This is not the end of the story, but it is a new stage for the exit of coal for Engie (ex-GDF-Suez). The French energy group announced on Wednesday April 28, alongside Chilean President Sebastian Pinera, that it would accelerate its timetable for the exit of coal – a movement which passes through Chile – with the objective of stopping its last units or of them. reconvert by 2024. An announcement that will significantly reduce the country’s emissions, in the order of 5 million tonnes of CO2 by 2026 – equivalent to 30% of emissions from the Chilean vehicle fleet.
In detail, Engie had already made a commitment to close its six oldest units – of the order of 800 megawatts, a little less than a French nuclear reactor – by 2024. On Wednesday, the group added that ‘it was going to convert its three most recent units: two of them will become biomass power plants, and one will switch to natural gas, for an installed capacity of 700 megawatts. “It is a profound transformation project, a radical change that we are proposing”, explains Frank Demaille, Deputy Managing Director of Engie.
The unit promised to become a gas power station was a complex subject for the energy company: it was inaugurated just two years ago, without fanfare or trumpets, in full contradiction with the group’s climate commitments. “With Engie’s objectives for an accelerated coal exit, we worked with the government, telling them that we can go much faster,” explains Mr. Demaille.
Change strategy
The group is thus continuing its withdrawal from coal, after having closed or sold dozens of power plants around the world. A strategy often criticized by NGOs, for whom selling assets to other players in the sector allowed Engie to perform well without impact on the climate. Thus, in 2019, the group sold its units in Germany, the Netherlands and Thailand, which are still in operation. Conversely, in 2016 it closed the Hazelwood plant in southern Australia.
This reconversion strategy is a new path for the group, and it is fraught with pitfalls. First, the production of electricity from wood poses questions of supply and important environmental questions. The group claims that the wood will be sourced in a “Responsible”, “with a reasoned use of the forest”. But it will have to be imported from other countries in the region, which can raise doubts about the durability of the wood used. Second, a biomass power plant does not operate continuously like a coal power plant. The group’s objective is therefore to change its strategy and only use them when the market price of electricity is high – ie use over a reduced number of hours. Converting these two units could cost “Around 100 million euros”, we believe at Engie.
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