Multinational renewable energy company Iberdrola reaffirmed its commitment to the data center sector, indicating it is in advanced conversations about creating a joint venture (JV) to develop new data center capacity in Spain.
Revealed in its latest earnings call, as part of the JV, Iberdrola will contribute land and network connections, participate in the design and licensing processes, and guarantee 24/7 renewable energy supply from its existing portfolio or new dedicated assets.
The unnamed JV partner will hold the majority interest in the company and be responsible for the construction, operation, and commercialization of the data center.
The deal is expected to be established in the first half of 2025 and would initially focus on Bilbao-based Iberdrola’s home market before expanding into other markets.
Last month, Bloomberg reported that Iberdrola will provide a planned Spanish data center with a grid connection and renewable power in exchange for up to 20 percent of the facility, which will cost as much as €2 billion ($2.2bn) to build.
The decision follows an announcement in July of the formation of a new data center unit within the Spanish market.
In addition, the company reported that it had supplied upwards of 10TWh per annum to companies covering their energy needs related to data and artificial intelligence.
In the earnings call, Ignacio Galan, executive chairman of Iberdrola, indicated that data center and technology companies will make up the bulk of off-takers for new and existing renewable assets to power their operations.
“There is a huge appetite for the technology companies to sign contracts for longer periods of time with prices -- forward prices above the actual one for securing more amount of energy,” Galan said, “the demand of more electricity in this moment worldwide is huge, especially for new demand like data centers,” he continued.
As a result, data centers have become one of Iberdrola’s main customers due to their 24/7 energy consumption requirements. Iberdrola is one of the largest renewable energy suppliers to the data center market. It has Power Purchase Agreements with the likes of Amazon, Meta, Vodafone, and O2 Telefónica.
In addition, Galan indicated Iberdrola’s openness to exploring traditional nuclear and small modular reactor solutions for the data center market to meet its 24/7 energy demand.
“I think nuclear can be a solution, no doubt, where the energy policy allows us to do so,” he said.
Galan added that he saw the potential for extending the life of existing nuclear power plants within the European market. However, he tempered this optimism by stating that unlike the US, where several traditional nuclear plants have been extended, European countries need to set out a clear energy policy that makes it attractive to extend the life of these facilities.
Despite the great promise in SMRs, Galan said that most are in the "demonstration” phase and are likely to reach the market by 2035.
