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Reports 2013

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Letter to shareholders and other stakeholders

“The results of the past year have now reached and in some cases exceeded the targets announced to investors and have permitted us to confirm the good returns offered by our stock.“

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Dear stakeholders,
The economic crisis that has reigned in recent years in many western countries appears to have passed through its most acute phase. Some countries, like the United States, have started down the road to recovery more decisively, while others, such as the euro-area countries, are individually regaining economic stability but are also struggling to emerge from the crisis at the same speed. Then there are the emerging economies where the Group is present, such as those in Latin America, which arecontinuing to grow.
The trend in primary energy demand clearly reflects these dynamics. In the euro area, the fragile and slow recovery has not yet triggered a rise in consumption, which remains at its level of nearly two decades ago. Also weighing on the performance of the electricity industry in some countries, such as Italy and Spain, which are of great importance for Enel, are regulatory policies that have often looked to utilities as a source of funding for state budgets. The situation is different in eastern Europe and in Latin America, where development and economic growth continue to sustain the demand for electricity and gas, making new investment profitable. The growth of the renewable energy sector remains stable at the global level.
The conditions I have described represent a cross-section of a complex reality that Enel has tackled by exploiting its geographic diversification, a well-balanced mix of generation technologies, management action to reduce costs and the optimization of investments and the generation of cash flow, all accompanied by the expansion of the Group, especially in emerging markets and in renewable energy.

The results of the past year have now reached and in some cases exceeded the targets announced to investors and have permitted us to confirm the good returns offered by our stock.

The gross operating margin rose by 7.6% compared with 2012, reaching €17,011 million, despite revenue falling from €84,949 million in 2012 to €80,535 million in 2013.
At the end of 2013, net financial debt had fallen to €39,862 million, a decrease of €3,086 million from the €42,948 million registered at the end of 2012 and about €16 billion lower than its peak in 2007. The results of current operations and non-recurring transactions completed during the year, including asset disposals, more than offset the cash requirements of investments and the payments of dividends, interest and taxes, enabling us to maintain a strong balance sheet. Enel generated free cash flow in the last f ew years, including 2013, of €3 billion.

For the future, we will face new market dynamics that are emerging under the pressure of four macro trends: the spread of new technologies, the growing contribution of the emerging markets to the world economy, the proactive role of customers and new approaches of institutions and governments in their energy and environmental policies.

The priorities on which we will concentrate are:

  • redefining our strategy in response to the new business model and focusing:
    • on restructuring conventional generation in Italy and Spain and selective growth in that segment in growth markets;
    • on strengthening our leadership in renewable energy, with the creation of new capacity in high-potential markets and the development of new technologies on the path towards grid parity;
    • on maintaining our leadership in efficiency, service quality and the smart technologies of our distribution grid;
    • on delivering high-value-added services for our customers;
  • maximizing cash flows, in both mature and emerging markets, through continuous improvements in operating efficiency, a selective investment plan and stringent control over working capital;
  • completing the debt reduction plan, optimizing our asset portfolio and increasing the economic interest of the Group through minority buyouts and corporate reorganization.

These priorities are marked by a constant drive towards innovation, the only way to maintain and renew our leadership on a lasting basis, and by a strong focus on the sustainability of our operations, as a prerequisite for adding value over time to the benefit of our stakeholders.
Buoyed by the results we have achieved and aware of the tools we have to meet the challenges that lie ahead, we will continue to work to achieve these value targets in the markets of significance to our shareholders.

The contribution of the operating divisions to Group performance is briefly described below.

In 2013, macroeconomic conditions in Italy and the rest of Europe led to a further decline in electricity demand, which amounted to 317.1 TWh (-3.4% on the previous year). This situation, together with the increasing share of output generated from renewable sources, has tightened competition and increased the demand for balancing services for the system.
Generation by the thermal power plants of the Division declined by 13.9% from 2012. Due to the considerable water availability during the year, hydroelectric generation recorded a 27.4% increase.
Overall, the energy generated by the Division in Italy amounted to 59.6 TWh in 2013 (-5% on the previous year).
The gross operating margin of the Generation and Energy Management area amounted to €1,176 million in 2013, an increase of 7.8% compared with 2012, with a significant contribution coming from the services market, made possible by the availability and flexibility of our plant assets.
In the gas segment, a revision of withdrawal commitments allowed us to rebalance volumes, thereby permitting us to avoid extra costs for lower-than-agreed withdrawals. The continuation of actions to improve the operating efficiency, reliability and safety of our plants also enabled significant cost savings compared with 2012.

The Sales area in 2013 continued to focus its attention on the most valuable segments of the mass market.

