Significant events in 2020

Brindisi plant - Ash dispute

With regard to the criminal investigation initiated by the Public Prosecutor’s Office of the Court of Lecce in 2017 concerning the use of fly ash in the cement industry, the Brindisi power plant was involved in a criminal investigation that resulted in the issue of a preventive seizure order that allowed operation of the plant subject to certain technical requirements. The order also provided for the seizure of Enel Produzione assets and receivables in an amount of about €523 million. On August 1, 2018, the Lecce Public Prosecutor lifted its seizure of the Brindisi plant, with the consequent termination of the judicial custody/administration of the facility and the restitution of the other seized assets to Enel Produzione, on the basis of the report prepared by the experts appointed by the investigating magistrate at the Court of Lecce, which fully confirmed the appropriateness of the operation of the plant.
However, the preliminary investigation is continuing both against the accused individuals and the company pursuant to Legislative Decree 231/2001.
On January 9, 2020, the original notices of the preliminary hearing set for January 29, 2020 were received. Due to a number of irregularities in the notices, the hearing was initially postponed until April 8, 2020. However, owing to the measures imposed to counter the COVID-19 pandemic, the hearing was again postponed until June 10, 2020 and then again until November 20, 2020, as a result of the impossibility of conducting the argument phase with the necessary guarantees provided for in health and safety guidelines. This hearing was also not held due to the persistence of the health emergency. In any event, the Region of Puglia and the City of Brindisi filed to join the proceeding as civil plaintiffs, the admissibility of which was discussed at the hearing of March 4, 2021. Following the discussion, the court did not issue a ruling and adjourned the hearing to April 21, 2021.

Criminal proceedings connected with Pietrafitta plant

With regard to the Pietrafitta thermal generation plant, the Perugia Public Prosecutor had started an investigation involving a number of officers of Enel Produzione SpA, as well as certain third parties who are today owners of the land adjacent to the plant – formerly Enel’s – on which ash was found.
The alleged offenses are as follows: failure to restore the site (Article 452-terdecies of the Italian Criminal Code) for a number of areas affected by the spillage of ash produced up to the 1980s by the Pietrafitta power plant and ash from other company plants, and other areas where contamination with polychlorinated biphenyls (“PCBs”) was found associated with decommissioned mining equipment; environmental pollution (Article 452-bis of the Criminal Code) connected with the PCB contamination, with respect to which Enel Produzione SpA was also charged with administrative liability pursuant to Legislative Decree 231/2001.
In the summer of 2019, Enel Produzione SpA filed a petition for dismissal, which was accepted by the prosecutor for the crime of environmental pollution, with consequent dismissal of the charge pursuant to Legislative Decree 231/2001.
A number of environmental associations filed an objection to the dismissal, and on February 21, 2020 a hearing was held before the investigating magistrate, which ended with dismissal of the charges (May 28, 2020), which, in brief, accepted all of Enel’s defenses and confirmed the dismissal of any other possible charges – even if not brought by the Prosecutor’s Office – relating to the possible health effects caused by the presence of the ash.
Accordingly, the criminal proceedings are continuing with sole regard to the crime of failure to restore the site, with respect to which in December 2019 the Enel Produzione SpA employees presented an application for a stay of proceedings with probation, consisting in the implementation of a program agreed with the Prosecutor’s Office for proportionate and fair restoration with respect to the complaints filed against the defendants. The probation hearing was held on October 29, 2020, when the investigating magistrate of the Court of Perugia granted the request for probation. The hearing was then postponed to February 18, 2021, when the program proposed by Enel Produzione was approved, setting a deadline of nine months for its execution.

Connection to the grid of São Gonçalo, the largest photovoltaic plant in South America

On January 13, 2020 Enel Green Power Brasil Participações Ltda (EGPB) started operations to connect the 475 MW section of São Gonçalo photovoltaic plant, located in São Gonçalo do Gurguéia, in Brazils northeastern state of Piauí, to the grid. The construction of the 475 MW section of the solar plant involved an investment of around R$1.4 billion, equivalent to approximately $390 million. Once fully up and running, the 475 MW section of the plant will be able to generate over 1,200 GWh per year while avoiding the emission of over 600,000 metric tons of CO2into the atmosphere.

