ENGIE Doubles Down On Renewables And Reaffirms Closure Of Belgian NuclearIndustry

ENGIE Doubles Down On Renewables And Reaffirms Closure Of Belgian Nuclear
Industry. ENGIE’s renewables share at 34%, up from 28% in 2019, with 2030
target 50%; 2021 renewable capacity 34.4GW. CEO Catherine MacGregor
confirms shutdown of ENGIE’s Belgian nuclear fleet by end of 2025,
despite big contribution in 2021.

Seeking Alpha 17th Feb 2022

https://seekingalpha.com/article/4487924-engie-stock-doubles-down-renewables-closure-belgian-nuclear

February 19, 2022 - Posted by Christina Macpherson | EUROPE, politics

2 Comments »

Article has paywall. Please don’t post stuff with a paywall. It’s a waste of your readers’ time. Jan Boudart NEIS.org

Comment by janboudart1gmailcom | February 19, 2022 | Reply
- to janboudart2gmail.com The mysteries of the Internet. This article was not behind a paywall for me. I didn’t pay, and am at a loss to know why it was behind a paywall for you.
  
  ENGIE Doubles Down On Renewables And Reaffirms Closure Of Belgian Nuclear Industry
  Feb. 17, 2022 12:47 PM ETENGIE SA (ENGIY)BP, BPAQF, ENGQF, SHEL, TTE, TTFNF11 Comments5 Likes
  Summary
  ENGIE’s renewables share at 34%, up from 28% in 2019, with 2030 target 50%; 2021 renewable capacity 34.4GW.
  CEO Catherine MacGregor confirms shutdown of ENGIE’s Belgian nuclear fleet by end of 2025, despite big contribution in 2021.
  Q4 2021 reporting showed that just about everything is up (including dividend).
  Dramatic restructure with Euro 9.2 billion disposals, exiting 18 countries; coal down to <3% centralised power generation capacity.
  ENGIY looks like it has shaken off a troubled past and is worth consideration by energy investors.
  A while ago I wrote about the possible re-emergence of the French nuclear industry and I wondered if this might impact ENGIE’s (OTCPK:ENGIY) nuclear program in Belgium. Since then President Macron has indicated clearly a path to re-emergence of the French nuclear industry, although this requires success at an upcoming election and more clarity about the technology approach. Yesterday at the Q4 earnings call ENGIE CEO Catherine MacGregor made clear that ENGIE has not changed plans to close down the Belgian nuclear fleet by the end of 2025 as has been planned for some time. This makes me cautious about whether the French Government enthusiasm for rebooting the nuclear industry might be a lonely cause. Notwithstanding ENGIE not entertaining prolonging its earnings from the Belgian nuclear reactors, there was a lot of good news on energy transition in the Q4 earnings call that makes ENGIE worth an energy investor has this company on a watch list.
  
  ENGIE will close down 7 Belgian nuclear reactors as scheduled
  When I last wrote about ENGIE it seemed that the possibility of extending the life of at least some of the 7 nuclear reactor fleet in Belgium was a possibility. Yesterday’s Q4 earnings call made clear that this is not the case. The plan is to cease nuclear operations in Belgium by the end of 2025. Nuclear shutdowns are expensive and long drawn-out affairs. If voted through in March the funding for costs through 2030 will become clear, with an expectation of Euro 700 million/annum for 2022 through 2024 and reaching ~Euro 2 billion by 2030. In the Q&A Catherine MacGregor acknowledged that there is still some lack of clarity due to arguments about security of energy supply, but she does expect the closure to occur and there to be satisfactory resolution of funding the dismantling process.
  
  Catherine MacGregor made the point that at this stage ENGIE will not be in a position to extend the life of 2 reactors even if requested. Nuclear operations are complicated and there are lots of issues to be worked through. She made the point that ENGIE doesn’t have time to make the investments needed to operate the facilities beyond 2025. This confirms my thought that a nuclear industry turnaround seems to suffer from timetabling issues that are going to be very hard to meet.
  
