Enagás presented its 2022-2030 Strategic Plan, through which the company aims to adapt and anticipate the challenges that the new global context and the new European energy paradigm present for Spain and Europe. The company plans to invest 2,775 million euros by 2030. If we add the interconnection projects included in the European REPowerEU document, this figure increases to 4,755 million euros.
Applying these investments, Enagás expects profitable dividend-adjusted EBITDA growth of 2% compound annual growth rate (CAGR) for the 2022-2030 period and 4% per year between 2026 and 2030.
During his presentation, Enagás CEO Arturo Gonzalo emphasized that “Enagás is returning to a growth path based on projects in our core business” and “mainly in Europe” is the strategic focus of the investment plan.
Arturo Gonzalo explained that “this 2022-2030 Strategic Plan repositions the company around the two main axes of the new European energy paradigm and Enagás’ purpose: security of supply and decarbonization”. He stressed that “in the current complex energy policy and strategic context, Spain and also Enagás can contribute decisively to these European objectives”.
TSO of reference and future HNO
In this context, he pointed out that “the integration of the European energy system through infrastructures is key” and stressed that an important lever will be those that are hydrogen-ready. “Enagás is a leading European transmission system operator (TSO) and with this Plan we will also be in a position to be a leading hydrogen network operator (HNO) by 2030”, in line with the current proposal for EU regulation. In this sense, he clarified that “by 2030, the entire hydrogen infrastructure will be transferred to these HNOs and it is expected that TSOs will be able to carry out this function”.
According to the European Hydrogen Backbone initiative, which is supported by 31 European transmission system operators — including Enagás — between 60 and 75% of the natural gas infrastructure can be reused for hydrogen, allowing the future network of European corridors to unleash the full potential of renewable hydrogen production. Enagás is a key player in the Iberian hydrogen corridor planned under REPowerEU, as well as in future infrastructures in this area.
REPowerEU plans to accelerate hydrogen consumption in the EU, estimated at 20 million tons by 2030, of which 10 million tons will be produced in Europe and another 10 million tons imported. By 2030, Spain could supply 21 billion cubic meters — equivalent to 2 million tons of hydrogen per year — to Europe, representing 20% of Europe’s expected hydrogen production.
The Enagás CEO explained that “besides the crucial importance of gas infrastructures”, the new Strategic Plan is “based on the conviction that Europe will turn its commitment to creating a real market for renewable gas into action” because the EU has the industrial capacity, learning curves and economies of scale that will make hydrogen competitive sooner than expected and, above all, the political will and determination to promote it through the necessary regulation.
Investments around four pillars of growth
The 2022-2030 Strategic Plan envisages four growth pillars: gas and hydrogen infrastructures and adjacent businesses, innovation, technology and digitalization, international development with the main focus on Europe, and the green hydrogen and biomethane generation activity and projects of the subsidiary Enagás Renovable.
In its first pillar, gas and hydrogen infrastructures and related businesses, the plan foresees investments totaling 1.78 billion euros until 2030, of which 890 million euros are for the 2022-2026 period.
These investments include, among others, the adaptation of the infrastructures to the regulatory forecast of 3% hydrogen as a limit for injection into the gas grid, the commissioning and adaptation of the El Musel Plant as a logistics center, and the Green Link project for biomethane connections to the grid. The company plans to invest 850 million euros in these natural gas and transitional infrastructure projects, including 470 million euros by 2026.
This first growth pillar also includes dedicated renewable hydrogen infrastructures, for which investments of 690 million euros are planned, of which 235 million euros will be invested up to 2026. This includes the main transmission projects such as HyDeal — in Asturias and Castilla y León — and Catalina — in Aragón and Valencia —, the connections to the transmission grid and the research and development of new hydrogen storage facilities.
The businesses adjacent to Enagás’ core business, which are also included in the first growth pillar, are related to the use of LNG in sectors that are difficult to decarbonize, such as maritime transport and small-scale and bunkering infrastructure, and the use of renewable gases in sectors such as mobility. Investments of 240 million euros are planned for the nine years covered by the Strategic Plan, of which 185 million euros are for the 2022-2026 period.
The company is also taking into account in this first axis the interconnection infrastructures envisioned in the European Commission’s plan to reduce the EU’s dependence on Russian energy resources, REPowerEU, projects that the company has submitted for the Ten-Year Network Development Plan (TYNDP), which would mean an additional investment of up to 1,980 million euros for Enagás. These infrastructures are currently in the proposal and analysis phase for approval by European regulators. Therefore, until all information is available, the company has not included them in its financial projections. Specifically, these projects are a third Pyrenees connection, an undersea gas pipeline to connect Spain and Italy and a third interconnection with Portugal. All these projects would be prepared for the transmission of hydrogen.
For the second pillar of growth, innovation, technology and digitalization, the plan provides for an investment of 105 million euros. Of this amount, 90 million is for the period between 2022 and 2026. Among other initiatives and projects, it includes Enagás’ participation in the Hy24 and Klima funds.
In the area of international development — the third growth area — Enagás plans to allocate 600 million euros (150 million between 2022 and 2026) to projects within the Mediterranean corridor, such as the doubling of the capacity of the Trans Adriatic Pipeline (TAP) to 20 billion cubic meters and the development of infrastructure in Greece, through its affiliate Desfa and in Albania based on the agreement recently signed with the TSO AlbGaz.
Arturo Gonzalo pointed out that of the three major linear natural gas infrastructures included in REPowerEU, “Enagás is positioned in two of them: the expansion of TAP and the undersea pipeline between Spain and Italy”.
The fourth area of growth includes the activities and projects of Enagás Renovable. This subsidiary plans to invest 205 million euros in this period in 30 projects for the production of renewable hydrogen and the decarbonization of all sectors, and 85 million euros in 20 projects for the production of biomethane and the promotion of waste management to contribute to the development of a circular economy. A total of 290 million euros, of which 170 million euros are for the 2022-2026 period.
Arturo Gonzalo said that “in July, the Clean H2 Infra Fund is expected to complete its entry into Enagás Renovable with 30% of the capital”. This new investor is an impact fund managed by Hy24, the world’s largest clean hydrogen infrastructure investment platform, which is a joint venture between Ardian and FiveT Hydrogen.
The CEO of Enagás explained that “all the investments included in this Strategic Plan have a business model that is currently regulated or will be regulated in the near future, or will have contracts that guarantee a security of returns comparable to that of regulated activity”.
To read the complete press release, please check here.