Completion of the triannual review of Belgian nuclear provisions by the CNP

Provisions to increase by €2.1 billion, primarily driven by lower interest rate environment.
Electrabel’s commitment to fund the full amount of nuclear waste provisions by 2025.

Synatom, of Electrabeland ENGIE, received on Thursday, December 12 the decision of the Commission for Nuclear Provisions (CNP) reassessing the required provisions for dismantling of Belgian nuclear power plants and nuclear waste management.

As a reminder, the April 11, 2003 Belgian law mandates Synatom to manage nuclear provisions that are required to cover:

  • the final shutdown and dismantling of nuclear power plants;
  • the management of nuclear waste until transferred to the Belgian National Agency for Radioactive Waste and Enriched Fissile Material (ONDRAF).

In accordance with Belgian law, nuclear provisions are re-evaluated every three years. The CNP submitted its findings on December 12, 2019 on the detailed assessment prepared by Synatom which takes into account:

  • the update of macroeconomic assumptions (inflation and discount rates) and expenses, (some of which will occur in more than 70 years);
  • the impact of the new baseline scenario for the long-term management of Category B and C nuclear waste (medium and high activity) in Belgium as agreed by ONDRAF in June 20181 ;
  • the scenario developed for the final shutdown and dismantling of nuclear power plants and for the management of nuclear waste on the basis of industrial experience and learnings, including in the ongoing dismantling in Germany.

As of December 31, 2018, the nuclear provisions in the ENGIE Group’s consolidated financial statements amounted to €11.5 billion2 (including €5.3 billion relating to the dismantling of facilities and €6.2 billion relating to the management of nuclear waste).

The CNP’s decision includes a reduction in discount rates reflecting the current environment of low interest rates and takes into account different expenditure horizons between dismantling and nuclear waste management expenditures. Thus, after having been set on December 31, 2018 at 3.50%, the rates are henceforth reduced to 2.50% for dismantling, for which expenditure starts as early as next year, and to 3.25% for nuclear waste management, for which expenditure will take place over the coming decades. These rates include an unchanged inflation rate of 2.0%.

Furthermore, Electrabel, going beyond its legal obligations, is making a commitment to finance via Synatom the full amount of nuclear waste provisions i.e. €6 billion3. This funding will be spread over a period ending 2025. Indeed, discussions among the parties of a broader set of provision arrangements could lead to this decision. Funds will be invested in financial assets that will guarantee their availability and adequacy.

In total, the findings of the CPN and the obligations related to nuclear waste disposal will lead to a revaluation of nuclear provisions, as presented in the consolidated accounts of the Engie Group, of €2.1 billion4. To this amount of provisions will be added the recurring annual amount of €0.4 billion corresponding to the discounting effect of the pre-existing provisions.

The level of provisions and funding arrangements reduce uncertainty for all parties, and provide a clear path to full funding of nuclear waste provision. For information, the CNP’s next reassessment will take place in late 2022.

As a reminder, ENGIE, through its affiliate Electrabel (present for more than 100 years in Belgium), owns and operates seven pressurized water nuclear reactors spread over two production sites, Doel and Tihange for a total capacity of 5.9 GW5 and whose residual life now extends to between 2022 and 2025. Electrabel’s local electricity generation fleet is one of the least CO2-emitting in Europe.

 

1 This new reference scenario includes notably a maximum estimate for the geological disposal center, the upward revision of a set of costs reassessed by ONDRAF and the consideration of accompanying measures.
2 Including the share relating to the provisions of nuclear units over which the Group has drawing rights.
3 Amount corresponding to the provisions as of the end of 2019, including the increase resulting from the triennial revision and the unwinding discount impact of the period.
4 €0.9 billion relating to dismantling of facilities, €1.1 billion relating to the management of the back-end of the nuclear fuel cycle and €0.1 billion relating to other marginal effects.
5 Doel1 and Doel2 are owned at 100% ; Doel3, Doel4, Tihange2 and Tihange3 at 90% and Tihange1 at 50%.

 

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ENGIE and Meridiam awarded 50-year Utility Management Concession with the University of Iowa toward a zero-carbon transition

ENGIE and Meridiam have been awarded a 50-year concession valued at more than $1 billion USD to address the University of Iowa (UI)’s energy, water, and sustainability goals for two campuses spanning 1,700 acres in Iowa City, Iowa. These campuses together form one of the largest University footprints in the United States.

Goals:

  • Make energy production on campus coal-free by January 1, 2025, if not sooner
  • Exploring multiple services and solutions involving reduction in energy usage as well as generation sources such as renewable energy, microgrids, energy storage, and other innovative technologies to prepare the campuses for a resilient and sustainable future
  • Build and deliver innovative programmes about energy transition for students & employees to benefit from experiential learning and innovation via internships, projects, and research opportunities.

Founded in 1847, the University of Iowa is the state’s oldest institution of higher education enrolling a diverse population of students of varying educational and demographic backgrounds on its campuses. It is also one of the nation’s premier public universities with top-tier programs in the health sciences, special distinction in the arts, and the #1 Creative Writing Program in the U.S. (40+ Pulitzer Prize-winning faculty and alumni).

“The University of Iowa is pleased to partner with ENGIE and Meridiam over the next 50 years in order to deliver on the UI’s strategic plan, which is focused on the success of students; research and discovery; diversity, equity, and inclusion; and engagement,” says UI President Bruce Harreld. “With ENGIE and Meridiam, the university has found partners who share our values of investing in our people, improving sustainability, and transitioning toward a zero-carbon footprint.”

Meridiam and ENGIE will be 50/50 partners in a new Special Purpose Vehicle that is locally resourced to deliver the requirements under the Concession Agreement. The team combines the global reference in low-carbon energy and services, ENGIE, with one of the leading long-term sustainable energy transition infrastructure investors, Meridiam. This partnership offers the University global resources, operational knowledge, and best practices needed to deliver crucial services while enabling the University to focus on its core missions in academics and research.

ENGIE will operate, maintain, optimize, and improve the on-campus utility systems for the University. The scope includes providing heating, cooling, and power to the campus through a dedicated network and managing high quality and sanitary water and storm sewer services.

