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Enel chief weighs the balance of power

June 19, 2010

FT Interview: by Guy Dinmore in Rome, June 19, 2010

Enel hopes the flotation of its renewable energies division will become Europe’s biggest IPO since the global financial crisis erupted two years ago, but critical environmentalists are questioning whether Italy’s heavily indebted utility, with a suspected “climate sceptic” as chief executive, is as green as its image boasts.

Enel filed a request to the Italian stock exchange on Friday to list its Enel Green Power unit, with placement of a minority stake planned for October, market conditions permitting. Enel could raise up to 4bn euros by selling about 30 per cent of EGP, Fulvio Conti, chief executive, was reported as saying.

Mr Conti, 62, is following the market trend in trying to exploit increased interest in renewable energy worldwide.

But he also stands out as a chief executive who refrains from endorsing the findings of the UN-backed Intergovernmental Panel on Climate Change (IPCC) that most of the increase in global temperatures are “very likely” caused by manmade emissions.

“My personal belief on the IPCC’s views on climate change is not that relevant,” Mr Conti tells the Financial Times when asked to address criticism that he is a climate change sceptic and that Enel is more focused on developing coal and nuclear power.

“It is much better to react now, believing it or not, before the world gets the impact of climate change. We have to do it. It is pure common sense to say let’s do it… My personal belief is in our programmes, initiatives, our investments, efforts and genuine proposals which are contributing to a greener world,” he replies.

Although Enel, as Italy’s largest power generator, is the country’s single largest emitter of greenhouse gases, Mr Conti insists that Enel “can claim to be one of the cleanest utilities.”

Saying Enel should be judged by its numbers, Mr Conti notes that he is spending 1bn euros in research in renewables – including bio-mass, hydrogen, solar and other areas.

“I am demonstrating that we are spending money on projects that are not economic (now) but looking for solutions for the future,” he says.

Founded in December 2008, EGP has installed capacity from renewables in Europe and the Americas of some 5,700 megawatts, with over 600 plants in operation or under construction. Italy contributes nearly half of total installed capacity.

Enel’s numbers have come under scrutiny from Greenpeace, which is being sued by Enel for damages it says the environmental group caused in briefly occupying a planned coal-fired power station in northern Italy.

“The reality we show in our report is that Enel – having some 35% of the market share in Italy – will contribute to less than 10% to reach the EU targets set for Italy (in renewables) by 2020, “ commented Giuseppe Onufrio, Greenpeace Italy director.

“Despite its declarations, Enel’s commitment remains very weak,” Greenpeace alleges in a report, noting that, excluding established hydro and geothermal generation, other renewables in Italy contribute less than one per cent of output for Enel.

Angelo Consoli, a green energy consultant focused on Sicily, sees Mr Conti as “the epitome of the champion of the old energy school, greenwashing his bad energy practices with a misleading advertising campaign.”

“Of course if the CEO of the Italian incumbent energy monopolist is a climate sceptic, I will not feel that his decisions will go in the right direction when it comes to energy production and distribution,” Mr Consoli said. Still, he also complimented Enel on its research, particularly the new generation “Diamond” solar energy project using hydrogen storage.

Enel’s green credentials were questioned when it hired Patrick Moore, a self-declared “climate sceptic” and nuclear power exponent, to speak at its headquarters in February when he attacked the IPCC’s findings and what he called “a fairly major conspiracy” among scientists.

Mr Conti declined to comment on Mr Moore’s views. He called him an “industry expert” among people invited to speak by Enel but who do not necessarily reflect its views.

A key criticism of Enel is that it is slow to facilitate connections to the grid of power produced by others’ wind and solar plants. Italy’s anti-trust authority last week said it was investigating Enel and other suppliers to the grid in Sicily, noting that “artificial dominant positions” in parts of Italy were “affecting conditions of supply”.

Enel says practical limitations are to blame. It also notes that through the installation of “smart meters”, some 48,000 Enel customers last year sold energy to the Italian grid from their own domestic solar panels.

Although the debate over Enel and pollution is set to continue, it appears unlikely to have a major impact on the flotation of EGP. More important, say analysts, are doubts over commitments by Italy and other deficit-cutting governments to sustain high subsidies for power generated by renewables.

Meryvn King, a South African professor who chairs the UN-backed Global Reporting Initiative promoting corporate sustainable development, noted in a speech at Enel that investment funds following guidelines of responsible investment were Enel shareholders.

A former Enel official, who asked not to be named, suggested that Mr Conti was reluctant to speak strongly on climate change because he had to answer primarily to the Italian government which is Enel’s controlling shareholder and has been reluctant to embrace EU climate goals.

Mr Conti says the future lies in coal and nuclear, as well as renewables. “You can’t be arrogantly intellectually perfect. You have to be balanced,” he says.

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