Enel Essay ⋆ Business Essay Examples ⋆ EssayEmpire

Enel is engaged in the production, distribution, and sale of electricity and gas across Europe and North and Latin America, managing a range of hydroelectric, thermoelectric, nuclear, geothermal, wind, and photovoltaic power stations. It currently operates in 21 countries with 75,500 MW of generating capacity and serves more than 50 million power and gas customers. It is the largest power company in Italy and the second in Europe by installed capacity. It is also the second largest Italian operator in the natural gas market, with approximately 2.5 million customers and a 10 percent market share in terms of volumes. Headquartered in Rome, Italy, in fiscal year 2007 Enel recorded revenues of 43.7 billion euros and net income of 4 billion euros. Its main global competitors are Centrica, EDP, Électricité de France, Electrabel, Eni; E.ON, Iberdrola, National Grid, RWE, Suez, and U. Fenosa.

Enel (Ente Nazionale per l’Energia Elettrica) was founded in 1962 with the nationalization of the power industry by the Italian government. The realization of the Italian transmission network and the building of new power plants was the first objective of the company, which had to face a difficult period in the 1970s with the increasing of construction costs and the Arab oil embargoes. Enel’s monopoly was disassembled in 1992 when the Italian government decided to open power generation to outside producers and Enel was converted into a joint-stock company. The actual shareholder’s structure is represented by the Economy and Finance Ministry (21.1 percent), the Cassa Depositi e Prestiti (10.1 percent), retail investors (34.5 percent), and institutional investors (34.3 percent).

Today Enel operates through eight different divisions. The Sales Division is responsible for sales and quality of commercial services targeted to the end-user market for electrical power and gas. The Generation and Energy Management Division operates power generation and environment safeguarding. The Infrastructure and Networks Division is in charge of distributing electricity and gas in Italy. Engineering and Innovation is a new organizational division that manages and controls the engineering processes related to the construction of generation facilities, coordinates research activities, and promotes and supports the development of innovation opportunities across the various business areas. The

International Division consolidates and promotes the internationalization strategies of the company in all foreign countries of interest with the exception of Spain, Portugal, and Latin America, which are the responsibility the new Iberia and Latin America Division. Finally, the Parent Company and Services and Other Activities area has the purpose to leverage group synergies and provide transversal services to Enel’s core activities.

Especially in recent years, innovation, infrastructure development, excellence in customer service, and internationalization through alliances and direct investments have represented the key success factors of Enel’s growth strategies. Innovation has constantly sustained company growth and profitability. Enel has been the first utility company in the world to replace its customers’ traditional electromechanical meters with modern electronic devices. The ability to take meter readings in real time and manage contractual relationships remotely has enabled Enel to implement time-of-use electricity charges, offering customer savings for evening and weekend electricity use, globally improving the efficiency of its electricity network. Innovation investment is now focused on the development of renewable energy sources, for research and development of new environment-friendly technologies, and for modernization of old power plants.

The consolidation of international activities has recently been driven by the necessity to reduce dependence on Italy. Enel has a relevant presence in Europe (Bulgaria, France, Greece, Italy, Romania, Russia, Slovakia, and Spain), North America (Canada and the United States), and Latin America (Brazil, Chile, Costa Rica, El Salvador, Guatemala, Mexico, and Panama). Recent acquisitions and alliances have been numerous. The acquisition of Endesa, the leading electricity company in Spain and Latin America, was completed through the partner Acciona, one of the leading Spanish groups operating in the development and management of infrastructure, services, and energy from renewables. Also of relevance is the completion of the public tender offer for OGK-5, one of the largest Russian generating companies. Both acquisitions have given Enel the size to play a leading role, reduce regulatory and business risks, and expand its growth potential, creating the basis for future efficiency.

Bibliography:

Datamonitor, www.datamonitor.com (cited March 2009);
“Enel, A Privatisation Gone Awry,” Economist (2000);
Enel SpA, www.enel.it (cited March 2009);
Hoovers, www.hoovers.com (cited March 2009);
David Lane, Enel (Financial Times Energy, 2000);
Loredana Mascheroni, “Lights on the City—In Rome, Angela Bulloch, Jeppe Heine and Patrick Tuttofuoco Set Up a Dialogue With Three Symbolic Locations For ENEL,” Domus (v.2/904, 2007);
“Russia: Enel Buys Power Plant,” Petroleum Economist (v.74./7, 2007).

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