EDP joins IETI call in Davos to boost Iberian energy and industrial competitiveness

At the World Economic Forum (WEF) Annual Meeting in Davos, and for the second time, the Iberian Industry and Energy Transition Initiative (IETI), a cross-industry effort led by McKinsey & Company and industry leaders such as ACS, EDP, Galp, Iberdrola, Moeve, Naturgy, Repsol, and Técnicas Reunidas, released its updated perspective on Iberia’s contribution to Europe’s competitiveness through reindustrialization enabled by the energy transition. The updated IETI Index highlights the progress made in the last year and sets out five priority initiatives moving forward.

The IETI perspective and proposals were presented during a multilateral working session with Enrico Letta (former Prime Minister of Italy and author of the Letta Report), Cristina Lobillo (Director of Energy Policy, European Commission), as well as other institutions, alongside CEOs and Chairs from IETI member companies ACS, EDP, Galp, Iberdrola, Moeve, Naturgy, and Repsol, and Senior Partners from McKinsey & Company. 

Miguel Stilwell d'Andrade, CEO of EDP: “Iberia has already shown that clean power scales. Europe’s edge now won’t come from more regulation, but from faster delivery – streamlined permitting, stable and predictable rules, and modern, interconnected grids. Get that right and Spain and Portugal can anchor energy‑intensive industry and unlock up to €1 trillion in value by 2030, lifting GDP by ~15%, raising industrial exports by ~20%, and creating ~1 million mostly qualified jobs”.

Competitiveness, innovation, strategic autonomy and economic growth

Participants highlighted Europe’s weak industrial position in strategic sectors, lower labor productivity, fragmented regulation and infrastructures, and a lag in innovation – against a more challenging geopolitical context. They also underscored how the energy transition can catalyze reindustrialization and help relaunch Europe’s competitiveness, especially in countries like Spain and Portugal, which have optimal conditions to attract investments. McKinsey & Company analysis suggests that Spain and Portugal alone could generate up to €1 trillion in value added and 1 million jobs by 2030.

Cheaper renewable energy, as well as its security of supply, are central to Europe’s growth model for the coming decades. The energy transition is rebuilding and upgrading the energy system onshore – and, in doing so, can catalyze industrial development across both established sectors (such as automotive, ceramics and refining) and emerging ones (such as batteries, renewable molecules, and data centers). Developing and deepening these value chains in Europe will strengthen strategic autonomy and resilience, while ensuring the economy is fit for future growth.

Keeping track of a complex transformation

The IETI Index keeps track of 21 indicators that help understand the progress of the energy transition and reindustrialization of Spain and Portugal. Overall direction is right and there are some promising signals; nevertheless, progress needs to be accelerated to overcome structural industrial gaps and get back on track to targets. More granular insights from the last assessment include:

• Promising signals encompass investment announcements, such as post-FID increased at a factor of 2x in Spain and 5x in Portugal. Also power, development of green gases and small-scale storage additions have registered a continued positive trajectory. These signals may anticipate an improvement in industrial outcomes and advance strategic autonomy.
• On the industry side, some structural gaps persist in both countries, well below the European benchmark. Critical variables such as R&D investment (1.5-1.7% of GDP), labor productivity, regulatory quality and overall weight of industry in the total economy are stagnant and behind European peers or other advanced economies such as the US. On a different trajectory, vehicle production (2.4 million in Spain) and industrial jobs (2.9 million people in Spain) seem to be rebounding and are on track to 2030 target.
• On the energy transition, Spain is on track and Portugal is ahead of the curve. Deployment of renewables (35% of the mix in Portugal), energy prices (-27% in Spain vs. EU average), and uptake of electrical transportation (40% of vehicle sales in Portugal) has evolved most positively. But incentives to investment in electricity grids and adoption of renewable molecules are still required.

A call to action: five initiatives to accelerate competitiveness, from ambition to execution

At Davos, IETI participants emphasized that while the opportunity is clear and there is some progress being made, the window for action is narrowing. Delivering results will require faster execution, deeper public-private collaboration, and bold leadership. Spain and Portugal, with their unique combination of energy, industrial, and human capital assets, are ready to play a central role in shaping a more competitive, resilient, and sustainable European future. 

Recognizing the urgency to accelerate the pace of developments, IETI identified five priority initiatives to unlock Iberia’s potential to lead the energy transition and boost Europe’s reindustrialization, during the discussions at Davos:

1. Boost ambition and coordination around competitiveness, by creating and scaling industrial ecosystems in strategic growth arenas, including renewable fuels/ molecules, batteries, defense, tech enablement and AI – in line with EU strategy for competitiveness. Sector plans like Spain’s Plan Auto 2030 and public guarantees to secure demand are among the critical levers.
2. Focus on competitiveness-driven regulation, simplifying and stabilizing frameworks focused on outcomes by improving ease of doing business: removal of barriers to investment, focused incentives, and an environment based on technology neutrality to achieve lower context costs. The 28^th regime at EU level and faster permitting, new financing mechanisms such as contracts for difference, and one-stop-shops for investors are key enablers.
3. Accelerate infrastructure deployment by reinforcing investments in critical infrastructure, like electricity grids, storage and transport and logistics. Earlier this year, over 70 industrial companies in Spain highlighted the critical state of electricity distribution networks, where 
   most connection requests are being rejected. Revised remuneration schemes could help fasten pace of capacity additions and construction.
4. Double down on innovation by increasing R&D investment in key technologies and sectors. Levers include tax incentives, excellence centers, and co-financing instruments for first-of-a-kind industrial and decarbonization technologies.
5. Unlock talent productivity through workforce development, large-scale re- and up-skilling, AI-enabled productivity tools, and fiscal incentives and dedicated visas to attract and retain top global talent.