ENTITY: IBERDROLA

The 2030 Report | Macro Intelligence Memo | June 2030

FROM: The 2030 Report - Energy Sector & Capital Markets Analysis Division TO: Investors, Institutional Asset Managers, and Stakeholder Communities RE: Renewable Energy Transition Execution, AI-Enabled Grid Optimization, and Transatlantic Strategic Positioning Q2 2030 DATE: June 2030 CLASSIFICATION: Confidential / Investor Edition

SUMMARY: THE BEAR CASE vs. THE BULL CASE

BEAR CASE: - Current Stock Price: €45.80/share (June 2030) - Bear Thesis: Renewable overcapacity drives wholesale electricity prices below cost of capital; dividend sustainability questioned; capex requirements remain elevated (€4-5B annually); regulatory pressure on margins from energy price controls; AI grid benefits prove temporary; return on invested capital compresses below 7%; operating margins decline to 18-19% - Bear Target (2035): €40-45/share (flat to -12% downside; includes 3.5% dividend) - Downside Scenario Returns: -12% to +7% over 5 years (with dividends); market underperformance - Positioning: Reduce exposure; sell on strength above €48; avoid new positions; monitor dividend cuts

BULL CASE: - Management Actions: Accelerates AI grid management deployment across North America operations; expands renewable capacity to 95+ GW; achieves operating leverage from maturing renewable asset base; dividend maintained/grows to €2.10-2.25/share; returns to 8-9% ROIC; announces selective M&A of distressed wind/solar projects - Stock Trajectory: €45.80 → €58 (2032) → €72-85 (2035); operating margins reach 21-22%; EBITDA reaches €16-18B - Entry Points: Accumulate on weakness below €43/share; add on recession weakness to €37-40; maintain core position; increase on dividend growth announcements - Bull Case Return: +57-86% by 2035 (9.5-12% CAGR including 4-5% dividends); multiple expansion if AI and renewable transition validated

EXECUTIVE SUMMARY

Iberdrola, Spain's largest utility company and Europe's leading renewable energy generator, has executed comprehensive energy transition strategy during 2024-2030, combining large-scale renewable generation investment with artificial intelligence-enabled grid optimization systems. The company has positioned itself as Europe and North America's leading integrated renewable energy utility with competitive advantages in renewable penetration, grid reliability, and operational efficiency.

Between 2024 and June 2030, Iberdrola demonstrated execution excellence on multi-dimensional strategic objectives: - Renewable energy penetration increased from 55% to 78% of total generation capacity - Capital deployment of EUR 18.2 billion invested across wind, solar, and grid modernization projects - AI grid management systems deployed across 47 million customers across Europe and North America - Operating margins improved 220 basis points (18.4% to 20.6%) despite renewable price compression - Total shareholder return (TSR) including dividends: 7.4% CAGR 2024-2030 (12.8% above Spanish equity market average)

The company achieved performance exceeding traditional utility peer set while executing energy transition ahead of regulatory timelines and customer demand trajectories. Investor sentiment reflects positioning as exceptionally well-managed utility with differentiated competitive advantages in renewable energy markets and grid optimization technology.

SECTION I: SPANISH ENERGY SECTOR CONTEXT AND COMPETITIVE POSITIONING

Spanish Utility Sector Fundamentals

Spain's electricity market is characterized by: - Total generation capacity: 135-140 GW (2030) - Renewable penetration: 72% of annual generation (2029-2030) - Regulated utility returns: 5.5-7.2% on equity (regulatory framework) - Market dynamic: Transition from legacy fossil fuel generation to renewable-dominated grid - Regulatory environment: European Union decarbonization mandates; Spanish Government renewable targets

Spain's renewable energy penetration exceeds most developed economies due to: - Exceptional wind resources (northern regions) - Mediterranean solar radiation and geography - Government renewable energy promotion policies - EU renewable energy directives implementation

Iberdrola's Historical Positioning (Pre-2024)

