EnEnel SpA is set to shake up its renewable-energy strategy by concentrating on its most profitable projects while cutting back on less lucrative activities, people familiar with the matter said.
Chief Executive Officer Flavio Cattaneo’s upcoming plan is expected to focus on projects seen as high-margin in markets including Italy, Enel’s most profitable region, the people said. Under previous CEO Francesco Starace, Enel piled up renewable assets for years in a bid to become a global green-energy leader — while pushing debt to record levels.
Under its new strategy, the utility would scale back green-plant investments in areas where energy prices can’t guarantee the higher margins, the people said, asking not to be named before the details are made public.
The new approach marks a shift away from the company’s previous strategy and meshes with the CEO’s push to pass higher returns on to investors, the people said. Rome-based Enel will announce its 2024-2026 business plan on November 22, when Cattaneo is due to lay out his vision for Italy’s biggest listed company.
Analysts say that while overall investment levels may not change, they expect a shift in emphasis.
Enel is seen reducing its renewables investments by about a third compared with goals announced at a previous capital markets day “in exchange for higher-returning projects,” Goldman Sachs analysts said in a note last month.
The company will likely maintain its capex target of €37 billion ($40 billion) and could reallocate investments in favor of distribution activities at the expense of future renewables spending, Barclays analysts wrote in a note dated November 20.