ENGIE pursuing organic growth for India renewables portfolio: Group CEO

CATHERINE MACGREGOR, group chief executive officer and board member of French utility company ENGIE, spoke to S DINAKAR on energy transition and the firm’s plans for India and the world. India contributes around 25 per cent to ENGIE’s global renewable development portfolio on an annual basis between 2022 and 2025 and then 20 per cent per year from 2026 to 2030. MacGregor, an engineer by training from the elite Ecole Centrale of Paris who spent 23 years at oil field services company Schlumberger, declined to comment on actual investments into India. But based on the country’s contribution to ENGIE’s global renewable portfolio, India is expected to have a fair share of the €22-25 billion in investments the firm has planned over a three-year period between 2023 and 2025. Edited excerpts:

How do you stress the importance of renewables and green hydrogen/biomethane in decarbonisation, both for India and the world?

Obviously, you have to decarbonise, but you also have to ensure security of supply and affordability. That sounds simple, but it's quite difficult to achieve. ENGIE is very engaged in developing renewables, but also in what we call flexible assets, which are crucial complements to renewable energy. This includes energy storage solutions, such as batteries, where ENGIE has taken a pioneering position in some key countries.

We have a strong ambition to be net-zero by 2045, which serves as our guiding compass. To support this, we’ve allocated between €22 and €25 billion in growth capex over the current three-year period (2022–2025).

Of that global allocation, what part goes to Asia, especially India?

In Asia, ENGIE is focused on key markets like Australia, Singapore, and India. We have a strong base in both Singapore and Australia.

Does much of your equipment for decarbonisation efforts come from China?

Some of it does, but we also source from Southeast Asia, the US, and increasingly, India. We aim to diversify our sourcing.

There’s a trend toward localising the supply chain, especially with mandates like “Buy American” or “Make in India”. Some developers are entering the manufacturing space. Do you see ENGIE following suit?

Manufacturing is not ENGIE’s competency. We prefer to remain supplier-agnostic and choose the best technology for each project. We don’t see local manufacturing as a direction we need to pursue.

In terms of renewables, India has ambitious goals of achieving 500 gigawatt (Gw) capacity. Where does ENGIE fit in?

In India, we currently have 1.1 Gw of capacity in operation and a total portfolio of 2.3 Gw, including development projects. Our ambition is to add around 1 Gw annually in India, contributing to the country’s broader targets. Globally, from 2026, ENGIE plans to increase its renewables capacity by 6 Gw per year, with India accounting for about 1 Gw of that.

What kinds of projects are you focusing on?

It’s a mix of onshore wind, offshore wind, and solar. In India, solar dominates our portfolio.

You mentioned earlier that half of your investment goes into renewables. Where does the rest go?

The remaining investment focuses on energy transition solutions like battery energy storage, energy networks, and decarbonising customer energy needs. We also invest in district heating and cooling, and on-site production for industries.

Total, another French energy company, has been aggressive in India, often buying into existing companies like Adani’s green projects. ENGIE has mostly developed projects from scratch. Will you continue with this approach?

Yes, our focus is on greenfield development, where we create value by developing projects from scratch. While we might pursue some adjacent acquisitions, our main strategy is organic development.

Does ENGIE plan to sell any of its renewable assets in India, as you develop new ones?

Our strategy has shifted in recent years. We now operate most of the assets we develop, as we believe there is value in controlling the energy output. However, partnerships are still part of the strategy, but always with operational control in mind.

Does the company plan to expand into the commercial and industrial customer space?

Right now, our projects in India are mostly utility-based, but we are exploring opportunities in the C&I space as it grows.

Renewable energy tariffs in India are extremely competitive. Do renewables offer the same returns as traditional energy sources, like oil?

ENGIE’s approach is to ensure that every project meets strict return criteria. We are selective and avoid projects that don't meet these benchmarks. While renewables may not have the same returns as oil for some companies, for us, as a utility focused on energy transition, renewables create value, and are an essential part of our business.

What is ENGIE's internal rate of return for renewable projects?

Our return criteria depend on the risk profile, technology, and country. For example, projects exposed to merchant prices require higher returns compared to fully contracted projects. In India, returns can reach double digits depending on the project.

In India, compressed biogas hasn’t taken off due to challenges with waste collection and local opposition. Why hasn’t ENGIE entered this space in India?

Biomethane production is highly localised. It requires community buy-in and proper logistics, which are key to its success. We haven’t entered this space in India yet because we’re focusing on renewable energy and battery storage, which present significant opportunities.

Are you planning any battery energy storage projects in India?

Yes, we’re closely monitoring the market and are interested in battery energy storage in India. We already operate 2.3 Gw of storage globally, mostly in the US, and we see potential for integrating storage with solar in India. We believe such projects can offer around-the-clock energy solutions.

What would help the company further its goals in India?

Government support for energy storage and grid solutions would be beneficial. We commend India’s ambitious energy transition plans and look forward to being a part of them.