Innovation and digital transformation, implementation of the distribution network of natural gas in Sardinia and growth also through acquisitions: these are the guidelines of our Strategic Plan 2019-2025, which will allow us to strengthen our leadership at European level and at the same time transform infrastructures of gas in Italy.
Our company’s return to the stock exchange at the end of 2016 marked a change in pace, imposing acceleration on all our activities. We announced an investment program of € 4.5 billion by 2025 (excluding tenders), up 12.5% compared to the previous plan, with the goal of developing an increasingly efficient, technologically advanced network and strengthening our distribution leadership in Italy.
Our 2019-2025 plan focuses on sustainability, growth and innovation, generating positive effects on the community and on the territory: gas is in fact a fundamental enabler of the energy transition and will play a significant role in the process of decarbonisation.
Watch the video with the comment of the CEO Paolo Gallo about the strategy
The new Strategic Plan focuses on innovation and digital transformation, which will cover assets, business processes and people. We will also make important investments for the modernization of the network.
Clear strategy up to 2025
Investments of 4.5 billion to sustain growth and M&A operations, 6.4 billion considering gas tenders
Over the course of the 2019-2025 Strategic Plan, we will dedicate €4.5 billion to our growth (including acquisitions, but without taking into account gas tenders): 500 millions more than the previous plan (+12.5%). This will allow the regulatory asset base (RAB) to grow by 4.7% per year on average (CAGR) over the period of the plan compared to 6.4 billion euros at the end of 2018, with an expected growth of around 7.1%, if the positive completion of participation in gas tenders and the realization of the relative technical investments are considered.
- Technological innovation and digitization: we will invest around 1 billion euros for digital innovation, including the completion of the traditional meter replacement program with smart meters in 2020, before the terms set by the regulator. More than half of the sum (540 million) will be dedicated to the digitization of assets and processes, in particular to the replacement of 5,300 intermediate pressure regulation systems with digital devices. Among our priorities, the massive installation of remote-controlled sensors and valves for detecting the network operating parameters and their remote management. This will allow us to manage the network according to innovative methods, criteria and algorithms that will make it unique in Europe. In November 2018, we also completed the migration of our cloud application systems and launched the Digital Factory, a true engine for the digitalization of business processes. We will also focus on the creation of new Machine Learning applications, Big data analysis, use of the "Internet of Things" and augmented reality. To learn more about our innovative initiatives, see the box dedicated to new technologies.
- Methanisation of Sardinia: we have become the main operator of the island, acquiring the management of around one third of the 38 areas in which the island is divided. Within the plan, we will invest around 500 million euros (+ 11% compared to the previous plan) to continue building the natural gas distribution network on the island. Currently, around 160 kilometers of pipelines have been built. At the same time, we will develop technological innovation programs that will enable us to equip the territorial areas in which we operate with most advanced networks and services.
- Growth through M&A transactions: the 2019-2025 strategic plan expects to allocate approximately €350 million to new M&A initiatives to accelerate the growth and improvement of our competitive positioning. The targets set in the previous plan have been reached, with the acquisition of a network corresponding to 4,600 kilometers of networks and 190 thousand redelivery points (PdR). The new targets call for acquisitions for another 160 thousand PdR, of which 60 thousand in 2019. Our M&A policy is driven by the desire to consolidate our presence in interesting ATEM and invest in areas of the country that do not benefit from natural gas infrastructure yet. This is the rational at the base of the acquisitions realized in the last two years in the North East, in Campania, Basilicata, Calabria and Sicily.
- Development, renewal and improvement of the network: by the end of 2025 we will have dedicated €2.1 billion to grid replacement and modernization operations (in particular for the replacement of cast iron sections), as well as the extension of our network with new connections and the development of energy efficiency.
See the box dedicated to new technologies for more information about our innovation initiatives.
New efficiencies in the energy, operational and financial areas
- Energy efficiency: energy efficiency remains one of the drivers in Italgas 2019-2025 Plan. The acquisition in 2018 of Seaside, one of the most important Italian Energy Service Companies, puts the Group in the best position to develop projects aimed at optimizing its overall energy expenditure. The new Plan also assigns to Seaside the establishment of a platform for the management of innovative projects and the possibility of developing appropriate partnerships for the contribution of innovative products and services.
- Operational efficiency: we pay constant attention to the optimization of operating costs. About this, a significant contribution is expected from the company's digital transformation project. In particular, it is estimated that the benefits of the digitization will amount to approximately 160 million euro over the entire duration of the Plan in terms of reduction of operating costs, efficiency on investments and higher revenues.
- Financial efficiency and capital structure: we will continue to focus on optimizing the financial structure. We expect to fully cover, thanks to our significant operating cash flow, both the investment plan and shareholders remunaration, maintaining appropriate financial flexibility to support our development. We intend to preserve a cost of debt (currently just over 1%) at levels of excellence throughout all long the plan period. Strong cash generation will enable us to keep rating indicators at levels consistent with a solid investment grade area.
Increase the market share through tenders
- A decisive role in the industry consolidation: tenders represent a further way to growth. Over the period of the plan, we will invest 9 billion euros to participate in the tenders that will be announced, of which 1.3 billion for the acquisition of third party networks in the areas where we will obtain the concessions, and 600 million dedicated to development, maintenance and efficiency of the networks acquired through the tender. Our goal is to increase our market share in terms of redelivery points from the current 35% (including affiliates companies) to a share close to 45% at the end of the plan, moving from 7.6 million at the end of 2018 to around 9.7 million in 2025.
- Our strategy is supported and supported by the sustainability plan, which has defined 5 strategic pillars and 14 objectives to be achieved. Attention to our people, to the areas where we operate and to our customers permeates our actions, as well as the awareness of the key role of natural gas in the process of decarbonization.
New technologies to position us at the forefront in the sector
Digital innovation is a keyword and a priority for our management. Through new technologies we have the opportunity to give a “digital identity” to the network. This is the industrial Internet of Things (IoT): numerous sensors distributed across the network that can communicate and interact with each other and with the outside environment to provide information and make decisions, for example to regulate certain operating parameters. Digitisation will therefore allow predictive maintenance - acting before the problems arise - to be carried out, and also give the sales companies more information on gas consumption by the end customers. Digital technologies are also transforming how our technicians work. They can now perform a variety of activities in the field which until a short time ago required their presence in the office.
The Digital Factory, launched in November 2018, will be the real engine for the digitalization of business processes: multifunctional teams will develop IT solutions in Agile and Time-Boxed mode.
ultimo aggiornamento 01 July 2020 09:01 UTC