Iberdrola to double UK energy investment to GBP24 billion

Iberdrola plans to more than double its UK electricity investments to GBP24 billion ($31 billion) between 2024 and 2028, the Bilbao-based utility said Oct. 11.

Almost two-thirds of this will be in transmission and distribution networks, with the "GB electricity grid needing the biggest rewiring ever seen."

Offshore wind will be another focus with its East Anglia 3 project under construction, to be followed by East Anglia 2, a GBP4 billion shovel-ready project that was recently awarded a contract in the UK's AR6 auction.

The company also continues investing in new onshore wind, solar PV and battery projects, it said.

"This is a vote of confidence in the UK's clear and stable policies and is a major boost to the economy and the path toward green energy security and net zero," Iberdrola Executive Chairman Ignacio Galan said ahead of the International Investment Summit in London on Oct. 14.

Through its ScottishPower unit, Iberdrola has invested GBP30 billion in the UK over the last 15 years.

Galan joined UK Prime Minister Keir Starmer in Scotland on Oct. 14 Friday for a meeting of regional leaders.

"We are creating the conditions for businesses to thrive, and our International Investment Summit will be a springboard for every part of the UK to be an engine of innovation and investment," the UK Prime Minister said in a separate statement welcoming a "tidal wave of clean energy investment."

UK electrification

Given Britain's significant power demand growth prospects and the energy policies set out to promote net zero, industrialization and electrification, Iberdrola is now setting out a new plan to accelerate investment in the UK, it said.

Transmission investments will increase following the significant upgrades required in the country under the grid investment (RIIO-T3) framework, to be approved in 2025.

Investments will include a new subsea superhighway, Eastern Green Link 1, between Torness in Scotland and Hawthorn Pit in England.

ScottishPower is also in the latest stages of completing the integration of ENW, the distribution network company covering the northwest of England, which it agreed to buy in August for GBP2.1 billion.

"Governments have woken up to the fact that they need to invest in the grid," ScottishPower CEO Keith Anderson said Oct. 8 at the BNEF Summit in London, adding that the realization has been driven by the fact certain offtakers -- such as data centers and gigafactories -- have struggled to get connections.

East Anglia wind hub

In offshore wind, Iberdrola's 3-GW East Anglia hub will amount to a total GBP10 billion investment volume with construction to be completed by 2026.

The 714-MW East Anglia-1 is already operating after Iberdrola and Macquarie jointly invested GBP2.5 billion in this first of four EA project phases.

The 1.4-GW East Anglia-3 is now under construction, while the 963-MW East Anglia-2 was awarded a Contract for Difference in the AR6 auction that saw offshore wind contracts cleared at GBP58.87/MWh in 2012 money for newly bid projects.

The projects will help the UK in its quest to quadruple offshore wind capacity as part of the government’s plan to decarbonize the power sector by 2030.

What is missing is "how you do it," Anderson told research firm BloombergNEF’s conference. "That's what the developers in the industry are crying out for.”

The government plans to publish an action plan by the end of 2024 on how it intends to meet the 2030 clean power target.

UK offshore wind capture prices averaged GBP62.85/MWh in the third quarter, according to daily assessments by Platts, part of S&P Global Commodity Insights.

'Tidal wave of clean energy investment'

The UK government also noted that the expanded offshore wind auction means that Orsted and Green Volt will invest GBP8 billion and GBP2.5 billion respectively in their planned offshore wind farms.

Green Volt’s floating wind project off the Aberdeenshire coast cleared 400 MW at a price of GBP139.93/MWh, while Orsted's secured CfD's for 3.5 GW at its massive Hornsea offshore wind hub.

In addition, Macquarie is to invest GBP1.3 billion into green infrastructure, including its Island Green Power solar farm in Stow, as a result of planning consents having been granted, while its Roadchef portfolio is to install electric car ultra-fast charging points across its sites along the UK motorway network.

Meanwhile, BW Group was proceeding with a GBP300m investment into a new battery energy storage project in Birmingham, the UK government noted in its statement listing various new clean energy investments.

The new administration pledged to unlock investment into clean energy and to hold such an investment summit within 100 days of government.