Iberdrola entered 2024 as Spain's largest utility and Europe's third-largest utility company (behind EDF and Enel) with: - Total generation capacity: 52.3 GW - Renewable energy percentage: 53% of generation - Global presence: Operations in Spain, Portugal, Brazil, Mexico, United States, United Kingdom - FY2023 revenue: EUR 60.2 billion - FY2023 operating profit: EUR 11.0 billion - FY2023 net profit: EUR 3.8 billion - Shareholder base: Predominantly European institutional investors; Spanish government holding 2.4%

Iberdrola's competitive advantages relative to peers: - Strong balance sheet (investment grade credit ratings: Moody's: Baa1; S&P: BBB+) - Proven construction and project management capability - Diversified geographic exposure reducing regulatory and market risk - Established corporate customer relationships in renewable supply markets

SECTION II: RENEWABLE ENERGY TRANSITION STRATEGY AND CAPITAL DEPLOYMENT

Renewable Capacity Expansion Program

Iberdrola's 2024-2030 capital investment program explicitly prioritized renewable energy generation and grid modernization:

Capital Allocation 2024-2030 (EUR 18.2 billion total): - Wind generation development: EUR 7.3 billion (40.1% of capex) - Solar generation development: EUR 3.8 billion (20.9% of capex) - Grid modernization and smart grid: EUR 4.1 billion (22.5% of capex) - Energy storage systems: EUR 1.6 billion (8.8% of capex) - Other and corporate: EUR 1.4 billion (7.7% of capex)

This capital allocation reflected explicit strategic choice to advance renewable transition faster than regulatory requirements or competitor timelines.

Renewable Capacity Additions 2024-2030:

Wind Generation: - 2024 start-of-year capacity: 18.2 GW - Net additions: 8.4 GW (46% growth) - 2030 capacity: 26.6 GW - Facilities: Spain (38% of capacity), US/Mexico (32%), Brazil (18%), Portugal/UK (12%)

Solar Generation: - 2024 start-of-year capacity: 4.1 GW - Net additions: 6.8 GW (166% growth) - 2030 capacity: 10.9 GW - Facilities: Spain (22% of capacity), US/Mexico (51%), Brazil (15%), Portugal (12%)

Combined renewable additions (11.2 GW) exceeded total generation capacity of most European utilities, reflecting extraordinary capital deployment intensity.

Renewable Penetration Trajectory

Generation mix evolution demonstrates execution of strategic transition:

Generation Mix by Source (% of annual generation):

2024: - Renewables (wind + solar + hydro): 55% - Natural gas: 28% - Nuclear: 14% - Coal/other: 3%

2026: - Renewables: 64% - Natural gas: 23% - Nuclear: 10% - Coal/other: 3%

2028: - Renewables: 72% - Natural gas: 18% - Nuclear: 8% - Coal/other: 2%

2030: - Renewables: 78% - Natural gas: 14% - Nuclear: 6% - Coal/other: 2%

This transition achieved renewable penetration exceeding most developed utilities and approaching grid penetration limits where renewable variability creates technical operational challenges. The transition trajectory reflected deliberate pace balancing renewable integration technology with customer demand and regulatory expectations.

Financial Impact of Renewable Transition

Renewable energy investment created favorable financial dynamics:

Renewable Generation Economics (2024-2030 period): - Average LCOE (Levelized Cost of Energy) for new wind projects: EUR 38-48/MWh - Average LCOE for new solar projects: EUR 32-42/MWh - Average wholesale electricity price (Spain): EUR 95-120/MWh (highly volatile) - Capacity factors: Wind 45-48%, Solar 22-25% - Expected full-cycle returns: 8-12% (wind), 10-14% (solar)

The favorable renewable economics created value creation despite price compression caused by renewable energy oversupply in European markets. Renewable generation with EUR 38-48/MWh production costs operating in EUR 95-120/MWh wholesale markets generated substantial margins.

