French energy giant Engie – the owner of Australia’s dirtiest coal power plant, Hazelwood in Victoria – has launched an ambitious three-year strategy to fast-track its plans to become a global clean energy leader and dump its carbon-risk exposed coal and gas assets.
The company said at its annual results presentation on Thursday that in order to speed up its “portfolio rotation program”, it would focus all new development on low-carbon activities, integrated customer solutions and other activities “not exposed to carbon prices.”
It has also started to shed its fossil fuel generators, announcing on Thursday the sale of a total of 13GW of power plant – 10GW of which was exposed to commodity prices in the US and two coal-fired power plants – totalling 3GW – located in India and Indonesia.
The company said the “disposals” in the USA, India and Indonesia had already realised over one-third of its three-year €15 billion portfolio rotation program, and cut its coal-fired generation installed capacity by 20 per cent – and debt by €5.5 billion.
The plan is for low-carbon activities to represent more than 90 per cent of Engie’s total earnings by 2018; while activities not exposed to commodity prices are hoped to make up more than 85 per cent by 2018. Earnings of the group’s integrated customer solutions are also expected to grow by more than 50 per cent over the period.
What these tight timelines mean for the future of Hazelwood and Engie’s other Australian fossil fuel assets – including Loy Yang B (another Victorian coal power plant, also in the Latrobe Valley) and South Australia’s Pelican Point gas power station – remains unclear. But they are clearly not part of the long- or even near-term plan, and haven’t been since June last year, when the company issued a “call to arms” against coal.
“In a deteriorated market context, ENGIE launches… an ambitious three-year transformation plan to become leader of the world energy transition,” said Engie chairman and CEO Gérard Mestrallet during the FY15 results presentation. “This plan aims at redesigning the portfolio of activities of the group …and at improving its risk profile by reducing its exposure to commodity prices.
“We want to focus on low carbon activities and on integrated customer solutions, while improving the efficiency of the group.
“Our agility and our new simplified organization, closer to clients and territories, will enable us to seize new market opportunities and to develop new businesses to become a provider of global energy and digital solutions,” he said.
On the renewables front, in January this year Engie launched the “Terrawatt initiative” – a major public-private initiative to ensure that 1,000GW of solar capacity is installed around the world by 2030.
At the launch, at the World Future Energy summit in Abud Dhabi, Engie’s relatively new addition (soon to assume the role as CEO) Isabelle Kocher said the utility believed in solar’s potential.
“The resource is available. The technologies are affordable. They are full of hope …for the planet, for humanity, but it won’t happen if we are not fully mobilised,” she said.
“We need to identify ways to implement solar technologies at large scale, not incrementally, but at a massive scale.”
But it won’t be all about large-scale renewables. Engie – which currently owns plants around the world ranging from coal, gas and nuclear, to increasing investments in wind, solar and hydro – has also forecast that 50 per cent of all global energy generation will, in future, be sourced locally, rather than from traditional centralised generators.
It is also forecasting a massive energy transition as generation becomes decentralised and digitised. To this end, Engie recently took a stake in US-based low-carbon and energy management software company, Tendril, providing its first entree to the European market.
Tendril – which is making similarly ambitious noises about leading the digitisation of the energy transformation – has also been eyeing the Australian market, after considerable success working with Duke Energy in the US.
But it will have no shortage of competition. Engie also announced on Thursday that it had acquired California-based OpTerra, another company specialising in the ‘internet of things’ in the energy space. The purchase makes Engie the third US leader in energy services.
