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Annual Report
2017
enel.com
Annual Report 2017
1
Report on operations 2
Annual Report 2017 Contents
Report on operations
> Enel organizational model | 8
> Corporate boards and powers | 10
> Letter to shareholders and other stakeholders | 12
> Summary of results | 18
> Overview of the Group’s operations, performance
and financial position | 28
> Results by business area | 42
> Performance and financial position of Enel SpA | 85
> Significant events in 2017 | 91
> Reference scenario | 108
> Main risks and uncertainties | 143
> Outlook | 149
> Other information | 151
> Sustainability | 154
> Related parties | 172
> Reconciliation of shareholders’ equity and net
income of Enel SpA and the corresponding
consolidated figures | 173
Consolidated financial statements
> Financial statements | 176
174
> Notes to the consolidated financial statements | 183
> Declaration of the Chief Executive Officer and the
officer responsible for the preparation of the
consolidated financial reports of the Enel Group | 322
Financial statements of Enel SpA
> Financial statements | 326
324
> Notes to the separate financial statements | 333
> Declaration of the Chief Executive Officer and the
officer responsible for the preparation of the
financial reports of Enel SpA | 397
6
Reports
400
> Report of the Board of Auditors to the Shareholders'
Meeting of Enel SpA | 402
> Report of the independent audit firm on the 2017
financial statements of Enel SpA | 410
> Report of the independent audit firm on the 2017
consolidated financial statements
of the Enel Group | 416
> Summary of the resolutions of the Ordinary
and Extraordinary Shareholders’ Meeting | 426
Attachments
> Subsidiaries, associates and other significant
equity investments of the Enel Group
at December 31, 2017 | 430
Corporate governance
> Report on corporate governance and
ownership structure | 478
428
476
3
Enel is Open Power
Open to the world, to technology and, internally, among our
people. This is the strategic concept of Open Power. But in
order to transfer to our customers and stakeholders the
essence of a new innovative and open Enel, it is essential to
instill this approach to openness within the company.
In order to create a shared culture among all of the Group’s
parts, we have developed a “galaxy” composed of a Vision –
for the first time in Enel – which represents our major
long-term objective, a Mission 2025 expressed in five points,
the values that represent Enel’s DNA and ten principles of
conduct that must inspire everyone who works for the
company. Let’s discover the Open Power galaxy.
S
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Annual Report 2017
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Enel is Open Power
Open to the world, to technology and, internally, among our
for the first time in Enel – which represents our major
people. This is the strategic concept of Open Power. But in
long-term objective, a Mission 2025 expressed in five points,
order to transfer to our customers and stakeholders the
the values that represent Enel’s DNA and ten principles of
essence of a new innovative and open Enel, it is essential to
conduct that must inspire everyone who works for the
instill this approach to openness within the company.
company. Let’s discover the Open Power galaxy.
In order to create a shared culture among all of the Group’s
parts, we have developed a “galaxy” composed of a Vision –
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5
01Report on operations
Enel organizational
model
On April 28, 2017, the Enel Group adopted a new organiza-
tion to the best technologies available at the Group level;
tional structure, introducing a new Global Business Line,
> Regions and Countries (Italy, Iberia, South America, Eu-
called “Enel X”. It is intended to foster greater customer
rope and North Africa, North and Central America, Sub-
focus and digitization as accelerators of value within the
Saharan Africa and Asia), which are responsible for mana-
2017-2019 Strategic Plan:
ging relationships with institutional bodies and regulatory
authorities, as well as selling electricity and gas, in each
More specifically, the new Enel Group structure is organized,
of the countries in which the Group is present, while also
like the previous one, into a matrix that comprises:
providing staff and other service support to the Divisions.
> Divisions (Global Thermal Generation and Trading, Global
The following functions provide support to Enel’s business
Infrastructure and Networks, Renewable Energy, Enel X),
operations:
which are responsible for managing and developing as-
> Global service functions (Procurement and ICT), which are
sets, optimizing their performance and the return on ca-
responsible for managing information and communication
pital employed in the various geographical areas in which
technology activities and procurement at the Group level;
the Group operates. The Divisions are also tasked with im-
> Holding company functions (Administration, Finance and
proving the efficiency of the processes they manage and
Control, Human Resources and Organization, Commu-
sharing best practices at the global level. The Group will
nications, Legal and Corporate Affairs, Audit, European
benefit from a centralized industrial vision of projects in
Affairs, and Innovation and Sustainability), which are
the various Business Lines. Each project will be assessed
responsible for managing governance processes at the
not only on the basis of its financial return but also in rela-
Group level.
8
Annual Report 2017 r m a n
G r i e c o
C h a i
P.
g c o m p a n y
H o l d i n
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f u n c t
F i n a n c e a n d C o n t r o l
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Human Resources and Organization
F. Di Carlo
Legal and Corporate Affairs
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S. Mori
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S. Bernabei
G l obal Business Lines
Global ICT
C. Bozzoli
G l o bal Infrastructure and Networks | L. Gallo
Global Thermal Generation | E. Viale
Global Trading | C. M
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9
Corporate boards and powers
u
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Romina Guglielmetti
Auditor
Roberto Mazzei
Auditor
Alfredo Antoniozzi
Alberto Bianchi
Director
Director
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c
n
Board of Auditors
Board of Directors
The Board is vested by the bylaws with the broadest powers for the
ordinary and extraordinary management of the company, and
specifically has the power to carry out all the actions it deems advisable
to implement and attain the corporate purpose.
Independent auditors
Silvia Alessandra Fappani
Secretary
The Chief Executive Officer is vested by the bylaws
with the powers to represent the company and to sign
on its behalf, and in addition is vested by a Board
resolution of May 5, 2017 with all powers for managing
the company, with the exception of those that are
otherwise assigned by law or the bylaws or that the
aforesaid resolution reserves for the Board of Directors.
Cesare C
Director
alari
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Paola Girdinio
Director
The
Chairman is
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powers to represent
the company and to sign
on its behalf, presides over
Shareholders’ Meetings,
Angelo Taraborrelli
Anna Chiara Svelto
Director
Director
e r a
r t o P
D ir e
c t o r
e
A l b
convenes and presides over the
Board of Directors, and ascertains that
the Board’s resolutions are carried out.
Pursuant to a Board resolution of May 5,
2017, the Chairman has been vested
with a number of additional
non-executive powers.
E
Y S
p
A
S
ela Barbiero
Alternate auditor
Mich
o
n
o
T
o
s
n
o
f
l
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o
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T
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d
i
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t
i
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n
o
10
Annual Report 2017
ela Barbiero
Alternate auditor
Mich
o
n
o
T
o
s
n
o
f
l
A
r
o
t
i
d
u
a
e
t
a
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e
t
l
A
F
r
a
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a
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o
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c
n
u
e r g i o D
a ir m a
h
C
S
E
Y S
p
A
Romina Guglielmetti
Roberto Mazzei
Auditor
Auditor
Alfredo Antoniozzi
Director
Alberto Bianchi
Director
The Chief Executive Officer is vested by the bylaws
with the powers to represent the company and to sign
on its behalf, and in addition is vested by a Board
resolution of May 5, 2017 with all powers for managing
the company, with the exception of those that are
otherwise assigned by law or the bylaws or that the
aforesaid resolution reserves for the Board of Directors.
Cesare C
Director
alari
F
r
C
a
a
h
i
n
n
d
e
c
f
e
E
s
G
x
e
e
c
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M
a
O
r
a
n
a
f
fi
a
c
c
g
e
e
e
r
r
Board of Auditors
Board of Directors
The Board is vested by the bylaws with the broadest powers for the
ordinary and extraordinary management of the company, and
specifically has the power to carry out all the actions it deems advisable
to implement and attain the corporate purpose.
Independent auditors
Silvia Alessandra Fappani
Secretary
Angelo Taraborrelli
Director
Anna Chiara Svelto
Director
e r a
r t o P
c t o r
D ir e
e
A l b
C
h
a
i
r
m
a
n
P
a
t
r
i
z
i
a
G
r
i
e
c
o
Paola Girdinio
Director
The
Chairman is
vested by the
bylaws with the
powers to represent
the company and to sign
on its behalf, presides over
Shareholders’ Meetings,
convenes and presides over the
Board of Directors, and ascertains that
the Board’s resolutions are carried out.
Pursuant to a Board resolution of May 5,
2017, the Chairman has been vested
with a number of additional
non-executive powers.
11
Report on operations
Letter to
shareholders and
other stakeholders
Dear shareholders and stakeholders,
in 2017 the Enel Group once
again had to cope with strong and
sudden changes in macroeconomic
conditions: the strategic
decisions taken in the recent past
prepared the Group to tackle the
emerging challenges and seize
the opportunities that presented
themselves in a highly volatile and
increasingly complex environment.
The effectiveness of our strategic
approach and our capacity to
implement it on the operational
level enabled Enel to become the
European utility with the largest
market capitalization during the year,
confirming the soundness of the
choices made in recent years.
12
12
Annual Report 2017
Annual Report 2017 The macroeconomic environment
enabled the implementation of more
target, prompting the Federal
accommodative monetary policies.
Reserve to undertake a monetary
In 2017, global economic activity
More specifically, growth in the
tightening.
expanded at an average rate of
euro-area economies outpaced
Last year was also one of economic
3.7%, the fastest pace since 2011.
expectations, and inflationary
growth in Latin America: Brazil and
Economies in the advanced phase
pressures, while mixed, gradually
Argentina emerged from recession,
of the expansion consolidated their
increased. Although the exceptional
while Peru and Mexico displayed
positions, while those that in 2016
volume of liquidity in the system
considerable resilience to external
had begun the recovery process
remains, driven by the expansionary
shocks, and Colombia and Chile
posted further gains.
monetary stances of the main
continued to post strong growth,
Despite the persistence of a
central banks, the improvement
albeit at a slower pace compared
number of sources of uncertainty,
in the macroeconomic situation
with previous years.
such as the Brexit negotiations and
prompted the ECB to reduce the
On the commodity front, over the
the renegotiation of NAFTA, the
volume of its asset purchases under
course of 2017 the price of oil went
positive data on the state of the
quantitative easing and to announce
from initial broad stability (with a
global economy helped to boost
the possible termination of the
low of about $45 a barrel at the
the general level of confidence
program, indicating its intention
end of June) to a period of steady
and reduce volatility in the financial
to begin a gradual process of
increases, ending the year above
markets. In 2017, economies
normalizing monetary policy.
$65 a barrel following the OPEC
benefited especially from the rise
The United States continues to
agreement to cut production. The
in commodity prices, the recovery
grow rapidly. Structural inflation,
price of coal was much higher than
in global trade and, in some cases,
supported by an extremely strong
in 2016, mainly due to the sharp
a reduction in inflation, which
labor market, is close to the 2%
increase in demand in China, the
Report on operations
13
high temperatures registered during
Ordinary net income, on which the
managed capacity. During the year,
the summer in southern Europe and
dividend is calculated, increased by
Enel was also awarded contracts
structural difficulties in Indonesia
14%, reaching €3.7 billion compared
for the supply of renewable energy
and Australia, which limited flows of
with €3.2 billion the previous year.
(through public tenders or private
coal towards international markets.
The 2017 dividend amounts to
agreements) totaling about 5,000
The gas market was characterized
23.7 eurocents per share (with an
MW in the Americas, Spain, Russia,
by the growing role of LNG and by a
implicit pay-out of 65%), an increase
Australia and Ethiopia. Significant
sharp increase in European demand,
of 32% compared with the 18
transactions were also carried out,
driven both by seasonal factors and
eurocents registered the previous
involving the termination of tax
by the reduced availability of French
year and well above the minimum
partnerships in the United States and
nuclear plants in the first part of
dividend of 21 eurocents guaranteed
the signing of disposal agreements
the year, which exerted upward
to shareholders. In line with the
to implement the BSO business
pressure on prices compared with
dividend payment policy in effect
model (“Build, Sell and Operate”) in
the previous year.
since 2016, an interim dividend of
Mexico.
In addition, 2017 saw a substantial
10.5 eurocents was distributed in
Acquisitions also played a prominent
and consistent recovery in electricity
January 2018. The ratio of FFO to
role in 2017. In particular, those
demand in almost all the countries
net debt, an indicator of financial
carried out through the new Enel
in which the Enel Group operates.
strength, reached 27%, in line with
X Global Business Line involved
In particular, in Europe demand
the target and an improvement on
companies active in the fields of
expanded by around 1% compared
the 26% posted in 2016. Net debt
demand response, energy storage
with the previous year, thanks to
remained broadly stable at €37.4
and the construction of infrastructure
especially hot weather during the
billion, an improvement on the
for electric mobility. At the same
summer and cold temperatures in
guidance of €37.8 billion, despite the
time, acquisitions in the distribution
the latter part of the year. South
continuation of Group investment for
sector enabled the Group to become
America (with the exception of
growth (which in 2017 was around
the second largest electricity
Argentina) also registered an
€8.1 billion, only slightly lower than
distributor in Brazil.
expansion in electricity consumption.
the record level posted in 2016).
One of the most important
The year was also characterized
These decidedly positive results
challenges in 2017 concerned the
by an exceptional wave of drought
were reflected in the performance of
mass installation of smart meters in
and, consequently, poor availability
the Enel stock, which in 2017 rose
the countries in which the Group’s
of water resources, which heavily
by about 21.5%. This performance
distribution companies operate.
penalized hydroelectric generation
was even more significant when
In particular, in Italy – a country
in a number of key markets such as
compared with the benchmark index
historically in the vanguard on this
Italy, Spain and Chile.
for the European utilities sector
front – the plan to replace 32 million
Performance
rose by about 14.6%, and with the
the new Open Meters (the second
(Euro STOXX Utilities UEM), which
first-generation digital meters with
benchmark index for the Italian
generation) was launched in June.
Despite the adverse market
market as a whole (FTSE-MIB),
In 2017, the installation of 1.7 million
conditions for gas and coal and
which over the same period posted
Open Meters in Italy made it possible
the limited availability of hydro
a gain of 11.7%.
to activate previously unexplored
resources, the Enel Group managed
functions and make progress towards
to surpass the financial targets set
Main developments
the world of smart grids. In addition,
for 2017.
in Spain more than 11 million digital
In particular, the Group closed
With regard to industrial growth,
meters have already been installed, of
the year with ordinary EBITDA of
the development of renewable
which about 2 million in 2017 alone,
€15.6 billion, up from €15.2 billion
energy also continued in 2017, with
while in Romania about 290,000 are
the previous year, outpacing the
the installation of 2,600 MW of
installed, of which more than half in
guidance provided to the market.
new capacity, of which 300 MW of
2017.
14
Annual Report 2017
In 2017, the Group’s efforts to
three newly opened hubs in San
Group to achieve its objectives,
create an ultra-broadband fiber optic
Francisco, Moscow and Madrid
confirming a significant capacity
network in Italy also continued. The
– enables the Group to seize
for generating value and the
main transactions undertaken as part
the opportunities generated by
Group’s clear positioning in the
of the active portfolio management
the world’s leading innovation
ongoing energy transition. Enel is
program included the purchase of
ecosystems and actively foster
now recognized as a global leader
minority interests in the Romanian
collaboration with the best start-
in renewable generation and in
companies and the sale of the
ups in the world. Today, the Group
distribution through smart grids: two
stake in the coal mine at Bayan in
boasts a portfolio of 126 active
key pillars in an energy context that
Indonesia.
collaborations, mainly in the fields of
is evolving towards the electrification
As part of its commitment to
electric mobility and smart charging,
of final consumption and the deep
electric mobility, in November
energy efficiency, advanced
decarbonization of the energy mix.
2017 Enel presented a National
automation of generation plants,
Our industry is currently
Plan for the installation of charging
digitization of networks and the
experiencing far-reaching change
infrastructure for electric vehicles.
Internet of Things.
under the impetus of two
The plan provides for comprehensive
These results were also achieved
fundamental drivers that mutually
coverage of Italy, with the installation
thanks to the continuing
fuel and reinforce each other:
of some 7,000 charging stations by
rationalization of the organizational
digitization, with technologies that
2020, rising to 14,000 by 2022.
structure, which is now more
enable the roll-out of innovative
The year 2017 was also busy on the
streamlined and efficient, thanks in
processes and services at an
financial front, with the issue of the
part to the corporate reorganization
increasingly rapid pace and at lower
first Green Bond and the launch of
in Chile.
two bond issues on the US market.
cost; and a focus on customers,
who are ever more actively involved
Our commitment to innovation
Strategy and forecasts for 2018
and equipped to choose in a more
also continued in 2017, where,
knowledgeable and informed
in implementation of the Open
The strategy adopted in recent
fashion.
Innovation strategy, the network of
years, together with its effective
To lend further impetus to
seven innovation hubs – including
implementation, has enabled the
the strategic journey we have
Report on operations
15
undertaken, the 2018-2020 Strategic
focusing on the delivery of value-
particular reference to the 17
Plan was presented in November
added services for domestic and
Sustainable Development Goals
2017. It essentially confirms the
industrial customers, and for cities,
(SDGs) of the United Nations. For
substance and medium-term
as well as on electric mobility, with
Enel, sustainability – in essential
objectives of the Group’s strategy,
the aim of generating €3.3 billion of
combination with innovation – is
incorporating 2020 within the
EBITDA in 2020.
central to the Group’s strategy
plan horizon. The Enel Strategic
After the major gains achieved
and is fully integrated with its
Plan is the outcome of the shared
in recent years, the Group’s path
industrial and financial dimension,
efforts of management and the
of industrial growth continues to
fully aware that it is only possible
Board of Directors, which is called
strengthen. In 2018-2020, Enel plans
to remain competitive in the
upon to approve the strategy
to allocate 70% of resources to
long term and create value in a
and to periodically monitor its
investments for growth and 30% to
changing environment by identifying
implementation.
maintenance activities, with a total
sustainable business solutions
In the Strategic Plan, digitization
investment of €24.6 billion. This will
that can reduce environmental
and customer focus are again the
consolidate growth and at the same
impact and increase interaction and
key enablers of the Enel Group’s
time keep the level of debt in 2020
cooperation with all stakeholders.
strategy.
at current levels, thanks to solid
The actions taken by the Group in
More specifically, the digitization of
cash generation. More specifically,
line with this vision contributed to
operations represents a fundamental
80% of the investment program
the achievement in 2017 of some
lever for the creation of long-term
for growth is dedicated to mature
of the SDG commitments that the
value, thanks to the transformation
markets, contributing to a further
Group had set for 2020. In particular,
of processes, the introduction
reduction in risk and underscoring
Enel has confirmed and increased
of new systems, the continuous
considerable flexibility in allocating
its specific commitment to the
dialogue with technology to enhance
resources to the most attractive
following SDGs:
efficiency and effectiveness, and to
growth opportunities.
> 800,000 beneficiaries of quality
be increasingly resilient and flexible
The Group also plans to continue
education by 2020, doubling
in responding to sudden changes
the rationalization of existing assets
the previous target of 400,000
in the competitive environment.
over the next few years, mainly
beneficiaries (SDG 4);
For precisely these reasons, in the
by focusing on thermal generation
> 3 million beneficiaries of access
new Strategic Plan investments in
plants and exiting non-strategic
to clean and low-cost energy by
digitization in the next three years
countries. We also plan to invest
2020, mainly in Africa, Asia and
have increased to €5.3 billion from
up to €4.7 billion in strategic
South America (SDG 7);
the €4.7 billion envisaged in the
acquisitions.
> 3 million beneficiaries of
previous plan. In particular, the
People are a central element of
employment and sustainable and
investment plan focuses on digitizing
Enel’s strategy, and for this reason
inclusive economic growth by
not only grid assets (smart meters,
the Group aims to leverage skills
2020, doubling the previous target
remote control and connectivity of
to an ever greater extent, as they
of 1.5 million (SDG 8);
systems), but also the customer
are the engine of development and
> in the fight against climate change
relationship, while at the same
change in a vision inspired by the
(SDG 13), Enel will continue the
time promoting a stronger digital
principles of ethics, transparency,
process of decarbonizing its
orientation among all of Enel’s
inclusiveness, diversity, respect
generation mix with the aim of
people.
for human rights and maximum
Customer focus will receive a
attention to safety.
significant boost from the creation
Continuing along the road
of the new Enel X Global Business
undertaken, the Strategic Plan
reducing average CO2 emissions
per kWh generated to 350
gCO2/kWheq by 2020, following
the trajectory for complete
Line, whose commercial offer
promotes the implementation
decarbonization by 2050.
supplements the traditional business
of a sustainable business model
of selling electricity and gas,
along the entire value chain, with
The Enel Group is moving forward
16
Annual Report 2017
with the process of transformation
to our shareholders and other
shareholders an attractive return
undertaken some years ago. This
stakeholders of the actions that
on their investment and generating
journey is based on the transparency
will be undertaken in the coming
sustainable value over the long term
and full visibility with respect
years, with the aim of offering our
for all stakeholders.
Chairman of the Board
of Directors
Patrizia Grieco
Chief Executive Officer
and General Manager
Francesco Starace
Report on operations
17
e u r o a n d % ch a n ge on 2016)
| ( m illi o n s o f
7
1
0
r 2
e f o
c
n
e rf o r m a
P
r e s o u r c e | 2 4 9 .9 (TWh)
i o n b y
t
a
r
e
n
e
t g
e
o t a l n
T
8 1. 7 (TWh)
|
r e s o u r c e
s
b l e
a
w
e
%
R
n
e
3 3
b l e
e w a
n
y r e
n b
Summary of results
Italy
Abroad
Italy
Abroad
Italy
Abroad
Italy
Abroad
227.3
217.9
4.8
6.9
103.2
181.6
53.5
196.4
Electricity transported (TWh) | 445.2
Gas sales (billions of m3) | 11.7
Electricity sales (TWh) | 284.8
Total net generation (TWh) | 249.9
Capital expenditure
by Country/Region
8,130 (millions of euro)
1,812
1,105
3,002
307
1,802
30
Italy
Iberia
South America
Europe and North Africa
North and Central America
Sub-Saharan Africa and Asia
72
Other, eliminations and adjustments
18
Annual Report 2017
9 (+5.7%)
ue
even
3
74,6
R
argin
g m
%)
eratin
2.5
p
s o
3 (+
5
s
o
r
G
5,6
1
e
m
o
c
n
i
)
%
8
.
9
+
(
2
9
7
,
9
g
n
i
t
a
r
e
p
O
)
%
7
.
0
4
+
(
e
m
o
c
n
i
9
2
t
e
N
3
,
5
E m p l o y e e s b y b u s i n e s s a r e a
6 2 , 9 0 0
al
o
C
%
8
2
r
a
cle
u
N
%
0
1
e
l
c
y
c
d
e
n
i
b
m
o
C
s
a
g
d
n
a
%
8
1
e
n
i
b
r
u
t
d
n
a
s
%
l
i
a
1
O
g
1
2 8 , 6 8 4
1 1
9 , 7
3
0
3 , 9
1
Total net ge n eratio
ydroelectric
8%
6
H
d
Win
%
2
2
l
a
m
r
e
h
t
o
e
G
%
7
r
a
l
o
s
s
s
a
m
o
i
B
d
n
a
%
3
t a l y
I
e r i a
I b
a
ri c
h A m e
o rt h A fri c
a
a
e ric
t
u
o
S
u r o
d N
m
n
p
e
n
e a
d C
n tr al A
u b-S a h ara n A fric a a n d A sia
o rt h a
E
N
O th er
3
3
5 , 7
0
5
2 , 0
S
1 9 8
2,6 2 1
Summary of results
e u r o a n d % ch a n ge on 2016)
| ( m illi o n s o f
7
1
0
r 2
e f o
c
n
e rf o r m a
P
Italy
Abroad
Italy
Abroad
Italy
Abroad
Italy
227.3
217.9
4.8
6.9
103.2
181.6
Abroad
196.4
Electricity transported (TWh) | 445.2
Gas sales (billions of m3) | 11.7
Electricity sales (TWh) | 284.8
53.5
Total net generation (TWh) | 249.9
Capital expenditure
by Country/Region
8,130 (millions of euro)
1,812
1,105
3,002
307
1,802
30
72
Italy
Iberia
South America
Europe and North Africa
North and Central America
Sub-Saharan Africa and Asia
Other, eliminations and adjustments
9 (+5.7%)
ue
even
3
74,6
R
argin
g m
eratin
%)
2.5
p
3 (+
s o
s
5
o
5,6
r
G
1
al
%
o
C
8
2
r
a
cle
%
u
N
0
1
e
m
o
c
n
i
g
n
i
t
a
r
e
p
O
)
%
8
.
9
+
(
2
9
7
,
9
e
l
c
y
c
d
e
n
i
b
m
o
C
s
a
g
d
n
a
%
8
1
)
%
7
.
0
4
+
(
e
m
o
c
n
i
9
2
3
,
5
t
e
N
e
n
i
b
r
u
t
d
n
a
l
i
O
%
1
1
s
a
g
E m p l o y e e s b y b u s i n e s s a r e a
6 2 , 9 0 0
2 8 , 6 8 4
1 1
9 , 7
3
0
3 , 9
1
3
3
5 , 7
0
5
2 , 0
r e s o u r c e | 2 4 9 .9 (TWh)
i o n b y
t
a
r
e
n
e
t g
e
8 1. 7 (TWh)
|
r e s o u r c e
b l e
e w a
s
b l e
a
w
n
y r e
n b
o t a l n
T
e
%
R
n
e
3 3
Total net ge n eratio
ydroelectric
H
8%
6
d
Win
%
2
2
l
a
m
r
e
h
t
o
e
G
%
7
r
a
l
o
s
s
s
a
m
o
i
B
d
n
a
%
3
a
t a l y
I
e r i a
I b
ri c
h A m e
a
o rt h A fri c
t
e ric
d N
n tr al A
e
m
a
u
o
S
e a
p
u r o
o rt h a
n
d C
u b-S a h ara n A fric a a n d A sia
n
E
N
O th er
S
1 9 8
Report on operations
2,6 2 1
19
Performance data
Revenue
Revenue in 2017 amounted to €74,639 million, an increa-
Millions of euro
se of €4,047 million (5.7%) compared with 2016. The rise
mainly reflected an increase in revenue from the sale and
transport of electricity (especially in end-user markets in
Italy and Spain) as a result of greater quantities sold in an
2017
environment of rising prices, for grid management and for
the sale of fuels, especially natural gas. In addition revenue
2016
from trading on international electricity markets also incre-
ased, essentially reflecting a rise in quantities handled in a
74,639
70,592
+5.7%
context of rising prices.
Positive exchange rate developments, which saw gains
posted in all countries with the exception of Argentina and
the United States, were essentially offset by the impact
of the changes in the scope of consolidation following the
disposal of Slovenské elektrárne, Marcinelle Energie and
Enel France and the acquisitions of Enel Distribuição Goiás
(formerly CELG-D) and EnerNOC.
Revenue includes a number of extraordinary items asso-
ciated with gains on the disposal of companies. In 2017
this mainly included the gain of €143 million on the dispo-
sal of the investment in Electrogas in Chile.
In 2016, it had mainly regarded the gain from the sale of
GNL Quintero (an associate in which the Group held 20%)
of €173 million and the gain of €124 million on the sale of
Hydro Dolomiti Enel.
The following table reports developments in revenue by
geographical area.
Millions of euro
Italy
Iberia
South America
Europe and North Africa
North and Central America
Sub-Saharan Africa and Asia
Other, eliminations and adjustments
Total
20
2017
38,781
19,994
13,154
2,411
1,187
96
(984)
74,639
2016
Change
37,045
18,953
10,768
3,798
1,125
29
(1,126)
70,592
1,736
1,041
2,386
(1,387)
62
67
142
4,047
4.7%
5.5%
22.2%
-36.5%
5.5%
-
12.6%
5.7%
Annual Report 2017
Gross operating margin
The gross operating margin in 2017 totaled €15,653
Millions of euro
million, up €377 million (2.5%) compared with 2016, de-
spite a negative impact of €225 million from the change
in the scope of consolidation – mainly due to the deconso-
lidation of Slovenské elektrárne and EGPNA REP and the
acquisition of Enel Distribuição Goiás (formerly CELG-D)
and EnerNOC – and an unfavorable context attributable to
adverse weather and water conditions, which penalized
Group performance. In addition to exchange rate gains,
the increase in the gross operating margin reflected the
implementation of the investment plan over the past few
years and the efficiency plans pursued by the Group. The
following table reports gross operating margin by geo-
2017
2016
15,653
15,276
+2.5%
graphical area.
Millions of euro
Italy
Iberia
South America
Europe and North Africa
North and Central America
Sub-Saharan Africa and Asia
Other
Total
2017
6,863
3,573
4,204
543
759
57
(346)
15,653
2016
6,618
3,562
3,556
762
833
14
(69)
15,276
Change
245
11
648
(219)
(74)
43
(277)
377
3.7%
0.3%
18.2%
-28.7%
-8.9%
-
-
2.5%
The ordinary gross operating margin amounted to
> the gains on the sale of GNL Quintero and Hydro Dolo-
€15,555 million, up €381 million on 2016 (+2.5%). Extraordi-
miti Enel for €173 million and €124 million respectively;
nary items for 2017, which are not reflected in the ordinary
> the losses recognized following the definitive aban-
gross operating margin, amounted to €98 million, including:
donment of the development of a number of hydroelec-
> the gain of €143 million on the sale of Electrogas; and
tric projects in Chile and Peru (about €196 million).
> the losses of €45 million posted in South America from
the abandonment of hydroelectric projects in Chile and
The following table reports developments in the ordinary
Colombia.
gross operating margin by segment.
