Enel counting on US market to boost green drive
Italian utility Enel is looking to add 5.4GW of new renewable capacity to its portfolio this year and is counting on the US market to help it succeed.
The Inflation Reduction Act (IRA), which was introduced last year by President Joe Biden's administration to fund a massive clean energy drive in the US, was extremely positive and beyond initial expectations, Enel chief executive Francesco Starace said. "We think it has intrinsically an incredible acceleration potential for all the major strategic directions we intend to pursue in the US," Starace said in a call on Enel's full-year results.
The IRA is the largest climate and energy spending package in US history, earmarking $370bn for projects to help cut carbon emissions by 40pc in 2030.
Besides boosting solar and wind farm construction, the initiative will also be beneficial for the energy services businesses Enel is launching in the US, which are "picking up speed quite strongly".
It would also help develop a solar panel and supply chain industry in the US at a time when panel imports from the world's biggest manufacturer, China, are slowing owing to geopolitical tension.
"We are building a 3GW factory in Italy and the IRA clearly opens up the window for a similar factory to be deployed in the US," Starace said.
Enel currently generates 61pc of its electricity from zero-emission sources, including nuclear, and is looking to add 21GW of new renewable capacity in 2023-25 from its present 59GW.
"With a pipeline in Italy and Iberia of 130GW, Enel could ramp up its renewables rollout if required with a view to boosting energy independence in Europe," Starace said.
Starace, whose third mandate as chief executive ends in May, said he was not aware of any new measures to tackle the energy price crisis. He said the situation was normalising and that Brussels had made it clear that if there were no special circumstances "there could be no special measures".
The European Commission's recent proposals to reform the bloc's power market design by introducing mechanisms like contracts for difference and power purchase agreements was "very positive", he said, since it gave European buyers long-term visibility. But it should also be coupled with mandatory long-term buying quotas for retailers, allowing them not only to be better hedged but also encouraging them to sell long term to customers, triggering faster development of a long-term market.
"I also like the fact that it gives member states some discipline in what kind of creativity they want to put in place in ruling on inframarginal technology retrospectively and extending price caps which, at this point in time and if volatility remains contained, make no sense anymore," Starace said.
He confirmed Enel's target of exiting coal production in Italy by 2025. Enel has pledged to sell assets worth €21bn to cut debt and focus its transition to cleaner energy on six core markets in Europe and the Americas.
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