Harmonization, sustainable financing key to Europe's Green Deal: Enel

Europe's Green Deal must address harmonization of permitting procedures and encourage sustainable financing to accelerate growth in renewables, Italian utility group Enel said Wednesday.

Company CFO Alberto de Paoli told analysts the company saw simplification and harmonization at the EU level of permitting procedures for power plants from coal to gas, investment in storage, and monetization of hydro plant as fundamental enablers of decarbonization.

EU recovery funds under discussion could trigger the scale-up of sustainable investment across Europe, improving corporate access to debt and the establishment of temporary equity partnership to reduce corporate need capital, he said.

Enel has 6 GW of projects in execution, of which 47% is wind and 52% solar capacity. Close to 4 GW of these projects, however, are in Latin America, with just 60 MW in Italy and 372 MW in Iberia.

Enel remained on track to roll out 4 GW this year, although the COVID-19 impact might delay some projects by up to two months -- delays which it is already working on recovering, the company said.

More than 90% of is planned capital expenditure for 2020 has already been addressed, de Paoli said, as well as 72% of 2021 and 42% of 2022 with renewables and networks the main focuses.

A pipeline of 40 GW was spread 39% in Latin America, 21% North America, 7% Italy and 14% Iberia.

In the Spanish market, the launch of two new auction rounds for the offshore Canary Islands and Balearic Islands might imply that a new round of auctions will be forthcoming for the mainland once the situation has stabilized, de Paoli said.

Coronavirus impacts

The company said the reduction in demand from coronavirus restrictions would continue in Italy and Spain in Q2.

De Paoli expected both Spain and Italy to see a reduction of 5 TWh in Q2 as a result, with volumes rising through May and June.

The company sold 16.2 TWh during Q1 in Italy's free market, down 6% year on year and 20.4 TWh in Spain's free market, down 3% from national demand levels of 77 TWh for Italy and 62 TWh for Spain during the quarter, both down around 5% year on year.

However, the shift from larger industrial and business customers to residential ones as well as increased activity in balancing markets helped offset the company's volume decline with wider margins.

De Paoli said the company boosted Q1 income from the balancing market by Eur50 million ($54 million) year on year to Eur290 million and he expects this effect to continue in Q2 as phase two of COVID-19 plans are implemented.

In Italy, the company said it had sold 100% of its 2020 production at Eur57.10/MWh and 50% of 2021 at Eur51.60/MWh.

These achieved prices were down from figures released at the start of the quarter, when 80% of 2020 production had been sold at Eur58.80/MWh and 20% of 2021 at Eur57.80/MWh.

For Iberia, where Enel uses the retail price in its reports, the figures were 100% of 2020 production at Eur73.50/MWh and 80% of 2021 at Eur74.50/MWh.

These were higher when compared with 90% of 2020 sold at Eur72.80/MWh and 60% of 2021 at Eur77.50/MWh at the start of the quarter.