In addition, in 2016 extraordinary items amounted to €101
million and included:
Millions of euro
Italy
Iberia
South America
Europe and North Africa
North and Central America
Sub-Saharan Africa and Asia
Other
Total
2017
6,863
3,573
4,106
543
759
57
(346)
15,555
2016
6,494
3,562
3,578
762
833
14
(69)
15,174
Change
369
11
528
(219)
(74)
43
(277)
381
5.7%
0.3%
14.8%
-28.7%
-8.9%
-
-
2.5%
21
Report on operations
Operating income
Operating income in 2017 amounted to €9,792 million, an
Millions of euro
increase of €871 million compared with 2016 (€8,921 mil-
lion), with a decrease in depreciation, amortization and impai-
rment losses of €494 million. The latter was almost entirely
attributable to the greater impairment recognized in 2016
2017
9,792
+9.8%
than in 2017. In 2016, impairment regarded the writedown of
the value of water usage rights for hydroelectric projects on
2016
8,921
the rivers Neltume and Choshuenco in Chile, which face pro-
cedural difficulties (€273 million), upstream gas assets (€55
million), the writedown of Marcinelle Energie following the
application of IFRS 5 (€51 million), as well as the writedowns
recognized following impairment testing of the Enel Green
Power Romania CGU (€130 million) and the Nuove Energie
CGU (€92 million). In 2017, the only impairment recognized
regarded the geothermal assets in Germany under deve-
lopment through Erdwärme Oberland GmbH (€42 million).
The following table reports developments in operating in-
come by geographical area.
Millions of euro
Italy
Iberia
South America
Europe and North Africa
North and Central America
Sub-Saharan Africa and Asia
Other
Total
2017
4,470
1,842
2,970
306
553
15
(364)
9,792
2016
4,270
1,766
2,163
286
565
(5)
(124)
8,921
Change
200
76
807
20
(12)
20
(240)
871
4.7%
4.3%
37.3%
7.0%
-2.1%
-
-
9.8%
Ordinary operating income, which in addition to not in-
The following table reports developments in ordinary ope-
cluding the items excluded from ordinary gross operating
rating income by geographical area.
margin does not consider the effects of the impairment
noted above, amounted to €9,736 million, an increase of
€301 million (3.2%) on 2016.
Millions of euro
Italy
Iberia
South America
Europe and North Africa
North and Central America
Sub-Saharan Africa and Asia
Other
Total
22
2017
4,470
1,842
2,872
348
553
15
(364)
9,736
2016
4,289
1,766
2,458
486
565
(5)
(124)
9,435
Change
181
76
414
(138)
(12)
20
(240)
301
4.2%
4.3%
16.8%
-28.4%
-2.1%
-
-
3.2%
Annual Report 2017
Net income
Net income attributable to shareholders of the Parent
Millions of euro
Net income per
share attributable to
shareholders of the Parent
Company (euro) 0.40
Net income per
share attributable to
shareholders of the Parent
Company (euro) 0.28
2017
3,779
1,550
5,329
2016
2,570
1,217
3,787
Non-controlling interests
Parent Company
Company amounted to €3,779 million in 2017, compared
with €2,570 million in 2016. More specifically, the increase
in operating income improved further with the reduction in
financial expense on the debt, the gain from the disposal
of Bayan Resources and the differences between the two
years in the impact of the writedown of the investment
in Slovak Power Holding and the financial receivable in re-
spect of the disposal of an interest in that company.
In addition, taxes decreased, mainly due to the reduction
in the rate of corporate income tax (IRES) from 27.5% to
24% in Italy and the adjustment of the deferred taxation
of companies resident in the United States following the
tax reform approved in December 2017, which reduced the
corporate income tax rate from 35% to 21%.
Ordinary net income attributable to shareholders of
the Parent Company in 2017 amounted to €3,709 million
(€3,243 million in 2016), an increase of €466 million on
2016. The following table provides a reconciliation of net in-
come and ordinary net income attributable to shareholders
of the Parent Company, reporting the non-ordinary items
and their respective impacts on net income, excluding the
associated tax effects and non-controlling interests.
Millions of euro
Net income attributable to shareholders of the Parent Company
Gain on disposal of Bayan Resources
Impairment of Erdwärme geothermal assets
Abandonment of hydroelectric projects in Chile and Colombia
Gain on disposal of Electrogas
Revaluation of investment in Slovenské elektrárne
Ordinary net income attributable to shareholders of the Parent Company
2017
3,779
(52)
36
11
(37)
(28)
3,709
23
Report on operations Financial data
Net capital employed
Net capital employed, including net assets held for sale
Millions of euro
of €241 million, amounted to €89,571 million at December
31, 2017 and was financed by equity pertaining to share-
holders of the Parent Company and non-controlling inter-
ests of €52,161 million and net financial debt of €37,410
million. At December 31, 2017, the debt/equity ratio came
to 0.72% (0.71% at December 31, 2016).
Net financial debt amounted to €37,410 million, a de-
crease of €143 million on December 31, 2016, a slight
change compared with the balance at the end of the previ-
ous year.
Cash flows from
operations
Group shareholders’ equity
per share (euro) 3.42
2017
37,410
52,161
89,571
-0.6%
Group shareholders’ equity
per share (euro) 3.42
2016
37,553
52,575
90,128
Total shareholders’
equity
Net financial debt
Cash flows from operations amounted to €10,125 mil-
Millions of euro
lion in 2017, an increase of €278 million on the previous
year, mainly reflecting the increase in the gross operating
margin, a reduction in uses of provisions and a decline in
taxes paid, which more than offset the deterioration in net
working capital.
2017
2016
10,125
9,847
Capital expenditure
Capital expenditure amounted to €8,130 million in 2017
Millions of euro
(of which €6,857 million in respect of property, plant and
equipment), a decrease of €422 million on 2016, mainly
concentrated in renewable energy plants in Brazil, Chile
and South Africa and in Italy due to the deconsolidation of
OpEn Fiber.
2017
2016
8,130
8,552
+2.8%
-4.9%
24
Annual Report 2017
The following table reports developments in capital expenditure by geographical area.
Millions of euro
Italy
Iberia
South America
Europe and North Africa
North and Central America
Sub-Saharan Africa and Asia
Other, eliminations and adjustments
Total
2017
1,812
1,105
3,002
307 (1)
1,802 (2)
30
72
8,130
2016
1,894 (3)
1,147
3,069
265 (4)
1,832
304
41
8,552
Change
-4.3%
-3.7%
-2.2%
15.8%
-1.6%
-90.1%
75.6%
-4.9%
(82)
(42)
(67)
42
(30)
(274)
31
(422)
(1) Does not include €44 million regarding units classified as “held for sale”.
(2) Does not include €325 million regarding units classified as “held for sale”.
(3) Does not include €7 million regarding units classified as “held for sale”.
(4) Does not include €283 million regarding units classified as “held for sale”.
Operations
Net electricity generated by Enel (TWh)
Electricity transported on the Enel distribution network (TWh) (1)
Electricity sold by Enel (TWh)
Gas sales to end users (billions of m3)
Employees at period-end (no.)
Italy
Abroad
Total
Italy
Abroad
Total
2017
196.4
217.9
181.6
6.9
53.5
227.3
103.2
4.8
249.9
445.2
284.8
11.7
60.9
224.1
94.1
4.6
2016
200.9
202.6
168.9
6.0
261.8
426.7
263.0
10.6
31,114
31,786
62,900
31,956
30,124
62,080
(1) The figure for 2016 reflects a more accurate measurement of amounts transported.
Net electricity generated by Enel in 2017 decreased by 11.9
TWh on 2016 (-4.5%), due to the decrease in amounts gene-
rated in Italy (-7.4 TWh) and abroad (-4.5 TWh). The decline in
generation in Italy is mainly attributable to the decrease in con-
ventional thermal generation. Abroad, the reduction reflects
the deconsolidation at the end of July of Slovenské elektrárne
(-7.5 TWh), which more than offset the increase in generation
in Spain and South America.
As regards the technology mix, the change is mainly attribu-
table to a decrease in nuclear generation (-7.0 TWh), coal- and
oil-fired generation (-4.7 TWh) and hydroelectric generation
(-4.7 TWh). These effects were only partly offset by an incre-
ase in natural gas generation (+4.1 TWh) and solar generation
(+1.4 TWh).
Finally, 33% of the electricity generated by Enel in 2017 came
from renewable sources.
Net electricity generation
by source (2017)
18%
10%
11%
33%
28%
Renewables
Oil and gas turbine
Coal
Nuclear
Combined cycle and gas
25
Report on operations
Electricity sold by geographical
area (2017)
4%
26%
36%
34%
Italy
South America
Iberia
Other countries
at Dec. 31, 2017
at Dec. 31, 2016
28,684
9,711
13,903
5,733
2,050
198
2,621
62,900
29,321
9,695
12,979
5,858
891
185
3,151
62,080
Electricity transported on the Enel distribution net-
work in 2017 amounted to 445.2 TWh, up 18.5 TWh
(+4.3%), essentially reflecting the acquisition of Enel Distri-
buição Goiás (formerly CELG-D).
Electricity sold by Enel in 2017 amounted to 284.8 TWh,
up 21.8 TWh (+8.3%) on the previous year, reflecting the in-
crease in amounts sold on markets in Italy (+9.1 TWh, with
the largest increase coming in the business customer seg-
ment), South America (+11.6 TWh) and Spain (+3.0 TWh),
only partly offset by a decrease in amounts sold in Romania,
France and Slovakia following the Group’s exit from those
markets.
At December 31, 2017, Enel Group employees numbe-
red 62,900 (an increase of 820 on the end of 2016). The
rise reflects the net balance of new hires and termina-
tions (-2,111) and the change in the scope of consolidation
(+2,931 overall), which included the acquisition of Demand
Energy and EnerNOC in North America and Enel Distribu-
ição Goiás (formerly CELG-D) in Brazil.
The following table reports the employee workforce by
geographical area.
No.
Italy
Iberia
South America
Europe and North Africa
North and Central America
Sub-Saharan Africa and Asia
Other
Total
26
Annual Report 2017 Environmental, social and governance indicators
“Zero-emission” generation (% of total)
Total specific emissions of CO2 from net generation (gCO2/kWheq) (1)
Average efficiency of thermal plants (%) (2)
Specific emissions of SO2 (g/kWheq) (1)
Specific emissions of NOx (g/kWheq) (1)
Specific emissions of particulates (g/kWheq) (1)
ISO 14001-certified net efficient capacity (% of total)
Enel injury frequency rate (3)
Enel injury severity rate (4)
Serious and fatal injuries at Enel (no.)
Serious and fatal injuries at contractors (no.)
Verified violations of the Code of Ethics (no.) (5)
2017
2016
Change
43.3
411
40.7
0.84
0.79
0.27
99.0
1.20
45.6
395
40.0
0.82
0.75
0.22
97.9
1.25
0.058
0.050
6
20
27
5
12
21
(2.3)
16
0.7
0.02
0.04
0.05
1.1
(0.05)
0.008
1
8
6
-5.0%
4.1%
1.8%
2.4%
5.3%
22.7%
1.1%
-4.0%
16.0%
20.0%
66.7%
29.0%
(1) Specific emissions are calculated as total emissions from simple thermal generation and co-generation of electricity and heat as a ratio of total renewables
generation, nuclear generation, simple thermal generation and co-generation of electricity and heat (including the contribution of heat in MWh equivalent).
(2) Percentages calculated using new method that does not include oil and gas plants in Italy that are in the process of decommissioning or are marginal
among thermal plants. The figures also do not consider consumption and generation for co-generation at Russian thermal plants. The average efficiency
is calculated on the basis of the number of plants and weighted by output.
(3) The indicator is calculated as the ratio between the total number of injuries and the number of hours worked, in millions.
(4) The indicator is calculated as the ratio between the number of days lost for injuries and the number of hours worked, in thousands.
(5) The analysis of reports received in 2016 was completed in 2017. For that reason, the number of verified violations for 2016 was restated from 18 to 21.
In line with the decarbonization objective for 2050, new
The Enel Group has an environmental management sy-
renewables capacity totaling about 2.8 GW was installed,
stem that covers almost 100% of all activities (generation
mainly in Brazil, Peru and the United States. However, zero-
plants, grids, services, properties, sales, etc.). The entire
emissions generation in 2017 was equal to about 43% of
scope of operations is certified except for new plants and
total output, a decrease on the previous year that reflected
newly acquired or constructed installations, which require
the deconsolidation of the plants in Slovakia, Belgium and
a certain amount of time for certification.
North America. Emissions of CO2 diminished slightly in ab-
solute terms compared with 2016, but with a reduction in
the Group’s total net generation, specific emissions of CO2
increased by 4% on the previous year (411g/kWheq).
The values for other specific atmospheric emissions rose
Injury frequency and severity rates for employees of the
Enel Group were equal to 1.20 (1.25 in 2016) and 0.058
(0.050 in 2016).
In 2017 there were 2 fatal accidents and 4 serious acci-
dents involving Enel personnel and 11 fatal accidents and
slightly compared with 2016 as a result of the decline in
9 serious accidents involving the employees of contrac-
output. Particulates increased by about 23%, however,
tors working for Enel.
reflecting the increase in coal-fired thermal generation in
Reports of violations of the Code of Ethics numbered 123
Russia. Nevertheless, these figures were in line with the
last year. Following analysis in 2017, 27 were classified as
Group’s targets for 2020.
violations.
The average efficiency of thermal plants was virtually un-
changed on 2016.
27
Report on operations
Overview of the Group’s
operations, performance
and financial position
Definition of performance
indicators
In order to present the results of the Group and the Parent
nected with non-recurring transactions such as acquisitions
Company and analyze its financial structure, Enel has pre-
or disposals of entities (e.g. capital gains and losses), with
pared separate reclassified schedules that differ from those
the exception of those in the renewables development seg-
envisaged under the IFRS-EU adopted by the Group and by
ment, in line with the new “Build, Sell and Operate” busi-
Enel SpA and presented in the consolidated and separate
ness model launched in the 4th Quarter of 2016, in which
financial reports. These reclassified schedules contain dif-
the income from the disposal of projects in that sector is the
ferent performance indicators from those obtained directly
result of an ordinary activity for the Group.
from the consolidated and separate financial statements,
which management feels are useful in monitoring the perfor-
Ordinary operating income: this is calculated by correcting
mance of the Group and the Parent Company and represen-
“Operating income” for the effects of the non-recurring
tative of the financial performance of the business.
transactions referred to with regard to the gross operating
As regards those indicators, on December 3, 2015, CON-
margin, as well as significant impairment losses on assets
SOB issued Communication 92543/15, which gives force to
following impairment testing or classification under “Assets
the Guidelines issued on October 5, 2015, by the European
held for sale”.
Securities and Markets Authority (ESMA), concerning the
presentation of alternative performance measures in regu-
Group ordinary net income: this is defined as “Group net in-
lated information disclosed or prospectuses published as
come” generated by Enel’s core business and is equal to
from July 3, 2016. These Guidelines, which update the pre-
“Group net income” less the effects on net income (inclu-
vious CESR Recommendation (CESR/05-178b), are intended
ding the impact of any tax effects or non-controlling inte-
to promote the usefulness and transparency of alternative
rests) of the items referred to in the comments on “Ordinary
performance indicators included in regulated information or
operating income”.
prospectuses within the scope of application of Directive
2003/71/EC in order to improve their comparability, reliability
Gross global value added from continuing operations: this
and comprehensibility.
is defined as value created for stakeholders and is equal to
Accordingly, in line with the regulations cited above, the cri-
“Revenue”, including “Net income/(expense) from commo-
teria used to construct these indicators are as follows.
dity management” net of external costs defined as the alge-
Gross operating margin: an operating performance indicator,
“Costs of materials”, “Capitalized costs of internal projects”,
calculated as “Operating income” plus “Depreciation, amor-
“Other costs” and “Costs for services, rentals and leases”,
tization and impairment losses”.
with the latter net of “Costs for fixed water diversion fees”
braic sum of “Cost of fuels”, “Cost of electricity purchases”,
Ordinary gross operating margin: an indicator calculated by
eliminating from the gross operating margin all items con-
Net non-current assets: calculated as the difference betwe-
and “Costs for public land usage fees”.
28
Annual Report 2017 en “Non-current assets” and “Non-current liabilities” with
Net capital employed: calculated as the algebraic sum of
the exception of:
> “Deferred tax assets”;
“Net non-current assets” and “Net current assets”, “Provi-
sions for risks and charges”, “Employee benefits”, “Defer-
> “Securities held to maturity”, “Financial investments in
red tax liabilities” and “Deferred tax assets”, as well as “Net
funds or portfolio management products measured at
assets held for sale”.
fair value through profit or loss” and “Other financial
receivables” included in “Other non-current financial as-
Net financial debt: a financial structure indicator, calculated
sets”;
> “Long-term borrowings”;
> “Employee benefits”;
as:
> “Long-term borrowings” and “Short-term borrowings
and the current portion of long-term borrowings”, taking
> “Provisions for risks and charges (non-current portion)”;
account of “Short-term financial payables” included in
> “Deferred tax liabilities”.
“Other current liabilities”;
> net of “Cash and cash equivalents”;
Net current assets: calculated as the difference between
> net of the “Current portion of long-term financial recei-
“Current assets” and “Current liabilities” with the excep-
vables”, “Factoring receivables”, “Cash collateral” and
tion of:
“Other financial receivables” included in “Other current
> “Long-term financial receivables (short-term portion)”,
financial assets”;
“Factoring receivables”, “Securities held to maturity”,
> net of “Securities held to maturity”, “Securities available
“Cash collateral” and “Other financial receivables” inclu-
for sale”, “Financial investments in funds or portfolio ma-
ded in “Other current financial assets”;
nagement products measured at fair value through pro-
> “Cash and cash equivalents”;
fit or loss” and “Other financial receivables” included in
> “Short-term borrowings” and the “Current portion of
“Other non-current financial assets”.
long-term borrowings”;
More generally, the net financial debt of the Enel Group
> “Provisions for risks and charges (current portion)”;
is calculated in conformity with paragraph 127 of Re-
> “Other financial payables” included in “Other current lia-
commendation CESR/05-054b implementing Regulation
bilities”.
2004/809/EC and in line with the CONSOB instructions
of July 26, 2007, net of financial receivables and long-term
Net assets held for sale: calculated as the algebraic sum of
securities.
“Assets held for sale” and “Liabilities held for sale”.
Main changes
in the scope
of consolidation
In the two periods under review, the scope of consolidation
information, please see note 5 in the notes to the consoli-
changed as a result of a number of transactions. For more
dated financial statements.
29
Report on operations Group performance
Millions of euro
Total revenue
Total costs
Net income/(expense) from commodity contracts measured at fair value
Gross operating margin
Depreciation, amortization and impairment losses
Operating income
Financial income
Financial expense
2017
74,639
59,564
578
15,653
5,861
9,792
3,982
6,674
2016
70,592
55,183
(133)
15,276
6,355
8,921
4,173
7,160
Total financial income/(expense)
(2,692)
(2,987)
Share of income/(losses) of equity investments accounted for using the
equity method
Income before taxes
Income taxes
Net income from continuing operations
Net income from discontinued operations
Net income (Group and non-controlling interests)
Net income attributable to shareholders of Parent Company
Net income attributable to non-controlling interests
111
7,211
1,882
5,329
-
5,329
3,779
1,550
(154)
5,780
1,993
3,787
-
3,787
2,570
1,217
Change
4,047
4,381
711
377
(494)
871
(191)
(486)
295
265
1,431
(111)
1,542
-
1,542
1,209
333
5.7%
7.9%
-
2.5%
-7.8%
9.8%
-4.6%
-6.8%
9.9%
-
24.8%
-5.6%
40.7%
-
40.7%
47.0%
27.4%
Revenue
Millions of euro
Revenue from the sale of electricity
Revenue from the transport of electricity
Fees from network operators
Transfers from institutional market operators
Revenue from the sale of gas
Revenue from the transport of gas
Gains on disposal and negative goodwill on acquisitions of subsidiaries, associates,
joint ventures, joint operations and non-current assets held for sale
Remeasurement at fair value after changes in control
Gains on the disposal of property, plant and equipment and intangible assets
Other sales, services and revenue
Total
2017
43,433
9,973
900
1,635
3,964
570
159
-
43
13,962
74,639
2016
42,337
9,587
557
1,462
3,876
563
399
99
65
11,647
70,592
Change
1,096
386
343
173
88
7
2.6%
4.0%
61.6%
11.8%
2.3%
1.2%
(240)
-60.2%
(99)
(22)
2,315
4,047
-
-33.8%
19.9%
5.7%
In 2017 revenue from the sale of electricity amounted to
pact for all countries with the exception of Argentina. The
€43,433 million, an increase of €1,096 million on the pre-
change in the scope of consolidation also had a significant
vious year (+2.6%). The rise is mainly attributable to the
impact: the acquisition of Enel Distribuição Goiás had an
following factors:
impact of €1,042 million on revenue in 2017, while the de-
> an increase of €2,317 million in revenue from electricity
consolidation of Slovenské elektrárne had an impact of
sales to end users. The change reflects an increase in
€345 million;
quantities sold as well as a recovery in average prices and
> a reduction of €2,189 million in revenue from wholesale
developments in exchange rates, which had a positive im-
electricity sales, mainly due to the contraction in volumes
30
Annual Report 2017
generated in Italy (€1,777 million) together with the con-
in which the Group had held 20%) of €173 million;
traction in revenue (€880 million) associated with the de-
> the gain of €124 million from the sale of Hydro Dolomiti
consolidation of Slovenské elektrárne at the end of July
Enel;
2016. These factors were partly offset by exchange rate
> the gain of €35 million recognized by Enel Green Power
developments and an increase in revenue in Chile and
Kansas from the disposal of its subsidiaries Cimarron and
Brazil;
Lindahl;
> an increase of €968 million in revenue from electricity tra-
> recognition of a price adjustment on the Portuguese as-
ding, reflecting the increase in volumes handled on the
sets sold in 2015 in the amount of €30 million.
foreign market, which offset the decline in revenue from
trading on the Italian market.
There were no gains from remeasurement at fair value
after changes in control in 2017, while in 2016 they to-
Revenue from the transport of electricity amounted to
taled €99 million, of which €95 million in respect of the
€9,973 million in 2017, an increase of €386 million on 2016.
adjustment to fair value of the assets and liabilities of the
The rise was mainly concentrated in Spain, South America
Group following the changes in governance arrangements
and Italy. The increase in average rates on foreign markets
and the consequent loss of control of EGPNA REP, which
was associated with an increase in quantities transported,
had prompted a remeasurement to fair value of its interest
especially on the free market.
in the company sold.
Fees from network operators amounted to €900 million
Gains on the disposal of property, plant and equipment
in 2017, an increase of €343 million on the previous year.
and intangible assets in 2017 amounted to €43 million
The change mainly reflects the increase in revenue from
(€65 million in 2016) and regarded ordinary disposals during
the reimbursement of the costs of essential generation
the period.
units in Italy, due to the inclusion of the Brindisi Sud plant.
Revenue under other sales, services and revenue
Revenue from transfers from institutional market ope-
amounted to €13,962 million in 2017 (€11,647 million
rators totaled €1,635 million in 2017, up €173 million. More
the previous year), an increase of €2,315 million on 2016
specifically, the increase in transfers mainly reflected an
(+19.9%).
increase in the costs of liquid fuels in the Spanish extra-
The change on 2016 mainly reflects:
peninsular area, for which the Group is entitled to reimbur-
> an increase of €1,312 million in revenue from the sale of
sement.
fuels, especially natural gas;
> an increase of €342 million in transfers associated with
Revenue from the sale of gas in 2017 amounted to €3,964
environmental certificates, mainly due to an increase in
million, an increase of €88 million (+2.3%) compared with
quantities handled;
the previous year. The change essentially reflected the in-
> an increase of €262 million in revenue from construction
crease in revenue in Iberia, primarily as a result of an incre-
contracts, mainly reflecting works on infrastructure opera-
ase in volumes sold and higher average unit prices than in
ted under concession arrangements within the scope of
2016.
IFRIC 12 by Enel Distribuição Goiás;
> an increase of €139 million in revenue from reimburse-
Revenue from the transport of gas in 2017 amounted to
ments and indemnities, including €100 million in respect
€570 million, an increase of €7 million (+1.2%), largely as a
of the arbitration proceeding undertaken by the Group
result of the increase in quantities transported in Italy.
with regard to the Chucas wind farm, for which the Group
received that amount from the Instituto Costarricense de
The item gains on disposal of entities amounted to €159
Electricidad (ICE);
million in 2017, a decrease of €240 million (-60.2%) on 2016,
> an increase of €65 million in revenue from tax partner-
mainly reflecting the gain of €143 million from the disposal
ships.
of the Chilean company Electrogas.
In 2016, this item mainly consisted of:
> the gain from the disposal of GNL Quintero (an associate
31
Report on operations Costs
Millions of euro
2017
2016
Change
Electricity purchases
20,011
18,514
Consumption of fuel for electricity generation
Fuel for trading and gas for sale to end users
Materials
Personnel
Services, leases and rentals (1)
Other operating expenses
Capitalized costs
Total
5,342
10,906
1,880
4,504
4,738
9,061
1,708
4,637
15,882
15,411
2,886
2,783
(1,847)
(1,669)
59,564
55,183
1,497
604
1,845
172
(133)
471
103
(178)
4,381
8.1%
12.7%
20.4%
10.1%
-2.9%
3.1%
3.7%
-10.7%
7.9%
(1) Of which costs for fixed water diversion fees of €169 million in 2017 (€166 million in 2016) and costs for public land usage fees of €24 million in 2017 (€24
million in 2016).
Costs for electricity purchases increased in 2017 by
Costs for materials in 2017 amounted to €1,880 million,
€1,497 million compared with 2016, a rise of 8.1%. The in-
an increase of €172 million on the previous year. The rise
crease reflects a rise in volumes purchased on the market,
was mainly attributable to purchases of materials and
especially in Italy and Spain. More specifically, purchases
equipment for works on infrastructure and networks ope-
of electricity on electricity exchanges increased by €2,026
rated under concession arrangements in Brazil, mainly due
million, notably in Italy, Iberia and South America, while
to the consolidation of Enel Distribuição Goiás. This effect
costs for purchases through bilateral contracts rose by
was partly offset by a reduction in costs for purchases of
€693 million. These factors were partly offset by a reduc-
environmental certificates.
tion in purchases on local and foreign markets and as part
of ancillary and balancing services totaling about €1,222
Personnel costs in 2017 totaled €4,504 million, a decrea-
million, essentially reflecting the reduction in volumes and
se of €133 million (-2.9%) on 2016. The change essentially
prices handled by Country Italy and the effect of the chan-
reflects:
ge in the scope of consolidation with the deconsolidation
> a decrease in costs for early retirement incentives of
of Slovenské elektrárne.
€152 million, mainly attributable to the reduction of €205
million in costs compared with 2016 for incentive plans
Costs for the consumption of fuel for electricity gene-
in Spain (Plan de Salida), only partly offset by the intro-
ration amounted to €5,342 million in 2017, an increase
duction of a similar plan at the newly acquired Enel Di-
of €604 million (+12.7%) on the previous year. The chan-
stribuição Goiás in order to enhance the efficiency of the
ge essentially reflected an increase in purchase costs to
structure (€45 million);
meet the requirements of the expansion in thermal gene-
> the effect of the increase in average unit costs, espe-
ration, especially in South America. These effects more
cially in South America, which was almost entirely offset
than offset the effect of the deconsolidation of Slovenské
by the reduction in the average workforce reflecting the
elektrárne.
changes noted below.
Costs for the purchase of fuel for trading and gas for
The Enel Group workforce at December 31, 2017 numbe-
sale to end users came to €10,906 million in 2017, an
red 62,900, of whom 31,786 abroad. The Group workforce
increase of €1,845 million on 2016. The change reflects an
expanded by 820 in 2017. The negative balance between
increase in quantities purchased and handled with rising
new hires and terminations (-2,111 employees), mainly at-
average prices, especially in Italy and Spain.
tributable to the early retirement incentives noted earlier
(44% of terminations took place in Italy), was more than of-
32
Annual Report 2017
fset by the changes in the scope of consolidation (+2,931)
services (€44 million) and for the change in the scope
attributable to the acquisitions in 2017, especially Enel Di-
of consolidation associated with Enel Distribuição Goiás
stribuição Goiás and EnerNOC.
(€18 million);
The overall change compared with December 31, 2016
reflected the writedowns recognized in 2016 in South
> a decrease of €161 million in capital losses. The item
breaks down as follows:
Balance at December 31, 2016
Hirings
Terminations
Change in scope of consolidation
Balance at December 31, 2017
62,080
2,302
(4,413)
2,931
62,900
Costs for services, leases and rentals in 2017 amounted
to €15,882 million, an increase of €471 million on 2016.
The change during the period essentially reflects:
> an increase of €398 million in wheeling costs, mainly in
South America and Brazil in particular, in part reflecting
the consolidation of Enel Distribuição Goiás, and in Italy,
essentially due to the increase in transmission rates;
> an increase of €185 million in costs for IT services in Italy
and Spain;
> an increase in costs for maintenance and other activities
performed under public service concession arrange-
ments in Brazil in the amount of €134 million;
> a decrease of €219 million in access fees for power
transmission grids, mainly in Spain as a result of the eli-
mination of charges provisioned in 2011-2016 in respect of
fees paid by generation companies for self-consumption,
as well as the effect of the deconsolidation of Slovenské
elektrárne (€78 million).
