Move towards renewable to be the leader of the zero-carbon transition
Engie is a French stated-owned company that involved in electricity, natural gas and energy services businesses.
The company purchases, produces, and distributes natural gas and electricity. It offers a broad range of energy services including engineering, energy performance management, facility management, electrical and climate control engineering, information systems, and industrial maintenance. The company’s businesses are subject to a host of EU laws and regulations that address environmental protection, promote energy systems with zero or low greenhouse gas emissions, reduce energy consumption protect health and develop safety standards.
In 2015, Engie announced that it would to drastically reduce its production of electricity from coal and gradually close or dispose of disposal assets and no longer build any new coal plant. Just recently, Engie has sold its coal-fired power plant in Rotterdam in Netherland, and Farge, Zolling and Wilhelmshaven in Germany in 2019, reducing coal power generation capacity from 13% in 2015 to 4% in 2019. Earlier in 2019, Engie exited its investment in Glow, an independent energy producer in Thailand, achieving zero coal assets in Asia Pacific region.
TRANSFORMATION: NEW BUSINESS FOCUSES
Engie targets to transform its business through three initiatives:
- Decarbonisation
- Decentralisation
- Digitisation
Natural gas and renewable energies will be the drivers of the global energy transition. While exiting all its coal-fired power plants, Engie invests heavily in renewable energies to position for the future. In October 2017, the company signed an agreement with its consortium partners Toyota Tsusho Corporation/Eurus Energy Holdings Corporation (40%) and Orascom Construction Limited (20%), to build, own and operate a 250Mw wind farm located on the Gulf of SUEZ, Egypt with an investment of US$400 million. In September 2017, the company signed contracts to develop two hydropower plants (HPP) namely Jaguara HPP, located in Rio Grande, and Miranda HPP located in Rio Aragui with EUR950 million in Brazil.
R&D AND INVESTMENTS
In 2018, ENGIE invested €182M in R&D and €166M in innovative start-ups. ENGIE has 1,000 researchers and experts at 11 research and development centers. Two key centers are Lab Laborelec and Lab CRIGEN
- Lab Laborelec, focuses on the electricity value chain and aims to reduce effects on the environment, improve availability and maintenance, and develop energy systems of the future.
- Lab CRIGEN, develops innovative low carbon solutions for customers and improves the operational excellence of industrial assets. This is achieved through R&D in new energy resources (hydrogen, biogas and gas liquefaction) and emerging technologies (Al, drones and robots, nanotechnologies and sensors).
In 2016, ENGIE invested in an R&D lab in Singapore to act as the regional hub for energy innovation and technology in Southeast Asia, focusing on smart energy systems for cities and islands, industrial energy efficiency and gas technologies. ENGIE aims to help the region transition to low-carbon energy sources. In collaboration with a local institution in Singapore, ENGIE developed an app to gamify the reduction of energy consumption on campus.
One notable investment ENGIE made recently in Mar 2019, was in tiko, a Swiss startup and pioneer in the development of intelligent energy management systems for the residential market. In addition to micro-local management of energy consumption, users can also participate in schemes to aggregate connected homes and create extensive flexible energy consumption, generation and storage reservoirs. This investment further accelerates ENGIE’s capabilities to achieve its strategy of decentralization and digitization.
IMPACT & RESULTS
ENGIE’s transformation has already begun to yield results, as demonstrated in contracts and projects across three key areas globally:
- Low CO2 activities: ENGIE is implementing solar projects in Brazil, India, France and South Africa and has enhanced their solar capabilities through the acquisition of Solairedirect.
- Gas infrastructures: ENGIE has developed partnerships to supply LNG in China, Indonesia and Japan.
- Integrated customer solutions: Distributed energy system project in China, and district cooling system project in Philippines.
NEXT STEPS:
Making changes to various activities:
- stepping up the pace with two growth drivers: customer solutions & second-generation renewables
- maintaining strong positions in Networks and keeping up optimizing thermal assets
2 high added value activities to drive growth
- Customer solutions: Integrated “as a service” solutions intended for companies and local authorities, allowing them to reduce consumption with smart, energy-efficient equipment, powered using carbon-free energy.
- 2nd generation renewable energies: advanced technologies: offshore wind, green gas, geothermal; 50% new projects by 2021
2 growth drivers
- Gas and electricity grids: Gas and electricity grids adapted to renewables energies to ensure the continuity of supply as decarbonized as possible. Continue to invest in French gas networks, adapting to future requirements in terms of green gas..
· Power generation: The combination of advanced and made-to-measure technologies (energy efficiency offers and co-generation) Gas power plants in addition to renewables energies
3 accelerators: for continuous upgradation of technological solutions and invest, with clients for delivering infrastructures “as a service”
- Digital to strengthen the technical component of offers
- Consulting to help the 500 largest global companies to build their zero-carbon transition
- Financing to leverage our impact on customers by setting up financial partnerships.
2 Key figures:
- €12 bn in investment for growth on 2019-2021, specifically on customer solutions “as services”.
- +9 GW in additional renewable capacity by 2021
Tang Yue Feng, Zeng Yang, Lim Han Rui
The Engie is comparable to our case in terms of the common theme, upstream oil and gas industry. But this case is more specific, about one particular company. It purchases, produces, and distributes natural gas and electricity. It is interesting that Engie achieved zero coal assets in Asia Pacific region and transform through three initiatives. The post also demonstrates Engie’s impact and next steps. The post provides a comprehensive view of how Engie did and will do to protect the environment, not only by executing actions but also by giving consulting service to other companies.
One interesting aspect of Engie’s initiatives is that they are not only focusing on changing their business portfolio, but they are also committed to help other companies in their zero carbon transmission by through their consulting and financing services. Especially as a first-rate power EPC company, their credibility will be key in influencing change management in other companies as well.
That’s a lot of effort and it is awesome!
I’m still questioning the use of solar panels, since their production cycle and disposal is very toxic for the environment.
To complement Engie’s efforts, a cut in electricity use is critical. Architects and engineers need to work together even more, to create energy-efficient buildings and construction materials.
Thanks for your great post! It’s interesting to see that even such a big energy service provider is trying to get rid of coal-fired power plants for Zero-carbon transition. Clean energy such as solar and wind has the problem of its fluctuated supply, so Engie should balance between these plants and coal-fired plants.
Thank you for the fantastic write-up.
I would be very curious to learn about how much of Engie’s push for Renewable is organic growth and how much is aided by French government policies and subsidies?
From my experience of working for the state electricity grid operator in California, policy push and heavy subsidies created a “too much renewable” problem for California (negative market prices and high ramp requirements).