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Iberdrola hit hard by Spanish reforms

SPAIN: Iberdrola saw its revenues and profits from wind generation slump in the first half of the year following reforms in Spain that have hit renewable energy generators.

Revenues for the renewables division fell 15% compared with the same period last year to EUR 1.1 billion. With a drop in margin on top of this, the division’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) declined by 20% to EUR 713 million.

Spain led the decline, with the renewables business seeing its EBITDA collapse by 46%. The division’s capacity is made up of 97% wind power.

Iberdrola said that the poor performance was due to an 18% decrease in the average price of renewable energy in the period to EUR 56.7 per MWh. This derived mainly from the lower price in Spain as a result of the regulatory reform that reduced the average price in this country by 38%.

However, Iberdrola pointed out that the effect of the reform was increased by an abnormally low spot price in this period. “Given that it is expected that the spot price recovers in the second half of the year, the impact registered up to June cannot be extrapolated to the entire financial year of 2014,” the company said.

The reforms introduced in June impose a retroactive subsidy cut, removing all renewable energy production incentives even for existing capacity. Iberdrola said the impact on renewables over the period is extimated to be EUR 227 million.

Despite the bleak outlook in its home market, Iberdrola increased its investment in renewables worldwide, with EUR 430 million invested, compared with EUR 359 million previously.

Over the last 12 months, Iberdrola installed 411MW in new renewables facilities, mainly wind farms, bringing its installed wind capacity to just below 14GW.