Strategic Plan

The sustainability strategy developed in recent years and the integrated business model have enabled the Group to create value for all stakeholders, benefiting from the opportunities that are emerging from the energy transition while at the same time limiting the related risks.
The Group has therefore again confirmed its strategic direction based on the trends connected with the energy transition. The use of capital is in fact focused on decarbonization, through the development of renewable generation assets, on the enabling infrastructures linked to the development of networks and on the implementation of platform models, exploiting technological and digital evolution, which will foster the electrification of energy consumption and the development of new services for customers. All of this is aimed at achieving the SDGs of the United Nations. Our ambition is to accelerate the processes related to decarbonization and electrification to enable achievement of the objectives of limiting global warming in line with the Paris Agreement.

The energy transition, impelled by the fight against climate change and characterized by the trends in the decarbonization and electrification of consumption, is revolutionizing not only the energy sector but all economic areas in a world in which the role of electricity will be increasingly significant.
Precisely because of this transformation, investment in the energy sector is expected to surge, tripling its annual value in 2020-2040 compared with 2010-2019.

In this context, it is essential to extend the strategic vision to the medium/long term. Driven by this need, in November 2020 the Group presented a new Strategic Plan with a vision that extends to 2030, placing the acceleration of the energy transition at the center of our strategy, together with sustainable and profitable growth to create significant shared value for customers, society and the environment, as well as an attractive return for shareholders over time.

In order to respond more effectively to the expected acceleration of investments, and to contribute to more rapid achievement of the main objectives necessary to fight climate change, the Enel Group intends to leverage its progress in digitalization as well as its positioning as (i) the leading private operator in the renewables sector worldwide, with 48.6 GW of capacity under management;(1) (ii) the world’s leading private grid operator, with over 74 million end users; and (iii) the private operator with the largest retail customer base worldwide, with around 70 million customers worldwide.

Thanks to platform-based models, in this decade utilities will strengthen their leadership role at the top of increasingly complex systems, which will include a growing number of distributed generation assets with a consequently more active role being played by final customers. A platform-based and multi-layer digital model (discussed in the “Business model” section) that connects data and solutions will therefore be essential to successfully complete this transformation.

Thanks to this comprehensive approach, the Group is ideally positioned to fully benefit from emerging opportunities, capturing the value that will become available to accelerate the energy transition.

In this way, the Group plans to mobilize investments of €190 billion in the period 2021-2030, promoting decarbonization, the electrification of consumption and the development of platforms to create shared and sustainable value for all stakeholders and profitability in the medium and long term. The Group expects to directly invest around €160 billion, of which over €150 billion through the Ownership business model and around €10 billion through the Stewardship business model, while mobilizing another €30 billion from third parties.

This level of investment will support achievement of the long-term ambitions that the Enel Group has identified, namely:

  • becoming a “Renewable Supermajor”, tripling the renewables capacity operated from around 49 GW in 2020 to around 145 GW in 2030, thanks to the planned investments and the joint action of Ownership and Stewardship models, to reach a global market share of more than 4%;
  • becoming a world leader in networks for reliability, quality of service and efficiency. The investments are intended to make grids more resilient and increase the degree of digitalization to enable more effective and efficient management and transform distributors into real system operators;
  • becoming the reference energy partner for all customer segments (domestic customers, offices, industrial customers, cities, etc.), promoting decarbonization, the electrification of consumption and circularity, enabling the creation of benefits in terms of emissions, costs and efficiency.

(1) In addition to installed capacity, this includes the capacity of associates or joint ventures (about 3.6 GW).

