Efforts to improve domestic energy efficiency across the UK and reduce customers’ energy bills has resulted in a profit fall for Spanish energy giant Iberdrola, which owns ScottishPower.
The company’s financial results for the first quarter of 2013 reveal that net earnings stood at £740.4 million in the first quarter of 2013, which is a decline of 14.1%, while earnings before interest, taxes, depreciation and amortisation were down 3.7% at £1.9 billion.
For the first time, levies paid by the company exceeded personnel costs, particularly in the UK, where they were 30% higher, and the company has taken steps to point out that investing in boosting the energy efficiency of the country’s homes was a reason for the fall in profits.
Investment through ScottishPower means that the company “front-loaded” costs involved in meeting the coalition’s drive to reduce energy bills through the Energy Company Obligation (ECO).
Under the terms of ECO, which works alongside the Green Deal, major energy suppliers are required to offer support for packages of energy efficiency measures and provide insulation and heating to low-income and vulnerable households, as well as insulation measures to low-income communities.
Looking to the future
Iberdrola said that the implementation of these measures was the biggest factor affecting its performance in the UK, where earnings before interest, taxation, depreciation and amortisation stood at £430.4 million, 13.8% lower than last year.
However, the Spanish energy giant noted that its liquidity position remains comfortable, standing at £10.2 billion at the end of March, which is enough to meet financing needs for more than three years as the company continues its expansion through ScottishPower and its other business arms.
Further investment in wind power in the coming months and years is also set to boost Iberdrola’s profits, as the company seeks new ways of delivering power to consumers’ homes.