Iberdrola S A : Term and conditions of the second edition of the 'Iberdrola Retribución Flexible' optional dividend system corresponding to the fiscal year 2020

Julián Martínez-Simancas

Secretary of the Board of Directors

Bilbao, 21 October 2020

To the National Securities Market Commission

Subject: Other relevant information / Terms and conditions of the second edition of the "Iberdrola Retribución Flexible" optional dividend system corresponding to the fiscal year 2020

Pursuant to article 227 of the restated text of the Securities Market Law approved by the Royal Legislative Decree 4/2015, of 23 October (texto refundido de la Ley del Mercado de Valores aprobado por el Real Decreto Legislativo 4/2015, de 23 de octubre) and related provisions, we hereby inform you that the Board of Directors of Iberdrola, S.A. ("Iberdrola" or the "Company") resolved yesterday to carry out the second edition of the "Iberdrola Retribución Flexible" optional dividend system corresponding to the fiscal year 2020.

For such purposes, the Board of Directors of the Company resolved: (a) to carry out the paid-up capital increase approved by the shareholders acting at the General Shareholders' Meeting of Iberdrola held on 2 April 2020 under item number fourteen of its agenda (the "Capital Increase"), all of which also pursuant to the section titled «Common terms and conditions of the dividend distribution and increase in capital resolutions proposed under items number twelve, thirteen and fourteen on the agenda, by virtue of which the "Iberdrola Flexible Remuneration" optional dividend system is implemented» included among the proposed resolutions that were submitted to the approval of the abovementioned General Shareholders' Meeting; and (b) the distribution of the interim dividend corresponding to the fiscal year 2020, subject, in any event, to the fulfilment of the requirements set out in article 277 of the Spanish Companies Act -Ley de Sociedades de Capital- (the "Interim Dividend"). The Company is expected to attest the fulfilment of these requirements during December 2020 and this will be published by means of a notice of other significant information (comunicación de otra información relevante).

As is customary, in this edition of the "Iberdrola Retribución Flexible" optional dividend system, the Company's shareholders will be entitled to choose between the following options:

1. receive their remuneration through the delivery of fully paid-up new shares;
2. transfer all or a part of their free allocation rights in the market; or
3. receive their remuneration in cash by means of the Interim Dividend.

Likewise, the shareholders of the Company will be able to combine any of the alternatives mentioned in paragraphs (i) through (iii) above with respect to the different groups of shares owned by each shareholder.

The value of the remuneration that the shareholders will receive under options (i) and (iii) above will be equivalent (in terms of market value and notwithstanding the tax treatment applicable to each of them).

Iberdrola estimates that the gross amount of the Interim Dividend per share will be, at least, 0.168 euros.

NOTICE: This document is a translation of a duly approved Spanish-language document, and is provided for informational purposes only. In the event of any discrepancy between the text of this translation and the text of the original Spanish-language document which this translation is intended to reflect, the text of the original Spanish-language document shall prevail.

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If the requirements set out in article 277 of the Spanish Companies Act for the distribution of the Interim Dividend are not fulfilled, the conditional approval of such distribution would therefore be ineffective. In such a case and in order to guarantee that, in the context of this second edition of the "Iberdrola Retribución Flexible" optional dividend system corresponding to the fiscal year 2020, the shareholders of the Company will be entitled to receive in cash -in part or in full- their remuneration, the Company would undertake the irrevocable commitment to acquire the free allocation rights resulting from the Capital Increase at a fixed guaranteed price (the "Purchase Commitment" and the "Fixed Purchase Price", respectively).

Thus, in that event, the shareholders of the Company would be able to monetize their free allocation rights by transferring them to the Company at the Fixed Purchase Price receiving, in such a way, a cash amount equivalent to the one that would have been distributed by the Company as Interim Dividend. In that case, the shareholders of the Company would only be entitled to choose between (i) receiving their remuneration as completely paid-up new shares of the Company; (ii) transferring all or part of their free allocation rights in the market; or (iii) transferring all or part of their free allocation rights to the Company at the Fixed Purchase Price pursuant to the Purchase Commitment assumed by the Company. In this case, the Company's Board of Directors, during December 2020, would determine the terms and conditions under which the Company would assume the Purchase Commitment. If the Company verifies that the requirements set out in article 277 of the Spanish Companies Act for the distribution of the Interim Dividend are not fulfilled, it will inform the market about that circumstance through a notice of other significant information (comunicación de otra información relevante).

For the purposes of article 1.5.(g) of Regulation (EU) 2017/1129 of the European Parliament and of the Council, of 14 June 2017, on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC, we provide you, enclosed hereto as Annex 1, with the information memorandum (documento informativo) regarding the implementation of this edition of the "Iberdrola Retribución Flexible" optional dividend system approved yesterday by the Board of Directors of Iberdrola.

This information is provided to you for the appropriate purposes.

Secretary of the Board of Directors

NOTICE: This document is a translation of a duly approved Spanish-language document, and is provided for informational purposes only. In the event of any discrepancy between the text of this translation and the text of the original Spanish-language document which this translation is intended to reflect, the text of the original Spanish-language document shall prevail.

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IMPORTANT INFORMATION

This communication does not constitute an offer to purchase, sell or exchange or the solicitation of an offer to purchase, sell or exchange any securities. The shares of Iberdrola, S.A. may not be offered or sold in the United States of America except pursuant to an effective registration statement under the Securities Act or pursuant to a valid exemption from registration.

This communication contains forward-looking information and statements about Iberdrola, 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. securities 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 documents filed by Iberdrola, S.A. with the Comisión Nacional del Mercado de Valores and which are available to the public.

Forward-looking statements are not guarantees of future performance. They have not been reviewed by the auditors of Iberdrola, 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 oral or written forward-looking statements hereby made or otherwise attributable to Iberdrola, S.A. or any of its members, directors, officers, employees or any persons acting on its behalf are expressly qualified on its entirety by the cautionary statement above. All the forward-looking statements included herein are based on information available on the date hereof. Except as required by applicable law, Iberdrola, S.A. does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

NOTICE: This document is a translation of a duly approved Spanish-language document, and is provided for informational purposes only. In the event of any discrepancy between the text of this translation and the text of the original Spanish-language document which this translation is intended to reflect, the text of the original Spanish-language document shall prevail.

www.iberdrola.com

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Annex 1

Information memorandum regarding the terms and conditions of the second edition of the "Iberdrola

Retribución Flexible" optional dividend system corresponding to the fiscal year 2020

NOTICE: This document is a translation of a duly approved Spanish-language document, and is provided for informational purposes only. In the event of any discrepancy between the text of this translation and the text of the original Spanish-language document which this translation is intended to reflect, the text of the original Spanish-language document shall prevail.

www.iberdrola.com

Take care of the environment.

Printed in black and white and only if necessary

1