Long-term planning

Consistent with the above vision, as regards the approximately €150 billion of investments planned in the Ownership business model, almost half will be dedicated to Global Power Generation, with a total of around €65 billion allocated to renewable energy, which is expected to enable the Group to add some 75 GW of renewables capacity, balanced between solar and wind, to the current consolidated total of 45 GW, for about 120 GW of total renewables capacity by 2030 (2.7 times current levels). The investments will mainly be focused on the countries in which the Group has an integrated presence, but the involvement of a variety of areas will enable natural derisking of the volatility of renewable resources. To achieve this, the Group will capitalize on a pipeline of renewable projects (some 206 GW in December 2020), combined with a global platform-based model for business development, engineering and construction and operation and maintenance activities. In addition, the Group plans to invest an additional €5 billion in the hybridization of renewable sources and storage systems, the potential of which is expected to reach around 20 TWh by 2030.

 

Significant opportunities will also come from the green hydrogen segment, in which the Group plans to integrate electrolyzers into renewables plants that produce electricity for direct sale or for dispatching services, while also selling green hydrogen to industrial customers. The Group plans to increase its green hydrogen capacity to over 2 GW in 2030.

The increase in renewables capacity and the simultaneous reduction in thermal capacity, which includes the early closure of coal plants by 2027, represent the two main strategic levers that the Group intends to use to decarbonize its generation mix.

In 2019, Enel, responding to the call for action from the United Nations, signed a commitment to act to limit the increase in global temperatures to 1.5 °C and be net zero across its entire value chain by 2050, including both direct (Scope 1) and indirect (Scope 2 and 3) emissions.

This objective requires not only a sharp acceleration in renewables and energy efficiency, but also a complete rethinking of the economic model and investment planning. With regard to the latter, in particular, future investments will be aimed at achieving the objectives that Enel has set itself in terms of reducing greenhouse gas emissions in order to limit the increase in global temperatures to 1.5 °C. With particular reference to investment planning for the next 10 years, the Strategic Plan presented by Enel in November 2020 describes how the massive investments envisaged through the Ownership business model are consistent with the objective of reducing direct emissions to 82 gCO2eq/kWh, an objective that has been certified by the Science Based Targets initiative (SBTi) as in line with the 1.5 °C scenario set out in the Paris Agreement. In particular, investments in new renewables capacity will enable the achievement of certain Key Performance Indicators (KPIs): renewable sources will account for more than 80% of total capacity and about 80% of electricity generation in 2030. This will allow the share of “emission-free” generation to grow from 65% in 2020 to about 85% in 2030 and, consequently, to cut direct emissions from 214 gCO2eq/kWh in 2020 to 82 gCO2eq/kWh in 2030.

The goal of achieving total decarbonization by 2050 requires not only a major acceleration in renewables and energy efficiency, but also a complete rethinking of the economic model in terms of circularity. It is estimated that about 45% of global emissions are currently associated with the extraction and production of materials, manufacturing, and disposal. This is an area in which action can be taken to achieve full decarbonization, as well as positively contributing to solving a series of further environmental problems connected with resource consumption and waste generation.
Accordingly, Enel is acting on the main lever of direct emissions and at the same time rethinking its business model in a broader sense to act on all other dimensions.

