Iberdrola

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Iberdrola is a private multinational Spanish utility company, which owns ScottishPower in the UK. It is Spain's largest power company and has subsidiaries in over 40 countries.

Background

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

In 2011 Iberdrola had an installed capacity across the globe of 46,026MW of which 7.5 per cent was nuclear. It is the largest Spanish power company with an installed capacity in 2011 of 21,989 MW in Spain (excluding 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 per cent share, along with GDF Suez in the NuGen consortium which is planning to build a new nuclear station next to Sellafield in Cumbria. [1]

Iberdrola is probably the world’s largest wind generator with 13,755MW of installed onshore wind capacity in 2012 across 23 countries. 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. [2]

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. [3]

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'.[4]

A nuclear utility

Iberdrola is a member of the World Nuclear Association,[5] the Spanish Nuclear Industry Forum, [6] and the American Nuclear Energy Institute, [7]

Spain

In theory the previous Spanish government was committed to phasing out nuclear power, but only "if circumstances permit", according to former 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 campaigning hard for the phase-out policy to be dropped. [8]

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. [9]

Iberdrola owns a share of seven Spanish nuclear reactors:

  • 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). [10]

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. [11]

Iberdrola has substantial nuclear links abroad, mainly forged by its engineering division, which works on a range of power projects including nuclear jobs such as steam generator replacement in Mexico and construction in Romania.

Kalingrad and Russia

Iberdrola's engineering division also leads 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. [12] RosEnergoAtom will be the majority shareholder in the Kaliningrad plant; 49 per cent will be available to private investors. Iberdrola is one of the utilities in talks with the Russians about taking a stake. [13] Iberdrola is already working at the Kola, Balakovo and Novovoronezh nuclear power plants in Russia.[14]

Romania

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 per cent of the project, and Enel, CEZ, GDF Suez, RWE Power (each 9.15 per cent), Iberdrola (6.2 per cent) and ArcelorMittal Galati (6.2 per cent).

However, in 2011 Iberdrola withdrew from the project for commercial reasons. [15]

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. However it is a member of a consortium with France's Alstom, which won a contract to expand and modernise Mexico’s only nuclear plant at Laguna Verde. The upgrade is aimed at increasing Laguna Verde's capacity to 1,634 megawatts from 1,365 MW.[16]

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. [17]

Renewable expansion

Iberdrola claims to be the world´s leading wind energy company and one of its largest operators in renewable energies. [18]

The company’s renewable capacity exceeded 14,000MW in early 2012. Iberdrola says it is a leader in the wind power sector in Spain and the United Kingdom, holds second place in the USA, and has facilities in Brazil, Mexico, Germany, Portugal, Italy, France, and various countries of Eastern Europe. [19] Its statistics show that there in Spain it has 5643MW installed; USA 5,366MW; 1,195MW in the U.K. and 1,536MW in the rest of the world. [20]

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 bought the Scottish Utility, Scottish Power. Scottish Power also said its vision was to be a world leader in renewables. ScottishPower Renewables became the first UK developer to reach an installed generating capacity of 1,000 MW in 2011. With a pipeline including 10,000 MW of offshore wind, and the 10 MW world-first tidal energy array in the Sound of Islay, ScottishPower Renewables is one of the UK’s leading renewable energy developers. [21]

Scottish Power did not demonstrate any great enthusiasm for new nuclear reactors in Scotland. It was reported to have no interest in nuclear generation. [22] 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 went 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. [23]

In October 2011 Scottish Power received planning consent for a new 1000MW Combined Cycle Gas Turbine power station on the site of the existing Cockenzie coal power plant, in East Lothian. [24] The current coal power station is reaching the end of its operational life and will close in March 2013. [25]

Scottish Power also owns and runs Longannet in Fife, Longannet, which is the UK's second largest coal-fired power station and Europe's third largest, and among the biggest polluters in the country. It has a capacity of 2,400MW and emits between seven million and eight million tonnes of carbon dioxide (CO2) a year. Plans for the UK's first carbon capture and storage facility at Longannet were dropped in October 2011. According to the Energy Secretary at the time, Chris Huhne, the length of pipeline needed to take the CO2 to the undersea reservoirs made the Longannet scheme "unviable". [26]

Takeover approved

The European Commission cleared the proposed acquisition of ScottishPower by Iberdrola in the middle of February 2007. [27] After a meeting between the Iberdrola management and Scotland’s First Minister, it became clear that the Spanish company was 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”. [28]

A merger made on the wind?

