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US is a magnet for green investments.


 The US is marching ahead of the EU as a more attractive destination for clean energy investment as government responses to the cost of living crisis diverge, according to one of the world’s biggest energy companies. Ignacio Galán, executive chair of Iberdrola, said that, even though the EU had been first to act decisively on decarbonisation, the balance had shifted as green incentives in the US’s Inflation Reduction Act made it a «very much» more attractive place to invest. However, in an interview with the Financial Times, the head of the Spanish group lamented the EU’s proposed cap on electricity generation revenue and Spain’s planned windfall tax on its most prominent energy companies, including Iberdrola. «The key issue is that these measures can create uncertainty,» Galán said.

Iberdrola plans to invest €36bn in renewable generation and power networks, with the US receiving 34 per cent of that, the largest share. It is also close to finalising its €9bn acquisition of US group PNM Resources, which will receive €2bn of investment, lifting the US investment share to 47 per cent. In addition, Galán welcomed the Inflation Reduction Act, an economic package passed in August that provides $370bn in tax giveaways for wind and solar power, batteries and other green technologies. In its 2023-25 investment plans, Spain will get 17 per cent of the capital, and other EU countries, including France, Germany and Italy, will receive a combined 12 per cent.

The UK, where it owns ScottishPower, will receive 20 per cent. Iberdrola is seeking to participate in a variety of green projects funded by the EU’s €800bn coronavirus recovery funds, which began to be distributed last year. Galán stressed that the European Commission was committed to more renewable power. «If instead of gas markets you intervene in the electricity market, the result will be less investment in clean electricity and ultimately more gas dependence». While the EU is proposing a windfall tax only on oil and gas groups, Spain has proposed a temporary 1.2 per cent tax on the revenues of the country’s largest energy groups.

Despite the Socialist party-led government’s rhetoric on «excess» corporate earnings, Galán said Iberdrola’s profits in Spain were down 14 per cent from a year ago in the past quarter. In the nine months to the end of September, Iberdrola reported global net profits of €3.1bn on revenues of €37.9bn. The US, where it owns Avangrid, is the company’s most prominent investment destination, but the country’s share of new funds this year has been 25 per cent, lower than the proportion set for 2023-25. Latin America will receive 14 per cent of the total in the next three years.

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  1. Kyle11 November 2022 at 13:19

    The Inflation Reduction Act is one of the better laws that was recently passed in the US. It has (and will) attract more and more companies to provide renewable energy to the US. The EU needs to step up its game and avoid adding more roadblocks to companies that are trying to clean the environment and offer better solutions.

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