Total, Iberdrola CEOs Discuss Renewables in New Energy Landscape

As more traditional oil and gas players enter renewables, ramping up plans to produce offshore wind and solar power, Ignacio Galán welcomes what some would consider competition.

The CEO of Spanish utility Iberdrola, one of the world’s biggest offshore wind companies and an early mover in the U.S. wind energy space, recalled how attitudes have evolved from climate change denial to being slow to take actions to emissions reductions targets becoming priority.

Considering the International Renewable Energy Agency estimates about $30 trillion of investment in renewables will be needed to meet objectives of the Paris Agreement through 2050, companies working toward a common goal is a must, according to Galán, who spoke during a CERAWeek by IHS Markit session with Total SE CEO Patrick Pouyanné and IHS Markit Vice Chairman Daniel Yergin.

“I think it’s not a question of one against another. It’s a question of everybody moving in this direction,” Galán said, commending companies like Total SE for its decarbonization efforts. “It is good business.”

His words came as energy companies adjust spending and strategies, responding to calls from investors to shrink carbon footprints while continuing to meet the world’s energy needs and hopefully, turning profits amid the energy transition.

“We need solar. We need onshore wind, offshore wind. …We need hydrogen,” Pouyanné said. “I think it’s not a matter today of if we want to make the energy transition a reality, we need to push all of these technologies and at the end, the most efficient, of course, will win.”

‘Living the Energy Transition’

In May, the French supermajor is slated to become Total Energies, reflecting its objectives to deliver not just oil and gas but also renewable energy. It aims to become one of the world’s top five green energy supermajors by 2030, Pouyanné said, adding that more than 20% of its $12 billion budget will go toward renewables and new energy. That’s up from about 10% two or three years ago, he added.

“We have been quite successful in building a portfolio [to reach] 35 gigawatts by 2025,” Pouyanné said, referring to Total’s renewable power generation capacity target.

In January, Total acquired a 20% stake in solar developer Adani Green Energy Ltd.

“We have a big potential providing we identify the right locations,” Pouyanné said.

The company is also diving into floating wind, calling it a new frontier but one in which Total can transfer its offshore expertise.

Combating climate change is nothing new for Iberdrola.

“We’ve been living the energy transition for the last 20 years,” Galán said.

Since becoming CEO in 2001, Galán said Iberdrola has invested more than $140 billion in renewable energy, including batteries and storage, and closed all of its coal- and oil-fired power plants. “As a result, our emission today is only 90 grams of CO₂ per kilowatt hour, which is four times less than the average of our peers in European and any other state.”

Iberdrola, a producer of green hydrogen along with photovoltaic solar and hydroelectric energy, in February unveiled its ambitions to invest more than $180 billion through 2030 to grow its renewable capacity from about 35 megawatts today to 70 MW by 2025, surpassing 100,000 by 2030.

This year alone the company plans to spend nearly $20 billion on acquisitions and new investments, Galán said. Iberdrola is also strengthening its presence in the U.S., where it already operates in 25 states, by investing $35 billion through 2025.

Iberdrola, through Avangrid Renewables, is a partner in the Vineyard Wind project offshore Massachusetts, which would be the first commercial-scale windfarm offshore the U.S.

Hydrogen Opportunities

Like others in the industry, Iberdrola and Total also see opportunity in hydrogen.

“It can replace coal and natural gas in several industrial processes,” Galán said of hydrogen. “But today, most of hydrogen is produced from fossil fuels, which are emitting close to a billion tons of CO₂ per annum, which I think is a lot. That’s why green hydrogen has an important [role] to play.”

Working with fertilizer company Fertiberia of Spain, Iberdrola has set sights on installing 800 MW of green hydrogen production capacity by 2027.

Total also recently formed a partnership, teaming with Engie to develop France’s largest green hydrogen production site from 100% renewable electricity.

Asked by Yergin “where the game is in terms of hydrogen today,” Pouyanné said demand is not high yet. “70 million tons of hydrogen demand today for steel and refineries or fertilizer is not big enough if we want to develop massive hydrogen production at a low cost.”

Policymakers, however, could help change that.

In Europe, shifting heavy trucks from oil fuels to hydrogen would create a big market, Pouyanné said. He compared the hydrogen industry to LNG about 40 years ago—the latter needed large projects to lower costs. For mass hydrogen production, “demand will be key,” he said.

Both CEOs agreed that renewables of all forms will be needed to meet decarbonization targets, and there is plenty of room for investments in the renewables space.

Competition is good for customers at the end, Pouyanné said. However, when it comes to sharing risks, technology and bringing down costs, it’s good that big players are working together, he added.

Total and Iberdrola in January said they are jointly developing plans for a windfarm offshore Denmark in the North Sea. If successful in the Thor windfarm tender, the two would be behind one of the world’s largest windfarms with a capacity between 800 MW and 1,000 MW.

They face competition, however, from others that include Ørsted Wind Power and Vattenfall Vindkraft along with three consortia—Copenhagen Infrastructure IV Thor OFW and Andel Holding; Eneco Wind B.V. and European Energy A/S; and RWE Wind Holding and RWE Offshore Wind.