Forbes Magazine said Scottish Power would fit well with Iberdrola. Scottish Power already had 14 wind farms throughout Britain and Ireland. Its US business, PPM Energy, operated cogeneration power plants and wind farms. Iberdrola had already acquired two wind farms in Britain in 2006, and signed a tentative agreement to build a 1,000 megawatt wind farm in northern China. [29] It has also agreed to invest over $1 billion on wind farms in Turkey. [30]

At the time of the merger it was reported that ACS, one of the world's largest building and services groups, was trying to increase its stake in Iberdrola from 10 per cent to 25 per cent to gain a decisive stake in the combined business, which would be the world's biggest renewable energy company. [31] ACS had increased its share to over 14 per cent by 23rd January 2007. [32] In April 2012 ACS sold a 3.7 percent stake in Iberdrola triggering speculation that the builder was reversing its initial strategy to gain control of the utility. Then in July ACS signed a three-year deal with Societe Generale to refinance a loan it used to buy part of a 14.85 percent stake in Iberdrola. ACS, headed by self-made billionaire Florentino Perez who also runs soccer club Real Madrid, said it will take a decision on the future of its investment in Iberdrola in three years' time. [33]

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. [34]

Notes

  1. ↑ Liberalised Business, Iberdrola website, accessed 29 August 2012.
  2. ↑ Renewable Energy Business, Iberdrola website, accessed 29 August 2012.
  3. ↑ Reuters website, Iberdrola SA. Accessed 29 August 2012.
  4. ↑ Who's Lobbying, Jonathan Marland, undated, acc 21 June 2012
  5. ↑ World Nuclear Association website
  6. ↑ Spanish Nuclear Industry Website
  7. ↑ By virtue of its membership of the Spanish Nuclear Industry Forum.Nuclear Energy Institute website, accessed 29 August 2012.
  8. ↑ Nuclear Monitor, 14 July, 2006.
  9. ↑ Nuclear Power in Spain World Nuclear Association Briefing July 2012, accessed 29 August 2012.
  10. ↑ Nuclear Power in Spain World Nuclear Association Briefing July 2012, accessed 29 August 2012.
  11. ↑ Spanish banks to assume nuclear debt, Wise News Communique, 21 July, 1995.
  12. ↑ Iberdrola looks for new build opportunities, World Nuclear News 6 August 2009, accessed 29 August 2012.
  13. ↑ Imminent construction of Baltic nuclear power plant, World Nuclear News 8 February 2012. Accessed 29 August 2012.
  14. ↑ Nuclear Power in Russia World Nuclear Association Country Briefings, 22 August 2012, accessed 29 August 2012.
  15. ↑ China may invest in Romanian reactors World Nuclear News 21 October 2011, accessed 29 August 2012.
  16. ↑ Mexico has Three Bids to Upgrade Nuclear Plant, Reuters, 19 January, 2007. Also: Alsom, Iberdrola poised to win Mexico Nuclear Power Plant Contract Forbes, 22 January, 2007. Platts Nuclear News Flashes, 2 March, 2007
  17. ↑ Nuclear Power in Mexico, World Nuclear Association Briefing, July 2012, accessed 29 August 2012.
  18. ↑ Iberdrola website, accessed 29th August 2012.
  19. ↑ Iberdrola Annual Report 2011 accessed 29 August 2012.
  20. ↑ Renewable Energy Business, Iberdrola website, accessed 29 August 2012.
  21. ↑ Scottish Power Renewables website, accessed 29th August 2012.
  22. ↑ Ian McConnell, Scottish Power warns on nuclear Government should not commit to major build, The Herald, 14 April, 2007.
  23. ↑ Our Energy Challenge – Scottish Power Response Scottish Power, April, 2006.
  24. ↑ Scottish Power Press Release 5th October 2011, accessed August 2012.
  25. ↑ Scottish Power Press Release 15th March 2012, accessed 29th August 2012
  26. ↑ Longannet carbon capture scheme scrapped, BBC 19th October 2011, accessed 29th August 2012.
  27. ↑ Nick Bevens, EU gives Scottish Power takeover the green light Scotsman 16 February, 2007.
  28. ↑ Executive Meets with Iberdrola, Scottish Executive Press Release, 5 December, 2006
  29. ↑ Spanish Scottish Match in Thin Air Forbes, 8 November, 2006.
  30. ↑ Spanish Iberdrola plans to build Wind Farms in Turkey, Turkish Weekly, 6 November, 2006.
  31. ↑ Douglas Friedli ACS targets 25% of Iberdrola Scotland on Sunday, 3 December, 2006.
  32. ↑ ACS takes Additional 2.3 pct of Iberdrola via Equity Swap Contract Forbes, 23 January, 2007.
  33. ↑ ACS refinancing deal provides some Iberdrola relief, Reuters 13th July 2012, accessed 29th August 2012.
  34. ↑ Ranking Power: Scorecards for Electricity Companies WWF Powerswitch Campaign, November, 2004.
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