PARIS (Reuters) - French utility Engie (ENGIE.PA) expects 40 percent earnings growth over three years in its smart services to cities, which include heating networks, video surveillance and street lighting.
Engie said services to cities currently account for 350 million euros ($375 million) of core earnings and revenue of about 2 billion euros, compared to total 2015 group core earnings of 11.3 billion euros on revenue of 70 billion.
"Between early 2016 and end 2018, we expect 40 percent growth from this line of business," Chief Executive Isabelle Kocher told a press briefing on Wednesday.
She said the company is participating in tenders worldwide and has a strong pipeline of contracts, which makes her confident about the growth target.
In Europe, Engie operates more than 240 heating and cooling networks, runs more than 5,000 electric car charging stations and more than a million public lighting points.
It is also France's No. 1 operator of video surveillance systems, with a 70 percent market share and a presence in 600 municipalities. Engie, which is a major power producer in Brazil, has also won a surveillance contract in Rio de Janeiro.
The firm installs and operates security cameras, and also provides computer analysis of the images - in cooperation with IBM (IBM.N) - notably to identify suspicious behaviors.
"We want to be the No. 1 partner of cities worldwide," said Olivier Biancarelli, head of Engie's "Business to Territories" (B2T) division.
Engie said 50 percent of the world's population lives in cities, which account for 75 percent of global energy consumption and 80 percent of greenhouse gas emissions.
Kocher said city authorities increasingly want to deal with companies able to sell a range of smart integrated services from water and waste management to energy, security, street lighting, air quality monitoring and transport.
"This is a major growth area for the company," she said.
Kocher said Engie would focus on organic growth in this business but there could also be some takeovers, such as the utility's acquisition in October of Siradel, a French firm that provides three-dimensional modeling of cities.
She said Siradel's 3D models - which visualize data such as traffic flow, street furniture position, air quality, noise levels, photovoltaic potential or Wi-Fi coverage - are a key tool for winning tenders as they allow city managers to model the impact of investments in urban infrastructure and services.
The models can for instance simulate how replacing diesel-powered buses with electric buses impacts air quality and noise levels and can measure this for individual floors of buildings.
Reporting by Geert De Clercq and Benjamin Mallet; Editing by Susan Fenton