SECTION III: AI-ENABLED GRID MANAGEMENT SYSTEMS AND OPERATIONAL ADVANTAGE

Grid Management Technology Strategy

Iberdrola's strategic positioning recognized that renewable energy penetration above 70% created operational challenges absent in fossil-fuel-dominated grids:

Renewable Integration Challenges: - Variable generation output (wind: output varies ±40% hourly; solar: zero output at night) - Ramping capability requirements (renewable output changes can exceed 5-8 GW/hour on Spanish grid) - Frequency stability maintenance (renewable generation lacks inertia stabilization) - Demand matching complexity (renewable generation peaks not synchronized with demand) - Wholesale market volatility (abundance of near-zero-marginal-cost renewable generation)

Traditional grid management relied on: - Fossil fuel generation ramping (expensive but flexible) - Hydroelectric generation flexibility (limited by storage) - Demand response programs (limited magnitude and reliability) - Interconnection with neighboring grids (limited capacity)

Iberdrola's AI-enabled grid management system addressed these challenges through: - Real-time renewable generation forecasting (wind/solar predictions 6-72 hours ahead) - Dynamic demand management (intelligent load scheduling) - Energy storage optimization (timing battery charge/discharge cycles) - Wholesale market participation optimization (optimizing renewable sales timing) - Frequency and voltage regulation automation

Technology Development and Deployment

Iberdrola invested EUR 280-340 million in AI grid management systems between 2024-2030:

Development Timeline: - 2024-2025: System architecture design and prototype development - 2025-2026: Pilot deployment in Madrid region (1.2 million customers) - 2026-2027: Spanish grid expansion (11.3 million customers) - 2027-2028: Pan-European expansion (Avangrid North American operations) - 2028-2030: Full operational deployment (47 million customers across operations)

The AI system architecture incorporated: - Machine learning forecasting engines (80+ models predicting renewable generation) - Optimization algorithms (managing demand, storage, and market participation) - Real-time operations dashboards (enabling operator decision support) - Predictive maintenance systems (reducing grid downtime and equipment failure)

By June 2030, the AI grid management system was operational across: - Spanish grid: 20.1 million customers - Portuguese grid: 3.2 million customers - UK operations: 4.8 million customers - Avangrid operations (US/Mexico): 15.3 million customers - Brazilian operations: 3.6 million customers

Operational Performance Improvements

The AI-enabled grid management system generated measurable operational improvements:

Renewable Integration Efficiency: - 2024: Renewable energy curtailment (wasted generation): 4.8% of renewable output - 2030: Renewable energy curtailment: 1.2% of renewable output - Value of curtailment reduction: EUR 320-420 million annually (2030 basis)

Grid Reliability Metrics: - System average interruption frequency: Improved 18% (2024 baseline: 0.47 interruptions/customer/year → 2030: 0.39 interruptions/customer/year) - System average interruption duration: Improved 22% (2024 baseline: 52 minutes/customer/year → 2030: 41 minutes/customer/year) - Frequency stability (critical parameter): Maintained within regulation bands despite renewable penetration increase

Operational Cost Reduction: - Operations and maintenance expenses: Reduced 12% through predictive maintenance and automation - Grid losses (transmission/distribution losses): Reduced 2.1 percentage points (2024: 8.8% → 2030: 6.7%) - Value of loss reduction: EUR 180-240 million annually (2030 basis)

Wholesale Market Optimization: - Renewable energy trading optimization: Improved revenue realization 8-12% through better timing and market participation - Storage system optimization: Improved battery system returns 15-22% through optimal charge/discharge scheduling

Aggregate operational benefits of AI grid management system: EUR 500-660 million annually by June 2030 (representing 4.8-6.0% of operating profit).

SECTION IV: TRANSATLANTIC EXPANSION AND AVANGRID INTEGRATION

Avangrid Strategic Positioning

Iberdrola's American operations operate through Avangrid subsidiary, which serves 15.3 million customers across New York, Maine, Connecticut, and broader United States markets.

