Iberdrola continues to strengthen in Brazil with more wind energy projects

Iberdrola obtained two new wind power projects for a combined capacity of 74.2 MW in Brazil, in the state of Piauí, through its subsidiary Força Eolicado Brasil. The country of Rio de Janeiro made a new energy auction at the end of June, it has been in its thirties, where it is securing electricity supply contracts through solar power, wind turbines, hydroelectric and biomass energy.

So far, the Spanish firm has already been awarded contracts for up to 178 MWh of power, all of them through wind farms. In one of the last closed auctions, on June 28 (the 29th auction that was held), the Spanish firm was the main winner in the wind field by adding wind farm contracts for 74.2 MW, ahead of Voltalia which added 21 MW for a wind farm in Rio Grande, in the north of the country. In addition, Iberdrola benefited from the fact that the average price was 62% lower than the maximum and that value (about 20.7 dollars per MWh) was the second lowest recorded in Brazil.

The Spanish company, also other companies such as Voltalia or Enerlife, is following a strategy with which they commit to supply through the regulated business under half the installed capacity, close to 30%, while the rest is left to fight for clients in the free market. The strategy allows you to benefit after higher prices and offer greater profitability. In fact, last year the average spot price in Brazil was 280.9 Brazilian reais, close to 4.2 times the average price of the auction that Iberdrola has paid. In addition, these operations “help facilitate access to finance by reducing the risk of the project,” explain Bloomberg analysts.

The firm chaired by Ignacio Sánchez Galán has benefited from the high competition in the sector that pushed prices down, given that the 20.7 dollars per MWh represents the second lowest price registered in Brazil since April 2018. ” urgency on the part of the local manufacturers of wind energy to ensure supply orders also helped lower prices “, point out from Bloomberg as another key in the auction. Even so, Brazil is expected to add at least 2.6 GW in contracts for wind power for 2019 and 2022, a quarter of what was offered in the last four years.

Although it has moderated its exponential growth in the last sessions, Neoenergia continues to shoot up compared to its stock market startup. The firm has revalued 9.6% in the few days it has been trading, by trading above the 17.5 Brazilian reais from the 16 with which debuted, which is an important gain for the three large owners of the Same: Iberdrola which controls 52.45%, Caixa de Previdencia with 38.21% and finally Banco de Investimento with 9.34%.

The Brazilian subsidiary of Iberdrola has accumulated significant growth in recent years that has allowed it to shoot its value. Thus, while five years ago its turnover was just over 3,900 million, for this 2019 is expected to stay close to 6,300 million euros. Regarding the growth of its operating profit has not been so broad, revenues come through purchases, but it is also important to go from 722 million euros in 2015 to around 1,100 million in 2018.