The annual conference of theAgici utilities observatory. The title is indicative: Utilities: digitization as a lever for development in a recovering market.
The world of Italian utilities now has the opportunity to emerge from the tunnel of a crisis that now dates back almost a decade. The shock of 2008, faced with delays and errors, has been metabolized and today the debate revolves around the strategies for overcoming the long impasse. The relaunch starts from the acknowledgment that the market will never return to the one that lasted for decades; however, clear growth opportunities are opening up, often not easy to seize, the result of technological developments and regulatory dynamics.
Let's see the first point. All operators are prepared for a stable or slightly declining trend in consumption and if reality proves to be more generous this will constitute an upside. The relatively comforting data of 2015 (+1,5 electricity consumption and +9% gas consumption) do not deceive the most attentive operators who have however had the opportunity to take a "breath in the arm" which is also useful for supporting the change. Some possibility of growth may derive from the electrification of consumption, above all, however, at the expense of gas.
The theme of opportunities is different and more articulated. It is well known that political and regulatory choices are very relevant. A far-reaching political issue is that of the green economy, especially after the outcome of COP 21. We should expect a strong push to relaunch investments with positive environmental effects; this, thanks also to the 100 billion dollars a year that should be made available to developing countries from 2020 onwards. All the sectors of our interest have opportunities for international development both for technologies and for management skills which are certainly not lacking in our country; a market of substantial dimensions is opening up which nevertheless requires an adequate industrial capacity at a global level. And here a vexed question reopens: if our presence abroad is decent or good in energy, this is not true in waste and water and this is paradoxical since we have the skills to manage problems in even very different environments. It is necessary to promote a large national operator, a Champion as they used to say, who knows how to develop a strong presence also by making use of the network, for example of embassies.
Another opportunity in waste is in the so-called Circular Economy, referred to in the proposal for a European directive formalized at the end of 2015. In truth, a lot has already been done in our country (without calling it the Circular Economy). But more can be done. For example, better develop recovery and recycling technologies, intercept smaller but significant value chains of waste (such as those in materials that converge in electronics), strengthen and optimize separate collection techniques. Here the role of the public appears significant in guiding the undertakings' commitments since it is by no means clear that many of these activities are immediately profitable.
The broadband-energy convergence opens up spaces for development of extraordinary importance, if they are grasped. These range from the creation of the FTTH (Fiber To The Home) broadband network, which is worth around ten billion euros, to its management and maintenance, up to its exploitation to generate further business; just think of home automation or demand side management. Enel will play a very important role, but the large former municipal companies will also play a significant role. The challenge is epochal to make up for our country's delay in digitization, and making a mistake will have significant impacts on its economic and social development in the coming decades. Once again the Government has a central role in keeping the bar straight towards the most logical and economic direction which sees electricity distribution companies with pivotal functions at least for the physical network. Of course, for them it is a significant cultural leap that also requires considerable financial resources and new skills. However, for years we have been talking about smart grids and many of these topics presuppose the use of broadband networks: it is a matter of passing from theory to practice and here management skills and also an entrepreneurial spirit of companies are essential.
Therefore, even in networks – far from being made obsolete by the new generation-distribution-consumption models especially in energy – new challenges and new opportunities are opening up precisely deriving from the application of advanced systems and logics. Water networks, gas networks and even collection systems (think of the smart dumpster that has been talked about for at least twenty years) can become much smarter with impacts in terms of management savings, longer life, energy efficiency.
It should also be noted that the remuneration of the networks launched by the AEEGSI certainly cannot be said to be a little generous and the grumblings of some operating companies are astonishing, which are however reduced to silence by the positive evaluations of the world of finance. In a context in which the profitability of risk-free investments (or hypothesized as such) has zeroed or has even become negative, rates above 5% are certainly interesting if not generous. However, the Authority has done well to loosen up a thread. Let it be clear that, at this point, it is up to the companies to carry out all the modernization projects briefly mentioned, guaranteeing that the investments are truly useful and effective in terms of cost-benefit.
But opportunities for growth are also given by the fragmentation of the sectors in question which do not allow many companies to face the challenges. There are spaces for aggregation capable of generating benefits for economies of scale and scope. This is true in the water sector, where the size of the companies is always too small, but also in the distribution of gas, renewables and waste. The launch of the gas tenders opens up new opportunities to encourage concentration; An M&A process is underway in the photovoltaic and wind sectors with some large players who are actively seeking acquisitions of even smaller companies. In short, spaces and opportunities are not lacking, also pushed by the Government which welcomes the reduction of public companies that are bearers of inefficiencies or even corruption. In 2015, the operations involving A2A and LGH were significant, as well as the one involving SEL and AEW Alto Adige; in the latter case, the company that emerges, Alperia, has truly significant dimensions to play important roles even beyond the Region.
We believe that overall the legislative framework is favourable, as well as the regulatory one; the world of finance is almost always ready to support reasonable investment projects. In short, the companies, their management and the public administrations that nominate him have no more excuses: there are many things to do and they have an impact on the country and they must certainly be implemented!