Other operating expenses in 2017 amounted to €2,886
million, an increase of €103 million on 2016, mainly reflec-
ting:
> an increase of €239 million in charges for environmental
compliance, especially in Italy and Romania;
> an increase of €137 million in costs for taxes and du-
ties, largely reflecting the increase in thermal generation
taxes in Spain and higher taxes on nuclear generation in
Catalonia as a result of the introduction of the new Law
5/2017, which taxes nuclear waste. This effect was am-
plified by the fact that in 2016 the Group had benefitted
from the reversal of previous provisions for nuclear gene-
ration taxes provided for under the previous law, which
was declared unconstitutional;
> an increase in costs for fines recorded in Argentina for
failure to meeting quality standards in electricity supply
America following the waiver of water usage rights for a
number of development projects after an analysis of their
profitability and socio-economic impact;
> the reversal of the litigation provision in 2016 in respect
of the SAPE dispute in the amount of €80 million fol-
lowing the issue of the arbitration ruling;
> the recognition of lower charges connected with the ru-
ling that granted Endesa reimbursement of amounts paid
to finance the “bono social” in 2016, 2015 and 2014, with
a positive impact of €222 million.
In 2017, capitalized costs amounted to €1,847 million, an
increase of €178 million compared with the previous year,
reflecting the increase in capital expenditure.
Net income/(expense) from commodity contracts
measured at fair value showed net income of €578 mil-
lion in 2017 (net expense of €133 million the previous year).
More specifically, the net income for 2017 was essential-
ly attributable to net income from managing positions in
cash flow hedge derivatives in the amount of €246 million
(net expense of €610 million in 2016) and derivatives me-
asured at fair value through profit or loss in the amount of
€302 million (net income of €477 million in 2016).
Depreciation, amortization and impairment losses
in 2017 amounted to €5,861 million, a decrease of €494
million, almost entirely attributable to impairment. More
specifically, the impairment losses recognized in 2016
mainly regarded the writedown of water usage rights for
the development of projects involving the Neltume and
Choshuenco rivers in Chile for which procedural difficul-
ties have been identified (€273 million), as well as wri-
tedowns recognized following impairment testing of the
Enel Green Power Romania CGU (€130 million) and the
Nuove Energie CGU (€92 million). In 2017, the adjustment
mainly regards the impairment of the geothermal assets
of the German investee Erdwärme (€42 million).
In addition to the foregoing, another development was the
increase in writedowns of trade receivables and other re-
ceivables net of reversals in the amount of €70 million,
due essentially to the increase in net adjustments in Ar-
gentina and Brazil, due to the deterioration of economic
33
Report on operations conditions, and in Italy as a result of the risk of default in
rivatives (hedging both interest and exchange rates), al-
respect of a number of traders.
most entirely offset by an increase of €203 million in net
exchange gains as a result of developments in exchange
Operating income in 2017 amounted to €9,792 million,
rates.
an increase of €871 million.
The share of income/(losses) of equity investments
Net financial expense amounted to €2,692 million in
accounted for using the equity method in 2017 show-
2017, a decrease of €295 million, mainly reflecting:
ed net income of €111 million, compared with net losses
> a decline of €255 million in impairment losses on fi-
of €154 million in 2016. The change of €265 million is es-
nancial receivables, almost entirely attributable to the
sentially attributable to the writedown of the 50% stake
adjustment to fair value of the financial receivable ari-
in Slovak Power Holding (€246 million), which in 2016 had
sing from the disposal of 50% of Slovak Power Holding,
been written down by €219 million following changes of
which in 2016 involved the recognition of charges of €220
the reference parameters used to determine the price for-
million and a positive adjustment in 2017 of €34 million;
mula included in the agreements with EPH and, conver-
> a decrease of €199 million in net interest expense,
sely, in 2017 increased by €27 million to take account of
mainly due to the Group’s refinancing strategy, exploiting
net income for the year.
the maturing of more expensive bonds and refinancing at
much lower market rates;
Income taxes in 2017 amounted to €1,882 million, equal
> a decrease of €96 million in charges for the accretion of
to 26.1% of taxable income, while taxes in 2016 totaled
other provisions, associated with the reduction of €58
€1,993 million, equal to 34.5% of taxable income. The de-
million in charges in respect of the provision for early re-
crease of €111 million in taxes compared with the previous
tirement incentives, largely in Spain, and with the decre-
year essentially reflected:
ase of €48 million in charges for the decommissioning
> a decrease in current taxes in Italy as a result of the
provision following the deconsolidation of Slovenské
reduction of the IRES (corporate income tax) rate from
elektrárne;
27.5% to 24%;
> an increase of €45 million in income on equity in-
> the adjustment of the deferred taxation of companies
vestments, due essentially to the gain on the disposal of
resident in the United States following the tax reform ap-
the interest in the Indonesian company Bayan Resources
proved in December 2017, which reduced the corporate
(€52 million).
tax rate from 35% to 21% (€173 million);
These factors were only partly offset by:
> the recognition of deferred tax assets in Argentina as a
> an increase in financial expense recognized by Enel Fi-
result of the improvement in the profit outlook for com-
nance International (€109 million) as a result of the early
panies resident there (€60 million).
redemption of bonds under the “make whole call option”
option provided for in the original loan contract;
These decrease in taxes were partly offset by the increa-
> a decrease in capitalized interest (€75 million), mainly
se in pre-tax income in 2017 compared with the previous
due to the deconsolidation of Slovenské elektrárne;
year and the change in the weight of operations subject to
> an increase in financial expense of a regulatory nature
different tax rates from the theoretical rates (in 2016 the
connected with the acquisition of Enel Distribuição Goiás
gains on Hydro Dolomiti Enel and GNL Quintero, as well
(€55 million) and an increase in charges on revolving cre-
as writedowns of assets associated with Slovak Power
dit lines (€37 million);
Holding; in 2017, the gain on the disposal of Electrogas).
> an increase of €218 million in net charges on financial de-
34
Annual Report 2017 Analysis of the Group’s
financial position
Millions of euro
Net non-current assets:
- property, plant and equipment and intangible assets
- goodwill
- equity investments accounted for using the equity method
- other net non-current assets/(liabilities)
at Dec. 31, 2017
at Dec. 31, 2016
Change
91,738
13,746
1,598
(1,677)
92,318
13,556
1,558
(802)
(580)
-0.6%
190
40
(875)
1.4%
2.6%
-
Total net non-current assets
105,405
106,630
(1,225)
-1.1%
Net current assets:
- trade receivables
- inventories
- net receivables due from institutional market operators
- other net current assets/(liabilities)
- trade payables
Total net current assets
Gross capital employed
Sundry provisions:
- employee benefits
- provisions for risks and charges and net deferred taxes
Total provisions
Net assets held for sale
Net capital employed
Total shareholders’ equity
Net financial debt
14,529
2,722
(3,912)
(6,311)
(12,671)
(5,643)
99,762
(2,407)
(8,025)
(10,432)
241
89,571
52,161
37,410
13,506
2,564
(3,592)
1,023
158
(320)
7.6%
6.2%
-8.9%
(5,201)
(1,110)
-21.3%
(12,688)
(5,411)
17
(232)
101,219
(1,457)
(2,585)
(8,517)
(11,102)
11
90,128
52,575
37,553
178
492
670
230
(557)
(414)
(143)
0.1%
-4.3%
-1.4%
6.9%
5.8%
6.0%
-
-0.6%
-0.8%
-0.4%
Property, plant and equipment and intangible assets (inclu-
acquisition of Enel Distribuição Goiás (including the conces-
ding investment property) amounted to €91,738 million at
sion rights for the distribution of electricity in the region of
December 31, 2017, a decrease of €580 million. The decline
Goiás), EnerNOC and eMotorWerks.
mainly reflects the negative impact of translating financial
statements denominated in foreign currencies (€3,824 mil-
Goodwill amounted to €13,746 million, an increase of €190
lion, with the largest losses coming in respect of the US
million on December 31, 2016.
dollar, the Colombian peso and the Chilean peso), depre-
In addition to exchange losses, the net change mainly re-
ciation, amortization and impairment losses totaling €5,021
flects:
million and the reclassification to asset held for sale of the
> the recognition of goodwill of €289 million in respect of:
“Kino” renewables projects in Mexico in application of IFRS
(i) the acquisition of EnerNOC, a US company that is le-
5 (€1,207 million).
ader in demand response and energy services for indu-
These factors were partly offset by investments in the pe-
strial, commercial and government customers and (ii) the
riod (€8,130 million) and the change in the scope of conso-
subsequent acquisition of eMotorWerks by EnerNOC;
lidation (a positive €1,758 million), mainly attributable to the
> the reclassification of €38 million to assets held for sale
35
Report on operations
of the goodwill of the Central America CGU associated
as part of the Open Meter plan, the purchase of materials
with the “Kino” wind farms in Mexico, for which the con-
for the maintenance and operation of medium- and low-
ditions established in IFRS 5 for recognition in that cate-
gory were met during the year.
voltage grids and an increase in CO2 emissions allowan-
ces and stocks of gas and other fuels;
> a decrease of €320 million in net receivables due from
Equity investments accounted for using the equity method
institutional market operators, mainly in Italy in respect
amounted to €1,598 million, an increase of €40 million on
of white certificates and electricity equalization on the
December 31, 2016.
regulated market, as well as the effects in South America
This mainly reflects the recognition of net income pertai-
of the consolidation of Enel Distribuição Goiás and the
ning to the Group, net of dividends paid. In addition to this
increase in system charges in Argentina as a result of
factor and exchange differences, other factors included the
rate increases;
changes in the scope of consolidation due to the disposal
> a decrease of €1,110 million in other current assets net of
of the Chilean company Electrogas and the recognition of
associated liabilities. The change reflected the following
the residual portion attributable to the Group following the
factors:
disposal of 80% of the Caney River and Rocky Ridge wind
- a decrease of €541 million in net current financial as-
farms in the United States.
sets, essentially reflecting the decrease in the fair va-
lue of derivatives, mainly cash flow hedges on exchan-
Other net non-current assets/(liabilities) showed net liabi-
ge rates and commodity prices;
lities of €1,677 million at December 31, 2017, an increase
- a decrease of €227 million in net income tax receiva-
of €875 million on December 31, 2016 (€802 million). The
bles. This was largely attributable to payments of in-
change is mainly attributable to:
come tax in the amount of €1,579 million, down €380
> the decrease of €1,398 million in net assets in respect
million on the previous year, partly offset by the reco-
of cash flow hedge derivatives (especially those hedging
gnition of the current tax liability (net of adjustments
exchange risk);
for prior years) in the amount of €1,867 million, an in-
> the decrease of €138 million in other equity investments,
crease of €171 million;
mainly associated with the sale of the 10% interest in
- a decrease of €94 million in other net current liabili-
Bayan Resources;
ties. More specifically, the reduction in liabilities for
> an increase of €455 million in financial assets in respect
the purchase of equity investments (attributable to the
of service concession arrangements, mainly attributable
payment of the put option that enabled the acquisition
to the award of a 30-year concession for the Volta Grande
of an additional 13.6% of Enel Distributie Muntenia
hydroelectric facility in south-eastern Brazil;
and Enel Energie Muntenia for €401 million) was only
> an increase of €106 million from the consolidation of Enel
partly offset by the increase in liabilities for dividends
Distribuição Goiás;
to be paid, which reflects the larger interim dividend
> an increase of €94 million in long-term receivables from
approved by Enel SpA for its shareholders and by the
institutional market operators in Spain and Italy.
increase in liabilities in respect of customers for reim-
bursements to be paid, mainly in Italy;
Net current assets were a negative €5,643 million at De-
> a decrease of €17 million in trade payables. More speci-
cember 31, 2017, an increase of €232 million on December
fically, the decline in payables in Italy was almost entirely
31, 2016. The change reflects the following factors:
offset by an increase in Spain and South America.
> an increase of €1,023 million in trade receivables, mainly:
(i) in South America, where unfavorable exchange effects
Sundry provisions amounted to €10,432 million, a decre-
were more than offset by the change in the scope of
ase of €670 million compared with the previous year. The
consolidation with Enel Distribuição Goiás (€336 million),
change essentially reflects the following factors:
the increase in quantities sold and transported and rate
> a decrease of €178 million in provisions for employee be-
increases, notably in Argentina and (ii) in Italy in respect
nefits, mainly due to developments in exchange rates;
of traders;
> a reduction of €384 million in provisions for risks and
> an increase of €158 million in inventories, mainly in Italy
charges, mainly associated with the provision for early
and reflecting the purchase of second-generation meters
retirement incentives (largely in Italy and Spain);
36
Annual Report 2017 > a decrease of €159 million in net deferred tax liabilities,
> project companies associated with the Kafireas wind
mainly due to exchange differences on the net deferred
project, for which Enel Green Power Hellas has signed a
tax liabilities of companies with a currency other than the
Joint Venture Agreement with a partner that governs the
euro.
terms and management of 100% of the projects linked
to that wind farm.
Net assets held for sale amounted to €241 million at De-
cember 31, 2017 (€11 million at December 31, 2016).
Net capital employed at December 31, 2017 amounted
The change mainly reflects the reclassification to assets
to €89,571 million and was funded by shareholders’ equity
held for sale of:
attributable to the shareholders of the Parent Company and
> eight Mexican project companies, which own three
non-controlling interests in the amount of €52,161 million
plants in operation and five under construction, for which
and net financial debt of €37,410 million. At December 31,
Enel Green Power has signed agreements for the sale of
2017, the debt/equity ratio was 0.72 (0.71 at December 31,
80% of their share capital (the “Kino Project”);
2016).
37
Report on operations Analysis of the financial
structure
Net financial debt
Net financial debt and changes in the period are detailed in the table below.
Millions of euro
Long-term debt:
- bank borrowings
- bonds
- other borrowings
Long-term debt
Long-term financial receivables and securities
Net long-term debt
Short-term debt:
Bank borrowings:
- short-term portion of long-term bank borrowings
- other short-term bank borrowings
Short-term bank borrowings
Bonds (short-term portion)
Other borrowings (short-term portion)
Commercial paper
Cash collateral on derivatives and other financing
Other short-term financial payables (1)
Other short-term debt
Long-term financial receivables (short-term portion)
Factoring receivables
Financial receivables - cash collateral
Other short-term financial receivables
at Dec. 31, 2017
at Dec. 31, 2016
Change
8,310
32,285
1,844
42,439
(2,444)
39,995
1,346
249
1,595
5,429
225
889
449
307
7,299
(1,094)
(42)
(2,664)
(589)
(7,090)
(11,479)
(2,585)
37,410
1,364
7,446
32,401
1,489
41,336
(2,621)
38,715
749
909
1,658
3,446
189
3,059
1,286
414
8,394
(767)
(128)
864
(116)
355
1,103
177
1,280
597
(660)
(63)
1,983
36
(2,170)
(837)
(107)
(1,095)
(327)
86
(1,082)
(1,582)
(911)
(8,326)
(11,214)
(1,162)
37,553
-
322
1,236
(265)
(1,423)
(143)
1,364
11.6%
-0.4%
23.8%
2.7%
6.8%
3.3%
79.7%
-72.6%
-3.8%
57.5%
19.0%
-70.9%
-65.1%
-25.8%
-13.0%
-42.6%
67.2%
-
-35.3%
14.8%
-2.4%
-
-0.4%
-
Cash and cash equivalents with banks and short-term securities
Cash and cash equivalents and short-term financial receivables
Net short-term debt
NET FINANCIAL DEBT
Net financial debt of “Assets held for sale”
(1) Includes current financial payables included in ”Other current financial liabilities”.
Net financial debt amounted to €37,410 million at Decem-
of €864 million due mainly to drawings on bank financing
ber 31, 2017, a decrease of €143 million on December 31,
by Enel SpA and subsidized loans to Endesa, e-distribu-
2016.
zione, and Enel Green Power Perú, partly offset by the re-
More specifically, net long-term debt rose by €1,280 mil-
classification to short-term of amounts falling due within
lion, the joint effect of a decrease in long-term financial re-
12 months and the exchange gains of €287 million (the
ceivables of €177 million and an increase in gross long-term
amount includes exchange differences in respect of the
debt of €1,103 million.
short-term portion of borrowings);
With regard to the latter aggregate:
> bonds amounted to €32,285 million, a decrease of €116
> bank borrowings amounted to €8,310 million, an increase
million on the end of 2016, mainly reflecting:
38
Annual Report 2017
-
the repurchase by Enel Finance International of its
within 12 months amounting to €5,429 million.
own 10-year bonds issued in US dollars in October
Finally, cash collateral paid to counterparties in over-the-
2009 amounting to €1,479 million;
counter derivatives transactions on interest rates, exchange
-
the reclassification to short term of the current por-
rates and commodities totaled €2,664 million, while cash
tion of bonds maturing within the next 12 months, the
collateral received from such counterparties amounted to
residual amount of two retail bonds issued by Enel
€449 million.
SpA with a nominal value of €3,000 million falling due
Cash and cash equivalents and short-term financial recei-
in February 2018, €512 million and €543 million in re-
vables came to €11,479 million, up €265 million compared
spect of two fixed-rate bond issued by Enel Finance
with the end of 2016, mainly reflecting the increase in cash
International falling due in April 2018 and October 2018
collateral paid to counterparties of €1,582 million, partly of-
respectively and €191 million in respect of issues in
fset by a decrease in cash with banks and short-term secu-
local currencies by the South America companies;
rities of €1,236 million.
- new issues in 2017, including:
- €1,250 million in respect of a fixed-rate Green Bond
The main transactions carried out in 2017 included:
falling due in 2024, issued by Enel Finance Internatio-
> the renegotiation with an extension until 2020 of the
nal in January 2017;
main credit lines of Endesa in the total amount of €1,985
- $5,000 million (the equivalent of €4,169 million) in
million. As at December 31, 2017, the credit was drawn in
respect of a multi-tranche bond falling due in 2022,
the amount of €12 million;
2027 and 2047, issued by Enel Finance International
> the agreement, on July 28, 2017, of the first tranche of a
in May 2017;
loan of €500 million from the European Investment Bank
- $3,000 million (the equivalent of €2,501 million) in
to e-distribuzione for the replacement of digital meters in
respect of a multi-tranche bond, falling due in 2023,
Italy. As at December 31, 2017, the credit was drawn in
2028 and 2047, issued by Enel Finance International
the amount of €100 million;
in October 2017;
> the agreement, on December 18, 2017, between Enel
- €484 million in respect of issues in local currencies
SpA and Enel Finance International and a pool of banks
by the South American companies;
of a revolving credit line of €10 billion, which will fall due
- exchange rate gains during the year in the amount of
in December 2022 and as at December 31, 2017 was not
about €1,850 million (the amount also includes the
drawn. This credit facility replaces an existing €9.4 billion
exchange difference on the short-term portion of the
facility agreed in 2015 and falling due in February 2020;
bonds).
> the following bond repayments:
- €908 million in respect of a fixed-rate bond, issued by
Net short-term debt showed a creditor position of €2,585
Enel SpA in 2007, maturing in June 2017;
million at December 31, 2017, an increase of €1,423 million
-
the equivalent of €1,254 million in respect of a fixed-
on the end of 2016, the result of the decrease in other bor-
rate bond in US dollars, issued by Enel Finance Inter-
rowings and in short-term bank borrowings of €1,095 mil-
national, maturing in September 2017.
lion and €63 million, respectively, and an increase in cash
and cash equivalents and short-term financial receivables in
The net financial debt of assets and liabilities held for sale
the amount of €265 million.
at December 31, 2017 amounted to €1,364 million and
mainly regarded the borrowing with which the Group finan-
Other short-term debt, totaling €7,299 million, includes
ced the construction of the plants of the Mexican project
commercial paper issued by International Endesa BV
companies (the “Kino Project”).
amounting to €889 million, as well as bonds maturing
39
Report on operations Cash flows
Millions of euro
Cash and cash equivalents at the beginning of the period (1)
Cash flows from operating activities
Cash flows from investing/disinvesting activities
Cash flows from financing activities
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the period (2)
2017
8,326
10,125
(9,294)
(1,646)
(390)
7,121
2016
10,790
9,847
(8,087)
(4,474)
250
8,326
Change
(2,464)
278
(1,207)
2,828
(640)
(1,205)
(1) Of which cash and cash equivalents equal to €8,290 million at January 1, 2017 (€10,639 million at January 1, 2016), short-term securities equal to €36
million at January 1, 2017 (€1 million at January 1, 2016) and cash and cash equivalents pertaining to assets held for sale equal to €150 million at January
1, 2016.
(2) Of which cash and cash equivalents equal to €7,021 million at December 31, 2017 (€8,290 million at December 31, 2016), short-term securities equal
to €69 million at December 31, 2017 (€36 million at December 31, 2016) and cash and cash equivalents pertaining to assets held for sale equal to €31
million at December 31, 2017.
Cash flows from operating activities in 2017 were a
the hydroelectric generation sector in Italy, for €313 mil-
positive €10,125 million, up €278 million compared with
lion;
2016, mainly reflecting an increase in the gross operating
> the disposal, in December 2016, of the Cimarron and Lin-
margin, a decline in the use of provisions and a reduction
dahl wind farms to EGPNA Renewable Energy Partners
in taxes paid, which more than offset the deterioration in
(for €216 million), a vehicle to which plants operating in
net working capital.
the United States for which a partnership agreement
was reached with General Electric were transferred (and
Cash flows from investing/disinvesting activities
will continue to be transferred);
in 2017 absorbed funds in the amount of €9,294 million,
> the disposal of GNL Quintero, an associate in which the
while in 2016 they had absorbed liquidity totaling €8,087
Group held 20%, for €177 million;
million.
> the sale of 50% of Slovak Power Holding, which in turn
More specifically, cash requirements in respect of in-
holds 66% of Slovenské elektrárne, for €139 million;
vestments in property, plant and equipment and in intangi-
> the disposal, in May 2016, of 65% of Drift Sand Wind
ble assets amounted to €8,499 million in 2017, down €343
Project, a company operating in the wind generation sec-
million on the previous year, mainly due to decreased in-
tor in the United States, for €98 million;
vestment in renewable technologies.
> the sale of Marcinelle Energie, a company operating in
the thermal generation sector in Belgium, for a total of
Investments in entities or business units, net of cash and
€36 million;
cash equivalents acquired, amounted to €900 million in
> price adjustments for disposals carried out in previous
2017 and primarily regarded the acquisition of Enel Distri-
years totaling €60 million.
buição Goiás (formerly CELG-D), a power distribution com-
pany operating in the Brazilian state of Goiás, as well as
Cash flows from financing activities absorbed liquidity
EnerNOC, which operates in active demand response and
in the amount of €1,646 million, while in 2016 they showed
energy intelligence software services in North America,
cash absorbed of €4,474 million. The flow in 2017 is es-
Europe and Asia-Pacific.
sentially associated with the increase in net financial debt
In 2017, the disposal of entities and business units, net of
(the net balance of repayments and new borrowing) in the
cash and cash equivalents sold, generated cash flows of
amount of €1,705 million and the payment of dividends to-
€216 million and mainly regarded the disposal of the Caney
taling €2,873 million.
River and Rocky Ridge wind farms in North America. In
These factors were accompanied by an increase in out-
2016, the item amounted to €1,032 million and included:
lays for transactions involving non-controlling interests in
> the disposal of Hydro Dolomiti Enel, which operates in
the amount of €478 million, mainly regarding the outlay for
40
Annual Report 2017 the put option that enabled the acquisition of an additional
million and for investing activities totaling €9,294 million.
13.6% of e-distribut¸ie Muntenia and Enel Energie Munte-
The difference is reflected in the decrease in cash and
nia.
cash equivalents, which at December 31, 2017 amounted
to €7,121 million, compared with €8,326 million at the end
Accordingly, in 2017, cash flows from operating activities
of 2016. This decrease also reflects the effect of negative
in the amount of €10,125 million only partly covered the
developments in the exchange rates of the various local
cash needs for financing activities in the amount of €1,646
currencies against the euro, equal to €390 million.
41
Report on operations Results by business
Risultati economici
area
per area di attività
The representation of performance by business area pre-
> “Thermal Generation” and “Trading and Upstream” are
sented here is based on the approach used by management
La rappresentazione dei risultati economici per area di at-
in monitoring Group performance for the two periods under
tività è effettuata in base all’approccio utilizzato dal mana-
review, taking account of the operational model adopted by
gement per monitorare le performance del Gruppo nei due
the Group as described above.
periodi messi a confronto, tenuto conto del modello opera-
Taking account of the provisions of IFRS 8 regarding the
tivo adottato descritto in precedenza.
management approach, performance by business area re-
In particolare, tenendo conto di quanto stabilito dal prin-
ported in this Annual Report was determined by designa-
cipio contabile internazionale IFRS 8 in termini di “mana-
ting the Regions and Countries perspective as the primary
gement approach”, i risultati per settore di attività inclusi
reporting segment. In addition, account was also taken of
nella presente Relazione finanziaria annuale sono costruiti
the possibilities for the simplification of disclosures asso-
identificando come “reporting segment primario” la vista
ciated with the materiality thresholds also established un-
per Regioni e Paesi. Si segnala, infine, che sulla base dei
der IFRS 8 and, therefore:
criteri determinati dall’IFRS 8, si è anche tenuto conto della
presented together given the considerable interaction
internazionale e, pertanto:
and interdependence between them;
> “Generazione Termoelettrica” e “Trading e Upstream”
> the “Enel X” area is presented together with “End-user
sono presentati unitariamente dato il forte grado di inte-
markets” pending the full operation of the organization
razione e interdipendenza tra le due filiere;
and the corporate reorganization to separate the scope
> il perimetro di attività di “Enel X” è per il momento pre-
of activities of the new Business Line;
sentato insieme ai “Mercati finali” nell’attesa che risulti
> the item “Other, eliminations and adjustments” includes
pienamente operativa l’organizzazione e il riassetto so-
not only the effects from the elimination of intersegment
cietario finalizzato alla separazione del perimetro di attivi-
transactions, but also the figures for the Parent Com-
tà della nuova Business line;
pany, Enel SpA.
> la voce “Altro, elisioni e rettifiche”, oltre a includere gli
The following chart outlines these organizational arrange-
effetti derivanti dalla elisione dei rapporti economici in-
ments.
tersettoriali, accoglie i dati relativi alla Holding Enel SpA.
possibilità di semplificazione espositiva derivante dai limiti
La seguente rappresentazione grafica schematizza quanto
di significatività stabiliti dal medesimo principio contabile
sopra riportato.
Geographical
areas
Holding company
Global Divisions
Local businesses
Infrastructure
and Networks
Thermal
Generation
Trading and
Upstream
Renewable
Energy
Enel X
End-user
markets
Services
Italy
Iberia
Europe
and North Africa
Sub-Saharan Africa
and Asia
North
and Central America
South America
42
42
Relazione finanziaria annuale 2017
Annual Report 2017 Risultati economici
per area di attività
La rappresentazione dei risultati economici per area di at-
internazionale e, pertanto:
tività è effettuata in base all’approccio utilizzato dal mana-
> “Generazione Termoelettrica” e “Trading e Upstream”
gement per monitorare le performance del Gruppo nei due
sono presentati unitariamente dato il forte grado di inte-
periodi messi a confronto, tenuto conto del modello opera-
razione e interdipendenza tra le due filiere;
tivo adottato descritto in precedenza.
> il perimetro di attività di “Enel X” è per il momento pre-
In particolare, tenendo conto di quanto stabilito dal prin-
sentato insieme ai “Mercati finali” nell’attesa che risulti
cipio contabile internazionale IFRS 8 in termini di “mana-
pienamente operativa l’organizzazione e il riassetto so-
gement approach”, i risultati per settore di attività inclusi
cietario finalizzato alla separazione del perimetro di attivi-
nella presente Relazione finanziaria annuale sono costruiti
tà della nuova Business line;
identificando come “reporting segment primario” la vista
> la voce “Altro, elisioni e rettifiche”, oltre a includere gli
per Regioni e Paesi. Si segnala, infine, che sulla base dei
effetti derivanti dalla elisione dei rapporti economici in-
criteri determinati dall’IFRS 8, si è anche tenuto conto della
tersettoriali, accoglie i dati relativi alla Holding Enel SpA.
possibilità di semplificazione espositiva derivante dai limiti
La seguente rappresentazione grafica schematizza quanto
di significatività stabiliti dal medesimo principio contabile
sopra riportato.
Geographical
areas
Holding company
Global Divisions
Italy
Iberia
Europe
and North Africa
Sub-Saharan Africa
and Asia
North
and Central America
South America
Results by business area for 2017 and 2016
Results for 2017 (1)
Millions of euro
Italy
Iberia
South
America
Europe and
North Africa
North and
Central
America
Sub-Saharan
Africa and
Asia
Revenue from third parties
37,900
19,940
13,126
2,374
1,185
Revenue from transactions with
other segments
881
54
28
37
2
Total revenue
38,781
19,994
13,154
2,411
1,187
Net income/(expense) from
commodity contracts measured
at fair value
537
13
26
Gross operating margin
6,863
3,573
4,204
Depreciation, amortization and
impairment losses
2,393
1,731
1,234
Operating income
4,470
1,842
2,970
-
543
237
306
2
759
206
553
Capital expenditure
1,812
1,105
3,002
307 (2)
1,802 (3)
96
-
96
-
57
42
15
30
Other,
eliminations
and
adjustments
Total
18
74,639
(1,002)
-
(984)
74,639
-
578
(346)
15,653
18
(364)
72
5,861
9,792
8,130
(1) Segment revenue include both revenue from third parties and revenue flows between the segments. An analogous approach was taken for other income
and costs for the year.
