Iberdrola

This article is part of the Nuclear Spin project of Spinwatch.

Background

In 2011 Iberdrola had an installed capacity across the globe of 46,026MW of which 7.5% was nuclear.It is the largest Spanish power company with an installed in 2011 of 21,989 MW in Spain (ecluding renewables), of which 3,373MW are nuclear.

In 2006 Iberdrola made an £11.6bn takeover bid for ScottishPower. The offer was formally approved by shareholders at an EGM on 30 March 2007, effectively creating Europe's third largest utility company. Iberdrola’s installed capacity in the United Kingdom in 2011 was 6,036 MW (excluding renewables), none of which is nuclear. However, Iberdrola has a 50% share, along with GDF Suez in the NuGen consortium which is planning to build a new nuclear station next to Sellafield in Cumbria.

Iberdrola is probably the world’s largest wind generator with 13,755MW of installed onshore wind capacity in 2012 across 23 countries including: Spain 5643MW installed; USA 5,366MW; 1,195MW in the U.K. and 1,536MW in the rest of the world. Iberdrola also leads in offshore development with more than 6,300 MW under development in the UK and Germany as well as with licenses recently awarded in France.

The company has subsidiaries in approximately 40 countries, including Spain, Portugal, the United Kingdom, Germany, France, Italy, Greece, Russia, China, Egypt, Canada, Mexico, Brazil and the United States, among others.

UK lobbying

Between 2010 and 2011, Iberdrola met five times with the UK Parliamentary Under-Secretary of State at the Department of Energy and Climate Change (DECC) Jonathan Marland to discuss 'energy issues'.

A Nuclear Utility

Iberdrola owns a share of 7 nuclear reactors in Spain:

• Santa Maria de Garona owned by Nuclenor which is a company jointly owned by Iberdrola and Endesa (Iberdrola’s share 50% of 446MW);
• Trillo I (48%- 1003MW);
• Asco II (15% - 992MW);
• Vandellos II (22% - 1045MW);
• Cofrentes (100% - 1063MW);
• Almaraz 1 & 2 (53% of 947MW & 956MW).

Apart from stakes in seven Spanish power reactors Iberdrola has substantial nuclear links abroad, mainly forged by its engineering division which has undertaken a range of power projects including nuclear jobs like steam generator replacement in Mexico and construction in Romania. This division is also leading the company's potential involvement with the project for new reactors in the Russian exclave of Kaliningrad, which sits on the Baltic Sea between Poland and Lithuania. RosEnergoAtom will be the majority shareholder in the Kaliningrad plant, but 49% will be available to private investors. Iberdrola is one of the utilities in talks with the Russians about taking a stake. Iberdrola is already working at the Kola, Balakovo and Novovoronezh nuclear power plants in Russia.

Romania's state-owned Nuclearelectrica is trying to complete two reactors Cernavoda units 3 and 4.In November 2008 an investment agreement setting up a new project company, EnergoNuclear SA, was signed between Nuclearelectrica, with 51% of the project, and Enel, CEZ, GDF Suez, RWE Power (each 9.15%), Iberdrola (6.2%) and ArcelorMittal Galati (6.2%). However, in 2011 Iberdrola withdrew from the project for commercial reasons.

It is a member of the World Nuclear Association. The Company is also a member of the Spanish Nuclear Industry Forum, as well as the American Nuclear Energy Institute, by virtue of its membership of the Spanish Nuclear Industry Forum.

In theory the previous Spanish Government was committed to phasing out nuclear power, but only "if circumstances permit," according to Prime Minister Jose Luis Zapatero speaking to the Spanish parliament in May 2006. There was no specific timetable. Industry Minister, Jose Montilla, had even said the government would consider lifetime extensions for existing reactors. The nuclear industry in Spain was been campaigning hard for the phase-out policy to be dropped.

The November 2011 election brought about a change of government which revisited an earlier decision to close Santa Mazria de Garona, allowing operation to continue until 2019.

Nuclear Mexico

In recent years Iberdrola may have been trying to downplay its connections with the nuclear industry, by referring to itself as the largest operator of renewable energy in the world, but it has recently been a member of a consortium, which won the contract to expand and modernize Mexico’s only nuclear plant at Laguna Verde. The consortium was made up of Iberdrola and France's Alstom. The upgrade is aimed at increasing Laguna Verde's capacity to 1,634 megawatts from 1,365 MW at present.

