Electricity house of the year: ENGIE

Energy Risk Awards 2024: French energy firm further advances tech platforms, enabling clients to better manage risk and decarbonise

Dario Acquarulo, ENGIE

This year’s Electricity house of the year, ENGIE, continues to dominate the sector both in the US and Europe. Over the past 18 months it has strengthened its risk management capabilities, enhanced its digital offerings and developed more low-carbon products for its clients – all while navigating falling prices and changing market conditions.

In addition to managing and developing renewable energy and battery storage projects, ENGIE’s global energy management and sales (GEMS) entity has been growing its asset management and optimisation activities in recent years. It now has more than 23 gigawatts (GW) of thermal assets under management as well as around 30GW of wind, solar and hydro assets in its optimisation portfolio.

“We’ve been scaling up this expertise for more than 20 years, starting the journey by managing our group’s thermal fleet and then quickly enlarging the scope with renewables,” says Dario Acquarulo, a member of the GEMS executive committee. “From 2021 onwards, and even during that year’s natural gas market crisis, we continued to expand and diversify our global asset portfolio. We provide our European thermal and renewable fleet with top-tier expertise in power risk management and can also help our external clients secure revenues and extract value from the market using a wide range of physical and financial products,” he says.

Following the eye-watering power price spikes triggered by Russia’s 2022 invasion of Ukraine, the market took a relatively bearish turn in 2023. Energy market participants had to manage this price drop and the resulting volatility in the spark spread. “This price collapse particularly impacted gas-fired power plants, which are part of our large and diversified client base,” Acquarulo says. “So, we supported that segment through, for example, developing sophisticated clean spark spread (CSS) hedging strategies to help secure thermal asset revenues. We also used CSS options to maximise the monetisation of the flexibility of such assets.”  

Acquarulo believes the ability to adapt quickly to changes in market conditions is due to ENGIE’s nearly 25 years’ experience managing its own large portfolio of assets. “Recent market turmoil has [meant we have] further strengthened our risk management leadership in Europe, as well as our digitalisation processes,” he says. “The latter has been key to steady client base growth of around 30% in 2023 compared to 2021.”

ENGIE’s tech capabilities have had an effect right across the business. Its EGMA OTC trading platform – voted the number one OTC commodities trading platform for the second year in a row in the 2024 Energy Risk Commodity Rankings – allows users to execute trades quickly, regardless of size. “Through digitalisation we have enhanced capabilities to onboard smaller clients with less volumes to trade on a standalone basis, for example resellers in France, the Netherlands and Germany,” Acquarulo says. 

Digitalisation has also improved ENGIE’s power purchase agreement (PPA) business – a significant element of its offering – boosting its forecasting performance and use of intermittency hedging (using batteries), as well as speeding up the PPA contract process and enhancing after-sales services, according to Acquarulo. “By connecting our versatile renewable asset portfolio upstream to 200,000 clients along the value chain worldwide, we are making the transition to net-zero reliable and affordable for all,” he says.

As a result, ENGIE signed more than 70 PPA contracts in 2023, totalling 2.7GW. Some 2GW of this was for contracts of more than five years. A 15-year, 470 megawatt (MW) PPA with Amazon, for example, is the sixth such contract that the tech giant has signed with ENGIE in Europe since 2020. It also has an additional 569MWs of PPAs with ENGIE in the US. 

Microsoft also has PPAs with ENGIE, including an agreement to match the load of one of the company’s data centres in Texas’s ERCOT power market with clean power. In addition, ENGIE has signed PPAs with several large European industrials over the past 18 months and, more recently, with a major cement manufacturer in the US.

Such deals play to ENGIE’s rapidly growing presence in the environmental commodities markets. The company launched its Environmental Market Access desk in 2022, which is dedicated to helping clients meet the increasing number of international policies and regulations around emissions and other green issues.

“The momentum is building for decarbonisation, energy efficiency and renewable energies within this fast-evolving environmental regulatory framework,” Acquarulo says. “We are fully synchronised with the resulting environmental commodities markets […] such as Energy Attribute Certificates, carbon allowances or carbon offsets. These products can be traced, disclosed and [traded across borders] in an unbundled form, adding global reach to the energy transition via market-based or location-based approaches.”

Indeed, ENGIE’s ability to anticipate such changing client needs as they attempt to cut emissions has been a useful addition to its offering as energy-intensive firms in the US and Europe attempt to reach net-zero.