Iberdrola’s EUR750 Million Green Notes Issue: A Windfall for Renewable Ambitions?

Iberdrola, a global leader in renewable energy, has further solidified its commitment to sustainable finance with the finalization of a EUR750 million green bond issue, part of its EUR5 billion sustainable promissory note program. This move underscores the Spanish utility giant’s strategic focus on funding its aggressive renewable energy expansion while capitalizing on investor demand for climate-aligned investments.

A Green Bond Success Story

The EUR750 million green notes, maturing in 2025, carry a fixed coupon rate of 1.75%, reflecting the favorable market conditions and investor confidence in Iberdrola’s sustainability strategy. The issuance was oversubscribed 3.75 times, attracting over EUR3 billion in demand from more than 200 international investors. This robust reception mirrors Iberdrola’s track record in green financing, including its €800 million hybrid green bond issued in 2024, which also drew strong interest.

The bond aligns with Iberdrola’s broader goal of having 63% of its debt classified as green or sustainable by 2025, up from 70% of hybrid bonds and 100% of credit lines already meeting these criteria by 2021. The transaction forms part of a €60 billion sustainable financing portfolio, including green bonds, credit lines, and commercial paper, all dedicated to projects that reduce carbon emissions and advance the energy transition.

Funding the Renewable Revolution

Proceeds from the green notes will directly fuel Iberdrola’s €41 billion investment plan through 2026, which prioritizes:
- Offshore wind: Over 50% of renewable investments, targeting projects in the U.S., U.K., France, and Germany, such as the Saint-Brieuc (France) and Baltic Eagle (Germany) wind farms.
- Grid modernization: €21.5 billion allocated to smart grids in the U.S., U.K., Brazil, and Spain, ensuring grid resilience to support electrification.
- Energy storage: €1.5 billion to expand pumped hydro capacity to 120 million kWh by 2026, addressing intermittency challenges in renewable generation.
- Green hydrogen: Aiming for 5 kilotonnes/year production by 2026, with the first public station already operational in Spain.

These investments are critical to Iberdrola’s net-zero goals: carbon neutrality in Scopes 1 and 2 emissions by 2030 and net-zero across all operations by 2040.

Financial Strength and Sustainability

The bond issuance highlights Iberdrola’s financial acumen. By securing €365 million/year in R&D for grid automation and cybersecurity, and maintaining 80% of debt in fixed-rate instruments, the company shields itself from market volatility. Its €700 million asset rotation strategy—including the €1.1 billion gain from selling Mexican plants in 2024—further bolsters liquidity for high-potential projects.

The structured nature of the green notes also mitigates risk. Unlike traditional debt, this issuance includes a share-price-linked option, allowing investors to benefit from equity performance without diluting existing shareholders. Iberdrola simultaneously hedged against share price volatility, ensuring cost efficiency while adhering to EU green bond standards.

Market Confidence and Future Outlook

Investor appetite for Iberdrola’s green bonds reflects growing demand for ESG-aligned assets. With global green bond issuance surpassing €500 billion in 2023, Iberdrola’s €22.9 billion in green bonds alone positions it as a market leader. The company’s 94% of financing already sustainable as of 2024 underscores its alignment with regulatory trends like the EU Taxonomy, which mandates transparency in climate-related investments.

CEO Ignacio S. Galán emphasized the strategic importance of these bonds in a statement: “The electrification of energy is unstoppable… We recognize the increasing role of storage technologies.” This vision is embedded in Iberdrola’s push to double its renewable capacity by 2026, with offshore wind as the cornerstone of its growth.

Conclusion

Iberdrola’s EUR750 million green notes issuance is more than a financing milestone—it’s a testament to the company’s ability to turn climate ambition into actionable capital. With €3 billion in demand and a 1.75% coupon, the bond reflects investor trust in Iberdrola’s strategy to dominate offshore wind, modernize grids, and pioneer green hydrogen.

The numbers speak volumes:
- €41 billion in investments through 2026 will accelerate the energy transition.
- 50% of renewables funding is allocated to offshore wind, a sector where Iberdrola already holds 41,246 MW of installed capacity.
- Net-zero by 2040 is within reach, supported by 70% of EBITDA insulated from volatile wholesale markets by regulated assets and long-term PPAs.

As the world shifts toward decarbonization, Iberdrola’s green bonds are not just tools for funding—they’re proof of a company poised to lead the renewable energy revolution.