Invest, invest and invest some more: Encevo has no choice. In a market under pressure and undergoing major technological and environmental changes, the Luxembourg energy company must pursue its investment strategy. It may sound like an exaggeration, but the economic future of Luxembourg is at stake, given that energy needs are set to increase and the ecosystem is set to change completely.
Even if, last year, of the €400m envisaged, “only” €288m was finally invested, these decisions need to be looked at over a number of years, depending on the progress of various major projects. Despite a debt of €649m at the end of December, the group explained at its lengthy 2024 results press conference, the €750m credit facility had not been drawn down.
“Between 2025 and 2027, the group is planning investments to the tune of €1.2bn, with around a third in renewables and two-thirds in the grid (including the 380KV project and hydrogen),” it said. It’s a spectacular figure when put into perspective with the operating profit for 2024, for example, at €371m. “The private placement with Banque de Luxembourg represents more than 20% of our consolidated gross debt,” says the Encevo Group.
Two projects to put Luxembourg on the map
The 380KV project aims to replace the 220KV infrastructure that dates from the 1960s between Aach in Germany and Bertrange via Bofferdange and was budgeted at €850m at the time of covid. Work is due to start next year with the erection of 145 60-70m pylons and a new transformer station at Bofferdange, and will continue until 2029. The old line will be dismantled around 2030. This should reduce energy loss by a factor of four when transporting electricity, and enable us to meet all future demands in an increasingly connected world.
The other project, MosaHYC (Moselle-Saar-Hydrogen-Conversion), supported by GRTgaz, Creos/Encevo Deutschland and Encevo Luxembourg, represents a total investment of €154m, including €44m in subsidies from the German government, and will see 70 to 90 kilometres of a hydrogen pipeline run through Luxembourg, again between Germany and France. Encevo is to contribute €70m to the project to put Luxembourg on the map.
Teams from Encevo and Banque de Luxembourg pictured as they finalise this bond, unprecedented in the history of the energy company. Photo: Banque de Luxembourg
It is in this investment context that the group has recently achieved a first: adding a financing line to its options by carrying out a private placement of €200m, with the help of Banque de Luxembourg and , one of the divisions of Crédit Mutuel Alliance Fédérale. “This placement was well subscribed,” commented Pit Linster, head of entreprises & entrepreneurs at Banque de Luxembourg. “This strong interest in an unrated issuer shows that institutional investors agree on Encevo's financial strength, critical size and sustainable prospects. Infrastructure is an asset class that attracts a lot of interest from this type of investor.”
“Strong” rating for Sustainalytics
And in the word “sustainable,” you have to understand... “sustainable.” Once the initial contacts between the company and the bank had been established in the third quarter of 2024, a roadshow in Paris was used to explain the planned transaction to around 20 investors, who expressed their interest directly. “The transaction is perfectly aligned with the group’s ESG strategy,” emphasised Marc Schroeder, Encevo's CFO and member of the executive committee. “The transaction was carried out within the framework of the Encevo Group’s ‘Green Finance Programme Framework,’ certified by Sustainalytics with a ‘strong’ rating.”
Sustainalytics, a division of Morningstar, “monitors” 20,000 companies in 172 countries, a guarantee of a real and serious commitment to respecting commitments. This is also in line with the attitude of Banque de Luxembourg, which was B-Corp certified in 2023 and is seeking to develop this activity for the benefit of businesses, “especially on the scale of the local economy,” adds business advisor Astrid Schlesser. She also mentions another activity: the business leaders’ workshops. Over a period of six months, these workshops aim to show participants how to transform their businesses from a very concrete point of view.
This article was originally published in French.
