The deal represents the growing might of a group of fast-moving, low-carbon utilities companies—increasingly coming from abroad—in the race to decarbonize America’s energy sector.

The deal folds PNM Resources—which serves homes in Texas and New Mexico and has 2,811 megawatts in capacity—into Avangrid, the much larger Northeast U.S. utilities and renewables company in which the Spanish Iberdrola holds a roughly 80% stake.

Avangrid has 7.1GW of power capacity, largely in wind and solar, and holds $32 billion in assets across 24 states, the company says on its website. It is split into two businesses: one an electric and natural-gas utilities company, the other a renewable capacity-and-operation business.

The deal is far from entirely renewable: PNM still has a stake in the coal sector, which it has pledged to phase out by 2031. But the company has also said it is targeting 100% emissions-free energy generation by 2040, which fits into Iberdrola’s broader goals to achieve net-zero emissions globally by 2050.

Iberdola has been hit by COVID-19 this year, denting demand for all forms of energy. But utilities, which tend to have a head start on decarbonization because they can directly rely on renewables, have fared relatively well in comparison to the legacy oil and gas giants, which have been roiled by a year of volatile oil demand because of global lockdowns and an ensuing financial crisis. The S&P 500 Utilities index, for example, is down 1.23% since the start of the year—while the S&P 500’s energy index is down more than 50%.

On Wednesday, Iberdrola said its nine-month net profit rose 4.7% since the start of the year, to €2.7 billion ($3.4 billion), but its revenue over the same period fell 8.4% as global energy demand fell. The company’s stock was down 1.37% on Wednesday but has fared well over the past 12 months, up more than 19%.

Investing big amid a downturn

The acquisition is just the latest in a buying spree orchestrated by Iberdrola’s chairman and CEO, Ignacio Gálan. The company has committed to investing €10 billion ($11.8 billion) expanding the business, including via M&A, through 2020, with 54% of the total invested in renewables. It has so far invested €6.6 billion ($7.8 billion) this year including the PNM deal, the company said on Wednesday. Iberdrola is also in the midst of a capacity construction boom, with 4,600MW of capacity installed over just the past 12 months and 7,600 under construction now, the company said.

Companies like Iberdrola are trying to gain an early edge as the market shifts toward low-carbon energy, a trend that has only gained pace amid the global pandemic.

The big players have a decidedly European accent: Long-running government policy support and generous subsidy programs have given the region and its companies a clear advantage in preparing for a “green” transition, executives in both the energy sector and ESG investing regularly say. An EU emphasis on a low-carbon recovery from the pandemic has only solidified that reality.

Europe-based companies such as BP, Royal Dutch Shell, and Norway’s Equinor have committed to net-zero emissions by 2050. They have also begun to map out how they will tilt their businesses away from fossil fuels and toward renewable capacity—a high-stakes race to acquire ready-to-run renewables projects in which companies like Iberdrola have a crucial head start.

It’s also not the only such company to push into the U.S. market. Ørsted is also expanding there, while Equinor-owned renewables and utility focused trader, Denmark’s Danske Commodities, has also opened trading offices in the U.S.

That’s not to say the local competition is a bunch of pushovers. In early October, Florida-based NextEra, the world’s largest solar and wind power generator, saw its stock market value overtake that of Exxon Mobil.