Norges-Iberdrola Deal Steadies Iberia EPC Pipeline

At two trillion dollars, the sovereign wealth fund of Norway is the largest of its kind anywhere in the world. In fact, the amount of money in the Government Pension Fund of Norway is so large that it beats out the annual GDP of all but a handful of the world's nations.

How exactly did a country with a population of just 5.5 million accumulate such a vast pot of money? The country's natural oil reserves have certainly helped, though Norway's fossil fuel resources are only large enough to place it 20th in the world rankings. In truth, the main thing that has helped Norway's wealth fund grow so large is the discipline and strategy with which the country has invested its fossil fuel revenues over the years.

Norges Bank is the financial institution which manages Norway's sovereign wealth fund. Naturally, it has developed a reputation for being one of the world's shrewdest investors in recent years, with its investments regarded as rubberstamped returners. As such, the bank's investments in Spanish energy giant Iberdrola say a lot about the Bilbao-based company's standing in the global energy sector.

It has been a little over three years since Norges and Iberdrola formed an alliance with the intention of expanding renewable energy infrastructure across Iberia. This week, that joint venture has crossed a significant threshold. The alliance has officially reached 1,500MW of operational renewable capacity, pushing well past the halfway mark of its 2,500MW target.

From shareholder to partner

For more than seven years, Norges Bank Investment Management held roughly 3% of Iberdrola's shares, watching the utility's renewable expansion from the sidelines. That changed in January 2023 when the bank took the unusual step of converting part of its equity position into operational assets.

The fund committed US$600m for a 49% stake in 1,265MW of solar and wind projects already generating power, with Iberdrola retaining 51% ownership and full operational control. That particular investment went on to establish a structure that proved to be scalable.

Doubling down in Davos

What began as a modest experiment in co-investment quickly proved its worth. Barely a year after the initial deal, Iberdrola's Executive Chairman Ignacio Galán and Norges Bank CEO Nicolai Tangen stood together at the World Economic Forum in Davos to announce they were doubling the alliance.

The January 2024 expansion added 1,300MW to the partnership, bringing the total committed portfolio to 2,500MW across Spain and Portugal. This marked the fund's first move into Portuguese renewable assets.

"Today we have expanded our clean energy alliance to advance the development of renewables in the Iberian Peninsula in a faster, more consolidated and competitive way," Ignacio said at the time. "Innovative agreements like this allow us to combine our knowledge in clean energy and our financial strength with those of Norges Bank Investment Management, a truly progressive partner."

Nicolai, meanwhile, was just as enthusiastic: "We are really pleased to announce this new important deal with our great partner Iberdrola," he said. "It gives us more critical mass in Spain and is also our first step into Portugal."

The expansion transformed the partnership from a single transaction into a strategic platform capable of absorbing projects at scale. By April 2024, both parties had concluded negotiations to add another 644MW of solar capacity still under construction.

Reaching 1.5GW across Iberia

The pace of asset integration has intensified since 2024 as construction projects have reached completion. Peñarrubia in Murcia became the first plant from the under-development pipeline to come online, adding 50MW to the partnership.

Then there was the eye-watering 708MW of energy brought by two massive solar installations in Extremadura.

The Ceclavín and Tagus XL photovoltaic plants pushed operational capacity to nearly 900MW, more than quadrupling the joint venture's size in less than two years.

Two further Spanish solar plants brought 646MW online recently. Caparacena in Granada and Ciudad Rodrigo in Salamanca now generate enough electricity to power more than 800,000 homes while avoiding 85,000 tonnes of annual CO₂ emissions.

Additional projects currently in advanced construction stages are expected to join the portfolio in the coming months, continuing the march towards the 2,500MW target established in early 2024.

A template for scale

The partnership brings together two organisations operating at vastly different scales but with complementary objectives. Norges Bank now invests in around 9,000 companies globally, averaging 1.5% ownership of all listed firms worldwide and 2.5% across Europe.

For a fund of its magnitude, the US$2bn alliance it shares with Iberdrola is a rather modest commitment, yet it offers something that is becoming increasingly valuable: direct exposure to operational renewable infrastructure with a trusted partner.

Iberdrola, meanwhile, gains access to patient capital that allows it to maintain majority control while recycling proceeds into new development opportunities.

The Spanish utility has deployed similar structures elsewhere, most notably with Masdar on US$15bn worth of offshore wind projects in Germany, the UK and the US.

The Norges Bank partnership remains concentrated in the Iberian Peninsula for now, though both parties have indicated the model could extend to other geographies.

What began as a single transaction converting equity into assets has evolved into a repeatable platform for renewable infrastructure investment at scale. With roughly 1,000MW still to be integrated from the committed pipeline, the alliance appears likely to reach its 2,500MW target well before any discussion of what comes next.