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Spain's Iberdrola to invest $47 billion in energy transition in 2023-25

Spanish utility company Iberdrola headquarters in Bilbao

By Nina Chestney

MADRID/LONDON (Reuters) -Spain's Iberdrola will invest 47 billion euros ($47 billion) in electricity networks, renewable energy production and customer businesses over the next two years, its chairman said in a strategy update on Wednesday.

Iberdrola is pushing to remain one of the leaders in global renewable power at a time when utilities are facing a challenging transition away from fossil fuels, accelerated by the need to cut energy dependence on Russia.

In its last strategy update, the company said it planned to invest 75 billion euros in renewable energy, grids and retail operations from 2020-2025. Around 30 billion euros has been invested since then, and a further 65-75 billion euro investment is planned from 2026 to 2030, a company spokesman said.

Iberdrola said 57% of the total 2023-25 investment, or 27 billion euros, would be in electricity networks in Britain, Brazil, Spain and the United States.

It said 85% of that investment had been secured, with deals already closed or expected to be closed next year.

"The global investment plans we have set out today will help us to bring more self-sufficiency and resilience against potential energy shocks in the countries where we operate," executive chairman Ignacio Galan told a capital markets day in London.

Some 17 billion euros of the 47 billion total investment will go on renewables. Nearly half of that will be spent on offshore wind.

Iberdrola said it aims to become carbon neutral by 2030 and reach the tougher net zero emissions standard by 2040.

ELECTRIFICATION

Italian peer Enel - which controls Spanish utility Endesa - has said it plans to spend 160 billion euros from 2020-2030 to become a green 'super major', of which 70 billion would be spent on renewables to triple capacity to 120 gigawatts (GW).

Iberdrola currently has 40 GW of renewables capacity, new chief executive Armando Martinez said.

The company plans to deliver 52 GW of new installed renewables capacity by 2025, he added. Over half of the new capacity is already secured and around 95% of the production in 2025 is contracted.

The target has been reduced from 60 GW previously and its 2030 renewables capacity target has been reduced to around 80 GW from 95 GW previously, analysts at Jefferies investment bank said.

Iberdrola's Martinez said there were still constraints from permitting processes for renewables and the company was taking a selective approach to developing the best quality projects.

Recent price spikes have prompted some countries to urge the European Commission to redesign its electricity market rules. While the EU's future power system might need certain adjustments, there needs to be very detailed analysis on reforms, Galan said.

Iberdrola's net profit should increase to 5.2-5.4 billion euros by 2025 from an expected 4-4.2 billion euros in 2022.

It also aims for earnings before interest, taxes depreciation and amortisation (EBITDA) of 16.5 billion-17 billion euros by 2025, up from 13 billion euros in 2022 and above analyst consensus of 12.6 billion euros.

Shareholders are expected to receive between 0.55 and 0.58 euros per share by 2025, after Iberdrola set a payout ratio of between 65% and 75% of earnings.

Iberdrola's share price rose by around 1% to 10.16 euros by 1000 GMT.

($1 = 0.9933 euros)

(Reporting by Jesus Aguado and Jessica Jones in Madrid and Nina Chestney in LondonEditing by Mark Potter, Jon Boyle and Emelia Sithole-Matarise)