November 3, 2022

Clean energy from Iberia: Iberdrola

Clean energy from Iberia: Iberdrola

Nuclear energy has always been a taboo, especially for investors looking into renewables and clean energy, with several questions arising: is it too expensive? Is it dangerous? Is it dirty? We can’t help but think the same when we look at our Nuclear Energy Top 10 list, especially with all the drama that’s been going on throughout Europe recently between renewables, dirty energy, oil and gas from dictatorships, nuclear power plants, out of which some that have been shut down and now reopened. Really overwhelming. Nonetheless, we did look through the list and found a name we know is famous not only for nuclear - Iberdrola.

The Spanish electricity producer operating around the world had over 45% of energy produced from renewable sources in 2021, with that number rising this year - they say that they already have a 13% rise in renewables in 2022 so far. It also had 14% of nuclear energy, which means they have already pushed the highly polluting production methods out for the most part. As it is mainly operating in countries that are rich with sunshine hours and wind, it is only logical that these energy sources are their focus for the future - which they also state in their sustainability report and plan. At least the European part - Spain and Portugal - can be fully independent of gas in the future. Iberdrola actually prides itself in that they brought the needed transition towards renewables two decades forward and it is easily seen in production numbers when compared to some European counterparts.

Let’s look at our pros and cons in detail and our investment decision, so you can make up your mind as well.

PRO: The following three points speak for a buy:

  1. Iberdrola focuses on renewables for the future and they already produce most of their electricity from relatively clean sources - they are quite proud of it. Being one of Spain’s largest producers of electricity only makes it logical to focus on solar and wind and they do.
  2. A huge investment of 8 billion Euros in renewables globally that already brought renewable sources themselves to more than 50% in their portfolio. They allocate 90% of all funding to renewables. This is more than needed currently, taking the energy crisis into account.
  3. Sturdy Obermatt ranks which are all green except for Growth.

CONTRA: The following three points argue against it:

  1. Low Obermatt Growth rank. This is somewhat expected as they are focusing on energy transition which also includes shutting down old and dirty power plants.
  2. Investments into electric energy producers during a Europe-wide energy crisis may seem dangerous. We think that their commitment to shifting away from gas is a good sign for the future.
  3. Utility companies like Iberdrola may not produce a large return in the near future. This doesn’t have to be a problem as Obermatt method focuses on the long run.

In our opinion, pros outweigh the cons, so we decide we buy it for the Obermatt Wikifolio. After all, we are huge supporters of the rapid energy transition and we like what they do with their big investments into renewable sources.

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