Davos, Enel presents the new circularity index

It might seem paradoxical but sometimes getting back to normality involves dealing with huge changes. The annual World Economic Forum (WEF), which has just drawn to a close in Davos, Switzerland, brings together the key players in the search for solutions to global challenges. After the 2021 edition was cancelled due to the pandemic and the 2022 one was put off for several months, the event finally returned to its traditional spot in the month of January.

The context of this year’s WEF was dominated by the unprecedented transformation occurring across all sectors: from the geopolitical tensions to the pandemic, global economic uncertainties, and the biggest problem of all for the entire planet in the long term, namely, the climate crisis.

We were represented at the international event by our CEO and General Manager Francesco Starace, Chair Michele Crisostomo, Chief Innovability^© Officer Ernesto Ciorra, and Gridspertise’s Sole Administrator and CEO Robert Denda.

On this occasion, we also became the world’s first utility to present an index for measuring the circularity of economic performance.

The energy transition is accelerating

Every year climate, together with the energy transition that can protect it, is at the top of the WEF agenda.

“The energy transition is progressing far faster than we initially expected and it is accelerating even faster still,” Starace said during a plenary session on “Repowering the World” on January 19. The backbone of this revolution is, naturally enough, renewable sources, which fulfill all the requirements of the three guiding principles: “Firstly, we need to make choices with economic return guaranteed by solid technologies. Secondly, we want to combat climate change. Thirdly, we have to think about supply chain security. This is a factor that didn’t seem to be of much importance just a year ago but is now foremost in the thoughts of many governments.”

Renewable energies now make economic sense, thanks to technological innovation. They are also the main tool at our disposal for limiting climate change and lastly, they don’t cause the problem shared by all fossil fuels, and that is dependency on imports.

There was an air of optimism in Davos about the future of clean energy but the question of what could stand in its way also arose. Starace has no doubts on that score: “What is limiting the current energy transition is the lack of focus on the other side: consumption. There is a lot of debate about how to generate electricity but that has already been answered by the way technology has evolved. The debate now should be on how that energy is distributed and how it is used.”

Starace also spoke at the launch of two accelerators, "Clean Power and Delivery" and "Electrification." These were developed by the World Economic Forum with the aim of facilitating collaboration among stakeholders from various sectors and sharing solutions, such as business models and policies, and they can be replicated in order to accelerate the energy transition. "The decade that ended in 2020 can be called the renewable energy decade," Starace said at the launch press conference, "because renewable energy was shown to be the most effective method for electricity production. When electricity becomes cheaper, safer and cleaner, then we can think about using it for applications that hadn’t previously been considered; and today we are facing this great transition. On the one hand, companies realize that by electrifying their processes, they are saving energy, improving services and facilitating the digitalization process. On the other, consumers have to convince themselves that it is affordable, good for the environment, and easy to use when it comes to electrifying their consumption: for example, by heating their homes with a heat pump or getting about in an electric car. Our role as a utility is to help consumers understand the benefits of the transition and make it as easy as possible. Three things are needed in order to do this: investment, innovation and policies. These are the areas where accelerators will be used to create a database of solutions and best practices that can be replicated."

In an interview Enel Chair Crisostomo emphasized the important role that consumers can also play in the production of clean energy: “Consumers are now realizing that sustainability also includes their becoming energy-independent and that is only possible through using renewables. In 2022, Enel had 345,000 connection requests for domestic and SME installations, three times the number received in 2021. It means that the energy transition is happening regardless and it is being driven from below by families and businesses, as well as the volatility of fossil fuels.” 

The Chair then reminded those present of the strengths that make Enel more resistant to crises, present and future: “Digitalization, which proved invaluable during the pandemic and required major investment; the ability to interact with the institutions which helped minimize the social impacts of the crisis; and geographical diversification.”

Cost-effectiveness and job opportunities

Another member of our executive management team attending the Davos Forum was Ernesto Ciorra, Enel’s Chief Innovability^© Officer, who took part in the “Making the Energy Transition a Reality” panel discussion alongside high-profile exponents of the world of industry. 

Ciorra reiterated the concept of the cost-effectiveness of clean energies, using data in order to do so: “While renewables were more expensive than fossil fuels in 2014, their price dropped by 70% over the following seven years, thereby making them cost-effective.” He then went on to underscore the fundamental role of instruments that are essential to ensuring that renewable sources become completely widespread, including electricity storage systems.

The need to protect the environment aside, the energy transition also offers fantastic employment opportunities: Ciorra reminded those present of that fact when he quoted the International Energy Agency – IEA: “Today, the energy sector provides 35 million jobs. But, with a strong energy revolution, that figure will be 63 million by 2050.”

An index for measuring circularity

Enel also made an important announcement at the WEF: we are the world’s first utility to launch a circularity index for economic performance. The new Economic CirculAbility^© indicator is a KPI (Key Performance Indicator) that measures the Group’s circularity. More precisely, the index evaluates the economic results (measured on the basis of EBITDA generated) of both the raw materials and fuels used to obtain it, along the entire value chain of the company’s various activities.

But measuring is not an end in itself: it is necessary for improvement. And our Group has decided to aim high in that regard, committing to doubling the value of the index by 2030, compared to 2020. This means halving the resources consumed with respect to EBITDA generated: a goal that few companies in the world – and no other utility – have set until now. 

The new indicator is the latest step on a journey Enel began a long time ago. As early as 2015, when the concept of the circular economy had only just begun doing the rounds in the corporate world, we identified it as a fundamental factor in focusing our activities.

Right off the bat, our approach to circularity meant that we didn’t just want to define it, we also wanted to measure it. This is an area where we have played a pioneering role on a global level and will continue to do so. The latest goal we have set ourselves confirms our desire to consolidate our position at the cutting edge because sustainability must involve circularity.