Transition phenomena: repercussions on our business, risks and opportunities

With regard to the risks and opportunities associated with transition variables, we use the different reference scenarios in combination with the elements that make up the risk identification process (e.g. competitive context, long-term vision of the industry, materiality analysis, technological evolution, etc.) to identify the drivers of potential risks and opportunities. Priority is given to the most material phenomena. The main risks and opportunities identified within this framework are described below.

Policy & Regulation

Limits on emissions and carbon pricing

The enactment of laws and regulations that introduce more stringent emission limits by government action (non-market driven) and market-based mechanisms, such as a carbon tax in non-ETS (Emissions Trading System) sectors or an expansion of the ETS in other sectors.

  • Opportunities: command & control regulations and market-based mechanisms strengthening CO2 price signals to foster investment in carbon-free technologies.
  • Risks: lack of a coordinated approach among the various actors and policy-makers involved and limited effectiveness of the policy instruments deployed, with an impact on the speed of the trend towards electrification and decarbonization in the various sectors, compared with a decisive group strategy focused on the energy transition.
Incentives for the energy transition

Development incentives and opportunities with a view to the energy transition, consequently guiding the energy system towards the use of low-emission energy resources as the mainstream approach in the energy mixes of countries, greater electrification of energy consumption, energy efficiency, flexibility of the electrical system and upgrading of infrastructure, with a positive impact on the return on investment and new business opportunities.

  • Opportunities: additional volumes and greater margins due to additional investment in the electricity industry, in line with the electrification strategy, decarbonization and the upgrading/digitalization of enabling infrastructure.
  • Risks: obstacles to achieving energy transition targets due to regulatory systems that do no effectively support the energy transition (delays in permitting processes, no upgrading of the electricity grid, etc.).
Resilience regulation

To improve standards or introduce ad hoc mechanisms to incentivize investments in resilience in the context of the evolution of climate change.

  • Opportunities: benefits from investments that reduce service quality and continuity risks for the community.
  • Risks: in the case of especially severe extreme events with a greater-than-expected impact, there is a risk that recovery could be slower than planned, with an associated reputational risk.
Financial measures for the energy transition

Incentives for the energy transition through appropriate policy measures and financial instruments, which should be capable of supporting an investment framework and a long-term, credible and stable positioning of policy-makers. Introduction of rules and/or public and private financial instruments (e.g. funds, mechanisms, taxonomies, benchmarks) aimed at integrating sustainability into financial markets and public finance instruments.

  • Opportunities: the creation of new markets and sustainable finance products consistent with the investment framework, activating greater public resources for decarbonization and access to financial resources in line with energy transition objectives and the related impact on costs and on finance charges; introduction of subsidized support tools (funds and calls) for the transition.
  • Risks: actions and instruments are not sufficient to provide incentives consistent with an overall positioning tailored to the energy transition, uncertainty or slowdown in the introduction of new instruments and rules due to the deterioration in the public finances or differences in application in the geographic areas in which the Group operates.


Market dynamics

Market dynamics, such as those connected with the variability of commodity prices, the increase in electricity consumption due to the energy transition and the penetration of renewables, have an impact on business drivers, with effects on margins and on production and sales volumes.

  • Opportunities: positive effects associated with the growth in electricity demand and the greater room for renewables and all sources of flexibility.
  • Risks: exposure of merchant technologies to market price volatility.


Penetration of new technologies

Gradual penetration of new technologies such as storage, demand response and green hydrogen; digital lever to transform operating models and “platform” business models.

  • Opportunities: investments in developing technology solutions.

Products and services

Electrification of residential energy consumption

With the gradual electrification of end uses, the penetration of products with lower costs and a smaller impact in terms of local residential emissions will expand (for example, the use of heat pumps for heating and cooling).

  • Opportunities: increase in electricity consumption against a background of declining energy consumption thanks to the greater efficiency of electricity.
  • Risks: additional competition in this market segment.
Electric mobility and electrification of industrial energy consumption

Use of more efficient and effective modes of transportation from the point of view of climate change, with a special focus on the development of electric mobility and charging infrastructure; electrification of industrial energy users.

  • Opportunities: positive effects of the increase in electricity demand and greater margins connected with the penetration of electric transportation and associated “beyond commodity” services.

The Group has already taken strategic actions to mitigate potential risks and exploit the opportunities offered by the energy transition. Thanks to our industrial and financial strategy incorporating ESG factors, an integrated approach shaped by sustainability and innovation makes it possible to create long-term shared value.
A strategy focused on complete decarbonization and the energy transition makes the Group resilient to the risks associated with the introduction of more ambitious policies for emissions reductions and maximizes opportunities for the development of renewable generation, infrastructure and enabling technologies.
Unlike chronic climate impacts, developments in the transition scenario could have impacts in the short and medium/long term (by 2030) as well.

As with climate variables, we can test the current Business Plan (2021-2023) for its sensitivity to the factors potentially influenced by the transition scenario, with particular regard to the price of CO2 (ETS). Examining the main transition variables, the price of CO2 appears to be an especially reliable driver of regulatory measures that could accelerate the transition process.

