Naturgy to Invest Over €9 M in Renewables by 2025

Investment in Solar Power to Exceed Investment in Oil in 2023: World Energy Report, IEA

Spanish utilities company Naturgy plans to make investments worth 14 billion euros by 2025, of which approximately two-thirds will be earmarked towards boosting renewable generation, the company said while presenting its Strategic Plan (2021–2025) to the market. The second area of investment will be gas and electricity grids, mainly in Spain.

In this period, the company aims to strengthen its role in energy transition and decarbonisation. The plan comes after the company has resolved many of the uncertainties in the current environment, closed on the sale of its Chilean electricity operations and confirmed the start of recovery in its results.

The five-year plan was a matter of urgency for the company given the demands of the financial markets and taking into account a complex 2020 hampered by the pandemic and the obvious need for a roadmap, which is mandatory for a company of its size and complexity, said Naturgy.

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Through the investment of 14 billion euros ($16.54 billion) by 2025 mostly towards boosting its renewable generation, the group’s generation capacity will likely increase from the approximately 5 GW in operation today to more than 14 GW, expected to be in operation by December 2025.

Apart from investing in Spanish gas and electricity grids, the remainder will be allocated to maintaining existing assets and enhancing the company’s commercial positioning model.

The new plan pursues ambitious profitability targets, setting an EBITDA of 4.8 billion euros by 2025, as well as an ordinary net profit of 1.6 billion euros. It also confirms that the company’s rating is set at a floor of BBB according to S&P criteria.

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Also, the new plan places special emphasis on ESG commitments, with a progressive reduction in CO2 emissions, gender parity and linking aspects of remuneration to meeting environmental and social targets.

In addition to its commitment to investment 14 billion euros, Naturgy has highlighted a potential additional amount of 13.8 billion euros to be invested in projects associated with the EU’s Next Generation plan.

The company has decided to give more visibility to its dividend policy for 2025, setting a floor of 1.2 euros per share per year, representing an average pay-out for the period of 85%. The company will review the evolution of the policy’s execution in 2023.

In January this year, Naturgy announced that it had acquired 100% percent of the economic interests in Hamel Renewables, a solar and energy storage development platform in the United States. The transaction represents the company’s first investment in the US renewable energy market.