Energy Central-News Article

In November last year, the Enel Group announced a sales plan for around US$ 21.59 billion in different countries, including Peru. Three months later, in January 2023, it confirmed a due diligence process of China Southern Power Grid to acquire electricity distribution assets, showing that the global strategy to optimize the business portfolio is in full execution. However, this would not have meant a slowdown of its projects in Peru. Marco Fragale, country manager of Enel Peru, tells Gestión about the progress of investments and the inclusion of new prospects.

Since the announcement of the sale, are the projects in Peru continuing or have they stopped?

Absolutely, we are continuing with everything, with the commitment to continue betting on the energy transition. We are continuing all investments in renewable energy projects. The idea is to have the commercial operation of Clemesí (solar plant in Moquegua) in the third quarter of this year and Wayra Extension (wind power in Ica) in the fourth quarter. In addition, we are promoting other projects that we had in the pipeline.

What other projects are still underway?

In distribution, the entire Energy for Growth project, for electrification of human settlements that to date do not have access to energy. In 2022 we electrified more than 20,000 lots and we are continuing in 2023 with even greater momentum.

What initiatives are you promoting in electric transportation?

We are doing them through our company Enel X Way Peru, created in September 2022. We have signed a contract with Aunor (Autopista del Norte) to install an electric charging network on its concession section, on the Panamericana Norte. The agreement provides for the installation of 19 chargers, five of which are fast chargers.

Are you negotiating agreements for a charger network with other companies?

We already have 48 charging points from Puno to Tumbes, but we are promoting this with other actors in the private and public sector to have the possibility for other companies to have their own charging network. There are companies that have their fleet and want to electrify it.

So, in sum, how much will you invest in Peru in 2023?

The budget is around S/ 850 million, in line with the 2022 investment.

Is the capital very focused on non-conventional renewable energy projects?

Investments are focused on all projects, not only in non-conventional renewable energy, but also in maintenance and expansion of our (distribution) network, with which we are installing more than 20,000 connections per year. There is a budget for the maintenance of the low, medium and high voltage grid, and of renewable, hydroelectric and thermal generation plants. And investment in public lighting with LED, we have a large project in the small north (of Lima) and eight agreements for the change of luminaires to LED in several districts.

Growing portfolio of projects in Peru

Are the projects that were not yet in execution also continuing?

Yes, and by 2022 we have increased the pipeline by 42%, reaching 12.2 GW (gigwatts) of renewable projects with solar and wind technology (not including Clemesí and Wayra Extension). They are in different stages of development. In addition, we have included hybrid projects, which are solar and wind at the same site.

Why are you betting on hybrid projects?

They are more efficient in everything that is common infrastructure, such as roads, sub-stations. There is greater efficiency, because two plants are built in the same place.

Didn't the portfolio in Peru already have hybrid projects?

We are putting them in our pipeline for the first time. The future is going in the direction of having hybrid projects whenever possible. We have done so because we see many opportunities in Peru. Compared to other countries in the region, it has a low production of non-conventional renewable sources and a top natural resource in the world.

After Clemesí and Wayra Extension, are there any new projects coming up?

We already have mature projects, but it takes some time to develop the detailed engineering and bidding until construction begins. There are projects that are mature and could start construction soon.

At Enel, how is the generation matrix being transformed with Clemesí and Wayra Extension?

We are adding 300 MW (megawatts) of new capacity between solar and wind and that doubles our production of renewable sources to 600 MW. In installed capacity, 6.4% today is already solar and 5.9% wind, with the entry of Wayra Extension and Clemesi the participation increases to 10.1% solar and 12.1% wind, that is, it will be 22.2% of the total (2.5 GW). In production, 6.3% was wind and 4.6% solar in 2022, that is, 10.9% with non-conventional renewable energies (NCRE).

In the project portfolio, is there a directive from the parent company to continue with the development even with the sale process underway?

The parent company's directive will always be to promote energy efficiency; that is our vision. The group's strategy points towards energy transition, which increases the value of the company.

Including potential green hydrogen projects?

In Chile we already have a pilot plant underway. The energy transition and the future without emissions goes through green hydrogen. At the moment, it is not yet competitive, but it will be, we believe it will reduce its costs in the coming years. In the second half of this decade, it could become not only a sustainable but also a competitive technology, and that is why we are closely following its development in the world and in Peru, which has very good natural resources.

Results and projections

Although the announcement of the sale did not allude to the performance of the operation, has Enel Peru been delivering positive results?

2022 was a year of excellent results in each line of business, financially and operationally. In projects, we have gone ahead with the construction of renewable plants, reaching more than 60% in each one. In distribution, we have had 21% more new connections compared to 2021, almost 50,000 new connections in one year, and at the same time we have reduced claims with different strategies.

So, are the financial results also in line with this?

From all these achievements comes the financial part. In generation, we have increased revenues by almost 25%, with an Ebitda that rose 18.3%, and that is due to higher energy sales and more generation. In distribution, revenues increased by almost 15% and Ebitda by almost 25% due to higher sales, revenues, sale of products and value-added services, all this in a very complicated year, with a situation of high interest rates and inflation. This is the result of a teamwork.

What are the prospects for 2023?

All our efforts are not only to replicate but also to improve the results of 2022, and we are doing so by moving forward with the same vision and strategy of last year.

Has the rains not affected the company's assets?

We have already updated all our contingency plans and risk mitigation measures in case of heavy rains. In Piura, where we have the Malacas plant (thermoelectric power plant), some areas were flooded, but we are continuing with the operation. In Lima we have also had heavy rains, but nothing that has had any extraordinary impact compared to other rainy years. Our entire operation continues in the generation and distribution plants.

What is the status of the negotiations for the sale of Enel Peru?

We are still in the sale process, as we have announced to the markets and we still do not have any more news compared to what has been publicly commented. (Last February, the Enel Group informed that China Southern Power Grid International Co., Ltd. was carrying out a due diligence process in relation to Enel Distribución Perú. However, the Peruvian subsidiary indicated that it did not have information on the status of the negotiations or the amount).

BIOGRAPHICAL INFORMATION:

Name: Marco Fragale.

Position: Country Manager of Enel Peru.

Nationality: Italian.

Age: 46 years old.

Profession: Mechanical Engineer.

Hobbies: Photography and cooking.