In February 2007 the Federal Electricity Commission signed contracts with Spain's Iberdrola Engineering and Alstom to fit new turbines and generators to the Laguna Verde plant at a cost of US$ 605 million. The two reactors were then uprated progressively by 138 MWe each from 2008 to January 2011. Their operating life was also extended to 40 years.

Once Bitten …?

On the other hand, the Spanish nuclear phase-out dates back to 1984. This left three Spanish utilities - Iberdrola, Sevillana and Union Fenosa – with a total debt of US$2,6 billion for unfinished nuclear power projects. Five nuclear power stations were in various stages of construction when the moratorium was declared: Lemoniz I and II (Iberdrola) Valdecaballeros I and II (Sevillana) and Trillo II (Union Fenosa). Although this debt was assumed by Spanish banks in 1995, Iberdrola may be wary of investing in further risky nuclear projects.

Renewable Expansion

Iberdrola claims to be the world´s leading wind energy company and one of its largest operators in renewable energies. It says it plans to invest 3.25 billion euros in renewable projects between now and 2009. The Company’s aim is to reach 7,000 MW of renewable energy during 2009, of which 1,450 MW will be located outside Spain, and 10,000MW by 2011. The Company is in the process of building its sixth wind farm in France, a wind energy project in Mexico and a solar photovoltaic facility in Spanish Province of Soria.

At least part of Iberdrola’s expansion into renewables has been done by buying other companies. Iberdrola bought Community Energy Inc, in the US during 2006, to give it a platform to enter the US wind market quickly. Iberdrola were said to be: “uniquely poised to accelerate CEI’s delivery of wind energy generation to its utility partners and customers.”

Scottish Power

The Company’s claim to be the largest owner and operator of renewable energy facilities in the world, and its clear interest in wind energy could be the reason it has been trying to buy the Scottish Utility, Scottish Power. Scottish Power, too, says its vision is to be a world leader in renewables. It is the biggest generator of onshore wind energy in the UK and is developing biomass and wave generation.

Scottish Power has not demonstrated any great enthusiasm for new nuclear reactors in Scotland. It has been reported to have no interest in nuclear generation. In its response to the Department of Trade and Industry's energy review consultation, the Company cautioned against the government becoming too pro- nuclear just because it might be wary of being too dependent on imported gas for electricity generation. It said it did not believe there needs to be any major programme of nuclear construction announced as a result of the Energy Review. The Company goes on to say that in 2015, if the economics are right and progress on other low carbon technologies demand it, then new reactors could be considered.

It would be unfortunate if Iberdrola’s purchase of Scottish Power meant the utility joined other UK utilities in lobbying for a nuclear renaissance.

Takeover Approved

The European Commission cleared the proposed acquisition of ScottishPower by Iberdrola in the middle of February 2007. Investors are due to receive some Iberdrola shares plus 400p cash for each SP share. Scottish Power chairman, Charles Miller Smith, is expected to give his views on the future of the combined operation soon, now that the EC has given its verdict, in time for a meeting of shareholders to approve the takeover in early March.

After a meeting between the Iberdrola management and Scotland’s First Minister, it became clear that the Spanish Company is committed to the existing investment programme of Scottish Power at Longannet coal-fired station (to meet the requirements of the Large Combustion Plant Directive which imposes strict limits on sulphur dioxide and nitrogen oxide emissions) and in renewables. The First Minister said: “…most importantly for the longer term they have opened up the opportunity for us in Scotland to bid for and to secure further investment in Scotland in the energy industry”. There has even been some discussion of Iberdrola cleaning up emissions from the Cockenzie coal-fired power station, which Scottish Power has slated for closure in 2015, rather than attempting to meet the Large Combustion Plant Directive.

A Merger Made on the Wind?

Forbes Magazine says Scottish Power will fit well with Iberdrola. Scottish Power has 14 wind farms throughout Britain and Ireland. Its U.S. business, PPM Energy, operates cogeneration power plants and wind farms. Iberdrola already acquired two wind farms in Britain in 2006, and it has signed a tentative agreement to build a 1,000 megawatt wind farm in northern China. It has also agreed to invest over $1 billion on wind farms in Turkey. Wind farm builder ACS is reported to be trying to increase its stake in Iberdrola from 10% to 25% in order to gain a decisive stake in the combined business, which would be the world's biggest renewable energy company. ACS had increased its share to over 14% by 23rd January 2007.

In 2004, WWF ranked global power companies according to the amount of renewable energy and gas-fired CHP installed and planned. In Europe Iberdrola and Scottish Power came out top.