Iberdrola Finalizes $6 Billion Deal to Sell Mexico Gas-Fired Plants

Spanish energy giant Iberdrola announced it has finalized an agreement to sell much of its power generation portfolio in Mexico to that country’s government. The $6 billion deal, first announced in April and completed June 12, will see Mexico take state control and operation of several power plants, including a dozen natural gas-fired facilities that produce about 10% of the country’s electricity.

Mexican President Andrés Manuel López Obrador said the deal enables state-owned power company Comision Federal de Electricidad (CFE) to have majority control of Mexico’s electricity market. Obrador said the agreement marks a “new nationalization of our electric industry.”

Iberdrola, like other energy companies, has battled with López Obrador’s administration over the past few years, and the deal reduces Iberdrola’s exposure in the Mexican market. The Mexican president has said Iberdrola has benefited from relationships with previous administrations, at times likening the energy company to Spanish invaders that took control of the country in the 16th century.

Andrés Manuel López Obrador (left), president of Mexico, and Ignacio Galán, chairman of Iberdrola, in April 2023 signed a deal in which Iberdrola cedes control of a dozen natural gas-fired power plants in Mexico to that country’s state-owned power company. Source: Iberdrola

Iberdrola in a news release Monday said its Iberdrola Mexico division and Mexico Infrastructure Partners (MIP) “signed a binding agreement whereby the trust led and managed by MIP acquires 55% of Iberdrola’s gross operating profit (EBITDA) in the country, including the associated contracts and more than 410 related jobs.” The release detailed 12 gas-fired power plants and one renewable energy facility—the 103-MW La Venta III wind farm—included in the deal.

Iberdrola said the natural gas-fired combined cycle power plants in the agreement operate “under the Independent Power Producer regime contracted with the Federal Electricity Commission (CFE).” The plants include:

  • Monterrey I and II (449 MW)
  • Altamira III and IV (1,096 MW)
  • Altamira V (1,155 MW)
  • Escobedo (878 MW)
  • La Laguna (537 MW)
  • Tamazunchale I (1,179 MW)
  • Baja California (324MW)
  • Topolobampo II (917 MW)
  • Topolobampo III (766 MW)

Private combined cycle gas-fired plants included in the deal are:

  • Monterrey III and IV (477 MW)
  • Tamazunchale II (514 MW)
  • Enertek (144 MW)

Iberdrola said the agreement has financial support from Mexico’s National Infrastructure Fund “and other public financial entities linked to the Mexican government.”

Ignacio Galán, chairman of Iberdrola, and López Obrador signed an agreement of intent for today’s deal in April, with both pledging support for more renewable energy development in Mexico, beginning with Iberdrola’s 105-MW Santiago wind farm in Guanajuato state.

Galán earlier had said he agreed with moves by López Obrador to increase state control of the country’s energy market. “That energy policy has moved us to look for a situation that’s good for the people of Mexico, and at the same time, that complies with the interests of our shareholders,” Galán said.

Iberdrola in an earlier securities filing related to the deal said it would continue to invest in renewable energy assets in Mexico. The company Monday said it has a renewables portfolio of about 6,000 MW in Mexico, providing power to private customers.

Darrell Proctor is a senior associate editor for POWER (@POWERmagazine).

SHARE this article