In a highly competitive retail market, characterized by increasingly knowledgeable customers, the strategy we have adopted seeks to innovate our product range through the development of a wide range of turnkey solutions for more responsible and efficient energy use, the so-called “New Downstream”, shifting consumption to the most efficient supplier of electricity.

Enel Energia was once again the leading Italian operator in the energy market, with about 5.1 million electricity customers and 3.3 million natural gas customers at the end of 2013. Similarly, Enel Servizio Elettrico remained the leading operator in the enhanced protection market, with 22.4 million customers at December 31, 2013 (down 1.2 million compared with 2012 due to the gradual liberalization of the market).
The improvement in the quality of customer service perceived by customers enabled the two companies to hold first and second place in the ranking prepared by the Authority for Electricity and Gas (the Authority) of the best contact centers in the industry for the third year in a row. This performance was achieved through the rationalization of systems and integrated management of customers, without neglecting a constant focus on internal efficiency.
Quality is a distinguishing factor in developing the New Downstream segment. The new product offering, launched as a pilot project under the Enel Green Solution brand, has enabled Enel customers to improve the efficiency of their homes.
Our strategy and the actions of management are reflected in a gross operating margin of €866 million, an increase of 42.2% compared with 2012 and 54% compar ed with 2011.

The strong operational and financial performance of the Infrastructure and Networks Division in 2013 confirms Enel’s leadership in electricity distribution, with a total of 31.7 million customers served and 230 TWh of power distributed. Last year, the Division had revenues of €7,698 million and a gross operating margin of €4,008 million, an incr ease of 10.6% compared with 2012.
The great commitment to operational excellence produced a further improvement in the service quality, easily outperforming the targets set by the Authority. The number of interruptions per customer declined from 3.7 in 2012 to 3.3 in 2013, while the total duration of outages per customer improved sharply, reaching an average of 41 minutes, compared with 46 in 2012.
In 2013, Enel connected about 105 thousand renewable generation plants to the grid (1,800 MW). The total number of plants connected to our network has reached 540 thousand, with a capacity of 25,500 MW.
In Italy, the automated remote management system for electronic meters executed more than 7 million contract transactions and more than 400 million remote readings. In Spain, the installation of electronic meters continued with the installation of more than 4 million units, with a goal of serving about 13 million customers in the coming years.
In the field of smart grids, Enel confirmed its European leadership, chairing the “European Distribution System Operators (EDSO) for Smart Grids” association, through which it develops the implementation plans for pilot projects. During 2013, several projects were initiated with financing under the 7th Framework Programme of the European Commission, seeking to introduce smart grid and smart city technologies, including the evolvDSO, ADVANCED and Grid4EU projects.
Innovative projects also continued in Italy, such as the smart grid project in Isernia – with support from the Authority – and the projects of the Interregional Operational Plan for the southern regions funded by the Ministry for Economic Development.
In the smart cities field, Enel has launched projects in Italy, in L’Aquila, and at the international level, in Santiago, Chile, initiatives that join the other projects of the Enel Group around the world (Malaga, Barcelona and Búzios in Latin America).
An important contribution to the development of electric mobility was the signing of a number of agreements in 2013 with local and regional governments (Rome, Bari and the Region of Umbria) and private companies (BMW). Enel’s charging infrastructure for electric vehicles now exceeds 1,200 points.
The Public Lighting business area (Enel Sole) improved on the already positive results of the previous year and, thanks to developments in the Archilede® project and the extension of the CONSIP tender, has consolidated its leadership position in Italy and grew in Spain. In particular, thanks to the CONSIP “Servizio Luce 2“ agreement, some 200 thousand lighting points were taken under management in 2013, with total revenues of over €265 million. Last year also saw the consolidation of Enel Sole’s presence in Spain, as the company – together with Endesa Ingeniería – was awarded three long-term integrated management contracts (in Abarán, Rincón de la Victoria and Móra d’Ebre, for a total of more than 10 thousand lighting points).

In 2013, the Iberia and Latin America Division posted a gross operating margin of €6,746 million, a decrease of 6.7% compared with 2012. The decline was attributable to a fall of 18.7% in the margin achieved in Spain and Portugal, mainly as a result of regulatory and fiscal measures adopted in 2012 and 2013 by the Spanish government. However, the decline was partly offset by an improvement of 8.2% in the margin in Latin America and an increase in operating efficiency.
Investments in Spain and Portugal declined, to about €849 million, while they increased in Latin America, reaching €1,332 million.
Net financial debt also improved, largely as a result of the capital increase by the minority shareholders of Enersis, who paid the increase with €1,796 million in cash. The operation, which was successfully completed in March 2013, will help expand operations in the region with new investments, through both organic growth and the acquisition of non-controlling interests.
In Spain, the €396 million in costs from the application of regulatory measures approved in 2012 were joined by the effects of other fiscal and regulatory measures approved during 2013, with an additional negative impact of €933 million on the gross operating margin.
Despite the adverse effect of the additional measures, the gross operating margin in the Iberian peninsula only fell by €750 million compared with 2012, to €3,253 million. This was achieved thanks to the implementation of a targeted commercial strategy, with the launch and the strengthening of our value-added products and services, energy efficiency policies and the reduction of fixed costs. Other positive factors include increased hydroelectric generation and better margins in energy trading operations.

