Bloomberg News

Iberdrola Invests 0.4% of Sales in R&D as Spain’s GDP Lags

March 02, 2012

Iberdrola Renovables jumped 8.1 percent after parent company Iberdrola SA bid 2.5 billion euros ($3.5 billion) to buy out minority investors. Photographer: Denis Doyle/Bloomberg

Iberdrola Renovables jumped 8.1 percent after parent company Iberdrola SA bid 2.5 billion euros ($3.5 billion) to buy out minority investors. Photographer: Denis Doyle/Bloomberg

Iberdrola SA (IBE), Spain’s biggest power company, spent 0.4 percent of its revenue on research, development and innovation last year as it urged the government to cut clean energy subsidies and ease costs to utilities.

The company spent 136 million euros ($180 million) on 150 projects meant to address the challenges of meeting future energy demands, it said in an e-mailed press release today. That matches the percentage a year earlier, when the company invested 130 million euros out of revenue of 30.4 billion euros.

The utility “wants to be seen to be doing something but this is a drop in the ocean,” said Gerard Reid, a renewable energy analyst who left Jefferies International Ltd. at the end of last year to set up his own advisory company. “They are not doing any innovation. I don’t see anything tangible at all.”

Iberdrola Chairman Ignacio Galan is battling with the government over the bill for the country’s power supply. Industry Minister Jose Manuel Soria last month insisted power companies will have to take on some of the costs of a system that has racked up debts of 24 billion euros. Galan said profits in Spain are already too slim and urged Soria to dock subsidies for solar power plants.

Lack of investment in research is hampering Spain’s efforts to restart an economy slipping into recession for the second time since 2009. The country ranks 26 out of 37 members of the Organization for Economic Cooperation and Development for R&D, spending 1.4 percent of gross domestic product behind Portugal, Estonia and Ireland.

Solar Subsidies

Abengoa SA (ABG), the Seville-based engineering company that builds solar-thermal generators and biofuel plants, invested 90.6 million euros, or 1.3 percent of revenue, in R&D last year. SMA Solar Technology SA, the inverter maker based in Niestetal, Germany, plans this year to spend 8.3 percent of its expected revenue of 1.2 billion euros, the company said today.

Successive governments have offered above-market rates for wind and solar power that helped Iberdrola to become the world’s biggest producer of renewable energy. Clean energy plants got more than 7 billion euros in subsidies last year from the Spanish power system.

Iberdrola is Spain’s fourth-most profitable company, posting net income of 2.8 billion euros last year. The European Commission rates it as Europe’s fourth-most innovative power utility, Iberdrola said.

The Spanish economy will shrink by 1.7 percent this year as the government slashes spending to rein in its budget deficit, Deputy Prime Minister Soraya Saenz de Santamaria said today.

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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