EMPOWERING OUR FUTURE - STRATEGIC PLAN 2021-27 Rome 15.06.2021 - Italgas
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STRATEGIC PLAN 2021-27 EMPOWERING OUR FUTURE Rome 15.06.2021
AGENDA
1 SCENARIO 4
NEW
OPPORTUNITIES
SMART GAS
2 5 FINANCIALS
NETWORKS
3 ESCO 6 APPENDIX
SCENARIO 3
ENERGY
TRANSITION
OUR FUTURE
“While we continue to battle the pandemic, we must
also focus on our long-term challenges: this is why
the Green Deal, as a growth strategy, remains our
compass throughout the recovery”
F. Timmermans
“I want Europe to become the EU Commission, Executive VP
first climate neutral continent December 2020
in the world by 2050”
U. Von Der Leyen
EU Commission, President
December 2019
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4
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EN
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ENERGY
TRANSITION EU committed to a carbon neutral economy by 2050
KEY MILESTONES both politically and economically
2021 PNRR
Funds for Green
Transition and
2050
Digitization Net zero-emissions economy
2015 Dec-19 Jan-20 Oct-20 Nov-20 Jan-21
2030
Mid-term targets
EMISSIONS
PARIS COP21 PNIEC 2030 REDUCTION
Preliminary STRATEGY TO 2050
decarbonization Green gases
commitment of EU
Members EMISSIONS Energy systems integration
Energy efficiency
(-40% GHG 1990-2030) REDUCTION
STRATEGY
EU GREEN DEAL IT HYDROGEN STRATEGY
New wave for decarbonization initial guidelines
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ENERGY
TRANSITION CO2 emissions cut
vs 1990
Energy Efficiency
vs 1990
AT THE CORE 65%
OF EU POLICIES 100%
32,5%
55%
1
2030 2050 2030 2050
The EU is preparing a package of initiatives to reduce Ongoing revision of the European Energy
CO2. A general revision of gas market legislation is Efficiency Directive
also targeted
€175-290bn a year of Biomethane Hydrogen in EU energy mix
consumption ~ 500 GW electrolysis
incremental investments MTOE capacity by 2050
necessary to reach 54-72
decarbonization goals
13%-14%
17 20-30%
Contribution of all sectors of gas demand 2%
is paramount 2017 2050 2030 2050
The revision of the gas market legislation includes Hydrogen may be transported via repurposed natural
how to facilitate the uptake of renewable gases gas pipelines and / or newly built pipelines
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Source: EU Commission; Energy efficiency data on 2050 is based on IEA scenario
ITALIAN PNRR
RESOURCES Energy transition is a tool to support economic recovery
AVAILABLE Italian PNRR to make new resources available
Digitisation, Innovation,
Green Revolution and Competitiveness, Culture,
Ecological Transition, ~€191bn* €40.3bn
€59.5bn FUNDS of which:
of which: > Transition 4.0 €13.4bn
Hydrogen €3.6bn < > High tech content investments €0.3bn
Biomethane €1.9bn <
Energy efficiency €15.4bn <
Water €4.4bn <
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* Resources being allocated through the Recovery and Resilience Facility, additional €30.6 billion funded through the Complementary Fund for a total amount of funds of €222bn;
IMPLICATIONS
FOR GAS SECTOR
OF EU ACTIONS
ENERGY TRANSITION
Gas to account for 20% of 2050 Green gases production should rapidly
European energy consumption increase to meet decarbonization target
Gas mix to include green hydrogen Gas infrastructures should be able to
(33%) and biomethane/ blue manage dynamic changes of gas
hydrogen / e-gases (67%) blending
Gas infrastructures strategic to Entire gas value chain including both
ensure efficiency of the energy T&D and storage needs to evolve
system
Investments needed to guarantee Gas and electric infrastructures should
flexibility, through gas and electric be able to cooperate effectively
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systems integration (“sector coupling”)
EN
SC
GAS DEMAND
EXPECTATIONS
REAFFIRMED Gas to provide the needed energy supply flexibility
EU Gas demand – ENTSOG high demand cases analysis
35 Gas demand to become
30 more dependent from
25 RES performance at
20 peaks
15
10 Cold spells coupled with
TWh / day
5 low RES to require high
0 0 gas peaking capacity
also in 2040
Peak 2 Weeks DF Peak 2 Weeks DF Peak 2 Weeks DF Peak 2 Weeks DF
BE 2020 NT 2040 GA 2040 DE 2040
Final Demand* Power Yearly average O
ARI
EN 9
SC
Source: ENTSOG, Scenarios BE – Best estimate, NT – National Trends, GA – Global Ambition, DE – Distribution Energy
The “2-week demand” refers to a two-week period during a cold spell resulting in high heating demand.
