Earth Protect Blog

By Stanley Reed and Raphael Minder © The New York Times Co.

MADRID » In winter 2015, three directors of a Connecticut electric company met with a potential acquirer: a determined Spanish utility executive named José Ignacio Sánchez Galán, who surprised them with a bold vision for America’s utility industry.

“He was very clear then that he saw the U.S. as having enormous potential in renewable energy,” said John Lahey, who was chairman of the company, United Illuminating. “This guy six years ago was already way ahead of where the U.S. was.”

Galán clinched that deal for United Illuminating for $3 billion. His company, Iberdrola, is now poised, with a Danish partner, to begin constructing the first large-scale offshore wind farm in the United States, in waters off Massachusetts. Overall, Iberdrola and its subsidiaries reach 24 U.S. states and have investments in countries from Britain to Brazil to Australia.

For the past 20 years, since he took over Iberdrola, based in Bilbao, Spain, with 37,000 employees, Galán has been on a mission to upend the electrical-utility industry, a fragmented collection of companies tied to aging coaland oil-burning generators.

With a voracious appetite for acquiring utilities and making big investments in renewable energy, Iberdrola is now the world leader in combined wind and solar power outside China, according to Bernstein, a market research firm. And it looks well positioned to take advantage of what is likely to be a clean-energy boom in the coming years as the Biden administration in the United States and European countries tighten regulations and provide incentives to encourage investment in green energy.

“Galán without doubt was the chief executive of a big utility that first understood that the energy transition from fossil fuels to clean energy was unavoidable and that it would happen fast,” said Miguel Arias Cañete, a Spanish politician and former European commissioner for energy and climate action.

The changes at Iberdrola are happening elsewhere, as the electric power industry is being reconfigured not only by tougher environmental laws but also by the advantages of immense scale in buying wind turbines or solar panels.

Iberdrola joins a handful of utilities — Enel in Italy, Orsted in Denmark and NextEra Energy in the United States — that many analysts see as leaders of a new generation of “renewable majors,” comparable to the way oil majors such as Exxon Mobil and Royal Dutch Shell exercised huge influence on how the world used energy.

“This is all pointing to an industry where you have a relatively small number of very large players, who achieve scale in renewables and drive the costs ever lower,” said Sam Arie, an analyst at UBS in London.

Iberdrola was primarily a Spanish electric company in 2001 when Galán became CEO. Just a few years earlier, the 1997 Kyoto Protocol was signed, the first major international agreement to call on countries to reduce greenhouse gases to prevent global warming.

Many industrial giants vowed to fight laws to tighten emissions, but Galán was inspired. He said in an interview that he saw the agreement as an opening for businesses prepared to invest in technologies — such as wind power and solar power — that would help reduce greenhouse gas emissions.

“Instead of being a problem, I saw that as an opportunity,” Galán said. The geopolitical trends represented by Kyoto were “moving in my direction.”

Under a 12 billion euro restructuring plan that was considered radical at the time, Iberdrola sold much of its portfolio of emissions- spewing coal- and oil-fired power plants to invest instead in renewables as well as in networks for delivering electricity.

Galán concedes that his proposals seemed risky, given that they coincided with the spectacular collapse of Enron, another ambitious electric-power business.

But he pushed to expand, especially overseas. He recalled being drawn to invest in the United States when, during a visit, he took notice of all the wooden poles carrying power lines. If a country of such great technological prowess still needed wooden poles to transport its electricity, he figured, there was a lot of room for a company such as Iberdrola.