(AOF) – Engie, through its 50/50 joint venture Ocean Winds with EDP Renewables and dedicated to offshore wind power, announces the financial closure of the Moray West wind farm with non-recourse project financing of 2 billion of pounds sterling. The wind farm, Moray West, located in the Moray Firth, Scotland represents an installed capacity of 882 MW with 60 turbines. Moray West is the first offshore wind farm in the UK to rely predominantly on Corporate Renewable Power Purchase Agreements (CPPAs) for the marketing of its generation.
CPPAs have been signed with long-term strategic partners for over 50% of the site’s production and represent the largest contracts of this type implemented in the UK market to date. A contract for difference (CFD) was obtained for one third of the installed capacity in order to market the rest of the project’s production.
The construction phase of the Moray West wind farm will create a total of 1,000 direct jobs in the UK. The financial close allows the project to secure the remaining elements of the supply chain in view of the offshore installation works planned for the end of 2023.
Moray West is set to reach full production by 2025, helping to meet the UK and Scotland’s renewable energy targets and enabling the equivalent of 1.3 million households per year to have access to long-term, low-cost and carbon-free electricity.
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Key points
– Group created in 2008 from the GDF-Suez merger, world leader in energy transition, world’s leading producer of non-nuclear electricity, leading supplier of energy efficiency services, second supplier of environmental services;
-Activity of €93.3bn with strong positions in Europe ahead of the Americas;
– Business model based on control of the value chain and on refocusing on 5 businesses: renewables, infrastructure, energy solutions, energy production & supply and energy and nuclear management;
– Capital controlled at 23.64% by the State, alongside Caisse des dépôts (4.59%), and at 3.2% by employees, Jean-Pierre Clamadieu chairing the board of directors and Catherine MacGregor providing general management;
– Controlled financial structure with €24.1bn of net debt giving a leverage effect of €2.8, €20.9bn of cash
Challenges
– Annual growth strategy for Renewables increased to 4 GW between 2022-25 and 6 GW between 2026-30 via:
– simplification of the group with 4 Business Units and an international presence reduced to less than 30 countries in 2023,
– deployment of “BRIGHT”, specialized in multi-technical services,
– At least €11 billion in disposals (completed at the end of 2022) and €15-16 billion in growth investments (€5.5 billion in 2022, in renewables, infrastructure and energy solutions), at least €11 billion in disposals and €15 to €16 billion in growth investments;
-hence an increase in profits (€3.8 to €4.4 billion in 2024 and €4.1 to €4.7 billion in 2025), a debt leverage effect of less than 4 and a payout rate of 65 to 75% until 2023, with a floor of €0.65.
– Innovation strategy organized in transversal roadmaps: Horizons: 1 / process efficiency, 2 / dissemination of new technologies, 3 / monitoring and research for future growth / Ecosystems: 23 thematic Labs, Engie Factories, internal platforms (DigiPlace , Common Data, Hub, Inner Source);
– Environmental strategy aiming for carbon neutrality by 2045: 2 2030 objectives: drop to 43 Mt in CO2 emissions vs 2017 (60 Mt) and increase to 58%, vs 38% at the end of 2022, of renewable energies in electricity production ; total exit from coal (2.6% of the total electricity portfolio) in Europe in 2025 and elsewhere in 2027,
– Strong growth in profitability thanks to the leading position in Brazil, a key market for the group, the CCGT fleet (the largest in Europe), renewables and long-term partnerships with gas producers, such as Gazprom.
Challenges
– Normalization of net profitability after a year 2022 impacted in particular by the Russian-Ukrainian conflict (€1bn) and Belgian nuclear power (€1.2bn)…
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Restructuring of Belgian nuclear power: closure of 2 reactors, 10-year extension of the activity of 2 others and dispute over the amount of provisions for dismantling;
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Normalization of net profitability after a year 2022 impacted in particular by the Russian-Ukrainian conflict (€1bn) and Belgian nuclear power (€1.2bn)…;
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2023 objective of net recurring income between 3.8 and 4 billion;
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2022 dividend of €1.4.
Learn more about the Utilities sector
Greater disparities between utilities
The World Energy Markets Observatory highlights a wide disparity in retail energy prices in Europe. Suffering from both the effect of the rise in wholesale prices and high volatility in selling prices to end consumers, the profitability of players is under pressure. While the sixteen largest European energy suppliers benefited last year from a significant increase in their turnover (+47% compared to 2020), their gross operating margin (Ebitda margin) , deteriorated from 20.2% to 19.6%. Those who had to resort to purchasing electricity on the market had to pay these additional volumes much more expensive than the level of sale prices already set and therefore saw their margins deteriorate.
Faced with the lower availability of its nuclear fleet, EDF, renationalised, should post an annual loss of 29 billion euros in 2022. Engie is doing better because it succeeded in reducing its imports of Russian gas in the first half while benefiting from high electricity prices and its increased exposure to renewable sources.