"The sector is changing spectacularly," said Isabelle Kocher in her introduction on July 5 during an informal meeting with journalists. "What is most striking is not the direction but the speed of the movement to a new energy model." This model is characterized by the emergence of new generations of decentralized and increasingly low-carbon energy production facilities which, rather than replacing large production sites, will complement them at an increasingly rapid pace.

"These decentralized production and storage facilities are already a reality – it is not at all a marginal phenomenon," says Isabelle Kocher. The reduction in carbon intensity will firstly affect electricity, followed by green gas, which is set to become economically viable within the next 15 years.

Solar, hydrogen and energy services solutions

The new boss of ENGIE is an especially firm believer in solar power, a sector in which the company has positioned itself by acquiring Solaire Direct a year ago. Scalable, highly flexible, with constantly falling costs and resources which are not only vast but also very well distributed around the world...

"Everything is in place to make solar a large-scale technology," concludes Isabelle Kocher. "And I am not sure that the geopolitical implications have yet been fully understood. It means an end to energy being concentrated in the hands of a small number of countries."

Morocco is a perfect illustration of this quest for energy independence. In 2009, the country announced a large-scale solar plan with a target of 52% renewable energy in its energy mix by 2030. ENGIE has several concentrated solar power projects as well as an integrated gasification terminal construction project to the south of Casablanca, in partnership with the Moroccan company Nareva and due to be commissioned in 2021.

Another technology Isabelle Kocher has great faith in is hydrogen, which offers a means of storing intermittent energies and which will play an increasingly important role in production smoothing. ENGIE is also currently testing various electrolytic batteries and is actively monitoring this technology. The "solar + hydrogen" solution tested in Australia is already competitive off-grid and this is likely to become more widespread in the future.

"We are the only energy group which already has dual positioning in both large centralized systems and new decentralized models," says Isabelle Kocher. Supported by its subsidiary ENGIE Energy Services, the group intends to base its development on services combining production and storage "in a highly interlinked way".

Soon no carbon and possibly no new nuclear

Meanwhile, ENGIE has given itself three years to sell assets which do not fit into this new strategy. "We can't do everything and we need to be consistent in our message, particularly if we want to get our teams on board," emphasizes Isabelle Kocher, recognizing the challenge presented by this transition in terms of corporate culture.

The €15bn asset disposal plan mainly concerns the "exploration/production" activity, coal-fired plants and activities exposed to market prices, particularly in the United States where they account for €4bn. Coal-fired plants have already been sold in Indonesia, India, Australia, Brazil, Italy and the UK. Others may simply be closed down, like Hazelwood in Australia, a favorite target for environmental NGOs. "While oil price volatility may create more favorable conditions for exploration/production activities than at the start of the year, I cannot see which drivers would push up coal prices," acknowledges the CEO.

In terms of nuclear, and particularly the NuGen project in the UK in partnership with Toshiba, Isabelle Kocher says she is very attentive to EDF's decisions regarding Hinkley Point, which predates it by several years. But she acknowledges questions regarding new nuclear projects, which are very expensive due to new safety standards post-Fukushima and the lack of mass production benefits, as well as competition from alternative solutions which will prove preferable in many cases.

"ENGIE does not need new nuclear projects, giving us significant freedom in our choice of actions." In addition to the overhaul of its portfolio, ENGIE is adopting a very vigorous approach in digital, based on an open innovation strategy, the opening of labs and the digital factory, and symbolized by the launch of ENGIE Tech a few days ago. The group will soon be announcing several structural, global partnerships with leading names, to which the group will bring its integrated business lines and its customer base. This will allow the group to preserve and stabilize its expertise.

Isabelle Kocher, who aims to show investors that ENGIE is one of the best-positioned groups in the energy revolution, was delighted with the response from analysts and the movement in the share price following the Investor Day on June 28.

Source: La Tribune, July 6.