MADRID – In the winter of 2015, three directors of a Connecticut electric company met with a potential acquaintance: a Spanish utility executive named Jose Ignacio Sanchez Galen, who surprised him with a bold vision for America’s utility industry.
“He was very clear that he saw America as having enormous potential in renewable energy,” John L. Lahey, president of the company, United Illuminating. “Six years ago this boy was already ahead of America.”
Mr. Galen made that deal For joint enlightenment for $ 3 billion. His company, Iberdrola, now with a Danish partner, is set to begin construction The first large-scale offshore wind farm in the United StatesIn Massachusetts closed water. Over all, Iberdrola and its subsidiaries reach 24 US states and invest in countries in Australia from the UK to Brazil.
For the past 20 years, ever since he took over Iberdrola based in Bilbao with 37,000 employees, Mr. Galen has been on a mission to grow the electric utility industry, a fragmented company of coal and oil-burning generators. Is a collection.
According to market research firm Bernstein, with a terrible appetite for acquiring utilities and making large investments in renewable energy, Iberdola is now the world leader in combined wind and solar power outside of China.
And it is well positioned to take advantage of the possibility of having a clean energy boom as both in the coming years Biden Administration Tightened regulations in the United States and European countries and provided incentives to encourage investment in green energy.
“Without a doubt Galen was the chief executive of a large utility,” said Miguel Arius Canete, a Spanish politician and former European commissioner, who first understood that converting energy from fossil fuels to clean energy is inevitable and will happen rapidly. ” Climate Action.
Changes in Iberdrola are taking place elsewhere, as the electric power industry is not only being rebuilt by tougher environmental laws, but also has immense scale advantages in purchasing wind turbines or solar panels.
Iberdrola is now one of a handful of utilities – with Enel in italy Orsted in denmark And Nextera Energy in the United States – that many analysts saw as the leaders of the new generation of “Rainsman Major”, with oil majors such as Exxon Mobil and Royal Dutch Shell significantly impacting the way the world uses energy .
Sam Arya, an analyst at UBS in London, said, “This all points towards an industry where you have a very small number of relatively large players, who gain massively in renewables and reduce costs.” . “
Iberdrola was primarily a Spanish electric company in 2001 when Mr. Galan became chief executive. A few years ago, 1997 Kyoto Protocol Signed, the first major international agreement to call countries to reduce greenhouse gases to prevent global warming.
Many industrial giants vowed to fight laws to strengthen emissions, but Mr. Galen was inspired. He said in an interview that he saw the agreement as an opening for businesses willing to invest in technologies such as wind and solar power that would help reduce greenhouse electricity emissions.
“Instead of a problem I saw that as an opportunity,” Mr. Galen said. The geopolitical trends represented by Kyoto were “moving in my direction.”
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Under a 12 billion-euro restructuring plan considered radical at the time, Iberdrola sold part of its portfolio of coal and oil-fired power plants for emissions rather than renewable energy, as well as networks to deliver electricity. Too.
Mr. Galen admitted that his proposals seemed risky, noting that they coincided with the spectacular collapse Enron, Another ambitious electric power business.
But he pushed to expand, especially overseas. He recalled that he was prepared to invest in the United States when, during a visit, he paid attention to all the wooden poles carrying the power lines. If a country with such great technical skills still needed wooden poles to transport its electricity, they felt, there was much room for a company like Iberdrol.
“He changed the company to be a leader not only in electricity, but in energy in general,” said anj Sakar Fanjul, former president of the Spanish energy company Repsol.
Mr. Galen now plans to broadly double Iberdrola’s capacity to generate clean energy over the next five years, not only by investing more than 35 billion in wind and solar power, but also in emerging sectors such as hydrogen Also, which the company says may be ready to take off as wind energy 20 years ago.
According to Aybrola, around 80 per cent of planned investment is outside its domestic market, which reported a net profit of € 3.5 billion on revenue of € 36.4 billion in 2020.
Generating electricity is part of Iberdola’s business. It also builds and manages the electric power network, and is expected to see increased investment in the region as well. Electricity is becoming central to cars and trucks as well as home heating, so the grid system needed to deliver electrons to homes will require major upgrades.
The region has the potential to become more competitive as oil giants, especially in Europe, renew billions of dollars to help reduce the overall carbon content of their products. in February, Major oil companies The bid for options for building wind farms off the British coast entered, and the prices paid were heavily criticized by some operators.
In the interview, Mr. Galen eliminated any competitive threat from Big Oil, as Iberdrola had been doing for decades.
“I am happy that the strategy that Iberdrola created 20 years ago is already using a photocopy,” he said.
Analysts say much work has to be done to reach climate goals, enough to thrive both Iberdrola and its rivals. “The market is growing very fast, and there is enough space,” said Meek Baker, an analyst at Bernstein in London. In addition, Ms. Baker said, Iberdrola is ordering so many wind turbines and solar panels that its size could give it a nearly 20 percent cost edge over smaller rivals.
These days, Mr. Galen’s position is as strong as ever Iberdrola. They have tripled since Iberdrola’s share price, though their acquisition has also contributed to a hefty debt pile of more than € 35 billion – almost half of Iberdrola’s market value.
He has faced boardroom challenges, such as another prominent Spanish executive, Florentino Perez, president of the Real Madrid Football Club. Mr. Perez’s construction company, ACS, acquired Iberdrola’s 10 percent stake in 2006, a move initially welcomed by Iberdrola as a potential Spanish affiliate against a possible bid. But the relationship soured when ACS tried to increase its seats on the board. The ACS eventually split.
Recently, the company has been caught in the dock belonging to a former police inspector, who was hired by security firm Iberdrola and several others. Mr. Perez has joined the case as a personal litigant, and he claims that Iberdrola has spied on him and re-ruled his old quarrel with Mr. Galen. Iberdrola Emphasizes It hasn’t done anything wrong.
But for an executive best known for making bold bets in the future, Mr. Galen, who is 70, has yet to announce any transition plans. He remains in firm control as both chairman and chief executive, and says he has no interest in retiring, once describing himself as “dean of all the chief executives of Europe”.
Some analysts say that he should be groomed as a successor in private. Both his son and son-in-law are managers in the company, but do not appear ready to step into the executive suite, and his second in command is 64.
“I think I just have to get this company up and running,” he said.
Stanley Reid reported from London and Rafael Minder reported from Madrid.