To assess the impact of possible changes in this driver, the effects of a potential change of +/-10% in the CO2 price for Italy and Spain are determined. This price change would modify the equilibrium price of both wholesale markets, with repercussions on the margins of Global Power Generation for both conventional and renewables plants.

To quantify the risks and opportunities engendered by the energy transition in the long term, the transition scenarios described in the section “Transition scenario” have been considered for Italy and Spain. The effects on the variables that can most influence the business were then identified. In the Brighter Future scenarios, these include electricity demand driven by greater electrification of consumption and the power generation mix. These considerations offer ideas for determining what the Group’s strategic positioning for resource allocation could be. The dynamics of the energy transition could bring growing opportunities for the Group in the context of greater ambition for decarbonization and energy efficiency. In particular, on the retail electricity market, the progressive electrification of final consumption – in particular in transportation and the residential segment – will lead to a significant increase in electricity consumption to the detriment of other forms of energy.
With regard to the financial impact of changes in transition scenarios, the Group analyzed the impact of the Brighter Future scenario on 2030 results in terms of EBITDA compared with the Reference scenario.
Given the ambition defined in the national plan, the two scenarios in Iberia would not see substantial increases in the penetration of renewable energy, and therefore no significant impacts deriving from changes in electricity prices are expected.
Conversely, in Italy the Brighter Future scenario enables a greater penetration of renewable energy, with additive effects on installed capacity, partially offset by a possible reduction in electricity prices. Similar effects are highly likely in other areas, such as North America.
With regard to the electrification of consumption, however, the Brighter Future scenario envisages higher penetration rates of the most efficient electrical technologies. In particular, a substantial increase in electric vehicles and heating/cooling systems based on heat pumps would give rise to a 5% increase in demand compared with the Reference scenario, with positive impacts both on the Retail business and on the “beyond commodity” services offered by Enel X. The greater penetration of heat pumps could at the same time lead to a reduction in gas sales in the Retail segment as a result of gradual switching to electricity. However, it is expected that the overall effect on EBITDA performance would be positive, accompanied by a reduction in Scope 3 CO2 emissions connected with the SBTi targets.
As noted above, the Brighter Future scenario will entail a considerable increase in the complexities that will have to be managed by grids in the various geographical areas.
In fact, we expect a significant increase in distributed generation and other resources, such as storage systems, the greater penetration of electric mobility with the related charging infrastructures, as well as the growing rate of electrification of consumption and the appearance of new actors with new modes of consumption.
These developments will lead to the decentralization of power withdrawal/injection points, an increase in electricity demand and the average power required, and strong variability of energy flows, requiring dynamic and flexible management of the network. The Group, therefore, expects that in this scenario incremental investments will be needed to ensure connections and adequate levels of quality and resilience, encouraging the adoption of innovative operating models. These investments must be accompanied by consistent policy and regulatory scenarios to ensure adequate financial returns within the distribution Business Line.


Risk & opportunity category Time horizon(1) Description and impact GBL affected Scope Quantification - Type of impact   Quantification - range
Policy &
Short/medium term Risk: Impact on margin due to measures affecting CO2 price.
Considering the potential impact of regulatory measures to incentivize energy transition, the Group assesses the exposure to changes of +/- 10% in the price of CO2 using sensitivity analysis.

Global Power

Italy and Iberia EBITDA/year +10%    
Global Power
Medium term Opportunity: Greater room for investment in new renewables capacity. Risk: Decrease in power prices due to increased penetration of renewables.
Considering the two alternative transition scenarios, the Group assessed the impact of an increase in the penetration of renewables on the benchmark power price and on additional capacity at 2030.

Global Power


Italy and Iberia EDITDA
Brighter vs
Market Medium term Opportunity: Increase in margins due to impact of transition on electrification of energy consumption. Risk: Increase in competition and possible decrease in market share. Rischio:
aumento della competizione e possibile
decremento della market share.
Considering two alternative transition scenarios, the Group assesses the impact of trends in efficiency, the adoption of electric devices and the penetration of EVs to estimate its potential effect on electricity demand, including the effect on gas customers associated with the increase in electrification..

End-user Markets

Italy and Iberia EBITDA
Brighter vs
& Services
Medium term Opportunity: Increase in margins and greater scope for investment due to impact of transition in terms of penetration of new technologies and electric transportation.
Considering two alternative transition scenarios, the Group has assessed the impact of trends in the electrification of transportation and residential consumption to assess the potential effects.

Enel X

Italy and Iberia EBITDA 2030
Brighter vs



Upside scenario current policies

Downside scenario current policies

(1) Time horizon : short (2020-2022); medium (up to 2030); long (2030-2050).

Competitive environment

The markets and businesses in which the Group operates are exposed to steadily growing competition and evolution, from both a technological and regulatory point of view, with the timing of these developments varying from country to country.
As a result of these processes, Enel is exposed to growing competitive pressure and, as electricity is this century’
s energy vector, competition driven by contiguous sectors is also rising, although this offers utilities the opportunity to move into new businesses.
The differentiation on which the Group can count, both geographically and in the various sectors in which it operates, is an important mitigation factor, but in order to orient strategic development guidelines more effectively, the evolution of the competitive environment is constantly monitored, both inside and outside the world of utilities.