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Enel to spend EUR 8.3bn on renewables in 3 years

Enel

November 21 (Renewables Now) - Italian utility Enel SpA (BIT:ENEL) intends to invest some EUR 8.3 billion (USD 9.7bn) over the next three years to grow in the renewable energy sector, it said on Tuesday.

As part of the group’s 2018-2020 strategic plan, Enel would spend enough funds to add 7.8 GW of renewables capacity. About EUR 3.4 billion will be invested under the build, sell and operate (BSO) model, which would result in 3.8 GW of capacity. The remaining additions will be delivered organically, it said.

Overall, the group expects to invest EUR 24.6 billion between 2018 and 2020, with 95% of the growth capital expenditure (capex) to be directed towards non-merchant risk businesses, such as Networks, Renewables and Thermal Generation. The sum is EUR 500 million higher than what was outlined in the prior plan.

Enel pointed out that 80% of the growth capex plan is now dedicated to mature markets, compared to 60% previously. The group will increase capex by 40% in North and Central America, by 23% in Italy and by 35% in Iberia at the expense of South America, where investments will be reduced by 26% mainly in renewables. Enel noted that the planned increases in North and Central America, as well as in Iberia, are primarily driven by renewables growth.

Through 2020, Enel plans to get rid of EUR 3.2 billion worth of existing assets mainly in Thermal Generation, while also exiting non-strategic countries. It will invest up to EUR 4.7 billion to buy out minorities, acquire assets in the Networks and e-Solutions businesses, and in equity partnerships.

The group will continue to work on simplifying its structure by reducing the number of operating companies in South America to 30 by 2020 from the current 53. Furthermore, it will pay even more attention to digitalisation and intends to increase growth capex in the field to EUR 5.3 billion from the previously planned EUR 4.7 billion.

The following table shows the group’s financial targets for the period through 2020.

  2017 2018 2019 2020 CAGR (%) 2017-2020
Ordinary EBITDA (EUR billion) ~15.5 ~16.2 ~17.2 ~18.2 ~ +6%
New ordinary income (EUR billion) ~3.6 ~4.1 ~4.8 ~5.4 ~ +15%
Minimum dividend per share (EUR) 0.21 0.28 -- -- --
Pay-out ratio 65% 70% 70% 70% +5 p.p.
Implicit dividend per share (EUR) 0.23 0.28 0.33 0.37 ~ +17%
FFO/Net debt 27% 27% 29% 31% ~ +4 p.p.

(EUR 1.0 = USD 1.173)

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Ivan is the mergers and acquisitions expert in Renewables Now with a passion for big deals and ambitious capacity plans.

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