A zero-emissions future with renewable energy and electrification: the 2022-2024 Strategic Plan

Published on Monday, 29 November 2021

In order to achieve sustainable growth, we need an equilibrium the likes of which have never been seen before: we are living in a decade that is crucial for containing the effects of climate change and avoiding the catastrophic consequences of an average temperature increase of more than 1.5° C. It was with this statement that Francesco Starace, CEO and General Manager of our Group, together with the CFO Alberto De Paoli, opened our Capital Markets Day 2021, the customary year-end event during which our Strategic Plan is presented to analysts. As in the previous edition, this recent event – which was held in Milan on November 24 - was an opportunity to present not only the plan for the 2022-2024 three-year period, but also to reiterate our vision for 2030.

The entire world is moving towards the Zero Emissions (Net Zero) objective, and to achieve it there needs to be a huge expansion in electrification with a simultaneous increase in the decarbonization of energy production. This is an objective we share and it's one that we're ramping up our commitment towards, as Starace explained, "bringing forward the Group’s full decarbonization target by ten years, reaching Net Zero by 2040. We will continue to grow in renewables, leveraging on what is already the world’s leading private renewable asset base." 

To this end, coal-fired power generation will be progressively phased out, a process that will be completed by 2027, and gas-fired power generation will follow suit by 2040. 

This is the direction in which our Strategic Plan is moving, including a €45 billion investment program spanning the 2022-2024 three-year period (a 12% increase compared to the plan presented last year) and it is structured across four pillars.

Firstly, to continue investing in decarbonization through renewable energy production: as a Group, we plan to mobilize €210 billion between 2021 and 2030, 170 billion of which will be in the form of direct investments (a 6% increase with respect to the previous plan) with the remaining 40 billion coming from third parties.

Around 70 billion will be dedicated to renewables with the aim of reaching a renewable energy capacity of approximately 154 GW by 2030 (with 596 MW of new capacity coming online in Italy alone over the 2022-2024 three-year period), three times the global level in 2020. An equivalent amount will be allocated to expanding and enhancing the efficiency of the Infrastructure and Networks, so as to strengthen their resilience and ability to cope with any possible extreme weather events caused by global warming.

The strategy's second pillar is greater electrification of consumption, with people and their day-to-day-choices playing a vital role in this change.

The strategic actions, supported by a unified platform that’s capable of managing the world's largest customer base among private operators, will result in the creation of significant shared value for consumers by 2030: a reduction in energy costs of up to 40%, as well as up to an 80% reduction in their carbon footprint. All of which translates into a significant and tangible improvement in everyone's quality of life.

The third pillar will further reinforce the central role of the customer through the creation of a new business line that will identify commercial strategies and investment plans aimed at meeting the needs of customers more effectively, capitalizing once again on the electrification of consumption and the improvement of the quality of service.

Last but not least, the fourth and final strategic pillar of our Plan concerns bringing forward the Net Zero objectives.

The investments and strategic actions will not only have a positive impact on the environment and customers, they will also be beneficial to shareholders who, as the CFO De Paoli underlined, can expect the fixed dividend per share (DPS) to grow by 13% over the three-year period, reaching € 0.43 per share. While over the next decade, the Group's ordinary EBITDA is estimated to increase at a Compound Annual Growth Rate (CAGR) of 5-6%, with net ordinary income growing at a CAGR of 6-7%.

"Electrification,” explained Starace as he concluded the presentation, "will happen much faster than we think. In recent years we've built a mechanism that enables us to take full advantage of all the opportunities that such a change would offer, to be ready at exactly the right time. And that time is now."

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