Iberdrola has pledged to invest $90bn over the next five years, as it prepares to make the most of a favorable time to access funding for clean energy and digitalization enterprises. Also, the Spanish utility conglomerate may be attractive for rising ESG funds, as a profitable and environmentally sustainable business. Considering the positive trend in renewable energy, most of this substantial investment will go into promoting organic growth by scaling up generation capacity as demand is expected to rise significantly. Additionally, it will be open to interesting M&A opportunities that may arise in emerging markets where Iberdrola is not a key player yet.
The Green Deal action plan presented by the EU commission in December 2019, has set a comprehensive and ambitious plan to achieve net-zero emissions in the continent by 2050. For that matter, the commission has created a $1.18tn investment plan to promote environmentally sustainable projects, and a clean energy and innovation champion like Iberdrola will be a beneficiary from this investment plan. The Spanish energy company has already projects underway that focus on energy digitalization, transition to electric mobility and sustainable infrastructure, which could be further developed and rolled-out across the continent within the EU green deal framework.
Across the pond, this also looks like a crucial time for renewable energy development in the USA. Almost a quarter of the total energy is generated by renewable sources, and they have managed to keep increase installed capacity in the United States while the fossil fuel energy struggles to get new contracts. However, the creation of a massive infrastructure committed the production of renewable energy, such us Iberdrola-owned Vineyard Wind 1 project, will take the segment to the next level and allow it to phase-out fossil fuels. Whilst state-wise there has been a significant shift to sustainable enterprises in some of the most economically relevant states in the US, the extent of success by new energy majors will be determined by regulatory changes at a federal level. The recent results of the US elections may imply a shift in environmental regulation in general, and transition to clean energy in particular. In fact, it was the first point of the President-elect “Day One” plan, the signing of several executive orders to put the largest economy in the world, on track to net-zero emissions by 2050. Although it is still unclear the extent to which this push in sustainability policy will actually materialize, it will certainly play to the strengths of a well-positioned Iberdrola.