Iberdrola signs £2.1 billon deal to become second biggest electricity network player in the UK

Spain’s Iberdrola has become the second largest electricity networks operator in the UK, following an agreement signed on 2 August to acquire 88% of Electricity North West (ENW) for an equity value of £2.1 billion (€2.5 billion).

by Gail Rajgor 5 August 2024

Iberdola, led by executive chairman Ignacio Galán, has become the UK's second largest electricity network operator (Pic: Iberdrola)

The acquisition accelerates Iberdrola's commitment to grow its electricity networks business, the company said.

The deal values 100% of ENW, including debt, at approximately €5 billion. The ENW deal will make the UK Iberdola’s biggest market by regulated asset base, which is valued at €14 billion, followed by the US – where it recently took full control of grid and renewables company Avangrid – at €13.3 billion.

Combined, the UK and US markets now represent two thirds of Iberdrola’s total global regulated asset base. 

Ignacio Galán, Iberdrola’s executive chairman, said:  "This transaction reinforces our commitment to investing significantly in electricity networks, which are a critical component for supporting the electrification and decarbonisation of the economy. The agreement is also consistent with our strategy to invest in countries that have ambitious investment plans and stable and predictable regulations.”

Since it took over ScottishPower in 2007, the UK has been one of the leading investment destinations for the company, where it has invested around £30 billion (€36 billion) to date.

Geographically, ENW is located between the two existing ScottishPower networks license areas, in central and southern Scotland and Merseyside and North Wales. ENW distributes electricity to almost five million people in the north-west of England and has around 60,000km of electricity distribution networks.

As well as being a major investor in renewable energy, ScottishPower owns and operates the transmission and distribution networks in south-central Scotland and the distribution network in Merseyside, north Wales and Cheshire. It is also one of the largest energy suppliers in the country, with 4.2 million customers.

As the second largest electricity network operator in the UK, Iberdrola will now distribute electricity to around 12 million people, across a network that will span more than 170,000km. In addition, Iberdrola will employ more than 8,500 people in the country.

Iberdrola and a consortium of investors from Japan, led by Kansai, which will retain 12% of ENW's capital, have signed a shareholders' agreement to collaborate on a long-term basis. 

The acquisition is subject to the standard authorisations for this type of transaction. 

Currently, Iberdrola operates more than 111,400km of installed power lines in the UK, with 40 onshore wind farms and two offshore wind farms in operation. The total capacity of renewables in operation in the UK exceeds 3GW.  As part of its growth plans, the company is building the East Anglia Three offshore wind farm, the second largest in the world, with a total capacity of 1.4GW.