(2) Does not include €44 million regarding units classified as “held for sale”.
(3) Does not include €325 million regarding units classified as “held for sale”.
Local businesses
Results for 2016 (1)
Millions of euro
Italy
Iberia
South
America
Europe and
North Africa
North and
Central
America
Sub-Saharan
Africa and
Asia
Infrastructure
Thermal
Trading and
Renewable
Enel X
Services
and Networks
Generation
Upstream
Energy
End-user
markets
Revenue from third parties
36,091
18,831
10,739
3,618
1,122
Revenue from transactions with
other segments
954
122
29
180
3
Total revenue
37,045
18,953
10,768
3,798
1,125
Other,
eliminations
and
adjustments
Total
162
70,592
(1,288)
-
(1,126)
70,592
-
(133)
(69)
15,276
55
6,355
(124)
8,921
29
-
29
-
14
19
(5)
Net income/(expense) from
commodity contracts measured
at fair value
(266)
131
9
Gross operating margin
6,618
3,562
3,556
Depreciation, amortization and
impairment losses
Operating income
2,348
1,796
4,270
1,766
Capital expenditure
1,894 (2)
1,147
1,393
2,163
3,069
(6)
762
476
286
(1)
833
268
565
265 (3)
1,832
304
41
8,552
(1) Segment revenue include both revenue from third parties and revenue flows between the segments. An analogous approach was taken for other
income and costs for the year.
(2) Does not include €7 million regarding units classified as “held for sale”.
(3) Does not include €283 million regarding units classified as “held for sale”.
42
Relazione finanziaria annuale 2017
43
Report on operations In addition to the foregoing, the Group monitors performan-
margin for the two periods under review, offering visibility
ce at the Global Division level, classifying results by Busi-
of performance not only from a Region/Country perspecti-
ness Line. The following table presents the gross operating
ve but also by Division/Business Line.
Millions of euro
End-user markets
Services
Generation and Trading
Infrastructure and Networks
Renewable Energy
Other
Total
Local businesses
Global Divisions
2016
Change
2017
2016
Change
2017
2016
Change
2017
2016
Change
2017
2016
Change
2017
2016
Change
2017
2016
Change
2017
2,007
467
-
-
-
-
-
-
-
(42)
(42)
-
-
-
8
8
-
-
-
-
-
-
-
-
1,932
75
677
(210)
-
-
-
-
-
-
-
25
30
-
-
(5)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(67)
(72)
-
-
5
8
8
-
-
-
-
-
-
-
-
96
38
(87)
(1)
(39)
(47)
105
(95)
(107)
-
(36)
(71)
-
-
-
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
2
3
-
-
-
-
-
-
-
-
-
-
-
-
(9)
133
20
(1)
(3)
24
-
-
-
4
1
3
-
-
-
-
-
-
-
-
-
-
-
239
783
687
116
119
281
43
128
-
269
2
267
-
-
-
-
-
-
-
-
-
-
-
(70)
812
737
98
73
389
51
126
-
373
(1)
186
191
(3)
-
-
-
-
-
-
-
-
-
309
(29)
(50)
18
46
(108)
(8)
2
-
(104)
3
81
(191)
3
-
-
-
-
-
-
-
-
-
3,620
(153)
1,054
1,031
23
1,817
199
351
(152)
1,687
1,429
1,917
1,497
420
3,467
2,086
140
644
237
461
205
166
166
-
-
-
-
-
-
-
-
-
-
-
-
-
269
258
(15)
211
(15)
63
14
-
(59)
(59)
-
-
-
-
-
-
-
-
-
-
-
-
155
433
252
398
191
225
225
-
-
-
-
-
-
-
-
-
-
-
-
-
32
284
888
557
147
9
145
104
-
-
400
98
101
152
57
53
8
(4)
23
199
634
531
102
8
138
84
-
-
95
93
58
14
4
10
-
9
85
254
26
45
1
7
-
-
20
3
8
94
43
49
(2)
(4)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,863
6,618
3,573
3,562
4,204
3,556
287
1,008
1,061
1,359
1,204
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
480
9
543
232
270
-
41
408
98
101
152
57
53
8
(4)
245
11
648
11
339
155
81
61
1
(219)
(107)
84
(191)
(5)
3
8
94
43
49
(2)
(4)
276
669
980
419
8
762
339
186
191
46
95
93
58
14
4
10
-
41
54
(13)
751
833
(82)
759
833
(74)
587
(187)
587
(179)
2,440
2,634
(194)
52
(1)
(97)
1
149
(15)
(2)
1,963
1,850
(13)
113
(28)
(13)
(76)
(50)
(224)
(346)
(69)
(277)
(15)
300
(26)
233
(227)
(227)
(3)
(3)
7,378
7,078
4,047
3,814
(224)
15,653
15,276
377
Italy
Iberia
South America
Argentina
Brazil
Chile
Colombia
Peru
Other countries
Europe and North
Africa
Romania
Russia
Slovakia
Other countries
North and Central
America
United States and
Canada
Mexico
Panama
Other countries
Sub-Saharan
Africa and Asia
South Africa
India
Other countries
Other
Total
44
Annual Report 2017 2017
2,007
467
1,932
75
677
(210)
96
38
(87)
(1)
(39)
(47)
105
(95)
(107)
(36)
(71)
(42)
(42)
(67)
(72)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
8
25
30
(5)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
8
8
-
-
-
-
-
-
-
-
-
-
-
5
2
3
-
-
-
-
-
-
-
-
-
-
-
-
(9)
133
20
(1)
(3)
24
-
-
-
4
1
3
-
-
-
-
-
-
-
-
-
-
-
239
783
687
116
119
281
43
128
-
2
269
267
-
-
-
-
-
-
-
-
-
-
-
(70)
812
737
98
73
389
51
126
-
373
(1)
186
191
(3)
-
-
-
-
-
-
-
-
-
309
(29)
(50)
(108)
18
46
(8)
2
-
3
81
3
(104)
(191)
-
-
-
-
-
-
-
-
-
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
South America
Italy
Iberia
Argentina
Brazil
Chile
Colombia
Peru
Africa
Romania
Russia
Slovakia
Other countries
Europe and North
Other countries
North and Central
America
United States and
Canada
Mexico
Panama
Other countries
Sub-Saharan
Africa and Asia
South Africa
Other countries
India
Other
Total
Millions of euro
End-user markets
Services
Generation and Trading
Infrastructure and Networks
Renewable Energy
Other
Total
2016
Change
2017
2016
Change
2017
2016
Change
2017
2016
Change
2017
2016
Change
2017
2016
Change
2017
2016
Change
Local businesses
Global Divisions
3,620
(153)
1,054
1,031
23
3,467
2,086
1,817
1,687
1,429
140
644
237
461
205
-
166
166
-
-
-
-
-
-
-
-
-
-
-
-
155
433
252
398
191
-
225
225
-
-
-
-
-
-
-
-
-
-
-
-
269
258
(15)
211
(15)
63
14
-
(59)
(59)
-
-
-
-
-
-
-
-
-
-
-
-
199
351
(152)
1,917
1,497
420
32
284
888
557
147
9
145
104
-
-
23
199
634
531
102
8
138
84
-
-
9
85
254
26
45
1
7
20
-
-
41
54
(13)
751
833
(82)
400
98
101
152
57
53
8
(4)
587
(187)
95
93
58
14
4
10
-
3
8
94
43
49
(2)
(4)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,863
6,618
3,573
3,562
4,204
3,556
287
1,008
276
669
1,359
1,204
1,061
480
9
543
232
270
-
41
980
419
8
762
339
186
191
46
245
11
648
11
339
155
81
61
1
(219)
(107)
84
(191)
(5)
759
833
(74)
408
98
101
152
57
53
8
(4)
587
(179)
95
93
58
14
4
10
-
3
8
94
43
49
(2)
(4)
2,440
2,634
(194)
52
(1)
(97)
1
149
(15)
(2)
1,963
1,850
(13)
113
(28)
(13)
7,378
7,078
(15)
300
(76)
(50)
4,047
3,814
(26)
233
(227)
(227)
(3)
(3)
(224)
(346)
(69)
(277)
(224)
15,653
15,276
377
45
Report on operations Italy
2016
13,752
2017
13,613
2016
12,423
2017
12,425
2016
2017
2016
2017
2016
2017
761
761
728
772
97
81
Thermal plants1
Hydroelectric plants
Geothermal plants
Wind farms
Other
Net efficient
generation capacity (MW)
2016
27,761
2017
27,652
(1) 741 MW of which unavailable due to long-term
technical issues (1,225 MW at December 31, 2016).
Electricity distribution
and transport networks (km)
2017
1,149,218
13
353,808
795,397
High-voltage
lines at year end
Medium-voltage
lines at year end
Low-voltage
lines at year end
46
Annual Report 2017
Average number of customers
26,776,635
2016
2017
26,420,058
Free market
2016
6,732,570
2017
7,552,217
Business-to-consumer
Business-to-business
Safeguard market
5,266,409
2016
5,938,899
2017
1,420,466
2016
1,580,305
2017
45,695
2016
33,013
2017
Regulated market
Enhanced-protection market
20,044,065
2016
18,867,841
2017
e u r o )
( m i l l i o n s o f
0 1 7
e i n 2
c
n
r m a
e r f o
P
e
u
1
n
8
e
v
8 , 7
R
e
3
v
e
R
e
u
n
e ra tio
g 1
e n
Tra din
e
G
d
9
1
n
n a
9 , 9
t u r e a n d
7 , 5 8 4
s
c
r
k
u
r
t
s
t w o
I n
a
f r
N e
r g i n
g m a
c
r
r u
t
s
t w o
I n
a
f r
N e
t i n
d
n
t u r e a n d
3 , 4 6 7
s
k
d i t u r e
I n
d
a
f r
n
a
s
d N e
5
t
7
1 , 2
r u c
t u r e
t w o r k s
n
e
p
x
p it a l e
n
5
n a
1
g 1
e ra tio
e n
Tra din
G
a
C
G r o
a
r
e
p
s s o
n a
9
3
e r a ti o
g 2
G
n
e
Tra din
R e n e w a b l e s
1 , 8 2 2
End-user markets
16,256
Services
1,314
R e n e w a b l e s
1 , 0 5 4
End-user
markets 2,007
Services
96
R e n e w a b l es
2 2 7
End-user
markets 139
Services
56
Gross operating
margin 6,863
Eliminations and
adjustments
(8,114)
Capital
expenditure 1,812
Italy
2016
13,752
2017
13,613
2016
12,423
2017
12,425
2016
2017
2016
2017
2016
2017
761
761
728
772
97
81
Thermal plants1
Hydroelectric plants
Geothermal plants
Wind farms
Other
Net efficient
generation capacity (MW)
2016
27,761
2017
27,652
(1) 741 MW of which unavailable due to long-term
technical issues (1,225 MW at December 31, 2016).
Electricity distribution
and transport networks (km)
2017
1,149,218
13
353,808
795,397
High-voltage
lines at year end
Medium-voltage
lines at year end
Low-voltage
lines at year end
Average number of customers
2016
26,776,635
2017
26,420,058
Free market
2016
6,732,570
2017
7,552,217
Business-to-consumer
Business-to-business
Safeguard market
5,266,409
2016
5,938,899
2017
1,420,466
2016
1,580,305
2017
45,695
2016
33,013
2017
Regulated market
Enhanced-protection market
20,044,065
2016
18,867,841
2017
e u r o )
( m i l l i o n s o f
0 1 7
e i n 2
c
n
r m a
e r f o
P
u
e
1
n
8
v
e
8 , 7
R
e
3
v
e
R
e
G
e
u
n
n
n a
e ra tio
9 , 9
g 1
e n
Tra din
G r o
d
1
9
s s o
a
r
e
p
n a
3
9
n
e r a ti o
g 2
Tra din
e
G
R e n e w a b l e s
1 , 8 2 2
End-user markets
16,256
Services
1,314
t u r e a n d
7 , 5 8 4
s
c
r
k
u
r
t
s
t w o
I n
a
f r
N e
r g i n
t u r e a n d
3 , 4 6 7
s
k
c
r
r u
t
s
t w o
g m a
I n
a
f r
N e
t i n
d
n
R e n e w a b l e s
1 , 0 5 4
End-user
markets 2,007
Services
96
d i t u r e
t u r e
r u c
t
t w o r k s
s
f r
d N e
n
5
7
1 , 2
I n
a
a
n
e
d
n
5
R e n e w a b l es
2 2 7
End-user
markets 139
Services
56
a
C
p
x
p it a l e
n a
e ra tio
1
g 1
e n
Tra din
G
Gross operating
margin 6,863
Eliminations and
adjustments
(8,114)
Capital
expenditure 1,812
Report on operations
47
Operations
Net electricity generation
Millions of kWh
Thermal
Hydroelectric
Geothermal
Wind
Other sources
2017
32,421
14,025
5,758
1,188
126
2016
Change
37,609
(5,188)
-13.8%
16,052
(2,027)
-12.6%
5,832
1,298
122
(74)
(110)
4
-1.3%
-8.5%
3.3%
Total net generation
53,518
60,913
(7,395)
-12.1%
In 2017 net electricity generation amounted to 53,518 mil-
Imerese and Priolo Gargallo plants in Sicily, which were
lion kWh, a decline of 12.1% or 7,395 million kWh com-
placed at a disadvantage by the new interconnection with
pared with 2016. Specifically, the decrease in thermal
the mainland that entered into operation in 2016.
generation (down 5,188 million kWh) is the result of the
The decrease in hydroelectric generation (down 2,027 mil-
reduced competitiveness of the coal plants and the lower
lion kWh) was instead due to poorer water conditions com-
output of the combined-cycle plants, including the Termini
pared with the prior year.
Contribution to gross thermal generation
Millions of kWh
Fuel oil
Natural gas
Coal
Other fuels
Total
2017
10
2016
Change
-
88
0.2%
(78)
-88.6%
8,396
23.9%
9,601
23.6%
(1,205)
-12.6%
26,139
74.5%
30,286
74.7%
(4,147)
-13.7%
534
1.6%
592
1.5%
(58)
-9.8%
35,079
100.0%
40,567
100.0%
(5,488)
-13.5%
Gross thermal production in 2017 totaled 35,079 million
decline is due mainly to the reduced use of coal-fired and
kWh, a decrease of 5,488 million kWh (-13.5%) compared
combined-cycle plants as a result of developments noted
with 2016. Looking at the mix of fuels used shows that the
above.
Net efficient generation capacity
MW
Thermal plants (1)
Hydroelectric plants
Geothermal plants
Wind farms
Other
at Dec. 31, 2017
at Dec. 31, 2016
Change
13,613
12,425
761
772
81
13,752
12,423
761
728
97
(139)
-1.0%
2
-
44
(16)
-
-
6.0%
-16.5%
Total net efficient capacity
27,652
27,761
(109)
-0.4%
(1) 741 MW of which unavailable due to long-term technical issues (1,225 MW at December 31, 2016).
48
Annual Report 2017
Net efficient capacity in 2017 totaled 27,652 MW, a decrease
mainly reflects the closing of Section 6 of the Genoa coal
of 109 MW compared with the previous year. The change
plant.
Electricity distribution and transport networks
High-voltage lines at year end (km)
Medium-voltage lines at year end (km)
Low-voltage lines at year end (km)
2017
13
2016
13
353,808
352,607
795,397
792,367
Total electricity distribution network (km)
1,149,218
1,144,987
Electricity transported on Enel’s distribution network (millions of kWh) (1)
227,322
224,100
(1) The figure for 2016 reflects a more accurate measurement of amounts transported.
Change
-
1,201
3,030
4,231
3,222
-
0.3%
0.4%
0.4%
1.4%
Electricity transported on the Enel network in Italy for 2017
change is essentially in line with the increase in electricity
increased by 3,222 million kWh (+1.4%), going from 224,100
demand in Italy.
million kWh in 2016 to 227,322 million kWh in 2017. The
Electricity sales
Millions of kWh
Free market:
- business-to-consumer
- business-to-business
- safeguard-market customers
Total free market
Regulated market:
- enhanced-protection-market customers
TOTAL
2017
2016
Change
12,475
44,735
2,052
59,262
43,958
103,220
11,257
35,024
2,021
1,218
9,711
31
48,302
10,960
45,837
94,139
(1,879)
9,081
10.8%
27.7%
1.5%
22.7%
-4.1%
9.6%
Electricity sold in 2017 came to 103,220 million kWh for
umes sold on the free market, focusing mainly on business
an overall increase of 9,081 million kWh compared with
customers, as a result of new commercial policies.
the prior year. The trend essentially reflects the greater vol-
Average number of customers
Free market:
- business-to-consumer
- business-to-business
2017
2016
Change
5,938,899
5,266,409
672,490
1,580,305
1,420,466
159,839
12.8%
11.3%
- safeguard-market customers
33,013
45,695
(12,682)
-27.8%
Total free market
Regulated market:
7,552,217
6,732,570
819,647
12.2%
- enhanced-protection-market customers
18,867,841
20,044,065
(1,176,224)
TOTAL
26,420,058
26,776,635
(356,577)
-5.9%
-1.3%
49
Report on operations Natural gas sales
Millions of m3
Business-to-consumer
Business-to-business
Total
2017
2,910
1,901
4,811
2016
2,815
1,776
4,591
Change
95
125
220
3.4%
7.0%
4.8%
Gas sales in 2017 totaled 4,811 million cubic meters, an
previous year, essentially attributable to sales to business
increase of 220 million cubic meters compared with the
customers.
Performance
Millions of euro
Revenue
Gross operating margin
Operating income
Capital expenditure
2017
38,781
6,863
4,470
1,812
2016
37,045
6,618
4,270
1,894 (1)
Change
1,736
245
200
(82)
4.7%
3.7%
4.7%
-4.3%
(1) Does not include €7 million regarding units classified as “held for sale“.
The following tables break down performance by type of business in 2017.
Revenue
Millions of euro
Generation and Trading
Infrastructure and Networks
Renewables
End-user markets
Services
Eliminations and adjustments
Total
2017
19,919
7,584
1,822
16,256
1,314
(8,114)
38,781
2016
19,403
7,237
1,796
15,323
1,207
(7,921)
37,045
Change
516
347
26
933
107
(193)
1,736
2.7%
4.8%
1.4%
6.1%
8.9%
-2.4%
4.7%
Revenue in 2017 amounted to €38,781 million, an increase
tary trading conducted on the European electricity ex-
of €1,736 million compared with the same period of 2016
changes (particularly in France and Germany) against
(+4.7%), the result of the following main factors:
a background of rising prices;
> an increase of €516 million in revenue from Generation
-
a €293 million increase in revenue from fees from the
and Trading (+2.7%) compared with 2016. This develop-
Regulatory Authority for Energy, Networks and the
ment in primarily attributable to:
Environment (ARERA) for transactions on the Power
- an increase of €1,337 million in revenue from the sale
Exchange, mainly attributable to the cost reimburse-
of fuels on the domestic and international wholesale
ment scheme for essential generation units;
markets, essentially due to the increase in intermedia-
tion business;
-
a €80 million increase in revenue from the sale of CO2
emissions allowances and green certificates, owing
- an increase of €971 million in revenue from trading
to rising prices for allowances;
on international energy markets due essentially to a
-
a €1,982 million decline in revenue from the sale of
growth in quantities handled (+33.9 TWh) of proprie-
electricity, essentially related to the lower quantities
50
Annual Report 2017 generated. More specifically, the change is mainly at-
revenue from domestic customers. In addition, there
tributable to the decrease in revenue from the sale
was an increase in revenue relating to changes in the
of electricity by way of bilateral agreements to other
“regulatory lag” (ARERA Resolution 654/2015);
national resellers (€1,989 million), only partly offset by
> a €26 million increase (+1.4%) in revenue from Renewa-
increased revenue from sales on the Power Exchange
bles generation, the result of higher average sales prices,
(€47 million);
which more than offset the lower volumes generated;
-
a €124 million reduction in gains on extraordinary
> an increase of €933 million (+6.1%) in revenue from
transactions, which in 2016 included the gain on the
End-user markets for electricity, essentially reflecting:
sale of the equity investment in Hydro Dolomiti Enel;
-
an increase of €783 million in revenue on the free
> an increase of €347 million (+4.8%) in revenue from In-
market for electricity mainly as a result of higher vol-
frastructure and Networks operations, largely reflect-
umes sold (+11.0 TWh);
ing:
-
an increase of €80 million in revenue on the regulated
-
an increase in contributions from the Energy & Envi-
market for electricity attributable to the increase in
ronmental Service Fund for white certificates (in the
rate revenue and revenue from marketing, partly off-
amount of €347 million) due to the increase in vol-
set by the decrease in volumes sold (-1.9 TWh) and in
umes purchased, but especially to the rise in the unit
the number of customers served;
contribution, which reached record highs in the 2nd
-
a €4 million increase in revenue from the sale of natu-
Half of 2017;
ral gas to end users due to increased volumes sold
-
an increase of €10 million in rate revenue, mainly re-
and higher average sale prices. These effects were
flecting the rise in transmission rates (ARERA Reso-
only partly offset by the positive effect of prior-period
lution 779/2016), only partly offset by the reduction
items, which was €56 million lower than in 2016;
in distribution rates, the negative effect of the equali-
-
the increases in connection fees and in revenue from
zation mechanisms and the abolition, starting from
the cost reimbursement system for safeguard-market
January 1, 2017, of the equalization mechanism for
service providers (totaling €40 million).
Gross operating margin
Millions of euro
Generation and Trading
Infrastructure and Networks
Renewables
End-user markets
Services
Total
2017
239
3,467
1,054
2,007
96
6,863
2016
(70)
3,620
1,031
1,932
105
6,618
Change
-
-4.2%
2.2%
3.9%
-8.6%
3.7%
309
(153)
23
75
(9)
245
The gross operating margin in 2017 came to €6,863
negative impact of €279 million;
million, an increase of €245 million compared with 2016
-
the provisions during the previous year related to
(+3.7%). More specifically, the change is essentially attrib-
charges for reclamation work at the sites of the closed
utable to:
generation plants included in the Futur-E project (€160
> the €309 million increase in the margin from Genera-
million);
tion and Trading. Net of the difference in gains of €124
-
a decrease of €250 million in the margin on the Ancil-
million on the sale of the interest in Hydro Dolomiti Enel
lary Services Market;
recognized in 2016, the margin would have risen by €433
-
a decrease in the volume of electricity generated;
million due essentially to:
> a reduction of €153 million in the margin from Infrastruc-
-
the improvement in the trading margin, which reflected
ture and Networks operations (-4.2%), largely due to:
the benefits of the price review agreements involving a
-
a decrease of €66 million in the margin on electricity
number of gas supply contracts (€311 million);
transport, primarily reflecting the aforementioned re-
-
the CO2 provisioning transaction in 2016, which had a
duction in distribution rates and in equalization mecha-
51
Report on operations nisms, only partly offset by the positive effect of high-
bles generation as a result of the same factors affecting
er transmission rates and the change in the regulatory
revenue, only partly offset by the reversal of the provision
lag. In addition there was the positive effect of prior-
following the execution of the memorandum of under-
period items (€20 million);
standing with the Region of Sardinia for the disposal of
-
an increase of €60 million in allocations to the provi-
the hydroelectric plants on the Tirso River (€54 million);
sions for risks and charges, reflecting the reversal in
> an increase of €75 million in the margin from End-user
2016 of provisions following the Antitrust Authority’s
markets (+3.9%), mainly attributable to:
decision to dismiss the proceedings (no. A486) it had
-
a €64 million rise in the margin on the free market for
begun in 2015 (€47 million) and in part to the provi-
electricity and gas (of which €83 million for the gas
sion for a lump-sum payment of the energy discount
component), owing to the increase in quantities sold
benefit in 2015 (€44 million). In addition there was an
for both commodities (electricity and gas);
increase in provisions allocated during the period fol-
-
the increase in €23 million in the margin on the regu-
lowing ARERA Decision 40/2017 and the increase in
lated market for electricity, mainly as a result of an
the provision for exceptional weather events;
increase in revenue from marketing, only partly offset
-
higher operating costs;
by lower volumes sold.
> an increase of €23 million in the margin from Renewa-
Operating income
Millions of euro
Generation and Trading
Infrastructure and Networks
Renewables
End-user markets
Services
Total
2017
-
2,319
745
1,361
45
4,470
2016
(460)
2,596
751
1,333
50
4,270
Change
-
-10.7%
-0.8%
2.1%
-10.0%
460
(277)
(6)
28
(5)
200
4.7%
Operating income amounted to €4,470 million, up €200
for electricity sales to traders and regulated-market cus-
million (including an increase of €45 million in deprecia-
tomers;
tion, amortization and impairment losses) compared with
> higher depreciation, mainly for network infrastructure;
€4,270 million in operating income recognized in 2016.
> the recognition in 2016 of impairment on the goodwill
More specifically, in addition to the increase in the gross
and assets of Nuove Energie due to the change in a num-
operating margin, it reflected:
ber of measurement parameters in the midstream gas
> the increase in net writedowns of trade receivables, ow-
business.
ing to a deterioration in the recoverability of receivables
52
Annual Report 2017 Capital expenditure
Millions of euro
Generation and Trading
Infrastructure and Networks
Renewables
End-user markets
Services
Total
2017
115
1,275
227
139
56
2016
119 (1)
1,278
304
133
60
1,812
1,894
Change
-3.4%
-0.2%
-25.3%
4.5%
-6.7%
-4.3%
(4)
(3)
(77)
6
(4)
(82)
(1) Does not include €7 million regarding units classified as “held for sale“.
Capital expenditure in 2017 amounted to €1,812 million,
ment in service quality, which had been brought forward
down €82 million compared with the previous year. More
in 2016;
specifically, the change is attributable to:
> an increase of €6 million in capital expenditure in End-
> a decrease in investment in Infrastructure and Net-
user markets;
works operations equal to €3 million, mainly for digital
> a €4 million decrease in investment in Generation and
meter replacement work under the Open Meter plan
Trading;
approved by ARERA Resolution 222/2017/R/eel. This in-
> a €77 million reduction in investment in Renewables,
crease in activity was more than offset by lower invest-
mainly on hydroelectric, biomass and wind plants.
53
Report on operations Iberia
2016
13,030
2017
13,030
Thermal plants
Net efficient
generation capacity (MW)
2016
2017
2016
2017
2016
2017
2016
2017
3,318
3,318
4,764
4,752
1,618
1,618
14
14
Nuclear plants
Hydroelectric plants
Wind farms
Other
2016
22,744
2017
22,732
Electricity distribution
and transport networks (km)
2017
317,782
19,560
117,886
180,336
High-voltage
lines at year end
Medium-voltage
lines at year end
Low-voltage
lines at year end
54
Annual Report 2017
G r o s s o p e r a t i n g
m a r g i n 3 , 5 7 3
Capital
expenditure 1,105
E l
i m i n a t i o n s a n d
a d j u s t m e n t s
( 5 , 7 9 5 )
v i c e s
S e r
5
7
4
Performance in 2017 (millions of euro)
ue
ven
19,994
e
R
8
9
5 , 7
e r
e t s 1
n
E
s
d - u
a r k
m
R ene w a ble s
497
v i c e s
S e r
8
3
v i c e s
S e r
3 3
s
e r
e t s 5
5
d - u
a r k
E
n
m
7
6
e r
e t s 4
n
E
s
d - u
a r k
m
R en e w a ble s
65
R en e w a ble s
199
Infrastructure and
Networks 2,786
erating margin
Infrastructure and
Networks 2,086
e
u
n
e
v
e
R
d
n an
3
3
g 6,2
eratio
n
e
G
din
Tra
p
s o
s
ro
G
d
n an
eratio
3
8
g 7
n
e
G
din
Tra
Infrastructure
and Networks
657
pital expenditure
eration and
g 295
n
e
G
din
Tra
a
C
e r e ti
Iberia
Electricity distribution
and transport networks (km)
2017
317,782
19,560
117,886
180,336
High-voltage
lines at year end
Medium-voltage
lines at year end
Low-voltage
lines at year end
2016
13,030
2017
13,030
Thermal plants
Net efficient
generation capacity (MW)
2016
22,744
2017
22,732
2016
2017
2016
2017
2016
2017
2016
2017
3,318
3,318
4,764
4,752
1,618
1,618
14
14
Nuclear plants
Hydroelectric plants
Wind farms
Other
Performance in 2017 (millions of euro)
ue
ven
19,994
e
R
3
3
d
n an
g 6,2
eratio
din
n
e
Tra
G
e
u
n
e
v
e
R
Report on operations
G r o s s o p e r a t i n g
m a r g i n 3 , 5 7 3
Capital
expenditure 1,105
i m i n a t i o n s a n d
E l
a d j u s t m e n t s
( 5 , 7 9 5 )
v i c e s
5
S e r
7
4
8
9
5 , 7
e r
e t s 1
n
E
s
d - u
a r k
m
v i c e s
S e r
8
3
7
6
e r
e t s 4
n
E
s
d - u
a r k
m
R en e w a ble s
65
R ene w a ble s
497
199
R en e w a ble s
Infrastructure and
Networks 2,786
erating margin
Infrastructure and
Networks 2,086
pital expenditure
Infrastructure
and Networks
eration and
g 295
din
n
e
Tra
G
n an
3
eratio
8
g 7
din
n
e
Tra
G
p
s o
s
ro
G
a
C
657
d
v i c e s
S e r
3 3
s
e r
e t s 5
5
d - u
a r k
E
n
m
e r e ti
55
Operations
Net electricity generation
Millions of kWh
Thermal
Nuclear
Hydroelectric
Wind
Other sources
2017
43,754
26,448
5,038
3,351
27
2016
35,525
25,921
7,288
3,422
167
Total net generation
78,618
72,323
Change
8,229
23.2%
527
2.0%
(2,250)
-30.9%
(71)
(140)
6,295
-2.1%
-83.8%
8.7%
Net electricity generation in Iberia in 2017 amounted to
higher thermal power generation, which benefitted from
78,618 million kWh, an increase of 6,295 million kWh
the drought that affected Iberia in 2017, and greater elec-
compared with 2016. This increase was mainly due to
tricity demand.
