Italy’s Enel to cut renewable investments

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Italian energy company Enel is planning to cut renewable investments, spend more on grids and pledged more fiscal discipline, under the new management’s first three-year plan.

The state-controlled utility had become one of the world’s largest renewable energy producers under previous chief Francesco Starace, who clashed with Italy’s right-wing government over the group’s strategy and debt levels and was replaced by Flavio Cattaneo earlier this year.

The change at the top followed a bitter battle that pitted Italy’s government against a group of international investors who feared the company would renege on its renewables strategy.

The Italian state is Enel’s largest shareholder, owning a 23 per cent stake through the finance ministry.

“We will adopt a more selective approach towards investments in order to maximise profitability while minimising risks,” Cattaneo said in a statement on Wednesday. 

Enel now plans to invest a total of €35.8bn between 2024 and 2026, with nearly €19bn — mostly funded by EU grants — on grids. Its investments in renewables, particularly onshore wind, solar and battery storage, will fall from €17bn to €12.1bn. 

The group said it planned to add 13 gigawatts to its renewable energy capacity by the end of the three-year period by focusing on partnerships with companies outside Italy and the Iberian peninsula.

Before the plan was announced, analysts said they were expecting a greater focus on Italy and a more cautious approach towards renewables, which would translate into more limited overseas investments. 

Italy will now account for 49 per cent of investments, up slightly from the previous 48 per cent. However, total investments will drop from €37bn to €35.8bn.

“Financial discipline will be the cornerstone of our strategy, boosting cash generation and [efficiency],” Cattaneo said. 

The group forecast earnings to rise from €21.5bn this year to €23.6bn or more by the end of 2026, while it expected net debt to fall to about 2.3 times earnings before interest, tax, depreciation and amortisation over the same period.

However, the pace at which debt would be reduced would be slower over the next year.

Enel’s debt was €69bn at the end of last year, which became a point of contention between its previous management and Italy’s government, and forced the group to make a €21bn divestment plan to exit Argentina, Peru and Romania. 

Cattaneo said the asset disposal plan had been “partially redefined” and Enel would take more time than previously announced to finalise sales. 

It now expects to cut debt by about €11.5bn by the end of 2024, less than previous forecasts.

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