Strategy

The 2022-2028 Strategic Plan, presented on 15 June 2022, provides for investments of €8.6 billion euros to extend our network, complete the digital transformation and put us in a leading role in the energy transition.

Crafting the energy (R)evolution: our strategy to 2028

 

The new Plan envisages an investment program of 8.6 billion euros, with an increase of 0.7 billion euros compared to the previous Plan presented last year. The increase in investments (+8.9%) is driven by the digital transformation of assets, the extension of the network and the initiatives aimed at consolidating in the energy efficiency sector that will enable the Italgas Group to continue to play a leading role in achieving the EU climate targets; in addition, the 2022-2028 Strategic Plan integrates the future commitment of Italgas in Greece with the awaited acquisition of Depa. Infrastructure.

Our Plan is perfectly aligned with the important challenges facing the country and Europe.

In a geopolitical scenario strongly conditioned by the conflict in Ukraine, which has placed the issues of energy security and diversification of supplies at the forefront, REPowerEU has traced a path of independence from Russian gas. Moreover, it not only aims to strengthen the resilience of the European energy system, but also accelerates the process of decarbonization and the ecological transition.  The strategic choices we have made in recent years have actually anticipated the approach of national and EU institutions towards the decarbonisation of consumption and the containment of climate-changing emissions.

The 2022-2028 Strategic Plan

Paolo Gallo presents the “Empowering our future” 2022-2028 Strategic Plan

The 2022-2028 Plan is based on three main pillars…

Digital transformation, repurposing and network extension 

To equip the country with state-of-the-art infrastructures, capable of receiving and distributing renewable gases

Consolidation in the energy efficiency sector

To become one of the main national players in the sector

New growth opportunities

Through ATEM tenders, M&A in the gas and water sector, development of the Greek market

… with two enabling factors

People skills

Through the insourcing of core competencies and the internal Academy

Financial stability and efficiency

To maintain ratios in terms of solid investment grade area and guarantee an adequate return for shareholders

The plan sets ambitious sustainability targets

The Plan pivots on ESG (environmental, social and governance) principles and sets ambitious sustainability goals for 2028 and 2030.

We plan to reduce our net energy consumption by 27% in 2028 compared to 2020, bringing this target to -33% in 2030. We also plan to reduce our Scope 1 and Scope 2 emissions by 34% in 2028, and by 42% in 2030, again compared to 2020. We are intensifying the engagement of our suppliers to also reduce Scope 3 emissions (supply chain), tracing the path towards the carbon neutrality target by 2050.

Our Plan can’t be implemented without the involvement of our people: for that reason we put strong attention to generational change, to the engagement of the Group’s people as protagonists of the ecological transition and we focus on training.

Our investments

The new plan envisages an investment program of 8.6 billion euros, with an increase of 700 million compared to the 2021-2027 plan. We intend to dedicate:

  • 4.5 billion euros net for the development, digitization and repurposing of the Italian gas distribution network;
  • 500 million euros for diversification, doubling our commitment to the energy efficiency business and investing in the water sector;
  • 1.8 billion euros for the acquisition, consolidation and development of the Greek company Depa Infrastructure;
  • 1.8 billion euros for Atem tenders and investments in the concessions acquired.

Our investment program confirms Italgas as one of the leading industrial companies capable of putting its design, spending and value creation skills at the service of the objectives of sustainable development of the country and of the European Union.

The three main pillars of the plan

AD Italgas

In a European scenario that has REPowerEU as the new North Star to strengthen the resilience of the energy system and accelerate the ecological transition, Italgas can reap the benefits of a vision that had identified digital, flexible and smart networks as the main enabler of the decarbonization process.

Paolo Gallo
CEO of Italgas

Digital transformation, repurposing and network extension

We intend to equip the country with state-of-the-art infrastructures, capable of receiving and distributing renewable gases.

The largest share of the investments, equal to 4.5 billion euros, is once again destined for the extension, digital transformation and repurposing of the distribution network in order to create in time the conditions for the widespread use of the new gases, such as biomethane, green hydrogen and synthetic methane, which we will soon have to receive in our networks in increasing quantities, and which will play a key role in replacing part of the amount of gas that the EU imports from Russia.

