Iberdrola: a global player at the top of its game

HIGH in the Basque hills stand Spanish energy group Iberdrola's towering white windpower obelisks, blades whirling almost silently like hovering birds.

But money rather than aesthetics is the driving force behind the rapid expansion of the windfarm business of the group, which is expected to complete its acquisition of ScottishPower at the end of April.

In its results this week, Iberdrola consolidated its world leadership in the wind energy sector, with an operational renewable capacity of 4,434 megawatts - 10 per cent of it abroad.

Iberdrola supplies 60,000 people in the region fanning out from Bilbao with electricity from its windfarms.

That is 20 per cent of the population, and the group insists it is not pylons-in-the-sky to think it can meet the demand of the Basque energy authorities to increase this to 60 per cent coverage by 2010.

The company has 30 towers over four sites in the region, with a further ten in the pipeline.

They are impressive: 55 metres high, with blades 27 metres long. "We have found people actually like the look of them, if they are anywhere near their homes," says one Iberdrola insider.

They are run as joint ventures with the local energy board, with the Spanish company having so far invested 23 million (15.4m) in the windfarm project.

While it is far from the only reason for the planned 11.8 billion takeover of ScottishPower, the Scottish group's windfarm activities - the bulk of which are in its PPM energy subsidiary in the US - are bound to benefit from added investment from its new parent if the deal goes through as expected.

That deal has got regulatory clearance in Brussels and the US; it now only needs shareholder approval in Spain on 20 March and at an EGM in Scotland on 30 March.

There is also an impressive efficiency rate to Iberdrola's turbines - able to operate close to 30 per cent of the time.

It seems a microcosm of a wider Iberdrola business that, quite apart from its swoop on ScottishPower, seems to be firing on all cylinders.

Ignacio Galn, Iberdrola's chairman, whose affable manner to visiting British journalists comes with a machine-gun-like verbal style, announced a 20 per cent rise in profits to 1.66bn.

Galn exudes energy in every sense. And he has a lot to be energetic about.

He is evangelistic about liberalised energy markets, bemoaning that only Britain and Spain are walking the walk as well as talking the talk.

Galn, asked whether Iberdrola can be a positive countervailing free-market force against energy protectionism, replies: "Yes, why not?"

But there is time for other things as well as mounting a major foreign takeover, driving up profits, deflecting questions from a battery of Spanish journalists about the possibility (virtually nil, he says) of merging with Spanish rival Union Fenosa (they share the same big shareholder in construction company ACS) and pursuing an ongoing programme of efficiency gains.

Such as building a new HQ in Bilbao. Such as sponsoring the Spanish team in the upcoming America's Cup.

And such as starting on a major upgrade of its hydro-electric plant about one and a half hours' drive from Valencia at Cortes-La Muela.

The new Iberdrola Tower in Bilbao, which will be the tallest building in the city at 165 metres, will cost 200m, being shared equally between the utility and a construction company.

In a novel design, the first eight of the 33 storeys will be for an hotel, another dozen or so storeys will be for offices for other companies, and the top ten floors will be for Iberdrola. The first stone will be laid on 26 March.

Iberdrola's history is rooted in the city, and the company is a trustee of the world-famous Guggenheim Museum by Bilbao's waterfront, designed by the architectural icon Frank O'Gehry.

The museum - a monument to tangled, bendy design in titanium, glass and limestone - is the most vivid emblem of a Bilbao transformed over the past 25 years from rustbelt mundanity to gleaming modernity.

Iberdrola's plans for the Cortes-La Muela hydro-electric plant are ambitious.

The 900m project began in 1982, replacing an old plant dating from 1920, and now provides a large swathe of eastern Spain with a flexible, powerful electricity source.

Carved out of mountainside around the Rio Jucar, it is part of Iberdrola's huge network of 62 big dams, 119 small dams and 425km of water channels.

The price of kilowatts Cortes-La Muela produces reflects the demand at any particular time of the day, making it a fluid operation in more ways than one.

Now Iberdrola plans to start exploding on the site again. It is to spend another 200m to enlarge the plant over the next five years. When it is completed in 2011 Cortes-La Muela will be Europe's largest hydro-electric plant.

Vicente Sanchis, Iberdrola's director for hydroelectric power generation in the Mediterranean, also brightens at the business potential for "exporting this knowledge and experience" to Iberdrola's overseas operations.

This becomes ever more important to Galn, whose group is working from Russia to the US, from Mexico and Latvia to Tunisia.

If the ScottishPower acquisition goes through, more than one-third of Iberdrola's business will be outside its own country.

Galn would not be drawn this week on Iberdrola's investment plans, as he cannot yet discuss them with ScottishPower. But he said: "We are going to develop jointly with our new friends in Scotland.

"We are going to study where we need investment and where we need less investment.

"But I believe it [the forward investment programme] will be a greater one than it was before."

From conventional electricity to renewable and nuclear power - where, in the latter, Iberdrola is the Spanish market leader - the group looks to be on the front foot. Like utilities in Britain, it says it seeks clarity and coherence from its regulators in Spain and overseas.

One suspects that in a fast-moving sector, where the issue of energy nationalism threatens to be a continuing wild card, Iberdrola - with its widening spread of operations globally - is better equipped than many to cope.

WIND IN SHREWD SPONSORSHIP SAILS

THE growing strut of ScottishPower's likely new parent is spotlighted by its co-sponsorship of Spain's entry in the 32nd America's Cup, the world-famous sailing race.

Iberdrola was bound to be interested when Valencia - where the company has a big office - was chosen to host the event.

But the choice for its 25 million investment is also shrewd. In a country of fierce regional identities - think Catalonia, the Basque country, Madrid - putting your logo to a sporting team can be fraught with peril. A company is in danger of making as many enemies as friends by doing so.

But with the America's Cup, Iberdrola can tap into national pride.

There is a buzz about the country, not only because the event is in Valencia. For the first time Spain has a boat and a team - 17-strong and one non-participating guest - that is on the verge of reaching the semi-finals.

One team insider said: "It is our third time. The saying is that the first time a country enters it is largely to observe, the second to fail, and the third to mount a serious challenge."

There is tremendous interest in the Spanish media - and Iberdrola's sails therefore also get a freshening wind in them.

And whose to say what the Spanish might not achieve. After all, the defending cup holders are landlocked Switzerland. The final is from 23 June to 7 July, with the semis 14-25 May.