Executive Summary Capital Markets Day 2019

The strategic decision to adopt a sustainable, integrated business model, which was taken in 2015, has made Enel something of a leader in the energy transition. Today the Group is able to benefit from the opportunities offered by the global trends of decarbonisation and electrification in the energy sector and to increase value creation for its shareholders with ample potential for growth also beyond 2022.

The 2020-2022 Strategic Plan, which was presented to the financial markets and the media on 26 November 2019, outlines an acceleration in the decarbonisation of the Group’s generation mix. This is to be brought about by significant investment in the growth of renewables and by progressively reducing generation from thermoelectrical sources. Investment in the decarbonisation of the Group’s global plants will account for 50% of the plan’s total capital expenditure, with 14.4 billion euros earmarked for accelerating the deployment of new renewable capacity and progressively replacing coal generation. The Group is expected to develop 14.1 GW of new renewable capacity by 2022 (+22% with respect to the previous Strategic Plan) and to reduce coal capacity and production by 61% and 74%, respectively, from 2018 levels. Renewables are expected to represent 60% of total capacity by the end of 2022, increasing CO2-free production to 68% in 2022.

Enel has planned a road map of medium-term targets with a view to complete decarbonisation by 2050. This has been certified by the Science-Based Targets initiative (SBTi), which forecasts a 70% reduction in CO2 emissions per kWh from 2017 levels by 2030.

With regards to the electrification of consumption, approximately €1.2 bn will be invested in order to leverage the expansion and diversification of the retail client base, as well as the increased efficiency associated with the platformisation of Enel’s activities.

Infrastructures and grids

Investment in grids will reach approx. 11.8 billion euros, a 7% increase with respect to the previous Strategic Plan. Approximately half the 2020-2022 investment will be directed to producing further improvements in the efficiency and quality of the service, with about 30% dedicated to grid digitalisation. Enel will continue to invest in grid digitalisation from 2020 to 2022, increasing the number of second-generation smart meters installed from roughly 13 million in 2019 to an estimated 29 million in 2022.

Ecosystems and platforms

Enel X will invest 1.1 billion euros in responding to the growing demand for value-added services ushered in by decarbonisation and electrification and to promoting the increasingly central role of the client in the energy system.

Decarbonisation through new services will be facilitated by an increase in demand response capability to 10.1 GW in 2022 (as opposed to the 6.3 GW estimated in 2019) and in accumulation capacity, which is expected to reach 439 MW in 2022 (vs. 113 MW estimated in 2019). Electrification through new services will, on the other hand, be supported by the presence of roughly 736,000 public and private electric vehicle charging points by 2022, up from an estimated 82,000 in 2019, and by other electrification services.             

Integrating sustainability into our strategy

Enel’s total organic investment for 2020-2022 will reach 28.7 billion euros, an increase of 11% with respect to the previous Strategic Plan. This will lead to an expected EBITDA of 20.1 billion euros in 2022 (+ 13% from €17.8 billion forecast for 2019). Confirming the full integration of sustainability into the Group’s strategy, approximately 95% of the total investment is directly connected to three United Nations Sustainable Development Goals (SDGs): SDG 7 (“Affordable and Clean Energy”), SDG 9 (“Industry, Innovation and Infrastructure”) and SDG 11 (“Sustainable Cities and Communities”), which are all aimed at contributing to SDG 13 (“Climate Action”).

Sustainable sources of financing, such as SDG-linked bonds, are expected to represent about 43% of Enel’s gross debt in 2022, rising to about 77% in 2030, in comparison to the current estimate of 22%, with a net reduction in the cost of debt.

The 2020-2022 Strategic Plan enables Enel to confirm its target for consolidated net income for 2020, to increase the 2021 target by roughly €200 mln on the previous plan and to forecast €6.1 billion euros ordinary net profit for 2022 (+27% with respect to the €4.8 billion forecast for 2019). For the entire period of the plan, Enel will continue to pay out the highest amount between a dividend of 70% on the ordinary consolidated net income and a minimum guaranteed Dividend Per Share (DPS), with a compounded annual growth rate of 8.4% for the implicit DPS and 7.7% for the minimum guaranteed DPS.