Iberdrola, the Spanish utility specialising in renewables, has announced plans to invest €41bn over the next three years, with the lion’s share to go on modernising and extending power grids in the US.
Ignacio Galán, the company’s executive chair, said in a statement that the electrification of energy was “unstoppable” and would expand exponentially to support decarbonisation and energy security.
He said: “Our strategic pillars focus on networks, geographical diversification and a balanced energy and customers mix. This plan will allow us to grow our asset base, grow our profitability and strengthen our finances, as well as increasing dividends and driving jobs and skills and economic growth”.
The move signals a more selective approach to the development of renewable generation, and a shift to the more predictable returns available from investment in transmission and distribution infrastructure.
As Galán said, there is wide scope for investment in grids that were developed to deal with fossil fuel power stations, and now have to accommodate ever more intermittent generation from wind and solar.
The European Commission has estimated that the EU requires investment of €584bn to upgrade its electricity system.
In October, the US announced that $3.5bn would be spent on 58 projects in 44 states to upgrade the US’s ageing grid, but much more will be needed in the future.
A recent report from the North American Electric Reliability Corporation estimated that more than 300 million people could face power shortages in 2024. It also found that demand was rising in response to the electrification of heating and transportation systems.
Iberdrola’s money will be channelled into projects already under construction, and will include $2.5bn to buy outstanding shares in US subsidiary Avangrid.
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