Funac and the ICMS tax relief

With Law 20416 of February 5, 2019, the state of Goiás shortened from January 27, 2015 to April 24, 2012 the period of operation of the Funac fund (established with Law 17555 of January 20, 2012) and the tax benefit system (created with Law 19473 of November 3, 2016) that allowed Celg Distribuição SA to offset payment obligations in respect of the ICMS - Imposto sobre Circulação de Mercadorias e Serviços (tax on the circulation of goods and services). On February 25, 2019, Celg-D appealed the provisions of Law 20416 before the Court of the state of Goiás, filing a writ of mandamus and an accompanying petition for a precautionary suspension, which was denied on a preliminary basis on February 26, 2019. Celg-D appealed this ruling and the Court of the state of Goiás allowed the appeal on June 11, 2019. On October 1, 2019, the Court of the state of Goiás issued an order revoking the precautionary measure previously granted in favor of Celg-D and, accordingly, the effects of the law were restored as from that date. Celg-D filed an appeal against this decision, claiming that the right to guarantee tax credits has both a legal and contractual basis and that, therefore, the actions that the state of Goiás has taken in order to fully suspend the application of these laws are patently unfounded. On October 2, 2019, the appeal filed by Celg-D was denied. On November 21, 2019, Celg-D challenged this decision before the Superior Tribunal de Justiça (STJ). On February 27, 2020, the Tribunal de Justiça (TJ) declared inadmissible the appeal by Celg-D, which on May 5, 2020 appealed this decision before the STJ. These proceedings are under way. It is important to note that the coverage of the Funac fund is provided for in the agreement for the acquisition of Celg-D by Enel Brasil SA.
On April 26, 2019, Law 20468 was promulgated. With the law, the state of Goiás fully revoked the tax relief referred to above. On May 5, 2019, Celg-D filed an ordinary petition and a request for a precautionary suspension against the state of Goiás to contest this law. On September 16, 2019, the Court of the state of Goiás denied the petition for precautionary relief, citing the absence of any danger in delay, a requirement for the granting of precautionary relief. On September 26, 2019, Celg-D filed an appeal (agravo de instrumento) before the Court of the state of Goiás against the decision denying the precautionary suspension, claiming that the repeal of the tax credit law is unconstitutional to the extent that these credits were established in accordance with applicable law and constitute acquired rights. As part of the same appeal proceeding, the state of Goiás initiated an action to challenge the admissibility of the Celg-D petition, which was granted on a preliminary basis and subsequently challenged by Celg-D. On September 7, 2020, the state of Goiás submitted its reply to the precautionary petition filed with the appeal.
Moreover, the Brazilian association of electricity distribution companies (ABRADEE) had filed an action for a ruling on constitutionality with the Constitutional Court of Brazil (Supremo Tribunal Federal) with regard to Laws 20416 and 20468. This was denied on June 3, 2020 with an individual Decision by the judge-rapporteur for lack of formal requirements. On June 24, 2020, the ABRADEE filed an appeal (agravo regimental) against that decision. On September 21, 2020, the Supreme Court of Brazil, without going into the merits of the case, rejected ABRADEE’s appeal for formal reasons and the proceeding was concluded. On October 15, 2020, ABRADEE filed an appeal against this decision.

Hydroelectric concessions

Italian regulations governing large-scale hydroelectric concessions were recently modified by the “Simplifications Decree” (Decree Law 135 of 2018 ratified with Law 12 of February 11, 2019), which introduced a series of innovations regarding the granting of such concessions upon their expiry, or in the event of forfeiture or renunciation, and the valorization of the assets and works connected to them to be transferred to the new concession holder. This legislation also introduced a number of changes in the matter of concession fees as well as an obligation to provide free power to public bodies (220 kWh of power for each kW of average nominal capacity of the facilities covered by the concession).
In implementation of this national law and under specific enabling authority, various regions (Lombardy, Piedmont, Emilia-Romagna, Friuli-Venezia Giulia and the Province of Trento) enacted regional laws.
In the view of the Company, both the national law and the regional implementing legislation violate Community principles and constitutional principles such as property rights, the principle of legal certainty, the principle of proportionality and legitimate expectations and the freedom of enterprise.
In particular, the rules do not expressly provide for the transfer of the business unit from the outgoing to the successor concession holder, and also establish inadequate criteria for the valorization of the works to be transferred, which threatens to create what is essentially a mechanism for expropriation, in violation of constitutional principles.
The provision for the payment of the new fee and the obligation to supply free electricity for the existing holders of current concessions entails the introduction in the concession relationships of an unexpected and unreasonable element of significant financial imbalance, in clear violation of the principle of reasonableness and proportionality of the fee that constitutional case law has established must be respected in the event that changes worsening the position of a party are introduced in the context of long-term relationships.
The government challenged a number of the regional implementing laws before the Constitutional Court, claiming the violation of various constitutional principles.
The Company participated in the aforementioned proceedings before the Constitutional Court (in July 2020 in the proceeding involving the regional law of Lombardy and in February 2021 in the proceeding involving the provincial law of Trento and the regional law of Piedmont) and also challenged the first implementing acts issued under the individual regional laws before the competent judicial authorities (Regional Administrative Court and Regional Water Resources Court) asking that they be declared void and raising the question of constitutional illegitimacy of both the national law and the regional laws.
The trade associations (Utilitalia and Elettricità Futura) also presented briefs in the context of the proceedings brought before the Constitutional Court by the government. In addition, other sector operators have proposed legal actions against the implementing measures issued under the individual regional laws, requesting that they be declared void.