“ENGIE looks forward to supporting the University of Iowa in its zero-carbon transition. Over the next 50 years, we will continually work to improve system efficiency, cost, and performance both operationally and environmentally, leveraging the power of our global experience and focus on innovation to make the University of Iowa a showcase in next-generation energy management and sustainability,” said Isabelle Kocher, CEO of ENGIE.

Thierry Déau, CEO of Meridiam said, “As a Benefit Corporation1 built on the framework of the U.N. Sustainable Development Goals, with a strong focus on delivering access to clean energy across the globe, Meridiam is delighted to partner with ENGIE on this important project that will establish the University of Iowa as a landmark clean energy campus community for future generations.”

Meridiam is a leading developer, investor, and asset manager specializing in greenfield infrastructure with a core focus on sustainability and impact. The UN Sustainable Development Goals (SDG) and Environmental, Social, and Governance (ESG) stand at the core of Meridiam’s business approach for each one of its 75 projects worldwide. The firm’s energy transition portfolio spans three continents, and more than 20 major projects in the field of renewable energy production and energy efficiency (700 MW of solar, hydro and geothermal; 520 GWh of biomass/biogas, 200,000 tons/year of waste to energy and 300,000 solar home systems), or e-mobility (more than 10,000 electric vehicle charging stations). Present in North America since 2007, Meridiam has 15 projects and assets under development, construction or in operation on the continent for a total value of more than $22 billion USD, garnering numerous awards for leadership in energy and environmental design efficiency for projects including the Long Beach Courthouse (California), the CR-CHUM (Canada), and LaGuardia Airport Terminal B.

After winning a similar 50-year concession with The Ohio State University and acquisition of critical infrastructure to serve six Harvard-affiliated hospitals in Longwood Medical Area in Boston under a 34-year agreement, the work to be done with the University of Iowa reinforces ENGIE’s commitment to serving the university and healthcare sectors in North America. As the world’s leading energy services provider with more than 350 district energy systems, 109 GW of gross generation capacity, and tens of thousands of operations, maintenance, and technical staff around the world, ENGIE offers comprehensive and tailor-made solutions for a successful zero-carbon transition.

1Within the meaning of the French law

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ENGIE to replace 1 GW of coal assets with 1 GW of renewables

  • ENGIE announces the closure of three additional coal units – two in Chile and one in Peru
  • In Chile, this announcement follows the commitment made with the government in June this year – closing of four units in Tocopilla – and the recently announced 1 GW renewables development plan

Within the framework of COP 25 in Madrid, ENGIE announces the closure of almost 1 GW of coal units in Chile and Peru between 2019 and 2024.

In Chile, ENGIE announces the closure of the two coal units located in Mejillones (334 MW) by 2024. In June 2019, ENGIE closed two coal units in Tocopilla (units 12 and 13, corresponding to 170 MW) and announced the closure of two more coal units in the same site (units 14 and 15, equivalent to 270 MW) by 2021. In Peru, ENGIE will close the Ilo 21 coal power plant (135 MW) by 2022.

ENGIE announced last week an ambitious renewables development plan in Chile, for the construction of 1 GW of wind and solar assets, for an investment of approximately USD 1 billion. The first two projects (Capricorn Solar Park and Calama Wind Farm) are currently under construction, while a third one (Tamaya Solar Park) will begin construction in the first quarter of 2020, thus totaling the first 370 MW of the plan.

In line with Chile’s decarbonization plan, ENGIE recently signed a letter of intent with the Inter-American Development Bank (IDB) to structure a long term loan for up to USD 125 million to finance investments in renewables. IDB has developed an instrument to lower the financial cost of renewable energy projects for companies that own coal-fired power plants, monetizing the reduction in emissions.

Isabelle Kocher, ENGIE’s CEO said: “ENGIE confirms the rapid movement towards a zero carbon transition. The previously announced closures of two units in Tocopilla, the announcement of the closure of two units in Mejillones by 2024 and of two more units in Tocopilla by 2021 are an important part of Chile’s plan. The Group has also accelerated the pace of renewable energy development in Chile by committing to build 1 GW, including 370 MW already secured. As a leader in zero-carbon transition, we have the expertise to design roadmaps to carbon neutrality with national governments, as well as with multinational companies, local authorities and universities. The end of coal-fired electricity generation is a process that creates value, both economic and environmental, when strategically planned.”

ENGIE is active in Latin America in power generation and transmission, gas transportation and distribution and energy supply and services. The Group is currently accelerating the development of solar and wind renewable capacities and is committed to developing innovative energy solutions while strengthening its activities in distributed generation and green mobility.

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ENGIE acquires Renvico and strengthens its growth in wind energy in Italy and in France

ENGIE announces the acquisition of Renvico from Macquarie Infrastructure and Real Assets (MIRA), via Macquarie European Infrastructure Fund 4, and from KKR with its co-investors.

The onshore wind installed capacity of the Renvico comprises 329 MW of operating wind farms of which 142 MW in Italy and 187 MW in France. Renvico further develops a greenfield portfolio of 300 MW.

Gwenaëlle Avice-Huet, ENGIE’s Executive vice president in charge of Renewable Energy said: “This acquisition will contribute to ENGIE’s growth ambitions, adding 9 GW worldwide by 2021, of which 3 GW in Europe. In France, this transaction will allow ENGIE to strengthen its onshore wind leadership, with a 2.1 GW installed capacity at the end of 2018. In Italy, ENGIE will double its onshore wind installed capacity, to reach more than 300 MW. ENGIE already supplies 100% green electricity for 2,9 million clients in France and 1 million clients in Italy. This new portfolio brings also an additional 300 MW capacity to be developed. It’s a corner stone of our ambition to accelerate the zero carbon transition of our clients.”

In France, ENGIE is the leading producer of wind (2 100 MW) and solar power (1 200 MWp), and the leading alternative producer of hydropower energy (3 900 MW). ENGIE’s renewable activities employ 2,500 staff.

In Italy, ENGIE is the first operator for energy efficiency services. It currently employs 3,600 staff, managing the energy of 1 million customers, over 300 municipalities, 10,000 buildings and 3,500 schools. ENGIE provides also electricity and gas.

The completion of the transaction is subject to Antitrust and Foreign Investment clearances.

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ENGIE inaugurates Egypt’s largest wind farm

ENGIE and its consortium partners inaugurated today the 262.5 MW Ras Ghareb wind park, Egypt’s first private and largest wind farm.

Ras Ghareb project started commercial operation in October 2019, 6 weeks ahead of schedule. It is the first wind farm tendered on a Build-Own-Operate (BOO) scheme in the country and is part of the Egyptian government’s drive to increase the share of renewables in the energy mix with a target wind generation capacity of 7 GW by 2022.

The project company, Ras Ghareb Wind Energy SAE is owned by ENGIE (40%) and its consortium partners Toyota Tsusho Corporation/Eurus Energy Holdings Corporation (40%) and Orascom Construction (20%). The total investment cost of the project is approximately USD 380 million.

Shankar Krishnamoorthy, ENGIE’s Executive Vice President commented: “Ras Ghareb wind farm illustrates our ambitious development strategy, aimed to accelerate the zero carbon transition of our clients. We are proud to contribute to the greening of Egypt’s energy mix and we are ready to further work with our partners towards the renewables’ objectives of the country.”

ENGIE has set a target of developing 9 GW of additional renewable capacity worldwide by 2021, and intends to invest approximately EUR 2.5 billion in the sector.

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ENGIE signed a joint declaration with its European Works Council on digital technology issues for the Group

On 28 November 2019, ENGIE’s European Works Council, represented by secretary Robert Textoris and ENGIE’s CEO Isabelle Kocher, signed a joint declaration reflecting the commitment of the signatories to anticipating and supporting the economic, social and organisational changes resulting from the development of digital technologies across the Group.

Since 2016, ENGIE has put the energy transition at the core of its strategy and has initiated an in-depth transformation of its activities and organisations. Among the drivers of this transformation, digital technology figures most prominently. ENGIE is committed to ensuring that all its employees have a connection to the Group’s digital applications within 2 years.

For more than two years, the European Works Council has been working on a study to look more deeply into the concept of “digital transformation and digitisation” in the Group’s various areas of activity, and at the same time to identify the consequences of these transformations for employees.

It is in this context, that this frame of reference that is common to all of the Group’s entities and employees as regards support for digital issues has been defined.

1. Maintaining and developing skills and training in digital tools

Anticipating changes and developing the skills of all employees are at the heart of ENGIE’s Human Resources policy and the concerns of the European Works Council members. Each digital project gives rise to an assessment of its impact in terms of jobs and skills.

2. Supporting changing work patterns

The changes in work patterns that digital tools allow, such as teleworking, dynamic spaces, remote technical supervision systems and geolocation, have consequences for the way in which work is structured and for collective, individual and managerial relationships.
All of the Group’s entities, in conjunction with their employee representative bodies, routinely examine these impacts at the earliest possible stage in order to identify the most appropriate support measures to avoid any deterioration in working conditions and collective benefits.

3. Confirming the importance of quality of life at work

The quality of life at work is a factor in the success of all the changes brought about by the development of digital technologies (information and communication tools, teleworking, dynamic spaces).
From this point of view, the changes related to new technologies must be taken into account in the implementation of the Quality of Life at Work policy at all levels of the Group’s structure, especially in terms of work-life balance, with particular attention to respect for the right to log off and implementing this right.

4. Respecting individual freedoms

The signatories give a reminder that digital technologies (teleworking, geolocation, etc.) must be deployed in strict compliance with individual freedoms and European and national regulations on the protection of personal data.

5. IT security and protecting intangible assets

While information and communication technologies open up new opportunities, they also entail risks for the company in terms of strategic and sensitive data.
Everyone in the company must be made aware of these risks and contribute to the implementation of the protective measures defined by management.

6. Social dialogue in relation to digital transformation projects

The signatories are committed to ensuring that digital transformation projects are subject to transparent dialogue at the different levels of the Group’s organisational structure. For any digital transformation project, this means identifying and measuring, as early as possible, its possible impact on working conditions, jobs and skills, and taking the necessary measures to support them by anticipation.

They are also committed to requesting the opening of negotiations on a European framework agreement with the European Industry Federations starting in the second half of 2020.

To become a leader in the zero-carbon transition, ENGIE has introduced digital technologies on a massive scale across its processes, energy production, big data and the Internet of things. This has helped us to become more innovative, to develop renewables and to improve the ways in which energy is used. The role that digital technologies play through the impact that they have on our work patterns therefore makes it a vital issue for a social dialogue appropriate for the 21st-century. The joint declaration that we are signing today with our European social partners creates a fully-fledged social dialogue roadmap for the Group and all of its entities as regards digital technologies. It will enable our 170,000 employees to make better use of digital tools and do so with confidence, while the Group will be able to continue to move forwards”, said Pierre Deheunynck, ENGIE’s Executive Vice President, in charge of Group Human Resources, Transformation, Corporate, Global Business Support, Global Care and Real Estate.

 

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ENGIE, in partnership with Nexity, presents its new head office, a showcase for its zero-carbon solutions

ENGIE has the ambition to build a 136,000 m² eco-site by 2023 to illustrate its expertise in the zero carbon transition. Located right in the heart of La Garenne-Colombes, 700 m from the current head office and next to the new La Folie station, served by the RER E line, it will group together a large number of employees from Île-de-France on one site, promoting cooperation, cross-functional working, and open-mindedness.

The embodiment of the zero-carbon transition

Powered by an energy mix made exclusively of renewable energies, the eco-site will be a showcase for the innovative solutions that ENGIE is developing for its clients.

The energy mix for supplying the site with heating, cooling and electricity will combine:

  • Geothermal energy (optimised to meet between 70 and 90% of the site’s heating and cooling requirements);
  • Solar panels;
  • Biomethane boilers;
  • Power storage facilities;
  • Smart grid and blockchain technology.

As real evidence of the Group’s commitment to the zero-carbon transition “as a service”, this integrated solution combining renewable energies and digital technologies has been designed to be economically efficient and replicable.

The eco-site will therefore need to meet the requirements of the strictest environmental and biodiversity certification: HQE Excellent, BREEAM Excellent, E+C-, BiodiverCity, etc.

A central core to bring people together

A 6000 m² core area has been designed by the building’s architects and project managers as a multi-functional, unifying space. The Core will be a hybrid, bubbling area in which employees will be able to move around and is designed to inspire them to embrace new professional practices, such as incubation, meetings, ideation, discovery, events, etc.

