Iberdrola Doubled Its Investment Plan To $150 Billion And Extended It To 2030
2021-02-24 | by CusiGO
Iberdrola will expand its current investment plan from $75 billion in 2025 to $150 billion in 2030. In this way, the company expects to reach 95 GW of installed capacity by the end of this century and will triple its existing capacity to 60 GW by 2025. It will also have a regulatory asset base of EUR 60 billion, reaching EUR 47 billion by 2025. By the end of 2020, the value of these assets will be $31.1 billion. By 2021, with the investment of integrated businesses (PNM resources in the United States and ceb-d distributors in Brazil), the value of these assets will increase to $36 billion (an increase of 16%).
Last year, the company accelerated its investment to meet the challenges of energy transformation, reaching a record $9.246 billion, an increase of 13% over the previous year. 91% of them are used for renewable energy projects and power grid development.
Investment efforts and business development increased the net profit for the current fiscal year to EUR 36170.7 million, an increase of 4.2%. If the impact of covid-19 was not taken into account, the net profit for the current fiscal year would have been EUR 238 million, an increase of 10%. It is estimated that the investment and business development by 2030 will make Iberia achieve a net profit of 5 billion euro and 7 billion euro in 2025 and 2030 respectively.
In 2021, the company expects net profit to be between 3.7 billion and 3.8 billion. The performance growth has enabled Iberia to propose shareholder compensation of 0.42 euro per share in 2020, which is 5% higher than that in 2019. The board of directors shall propose at the general meeting to approve an additional dividend distribution of Euro 0.252, which shall be increased on the basis of the dividend payable of Euro 0.168. By 2021, it provides for a dividend of 0.44 euro. The company expects a dividend of EUR 0.56 per share in 2025 and about EUR 0.75 per share in 2030. The dividend policy means that shareholders’ compensation will increase by 40% in the period of 2019-2025 and by about 90% in the period of 2019-2030.
After deducting the impact of $218 million of covid-19 and the exchange rate impact of $487 million, the gross operating profit (EBITDA) was $10.715 billion (up 8%). By business, 75% of the total amount comes from regulated regions (networks) and renewable energy, while by geographical location, 76% comes from rated countries. Offshore wind power contributed US $585 million in this chapter, an increase of 72%.
During the year, the company led by Ignacio s á nchez gal á n installed 4000 megawatts (MW), nearly 3000 megawatts of renewable energy and 35000 megawatts of renewable installed capacity. As a result, Iberia’s emissions will be reduced by 11% to 98 g CO2 / kWh by 2020, and its commitment to achieve carbon neutrality by 2030 has been confirmed. Iberdrola will increase its portfolio by 25 GW to 74.4 GW in 2020. The group already has 17.4 GW of green building and development, of which 8.7 GW is for new solar power plants, 4.5 GW for onshore wind power, 2.6 GW for offshore wind power, 1.2 GW for hydropower and 400 MW for batteries.
During the exercise, offshore wind was identified as one of the group’s growth vehicles: it installed 1.3 GW, which will triple with the construction of 2.6 GW. The technology’s current portfolio is 19 GW, of which 9 GW is ready and 10 GW is planned to be developed in Sweden, Japan, Poland and Ireland. In 2020, offshore wind power projects contributed US $585 million to EBITDA after 72% growth, and will reach US $2.3 billion by 2030.
On the market side, Spain’s worst development has been offset by international growth, which accounts for two-thirds of its EBITDA. Affected by the crisis, power demand in the Iberian Peninsula fell by 5.1%. By 2020, Spain’s Iberdrola has cut its EBITDA by 5% and 13%, respectively. Nevertheless, investment grew 21% to $2.1 billion, reflecting the country’s commitment to a green recovery.
The company also improved its major financial ratios and strengthened the soundness of its balance sheet: operating cash flow increased by 1.6% to $8191.6 million, and debt decreased by 6.4% to $351.42 million. In 2020, it issued $24.5 billion in green or sustainable bonds. The working capital is US $17.4 billion, meeting the capital demand for 24 months. Recently, it issued the largest ever green hybrid bond: 2 billion euros, with the lowest cost (1.45% and 1825%).
The growth in the next few years will go hand in hand with the growth of the customer base. Iberia has registered 43.8 million contracts by 2020 and is expected to increase to 48.5 million by the end of 2021. About 60 million in 2025 and 70 million in 2030. In this case, customized and intelligent solutions will generate a net profit of 4% by 2020.
For Iberia, another major growth vehicle will be green hydrogen. It has developed projects to decarbonize or heavily motorize industry and transport in Spain and the UK, and to develop value chains. The company has also submitted 53 projects to the next generation EU plan, which will start a $2.5 billion investment to achieve an annual output of 60000 tons.
These projects will accelerate investment, economic recovery and employment in the short term, and accelerate the transformation of industrial clusters in the medium term. The company has led 150 proposals to mobilize $21 billion through electrification in Spain to invest in green power generation, smart grid, storage and energy efficiency projects. It is expected to create 45000 jobs, mobilize 350 enterprises and contribute to Spain’s GDP growth 1.5%。 In addition, the balance of payments will improve by about 1 billion euros a year.
Iberdrola will continue to strengthen its commitment to ESG principles – environmental, social and Governance – which form the basis of its business model. As the leader and pioneer of energy transformation, it has been the engine of social transformation and the reference point of good governance and transparency.
This bet enables the group to continue to act as an engine of green economic recovery: by 2020, it will buy 14 billion euros of products from suppliers, help maintain 400000 jobs in the value chain, and recruit 3800 people throughout the year. In addition, the financial contribution in this financial year is 7.5 billion euro in the world, of which 3.4 billion euro comes from Spain, accounting for 43% of Spain’s pre tax profit and tax revenue.