Eni to speed up renewables drive with greenfield development, M&A

China Clean Energy

04/12/2020 16:06

By Stephen Jewkes
    MILAN, Dec 4 (Reuters) - Italy’s Eni  ENI.MI  will expand
its renewable energy in Europe, the U.S. and the Pacific by
developing its own projects and making small acquisitions, the
group’s clean energy head said on Friday.
    Eni, which currently has a renewable energy capacity of only
350 megawatts, has pledged to reach 15 gigawatts by 2030 and 55
GW by 2050 – mainly by building its own capacity.
    "We're virtually starting from scratch so we'll need a lot
of greenfield development along with some small M&A to get to
our 2030 target," Massimo Mondazzi told Reuters. "You’ll see new
projects coming through in the months to come."
    "We're targeting Europe where we’d like to serve our clients
with the renewable energy we produce but also the U.S.,
Australia and some growing areas in the Pacific region."
    Eni took a first step into offshore wind on Friday, spending
405 million pounds ($548 million) to buy 20% of the 2.4 GW
Dogger Bank project off the British coast, which is set to be
the largest in the world.  urn:newsml:reuters.com:*:nL1N2IK0EG 
    Mondazzi said Eni did not plan to splash out on acquisitions
but would do small deals to enter new markets and technologies,
adding it could also buy small retail portfolios to boost
returns and create platforms to offer new services.
    He acknowledged pay-back times on green businesses could be
longer than with oil and gas but said they were far less capital
intensive. 
    Some analysts have commented that getting good value
renewable deals can be difficult since the assets are sought
after and sell at high prices.
    In October, Total's  TOTF.PA  CEO said a bubble was forming
in the M&A market for renewable power projects.  urn:newsml:reuters.com:*:nL1N2H50H1
    The company will hold on to its solar power business in
Australia, where it is currently selling gas assets, as a
platform for growth. 
    "It’s an interesting country and we want to build up
additional renewable assets there and maybe connect some clients
to these assets," he said.
    Mondazzi, till recently Eni CFO, was appointed head of a new
Energy Evolution division created earlier this year to look
after renewables and other clean energy businesses like
biorefineries and hydrogen.
    Eni, one of the biggest foreign oil and gas producers in
Africa with operations also in Latin America, has pledged to
slash its greenhouse gas emissions by 80% in one of the
industry's most ambitious clean-up drives.
    It will allocate 25% of its capex to clean energy in 2023
with oil and gas making up the lion’s share. But that will
change.
    "After 2025 oil production will decrease and gas will
plateau. It's likely that by 2030, 50% of spending will be on
our energy transition lines," Mondazzi said.
    Eni's existing oil and gas reserves, in the portfolio at
around $50/barrel, are expected to generate 94% of their overall
value by 2035. 
    "We have a small exposure to stranded asset risks and we’re
super careful anyway on what assets we develop," he said.
($1 = 0.7390 pounds)

 (Reporting by Stephen Jewkes;Editing by Elaine Hardcastle)
 ((stephen.jewkes@thomsonreuters.com; +39.0266129695; Reuters
Messaging: stephen.jewkes.thomsonreuters.com@reuters.net))