Iberdrola says US beats EU as green investment magnet

According to one of the world’s largest energy companies, the US is ahead of the EU as a more attractive destination for clean energy investment due to different government responses to the cost of living crisis.

Iberdrola President Ignacio Galán said the balance has changed as the environmental incentives in the new US policy, despite the EU taking decisive action first to decarbonise. Inflation control law It has become a “very” attractive place to invest.

In an interview with the Financial Times, the head of the Spanish group lamented the EU’s proposed power generation revenue cap and Spain’s planned windfall tax on its biggest energy companies, including Iberdrola. “The key issue is that these measures can create uncertainty,” Galang said.

His comments show rising global tensions as governments continue to push for a cleaner energy transition, taking different paths to manage rising costs of living and a slowing economy. I’m here.

Galán was speaking before Iberdrola’s 2023-25 ​​investment plans were announced on Wednesday. Iberdrola is Europe’s largest utility, surpassing Italy’s Enel by market value, and has already expanded from the US to Brazil and Australia.

Iberdrola will invest €36 billion in renewable generation and power networks, of which the US will receive 34%, with the largest share. It is also nearing the final stages of a €9 billion acquisition. US Group PNM Resourceswill receive €2 billion of investment, raising its US investment share to 47%.

Prime Minister Galang welcomed an economic package passed in August, the Inflation Reduction Act, which offers $370 billion in tax breaks for wind and solar power, batteries and other green technologies. “The U.S. government took a long time to take the climate change theme seriously. But now they are committing to it with all the necessary support,” he said.

He praised US legislation that promotes electrification with carbon-free vehicles and heating systems and provides a solid framework for the next decade.

A good example of that scale, he said, is green hydrogen, an alternative fuel produced using renewable energy. The US is providing about $100 billion in aid to produce it, while the EU, which has green hydrogen in its long-term plan to reduce Russia’s dependence on gas, is providing just $5 billion. There is

But Iberdrola is far from abandoning the EU. In the 2023-25 ​​investment plan, Spain will get 17% of the capital, with other her EU countries including France, Germany and Italy taking a combined 12%. The UK, which owns ScottishPower, receives 20% of her.

Iberdrola aims to participate in a range of green projects funded by the EU’s €800 billion coronavirus recovery fund, which began distributing last year, and Galan said the European Commission will work to promote more renewable electricity. emphasized that they are working on

But he wasn’t optimistic about how the crisis triggered by Russia’s invasion of Ukraine and the aftermath of record-high gasoline prices would be handled.

The EU is aiming at the wrong target with its proposal to impose a €180/MWh cap on electricity revenues for non-gas generators, he said. “The energy crisis is about gas,” he said. “Intervening in the electricity market instead of the gas market will result in less investment in clean electricity and ultimately more reliance on gas.”

Such a move denied investors the “certainty, stability and predictability” they needed, he said. “If you intervene at 180 euros, why not 67 euros, which is the upper limit in Spain? And why not 120 euros tomorrow?”

The EU has proposed a windfall tax only for the oil and gas group, while Spain has proposed a temporary 1.2% tax on the income of the country’s largest energy group.

Despite the Socialist-led government’s rhetoric of “excessive” corporate earnings, Galán said Iberdrola’s earnings in Spain fell 14% in the last quarter from the same period last year. This is mainly because we sell much of our electricity through long-term contracts at a fixed price based on production costs, with an average wholesale price currently around €70/MWh.

If the tax happens to go into effect at will, he said, “I will go to court to protect the interests of our shareholders.”

Asked if the tax is leading to a decline in investment in Iberdrola in Spain, he said: Not just for us, but for everyone. ”

In the nine months to the end of September, Iberdrola reported a global net profit of €3.1 billion on revenues of €37.9 billion.

The United States, which owns Avangrid, is the company’s largest investment destination, but its share of new funds this year is 25%, lower than the percentage set for 2023-25. Latin America will receive 14% of the total over the next three years.

Garan said: