Electricity house of the year: Engie

Energy Risk Awards 2021: Engie accelerates energy transition with raft of green power deals

Stéphane Pirotte, Engie

Engie is carving out a unique role for itself in electricity markets around the world as a green midstreamer, matching firms’ clean energy needs with those of renewable and green energy asset owners.

Over the past 18 months it has made some landmark renewable asset acquisitions, signed a series of pioneering power purchase agreements (PPAs) worldwide, expanded its demand-side management and further developed its asset optimisation services.

“Our ambition is to energise a sustainable world and accelerate the transition to a carbon-neutral economy,” says Stéphane Pirotte, head of European sales & origination at Engie Global Energy Management. “To do that we’re continuously expanding into new markets and diversifying our services.”

The group added three gigawatts (GW) of renewables capacity to its portfolio in 2020, securing its 9GW renewable capacity commissioning target for 2019–21, quite an accomplishment given the challenging conditions, Pirotte adds.  

One of Engie’s landmark deals was its July 2020 sale of a 49% equity interest in a 2.3GW US renewables portfolio to US climate investment firm Hannon Armstrong. Engie will retain a controlling share in the portfolio and continue to manage its 13 green projects. This is the largest deal of its kind in the US to date.

Group acquisitions in Europe included six Portuguese hydro plants bought from Energias de Portugal for €2.2 billion ($2.6) billion, which added 1.7GW of capacity to the firm’s 1.2GW Iberian onshore wind and solar portfolio.

“This enables us to add three run-of-the-river stations and three pumped storage plants to our portfolio, providing us with the right generation mix,” says Roberto Ferrari, co-lead of green power transversal business at Engie Global Energy Management. “Hydro acts as a battery to help balance the grid and integrate a bigger share of renewables. Diversification in our green assets is key.”

Roberto Ferrari

Engie also acquired a 9.3 megawatt (MW) solar park in Romania and a new 83MW solar plant in southern Italy, which will be commissioned in 2022.

“These global acquisitions pave the way for highly advantageous deals for clients aiming to secure their green power supply at local level,” Ferrari says.

As well as acquiring and developing its own assets, Engie is contributing to securing independent renewable developers’ projects to accelerate the integration of renewables.

Amid the pandemic and historical low prices on the German market, the firm was able to secure renewables developer EnergieKontor’s solar park through a 15-year solar PPA for the offtake of 40.5MW a year as from the commissioning of the park in October 2021.

“We stood out during these difficult times through our ability to continue offering PPAs across regions,” says Pirotte. “PPAs offer benefits along the entire value chain, from enabling the commissioning of new renewable assets to yielding reliable green power supply to buyers,” he adds.

The team struck a number of PPAs in the Iberian region, including an 11-year PPA for a total of four terawatt hours (TWh) with Fortia Energia, which manages energy supply to large industrials, and a 10-year PPA with industrial gases group Air Liquide totalling 800 gigawatt hours (GWh). In Belgium it signed a 10-year PPA with chemical firm Ineos for the delivery of 3TWh. Engie was also involved in a series of short-term PPAs in France and Germany intended to counteract the loss of European Union subsidies.

PPA contracts require a midstreamer to match the unpredictable supply of a renewable asset to the demand profile of a consumer. Taking on and transforming intermittency risk is extremely complex, requiring very specific expertise. Engie is able to achieve this through having a large and diverse clean energy portfolio and a huge client base. It has also developed specialised portfolio management techniques, market tools and IT systems that enable it to process highly granular live and forecasted production data in order to meet the specific demand profile of each client.

This expertise underpins its large PPA deal with Amazon, where Engie will provide the tech giant with 650MW of wind and solar capacity overall in the US, France and Italy. “The package of long-term PPAs we signed with Amazon well reflects the global expertise we have built over the years,” comments Pirotte.

Engie’s PPA portfolio is now at 3GW, with a target of 4.5GW by the end of 2021.

The firm also tackles intermittency through its flexibility management business. Across Europe the firm now manages almost 1GW of flexibility from industrial processes, small co-generation assets, diesel peakers and batteries.

The firm’s global presence meant it was involved in most of the major power market events last year from the launch of Japan electricity futures by the European Energy Exchange in May 2020, to the Texas Freeze in February 2021. The latter proved the mettle of the group’s Houston-based energy management and trading business, which has been in operation since in 2017. The platform, which now has 75 employees offering physical market access, hedging solutions and asset management services, helped to ensure security of supply by working on gas storage and managing the positions of Engie power generation teams through this extreme time.