Contribution to gross thermal generation
Millions of kWh
Heavy fuel oil (S>0.25%)
Natural gas
Coal
Nuclear fuel
Other fuels
Total
2017
2016
Change
6,319
9,750
8.6%
13.2%
6,254
5,008
9.7%
7.8%
65
1.0%
4,742
94.7%
26,156
35.5%
22,413
34.7%
3,743
16.7%
27,542
37.4%
26,993
41.9%
3,865
5.3%
3,810
5.9%
549
55
2.0%
1.4%
73,632
100.0%
64,478
100.0%
9,154
14.2%
Gross thermal generation in 2017 came to 73,632 million
previous year. As for the generation mix, there was an in-
kWh, an increase of 9,154 million kWh compared with the
crease across all types of fuels, especially natural gas.
Net efficient generation capacity
MW
Thermal plants
Nuclear plants
Hydroelectric plants
Wind farms
Other
at Dec. 31, 2017
at Dec. 31, 2016
Change
13,030
13,030
3,318
4,752
1,618
14
3,318
4,764
1,618
14
-
-
-
-
(12)
-0.3%
-
-
-
-
Total net efficient capacity
22,732
22,744
(12)
-0.1%
Net efficient capacity in 2017 totaled 22,732 MW, a decrease of 12 MW compared with the previous year.
56
Annual Report 2017
Electricity distribution and transport networks
High-voltage lines at year end (km)
Medium-voltage lines at year end (km)
Low-voltage lines at year end (km)
Total electricity distribution network (km)
Electricity transported on Enel’s distribution network (millions of kWh) (1)
(1) The figure for 2016 reflects a more accurate measurement of amounts transported.
2017
19,560
117,886
180,336
317,782
112,004
2016
19,539
117,632
179,391
316,562
109,201
Change
21
254
945
1,220
2,803
0.1%
0.2%
0.5%
0.4%
2.5%
Electricity transported in 2017 totaled 112,004 million kWh, an increase of 2,803 million kWh, which is essentially in line
with the development in demand.
Electricity sales
Millions of kWh
Free market
Regulated market
Total
2017
83,036
13,478
96,514
2016
79,008
14,482
93,490
Change
4,028
(1,004)
3,024
5.1%
-6.9%
3.1%
Electricity sales to end users in 2017 totaled 96,514 million kWh, an increase of 3,024 million kWh over the same period
of 2016.
Performance
Millions of euro
Revenue
Gross operating margin
Operating income
Capital expenditure
The following tables break down performance by type of business in 2017.
Revenue
Millions of euro
Generation and Trading
Infrastructure and Networks
Renewables
End-user markets
Services
Eliminations and adjustments
Total
2017
19,994
3,573
1,842
1,105
2017
6,233
2,786
497
15,798
475
(5,795)
19,994
2016
18,953
3,562
1,766
1,147
2016
4,893
2,569
665
14,121
249
(3,544)
18,953
Change
1,041
11
76
(42)
5.5%
0.3%
4.3%
-3.7%
Change
1,340
217
(168)
1,677
226
27.4%
8.4%
-25.3%
11.9%
90.8%
(2,251)
-63.5%
1,041
5.5%
Revenue in 2017 increased by €1,041 million due to:
increase in volumes in an environment of slightly rising
> a €1,677 million increase in revenue from End-user mar-
unit prices. The increase in electricity sales was instead
kets, of which €405 million for gas sales reflecting the
attributable to higher volumes sold in an environment of
57
Report on operations
rising unit prices in the regulated market, while prices fell
activities, mainly attributable to the drought conditions
in the free market;
mentioned above that penalized hydroelectric genera-
> a €1,340 million increase in revenue from Generation
tion, as well as the price adjustment relating to the sale
and Trading, mainly associated with higher electricity
of ENEOP recognized in 2016 in the amount of €30 mil-
sales in an environment of rising prices. Much of this
lion;
revenue was generated with respect to domestic com-
> an increase of €217 million in revenue from Infrastruc-
panies that sell electricity and is therefore also reflected
ture and Networks operations, primarily reflecting the
in eliminations. In addition, there was the effect of the
rate adjustments recognized in consideration of the draft
greater reimbursement received for costs incurred to en-
ministerial order currently being finalized by the Ministry
sure electricity generation in the extra-peninsular market;
of Energy, Tourism and Digital Agenda.
> a €168 million decrease in revenue from Renewables
Gross operating margin
Millions of euro
Generation and Trading
Infrastructure and Networks
Renewables
End-user markets
Services
Total
2017
783
2,086
199
467
38
2016
812
1,817
351
677
(95)
3,573
3,562
Change
-3.6%
14.8%
-43.3%
-31.0%
-
0.3%
(29)
269
(152)
(210)
133
11
The gross operating margin amounted to €3,573 million,
(totaling €63 million) of the ruling of the unconstitutional-
up €11 million compared with 2016, reflecting:
ity of the tax on nuclear power generation in Catalonia in
> an increase of €269 million in the margin on Infrastruc-
2016 and the subsequent introduction in 2017 by the re-
ture and Networks operations, which reflects the
gional government of a new tax on nuclear power waste.
abovementioned prices adjustments and the effect of
These factors were only partly offset by the ruling under
the recognition in 2016 of a number of charges relating to
which Endesa is entitled to reimbursement of amounts
the early-retirement plan. The second factor had a posi-
paid for the “bono social” in 2016, 2015 and 2014, which
tive impact on personnel costs in 2017 owing to the re-
had a positive impact of €222 million:
duction in the average size of the workforce;
> a decrease of €152 million in the margin from Renewa-
> a decline of €210 million in the gross operating margin
bles generation, which reflected the decline in revenue
on End-user markets, essentially owing to the sharp in-
mentioned above and the reversal in 2016 (€28 million) in
crease in electricity and gas procurement costs, which
respect of the obligations for the construction and devel-
was more than offset by efficiency gains, especially for
opment of the Girabolhos hydroelectric plant in Portugal;
personnel costs;
> an increase of €133 million in the margin on Services,
> a €29 million decline in the gross operating margin on
mainly owing to the €94 million reduction in personnel
Generation and Trading operations, reflecting the de-
costs as a result of the combined effect of the recogni-
terioration in the generation margin, primarily owing to
tion in 2016 of a number of charges relating to the ear-
higher taxes on generation as a result of greater volumes
ly-retirement plan and the consequent reduction in the
produced (€72 million), in addition to the combined effect
workforce in 2017.
58
Annual Report 2017
Operating income
Millions of euro
Generation and Trading
Infrastructure and Networks
Renewables
End-user markets
Services
Total
2017
191
1,367
12
286
(14)
2016
187
1,047
89
537
(94)
1,842
1,766
Change
2.1%
30.6%
-86.5%
-46.7%
-85.1%
4.3%
4
320
(77)
(251)
80
76
Operating income in 2017 totaled €1,842 million, includ-
extension of the useful life of all the renewables genera-
ing the effect of €1,731 million in depreciation, amortization
tion plants, was partly offset by the greater impairment on
and impairment losses (€1,796 million in 2016), an increase
trade receivables recognized in 2017 compared with 2016,
of €76 million compared with the previous year. The reduc-
primarily in the retail sector.
tion in depreciation (€115 million), essentially due to the
Capital expenditure
Millions of euro
Generation and Trading
Infrastructure and Networks
Renewables
End-user markets
Services
Total
2017
295
657
65
55
33
2016
355
644
78
53
17
1,105
1,147
Change
-16.9%
2.0%
-16.7%
3.8%
94.1%
-3.7%
60
13
(13)
2
16
(42)
Capital expenditure came to €1,105 million, down €42
provements in the quality of the service and the replace-
million year on year. In particular, capital expenditure in
ment of old meters with new generation smart meters, as
2017 primarily concerned work on the distribution network
well as with generation plants, largely nuclear and thermo-
(€657 million). This work was primarily associated with im-
electric plants, amounting to €295 million.
59
Report on operations South America
of which
Argentina
4,419
4,419
1,621
2,975
7,434
7,475
3,457
3,467
1,934
2,158
50
50
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
Brazil
Chile
Colombia
Peru
Other
countries
2016
2017
2016
2017
2016
2017
2016
2017
7,729
7,773
9,590
9,980
1,092
1,362
504
1,429
Thermal plants
Hydroelectric plants
Wind farms
Other
Net efficient
generation
capacity (MW)
2016
18,915
2017
20,544
Electricity distribution
and transport networks (km)
2017
566,010
18,308
350,376
197,326
High-voltage
lines at year end
Medium-voltage
lines at year end
Low-voltage
lines at year end
60
Annual Report 2017
e u r o )
( m i l l i o n s o f
0 1 7
e i n 2
c
n
r m a
e r f o
P
Gross operating
margin 4,204
Capital
expenditure 3,002
e
n
u
4
5
e
v
3 , 1
R
e
1
n
e
v
e
R
e
u
e
a
n tin
3
A r g
1,3 9
l e
C h i
3 , 6 6 7
Colombia
2,116
Peru
1,202
l e
C h i
1 , 3 5 9
Colombia
1,061
Peru
480
13
Other countries
9
Other countries
C h i
l e
5 4 3
Colombia
309
Peru
416
Other
countries -
G r o
e
a
p
s s o
n tin
e
A r g
2 8 7
z il
3
6
a
B r
4 , 7
t i n
a
r
r g i n
g m a
z il
0
a
B r
1 , 0
8
n
e
p
x
d i t u r e
z il
7
5
a
B r
1 , 4
a
C
p it a l e
a
n ti n
A r g
e
2 5
9
South America
2016
2017
2016
2017
2016
2017
2016
2017
7,729
7,773
9,590
9,980
1,092
1,362
504
1,429
Thermal plants
Hydroelectric plants
Wind farms
Other
Net efficient
generation
capacity (MW)
2016
18,915
2017
20,544
Electricity distribution
and transport networks (km)
2017
566,010
18,308
350,376
197,326
High-voltage
lines at year end
Medium-voltage
lines at year end
Low-voltage
lines at year end
of which
Argentina
Brazil
Chile
Colombia
Peru
Other
countries
4,419
4,419
1,621
2,975
7,434
7,475
3,457
3,467
1,934
2,158
50
50
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
e u r o )
( m i l l i o n s o f
0 1 7
e i n 2
c
n
r m a
e r f o
P
Gross operating
margin 4,204
Capital
expenditure 3,002
e
n
u
4
5
v
e
3 , 1
R
e
1
e
R
e
u
n
e
v
a
n tin
e
A r g
3
1,3 9
G r o
e
a
p
s s o
n tin
e
A r g
2 8 7
z il
a
B r
6
4 , 7
3
t i n
a
r
r g i n
g m a
z il
a
B r
0
1 , 0
a
C
p
x
a
p it a l e
n ti n
e
A r g
9
2 5
8
n
e
d i t u r e
z il
7
5
a
B r
1 , 4
l e
C h i
3 , 6 6 7
Colombia
2,116
Peru
1,202
l e
C h i
1 , 3 5 9
Colombia
1,061
Peru
480
13
Other countries
9
Other countries
l e
C h i
5 4 3
Colombia
309
Peru
416
Other
countries -
Report on operations
61
Operations
Net electricity generation
Millions of kWh
Thermal
Hydroelectric
Wind
Other sources
Total net generation
- of which Argentina
- of which Brazil
- of which Chile
- of which Colombia
- of which Peru
- of which other countries
2017
25,727
33,597
3,661
1,642
64,627
14,825
7,161
20,231
14,766
7,493
151
2016
26,268
32,619
2,451
827
62,165
13,124
5,474
19,728
14,952
Change
(541)
978
-2.1%
3.0%
1,210
49.4%
815
98.5%
2,462
1,701
1,687
503
(186)
4.0%
13.0%
30.8%
2.5%
-1.2%
8,698
(1,205)
-13.9%
189
(38)
-20.1%
Net electricity generation in 2017 totaled 64,627 million
also reflected the increase in net efficient capacity.
kWh, an increase of 2,462 million kWh compared with
2016. This increase was mainly attributable to:
These factors were partially offset by a reduction in ther-
> the increase in wind power generation in Brazil and Chile,
mal generation owing to adverse weather conditions in
especially after the entry of new plants into service;
the area compared with the year-earlier period, especially
> the increase in hydroelectric generation, concentrated
in Peru, which in April 2017 suffered from flooding along
mainly in Chile, Brazil and Colombia;
the coast caused by El Niño, leading to the shutdown of a
> greater solar power generation in Brazil and Chile, which
number of plants.
Contribution to gross thermal generation
Millions of kWh
Heavy fuel oil (S>0.25%)
723
2.7%
1,723
6.3%
(1,000)
-58.0%
2017
2016
Change
Natural gas
Coal
Other fuels
Total
21,669
81.2%
18,933
69.5%
2,736
14.5%
3,134
1,144
11.8%
4.3%
3,970
2,628
14.6%
(836)
-21.1%
9.6%
(1,484)
-56.5%
26,670
100.0%
27,254
100.0%
(584)
-2.1%
Gross thermal production in 2017 totaled 26,670 million
pages caused by the flooding mentioned above, only partly
kWh, a decrease of 584 million kWh compared with the
offset by increased use of natural gas, especially in Brazil
previous year. This was essentially connected to the de-
and Argentina.
creased use of traditional fuels as a result of plant stop-
62
Annual Report 2017
Net efficient generation capacity
MW
Thermal plants
Hydroelectric plants
Wind farms
Other
at Dec. 31, 2017
at Dec. 31, 2016
Change
7,773
9,980
1,362
1,429
7,729
9,590
1,092
504
44
390
270
925
0.6%
4.1%
24.7%
-
Total net efficient capacity
20,544
18,915
1,629
8.6%
- of which Argentina
- of which Brazil
- of which Chile
- of which Colombia
- of which Peru
- of which other countries
4,419
2,975
7,475
3,467
2,158
50
4,419
1,621
7,434
3,457
1,934
50
-
-
1,354
83.5%
41
10
224
-
0.6%
0.3%
11.6%
-
Net efficient capacity amounted to 20,544 MW in 2017,
Volta Grande hydroelectric plant in Brazil (380 MW), other
an increase of 1,629 MW compared with the previous
plants entering service included the following: in Brazil, the
year, essentially due to the expansion of installed capacity
Delfina (180 MW) and Cristalândia (90 MW) wind farms,
thanks to Group investments.
the Ituverava (254 MW), Nova Olinda (292 MW), Bom
More specifically, in addition to the increase in capacity
Jesus da Lapa (80 MW) and Lapa (78 MW) photovoltaic
associated with the acquisition of the concession for the
plants and in Peru the Rubí photovoltaic plant (180 MW).
Electricity distribution and transport networks
High-voltage lines at year end (km)
Medium-voltage lines at year end (km)
Low-voltage lines at year end (km)
2017
2016
Change
18,308
12,339
5,969
48.4%
350,376
159,961
190,415
-
197,326
149,846
47,480
31.7%
Total electricity distribution network (km)
566,010
322,146
243,864
Electricity transported on Enel’s distribution network (millions of kWh) (1)
- of which Argentina
- of which Brazil
- of which Chile
- of which Colombia
- of which Peru
90,655
17,737
34,876
16,318
13,790
7,934
75.7%
15.4%
-4.1%
78,525
12,130
18,493
(756)
22,809
12,067
52.9%
15,809
13,632
7,782
509
158
152
3.2%
1.2%
2.0%
(1) The figure for 2016 reflects a more accurate measurement of amounts transported.
Energy transported in 2017 came to 90,655 million kWh, an
Distribuição Goiás, a transaction that has also affected vol-
increase of 12,130 million kWh compared with 2016. The
umes transported in Brazil.
expansion in the network reflects the acquisition of Enel
63
Report on operations Electricity sales
Millions of kWh
Electricity sold by Enel
- of which Argentina
- of which Brazil
- of which Chile
- of which Colombia
- of which Peru
2017
74,672
14,877
30,497
13,232
9,389
6,677
2016
Change
63,090
11,582
15,654
(777)
18.4%
-5.0%
19,128
11,369
59.4%
13,067
8,505
6,736
165
884
(59)
1.3%
10.4%
-0.9%
Electricity sales in 2017 totaled 74,672 million kWh, increasing by 11,582 million kWh compared with the previous year.
Performance
Millions of euro
Revenue
Gross operating margin
Operating income
Capital expenditure
The following tables show a breakdown of performance by country in 2017.
Revenue
Millions of euro
Argentina
Brazil
Chile
Colombia
Peru
Other countries
Total
2017
2016
Change
13,154
10,768
2,386
22.2%
4,204
2,970
3,002
3,556
2,163
3,069
648
807
(67)
18.2%
37.3%
-2.2%
2017
1,393
4,763
3,667
2,116
1,202
13
2016
1,163
2,601
3,703
2,054
1,236
11
Change
230
19.8%
2,162
83.1%
(36)
62
(34)
2
-1.0%
3.0%
-2.8%
18.2%
13,154
10,768
2,386
22.2%
Revenue for 2017 posted an increase of €2,386 million due
of the strengthening of the Brazilian real against the euro
mainly to:
(€307 million);
> an increase of €2,162 million in revenue in Brazil, main-
> an increase of €230 million in revenue in Argentina, es-
ly due to the change in the scope of consolidation as a
sentially due to increased average sales prices as a result
result of the acquisition of Enel Distribuição Goiás on
of the rate reform introduced by the government in early
February 14, 2017 (€1,359 million), the recognition of rev-
2017, only partly offset by the highly negative exchange
enue arising from the sectoral assets and liabilities (CVA)
rate effects of the depreciation of the Argentine peso
of the distribution companies, higher revenue owing to
against the euro (€204 million);
greater volumes generated by the Cachoeira Dourada hy-
> a €62 million increase in revenue in Colombia, owing
droelectric plants and the increase in revenue as a result
mainly to the increase in average prices and volumes
64
Annual Report 2017 sold and to the positive trend in exchange rates due to
Electrogas in the 1st Quarter of 2017 and the positive
the appreciation of the Colombian peso against the euro
trend in exchange rates (€71 million);
(€25 million);
> a €34 million decrease in revenue in Peru, due to the ef-
> a €36 million decrease in revenue in Chile, essentially
fect of the decline in average prices and volumes sold,
owing to the gain on the sale of 20% of GNL Quintero in
partly reflecting the impact of the floods that hit the
2016 (€173 million) and to the reduction in average prices
country in 2017, only partly offset by the impact of ex-
on distribution and generation. These effects were only
change rates (€17 million).
partly offset by the gain of €143 million on the sale of
Gross operating margin
Millions of euro
Argentina
Brazil
Chile
Colombia
Peru
Other countries
Total
2017
287
1,008
1,359
1,061
480
9
2016
276
669
1,204
980
419
8
4,204
3,556
Change
4.0%
50.7%
12.9%
8.3%
14.6%
12.5%
18.2%
11
339
155
81
61
1
648
The gross operating margin amounted to €4,204 million,
> an increase of €81 million in the margin in Colombia due
an increase of €648 million (+18.2%) compared with 2016,
essentially to the increase in prices and quantities sold
reflecting:
and the positive trend in exchange rates;
> an increase of €339 million in the gross operating margin
> a €61 million increase in the gross operating margin in
in Brazil, which reflects the change in the scope of con-
Peru, mainly associated with the recognition in 2016 of
solidation with the entry of Enel Distribuição Goiás (€128
the loss from the abandonment of the Curibamba and
million), the positive exchange rate effect (€65 million) and
Marañon hydroelectric projects (€30 million) and provi-
the greater margins posted by distribution companies;
sions for charges connected with not having respected
> an increase of €155 million in the gross operating mar-
the terms of the contract to supply of electricity for Elec-
gin in Chile as a result of the loss of €166 million on a
troperu (€37 million);
number of water use concessions recognized in 2016
> an €11 million increase in gross operating margin in Ar-
following the abandonment of five hydroelectric projects
gentina owing to differences in regulatory mechanisms
(including Puelo and Futaleufú), positive exchange rate
compared with the previous year, only partly offset by
developments (€25 million) and a €27 million decrease
the negative trend in exchange rates (€42 million).
in capital gains from the disposal of equity investments
between the two periods compared, as discussed under
revenue;
65
Report on operations Operating income
Millions of euro
Argentina
Brazil
Chile
Colombia
Peru
Other countries
Total
2017
231
483
1,027
890
333
6
2016
208
250
610
801
290
4
2,970
2,163
Change
11.1%
93.2%
68.4%
11.1%
14.8%
50.0%
37.3%
23
233
417
89
43
2
807
Operating income in 2017 came to €2,970 million, includ-
in depreciation, amortization and impairment losses, the
ing €1,234 million in depreciation, amortization and impair-
change in the scope of consolidation with the acquisition
ment losses (€1,393 million in 2016), an increase of €807
of Enel Distribuição Goiás and the positive change in ex-
million. This change reflects the €159 million decrease
change rates in all the area countries, except Argentina.
Capital expenditure
Millions of euro
Argentina
Brazil
Chile
Colombia
Peru
Other countries
Total
2017
259
1,475
543
309
416
-
2016
232
1,434
878
266
258
1
3,002
3,069
Change
27
41
11.6%
2.9%
(335)
-38.2%
43
158
(1)
(67)
16.2%
61.2%
-
-2.2%
Capital expenditure came to €3,002 million, down €67
was a decline in capital expenditure in the renewable en-
million compared with the previous year. In particular, capi-
ergy in Chile to complete and begin operation of plants in
tal expenditure in 2017 concerned wind and solar plants in
2016.
Peru and work on the distribution network in Brazil. There
66
Annual Report 2017 67
Report on operations Europe and North Africa
of which
Russia
8,944
8,878
866
883
2016
2017
2016
2017
Other
countries
2016
2017
2016
2017
2016
2017
2016
2017
8,944
8,878
19
19
741
741
106
123
Thermal plants
Hydroelectric plants
Wind farms
Other
Net efficient
generation
capacity (MW)
2016
9,810
2017
9,761
Electricity distribution
and transport networks (km)
2017
127,548
6,505
35,016
86,027
High-voltage
lines at year end
Medium-voltage
lines at year end
Low-voltage
lines at year end
68
Annual Report 2017
e u r o )
( m i l l i o n s o f
0 1 7
e i n 2
c
n
r m a
e r f o
P
e
u
n
1
1
e
R
e
v
2 , 4
v
e
R
e
u
m
n
o
e
R
a nia
0
1,1 8
s i a
R u s
1 , 1 3 5
r g i n
g m a
s i a
R u s
2 7 0
t i n
a
r
e
p
d i t u r e
n
e
p
x
R u s s i a
1 0 9
a
C
p it a l e
n ia
a
4
R
o
m
1 3
G r o
s s o
o
R
m
2 3 2
a nia
Other countries
64
(1) Does not include €44 million regarding
units classified as “held for sale”.
Capital
expenditure 3071
Gross operating
margin 543
Other countries
96
Other countries
41
Slovakia
–
Slovakia
–
Europe and North Africa
of which
Russia
Other
countries
8,944
8,878
866
883
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
8,944
8,878
19
19
741
741
106
123
Thermal plants
Hydroelectric plants
Wind farms
Other
Net efficient
generation
capacity (MW)
2016
9,810
2017
9,761
Electricity distribution
and transport networks (km)
2017
127,548
6,505
35,016
86,027
High-voltage
lines at year end
Medium-voltage
lines at year end
Low-voltage
lines at year end
e u r o )
( m i l l i o n s o f
0 1 7
e i n 2
c
n
r m a
e r f o
P
e
u
R
n
1
1
e
e
v
2 , 4
v
e
R
n
o
e
R
e
u
a nia
m
0
1,1 8
G r o
s i a
R u s
1 , 1 3 5
g m a
r g i n
R u s
2 7 0
s i a
t i n
a
r
e
p
s s o
Slovakia
–
Slovakia
–
a nia
m
2 3 2
o
R
n
e
p
x
p it a l e
n ia
a
4
R
o
m
1 3
a
C
d i t u r e
R u s s i a
1 0 9
Other countries
64
(1) Does not include €44 million regarding
units classified as “held for sale”.
Capital
expenditure 3071
Gross operating
margin 543
Other countries
96
Other countries
41
Report on operations
69
Operations
Net electricity generation
Millions of kWh
Thermal
Nuclear
Hydroelectric
Wind
Other sources
Total net generation
- of which Russia
- of which Slovakia
- of which Belgium
- of which other countries
2017
39,830
-
22
1,814
173
41,839
39,830
-
-
2,009
2016
42,993
7,523
1,235
1,715
147
53,613
41,062
9,684
977
1,890
Change
(3,163)
(7,523)
(1,213)
99
26
(11,774)
(1,232)
(9,684)
(977)
119
-7.4%
-
-98.2%
5.8%
17.7%
-22.0%
-3.0%
-
-
6.3%
Net electricity generation in 2017 came to 41,839 million
consolidation owing to the sale of Slovenské elektrárne
kWh, a decrease of 11,774 million kWh compared with
(in July 2016) and Marcinelle Energie (in November 2016).
2016.
In addition, generation declined in Russia due to a slight
This result is mainly due to the change in the scope of
decrease in plants’ load factor.
Contribution to gross thermal generation
Millions of kWh
Natural gas
Coal
Nuclear fuel
Total
2017
22,384
19,647
-
2016
Change
53.3%
46.7%
-
25,000
20,483
8,102
46.7%
38.2%
15.1%
(2,616)
-10.5%
(836)
-4.1%
(8,102)
-
42,031
100.0%
53,585
100.0%
(11,554)
-21.6%
Gross thermal generation in 2017 posted a decrease of
and coal-fired plants in Russia at the expense of gas-fired
11,554 million kWh to 42,031 million kWh. In addition to
plants (which were also affected in the 1st Half of 2016 by a
the aforementioned changes in the scope of consolidation,
temporary shutdown at the Nevinnomisskaya plant).
this decrease reflects an increased used of combined-cycle
Net efficient generation capacity
MW
Thermal plants
Hydroelectric plants
Wind farms
Other
Total net efficient capacity
- of which Russia
- of which other countries
at Dec. 31, 2017
at Dec. 31, 2016
Change
8,878
19
741
123
9,761
8,878
883
8,944
(66)
-0.7%
19
741
106
9,810
8,944
866
-
-
17
(49)
(66)
17
-
-
16.0%
-0.5%
-0.7%
2.0%
Net efficient capacity in 2017 totaled 9,761 MW, a de-
tributable to the decommissioning of Block 2 of the Sred-
crease of 49 MW compared with the previous year. The
neuralskaya plant.
change compared with December 31, 2016 is mainly at-
70
Annual Report 2017
Electricity distribution and transport networks
High-voltage lines at year end (km)
Medium-voltage lines at year end (km)
Low-voltage lines at year end (km)
2017
6,505
35,016
86,027
2016
6,505
35,015
86,043
Total electricity distribution network (km) (1)
127,548
127,563
Electricity transported in the Enel distribution network (millions of kWh)
15,206
14,890
(1) The figure for 2016 reflects a more accurate calculation of the number of kilometres of distribution lines.
Change
-
1
(16)
(15)
316
-
-
-
-
2.1%
Electricity transported, which was concentrated entirely in
2017. This increase was mainly the result of demand in
Romania, posted an increase of 316 million kWh (+2.1%),
the Romanian market, especially in regions served by Enel.
going from 14,890 million kWh to 15,206 million kWh in
Electricity sales
Millions of kWh
Free market
Regulated market
Total
- of which Romania
- of which France
- of which Slovakia
2017
6,318
4,029
10,347
10,347
-
-
2016
7,471
4,864
Change
(1,153)
-15.4%
(835)
-17.2%
12,335
(1,988)
-16.1%
7,719
2,218
2,398
2,628
34.0%
(2,218)
(2,398)
-
-
Electricity sales in 2017 decreased by 1,988 million kWh,
consolidation, was partly offset by the sharp increase in
going from 12,335 million kWh to 10,347 million kWh.
electricity sales in Romania as a result of the progressive
This decrease, attributable to the changes in the scope of
liberalization of the market.
Performance
Millions of euro
Revenue
Gross operating margin
Operating income
Capital expenditure
(1) Does not include €44 million regarding units classified as “held for sale”.
(2) Does not include €283 million regarding units classified as “held for sale”.
The following tables show a breakdown of performance by country in 2017.
2017
2,411
543
306
2016
3,798
762
286
307 (1)
265 (2)
Change
(1,387)
-36.5%
(219)
-28.7%
20
42
7.0%
15.8%
71
Report on operations
Revenue
Millions of euro
Romania
Russia
Slovakia
Other countries
Total
2017
1,180
1,135
-
96
2,411
2016
1,058
986
1,360
394
3,798
Change
122
149
(1,360)
(298)
(1,387)
11.5%
15.1%
-
-75.6%
-36.5%
Revenue in 2017 totaled €2,411 million, a decrease of
which more than offset the decrease in output;
€1,387 million (-36.5%) compared with the previous year.
