Iberdrola’s Commitment Remains Even as Investments Drop

Iberdrola, Mexico’s largest private power producer, has been betting less and less on renewable development in the country. The government’s policy shift bogged down its developments, at times with discourse directed toward the company. In 2018, Mexican investment represented 16 percent of its portfolio; In 1H21, this dropped down to 2.3 percent.

2021’s first quarter renewable energy investments represent an amount totaling US$11,76 million. By comparison, Iberdrola still invested close to US$142 million in the first half of 2020, meaning that this amount dropped by more than 90 percent within the time-span of one year.

López Obrador’s efforts to reign in the Energy Reform of his predecessors has drastically changed the outlook in Mexico’s energy sector. Where the sky appeared to be the limit for private investment, backed by Peña Nieto’s private auctions and grand liberalization plans, the current government sees the previous privatization as destructive to Mexico’s economy and state-owned utility CFE. On the back of previous regulatory measures stranding in courts, the president now aims to introduce a constitutional change, despite lacking the congressional supermajority needed to enact such a sweeping alteration.

Owing to its weight in the Mexican market, Iberdrola has been a direct target of the president’s discourse on several times. “They wanted to remove CFE from the board in favor of private companies, especially foreign and corrupt entities. Imagine how much we will save if we stop subsidizing these foreign companies, like Iberdrola for example. They are heavily subsidized. Not only does CFE buy energy from them at elevated prices, they receive subsidies too,” said López Obrador in February of this year as he geared up to push a change to the electricity industry law (LIE) through congress. When the changes were suspended in court, López Obrador accused the federal judges of defending private interests over national interests.

Despite the controversy, Iberdrola highlights it is a “socially responsible” company, investing its vast resources in medical supplies and solar energy for underprivileged communities. The company’s previous investments continue to enter into operation. In 2020, the company increased its installed renewable energy portfolio significantly. “Currently, our photovoltaic and wind farms have 1,163MW of installed capacity, which represents 11 percent of the company’s total capacity and places us among the leaders in the generation of renewable energy in the country,” said Enrique Alba, CEO of Iberdrola’s Mexican arm to MBN. Cuyuaco, the company’s third photovoltaic solar plant in the country, became operational in December 2020.  The company’s total installed capacity, including for third parties, goes beyond 10,500GW, featuring 26 power plants in 13 states.