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Ignacio Galán, CEO of World’s Number One Wind Company, Iberdrola, on Electrifying Economies; Welcoming Competition with Oil and Gas Players; Versatile Applications of Green Hydrogen and the U.S. Being the Company’s "Core Country"

·9 min read

Galán speaks with IHS Markit Vice Chairman Daniel Yergin for the latest CERAWeek Conversations – available at www.ceraweek.com/conversations

In the latest edition of CERAWeek Conversations, Ignacio S. Galán, chairman and CEO of Iberdrola—the world’s number one producer of wind power—says he is "more than delighted" with the growing competition in the renewable energy space from traditional oil and gas players and that the opportunities to electrify economies means that "there is room for everybody."

In a conversation with Daniel Yergin, vice chairman, IHS Markit (NYSE: INFO), Galán discusses Iberdrola’s pioneering role in wind technology, despite skepticism from regulators, investors and competitors; innovative approaches to the energy transition; the multifunctional applications of green hydrogen across industries; and Iberdrola’s $30 billion investment plans in the United States, which he calls a "core country" of the company.’

The complete video is available at: www.ceraweek.com/conversations

Selected excerpts:
Interview Recorded Wednesday, November 18, 2020

(Edited slightly for brevity only)

  • On traditional oil gas companies moving into the renewable energy space:

    "I am more than delighted. Now they are becoming my competitors, in some cases they are already our allies because we are in talks with some of them for joint ventures together. There is room for everybody. We need to electrify the economy. Investments [for electrification] require tripling the investments we’ve made up to now. In the next 10 years we probably have to build around 4,000 new gigawatts of electricity. [There] is a place for everybody. Those who have been denying and growing against electrification [are now] welcome. Come on board."

  • On his vision for hydrogen energy:

    "[We would like] to transform existing uses of hydrogen which are being [made from] natural gas into green hydrogen with electrolyzers. Fertilizers, we are there. Refining, we would like to be there. [And we] are already working on steel production to use hydrogen instead of coal…At this moment we are building the largest electrolyzer in Europe in the center of Spain.

    "We are seeing there are a lot of industrial processes that are already using hydrogen—hydrogen already generated using natural gas as a raw material using the process of steam methane reforming. We saw that can easily be transformed with electrolyzers. We reached an agreement—we are the largest producer of ammonia in southern Europe—for transforming all the ammonia which is using hydrogen with green hydrogen. The vision and goal is to make 100% of the ammonia emission free.

    "We are seeing the same thing with other processes like steel or cement and eventually gasoline refining. We will be open to supply them using—in the case of southern Spain—high rates of [solar energy]. We can already produce cheap electricity in the sunny areas of the country. We can become the "Australia of Europe" generating hydrogen and ammonia."

  • On Iberdrola’s pioneering role in wind technology:

    "Twenty years ago, right after the Kyoto protocol was signed, we had a clear vision. I started in Iberdrola at the beginning of 2001. We strongly believed that climate change was a real threat and all sectors would have to be involved in one manner or another. Therefore, we needed to change the way we produce and consume energy—[that] for us was something we understood was already very needed. When we [constructed] our first plant we analyzed our technologies. We saw that the most efficient technology at that moment was wind; wind was the most convenient and most competitive technology.

    "For 20 years a lot of people were skeptical about our plan. Not many believed that what we were making made any sense. Regulators said [about green energy], ‘no, electricity has no color.’ Competitors said the wind never blows when it’s needed. And investors were thinking that the model [to follow] was Enron. We had a lot of people opposed in all sense. But we were very consistent with our strategy; we were fighting for our strategy, closing our coal power plants, closing our oil power plants, in some cases against the governments. And where we are today is an absolutely different situation.

    "We strongly believed that things can change, climate change will affect everybody, and everybody will have to provide resources, knowledge [and] capabilities to transform things in a different way. We were convinced that we could produce and generate electricity in a competitive manner with cleaner sources and we can distribute electricity with smarter grids. That has been our model during these 20 years."

  • On Iberdrola’s innovative thinking towards the energy transition:

    "Our approach has not changed in 20 years. We were so convinced that the decarbonized economy can already happen…There are technologies like offshore [wind] which can play more of a role in baseload. It’s one of the reasons why [in] my discussions with regulators in some countries they want to keep coal power plants in operation. Offshore can already provide baseload. Offshore can easily obtain 5,000 [kilowatt] hours per annum, which is practically baseload. Every day the wind is always blowing from the sea to the mainland. If you put offshore, plus storage, plus solar photovoltaic, which is already at peak in mid-day…you can absolutely provide the reliability the system requires.

