Investing for a World of Change

The eye of the storm: how a power company leads the energy transition

According to Ninety One’s Deirdre Cooper, “we are in the eye of the storm. This is a unique moment in time when capital allocators have an enormous role to play in funding the transition”. She discussed with José Sáinz, CFO of renewables-focused utility Iberdrola, how to finance the energy transition while keeping the lights on.

2021 M10 21

12 minutes

Deirdre Cooper
According to Ninety One’s Deirdre Cooper, “we are in the eye of the storm. This is a unique moment in time when capital allocators have an enormous role to play in funding the transition”. She discussed with José Sáinz, CFO of renewables-focused utility Iberdrola, how to finance the energy transition while keeping the lights on.

Fast view

  • Iberdrola has transitioned 65% of its generating capacity to renewables and spends US$10 billion a year on advancing the clean-energy transition.
  • It’s a great example of why a narrow focus on carbon-intensity (carbon-emissions/ revenues) is an inadequate measure of assessing a company’s contribution to decarbonisation and its climate-risk exposure – and why there’s a big difference between a low-carbon portfolio and a portfolio that is allocating capital to support the drive towards net zero.
  • Iberdrola’s carbon-intensity is more than double the market average, but it is accelerating the net-zero transition in countries worldwide. 
  • José Sáinz highlighted three things that need to happen to spur the flow of capital towards the net-zero transition, most of which must come from the private sector:
    • Regulators need to set predictable and transparent rules.
    • Governments need to remove bureaucratic and administrative barriers to investment.
    • Game-changing technology has to be developed further, which will likely include some hydrogen-based technologies.
  • According to Deirdre, the scale of the net-zero transition is daunting, but it also represents a huge opportunity: “The correlation between GDP and carbon emissions is 90%, so we need to completely break the economy and remake it in an entirely new shape. That shows both how hard the task is, but also the size of the opportunity for the companies that figure out how to do it.”

 

Please see full interview between Deirdre Cooper and José Sáinz here

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Deirdre Cooper
Portfoliomanager

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