NEW GROWTH PLATFORMS

Iberdrola consolidates its world leadership in renewables by backing markets with a big renewable future

#renewable energy #business #iberdrola projects

Iberdrola group has opened new platforms for growth in order to position itself in markets with a big renewable future and has strengthened its presence in the main countries in which it operates, adding medium and long-term projects to its pipeline. It has done this through 16 corporate operations, undertaken since the beginning of the COVID-19 pandemic, in line with its strategy to consolidate itself as the world's biggest renewables company, and for which it is to invest €150bn by 2030.

New platforms for growth and reinforcement in target markets.#RRSSNew platforms for growth and reinforcement in target markets.

 SEE INFOGRAPHIC: New platforms for growth and reinforcement in target markets [PDF]

NEW GROWTH PLATFORMS AND INCREASED PRESENCE IN TARGET COUNTRIES

Iberdrola, which has committed to investing 150 billion euros in the period 2020-2030, remains faithful to the strategy it has been implementing for more than 20 years by opting to reaffirm its leadership in renewables in countries with good credit ratings and legal and regulatory stability where there are opportunities for future growth.

This strategy is endorsed by the new environmental targets, renewable capacity tenders and development plans announced in the main countries where the group has a presence. This unstoppable progress towards the energy transition, decarbonisation and electrification of the economy will create new growth opportunities for Iberdrola.

 United States

The group, through its US subsidiary, Avangrid, has approved the purchase of the American energy company PNM Resources, which operates in New Mexico and Texas. The company will merge with Avangrid [PDF] to create one of the biggest companies in the US sector, with 10 regulated utilities in six states (New York, Connecticut, Maine, Massachusetts, New Mexico and Texas), and the third biggest renewables operator in the country — leader in offshore wind with the first large-scale project, contracts for 1.6 GW and lease capacity for up to 5 GW — present in a total of 24 states.

This amicable deal, valued at $8.3 bn, (about €7 bn), will mean that PNM shareholders receive approximately $4.318 bn in cash. The combination of Avangrid1 and PNM2, with 4.1 million supply points, a regulatory asset base (RAB) of $14.4 bn, over 168,000 kilometres of distribution and transmission lines, 10.9 gigawatts (GW) of installed capacity and a 19 GW renewables pipeline (data at the close of the 2019 business year), will accelerate the Iberdrola group's growth in the US.

New Mexico and Texas are states that are already familiar to the company. It currently has 1,900 renewable megawatts (MW) and 1,400 in its pipeline, as well as having begun to operate in Texas.

On a similar note, the states of New York, New Jersey and Virginia are preparing tenders for 4.9 GW of offshore wind power. Virginia also hopes to have 5.2 GW of this technology in the next few years.

 Australia

Iberdrola has acquired the Australian renewables company Infigen Energy, following a friendly takeover bid, completed in record time, giving it a 98.25 % share in the company. With this operation, Australia has become one of Iberdrola's big growth platforms. The group has become one of the leaders in this market, operating over 800 MW of solar, wind and battery-stored energy — including its own and contracted capacity — in the country, as well as a significant pipeline of projects: 453 MW under construction (including 317 MW at Port Augusta) and over 1,000 MW at varying stages of development.

Specifically, in Australia Iberdrola now has seven operational wind farms totalling over 670 MW and it operates another 560 MW through various owned, leased or capital lite assets, which include energy acquired through four PPAs (245 MW) and stored energy batteries (75 MW). Those 75 MW include the 25 from the battery which it already manages in the Lake Bonney wind farm in Southern Australia and a further 50 which it is to operate in the Wallgrove substation in New South Wales, through an agreement signed with the local distributor TransGrid [PDF].

In addition, Iberdrola has just started construction at Port Augusta, in Southern Australia, its first wind/solar hybrid plant anywhere in the world. This is a renewable facility which will combine a 210 MW installed capacity wind farm with a 107 MW photovoltaic plant and will generate enough clean energy to meet the annual demand of 180,000 Australian homes when it comes on stream, scheduled for 2021. The complex, involving an investment of 500 million Australian dollars, will create around 200 jobs in the construction stage, and on completion will provide employment for 20 people.

 Japan

The group is eyeing the Japanese market as a new renewables growth platform, specifically its emerging offshore wind power sector, after acquiring 100 % of the Japanese developer Acacia Renewables for the potential development of 3.3 GW of offshore wind power. The Japanese company, which is now called Iberdrola Renewables Japan, currently has two offshore wind farms under development with a combined output of 1.2 GW, which could be operational by 2028, and has four other projects in its pipeline, totalling 2.1 GW of capacity.

This deal has led to the creation of a joint venture between Iberdrola and Macquarie's Green Investment Group (GIG). Both partners have an equal share of these six facilities and will take on the development of the projects.