“Dunkelflaute” expresses a climate case, where in addition to a 2-week cold spell, variable RES electricity generation is low due to the lack of wind and sunlight.
GAS NETWORKS
KEY ROLE IN ENERGY Enable a cost-effective decarbonisation, balancing
TRANSITION short-term and long-term needs of energy markets
ALREADY DEVELOPED, ~2mln km of pipelines
STABLE AND WIDE-SPREAD INFRASTRUCTURE 2,000 gas DSOs and 45 gas TSOs
NATURAL GAS
ACCELERATOR IN THE DEVELOPMENT OF BIOMETHANE
RENEWABLE AND LOW CARBON GASES HYDROGEN
Schematic annual profile of
PV production vs gas load
STRATEGIC ROLE FOR FLEXIBILITY AND SECURITY
OF SUPPLY OVER TIME AND SPACE
10
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec2020-30
BIOMETHANE Biomethane accounts for 5% of EU gas demand,
THE CLOSER It is the most significant green gas source
VIABLE GREEN but still below its potential
OPTION
IN EUROPE
CAPACITY KEEPS AND PROSPECTS ARE ALSO STRONG IN ITALY
GROWING • Over 30 operative biomethane injection points on the
Italian gas network
+51%
number of • ∼90% biomethane plants produce methane from
729 biomethane organic waste and agri-food waste sources
483 plants in 2
• Significant economic incentive framework
years*
(certificates guaranteed for 10 years)
2018 2020
ITALY
67% 25% 5% 4%
Current
production
potential** 640
IO
ORGANIC WASTE AGRI-FOOD WASTE AGRO-INDUSTRY WATER TREATMENT 11
AR
Mcm/y
EN
SC
* EBA, ** Italgas’ estimates based on the biomethane total volume production from 81 plants, either in operation (31) or in progress (50)2030-40
HYDROGEN More than 200 projects for >$80bn announced globally
MOMENTUM
BUILDING
Europe leads globally, with
55% of world projects or 126
out of 228
EU leading the race also on the
legislative side
Production costs could fall
quicker than anticipated
but
Giga scale
Green hydrogen is not expected Large scale industrial
to be competitive before 2030 Transport
Integrate H2 economy
IO
Infrastructure projects 12
AR
EN
SC
12
Source: McKinsey, Hydrogen Insights Report 20212030-40 GREEN
HYDROGEN Green hydrogen expected to become competitive
COST ISSUES But this will require ~ 10 years for prices to fall
TO BE
ADDRESSED
Green hydrogen production costs
LCOE (€/MWh)
180
TODAY 2030-40
120
~ 95
60
~ 65
~ 35
0
2020 2025 2030 2035 2040 2045 2050 Electrolysers costs Electrolysers costs
720 €/kW 170 €/kW
Average PV Average wind Best case PV
LCOE = 17€/MWh
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Best case wind Hydrogen from fossil fuels with CCS LCOE = 35€/MWh 13
AR
EN
SC
Assuming falling electrolysers costs from 720 to 300 €/kW 13
Source: Italgas elaboration on IRENA dataGAS DSOs DSOs need to adapt their strategies
NEW CHALLENGES Networks upgrade necessary to distribute new gases,
AND
OPPORTUNITIES to support energy efficiency and cut methane emissions
Prominent role in circular
economy thanks to proximity to
end customers and distributed
production units of green gases
Build new infrastructure, network
repurposing & retrofitting
to dispatch green gases
Environmental responsibility
through methane emissions
management, considering an
Digitization of operations upcoming stricter regulation