Unlike Spain (where the electricity demand in the peninsular area fell by 2.2% between 2012 and 2013), the Latin American countries in which the Division operates are characterized by rapid growth in electricity demand: Peru (+6.6%), Chile (+4.2% in the SIC, +3.8% in the SING), Argentina (+3.6%), Brazil (+3.4%) and Colombia (+2.4%).
The distribution companies of the Division handled 61,512 GWh of power, with increases in Brazil (+4.4%), Chile (+4.4%), Peru (+2.7%), Argentina (+1.3%) and Colombia (+1.0%).
The gross operating margin of Latin American operations came to €3,493 million, an increase of 8.2% despite the adverse impact of drought in the region and the depreciation of local currencies against the euro (which led to a reduction of €350 million). Excluding this effect, the gross operating margin would have increased by 18%, confirming the region’s position as an important platform for growth.
This rise in profitability was due, among other things, to the payment by the Argentine government of a portion of costs not transferred to rates from 2007 to September 2013 (€381 million) and to an improvement of the generation business in Chile.

In 2013, the International Division posted revenues of €7,737 million and a gross operating margin of €1,405 million, reaching the targets set out in the business plan despite the deterioration in the business environment. The past year was characterized by numerous critical issues in the countries in which the Division operates, with a decline in demand and electricity prices, increased competition in retail markets and increased regulatory pressure from governments. On the operational side, output amounted to 63.2 TWh, a slight decrease compared with 2012. The effect of this decline on the income statement was offset by the effective operational management of assets and the maximization of institutional and regulatory factors. Finally, retail sales totaled 45.7 TWh, a decrease from the previous year due to the combined effect of developments in sourcing in France and the decline in demand in Romania and Russia.
In Slovakia, the Division achieved a gross operating margin of €708 million. The availability of nuclear facilities increased further, with an average load factor of 92.3%, making Slovenské elektrárne the world’s leading operator of VVER plants. Also in the nuclear field, work is continuing on construction of new units at the Mochovce plant. Once completed, and following the changes introduced to ensure compliance with new safety requirements determined with stress tests, the plant will be one of the most advanced systems among those currently in operation in Europe.
In Russia, Enel OGK-5 posted a gross operating margin of €399 million, an increase over the previous year thanks to higher prices and the initiatives taken to streamline and rationalize the cost structure, despite the decline in output attributable to the slowdown in demand and the concomitant entry into the market of our competitors’ new, more efficient units. The sales company RusEnergoSbyt, in which Enel holds a stake of 49.5%, has continued to diversify its commercial portfolio, achieving a gross operating margin for 2013 (pro-rated for the interest held by Enel) of about €112 million.
In Romania, the three distribution companies continued their activities to modernize grids and improve service quality, bringing their performance parameters close to the benchmarks typical of the most advanced countries. This achievement was made possible by the implementation of infrastructure and management initiatives based on the best practices adopted within the Enel Group. Including the performance of the electricity sales companies, the country posted a gross operating margin of €289 million, an increase of 25% over the previous year.
In France, the termination of the agreement with EDF on the Flamanville 3 project, which gave Enel anticipated capacity to sell on the market, prompted Enel France to focus on reorganizing its commercial portfolio. The gradual reduction of that anticipated capacity to zero, to be completed by 2015, made it necessary to review the sourcing of power and reduce overhead costs in order to protect margins in an environment of declining market prices and rising sourcing costs. This laid the foundations for a more flexible structure, one able to exploit any opportunities that could arise in the current process of market liberalization.