Likewise, the company has signed an agreement with local renewable energies developer Cosmo Eco Power — subsidiary of Cosmo Energy Holdings Co. Ltd. — and engineering firm Hitz to jointly develop and implement the Seihoku-oki offshore wind farm (600 MW) in the prefecture of Aomori, in north-western Japan.

With this operation, the group is increasing its pipeline in Japan to 3.9 offshore wind power GW and will be competing in rounds 2 (2021/2022), 3 and 4 (2023/2024) of the offshore auctions announced by the Japanese government, whose plans are to have between 30 and 45 GW operational by 2040.

Iberdrola's pipeline of offshore wind projects in Japan.#RRSSIberdrola's pipeline of offshore wind projects in Japan.

 Vietnam

Iberdrola is continuing its growth in Asian Pacific renewable energy markets with the purchase of Sowitec Vietnam, a company with a 550-MW renewable pipeline under development. The pipeline consists of six projects, five onshore wind farms and a 50-MW floating photovoltaic project.

The projects, set to be developed between 2022 and 2024 and with capacities ranging between 50 MW and 250 MW, are being developed as part of Vietman's energy strategy, which aims to mainly cover the growth of energy demand with renewable sources.

Also in the Asia Pacific region, Iberdrola has signed a collaboration agreement with energy company GS Energy to cooperate on renewable projects — including onshore and offshore wind farms and photovoltaic plants — in South Korea and other Asian regions.

 Brazil

The group — through its Brazilian subsidiary, Neoenergia3 Nota — has bought the distributor CEB Distribuição for around €400 m, asumming the operation of its activity. CEB-D is the electricity distributor for the Federal District of the country's capital, Brasilia, and supplies electricity to a population of 3 million. It has been under public ownership until now.

The combination of Neoenergia and CEB-D — which has been renamed Neonergia Distribuição Brasília — will cover an area of more than 840,800 km2, with a distribution network of 616,731 km in 18 states and will serve 15.3 million customers, 7.7 % more than those currently managed. The CEB-D concession guarantees 25 years of regulated business with stable and predictable income.

In addition, its investment plan in 2021 will triple the annual volume historically assigned by CEB-D and will improve the quality of the service, deploy and digitize the network and offer greater efficiency and satisfaction to its customers.

According to the president of the group, Ignacio Galán, the operation reinforces "our commitment to Brazil and allows Neoenergia to consolidate its leadership position in the country and Latin America." In addition, he has affirmed that this contributes to economic growth and job creation in Brasilia.

The group has also acquired a pipeline of 400 MW of wind power projects in Brazil, with the aim of boosting its renewable strategy in the country. Neoenergia has an installed capacity of 4 GW, of which 3.5 GW is renewable energy (88 %), and it is introducing a further 1 GW through the construction of new wind farms.

 Poland

Iberdrola sets foot in Poland to establish itself as the country's offshore wind market begin developing, which has great potential for growth in the coming decades. The company has reached an agreement to purchase 70 % of the developer Sea Wind, which has a pipeline of seven offshore projects with a capacity of up to 7.3 GW.

With this move, the group is also promoting the creation of a hub in the Baltic Sea, to act as the epicentre for offshore wind power services and local content for the company's projects in the German, Polish and Swedish arena.

Iberdrola will create a hub in the Baltic Sea that will group together its projects in Germany, Poland and Sweden.#RRSSIberdrola will create a hub in the Baltic Sea that will group together its projects in Germany, Poland and Sweden.

Likewise, Iberdrola has signed an agreement with CEE Equity Partner to purchase new renewable capacity in the country: three onshore wind farms that will contribute 163 MW, almost all associated with ten-year power purchase agreements (PPAs). With a capacity of 112.5 MW, two of the projects are already operational, while construction of the third, with 50.4 MW, will commence shortly.

 Sweden

Iberdrola has signed a majority purchase option with Svea Vind Offshore AB (SVO) for the future development of Sweden's largest pipeline of offshore wind energy projects. These projects, totalling 9 GW of capacity and at varying stages of development, will be commissioned from 2029 and are grouped around two geographical areas which are considered to be of national interest for the roll-out of wind power: Gavle (six farms totalling 5.1 GW of power) and Oxelosund (two farms with a combined power of 3.9 GW).

Thanks to this operation the company is making strong inroads into the Swedish market, where it hitherto had no presence. This is a country which, due to its immense future in renewables development, has become a strategic target for the group.

 Ireland

Iberdrola has reached an agreement with DP Energy to acquire a majority stake in its offshore wind portfolio: 3 GW, distributed in three clusters with projects off the east, west and south coast of the country, which will be eligible for the next auction for 2025-2030.

