‘Spain is not an energy island’ – Iberdrola slams power market intervention

The logo of Spanish utility company Iberdrola is seen outside its headquarters in Madrid, Spain, May 23, 2018. REUTERS / Sergio Perez / File Photo

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MADRID, April 27 (Reuters) – Global wind power group Iberdrola (IBE.MC) criticized moves by its native Spain and neighboring Portugal to take national measures aimed at curbing power prices on Wednesday, saying the solution to Europe’s energy crisis was in coordinated action .

European energy prices have climbed to historic highs as the conflict in Ukraine and fears of supply disruptions tightened markets already struggling with the effects of COVID-19.

Governments are scrambling to find ways to protect voters’ pockets, and Iberdrola CEO Ignacio Galan has opposed state decisions in some of its major markets including Britain, which has capped power prices for years.

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This week, Spain and Portugal, which have long argued they are isolated from the rest of Europe’s power system, clinched an agreement in principle with Brussels to allow them to limit the cost of gas for power generated domestically.

Spain and Portugal said this would help protect consumers. Galan objected strongly.

“Every time Europe has remained united things have gone well,” he told analysts on a conference call. “Instead of trying to create regime exceptions like the one proposed by the Iberian market, we must look for common solutions.”

He said the fact power prices in Spain and France could be seen converging was one factor showing they were integrated. “Spain is not an energy island.”

Galan said Iberdrola, which recently became Europe’s biggest utility by market value, overtaking Italian peer Enel, did not expect this measure to affect its business.

Spanish power firms’ shares were hit last year by government plans to curb their profits. read more

Iberdrola operates wind farms, solar parks, nuclear reactors and gas plants in Europe and Latin America, as well as thousands of kilometers of transmission and distribution lines.

Its net profit in Spain, which accounts for less than a third of earnings, fell 29% in the first quarter because of low wind and hydroelectric generation and an outage at a nuclear plant, Chief Financial Officer Jose Sainz said. This meant the company had to buy energy on the feverish open market.

It nevertheless confirmed it still expects full-year net profit to reach 4-4.2 billion euros ($ 4.25-4.46 billion), and is sticking to its long-term renewable energy strategy.

“The current crisis demonstrates the need to accelerate the energy transition to achieve energy self-sufficiency in Europe and decarbonize our economy,” Galan said in a statement.

($ 1 = 0.9412 euros)

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Reporting by Isla Binnie Editing by Louise Heavens and Mark Potter

Our Standards: The Thomson Reuters Trust Principles.

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