An interview with Francesca Gostinelli, Head of Group Strategy, Economics, and Scenario Planning at Enel
At Enel, renewable energy and a major energy provider go hand in hand. According to German statistics portal Statista, Enel is not only Europe’s largest power company, but also the largest in the world. Enel is now also the most important private player in renewables worldwide – a “super major” in this sector with around 49 gigawatts of installed renewable capacity. Out of the 217 terawatt-hours of the Enel group’s net electricity production in 2020 (including managed capacity), around 54 per cent was generated from renewable sources: by 2030, this figure is intended to grow to over 80 per cent. However, producing energy from renewables is just one area where the company is leading the way. Digitalisation is another: since the 1990s, Enel has equipped more than 30 million households with digital electricity meters. Although Francesca Gostinelli believes that decarbonisation, electrification, and digitalisation will undoubtedly transform the role played by power companies, she is also convinced that sustainable energy sources will bring huge opportunities – and not just for companies like hers.
The Quintessence: Cross your heart – how much renewable energy do you already use at home?
Francesca Gostinelli: My home is powered by renewable electricity and our multi-families building is looking into possible measures to install solar panels and increase energy efficiency. Indeed, a very important change in my daily life, relating to energy, has been the switch to a fully electric car. In my family, we are also embracing behaviours that can reduce our impact on the environment, such as eating less beef, trying to be circular in our consumption habits (reduce, reuse, recycle), buying km zero food products, using less plastic.
How important do you consider the transition to sustainable energy to be?
F. G.: The transition isn’t just important, it is vital. The energy transition has been driven primarily by climate change concerns, but other multiple effects from such a transition are becoming evident to all stakeholders. Zero emission technologies will improve people’s lives significantly, while entailing a wide range of positive effects on the way resources are currently produced and used, thanks to circular economy practices and smarter energy systems.
Embracing the transition gives companies greater resilience in order to overcome vulnerability to climate change and its effects. That’s why I expect to see increasing cooperation among actors working to achieve similar goals. Such engagement will naturally lead to stakeholder partnerships enabling thriving co-opetition and cooperation, imagining new set-ups and solutions, not only across and along value chains, but also across geographies and communities.
What was the reason behind Enel’s involvement with renewables in the first place?
F. G.: The Enel Group’s renewable footprint has grown over tenfold since the establishment in 2008 of Enel Green Power (EGP), the Group’s company dedicated to the development of renewables. At the time, such a commitment seemed quite risky; many used to think that clean forms of energy, which were then often referred to as “alternative”, were destined to remain marginal and labeled to be subsidised for good.
Since the early days of EGP, we placed a bet on green energy as we saw the transition coming. Towards this aim, we launched a business that did not rely on the major government incentives offered in those days, but we preferred a more self-sustaining model addressing those areas of the world characterised by an abundance of renewable energy sources alongside a steady regulatory framework and overall social acceptance of green energy projects.
„Wir steigen schrittweise aus fossilen Brennstoffen aus. Ein wichtiger Meilenstein ist der vollständige Ausstieg aus der Kohle im Jahr 2027.“
Francesca Gostinelli, Head of strategy, economics and scenario planning bei Enel
By 2050, the Enel Group aims to fully decarbonise its energy generation – how do you plan to achieve this goal?
F. G.: In line with our Strategic Plan up to 2030, our installed renewable capacity is expected to reach around 145 gigawatts in 2030, which is equal to approximately a threefold increase compared with today. At the same time, we plan to fully phase out our coal capacity by 2027 from the 8.9 gigawatts currently installed and consolidate our position as a “Renewables Super Major” with more than four per cent of the global market share, compared with the current 2.5 per cent. The Group’s emission-free production is set to reach around 85 per cent in 2030, from the current 66 per cent, in line with the targeted drop of direct CO2 emissions in 2030 to 82 gCO2eq/kWh from 214 gCO2eq/kWh in 2020: this target has been certified by the Science-Based Targets initiative (SBTi) as compliant with the 1.5 °C climate pathway.
Why is it still not possible to switch over completely to renewables with new capacity coming online?
F. G.: We are gradually phasing out fossil fuels, a major milestone being the total phase-out of coal in 2027. Please note that back in 2017 we used to operate as much as 16 gigawatts of coal capacity, which declined to 11.7 gigawatts in 2019 and further then down to the current 8.9 gigawatts, of which 5.6 gigawatts are located in Italy, 2.8 in Spain, and roughly 0.5 gigawatts in Latin America.
In order to decarbonise our society, we need massive electrification of final energy uses that are going to be supplied with increasing volumes of electricity from renewable sources. However, this transition, that some might call “revolution”, also poses some challenges that must be faced. A new market design based on renewable generation needs to rely on the appropriate services and infrastructure in order to ensure grid stability, which can be achieved through technological development and hybridisation, for example by coupling different generation technologies that enhance output steadiness, limiting the impact of intermittency. These investments must leverage regulatory frameworks that might support solutions in line with the transition, so as to keep providing reliable services to customers and supporting the growing electrification demand, while continuing to substitute current fossil fuel generation with renewables.
Does renewable energy actually pay off in economic terms?
F. G.: Renewables have a shorter time to market and lower costs than fossil fuels. Nowadays they constitute the cheapest source of energy in terms of Levelised Cost of Energy (LCOE) in many countries, as per the mapping BloombergNEF publishes periodically on LCOE. We have developed our strategic framework under the “sustainability is value” paradigm and we believe this is the direction that every company should take.
What role do electronics essentially play in sustainable energy generation?