    "We have to be very innovative. We have to make sure how to integrate all those things with the proper grid, with the proper transmission line, with the proper smart digital system—how to manage those [supplies] with demand. All those things have to be managed in a very innovative manner. That is why we are investing $400 million a year in innovation—to try to see how we can [make] better use of this electricity for providing direct service to the customers."

  • On Iberdrola’s commitment to the U.S. market:

    "We’ve been in the United States for almost 15 years. It is our core country. [In] our investment plan, more than $30 billion is going to be addressed to the United States from $75 billion, which is the [top] destination. We have been working with different federal administrations and we are already working in 25 states, each with different administrations."

  • On the roles of natural gas and nuclear in the energy transition:

    "Natural [gas] has a role to play during this transition period. The power plants [that we own] have decided to work [with gas] mostly as baseload. They are going to be used as backup. We have seen in some countries [that] as the share of renewables increases, the hours of operation of gas-fired power plants diminish. It’s more backup than the production itself, but there is still a role to play for keeping the system in operation.

    "Today the investment required for a nuclear power plant is much higher than any other solution. Nuclear already has variable costs, uranium has a cost, the operations and maintenance are very expensive, and nuclear waste costs a lot of money. Altogether it has a certain disadvantage [compared] to other technologies which have no variable costs—solar and wind—no nuclear waste, and very lower operational and maintenance costs. We own quite a few nuclear power plants. We have already reached agreements for closing existing ones in a period from 2028-2033."

  • On ESG and Iberdrola’s "social dividend:"

    "Many years ago, I introduced in our bylaws the concept of a "social dividend." Social dividend means many things—what we do in terms of our environment, what we do in terms of social [aspects], and what we do in terms of governance. I absolutely agree with this concept. My only concern in terms of environmental is to talk less in terms of percentages and to talk more about numbers.

    "In terms of social, we are very much aware. We are supporting 400,000 people through our suppliers and vendors, many [of them] concerned about their jobs. We advanced orders for the next three years [to assist them] in keeping their jobs.

    "[On] equality between women and men—when I came to the job there was one woman in a management position. At this moment we are almost half and half; almost half of my board members are women and they are chairing most of the committees of the board. In terms of governance, we are not the owners of the company. We are administrating the resources of the parties. We have to provide full transparency and the full means and show that the money they put in our hands is properly managed and not used in benefiting the few but used to benefit everybody."

Watch the complete video at: www.ceraweek.com/conversations

About CERAWeek Conversations:

CERAWeek Conversations features original interviews and discussion with energy industry leaders, government officials and policymakers, leaders from the technology, financial and industrial communities—and energy technology innovators.

The series is produced by the team responsible for the world’s preeminent energy conference, CERAWeek by IHS Markit.

New installments will be added weekly at www.ceraweek.com/conversations.

Recent segments also include:

  • Leadership Dialogue with Vicki Hollub – Occidental President and CEO interviewed by IHS Markit Vice Chairman Daniel Yergin

  • Post-Election Outlook: Energy, Climate & Geopolitics – Meghan L. O'Sullivan, Jeane Kirkpatrick Professor International Affairs, Harvard University; Atul Arya, chief energy strategist, IHS Markit; Nariman Behravesh, chief economist, IHS Markit. Moderated by IHS Markit Senior Vice President Carlos Pascual

  • Growing Share of Gas in India's Energy Mix: What is realistic? – Meg Gentle, president and CEO, Tellurian Inc.; Manoj Jain, chairman and managing director, GAIL India Ltd.; Ernie Thrasher, CEO and chief marketing officer, Xcoal Energy & Resources. Moderated by Michael Stoppard, chief strategist, global gas, IHS Markit

  • Indian Energy Innovation – Siddharth Mayur, founder and managing director, h2e Power Systems Pvt. Ltd.; Suruchi Rao, co-founder, Ossus Biorenewables; Vijay Swarup, vice president, research and development, ExxonMobil Research & Engineering Company. Moderated by Atul Arya, senior vice president and chief energy strategist, IHS Markit

  • Leadership Dialogue with Tengku Muhammad Taufik – PETRONAS President and Group Chief Executive interviewed by IHS Markit Vice Chairman Daniel Yergin

A complete video library is available at www.ceraweek.com/conversations.

About IHS Markit (www.ihsmarkit.com)

IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

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