A new decade has begun for energy and Enel is repositioning its objectives on a new model that is entirely renewable in the long term and focused on the electrification of consumption. With this premise, Francesco Starace, CEO and general manager of Enel, supported by the CFO Alberto De Paoli, presented the new strategic plan 2022-24 as a “turning point” during the Capital Markets Day in Milan: investment growth, cost reduction, anticipated decarbonisation by 2040, reduction of customers' energy costs. The other innovations presented in Milan are the new Global Customers division and the electric mobility spin-off.
"In 2040 100% of Enel's generation park it will be renewable” said Starace, stressing the point and clarifying what he means by decarbonisation: “The group will abandon coal-fired generation in 2027, replacing it with renewables and initially with small gas-fired plants. Subsequently, by 2040 we will abandon gas generation and 100% of energy sales will be from renewable sources. Within the same year, the group will exit the retail gas business”.
ENEL PLAN, ENERGY COSTS DOWN
The concrete result of this vision, also for the achievement of the objectives of limiting global warming to 1,5 degrees, is twofold. In the foreground is the theme of cost of bills. “Prices can continue to rise if there is no increase in renewables,” Starace added, referring to the risk posed by the volatility of oil and gas on the market. “But we – he continued – let's see our production cost go down by 50% between 2021 and 2030 precisely thanks to the replacement of thermoelectric power". The group intends to bring the share of renewable production from the current 60% to 85% for that date with cascading benefits for retail: the CEO quantified a 40% decrease in energy expenditure of households compared to what Italian and Spanish customers paid in 2020.
So it will be there price reduction, in Francesco Starace's vision, the real novelty is driving the energy transition and the drive towards the electrification of consumption. The plan envisages an increase in sales estimated at 70% by 2030, a number of charging stations 12 times higher than today and that of storage units multiplied by 13 times. “We will be surrounded by batteries” said Starace who has set a global target of 9 GigaWatt of storage at the end of the period. Closely linked to the topic of electrification is that of distribution networks. Half of the strengthening of total investments (8 billion more than in the previous plan) is intended for the development of renewable capacity (+19 Gigawatts over the period of the plan) with an expenditure of 15,6 billion.
The other half of the investments will go to the networks and will be favored by the Pnrr (The Resilience and Development Plan presented by the Italian government) which allocates the largest resources in Europe to Italy and Spain. "We expect 5-6 billion that will arrive during the period of validity of the Pnrr - specified the CFO Alberto De Paoli - and we expect that they will be disbursed mainly in the first 3 years".
Will it be possible to achieve such ambitious targets for the increase in renewables also in Italy? "We'll make it," replied Francesco Starace, emphasizing however that the reforms it will stimulate are more fundamental than the funds made available by the Pnrr. The most urgent, he said, is the simplification of the authorization processes. ” There has been some improvement, but there is still a long way to go”.
ENEL PLAN, GLOBAL CUSTOMERS, SPIN OFF AND ENEL PAY
The new business unit for global customers is born and will be called Global Customers. It is precisely from customers that Enel expects an important push towards electrification.
The most important financial news to emerge from Capital Markets Day is the possible electric mobility spin-off, understood as the business activities that concern the charging system (public and private), currently managed by Enel X. The business unit, once spun off, will be open to other partners and potentially placed on the market. “We have given birth to these activities, we believe that this effort can be extended to other subjects. An IPO might be a good choice – said Francesco Starace – we will see as the project progresses”. The management will be entrusted to Elisabetta Ripa, former CEO of Open Fiber.
For fintech, there are several questions that have come from the analysts. “The payment of bills but also of top-ups for electric mobility – replied De Paoli – requires digital payment methods on the move, it is part of the business. And if opportunities arise in the course of this process, we will seize them”. Today Enel has already launched EnelX Pay for its customers and rumors have circulated about the possibility that Enel will enter the field for the acquisition of Mooney (formerly Sisal Pay), born from a spin-off of Sisal and contributions from Intesa Sanpaolo.
Finally Ufinet, the optical fiber company operating in South America in which Enel X is a 21% shareholder: the "negotiations in progress, we cannot say more" confirmed.
Positive reception on the Stock Exchange, the stock closed the day up 2% above 7 euro. Equita, Kepler Chevreux and Intesa Sanpaolo recommend buys with target prices ranging from 8,4 to 9,7 euros. Jefferies is more cautious and stops at 7 eur, hold recommendation.
