Winds of change: how Enel and Iberdrola drove the energy transition

Winds of change: how Enel and Iberdrola drove the energy transition

But they will need to wrestle market share from incumbents such as Enel and Iberdrola that have been positioning themselves for years to profit from the shift to cleaner energy, betting the demise of fossil fuels was inevitable. “The energy transition has been part of my life,” Enel Chief Executive Francesco Starace told Reuters. “There was no eureka moment for us. We just said this is too stupid to be continued for a long time.”

Thanks to early decisions to buy power grids and build renewable plants, the once-staid utilities are now among a handful of global green energy majors going into battle with Big Oil to supply low-carbon power full of confidence. European oil giants such as BP, Royal Dutch Shell and Total have sharpened their focus on power, seeing it as the sector to build their businesses around as they reinvent themselves as clean energy suppliers. The transformation of the two companies into global green powerhouses has helped boost their profits and share prices while generating cash and dividends despite a global pandemic. Over the last two years their shares have skyrocketed as investors shifted from oil stocks to buy into businesses they felt had the financial footing and skill sets to lead the accelerating energy transition. tmsnrt.rs/3fwgdeJ

Enel and Iberdrola have built clean energy capacity in key markets such as the United States and Latin America and are now aiming to have a combined 215 gigawatts of their own renewable capacity by 2030 – enough to power some 150 million European homes, based on an estimate by consultancy Wood Mackenzie. Other leading green utilities that have also benefited from the shift away from fossil fuels include wind and solar power giant NextEra Energy in the United states and Denmark’s offshore wind farm specialist Orsted. (Graphic: Stock markets favour green utilities, )

‘KISS THE FROG’ Even before joining Enel at the turn of the century, Starace was pushing companies hooked on oil and coal to switch to less-polluting gas turbines. “This is not the first energy transition, before there were coal steam cycles which then transitioned to gas steam and so on,” he said. “I liked the sustainable side of renewables, the fact you keep reusing the same energy from the sun.”

The turning point for Enel was its creation of Enel Green Power (EGP) in 2008, just after it launched a 39 billion euro takeover of Spain’s Endesa, a deal that boosted its access to Latin America’s fast-growing markets. Starace was tasked with running EGP as a viable independent business which did not rely on the generous incentives governments were offering then to kick-start their green drives. “Renewables were a whole different ball game – smaller plants, less competitive, costlier. It needed its own space with the right footprint and technology mix to deliver,” a source who worked at EGP said. By the time Starace became chief executive of the Enel group in 2014, he lost little time in buying back the part of EGP listed in 2010 so the growth engine was fully in-house. Iberdrola Chief Executive Ignacio Galan made an even earlier switch away from coal and oil when he took the helm at Spain’s largest private utility in 2001.

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