We are at the forefront of this process: in the next year we will be the first gas utility in the world with a fully digitized network. 

In detail:

  • 1.5 billion euros (+100 million compared to the previous Plan) are dedicated to the continuation of the digital transformation programs of the network. In fact, having a “full digital” network is the technical precondition for effectively managing the distribution of renewable gases;
  • we will continue the repurposing, development and improvement of existing infrastructures, with investments of 2.7 billion euros;
  • approximately 200 million euros are earmarked for the methanization process of Sardinia;
    lastly, over 100 million euros will allow us to develop our presence in the gas distribution sector also for external lines.

Innovation is confirmed as our main growth driver. Around our Digital Factory we have developed an open innovation approach that allows us to meet the most advanced startups and SMEs in the world.

We also participate in Venture Capital initiatives.

Consolidation in the energy efficiency sector

We will dedicate € 500 million over the course of the plan to diversification initiatives. In particular, we intend to become one of the main national players in the energy efficiency sector, with a focus on innovation and digitization. Compared to the previous plan, we will double our commitment to this business, a fundamental lever for achieving the targets indicated by REPowerEU. We will invest 340 million euros to develop the Group’s ESCOs, carry out targeted M&A operations and strengthen the business areas and the customer portfolio in the reference sectors: residential, public, industrial and tertiary. We also intend to contribute to the consolidation of a still very fragmented sector.

The plan also assigns 160 million euros to the water sector for selected M&A transactions and to continue applying, in the networks currently under management, the best practices and technologies developed in the field of gas distribution.

New growth opportunities

We expect to be able to complete the acquisition of the Greek company DEPA Infrastructure in the coming months, marking our return to the international scene after twenty years. Our plan allocates 1.8 billion euros to Greece, including the acquisition, consolidation and execution of the development programs currently developed by the operating companies Eda Thess, Eda Attikis and Deda. Following the completion of the operation, we will evaluate the correspondence of these programs with our vision and their consistency with the decarbonization objectives set by the Greek government.

We plan to dedicate 1.8 billion over the plan to participate in ATEM tenders and investments in the acquired concessions. We reconfirm that at end of the tender process, the company could reach a market share of 45%, compared to the current 35%.

The two enabling factors of the plan

People skills

We will continue to devote important resources to training, the creation of new professionals, the attraction of talent, diversity and inclusion.

Our people are key to cope with the main challenges of digital transformation. We will continue to invest in upskilling and reskilling activities, with over 600,000 training hours, also through the nascent Italgas Managerial Academy. We will also continue to hire new resources to introduce additional digital skills, and to develop the insourcing of engineering and maintenance activities. In the coming years, the generational change will allow a significant lowering of the average age of our people.

Lastly, we are committed with increasing attention to the issues of Diversity & Inclusion and Sustainability. Among the many challenges on human capital, we have set targets on the growing engagement of people and on gender equality: at the end of the Plan more than one in four managers will be a woman.

Financial stability and efficiency

We will continue to optimize our financial structure, in order to support both the investment plan and the remuneration of the shareholders, with maintenance of the ratios in the solid investment grade area

With the acquisition of DEPA Infrastructure the Group estimates the ratio between the debt and the RAB to be close to 65%. During the plan period, thanks to cash generation, this ratio is expected to return to around 61%, consistent with a solid investment grade area.  Over the plan period, the cost of debt is expected to remain below 1.2% on average.

The use of sustainable sources of financing to support our investments in the energy transition makes the plan consistent with EU objectives.

The dividend policy reflects the commitment to provide our shareholders with attractive, growing and sustainable remuneration. The 2020-23 policy announced in October 2020 provides for the distribution of a dividend equal to the greater of (i) the amount resulting from the 2019 DPS increased by 4% per year and (ii) the DPS equal to 65% of adjusted EPS. The application of this policy for the financial year 2021 resulted in the distribution of a dividend of €0.295, up 6.5% on the previous year.

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