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Europe’s Biggest Utility Looks Beyond Subsidy for Green Projects

Europe’s Biggest Utility Looks Beyond Subsidy for Green Projects

(Bloomberg) -- Europe’s biggest utility is looking beyond government subsidies to fund its renewable-energy projects, relying increasingly on direct sales of electricity to companies.

Enel SpA, which is the main power provider in Italy, is also one of the world’s largest builders of wind and solar farms, completing 47 projects that produce a total of 3 gigawatts of electricity in 2019.

“In most of the countries in which we operate, there is no longer any need for subsidies,” Antonio Cammisecra, chief executive officer of the utility’s Enel Green Power unit, said in an interview.

Europe’s Biggest Utility Looks Beyond Subsidy for Green Projects

The remarks underscore a shift in the way clean-energy projects are drawing investment. In years past, Enel and its competitors relied on government guarantees for a price on the power they fed into national electric grids. Now, those companies are signing Power Purchase Agreements directly with major energy users.

Established in 2010, the Enel Green Power unit now has capacity of 46 gigawatts worldwide. It added 190 megawatts more wind and solar farms than it did last year in Europe, the Americas, Asia, Africa and Oceania. The goal is to bring total capacity to 60 gigawatts by 2022.

Construction Record

“We have beaten our yearly renewable capacity construction record,” Cammisecra said.

Cammisecra said companies are seeking to sign PPAs to lock in a source of clean electricity and fix power prices, which can be volatile in the wholesale market.

“For energy intensive sectors, from mining to manufacturing, it is cheaper to consume renewable energy at current fossil fuel prices,” he said. “Surely it is advisable to build a new renewable energy plant than a thermal power plant and it’s starting to be convenient to shut down thermoelectric plants in countries such as Chile and Spain.”

The volume of PPAs signed by companies reached to 17.4 gigawatts last year, according to research from BloombergNEF. The volumes signed across October and November 2019 were greater than the total PPA activity globally between 2009 and 2014, the London-based research arm of Bloomberg LP said.

Read More: Corporate PPA Deal Tracker

Enel signed PPAs with technology companies such as Facebook Inc. and Google, owned by Alphabet Inc., and with the French food company Danone. Cammisecra said he noticed that more and more retail brands are conscious of where there electricity comes from and want to assure their customers they have locked in greener supplies.

No Going Back

“That means that companies are beginning to glimpse the need to inform their customers about the environmental sustainability of their products, especially after big social movements such as Fridays for Future,” he said, referring to the student group that held protests across Europe raising concern about global warming.

“Once we have accustomed consumers to a standard of sustainability, there is no going back,” he said. “Even if fossil production should become cheaper, you cannot go back. That’s a much more stable driver than government subsidies.”

To contact the reporter on this story: Alberto Brambilla in Rome at abrambilla8@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Alessandro Speciale

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