Enel reaches 65% stake in Enel Américas

On April 3, 2020, Enel announced its intention to increase its shareholding in its Chilean listed subsidiary Enel Américas SA by up to an additional 2.7% in order to reach the maximum shareholding currently permitted under the bylaws of Enel Américas, equal to 65%. To this end, Enel entered into two new share swap agreements (the “share swap transactions”) with a financial institution. On May 28, 2020, following the settlement of two share swap transactions entered into in June 2019 with a financial institution, the stake held by Enel SpA in Enel Américas amounted to 62.3%. Subsequently, on August 18, 2020, Enel SpA increased its holding in Enel Américas to 65% of that company’s share capital, following the settlement of the two share swap transactions entered into in April 2020.
The above transactions are in line with the announced goal of the Enel Group to increase its shareholding in the Group companies operating in South America, thus reducing the presence of non-controlling shareholdings.

Early closure of Unit 2 of the Brindisi plant is authorized

On May 28, 2020, Italy’s Ministry for Economic Development gave Enel the green light for the early closure of Unit 2 of the Federico II thermal power plant in Brindisi as from January 1, 2021, following the Company’s request presented in January 2020. This is the first of the plant’s four coal-fired generation units set to be closed definitively. In line with Enel’s strategy to decarbonize its electricity generation mix and with the objectives of Italy’s Integrated National Energy and Climate Plan, in recent months the Company has started the permitting process for the conversion of the site into a high efficiency gas-fired plant. This process is necessary to ensure the complete closure of the Brindisi coal plant by 2025, while also guaranteeing the security of the national electricity grid. In addition, Enel is developing projects for the installation of photovoltaic capacity within the site, as part of the broader development initiative for the installation of new renewables capacity throughout Italy.
The early closure of Unit 2 of the Federico II plant in Brindisi is part of Enel’s commitment to the energy transition towards an increasingly sustainable model.

The Enel Group accelerates the closure of its last coal plant in Chile

In line with its decarbonization strategy, the Enel Group closed Unit I of the Bocamina plant in January 2021 and expects to close Unit II of the same plant by May 31, 2022, simultaneously planning the completion of 2 GW of renewables capacity in the country through Enel Green Power Chile. More specifically, on May 28, 2020 Enel SpA announced that its Chilean subsidiaries Enel Chile SA and Enel Generación Chile SA had informed the market of the decision of their respective Boards of Directors to expedite the closure of the Bocamina coal-fired plant located in Coronel. Specifically, Enel Generación Chile asked the Chilean National Energy Commission (CNE) to authorize the termination of operations at Units I (128 MW) and II (350 MW) of the plant by the scheduled dates. The closure, which is subject to that authorization, has been accelerated compared with the original plans of Enel Generación Chile in the national decarbonization plan signed with the Ministry of Energy of Chile on June 4, 2019, a plan that provided for the closure of Bocamina I by the end of 2023 and of Bocamina II by 2040. The Enel Group will ensure the re-employment of the workers at Bocamina within the Group, and at the same time will evaluate the possible conversion of the plant’s structures.

Enel Board authorizes the issue of hybrid bonds in the maximum amount of €1.5 billion

On June 10, 2020, the Board of Directors of Enel SpA, meeting under the chairmanship of Michele Crisostomo, authorized the issue by Enel, by December 31, 2021, of one or more hybrid non-convertible subordinated bonds in the maximum amount of €1.5 billion, to be placed exclusively with EU and non-EU institutional investors, including through private placements. The new issues are intended to refinance outstanding hybrid bonds for which early repayment options may be exercised as from this year, thus allowing the Enel Group to maintain a financial structure that is consistent with the assessment criteria of rating agencies and to actively manage maturities and the cost of debt.
The Board of Directors has also delegated the Chief Executive Officer with the task of deciding the issue of the new bonds and their respective characteristics, and therefore to establish, for each issue, times, amount, currency, interest rate and further terms and conditions, as well as placement methods and any listing on regulated markets or multilateral trading facilities, taking account of developments in market conditions.

