Enel ramps up clean energy as it steps up climate goals

Enel ramps up clean energy as it steps up climate goals
FILE PHOTO: The new logo of Italy's biggest utility Enel is seen inside its flagship store in downtown Milan, Italy, May 4, 2018. REUTERS/Stefano Rellandini Copyright STEFANO RELLANDINI(Reuters)
By Reuters
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By Stephen Jewkes

MILAN (Reuters) - Italy's Enel <ENEI.MI> aims to spend more to fund growth in clean energy and networks as it speeds up plans to reduce its carbon footprint and meet growing demand for electricity, Europe’s biggest utility said on Tuesday.

In its new business plan, Enel said it would spend 28.7 billion euros (£24.5 billion) through 2022 as it looks to install 4,700 megawatts of new green energy per year and cut its coal-fired electricity production capacity by 61%.

The group, which is committed to phasing out coal by 2030, said it expects renewable energy to account for 60% of its total capacity in three years, driving its carbon-free production to 68% by 2022.

"Renewables are no longer the alternative they are the generation of the future," CEO Francesco Starace said, adding growth would be mainly organic.

Enel, which controls Spain's biggest utility Endesa <ELE.MC>, has earmarked most of its renewable energy spend to decarbonise plants in Italy, Spain and Chile while developing green power purchase schemes in Brazil and the United States.

As governments around the world introduce more stringent rules to meet climate targets, Europe's power sector is undergoing significant change driven by a boom in renewable energy as costs fall and technology advances.

The International Energy Authority estimates that by 2040 around 70% of global electricity will be generated from green sources, four times higher than today.

The world's biggest private green energy generator said it would also raise spending on its grids infrastructure by 7% to almost 12 billion euros.

"Grids remain crucial enablers of the energy transition," Starace said, adding the increasing digitalisation of networks also generated new business services.

The state controlled utility, which expects its carbon reduction strategy to drive profitability, said it expected its ordinary net profit to grow by 8.3% over the period 2019-2022, raising its 2021 target to 5.8 billion euros.

In its previous plan, Enel said it expected annual growth in ordinary net profit of around 11% in the period 2018-2021.

It confirmed a 70% payout ratio while promising a 7.7% growth in its minimum dividend per share (DPS) to 0.4 euro in 2022. Enel will pay investors the higher amount between the payout ratio and minimum DPS.

Net debt is expected to rise over the period to around 47.3 billion euros due to the increase in investments.

At 0953 GMT Enel shares were down 1.15% while the European utility sector <.SX6P> was down 0.4%.

(Reporting by Stephen Jewkes; editing by Jason Neely and Ed Osmond)

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