Iberdrola's $1.3 billion deal signals focus on renewables

Spanish utility Iberdrola S.A. is selling three natural gas companies in New England for $1.3 billion to finance a major electricity transmission project in that region.

The major transmission upgrade is expected to enable the development of renewable energy in Maine.

In a news release Tuesday, Iberdrola said it has agreed to sell Connecticut Natural Gas, Southern Connecticut Gas and Maine-based Berkshire Gas Company to New Haven, Conn.-based UIL Holdings Corp. The divestiture is part of the Bilboa, Spain, company’s plan to shed what it considers non-strategic assets.

According to a Wall Street Journal report, the transaction will take Iberdrola, the world's largest generator of wind power, out of the gas-distribution business, allowing it to focus on renewable energy, its core business.

But this transaction's impact is more likely to be felt in Portland, Maine than Portland, Oregon. Iberdrola Renewables, which has its North American headquarters in Portland is a separate entity from Iberdrola S.A.

The proceeds will be used to finance most of a $1.4 billion transmission project being developed by subsidiary Central Maine Power that will include 500 miles of new and upgraded transmissions lines and five new substations.

The Maine Power Reliability Program is expected to spur the growth of renewable energy development in Maine, which has set a goal of generating 3,000 megawatts of renewable energy by 2030.

Iberdrola said it expects to invest more than $22 billion in new projects worldwide between 2010 and 2012, with half of that focused on renewable energy. The largest share of those investments — 39 percent — will be spent in the U.S.

The company said about 40 percent of its global project pipeline for renewables — about 24,400 megawatts — is in the U.S., where its Portland-based subsidiary is the nation’s second-largest operator.