The innovative building will also showcase the ENGIE Group’s expertise in demonstration areas that are modular and scalable.

A prototype for sustainable cities of the future

The site has been designed as a prototype for the sustainable city of the future. Integrated into its environment and inclusive, it will be able to welcome external stakeholders. As such, it will be opened up to the local community on a regular basis, and the on-site services will be shared with them, including sports facilities (2500 m²), a crèche, a medical centre, a concierge service and restaurants. Similarly, the Core aspires to being an ENGIE testing area. It will be able to accommodate students, researchers and start-up companies. There will also be a 150-seat and a 300-seat auditorium for hosting external events.
With a 2ha park leading out into the city, it will promote biodiversity, creating a new biotope right in the heart of the city.

This project will showcase the ENGIE Group’s zero-carbon strategy. Designed to be an inclusive living space, an extension of the city and open to residents, this eco-site will be a prototype for smart cities of the future. It will also accelerate ENGIE’s employee culture of collaboration, inclusiveness and interaction with the outside world”, commented Pierre Deheunynck, ENGIE’s Deputy CEO.

“Nexity and ENGIE share a great deal of DNA in their approach to building cities. We are making a major leap forward toward the zero-carbon city, through our convictions first and foremost, and also because we believe that it will provide us with a considerable competitive advantage. Never has a “user” as big as ENGIE entered into such a major partnership with an urban operator. This partnership is underpinned by an alignment of interests and us sharing our expertise, as well as wanting to create value and co-develop solutions”, explains Véronique Bédague, Deputy Chief Executive of the Nexity Group.

Project key figures:

  • 136,000 m²
  • 10,000 m² of terraces
  • 9000 employees and partners
  • 2 hectares of park
  • Core: 6000 m² for creation and innovation

Future project phases:

  • 2020: laying of the cornerstone
  • 2023: delivery of the buildings in phases
  • 2023/2024: relocation in waves

Architects:

  • SCAU – Chaix et Morel et associés – Art & Build
  • Landscape architect: Base

 

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Angers Loire Métropole: the ENGIE consortium has been selected to help create France’s first “smart region”

To lead the way in French smart regions, Angers Loire Métropole has selected the consortium managed by ENGIE Solutions, a brand owned by the Group leading the zero-carbon transition, alongside SUEZ, La Poste and the VYV Group.

Starting in January 2020, teams from ENGIE Solutions, SUEZ, La Poste and the VYV Group will develop innovative solutions, working closely alongside the local community, its partners, local companies and residents. The aim is to use digital technologies to speed up the region’s energy transition, enhance its appeal, optimise the way in which public services are structured and manage resources more efficiently, thus improving and facilitating the day-to-day lives of residents.

Thanks to the complementarity of ENGIE consortium’s areas of expertise,– and by installing sensors and undertaking renovation work – the amount of energy used for public lighting should be reduced by 66% by 2025. Furthermore, energy consumption in the town’s public buildings should be reduced by 20%, traffic should run more smoothly and more easily, and the quantities of water used for watering municipal plants and trees should be reduced by 30%.

Angers Loire Métropole, leading the digital and electronic transition of the future

With 7000 jobs and 900 companies generating turnover of some €1.3 billion in electronic and digital technologies, Angers Loire Métropole (ALM) was awarded the French Tech label in 2015. The urban community’s economic and cultural dynamism, together with the high quality of life enjoyed by its residents, make it an appealing region. To enhance the everyday lives of residents, to make it easier, smarter and more harmonious, ALM accelerates its transformation into a smart region. By entrusting the ENGIE consortium with this task, the urban community is reasserting its desire to commit to the zero-carbon transition, ensuring a more virtuous form of development.

The consortium spearheaded by ENGIE Solutions will densely cover the whole region with its unique understanding of the local fabric, ensuring that its teams are always ready to be mobilised.

A smart region serving residents: interactivity and cross-functional solutions

The consortium will create infrastructure components able to communicate with one another, to improve public services and their accessibility, as well as reducing the urban community’s environmental footprint and generating energy savings in all areas of day-to-day life.

At the heart of the project, ENGIE Solutions will deploy LIVIN’, the hypervisor platform that provides public services with all the information they need to optimise public lighting, video-protection, water and drainage services, together with the management of green spaces, healthcare, buildings, mobility and waste disposal. Furthermore, the platform will also provide 3D representations (digital twins of the region) so that decision-makers can take decisions based on relevant scenarios.

In concrete terms, once the current energy-guzzling lighting systems have been replaced by LEDs, the platform can be used to enhance the performance of lighting units by having them triggered when a pedestrian or car passes. Sensors integrated into urban furniture (lighting systems, public buildings, signage, etc.) will keep residents and local authority’s services informed via an application, providing information about the availability of parking spaces, any accidents or damage to the water networks, etc. The benefits will include traffic that runs more smoothly, time and energy savings and increased security.

To continue with this approach underpinned by a commitment to environmental excellence initiated by the urban community, SUEZ will supplement the existing tools (sensors, smart water meters, etc.) so as to optimise the performance of water, drainage, waste management and cleaning services, as well as the way in which green spaces are managed. As a result, water quality can be managed in real time, fly-tipping will be reduced and waste collection operations can be optimised.

Operating via its subsidiary Docaposte, LA POSTE will provide its expertise as a trusted digital third party. It will be tasked with storing and archiving the data generated by the smart city’s operation. Hosted in France on servers owned by Docaposte and operated by its teams, this anonymized data will remain the local authority’s property.

With its experience in local services, La Poste will give a human face to the smart city’s new features and functions to ensure that as many people as possible make use of them. La Poste will also provide its expertise in urban logistics, helping to reduce congestion in the town centre and improve quality-of-life for residents by ensuring that transport services run more smoothly.

As Angers’ leading private employer, the VYV Group will be in charge of deploying the health/well-being component. It will run these services by managing healthcare data on “E-PIC”, a trusted digital platform, alongside the hypervisor platform implemented by ENGIE. The local authority will also have access to a set of services provided by the other members of the consortium, to support in particular vulnerable people and ensuring that they are able to remain at home. This platform will list all the services designed to optimise people’s access to healthcare.

