Within the broader ambitions for the positioning of the Group by 2030, the 2021-2023 Business Plan is ideally placed as the first step in a growth path spanning the entire decade. The effect of the ambitions on the long-term Strategic Plan will translate into a decisive increase in both direct and indirect investments to enable the acceleration of decarbonization and electrification trends.
In 2021-2023, the Group expects to directly invest around €40 billion, of which €38 billion through the Ownership business model, mainly on expanding networks and renewables, and around €2 billion through the Stewardship model, while mobilizing €8 billion in third-party investment. These investments will be earmarked for the development of renewable energy, fiber optics, electric mobility and flexibility systems.
This increase in investments of about 36% over the previous plan, considering the analyses of the various possible transition scenarios in the countries in which Enel operates, will put the Group in an advantageous position to respond to any acceleration in the energy transition.
Almost 90% of the €38 billion of investment through the Ownership business model is planned to go to networks and renewables, for a total of €33 billion over the three years, with the remainder allocated to retail businesses and conventional generation. The €2 billion of investment attributable to the Stewardship business model are expected to be directed towards the development of renewable energy, fiber optics, e-mobility and flexibility systems.
As noted earlier, over 90% of Enel’s consolidated investments will be consistent with the United Nations Sustainable Development Goals (SDGs). Furthermore, in line with Enel’s initial estimates, between 80% and 90% of investments on a consolidated basis will be aligned with the European taxonomy criteria thanks to their substantial contribution to climate change mitigation.
With regard to the renewable energy business:
- as part of the Ownership business model, the Group plans to invest a total of €16.8 billion, of which €15.7 billion for the development of over 15.4 GW of new capacity, mainly in countries in which we have an integrated presence;
- as part of the Stewardship business model, the Group plans to mobilize a total of €3.8 billion, of which €500 million in direct investments and €3.3 billion in third-party investments. This investment will produce 4.1 GW of new capacity.
Investments under both business models will enable the Group to develop around 19.5 GW of new renewables capacity over the three years of the Plan.
As a result of the decarbonization strategy that the Group is implementing, the Group’s Scope 1 CO2 emissions (gCO2eq/kWh) will decrease by more than 30% between 2020 and 2023, accompanying the Group towards achievement of its science-based decarbonization goal of an 80% reduction in greenhouse gas emissions by 2030 compared with 2017 levels, as well as the ultimate goal of full decarbonization by 2050.
Global Power Generation’s ordinary EBITDA is expected to reach about €7.7 billion in 2023, up 11% from about €7 billion in 2020. This growth will be driven by the renewables business, whose ordinary EBITDA is expected to rise to about €6.5 billion in 2023 (+€1.8 billion compared with about €4.7 billion in 2020), while ordinary EBITDA from thermal generation is expected to decline to about €1.2 billion in 2023, down from about €2.2 billion in 2020.
In the Infrastructure and Networks business, the Group expects to invest €16.2 billion over the three-year period, bringing average annual investment to around €5.4 billion. Of this, 65% will be dedicated to improving the service quality and grid resilience, about 23% to new connections and about 12% to digitalization. The acceleration of investments is also expected to expand the Group’s RAB by 14%, reaching about €48 billion in 2023 (from about €42 billion in 2020).
At the operational level, the number of end users is expected to increase to around 77 million in 2023, of which 64% equipped with smart meters, from around 74 million in 2020 (of which 60% equipped with smart meters). Furthermore, on the service quality front, the SAIDI and the system average interruption frequency index (SAIFI) are expected to decline by 12% and 14%, respectively. Therefore, the Group’s networks are expected to become more efficient, while net operating expenditure per user will drop to around €34 in 2023, from around €41 in 2020 (a reduction of 17%).
The ordinary EBITDA of Infrastructure and Networks is expected to reach about €9.5 billion at the end of 2023, an increase of 23% compared with about €7.7 billion in 2020, thanks in part to efficiency improvements linked to the implementation of operating platforms.
