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News Article

Iberdrola’s Renewable Energy Business Drives Global Profits

By Cas Biekmann | Thu, 10/28/2021 - 12:51

With only a quarter of the year remaining, the renewables business of leading global power producer Iberdrola has boosted its net profits by US$1.28 billion. The company’s 3Q21 financial results reflect its market power, though operations in Mexico are hampered by the government’s endeavors to curtail private influence in the energy sector.

“We remain committed to our sustainability strategy based on the fight against climate change and the creation of wealth and employment in the communities where we operate, for the benefit of our stakeholders,” Ignacio Galán, Chairman, Iberdrola, framed the results ahead of the COP26 talks. The company does not report only good news, however: its net profit has been somewhat reduced, 10.2 percent less compared to last year with €2.4 billion (US$2.78 billion). High energy prices and new regulation in Spain contributed to these factors, although Iberdrola’s renewable energy business achieved stellar results in the country regardless.

Approximately 77 percent of Iberdrola’s investments are aimed at markets outside its native Spain. 90 percent of this €7.03 billion (US$8.15 billion) was earmarked for renewable energy and smart grid projects. The company installed 3,738MW of clean energy in the past twelve months and has a further 7,200MW under construction.

In Mexico, the company’s significant gas-fired power generation capacity, consisting of modern combined cycle projects such as El Carmen, Topolobampo II and Topolobampo III, has been struggling with higher gas prices and cold spells, especially in 1Q21. Iberdrola increased its solar capacity in the country by 17.6 percent, reaching 642MW. The company’s 274MW Cuyoaco solar plant in Puebla entered operations late 2020. Although Iberdrola does not mention the regulatory challenges in Mexico directly, it saw itself needing to take legal action against government measures across 2020 and 2021.

Iberdrola got a fair amount of grief by President López Obrador himself, who frequently mentioned the Spanish power producer as an example of what he sees as unfair private dominance in the energy sector. Recently, the president has used Spain as an example of why his proposal to reform the energy sector should be voted through. “If the reform to the Constitution is not successful, then these companies end up taking over the entire electricity market. What is happening now in Spain, where the electricity rates for consumers are going through the roof, would happen to us,” said López Obrador at his morning press conference. “But in Spain companies have a lot of power. Because companies like Iberdrola wanted to keep the status quo, the government cannot do anything. With all due respect, they look like employees,” he added.

Nevertheless, the company receives praise, too. In October, it won the ‘Exceptional Company award’, granted by the Communication Council (CC) and the Institute for the Promotion of Quality (IFC), for its work to combat the pandemic in Mexico. In addition, Iberdrola retained a position in the Top 10 of Standard & Poor’s Global Clean Energy Index, an important global sustainability benchmark.

Cas Biekmann Cas Biekmann Journalist and Industry Analyst