Iberdrola Doubles Down on Power Grids in the U.S. and U.K.Ion Jauregui - ActivTrades Analyst
Iberdrola is accelerating its international expansion with a historic investment of over €33 billion in power grid infrastructure across the United States and the United Kingdom. Through its subsidiaries New York State Electric & Gas (NYSEG) and Rochester Gas and Electric (RG&E), the company has launched the "Power New York" plan, which includes a $20 billion investment to modernize and reinforce the grid in New York State. This move follows the green light granted by the U.K. energy regulator Ofgem for a €12.42 billion investment through 2031 to develop infrastructure in the country, confirming the central role of networks in the group’s upcoming strategic plan.
The U.S. plan includes improvements in reliability, technology integration, customer service, and the hiring of over 1,100 employees. Around 40% of costs relate to legacy burdens such as delinquent payments, storm recovery, and new regulatory requirements. The modernization strategy also includes social investments, such as support for vulnerable households and the reinforcement of electric corridors to prevent outages.
Fundamental Analysis
The utility, chaired by Ignacio Galán, maintains a solid and diversified profile, supported by regulated revenues and a presence in key strategic markets. The newly announced plan aims to strengthen operational and financial stability in line with the group's energy transition goals.
Key strengths include:
A diversified and regulated business model, helping to reduce income volatility.
A strong focus on clean energy and smart grids, aligned with climate policy in both the U.S. and EU.
Positive regulatory backing, with Ofgem’s approval and the beginning of a rate case process in New York enhancing visibility on future revenues.
From a financial standpoint:
In 2024, Iberdrola posted a net profit above €5 billion, with solid EBITDA growth driven by grids and renewable generation.
The net debt/EBITDA ratio remains under control, supported by prudent financial management.
The dividend yield stood above 4%, indicating stable returns for shareholders.
Potential risks in the new investment cycle include:
Regulatory delays in the U.S. that could affect implementation timelines.
Prolonged high interest rates that may increase financing costs.
Legacy infrastructure issues in the U.S. subsidiaries requiring significant capital outlay.
Technical Analysis
As of July 2, Iberdrola shares closed at €16.29, down 0.58%. Early trading on the following day showed a slightly bearish tone. From a technical perspective, the stock maintains a sideways-upward trend, supported around €15.90. A breakout above €16.60 could pave the way toward €17.20, while a drop below the support level could lead to €15.30.
Overall trend: Sideways-upward since early May, with strong support at €15.90 and €15.065, and resistance around €16.80.
Moving averages: The 50-day MA sits just below the current price, offering short-term support. Longer-term moving averages are expanding, consistent with a consolidating upward structure.
Technical indicators:
RSI at 53.64%: Room for further upward movement before overbought conditions. The RSI reached 70% during the all-time highs on June 24.
MACD: Weakness appeared after recent highs. The Signal line is currently above the MACD, suggesting weakened momentum. A bullish crossover of the MACD over the Signal line in the coming sessions would be a key confirmation of potential upside.
Conclusion
With over €33 billion earmarked for power grids in its most strategic markets, Iberdrola strengthens its position as a key player in the global energy transition. Regulatory support on both sides of the Atlantic and the scale of investment enhance its role in modernizing critical infrastructure. Technically, the stock maintains a solid structure as the market digests the long-term implications of these plans.
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