Business Plan

The ERG Group presented its 2018 – 2022 Business Plan during a meeting with the Financial Community in Milan on 8 March 2018. 

FY 2018 Results & Strategy Update
Published on 7 March 2019
Press release - Board of Directors approves 2018-2022 Business Plan
Growth of 850 MW via Repowering and Re-blading in Italy, Greenfield and Co-Development overseas and M&A
Press release published on 8 March 2018
We have radically changed our business portfolio in anticipation of long-term energy scenarios, achieving a leadership position in renewables not only in Italy but also in Europe. Since completing our industrial transformation that we began 10 years ago, we have become one of the leading independent producers of energy from renewable sources in Europe.

We have reached an installed capacity of more than 2,900 MW with a portfolio of assets that is well diversified, from both a technological and a geographical standpoint. Our strategy has always been to anticipate trends in the industry and it is for this reason that the 2018- 2022 Business Plan was approved a year in advance, in 2018.

The industry for the generation of electricity from renewable sources has radically and fundamentally changed in recent years in Europe. While on the one hand governments are pushing ever harder for decarbonization in favour of renewable sources, on the other hand there has been a drastic change in the competitive scenario through the gradual introduction of competitive auctioning for the award of new renewable capacity and the consequent abandonment of incentive systems.

Renewables have therefore changed from being a business with strong infrastructural connotations to a business with purely industrial characteristics. Within the changed competitive environment, our strategy is to continue growing in renewable energies, now leveraging our own industrial know-how, our territorial presence, the quality of our own assets, our operating efficiency and the flexibility of the integrated Energy Management portfolio.

The objective for the 2018-2022 period is to increase the installed capacity by approximately 850 MW via three channels:

1) Greenfield and co-Development
: we intend to continue our growth strategy through internal growth of our pipeline of projects or co-development agreements in France, Germany and United Kingdom.

2) Repowering and Reblading in Italy: in view of technological developments in the wind power industry, we are aiming to carry out repowering and reblading on wind farms equipped with obsolete technology, with turbines below one MW, with incentives already expired or expiring, but at the same time located in the windiest sites and therefore with very high expected profitability even in the absence of incentives.

3) M&A: we intend to continue exploiting opportunities for growth in renewables in the countries of or  interest, levering the experience acquired in the course of our transformation and the synergies deriving from consolidation with our own portfolio.

In the course of 2018, we took several steps forward in the growth outlined by the Business Plan, adding nearly 200 MW both through M&A in solar (with particular reference to the acquisition of Forvei for 89 MW and the recent acquisition of Andromeda for 51 MW, which is consolidated as from 2019), and through greenfield development (entry into operation of the Torfou and Valle del'Aa wind farms in France), and bringing forward the repowering project with presentation of the applications for authorisation for an even higher number of MW than included in the Plan.
A BIG STEP FORWARD IN THE BP EXECUTION
 
 Business Achievement
Full Exit from oil 

10 January 2018 - ERG completes closing for the sale of its shareholding in TotalErg

Enhanced technological
diversification
(solar)

12 January 2018 - ERG enters the solar power business: completed acquisition of 100% stake in Forvei (89 MW)

11 January 2019 - ERG pursues growth in solar power by acquiring a 78.5% stake in two photovoltaic plants (51.4 MW)

12 February 2019 - ERG grows in Italian solar power reaching 140 MW installed. Finalised acquisition of 78.5% stake in two photovoltaic plants (51.4 MW)

Growth in France
(wind)


6 April 2018 - ERG steps up growth in France: two wind farms acquired totalling 26 MW and a development company with a pipeline of 750 MW

27 April 2018 - ERG continues to pursue growth in France. Project acquired for the construction of a 7 MW wind farm

15 May 2018 - ERG closes acquisition of two French wind farms totalling 26 MW and a development company with a pipeline of 750 MW

3 August 2018 - ERG acquires minority interests in two French wind companies. By the end of 2018 installed capacity will exceed 300 MW

19 January 2019 - ERG launches two new wind farms in France totalling 31 MW. Installed power in the country exceeds 300 MW
 
Growth in Germany
(wind)

15 January 2018 - ERG acquires project in Germany for the construction of a 21.6 MW wind farm

18 May 2018 - ERG wins auction for the construction of a 21.6 MW wind farm in Germany

Growth in UK
(wind)

 3 August 2018 - ERG continues to pursue growth in the United Kingdom wind sector. Project acquired to construct a 79 MW wind farm

17 September 2018 - ERG submits application for Sandy Knowe wind farm to increase generating capacity
 
Fitch assigned a BBB- Investment
grade rating

19 December 2018 - Euro Medium Term Notes programme for up to 1 billion Euro
Fitch assigns BBB- investment grade rating

 
Launched a Euro Medium Term Notes programme up to € 1bn
19 December 2018 - Euro Medium Term Notes programme for up to 1 billion Euro
Fitch assigns BBB- investment grade rating