The remainder is associated with the Customers business, where the value of B2C customers is expected to increase by approximately 28%, while the value of B2B customers is projected to rise by about 45%, thanks to the expansion of the portfolio of free-market customers and developments in the electrification of energy consumption, which will drive demand for “beyond commodity” services.
In the B2C segment, free market sales volumes in Europe are expected to increase by 55% (from about 39 TWh in 2020 to around 62 TWh in 2023). In the B2B segment, the gross margin is expected to increase from around €1.1 billion in 2020 to around €1.4 billion in 2023 (+27%), mainly thanks to “beyond commodity” services. Finally, in the B2G segment, the Group plans to continue supporting the transition of cities towards electric mobility, adding around 200,000 public charging points in 2021-2023 and contributing, with direct and indirect investments, to putting about 5,500 electric buses into circulation (up about 6 times compared with 2020). Street lighting is expected to expand from 2.8 million points in 2020 to about 3.4 million in 2023 (+21%).
At the end of the Plan period, Enel X aims to reach about 780 thousand public and private charging points – including interoperable points – available globally, up from about 186 thousand in 2020 (+4 times), approximately 10.6 GW of demand response capacity, up from the 6 GW offered in 2020 (+1.8 times), as well as 527 MW of storage capacity, up from 123 MW in 2020 (+4.3 times).
Ordinary EBITDA associated with the Customers business is expected to reach €4.5 billion at the end of 2023, compared with €3.4 billion in 2020, with a contribution of about €500 million from B2C, about €400 million from B2B, and about €100 million from B2G. Efficiency improvements, driven by an operating platform that unifies and digitalizes operations for customers, will contribute about €300 million to ordinary EBITDA in 2023.
At the Group level, the aggregate effects of the Ownership and Stewardship business models will have a substantial impact on the creation of value, with ordinary EBITDA expected to reach between €20.7 billion and €21.3 billion in 2023, with a CAGR of 5%-6%. At the same time, ordinary profit is expected to rise to between €6.5 billion and 6.7 billion in 2023, with a CAGR of between 8% and 9%. The Group expects to achieve these results thanks to the continuous optimization of Enel’s finance operations, notably an expansion of sources of sustainable funding, with a consequent reduction in the cost of borrowing.
|Ordinary EBITDA (€ billions)||17.9||18.7-19.3||19.7-20.3||20.7-21.3||+5%/+6%|
|Ordinary profit (€ billions)||5.2||5.4-5.6||5.9-6.1||6.5-6.7||+8%/+9%|
The Group’s net debt is expected to reach €57-58 billion by the end of 2023, driven by the acceleration of investments. In terms of credit metrics:
- the FFO/net debt ratio is expected to be at 26% in 2023, compared with 25% in 2020, driven by the improvement in cash conversion;
- the Group’s net debt/ordinary EBITDA ratio is expected to be 2.7 in 2023;
- thanks to the sustainable financing strategy that the Group is implementing, the cost of the Group’s gross debt is expected to reach 3.3% at the end of the Plan period, compared with 3.7% at the end of 2020.
Currently, sustainable funding sources, including sustainability-linked bond issues, green bonds and sustainable loans, represent about one third of the Group’s total gross debt. These sources are expected to increase as a proportion of total gross debt to about 50% in 2023 and to over 70% in 2030, as the Group aims to progressively refinance maturing issues and raise new funds through sustainable instruments.
The cost of debt of the Group’s sustainability-linked bond issues is on average about 15-20 basis points lower than conventional bond issues, a level that is expected to reduce Enel’s borrowing costs.
Enel has implemented a simple, predictable and attractive dividend policy. Shareholders will receive a fixed dividend per share (DPS) guaranteed over the next three years, with a CAGR of approximately 6%.
The soundness of our business model, combined with confidence in our ability to achieve strategic objectives, enables Enel to pay a guaranteed fixed dividend per share that will increase over the Plan period, reaching €0.43/share in 2023.
|Dividend per share (€)||0.358||0.38||0.40||0.43||~6%|