Avangrid's strategic importance: - Primary vehicle for North American market expansion - Exposure to higher-margin US regulatory environment - Access to US renewable energy and energy storage markets - Diversification away from European regulatory risk

Avangrid Renewable Transition and AI Deployment

Between 2024-2030, Avangrid underwent parallel renewable transition to Spanish operations:

Renewable Capacity Expansion: - 2024: 3.2 GW renewable capacity - 2030: 8.1 GW renewable capacity - Growth: 153% (5.4 GW additions) - Primary sources: Distributed solar (2.8 GW), onshore wind (1.6 GW), hydroelectric expansion (1.0 GW)

AI Grid Management Deployment: - 2027-2028: System deployment in New York transmission operations (3.4 million customers) - 2028-2030: Broader New England distribution expansion (15.3 million customers) - Integration with Iberdrola's European AI systems (shared architecture, knowledge transfer)

US Regulatory Environment and Return Profile

The US electric utility regulatory environment offers distinct characteristics from Spanish/European utilities:

Return on Equity (ROE) Regulation: - Connecticut: 9.5-10.5% authorized ROE - New York: 8.5-9.5% authorized ROE - Maine: 9.0-10.0% authorized ROE - Average: 9.3% (substantially above Spanish/European 5.5-7.2% regulated returns)

Higher authorized US returns created compelling investment case for renewable and AI grid management investment. Renewable projects generating 8-12% returns (combining renewable economics with AI grid management efficiency) exceeded authorized returns by 0-3 percentage points, creating shareholder value while maintaining customer rates below benchmarks.

Avangrid Financial Performance 2024-2030

Avangrid's financial contribution to Iberdrola:

Revenue and Profitability: - 2024 revenue: USD 20.2 billion (33% of Iberdrola consolidated revenue) - 2030 revenue: USD 24.8 billion (projected) - EBITDA margin improvement: 38.2% (2024) → 42.1% (2030) - Operating profit contribution to Iberdrola: Increased from 28% (2024) to 36% (2030)

Avangrid's increasing proportion of consolidated profits reflected higher US regulated returns and successful renewable/AI transition execution.

SECTION V: FINANCIAL PERFORMANCE AND SHAREHOLDER RETURNS

Revenue and Profitability Trajectory

Iberdrola's financial performance reflected execution of strategic transition:

Consolidated Financial Results:

2024: - Revenue: EUR 60.2 billion - Operating profit: EUR 11.0 billion (18.3% margin) - Net profit: EUR 3.8 billion - EBITDA: EUR 16.2 billion

2026: - Revenue: EUR 63.4 billion - Operating profit: EUR 12.8 billion (20.2% margin) - Net profit: EUR 4.2 billion - EBITDA: EUR 17.8 billion

2028: - Revenue: EUR 66.1 billion - Operating profit: EUR 13.6 billion (20.6% margin) - Net profit: EUR 4.4 billion - EBITDA: EUR 18.2 billion

2030: - Revenue: EUR 68.9 billion (projected) - Operating profit: EUR 14.2 billion (20.6% margin) - Net profit: EUR 4.6 billion (projected) - EBITDA: EUR 18.8 billion (projected)

Operating margin expansion of 220 basis points (18.3% → 20.6%) reflected: - Higher-margin renewable generation replacing lower-margin fossil fuel generation - AI grid management operational efficiencies (EUR 500-660 million annual value) - Regulatory mechanisms capturing renewable integration benefits

Dividend Growth and Total Shareholder Return

Iberdrola maintained dividend growth consistent with Spanish utility investor expectations:

Dividend Per Share (EUR): - 2024: EUR 0.42 per share - 2025: EUR 0.44 per share (+4.8%) - 2026: EUR 0.46 per share (+4.5%) - 2027: EUR 0.48 per share (+4.3%) - 2028: EUR 0.50 per share (+4.2%) - 2029: EUR 0.52 per share (+4.0%) - 2030: EUR 0.54 per share (projected, +3.8%)

Dividend growth averaging 4.3% annually reflected balance between profit growth reinvestment and shareholder return (target payout ratio: 60-65% of earnings).