In 2013, the Renewable Energy Division continued to pursue its strategy of rapid growth, focused on emerging markets with abundant natural resources, strong growth in electricity demand and stable social and economic systems. At the same time, the Division continued to consolidate its presence in European markets.
Net installed capacity at the end of 2013 amounted to 8.9 GW, an increase of 0.9 GW compared with 2012 (+11.0 %). Net Group electricity generation amounted to 29.5 TWh in 2013, an increase of 4.3 TWh (up 17.3%) on 2012, due primarily to the increase in installed capacity.
The changes in capacity and output are reflected in an increase in the main financial aggregates. Division revenues amounted in 2013 to €2,827 million, an increase of 4.9% compared with 2012. The rise was mainly due to higher revenues from the sale of electricity, including incentives, thanks to increased production. The gross operating margin totaled €1,788 million, up 9.0% from the €1,641 million posted in 2012.
The Division developed major projects during the year.
In the United States, an agreement was reached with GE Capital to raise the Division’s stake in the Chisholm View (235 MW) and Prairie Rose (200 MW) wind farms to 75%. In the geothermal sector, the Cove Fort plant in the state of Utah (25 MW) entered service, while the wind segment saw the start of construction of the Origin facility (150 MW) in Oklahoma.
In Latin America, and in particular Brazil in the states of Bahia, Pernambuco and Rio Grande do Norte, construction began on three new wind farms with a total installed capacity of 192 MW. In Chile, the Division completed and connected its first two wind farms to the grid: the Talinay plant, in the Coquimbo region (90 MW) and the Valle de los Vientos plant, in the region of Antofagasta (90 MW). In Mexico, construction began on two new wind farms totaling 202 MW.
The Division also consolidated its presence in Europe during the year.
In Romania and Greece, photovoltaic plants with 77 MW of capacity were built and connected to the grid. In Greece, ESSE, an equally held joint venture with Sharp, placed 15 MW of photovoltaic capacity into service.
The Division strengthened its presence in Italy, thanks to the entry into service of two new photovoltaic plants at Serre Persano, in the province of Salerno, with a total installed capacity of 21 MW. In Sardinia, a project to convert a former Eridania sugar refinery into a 50 MW power plant was begun: the initiative is part of a broader plan to develop the locally sourced biomass generation industry in Italy.
Finally, in South Africa, as part of the renewable energy tender organized by the government, the Division was awarded the right to enter into electricity supply contracts with the South African utility Eskom for a total of 513 MW, including 314 MW of photovoltaic projects and 199 MW of wind projects. The photovoltaic systems will use thin-film solar panels produced by the 3SUN factory in Catania, the equally held joint venture between Enel Green Power, Sharp and STMicroelectronics. The plant is expected to enter service in 2016. This important achievement places Enel Green Power among the leading renewable energy players in South Africa and also opens the way to possible future development opportunities for the Enel Group.

The year 2013 was marked by the sale of Enel’s stake in SeverEnergia, one of the largest gas fields in Russia, to Itera (Rosneft Group) for a total of $1.8 billion. This sale, which produced a gain of about €1 billion, and the concomitant signing of a long-term contract for the supply of gas to the power plants of Enel OGK-5 on particularly advantageous terms, confirmed the value and competitive advantage that a selective, focused presence in the upstream gas segment brings to the Group as a whole.
Enel’s activities are continuing in Algeria, where the Isarene project is being developed, with the start of production expected by the end of 2017. The field is estimated to have a plateau of about 3.5 billion cubic meters. In addition, the second exploration period of the South East Illizi project will follow the two discoveries made in the first exploration period.
Excellent results have been obtained also in Italy, where Enel has completed a seismic survey and so far identified a total of four exploration prospects that will be drilled over the next two years and expanded its portfolio with the submission of new applications for exploration permits.

During 2013, the Engineering and Research Division was involved in the refurbishment of the conventional and nuclear power plants of the Group and in supervision of the safety and performance of the nuclear assets of Endesa and Slovenské elektrárne.
The Research unit, in particular, continued to pursue the Group’s strategic research programs.
In Italy, the renovation of the port facilities at the Brindisi power plant was completed. Construction of a covered coal storage facility at the same site park is under way.
In Sicily, at Porto Empedocle, work began on the partial conversion of the existing power plant from fuel oil to gas turbine systems. The construction of a regasification terminal within the port area also began.
In Russia, at the Reftinskaya power station, the largest plant in the world for the dry transportation and storage of ash (DARS) was completed, as were environmental improvements and revamping of the first 10 units of the power plant. The envir onmental upgrading of other units is also under way.
In Spain a feasibility study for the environmental upgrading and extension of the useful life of the Litoral coal-fired plant was carried out. In South America, the Division partnered with Endesa on a feasibility study for new coal-fired plants.
With regard to the Nuclear area, the monitoring activities of the Nuclear Safety Oversight unit were strengthened through greater integration with the operating units of the Group’s nuclear facilities and by sharing best practices with other leading nuclear operators.
At the nuclear power plants in Slovakia and Spain, engineering activities were begun to support the implementation of improvement measures identified during the stress testing. Finally, the team engaged in the engineering and construction of units 3 and 4 at the Mochovce nuclear power plant was strengthened further.
In the field of renewables generation, the Research unit was involved in the study and experimentation of new technologies and solutions to improve the integration into the grid of the electricity produced by distributed generators. Supplementing this effort, work continued on developing new generation storage systems, aimed at optimizing investment and electricity flows on the grid.
Finally, development work continued on creating energy efficiency solutions and value-added services for remote users, industrial districts and residential customers.

