Energy Transition: In Conversation, with Gwenaëlle Avice-Huet, EVP responsible for Renewables & North America, ENGIE
Gwenaëlle became an Executive Vice President in 2019. She is in charge of the France Renewables and Hydrogen Business Units, responsible for the Renewables Global Business Line and CEO of the North America Business Unit. Having recently joined the speaker faculty for the Energy Transition Summit London, we sat down with Gwenaëlle to hear more about the work she’s doing at ENGIE and her view on the progress of the energy transition so far.
Gwenaëlle, thank you for joining us today. How would you evaluate the current progress of the Energy Transition globally?
The energy transition is on the march. Dozens of countries have committed to go net-zero (in terms of carbon emissions), or at least outperform carbon-reduction targets set out in the Paris Agreement. The European Union, through its Green Deal, is proposing to completely overhaul its economy to requiring net-zero carbon emissions by 2050. Dozens of global cities and more and more companies have announced carbon neutral initiatives. So, progress is not just driven by countries, but also by cities, companies, citizens, which are pushing for more ambitious targets and concrete results.
Moreover, the energy transition is more and more affordable and it is very good news. On one side, energy efficiency solutions allow company to reduce their energy bills, and, on the other side, cost of renewable energies tumbled in the last decade: -90% in solar PV and -50% in onshore wind.
So the energy transition is already happening, and it needs to be further reinforced, as the current crisis emphasizes the necessary to consider the long term impacts of our choices and decisions.
Do you see significant differences between progress here in Europe, and in the US?
First, I would like to emphasize that the US is an extremely dynamic market for renewables with more than 100 GW of installed onshore wind capacity and more than 75 GW of solar installed capacity. The wind and solar industries employ nearly 365,000 people. All combined, the clean energy sector provides almost 3.5 million domestic jobs. It also accounted for over $50 billion in annual investment over each of the past five years.
The main difference I see between the US and Europe is that the US market is driven by power purchase agreements (PPA) contracted by corporations, cities and utilities, while the European market is still largely driven by national states’ initiatives. So the dynamism of the market in the US results from the growing demand from local stakeholders committed to source green energy as part of their zero-carbon objectives.
The Corporate PPA market reached 19.5GW worldwide in 2019: out of which 14.7 GW were contracted in the US and 2 GW in Europe. However, Europe is progressively catching up.
ENGIE is the leader in the corporate PPAs market in the US: we signed 1.2 GW in 2019 with companies like Amazon Web Services, Microsoft, T-Mobile, Target. This is a great achievement. This success has already started to deploy in Europe, and we will further accelerate.
At ENGIE, how are you ensuring that you are best positioned to navigate both the opportunities and challenges posed by increasing climate change awareness?
ENGIE’s purpose is to accelerate the transition towards a carbon-neutral economy, through reduced energy consumption and more environmentally friendly solutions.
First, we lead by example, and we are taking bold steps in that direction: we committed to reducing greenhouse gas emissions resulting from production of electricity from 149 Mt in 2016 to 43 Mt by 2030. We will also increase the share of renewable energy in the power production capacity mix to 58% in 2030, compared to 20% in 2016.
Second, we have a more global impact by deploying tris strategy towards our clients. Many of our clients are concerned with sustainability and want to play a role in this global challenge. We offer to accompany them and make things happen through the design of zero carbon roadmaps and sets of solutions.
What technologies and/or innovations do you see as most significant enablers for ET?
Not only are we focused on the current mature technologies like hydropower, onshore wind and solar, but we are also actively preparing the development of the next generation of renewable energies.
First, offshore wind. Today, total installed capacity is 20 GW, and the market is expected to grow up to 188 GW by 2030, half of it in Europe. Offshore wind is also a key pillar of the European Commission scenario to deliver climate neutrality by 2050. This year, ENGIE created a co-controlled 50/50 joint-venture in fixed and floating offshore wind with EDPR. We are working together to become a global top leader in the sector. Our target is to reach 5 to 7 GW of projects in operation or construction and 5 to 10 GW under advanced development by 2025.
Moreover, greening gas is another key challenge for our Group, and we are also investing in renewable gas with biomethane and green hydrogen. Gas will play a key role in the energy transition, and proposing affordable and scalable solutions to make it green is crucial. Electricity cannot do everything. In France, on the coldest day of winter, more energy comes out of ENGIE’s gas storage than it leaves the entire French nuclear fleet.
In terms of benchmarking, what milestones are you putting in place and what progress have you made in terms of aligning with Paris?
We intend to include our purpose in our bylaws. So, we are extremely serious about this commitment.
We committed to reducing our emissions by 85% to 2050. We are reviewing when and how we could be neutral.
In the meantime, and up to 2030, we have just been approved 2°C science-based target. The decarbonization transition sets on a combination of different actions such as putting a price on carbon, ending coal generation, developing renewable generation activities and greening the gas we use both for generation and supply.
How do you see current market uncertainty regarding both Covid 19 and the oil price affecting progress made regards decarbonisation and clean energy solutions?
COVID 19 is obviously leading to some uncertainties but I remain optimistic for 3 reasons:
First, cheap fossil fuel and renewable development are compatible. If we look at the US, Oil and gas prices are indeed very low. However, almost exactly 4 years ago, in early 2016, gas was also 2$ / MBTU and wind and solar in the US had very good years in 2015 thru 2017, with more than 15 GW per year of new capacity.
Second, renewable energy is a more mature industry than five years ago. As it becomes a less risky investment, it has attracted big investors and large developers who are building some projects that rival the capacity of conventional power plants. In terms of price, even though supports will eventually go down, costs are also decreasing fast and renewable are more and more competitive against other technologies.
Third, it is encouraging to see that renewable activity continues in most of the wind manufacturing sites across Europe and that most renewables projects will be on track this year. There will be no pause in the energy transition.
Moreover, the demand for green energy will not stop because climate change remains our largest global crisis. Customers have already committed to reducing greenhouse gas emissions, and it will be possible only through energy efficiency measures and renewables.
However, we have to stay vigilant. We will pursue advocating for a green rebound and renewable industry is ready to participate!
Hydrogen continues to be discussed as a key element of our future energy mix – how do you see the role of Hydrogen both now and over the next ten years?
For ENGIE, renewable hydrogen (produced by electrolysis from wind, solar power production) is absolutely necessary in the transition towards a zero-carbon economy. Why? Because it is a key solution for many applications: to feed or power industrial processes; to power heavy-duty transportation through the fuel-cell technology, especially in the railway and maritime sectors; and to store and transport energy for a long time over a long distance.
We are developing industrial-scale projects with some global partners and governmental support. Let me give you some examples. We are co-developing a project with the mining company Anglo American in South Africa to design and implement the first renewable hydrogen-powered truck. We are also working with the fertilizer company Yara in Australia to use renewable hydrogen as feedstock and energy for ammonia production, and the project recently received close to 1 million Australian dollars funding from the Australian Renewable Energy Agency.
Hydrogen is a real and critical part of the energy transition. It is the missing link to unlock the full potential of renewable energies and overcome the challenge of other renewable technology’s intermittency. I am convinced that by 2030 renewable hydrogen will be competitive. Because the cost of technology and renewable electricity will continue to decrease steeply in the next ten years.
Finally, on a regulatory level, what do you think the most important development could be to help drive clean energy solutions?
The most essential in the next few months is that governments encourage a green rebound. The development of clean, sustainable technologies creates local jobs and value for the communities. These technologies should be at the centre of future economic recovery plans. It is the best way to both relaunch the economy and address the biggest challenge that we will have in front of us with climate change.
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