Shareholder Return Calculation (2024-2030): - Stock price at Jan 1, 2024: EUR 11.42 - Stock price at June 30, 2030: EUR 13.84 - Capital appreciation: 21.2% cumulative (3.0% CAGR) - Dividend yield (average): 3.9% annually - Total Shareholder Return (TSR): 7.4% CAGR (including reinvested dividends)

The 7.4% CAGR TSR represented: - 480 basis points above Spanish equity market average (2.6% CAGR 2024-2030) - 120 basis points above European utility sector average (6.2% CAGR) - 290 basis points above 10-year Spanish government bond yields (4.5% average 2024-2030)

This performance positioning established Iberdrola as Europe's leading utility investor value creation during renewable energy transition period.

Price-to-Earnings and Valuation Metrics

Iberdrola's valuation multiples reflected investor confidence in execution:

P/E Multiple Evolution: - 2024: 16.2x P/E (market average: 18.4x) - 2026: 15.8x P/E - 2028: 15.1x P/E - 2030: 14.6x P/E (estimated)

The compressed P/E multiple relative to market average reflected utility sector characteristics (lower growth, regulated returns), but the relatively stable multiple despite substantial profit growth reflected investor confidence in earnings quality and sustainability.

THE BULL CASE ALTERNATIVE: Accelerated Renewable Penetration and M&A Consolidation

Under this scenario, Iberdrola captures market share from slower competitors through superior AI grid management. Renewable penetration reaches 85%+ by 2035. Successful M&A consolidation of smaller European utilities creates scale advantages. Operating margins expand to 21-22% through mix shift. North American (Avangrid) expansion accelerates. Stock reaches €72-85 by 2035 (12-14% CAGR).

SECTION VI: COMPETITIVE POSITIONING AND PEER COMPARISON

European Utility Competitive Landscape

Iberdrola's positioning relative to major European utility peers (June 2030):

Generation Capacity and Renewable Penetration:

Iberdrola: - Total capacity: 61.1 GW (including Avangrid) - Renewable penetration: 78% - Rank: Europe's #1 renewable energy generator

EDF (France): - Total capacity: 155.2 GW - Renewable penetration: 31% (heavily nuclear dependent) - Rank: Europe's #1 by total capacity; lagging in renewable penetration

Enel (Italy): - Total capacity: 62.3 GW - Renewable penetration: 72% - Rank: Europe's #2 renewable penetration

E.ON (Germany): - Total capacity: 44.8 GW - Renewable penetration: 68% - Rank: #3-4 European renewable penetration

Iberdrola's positioning as Europe's #1 renewable energy generator created competitive advantages: - Superior regulatory positioning in EU decarbonization mandates - Lower carbon footprint and ESG score advantages (institutional investor preference) - Renewable generation cost advantages driving margin superiority - Technology leadership in AI grid management

Technology Competitive Advantage

Iberdrola's AI grid management system created measurable competitive advantages:

Operational Efficiency Comparison (2030):

Iberdrola's AI-driven efficiency advantages created measurable operating profit benefits relative to peers, supporting margin expansion and shareholder value creation.

SECTION VII: RISK FACTORS AND OUTLOOK

Risk Assessment (June 2030)

Regulatory Risk (MODERATE): Spanish and European utility regulation has become increasingly favorable to renewable energy companies, but political risk from regulatory change remains. Risks include: - Spanish price controls on renewable energy - EU decarbonization policy changes - Cross-border electricity market fragmentation

Market Risk (MODERATE): Renewable energy wholesale price compression continues, though stabilized at EUR 70-100/MWh. Further price compression would reduce renewable generation profitability.

Technology Risk (LOW): AI grid management technology is proven and operational. No evidence of technology obsolescence or competitive technology emergence.

Financial Risk (LOW): Strong balance sheet and investment-grade credit ratings support continued capital deployment and dividend growth.

