• The three European TSOs are contributing altogether through a 100 million euros investment in the Clean H2 Infra Fund managed by Hy24
The European gas Transmission System Operators (TSOs) Enagás (Spain), Snam (Italy) and GRTgaz (France), signed an agreement to set up shared initiatives aimed at supporting and exploring projects to accelerate the clean hydrogen market.
In line with the decarbonization goals set by the European Union, the three TSOs have addressed that hydrogen will play a critical role in the Energy Transition and have agreed to jointly explore further possibilities for cooperation in this field. Enagas, GRTgaz, Snam have joined the European Hydrogen Backbone Initiative: its last report shows that a pan European hydrogen infrastructure largely based on repurposed existing gas infrastructure is possible. This study showed a hydrogen pipeline network of nearly 40,000 km by 2040, connecting 19 EU Member States plus the United Kingdom and Switzerland.
This initiative of Enagás, Snam and GRTgaz, underlines the crucial role that the European gas TSOs will play by combining their experiences in the development of the European hydrogen ecosystem through the management of critical infrastructure.
As their first joint initiative, Enagás, Snam and GRTgaz will respectively invest 33 million euros in the Clean H2 Infra Fund in their role of anchor investors, for a cumulated investment of approx. 100 million euros.
Clean H2 Infra Fund is an impact fund managed by Hy24, a joint venture between Ardian and FiveT Hydrogen, aimed at supporting the development of the clean hydrogen infrastructure sector, with a commitment of 1,500-1,800 million euros in partnership with industrial and financial investors. This is the world’s largest platform for clean hydrogen infrastructure investment.
Hy24 combines Ardian’s experience in infrastructure and asset management and FiveT’s Hydrogen knowhow in the hydrogen value chain, along with the role and experience of the three TSOs in the management of energy networks and hydrogen technology.
By investing in Clean H2 Infra Fund, Enagás, Snam and GRTgaz aim at fostering the clean hydrogen industry with a positive impact on the use and development of hydrogen transmission grids.
According to Marcelino Oreja, CEO of Enagás, “The European Transmission System Operators are key elements in the battle against climate change, and this initiative fits perfectly with the projects promoted by Enagás based on its strategy of contributing a fair energy transition. This consortium is a clear example of joint co-operation between three European TSOs, which have an important role for future decarbonization of energy”.
Marco Alverà, CEO of Snam, commented: “With this agreement, three leading European TSOs commit to working together and contributing to the acceleration of the energy transition across the continent and beyond, in line with the Fit for 55 package and the EU hydrogen strategy. Our existing hydrogen ready networks and storage facilities will play a key role in enabling cost-efficient decarbonization. We are ready to share our capabilities and support new investment initiatives like the Clean H2 Infra Fund in order to boost green hydrogen projects on the road to net zero”.
Thierry Trouvé, CEO of GRTgaz points out: “In the future, hydrogen will play a major role to balance the electric system and in decarbonising industry, as the first lessons of the national hydrogen consultation, launched in France by GRTgaz with Teréga last June show. Industry is expressing a need for reliable access to competitively priced clean hydrogen, and it is therefore interested in the progressive development of a dedicated infrastructure to achieve that”.
Pierre-Etienne Franc, Hy24’s Chief Executive adds: “The joining of key TSO of the European gas infrastructure is a fundamental move for us as it shows the role we are expected to play in support to the whole industry development, from production to distribution and usage. We are honored that the first joint move of this consortium is to select Hy24 Clean H2 Fund as a first investment and expect this will trigger many scale projects on this part of the value chain”.
Enagás’ initiatives on the hydrogen field
Enagás is promoting 55 specific projects throughout Spain in the fields of renewable gases and decarbonisation (34 green hydrogen projects and 21 biomethane projects) alongside more than 60 partners. In total, these projects could mobilise a joint investment of 6.3 billion euros.
The company has achieved milestones in major projects such as ‘Power to Green Hydrogen Mallorca’, which is at final construction phase of the Lloseta photovoltaic plant, one of the two that will feed the first green hydrogen plant in Spain that Enagás is promoting together with its partners. As part of this same project, the Iberostar hotel group has signed the first green hydrogen supply contract for the tourism sector in Spain with Enagás and Acciona Energía.
