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Spain

Iberdrola bucks financial crisis

Revenue and pre-tax profits more than doubled for Iberdrola Renovables in 2008 to EUR 2.03 billion and nearly EUR 1.19 billion, respectively. Net profit increased by a factor of three to EUR 390.2 million. The end-year results were widely expected and the company's share price changed little. Global investment by the world's largest operator of wind plant amounted to just over EUR 3.8 billion in 2008, with the addition of 2.2 GW of wind capacity, 1.3 GW of that in the US. Iberdrola's cumulative wind capacity reached 8.96 GW from a total renewables holding of 9.3 GW.

Going into 2009, Iberdrola Renovables CEO Ignacio Sánchez Galán is choosing a conservative approach in the financial crisis, with a 47% cut in planned investment in renewables to EUR 2 billion. Even so, that represents nearly half the EUR 4.2 billion to be spent by the entire Iberdrola group, the world's fifth largest utility. The group as a whole is wielding a much bigger knife than its renewable division, reducing planned investment for 2009 by 78%.

Iberdrola denies reports in Britain that it is cutting investment in UK wind power by 40%. The UK represents just under a tenth of Iberdrola Renovables' global wind business. Through its ownership of Scottish & Southern Energy, Iberdrola has 58 MW of wind projects with construction consents on land in Britain, over 500 MW of consented offshore projects, more than 500 MW waiting for consent and several hundred megawatt in planning.

Galán's target for Iberdrola Renewables this year is growth of 32% and net profits of nearly EUR 520 million, an increase he will achieve by reducing wind farm acquisitions to concentrate more on the company's own developments, "which is cheaper for us." Galán expects to add 2 GW of renewables capacity in 2009, nearly all from wind. His lowest target is 1.3 GW. Depending on new US renewables regulation, as well as the timing of enforcement, Galán says the higher target could be surpassed and he is prepared to raise investment in new capacity by 20%.

While borrowing planned in 2007 for the 2008-2010 period was EUR 32 billion, it currently stands at EUR 25 billion. Iberdrola Renovables market risk is spread between the US and Europe. It operates 2.9 GW in the US and sees the country as its main opportunity, accounting for 44% of its 55 GW project pipeline. Spain follows, with 24.6% and the UK with 9.6%. Other European countries including France, Italy and Greece comprise most of the remainder.

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