Cutting Coal Advances Engie To 50% of Divestment Target
French utility giant Engie said February 8 it has now completed its previously announced asset disposals in the US, India and Indonesia, taking it almost to the half-way mark of its 2016-18 €15bn divestment programme announced a year ago. It has now sold assets for €6.9bn.
In the US, Engie has sold 8.7 GW of net thermal generation capacity (8 GW gas and 0.7 GW coal) to a Dynegy-ECP joint venture for an enterprise value of $3.3bn, resulting in a €3bn reduction in Engie's net debt. An earlier sale of US hydro-power assets closed June 2016 also reduced its debt by €1.1bn. Engie retains smaller generation and energy service operations in the US, and a stake in the Cameron LNG project currently under construction.
In Asia, Engie closed the sale of its stakes in two coal-fired power plants, Meenakshi (in India) and Paiton (Indonesia) totaling 3 GW (gross) in 2H2016, resulting in a net debt reduction of €1.5bn. Its 40.5% stake in the 2 GW Paiton plant was sold to Nebras Power and other existing Paiton shareholders, while its entire stake in Meenakasi (0.3 GW installed, 0.7 GW under construction) was sold to Bombay stock exchange-listed India Power Corporation.
Reducing carbon footprint
Engie said its three coal-fired divestments reduced its coal-fired installed generation capacity at end-2016 by 20%, also reducing its carbon footprint.
Engie CEO Isabelle Kocher (Photo credit: Engie)
In an interview last month with the French gas association, Engie CEO Isabelle Kocher said: "Natural gas is ...an element of stability that is absolutely necessary in a low-carbon energy system. Let’s take electricity generation for instance: for it to be decarbonised, we have to replace coal in order to reduce greenhouse-gas emissions and develop renewable energy while guaranteeing network stability. Only natural gas can meet these challenges."
Kocher recalled that, early in 2016, Engie committed to no longer launch any coal-fired projects, to develop renewables and continue gas-fired (CCGT) plants. Engie operates four CCGTs in France – DK6 in Dunkirk, Montoir, plus Cycofos and Combigolfe in Fos-Cavaou – and recently won a €500mn contract to build a 1.3-GW gas-fired power plant in Saudi Arabia.
Mark Smedley