Italy’s Enel (ENEI.MI) plans to spend 35.8 billion euros in gross capital expenditure in the next three years but be “more selective” on investments in renewables, the Group’s new chief executive said on Wednesday. The power group will direct more capital to networks with “fair and stable” regulatory frameworks, leveraging access to European financing while being less intensive in capital and risk in renewable energy. It will also invest more in client business, aiming to increase invested capital profitability by focusing on customer value.
In the regulated businesses, more than half of investment efforts — 18.6 billion euros — will go to Networks focused on improving quality, resilience, and digital,lisatdigitalization new connections, confirming their central role in the Group’s strategy. The remainder of the effort — 12.1 billion euros — will be spent on onshore wind, solar, and battery storage, leveraging the repowering opportunity.
The new plan will see Enel reach an 80% reduction in direct CO2 emissions by 2040, 10 years earlier than planned, accelerating decarbonization by speeding up its exit from coal and gas generation. It will reach net-zero emissions in its operations without using offsets. It will also focus on growing in industries that need to be electrified today.
Enel will increase efficiency and effectiveness, leveraging process simplification, leaner organizational structures, and more targeted geographic concentration. It will also invest in rationalizing costs to optimize its risk/return profile and generate cash. It is also expected to make savings from better managing its debt.
Investors welcomed the plan after a disappointing set of results on Wednesday, primarily driven by the company’s ill-advised investments in renewable energy projects. Shares in Enel rose as much as 7% on Thursday morning.
The plan will also see the Group shift to a partnership business model in its renewables activities, where it will own and operate projects and invest in third-party assets in partnership with others or where its platforms are used as a business enhancer. The move will improve project returns, reduce exposure to volatile markets, and allow Enel to gain a broader range of expertise. It will invest more than 30 billion euros directly in this way over the next five years while catalyzing around 10 billion from third parties. This will be in addition to the Group’s direct investments of over 40 billion euros over the same period. This will be implemented in the countries where the Group has an integrated presence, notably in Italy and Iberia, while further expanding in North America. It will also be applied to its reinsurance and insurance activities, where it intends to leverage its financial market position. The new strategy will enable Enel to grow its net operating income between 23 and 24 billion euros by 2026. It targets a payout to shareholders of at least 0.43 euros per share and up to 70% of the payout on ordinary net profit if cash flow neutrality is achieved.