The Repsol and Enagás’ renewable hydrogen production project -directly from solar energy- have received European Commission funding support. In addition, the company has developed the first commercial hydrogen station in Spain and has joined forces with Naturgy and Exolum to develop the first major green hydrogen alliance for mobility in Spain, which will promote the construction of 50 hydrogen stations.
Also, Enagás and LatemAluminium signed a deal for the development of an industrial project to promote two green hydrogen production plants in Castilla y León. Enagás is also involved in six biomethane projects that have received support from the Institute for Diversification and Saving of Energy (IDAE).
Snam’s initiatives on the hydrogen field
In its vision to 2030, Snam has identified investment opportunities for 23 billion euros in energy transport and storage and in new green projects, with hydrogen being at the core of this plan. Snam was the first gas transport company in Europe to experiment with blending hydrogen with natural gas into its network, which is currently undergoing hydrogen-ready certification. The company also tested the possibility of blending up to 100% hydrogen in its storage fields.
More than two years ago, Snam launched a Business Unit dedicated to hydrogen, with the aim of being a leader in a sector with great prospects, contributing with its skills and technologies to enable a hydrogen value chain both at an Italian and international level. The initiatives are located on three strategic lines.
The first concerns the logistics and use of hydrogen in various countries and in various sectors such as hard-to-abate industries and mobility, in partnership with other relevant operators. In this field, Snam is managing more than 150 projects, from the conversion of diesel-powered railway lines to hydrogen to initiatives involving steel, glass, ceramics, paper, chemicals, ports and airports. Some of these projects fall within the scope of national and European funding programs (IPCEI, PNRR, Innovation Fund, Horizon 2020).
The second line concerns R&D and venture capital initiatives. Snam, for example, is cooperating with leading international universities and research centers to build an international network around its Hydrogen Innovation Center.
Finally, Snam is working with over 50 international partners along the entire hydrogen value chain, including partnerships with leading companies in the main electrolysis technologies, i.e. Alkaline (Industrie De Nora) and Proton Exchange Membrane (ITM Power).
GRTgaz’s initiatives on the hydrogen field
GRTgaz plays an active role in the various hydrogen development pathway, the first project began in 2015 with the launch of the multi-partner Jupiter 1000 power to gas project. Located in Fos-sur-Mer (Bouches-du-Rhône), Jupiter 1000 has been injecting hydrogen molecules into the gas network since February 2020. Its testing programme will allow GRTgaz’s industrial sites to prepare for the arrival of hydrogen in the networks.
GRTgaz will play a full role in the emergence of the hydrogen market by developing 700 km of hydrogen pipelines by 2030, partly through new pipelines, partly through conversion of the current gas network. The most advanced of these, the MosaHYc project, aims to develop Europe's first hydrogen network by converting gas pipelines between the Moselle, the Saar and Luxembourg. GRTgaz is also strengthening its R&D resources with the development of the FenHYX test platform dedicated to hydrogen. This platform inaugurated last November aims to test the compatibility of materials and network equipments with hydrogen.
• The company achieves a net profit of 92.9 million euros, in line with its forecasts and targets for 2021
• The effect of the entry into force this year of the new Regulatory Framework for the 2021–2026 period has already been included in these results
• Enagás expects to obtain a net profit of approximately 380 million euros by the end of 2021, thanks to the intensification of the cost control and savings plan, and is upholding its commitment to employment
• The contribution by affiliates grew by 41.2% compared to the first quarter of last year, and now represents 38.1% of the company’s net profit
• The Trans Adriatic Pipeline (TAP) has started to contribute significantly to the company's results, following its commissioning at the end of 2020
• The US affiliate Tallgrass Energy has entered into an alliance with Bridger Pipeline LLC, strengthening its ability to meet its overall targets for 2021–2026
• For the year to 18 April, conventional demand for natural gas stands at 100.5 TWh, 4.7% higher than in the same period of 2020
• Together with 50 partners, Enagás is promoting 55 renewable gases projects that could mobilise a total joint investment of about 6.3 billion euros
• In March, the company obtained the highest ESG assessment score (75/100) that S&P Global Ratings has posted so far in Spain in any sector
• The cash flows generated by Enagás guarantee shareholder remuneration for this year, which is up by 1% on 2020
• The company is also upholding its commitment to shareholder remuneration for the 2021–2026 period
In the first three months of 2021, Enagás generated a net profit of 92.9 million euros, in line with the targets set for the year.