Enel included in MSCI ESG Leaders Indexes for the first time

On June 17, 2020, Enel was included for the first time in the MSCI ESG Leaders Indexes following the annual review carried out by the leading Environmental, Social and Governance (ESG) research and index provider MSCI of its sustainability indices. This capitalization-weighted index series provides exposure to companies with high ESG performance relative to their sector peers. In addition, Enel has been confirmed in the prestigious FTSE4Good Index series and Euronext Vigeo Eiris 120 Indices.
The indices, designed for institutional investors willing to integrate ESG factors into investment decision processes, uses a best-in-class approach by only selecting companies with the highest MSCI ESG ratings, which measure a company’s resilience to long-term, financially-relevant ESG risks. In 2019 Enel received for the first time the highest MSCI ESG rating (“AAA”), paving the way for the Company’s inclusion this year in the MSCI ESG Leaders Indexes, the most prestigious among MSCI’s index series measuring companies’ sustainability performance. In addition, the inclusion is attributable to Enel’s continued investments in renewables and to its ambitious carbon emissions reduction target aligned with the Paris Agreement, under which the Company commits to a 70% reduction in its direct greenhouse gas emissions per kWh by 2030 with respect to 2017 levels.

Enel reaches 64.9% of the share capital of Enel Chile

On July 7, 2020, Enel SpA announced that it had increased its stake in its Chilean subsidiary Enel Chile SA to 64.9% of the companys share capital, settling two share swap transactions entered into in December 2019 with a financial institution to acquire up to 3% of the share capital of Enel Chile, as announced to the financial markets at the time.

Enel accelerates energy transition towards decarbonization

Enel, in its role as a leader of the energy transition, has placed decarbonization and growth of renewables around the world at the center of its strategy. The 2020-2022 Strategic Plan provides for a significant increase in installed renewables capacity, from the current 46 GW to 60 GW at the end of 2022, and the progressive reduction of coal-fired capacity and generation. More specifically, it is expected that such capacity will decrease by more than 40% in 2022 compared with 2019. In order to manage renewable and thermal generation assets around the world in an integrated manner and guide and accelerate its transformation, Enel created a new Business Line in 2019.
In this context, on July 2, 2020 Enel began restructuring the activities associated with the energy transition process, which will involve thermal generation plants in all the geographical areas in which the Group operates. The consequent revision of processes and operating models will require changes in the roles and skills of employees, which the Group intends to implement with highly sustainable plans based on redeployment programs, with major upskilling and reskilling plans and voluntary individual early retirement agreements that will involve around 1,300 people worldwide.
The restructuring plan will be implemented with procedures and timing that will differ in the various countries in which we are present, initiating the appropriate dialogue with local communities and the competent institutions and social partners.

Enel launches sustainability-linked share buyback program supporting its 2020 Long-Term Incentive Plan

On July 29, 2020, the Board of Directors of Enel, implementing the authorization granted by the shareholders at their meeting held on May 14, 2020 and in compliance with the terms disclosed to the market, approved the launch of a share buyback program involving 1.72 million shares (the “Program”), equal to about 0.017% of Enel’s share capital.
The purpose of the Program, which ran from September 3 to December 7, 2020, was to support the 2020 Long-Term Incentive Plan for the management of Enel and/or its subsidiaries pursuant to Article 2359 of the Italian Civil Code (2020 LTI Plan), which was also approved by the shareholders at their meeting held on May 14, 2020.
The Program involved the purchase of a total of 1,720,000 Enel shares (equal to 0.016918% of share capital), at a volume-weighted average price of €7.4366 per share for a total of €12,790,870.154.
Considering the treasury shares already held in its portfolio, on October 28, 2020, Enel holds a total of 3,269,152 treasury shares, equal to 0.032156% of share capital.

Enel issues perpetual hybrid bonds

On September 1, 2020, Enel successfully launched a euro-denominated, non-convertible bond for institutional investors on the European market in the form of a subordinated perpetual hybrid bond, with an aggregate principal amount of €600 million. The transaction was oversubscribed by more than six times, with total orders of more than €3.7 billion.
At the same time, Enel launched of a non-binding voluntary offer to repurchase, and subsequently cancel, its £500 million hybrid notes due in 2076 with the goal of repurchasing a total of £200 million. As a result of the transaction, hybrid bonds with a total nominal value of £250 million were repurchased in cash.

