REPORT AND FINANCIAL STATEMENTS

OF ENEL SPA AT DECEMBER 31, 2023

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REPORT AND FINANCIAL STATEMENTS

OF ENEL SPA AT DECEMBER 31, 2023

Dear shareholders and stakeholders,

Last year was marked by an important change in the

management of the Enel Group, with the election of the

entire Board of Directors and the appointment of the new

Chairman in the person of Paolo Scaroni. The Board of

Directors in turn entrusted the position of Chief Executive

Officer to Flavio Cattaneo.

The extraordinary events that have impacted the global

geopolitical and macroeconomic environment have

generated unprecedented volatility in the energy system

and wrought structural changes in the energy market.

In this context, our new management has delineated

the new strategy underpinning the Group’s 2024-2026

Business Plan, which envisages: (i) the rigorous allocation

of resources to boost the return on capital employed,

together with the balancing of risk and return in

investment decisions and models; (ii) greater efficiency and

effectiveness in processes and organizational structure,

seeking to increase accountability and free up financial

resources to drive the industrial development of the

Group; and (iii) financial and environmental sustainability,

confirming our commitments to the energy transition and

the electrification of energy consumption, while ensuring a

more balanced and sustainable financial structure.

In 2023, Enel confirmed its position as the largest private

renewable power generator in the world, with 63 GW of

managed capacity (including our growing and necessary

battery energy storage capacity) and the largest private

electricity distribution company at the global level, with

over 70 million end users served by grids that will have

to deliver increasing levels of resilience and digitalization

to support the electrification of energy consumption.

Furthermore, we have the largest customer base among

private companies, with some 61 million electricity and gas

customers.

The Group’s leadership in sustainability has once again

been recognized worldwide, underscored by its constant

presence in various major sustainability rankings and

indices.

LETTER TO

SHAREHOLDERS

AND OTHER

STAKEHOLDERS

Paolo Scaroni

Chairman

Flavio Cattaneo

Chief Executive Officer

and General Manager

4 Report and financial statements of Enel SpA at December 31, 2023

End users

70.3

million

Renewables capacity

managed

The macroeconomic environment

In 2023, global growth proved more resilient than expect-

ed at the beginning of the year, thanks to a faster-than-ex-

pected reduction in inflation in many economies, support-

ed by the gradual normalization of energy commodity

prices and the gradual easing of supply chain bottlenecks.

Many governments’ energy support programs also helped

mitigate the impacts of the turbulence on household in-

comes and support productive activity in many econo-

mies.

However, the results differed among countries: growth

was solid in the United States, sustained by the recovery in

public and private spending, and in Latin America, where

inflation slowed and political and labor market conditions

improved. Conversely, much of the euro area experienced

an abrupt economic slowdown, reflecting both the re-

strictive monetary policy stance adopted by the European

Central Bank in order to counter inflationary pressures and

weak foreign demand, also accompanied by challenging

geopolitical developments in the Middle East.

With regard to the energy industry, in 2023, the Europe-

an gas market displayed a significant downward trend in

prices, thanks to high levels of storage and declining de-

mand, with the average reduction in TTF (Title Transfer Fa-

cility) prices exceeding 65% compared with 2022, reach-

ing about €35/MWh in the last quarter of 2023. Coal-fired

generation also declined, primarily discouraged by the rise

in CO2 prices within the ETS (Emissions Trading System),

despite coal prices plunging by 55.5% to an average of

$129/ton.

Compared with 2022, electricity prices in Italy and Spain

fell sharply, reflecting the decline in energy commodi-

ty prices and, in part, growing renewables generation.

More specifically, electricity prices in Italy decreased by

58% compared with the previous year, while in Spain they

dropped by 48%.

In the metals sector, economic weakness adversely im-

pacted the prices of aluminum and copper, with declines

of 16.6% and 3.8% respectively compared with 2022. Met-

als associated with renewable energy technologies, such

as lithium and polysilicon, experienced an even steeper

slide in prices as demand contracted.