The effect of the entry into force this year of the new Regulatory Framework for the 2021–2026 period has already been included in these results. This regulation brings visibility to the company’s regulated revenues for the next six years.
During the first quarter of 2020, the company also had a non-recurring positive result of 18.4 million euros owing to exchange rate differences, which has not been repeated in 2021 owing to its extraordinary nature.
By the end of 2021, Enagás forecasts a profit in the vicinity of 380 million euros, as a result of the intensification of the plan to control and save on operating costs. In the first quarter of this year, the company reduced its operating expenditure by 11% compared to the same period of 2020. The company remains firmly committed to employment.
The cash flows generated by the company allow to guarantee its shareholder remuneration policy for this year, which is up by 1% on 2020. The company is also upholding its commitment to shareholder remuneration for the 2021–2026 period.
Enagás has a solid financial structure, with more than 80% of its debt at a fixed rate.
Contribution by affiliates
In the first quarter of the year, contribution by affiliates grew by 41.2% compared to the same period last year, and now represents 38.1% of the company's net profit.
The Trans Adriatic Pipeline (TAP), a key infrastructure for the security of Europe's energy supply in which Enagás holds a 16% stake, has for the first time begun to make a significant contribution to the company’s results following its commissioning at the end of 2020.
Additionally, on March 31, TAP reached its financial completion date, a milestone that allows the partners to discharge guarantees provided by shareholders during the construction stage of the project.
In the first quarter of the year, TAP delivered a total of 1.16 bcm (billion cubic metres) of natural gas to its target markets, in line with expectations. The operational availability of the infrastructure in the period was 100%.
In addition to the positive contribution of Enagás affiliates in Greece, Mexico, Chile and Peru, in line with the targets set, it is also worth highlighting the good performance of the US affiliate Tallgrass Energy, in which Enagás holds a 30.2% stake. In the first quarter of 2021, its assets were key to guaranteeing energy supply during the cold snap experienced by the United States.
The outlook for the US market is favourable: in its first-quarter review, the Energy Information Administration (EIA) raised its production forecasts for 2021 and 2022.
Tallgrass Operation in the United States
Tallgrass Energy has entered into an alliance with Bridger Pipeline LLC (part of the True Companies group). This operation strengthens the ability of Tallgrass to meet its overall targets for the 2021–2026 period, with an increase in contracted capacity on the Pony Express Pipeline and further diversification of access to producing basins.
Natural gas demand*
In the year to date, conventional demand (industries and households), which represents 86% of the demand for natural gas in Spain, has reached 100.5 TWh, an increase of 4.7% compared to the same period of 2020.
Total demand reached 117 TWh, 0.8% more than on the same date in 2020. The fact that gas demand was not affected by the extraordinary situation of COVID-19 until 13 March 2020 should be taken into consideration.
This information highlights the importance of gas infrastructure in guaranteeing Spain’s energy supply.
Decarbonisation progress and projects
Enagás has reduced its emissions by 63% since 2014, a figure that reinforces its firm commitment to the ecological transition and the goal of carbon neutrality by 2040.
This has been made possible by improving energy efficiency in the operation of the gas system. The company’s decarbonisation plan includes specific actions such as the renewal of turbochargers, self-generation and the incorporation of guarantees of 100% renewable origin.
Enagás already has a portfolio of 55 renewable gases projects (34 for green hydrogen and 21 for biomethane) in which it participates with more than 50 partners, with the potential to mobilise a total joint investment of about 6.3 billion euros. Furthermore, the company continues to submit renewable gases projects to the different calls for proposals opened by the Spanish Government.
Commitment to ESG
As a result of its commitment in the field of environmental, social and corporate governance (ESG) criteria, Enagás has maintained its leading position on the main sustainability indices and ratings.
In March, the company obtained the highest ESG assessment score (75/100) that S&P Global Ratings has posted so far in Spain in any sector. It was also given the highest rating in Europe for its sector (Utility Networks) posted by the ratings agency over the past year.
Enagás has kept up its presence in the Dow Jones Sustainability Index (DJSI) for the thirteenth consecutive year, and the company leads the world in the Gas Utilities sector, with Gold Class distinction, and has been acknowledged by CDP by its inclusion in the CDP Climate Change ‘A List’.
Moreover, the company has been recognised for its people management model and gender equality by being ranked third in the world in the Bloomberg Gender-Equality Index (GEI).
*Demand data updated on 18 April 2021