F. G.: I would say electronics, together with digitalisation, are key elements. Four years ago, the Enel Group kicked off a massive digital transformation, setting the foundations to evolve towards a digital company. We successfully completed our Cloud transformation in April 2019, being the first major utility that is 100 per cent in the Cloud. This transformation has significantly impacted our performance in terms of scalability, automation, efficiency and accessibility alongside being preparatory to introduce a platform-based approach aimed at managing increasing levels of complexity brought on by the energy transition. Within this transition, utilities are indeed no longer seen only as owners or operators of assets, but potentially as enablers and orchestrators of more complex business relationships and ecosystems.
What is needed to guarantee a stable power supply?
F. G.: We do not see any contrast between the stability of the system and renewable penetration. Renewables are pivoting not only decarbonisation goals but also greater system resilience and long-term sustainability. They are leading such transition, but not alone: they must be accompanied by a transformation of the system as a whole in terms of network upgrade, market design features as well as storage systems penetration.
In this context, the non-programmable nature of renewables should be coupled with investments in advanced energy services and assets, including intelligent distribution networks, storage and demand response in order to ensure flexibility alongside security of energy systems. Storage systems in particular will allow a more efficient release of energy into the network with benefits for both energy producers and the grid as a whole.
Enel also provides various services around the topic of sustainable energy. how does this help you on the way to making energy sustainable?
F. G.: Digitalisation has radically changed the way we communicate, buy products and use services. In order to fully leverage the opportunities created by this new scenario, Enel has set up Enel X, its global business line offering beyond commodity services that accelerate innovation and drive the energy transition. Enel X manages services such as demand response for around 7.4 gigawatts of total capacity at global level and around 137 megawatts of storage capacity installed worldwide, as well as around 232,000 public and private electric vehicle charging points made available around the globe, including interoperable points. Furthermore, the company operates more than 1,475 electric buses, mainly in Latin America. Through its advanced solutions, including energy management, financial services and electric mobility, Enel X provides each partner with an intuitive, personalised ecosystem of tech platforms and consulting services, focusing on sustainability and circular economy principles in order to provide people, communities, institutions and companies with an alternative model that respects the environment and integrates technological innovation into daily life. Enel X brings the customer to the next level in a holistic way.
Enel has also set up the Open Innovability® Platform – what is this exactly?
F. G.: Enel has combined innovation and sustainability in a model called “Innovability®”, based on the fundamental concept that in order to be sustainable it is necessary to constantly innovate and, at the same time, every innovation pursued must be sustainable. Sustainability is the real engine of innovation and an accelerator of the strategic industrial plan. To innovate, Enel has adopted an open approach that leverages an ecosystem of various players. To engage them, Enel has created tools, such as openinnovability.com that works as a crowdsourcing platform that collects innovative solutions to challenges.
The community of 500,000 highly qualified solvers has sent over 7,500 proposals from more than 100 countries over the years. To date, more than 150 challenges have been launched and almost 300 proposals have been awarded, of which 65 have been deployed. I strongly believe the approach to innovation and sustainability together is a competitive edge for companies that are inspired by a purpose like “we empower sustainable progress”: you need to go and make things happen, and to make these things better and better, you need to play together.
Do you see the change of energy as a risk or an opportunity?
F. G.: We believe the energy transition offers opportunities for many companies in various industries, but while some companies are already benefitting from this transition, others are lagging behind. The electricity utility sector, in particular, is poised to be one of the greatest beneficiaries from the energy transition.
Utilities have substantially increased their role as market players thanks to their central position in the electricity space. This reality has widened the opportunities in a sustainable environment since these companies have become vital actors connecting the many transition elements. Utilities have lots of opportunities, they are changing their speed, they are upgrading their skills, they are reconsidering their organisation with the aim to better suit the new challenges in the ecosystems-industry world.
So yes, we believe that any energy policy favoring sustainable sources is an opportunity for us and like-minded utilities and represents, undoubtedly, a giant opportunity for society to change for the better.
Are there technological trends that you find particularly interesting in this context?
F. G.: Technology trends, such as the penetration of low-cost renewable technologies, electrification, efficient batteries for electric mobility and smarter grids are supporting the synergic pursuit of those policy objectives. They are the driving forces transforming the energy landscape and creating a new generation of efficiency solutions. New digital solutions, for example, are becoming smarter and are able to better integrate external data sources, improving energy management systems, increasing grid flexibility, energy demand forecasts and response capabilities.
How will the future energy landscape differ from that of today?
F. G.: The energy transition is gradually empowering customers who are turning into active, central players in the energy sector from being passive recipients of energy. This is happening through the spread of distributed energy resources such as residential or commercial and industrial rooftop photovoltaics, home batteries, as well as electric vehicles. In this sense, with the green transition the energy sector is becoming more democratic, participatory and, to put it simply, accessible to all.
What will the energy landscape look like worldwide in 30 years?
F. G.: The future we see and advocate for is a future in which the world manages to limit the temperature increase to 1.5 °C and build an effective adaptation framework to cope with the inevitable effects that we are in any case going to face. We see increasingly good signs of this, as more and more governments and private companies around the world set ambitious net zero commitments.
Moreover, the financial community is undergoing structural changes by prioritizing sustainable behaviours and practices. Beside policies, technology will be a key enabler of the future world we will live in. The increase in renewables will steadily beat expectations, as has happened until today. Just think that in the last two years IEA has increased the terawatt of renewables expected to be in operation globally in 2040 by around 20 per cent. Energy will be more democratic and accessible, in part thanks to the dramatic advancements that digital technologies will enable. 2050 is still far away, and if we start acting now and keep advancing on the most sustainable solutions, we increase our chances to allow humanity to keep on prospering without overburdening the planet and its natural limitations.