Subcontractors will also be involved in the delivery of these services: LACROIX Group for smart connected equipment and Onepoint for its expertise in smart city strategies, green growth and in the digital transformation for public stakeholders.

Ongoing dialogue with residents

Turning Angers Loire Métropole into a smart region also involves improving the way in which projects are managed by adopting a co-development approach with stakeholders. The ENGIE consortium is a firm believer in this and – in line with the approach long adopted by Angers Loire Métropole – suggests investing in the creation of a Forum in Angers. This would be a fully-fledged forum for creating the services of the future for the smart region, showcasing regional initiatives and sharing examples of best practice with other local authorities. Residents will be able to understand what the smart region is within the framework of this Forum. The ENGIE consortium and Angers Loire Métropole will be able to use it to provide other French local authorities and international delegations with demonstrations.

With this proposed smart region, the ENGIE consortium is helping Angers Loire Métropole to become a forerunner in regional intelligence for everybody’s benefit.

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ENGIE, DLVA and Air Liquide are entering into an ambitious partnership to produce green hydrogen on an industrial scale.

ENGIE, the Durance, Luberon, Verdon urban area (DLVA) and Air Liquide are signing a cooperation agreement to develop the “HyGreen Provence” project. which aims at producing , storing and distributing green hydrogen.

Initiated in 2017, “HyGreen Provence” will make it possible to develop and validate the technico-economic conditions for the production of 1,300 GWh of solar electricity, equivalent to the annual residential consumption of about 450,000 people, together with the production of renewable hydrogen on an industrial scale through water electrolysis.

The project will be developed in several phases with the first deliverables envisaged by the end of 2021 and a possible final phase in 2027. Eventually, several tens of thousands of metric tons of renewable hydrogen could be produced in this way every year to meet a very broad spectrum of uses.

The DLVA urban area region, which comprises 25 municipalities and 65,000 inhabitants, has considerable advantageous resources for this project, including one of France’s most favourable levels of sunshine (an average of 1,450 hours per year), substantial land availability and the presence of a salt cavity storage site able to accommodate the large-scale centralised production of renewable hydrogen.

ENGIE and Air Liquide, partners committed to the development of hydrogen solutions, have decided to join forces in the project, alongside the DLVA urban area region, by combining their strengths:

  • ENGIE’s expertise in the implementation of zero-carbon solutions for its industrial customers and the regions, solutions that are based on fully renewable energy sources including hydrogen and incorporate the entire value chain (production, storage, distribution)
  • Air Liquide’s expertise in the field of hydrogen, spanning across the entire value chain, from production until final usage, and which includes in particularly in low-carbon production technologies including electrolysis
  • And the commitment of the DLVA region urban area to supporting the development of a project of a scale and nature unprecedented in France

This hydrogen will serve various uses in the areas of mobility, energy and industry, both locally and regionally. As far as mobility is concerned, hydrogen can power all types of vehicle from light motor cars to buses, utility vehicles and trucks. On the energy front, the project plans to provide heat and cooling for an urban eco-district. Lastly, hydrogen can be used in industrial processes that will benefit the entire region.

The signature of this innovative public-private partnership has been made possible by the involvement of many stakeholders committed to the zero-carbon transition. It is fully aligned with the regional initiative being undertaken by DLVA and will contribute most substantially to the development of the hydrogen sector in France.

Gwenaëlle Avice-Huet, ENGIE’s Executive Vice President in charge of Renewables, says, “Entering into the partnership heralds a ground-breaking alliance between large industrial groups in France, and a local with the support of the public authorityies, that will accelerate the emergence of massive renewable hydrogen production projects in France. ENGIE is convinced of the importance of renewable hydrogen in providing “zero carbon as a service” solutions to industrial customers and the regions.

Bernard Jeanmet-Péralta, the President of DLVA, says “First and foremost, HyGreen Provence is an ambitious and innovative regional project. It will embrace all those desiring consultation and dialogue, particularly the National Parks in Verdon and Luberon. We are involved in the dynamic that is the “Vallée des Énergies” together with partners such as the Iter project, the Cadarache CEA, Géomethane and hydroelectricity in Durance. We are thereby contributing to the energy transition in France along with leading industrialists which, through their respective expertise, bring credibility and viability to the requirement for zero carbon emissions.

Guy Salzgeber, Executive Vice President and member of the Air Liquide Group Executive Committee supervising Industrial Merchant, Hydrogen and Innovation, said: “We are pleased to contribute to this flagship project, which will demonstrate, in France, on an industrial scale, the key role that hydrogen will play in the energy transition. For more than 40 years, the Group has developed a unique know-how in the field of hydrogen. With expertise in all production technologies—including electrolysis—the Group is now a leading player in the world with regards to low-carbon hydrogen energy production. This project is in line with the Group’s climate strategy, the most ambitious in its sector

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ENGIE financial information as of September 30, 2019 Sustained growth in Q3 and for 9M 2019 – 2019 full year guidance confirmed

  • Financial results as of September 30, 2019 with earnings acceleration, in line with expectations: current operating income (COI1) of EUR 3.8bn, up 9%, and 14% on an organic2 basis, and EBITDA of EUR 7.1bn, up 5%, and 7% on an organic2 basis.
  • Sustained Q3 performance, notably with the expected improvement in Nuclear availability as well as good momentum in Renewables.
  • Solid 9M organic2 COI1 growth, up 14% yoy (+ 12% excluding the 2019 positive one-off from Suez linked to the Argentina court case), driven by Nuclear, Thermal, and Others (notably Energy Management), partially offset by Networks.
  • Clients Solutions driven by sustained revenues growth (+10%) and good COI1 performance of decentralized activities.
  • ENGIE confirms its 2019 guidance3 for net recurring income Group share (in a range of EUR 2.5 billion to EUR 2.7 billion) and for the net financial debt / EBITDA ratio (equal to or below 2.5x excluding the TAG acquisition).

Presenting the financial information as of September 30, 2019 Isabelle Kocher, ENGIE’s CEO, said: “Our 9M results confirm ENGIE’s ability to grow following the profound transformation undergone over the last three years. This quarter, our increased wind and solar capacity and the Microsoft PPA demonstrate the accelerated development of our Renewables portfolio. The acquisition of Conti in the United States and the launch of ENGIE Impact are two other milestones in the Group’s drive to boost the zero-carbon transition of our clients. ENGIE’s underlying organic performance in Thermal is also solid, across several regions and across both contracted and merchant operations, while we continue to optimize our Networks businesses and integrate the exciting acquisition of TAG in Brazil. Lastly, we confirm our guidance for 2019.”