and smart tools
implementation
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14SMART GAS
NETWORKS
15NETWORKS Upgrade and repurposing combined with digitization to
A TANGIBLE CHANGE allow distribution/injection of green gases as well as
IN PARADIGM
reduce costs, increase efficiency and reliability
Digital sub-networks Central Control Room
Network digital Smart Segmentation
endpoints Metering valves
Biomethane
Reverse flow H2 Blending
City gate
District
Governors H2
Turbo- Cathodic protection Gas Quality Tracking
CH4 expansion
Environmental data
Storage
Electrolyser
Auto-consumption
ON
Co-generation
TI
EE RES Power to Gas 16
ZA
production
TI
GI
DI
TSO Network 16DIGITIZATION
CAPEX Step-up
ASSETS NUMBERS in digitization
deployment
~€1.4bn ~7,100
~7,700 ~7,700
CAPEX ~3,900
DIGITAL ~1,600
GRFs
2020 2021 2022 2023 2027
# of installed devices
Smart meters replacement plan near completion
~8.4 ~10,400
~8.1
~7.9 ~8.0
~5,000
~7.4 ~3,600
SMART NETWORK ~800
~2,200
METERS END POINTs
2020 2021 2022 2023 2027 2020 2021 2022 2023 2027
# of installed devices # of installed devices
ON
+5,000 digital assets, including gas analysers
TI
17
ZA
TI
segmentation valves and odorization plants
GI
17
DIDIGITIZATION
CORNERSTONE OF Digitization to benefit the gas distribution
OUR CAPEX PLAN system in several ways
Strict
Safer Consumption Efficiency
emission Green gases
operations data gains
control
Safer More accurate and Efficiency Crucial for Enabler for
operations updated gains both on reaching EU injection of
foster service consumption data opex and ambitious renewable and
continuity enable proactive capex resulting decarbonization low carbon
behaviors and in savings for targets gases
ON
predictive the system
TI
18
ZA
maintenance
TI
GI
DIDIGITIZATION
IoT, BIG DATA AND
DIGITAL FOR GAS
ONGOING INITIATIVES
SMART
NETWORKS
Multiple gases blending
Data &
Simulation
Information Network balancing for
exchange leaks identification
Interventions
prioritization
Pressure
Smart gas networks Assets level optimization
enable an evolution in IoT-ization Auto
Fault regulation
Odorization
infrastructure Prediction level optimization
management towards real- Pre-heating
time, optimized and optimization
seamless operations Self-diagnosis
Predictive maintenance
Metering
ON
TI
19
ZA
TI
GI
DIR&D
LEVERAGE ON Pursue technical innovation
DISTINCTIVE Targeting several research projects
CAPABILITIES towards the future of the network
~€40mn
CAPEX
ITALGAS LAB P2G PROJECT
REVAMPING
DESIGN NEW Other
0,3
ITALGAS SMART INNOVATION
cm
METER projects
20
D
R&
202030-40
HYDROGEN H2 P2G project aimed at testing the entire green hydrogen value
ITALGAS H2 chain, including implications on equipment
PROJECT
Shortlisted by MISE as eligible for European funds (IPCEI)
Hot water
Cooking
Heating
Network H2 FOR RESIDENTIAL
injection and
blending
Industrial Heat
EE RES
Green H2 Chemical
production
Sestu
H2 FOR INDUSTRY
Owned RES Plant 1 MW
Electric grid Electrolyser Pure H2
Electrolyzer 0.5 MW Storage Public Mobility
Refuelling station 200 kg/d H2 FOR MOBILITY
Basic design completed;
21
G
permitting & procurement ongoing
P2
expected to be in operation in 2022R&D
