Europe's top utility Iberdrola to invest $120 billion by 2031 in grids shift

By Pietro Lombardi

MADRID, Sept 24 (Reuters) - Spanish utility Iberdrola IBE.MC is planning more than 100 billion euros ($117 billion) of investments through 2031 as it intensifies its shift towards the more regulated business of power grids in countries such as Britain and the United States.

Europe's largest utility presented on Wednesday its strategic update through 2028 and an outlook of what to expect until 2031: a big increase in power network investments and a more selective approach to renewable energy generation projects.

The plan is in line with its previous pledge to increase annual investments to around 15 billion euros from around 12 billion euros and builds on a strategic shift launched in 2022.

US A KEY MARKET DESPITE TRUMP'S SCEPTICISM ON RENEWABLES

Iberdrola will invest 58 billion euros through 2028 - two thirds of which in power networks mainly in Britain and the U.S. - and expects additional investments of around 45 billion euros between 2029 and 2031.

The company continues to see the U.S. as a key market, despite opposition from President Donald Trump's administration to offshore wind in particular.

That's because the majority of Iberdrola's business, and the bulk of new investments there, are in power networks - regulated at state level - in Democratic states like New York, Maine, Massachusetts and Connecticut.

"In the U.S., we are only considering the commissioning of projects under construction," Chief Executive Pedro Azagra told investors about offshore wind projects, adding that construction was on track.

This reflects a broader caution on renewables.

"This plan aims to transform Iberdrola's profile into a more regulated company, with networks as a vector for growth," Executive Chairman Ignacio Sanchez Galan said.

Iberdrola is targeting an annual adjusted net profit of 7.6 billion euros by 2028, about 2 billion euros more than in 2024.

Financial goals include 52 billion euros in cash flow generated during the period and 13 billion in asset sales and partnerships, three quarters of which have been completed. It will hire 15,000 people.

Shareholders will see rewards grow in line with returns, with some 20 billion euros in dividends between 2025 and 2028, equivalent to between 65% and 75% of earnings and with a floor of 0.64 euros per share.

As a result of the investments, the value of Iberdrola's grid assets, whose returns are regulated and guaranteed, is expected to reach 70 billion euros in 2028 and top 90 billion euros by 2031.

In its 2031 outlook, the firm sees earnings growth of at least a mid-to-high single-digit percentage.

($1 = 0.8480 euros)