Naturgy does it again. The company is taking a new step forward vis-à-vis the rise in raw material prices in international markets and in support of the industrial sector by providing the means to stabilise energy budgets for the next three years, and consolidating its competitiveness.
With the new initiative Compromiso Gas Industrial, the company is offering its industrial gas clients a stable, competitive price within the current energy scenario. This means that the industry can benefit from a fixed price of €55/MWh until the end of 2025, which is below the current European gas market prices.
“We want to contribute to improving the competitiveness of Spanish companies by raising their profile and reducing their exposure to the volatility of international energy prices. This is not the first time we have done this, and it is a demonstration of our commitment to our clients and to society”, explained the Chairman of Naturgy, Francisco Reynés.
The energy company is re-editing their action Iniciativa Compromiso Luz, launched at the beginning of September 2021, but this time with gas. Iniciativa Compromiso Luz, a pioneer initiative in the sector, sought to mitigate the effects of the high prices of the electricity pool and has resulted in the sale of its entire infra-marginal generation (equivalent to the consumption of 4,000,000 households) for under the €67/MWh fixed by the government.
Main milestones for the quarter. International markets.
In a highly volatile scenario, Naturgy recorded an ordinary net profit of €354 million (+9%) and an ordinary EBITDA of €1.07 billion (+4%). The first quarter of 2022 saw uneven performance in the countries in which the company operates, in addition to a variable evolution in demand, reflecting the macroeconomic scenarios, energy trends and diverse meteorology.
In general, the period has been marked by the recovery of international activity, while operations inside Spain continued to be under pressure on profit margins, affected in part by contracts that do not reflect the global increase in gas and electricity prices.
Naturgy, which has made the long-term sale of its entire infra-marginal electricity generation capacity for below the price of €67/MWh fixed by the government, has had to buy electricity from the pool due to low hydraulic energy. Meanwhile, the activities of electricity generation and renewables have been affected by external factors and regulatory adjustments.
Network activity grew, mainly boosted by international activity, which recorded tariff updates in various geographical regions that reflect the currency inflation and depreciations of previous financial years. The Spanish networks remained stable, despite regulatory impacts and falling demand in the latter part of the quarter.
Regarding technologies, the first quarter of the year saw the consolidation of thermal generation through combined cycles in its key role as backup to the Spanish energy system, marked by the closure of coal-fuelled power stations. In the first three months of the year, the main backup for the intermittence of renewables was gas turbine generation, which represented more than 25% of the country’s energy mix, with a total of 64TWh.
Naturgy increased its total investments by 32%, up to €259 million. In the financial area, net debt was €13.06 billion, 1.8% higher than at the close of 2021, after settling the dividend of €0.5/share in the first quarter, and supported by the generation of cash flow.
Boosting the energy transition
Naturgy continues its commitment to the energy transition and to leading the way in initiatives that contribute to making it a reality, based on common sense. To this end, the company is pressing forward with its development strategy for a renewable portfolio at international level, focusing on stable geographic regions, and on projects in the initial stage of development, and with more than 5GW of installed renewable capacity.
Between the end of the first quarter of last year and the close of the first quarter of 2022, Naturgy put 73 MW into commercial operation in Spain and 181 MW in Australia. Additionally, during the same period, six construction projects with a capacity of 238 MW were started in Spain, and a further two projects with a capacity of 276 MW and 68 MW in Australia and Chile, respectively.
The company also leads renewable gas development in Spain as one of the central tenets of decarbonisation in the short and medium terms.
According to European Commission data, Spain is the third country with the most potential for developing biogas in Europe, with the capacity to reach an annual power output of 137TWh. These figures, combined with the other renewable gases, could manage to cover 57% of the total demand for gas in 2028. Furthermore, and with the right incentives, by 2030 Spain could be producing 20TWh of biomethane, representing 8% of conventional (industrial and residential) natural gas demand.
The company is currently working on hydrogen and biomethane projects worth €4 billion, with a view to reaching 10% biomethane, in line with the latest EU guidelines on increasing energy independence in Europe. Through the group’s gas distributor in Spain, the company now has a portfolio of projects to connect biomethane plants to its distribution networks, which will mean the injection of around 6 TWh a year.
Moreover, as part of its commitment to the energy transition, the company has just launched its Naturgy Solar campaign to promote auto-consumption in all market segments. This is a comprehensive solution aimed at private clients, communities of owners, SMEs and companies that includes the design, management and processing of authorisations, subsidies and payment plans. With this new proposal, Naturgy aims to contribute to decarbonisation goals, facilitating access for its clients to clean energy and lowering their electricity bills by installing solar panels and batteries and increasing the prices the company can offer for buying excesses.
ESG
The company is advancing in its commitment to environmental, social and governance matters with some significant increases in its indicators. The first quarter of the year saw an increase of almost 3% in emission-free installed capacity thanks to the increase in wind power installations, mainly in Spain and Australia.
The company also remains committed to promoting young talent through the Flex&Lead programme, focused on attracting young, female talent with key qualifications to assist in the energy transition. More than one hundred people with an average age of 25, 7 out of 10 of whom are women, have joined the company through this programme. Naturgy also has an Internal Talent Development programme (Internal Lead), the goal of which is to develop the skills and competencies needed for the transformation and creation of a talent pool with multi-technical profiles.
Furthermore, Naturgy is moving forwards in its commitment to gender parity. In the period, the number of women in management positions continued to rise and 33% of these positions in the company are currently held by women.