NET-ZERO COMMITMENT
Enel, as a signatory of the Business Ambition for 1.5 °C” campaign promoted by the United Nations and other institutions, is committed to setting a long-term goal to achieve net-zero emissions across the entire value chain by 2050, including both direct emissions (Scope 1) and indirect emissions (Scope 2 and 3), together with science-based targets in all relevant areas and in line with the criteria and recommendations of the ScienceBased Targets initiative (SBTi).
  GHG Target Scope Climate scenario Main drivers and actions to achieve target
Short term (2023) 148 gCO2eq/kWh by 2023 100% of Scope 1 GHG emissions(1) 1.5 °C (2) Gradual phase out of 90% of coal-fired capacity in 2021-2023 period (percentage weight of coal capacity in total consolidated capacity reduced from 10% in 2020 to about 1% in 2023)Invest €16.8 billion to accelerate the development of renewable energy by installing 15.4 GW of new renewables capacity in 2021-2023 period, reaching 60 GW of consolidated renewables capacity by 2023
Medium term (2030) 82
gCO
2eq/kWh by 2030
(80% reduction compared with 2017)
100% of Scope 1 GHG emissions (1) 1.5 °C,
SBTi certified
Accelerate the exit from coal to 2027 from 2030 (phasing out of 16 GW of coal capacity over 2017-2027)Invest €65 billion to accelerate the development of renewable energy by installing 75 GW of renewables capacity in 2021-2030 period, reaching 120 GW of consolidated renewables capacity by 2030 (3 times installed renewables capacity in the 2017 base year)
  21.2 MTonCO2eq 
(16% reduction compared with 2017)
100% of Scope 3 emissions connected with sale of natural gas on end-user market (Scope 3, use of products sold) 2 °C,
SBTi certified
Promote the switch of customers from gas to electricity (especially residential customers)Optimization of the gas portfolio of customers (especially industrial customers)
Long term (2050) ~0
CO
2eq/kWh by 2050
100% of Scope 1 GHG emissions(1) (3) 1.5 °C (2) Aim for the gradual elimination of thermal capacity and achieve a 100% renewable energy mix

(1) Although Enel constantly monitors Scope 2 emissions and is actively committed to reducing them, the Group has not set a specific reduction target, as they represented less than 4% of total Scope 1 and Scope 2 emissions in 2017 (base year of the target certified by SBTi). Therefore they are considered marginal and fall within the exclusion criteria under the SBTi methodology, which sets a margin of 5% on total Scope 1 and Scope 2 emissions.
(2) The target could not be officially validated by SBTi because the targets must cover a minimum of 5 years and a maximum of 15 years from the date the target is presented to SBTi for official validation. However, they meet the 1.5 °C path established by the SBTi for the electricity services sector (sectoral decarbonization approach, SDA).
(3) In compliance with the Group’s net-zero commitment, which comprises both direct and indirect emissions, targets will be set for Scope 2 and Scope 3 emissions in accordance with the Net-Zero Standard under development by SBTi.

Investments related to the decarbonization of the generation mix, together with those related to the digitalization and efficiency of the distribution grid, as well as to the offer of new services to promote the electrification of consumption (such as electric mobility or demand response services), will all contribute to the fight against climate change (SDG 13). In fact, Enel expects that approximately 90% of consolidated investments in 2021-2023 will be aimed at achieving the objectives set by SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation and Infrastructure) and SDG 11 (Sustainable Cities and Communities), thereby all contributing to the fight against climate change (SDG 13 - Climate Action). Furthermore, it is estimated that between 80% and 90% of these investments will be aligned with the criteria of the European taxonomy, given the substantial contribution to climate change mitigation.
In particular, it is estimated that about 46% of investments in 2030 relating to the Ownership business model will be dedicated to the Infrastructure and Networks business, with the aim of obtaining improvements in terms of service quality and grid resilience, increasing the number of connections and increasing the digitalization of the infrastructure. Thanks to these initiatives, the Group expects to expand the number of end users to about 90 million, all equipped with smart meters, from the current 74 million, of which 60% are equipped with smart meters. The Group’s RAB (Regulatory Asset Base) will reach around €70 billion in 2030, up about 70% from current levels (around €42 billion). These results will benefit from our unique operational dimensions, a very high level of expertise in digitalization and the significant value of intellectual property. The extensive use of digital platforms in the management of assets and end users should reduce operating expenses per user by about 27% in real terms compared with 2020.

The remainder of the investments related to the Ownership business model, about 5%, will be dedicated to the Customers sector, and it is expected that, in 2030, it will produce a net increase in customer value, i.e. the annual gross margin per customer. The Group will play an enabling role in the electrification process, accelerating the transition of customers towards sustainability and energy efficiency, combining its traditional range of services with “beyond commodity” services. This business will benefit from the largest customer base globally, digital platforms and a growing integrated portfolio of products and services. The Group’s strategy will encompass all segments: B2C (business to customer), B2B (business to business) and B2G (business to government).