Enel Board of Directors votes to sell 40%-50% of OpEn Fiber to Macquarie

On September 17, 2020, the Board of Directors of Enel SpA received notice of a binding offer submitted by Macquarie Infrastructure & Real Assets (MIRA) for the acquisition of the 50% stake held by Enel in OpEn Fiber SpA.
The offer provides for a price of about €2,650 million, net of debt, for the purchase of the investment, with adjustment and earn out mechanisms.
Enel’s Board of Directors acknowledged that it received the notice and is awaiting updates on the details that may emerge following an examination with MIRA of the details of the offer.
On December 17, 2020, the Board of Directors of Enel SpA, meeting under the chairmanship of Michele Crisostomo, resolved to initiate the procedures for the sale of a stake of between 40% and 50% of the share capital of OpEn Fiber SpA to MIRA, giving the CEO specific authority to pursue the transaction.
Based on MIRA’s final offer, the price for the sale of 50% of OpEn Fiber is equal to €2,650 million and includes the transfer to MIRA of 100% of Enel’s portion of the shareholder loan granted to OpEn Fiber, including accrued interest, amounting to an estimated €270 million at June 30, 2021, the date by which the transaction is expected to close. Should 40% of OpEn Fiber be sold, as MIRA’s final offer envisages a proportional reduction of the above values, the price would amount to €2,120 million, Enel’s portion of the shareholder loan granted to OpEn Fiber being transferred to MIRA would be equal to 80%, with an estimated value at June 30, 2021 of around €220 million. The above price does not include the potential effects of the earn-out mechanisms described below, as they cannot currently be quantified.
The final offer received from MIRA envisages that, should the transaction close after June 30, 2021, the above price will be increased at a rate of 9% per year calculated from July 1, 2021 and up to the closing itself. The offer also provides for the payment of two different earn-outs in favor of Enel related to future and uncertain events. One earn-out is linked to the positive conclusion, with a final judgment, of the dispute initiated by OpEn Fiber against TIM SpA for anticompetitive conduct by the latter. Specifically, this earn-out will pay Enel 75% of any net damages that OpEn Fiber should subsequently collect and is expected to be paid to Enel based on the dividends distributed by OpEn Fiber to its shareholders for any reason. The earn-out will be calculated in proportion to the actual stake sold by Enel to MIRA.
The other earn-out is related to the creation of value deriving from the possible implementation of the so-called “single broadband network” between OpEn Fiber and TIM. It is based on investor returns and envisages that, should MIRA’s stake in OpEn Fiber be transferred, resulting in a return on investment (IRR) greater than 12.5%, Enel will be paid 20% of the amount achieved by MIRA exceeding the above threshold, up to a maximum of €500 million should 50% of OpEn Fiber be sold and €400 million should 40% of the company be sold.
The signing of the purchase agreement between the parties is subject to certain conditions, including:

  • OpEn Fiber issuing an authorization to MIRA to share the information acquired during the due diligence process with a small number of potential co-investors in order to syndicate the price;
  • the non-exercise of the right of pre-emption that the OpEn Fiber bylaws give CDP Equity SpA (CDPE, which is in turn 50% shareholder of OpEn Fiber);
  • in the event of the sale of 50% of OpEn Fiber, the agreement between MIRA and CDPE of the modification of certain aspects that currently regulate the governance of OpEn Fiber.

The closing of the transaction is in turn subject to a series of conditions, including:

  • OpEn Fiber’s lending banks obtaining the waivers required for the transfer of Enel’s stake in OpEn Fiber to MIRA;
  • obtaining various administrative authorizations needed for the transfer of Enel’s stake in OpEn Fiber to MIRA, specifically relating to the golden power procedure with the Presidency of Italy’s Council of Ministers and the authorization to be issued by the EU Antitrust Authority.

Enel Group begins reorganization of renewables business in Central and South America

On September 22, 2020, Enel SpA announced that the Board of Directors of its Chilean listed subsidiary Enel Américas SA had resolved to commence the process to approve a merger as part of a corporate reorganization of the Enel Group’s shareholdings, with the intention of integrating the non-conventional renewable energy businesses of the Enel Group in Central and South America (except Chile) into Enel Américas. The transaction, consistent with Enel’s strategic objectives, will further simplify the Group’s corporate structure and align the structure of Enel Américas’ business with the rest of the Group.
The corporate reorganization provides for the integration into Enel Américas of the current non-conventional renewable assets of the Enel Group in Argentina, Brazil, Colombia, Costa Rica, Guatemala, Panama and Peru, through a series of transactions culminating in a merger of those assets into Enel Américas. The merger, which will increase Enel’s stake in Enel Américas, will also involve the amendment of the latter’s bylaws by its Shareholders’ Meeting to remove the existing limitation whereby a single shareholder may not hold more than 65% of the voting rights. That Shareholders’ Meeting was also asked to approve the merger as a transaction with related parties in compliance with applicable Chilean law.
Enel has given Enel Américas a favorable preliminary opinion on the reorganization provided that it:

  • is carried out on market terms and conditions;
  • ensures that Enel Américas has a financial position that supports the future development of the renewables business and the growth prospects of the company.