Performance

Thanks to management actions and our focus on the core

business, the Group closed the 2023 financial year having

achieved our full-year targets as revised upwards in the

3rd Quarter and announced to the market, with ordinary

EBITDA of €22.0 billion and an ordinary net profit of €6.5

billion, up 12% and about 21%, respectively, compared with

the previous year. The dividend that will be proposed to

shareholders for 2023 amounts to €0.43 per share, 7.5%

higher than that for 2022. In terms of cash generation,

FFO in 2023 amounted to about €14.8 billion, up more

than 60% compared with 2022. Net debt is equal to €60.2

billion, with the net debt to ordinary EBITDA ratio improv-

ing from 3.1x to 2.7x. This last indicator does not yet reflect

the effects of the proceeds generated by divestments,

already announced to investors and subject to binding

agreements between the parties, carried out in 2023 as

part of the extraordinary plan to reduce the Group’s finan-

cial debt. Recall that the Plan approved in 2022 to restore

a sustainable and balanced Group financial structure pro-

vided for the sale of Group investments and other assets

of over €12 billion in 2023 alone.

Main events

In 2023, the Group confirmed its hard-won technologi-

cal leadership in renewables generation and distribution

grids.

On the power generation front, in 2023 Enel built out

about 5.3 GW of new renewables capacity (including 934

MW of battery storage), reaching a total of approximately

63 GW of installed capacity and a volume of renewables

generation of 140 TWh/year. The capacity we operate is

also supported by a pipeline of projects in the advanced

development phase of up to 160 GW.

In the power distribution segment, our strong commit-

ment to modernizing and digitalizing electricity grids

continues, both to increase their resilience to increasingly

extreme and frequent climate events and to make them

ready to play the role of enablers of the energy transition:

during the year, Enel Grids activated almost 540,000 new

5Letter to shareholders and other stakeholders

producer and prosumer

(1)

connections globally, adding

about 8 GW of distributed renewables capacity connect-

ed to our grids, reaching a total of some 68 GW of capac-

ity from approximately 2 million producer and prosumer

connections.

The development of a portfolio of products dedicated to

residential consumers, businesses and municipalities also

confirmed the Group’s leading role in fostering the energy

transition and the electrification of consumption.

In 2023, Enel X Global Retail operated at full capacity with a

new, more tightly integrated structure to reap the benefits

of bundled packages of electricity, gas, electric mobility,

energy efficiency and ultra-fast connectivity services. An

example of this is the “Formidabile” offer, launched in Italy

at the end of October 2023 and in Spain at the beginning

of 2024. Our commitment to improving the customer ex-

perience also continues: in 2023 commercial complaints

decreased by 12%

(2)

compared with the previous year, and

in February the German Institute for Quality and Finance

awarded Enel Energia its “Nr. 1 in Service” quality seal

based on customer satisfaction in the electricity and gas

sector, with a score of 74.2%, well above the category av-

erage of 55.9%.

The new Enel Global Service Function, which groups to-

gether Global Information & Communication Technolo-

gies, Global Procurement, Global Customer Operations

and the newly established Workforce Evolution, contin-

ued the Group’s digital transformation path, focusing on

solutions and advanced technologies, such as artificial

intelligence and quantum computing solutions. Thanks in

part to the key skills we have developed internally, to date

we have over 500 traditional and generative artificial in-

telligence applications in operation or in the development

phase, mainly to support the Generation, Distribution and

Retail businesses. Furthermore, the Workforce Evolution

unit will promote the evolution of employee skills consis-

tent with these new technological tools and with the stra-

tegic repositioning of the Group, in order to foster greater

internal control over higher value activities and guarantee

our distinctive positioning in the markets and sectors in

which the Group is present.

The Group continues to follow the decarbonization road-

map in line with limiting global warming to below 1.5 ºC. In

2023, absolute direct and indirect greenhouse gas emis-

sions along the Group’s entire value chain, equal to 94.3

(1) “Prosumer”, a contraction of “producer” and “consumer”, is an individual or firm that not only consumes goods and services but also produces them, such

as, for example, by installing photovoltaic panels to generate electricity.

