Enel recently announced a strategic, three-year plan that boosts the carbon-free portion of its power portfolio from the current 48 percent to 62 percent by 2021.
Looking ahead, the European energy distributor will spend 42 percent of its money on renewables — which it called “the driver of Group growth” — and just 9 percent on thermal generation. Four percent of capex will go to supporting Enel X, its e-solutions division launched in 2017 comprising acquisitions including Demand Energy, EnerNOC and eMotorWerks.
The plan comes on the heels of a similar 2017 plan that focused on digitalization and streamlining Enel’s businesses. This year, Enel said prioritization of generation decarbonization will allow the company to seize on the financial opportunities associated with climate action. It’s part of a multi-year pivot started in early 2016, when Enel put forward a vision of a utility “ready to lead the energy transition.”
“The transformation underway in our industry is presenting challenges, but also opening new opportunities,” said CEO Francesco Starace in a statement about the 2019 through 2021 plan. “Today’s Enel is a more sustainable, efficient, profitable and lower-risk organization.”
Elta Kolo, grid edge research manager at Wood Mackenzie Power & Renewables, said the latest plan fits squarely within Enel’s transition-focused evolution.
“They’re full force on the energy transition,” she said, adding that the plan also lines up with European policy objectives.
All told, Enel plans to spend €10.6 billion (nearly USD $12 billion) on renewables and add 11.6 gigawatts of capacity through the plan period, an increase from its previous plan that forecasted an added 7.8 gigawatts through 2020. At the same time, Enel will draw down thermal capacity by 7 gigawatts.
The energy company also plans to install 46.9 million smart meters and spend €5.4 billion (over $6 billion) on digitalization. Enel also noted that fiber optics will continue as a priority for Enel X, “as a key enabler of smart city infrastructures and digital platforms,” with joint ventures including Open Fiber in Italy and Ufinet in South America.
"The activity in fiber optics is critical in the digitization efforts in gaining efficiencies across retail, distribution and direct to customer services,” said Kolo. “It will be interesting to see how those joint ventures evolve."
The overall plan falls in line with Enel’s past statements about the energy transition. When it launched, the company fashioned Enel X as “a key component of the group’s strategy to lead the ongoing energy transition,” which Enel said was changing the role of utilities.
Buying up clean energy startups like those rolled into Enel X, the company said, allowed it to “accelerate the transition toward new businesses.”
Kolo said Enel will likely pause on acquisitions for now, focusing capital on the new companies it’s already bought.
“If we look at the €27.5 billion in forecasted gross capex between 2019 and 2021, the majority of that is going to be spend on capital, with only 4 percent allotted for the development of the distributed practice Enel X,” said Kolo. “Although that 4 percent adds up to €1.1 billion, I think Enel will focus that spend on giving the grid edge acquisitions of EnerNOC, Demand Energy and especially eMotorWerks the platform they need to scale across Enel’s global footprint rather than continuing to expand acquisitions.”
The utility has also moved to get rid of “assets no longer fitting with its strategic guidelines.” In its 2017 plan, Enel said it would offload €3.2 billion in existing assets, with a focus on thermal generation and reducing engagement with operating companies in “non-strategic” markets like some areas of South America.