The favorable preliminary opinion is subject to an assessment by Enel of the final terms and conditions to be submitted for approval of the shareholders of Enel Américas.
On December 18, 2020, Enel SpA announced that the Extraordinary Shareholders’ Meeting of the listed Chilean subsidiary Enel Américas had adopted resolutions on that date concerning the implementation of the corporate reorganization intended to integrate the non-conventional renewable business of the Enel Group in Central and South America (excluding Chile) into Enel Américas.
On December 17, 2020, Enel announced that as part of the corporate reorganization intended to integrate the non-conventional renewable energy business of the Enel Group in Central and South America (excluding Chile) into the listed Chilean subsidiary Enel Américas SA, it would launch a voluntary partial public tender offer for the acquisition of the shares and American Depositary Shares (ADSs) of Enel Américas representing up to a maximum of 10% of its current share capital (the Offer), at a price of 140 Chilean pesos per share (or its equivalent in US dollars at the time of settlement in the case of ADSs). The Offer was launched in March 2021 (for more details, please see note 55 to the consolidated financial statements). The Offer is also subject to Chilean, US and any other applicable regulations.
As announced on November 13, 2020, the Extraordinary Shareholders’ Meeting of Enel Américas was called for December 18, 2020 to resolve on (i) the merger of EGP Américas SpA into Enel Américas with a consequent increase in the share capital of Enel Américas in support of the merger, and (ii) the amendment of the bylaws of Enel Américas in order to remove the limits that currently do not allow a single shareholder to own more than 65% of shares with voting rights. The Offer is an opportunity for non-controlling shareholders who wish to reduce their ownership interest in Enel Américas after the merger is completed. In this respect, the Offer provides shareholders an opportunity to sell shares for more than the price of 109.8 Chilean pesos per share that Enel Américas will offer in accordance with Chilean law to dissenting shareholders who intend to exercise their withdrawal rights. The Offer will not be launched if the merger of EGP Américas SpA into Enel Américas and the amendment of the bylaws of Enel Américas do not take effect by December 31, 2021. The total price to be paid under the Offer, which is expected to amount to up to €1.2 billion (calculated at the exchange rate prevailing on December 16, 2020 of 895 Chilean pesos per euro), will be funded through internally generated cash flow and existing borrowing capacity.

Enel successfully launches a £500 million “Sustainability-Linked Bond”, the first sterling-denominated bond of its kind

On October 13, 2020, Enel Finance International NV placed the sterling market’s first “Sustainability-Linked Bond”, which is linked to the achievement of Enel’s sustainable objective for consolidated installed renewables capacity as a percentage of total consolidated installed capacity, in line with the commitment to achieving the United Nations Sustainable Development Goals.
The issue of £500 million (about €550 million), which is guaranteed by Enel, was targeted at institutional investors and was oversubscribed by almost six times, with total orders of approximately £3 billion and the significant participation of Socially Responsible Investors (SRI), allowing the Enel Group to continue to diversify its investor base.

Enel signs contract for a €1 billion “Sustainability-Linked Loan”

On October 16, 2020, Enel SpA signed a €1 billion “Sustainability-Linked Loan” facility agreement with a 6-year term. Structured as a club deal maturing on October 15, 2026, the loan is intended to meet the Group’s ordinary financing needs and follows the adoption by Enel of a “Sustainability-Linked Financing Framework” (the Framework), aligned with the International Capital Market Association’s (ICMA) “Sustainability-Linked Bond Principles” and Loan Market Association’s (LMA) “Sustainability-Linked Loan Principles”.
The loan is linked to the key performance indicator (KPI) of Installed Renewables Capacity Percentage (i.e., consolidated installed renewables capacity as a percentage of total consolidated installed capacity) and to the related achievement of a Sustainability Performance Target (SPT) equal to or greater than 60% by December 31, 2022 (as of June 30, 2020, the figure was equal to 51.9%). Based on the achievement of the SPT by the target date, the credit line provides for a step-up/step-down mechanism that will impact the interest spread applied to drawings on the line, thus reflecting the value of sustainability. The loan reflects the commitment of Enel, leading private electricity company in the world by installed renewables capacity, to contribute to the achievement of SDG 7.2, i.e. to “Increase substantially the share of renewable energy in the global energy mix by 2030”.

Enel launches a consent solicitation for holders of certain hybrid bonds

On October 23, 2020, Enel announced that it had launched a consent solicitation addressed to the holders of a number of subordinated non-convertible hybrid bonds issued by the Company in order to align the terms and conditions of the bonds with those of the perpetual subordinated, non-convertible hybrid bond launched by Enel on September 1, 2020. To this end, the Company called the Meetings of the noteholders of the following bonds, with a total outstanding amount of about €1,797 million (the “Bonds”), at first and single call on November 26, 2020. On the same date, the Noteholders’ Meetings approved the proposed changes to the terms and conditions of the Bonds, aimed at aligning the latter with the terms and conditions of the perpetual subordinated non-convertible hybrid bond launched by Enel on September 1, 2020. More specifically, the approved changes establish, inter alia, that:

  • the Bonds, originally issued with a specified long-term maturity date, will become due and payable and hence have to be repaid by the Company only in the event of winding up or liquidation of the Company;
  • the events of default, previously envisaged in the terms and conditions and additional documentation that regulate the Bonds, would be eliminated.

