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Risks and opportunities

The increasing international attention to climate change makes it necessary to increase the level of awareness of the main risks and opportunities which arise from it with particular reference to energy transition. Combating climate change is one of the elements which guides Enel’s strategy which aims at the complete decarbonization of energy generation by 2050, in line with science-based targets.

Enel has launched an innovative and ambitious project to analyze the issues connected to resilience and adaptation to climate change. In particular, the main objectives concern: the definition of the key climatic scenarios, the mapping of the risks and opportunities linked to climate change and the related assessments. It is a project which will involve all the business areas of the Group in the main countries where it is present.
This initiative anticipates what the task force of the Financial Stability Board (TCFD – Task Force on Climate-related Financial Disclosure), an international structure which deals with containing and protecting financial markets from systemic risks, is preparing to issue in its recommendations on the risks linked to the climate. It is a document broken down into four areas: governance, strategy, risk management and measuring targets, and will be used as a reference point by institutional investors engaged in climate change.
Climate change entails operating and regulatory risks. The uncertainty of the political framework increases the risk linked to regulatory instability, reopening the debate on the introduction of alternative and less efficient policy instruments (for example, the European carbon tax and standards on CO2 emissions).

Regulatory environment

At the European level, in order to ensure full management of the regulatory risk, Enel has further enhanced its commitment in support of the credibility and effectiveness of the Emissions Trading Scheme (ETS).

The Emissions Trading Scheme (ETS)

The European system for trading emission quotas (European Union Emissions Trading Scheme – EU-ETS) is the main instrument adopted by the European Union, in implementation of the Kyoto Protocol, to reduce greenhouse gas emissions in high energy consumption sectors, in other words the industrial sectors characterized by higher emissions. It is a “cap&trade” system because it sets a cap to the total level of emissions allowed to all the subjects bound by the system, but allows participants to trade CO2 emission quotas according to their needs, within the set limit.
Enel acknowledges the role of the ETS (Emissions Trading System) in providing a price signal associated with the emission of CO2 and believes that the cap&trade mechanism is the most efficient to reduce emissions, especially in industrialized economies: the definition of a target with an absolute value guarantees the effectiveness of achieving the environmental goal, while the price signal set by the market guarantees economic efficiency and the minimization of costs. Enel’s strategy is in line with the provisions of the ETS. The dynamic management of the credit portfolio enables minimization of the quota purchase costs and ensures cover of the volatility risk on the carbon market. The advocacy and engagement with institutional stakeholders, category associations, non-governmental organizations and universities, which are undertaken through the European Affairs Function and the institutional Functions of the various countries, enable promotion of the Group’s strategy towards ambitious climate change objectives.

Operational environment

Besides the aforementioned project, in terms of adaptation Enel started to map the environmental risks which include the risks associated with climate change through the weighting of the vulnerability of production sites. A pilot project for the assessment of vulnerability was carried out at sites in Iberia and Latin America to identify and prioritize climatic events which may impact on the operativity of the service. The project initially, on the basis of a UNFCCC method, assessed natural phenomena, such as for example hurricanes, which can represent a threat for the Group’s assets, assessing the potential associated risk and subsequently the capacity to adapt the plants to face the impacts of the phenomena analyzed. To minimize these risks in the long term Enel has accelerated its decarbonization process, developing new business opportunities in the field of renewable sources, energy efficiency and new digital technologies in the market for end uses. Among the main opportunities: the digitalization of networks, the development of new products and services for energy efficiency for consumers and the promotion of electric vehicles in the sectors of transport and residential use.

