the territories of Iberdrola Energía Internacional, 1,700 MW in Spain, 1,050 MW in Brazil and 150 MW in the United Kingdom (with 100 MW in batteries). This will allow the company to finish the year with an additional 4,000 MW in operation, added to the 2,960 green MW commissioned in the last 12 months (1,950 MW onshore wind, 930 photovoltaic and 80 MW in batteries).

Iberdrola has one of the industry's largest renewable energies pipelines: a total of 81.5 GW throughout its traditional areas as well as new growth platforms in Poland, Sweden, Ireland, Japan, Korea, Taiwan and Australia. By technologies, this portfolio comprises: 36.6 GW photovoltaic; 25.2 GW offshore wind; 15.5 GW onshore wind; 3.4 GW hydroelectric; and 1.1 GW correspond to storage batteries. In Spain alone, the company has connection rights for 15 GW and land rights for an equivalent capacity.


 


Networks business.

The Networks area of the Iberdrola group — i-DE, ScottishPower Energy Networks, the Distribution business of Neoenergia and Avangrid Networks — is responsible for building, operating and maintaining electricity lines, substations, transformation centres and other infrastructures to transfer electrical power from the production centres to the end user. Iberdrola currently operates one of the world's largest power distribution systems, comprising more than 1.1 million km of distribution lines and more than 4,400 substations, which carry electricity to more than 34 million people around the planet.

The group has launched an unprecedented investment plan worth €75 billion for the 2020-2025 period — that will increase to €150 billion in 2030 —, 90 % of which will be organic — €68 billion —. Of the group's organic investment, 40 % for the 2020-2025 period is earmarked for networks, over €27 billion, raising the regulated asset base at the end of the period to €47 billion, 1.5 times its current value, 83 % of which will be in 'A' rated countries. This figure takes into account investments in transmission, which will reach €4 billion. At the close of the First Half 2021, 46 % of the group's investments for the period were earmarked for Networks, that is, €2,240.4 million, in line with the group's strategy to increase and strengthen key infrastructure for the energy transition and the electrification of the economy.

A significant portion of this investment has been allocated to Brazil, a country where Iberdrola has had a greater presence since the acquisition, for 403 million euros, of distributor Neoenergia Distribuiçao Brasil (formerly CEB-D), which has a concession that runs through to 2045, guaranteeing 25 years of regulated activity with stable, predictable returns. As a result, the combination of Neoenergia and CEB-D, now called Neoenergia Distribuição Brasília, will cover an area of more than 840,800 square kilometres serving 15.3 million customers, increasing the percentage managed by the Brazilian affiliate by 7.7 % compared to that prior to acquisition.

Another area strengthened by this strong investment was the United States, where construction on the NECEC line will allow renewable energy to be transported from Canada and where the acquisition of PNM Resources is expected to be completed before the end of the year; operation that will consolidate Iberdrola as one of the largest electricity distribution companies in the North American industry and the third largest operator of renewable energy. Likewise, in Spain, an investment plan to 2025 of more than 4.3 billion has been presented to help achieve the objectives of the National Energy and Climate Plan (NECP), entailing an increase of 80 % over current investments.

Investments in all target markets and the addition of CEB-D in Brazil and PNM Resources in the USA will increase the asset base in 2021 to 36 billion euros, up from 31 billion euros at the close of the Fiscal year 2020.

The regulated asset base will double for the 2030 horizon, to reach €60 billion.
 


 


Wholesale and retail business.

The Wholesale and Retail area of the group — Iberdrola Generación España, Iberdrola Energía Internacional, ScottishPower Retail Holdings, Neoenergia Comercializaçao and Iberdrola Generación México — focusses on the production of electricity through building, operating and maintaining generation centres, and the purchase and sale of power on wholesale markets. It is likewise responsible for marketing the end user with power and additional services and products.

Of the organic investment in the 2020-2025 plan, 9 % will go to this area, €6 billion. By the end of the period, the company will have contracts with 60 million customers worldwide. The trend will continue rising, and by 2030, the electrification of energy usage will result in Iberdrola increasing its customer contract base to 70 million, compared with 43.8 million at the close of the Fiscal year 2020, to whom it will offer smart and cutting-edge solutions for the home (energy storage and heat pumps, self-generation and electric mobility) and for industry (Smart Solutions, electrification processes and green hydrogen). Services to customers will also increase to 40 million by 2025, compared to 25 million in 2019, with strong growth in Smart Solutions, which will see a twofold increase to 22.6 million.

At the close of the First Half 2021, there has been a significant expansion in smart home and electric mobility solutions: Smart Mobility uptake has almost tripled and Smart Solar registrations have multiplied by 2.3, while Smart Home and Smart Clima have multiplied by 1.2 and 1.4 respectively.

The EU regulation regarding the Integrity and Transparency of the wholesale energy markets (REMIT) requires all generators to publically declare as quickly as possible and in as much detail as possible the current status of power facilities. Iberdrola encourages disclosing this information as accurately as possible in this web page.