MET Group goes green in CEE markets
As part of the ongoing energy transition, Swiss-based MET Group shift its focus to the renewables growth strategy. Balázs Gábor Lehőcz, chairman of the Asset Management Board says the aim is to establish a renewable portfolio of 500+ megawatts by 2023 in Central and Eastern Europe.
“MET Group announced its European renewables expansion strategy two years ago, and now, in line with this strategy, we are acquiring assets along the whole value chain: we are interested in greenfield investments, ready-to-build (RTB) projects, as well as brownfield investments,” says Balázs Gábor Lehőcz. MET has just announced the acquisition of three ready-to-build solar power plants in Hungary (77 MWp solar project in the municipality of Buzsák, a 48 MWp plant in Gerjen and a 43 MWp plant in Söjtör).
The energy company’s goal is to build a geographically and technologically diversified renewable portfolio. MET recently acquired a 42 MW wind park from Enel in Bulgaria, and it has been progressing with the joint venture established with NIS to build a 102 MW wind park in Serbia.
”MET Group has been active in Central and South-eastern Europe for years, and we have a good understanding of the market,” adds the chairman. MET has subsidiaries in Croatia, Serbia, Romania, Bulgaria, and Slovakia, while big international renewable energy companies do not really focus on this region. The CEE market is a fragmented one, with several smaller countries and special regulatory regimes.
Renewables are important to MET both from a strategic and business perspective. “MET Group is a follower in the renewables market. We analyzed the market, we wanted to understand it, we launched a pilot project (Dunai Solar Park in Hungary) and gathered experience,” says Lehőcz. He thinks it is more appropriate to begin substantial expansion once the level of understanding becomes higher – in the area of solar power plants this is already the case, as MET now has five solar projects in Hungary.
The deep knowledge of European energy markets supports MET Group in its renewable growth strategy. There are several risks to be taken into account: subsidy schemes vary from country to country, the regulation of balancing costs represents a commercial risk, and all these risks need to be managed properly – this is where you need strong expertise.
Although the proportion of renewables is increasing rapidly in power generation, the importance of natural gas as a transition fuel will not change for the foreseeable future. The growing amount of solar and wind energy being installed into the grid makes matching the supply and demand of energy more difficult, and natural gas is the main provider of the necessary flexibility.
The integrated energy company recently acquired a gas storage business from Gas-Union in Germany, supporting the build-up of sales activities to end-consumers in the country. Gas-fired power plants are also among the potential targets, primarily in Italy and Spain.
“Coal-based power generation is already being phased out, nuclear energy is not flexible enough, so all you have left is natural gas and eventually water in certain geographical areas,” notes Lehőcz. MET Group’s core competence is natural gas, and this competence in natural gas and gas-based power production helps MET to support the energy transition from a fossil-based towards a zero-carbon world.
Even though assets are an increasingly important part of MET’s business strategy, the company has decided to sell its 49,57% stake in the Hungarian natural gas distributor TIGÁZ Zrt. to Opus Global Nyrt. “This transaction does not overwrite MET Group’s strategy, it actually fits our long-term ambition to shift towards a renewable-focused asset portfolio,” says Lehőcz. There were varying strategic priorities adopted by the parties, which inevitably concluded in negotiations about how to transform the TIGÁZ partnership. Since the gas distributor is a fully independent operation, the sale will not reduce synergies with MET Group’s core activities.
“Nowadays, it has become an expectation both from financing banks and from shareholders for companies to take part in renewable energy generation. People are more and more open to renewable energy sources, to sustainable economies, to protecting the environment,” stresses the chairman.
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