Equities

Iberdrola Considers $1.8 Billion Sale of US Renewable Stake Amid Trade Dispute

Iberdrola seeks $1.8 billion for 50% stake in US renewable assets, including 700 MW of solar and wind projects.

By Mackenzie Crow

5/23, 09:56 EDT
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Key Takeaway

  • Iberdrola plans to sell a 50% stake in US renewable assets, potentially raising $1.6-$1.8 billion, with Bank of America facilitating.
  • A US solar trade dispute could lead to tariffs up to 271%, impacting manufacturing investments and project costs.
  • Exxon Mobil, Shell, TotalEnergies, and Equinor are considering bids for Galp's 40% stake in Namibia's Mopane oil field.

Iberdrola's Stake Sale

Iberdrola SA is seeking an investor to purchase a 50% stake in a portfolio of US renewable-energy assets, potentially raising between $1.6 billion to $1.8 billion. The Spanish energy giant is collaborating with Bank of America Corp. to facilitate the sale, which includes 700 megawatts of projects under construction. The portfolio comprises 400 megawatts in solar plants and 300 megawatts in onshore wind, all of which have power purchase agreements with large technology companies. The formal sale process is expected to launch in July, with a target to complete the transaction by the end of the year.

This move is part of a broader strategic review of Iberdrola’s operations in the US, following the termination of its multi-year attempt to acquire New Mexico utility PNM Resources Inc. Subsequently, Iberdrola announced a full takeover of its US unit, Avangrid, for $2.55 billion. Previously, Iberdrola had considered selling half of Avangrid’s renewable platform, a project known internally as Maverick, but this plan has been abandoned. The company is currently gauging interest from potential suitors, although spokespeople for Iberdrola and Bank of America have declined to comment.

US Solar Trade Dispute

A significant trade dispute is unfolding in the US solar sector, involving major industry players and potentially impacting billions in manufacturing investments. The US Department of Commerce has initiated a probe in response to complaints from the two largest US solar panel manufacturers, First Solar and Hanwha QCells, along with five other companies. They allege that Chinese producers are dumping cheap solar cells through their operations in Southeast Asia. The investigation could result in new tariffs ranging from 70% to 271% for dumping, and 15% to 50% for cooperating companies.

This probe comes at a critical time for the sector, which is the fastest-growing source of new electricity generation on the US grid. The Inflation Reduction Act (IRA) has attracted significant investment for new factories for panels and their inputs. However, the dispute has divided the industry, with large solar companies, often Chinese, and industry groups like the American Clean Power Association opposing the petition. Jim Murphy, president of Invenergy and board chair of Illuminate USA, criticized the petition as "anti-competitive" and warned it could delay solar project deployment.

At the core of the dispute is the Biden administration's challenge of balancing the need to reduce dependence on Chinese supply chains while accelerating decarbonization. The US currently imports the bulk of its solar cells from Southeast Asia, and domestic production capacity is insufficient to meet projected deployment needs. Elissa Pierce, a solar analyst at Wood Mackenzie, noted that higher tariffs could make domestic cell manufacturing more competitive. However, BloombergNEF estimates that the petition could make US panels three times more expensive than the global market price, potentially undermining $8 billion in manufacturing investments from Chinese companies in Southeast Asia.

Energy Giants Eye Galp's Namibia Stake

Major energy companies, including Exxon Mobil Corp. and Shell Plc, are evaluating bids for a 40% stake in Galp Energia SGPS SA’s significant oil field offshore Namibia. TotalEnergies SE and Equinor ASA are also considering acquiring the stake in the Mopane discovery, which Galp estimates could hold around 10 billion barrels of oil equivalent, potentially valuing the entire discovery at approximately $20 billion or more. Galp, which currently holds an 80% stake in the Mopane license area, is working with a financial adviser to sell half of its holding, with first-round bids expected by mid-June.

Following the announcement, Galp's shares rose by 2.2% in Lisbon, marking the biggest daily gain in about a month and giving the company a market value of €15.2 billion ($16.5 billion). The deliberations are still in the early stages, and other bidders could emerge. Galp may also decide to retain the stake if no final agreement is reached. Representatives for Galp, Shell, Exxon, and Equinor declined to comment, while a spokesperson for TotalEnergies did not respond to a request for comment.