Spanish utility Iberdrola invested a record €12 billion (US$12.5 billion) into its operations in 2024, which yielded a 31% year-on-year increase in its operational solar capacity.
As of the end of 2024, the company had 7.8GW of solar capacity in operation, in line with its 7.9GW of gas combined cycle capacity in operation. However, while its solar deployments increased 31% from the capacity installed as of the end of 2023, the capacity of gas projects in operation fell by 15.4% year-on-year, making clear the company’s goals for the future of its power generation projects.
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The only technology to see a greater year-on-year growth than solar was offshore wind, which saw a 32.3% growth, up to 2.4GW of operating capacity. The majority of the company’s projects are in the onshore wind and hydropower sectors – with 20.7GW and 13.1GW of operating capacity respectively – but the general growth in renewable energy investments helped increase the company’s total electricity generating capacity by 1.7% compared to 2023.
“We are continuing on this path through our focus on network investments in the US and the UK, using the proceeds from fossil fuel divestments to accelerate growth in both markets,” said Iberdrola executive chairman Ignacio Galán. “A strengthened business profile and better market fundamentals contribute to a structural improvement in our outlook for 2025 and beyond.”
Strong financial performances
This “structural improvement” takes the form of a forecast of “mid to high single digit growth,” according to Iberdrola documents.
The vast majority of the company’s profits were driven by a Q1 sale of 12 combined cycle power plants and a wind farm in Mexico; at the time, the company said that this sale alone added €1.16 billion to its net profit in the first quarter of the year. Iberdrola has not divested completely from Mexico, either, with 1.2GW of solar and onshore wind capacity currently in operation in the country, although its renewable electricity production did fall 3.4% year-on-year to 2,747GWh by the end of 2024.
The graph below demonstrates how Iberdrola’s Q1 2024 profits exceeded the profits generated in the first half of the previous year.
Iberdrola also made a number of announcements of new project capacity early in 2024, as it looked to expand its renewable power portfolio. These include plans to invest €2 billion into Spanish and Portuguese renewable power projects, signed with the sovereign wealth fund of Norway, and an agreement to build what was said at the time to be Italy’s largest PV plant by operational capacity.
The graph also demonstrates the company’s weaker profits in the fourth quarter of the year, which may have been driven by higher losses from amortisation than in the previous quarters. In the fourth quarter, “amortisation and provisions” cost Iberdrola €2.9 billion, compared to €1.4 billion in each of the previous three quarters, eating into the company’s profits.
This may be tied to the natural decline in productivity at the end of the lifespan of its assets, most notably its wind farms; in November, the company secured an environmental permit for its first repowering project of the 49.5MW Molar do Molinar wind farm in Spain, which has been in operation for 24 years.
Both declines in electricity generation efficiency from older assets, and the cost of end-of-life practices such as revamping and repowering, could make greater contributions to developers’ balance sheets as the renewable energy sector matures.
Mexico drives regional growth
The sale of its assets in Mexico helped deliver the greatest year-on-year growth in earnings by region, with earnings from the company’s Mexican operations soaring from €791.5 million in 2023 to around €2.1 billion in 2024. While Mexico remains the country with the smallest earnings in the Iberdrola portfolio, its earnings are now on par with the US and Brazil, which both posted earnings of €2.3 billion in 2024.
Indeed, Iberdrola posted greater earnings in Spain, the US, Mexico, Brazil and its “rest of world” category, with its only regional market to see a decline in earnings from one year to the next the UK. These trends are shown in the graph below.
Despite a lack of growth in earnings for its UK business, Iberdrola has made a number of investments into its projects in the space. In October, it became the second-largest UK electricity network operator, and signed a power purchase agreement (PPA) with Amazon for its East Anglia 3 offshore wind farm in March.
Also notable is the company’s significant divestment from owning and operating assets for other companies. Between 2023 and 2024, Iberdrola’s net owned production remained relatively stable, falling just 1.8% from 128,677GWhn to 126,344GWh, while its solar generation increased, by 15.6%, from 5,639GWh to 6,520GWh. Its net production for other companies, meanwhile, fell by 84.6% year-on-year, with onshore wind generation collapsing from 210GWh to 44GWh and even gas production falling from 39,721GW to 6,111GWh.
