Multinational power and gas giant ENGIE, which embarked on an aggressive transition toward zero-carbon three years ago, saw tempered revenue growth over 2018, owing in part to its disposal of thermal generation businesses in the UK and Poland, and the 1-GW Loy Yang B coal-fired power plant in Australia.
ENGIE CEO Isabelle Kocher, who outlined the company’s updated strategic plan in a webcast on Feb. 28, said the company will pare future operations in an effort to “sharpen geographic focus and capital allocation.” Over the next three years, it will exit about 20 countries “to enhance focus and economic returns,” but intensify its focus on 20 other countries and 30 “major developing market urban areas,” she said.
Kocher spoke at length about the business need to engage in the global energy transition toward “decarbonization, digitization, and decentralization.” Since 2016, the ENGIE Group—which was born out of a 2008 merger between French energy giant SUEZ and Gaz de France (and was until 2015 known as GDF SUEZ)—has undergone “a deep transformation” whose focus is set on developing gas infrastructure, renewables, and energy efficiency. It has sought to position itself as a leader in electrification of transportation and smart grids, she noted.
Kocher said that while the “first wave” of the energy transition was driven primarily by central governance, the “second wave is pulled by industry and by local authority.”
“Decentralization is really taking momentum for the simple reason, which is that this industry, these local governments, these local outreaches, they are under strong pressure—very strong pressure—because they are expected to be able to act, to have the resources to act,” she said.
The company’s 2018 financial results, announced on Feb. 28, show revenues grew to €60.6 billion ($69.4 billion)—1.7% more compared to 2017.
But while growth was fueled mainly by contracted renewable power generation, ENGIE also profited from new thermal long-term power purchase agreements obtained in Chile, as well as its 35% stake in the coal-fired 693-MW Safi Thermal Power Plant in Morocco—which became the first plant in Africa to use ultrasupercritical technology when it came online in 2018. Its merchant business performed well, but the company saw steep losses pegged to unscheduled outages (at Doel 3 from September 22, 2017, until August 5, 2018, and Tihange 3 since March 31, 2018) in Belgium that led to a “very low availability rate of 52% in 2018.”
However, ENGIE said revenues were also strong in its gas infrastructure division, owing to a build out of smart gas meters and a pilot to inject renewable hydrogen to the gas distribution network in France; and client solutions, including business-to-business and business-to-cities. ENGIE also profited from tariff increases and new power supply contracts in Latin America, growth in hydropower sales in France and Brazil, higher retail power sales in France, and higher energy sales in the UK, Romania, and Australia.
Looking forward, ENGIE plans to slash €800 million in costs by 2021 to enhance profitability. It will use its “infrastructure expertise and client relationships” and a €11–12 billion development CapEx accelerating growth for 2019–2021 to boost its Client Solutions and renewables businesses. Its strategy will incorporate “customer strategy, design, assets, services, digital platforms, financing and operations management.”
On the renewables front, it will add 9 GW of new capacity by 2021, targeting 50% of new projects to specific customers, and “play a major role in sophisticated technologies including offshore wind and green gas.” ENGIE added it will continue to further narrow its thermal capacity, “reducing coal generation and selectively honing gas-fired capacity to customer requirements, including combined technologies such as desalination and co-generation.” ENGIE’s Belgian nuclear operations, meanwhile, “continue to stabilize, with operational availability anticipated to rise as previously announced,” it said.
To accelerate growth in Client Solutions, it will broaden its services including “on-site co-generation, heating and cooling networks, public lighting, rooftop solar and [electric vehicle] charging stations.”
—Sonal Patel is a POWER associate editor (@sonalcpatel, @POWERmagazine)