Analysts are positive about Iberdrola's award of the rights to develop three offshore wind farms in Scotland, which was made public yesterday. Iberdrola, through its subsidiary ScottishPower, has been awarded the seabed rights for the development of three offshore wind projects for a total capacity of 7 GW in the last auction held in Scotland.
Two of them will be floating and in alliance with the Shell oil company, MarramWind of 3 GW and CampionWind of 3 GW. The third, non-floating, will be developed exclusively by ScottishPower, MachairWind will be 2 GW. The investment required for its development has not been disclosed.
This award triples the offshore wind portfolio in Scotland to 10.1 GW (vs. 3.1 GW previously), 5 of which in alliance with Shell. The company has 35 GW globally of offshore wind capacity between installed capacity and pipeline.
"The news is positive because, while confirming the company's plans for offshore wind development, it strengthens Iberdrola's leadership position in the British Isles," explain the Renta 4 experts, who have an overweight recommendation for the electricity company's shares.
They also add that the start of the development of large-scale projects in floating offshore wind technology is favorable, a new technology in which Iberdrola "once again positions itself as a pioneer".
For its part, Barclays explains that in its previous report on Iberdrola, it estimated an increase of at least 25% in the additional pipeline to 22GW (from the previous 17.6GW).
"Given that yesterday's award triples Iberdrola's UK offshore wind pipeline to over 10GW (including 100% of the Shell joint venture), we think at least 25% growth is achievable (excluding 40% of the Shell joint venture)," the report adds. The British bank reiterates its overweight recommendation for Iberdrola.
Alantra points out that the results of the Scotwind lease are good news for Iberdrola and imply a material success rate compared to the 10GW submitted to the auction.
These experts note that it increases Iberdrola's UK offshore pipeline to 10GW, and its global offshore pipeline from c.23GW to c.28GW. Iberdrola (and its partner) will now initiate the design of the projects with the aim of making a final investment decision probably in the next 12-24 and looking to be able to submit the projects to the next tariff auctions."
Credit Suisse notes that "the lease fees are more reasonable than recent tenders (e.g. £0.03m/MW, assuming everything is developed), but there is considerable time before the assets can reach a final investment decision."