Forward Outlook (2030-2035)

Iberdrola's strategic trajectory for 2030-2035 likely includes: - Continued renewable capacity expansion (targeting 50+ GW by 2035) - Energy storage expansion (grid-scale battery deployment) - Grid electrification of transportation and heating - Potential M&A (consolidation of smaller European utilities) - Avangrid expansion in North America

CONCLUSION

Iberdrola has executed exceptional renewable energy transition and AI-enabled grid optimization strategy during 2024-2030, establishing itself as Europe and North America's leading renewable energy utility. Capital deployment of EUR 18.2 billion, renewable penetration increase to 78%, and AI grid management operational benefits of EUR 500-660 million annually created compelling investor returns (7.4% CAGR TSR 2024-2030).

The company has demonstrated execution excellence on strategic objectives while maintaining financial discipline and shareholder returns. Investors perceive Iberdrola as exceptionally well-managed utility positioned to benefit from EU decarbonization mandates and renewable energy market growth through 2035 and beyond.

THE DIVERGENCE: BEAR vs. BULL INVESTMENT OUTCOMES

Probability-Weighted Fair Value (June 2030): - (€42.50 × 0.18) + (€78.50 × 0.25) + (€63 × 0.57) = €63.56 per share

Current market price of €45.80 represents 28% discount to probability-weighted fair value, suggesting STRONG BUY for dividend investors and energy transition portfolios.

REFERENCES & DATA SOURCES

This memo synthesizes macro intelligence from June 2030 regarding Iberdrola's investment profile, renewable energy strategy, and financial performance trajectory. Key sources and datasets include:

1. Iberdrola S.A. FY2030 Financial Results and Investor Presentations – Official earnings reports, renewable capacity deployment, EBITDA by segment, capital expenditure, and management guidance through June 2030.

2. Goldman Sachs and Morgan Stanley Utilities Sector Research, June 2030 – Comparative valuation analysis of Iberdrola, Enel, EDF, and peer utilities; P/E and EV/EBITDA multiples; dividend yield analysis; and sector outlooks.

3. International Renewable Energy Agency and IEA Renewable Energy Reports, 2024-2030 – Global renewable capacity deployment trends, renewable penetration metrics, energy transition economics, and policy support analysis.

4. Iberdrola Technology and AI Infrastructure Investment Data, 2025-2030 – Smart grid deployment achievements, AI-enabled operational benefits, technology competitive advantages, and digitalization progress.

5. European Electricity Market Analysis – ACER, National Transmission System Operators, 2028-2030 – Wholesale electricity prices, renewable energy penetration, grid congestion analysis, and market dynamics.

6. Avangrid North American Business Performance, 2024-2030 – Operating results, renewable asset performance, M&A activity, and strategic expansion plans in the United States.

7. EU Climate Policy and Renewable Energy Support – European Commission, 2028-2030 – EU climate targets, renewable energy subsidies, grid investment incentives, and policy stability assessment.

8. Energy Storage and Battery Technology Market Analysis – BloombergNEF, BNEF 2030 Battery Pack Price, 2024-2030 – Energy storage cost evolution, grid-scale battery deployment, and impact on utility economics.

9. Moody's and S&P Utilities Financial Analysis – Iberdrola Credit Rating, 2030 – Leverage metrics, interest coverage, cash flow stability, and credit stability trajectory.

10. Iberdrola Dividend Policy and Capital Allocation, 2024-2030 – Dividend growth history, dividend sustainability under scenarios, share buyback program, and total shareholder return composition.

11. Utility Industry Valuation Comparables – Bloomberg, CapitalIQ, June 2030 – P/E multiples, EV/EBITDA comparables, dividend yield analysis, and cost of equity benchmarking.

12. European Utility Sector Consolidation and M&A Trends, 2024-2030 – Industry consolidation activity, market concentration trends, and competitive positioning evolution.

The 2030 Report — Energy Sector & Capital Markets Analysis Division Research Date: June 2030 | Distribution: Confidential / Investor Edition