With regard to the Stewardship business model, in 2021-2030 the Group expects to invest approximately €10 billion directly, while at the same time mobilizing some €30 billion in third-party investments, for a total of around €40 billion, mainly in renewable energy, fiber optics, electric mobility and flexibility services.

In particular, in the Customers sector, the two business models will promote customer value in all segments through combined product offering:

  • in the B2C segment, the Group will promote the electrification of the customer base through an integrated offer of power and services offered by Enel X. The volume of electricity sold on the free market in Europe is expected to increase by 2.5 times compared with 2020, reaching around 100 TWh in 2030 compared with 39 TWh in 2020;
  • in the B2B segment, the Group intends to be a leading energy partner for global and local companies on their path towards sustainability and energy efficiency. Traditional products, such as PPAs, will be combined with new services, including flexibility services, solutions for electric mobility and the enhancement of circularity. The Group’s gross margin in B2B operations in Europe is expected to reach €1.9 billion in 2030, compared with about €1.1 billion in 2020, driven by “beyond commodity” services;
  • in the B2G segment, the Group will support city governments in achieving ambitious long-term decarbonization and sustainability objectives, through the electrification of public transport, supplementing the product range with digital mobility services (such as city analytics), intelligent lighting and other advanced services. By 2030, the Group expects to increase the number of electric buses to over 10,000 (12 times the number in 2020), while public lighting points are expected to exceed 4 million in 2030, up from 2.8 million in 2020 (up 1.5 times). In addition, charging points for electric vehicles are expected to increase to over 4 million and demand response solutions to grow by more than three times, to around 20 GW compared with about 6 GW in 2020.

Across the segments, the progressive digitalization of customer relationships, supported by the evolution of digital management platforms, should produce a substantial reduction in costs in real terms.

The strategic vision of an action based on sustainability, integrated along the entire value chain, will be rewarded by an increase in the value generated by the Group within the “sustainability = value” strategic paradigm. It is expected that the Group’s ordinary EBITDA will achieve a CAGR of 5%-6%, while ordinary profit will show a CAGR of 6%-7% between 2020 and 2030.
By promoting decarbonization, electrification and platform migration processes, the Group also plans to create shared and sustainable value for all stakeholders. Examples include:

  • over €240 billion of gross domestic product in the countries in which the Group operates, through local investments in decarbonization and electrification;
  • a tripling of service quality levels, with the system average interruption duration index (SAIDI) falling to about 100 minutes in 2030 from 258.9 minutes in 2020.

People centricity is one of the pillars of Enels sustainability strategy.
The Enel Group promotes the economic and social growth of the local communities in which it operates, strengthening its commitment to supporting sustainable development: 5 million beneficiaries of quality education in 2015-2030 (SDG 4); 20 million beneficiaries of clean and accessible energy in 2015-2030 (SDG 7.1); 8 million beneficiaries of decent work and lasting, inclusive and sustainable economic growth in 2015-2030 (SDG 8).
We pay great attention to our people, developing plans designed to strengthen their roles and skills and provide the tools for managing the energy transition, with clear and precise goals in terms of performance assessment and business climate. We work to promote upskilling and reskilling programs as well as the development of digital skills. The Group also aims to promote diversity and inclusion by having 50% female participation in selection processes by 2023.
These effective objectives and actions are also confirmed by the signing in July 2019 of the “
just transition commitment promoted by the United Nations.
Unwavering attention continues to be devoted to workplace health and safety, to promoting a sustainable supply chain, to forging an increasingly integrated governance structure and to managing environmental impact through the reduction of atmospheric emissions and water consumption and the promotion of biodiversity.
Finally, technological transformation cannot be divorced from serious concerns about cyber security, where the Group confirms and expands its objectives for disseminating cutting-edge solutions supported by associated verification measures (ethical hacking, vulnerability assessment and cyber exercising involving plants and other industrial sites), and fostering an effective IT security culture.