DESIGN NEW DIGITAL Development of a new hydrogen ready smart meter to
SMART METERS improve performance, guarantee security
and benefit from standardisation 0,3
cm
SECURITY INNOVATION
Security by design Sustainability
+ +
Long-lasting battery + Modular Design
+
Remote Control
+ + Connectivity
+ +
Advanced safety Gas blending
ER
SMART METER
ET
M
22
NEXT GENERATION
22NETWORK,
REPURPOSING & Network spending, well balanced between repurposing
UPGRADE
and extensions
~€3.4bn
CAPEX Repurposing Extensions Maintenance Sardinia Technical
and upgrade and new of existing new grids Innovation and
grids network energy efficiency
23NETWORK
DEVELOPMENT
TO ALLOW GAS TO TORINO, VALLE D’AOSTA, BELLUNO
REACH NEW
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Network development
of won tenders
~€1bn
SARDEGNA CAPEX
New fully digital native network
900km built starting from 2018
out of 1,100km of new grid planned
45k active meters* EXISTING NETWORK
potential market 200.000** ~€0.3bn
CAPEX
K
OR
24
TW
NE
* LPG / GNL to be converted to GNL / Natural gas ** GNL / natural gasTENDERS
THE TIMELINE Opportunity for investment and digital transformation,
but timing subject to political decisions
2024 peak year in terms of expected awarded tenders
~€2.2bn
CAPEX
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
2017-23 Plan 2018-24 Plan 2019-25 Plan 2020-26 Plan 2021-27 Plan
S
ER
25
ND
TE
25ESCO 26
ESCO
STRONG ENERGY Outlook for the Italian energy efficiency market is very strong
SAVINGS MARKET
OUTLOOK Efficiency in residential buildings is core to achieve EU targets
Highly fragmented market
Residential sector accounts for
Target of energy savings by 2030 per ~35% of the 2030 target
sector* (TWh)
12
Residential buildings in Italy
14 mn
5
50 13
60% Older than 45 years
18
Currently very low energy efficiency
Total Transports Industry Services Residential
>25% needs robust requalification
initiatives
€220bn investments expected by 2030 27
CO
ES
*Reduction of annual energy consumption, Source: PNIEC and EER 2020ESCO
FROM NEW
OPPORTUNITY Delivering on announced strategy
TO REALITY
NOW 1 COMPANY INTERNAL EFFORT
• Seaside and Toscana Energia Green • Support Italgas energy transition, providing services within
completed the merger the Group
• High potential thanks to • Key asset for tenders
complementary businesses
(geography, customer base)
• Focus on Buildings energy EXTERNAL OPPORTUNTIES
renovation and Digital Services
• M&A initiatives to expand the scale of services offered and to
consolidate a fragmented sector gaining economies of scale
• Ceresa acquisition
28
CO
ES
28ESCO REVENUES
FROM NEW
OPPORTUNITY
TO REALITY Growing EBITDA contribution
>€700mn
TOTAL
CUMULATED
POTENTIAL*
~€100mn
CAPEX*
M&A: CERESA (14/06/21) Titolo del grafico
45.000 Improving EBITDA ~40mn 35,0%
• Operates in buildings energy efficiency with 40.000 30,0%
a focus on heat management 35.000
25,0%
30.000
• Founded in 1921
25.000 20,0%
• Mainly operates in the Northwest Italy with
20.000
27 employees. 15,0%
15.000
• Serves a large customer portfolio (3,651 10,0%
10.000
customers, mainly in individuals and 5,0%
5.000
condominiums).
