Climate risk manager of the year: Engie

Energy Risk Awards 2021: French mid-streamer structures array of pioneering deals that span environmental markets

Jérôme Malka, Engie Global Energy Management

Engie, Energy Risk’s 2021 climate risk manager of the year, is breaking ground in the environmental markets as it pursues an ambitious corporate green agenda that also helps its clients from all sectors decarbonise their portfolios and manage their climate exposures.

In order to align its activities with the Paris Accord goals and the European Union’s target to be climate-neutral by 2050, Engie is active in a huge range of environmental markets including: corporate power purchase agreements (PPAs); demand-side management; energy efficiency; power asset optimisation; biomethane; hydrogen and low-carbon gas; biomass; emissions trading; energy-efficiency certificates; and other carbon offsetting schemes.

“We position ourselves as a ‘glocal’, green and client-centric midstreamer,” says Mircea Caratas, chief commercial officer at Engie Global Energy Management. “With over 20 years’ experience in energy management, we’re in a good place to explore all low-carbon technologies, and to help clients from all sectors reduce their carbon footprint,” he adds.

The corporate PPA market has been a major focus for Engie recently. As renewables subsidies are phased out in Europe and the US, PPAs have become increasingly important. Engie’s PPA portfolio consists of three gigawatts (GW) of capacity, which it plans to grow to 4.5GW by the end of 2021.

“We are one of the top five firms developing corporate PPAs globally, and our goal is to become the leader of that market by 2030,” says Jérôme Malka, vice-president and executive committee member at Engie Global Energy Management.

Engie’s recent PPA deals include a 15-year solar PPA with Energiekontor, one of Germany’s major mid-sized renewables developers, providing for the offtake of 40.5 megawatts (MW) a year from a solar park to be commissioned in October 2021. The firm also signed a set of PPAs at global level in 2020 that included a key deal with Amazon in the US and Europe, for more than 650MW of wind and solar capacity to be commissioned in 2022.

The team also struck a number of PPAs in the Iberian region, including an 11-year PPA for a total of four terawatt hours (TWh) with Fortia Energia, which manages energy supply to large industrials, and a 10-year PPA with industrial gases group Air Liquide totalling 800 gigawatt hours (GWh).

Mircea Caratas

In Belgium, it signed a 10-year PPA with Ineos for the delivery of 3TWh, one of the largest PPAs ever entered into by a chemical group in the country. Engie was also involved in a series of short-term PPAs in France and Germany, intended to counteract the loss of EU subsidies.

The scale and diversity of Engie’s energy portfolio is what enables it to connect consumers and producers with very different supply and demand profiles. “Building a diversified renewable portfolio on the upstream while benefiting from a large client base enables us to play a key role in transforming intermittency risk, which is complex and requires a very specific expertise,” says Malka. “Portfolio management techniques, market tools and cutting-edge IT systems that process highly granular live and forecasted production data enable us to meet the specific demand profile of each client.”

The firm is also taking strides to ensure the gas it uses to offset the intermittency of renewables is as green as possible. In 2020, it was an early mover into the European biomethane market and can now offer large consumers tailor-made gas supply contracts combining renewable and natural gas.

“We are currently the leader in the French biomethane market, with a 50% market share and a yearly energy equivalent of one TWh a year,” Malka says.

Engie aims to grow this to 10TWh/year of installed capacity by 2023–24, sourcing from 450 producers, and to 30TWh/year by 2030.

The firm has also stepped into the nascent low-carbon hydrogen market, signing a partnership with Equinor in February 2021 around low-carbon hydrogen produced from natural gas with carbon capture and storage. It aims to market 30TWh of hydrogen by 2030.

On top of this, Engie trades around two million tons of biomass each year from five locations around the world.

Underpinning Engie’s strong corporate environmental strategy is its climate risk management expertise, with the firm constantly assessing and mitigating its own climate risk exposures and those of its clients. Key to this is its work on weather. Because temperature changes and adverse weather patterns have a huge impact on energy firms, Engie has developed a unique weather and climate risk management offering that includes weather-contingent products and a shared risk strategy with insurers. Innovative products include a hedge against fluctuations in river flow for firms with exposure to hydro assets. 

As well as being active in carbon emissions trading, Engie is also committed to the white certificate energy-efficiency market. “Having bought CertiNergy & Solutions in 2019, the leader of energy-efficiency solutions in Italy and France, we added white certificates to the range of environmental products available on our digital market access platform EGMA,” says Caratas. “This allows efficient and transparent market access for our clients.”

The firm’s wide presence across environmental markets is recognition that it will take many different measures to tackle climate change. “The solution is not one, but many,” says Caratas.