Enel-owned Endesa to invest €8.9bn in networks and renewables by 2026

Spanish power company Endesa has announced an investment plan of €8,9 billion ($9.7 billion) for the period 2024 to 2026, with distribution networks and renewable generation as two key focus areas.

The investment comes a week after the utility’s parent company, Enel Group, unveiled plans of a €18.6 billion ($20.4 billion) grid investment as part of their investment strategy within the same time frame.

Endesa said in a statement that their activities will be guided by three strategic pillars: profitability and flexibility when deciding the destination of investments based on an external partners model for renewable development; efficiency and effectiveness of operations, with greater cost control and maximising of cash generation; financial and environmental sustainability.

The investment will be distributed as follows:

• €2.8 billion ($3.1 billion) gross for distribution networks, an increase of €200 million ($219 million) compared to the previous plan
• €4.3 billion ($4.7 billion) for renewables, the same figure as in the previous plan
• €900 million ($985 million) for the customer area

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José Bogas, chief executive officer of Endesa, commented on the networks and renewables-focused investment, telling investors during a presentation of the plan: “This new, more selective investment strategy optimises our vertically integrated business model, while maintaining the flexibility to take advantage of future opportunities.”

In announcing the investment, Endesa cited challenges from increasing levels of inflation and higher financial costs.

Through the strategy, they stated a pivot in priorities, linking investments in networks with new regulatory parameters and collaborating with partners on the development of renewable projects.

The company’s activities over the next three years will aim to account for a possible deceleration in electrification as a result of higher financial costs and inflation, while the regulatory context still needs to be clarified in the distribution business and in non-mainland territories.

All of this has resulted in a re-evaluation of the company’s growth strategy.

By 2026, the company’s expected net ordinary income from the investment will be €2,2 billion ($2.4 billion) to €2,3 billion ($2.5 billion).

Added Bogas: “Networks and Renewables, key axes of the energy transition, are essential to increase Europe’s energy independence, security of supply and to achieve affordable energy.

“A strong cash flow is the basis for meeting the demands of the transition while consolidating financial strength. All this is also aimed at offering an attractive and sustainable dividend policy”.