Iberdrola plans to more than double its investments in the UK electricity sector, reaching £24 billion ($31 billion) between 2024 and 2028, the Bilbao-based company said on October 11.
Nearly two-thirds of this investment will be dedicated to expanding transmission and distribution networks, as the British electricity grid requires the largest overhaul ever seen. Offshore wind will be another major focus, with the 3 GW East Anglia 3 project currently under construction. This project will be followed by East Anglia 2, a shovel-ready project valued at £4 billion, recently awarded in the UK’s AR6 auction.
Transmission Network Expansion
The company is also continuing to invest in new onshore wind, solar photovoltaic, and battery projects. “This is a vote of confidence in the UK’s clear and stable policies and a major boost to the economy and the path toward green energy security and net zero,” said Ignacio Galan, Executive Chairman of Iberdrola, at the International Investment Summit in London on October 14.
Through its ScottishPower unit, Iberdrola has invested £30 billion in the UK over the past 15 years. Galan joined UK Prime Minister Keir Starmer in Scotland on Friday, October 14, for a meeting of regional leaders.
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 network investment (RIIO-T3) framework, to be approved in 2025. These investments will include a new subsea superhighway, Eastern Green Link 1, between Torness in Scotland and Hawthorn Pit in England.
East Anglia Wind Hub
ScottishPower is also in the final stages of integrating ENW (Electric Networks of West Midlands), the distribution network company covering the northwest of England, which it agreed to acquire in August for £2.1 billion.
“Governments have realized the need to invest in the grid,” said Keith Anderson, CEO of ScottishPower, at the BNEF Summit in London on October 8, adding that this realization has been driven by the fact that certain off-takers — such as data centers and gigafactories — have struggled to get connections.
Offshore Wind Projects
In offshore wind, Iberdrola’s 3 GW East Anglia hub will amount to a total investment volume of £10 billion, with construction scheduled to be completed by 2026. The 714 MW East Anglia-1 project is already operational after Iberdrola and Macquarie jointly invested £2.5 billion in this first phase of the four EA project phases.
The 1.4 GW East Anglia-3 project is currently under construction, while the 963 MW East Anglia-2 project was awarded under a Contract for Difference in the AR6 auction, where offshore wind contracts were cleared at £58.87/MWh in 2012 money for newly bid projects.
These 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’s missing is ‘how you do it,'” Anderson told research firm BloombergNEF’s conference. “That’s what 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 £62.85/MWh in the third quarter, according to daily assessments by Platts, part of S&P Global Commodity Insights.