0 0,0%
2021 2022 2023 2024 2025 2026 2027
Organic Ceresa M&A EBITDA margin
29
CO
ES
* Whole ESCO business,NEW OPPORTUNITIES 30
POTENTIAL Italgas has been shortlisted for DEPA privatization in
GROWTH Greece
OUTSIDE ITALY Offer due date July 15, closing expected before year end
MONITORING
OPPORTUNITIES
EDA Thess DEPA
FITS WITH INVESTMENT CRITERIA
1 infrastructure
assets
• Comparable sovereign risk
• Ability to exercise an industrial role
significant network development
digital transformation
• Visible and established regulatory
2
EDA Attikis
framework
DEDA 3
• Similar-risk adjusted returns
to Italy
CE
31
EE
GRWATER
CONFIRMING Total water distribution market in Italy 27bcm,
TARGETS of which 20% for civil uses
Distribution and sale
~9.5 Water used for domestic use
Integrated water services system (SII)* bcm
Purification
Digital
Transport Distribution
metering
~5.2 Water supplied to end customers
and sale bcm
Water Reuse, Recycle
Water
extraction uses 41% Average leak rate
~2.7 Water savings potential
Waste water bcm
Sewage
treatment
ER
32
AT
W
* For civil uses only, Source: Istat, Utilitas Blue Book 2019, MIP Energy Strategy Group Water Management Report 2018.WATER
CONFIRMING Best practices in gas network management
TARGETS applied to water networks REVENUES
>€250mn
CUMULATED
POTENTIAL
ADVANTAGES 2021-27
★ Deep understanding of the regulation
and knowledge of the business
★ Expertise in managing pipeline networks
ITALGAS ACQUA ★ Opportunity to digitise new grids replicating what
already done by Italgas
Serving 5 municipalities ★ Solid expertise in water leakages management and reduction,
in the province of Caserta also thanks to Takadu partnership
100% of the network remotely controlled ★ Sustainability focus
2019 Network Assessment Plan Period
CEM technology implementation
ER
2020 Network Design 33
AT
NB-IoT smart meters deployment
WNEWCO ICT
ACCELERATOR OF Competence centre for the entire group,
INNOVATION
unlocking value of proprietary solutions
in the market
~100
RESOURCES
ASSETS
€100mn
NEWCO ICT
Rationalisation of all ADVANTAGES
ICT activities previously run by
different group entities into a ü Agile vehicle
NewCo fully owned by Italgas ü Acceleration of technological innovation and digitization
ü Simplified ICT organization
ü Unique reference for companies of the Group
ü Clearer focus on economics
T
IC
34
CO
W
NENEWCO ICT
INTERNAL AND
EXTERNAL Potential to sell technological solutions developed
OPPORTUNITIES and tested by Italgas to third Parties
DESIGNED FOR ITALGAS OFFERED TO THIRD PARTIES
Innovate Run and improve Go to market
• Test and learn • Roll-out at scale to capture Productization of selected solutions for third
• Customization and operational efficiencies parties such as:
development of • Monitoring for continuous • SaaS solutions supporting client’s needs
proprietary solutions improvements and • Turn-key services offered by Italgas
• Piloting • Evolved operating model • Opportunity to leverage the Italgas
agile delivery model in the Digital Factory
T
IC
35
CO
W
NEFINANCIALS 36
CAPEX PLAN
2021-27 €7.9bn total capex, +5.2% vs 2020-26
OVERVIEW
EXPANSION OF GAS
DISTRIBUTION
PERIMETER(1)
DIGITIZATION SARDINIA
€0.4
NETWORK CENTRALIZED TENDERS
bn
M&A & development
€1.4bn €3.1bn €0.3bn €0.4bn €2.2bn
DIVERSIFIED ACTIVITIES
€ 5.2 bn related to gas distribution base perimeter Net capital deployed
€0.2 and induced capex
bn
M&A & development
S
IA
Energy efficiency
NC
37
NA
Water
FI
(1) €0.4bn
Retail
is M&A in the No Tenders scenario, while in the Tender scenario is reduced to €0.3bnCAPEX PLAN
2021-27 Increase in spending related to core assets
+58% IN and digitization
5 YEARS
+58% in 2021-27 vs 2017-23
€ mln
2017-23 2018-24 2019-25 2020-26 2020-27
LS
IA
NC
38
Digitization* Network** New opportunities Tenders
NA
FI
(*) Including metering (**) Including centralised capex, Sardinia, expansion of gas distribution perimeterGROWTH
