Energy business should focus on complete value chain, says Enel's chief executive
Europe’s largest power company by market capitalization, Enel, has pointed out that breaking up utilities might not be the right thing to do. Enel has committed towards an integrated business model.
Europe's largest power company by market capitalization, Enel, has pointed out that breaking up utilities might not be the right thing to do. Enel has committed towards an integrated business model.
The Chief Executive of Enel, Francesco Starace, has emphasized on the point that it is too risky to leave out certain parts of energy business values chain and betting on certain parts only. He is of the opinion that the disruptive shift from fossil fuel to renewable is still happening and need some more time.
His comments came after an asset swap between EON and RWE, two German utilities. The asset swap of worth €43bn assigns the former to focus on energy network operations and retail customers while the latter will be focusing on the electricity generation.
As stated by a local media news agency Mr. Starace said. "We believe time will tell, honestly, which part of the value chain prevails over which, or whether they both are necessary," he told the Financial Times. "We'd rather not bet and [instead] continue to optimize across the value chain because. . . the market has not yet made up its mind."
He also reiterates that bigger energy firms are facing challenges because old business models are facing challenges from falling cost of renewable energy and also governmental pressure to shift from fossil fuel to renewable energy.
He believes that technological evolution will find their places irrespective of focusing on the specific parts of the value chain and hence it is too risky for that to happen. He believes that technological revolution can guide market when it happens and hence an overall value chain focus is required.
Last year, Enel added 3 gigawatts of capacity around the world. This capacity was from renewable energy power generation. Out of the total installed capacity of 84 GW for Enel, almost fifty percent is from renewable energy sources.
Renewable energy sources are the clean form of energy that helps to combat climate change and reducing the cost of renewable energy is making clean energy affordable.