Spain's Iberdrola targets growing data center sector; record renewables output in Q2

Spain's Iberdrola plans to become more involved with the installation of new data centers going forward, having established a new subsidiary to manage the growing business, Executive President Ignacio Sanchez Galan said July 24.

Demand from the sector could double worldwide by 2030 and treble in the US market, where Iberdrola has an extensive network and renewable business, the company estimates.

The burgeoning sector offers positives to the company both in terms of new demand points and for the opportunity of network development, Sanchez told analysts on a conference call.

Iberdrola already has 8 TWh/year of supply contracts with global data groups such as Amazon.

It plans to unveil a new business plan in December, spanning 2026 to 2031, in which Sanchez said he expects to see "huge investment" to reflect the growing need for grid investment.

In Spain, for example, he estimates that network investment will have to treble if the country wants to hit its 2030 National Energy and Climate Plan targets.

In the first half of 2024, Iberdrola increased its investment by 16% year on year to Eur5.3 billion, with 51% spent on networks and 41% on renewables, it said in its financial report.

This has boosted its total asset base 7% year on year to Eur43.3 billion.

The new plan should build on current growth sectors, such as storage, electrification and power purchase agreements, the company said.

To date, the company has 35 TWh committed to PPAs after signing 3 TWh in the last 12 months, and counts important data companies such as Amazon, Meta, Apple and Microsoft among its counterparties.

The Platts-Pexapark Index for a standard 10-year Spanish solar PPA was Eur33.99/MWh on July 24.

Renewables additions

In renewables, Iberdrola said it expects to add 1.6 GW of new capacity in the second half, following global additions of 2.2 GW in the first half.

Renewable production registered a record 21.1 TWh in the second quarter, up 13% year on year.

The capacity additions include 1.5 GW of mostly solar additions in its domestic Spanish market.

However, pumped storage hydro was the standout performer in the Spanish market in the first half of the year, with output up 7% year on year at 3 TWh.

The company's hydro reserves ended the first half at 77% full, up from 53% at the same point in 2023, it said.

The company noted that storage was benefitting from large intraday spreads caused by strong solar midday and morning and evening peaks outside solar hours.

Iberdrola aims to nearly treble its pumped storage capacity from 100 GWh to 270 GWh, with three projects under construction and a further seven in the pipeline.

Its other main growth market, offshore wind, is also starting to make an impact, with the new projects starting in France and Germany.

Installed capacity is to rise from 2.3 GW to 3.0 GW by end-2025 and 4.8 GW by 2026 with all projects currently are on track, Iberdrola said. A further 3.6 GW is submitted in UK and US auctions.