France’s Engie ramps up Middle East renewables push

Engie

• Deal with Saudi’s PIF to collaborate on green hydrogen
• Firm targeting UAE and Oman for solar, wind and hydrogen projects
• Plans to bid on EWEC’s $2bn PV4 solar power plant in Abu Dhabi

French utilities firm Engie is closing in on several opportunities in the Middle East as it looks to the region to help it hit targets to double renewables generation to 80 gigawatts by 2030.  

“We are trying to identify the best geographies for renewables and clearly the Middle East is one of those,” said Frédéric Claux, Engie’s GCC chief executive.

Claux said there were “huge ambitions” to grow the renewables sector in the Middle East, “where abundant land and natural resources offer the potential to combine wind and solar power for greater efficiency”.

• PIF and Engie to collaborate on green hydrogen 
• ‘A long way to go’ to reduce the Gulf’s carbon emissions
• Carbon targets deter Middle East power project developers

Green hydrogen – hydrogen generated by renewable energy – is touted by experts as a key fuel for energy producers looking to cut greenhouse gas emissions. It will account for 4GW – or five percent – of its target, Engie said. 

Last month it signed an initial agreement with Saudi Arabia’s Public Investment Fund to develop green hydrogen projects in the kingdom. They will explore opportunities to produce green hydrogen and its derivatives for export to Europe, Asia and elsewhere. 

Claux said the parties are now searching for a location to build a gigawatt-scale facility, most likely in the north of the kingdom, which has abundant sunshine and wind. Around a dozen potential sites have been identified. 

Wam

The preferred site will need to be close to a port, as the bulk of the product will be converted into ammonia, the favoured mechanism to transport hydrogen over large distances. 

“We just need to put flesh on the skeleton of our idea,” Claux said.

The exploratory part of the deal will likely last a couple of years. Then the parties will undertake feasibility studies before hopefully starting to construct the first facility. Other hydrogen projects in Saudi Arabia may follow. 

Further expansion

Engie has been focusing on energy transition for some time, and rebranded from Suez in 2015, to “a name that evokes energy” to reflect its ambition to be “the benchmark energy player in fast growing markets and the energy transition leader in Europe”.

It plans to expand its renewables activity in the UAE and Oman, Claux added.

“The other countries in the Gulf are much smaller with less potential for mega-scale projects,” he said.

Engie signed a $5 billion pledge with Abu Dhabi’s Masdar last December to co-develop up to 2GW of green hydrogen production capacity in the UAE by 2030.

Since then, the parties have agreed with ammonia company Fertiglobe, a joint venture between chemicals firm OCI and Abu Dhabi National Oil Company, to explore the development of a 200MW hydrogen plant in the UAE. 

They also agreed with TotalEnergies and Siemens in January to develop a project to convert green hydrogen into sustainable aviation fuel. 

Engie had been preparing to bid to construct the 1.5GW Al Ajban solar plant in Abu Dhabi. It did not proceed in the end, Claux said, as the project did not meet certain investment criteria.

The company will bid instead for another Abu Dhabi contract tendered by state-run utility provider Emirates Water & Electricity Company, for the $2.2 billion, 1.5GW PV4 solar plant.

In Oman, Engie is looking for further opportunities after being picked as part of a consortium it is leading with South Korea’s Posco to deliver Hydrom Phase A Round 1, a green ammonia project with a planned capacity of 1.2 million tonnes per year. The sultanate in June awarded the consortium a 340 sq km parcel of land in Duqm on which to deliver the project.  

Back in Saudi Arabia, Engie plans to bid for three state-run wind power projects and, in the longer term, wants to invest in the $500 billion Neom mega-project, through renewables, district cooling, engineering and other services. 

The Gulf has “the political will, land, money and a clear drive towards decarbonisation, which makes things easier for us to operate there [than other parts of the world],” Claux said.

Egypt is keen to develop a hydrogen industry. While Engie already has projects in Egypt, Claux said political and economic turmoil has dissuaded it – and other global investors – from increasing their activities there. 

“What is really challenging is raising international financing,” he said. “[Egypt] is below investment grade, which is not the case in the UAE and Saudi Arabia, of course.” 

Engie last month posted a 24 percent drop in second-quarter pre-tax earnings to €2.9 billion, attributed to lower sales, tighter trading margins and provisions made on the back of a July agreement with the Belgian government to extend the use of the country’s nuclear reactors – operated by Engie – by 10 years. 

Taking out those provisions, the company’s results were “good” and the earnings drop will not impact Engie’s ability to keep investing in the Middle East, Claux said.