Historic milestone for Enel taking top spot in 2020 Dow Jones Sustainability World Index

On November 14, 2020, Enel’s global sustainability leadership was acknowledged by a number one ranking in this year’s Dow Jones Sustainability World Index (DJSI World), an unprecedented milestone in the Company’s seventeen year presence in the index. During the DJSI World selection process, Enel stood out in most of the 27 criteria assessed by SAM (the S&P Global Division in charge of ESG – environmental, social and governance – related research acquired in 2020 from RobecoSAM, an affiliate of asset management firm Robeco).
Specifically, the Company achieved a score higher than 90/100 in more than 70% of the criteria, among which some of the most significant ones are climate strategy and market opportunities, both criteria aimed at assessing the performance of electric utilities on leading the transition towards a low-carbon energy model. Enel also ranks first in DJSI Europe for the “Electric Utilities” sector and second globally in the overall family of Dow Jones Sustainability Indices for the same sector.
Enel also excelled in other criteria focused on assessing responsible business management practices including risk and crisis management, environmental policy and management, operational eco-efficiency, water-related issues, human rights, human capital development as well as transparency on social and environmental performance.
The Group’s Spanish subsidiary Endesa has also been included in this year’s DJSI World, marking the company’s twentieth straight year in the index. Enel and Endesa are two of the eight companies admitted to the index at the global level in the electric utility sector. In addition, the Group’s South American subsidiary, Enel Américas, has been confirmed in the Dow Jones Sustainability Emerging Markets Index and Dow Jones Sustainability MILA (Mercado Integrado Latinoamericano) Pacific Alliance Index for the third consecutive year, as well as in the Dow Jones Sustainability Chile Index for the fourth straight year, while Enel’s Chilean subsidiary Enel Chile has been confirmed in the three indices for the third time.

Enel recognized as world sustainability leader among all industries in the 2020 edition of Vigeo Eiris Universe

On December 2, 2020, Enel’s global sustainability leadership was acknowledged by a number one ranking in this year’s Vigeo Eiris (V.E) assessment edition for its first time ever among nearly 5,000 companies that have been assessed. The unprecedented score achieved in the sustainability performance assessment, which doubles the average score, led to Enel being confirmed in the 2nd Half 2020 review of the Euronext Vigeo Eiris World 120 index. Powered by V.E’s data, twice a year, the Euronext Vigeo Eiris World 120 index lists the 120 most sustainable companies out of the 1,500 largest companies in terms of free-float market capitalization in North America, Asia-Pacific and Europe. Enel has also maintained its position in the regional Euronext Vigeo Eiris Europe 120 and Eurozone 120 indices, which respectively list the 120 most sustainable companies out of the 500 largest free-float companies in Europe and the euro area. Endesa, Enel’s Spanish subsidiary, has also been included in the latter three indices.
In particular, V.E recognized Enel’s outstanding performance in the development of its environmental strategy, including the specific environmental targets set out to limit greenhouse gas emissions and improving air quality, by accelerating the decarbonization of its energy mix and boosting renewables. Enel also excelled in different criteria related to the management of its human capital, including the promotion of labor relations, non-discrimination and diversity. Furthermore, different governance related practices also outstood, among which the role of the Board of Directors in the oversight of the Company’s sustainability performance.

Enel Green Power and Maire Tecnimont Group’s NextChem sign MoU for a green hydrogen production plant in the United States

On December 9, 2020, Enel Green Power, acting through its North American renewables subsidiary Enel Green Power North America Inc. (EGPNA), and Maire Tecnimont SpA, acting through NextChem, its subsidiary dedicated to the deployment of technologies for the energy transition, signed a memorandum of understanding to support the production of green hydrogen via electrolysis in the United States. The project, which is expected to be operational in 2023, will convert renewable energy from one of EGPNA’s solar plants in the United States into green hydrogen to be supplied to a bio-refinery.
Enel Green Power is developing projects in the green hydrogen segment in Italy, Spain, Chile and the United States. As green hydrogen is a new business application, the Enel Group is monitoring the relevant market developments to identify the most efficient way to achieve its plans to grow its green hydrogen capacity to over 2 GW by 2030.

