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Engie calls on Europe to strengthen local energy supply chains

by SuperiorInvest

Europe must do more to boost the self-sufficiency of its renewable energy supply chain, the head of French energy company Engie has warned, as huge US subsidies help it steal a march on creating an independent green technology sector.

Catherine MacGregor, the gas distributor’s chief executive, said it was branching out heavily into renewables in Europe and the United States, where President Joe Biden’s $369 billion package of tax breaks and incentives “sparked quite a lot of interest” from the group to continue . hydrogen and battery storage projects.

“We’ve already developed and operated large renewable projects in the US, but we’re seeing an acceleration,” McGregor told the Financial Times, adding that “a large chunk” Engie’s The target battery capacity of 10 gigawatts by 2030 would be in the US.

The U.S. system should inspire Europe on several fronts, MacGregor said, including the fact that it rewards not only companies that make goods domestically, but also those that “buy local.”

“Europe needs to think about protecting or making sure its industry thrives,” MacGregor said, adding that she would welcome incentives to help more regional suppliers emerge. “From a business perspective, it’s also a way to mitigate my risk – to have local, healthy suppliers.”

Europe is heavily dependent on other markets to supply its renewable energy sector. For example, in the solar industry, most panel production is concentrated in China.

The EU is still working on its policy responses Inflation Reduction Act (IRA) and presented proposals that would loosen state aid rules and cut red tape to encourage the development of green technologies in the region.

But the “Buy European Act”, an idea originally supported by France, does not seem to have momentum among all EU member states. More specific proposals will be presented by the European Commission in mid-March.

Under MacGregor, who takes over as chief executive in early 2021, Engie this week unveiled a new investment push focused on renewables as well as “green molecules” – the development of cleaner forms of gas such as biofuels.

It is raising spending on new projects to between €22 billion and €25 billion between 2023 and 2025, up from €15 billion to €16 billion over its 2021-2023 plan, partly funded by a major divestment program completed from 2021 as the group restructures and sold out. some service businesses like Equans.

The group, born from the 2008 merger of Gaz de France and Suez, plans to more than double its renewable capacity to 80 GW by 2030. A quarter of its pipeline is aimed at Europe and almost a third at the US, with the rest spread across regions such as Latin America, Asia and Africa.

Even without a full-fledged IRA response in Europe and as the EU prepares for discussions this year on how to reform electricity markets, MacGregor said the region remains attractive.

“The sheer amount of renewables that needs to be developed in Europe is huge,” MacGregor said. “You have to be very, very local, you have to go and talk to local authorities and citizens. . . it’s a competitive advantage for us.”

However, both Europe and the US would also need to invest heavily in areas such as grid infrastructure to help support their electrification push, MacGregor said, echoing warnings from other countries. big power groups like Eon.

Engie has replaced gas bought from Russia’s Gazprom, which before last year’s invasion of Ukraine represented 17 percent of its supplies, with other sources, including Norway.

Europe “came out of the winter in a good position” on the gas front, MacGregor said, with encouraging storage levels thanks to favorable weather conditions and solidarity in the region.

It warned that Europe would still be exposed to potential stress on its energy systems in the coming months, including due to drought that could affect hydropower generation.

Engie reported record net profits of 5.2 billion euros for 2022 as it stripped out exceptional items, boosted by soaring gas prices. Its net income was €200m including impairments, including those related to the delayed Nord Stream 2 gas pipeline to Russia, to which it was a lender, and provisions for its Belgian nuclear operations.

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