Eneco grows reach with Eni Belgium buyout

Dutch utility Eneco has just unveiled its strategy to grow in Belgium's 2.4GW wind market. Last Friday, it agreed to buy Italian oil giant Eni’s operations in the country.

Eneco has signed a deal to take ownership of Eni Wind Belgium and Eni's Belgian gas and power retail arm. Eni Belgium serves approximately 850,000 electricity and gas connection points in Belgium and has a market share of around 10%, with 200 staff. The company was established in 2012 when Distrigas and Nuon Belgium merged. Since then, Eni Belgium has increased its customer base by over 30%.

Meanwhile, Eneco has been present in the country through its Eneco Belgium unit since 2011. Following this deal, the company aims to increase its market share to serve more than 1million Belgian households and 55,000 business customers.

Eneco’s strategy is clear: it wants to expand its customer while bolstering its presence in northwest Europe. Indeed, earlier this year, Eneco acquired Germany’s largest independent renewable energy supplier Lichtblick to grow in Germany, and it already operates in Britain, France and its home market, the Netherlands.

And the deal fits neatly with Eni's strategy too.

While Eneco is pursuing its objective to increase its market share and supply more renewable energy to its customers, Eni has committed to enhance shareholder value by divesting assets that are no longer a strategic fit in its portfolio.

Last year, Eni announced plans to jointly develop renewable projects with US giant General Electric, particularly offshore and onshore wind farms. In order to do that, it needs capital that it can reinvest, and selling non-core assets can help.

Despite that, the main focus of the Italian company remains oil and gas. Indeed, in its 2017-2020 strategic plan, presented last month, Eni forecast that it would achieve higher profit margins in the next five years based on these “conventional resources”.

A warning for Eni, though: oil isn’t the safe haven that used to be.