  Renewable energy
  ENGIE is now a world leader in renewable energy with 34.4 GW installed and targets of 50 GW by 2025 and 80 GW by 2030. The pipeline is deep (66 GW 2022 and beyond, including 7 GW secured/under construction, 31 GW advanced development and 28 GW in development) and well distributed over Europe (25 GW), North America (18 GW), Latin America (12 GW) and Rest of the World (12 GW). This includes a significant presence in emerging markets. The distribution of renewables in the pipeline includes 23 GW offshore wind, 21 GW onshore wind and 21 GW solar PV. A core skill of the company is in energy management, which helps when integrating renewables into existing grids. It has substantial pumped hydro storage and deep experience in managing intermittency and customer load demand with a strong CCGT gas fleet. It seems that ENGIE is mostly focused on pumped hydro and CCGT gas for managing intermittency. There doesn’t seem to be a big focus on big battery technology.
  
  ENGIE posts strong Q4 results at the top end of guidance range
  There is a lot to like about the turnaround of ENGIE’s business. Its share price is up 15% in the past 6 months and proposed dividend is Euro 0.85, up from Euro 0.53 in 2020. There is a laser-like focus on building renewables capacity in all of its markets, with a balanced approach to energy source from solar PV, onshore and offshore wind. More than 90% of CAPEX in 2021 was dedicated to energy transition activities, with 44% on renewables, 31% on networks and 17% on energy solutions. At the same time that this big change is taking place, the business is being streamlined both in terms of countries that it operates in and also complexity of the management structure. ENGIE’s Q4 presentation is full of details that make it a model for what a quarterly report should cover. It is well worth investors having a look.
  
  Given the chaos of COVID, here is a company looking confidently to a bright future.
  
  Area of concern
  ENGIE has endured some controversy about the pace of switch to renewables and this was probably the reason former CEO Isabelle Kocher lost her job. New CEO Catherine MacGregor has reasserted ENGIE’s traditional gas focus, although she has also stayed the course in the initial transition to renewables as Q4 results show.
  
  Keeping a big bet on natural gas may cause problems down the track. Focus on biomethane and grey hydrogen isn’t going to solve this problem. Biomethane still increases emissions and I’m not convinced that biomethane is “green”. It seems invariably the case that “so called” renewable gas ends up emitting CO2 while the supposed CO2 capture proves to be illusory. The argument for grey hydrogen is hard to justify and there are some big supporters of the emergence of a hydrogen industry who see grey hydrogen as being a smokescreen. I’ve considered elsewhere my skepticism about grey hydrogen and whether even green hydrogen will be able to compete with other low emissions technologies.
  
  The point is that notwithstanding recent natural gas crises in Texas and Europe, the tide is turning for natural gas as it is the next fossil fuel to come into the spotlight as the world urgently addresses carbon emissions. I intend to revisit this issue as a lot is happening. My point here is that ENGIE needs to be thinking about the end of its natural gas business as change is coming fast. I don’t see that senior management is addressing this issue.
  
  Conclusion
  My takeaway from reviewing ENGIE’s Q4 results initially focused on ENGIE’s nuclear (closedown) program to give me further insights into the nuclear industry. The upcoming closure of the Belgian nuclear reactors reinforces my impression that, while there is a lot of renewed interest in nuclear power, reality seems that it remains unclear whether this is going to gain momentum beyond France.
  
  ENGIE has a much bigger story than how it is managing the closure of the Belgian nuclear industry. A lot has happened in the past 3 years and the company is emerging from a dark period with a major commitment to renewable energy as part of huge restructuring of the company. It is definitely a candidate for investment in an energy major, albeit a European company. Investors who have traditionally felt safe with investment in oil and gas majors might well have ENGIE on their watchlist along with companies like BP (BP), Shell (SHEL) and TotalEnergies (TTE). All of these companies are intent on managing the transition to a low carbon future.
  
  I am not a financial advisor but I follow closely big changes in the energy industry as the world moves towards a decarbonized economy. I hope my comments assist you and your financial advisor to see how ENGIE fits in this transition and perhaps how it might compare with other investment opportunities in the energy transition.
  
  Comment by Christina Macpherson | February 19, 2022 | Reply