SUPERIOR RAB
GROWTH Growth in RAB and redelivery points driven by organic
investments, M&A and tenders
RAB Redelivery points(1)
6.3% CAGR 3.9% CAGR
2020-27 2020-27
TENDERS
TENDERS
ORGANIC
ORGANIC
11.9 & M&A
& M&A
10.3 9.9
7.6 8.2
7.7
2020 2027 2027 2020 2027 2027
RAB
4.2% CAGR ~35% Market share ~45%
LS
2020-27
IA
NC
39
NA
FI
39
RAB referred to the year end T - revenues in the year T+1, gas distribution only
Average deflator over the plan period assumed at 1.8%, starting from 1.2% in 2021 (1) millionsSTRONG
COMMITMENT -30%
NEW
ENVIRONMENTAL
TARGETS SET
Scope I and II Gas leaks Vehicles
GHG emissions
103t CO2 eq
Civil and
FY 2020
FY 2027
reduction(1) Industrial Gas
Consumption
Major step ahead in our
commitment to the environment -25%
Identified specific initiatives,
made possible also by Electricity
digitization Civil and Vehicles
Net Energy Industrial Gas
Picarro boosts emissions Consumption(1)
FY 2020
FY 2027
Consumption
reduction
TJ
40
(1) Unchanged perimeter, ie excluding M&A and tendersHRO STRATEGY
TO SUPPORT 3 pillars HRO based strategy designed to
GROWTH sustain people development and industrial growth
SUSTAINABILITY
& INCLUSION OPERATIONAL
EFFICIENCIES
ENGAGEMENT & CHANGE Improve business
MANAGEMENT sustainability and inclusion Operational efficiencies
leveraging on digitization
Strengthen engagement and facilitate • Smart working, start from
change management home & office transformation
• Safety focus GENERATIONAL
• Listening (Inclusion Manager), CHANGE
• Welfare upgrade
• Ambassadors & contamination INSOURCING
• Employee as a stakeholder OF
1 STRATEGIC
2 6 DIGITAL ACTIVITIES
TRANSFORMATION
3 5
4
O
REALLOCATION 41
HRINSOURCING
OF STRATEGIC Insourcing of core activities previously managed by 3rd Parties
ACTIVITIES
New activities created by digitization
People reskilling and upskilling to empower strategic know-how
and deliver excellence
ACTIVITIES ALREADY INSOURCED 2021 TO BE INSOURCED OVER PLAN PERIOD
Currently
✓• Leak detection and repair • Construction engineering externalized
✓• Metrological inspections • Digitized assets maintenance
New, driven by
digitization
✓• Quote issuing activity
+ • New activities yet to be identified
✓• On-site inspections
✓• Smart meters batteries replacement
✓• Risers Leveraging on people growth and HR
O
42
HRPEOPLE
KEY TARGETS
Gender equality
new hires
50% Women in 25%
responsibility roles
100 digital d ors
sa
50 sustainability
m ba
s Total hours to 600k hours Employees
in welfare
>75%
30 inclusivity a training in 2021-27 ...
Increase in Smart Office
… of which digital Learning
& Smart working
learning 250k hours hours/employee/yr 38 hours
Top 10 Talent attraction
brand awareness Engagement
in Net Promoter >80% New hires under
30 years old
60%
Development of Italgas Score (NPS)
Academy
O
43
HRFINANCIAL
STRATEGY
A KEY SOURCE
OF VALUE
CREATION
Organic
Capex
OCF
Sustainable
finance sources
Dividends
Support capex growth
maintaining flexibility § Tenders
Preserve Financial § M&A and new
Preserve a solid current flexibility opportunities
investment grade profile credit rating § Enhance shareholders
remuneration
LS
IA
NC
44
NA
FI
44FINANCIAL
STRATEGY Debt Maturities EIB
A KEY SOURCE Bonds
OF VALUE 900
600
300
0
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 beyond
2033
Limited refinancing needs and
1Q 2021 Gross Debt Structure*
ample liquidity buffer
Institutional
Lenders (EIB)
Low exposure to interest rates Floating
2%
volatility and long debt tenor 16%
Best in class cost of debt of ~1%
over plan period
98%
84%
Fixed Bond
LS
IA
NC
45
NA
FI
(*) excluding IFRS16CREDIT METRICS
MOODY’S Baa2
FITCH BBB+ Credit metrics remain within range throughout the plan
Net Debt / RAB FFO / Net Debt
80% 20%
70% 15%
60% 10%
50% 5%
40% 0%
2020 2021 2022 2023 2024 2025 2026 2027 2020 2021 2022 2023 2024 2025 2026 2027
LS
IA
NC
46
NA
FI
46DIGITIZATION
A SOURCE OF
