Enel's Italian revolutionary: Decisively away from Fossil Fuels By Christopher Hopson Recharge News, January 14 2016
ONES TO WATCH: Enel's Italian revolutionary
Francesco Starace: 'Big is bad. Our strategy is much more flexible and modular then it was before, and more adaptable to the world we live in'
Francesco Starace is promising nothing short of a “revolution” at Enel this year as Italy’s biggest utility adopts a groundbreaking business model that moves it decisively away from fossil fuels.
The 60-year-old chief executive is putting renewable energy at the heart of the state-owned company’s growth plans. In early 2016, it plans to take 100% control of renewables subsidiary Enel Green Power (EGP), clawing back the 31% of shares it doesn’t currently own, before adding 7.7GW to EGP’s existing 10.6GW of capacity by 2019. Latin America and hybrid facilities — in which two different renewables sources are utilised to create cost-saving synergies — will be key focuses.
Enel has also pledged to become carbon-neutral by 2050, close down 23 coal power stations in Italy, and to never build another coal-fired plant — scrapping plans for two new facilities in Italy and Chile. Starace recently went so far as describing coal power as “technologically obsolete”. It is a major departure for a company that supplied 19% of its energy from coal in 2014.
Starace — who was chief executive of EGP from its launch in 2008 until he waspromoted to the Enel top job in May 2014 — is one of the most green-minded utility bosses in the world.
Unlike other utility chief executives, he does not believe that nuclear and natural gas are the answer to the world’s problems. The new generation of nuclear plants, such as the planned Hinkley Point C in the UK, he says, are “typically nightmares of engineering and construction” that are “incredibly complex and very, very difficult to complete”. He believes that building gas plants will only make sense until about 2025, while carbon capture and storage schemes “simply don’t work”.
And unlike the shift towards renewables by other major European utilities, Enel’s move is not born out of urgent necessity. The likes of E.ON and RWE in Germany have needed to embrace green energy because their business models have become unprofitable — their over-reliance on fossil-fuel plants that are increasingly being switched off to allow low-cost renewable power onto the grid has resulted in significant financial losses.
As the Italian grid is not so heavily saturated with wind and solar, Enel does not need to take such a leap now. But Starace has realised that the rise of renewables is inevitable, so he is future-proofing his company today. It is a move that is likely to be hugely influential among utilities globally.
“We have to acknowledge that the climate clock is ticking and time is of the essence,” Starace told a conference in October. Conventional fossil-fuel and nuclear plants are “a trap”, he explained. “A trap for companies to die.”
He does acknowledge, however, that Enel’s transition away from coal and nuclear will not be without some pain.
“You need to be willing to say, ‘Even if it’s my own arm, I’ll cut it off if it’s not needed’,” Starace said. “Big is bad. Our strategy is much more flexible and modular then it was before, and more adaptable to the world we live in.”
Other utilities — many of which are unsure of their role in the future energy landscape — will be watching keenly to see how Enel’s energy transition plays out.