  • Nuclear was driven by higher availability of Belgian production units and achieved price improvement;
  • Networks were impacted by several factors in France that were expected and are mostly temporary, particularly in gas transmission with tariff linearization and in gas storage with customer penalties due to temporary technical issues. Networks also benefited from the first contribution of TAG in Brazil, acquired earlier this year;
  • In Others, Energy management results were strong, mainly driven by gas contract renegotiations and international activities;
  • Supply activities continued to be impacted by a difficult market context, mainly from margin contractions in French retail;
  • Client Solutions results benefited from an increased level of activity, notably driven by the performance of decentralized activities. SUEZ one-offs additionally contributed positively;
  • Thermal benefited from liquidated damages (LDs) and positive Power Purchase Agreement (PPA) effects in Latin America, as well as from positive contribution from gas power plants in Australia. Nevertheless, these activities were affected mainly by the disposal of Glow;
  • Renewables benefited from the steep acceleration in asset commissioning and development of wind & and solar capacities with 1.8 GW installed over the first nine months and now 8.8 GW secured out of the target of 9 GW to be installed by 2021. On hydro power production, lower volumes in France had a significant negative impact year on year.

Analysis of financial data as of September 30, 2019

Revenues of EUR 46.8 billion

Revenues were EUR 46.8 billion, up 8.8% on a gross basis and 7.9% on an organic2 basis.

Reported revenue growth includes a slightly positive foreign exchange effect, mainly due to the appreciation of the US dollar, partly offset by the depreciation of the Argentinian peso and the Brazilian real against the euro, and to an aggregate positive scope effect. Changes in the scope of consolidation included various acquisitions in Client Solutions (primarily in the United States, in Latin America and in France) and in business Supply in the US, partly offset by the disposals of the stake of Glow in Thailand in March 2019 and of the business Supply activities in Germany at the end of 2018.

Organic2 revenue growth was primarily driven by effective energy management services and favorable market conditions for Global Energy Management (GEM) activities, by Thermal in Europe with higher volumes sold, by growth in Client Solutions in France and Europe, by a wide ranging momentum in Latin America (tariff increases in Mexican and Argentinian gas distribution activities, PPA portfolio growth in Chile and dynamic energy allocation as well as commissioning of new wind farms in Brazil), and by Supply activities (benefitting from a favorable market context for business customers in France, higher power sales in France both to business and retail customers and positive price effects in Belgium, Romania and in the United States). This growth was partly offset by lower revenues from gas storage activities with less purchase/sale operations in France and in the United Kingdom.

Clients Solutions revenues were up 10% on a gross basis and 3% on an organic2 basis.

EBITDA of EUR 7.1 billion

EBITDA was EUR 7.1 billion, up 4.9% on a gross basis and 7.1% on an organic2 basis. These gross and organic2 variations are globally in line with current operating income1 growth, except for the positive one-offs in SUEZ (mainly linked to the settlement of the Argentina court case in 2019) which are not booked at EBITDA level.

Current operating income1 of EUR 3.8 billion

Current operating income including share of net income of entities accounted for using the equity method (COI) amounted to EUR 3.8 billion, up 9.0% on a reported basis and 13.6% on an organic2 basis.

Reported COI1 increase includes a positive foreign exchange effect, mainly due to the appreciation of the US dollar, partly offset by the depreciation of the Argentinian peso and the Brazilian real against the euro, and to an aggregate negative scope effect. This negative scope effect stems mainly from the sale of Glow, partly offset by various acquisitions predominantly in Networks (TAG), Client Solutions and Renewables.

Based on the reporting segments, the organic2 COI1 growth was mainly driven by Latin America (notably due to the favorable impact of LDs received for Thermal activities in 2019, better performance of hydroelectric power generation and commissioning of new wind and solar assets in Brazil as well as PPA portfolio growth in Chile), by the Rest of Europe (mainly driven by the very strong performance of Nuclear activities with better availability and higher prices, partly offset by decreasing Supply activities in Benelux and Romania), by the Others segment (mainly due to GEM’s good performance in market activities, positive one-offs in SUEZ, higher power margins for business Supply in France; partly offset by some headwinds at Tractebel), and by Middle East, Africa & Asia (mainly driven by higher achieved margins and generated volumes in Thermal generation in Australia; partly offset by a negative temperature effect for Australian Supply).

These positive impacts are partly offset by an organic2 COI1 decrease in France (for France excluding Infrastructures, mainly due to the impact of lower hydroelectric power generation and to margin pressure in Supply activities, partly offset by increasing wind and solar contributions and improved performance on decentralized energy; for France Infrastructures, mainly due to the transmission activity and, to a lesser extent, to the storage profits) and in USA & Canada (mainly driven by Client Solutions, notably due to negative one-offs booked in 2019, by the lower contribution from Thermal activities due to higher costs for LNG sourcing in Puerto Rico, and by the temporary margin pressure on business Supply activities; partly offset by DBSO sell down contribution in Renewable activities).

Organic2 COI1 performance varied also across the Group’s business lines with growth for all business lines except for Networks and Supply:

