Iberdrola’s Business Stalls as CRE Denies Permit Changes

Over the past year, the Spanish electric utility Iberdrola has faced numerous restrictions coming from regulator CRE. Most recently, CRE denied the company a permit regarding the latest construction stage of a wind power plant located in San Luis Potosi. Before that, at least four permits were withheld, seemingly part of the government’s wider plans to reform the energy sector. 

Last week, CRE announced that it had denied Iberdrola’s requests to adapt construction permits associated with a wind power plant identified as E/1444/AUT/2015 located in Villa de Reyes, San Luis Potosi, with an original total capacity of 105MW. The desired change includes an adapted schedule for multiple projects that already started production in July 2016 but could be upgraded.

In November 2021, CRE refused to accept Iberdrola’s permit change from a self-supply scheme to the Wholesale Electricity Market (WEM) for its two-unit combined cycle power plant Dulces Nombres, located in Pesqueria, Nuevo Leon. The Spanish energy giant wanted to move its asset out of the government-targeted legacy scheme and into the WEM, but the denied move led to the plant’s interconnection contract to expire on January 31. This allowed CFE to rake in all of Iberdrola’s former clients in the area. However, on March 30, a judge ruled to grant Iberdrola a temporary amparo to resume operations at Dulces Nombres until questions regarding permits are fully resolved.

CRE’s refusals are linked to the administration’s proposed constitutional energy reform as part of its efforts to strengthen CFE’s role within the sector. Enerdata reported that, if approved, the reform would guarantee CFE a market share of at least 54 percent, a move that could cancel contracts of 34 private power plants and it would frame another 239 private power plants as illegal.

Iberdrola has been the target of several comments made by President Andrés Manuel López Obrador, in which he calls out the Spanish energy giant for using the self-supply model to take part in “illicit activities,” as well as lobbying against the new energy reform. During the Open Parliament forums, CFEnergía Director Miguel Reyes, expressed how detrimental the self-supply model was to the state utility’s finances. He went on to say that around 89 percent of the electric power generated in Matamoros, Monterrey, and Reynosa, Tamaulipas was managed by Iberdrola and Mitsui alone.

Under these circumstances, Iberdrola has decided to use the impasse in the industry to strengthen other business ventures, such as its distributed generation (DG) platform called Smart Solar. The company’s DG arm already has seven locations in the country, including Puebla, Veracruz, Jalisco, Queretaro and State of Mexico, according to Forbes. Currently, Smart Solar manages a total capacity of 2.5MW, but the company plans to triple this capacity, said Gerardo Rojano, Regional Manager.