> the increase of €122 million in revenue in Romania, es-
This decline is related to:
sentially owing to the increase in volumes transported
> the decrease of €1,360 million in revenue in Slovakia due
and sold, which more than offset the reduction in distri-
to the deconsolidation following the sale at the end of
bution rates;
July 2016;
> the €298 million decrease in revenue in other countries,
> the increase of €149 million in revenue in Russia, mainly
of which €295 million relating to the deconsolidation of
related to the strengthening of the ruble against the euro
Marcinelle Energie and Enel France.
(€126 million) and the increase in the unit sales prices,
Gross operating margin
Millions of euro
Romania
Russia
Slovakia
Other countries
Total
2017
2016
Change
232
270
-
41
543
339
186
191
46
762
(107)
84
(191)
(5)
(219)
-31.6%
45.2%
-
-10.9%
-28.7%
The gross operating margin amounted to €543 million, a
electricity, owing to a crisis on the supply market, which
decrease of €219 million compared with 2016. This perfor-
was not reflected in the prices charged to customers;
mance was mainly due to:
> the increase of €84 million in the gross operating margin
> the change in the scope of consolidation relating to Slov-
in Russia, due mainly to the strengthening of the ruble
enské elektrárne (€191 million);
against the euro and the improvement in the generation
> the decrease of €107 million in the margin in Romania,
margin.
due to the increase in the costs for the provisioning of
Operating income
Millions of euro
Romania
Russia
Slovakia
Other countries
Total
2017
2016
Change
114
210
-
(18)
306
71
136
114
(35)
286
43
74
(114)
17
20
60.6%
54.4%
-
-48.6%
7.0%
Operating income in 2017 totaled €306 million, an in-
depreciation, amortization and impairment losses reflects
crease of €20 million. Specifically, a €162 million decline in
not only the effects of the sale of Slovenské elektrárne (€77
72
Annual Report 2017 million), but also the effect of the impairment recognized in
adjustment of the assets of Marcinelle Energie designated
2016 on Enel Green Power Romania (€130 million) and the
for disposal to their estimated realizable value (€54 million).
Capital expenditure
Millions of euro
Romania
Russia
Other countries
Total
2017
2016
Change
134
109
64
136
105
24
307 (1)
265 (2)
(2)
4
40
42
-1,5%
3,8%
-
15,8%
(1) Does not include €44 million regarding units classified as “held for sale”.
(2) Does not include €283 million regarding units classified as “held for sale”.
Capital expenditure came to €307 million, up €42 million year on year, mainly in respect of wind plants in Greece and
geothermal plants in Germany.
73
Report on operations North and Central America
2016
2017
2016
2017
2016
2017
630
623
2,018
2,566
144
344
Hydroelectric plants
Wind farms
Other
Net efficient
generation
capacity (MW)
2016
2,792
2017
3,533
of which
United States
and Canada
1,495
2,092
Mexico
Panama
Other countries
728
843
325
354
244
244
2016
2017
2016
2017
2016
2017
2016
2017
Performance in 2017 (millions of euro)
ue
ven
1,187
e
R
e
r
d i t u
n
e
p
x
a l e
1
2
a
C
p it
0
1 , 8
a
m
9
a
4
P a n
1
a
a m
1
P a n
1 0
g
p e r a ti n
G ro s s o
m argin 7 5 9
M exico
142
i e s
r
c o u n t
O t h e r
1 8 0
c o u n t r i e s
O t h e r
1 5 2
c o u n t r i e s
O t h e r
3 3
a m a
P a n
0
1
e
u
n
e
v
e
R
d State
nite
U
6
1
7
M exico
98
d Canada
s an
erating margin
d States and Canada
nite
U
8
0
4
p
s o
s
ro
G
M exico
4541
pital expenditure
d States
d Canada 1,305
nite
U
n
a
a
C
(1) Does not include €325 million
regarding units classified
as “held for sale”.
e r e ti
74
Annual Report 2017
North and Central America
2016
2017
2016
2017
2016
2017
630
623
2,018
2,566
144
344
Hydroelectric plants
Wind farms
Other
Net efficient
generation
capacity (MW)
2016
2,792
2017
3,533
of which
United States
and Canada
1,495
2,092
Mexico
Panama
Other countries
2016
2017
2016
2017
2016
2017
2016
2017
728
843
325
354
244
244
Performance in 2017 (millions of euro)
ue
ven
1,187
e
R
e
u
n
e
v
e
R
Report on operations
e
r
d i t u
n
e
p
x
a l e
2
1
C
a
p it
1 , 8
0
a
m
9
a
4
P a n
1
a
a m
1
P a n
1 0
g
p e r a ti n
m argin 7 5 9
G ro s s o
M exico
142
i e s
r
c o u n t
O t h e r
1 8 0
c o u n t r i e s
O t h e r
1 5 2
c o u n t r i e s
O t h e r
3 3
M exico
98
a m a
P a n
1
0
d Canada
s an
d State
nite
U
6
1
7
erating margin
d States and Canada
nite
U
8
0
4
p
s o
s
ro
G
pital expenditure
M exico
4541
d Canada 1,305
d States
nite
U
n
a
a
C
(1) Does not include €325 million
regarding units classified
as “held for sale”.
e r e ti
75
Operations
Net electricity generation
Millions of kWh
Hydroelectric
Geothermal
Wind
Other sources
Total net generation
- of which United States and Canada
- of which Mexico
- of which Panama
- of which other countries
2017
2,681
-
6,920
192
9,793
5,313
2,025
1,528
927
2016
2,837
362
Change
(156)
(362)
-5.5%
-
9,007
(2,087)
-23.2%
62
130
-
12,268
(2,475)
-20.2%
8,628
1,781
1,367
492
(3,315)
-38.4%
244
161
435
13.7%
11.8%
88.4%
In 2017, net electricity generation totaled 9,793 million kWh,
factor was partly offset by an increase in output in Mexico
a decrease of 2,475 million kWh from 2016. This decrease
(+244 million kWh), thanks to the entry into service of the
can be attributed to the decline in output in the United
Vientos del Altiplano and Palo Alto wind plants, and greater
States and Canada (-3,315 million kWh) as a result of a de-
generation from hydroelectric plants in Panama (+120 mil-
crease in wind generation (-2,240 million kWh), largely ow-
lion kWh), Guatemala (+240 million kWh) and Costa Rica
ing to the deconsolidation of the EGPNA REP plants. This
(+200 million kWh).
Net efficient generation capacity
MW
Hydroelectric plants
Wind farms
Other
Total net efficient capacity
- of which United States and Canada
- of which Mexico
- of which Panama
- of which other countries
at Dec. 31, 2017
at Dec. 31, 2016
Change
623
2,566
344
3,533
2,092
843
354
244
630
2,018
144
2,792
1,495
728
325
244
(7)
548
200
741
597
115
29
-
-1.1%
27.2%
-
26.5%
39.9%
15.8%
8.9%
-
Net efficient generation capacity in 2017 amounted to 3,533
Creek, Thunder Ranch and Red Dirt plants, partly offset by
MW, an increase of 741 MW on the previous year, essen-
the disposal of the Caney River and Rocky Ridge facilities. A
tially reflecting the increase in net installed capacity of wind
further increase in net efficient capacity was also registered
plants in the United States and Canada (+600 MW) as a
in Mexico, mainly attributable to the Villanueva photovoltaic
result of the increased net capacity at the new Rattlesnake
plant.
76
Annual Report 2017
Performance
Millions of euro
Revenue
Gross operating margin
Operating income
Capital expenditure
(1) Does not include €325 million regarding units classified as “held for sale”.
The tables below show financial performance by geographic area in 2017.
Revenue
Millions of euro
United States and Canada
Mexico
Panama
Other countries
Total
2017
1,187
759
553
2016
1,125
833
565
1,802 (1)
1,832
Change
62
(74)
(12)
(30)
5.5%
-8.9%
-2.1%
-1.6%
2017
2016
Change
716
142
149
180
774
125
143
83
1,187
1,125
(58)
-7.5%
17
6
97
62
13.6%
4.2%
-
5.5%
Revenue in 2017 amounted to €1,187 million, an increase
> an increase of €17 million in revenue in Mexico, mainly
of €62 million (+5.5%) on 2016. This reflected:
reflecting the increase in wind output, as discussed in
> a decrease of €58 million in revenue in the United States
the section on operations (€37 million), partly offset by
and Canada, essentially due to a decline in revenue from
the effect of the recognition in 2016 of revenue from the
the sale of electricity (-€137 million) and lower revenue
successful outcome of VAT recovery procedures (€14
from the electric business (-€8 million) as a result of the
million);
decline in output (mainly reflecting the deconsolidation of
> an increase of €6 million in revenue in Panama, mainly
the EGPNA REP plants), and the effect of the recognition
due to an increase in hydroelectric generation, as noted
in 2016 of the remeasurement at fair value (€95 million)
in the section on operations;
of the interests held by the EGPNA REP group follow-
> an increase of €119 million in revenue in Costa Rica,
ing the loss of control and the gains on the disposal of
largely reflecting the indemnities in respect of the Chu-
Cimarron and Lindahl (€35 million). These developments
cas wind farm (€100 million) paid to the Group by the In-
were partly offset by an increase in revenue from the change
stituto Costarricense de Electricidad (ICE), partly offset
in the scope of consolidation following the acquisition of
by a decline in revenue in Guatemala (-€23 million).
EnerNOC on August 7, 2017 (€146 million) and the in-
crease in revenue from tax partnerships (€68 million);
77
Report on operations Gross operating margin
Millions of euro
United States and Canada
Mexico
Panama
Other countries
Total
2017
408
98
101
152
759
2016
587
95
93
58
833
Change
(179)
-30.5%
3
8
94
(74)
3.2%
8.6%
-
-8.9%
The gross operating margin amounted to €759 million in
ing the increase in output noted above;
2017, down €74 million (-8.9%) on 2016. This reflected:
> an increase of €8 million in the margin in Panama, attrib-
> a decrease of €179 million in the margin in the United
utable to the expansion of output;
States and Canada, attributable to the decline in revenue
> an increase in the margin in other countries, essentially
discussed earlier and an increase in personnel and oper-
attributable to the greater revenue registered by PH
ating costs associated with the acquisition of EnerNOC;
Chucas, as noted earlier.
> an increase of €3 million in the margin in Mexico, reflect-
Operating income
Millions of euro
United States and Canada
Mexico
Panama
Other countries
Total
2017
293
52
87
121
553
2016
398
42
80
45
565
Change
(105)
-26.4%
10
7
76
23.8%
8.8%
-
(12)
-2.1%
Operating income in 2017 amounted to €553 million, a
that was essentially associated with the deconsolidation
decrease of €12 million, taking account of a decrease of
of the EGPNA REP plants, partly offset by an increase in
€62 million in depreciation, amortization and impairment
depreciation due to the entry into service of new plants.
Capital expenditure
Millions of euro
United States and Canada
Mexico
Panama
Other countries
Total
2017
1,305
454 (1)
10
33
2016
1,467
248
42
75
1,802
1,832
Change
(162)
-11.0%
206
(32)
(42)
(30)
83.1%
-76.2%
-56.0%
-1.6%
(1) Does not include €325 million regarding units classified as “held for sale”.
Capital expenditure in 2017 amounted to €1,802 million,
million) in the United States and the photovoltaic plants
a decrease of €30 million on the previous year. Investment
of Villanueva (€272 million) and Don José (€104 million) in
mainly regarded the wind plants of Rock Creek (€364 mil-
Mexico.
lion), Red Dirt (€325 million) and Thunder Ranch (€359
78
Annual Report 2017 79
Report on operations Sub-Saharan Africa and Asia
2016
2017
2016
2017
335
371
323
323
Wind farms
Other
Net efficient
generation
capacity (MW)
2016
658
2017
694
g i n
r
g m a
t i n
a
r
e
p
s o
s
G r o
7
5
e x p e n d i t u re
C a p i t a l
3 0
i e s
r
c o u n t
O t h e r
)
4
(
Performance in 2017 (millions of euro)
ue
ven
e
R
6
9
India
16
erating margin
p
s o
s
ro
G
uth Africa
o
S
3
5
India
8
pital expenditure
uth Africa
o
S
7
2
a
C
India
3
e
u
n
e
v
e
R
a
uth Afric
o
S
0
8
of which
South Africa
India
486
522
172
172
2016
2017
2016
2017
e r e ti
80
Annual Report 2017
Sub-Saharan Africa and Asia
2016
2017
2016
2017
335
371
323
323
Wind farms
Other
Net efficient
generation
capacity (MW)
2016
658
2017
694
of which
South Africa
486
522
172
172
2016
2017
2016
2017
India
Performance in 2017 (millions of euro)
ue
ven
e
R
6
9
a
uth Afric
o
S
0
8
e
u
n
e
v
e
R
Report on operations
e x p e n d i t u re
C a p i t a l
3 0
i e s
r
c o u n t
O t h e r
)
4
(
g i n
r
g m a
t i n
a
r
e
p
s o
s
G r o
5
7
India
16
erating margin
uth Africa
o
S
3
5
p
s o
s
ro
G
India
8
pital expenditure
uth Africa
o
S
7
2
a
C
India
3
e r e ti
81
Operations
Net electricity generation
Millions of kWh
Wind
Other sources
Total net generation
- of which South Africa
- of which India
2017
892
589
1,481
1,156
325
2016
Change
401
129
530
203
327
491
460
951
953
(2)
-
-
-
-
-0.6%
Net generation in 2017 amounted to 1,481 million kWh,
lion kWh) in South Africa following the entry of new plants
an increase compared with 2016 of 951 million kWh. The
into service, mainly in the 2nd Half of 2016. By contrast,
increase is mainly attributable to the increase in wind gen-
output declined slightly in India.
eration (+491 million kWh) and solar generation (+589 mil-
Net efficient generation capacity
MW
Wind farms
Other
Total net efficient capacity
- of which South Africa
- of which India
at Dec. 31, 2017 at Dec. 31, 2016
Change
371
323
694
522
172
335
323
658
486
172
36
-
36
36
-
10.7%
-
5.5%
7.4%
-
Net efficient generation capacity in 2017 totaled 694 MW
crease in installed generation capacity associated with the
for an increase of 36 MW compared with the previous year.
Gibson Bay plant.
The change on December 31, 2016 mainly reflects the in-
Performance
Millions of euro
Revenue
Gross operating margin
Operating income
Capital expenditure
2017
2016
Change
96
57
15
30
29
14
(5)
67
43
20
-
-
-
304
(274)
-90.1%
The following tables show a breakdown of performance by geographic area in 2017.
82
Annual Report 2017
Revenue
Millions of euro
South Africa
India
Total
2017
2016
Change
80
16
96
12
17
29
68
(1)
67
-
-5.9%
-
Revenue in 2017 amounted to €96 million, an increase of
mainly due to the higher output and sale of electricity gen-
€67 million compared with the prior year. The increase is
erated by the Pulida, Adam Solar and Gibson Bay plants.
Gross operating margin
Millions of euro
South Africa
India
Other countries
Total
2017
2016
Change
53
8
(4)
57
4
10
-
14
49
(2)
(4)
43
-
-20.0%
-
-
The gross operating margin in 2017 amounted to €57 mil-
change reflects the aforementioned increase in revenue,
lion, an increase of €43 million compared with 2016. The
partly offset by the decreases reported in Australia and Kenya.
Operating income
Millions of euro
South Africa
India
Other countries
Total
2017
18
-
(3)
15
2016
(10)
5
-
(5)
Change
28
(5)
(3)
20
-
-
-
-
Operating income in 2017 came to €15 million, an in-
mainly to the start of operations at plants in South Africa
crease of €20 million, which includes an increase of €23
in 2016.
million in depreciation, amortization and impairment, due
Capital expenditure
Millions of euro
South Africa
India
Total
2017
27
3
30
2016
301
3
304
Change
(274)
-91.0%
-
-
(274)
-90.1%
Capital expenditure came to €30 million in 2017, down
ly refers to photovoltaic plants in South Africa on which
€274 million compared with the prior year. The figure main-
construction work was completed, as noted earlier.
83
Report on operations Other, eliminations and adjustments
Performance
Millions of euro
Revenue (net of eliminations)
Gross operating margin
Operating income
Capital expenditure
2017
389
(346)
(364)
72
2016
855
(69)
(124)
41
Change
-54.5%
-
-
(466)
(277)
(240)
31
75.6%
Revenue net of eliminations for 2017 amounted to €389
The gross operating margin in 2017, a negative €346
million, a decrease of €466 million compared with the prior
million, showed a decrease of €277 million compared with
year (-54.5%). The change can essentially be attributed to:
the figure for 2016. This change reflected the elimination
> a decrease of €162 million in engineering revenue follow-
of the margins on the assets that were transferred, the ef-
ing the incorporation of Enel Ingegneria e Ricerca into
fect of the capital gain on Compostilla Re and the reversal
Enel Produzione, with the transfer of the related flows to
of the SAPE litigation provision, recognized in 2016 in the
the Italy segment;
amount of €80 million.
> a decrease of €147 million in revenue for IT services fol-
lowing the transfer of the Information Technology unit
The operating loss in 2017 amounted to €364 million, a de-
from Enel Iberoamérica to Endesa, and the consequent
terioration of €240 million compared with the previous year,
inclusion of the figures in Iberia segment;
taking account of a decrease in depreciation, amortization
> a €49 million reduction in management fees on services
and impairment of €37 million, reflecting writedowns recog-
provided to other Divisions of the Group;
nized in 2016 on upstream gas exploration assets owing to a
> the capital gain of €19 million on the disposal of Compos-
number of difficulties in executing the projects and changes
tilla Re in 2016.
in price conditions in the global fuel market.
Capital expenditure
Capital expenditure in 2017 amounted to €72 million, an increase of €31 million on 2016, mainly on information techno-
logy activities.
84
Annual Report 2017 Performance and financial
position of Enel SpA
Performance
The following table summarizes the performance of Enel SpA in 2017 and 2016.
Millions of euro
Revenue
Revenue from services
Other revenue and income
Total
Costs
Consumables
Services, leases and rentals
Personnel
Other operating expenses
Total
Gross operating margin
Depreciation, amortization and impairment losses
Operating income
Net financial income/(expense) and income from equity investments
Income from equity investments
Financial income
Financial expense
Total
Income before taxes
Income taxes
NET INCOME FOR THE YEAR
2017
2016
Change
120
13
133
1
165
174
20
360
(227)
15
(242)
3,033
3,093
3,774
2,352
2,110
(160)
2,270
197
10
207
1
152
166
17
336
(129)
448
(577)
2,882
3,343
4,106
2,119
1,542
(178)
1,720
(77)
3
(74)
-
13
8
3
24
(98)
(433)
335
151
(250)
(332)
233
568
18
550
Revenue from services amounted to €120 million (€197
€3 million compared with the previous year. In both years,
million in 2016) and essentially regards services provided to
the item is essentially composed of the rebilling of costs for
subsidiaries as part of Enel SpA’s management and coordi-
the personnel of Enel SpA seconded to other Group com-
nation functions and the rebilling of costs incurred by Enel
panies.
SpA but pertaining to the subsidiaries.
The overall decrease of €77 million is primarily attribut-
Costs for consumables amounted to €1 million in 2017, un-
able to the decline in revenue from management fees and
changed on the previous year.
technical fees, which reflects the negative adjustments for
years 2015 and 2016, and the application of the new remu-
Costs for services, leases and rentals amounted to €165
neration model adopted by the Parent Company during the
million in 2017 (€152 million in 2016), of which charges from
year.
third parties in the amount of €82 million and from Group
companies in the amount of €83 million. The former mainly
Other revenue and income amounted to €13 million, up
regarded communication services, technical and profes-
85
Report on operations sional services as well as strategic, management and cor-
Income from equity investments amounted to €3,033
porate organization consulting and IT services. Those in
million (2,882 million in 2016). The item regards dividends
respect of services provided by Group companies regard
and interim dividends approved in 2017 by subsidiaries and
IT and administrative services and purchasing, as well as
associates in the amount of €3,032 million and by other
rentals and personnel training received from Enel Italia, and
companies in the amount of €1 million and shows an in-
costs for the personnel of a number of Group companies
crease of €151 million on the previous year, partly reflect-
seconded to Enel SpA.
ing dividends received from the subsidiaries Enel Américas
and Enel Chile following the corporate restructuring of the
Personnel costs totaled €174 million in 2017, an increase
Group’s operations in South America.
of €8 million compared with the previous year. The
change is mainly attributable to higher costs connected
Net financial expense amounted to €681 million and es-
with the Long-Term Incentive Plans (€5 million) and to
sentially reflects interest expense on financial debt (€860
post-employment benefits relating to defined benefit
million), partly offset by interest and other income on cur-
plans (€2 million).
rent and non-current financial assets (totaling €158 million).
The decrease in net financial expense on the previous year,
Other operating expenses amounted to €20 million in
equal to €82 million, was essentially the result of lower in-
2017, up €3 million compared with 2016, mainly as a result
terest expense on financial payables, which benefited from
of higher representation expenses.
favorable interest rate developments and a decline in the
average stock of net financial debt (€66 million), and the
In the light of the foregoing, the gross operating margin
increase in other financial income on guarantees pledged
was a negative €227 million, a deterioration of €98 million
in favor of Group companies (€30 million).
compared with the previous year, mainly attributable to the
combined effect of the reduction in management fees and
Income taxes showed a tax receivable of €160 million,
technical fees, and the concomitant increase in labor costs
mainly due to the reduction in taxable income for IRES
and services and leases and rentals.
purposes compared with statutory taxable income as a re-
sult of the exclusion of 95% of dividends received from
Depreciation, amortization and
impairment
losses
subsidiaries and the deductibility of Enel SpA interest ex-
amounted to €15 million in 2017, attributable solely to de-
pense for the Group’s consolidated taxation mechanism in
preciation and amortization. In 2016, the item also included
accordance with corporate income tax law (Article 96 of
the writedown of the interest in Enel Produzione SpA (€474
the Uniform Income Tax Code). Compared with 2016 (a tax
million) and the writeback of the interest in Enel Trade SpA
receivable of €178 million), the decrease of €18 million is
(€42 million), which were recognized following impairment
attributable to the increase in estimated taxable income for
testing of the investments.
IRES purposes.
Accordingly, the operating result showed a loss of €242
Net income for the year totaled €2,270 million, compared
million, an improvement of €335 million compared with
with €1,720 million the previous year.
2016.
86
Annual Report 2017 Analysis of the financial position
Millions of euro
Net non-current assets:
- property, plant and equipment and intangible assets
- equity investments
- net other non-current assets/(liabilities)
Total
Net current assets:
- trade receivables
- net other current assets/(liabilities)
- trade payables
Total
Gross capital employed
Provisions:
- employee benefits
- provisions for risks and charges and net deferred taxes
Total
Net capital employed
Shareholders’ equity
NET FINANCIAL DEBT
at Dec. 31, 2017
at Dec. 31, 2016
Change
41
42,811
(667)
42,185
237
(1,612)
(137)
(1,512)
40,673
(273)
87
(186)
40,487
27,236
13,251
27
42,793
(440)
42,380
255
(1,500)
(150)
(1,395)
40,985
(286)
56
(230)
40,755
26,916
13,839
14
18
(227)
(195)
(18)
(112)
13
(117)
(312)
13
31
44
(268)
320
(588)
Net non-current assets amounted to €42,185, a decrease
Net current assets came to a negative €1,512 million, an
of €195 million. This was attributable to:
increase of €117 million on December 31, 2016. The change
> an increase of €227 million in “net other non-current as-
is attributable to:
sets/(liabilities)”, which at December 31, 2017 showed a
> an increase of €112 million in net other current liabilities,
net liability of €667 million (net other non-current liabili-
mainly reflecting the liability to shareholders for the in-
ties of €440 million at December 31, 2016). The change
terim dividend on 2017 earnings approved by the Board
is essentially attributable to the decrease in the value
of Directors on November 8, 2017 and to be paid as from
of non-current derivative assets (€1,014 million) and the
January 24, 2018 (equal to €1,068 million in 2017 and
decrease in the value of non-current derivative liabilities
€915 million in 2016);
(€812 million);
> a decrease of €18 million in trade receivables, mainly in
> an increase of €18 million in the value of equity invest-
respect of Group companies for management and coor-
ments in subsidiaries, which reflected the following op-
dination services from Enel SpA;
erations: the acquisition of Tynemouth Energy Storage
> a decrease of €13 million in trade payables.
Limited (€5 million) and Enel M@p (€12 million), and the
formation of Enel Global Thermal Generation Srl with the
Net capital employed at December 31, 2017 came to
subscription and payment of its entire share capital (€1
€40,487 million, funded by shareholders’ equity of €27,236
million);
million and net financial debt of €13,251 million.
> a change of €14 million in property, plant and equipment
and intangible assets as a result of investments (totaling
Shareholders’ equity came to €27,236 million at Decem-
€29 million) and depreciation and amortization (totaling
ber 31, 2017, an increase of €320 million on the previous
€15 million) for the year.
year. More specifically, the change is attributable to the rec-
87
Report on operations ognition of net income for 2017 (€2,303 million), the distri-
Net financial debt amounted to €13,251 million at the end
bution of the balance of the dividend for 2016 (totaling €915
of 2017, with a debt/equity ratio of 48.7% (51.4% at the end
million) and the interim dividend for 2017 (€1,068 million).
of 2016).
88
Annual Report 2017 Analysis of the financial structure
Net financial debt and changes in the period are detailed in the table below.
Millions of euro
Long-term debt:
- bank borrowings
- bonds
- debt assumed and loans from subsidiaries
Long-term debt
- financial receivables from others
- debt assumed and loans to subsidiaries
Net long-term debt
Short-term debt/(liquidity):
- short-term portion of long-term borrowings
- short-term bank borrowings
- cash collateral received
Short-term debt
- short-term portion of long-term financial receivables
- short-term portion of loans assumed/granted
- other short-term financial receivables
- cash collateral paid
- net short-term financial position with Group companies
- cash and cash equivalents and short-term securities
Net short-term debt/(liquidity)
NET FINANCIAL DEBT
at Dec. 31, 2017
at Dec. 31, 2016
Change
1,039
8,541
1,200
10,780
(6)
-
50
12,414
1,200
13,664
(5)
(27)
989
(3,873)
-
(2,884)
(1)
27
10,774
13,632
(2,858)
3,654
245
256
4,155
(1)
(27)
1
(2,074)
2,912
(2,489)
2,477
13,251
973
810
1,107
2,890
(1)
(45)
(6)
(1,012)
1,419
(3,038)
207
13,839
2,681
(565)
(851)
1,265
-
18
7
(1,062)
1,493
549
2,270
(588)
Net financial debt at December 31, 2017 amounted to
2016 the facility had been drawn in the amount of €50
€13,251 million, a decrease of €588 million, the result of
million);
an improvement in the net long-term debtor position of
> the agreement of new loans from UniCredit SpA and UBI
€2,858 million, partly offset by an increase of €2,270 mil-
Banca SpA in the respective amounts of €200 million and
lion in net short-term financial debt.
€150 million;
The main transactions in 2017 impacting debt can be sum-
> the agreement of a dollar-denominated loan from Bank of
marized as follows:
America in the amount of €199 million at the exchange
> the repayment of the residual €909 million of a bond is-
rate prevailing at issue ($227 million).
sued in 2007 in the amount of €1,500 million, which was
partially redeemed in 2016;
Cash and cash equivalents amounted to €2,489 million, a
> the redemption of four tranches of INA and ANIA bonds
decrease of €549 million on December 31, 2016, reflect-
totaling €65 million;
ing the effects of the above financial transactions, the pay-
> the repurchase of own unlisted floating-rate bonds from
ment of dividends for 2016 and the normal operation of
the “Serie speciale riservata al personale 1994-2019” in
the centralized treasury function performed by Enel SpA.
the amount of €19 million;
> an additional drawing of €450 million on the loan granted
by UniCredit SpA the previous year (at December 31,
89
Report on operations Cash flows
Millions of euro
Cash and cash equivalents at the start of the year
Cash flows from operating activities
Cash flows from investing/disinvesting activities
Cash flows from financing activities
Cash and cash equivalents at the end of the year
2017
3,038
2,465
(48)
(2,966)
2,489
2016
5,925
2,511
(409)
(4,989)
3,038
Change
(2,887)
(46)
361
2,023
(549)
Cash flows from financing activities came to a negative
Limited (€5 million) and Enel M@p (€12 million), and the
€2,966 million (€4,989 million in 2016). They were largely
formation of Enel Global Thermal Generation Srl with the
generated by the repayment of bonds and the payment of
subscription and payment of its entire share capital (€1
dividends for 2016 totaling €1,830 million.
million).
Cash flows from investing activities were a negative €48
The cash requirements generated by financing and invest-
million (€409 million in 2016), and were essentially gener-
ing activities were funded by liquidity generated by oper-
ated by:
ating activities (a positive €2,465 million, compared with
> €30 million in changes in property, plant and equipment
€2,511 million in 2016), essentially reflecting dividends re-
and intangible assets as a result of capital expenditure;
ceived from subsidiaries (€2,977 million) and the use of
> €18 million from the increase in the value of equity in-
cash and cash equivalents, which at December 31, 2017
vestments in subsidiaries, reflecting the following trans-
consequently amounted to €2,489 million (€3,038 million
actions: the acquisition of Tynemouth Energy Storage
at the start of the year).