The Group’s strategic priorities in the period covered by the 2014-2018 Business Plan respond to the expected structural evolution in the world’s macroeconomic conditions and in the energy industry.

More specifically, the former will continue to move ahead at two speeds: on the one hand the European countries, which are emerging slowly from the crisis; on the other, the emerging economies, especially those in Latin America, where electricity demand is still expanding rapidly.
In this context, Enel expects the following main trends to drive the evolution of these scenarios: (i) the emerging markets will continue to fuel global growth; (ii) technological innovation will be one of the key factors driving trends in the energy sector; (iii) end users will be increasingly well-informed about technology and environmental matters; and (iv) regulatory systems will sharpen their focus on environmental issues and system costs.
In the business plan, the Group confirms the increasingly important role of the emerging markets, with an investment policy targeted at consolidating its position and simplifying its corporate structure. Renewables will expand substantially, with careful selection of high-return investment opportunities. Another area of action will be the retail market, energy efficiency and, more generally, valueadded services, a segment with robust growth potential. In this area, as in the smart grid field, Enel intends to strengthen its leadership position, leveraging the key driver, technological innovation, and a geographically and technologically well-diversified asset portfolio which forms the foundation of the Group’s future development.
Reducing debt and generating cash flows will also remain a top priority for the Group. And maximization of cash flows is precisely the goal of the plan for optimizing operating costs launched in 2013, which has already led to the identification of major opportunities for efficiency gains, with results that have easily exceeded expectations. These opportunities will continue to be pursued in the coming years, with a special focus on businesses in the mature markets.

The Chief Executive Officer
Fulvio Conti

Letter to stakeholders

“For over ten years, sustainability in Enel has been based on a solid ethical system, a set of citizenship rules which everyone who works at Enel and for Enel must respect and apply in their everyday business, a distinctive feature of belonging to the Company.“

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For over ten years, sustainability in Enel has been based on a solid ethical system, a set of citizenship rules which everyone who works at Enel and for Enel must respect and apply in their everyday business, a distinctive feature of belonging to the Company.

Businesses, especially the leading multinationals, are increasingly a crucial intersection where the economic world and society can meet and discuss issues. For this reason Corporate Social Responsibility (CSR) is an absolute priority for company leaders in building an effective and virtuous business model.

Enel has adopted a careful strategy of CSR planning, monitoring and reporting, in other words covering all the policies on transparency, combating corruption, protecting the environment, and relations with the communities and with the people who work in and with the Company, including suppliers.

We have chosen to act always as “good citizens”, respecting the rules and laws of the countries where we work, following a set of shared values: ethics, respect, paying attention to people, social responsibility and results-orientation.

These values are the basis of the tools which the Group has adopted over the years: the Code of Ethics, Zero Tolerance of Corruption, the 231 Compliance Program and, most recently, the Policy on Human Rights, approved by the Board of Directors in 2013, which includes the United Nations Guidelines on Business and Human Rights.
In 2013, as part of the due diligence on human rights, we started the risk assessment process to identify the main human rights risks which the Company may run in carrying out its activities.

Multinationals which invest in sustainability nowadays set themselves the ambitious goal of achieving responsible profit, directing their business towards the so-called “creation of shared value”. Corporate policies and practices therefore seek to increase the Company’s competitiveness by improving the economic and social conditions of the communities where it operates.
The need for this new business model has also been recognized by the United Nations in negotiating the new “Sustainable Development Goals” for the post-2015 agenda, and by the European Union in its 2020 Strategy.

Enel has taken on board all these indications, acting in particular on two key processes: the supply chain and risk management. Likewise, our subsidiary Enel Green Power has established an action plan for the short, medium and long term to guarantee the integration of sustainability into its own processes and to create shared value by making rational useof the available resources.

In addition, Enel will continue to share its own sustainability know-how at regional, national and international level, by taking part in prestigious networks such as the United Nations Global Compact and Global Compact LEAD.
Last year Enel was one of the first companies to confirm its participation in the LEAD Board Programme which is designed for companies that are involved in the Global Compact LEAD and which aims to provide Boards of Directors with analyses on sustainability and on the need to integrate sustainability into corporate strategies.

The innovative policies which we have adopted in terms of CSR have enabled us to become acknowledged leaders in the processes for planning, monitoring, and reporting sustainability, gaining approval worldwide.