  • Client Solutions reported a 6% organic2 COI1 increase, benefitting from a good commercial performance, an increased contribution of decentralized energy activities and positive one-off from SUEZ linked to the Argentina court case. In addition, restructuring actions are underway in some entities, particularly in Canada.
  • Networks reported a 9% organic2 COI1 decrease. This decrease is mainly due to transmission activities in France from the effects of the merger of the zones (end of subscriptions on North-South transit), mainly caused by the tariff linearization mechanism and higher than expected congestion costs. To a lesser extent, storage profits were impacted by customer penalties due to technical issues in France and negative price effects in Germany. Lastly, a positive one-off was recorded in 2018 in Latin America. Tariff increases in Mexican and Argentinian gas distribution activities only partly offset these negative effects.
  • Renewables reported a 3% organic2 COI1 increase. This was primarily driven by the 1.8 GW commissioning of new wind farms and solar plants since January 1st, 2019, notably in Brazil (0.5 GW) and the US (0.5 GW), and by a better performance of hydroelectric power generation in Brazil. These positive effects were partly offset by the lower hydroelectric power generation in France.
  • Thermal showed a significant 25% organic2 COI1 increase. This increase is mainly attributable to the favorable impact of LDs received in Latin America in 2019, the PPA portfolio growth in Chile and the higher margin achieved and volumes generated in Thermal activities in Australia. These positive effects were partly offset by the suspension of capacity market revenues in the United Kingdom, and the lower contribution in the United States due to higher costs for LNG sourcing in Puerto Rico as well as lower spreads in the US North East in the first half of 2019.
  • Nuclear delivered a very significant 56% organic2 COI1 growth, benefitting from higher availability rates in Belgium following 2018 unplanned outages (+ 2,220bps and + 25% volumes produced) and better achieved prices (+ 2€/MWh).
  • Supply COI1 reduced significantly by 27% on an organic2 basis, primarily driven by margin pressures for retail sales in France on market offers in gas and power, by a negative temperature effect in Australia as well as lower results in business sales in Benelux and in the United States. These effects were partly offset by higher power margins for business supply activities in France.
  • The Others segment delivered a very significant 65% organic2 COI1 growth, mainly reflecting GEM’s good performance on market activities notably with strong positive impact from gas contract renegotiations and significant positive timing effects, as well as lower Corporate costs.

Net financial debt at EUR 26.7 billion

At the end of September 2019, net financial debt stood at EUR 26.7 billion, up EUR 3.4 billion compared with December 31, 20185. This variation was mainly due to (i) capital expenditures over the period (EUR 7.0 billion8 , including notably the EUR 1.5 billion expenditures for the TAG transaction in Brazil), (ii) dividends paid to ENGIE SA shareholders (EUR 1.8 billion) and to non-controlling interests (EUR 0.7 billion) and (iii) other elements (EUR 0.5 billion) mainly related to foreign exchange rates, new right-of-use assets accounted for over the period and mark-to-market variation. These items were partly offset by (i) cash flow from operations7 (EUR 4.0 billion) and (ii) the impacts of the portfolio rotation program (EUR 2.6 billion, mainly related to the completion of the disposal of the stake in Glow). In particular, ENGIE paid a higher than usual dividend in the first three quarters of 2019 (EUR0.75 per share paid in May but no more interim dividend paid in October).

Cash flow from operations7 amounted to EUR 4.0 billion, down EUR 1.0 billion. The decrease stemmed chiefly from temporary working capital requirement variations (EUR 1.6 billion negative impact) caused by margin calls on derivatives and mark-to-market variation of financial derivatives, partly offset by the increase of operating cash flow (EUR 0.4 billion) and lower tax and interests paid (EUR 0.1 billion).

At the end of September 2019, net financial debt to EBITDA ratio amounted to 2.7x. Excluding the TAG acquisition which does not yet materially contribute to the EBITDA, this ratio amounted to 2.5x, slightly increasing compared with the end of 20185 and on the target of less than or equal to 2.5x. The average cost of gross debt was 2.73%, slightly up compared with the end of 2018, notably due to new borrowings in Brazil. At the end of September 2019, net economic debt9 to EBITDA ratio stood at 4.0x. Excluding the TAG acquisition, this ratio stood at 3.8x, slightly increasing compared with the end of 20185.

The Group’s robust financial structure has been reaffirmed by S&P, which confirmed its A- rating in April, and by Fitch, which confirmed its A rating in June, both maintaining their stable outlook. In June, as announced, Moody’s downgraded its rating from A2 to A3 following the adoption of the Loi PACTE in France which has prompted a reappraisal of its one notch uplift for government support.

2019 financial targets3

ENGIE confirms its financial anticipations for 20193:

  • a net recurring income Group share (NRIgs) between EUR 2.5 and EUR 2.7 billion. This guidance is based on an indicative range for the EBITDA of EUR 9.9 to 10.3 billion,
  • a net financial debt / EBITDA ratio below or equal to 2.5x excluding the TAG acquisition,
  • an ‘A’ category credit rating.

Operational milestones: towards a zero-carbon transition

ENGIE continued to pursue its strategy, focused on zero-carbon transition leadership in the first three quarters of 2019.

In Client Solutions, ENGIE and its partners were awarded a 35-year energy efficiency contract in Ottawa to deliver and modernize heating and cooling systems for Government of Canada buildings. In addition, ENGIE acquired Conti, a North American provider of services to the building, design, engineering and construction sectors. Lastly, GE Renewable Energy has chosen ENGIE Impact, our recently launched consulting entity, to help meet its aggressive zero-carbon goal by 2020.

In Networks, ENGIE announced on June 13, 2019 that the consortium in which it holds a majority stake completed the acquisition of a 90% shareholding in TAG, owner of the largest Brazilian gas transmission network. TAG’s portfolio of long-term contracts provides an attractive earnings stream and rebalances ENGIE’s geographic exposure in Networks activities.

In Renewables, 1.8 GW of wind and solar capacity was commissioned in the first three quarters, confirming a marked acceleration after the commissioning of 1.1 GW for the full year 2018, and 8.8 GW are now installed, under construction or secured to reach the 9 GW target of commissioning over 2019-21. The new joint-venture in Mexico with Tokyo Gas and the long-term solar and wind energy PPAs announced with Microsoft and Walmart in the US demonstrate our ability to deploy our DBSO7 model and attract strong partners to accelerate the development of our portfolio both for installed capacities as well as for corporate PPAs. In offshore wind, the signing of a strategic Memorandum of Understanding with EDP aims at creating a leading global player.

In Thermal, ENGIE continued to execute its strategy of carbon footprint reduction. ENGIE closed the disposal of its 69.1% stake in Glow in Thailand (3.2 GW of generation capacity, of which 1.0 GW is coal), ending its participation in coal in Asia-Pacific. ENGIE also announced the disposal of its German and Dutch coal assets (capacity of 2.3 GW), reducing coal to c. 4% of its global power generation capacity after closing of this transaction.

The presentation of the Group’s financial information as of September 30, 2019 used during the investor conference call is available to download from ENGIE’s website.