90
Annual Report 2017 Significant events
in 2017
Business
11 JANUARY
14 FEBRUARY
Acquisition of Brazilian distributor
CELG-D finalized
On February 14, 2017, the Enel subsidiary Enel Brasil fi-
nalized the acquisition of about 94.8% of the share capi-
Acquisition of Demand Energy
On January 11, 2017, Enel Green Power North America
tal of CELG Distribuição (“CELG-D”), a power distribution
company that operates in the Brazilian state of Goiás, for
acquired a 100% stake in Demand Energy Networks
a total of R$2.187 billion. The original agreement provided
(“Demand Energy”), a US-based company specialized in
for the remaining shares of CELG-D to be offered to the
intelligent software and energy storage systems. Enel will
company’s current and retired employees through a pro-
work with Demand Energy, which has established itself as
cess that in May enabled Enel to purchase the shares not
a leader in the New York City storage market, delivering
bought by those employees.
value to commercial and industrial customers, to expand
The acquisition of CELG-D expanded Enel’s presence in
deployment of the company’s Distributed Energy Network
the Brazilian distribution sector, increasing Enel’s Brazilian
Optimization System (DEN.OSTM), an intelligent software
customer base from 7 million to 10 million, making Enel
controls platform that enables real-time optimization of en-
Brasil the second largest power distributor in the country,
ergy management and revolutionizes the way electricity is
generated, stored and consumed.
4 APRIL
10 FEBRUARY
Enel Green Power participates in
construction of hospital in Uganda
On February 10, 2017, Enel Green Power participated in
Power purchase agreement in
Zambia
On April 4, 2017, Enel Green Power signed a 25-year
power purchase agreement with Zambia’s state-owned
utility ZESCO for the 34 MW Ngonye photovoltaic plant
the project of Emergency and the architect Renzo Piano for
won in June following the first round tender of the Scal-
the construction of a pediatric surgery hospital in Entebbe,
ing Solar program, which was launched by state-owned
Uganda, which will become the new center of pediatric ex-
investment holding company Industrial Development Cor-
cellence in Africa. The hospital will also be a training center
poration Limited (“IDC”). Ngonye is located in the Lusaka
for young doctors and nurses from Uganda and neighbor-
South Multi-Facility Economic Zone in southern Zambia,
ing countries, making a significant contribution to improv-
and the award of the capacity to Enel marked the Group’s
ing health standards in the area.
entry into Zambia’s renewable energy market. Enel will
Enel Green Power will provide 2,600 thin-film photovoltaic
be investing approximately $40 million in the construc-
modules manufactured at the 3Sun factory in Catania, for a
tion of the new photovoltaic plant, which is expected to
total of 289.24 kWp (kilowatt peak), giving the new facility
generate around 70 GWh per year. Ngonye will be owned
energy autonomy and sustainability.
by a special purpose vehicle in which Enel Green Power
will hold 80% and IDC will have a 20% minority stake.
91
Report on operations 10 APRIL
Acquisition of a photovoltaic
project in Australia
On April 10, 2017, Enel, acting through a joint venture
between the subsidiary Enel Green Power and Dutch In-
frastructure Fund, closed an agreement to acquire Bun-
gala Solar One, the first 137.5 MW phase of the 275 MW
Bungala Solar photovoltaic project, which is currently the
largest ready-to-build solar PV project in Australia, from
an Australian developer.
The acquisition of Bungala Solar Two, the second phase
of the project, closed at the end of July. The Bungala So-
lar project is located near Port Augusta in South Australia.
The joint venture’s total investment in the 275 MW pro-
ject is around $315 million, including project construction,
with Enel contributing around $157 million. The total in-
vestment will be financed through a mix of equity and
project finance with a consortium of local and interna-
tional banks. The project already holds a long-term power
purchase agreement with Origin Energy, a major Australi-
an utility. Construction at Bungala Solar One began in July
and will be completed in the 3rd Quarter of 2018, while
Bungala Solar Two began construction in December and
will be completed in the 1st Quarter of 2019.
in interest. In its ruling of February 3, 2017, the Arbitral
Tribunal set the purchase price for the equity interests
involved in the put option at about €400 million, reducing
the amount requested by SAPE by more than €100 mil-
lion and dismissing the claim for interest.
16 MAY
Acquisition of Tynemouth Energy
Storage
On May 16, 2017, Enel purchased the Tynemouth stand-
alone battery energy storage system project located in
Newcastle in the United Kingdom by acquiring 100% of
Tynemouth Energy Storage Limited from the European
energy project developer and operator Element Power.
The ready-to-build project, which is expected to be com-
pleted by the 1st Half of 2018, will use lithium-ion batter-
ies with a capacity of 25 MW (12.5 MWh). Enel’s overall
investment in the project, including construction, is ex-
pected to total about €20 million.
Tynemouth is supported by a four-year Enhanced Frequen-
cy Response (EFR) contract with National Grid awarded to
the project in last year’s EFR tender to provide grid balanc-
ing services. After four years, the project will participate in
ancillary services and capacity market tenders.
10 APRIL
17 MAY
Acquisition of an additional stake
in e-distribut¸ie Muntenia and Enel
Energie Muntenia
On April 10, 2017, Enel Investment Holding (“EIH”) fi-
Award of wind capacity in Spain
On May 17, 2017, Enel Green Power España was awarded
540 MW of wind power capacity in a tender for 3,000 MW
of renewable energy launched by the Spanish government
nalized the acquisition from SAPE (the Romanian state-
to help the country achieve its target of supplying 20% of
owned holding company that owns state shareholdings)
energy consumption from renewables by 2020. The Enel
of around 13.6% of the share capital of e-distribut¸ie
Group will invest about €600 million in the construction of
Muntenia and Enel Energie Muntenia for a total of about
the wind capacity, which is part of the investment envis-
€400 million. Following the transaction, EIH had increased
aged in its current Strategic Plan. The plants, which are
its interest in the two companies to about 78% of their
expected to enter service by 2019, will sell their power in
share capital, from the 64.4% held previously. The ac-
the Spanish wholesale market, while the Spanish govern-
quisition was a consequence of SAPE exercising a put
ment will provide incentives, in terms of yearly capacity
option in November 2012. With the exercise of the put
payments, to guarantee a constant return over the 25-year
option, SAPE had asked for a price of about €520 million,
lifetimes of the plants. The wind farms will be located in
an amount which was contested by EIH. After failing to
the regions of Aragona, Andalusia, Castile and León, and
reach an agreement on the price for the equity interests,
Galicia, areas which enjoy high levels of wind resources.
in 2014 SAPE began an arbitration proceeding before the
Once up and running, the wind facilities will generate
International Chamber of Commerce in Paris, in which it
about 1,750 GWh per year.
lodged a claim for the above price and about €60 million
92
Annual Report 2017 29 MAY
14 JUNE
Tax partnership agreement for
Rock Creek wind farm in the
United States
On May 29, 2017, Enel Green Power North America
(“EGPNA”), the Enel Group renewable energy company
operating in the United States, signed a tax equity agree-
ment worth about $365 million with Bank of America Mer-
rill Lynch and JP Morgan for the 300 MW Rock Creek wind
farm located in Missouri. Under the agreement, the inves-
tors will contribute the agreed amount to the wind farm’s
owner in exchange for 100% of the “Class B” equity inter-
est in the project. This interest will allow the two inves-
tors to obtain, under certain conditions set by US tax laws,
a percentage of the tax benefits that will be attributed to
the Rock Creek wind project. In turn, EGPNA, through
Rock Creek Holding, will retain 100% ownership of the
“Class A” interests and therefore management control of
Award of wind capacity in Russia
On June 14, 2017, Enel Russia was awarded two wind
projects with a total capacity of 291 MW within the
framework of the 2017 Russian government tender for
the construction of 1.9 GW of wind capacity in the coun-
try. The two projects will be developed and built by Enel
Green Power with an overall investment of about €405
million. The two plants will sell their energy in the Rus-
sian wholesale market and will be supported by capacity
payment agreements with the Russian government. The
Azov wind farm, which is expected to enter service by
2020, is located in the Rostov region, in southern Russia,
and will have an installed capacity of 90 MW, generating
around 300 GWh. The Murmansk wind farm, located in
the northwestern Russian region of the same name, is
expected to enter service by 2021 and will boast an in-
stalled capacity of 201 MW, generating around 730 GWh
the project. The agreement secures the funding commit-
per year.
ment by the two investors, and the closing of the funding
is expected to occur upon completion of construction and
start of commercial operation of the farm. The tax equity
accord will be supported by a parent company guarantee
from Enel SpA.
5 JUNE
Acquisition of Amec Foster
Wheeler Power
On June 5, 2017, Enel Green Power has completed the
acquisition of 100% of Amec Foster Wheeler Power from
Amec Foster Wheeler Italiana, owner of two wind farms
in Campania with a total installed capacity of 54.5 MW.
The two plants, in operation since 2006 and 2008, are
located in the municipalities of Vallesaccarda (22.5 MW)
26 JUNE
Implementation of the smart
meter
One of the most important challenges facing Enel is the
implementation of the new-generation meter in the coun-
tries where the Group is present with distribution com-
panies. On June 26, 2017, Enel kicked off Open Meter in
Italy, the plan to replace 32 million first-generation meters
installed beginning in 2001. In Spain, more than 11 mil-
lion devices will have been installed by the end of 2017.
In Romania, 290,000 will be installed on the three Enel
networks by the end of the year. The new smart meter
offers considerable benefits to customers and distribu-
tors alike, representing the first essential step towards a
and Scampitella (32 MW), in the province of Avellino, and
smart digital grid.
generate about 90 GWh per year.
With the transaction, Enel Green Power and Amec Fos-
ter Wheeler Italiana closed a preliminary sale agreement
signed in December 2016. Enel Green Power paid about
€21 million.
One of the largest challenges facing this innovative tool is
the regulatory framework in the various countries, which
will require ongoing dialogue to overcome.
26 JULY
Award of renewables capacity in
Spain
On July 26, 2017, Enel Green Power España was awarded
93
Report on operations 339 MW of solar power capacity in Spain in a renewable
Energy Partners of America (“Allianz”) for the Red Dirt
energy tender. The plants, whose construction will re-
wind project located in Oklahoma, which has a total in-
quire an investment of about €270 million, will sell their
stalled capacity of around 300 MW.
electricity on the Spanish pool market, with incentives
Under the agreement, which is commonly used for the
from the Spanish government in the form of annual ca-
development of renewable energy projects in the United
pacity payments to guarantee a steady return over the
States, MUFG and Allianz will pay the above amount to
25-year lives of the facilities. The photovoltaic plants are
the wind farm owner, Red Dirt Wind Holdings, purchas-
expected to enter service by 2019 and will be located in
ing 100% of the “Class B” equity interests in the project.
the regions of Murcia and Badajoz. Once up and running,
This investment will enable the two investors to obtain,
the plants will generate approximately 640 GWh per year.
under certain conditions set under US tax law, a percent-
age of the tax benefits of the Red Dirt wind project. In
turn, EGPNA, through Red Dirt Wind Holdings, will retain
100% ownership of the “Class A” interests and therefore
management control of the project. The agreement se-
cures the funding commitment by the two investors, with
the closing of the funding expected to occur upon start of
commercial operation of the Red Dirt wind farm. The tax
equity partnership will be supported by a parent company
guarantee from Enel SpA.
The Red Dirt wind project, construction of which started
in April, began operations in December. The investment
in Red Dirt amounts to about $420 million, which is part
of the investment outlined in Enel’s current Strategic Plan.
13 SEPTEMBER
Long-term power purchase
agreements reached in the United
States
On September 13, 2017, Anheuser-Busch and Enel Green
Power (“EGP”) signed a Power Purchase Agreement
(“PPA”), whereby Anheuser-Busch will purchase the en-
ergy delivered to the grid and the associated renewable
electricity credits from a portion of Enel Green Power’s
Thunder Ranch wind project, in the amount of 152.5 MW.
The wind energy partnership between EGP and Anheuser-
Busch is the beer company’s first contracted utility-scale
project to start operations in the world, with the Thun-
der Ranch wind farm becoming operational in December.
More specifically, under a Virtual Power Purchase Agree-
ment (“VPPA”), EGP will sell Anheuser-Busch the elec-
tricity output delivered to the grid by a 152.5 MW portion
of the Thunder Ranch wind farm, substantially boosting
the beer company’s purchases of renewable energy.
7 AUGUST
Acquisition of EnerNOC
On August 7, 2017, Enel Green Power North America
(“EGPNA”) completed a tender offer for all of the out-
standing shares of EnerNOC for a total price of about
$250 million.
EnerNOC has active demand response networks in North
America, Europe and Asia-Pacific. Additionally, EnerNOC
energy intelligence software enables businesses to boost
facility efficiency, simplify utility bill management and
ease reporting burdens. The company’s energy procure-
ment tools and services help customers buy energy more
strategically, manage risk and optimize pricing.
The completion of the acquisition came as a result of
EGPNA’s successful tender offer to EnerNOC’s share-
holders for no less than a majority of its shares. A total
of 22,447,759 shares were validly tendered into and not
withdrawn from the offer, representing about 71.61% of
EnerNOC’s outstanding shares at a price of $7.67 per
share in cash, representing a premium of about 42% to
the company’s closing stock price on June 21, 2017 and
a 38% premium to the 30-day weighted average price.
Following its acceptance of the tendered shares, EGPNA
completed the acquisition by acquiring a 100% owner-
ship interest in the company. EnerNOC will be delisted
following the merger.
17 AUGUST
Tax partnership agreement for Red
Dirt wind farm in the United States
On August 17, 2017, Enel Green Power North America
(“EGPNA”), acting through its subsidiary Red Dirt Wind
Holdings, signed a tax equity agreement worth approxi-
mately $340 million with MUFG and Allianz Renewable
94
Annual Report 2017 28 SEPTEMBER
Enel wins renewable energy tender
in Brazil
On September 28, 2017, Enel Brasil was awarded a
30-year concession for the operational 380 MW Volta
Grande hydro power plant located in south-eastern Brazil
following the “Leilão de Concessões não Prorrogadas”
company’s executives/employees are accused. Follow-
ing the charges, as provided for by law, the investigating
magistrate of Lecce also ordered the seizure of approxi-
mately €523 million, equivalent to the profit that the Lec-
ce Public Prosecutor conducting the investigation alleges
was generated through the illegal handling of the ash.
The seizure order appointed two custodians in order to
monitor compliance with the technical measures men-
public auction organized by the Brazilian federal govern-
tioned earlier.
ment via the Brazilian electricity regulatory agency - AN-
EEL. Enel invested a total of around R$1.4 billion, equal to
about $445 million, for the hydro concession, in line with
the investment outlined in the Group’s current Strategic
Plan. The hydro power plant is supported by the 30-year
concession awarded with guaranteed annual generation
revenue.
After the signing of the concession in November, Enel’s
hydro capacity in the country increased to 1,270 MW
from the current 890 MW.
28 SEPTEMBER
Seizure of Brindisi plant
On September 28, 2017, Enel Produzione was notified
of the decision issued by the investigating magistrate of
Lecce ordering the seizure of the thermoelectric power
plant of Brindisi-Cerano.
The measure is part of a criminal investigation initiated
by the Public Prosecutor’s Office of the Court of Lecce
concerning the use of fly ash, i.e. that produced by the
combustion of coal and captured by the smoke abate-
ment systems of the plant, in the cement industry. The
investigation also involves Cementir, a cement company
to which the ash was sent for cement production, and
ILVA, which provided Cementir with other residues for
cement production.
Within the scope of the enquiry, a number of executives/
employees of the company are being investigated for il-
legal waste disposal and unauthorized blending of waste.
In order to enable plant operations to continue, the sei-
zure order authorizes the Brindisi power station to con-
tinue generation for 60 days (subsequently extended until
February 24, 2018), subject to certain technical require-
ments intended, according to the accusations, to remove
the alleged ash management deficiencies. Enel Produzio-
ne has been charged under the provisions of Legislative
Decree 231/2001 with the same offenses of which the
Enel Produzione has informed the investigating magis-
trate that the plant is operated in accordance with indus-
try regulations and the highest international technology
standards, as well as with a cycle for the production and
reuse of residues that is identical to that adopted in the
most efficient power plants in Europe and the world, in
compliance with the most modern environmental require-
ments intended to promote a circular economy. Analyses
of the ash prior to seizure and those conducted after-
wards have consistently confirmed the non-hazardous
nature of the material and therefore the legitimacy of
the manner in which they have been handled. Enel Pro-
duzione, although not agreeing with the allegations, has
nevertheless expressed its full willingness, in agreement
with the investigating magistrate and the custodians, to
rapidly implement technical solutions for the execution
of the requirements imposed with the seizure order that
take account of the operational and logistical complexities
associated with their implementation and the associated
risks to the national electricity system.
In this regard, with the request for an extension of the
use of the power station on November 15, 2017, Enel Pro-
duzione asked for authorization to test a management ap-
proach that would separate the ash by operational stage,
thereby enabling the implementation of the provision of
the order. Subsequently, following the testing, the com-
pany obtained an extension of another 90 days until Feb-
ruary 24, 2018.
In the meantime, the Public Prosecutor, in view of the
need to proceed with evidence gathering with a technical
enquiry into the facts of the case, asked the investigating
magistrate to move ahead with this stage. At the hearing
of February 2, 2018, the magistrate assigned the engage-
ment to the technical experts, giving them 150 days to
file their report.
95
Report on operations 6 OCTOBER
Tax partnership agreement for
Thunder Ranch wind farm in the
United States
On October 6, 2017, Enel Green Power North America
(“EGPNA”), acting through its subsidiary Thunder Ranch
Wind Holdings (“Thunder Ranch Holdings”), signed a tax
equity agreement worth approximately $330 million with
the Alternative Energy Investing Group of Goldman Sachs
and GE Energy Financial Services, a unit of General Elec-
tric, for the 298 MW Thunder Ranch wind project located
in Oklahoma.
Under the agreement, which is a common transaction
structure for the development of renewable energy pro-
jects in the United States, the two passive investors will
purchase 100% of “Class B” and “Class C” equity inter-
ests in the project, respectively, in exchange for their pay-
ment of the above purchase price. This interest will allow
the investors to obtain, under certain conditions set by
Under the agreements, EGP will continue to operate the plants
owned by the SPVs after the disposal and will complete those
still under construction, maintaining a significant influence.
In addition, as from January 1, 2020, EGP may transfer ad-
ditional projects to the Holding company. As a result of these
possible transfers, it could therefore increase its interest in the
Holding company until it becomes the majority shareholder.
The transaction is worth $2.6 billion, of which a price of
about $340 million for the sale of 80% of the Holding
company’s share capital and about $2.2 billion for financ-
ing (in part through related-party loans and in part through
project financing arrangements) granted to the SPVs.
The closing of the transaction was originally subject to a
number of ordinary conditions and receipt of the neces-
sary authorization from the Mexican antitrust authorities.
The price will be paid at the closing, bearing in mind that
the amount will be subject to a subsequent price adjust-
ment normal for this type of transaction, based on varia-
tions in the net working capital of the Holding company.
US tax laws, a percentage of the tax benefits of the Thun-
der Ranch wind project. In turn, EGPNA, through Thun-
10 OCTOBER
der Ranch Holdings, will retain 100% ownership of the
“Class A” interests and therefore management control of
Disposal of Bayan Resources
On October 10, 2017, Enel closed a deal for the sale of its
the project. The agreement secures the funding commit-
10% stake in Indonesian coal producer PT Bayan Resourc-
ment by the two investors, and the closing of the funding
es (“Bayan”), currently owned by Enel Investment Hold-
is expected to occur upon achievement of commercial
ing, to Bayan’s controlling shareholder Mr. Dato’ Low Tuck
operation of the 298 MW wind farm.
3RD QUARTER
Agreement for the disposal of
renewables plants in Mexico
In the 3rd Quarter of 2017, Enel Green Power (“EGP”) final-
ized agreements with the Canadian institutional investor
CDPQ and the investment vehicle CKD IM for the sale of
a total of 80% of the share capital of eight special purpose
Kwong, for $85 million, fully paid in cash. Enel purchased
the 10% stake in Bayan in August 2008 during the Initial
Public Offering (IPO) that led to the listing of the Indone-
sian coal company on the Jakarta Stock Exchange.
23 OCTOBER
Award of renewables capacity in
Ethiopia
On October 23, 2017, Enel, acting through a consortium
vehicles (“SPVs”). The SPVs, which are owned by EGP
led by the Enel Green Power (“EGP”) renewables division
through a Mexican company, own three plants in opera-
and including leading Ethiopian infrastructure company Or-
tion and five under construction for a total capacity of 1.7
chid Business Group, was selected as the preferred bidder
GW. The finalization of the disposal involved a corporate
for a 100 MW photovoltaic project following a solar tender
restructuring of Enel Green Power México, the sole share-
launched by local utility Ethiopian Electric Power (“EEP”)
holder of the eight SPVs being sold. The restructuring was
within the framework of the country’s Growth and Trans-
completed with the demerger of 60.8% of the eight SPVs
formation Plan (“GTP 2”), with which the Ethiopian govern-
to a newly formed company – Tenedora de Energía Renov-
ment hopes to achieve about 12,000 MW of hydroelectric,
able Sol y Viento SAPI de Cv – and the remaining 39.2% to
wind, geothermal and solar capacity in partnership with the
eight new companies (the mini-holding).
private sector in order to meet the country’s demand for
96
Annual Report 2017 electrification while at the same time diversifying the gen-
country’s National Energy Commission (Comisión Nacional
eration mix in line with the 2020 national energy plan. The
de Energía) aimed at meeting the energy demand of regu-
consortium has the right to develop, build and operate the
lated market customers over the 2024-2043 period.
100 MW of photovoltaic capacity in Metehara, in the Oro-
Thanks to the synergies between Enel Generación Chile and
mia region, about 200 km east of Addis Ababa, an area with
Enel Green Power, the Group won 54% of the 2.2 TWh per
a high level of solar radiation.
year offered in the tender, more than any other participant.
The consortium headed by EGP will be investing about
The energy awarded to Enel will be generated with a mix of
$120 million in the construction of the photovoltaic plant.
new renewable projects comprising 116 MWp of solar, 93
The Metehara plant is expected to enter service in 2019.
MW of wind and 33 MW of geothermal for a total capacity of
Once up and running, the facility will be able to gener-
242 MW in the Antofagasta region, in northern Chile, as well
ate approximately 280 GWh per year, while avoiding the
as a wind farm in the Araucanía region, in southern Chile.
emission of around 296,000 metric tons of CO2 into the
atmosphere. The project is supported by a 20-year power
The facilities are expected to enter into service by 2024, gen-
erating around 1.180 TWh per year and avoiding the annual
purchase agreement with EEP for all of the energy gener-
ated by the plant.
25 OCTOBER
Acquisition of eMotorWerks
On October 25, 2017, Enel, acting through its US subsidi-
ary EnerNOC, announced the acquisition of the California-
based eMotorWerks, a leading North American supplier
of electric vehicle (EV) charging stations, called JuiceBox,
emission of around 500,000 metric tons of CO2 into the at-
mosphere.
The tender was launched within the scope of Chile’s Gen-
eral Power Service Law (Ley General de Servicios Eléctricos)
4/2006 shaping the regulatory framework for public tenders
in order to provide distribution system operators with long-
term power supply contracts with generators that would ena-
ble them to meet the power consumption needs of regulated
market customers in their concession areas.
and owner and operator of JuiceNet, an Internet of Things
9 NOVEMBER
(IoT) platform for the smart management of EV charging
and other distributed energy storage facilities. Through
the JuiceNet platform, these facilities can be remotely
National e-mobility plan
On November 9, 2017, Enel presented the company’s Na-
controlled and aggregated for grid balancing purposes re-
tional Plan for the installation of electric vehicle charging
lying on unidirectional and bidirectional (Vehicle-to-Grid,
infrastructure, which provides for the installation of around
V2G) electricity flows. The acquisition of eMotorWerks
7,000 charging stations by 2020 and a total of 14,000 by
marks Enel’s entrance into the US electric mobility mar-
2022. The program envisages the comprehensive cover-
ket, one of the largest EV markets at global level.
age of all Italian regions and will contribute to increasing
The acquisition consolidates Enel’s strategic commit-
the number of electric and hybrid vehicles in circulation.
ment to provide the market with innovative customer-fo-
Enel will invest between €100 million and €300 million
cused products and services, including smart recharging
to develop an extensive charging infrastructure network
and integration between electric vehicles and distributed
comprising Quick (22 kW) charging stations in urban ar-
generation, grid balancing services and V2G.
eas and Fast (50 kW) and Ultra Fast (150 kW) charging
Enel is planning to use JuiceNet platform’s functions in all
stations in extra-urban areas. Approximately 80% of the
of its EV charging stations globally.
charging points will be installed in urban areas, of which
2 NOVEMBER
Award of renewables capacity in
Chile
On November 2, 2017, Enel Generación Chile was awarded
the supply of 1.180 TWh per year to a number of Chilean
distribution companies through the tender launched by the
21% in major metropolitan areas, 57% in other cities and
the remaining 20% in other areas around the country to
enable medium and long-range travel in extra-urban ar-
eas and on motorways. The latter category includes the
charging stations of the EVA+ (Electric Vehicles Arteries)
project, co-financed by the European Commission, which
provides for the installation of 180 charging stations along
Italian roads in extra-urban areas over three years. In
97
Report on operations 2018, more than 2,500 charging stations will be installed
throughout the country.
23 NOVEMBER
The infrastructure developed by Enel, which currently
boasts about 900 charging stations throughout Italy,
has been designed to meet the various charging needs
of customers. These features are possible thanks to the
Electro Mobility Management System (EMM) cloud plat-
form, which enables the remote monitoring and manage-
ment of the entire network. The integration between
Enel’s charging stations and the EMM platform also ena-
bles smart charging services, which allow customers to
manage their charging activities more effectively. Thanks
to the recent acquisition of the California-based eMotor-
Werks, Enel will be able to offer solutions using Vehicle-
to-Grid (V2G) technology that can generate economic
benefits for customers who make their vehicle’s batteries
available to help stabilize the grid.
The National Plan will be developed in collaboration with
the municipalities and regions involved, where Enel will
invest directly in the charging infrastructure, and together
with private-sector players that want to participate in the
project, with a contribution from Enel of up to 65% of
the investment. More specifically, this will involve the
installation of charging stations on private property ac-
cessible to the public owned by small and medium-sized
enterprises (SMEs), independent professionals and the
self-employed (SOHOs) as well as commercial establish-
ments and large retailers, such as gyms, supermarkets,
shopping malls, holiday farms and hotels.
Moreover, Vallelunga will host Enel’s first technology center
for R&D in e-mobility solutions in Italy, which will aggregate
research institutes and start-ups operating in the sector.
To date, more than 20 charging infrastructures using Enel
technology have been installed and are operational, which
will enable:
> the development and testing of charging infrastructure in
a real-world environment, involving the various automo-
tive companies active at the racetrack;
Award of renewables capacity in
Mexico
On November 23, 2017, Enel Rinnovabile was awarded
the right to sign a number of contracts in Mexico to sup-
ply energy and green certificates from four wind projects
with a total capacity of 593 MW in the country’s third
long-term public tender since its energy reform.
The Enel Group will be investing around $700 million in
the construction of the new facilities, in line with the in-
vestments outlined in the company’s current Strategic
Plan. Each project will be supported by a contract provid-
ing for the sale to Mexico’s Cámara de Compensación of
specified volumes of energy over a 15-year period and of
the related green certificates over a 20-year period.
The new plants are due to enter into operation in the 1st
Half of 2020. Once fully operational, the facilities are ex-
pected to produce 2.09 TWh/year of renewable energy,
therefore avoiding the annual emission of nearly 960,000
metric tons of CO2 into the atmosphere.
Three plants, Amistad II and Amistad III with a total in-
stalled capacity of 100 MW each, and Amistad IV with an
installed capacity of 149 MW, will be built in Acuña, in the
northern state of Coahuila. Amistad II and III are expected
to generate annually over 350 GWh each, while avoiding
the emission into the atmosphere of around 170,000 met-
ric tons of CO2 each. Amistad IV is expected to generate
more than 510 GWh per year, while avoiding the annual
emission of around 234,000 metric tons of CO2 into the
atmosphere.
The 244 MW Dolores facility will be built in China, a mu-
nicipality in the north-eastern state of Nuevo León. The
plant is expected to generate nearly 850 GWh each year,
while avoiding the annual emission of about 390,000
metric tons of CO2 into the atmosphere.
> the creation of a motor sport specialized center for the
30 NOVEMBER
development and testing of new solutions for electric ve-
hicles and charging stations;
> the testing of sustainable mobility services such as pay-
ment and access control systems for charging infrastruc-
ture and e-car sharing;
Disposal of Caney River and Rocky
Ridge wind farms in the United
States
On November 30, 2017, Enel Green Power North America
> the leveraging of ACI Vallelunga’s competencies in road
(“EGPNA”) signed a cash equity agreement with invest-
safety with safe driving courses specific for electric ve-
ment fund Gulf Pacific Power, whereby EGPNA will sell
hicle drivers.
98
to the fund 80% of the “Class A” shares in EGPNA’s
subsidiary Rocky Caney Wind LLC, the owner of the 200
Annual Report 2017 MW Caney River wind farm in Kansas and the 150 MW
Rocky Ridge wind farm in Oklahoma. The total price for
the transaction is approximately $233 million, which was
paid upon the closing of the deal in December 2017.
EGPNA will continue to manage, operate and perform
maintenance activities at both wind farms while retaining
20% of the “Class A” interest in Rocky Caney Wind LLC.
Furthermore, Enel was able to deconsolidate Caney Riv-
er and Rocky Ridge’s debt, amounting to approximately
$140 million.
