A company that invests in renewable energy

On November 24, the company revealed its plans to, by 2030, invest massively in renewable energy capacity to 120 gigawatts and transform its grids in Europe and Latin America to prepare for an all-electric future. The announcement came weeks after a similar pledge from Iberdrola, Spain's second-largest company, when it invested €75 billion (about R$ 478 billion) in renewables and grids through 2025. In America, NextEra, a pioneering utility that recently eclipsed ExxonMobil in value, also promised to spend a fortune on wind and solar power. The spending plans of the triumvirate are still overshadowed by the vast sums oil companies pour into fossil fuels each year. But they make three things clear: • Renewables have moved from niche to prime time.

• Utilities, once the dowdiest part of the energy universe, are now where the action is.

• The oil industry has a lot to learn if it wants to invade their turf.

For years, it was a hotly debated question how much intermittent wind and solar power an electricity system could absorb without breaking down. The lockdowns, it thinks, helped settle the argument. They crushed demand, squeezing out conventional power generation sources in favor of cheaper renewables. Enel is taking advantage of the favorable political winds. By 2023, it plans to invest €16.8 billion (about R$ 107 billion) in onshore wind and solar power, promising to increase core earnings, or EBITDA, by 13%. Renewables grab everyone's attention. But Enel also proposes massive investments in grids and distribution operating in eight countries. To reinforce and digitalize them for a clean energy future, electric vehicles, and mass electrification, Enel plans investments of €16.2 billion (about R$ 103 billion) over the next three years. It is also open to making acquisitions. Total spending will be funded by a slight increase in net debt, green bonds, and government clean energy programs. The annual EBITDA investment Enel expects to generate as a result marks a turnaround scenario for investment bank UBS. When Mr. Starace, Enel's CEO, took over, the company was heavily in debt and had recently cut dividends. Yet, now he promises a guaranteed payout for the next three years, even as many pandemic-stricken companies can barely look past January 2021. Utilities, on the other hand, like to underpromise and overdeliver. Dangers lie ahead. Increased competition means Enel is lowering its forecasted returns beyond 2023. Its desire to move into India, a minefield of a power market, could lead the company into a strategic blunder. And its push to expand could lead to costly bidding wars for grids, like the one it won in 2018 against Iberdrola in the state of São Paulo.