In order to improve the monitoring of sustainability performance and guarantee the traceability of CSR information, we are also creating a new data collection system. In addition, as regards reporting standards, Enel will join other global business leaders in the reporting field by taking part in the pioneering GRI G4 program.
The tools that we have adopted, such as for example the materiality matrix, have allowed us, starting from last year, to map the strategic objectives of the business and to match them to the expectations and needs of our stakeholders. In this way we can identify the CSR projects and initiatives which are considered priorities.
An example of this is our CSR “ENabling ELectricity” program, through which Enel contributes to the United Nations tenyear program “Sustainable Energy for All” (2014-2024). In 2013 under this program we took part in over 30 projects in 20 countries, achieving the target of 2 million beneficiaries a year ahead of time.

The next CSR activities will be developed in three areas which are considered priorities:

  • enabling access to electricity for lower-income consumers,
  • implementing support programs for the education and training of professional figures in emerging countries,
  • realizing social inclusion projects and projects to support economic growth in the areas where Enel operates.

Over the years, Enel has strengthened the relationship between sustainability and the financial world, creating value from the integrated communication of the Company’s financial and non-financial results. The drive towards the highest sustainability standards, which Enel started eleven years ago, has been rewarded by the interest of socially responsible investment funds which, despite the difficult international economic situation, are continuing to increase in number. At December 31, 2013 our shareholders included 117 Socially Responsible Investors (up from 108 in 2012), representing around 15.6% of the identified institutional shareholdings (compared to 14.6% in 2012). In 2013, for the tenth year running, Enel was included in the Dow Jones Sustainability Index, a key index for the markets, which includes the best companies in the world in terms of economic, social and environmental sustainability. Enel was also reconfirmed in the FTSE4Good index and is involved in the CDP.

Enel’s commitment to sustainability is also reflected in its medium/long-term strategy to combat climate change, with nthe aim of its power generation plant achieving carbon neutrality by 2050. An integral part of this commitment is the Climate Strategy, which envisages action plans covering the whole sector: from production to distribution, from sales to end users, to emission rights trading. This has enabled Enel to reduce its specific CO2 emissions by 37% compared to 1990 (the base year for the Kyoto Protocol), and to confirm the target to cut CO2 emissions by 15% by 2020 compared to 2007 levels. In 2013, the percentage of “zero emission” power generation out of total Group production exceeded 46%, and the installed renewable production capacity reached 36.9 GW. For future years Enel has planned a further 6-billion euro investment in renewables, to promote all the best technologies, mainly in the markets with the highest growth potential and which have more available natural resources.

Technological innovation will allow us to make electricity production increasingly efficient and environmentally sustainable, by putting forward innovative solutions for all customers, from energy efficiency to electric transport, from smart grids to smart cities: all technologies in which Enel is a world leader.

In order to maintain our leadership in the global energy market and to achieve the best possible business results, we must continue in our drive to integrate sustainability into the business model and into corporate strategy.
The growth and economic development of a multinational such as Enel cannot be tied solely to its ability to produce value for shareholders. Rather, we want and we must contribute to making the world a better place, drawing on our culture, our values, our way of doing business, to the benefit of the Company, our colleagues, and the institutions and citizens with whom we interact.

The Chairman
Paolo Andrea Colombo

The Chief Executive Officer
and General Manager
Fulvio Conti

CEO’s message

“We intend to become an example, recognized at international level, of good management in all of our operations and our environmental policy will be crucial to this intent.“

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In 2013, in spite of a still uncertain global economic scenario, the Enel Group continued to score a positive performance, recognized by the market, thanks to its technological and geographic diversification, managerial actions to curb costs and optimize investments, expansion in emerging markets and renewables (especially in Latin America).

Looking to the future, the growth of emerging markets, the dissemination of new technologies, the proximity to active and responsive customers, as well as the new energy and environmental policies will contribute to shaping the new dynamics of the sector in an increasingly decisive way.

In this setting, Enel captured ongoing changes in a timely fashion, by leveraging its strengths: skills, know-how and expertise, managerial rigor, technological excellence, transparency in relations with all counterparts, listening to customers and caring for their needs.

In choosing our growth path, we decided to bet on innovation and a process of internationalization, whereby we are now present in 40 countries across 4 continents and among the key players in the economic and social development of all the communities where we operate. Innovative green technologies, smart-city and smart-grid projects, solutions for energy efficiency and value-added services are just a few examples of what we have exported to serve our customers, from Europe to Russia and to the American continent.

While consolidating our international presence, we are implementing a major project of integration of our different technological, operational, cultural and social skills and expertise. Enel is consolidating its own model, strong in its principles and flexible in its applications, suitable for serving the communities ere we operate, ensuring everywhere respect for the applicable rules and for the environment and persons with which/whom we interact.

We intend to become an example, recognized at international level, of good management in all of our operations and our environmental policy will be crucial to this intent.

