Enagás foresees a new investment cycle that could amount to 4,755 million euros until 2030, if the interconnection projects of the ‘RepowerUE Plan’ in which the group could participate and which are in the proposal and approval phase are included, and maintain the shareholder remuneration plan set until 2026, according to the group’s new strategic plan for the period 2022-2030.
In a presentation sent to the National Securities Market Commission (CNMV), the company led by Arturo Gonzalo Aizpiri, who took over as CEO last February, stated that this investment plan focuses on Spain and Europe to guarantee security of supply and respond to the requirements of the ‘Green Deal’, ‘Fit For 55’ and ‘REPowerEU’ plans.
The company’s strategic plan coincides with a crucial moment for the energy sector, at the gates of a winter in which Russia may decide to cut off the gas it sends to Europe, and even anticipating the next day 21 when the Nord Stream I should reopen connecting with Germany. Doubts about a possible sudden closure continue to raise the price of gas on the international market, which rose another 4% this Tuesday to above 170 euros/MWh, a figure not seen since last March.
The four growth axes of the strategic plan thus focus on gas and hydrogen infrastructure and adjacent businesses, innovation, technology and digitization, international development, and the activity and projects of Enagás Renovable.
In a conference with analysts, Gonzalo stressed that this plan is “built on the reality” that Europe is going to create a large-scale market for renewable gases and play a role as Transmission System Operator (TSO) and future Hydrogen Network Operator ( HNO). “The strategy is aligned with what Europe is setting and has the objective of contributing to security of supply and decarbonisation, which are the same two sides of the coin,” he said.
Not including the 1,980 million euros, which do not include possible subsidies or potential non-recourse financing, corresponding to investments linked to gas interconnection projects in Europe in which the group could participate -which would correspond to the third Pyrenean connection, the gas pipeline submarine between Spain and Italy and the third connection with Portugal-, the investment figure until 2030 amounts to 2,755 million euros.
In the axis of gas and hydrogen infrastructures and adjacent businesses, Enagás foresees investments of a total of 1,780 million euros until 2030, of which 890 million correspond to the period 2022-2026.
These investments include the adaptation of infrastructures to the regulatory forecast of 3% hydrogen as the limit for injection into the gas network, the start-up and adaptation of the El Musel Plant as a logistics center, or the ‘Green Link’ project of biomethane connections to the network, among others.
The company plans to invest 850 million euros in these natural gas and transition infrastructure projects, 470 of them until 2026.
This first axis of growth also includes dedicated renewable hydrogen infrastructures, for which investments of 690 million euros are planned, of which 235 million will be invested until 2026.
To these infrastructure items would also be added, if approved, the three possible projects to reinforce the security of supply in Europe, such as the underwater gas pipeline between Spain and Italy, in which the group would participate together with the Italian Snam, whose investment throughout the period would amount to 1,500 million euros; as well as the third connection with France through the Pyrenees, which would involve an investment of 370 million euros, and the third connection with Portugal, with some 110 million euros.
With regard to the axis of innovation, technology and digitization, the Enagás plan contemplates an investment of 105 million euros. Of that amount, 90 million correspond to the period between 2022 and 2026. Among other initiatives and projects, it includes Enagás’ participation in the Hy24 and Klima funds.
600 MILLION TO INTERNATIONAL DEVELOPMENT.
In international development, the company plans to allocate 600 million euros (150 million between 2022 and 2026) to projects framed in the Mediterranean Corridor, such as doubling the capacity of the Trans Adriatic Pipeline (TAP) to 20 bcm, and the development of infrastructures in Greece, through its subsidiary Desfa, and in Albania, based on the agreement recently signed with the TSO AlbGaz.
Finally, in the activity and projects of Enagás Renovable, it plans to invest 205 million euros through its subsidiary in the period in 30 projects for the production of renewable hydrogen and the decarbonisation of all sectors, and 85 million euros in 20 projects for the production of biomethane and the promotion of waste management to contribute to the development of a circular economy. A total of 290 million euros, of which 170 million correspond to the 2022-2026 period.
CLOSING IN JULY OF ENTRY OF PARTNER IN ENAGÁS RENEWABLE.
In this sense, Gonzalo advanced that in this month of July the entry of Clean H2 Infra Fund into Enagás Renovable is expected to close, with 30% of the capital.
The CEO of Enagás stressed that “the vast majority” of the investments contemplated in the group’s strategic plan “have a regulated business model or that will be regulated in the near future, or they will have contracts that guarantee security over returns comparable to that of the regulated activity.
In this regard, the first tranche of Enagás’ strategic plan, between 2022 and 2026, has a stable regulatory framework and, in the second tranche, starting in 2027, the regulatory bases will be laid for the new renewable gas networks, especially those of hydrogen.
Enagás estimates that the entry into operation of the investments foreseen in its plan will change the profile of the company, which expects profitable growth in its gross operating profit (Ebitda) adjusted for dividends of 2% per year in the period 2022-2030 and from 4 % since 2026.
Regarding the dividend, the group reaffirms the path that had already been marked of an increase of 1% for this 2022 -up to 1.72 euros- and 2023 -up to 1.74 euros- and a floor of 1, 74 euros until 2026, the horizon until which the company provides visibility for the remuneration of its shareholders.
Enagás indicated that the confirmation of this remuneration until that year is “compatible with a solid and optimal balance sheet structure, where the ratio of funds from operations / net debt (FFO / DN) is greater than 14%”.
Both the shareholder remuneration and the investment plan are supported by the solid cash generation forecast for the period and, also, by the good liquidity situation of the company, of 3,300 million euros as of December 31, 2021.
A PROFIT IN 2022 OF BETWEEN 380 AND 390 MILLION.
Looking ahead to 2022, Enagás expects to close the year with a profit of between 380 and 390 million euros, including both the positive impact of asset sales and the negative impact of the deterioration of the investment in the US company Tallgrass Energy, which amounts to about 130-140 million euros.
The ordinary net profit would amount to 360 million euros without including the extraordinary capital gains from the asset rotation process and the ‘impairment’ of Tallgrass Energy.
On the other hand, within the framework of the 2022-2030 Strategic Plan, the company has also presented its new Sustainability and Transformation ‘road map’, with the commitment to achieve carbon neutrality by 2040.
To this end, it has outlined a decarbonisation path with emission reduction targets in line with the 1.5ºC temperature increase scenario, which has already allowed it to reduce its emissions in tonnes of CO2 equivalent (tCO2e) by 54% between 2014 and 2021. In addition, the objective of reducing its indirect scope 3 emissions by 25% and 50% in 2030 and 2040, respectively, has been set.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.