(2) Reduction in new complaints for each 10,000 customers.

MtCO

2eq

, declined by 26.3% compared with 2022, and re-

main in line with the targets for 2030 and 2040 certified by

the Science Based Targets initiative (SBTi).

The financial instruments employed by the Group are also

closely linked to sustainability objectives. In 2023, Enel

Finance International NV issued euro-denominated sus-

tainability-linked bonds in the amount of €1.5 billion, us-

ing multiple key performance indicators (KPIs) to further

strengthen Enel’s commitment in accelerating the energy

transition. For the first time, in fact, a tranche of a publicly

placed bond involved the combination of a KPI linked to

the EU taxonomy with a KPI linked to the United Nations

Sustainable Development Goals (SDGs), while the other

tranche of the bond was linked to two KPIs associated with

the Group’s full decarbonization trajectory through the re-

duction of direct and indirect greenhouse gas emissions.

These bond issues have enabled us to achieve a ratio

between the sources of sustainable financing and the

Group’s total gross debt of approximately 64%, a level that

will rise further over the period of the Plan.

In parallel, in order to reduce debt and strengthen the

Group’s financial structure, our new management team

has revised the divestment plan referred to earlier with a

view to portfolio rotation focused on maximizing the value

of assets. In this context, the Argentine thermal genera-

tion companies Enel Generación Costanera SA and Inver-

sora Dock Sud SA were sold during the year, and agree-

ments were signed for the disposal of the Peruvian elec-

tricity distribution and supply company Enel Distribución

Perú SAA, the advanced energy services company Enel X

Perú SAC and the electricity generator Enel Generación

Perú SAA. The divestment of all the investments held by

the Group in Romania was also completed. Asset rotation

transactions were also completed, including the sale of a

portfolio of photovoltaic plants in Chile (416 MW) and the

entire geothermal portfolio in the United States, as well

as several small solar plants in that country. Finally, in line

with the strategy presented to investors on our steward-

ship approach in non-core countries, acting through the

subsidiary Enel Green Power SpA we completed the sale

of 50% of the two companies that own all of the Group’s

renewables operations in Australia to INPEX Corporation,

while the sale of 50% of Enel Green Power Hellas to Mac-

quarie Asset Management was finalized.

6 Report and financial statements of Enel SpA at December 31, 2023

Strategy and forecasts

for 2024-2026

Short-term global uncertainties have forced electricity

companies to increase their flexibility and improve the vis-

ibility and predictability of prospective returns.

In this context, over the 2024-2026 Plan period the Enel

Group plans to focus on:

•

profitability, flexibility and resilience through selective

capital allocation aimed at optimizing the Group’s risk/

return profile;

•

efficiency and effectiveness as drivers of the Group’s

operations, based on process simplification, a leaner

organization with defined responsibilities and a focus

on core geographies in which the Group has an inte-

grated position (Italy, Spain, Brazil, Chile, Colombia and

the United States), as well as boosting operational effi-

ciency in order to maximize cash generation and offset

inflationary pressures and the higher cost of capital;

•

financial and environmental sustainability to pursue val-

ue creation with a balance and solid financial structure,

addressing the challenges of climate change.

In this scenario, regulated businesses will be at the center

of the Group’s strategy, with a concentration of invest-

ment in geographical areas with a clear and predictable

regulatory framework as well as stable macroeconomic

environments. Investment decisions on renewables will

be more selective, seeking to achieve a positioning that

maximizes returns and mitigates risks at the same time.

Finally, the Group plans to optimize its customer portfolio

and end-to-end processes, enhancing efficiency in cus-

tomer acquisition and management, improving customer

loyalty through bundled offers and promoting the electri-

fication of energy consumption. The generation and retail

businesses will be managed in a more integrated manner,

with a flexible approach to sourcing strategies in order to

maximize profitability along the entire value chain.

In the 2024-2026 period, the Group’s gross investments

will amount to €35.8 billion, of which €18.6 billion will be

allocated to Grids, €12.1 billion to Renewables and €3 bil-

lion to Customers.