VALUE CREATION POTENTIAL
BENEFITS*
~€250mn
2019A 2020A 2021 2022 2023 2024 2025 2026 2027
~ €60mn capex impact ~ €190mn P&L impact
ü ICT: cloud adoption and reduction of ü ICT: cloud adoption to drive opex
software development requests reduction
ü Operation: savings from activities to
end-users, penalties reduction, grid
ü Network: more efficient maintenance maintenance efficiencies
capex through workforce re-
organization and intervention ü Increase of ARERA incentives thanks
optimisation to leak detection activity and digital
LS
IA
NC
equipment 47
NA
FI
47
(*) Cumulated over 2021-27 compared with a scenario of no digitization investments, more than €260mn since 2019DISTRIBUTION
COSTS Distribution operating expenses without tenders*
FURTHER
EFFICIENCIES
WITH TENDERS
Opex 2021 Efficiencies Inflation Redelivery Points Opex 2027
Efficiencies driven by
technological innovation
and digitization Unit cost per redelivery point**
30,0
Offset X-factor impact 25,0
Without tender
20,0
Tenders will drive higher With tender
15,0
economies of scale
and optimised geographical 10,0
LS
2021 2022 2023 2024 2025 2026 2027
IA
footprint
NC
48
NA
FI
48
(*) without M&A and other activities, (**) net of pass thoughGUIDANCE
2021 2024 2027
€ mn
Revenues >1.35bn Revenues ~1.9bn ~2.1bn
EBITDA ~1.0bn EBITDA ~1.37bn ~1.6bn
EBIT 560-580 EBIT/RAB* ~7.5% ~8.2%
Capex 850-900 Consolidated RAB 10.5bn 11.9bn
Net Debt
~5bn FFO / RAB 10% 10%
with IFRS 16
Leverage ~61% Leverage ~62% ~60%
.
49
LS
IA
NC
NA
FI
* Gas distribution onlyDIVIDEND POLICY
CONFIRMED Dividend policy allows shareholders
to benefit from growth potential
0.256 0.277
Higher between
ü DPS equal to 65% payout on
Adjusted Net Income
ü DPS 2019 +4% per annum
FY2019 FY2020 FY2021 FY2022 FY2023
LS
Dividend per share (€)
IA
NC
50
NA
FI
Illustrative chartEMPOWERING
OUR FUTURE
Foster Energy Transition
Foster the development, injection and at scale usage of green gases.
Smart Gas Networks
Network upgrade and repurposing to reduce costs, increase efficiencies
and resilience, enable green gases distribution, via digital transformation.
Emission reduction and energy efficiency
GHG Decarbonization of operations and full deployment of energy efficiency initiatives
within the Group and versus the external market
External growth / New opportunities
M&A initiatives (in Italy and abroad), tenders to grow in the gas distribution,
leverage on existing internal capabilities to grow further (Water, ICT)
Financial Structure & Shareholders’ Returns
LS
To ensure value creation, support growth opportunities and guarantee a robust
IA
NC
shareholder’s return 51
NA
FIAPPENDIX 52
GROUP
STRUCTURE
50%
45%
100% 100% 50.66% 67.20% 51.85%
32.80%
10%
15.00%
51.85%
42.96%
30.05%
100%
10%
53
Equity accounted 53MAIN NUMBERS
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OPERATING OF WHICH
HIGHLIGHTS AFFILIATES
(TOTAL)
Network length 73,319 km 1,877 km
Municipalities 1,888 61
Redelivery Points 7.750 mn 0.153 mn
Market Share(1) 35% 0.1%
Subsidiareis
Controlled companies
54
54ITALY GAS DEMAND
EXPECTATIONS Networks to accommodate new green gases
REAFFIRMED
100
90 86 84 85 85
83
78 78 75 75 73 74 80
80 76
70 71 73
Italian gas demand (Bcm)
68
70 62 74 69
60
62
50
Covid-19 impact
40
30
20
34 30 33 31 31 29 30 31
10
-
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2025
2030
Other sectors Transport (CNG+LNG) Power gen Industrial
Distribution Decentralised Business as Usual Green gases
IO
55
AR
EN
CEN Residential outlook PNIEC
SC
55
Source: Italgas elaboration on Snam 2020 TCFD, PNIEC 2019 and ENEASUSTAINABILITY
AT THE CORE OF Committed to performance improvement and ESG
OUR ACTIONS culture. New targets set integrating
Sustainability Plan pillars
ENVIRONMENT SOCIAL GOVERNANCE
• Decarbonization of operations and • People empowerment and safety, also • ESG KPIs in top management
