The achievement of the global climate objectives will lead to significant investments in the decarbonisation of the energy sector over the next 30 years. To date, several countries, accounting for over 50% of global emissions, have announced or are elaborating climate neutrality targets. A new “super cycle” of public and private investments of about $ 100-150 trillion for the innovation of energy systems is therefore expected, which will result in new opportunities for creating value for operators along the entire value chain. In this context, green gases – and particularly hydrogen – have significant growth prospects and can potentially reach over 25% of the global energy mix by 2050.
Europe is leading on this front thanks to the Hydrogen Strategy launched last July by the EU Commission and the national plans launched or soon to be launched in countries such as Germany, France, the United Kingdom, Spain and Portugal. The guidelines of the Italian hydrogen strategy, under consultation from November 24th, envisage investments of up to € 10 billion, 5 GW of installed electrolyser capacity and a target of 2% of the energy mix by 2030, with an expected growth up to 20% in 2050.
Green hydrogen, in particular, is expected to become competitive in a few years in various sectors – starting from rail and heavy transport – thanks to the progressive and already evident reduction in the production costs of renewable energy, combined with the reduction in the cost of electrolysers. The most efficient way to transport green hydrogen is through the gas infrastructure. Indeed, at a European level, retrofit costs would be limited, equal to 10-25%1 of those for newly built pipelines.
In recent years, Snam has repositioned itself to capture the new megatrends of the energy transition, thanks to infrastructure assets that will be key to achieve decarbonisation targets, its presence in the energy transition business, its international footprint and thanks to a disciplined approach to capital allocation. Snam’s position in the capex supercycle benefits from infrastructure assets that are 70% hydrogen-ready, and that will enable the energy transition. The prospect, by 2050, is to transport fully decarbonised gas to make Italy a European hydrogen hub. In addition, Snam is developing positions upstream and downstream of its infrastructure, both in hydrogen and in biomethane. Finally, energy efficiency will be an important lever to reduce consumption and environmental footprint. A net zero future places renewables at the core of many of Snam’s activities, becoming increasingly strategic. The company intends to leverage its distinctive competences for adjacent sectors such as water. Neither of these opportunities are factored in the plan.
Snam’s new capex plan envisages an increase in investments of almost € 1 billion compared to the € 6.5 billion of the 2019-2023 plan, bringing them to approximately € 7.4 billion in the 2020-2024 period. Compared to the previous plan, the growth is attributable both to the core business of regulated infrastructures (€ 6.7 billion in investments) and to the new activities of the energy transition (over € 0.7 billion in investments, almost doubled compared to the previous plan). 50% of the investments in the plan is dedicated to a “hydrogen-ready” infrastructure (replacement and development of new assets with hydrogen-ready standards). Most of the investments envisaged in the plan are aimed at decarbonisation to achieve the carbon neutrality goal by 2040 and seize the opportunities offered by the energy transition. Approximately 40% of the plan investments are aligned to the European taxonomy criteria under finalisation.
In recent years, Snam has created a wide and diversified platform of activities (energy efficiency, biomethane production and infrastructure, sustainable mobility, hydrogen along the entire value chain) to be a “system integrator” able to offer green solutions and contribute to development of renewable gases. For the period 2020-2024, Snam’s investments in energy transition activities will amount to approximately € 720 million, almost doubled compared to the previous plan, with an annual contribution to EBITDA of € 150 million from 2024.
Snam expects to strengthen the efficiency plan launched in the second half of 2016, with over € 70 million in savings expected by 2022. From launch in 2016, the efficiency program resulted in an approximately 20% reduction in costs relating to the core perimeter, allowing the start of activities in the energy transition without penalizing the performance of the group.
The optimization of the financial structure carried out in the last five years has led to a reduction in the average cost of gross debt from 2.4% in 2016 to approximately 1.2% average over the plan horizon, compared to 1.4% in the previous plan thanks to the actions taken to lock in favourable market conditions and the improved interest rate and credit spread scenario. It does not take into account any contribution from the treasury optimization exercises that have characterized the last few years, as well as further diversification of financing sources and growing share of sustainable financing instruments.
|Investments||€ ~ 1.4 bn|
|Tariff RAB||€ ~ 21 bn|
|Net income||~+3% vs 2020 guidance|
|Net debt*||€ ~ 13.5 bn|
* Excluding change in tariff related items (essentially neutral)
04 December 2020 - 18:07 CET