Q: According to fDi Markets [fDi Intelligence’s greenfield FDI database], renewable energy was the fastest growing sector for FDI in 2011. Could you tell me what has led to the increased popularity of renewable energy among investors, especially given the uncertainties facing the industry following the 2008 global economic crisis?

A: Actually during the 2008 crisis this was one of the few industries that faced fewer uncertainties in general. We have to separate the world at that time into two parts, which are basically Europe and the part of the world that is not following a European renewable energy policy. Because there is a big difference between them, then and today, and it shows in the growth that we have seen.


In 2008, Europe was relatively well insulated from the crisis. It continued to grow following incentive policies that remained in place several years after the crisis and have only been addressed very recently. So at the beginning of the crisis, this industry in Europe basically suffered very little – it was insulated by this well-managed and well-run system that Europe had put in place for its growth.

As for the other part of the world, we started to see in 2009 and 2010 a huge wave of investment in renewables that had little to do with incentivisation and a lot to do with growing energy demand that had to be met. These two trends in a way continued, with Europe slowly but steadily decreasing the pace of growth, and the rest of the world accelerating growth because energy demand began to be a problem in many areas and renewable energy was a good asset [in meeting] this need.

We have seen these two trends clearly merging in the past few years; we see Europe slowing down and the world picking up in demand, which is more than compensating for the decrease in Europe.

Q: fDi Markets found that in 2011 the number of FDI projects into coal, oil and natural gas fell by 6%. Do you believe that interest in natural non-renewable energy resources is declining?

A: I think that it is certainly declining in Europe and probably it is declining in other parts of the world. Frankly I believe this has to do with two major issues. First, again separating Europe from the rest of the world, Europe needs to look at growth that takes into account the lack of demand that it is experiencing. It is no surprise that a lot of projects have been put on hold or cancelled. Second, in many parts of the world, large installations of fossil fuel power plants [are] encountering increasing difficulties.

Q: According to fDi data, Enel has emerged as one of the top investors in FDI projects in the renewable energy sector. Could you provide us with a more detailed background about the regions Enel Green Power is actively engaged in?

A: We are basically engaged in three macro areas in the world. One is Europe and Italy, another one is Iberia and Latin America, and the third is North America. So the trends are clearly quite different in the three regions. In Europe [in 2012] we basically have completed our growth trajectory and we see [it] as a year of installation and investment in European and Italian territory. [Work] will go on, but not in the same order of magnitude.

In 2012 we made a lot of investments in North America, following the clear cycle of tax incentives that the US has put in place to foster renewable growth. This called for an acceleration of investments this year in order to qualify for tax credits.

In 2013 and onwards, we see much growth and a lot of investments directed into Latin America: basically Mexico and Central American states, and also in Peru and Colombia – we are directing a big flow of investments there over the next two to three years. On the back of this we will see investments in new countries starting to show in our portfolio. One is South Africa, another is Turkey and probably Morocco will come at the very end of the year.

This year we invested a total of about €1.5bn, from which we created additional capacity of 900 megawatts, of which about half is in North America. The rest is basically in Europe and a tiny part in Latin America.

In 2013 it will probably be the other way round. Latin America will be about 50% of investment and the rest will be split between North America and Europe. More than 90% of our capital expenditure is into greenfield projects. [Out of] €1.5bn [in 2012], almost all of it was greenfield, about 95%.

Q: Demand for renewable energy has come under increased pressure, given that government budgets to support ventures within this sector have been reduced. Therefore how difficult has it been for Enel to secure financing for its projects?

A: We have a distinctive growth strategy which is a self-financed one, so basically the limit of our growth is the capability to raise cash, but we have a very large cash flow. That makes us relatively insulated from difficulties on the credit market. Having said this, we identified this trend of a reduction of growth in Europe about two years ago and [then] we moved our strategic development into Latin America and the US, so when this change in regulation happened in Europe, we were well equipped. We had time to shift our growth focus so we were not affected by the change in Europe.

Q: Additionally how is the EU’s policy landscape changing with regards to renewable energy, and will it become more geared towards supporting and encouraging enterprises engaged in this sector to grow and develop their businesses?

A: I think the EU clearly has an aim to push for the de-carbonisation of the energy portfolio in Europe. The commission is working to a 2020 deadline, and we know that there are different positions, but certainly there is no doubt that Europe wants to move away from fossil fuels and more towards renewables. So I think that it will not be as generous and as indiscriminate as it has been in the past. I think forces will push for competitiveness and cost-effectiveness of renewables. This should be welcomed because we think renewables today are very close to achieving this equilibrium in Europe and they are already at that point in many other parts of the world. So [I think] there will be accelerated growth in Europe after a few years of competitive assessment of the current renewable energy sources.

Q: What is your outlook for the renewable energy sector in 2013? Do you think the growth of this sector will decline or will renewable energy continue to perform well as a generator of FDI, and why?

A: Two-thousand and thirteen is a new year, and there are two countries in the world that will important for the renewable sector. One is China and the other is the US, for different reasons.

[Next year] seems to be a gap year in renewable energy growth. For example in the US, following [the re-election of US president Barack Obama] and a new decision on what kind of fiscal incentives it will have, there will have to be discussions. This is not new to the US, we have seen it twice before, and we know it will take a few months, but that [may] hamper development.

Having said that we believe the rest of the world will push growth at a faster pace than in 2012 and it remains to be seen if that will be enough to compensate for any breaks in China and the US.