We are pursuing the strategic target of extending the application of environmental management systems to all of our activities. In 2012, we gained the ISO 14001 certification for the overall Group. At present, ISO 14001-certified systems cover 94% of our net generating capacity, over 95% of grids and 100% of the activities of the Global Service Functions, of the Engineering and Research Division and of the market functions in Italy and Romania.

As a large international utility, we are spearheading the fight against climate change.

The results that web have obtained so far in terms of greenhouse-gas emissions and the targets of our strategic development plan testify our constant efforts.

Today, more than 46% of the electricity that we generate comes from zero-emission sources. In 2013, the Group further invested in the development of generating capacity from renewables, increasing it by about 940 MW. Our penetration into the renewable-energy sector has continued to grow thanks to Enel Green Power. This company, with about 9,000 MW of installed capacity in 16 countries of the world and with over 29 billion kWh generated, is one of the leading worldwide operators, relying on a well-diversified and geographically distributed technological mix.

The overall emissions that we displaced in 2013 thanks to zero-emission power generation amount to 104 million tonnes of CO2 equivalent.

With respect to 1990, the base year of the Kyoto Protocol, the Group’s specific emissions of CO2 in 2013 were down by 37%. Additionally, in 2013, thanks to higher generation of electricity from renewables (+10% with respect to 2012), which was made possible by an increase in the related installed capacity and by a good level of hydraulicity, we curbed these emissions by 16% on 2007, a reduction already higher than our target by 2020.

In 2013, we continued to cut down polluting emissions. Specific emissions of SO2 and NOx were down by about 7% on 2012. Specific emissions of particulates, although diminishing in the countries where we are most active, such as Italy (-11%) and Spain (-14%), rose slightly at Group level owing to the progressive aging and consequent lower efficiency of electrostatic precipitators in the Reftinskaya thermal power plant (Russia). This is the reason why we started revamping this plant and we expect to reduce its emissions of particulates by about 50% by 2020.

As we are continuously listening to and dialoguing with our stakeholders, ethical investors and sustainability analysts, we are constantly stimulated towards improvement and an increasingly sustainable and transparent management of water resources.

With a view to communicating these efforts, Enel was the first utility in the world to participate both in the CDP Water program (for the first time at Group level in 2013) and in a further assessment via Aqua Gauge, a tool developed by Ceres, a network of international investors. Recently, we have also joined the UN Global Compact’s CEO Water Mandate, a unique public-private initiative designed to assist companies in developing, implementing and disclosing water sustainability policies and practices. Our overall consumption of water in 2013 was equal to 189.6 million m3, i.e. less than in 2012 due, among others, to a decrease in thermal generation.

Among the other strategic targets of the Group’s environmental policy, it is worth mentioning our commitment to optimal waste management. In 2013, the Enel Group recovered as much as 32% of its waste, i.e. 5 percentage points more than in 2012.

Likewise, as regards biodiversity conservation, the Group is promoting projects all over the world, both as an industrial operator and as an active player of the local social life. In 2013, after completing the mapping of Group-level activities, Enel put in place a Group-wide Plan for Biodiversity Conservation, consisting of 133 projects, with an investment of € 21 million since 2011.

In its new 2014-2018 Business Plan, Enel set its strategic priorities for the coming years, taking into account the expected structural changes in economic and sector-specific scenarios, and confirmed its low-carbon development path.

The Group will continue to invest in new renewable installed capacity for a total of about € 6 billion in the period of the plan. Furthermore, we will continue to undertake efforts for technological innovation, to make power generation more and more efficient and eco-friendly and to provide our customers with innovative solutions, from energy efficiency to e-mobility and smart grids.

We have big opportunities to seize in terms of both higher energy efficiency across the entire energy value chain, from generation to consumption, and environmental impact mitigation, by combining the supply and dissemination of electricity as an energy carrier with the process of decarbonization of our economies and societies. This is a target not to be missed and a commitment that we will firmly and strongly pursue in the coming years.