Carbon pricing

The process of strategic and industrial planning assesses the impact of the carbon price on operations and on short-, medium- and long-term investment decisions. Decarbonization is one of the four strategic ESG (Environmental, Social and Governance) pillars and consequently the investment choices in new capacity are automatically in line with the goal of keeping the rise in the global temperature to below 2 °C. In this regard, Enel’s strategy is focused, on the one hand, on increasing renewable capacity and, on the other, the gradual and selective reduction of the thermoelectric power plants present in various countries. For example, in Italy, the Futur-e Project aims to lead this transition with the widest possible involvement of all those concerned.
With reference to the medium term, the Group’s Strategic and Industrial Plan for 2017-2019 envisages investments in the renewables sector of 5.2 billion euro and further growth in renewables through the development of the “Build, Sell and Operate” (BSO) model. The Group’s new renewable production capacity globally will be 6.7 GW by 2019 including both organic growth (3.5 GW) and the BSO model (3.2 GW).
As for the short term, the internal reference price of CO2 is set in the range of 7-13 €/t, in keeping with the recommendation internationally and with the orientations for the ETS. The short-term prospects reflect regulatory scenarios and market expectations and enable assessment of the impact of the price of CO2 on Enel’s operations.

The Futur-e Project

Futur-e represents a unique example worldwide, in which a company leads a process to redevelop disused industrial sites, which differ in terms of size and location, making it a development opportunity for the local area and for the Italian industrial system. Futur-e aims to transform 23 power plants in Italy, in the concept of the circular economy, into ecosustainable places dedicated to science, art, culture or tourism, and new industrial activities.
These are power plants producing a total of 13 GW which used non-renewable sources, based on obsolete or inefficient technology, and which therefore are no longer competitive on an energy market in which generation from large plants is giving way to increasingly distributed production using renewable sources.
For Enel, it is an opportunity for growth for the Group and a potential element of innovation for the whole country. The Futur-e program is designed with the goal of finding the most innovative and sustainable solutions for the decommissioning of these power plants and at the same time strengthening relations between the Company and communities.
The Shared Value approach used, which is based on close analysis of the context and on the direct and proactive involvement of local communities, is the key to the initiative. The dialogue started with local communities and institutions to transform the plants involved takes many forms: competitions, ideas contests, working groups.
During 2016 Enel launched the project competition for the former power plants of Rossano, Montalto di Castro, Porto Tolle, and Trino. Before each competition, a survey tailored to the local area in question enables local needs to be understood as well as the related expectations. The results of the analysis are essential to develop a stakeholder management and engagement plan, as also in the stage of selecting the best solutions for the reuse of the sites.
In the case of Porto Tolle, for example, the study of the local context and the materiality analysis were carried out through various channels, including interviews with the population to sound out ideas on the future reuse of the plant, and a series of meetings with category associations as well as the direct involvement of local institutions in the assessment of the projects. To assess the suitability of the proposals, there is a commission made up of representatives of the Municipality and Region, the University of Padua, Milan Polytechnic and Enel. The selection criteria for the projects are: technical and economic quality, level of innovation and environmental, economic and social sustainability, with particular attention to safeguarding the levels of employment and the best possible reuse. The common element to the projects presented is the desire to valorize the area and part of the existing structures by giving them completely new functions in the spirit of sustainability. The future of the site of the plant may therefore develop into sectors such as tourism, agrifood, fishing, with ideas aimed at creating value for the local area hosting the plant.
For the plants of Montalto di Castro, Rossano and Trino, the stakeholder engagement activities have involved local industry and international institutions, universities and schools, in assessing the selected projects and in promoting their dissemination. During 2016, over 8,400 stakeholders were involved at national and local level. In addition, a dedicated website has been developed, www.futur-e.it, to ensure complete transparency in all information regarding the program, promoted as an example of the circular economy. In addition, during the year the redevelopment of the former plant of Carpi was decided and it will become a logistics center for Enel.

Reference SDGs: 
Main actionsTargets
Development of renewable capacity

~+8 GW of additional renewable capacity in the 2017-2019 period

Reduction of thermal capacity-10.3 GW in the 2017-2019 period
Specific CO2 emissions reduction

<350 gCO2/kWheq by 2020 (-25% base year 2007)

Environmental retrofitting* of selected plants

~500 million euro in investment in the 2017-2020 period

Sustainability Plan 2017-2019