Thanks to the implementation of a less capital- and

risk-intensive business model, investments will have a

smaller cash requirement, with expected net investments

of about €26.2 billion thanks to access to European grants

and financing (up to €3.5 billion) and the use of a diversi-

fied co-investment model for renewables projects (a total

of about €6.1 billion).

Investments in distribution grids will increase their ef-

(3) Capacity of the system to carry additional power.

(4) Upgrading a plant in order to increase efficiency, capacity and output.

ficiency, flexibility and resilience: more than half will be

allocated to grid strengthening, remote operation, auto-

mation and digitalization projects in order to deliver high

standards of service quality and reduce power losses. In

addition to managing assets, the remainder will be allo-

cated to expanding hosting capacity

(3)

to meet customer

demand for new connections and encourage the integra-

tion of distributed generation from renewable resources,

all to support the energy transition and the electrification

of final energy consumption.

Investments in renewables will add 13.4 GW of new capac-

ity, bringing the Group’s total to 73 GW (including energy

storage systems) by 2026, with the share of zero-emis-

sions generation growing from 75% to about 86%.

The push for innovation will continue to be a strategic

driver: in generation, it will improve plant performance

through the introduction of new technologies along the

entire value chain. The use of repowering

(4)

and automa-

tion is also expected to increase the efficiency of plants

and processes, as will testing of new battery technologies

and energy storage systems, whose role will be increas-

ingly important in ensuring the flexibility of electrical sys-

tems. In grids, digitalization, new automation models and

the introduction of new technologies will enable new ap-

proaches to remuneration.

Finally, the Group will continue to pursue the evolution of

new technologies that will mature over the medium and

long term, such as hydrogen and new small and modular

nuclear fission reactors or fusion power.

On the environmental sustainability front, the Group in-

tends to continue reducing its direct and indirect green-

house gas emissions by achieving the zero-emissions tar-

get for all Scopes by 2040, in line with the Paris Agreement

and with the 1.5 ºC scenario, as certified by the SBTi.

Group ordinary EBITDA is expected to increase to between

€23.6 and 24.3 billion in 2026, with a CAGR (Compound

Average Growth Rate) of approximately 5%, while our am-

bition for Group ordinary profit is a rise to between €7.1

and 7.3 billion in 2026, with a CAGR of about 6% compared

with 2023, net of differences in scope.

The organic and structural path of reducing the Group’s

net debt will enable us to achieve a ratio of net debt to

EBITDA of about 2.3 by 2026, down from over 3 at the end

of 2022.

Finally, as regards shareholder remuneration, the Group

has decided to adopt a simple and attractive dividend

policy with a minimum fixed DPS (dividend per share) of

€0.43 for the 2024-2026 period, with a potential increase

up to a payout of 70% of ordinary profit if cash neutrality

is achieved.

7Letter to shareholders and other stakeholders

CONTENTS

Letter to shareholders and other stakeholders 4

Enel organizational model 12

Enel shareholders 15

Corporate boards 16

Enel shares 19

Activities of Enel SpA 21

Significant events in 2023 22

Definition of performance measures 24

Performance and financial position

of Enel SpA 25

Performance of the main subsidiaries 30

People centricity 34

Research and development 43

Main risks and opportunities 45

Outlook 52

Other information 53

Incentive system 56

REPORT ON

OPERATIONS 11

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Statement of Comprehensive Income

Statement of Financial Position

Statement of Cash Flows

Statement of Changes in Equity

Income Statement

Separate financial statements 64

Notes to the separate financial

statements 71

Declaration of the Chief Executive

Officer and the officer in charge

of financial reporting 153

SEPARATE

FINANCIAL

STATEMENTS 63

Report of the Board of Statutory

Auditors to the Shareholders’

Meeting of Enel SpA 156

Report of the Audit Firm 172

Notice of Ordinary Shareholders’

Meeting 177

Allocation of the annual net income

and distribution of available reserves 178

REPORTS 155

Report on corporate governance

and ownership structure 60

CORPORATE

GOVERNANCE 59