Enel updates agreement with EPH for sale of stake in Slovenské elektrárne

On December 22, 2020, Enel Produzione SpA (Enel Produzione), EP Slovakia BV and Energetický a průmyslový holding AS (jointly EPH) had signed a general term agreement that modifies some of the terms and conditions of the contract (the Contract) signed on December 18, 2015 (as already amended during 2018) between Enel Produzione and EPH concerning the sale of the stake held by Enel Produzione in Slovenské elektrárne AS (Slovenské elektrárne or SE). As announced on December 18, 2015 and on July 28, 2016, the Contract had provided for the contribution to the newly established Slovak Power Holding BV (HoldCo) of the entire stake held by Enel Produzione in Slovenské elektrárne, equal to 66% of the latter’s capital, and governed the subsequent sale of 100% of HoldCo in two stages to EP Slovakia BV for a total of €750 million, subject to adjustment based on certain criteria (the first phase of the transaction was completed on July 28, 2016 with the sale to EP Slovakia of 50% of the share capital that Enel Produzione held in HoldCo).
Under the new general term agreement, which is subject to a number of conditions, Enel Produzione and EPH agreed a number of amendments to the Contract, which regard the financial support provided to Slovenské elektrárne for the completion of units 3 and 4 of the Mochovce nuclear power plant as well as the mechanisms governing the exercise of the put or call options concerning the transfer of the residual stake in HoldCo. More specifically, with regard to the financial support, the amendments provide that Enel Produzione will grant, directly or through other companies of the Enel Group, loans to the HoldCo – which will in turn make them available to Slovenské elektrárne – in the maximum amount of €570 million falling due in 2032. These loans will be made available in accordance with the needs and timing envisaged for the completion of the construction of units 3 and 4 of the Mochovce nuclear power plant (the “Project”). The disbursement of the first loan, amounting to €270 million, is subject to certain conditions, in particular the amendment of certain loan agreements between Slovenské elektrárne and its lender banks, in order to take account of the progress of the Project, and other conditions customary for these kinds of transactions. The disbursement of this first loan is a condition for the effectiveness of the additional amendments to the Contract agreed between the parties and illustrated below. The loans of up to €570 million come in addition to the loan of €700 million (jointly referred to as the “Loans”) already made by the Enel Group in line with the agreements amending the Contract signed by the parties in 2018, whose maturity will also be extended to 2032. The new agreement between the parties also envisages that EPH will grant an additional loan of €200 million to fund the Project.
With regard to the amendments related to the mechanisms governing the exercise of the put or call options, new rules have been introduced governing the so-called “trigger events” under which Enel Produzione and EPH can exercise their respective options. Specifically, the so-called “Long Stop Date” has been eliminated (the date after which Enel Produzione and EPH were entitled to exercise their respective put and call options, even without completion of units 3 and 4 of the Mochovce nuclear power plant) and therefore the put or call options can be exercised after the latest of the following events:

  • six months from the date of completion of the trial run of Mochovce’s unit 4 (i.e., the moment in which that plant will be able to send power to the grid and sell the generated electricity);
  • the date of completion of the first outage of Mochovce’s unit 4 (i.e., the mandatory annual technical shutdown of the plant to ensure adequate safety levels), which is expected to occur within a maximum of 12 months from the trial run; and
  • the Loans fall due, set for 2032.

The new agreement also gives EPH an early call option that can be exercised in the period between six months after the signing of the updated text of the Contract and the first of the following dates:

  • four years from the completion of the trial run of unit 4 of the Mochovce plant; and
  • December 2028.

The total price of €750 million is subject to an adjustment mechanism, which will be calculated by independent experts in accordance with a formula defined in the Contract, for which the new agreement envisages a number of amendments relating to the exclusion of part of the investments planned for the completion of Mochovce’s unit 4 and setting the percentage of the unit 4’s enterprise value to be considered depending on when the option is exercised.
Furthermore, in the event of the exercise of the so-called “early call option” from EPH, a floor and cap have been introduced for the price – which will vary depending on when the option is exercised and the effective application of the price determination formula – ranging from a minimum of €25 million and a maximum of €750 million.
Finally, the new agreement envisages that when the options are exercised, EPH will take over the Loans. In the event of the exercise of the early call option, EPH is expected to take over the Loans according to a plan starting from 2026, with the last tranche expected in 2032 at the latest.
The above agreement led to a write-down of the carrying amount of the investment and the financial receivable from EPH in the total amount of €833 million.

COVID-19

The year 2020 was substantially characterized by the spread of the COVID-19 pandemic, with periods of greater spread and mortality accompanied by the imposition of drastic social isolation measures (lockdowns) and total or partial closure of all economic, social and sports activities, as well as the dissemination of new mores of conduct and the systematic and rigorous adoption of personal protective equipment.
The countries most severely affected were initially China, Italy and Spain, gradually followed by the United Kingdom, the other Central European countries, the United States and the countries of South America (in particular Brazil and Chile).
Governments adopted numerous containment measures, essentially intended to restrict the free movement of people, such as selective lockdowns or the early closure of public places to limit crowds. Numerous regulatory measures concerning essential services and public utilities have been implemented, which subsequent sections on the regulatory frameworks adopted in the various countries for the different Business Lines address in more detail.
Already during the 1st Quarter, the Group had issued guidelines aimed at ensuring compliance with the measures introduced at the local level and taken numerous steps to adopt the most suitable procedures to prevent and/or mitigate the effects of contagion in the workplace.
For further information, please see the sections on COVID-19 included in the “Performance of the Group” in this Report on Operations and note 5 of the consolidated financial statements.

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