Three decisive years ahead for Enel and the energy transition process

A word from Francesco Starace


Those operating in a complex, globalized, strategic industry such as the energy sector can never rest on their laurels, not even for one second. But Enel's 2023-2025 Strategic Plan, which we presented to the financial community in November during Capital Markets Day, was drawn up in a period almost without precedent, with entirely new challenges – as well as opportunities – all converging at once.

Since 2020, the world economy has experienced two entirely unforeseen events, which have also had particular repercussions for our industry: the pandemic and the war in Ukraine. The former slowed global growth, the stock markets and investment almost to a standstill, and caused the demand for energy to drop significantly. The latter cast significant doubt over the energy security of Europe as well as of entire areas of the world, just at a time when its economies were starting to show signs of recovery. Furthermore, this complex socioeconomic situation has been dominated by inflation and a series of extreme weather events that have reminded us of the urgency with which we need to deal with global warming. As a result, fossil fuel costs have risen and this has had a significant impact on consumer prices and therefore on the budgets of households and businesses.


Protecting the energy sector from volatility

With this backdrop in mind, and taking into account what has happened and what might happen during this difficult period in history, we have set out our plans for the direction we intend to take over the next three years. One of the most important variables is volatility, which has affected the prices of raw materials, exchange and interest rates, and stock market indices in recent months. Indeed, when the price and availability of energy are both volatile, manufacturing sectors and the weaker sections of society can quickly find themselves on their knees, often with uncontrollable consequences. Our task, therefore, must be to protect our customers, our shareholders, and all other stakeholders from this volatility.

To this end, we see sustainable electrification as the best approach to overcoming such volatility and to ensuring a stable and reliable supply of energy at affordable prices. This will also safeguard the health of the planet as well as living standards for future generations, while simultaneously reducing geopolitical tensions. All of which means extending the use of energy produced from renewable sources to sectors that until now have depended almost entirely on fossil fuels, such as transportation and domestic heating. We’re convinced that, as a direct result of this crisis, we’ll see the acceleration of this positive and beneficial process.

Enel has been investing heavily in renewable sources for at least two decades, particularly solar and wind, and is now the world's largest private operator in the renewable energy sector. We will, over the next three years, further increase our installed capacity from over 54 GW today to 75 GW by 2025, by which time we intend to be generating 75 per cent of our electricity from renewable sources. This will enable us to achieve our objective of producing all our electricity from renewable sources, with zero CO2 emissions, by 2040.

At the same time, this growth in renewables must be accompanied by the digitalization of the electricity system, which is absolutely essential in a new world where the distinctions between energy producers and consumers are becoming ever more blurred and where the levels of supply and demand must be constantly monitored and managed so as to ensure energy efficiency and to avoid grid outages. Over the next three years we aim to digitalize approximately 80 per cent of our customers, and we will invest around €15 billion in next-generation grids.

The past year has made it abundantly clear just how dangerous it is to be energy dependent. But dependence comes in many forms. Indeed, it would be absurd if, after having resolved our dependence on fossil fuels, we once again found ourselves dependent on others for access to key technologies. That is why we’re also planning to invest heavily in locating photovoltaic panel production facilities here in Europe, in particular with the 3SUN Gigafactory in Sicily, whose production capacity will grow 15-fold between now and 2024, reaching 3,000 MW per year.


Repositioning to enable continuous growth

It’s all well and good having the energy transition as the core element of our strategy, but we must also be aware of the fact that other countries aren't all progressing at the same pace. Some countries are investing more than others in renewables and digitalization. Some provide regulatory frameworks that are more conducive to integrating generation, distribution and service provision, which is what Enel does best. Therefore, while still continuing to remain true to our DNA as a global organization, in the coming years we’ll focus on what we consider to be our core markets: Italy, Spain, the United States, Brazil, Chile and Colombia.


The most important resource

We’re convinced that this strategy can offer stability, security and value – in the broadest sense of the word – on many levels. For our customers, who will see their household energy bills gradually come down by as much as 20 per cent over the next 3 years. For our shareholders, to whom we expect to pay a dividend of €0.43 over the 2023-2025 period, up from €0.40 in 2022. And for society as a whole, because we calculate that our investments will contribute, in the countries where we operate, to an overall increase in Gross Domestic Product of around €70 billion by 2025.

The last, but certainly not the least important message, is about people. At Enel we’re fortunate to be able to count on an extraordinary group of professionals who, since 2020, have risen to the challenge and have managed to deal with a series of difficult and unpredictable situations. It is mainly thanks to them that we can look toward the future with confidence. We cannot rule out the possibility of further turbulent times ahead, but we know we’ve got people who can help us tackle whatever the future throws at us. Of all the assets this great company has, this is the most important.