Enel's rising renewables output drives profits, despite falling electricity price

Renewables provided the bright spot for Enel as the Italian energy group's first quarter results showed overall revenues declining more than 26% on the year — mainly as a result of lower electricity prices and less generation from thermal sources — but earnings on the up.

Higher electricity generation from renewable sources helped the Enel group post first quarter earnings of €6.1bn ($6.6bn) measured before income tax, depreciation and amortisation (Ebitda), some 12% higher than the same period last year.

While revenues from thermal generation were down 51.7% on the year, at €5.9bn, Enel Green Power’s revenues of €3bn were up 17% on the corresponding quarter of 2023.

Optimisation of costs also contributed to an improvement in margins on sales, Enel said, as the group posted net ordinary income of €2.2bn, compared with $1.5bn in the first quarter of 2023.

“The solid results in the first quarter of 2024 confirm the effectiveness of the managerial actions we have undertaken with the 2024-2026 strategic plan, as well as the resilience of our business model in all the countries in which we operate,” said Enel CFO Stefano De Angelis.

Enel Green Power’s improvement came mainly from an increase in generated output and sales from solar and hydro sources, especially in Italy, Spain and Chile.

An increase in earnings from Enel Grids was attributed mainly to tariff adjustments in Italy and Spain, although this was partially offset by the recognition in 2023 in Brazil of a concession termination fee.

Electricity generation from renewable sources, including volumes produced by managed capacity, reached 36.7TWh in the quarter, up 11% on the year. This compared with thermal generation's 9.4TWh, which was down from 17TWh in the same period of 2023.

Enel’s strategic plan for the 2024-2026 period, announced last October, earmarks a planned gross capex of approximately €35.8bn, including €18.6bn in grids, and approximately €12.1bn in renewables, focusing on onshore wind, solar and battery storage.

Enel has since said it plans to make investments in distribution networks focused on geographical areas “with a more balanced and clearer regulatory framework, especially in Italy”.

The utility also targeted “selective investments in renewables, aimed at maximizing the return on invested capital and minimizing risks.”

The company maintained guidance provided to financial markets during the presentation of the 2024-2026 Strategic Plan in November 2023, with expectations of a Ebitda between €22.1bn and €22.8 bn and a net ordinary profit between €6.6bn and €6.8bn.