The contrast between the UK and Spanish regulatory environments is central to understanding Iberdrola’s move. Photo credit: lma_ss/Shutterstock

Iberdrola’s decision to commit a record €14 billion to electricity networks in the United Kingdom marks one of the most significant investment moves made by a European energy company in years. Approved by the UK regulator Ofgem, the plan strengthens the role of ScottishPower, its British subsidiary, and deepens the firm’s long-term bet on stable, predictable markets. It also sends a clear signal to Madrid: unless Spain updates its regulatory framework for networks, major energy investments may increasingly flow elsewhere.

The investment centres on a vast package of new electricity transmission infrastructure, including several high-capacity subsea interconnectors linking Scotland with England and Wales. These links, essential for moving renewable energy from northern generation hubs to southern demand centres, form the backbone of Britain’s strategy to modernise its grid for the energy transition. For Iberdrola, the package represents the largest single networks investment in its corporate history.

What Iberdrola Is Building in the UK
A modern backbone for the British grid

At the heart of the plan are more than 1,100 kilometres of subsea cables and six major converter stations, forming a new high-voltage spine for the British electricity system. Projects such as the Eastern Link and Western Link expansions will enhance cross-border flow capacity and ease chronic congestion between Scotland’s renewable-rich regions and the industrial south.

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Beyond transmission works, the plan foresees thousands of jobs across construction, manufacturing, engineering and long-term maintenance. Iberdrola estimates that the programme will support around 12,000 jobs and generate €2.3 billion per year in economic activity. Much of this will be anchored in local supply chains, with UK-based firms already receiving procurement commitments worth several billion euros.

Importantly, Ofgem’s regulatory approval provides a clear timetable and guaranteed remuneration, allowing Iberdrola to deploy capital with long-term certainty. That contrasts sharply with conditions in Spain, where the remuneration for distribution and transmission networks remains under review.

Why Investment Is Flowing to the UK Instead of Spain
A tale of two regulatory frameworks

The contrast between the UK and Spanish regulatory environments is central to understanding Iberdrola’s move. Britain’s RIIO-T3 regulatory cycle offers clear returns, defined incentives and long-term visibility, three prerequisites for large-scale infrastructure investment. It also aligns with the UK’s political drive to rapidly expand grid capacity to support offshore wind, interconnection and electrification of transport.

Spain, however, remains locked in a contentious debate over the remuneration of electricity networks. The proposed methodology from the National Commission for Markets and Competition (CNMC) has drawn criticism from both major utilities and industry analysts, who argue that the draft returns do not cover the real costs of modernising and expanding the grid. Energy companies warn that an unattractive framework will deter investment at a time when Spain must upgrade networks to integrate renewables and electrify the economy.

For Iberdrola, the UK’s clarity stands in stark contrast to Spain’s uncertainty. The firm has openly indicated that future capital allocation will favour markets offering stable rules and predictable returns—meaning Britain and the United States currently top its list.

Key Points

  • Iberdrola has approved a record €14 billion investment in UK electricity networks, the largest in its history.
  • The plan includes subsea interconnectors, converter stations and extensive upgrades to support Britain’s energy transition.
  • The programme is expected to create around 12,000 jobs and deliver significant annual economic impact.
  • A stable UK regulatory model contrasts with Spain’s ongoing debate over network remuneration, influencing Iberdrola’s investment choices.
  • The company warns that without reform, Spain risks losing major infrastructure investment to international markets.

What This Means for Spain
A wake-up call for policymakers

Spain’s challenge is now twofold. First, it must ensure that its regulatory model remains competitive in attracting long-term, capital-intensive investment. Second, it must accelerate the modernisation of its own grid if it wants to avoid bottlenecks that could stall renewable development and electrification targets.

For policymakers in Madrid, Iberdrola’s UK move should not be seen merely as corporate strategy but as a barometer of investor confidence in Spain’s regulatory environment. If domestic conditions remain uncertain, more Spanish-based energy companies may be tempted to redirect investment abroad.

An investment with international and domestic implications

Iberdrola’s record-breaking UK commitment reinforces Britain’s role as a leading destination for energy-transition investment. It also highlights the importance of regulatory stability in shaping where Europe’s major energy players choose to build the grid of the future. For Spain, the message is clear: without modernised, predictable rules, the country risks falling behind in securing the infrastructure necessary for its own transition.