Engie EPS Cites Earnings Uncertainty from Coronavirus. Sticks to Long-term Microgrid Strategy
Engie EPS sees microgrids and energy storage as key to its growth, but expects a short-term disruption because its manufacturing facilities are in Italy, which has been heavily hit by the coronavirus (COVID-19).
The technology division of France-based energy giant Engie issued the warning in its 2019 earnings results released March 19.
The company reported 2019 revenues and other income of $21.6 million, up 29% year over year, with a 127% increase in its project pipeline.
The 2019 growth stems from the company’s long-term strategic plan to pursue microgrids, energy storage and solar plus storage projects, according to the earnings release.
“The COVID-19 outbreak is heavily impacting both the industrial operations of Engie EPS and its short-term business prospects. Engie EPS’ operations and the majority of the supply chain are based in Italy, the country currently at the epicenter of the European outbreak,” the company said in the statement.
Significant volatility ahead
Engie EPS has two industrial facilities in Lombardy, which the Italian government put under quarantine on March 8 along with neighboring regions. The government extended restrictions to the entire country on March 10, and then instituted a lockdown. In addition, travel restrictions all over the world are limiting project development and response to large solicitations, the company said.
As a result, scenarios for 2020 “are subject to significant volatility,” the company said, which led Engie EPS to refrain from confirming its earlier 2020 revenue guidance or to set an alternative target.
Affirmed long-term strategy for microgrids, storage
However, Engie EPS said it remains committed to its long-term strategic plan, which focuses on three product lines:
- Giga Storage, with utility-scale storage and large solar plus storage projects
- Industrial Solutions, with microgrids and storage systems
- e-Mobility, with innovative charging stations, typically vehicle to grid (and special charging devices leveraging on the Engie EPS intellectual property portfolio)
The company plans to focus on markets where regulation is favorable and solicitations have been announced. Engie EPS says its parent company backs the strategy.
Engie EPS described several projects it has underway or has completed, among them a microgrid in Lifou, New Caledonia. The three-phase project is aimed at making the island’s energy consumption 100% renewable this year.
Blueprint for islands
The Lifou microgrid includes 5 MWh of energy storage, solar PV and wind power, installed in its first two phases. The island plans to add more wind and solar this year.
Microgrid control technology will help stabilize the intermittency of the renewables. When the energy demand is fully covered by the solar or wind production, the energy management system will switch off the island’s diesel generators without any risk for the stability of the network, according to Engie EPS.
Engie EPS sees the project as a blueprint for islands worldwide.
The company also cited its microgrid project in the African state of Somaliland, which it said made significant third-stage progress in 2019.
In addition, the Engie EPS said it has secured its first microgrid project in the US and is well positioned to secure a second project in New Caledonia.
Engie also reported that its project backlog decreased by 18% compared to the 2018 backlog reported in June 2019. The company said several significant projects have been either delayed or not awarded, reducing the backlog.
It is still too early to assess the impact of coronavirus outbreak on its industrial operations and short-term business prospects, the company said.
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