The Spanish renewables market is “very attractive”, it is full of “opportunities” and Galp “is going to keep looking at them”. That’s how clear Andy Brown is, having just completed four months as CEO of Galp, Portugal’s largest oil company.
Brown took over the reins of Galp in February with the task of accelerating the group’s decarbonization process. Like other oil companies around the world, especially in Europe, the Galp group is immersed in a radical transformation process to convert to a zero net emissions business. And within this race, renewables are playing an essential role, especially in Spain, explains Brown in an exclusive interview with EXPANSIÓN. It is the first he has given to a Spanish media since taking up his new position.
In September last year, Galp completed the purchase from ACS of 75% of the company that brought together the group’s shareholdings in photovoltaic plants in Spain, with a company value of some 2,200 million.
“Thanks to the alliance we signed with ACS, we have now reached more than 3,300 megawatts in renewables,” explains Brown. Of this amount, 914 megawatts are already in operation, and 2,387 megawatts are in various stages of development. This was stated in Brown’s presentation to analysts last week at Galp’s Capital Markets Day, where he updated the company’s strategic plan.
“Spain is of great importance in Galp’s strategy towards decarbonization because it is the country where we have and will have the most renewables, given the opportunities and potential that exist in the market,” explains Brown.
At present, Galp concentrates practically all its renewable power in the Spanish market. These 3,300 megawatts are more than 85% of the 3,808 megawatts that Galp has in its entire portfolio. Portugal makes up the company’s other major renewables leg, with some 500 megawatts.
“Given that the bulk of renewables are concentrated in Spain, investments also have to be substantial,” Brown explains. “In the next few years, Galp’s investment in renewables in Spain is going to be an all-time record for the company in Spain. Galp has so far been one of the major players in the hydrocarbon market in Spain. With some 600 service stations in this country, the company has been among the five largest gas station networks in the Spanish market. This is, outside Portugal, its big bet in distribution.
Now, Spain is a spearhead in its transformation. The strategic update presented a few days ago envisages as a 2030 scenario to achieve “greater electrification of the company, although the oil business continues to play a crucial role” to ensure cash flows with which to feed investments in renewables. “This is not only about renewables, but also in other businesses, such as facilities for electric vehicle recharging, or hydrogen projects.”
The planned investment up to 2025 is about one billion euros per year on average. This is 20% less than initially planned, but above all, it represents a realignment. Twenty percent will continue to be allocated to the upstream (exploration and production). Another 15% will go to the industrial business and what has come to be known as “energy transformation”, which includes investments to decarbonize production processes in refineries, for example. Another 20% will be allocated to the commercial business, and another 20% or more to renewables and new energies. Of the total investment, Brown estimates that “around a third” could be earmarked for Spain, especially because of the boost from renewables.
More at the beginning
The big push will be in the first two years, with more than a third of the investment going to Spain. Brown does not rule out “new movements” by Galp in this country when looking for projects, with growth or acquisitions. And another focus will be “to continue growing commercially”. Galp reached an agreement months ago with the Spanish electricity and gas retailer Podo, with which it will continue to grow both in Spain and Portugal. In electric vehicle recharging, Galp wants to maintain its leadership in Portugal and position itself in Spain. By 2025, it aims to have 10,000 points in the Iberian market.