These projects are the Inis Ealga (south coast of County Cork) and Clarus (west coast of Clare) wind farms, both to be developed with floating offshore wind technology. The third, the Shelmalere project, will be located off the east coast and will be built with fixed foundation offshore wind technology. Once in operation, these wind farms will generate green energy for an equivalent population of 2.6 million Irish households.

The group is therefore positioned in the early developmental stage of the Irish offshore wind market, which has great potential for growth in the coming years. Iberdrola plans to invest up to 100 million euros in new renewable and energy storage projects by 2025. Its development projects include the repowering of the Barnesmore wind farm in County Donegal and the Rigged Hill and Corkey projects in Northern Ireland, all of which involve storage. It is also building the country's largest battery facility in Gorman (50 MW), which will become operational this year.

 Denmark

Iberdrola has joined forces with Total to enter a new offshore wind power market: Denmark. The two companies have set up a 50/50 joint venture that has been preselected by the Danish Energy Agency to take part in the tender for the Thor offshore wind farm, which, with a capacity of 800 to 1,000 MW, will be one of the largest in the world.

The partnership will bring together Iberdrola's capabilities and experience in wind power generation and Total's knowledge of offshore operations in Danish waters. The complex, which is expected to be awarded in the last quarter of 2021, will be situated in the North Sea some 20 km off the coast of Thorsminde and could be operational by 2025 or 2027.

With this operation, Iberdrola is seeking to strengthen its position in the northern European offshore market, where it already operates three wind farms with a total capacity of almost 1,500 MW: West of Duddon Sands, in the Irish Sea, which was commissioned in 2014 and has a capacity of 389 MW; Wikinger, in German waters in the Baltic Sea, in operation since 2017, with a capacity of 350 MW; and East Anglia ONE, in British waters in the North Sea, in operation since 2020, with a capacity of 714 MW.

 France

In line with its strategy of reinforcing its presence and growth in the French renewables sector, Iberdrola has bought the company Aalto Power, previously owned by Aiolos and Caisse des Dépôts et Consignations, for €100 m. Founded in 2005 and based in Marseilles, Aalto Power currently has 118 megawatts (MW) of operational onshore wind generation in France and a pipeline of onshore wind projects in the country totalling a further 636 MW, at various stages of development.

This deal provides Iberdrola with its first operational megawatts on French soil and boosts its renewable plans in the country, where it recently took over 100 % of the Saint-Brieuc offshore wind farm. The company already owned 70 % of the shares of Ailes Marines — the company responsible for the development, construction, installation and operation of this farm located in Brittany — and has now acquired the remaining 30 % from Avel Vor.

The Saint-Brieuc project involves an investment of €2.4 bn and will have a total installed capacity of 496 MW. At its scheduled opening date in 2023 it will meet the energy demands of 835,000 people.

Location of the Saint Brieuc offshore wind farm.#RRSSLocation of the Saint-Brieuc offshore wind farm.

 The United Kingdom

Iberdrola group — through its UK subsidiary ScottishPower — has bought two onshore wind projects in Scotland totalling 165 MW which will involve an investment of around €190 m. These two projects, bought from individual local shareholders of 3R Energy and the company Mitchell Energy, are in the county of South Lanarkshire, about 35 km south of Glasgow.

The first project requires the construction of a 100 MW wind farm, with 20 x 5 MW turbines with a maximum height of 200 metres. The second will make it possible to repower Hagshaw Hill, the first non-experimental wind farm built in Scotland, now 25 years old. This upgrade will increase the facility's operating capacity from 42 MW to 65 MW.

Thanks to this operation ScottishPower will be able to develop its third largest wind power complex in the country, with a capacity of 220 MW, given that the 165 MW acquired will be augmented with 55 MW from another nearby park that it was already developing and is now being reactivated. This complex, the development of which will require an overall investment of around €250 m, will be capable of supplying green energy to almost 135,000 homes.

The UK has stepped up its commitment to offshore wind with 40 GW planned between now and 2030.

 Spain

Meanwhile, Spain, another target area for the group, is working on the structuring of European funds for its post-COVID recovery, in line with the green transition, which is set to receive 37 % of €72 bn. It is also working on a green hydrogen strategy, with forecast investments of €8.9 bn in the run up to 2030, in line with EU targets to reach an installed capacity of 40 GW of this technology, also by 2030.

 

1 Avangrid, Inc., a company listed on the New York Stock Exchange, is an integrated energy company with regulated businesses and operations in 24 states which represents the US operations of its parent company, Iberdrola. It is 81.50 % owned by Iberdrola S.A.

2 PNM Resources is a company listed on the New York Stock Exchange, with a share capital as of 20 October 2020 of around $3.926 bn, a business value of $7.48 bn and an EBITDA of $586 m at the end of 2019.

3 Neoenergia, S.A. is owned indirectly by Iberdrola S.A. with 50 % + 1 share.