reduction of energy consumption considering impact from COVID-19 remuneration
Network digitization to accommodate • Diversity and equal opportunities • Integrated Annual Report
green gases promotion • 67% Independence of the board
• Ongoing Sardinia methanization • Improvement of the relation with final • Improved focus on ESG and climate
• Scale-up of the Power to Gas project customers, sales companies and change issues in Enterprise Risk
suppliers Management
• Promotion of social innovation through • Valorisation of sustainability and gas
education (digital divide, cultural advocacy on national and international
projects) round tables (e.g. GD4S and OGMP)
56
562020-30 Connections requests keep raising. Italgas received 38
BIOMETHANE preliminary requests for connections since 2017.
THE CLOSER Need to consider “reverse flow ops”
VIABLE GREEN
OPTION
Technical cycle
Italy request for connections Production Unit Gas
Supply line distribution grid
In progress biomethane injection
1 50 points (∼290 Mln Sm3/y)
In operation biomethane injection Delivery and Redelivery
1 31
14 points (∼350 Mln Sm3/y) metering and injection
1 4 plant* plant
3 4 3 10 5 Injection
1 Of which on Italgas’ network point
7 2 5
2 1 5 Realized and managed by the Realized and
Preliminary feasibility requests
1 33 on ITG network producer managed by
Italgas**
Formal requests quotation for
1 1 5 connections on ITG network
1
3 1
1
1 2
6 Preliminary Technical Work
7 Connection
7 feasibility request feasibility execution and
4 1 assessment
request plant
1 (discretionary) operation
2
2 5
33
AS
Economic cycle
5 57
OG
4
BI
* criteria set by Italgas, ** economic contribution from the biomethane supplierDISCLAIMER
Italgas’s Manager, Giovanni Mercante, in his position as manager responsible for the preparation
of financial reports, certifies pursuant to paragraph 2, article 154-bis of the Legislative Decree n.
58/1998, that data and information disclosures herewith set forth correspond to the company’s
evidence and accounting books and entries. This presentation contains forward-looking
statements regarding future events and the future results of Italgas that are based on current
expectations, estimates, forecasts, and projections about the industries in which Italgas
operates and the beliefs and assumptions of the management of Italgas. In particular, among
other statements, certain statements with regard to management objectives, trends in results of
operations, margins, costs, return on equity, risk management are forward-looking in nature.
Words such as ‘expects’, ‘anticipates’, ‘targets’, ‘goals’, ‘projects’, ‘intends’, ‘plans’, ‘believes’,
‘seeks’, ‘estimates’, variations of such words, and similar expressions are intended to identi1Q
such forward-looking statements. These forward-looking statements are only predictions and
are subject to risks, uncertainties, and assumptions that are difficult to predict because they
relate to events and depend on circumstances that will occur in the future. Therefore, Italgas’s
actual results may differ materially and adversely from those expressed or implied in any
forward-looking statements. Factors that might cause or contribute to such differences include,
but are not limited to, economic conditions globally, political, economic and regulatory
developments in Italy and internationally. Any forward-looking statements made by or on behalf
of Italgas speak only as of the date they are made. Italgas does not undertake to update
forwardlooking statements to reflect any changes in Italgas’s expectations with regard thereto
or any changes in events, conditions or circumstances on which any such statement is based.
The reader should, however, consult any further disclosures Italgas may make in documents it
files with the Italian Securities and Exchange Commission and with the Italian Stock Exchange.
58
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