Iberdrola has unveiled its 2016-2020 investment plans, which include a 33% allocation for renewable energy from the EUR 22 billion planned investment in regulated activities or long-term contracts.
In total, Iberdrola plans to invest EUR 24 billion during this time period. Besides for renewables, the rest of the allocated EUR 22 billion will go to networks (46%) and regulated generation (9%). The remaining 12% will be invested in generation and retail.
By currency, the company says it will continue diversifying its business and boosting its process of internationalization: Of the planned investments, 43% will be made in U.S. dollars, 35% in British pounds, 20% in Euros and the remaining 2% in other currencies.
In terms of how profits will evolve, Iberdrola expects both earnings before interest, taxes, depreciation and amortization (EBITDA) and net earnings to increase by an average of 6% per year until 2020. On the other hand, funds from operations accumulated over the 2016-2020 period will amount to EUR 34.5 billion – exceeding investments in all businesses, the group says.
Iberdrola says it recorded a net profit of EUR 2.4216 billion in 2015 – 4.1% more than the previous year’s total. EBITDA rose to EUR 7.3059 billion, a 4.9% increase on 2014. Of this amount, the regulated businesses contributed 75%.
According to Iberdrola, these results stem from positive business performance, particularly in renewables, where EBITDA increased by 18.6% to EUR 1.5723 billion.
In Spain, EBITDA for renewables rose to EUR 473.2 million during a year in which a lower output was compensated by a recovery in prices.
The U.K. results were marked by the positive performance of operations, with a 19.3% increase in output, lifted by the positive contribution of the West of Duddon Sands offshore wind farm. As a result, EBITDA rose to 317.7 million British pounds.
Meanwhile, in the U.S., renewables EBITDA, $554.7 million, was affected by a 4.1% drop in output. In Latin America, EBITDA rose to EUR 69.9 million, thanks to the increase in capacity in Mexico (+60%) and Brazil’s output (+17.4%). Elsewhere in the world, the figure recorded for renewables EBITDA was EUR 92.1 million, boosted by a 7.4% increase in output.
In 2016, Iberdrola anticipates EBITDA growth in networks, generation and retail, whereas renewables earnings will remain stable.
The following are some of the main investments to which Iberdrola has already committed:
- U.K.: Transmission and distribution infrastructure under regulatory frameworks have been approved – until 2021 and 2023, respectively – and Iberdrola will increase renewables capacity by commissioning 1,070 MW in new offshore wind and 450 MW in new onshore wind.
- U.S.: With the new merger between Iberdrola USA and UIL Holdings Corp., AVANGRID, the new U.S. sub-holding, which operates within stable tariff regimes in New York, Maine, Connecticut and Massachusetts, will be developing new networks infrastructure projects in New York and installing over 750 MW of renewable capacity.
- Iberia: In Spain, Iberdrola will continue to deploy smart grids. In Portugal, the company will continue to develop the Alto Tâmega hydroelectric project, which will see its capacity increase by an additional 1,160 MW of storage capacity.
- Mexico: In keeping with its commitment to this country after the approval of the energy reform, Iberdrola plans to commission new combined cycle and cogeneration plants with long-term contracts for a total capacity in excess of 1,600 MW.
- Brazil: The company has approved tariff frameworks for networks up to 2017, 2018 and 2019 and plans to continue contributing to the development of clean energy, with 180 MW of projects under construction. It will also be increasing its hydroelectric capacity via its stake in Neoenergia.
Once these investments are complete, Iberdrola expects that by 2020, 81% of its gross operating profit will be from regulated businesses or long-term contracts (compared to the current rate of 75%), and over 60% will be generated in dollars and pounds.