IBERDROLA has acquired from the German company Inergetic the rights for the promotion of a biomass plant in the town of Archidona (Malaga), with a power of 15 megawatts (MW).

The plant, which will start up in December 2007 after an investment of 34.7 million euros, will generate 117 million kilowatt hours (kWh) annually. The fuel used will be composed of forestry waste, wood and olive and garden prunings, which will be supplied by agricultural installations of the area, for which an undertaking to supply 40 % of the necessary quantity has been signed with the company Union Biomasa. The total quantity needed amounts to 102,000 tonnes per annum.

Inergetic is a German promoter of biomass plants that is developing installations in Germany and Spain, where it is carrying out projects in Seville, Granada and Almeria.

The building of the Archidona plant is added to the other forestry biomass plant that IBERDROLA will install in the municipality of Corduente (Guadalajara), near the area affected by the forest fire last year in the province.

These projects are further proof of IBERDROLA’s interest in renewable energy, a sector in which it is the world leader with an installed power of 4,004 MW at the end of the first half of 2006. The Company’s renewable energy installations are present in 12 Spanish regions (Castilla-La Mancha, Galicia, Castilla y León, La Rioja, Aragon, Comunidad Valenciana, Basque Country, Navarre, Murcia, Cantabria, Extremadura and Madrid) and in a further four countries: Greece, Portugal, France and Brazil.

IBERDROLA has closed major deals in these six months, like the acquisition of the French company, Perfect Wind, which has a portfolio of 600 MW projects, the purchase of Community Energy Inc (CEI) in the USA and the signing of a framework agreement with the City Council of Bayannaoer (Northern China) to seek locations to install wind farms.

Referring to other renewable energy, IBERDROLA has a portfolio of a total of 13 projects for thermo-electric solar plants in Spain, amounting to 605 MW of installed power. To this should be added the construction and exploitation of a bioethanol plant in Barcial del Barco (Zamora) and the wave energy project in Cantabria. In the field of cogeneration, included in the Special Regime as is renewable energy, IBERDROLA has also become the largest company in Spain in terms of installed power with 562 MW.

Growth forecast

Renewable energy comprises one of the growth pillars of the Company, whose target is to reach 6,200 MW of installed power in 2008 and 10,000 MW in 2011. The Company strategy has been focused till now on developing wind energy, consolidating its leadership in Spain while, at the same time, making progress in international expansion. Over the 2007 – 2011 period the development of this technology will be advanced, both in Spain and overseas and other options, such as solar or biomass will be pursued.

The aim of these initiatives is to carry on reinforcing IBERDROLA’s world leadership in the wind power sector. The Company’s interest for growth in the renewable energy sector falls within the framework of its commitment to sustainable development and is aligned with compliance with the Kyoto Protocol.