Enel Unveils €35.8 Billion Investment Plan with Focus on Grids and Selective Renewables

One of the key targets in Enel's strategy is to add around 13 gigawatts (GW) of new green energy capacity on a global scale.

Enel, the Italian power giant, has unveiled a strategic plan outlining a cautious investment approach under its new CEO, Flavio Cattaneo.

Over the next three years, Enel plans to commit a substantial 35.8 billion euros (approximately $39 billion) in gross capital expenditure.

The allocation of these funds will be characterized by a focus on grid infrastructure and selective investments in renewable energy, with approximately 19 billion euros earmarked for grids and 12.1 billion euros dedicated to onshore wind, solar, and battery storage projects.

One of the key targets in Enel’s strategy is to add around 13 gigawatts (GW) of new green energy capacity on a global scale.

This will be achieved through partnerships with other groups, allowing Enel to expand its presence in the renewable energy sector.

However, the announcement did not have an immediate positive impact on Enel’s shares, as they were down 1% in early trading on the Milan Stock Exchange.

This underperformance came despite a slightly positive trend in the broader blue-chip index.

Enel’s commitment to its home country, Italy, remains strong, as the company intends to allocate 49% of its gross capital expenditure to investments within Italy.

This marks a slight increase from the previous plan, which had allocated 48% of investment, including 17 billion euros for renewables.

CEO Flavio Cattaneo emphasized the company’s shift towards a more selective approach to investments, aiming to maximize profitability while minimizing risks.

Financial discipline is set to be a cornerstone of this strategy.

Enel’s future financial outlook appears promising, with an anticipated average annual growth of 6% in net ordinary income.

By 2026, the company aims to achieve net ordinary income figures ranging from 7.1 to 7.3 billion euros.

Additionally, Enel has committed to maintaining a dividend floor of 0.43 euro per share over the next three years and has expressed its willingness to increase the dividend per share, up to a 70% payout on net ordinary income if cash flow neutrality is reached.

Cattaneo also redefined the disposal plan inherited from the previous management, with a goal to reduce debt by approximately 11.5 billion euros between 2023 and 2024.

This adjustment allows for more time to finalize asset sales than previously outlined.

As a result, Enel anticipates that its net financial debt will drop to around 2.3 times its earnings before interest, taxes, depreciation, and amortization (EBITDA) by 2026, presenting a more optimistic financial outlook.

However, it’s worth noting that by the end of the current year, Enel expects its net debt to be between 60 and 61 billion euros or approximately 2.7-2.8 times its EBITDA, which is slightly higher than what was initially projected in the previous business plan.