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IBERDROLA projects investments of approximately €16 billion between 2010-2012 to continue its programme of organic growth and consolidate international expansion which last year bore fruit with earnings above €2.87 billion.

By business area, €5.6 billion will be invested in networks, not including the €2.4 billion for the acquisition of Brazilian distribution company Elektro, €5.3 billion in renewables, €2.2 billion in generation and retail and €300 million for other activities.

This involves a reprogramming of investments previously envisages for the three-year period, reducing the amount assigned to organic growth in the different business areas though offset by the Brazil acquisition.

The investment programme, presented today at an Investor Day held in Madrid, nonetheless reaffirms the Company’s strategic priorities of focusing on regulated or partially regulated businesses – networks and renewables – which amount to more than 80% of the total (41% and 40%, respectively).

The Company projects 70% of investments for growth – 60% in transmission and distribution and 40% in liberalised business through hydro projects in Spain– and 30% to operations and maintenance. It confirms the goal of €3 billion in divestments for the 2010-12 period, and has completed 70% of this programme.

The investment programme will intensify the Company’s international diversification and 70% of Ebitda is projected from regulated business (networks and renewables) in 2012. By then, IBERDROLA expects traditional energy business in Spain to provide 35% of operating earnings, the UK 20%, Latin America 14%, the U.S. 9% and Renewables 22%.

Annual growth between 5-9%

IBERDROLA is projecting annual growth of between 5% and 9% in both Ebitda and in recurring net earnings (excluding extraordinary ítems), a range that has already been surpassed in the case of gross operating profit in 2010 results announced last week, with a rise of 10.5% to €7,528 million. The Company anticipates maintaining policy on shareholder returns.

The Group will continue efforts to increase efficiency, which improved 11% in 2010, and to strengthen the balance sheet. Last year equity stood at €31,663 million, adjusted net debt at €24,212 million and leverage at 43.3% (the last-two items excluding the impact of the tariff deficit).

In order to achieve these goals, the Company has created a new organization model that reflects the global dimension resulting from international expansion. This is structured along global business areas, full development of a corporate centre (which has so far enabled savings of €100 million) and coordinating geographical areas with a local focus.

The Company will at the same time continue to implement best practices in corporate governance, where it already meets 56 of the 58 recommendations of the Unified Code of Corporate Governance, to sustain its goal of long-term value creation in the interests of all stakeholders.

IBERDROLA has undergone a major transformation in the past decade that has seen it become Spain’s leading energy group, the fifth largest Spanish company in the Ibex 35 stock index, the global wind power leader and one of the world’s five largest electricity groups.

This has been possible due to a strategic vision that placed the Company ahead of developments in the energy sector through investments of around €67 billion in the 2001-2010 period. The fruits of this vision have been seen in two stages:

- 2001-2006: a focus on core energy business and on Spain and Latin America. At the close of this period, the Company had achieved its objective of doubling in size and in earnings. Installed capacity rose from 16,500 megawatts (MW) to 30,500 MW, while net earnings came to €1.66 billion in 2006.

- 2007-2010: intense growth outside Spain and consolidation. Integration of ScottishPower and Energy East (now IBERDROLA USA), and rapid expansion of the renewable energy subsidiary which is the world’s largest wind power operator with 12,500 MW. Total Group capacity at the end of this period was nearly 45,000 MW, making it one of the world’s top electricity groups.

As a result of this expansion over the previous 10 years, IBERDROLA last year achieved the highest production (154,073 million kWh,+8%), revenues (€30,431 million) and net earnings (€2.87 billion) in its history.

Major projects

IBERDROLA’s current strategy consists of consolidating businesses in the UK and the United States, as well as in Mexico and Brazil. The Company is also focused on creating the foundations for future growth with a focus on networks and renewable energy.

- United Kingdom: the Company will strengthen its presence in distribution and especially in renewables where IBERDROLA, with 932 MW in operating capacity, last year was awarded rights to develop one of the largest offshore wind farms in the world with up to 7,200 MW in capacity. The Company is also involved in the new nuclear build programme having acquired a site at Sellafield, together with GDF Suez and Scottish & Southern, where it could build a plant of 3,600 MW. Its ScottishPower subsidiary continues testing of carbon capture technology at Longannet.

- United States: President Obama’s energy policy has supported IBERDROLA’s plans in a market that is central to its development. The Company has already obtained more than $1 billion in grants from the U.S. government for wind projects. IBERDROLA RENOVABLES is the second largest wind operator there, with 4,600 MW in installed capacity and 25,000 MW in pipeline. Elsewhere, IBERDROLA USA is engaged in major distribution projects including an 800km transmission line in Maine which will upgrade the connection between this state and Canada and also a smart meter programme for 620,000 customers in the state.

- Spain and Portugal: apart from developing distribution infrastructure, including smart grid projects in Castellón and Bilbao, the Company is building some of the largest hydro plants in the world which will start operations during this decade.  In Spain it will install an additional 1,050 MW, expanding the power stations at La Muela in Valencia, and San Esteban and San Pedro in Galicia. In Portugal it will build the Alto Támega complex, one of the largest to be built in Europe in the past 25 years, with more than 1,000 MW in capacity.

- Latin America: IBERDROLA will focus activity in networks in Brazil with the agreed acquisition of Elektro, a distribution company with 2.17 million customers. It will also develop major hydro projects in the country, notably the 11,200 MW Belo Monte development. In Mexico, where it is the largest prívate sector electricity generator, with 5,000 MW in capacity, progammes are in place to optimise operational performance.

IMPORTANT INFORMATION

This announcement is not an offer for sale of securities in the United States, nor in any other jurisdiction. The securities referred to herein may not be sold in the United States absent registration or an exemption from registration under the US Securities Act of 1933, as amended.

FORWARD-LOOKING STATEMENTS

This communication contains forward-looking information and statements about IBERDROLA S.A. and its subsidiary IBERDROLA RENOVABLES, S:A:, including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, capital expenditures, synergies, products and services, and statements regarding future performance. Forward-looking statements are statements that are not historical facts and are generally identified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates” and similar expressions.

Although IBERDROLA, S.A. believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of IBERDROLA, S.A. shares are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of IBERDROLA, S.A., that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the public documents sent by IBERDROLA, S.A. and IBERDROLA RENOVABLES, S.A. to the Comisión Nacional del Mercado de Valores.

Forward-looking statements are not guarantees of future performance. They have not been reviewed by the auditors of IBERDROLA, S.A. and IBERDROLA RENOVABLES, S.A. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date they were made. All subsequent oral or written forward-looking statements attributable to IBERDROLA, S.A., or any of its members, directors, officers, employees or any persons acting on its behalf are expressly qualified in their entirety by the cautionary statement above. All forward looking statements included herein are based on information available on the date hereof. Except as required by applicable law, IBERDROLA, S.A. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.