 
ESG Achievement
ERG included in the
ECPI Global Clean Energy Index

The inclusion of ERG in the ECPI Global Clean Energy Index, which selects the 80 top publicly-listed companies in developed countries, active in the production and trading of renewable energy, which satisfy ESG (Environmental, Social and Governance) criteria, has also been confirmed.
Read more in Sustainability Indices

Achieved rating B from CDP

ERG achieved a B rating from the Climate Change programme promoted by the Carbon Disclosure Project (CDP), the international not-for-profit organisation set up to gather and disseminate quantitative and qualitative information and data regarding the strategies used by firms to combat "climate change". The rating assigned exceeds both the average achieved by the Utilities sector (C rating), and the average insofar as concerns the region of Europe (B- rating).

Ranked 16th in the
Corporate Knights Global 100 Index - Worldwide


ERG ranked 16th place in the "Corporate Knights Global 100 Most Sustainable Corporations in the World Index" published by the Canadian company Corporate Knights. With a score of 75.39%, ERG is the leading Italian company, as well as the only one included among the Top 50. 
Read more on the press release published on 4 February 2019
 
Obtained ESG rating from Vigeo, IGI, Ethibel and Oekom

Read more in Sustainability Indices

Signed 2 ESG Loans
for € 240 mn

20 November 2018 - ERG executes two Environmental
Social Governance loans totalling 240 million Euro

Business Outlook (expected outlook for the main operating and performance indicators in 2019)

  • Wind
    For wind power in Italy, although greater output is forecast than in 2018, the expectation of lower prices on electricity markets in the second part of the year, associated with the lower unitary revenue of the incentive and higher production costs for some maintenance activities, lead to forecast a slightly lower profit than in the previous year.

    With regard to other Countries, results are expected to increase in 2018, mainly as a result of:
    • better performance of existing assets, both in terms of volumes and due to the higher prices of electricity;
    • higher installed power in France by approximately 90 MW fully operational for the entire year 2019;
    • higher installed capacity in Germany, by 22 MW;
    • partly offset by the smaller presence in Northern Ireland as a result of the sale of a wind farm of 28 MW, which took place in March 2018.

    In general, the total EBITDA of the Wind sector is expected to grow compared to the previous year thanks to the increased capacity and output abroad which more than offset the slight decrease in the expected results in Italy.
  • Solar
    The expected results for 2019 are significantly higher than in 2018, thanks to the good performance of existing installations and to the contribution of the new ones acquired in January of this year.

    For the entire year 2019, the EBITDA is expected to be more than doubled compared to EUR 32 million in 2018.
  • Hydroelectric
    For this assets, results are expected to decline significantly compared to 2018, because of markedly lower water resources compared to the exceptionally high values recorded the previous year.

    In addition, this will also negatively affect the possibility of modulating the plants and participating in the dispatching services market as in 2018.

    EBITDA for the hydroelectric sector is therefore forecast to be significantly lower compared to the exceptionally high values recorded last year.
  • Thermoelectric
    Results are expected to be higher than in 2018 thanks to very low natural gas prices and higher electricity prices in Sicily, such as to more than offset the growth of CO2 costs, with consequent higher Clean Spark Spreads.

    Control over costs and the greater production of White Certificates (TEE) will also contribute to these better results.
  • In brief...
    In brief, at consolidated level for the 2019 financial year, EBITDA is forecast to be higher than in 2018 (EUR 491 million), between EUR 495 and 505 million, versus the value previously indicated between EUR 495 and 515 million.

    This growth is expected in spite of a decreasing incentivised perimeter in the Wind sector in Italy and the lower price of the unit incentive both for Wind and for Hydroelectric, and in spite of a forecast sharp decline in the results of the Hydroelectric sector relative to the extraordinary ones of the previous year. These effects are more than offset by the better results expected from all the other generation assets and from the energy management activity.

    Capital expenditure for 2019, confirmed with respect to the previous indication, is expected to be between EUR 340 million and EUR 370 million, down compared to 2018 during which some capital expenditure previously planned for the current year was carried out.

    Operational cash generation will allow to contain the forecast increase in net indebtedness from EUR 1.34 billion in 2018 to an amount between EUR 1.39 and 1.47 billion at the end of 2019, partially offsetting the investments of the period, the distribution of the ordinary dividend of EUR 0.75 per share and payment of financial expenses.

    The previously indicated range of between EUR 1.36 and 1.44 billion was increased to take into account the higher fair value of the instruments hedging interest rates, as a result of a higher prospective reduction of the rates in the market.
Source: Interim Financial Report as at 30 June 2019

Archive

Board of Directors approves 2015 - 2018 Business Strategy
Download the press release published on 16th December 2015
Presentation of 2015-2018 Business Plan
Conference call - Transcript - 16 December 2015
Page updated at 29 Aug 2019