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

Source: Bloomberg - Sat 3rd Mar 2012
Iberdrola Invests 0.4% of Sales in R&D as Spain's GDP Lags

Iberdrola spent 0.4% 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 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 out of revenue of 30.4 billion.

Iberdrola Renovables jumped 8.1% after parent company Iberdrola bid 2.5 billion to buy out minority investors.

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. 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% of GDP behind Portugal, Estonia and Ireland.

Solar Subsidies

Abengoa, the Seville-based engineering company that builds solar-thermal generators and biofuel plants, invested 90.6 million, or 1.3% 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% of its expected revenue of 1.2 billion, 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 in subsidies last year from the Spanish power system.

Iberdrola is Spain's fourth-most profitable company, posting net income of 2.8 billion 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% this year as the government slashes spending to rein in its budget deficit, Deputy Prime Minister Soraya Saenz de Santamaria said today.

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