Spanish Energy Giant Iberdrola to Invest $44 Billion in Grid Upgrades and Renewables Worldwide

The Spanish energy and utility giant, Iberdrola has announced ambitious plans to invest $44 billion to accelerate electrification and upgrade grids in various countries across the world. This pledge is a significant boost to its already diverse portfolio of renewable initiatives. 

The announcement follows Iberdrola’s recent Power Purchase Agreement with tech giant Amazon which cemented its commitment to supplying 159MW of electricity from the East Anglia Three offshore wind farm, which is currently in development in the North Sea. 

The primary focus of the company’s investment will be on enhancing grid infrastructure, expanding renewables capacity, and integrating storage technologies to guarantee a balanced energy supply. The best part of two-thirds of the investment will target distribution and one-third will target transmission. 

As well as committing to invest $44 billion Iberdrola also plans to recruit 10,000 individuals by 2026 to expedite the electrification drive across its portfolio.  

A considerable portion of Iberdrola’s investment, over a third (35%), will flow into the US market, with almost a quarter earmarked for the UK and 15% destined for projects in Brazil and the Iberian Peninsula.

As the parent company of Scottish Power in the UK, Iberdrola is set to create 1,000 jobs in the UK through £12 billion investment in new wind, solar, and network projects. 

According to a press statement from Iberdrola, electrification is now “unstoppable in all sectors” due to the rapid pace of decarbonisation of industrial processes and transport networks as the energy transition ramps up. Due to the speed of the transition, it is crucial that electricity network infrastructure can be located where it's needed in advance and strengthened to accommodate increasing capacity. The largest part of the investment (60%) will go to expanding and strengthening networks in the US, UK, Brazil, and Spain.

Ignacio Galan, Iberdrola’s Executive Chairman, said:

"The electrification of energy is unstoppable and will expand exponentially in the years ahead, supporting decarbonisation, boosting energy security, and reducing the volatility caused by fossil fuels. Our strategic pillars focus on networks, geographical diversification, and a balanced energy and customers mix. This plan will allow us to grow our asset base, grow our profitability, and strengthen our finances, as well as increasing dividends and driving jobs and skills and economic growth".

Ignacio Galan pointed out that customers have been driving this change for some time now. Once people move to electric power, they are not returning to fossil fuels. Those who make the change from petrol to electric vehicles do not move back and the same is true for customers who replace gas boilers with heat pumps.

The $44 billion investment includes the $2.5bn purchase of 18.4% of Avangrid announced earlier this month. Gross investment of €15.5 billion, including €5 billion contributed by partners in projects previously identified, will go to renewables projects. All projects subject to funding are already under construction. 

Iberdrola has said that more than 50% of the renewables investment will go to developing offshore wind in the US, UK, France, and Germany. A total of €21.5 billion will go towards the expansion and strengthening of grid networks in the US, UK, Brazil, and Spain. A further €1.5 billion of investment will go to boosting global energy storage systems. The company aims to reach 120 million kilowatt hours of pumped storage capacity over the next 3 years, an increase of 20% which will give greater stability to renewable energy output. 

“Our strategy will focus on delivering enhanced grid to support the security of supply, now 60% of our total investment, as well as a strong expansion of renewables capacity, driven by the substitution of fossil technologies and additional demand. We also recognise an increasing role of storage technologies to preserve the balance between supply and demand 24 hours a day.”

Not only will these strategic investments drive Iberdrola’s net profits to $5.6 billion and on to $5.8 billion by 2026 but they will set Iberdrola on a path toward achieving zero emissions from generation as soon as 2030 while creating 10,000 new roles globally in the industry by 2026 at the same time. 

Iberdrola’s network expansion plan comes at a time when investment in grids is seen as a key constituent to enabling the achievement of global climate goals.  According to a recent report by the International Energy Agency (IEA) 80 million kilometres of power lines will need to be added or replaced globally by 2040, which is roughly equal to the entire global grid today if we are to remain on track to achieve the Paris Agreement goal to limit temperature rise to 1.5 centigrade and keep up with the increasing deployment of new renewable energy capacity. This will lead to investment doubling to over $600 billion per year by 2030.

Back in 2022, Iberdrola outlined plans to take a more selective approach to renewable energy projects and this investment builds on that strategy. Italy’s Enel made a similar business decision last year. 

Iberdrola is hoping to have an additional 3MW of offshore wind in operation by 2027 building up to 5GW by the end of the decade. It also has a target to increase solar and onshore wind capacity by 6GW by 2027. The company has said that it will have a total renewables pipeline of 100GW for future development by 2030. 

If you take into consideration all the crucial factors of their investment plan you can see that Iberdrola’s $44 billion investment is certainly going to be a game changer in the renewable energy sector.