Spanish energy giant Iberdrola to invest a record 14 billion euros in the UK
The British-based power networks consolidate their position as the Spanish group's main investment destination within its current strategy
Félix Montero
Friday, 5 December 2025, 18:16
Iberdrola is reinforcing its commitment to the United Kingdom, which, together with the United States, is consolidating itself as a central focal point to its investment strategy until 2028. The electricity giant will undertake an unprecedented investment - its largest in company history - of 14 billion euros in its networks business, which has become one of the group's strategic pillars by delivering stable and regulated revenue in the face of volatile electricity prices.
The plan, which received approval from the UK regulator on Thursday, will be implemented by Iberdrola's subsidiary, ScottishPower, and will focus on the construction of new, undersea, direct current (DC) interconnections between Scotland, England and Wales. The projects will allow for the transmission of electricity at very high voltage - over 500 kilovolts (kV) - along 1,100 kilometres of undersea cable and will require the construction of six converter substations.
These infrastructure projects will strengthen the UK's national grid capacity to absorb the sharp increase in electricity demand, facilitate the integration of new renewable energy capacity and help reduce system congestion, one of the factors currently driving up electricity prices. The plan, said this energy provider in a press release, will have a significant economic impact, with an estimated contribution of 2.3 billion euros per year to the UK economy and the creation of more than 12,000 jobs across the value chain.
This strategic move by Iberdrola comes amid an ongoing power struggle in Spain between the electricity companies, the regulator and the Spanish government over remuneration for network investments. The national markets and competition commission (CNMC), after months of consultations and adjustments with the sector, has proposed raising the rate of return to 6.58%, compared to the currently 5.58% and the 6.46% initially proposed in July. This figure, however, remains far from the 7.5% demanded by electricity companies. In the United Kingdom, however, the company operates under a more favourable regulatory framework, with a rate of return close to 8%.
It is in this context that Iberdrola's chairman, Ignacio Galán, has stressed that "the largest plan committed to by Iberdrola in its company history" is the result of a "clear and predictable" energy policy by the British government and a "constructive dialogue with the regulator". This message not only highlights the UK's legal and regulatory security, but also serves as an implicit warning to other markets, including Spain, where uncertainty over network profitability continues to affect the pace of investment in the sector.
Investing in the UK
The group's investment plan for 2028 amounts to 58 billion euros, while Iberdrola plans to allocate 20 billion euros in dividend payments to its shareholders, a combination that seeks to strengthen growth without sacrificing returns on capital capital. Within this strategy, the United States and the United Kingdom account for the bulk of the investment, with 20 billion euros for the UK and another 16 billion euros for the country presided over by Donald Trump.
