Iberdrola makes part of its investment in Spain conditional on the remuneration of the electricity grid.

MadridIberdrola has presented its new roadmap for the next four years (2025-2028) and has done so in a key market for its growth: the United Kingdom. The company, which is Europe's leading electricity company, held its Capital Markets Day in London and announced a record investment of €58 billion during this period (30% more than in the previous four years). It has also promised to distribute €20 billion in dividends to its shareholders.

Aside from the United Kingdom, the company chaired by Ignacio Sánchez Galán intends to continue focusing its business in the United States, which will become the leading market in terms of investment. The third will be Spain, where Iberdrola plans to invest €9 billion. However, part of this investment will be contingent on the profitability of the electricity grid in the coming years.

"Investment [in the State] for the distribution network business could vary by approximately €1 billion depending on the conditions approved by the regulator," stated Iberdrola CEO Pedro Azagra during the presentation of the new strategic plan to analysts. Specifically, Iberdrola plans to allocate approximately €4 billion to the deployment and improvement of this business. The remaining money, up to the announced €9 billion, will go to energy (especially renewable generation) and customers, according to the listed company.

The National Commission of Markets and Competition (CNMC) is responsible for submitting a proposed remuneration rate for the electricity transmission and distribution network for the period 2026-2031, as well as the methodology for calculating its price. The Competition Authority is now analyzing the objections presented in the initial proposal and plans to approve a final document in the coming weeks.

The CNMC has proposed a rate of 6.46% for the next six years (the current rate is 5.58%). In Iberdrola's view, this rate should be 7%. The agency intervenes because it is a regulated business: companies—like Iberdrola, but also Endesa and others—make their investments based on this rate of return, because they are paid for it through so-called access tolls, which are included in customers' electricity bills.

Pressure on the Spanish government

The back-and-forth between the electricity companies and the CNMC in this debate has been constant, so some industry insiders suggest that the Ministry of Ecological Transition will be the one to resolve the conflict: the Spanish government is yet to issue a report on the Competition proposal. "Our expectation is that [the rate] will increase [...]. If conditions aren't favorable, we will look to other countries," Sánchez Galán warned analysts.

Although companies like Iberdrola have long been pressuring Pedro Sánchez's administration to reconsider the closure schedule for nuclear power plants in Spain, the utility's new strategic plan includes the 2019 protocol that provides for the orderly closure of nuclear plants. Thus, it plans to close Almaraz Group I, a plant in which Iberdrola holds a partial ownership, by November 2027.

The company's priority business is regulated electricity grids (which allow light to reach homes), both in the United Kingdom and the United States, where it will allocate 65% of its investment. "Iberdrola's focus is on the regulated business and the most attractive countries to invest in," the utility states. In response to analysts' questions about how Donald Trump's energy policy could affect –in his speech at the UN has once again attacked renewable energies, the president of Iberdrola has simply stated: "Energy policy is defined by the countries. And if they tell us they need us to invest in electricity grids, we do it, period. That's the point."