Revenues for France increased by 4.3% on a gross basis and by 2.8% on an organic2 basis. For France excluding Infrastructures, revenues increased by 5.9% on a gross basis and by 5.0% on an organic2 basis. The higher gross increase than the organic2 decrease is explained by the acquisition of several companies in the Client Solutions activities. The organic2 increase is mainly due to higher sales in Client Solutions activities (installations, construction and energy efficiency) as well as in retail power supply and is partly offset by the lower hydroelectric power generation and by lower gas sales volumes (due to a reduction of the customer base in retail gas supply and a negative temperature effect).

For France Infrastructures, revenues were flat on a gross basis and decreased by 2.7% on an organic2 basis. The organic2 decrease is due to gas storage with a reduction in purchase/sale operations in France as a result of the new regulatory framework implemented in 2018 and lower gas storage revenues in the United Kingdom, partly offset by the distribution activity, which benefitted from tariff increases of July 1, 2018 (+2.0%) and July 1, 2019 (+0.5%). On a gross basis, this organic2 decrease is offset by the outsourcing of LNG activities.

Revenues for Rest of Europe were up 11.5% on a gross basis and 12.6% on an organic2 basis. Revenue growth was driven mainly by Thermal activities (benefiting from favorable volume and price effects, partially offset by the suspension of the capacity remuneration mechanism in the United Kingdom since October 1, 2018, resulting in the non-recognition of the corresponding revenues), by Client Solutions activities in Belgium (notably on installation and energy efficiency) and in Spain (mainly on installation), by Nuclear recovery both in volumes and price and by Supply activities in Benelux (fueled by positive price effects) and in Romania. On a gross basis, this organic2 increase is partially offset by the sale of the BtoB Supply activities in Germany at the end of 2018 despite contributions of several tuck-in acquisitions in Central Europe (notably OTTO in Germany).

Revenues for Latin America increased by 14.9% on a gross basis and by 11.7% on an organic2 basis. Gross growth includes the positive impact of the integration of a Client Solutions service company (CAM) acquired at the end of 2018, partially offset by a globally unfavorable exchange rate effect, driven by the depreciation of the Argentinian peso (- 53%) and the Brazilian real (- 2%), only partially compensated by the appreciation of the US dollar (+ 6%), Mexican peso (+ 5%) and Peruvian sol (+ 4%). In Brazil, organic2 growth was mainly due to dynamic hydro energy allocation and to the commercial commissioning of new wind and solar farms. In Chile, the business was positively impacted by the ramp up of long-term PPAs.

Revenues for USA & Canada were up 33.5% on a gross basis and 8.5% on an organic2 basis. They benefited from a positive exchange rate effect due to the appreciation of the US dollar and positive scope effects due to the contribution of acquisitions in Client Solutions (Donnelly, Unity, Systecon) and in power Supply activities (Plymouth Rock) in the USA. The organic2 growth was mainly due to a positive price effect in the power B2B Supply activities in the USA.

Revenues for Middle East, Africa & Asia were down 22.9% on a gross basis and 3.8% on an organic2 basis. The higher gross decrease is mainly due to the negative scope effect of the disposal of Glow (Thailand) in March 2019, partly offset by acquisitions in Client Solutions in the Middle East (Cofely BESIX) and Asia as well as by positive currency effects mainly linked to the appreciation of the US dollar. On an organic2 basis, Supply showed a lower performance (mainly in Australia) and Customer Solutions activities delivered lower revenues in Africa and Australia.

Revenues for the Others segment increased by 15.2% on a gross basis and by 11.9% on an organic2 basis. This increase is mainly due to the GEM activities fueled by growth in international activities and gas contracts renegotiation as well as to Supply activities benefitting from a favorable market context for business customers in France.

Contributive revenues by business line:

The calculation of organic2 growth aims to present comparable data both in terms of the exchange rates used to convert the financial statements of foreign companies and in terms of contributing entities (consolidation method and contribution in terms of comparable number of months). Organic2 growth in percentage terms represents the ratio between the data for the current year (N) and the previous year (N-1) restated as follows:

  • The N-1 data is corrected by removing the contributions of entities transferred during the N-1 period or pro rata temporis for the number of months after the transfer in N.
  • The N-1 data is converted at the exchange rate for the period N.
  • The N data is corrected with the N acquisition data or pro rata temporis for the number of months prior to the N-1 acquisition.

1 Including share in net income of entities accounted for using the equity method.
2 Organic variation = gross variation without scope and foreign exchanges impacts.
3 These targets and this indication assume average weather conditions in France, full pass through of supply costs in French regulated gas tariffs, no significant accounting changes except for IFRS 16, no major regulatory and macroeconomic changes, commodity price assumptions based on market conditions as of December 31, 2018 for the non- hedged part of the production, average foreign exchange rates as follows for 2019: EUR/USD: 1.16; EUR/BRL: 4.42, and without significant impacts from disposals not announced as of February 28, 2019.
4 Variations vs. 9M 2018.
5 2018 figures adjusted for IFRS 16.
6 Cash flow from operations = Free Cash Flow before maintenance Capex.
7 DBSO = Develop, Build, Share & Operate.
8 Net of DBSO partial sell-downs.
9 Net economic debt amounted to EUR 39.9 billion at the end of September 2019 (compared with EUR 35.7 billion at the end of December 2018); it includes, in particular, nuclear provisions and post-employment benefits.

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Important notice

The figures presented here are those customarily used and communicated to the markets by ENGIE. This message includes forward-looking information and statements. Such statements include financial projections and estimates, the assumptions on which they are based, as well as statements about projects, objectives and expectations regarding future operations, profits, or services, or future performance. Although ENGIE management believes that these forward-looking statements are reasonable, investors and ENGIE shareholders should be aware that such forward-looking information and statements are subject to many risks and uncertainties that are generally difficult to predict and beyond the control of ENGIE, and may cause results and developments to differ significantly from those expressed, implied or predicted in the forward-looking statements or information. Such risks include those explained or identified in the public documents filed by ENGIE with the French Financial Markets Authority (AMF), including those listed in the “Risk Factors” section of the ENGIE (ex GDF SUEZ) reference document filed with the AMF on March 20, 2019 (under number D.19-0177). Investors and ENGIE shareholders should note that if some or all these risks are realized they may have a significant unfavorable impact on ENGIE.

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