Iberdrola speeds up global growth with investments of €34 billion by 2022
CEO of Iberdrola
Through this plan we give a major boost to the irreversible transition towards a low-carbon energy model. Our capital expenditure grows by 2 billion euros and our generation capacity will be 40% higher by the end of 2022
- Commitment to a decarbonised model: 86% of total investments will be in regulated or long-term contracted activites. Iberdrola to invest €16 billion in Networks and €13 billion in Renewables
- Over 10,000 new megawatts executed or being built world-wide: of which nearly 65% - 6,606 megawatts - is renewables
- Adding to offshore wind farm projects: a pipeline of over 10,000 megawatts in the U.S. and Europe enhances Iberdrola's global leadership in offshore wind
- Leading the energy transition in Spain: the Group will invest €8 billion over the period, 40% above previous plan, of which some €4.2 billion will be in renewables. The Group plans to grow three-fold its wind and solar capacity in the country with at least 10,000 new megawatts in operation by 2030
- Future growth: the Group will have €9 billion of capital in progress by the end of 2022 which guarantees its long-term growth
- Former upper part of the range becomes the lower part of the new range for 2022: the Group expects to obtain net profit between €3.7 billion and €3.9 billion in 2022, 30% up on 2018, and an EBITDA of over €12 billion
- Dividend increases: shareholder remuneration will continue to increase in line with earnings, with growing minimum annual pay-out reaching a floor of €0.40 gross per share by 2022
- A strong balance sheet to tackle new opportunities: cash flow to net debt ratio, expected to exceed 24% by the end of 2022, will enable the company to consider new projects in onshore and offshore wind, transmission and distribution
Iberdrola is stepping up global growth with investment rising to €34 billion in the 2018-2022 period. This breakthrough means an upward revision from initial outlook, made possible by accelerated delivery of targets and new opportunities in the various countries where the company operates.
The updated 2018-2022 Outlook announced today in London follows the news that for the first time, Iberdrola has broken through the 3 billion-euro barrier in terms of net profit for a financial year - €3.014 billion in 2018 - within a context that is highly favourable to ensuring organic growth in the main geographical areas where it is present: Continental Europe (with the significant role played by Spain), United Kingdom, Brazil, United States and Mexico.
As the Group's Chairman, Ignacio Galán, explained “through this plan we give a major boost to the irreversible transition towards a low-carbon energy model. Our capital expenditure grows by €2 billion and our generation capacity will be nearly 40% higher by the end of 2022.”
In particular, of the €34 billion total investment, 86% will be in regulated or long-term contracted activities, in line with the company's strategy of focussing on businesses characterised by stable and predictable returns. Thus, 47% of the overall amount - €16 billion - will be invested in Networks and 39% - €13.3 billion - in Renewables. Generation and Supply will receive 11% of the total - €3.8 billion -. As a result, Iberdrola will have increased its installed capacity by 29% throughout the implementation of its strategic outlook.
The company is currently advancing development and installation of 10,113 new megawatts (MW), of which 65.3% - 6,606 MW - correspond to renewable energy projects. In addition, by 2023, Iberdrola will have €5.3 billion of capital in progress, mainly in the offshore wind farm projects of Saint Brieuc (France), Vineyard Wind (USA) and Baltic Eagle (Germany), as well as the Tâmega hydroelectric complex in Portugal.
Practically all investment in Networks - around 98% - is already secured thanks to the regulatory frameworks established in the different countries. In consequence, the value of Iberdrola's regulated assets will have increased 34% by 2022, with the total standing at €38.9 billion.
In the three business areas - Renewables, Networks, and Generation and Supply - capital in progress towards the end of 2022 will be €9 billion which will contribute to profit generation beyond that date.
In Renewables, Iberdrola will have 9,900 new MW on stream by year-end 2022 compared to the 2017 close. The company will also reach 90 gigawatts per hour (GWh) of storage capacity in 2022, an increase of 20 GWh on current levels. Storage through pumped hydro technology is the key to ensuring greater penetration of clean energies in the power system.
With regard to currency spread, the company will continue to maintain a diversified profile: 36% of investment will be in dollars, 29% in euros, 17% in sterling and 18% in Brazilian reais.
New opportunities - leading the energy transition
In a context of growing energy demand, the energy transition requires the implementation of a clean, reliable and intelligent energy model which facilitates the electrification of the economy. Thanks to innovation and technological progress, this transition is now possible at a lower cost, accompanied by ever-greater customer empowerment.
In this sense, new opportunities are opening up for Iberdrola. The company will be able to take on new renewable energy projects in all countries where it operates, as well as commissioning new transmission and distribution assets in the United States, Brazil and the United Kingdom.
In Spain, where the Government recently presented the Integrated National Energy and Climate Plan (NECP) for 2021-2030, the company will further consolidate its position at the forefront of renewable energy, leading the energy transition. The company will have 3,000 MW of new wind and solar power on stream by 2022 - up 51.9% from 2018 year end - and a total of 10,000 new MW by 2030, meaning that the company's wind and solar generating capacity will have grown three-fold. Iberdrola currently has 700 MW under construction, plus 2,500 MW under development and a project pipeline of over 7,000 MW.
Over 2018-2022, the company's total investments in Spain will be €8 billion, a rise of 40% from the initial plan estimates. New renewable initiatives in Spain will double the investment figure to €4.2 billion over the four year span. To deliver them, a long-term regulatory framework needs to solidify, thus providing certainty and stability to investments.
New opportunities are also emerging for Iberdrola in the offshore wind power industry. The company has a total project pipeline of over 10,000 MW, with new projects located in the United States, United Kingdom, Germany and France. Currently, the company has awarded projects which together with installed capacity will reach over 2,000 MW in 2022 and nearly 1,000 additional MW thereafter.
Higher earnings and dividend, keeping up financial strength
The new investments planned for 2018-2022 allow Iberdrola to step up expansion and improve its earnings forecasts for the period. The company expects to close 2022 with net profit between €3.7 billion and €3.9 billion, an increase of 30% on 2018 and an EBITDA in excess of €12 billion. Thus, former upper part of the range becomes the lower part of the new updated range for 2022.
Such results will allow Iberdrola to meet its commitment to increasing its annual shareholder return in line with earnings. Iberdrola will set growing minimum annual pay-outs, reaching a floor of €0.40 gross per share by 2022.
The implementation of its Outlook as revised today in London will also mean the continuous improvement of efficiency levels and implementing a non-strategic asset rotation plan, whose value will increase to €3.5 billion over the period. As a consequence of the above, the company will maintain balance sheet strength: the cash flow to net debt ratio will exceed 24% in 2022.
Iberdrola is a global energy leader, the number one producer of wind power, and one of the world's biggest electricity utilities by market capitalisation. The group is present in numerous countries and supplies energy to over 100 million people mainly in Spain, the United Kingdom (Scottish Power), the USA (AVANGRID), Brazil (Neoenergia) and Mexico. With a workforce of 34,000 and assets in excess of Euros 113 billion, it posted revenues of 35.0759 billion euros and a net profit of 3.014 billion euros in 2018.
Iberdrola is leading the transition towards a sustainable energy model through investments in renewable energy, smart grids, large-scale energy storage and digital transformation, offering the most advanced products and services to its customers. Thanks to its commitment to clean energy, Iberdrola is one of the companies with the lowest emissions and an international benchmark for its contribution to the fight against climate change and for sustainability.