Why is Iberdrola betting on the United States despite Trump's push for renewables?

MadridIberdrola, the electricity company chaired by José Ignacio Sánchez Galán, has set its sights on expanding in the United States. It is, in fact, one of its strategic markets along with the United Kingdom Now it aspires to be recognized as a "global Spanish" company. This move may seem surprising given Donald Trump's energy policy and the business the electricity company has always been proud of: while Trump's presidency was marked by the fight against renewables and the dismantling of climate policy, for the company, these technologies—wind power in particular in the US—are one of its cornerstones. So why does Sánchez Galán continue to look across the Atlantic? One of the keys lies in the business. of the electrical transmission and distribution networksThis is unknown to the general public, but not to the company. This activity accounts for a large part of its income and investments in the United States. In fact, it represents 80% of its business.

The question has resurfaced these days after the White House announced the suspension of five offshore wind energy projects, also called offshoreAmong them is the Vineyard Wind 1 wind farm in Massachusetts, 50% owned by Iberdrola through its US subsidiary Avangrid, along with the Danish firm CIP. The project represented a $3 billion investment (approximately €2.7 billion), which the company expects to recoup after signing contracts with the state's main power companies. Despite the Trump administration's decision, Iberdrola sources maintain that the order's impact "does not affect them" because "80% of the wind farm is already operational." Thus, the disruption would be minimized to 20% of the project's planned capacity. In total, there are 62 turbines, and only two remain to be installed, according to Iberdrola, which also rules out any impact on the company's finances.

The lifeline of the networks

Trump's strategy is clear (as it was during his first term): nuclear power plants and gas-fired power plants. In fact, upon arriving at the White House at the end of 2024, he revoked Joe Biden's commitment to reduce US emissions by 66% by 2035. At Iberdrola, however, they seem to be breathing a sigh of relief when it comes to their plans in the country, despite the uncertainty generated by the amendments, which affect not only Iberdrola but also the auxiliary industry that provides the technology for its projects. For example, wind turbines.Relations are smooth and the outlook is positive"Sánchez Galán argued last May before analysts.

In his last Capital Markets Day, The electricity company pledged to invest over $20 billion by 2030 in its US electricity grid business, particularly in key states like New York and Maine, where it operates over 170,000 km of lines, and intends to continue growing its regulated assets. One of the reasons Iberdrola finds this business attractive in the country is the stable, long-term remuneration framework. This infrastructure is crucial because it enables electricity to reach homes and businesses. In the US, it has overshadowed all other areas because, as noted in a World Economic Forum article, "the demand for electricity from data centers and new advanced manufacturing facilities has placed unprecedented pressure on the energy sector in the United States." According to the electricity sector, this requires the deployment and improvement of the grid, which adds to the United States' need to promote long-distance electricity transmission between states and which is now one of the "shortcomings" of the US electrical system, as noted in an article by the Elcano Royal Institute. Examples of this are the power outages recorded in states like Texas.

And who pays for it?

"Politicians may be forced to choose between winning the AI arms race and protecting consumers' bills," the World Economic Forum stated. Upgrading electricity grids has another consequence for consumers, beyond ensuring they receive the energy they need safely. The cost of the infrastructure, or part of it, is passed on to the electricity bill, meaning that a portion of the business is regulated.