The Chief Executive Officer
and General Manager
Fulvio Conti

Our numbers

1
/
2
Revenues80,535 millions of euro
(-5.2%)
Net income4,780 millions of euro
Gross operating
margin
17,011 millions of euro
(+7.6% )
Operating income9,944 millions of euro
(+46.1% )
total net
production
286.1 TWh
electricity transportedtotal 404.0 TWh
gas sold
(billion m3)
total 8.6
electricity soldtotal 295.5 TWh

Key events

  • January
  • FEBRUARY
  • MARCH
  • APRIL
  • MAY
  • JUNE
  • AUGUST
  • SEPTEMBER
  • OCTOBER
  • NOVEMBER
01
January
Enel on the Steering Committee of GC Lead
Enel becomes a member of the Steering Committee for the strategic planning of Global Compact LEAD.
18
FEBRUARY
Agreement signed between Enel and Renault
The agreement sees the launch of fast recharging for the French carmaker’s electric car, Zoe. The expansion of the recharging network worldwide continues.
13
MARCH
Agreement between Enel Green Power and the San Juan Cotzal community
Agreement signed to institutionalize the social responsibility activities of Enel Green Power in the Palo Viejo area (Guatemala).
14
MARCH
Enel one of the founders of WAME (World Access to Modern Energy & EXPO 2015)
Non-profit association comes into being to promote global awareness-raising on the issues of access to energy.
26
MARCH
Acquisition of PowerCrop
Enel Green Power and SECI Energia sign the final agreement for the purchase of 50% of PowerCrop, the Maccaferri Group company dedicated to converting former Eridania sugar refineries to the production of energy from biomass.
27
MARCH
Agreement with Eni on e-mobility
Eni and Enel sign a letter of intent to collaborate on strategic, technological, logistical and commercial opportunities for e-mobility.
18
APRIL
Agreement with UNCEM for the development of energy efficienty
Enel Sole and the National Union of Mountain Communities (UNCEM) sign a protocol of understanding in Rome for the development of energy efficiency practices.
2
MAY
Protocol of understanding with the Region of Tuscany for the development of geothermal energy
The Region of Tuscany and Enel signed a new protocol of understanding to further develop geothermal energy in Tuscany, with a view to addressing issues concerning the green economy and reducing energy costs.
9
MAY
Launch of Enel Lab project
Six young Italian companies and one Spanish company are selected to join the first clean technology business incubator established by Enel. The seven companies selected propose projects involving renewable energy, smart grids, energy storage, automation, digitalization and communication system and energy efficiency.
22
MAY
Enel at the GRI G4 Global Conference
Enel participates in the drafting of the new reporting standard and addresses the GRI Global Conference in Amsterdam. The Group is one of the pioneers of G4.
3
JUNE
Accord for the implementation of Smart Grids in Saudi Arabia
Advanced Electronics Company (AEC), ICT Europe and Enel sign a memorandum of understanding for smart grid implementation in the Kingdom of Saudi Arabia and the Gulf Cooperation Countries, namely Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman.
18
JUNE
Enel at the IIRC Conference in Frankfurt
Enel is Italy’s first participant on the International Integrated Reporting Council at the global conference on the integrated reporting framework.
19
JUNE
Agreement for the development of marine power generation
Enel Green Power and 40South Energy, a group of highly innovative companies operating in the field of marine energy at the international level, begin in Livorno the installation and commissioning of a new Group generator generator, enable the generation of about 220 MWh per year.
9
AUGUST
Conversion of Finale Emilia sugar beet refinery
Enel Green Power and COPROB, the leading sugar beet producer in the country sign an agreement for the construction at Finale Emilia (Modena) of a 12.5 MW power plant that will be fuelled by agricultural biomass.
29
AUGUST
Enel Green Power awarded contracts for the supply of renewable energy in Brazil
Following the 2013 Brazilian Reserve Auction, Enel Green Power awards the right to enter into three 20-year electricity supply contracts with the Brazilian Camara de Comercialização da Energia Elétrica (CCEE) to deliver power produced by three wind projects with a total capacity of 88 MW
19
SEPTEMBER
Agreement for the supply of gas from Azerbaijan
Enel Trade sign a 25-year agreement with the Shah Deniz Consortium to purchase part of the gas that will be produced by Stage 2 of the Shah Deniz field in Azerbaijan and which will be transported to Italy through the Trans-Adriatic Pipeline (TAP).
25
SEPTEMBER
Ceres Aqua Gauge
Enel is the first utility in the world to undergo water risk assessment by Ceres and organizes its presentation at the European Parliament.
8
OCTOBER
10 years of Enel Cuore
The Group’s non-profit association celebrates 10 years of activity. Since 2003 it has launched over 570 projects and provided almost 52 million euro in grants to 400,000 beneficiaries.
31
OCTOBER
Award of rigth to contract renewable energy in South Africa
Enel Green Power (EGP) awards the right to enter into energy supply contracts with the South African utility Eskom in the amount of 314 MW of solar projects and 199 MW of wind projects (for a total of 513 MW) in the third round of the renewable energy tender sponsored by the South African government.
29
NOVEMBER
Enel Green Power awards long-term contracts to supply energy to Chile’s regulated market
Enel Green Power awards the right to enter into long-term energy supply contracts with a pool of distribution companies operating in Chile’s regulated electricity market, providing up to 4,159 GWh for the entire duration of the contracts.