Iberdrola backing UK assets with £3.8bn pledge

Ignacio Galan confirmed that the ScottishPower business was a major earner for Spanish giant Iberdrola. Picture: Getty
Ignacio Galan confirmed that the ScottishPower business was a major earner for Spanish giant Iberdrola. Picture: Getty
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ENERGY giant Iberdrola has pledged to plough more than 40 per cent of its total investment until 2014 into its UK operations as its ScottishPower business proved a star turn in resilient annual trading results.

The Spanish multi-national’s commitment came as ScottishPower Renewables also revealed yesterday that it has won planning permission from the Scottish Government to build a giant 96-turbine windfarm at Kilgallioch, south of Barrhill in south-west Scotland.

Iberdrola said €4.4 billion (£3.8bn) would be invested in the UK over the three-year period, the lion’s share of it in ScottishPower, but also other operations including those in the north-west of England and Wales.

The company said in its results statement that the UK’s “relatively stable and predictable regulatory environment” was the catalyst for the decision.

It added: “2013 capital investment in the UK will amount to a record £1.3bn. This doubles ScottishPower investment [£588m in 2006] made prior to integration with Iberdrola.”

Ignacio Galan, Iberdrola’s chairman, also quashed recent speculation that in a bid to bring down its debts faster the company might seek a partner to run ScottishPower’s distribution or transmission activities.

“I deny [that] absolutely. There are not any plans to sell any stake in distribution or transmission,” he said.

ScottishPower’s underlying earnings came in at £1.2bn in 2012 compared with £1.16bn the previous year. This included a 6 per cent rise to £760m in its regulated networks, and a 4 per cent increase to £292m from its generation and retail business. There was also a £134m profit from ScottishPower’s renewables arm.

Iberdrola’s group net profits edged up 1.3 per cent to €2.84bn as a resilient international performance outweighed difficult trading in the group’s home Spanish market.

Net profit from the international business jumped over a third to €1.97bn – now 70 per cent of the total. Earnings in Spain, whose economy has been badly hit by the financial crisis, fell 36 per cent to €862m. Iberdrola’s revenues climbed 8 per cent to €34.2bn.

The UK and ScottishPower are now the biggest contributor to group earnings outside Spain, accounting for 28 per cent, with Brazil making up 20 per cent and the US 13 per cent.

Galan said the divestment programme to cut Iberdrola’s debts was going well, with €850m achieved last year against a 2014 target of €2bn. He suggested another divestment was likely to be announced “in the next few days”.

Iberdrola’s debts fell €1.4bn to €30.3bn in the year.

On the windfarm planning consent announced yesterday, Keith Anderson, chief executive of ScottishPower Renewables, said: “Kilgallioch is a very significant renewable energy project that will make a major contribution towards both Scotland’s and the UK’s carbon reduction targets.

“It represents a major investment in new electricity generation in Scotland, and will sustain hundreds of jobs during construction, helping to boost the economy in south-west Scotland.”