The head of global generation at Italian energy company Enel said today that the European power industry is “in the middle of a new energy paradigm”.
Enrico Viale told the audience at POWER-GEN Europe in Milan that there were four factors changing the face of the electricity sector: “Persistent market volatility, a growing environmental culture, a call for sustainability in our culture, and a sweeping trend in digitalization.”
He said that the global market was “experiencing uncertainty and unpredictability” and added that there was “a decoupling of GDP versus power consumption, which is changing the old paradigm”.
“For example, in Italy this year we have experienced the lowest prices since the beginning of the free market. But this is nothing when compared to the zero prices in Germany.”
He said all of these were “signals that represent difficulties for the whole sector and the current regulatory models”, which he noted “were conceived for a completely different context and with completely different technology”.
He said one of the most important factors affecting the sector was “the constant cost reduction in renewables, which is allowing faster access to a lower cost of energy in all regions”.
In this energy landscape, he said “it is very difficult to make long-term or even short-term price predictions, since the sector has been evolving very very quickly”.
He said that this scenario has consequences for conventional generations: “In fact, I would not even call them consequences, but needs. And the first need is much high efficiency for all our plants. The need of flexibility for the plant – but also for the way that we do business.
Viale said that while at least “five main utilities have said that they plan to shut down 20 GW of capacity”, Enel had started a project called Future-E which had targeted 23 “marginal plants” – worth 13 GW of installed power – for which the company was for “a new use”.
He said that Enel had set itself on a path to be carbon-neutral by 2050 and intended to “retrofit plants with state-of-the-art technology, increase investment in renewables and close older plants”.
And he stressed that Enel had embraced clean energy because “companies can no longer afford to separate sustainability from profitability”.
On digitalization, Viale called it “the fourth industrial revolution” and set that it will “change the way that we are managing our business”.
“We cannot talk about energy sector changes and not talks about storage. Storage will change the way operators and consumers produce, consume or dispatch energy. The most interesting time is yet to come.”
He said the energy business was facing “lots of threats but also lots of interesting opportunities. We are living a great transition from concentrated energy to distributed generation and to finally to the energy cloud.
“Companies that fail to position themselves in these environments risk being left behind or becoming obsolete.”