Enel’s 10-Year Vision to Increase Profitability and create sustainable shared value for all stakeholder
The energy revolution is set to transform the way our world is powered. Oil and coal will give way to wind farms, solar panels and other forms of renewables as energy generation is decarbonized. Switching to a sustainable, zero-carbon power supply—with electricity and green hydrogen penetrating the global energy mix—will be vital in reducing greenhouse gases and fighting climate change. This energy transition will require widespread electrification of the economy to power transport, industry and buildings with electricity produced from renewable sources.
This is an era of transformational change—and opportunities—especially for utility companies. An estimated $50 trillion[1] will be invested in decarbonizing the power supply over the next 20 years, requiring a nearly three-fold rise in annual energy investment. Utility companies will spearhead much of this spending.
About half of this sizable sum will be spent on building renewable power generation infrastructure, and another $12 trillion will be spent on upgrading electricity grids. This investment in power networks is critical, as the energy transition will depend on grids becoming digital, more efficient and more resilient. Under the fossil fuel regime, power production is predictable and stable—simply add more coal, gas or oil to the generator to increase production. However, when power generation relies on less predictable wind and sun, fluctuating production requires advanced digital technology to manage storage and distribution and ensure that everyone can access electricity when and where they want it.
From Utilities to Platform Providers
Utilities will no longer simply be large-scale commodity and infrastructure providers. They will become platform businesses that integrate an ecosystem of decentralized, digitally connected energy supplies. As Francesco Starace, CEO of Italy-based energy group Enel, Europe’s largest utility provider, told investors last week: “Utilities will not just act as owners and operators of assets, but ... will become enablers and orchestrators of more complex systems.” These systems will include renewable plants and energy storage systems as well as electric vehicles, transport charging stations and demand response solutions. “Digital platforms will be key to managing this increasing complexity, and driving a sustainable energy transition within evolving regulatory frameworks,” he added. The contribution of regulators, he said, will be vital to developing these new platforms.
“Utilities will become enablers and orchestrators of more complex systems.”
Francesco Starace, CEO, Enel
Enel is well placed to drive the energy transition. The group began preparing for the energy transformation five years ago and has already boosted renewable sources to over 50% of its energy production. Enel has begun a massive digital transformation, in 2019 it became the first major utility to migrate 100% of its systems to the cloud.
Enel Reveals Its Plans for the Future
On Nov. 24 at its 2020 Capital Markets Day, Enel unveiled its strategy for 2021–2023 and its vision for 2030.
The group will mobilize investments of around €190 billion ($230 billion) by 2030 to boost decarbonization and electrification and develop digital platforms. This will be “a decade full of opportunities,” Starace told investors.
In forging the transition to a decarbonized, electrified economy, Starace outlined two separate business models that Enel Group will employ. Under its traditional ownership model, Enel will invest around €150 billion ($182 billion) mainly in renewables, networks and retail. Meanwhile, under its stewardship model, Enel will leverage co-investments with third parties, joint ventures and partnerships to offer services, products and expertise. Enel will invest €10 billion ($12 billion), while third parties are expected to contribute some €30 billion ($36 billion).
Almost half of Enel’s direct investment will be devoted to power generation, with around €70 billion ($85 billion) ploughed into renewable plants. This will almost triple Enel’s consolidated renewable capacity to 120 GW. The extra 75 GW added over the next 10 years will be evenly balanced between wind and solar.
Meanwhile, 46% of the investment will go toward updating infrastructure and networks to prepare them for the new world of sustainable energy generation and distribution. A key aim will be to improve the reliability of electricity supply and reduce the number of outages and power failures.
Enel will bring forward the planned phase-out of coal from 2030 to 2027. This will boost Enel’s emissions-free electricity generation to 85% of production in 2030, up from 66% in 2020, slashing carbon emissions by two-thirds. This level of decarbonization is an essential step on the pathway to restrict global warming to 1.5C above the pre-industrial levels set out in the Paris Agreement. At the same time, according to Enel, its sustainable energy strategy will boost economic activity in over 30 countries in which it operates by more than €240 billion ($291 billion) of gross domestic product, through local investments in generation and electrification.
The 2030