The Caney River wind farm, which is located in Elk Coun-
ty, Kansas, and began operations in 2011, is able to gen-
erate around 765 GWh each year, avoiding the annual
emission of over 580,000 metric tons of CO2. The Rocky
Ridge facility, located in Kiowa and Washita Counties,
Oklahoma, began operations in 2012. The plant is able to
generate around 600 GWh each year, while avoiding the
annual emission of over 450,000 metric tons of CO2 into
the atmosphere.
4 DECEMBER
Capacity Storage Agreements in
California
On December 4, 2017, Enel Green Power North America
signed three Capacity Storage Agreements (“CSA”) with
California utility Pacific Gas and Electric (“PG&E”) for a to-
tal capacity of 85 MW/340 MWh. Under the agreements,
Enel will build the Kingston, Cascade, and Sierra stand-
alone lithium-ion energy storage projects, which will all
be located in California. The energy storage systems will
connect directly to PG&E’s grid and will charge the lithi-
um-ion batteries when there is an abundance of renewa-
ble energy. The energy stored in the batteries will then be
delivered back to the grid during times of peak demand,
increasing grid reliability, while also easing congestion.
The projects have been developed with Sovereign Energy
Storage, an independent developer of large-scale utility
battery energy storage projects, and are expected to be
operational by 2023, pending review and approval by the
California Public Utility Commission as well as local and
regulatory agencies.
14 DECEMBER
Award of renewables capacity in
Canada
On December 14, 2017, Enel Green Power North America
(“EGPNA”) was awarded two 20-year Renewable Energy
Support Agreements (“RESAs”) for 146 MW of new wind
capacity in Alberta, Canada, in a tender launched by the
Alberta Electric System Operator (“AESO”). Under the
two agreements, Enel will build two new wind facilities,
the 115 MW Riverview Wind project and the 30.6 MW
Phase 2 of Castle Rock Ridge wind farm, to supply their
power output and renewable energy credits to AESO.
The overall investment in the construction of the two
wind farms amounts to approximately $170 million.
Riverview Wind and Phase 2 of Castle Rock Ridge, which
is an expansion of EGPNA’s existing 76.2 MW Castle
Rock Ridge wind farm, are both located in Pincher Creek,
Alberta, and are due to enter service by 2019. Once oper-
ational, the two facilities are expected to generate around
555 GWh per year.
18 DECEMBER
Award of renewables capacity in
Brazil
On December 18, 2017, Enel Green Power Brasil Partici-
pações was awarded the right to sign 20-year power sup-
ply contracts in the country with a new solar PV project
of 388 MW following the A-4 public tender organized by
the Brazilian federal government via the country’s energy
regulator ANEEL. The Enel Group is expected to invest
nearly $355 million in the construction of the plant, in line
with the investment outlined in its current Strategic Plan.
The award, equal to 49% of the 791 MW of PV capacity
offered in the tender, was greater than any other awards
to the other solar energy bidders. The São Gonçalo so-
lar plant will be supported by 20-year power supply con-
tracts, which provide for the sale of specified volumes of
energy generated by the facility to a pool of distribution
companies operating in the Brazilian regulated market.
The plant will be built in the São Gonçalo do Gurguéia
municipality, in the state of Piauí. The plant is expected
to start operations in early 2021 and will generate more
than 850 GWh of renewable energy each year once fully
up and running.
Subsequently, on December 20, 2017, Enel Green Power
99
Report on operations Brasil Participações was awarded the right to sign 20-
within the framework of RenovAr, the clean energy devel-
year power supply contracts in the country with three
opment plan launched by Argentina’s Energy Ministry, fol-
wind projects for 618 MW of new capacity following the
lowing the extension of the capacity awarded in the ten-
A-6 public tender organized by the Brazilian federal gov-
der to over 1,800 MW from the initial 1,200 MW. Pampa,
ernment via the country’s energy regulator ANEEL. The
located in the wind resource-rich Chubut province, will be
Enel Group is expected to invest approximately $750 mil-
the Group’s first wind project in the country.
lion in the construction of the three plants, in line with the
Enel is investing nearly $130 million in the construction
investment set out in its current Strategic Plan.
of the wind farm. The project, which is expected to enter
Each wind farm is supported by 20-year power supply
into operation by the 1st Half of 2020, will be supported
contracts, which provide for the sale of specified volumes
by a 20-year power purchase agreement (PPA) for the
of energy generated by the plant to a pool of distribution
sale of all the renewable energy generated by the plant to
companies operating in the Brazilian regulated market.
Argentina’s wholesale electric market management com-
The wind farms, which will be built in the north-eastern
pany CAMMESA. Once up and running, Pampa will be
Brazilian states of Piauí and Bahia, are expected to start
able to generate approximately 500 GWh per year.
operation in early 2023. The projects, once fully up and
running, will be able to generate approximately 3 TWh of
renewable energy each year.
20 DECEMBER
Award of renewables capacity in
Argentina
On December 20, 2017, Enel Green Power Argentina
was awarded the right to build the 100 MW Pampa wind
farm in round 2 of the renewable energy tender launched
Finance
4 JANUARY
Renewable energy loan in Brazil
On January 4, 2017, the Enel Group and the Brazilian De-
velopment Bank (“BNDES”), the main financing agency
for development in Brazil, signed a 20-year loan agree-
ment worth around R$373 million (about €109 million)
that will cover part of the investment required to build
the 102 MW Apiacás hydropower plant, located in the
state of Mato Grosso in Brazil’s central-west region. Un-
der the provisions of the loan agreement, the first instal-
ment of R$293 million (about €85 million) was disbursed
loan bears an interest rate based on the TJLP (Taxa de Ju-
ros de Longo Prazo), the long-term interest rate reviewed
quarterly by the Brazilian central bank. The TJLP currently
stands at 7.5%, below the current interbank rate in Bra-
zil of 13.63%. The TJLP is used as base rate for loans
granted by BNDES to private companies whose projects
are deemed eligible for federal funding.
9 JANUARY
Issue of first Green Bond
On January 9, 2017, Enel Finance International (“EFI”)
at signing, and will be followed by a second instalment of
successfully placed on the European market its first
R$80 million (about €24 million), subject to the fulfilment
Green Bond for institutional investors (with settlement on
of conditions customary for this type of transaction. The
January 16), backed by a guarantee issued by Enel. The
100
Annual Report 2017 issue totals €1,250 million and provides for repayment in
be offered to institutional investors within or outside the
one instalment at maturity on September 16, 2024, as
European Union, including through private placements.
well as the payment of a fixed-rate coupon of 1%, pay-
able annually in arrears in September, as from September
2017. The issue price was set at 99.001% and the ef-
23 MAY
fective yield to maturity is equal to 1.137%. The Green
Bond is listed on the regulated markets of the Irish and
Luxembourg Stock Exchanges. The transaction received
subscriptions of about €3 billion, with considerable in-
terest from socially responsible investors (“SRI”), ena-
bling Enel to further diversify its investor base. The net
proceeds raised from the issue – carried out under the
medium-term note program of Enel and EFI (the Euro
Medium-Term Notes - EMTN) – will be used to finance
the Enel Group’s eligible green projects identified and/or
to be identified in accordance with the Green Bond Prin-
Enel Finance International issues
$5 billion bond
As part of the refinancing program approved by the Board
in April, on May 23, 2017, Enel Finance International, an
Enel Group finance subsidiary, launched a multi-tranche
bond issue offered on the US and international markets
for institutional investors for a total of $5 billion, the equiv-
alent of about €4.5 billion. The issue was oversubscribed
around 3.5 times, attracting orders exceeding $17 billion.
ciples 2016 published by the International Capital Market
Association (ICMA). More specifically, the categories of
28 JULY
projects that qualify as eligible green projects include, for
example, the development, construction and repowering
EIB loan for smart meters
On July 28,2017, the European Investment Bank (EIB)
of renewable power plants, the development of transmis-
agreed the first tranche of €500 million of a loan to sup-
sion and distribution grids, and the implementation of
port e-distribuzione’s plan for the replacement of smart
smart grids and smart meters in the geographical areas in
meters in Italy. The EIB will finance part of the investment
which the Group operates.
envisaged for 2017-2021 in the smart meter installation
The operation was led by a syndicate of banks comprising
plan, which provides for the installation of around 41 mil-
Banca IMI, BofA Merrill Lynch, Crédit Agricole CIB, Citi,
lion new generation smart meters (generation 2.0) over a
Deutsche Bank, HSBC, JP Morgan, Mizuho Securities,
15 year-period. Of the total number of meters, about 32
Natixis, SMBC Nikko and UniCredit as joint-bookrunners.
million will replace the existing first generation meters,
12 APRIL
Board approves bond issue
On April 12, 2017, the Board of Directors of Enel authorized
the issue by December 31, 2018 of one or more bonds
to be placed with institutional investors up to a maximum
value of €7 billion as part of the strategy to refinance the
Group’s maturing consolidated debt. The issues may be
carried out by the Dutch subsidiary Enel Finance Interna-
tional (backed by a parent company guarantee) or directly
by Enel depending on the existing market opportunities.
The Board also charged the Chief Executive Officer with
establishing the amounts, currencies, timing and charac-
teristics of the individual issues, taking account of develop-
ments in market conditions, with the power to apply for
a listing of the issues on one or more regulated markets
in the European Union or on multilateral trading facilities.
With a view to increasing diversification, the issues may
while the remainder will be used for new connections and
customer requests. The replacement of existing meters
with the next generation of devices has been prompted
by the requirement for electricity distribution companies
to deploy intelligent metering systems that meet the
energy-efficiency standards set by the European Union
(European Directive 2012/27/EU, transposed into Italian
law with Legislative Decree 102/2014).
The energy scenario of recent years has underscored the
importance of timely management of more comprehen-
sive and detailed information to support the operations of
electric companies and their customers. The Open Meter
technology will make it possible to promote energy ef-
ficiency, increase awareness of consumption behavior,
foster competition in post-meter services and develop
the home automation market.
e-distribuzione’s plan has been designated an EU project
of common interest (PCI) and is part of the EIB’s activities
in the energy sector, fighting climate change and provid-
ing support for convergence regions (i.e. economically
101
Report on operations underdeveloped regions), since 40% of meters are locat-
Energy Storage (ACES) program run by the Massachusetts
ed in southern Italy, Sicily and Sardinia.
Clean Energy Centre (“MassCEC”). These will be Enel’s
2 AUGUST
Repurchase of dollar-denominated
bonds
On August 2, 2017, Enel Finance International (“EFI”) pur-
chased in cash the entire $1,750,000,000 bond issued by
EFI and guaranteed by Enel. The operation was conducted
on the basis of the “make whole call option” provided for
in the original contract, under which it is possible to re-
deem the bond early at a price calculated on the basis of
the present value of the payments of principal and inter-
est, discounted at a rate increased by a spread of 30 basis
points.
The repurchase was carried out as part of the strategy to
optimize the structure of the Enel Group’s liabilities through
active management of maturities and of cost of debt.
3 OCTOBER
New issue of bonds denominated
in US dollars
On October 3, 2017, Enel Finance International placed a
multi-tranche bond for institutional investors on the US and
international markets totaling $3 billion, the equivalent of
approximately €2.5 billion. The issue, which is guaranteed
by Enel, was oversubscribed by about three times, with to-
tal orders of approximately $9 billion.
The second offering on the US market of the Enel Group in
2017 is part of the Group’s financing strategy, including the
refinancing of its maturing consolidated debt.
The transaction is structured in the following tranches:
> $1,250 million at 2.75% fixed rate maturing in 2023;
> $1,250 million at 3.5% fixed rate maturing in 2028;
> an additional $500 million of EFI’s existing 4.750%
fixed-rate notes issued in May 2017 maturing in 2047.
8 DECEMBER
Subsidized financing in the United
States
On December 8, 2017, Enel announced that two of its distrib-
uted energy projects had been selected to receive financing
totaling $2.1 million under the Advancing Commonwealth
102
first distributed energy projects in Massachusetts, the state
that hosts the Group’s headquarters in North America, and
involve a “behind-the-meter” microgrid and a battery stor-
age system. More specifically, the initiatives consist in:
> a project proposal for a “behind-the-meter” microgrid,
which received funding of $850,000. The project, in a
collaboration between Enel Green Power North America
and the University of Massachusetts Boston (“UMass
Boston”), involves a lithium-ion storage system of 0.5
MW/1.82 MWh integrated with a 0.5 MW photovoltaic
system to be installed on the university campus in Boston;
> the development of a lithium-ion power storage system
of 2 MW/4 MWh proposed by EnerNOC to the Acton
Boxborough Regional School District (ABRSD), which
was awarded $1.25 million, the largest financing granted
under the ACES program.
Both projects are combining behind-the-meter demand
charge management and in-front-of-the-meter, demand
response applications, creating multiple revenue streams
for all the parties involved and generating benefits for the
grid in terms of balancing and reliability.
18 DECEMBER
New revolving credit line
On December 18, 2017, Enel and its Dutch subsidiary Enel
Finance International agreed a new €10 billion revolving
credit line replacing the previous €9.44 billion line renegoti-
ated in February 2015. The new facility has a lower cost
and matures in December 2022 rather than February 2020
as envisaged for the previous credit line. The cost of the
new credit facility varies on the basis of the rating assigned
to Enel. Based on the current rating, it has a spread which
changes to 45 basis points above Euribor from the previ-
ous 72.5, while the commitment fees remain at 35% of the
spread. Accordingly, following the decline in the spread, the
latter decrease to 15.75 basis points from 25.38.
The new credit line, which can be used by Enel itself and/
or Enel Finance International with a parent company guar-
antee, is not connected with the debt refinancing program
and is intended to give the Group an extremely flexible and
practical instrument for the management of working capital.
The transaction involved various Italian and international
banks, including Mediobanca in the role of Documenta-
tion Agent.
Annual Report 2017 Partnership
11 JANUARY
Collaboration agreement with
Saudi Electricity Company
On January 11, 2017, Enel SpA and Saudi Arabian util-
ity Saudi Electricity Company (“SEC”) signed a frame-
tion opportunities in network technologies for Expo 2020
Dubai, given Enel’s experience in building a fully-electric
smart city for Expo Milano 2015 and DEWA’s contribution
to the development of network infrastructure and related
technologies for Expo 2020.
work agreement for cooperation in the power distribution
sector which will involve the two companies in working
7 FEBRUARY
together to develop long-term strategic knowledge shar-
ing regarding the latest network technologies. Under the
Agreement with Aton Storage
On February 7, 2017, Enel SpA and Aton Storage, one
agreement, Enel and SEC will enhance the exchange of
of the leading Italian companies in the development and
information, best practices and experiences in the distri-
manufacture of innovative storage systems, signed an
bution sector. More specifically, the two companies will
agreement to collaborate on initiatives in renewable elec-
share best practices and benchmarks to take distribution
tricity storage services. The aim of the accord is to enrich
networks’ performance in areas like operations, efficien-
and strengthen the range of products offered to end us-
cy and security to best-in-class levels, while also intro-
ers with innovative, high performance solutions that con-
ducing a technology roadmap aimed at digitizing distribu-
tribute to energy efficiency. Storage solutions play a key
tion grids and improving energy efficiency at customer
role in the development of renewable energy and electric
premises. Enel and SEC will also jointly evaluate further
mobility, sectors in which Enel is a world leader.
areas of collaboration in the power distribution sector.
The battery developed by Aton was included among the
14 JANUARY
Agreement with Dubai Electricity
and Water Authority
On January 14, 2017, Enel SpA and Dubai Electricity and
Water Authority (“DEWA”), Dubai’s public service infra-
structure company, signed a memorandum of understand-
ing (MoU) for cooperation in smart grids and network digi-
tization. The MoU, which has a duration of three years and
new technologies that Enel presented during the For-
mula-E event held in Marrakech on November 12, 2016,
and the Capital Markets Day in London on November 22,
2016.
28 FEBRUARY
Enel invests in green start-ups in
Hawaii
On February 28, 2017, Enel, acting through its US renew-
could be extended by mutual agreement, seeks to build
able energy subsidiary Enel Green Power North America
partnership relations between Enel and DEWA to facilitate
(“EGPNA”), became a global partner and strategic advi-
the achievement of common strategic objectives and the
sor of Energy Excelerator, a leading American incubator
exchange of information, experience and studies in the
for clean energy start-ups based in Hawaii.
areas outlined by the MoU, including the analysis of key
By joining Energy Excelerator, a non-profit organization
performance indicators in smart grid management as well
whose mission is to solve the challenges of world energy
as network digitization and security. Enel and DEWA will
systems through innovation, Enel will access its portfolio
cooperate in research activities in the areas covered by the
of start-ups advise in the selection of projects to be sup-
MoU and will share Enel’s experience in distribution auto-
ported by the incubator.
mation, renewable energy integration, smart meters and
Hawaii, which has a high penetration of renewable en-
smart cities, with special reference to the role played by
ergy sources, will enable Enel to expand its network of
Enel in Expo Milano 2015, as well as DEWA’s efforts in the
innovators to open energy up to new uses, new technolo-
field of smart grids. The parties will also evaluate coopera-
gies and new people.
103
Report on operations 1 JUNE
10 JULY
Memorandum of understanding
with Rosseti for the development
of smart grids
On June 1, 2017, Enel and Rosseti, the national operator
Agreement to identify energy
access start-ups in Africa
On July 10, 2017, Enel Green Power and the Swiss com-
pany Seedstars World signed a cooperation agreement
of power grids in Russia, signed a memorandum of un-
establishing the Africa Energy Track challenge, a competi-
derstanding for cooperation in innovative smart grid solu-
tion aimed at identifying innovative start-ups in the field
tions. The two-year agreement seeks to build a partnership
of electricity access in Africa within the framework of the
between Enel and Rosseti by promoting the exchange of
Seedstars World start-up competition. The project’s goal
information and the sharing of best practices and techno-
is to promote technology and entrepreneurship in Sub-Sa-
logical solutions in the areas of work outlined in the memo-
haran rural areas by bringing innovative energy solutions
randum such as smart metering and grid digitization. Enel
focused on electric mobility, storage, distributed genera-
and Rosseti will exchange know-how in the construction,
tion and energy efficiency, thereby helping to tackle the
modernization, and maintenance of grid infrastructure to
UN Sustainable Development Goals (SDGs), especially
improve and enhance its efficiency, reliability and safety,
SDG7 – ensuring affordable and clean energy for all.
including the possible implementation of a joint pilot pro-
ject for the creation of a smart cluster using Enel’s cutting-
edge smart grid platform.
12 JULY
6 JULY
Electricity storage agreement with
Amber Kinetics
On July 6, 2017, Enel signed a two-year agreement with
Agreement with Cisco for
digitization and innovative
services
On July 12, 2017, Enel and Cisco signed a memorandum
of understanding for developing innovative digital solu-
tions in the energy sector. The aim is to fully leverage the
Amber Kinetics, the US-based start-up born out of an ini-
potential of telecommunications technology, IT security
tiative of professors and researchers from UC Berkeley,
and the Internet of Things to create new services and a
with the aim of assessing the start-up’s innovative fly-
smart grid that is even more secure, intelligent and reli-
wheel storage technology, which is an electro-mechan-
able to serve Italy’s needs. This goal can also be achieved
ical system consisting of a large rotating mass able to
thanks to a specialist training program enabling not only
store energy. Under the terms of the agreement, Enel will
Enel employees but also numerous students and industry
study and test the technology and identify mass business
professionals to update their skills and acquire the neces-
applications for the integration of the technology with
sary knowledge for managing, monitoring and protecting
the grid. Upon completion of a three-month test phase
a grid in which digital technology and traditional electrical
involving two synchronized flywheel units at one of Am-
technology are ever more interconnected.
ber Kinetics’ test sites in California, Enel will evaluate the
possibility of utilizing the 40 kW/160 kWh model of the
technology in a pilot project at one of its thermal power
17 OCTOBER
plants.
The 5,000 lb. (approximately 2,267 kg) steel flywheel
system is charged by converting the electricity from the
power plant to which is coupled or from a power grid into
the kinetic energy of the spinning wheel, which can rotate
for up to four hours on a single charge. At times of peak
power demand, the flywheel turns a generator – automat-
ically or through a control system – converting its kinetic
energy back into electricity that is delivered to the grid.
Opening of Innovation Hub in
Moscow
On October 17, 2017, at the Open Innovation Forum in
Skolkovo, near Moscow, Enel launched its Innovation Hub
in Russia.
Enel’s Russian Innovation Hub was established within the
Skolkovo technology ecosystem and is aimed at identify-
ing and developing partnerships with Russian start-ups,
104
Annual Report 2017 SMEs and other companies on a wide range of projects in
different fields such as energy efficiency solutions, smart
28 DECEMBER
grids, renewables, Internet of Things (IoT) and big data
analytics.
7 NOVEMBER
Memorandum of understanding
with Italian State Railways
On November 7, 2017 Enel and the Italian State Railways
signed a three-year memorandum of understanding to
jointly develop innovative projects in the transportation
and energy fields. The areas of interest include 3D print-
ing, the efficient use of electricity, the sharing of inno-
vation spaces and co-working and joint participation in
national and international project financed by the Italian
government and the European Union. The skills held by
the two companies are perfectly complementary in the
capacity for analysis and application of innovative solu-
tions in the transportation and energy sectors, in line with
market developments and opening the way to the genera-
tion of considerable synergies, including in the infrastruc-
ture area.
7 DECEMBER
E-VIA FLEX-E mobility project
On December 28, 2017, the “E-VIA FLEX-E mobility in
Italy, France and Spain” project was launched for the
installation of 14 ultra-fast charging stations in Europe,
coordinated by Enel and co-financed by the European
Commission. The aim is to test a network that enables
new electric vehicles with a range of more than 300 km
to travel long distances and to contribute to the develop-
ment and spread of e-cars in Europe.
The project, presented by Enel as coordinator, in collabo-
ration with the utilities EDF, Enedis and Verbund, the car
manufacturers Nissan and Groupe Renault as well as Ibil,
a Spanish company specialized in charging services for
electric vehicles, was selected by the European Com-
mission in the Connecting Europe Facility Transport 2016
call, obtaining funding that will cover half of the invest-
ment required. The overall budget co-financed by the Eu-
ropean Commission is about €6.9 million. Enel will invest
€3.4 million in the project, which will also be co-financed
by the Commission.
The installation of the ultra-fast charging stations (High
Power Charging - HPC) will start by the end of 2018 at 14
sites: 8 in Italy, 4 in Spain and 2 in France. The charging
stations will all be high power, ranging from 150 kW to
350 kW.
Agreement with Volkswagen Italy
On December 7, 2017, Enel and Volkswagen Group Italia,
The network of ultra-fast charging stations of the E-VIA
FLEX-E project will join that envisaged in the EVA+ (Elec-
distributor of the Audi brand, signed a memorandum of
tric Vehicles Arteries) project, also co-financed by the Eu-
understanding for the integration of charging services in
ropean Commission, which provides for the installation
the offer for the new Audi e-tron, the brand’s first 100%
of 180 fast charging points (Fast Recharge Plus) in three
electric car, and to promote and develop electric mobility
years along Italian extra-urban corridors. The first 40 Fast
in the country.
stations have already been installed, making it possible
Thanks to this agreement, product offers will be designed
to travel with an electric car along the Rome-Milan route,
to make life easier for individuals and companies who are
among others.
considering the switch to electric. Individuals, profes-
sionals and small businesses will have the opportunity to
combine one or more packages for the charging service,
products and other services offered by Enel included in
the purchase of the Audi e-tron directly from dealers and
the sales network of Audi Italia.
105
Report on operations Organization
16 JUNE
Merger of Enel South America into
Enel
On June 16, 2017, the plan for the merger of Enel South
America into Enel was filed with the Company Register of
Rome. The transaction, which was completed on Novem-
ber 16, 2017, is part of the Group’s corporate structure
simplification process, one of the main pillars of Enel’s
2017-2019 Strategic Plan. In particular, the transaction
will enable Enel to benefit from the direct management of
the equity stakes in the two Latin-American sub-holdings
Enel Américas and Enel Chile, thereby shortening the cor-
porate chain of control.
As the merger is subject to a simplified procedure with
no share swap, Enel will not increase its share capital nor
assign shares to replace the equity interest held in Enel
South America.
25 AUGUST
Corporate reorganization in Chile
On August 25, 2017, the Board of Directors of the subsidi-
tion of the latter into Enel Chile, with the Extraordinary
Shareholders’ Meeting of Enel Chile having approved a
capital increase to serve the merger. The shareholders
of Enel Chile who expressed their disagreement with
the merger will have the right to withdraw pursuant to
applicable regulations. The merger is conditional on the
withdrawal of shareholders holding no more than 5%
of share capital of Enel Chile. The merger was also ap-
proved by the Extraordinary Shareholders’ Meeting of
EGP Latin America;
> the launch by Enel Chile of a public tender offer (the “Of-
fer”) for all of the shares of the subsidiary Enel Gener-
ación Chile held by minority shareholders, whose effec-
tiveness is subject to the acquisition of a total number of
shares that would enable Enel Chile to increase its hold-
ing in Enel Generación Chile to more than 75% of share
capital from the current 60%. In accepting the Offer,
Enel Generación Chile’s minority shareholders will com-
mit to reinvest in newly issued Enel Chile shares part of
the consideration they receive, as a capital increase of
Enel Chile has been approved to serve the Offer;
> the amendment of the bylaws of Enel Generación Chile
with the aim to remove the limits on share ownership
in the company, which currently do not allow any single
ary Enel Chile began analyzing a possible reorganization of
shareholder to own more than 65% of the company’s
the Enel Group’s shareholdings in Chile based on a non-
share capital.
binding proposal formulated by Enel Chile and sent to Enel
in July. The analysis began following examination by the
Board of Directors of Enel Chile of a letter transmitted on
the same date by Enel in which the latter expressed a fa-
vorable preliminary opinion on the possible reorganization.
This favorable assessment was based on the conclusion
reached by Enel that the operation was consistent with a
number of Enel’s strategic objectives, including the sim-
plification of the ownership structure of the Group’s listed
Chilean companies.
Following the analysis, on December 20, 2017, the Share-
holders’ Meetings of the two companies approved, within
the scope of their respective authority, the following phas-
es of the operation, each of which is conditional on imple-
mentation of the other:
> the integration in Enel Chile of the Chilean renewables
assets held by Enel Green Power Latin America SA
(“EGP Latin America”) through the merger by incorpora-
106
Annual Report 2017 Acknowledgements
On September 7, 2017, it was announced that Enel had
On October 24, 2017, Enel was admitted for the second
been ranked 20th in Fortune’s “Change the World” list,
year in a row to the Climate A List of the non-profit
a ranking of the top 50 businesses in the world that had
global environmental disclosure platform CDP (for-
a positive social impact through activities that are part of
merly the Carbon Disclosure Project), which com-
their business strategy and operations. The Group is the
prises companies from around the world that have been
only utility and the only Italian company to be included in the
identified as global leaders in the fight against climate
list. The list was created to promote the idea that capital-
change. CDP, an international non-profit organization for
ism should be celebrated for its power to do good. Fortune
the promotion and dissemination of information on envi-
begins the process with an open call for nominations from
ronmental issues, recognized Enel’s actions to cut emis-
business, academic, and non-profit organizations around the
sions, mitigate climate risks and develop the low-carbon
world in partnership with, among others, FSG, a non-profit
economy. The 2017 Climate A List comprises 112 global
social-impact consulting firm and the Shared Value Initiative,
companies, selected out of more than 2,000 compa-
a global platform for organizations seeking business solu-
nies that participate in CDP’s climate change disclosure
tions to social challenges. A team of journalists from For-
program. Inclusion in the Climate A List is based on a
tune investigates each of the candidates independently.
score which assesses a company’s awareness of climate
On the same date, Enel was admitted to the Dow Jones
change issues, management methods and progress to-
Sustainability World Index (DJSI World) for the fourteenth
wards action taken on climate change.
year in a row. Enel’s Spanish subsidiary Endesa was also
On November 28, 2017, Enel was confirmed in the De-
included. Enel and Endesa are two of the eight utilities
cember 2017 edition of the Euronext Vigeo - World
admitted to the index at the global level.
120 index, following its 2nd Half 2017 review. Twice a
Enel stood out for its performance in the Environmental
year the index lists the 120 most sustainable companies
dimension, scoring 100/100 in the Climate Strategy, Wa-
with the largest free-float market capitalization in Europe,
ter-related Risks, Biodiversity and Environmental Report-
North America and the Asia Pacific region. The company
ing criteria. The Group also obtained the maximum score
has also maintained is place in the regional Euronext Vi-
in Policy Influence, which measures transparency and
geo - Eurozone 120 and Europe 120 indices, which re-
disclosure on advocacy activities, and Materiality, which
spectively list the 120 most sustainable companies with
refers to the company’s ability to match its strategy with
the largest free-float in the euro area and Europe. Enel
stakeholders’ expectations.
has been included in all three of these indices since their
On October 20, 2017, Enel was included in the top 20 of
creation five years ago.
Forbes World’s Best Employers List 2017, first among
The Euronext Vigeo Eiris indices recognize the efforts
utilities at the global level and highest-rated among Italian
of prominent companies that make sustainable develop-
companies. Every year Forbes compiles the list, which
ment a focal point of their business strategy. Vigeo Eiris
ranks the 500 best employers in the world, based on a
compiles the indices by analyzing approximately 330 in-
survey of 36,000 global opinion leaders. During the rank-
dicators for each company based on 38 criteria, including
ing process of the World’s Best Employers List 2017, em-
respect for the environment; human rights engagement
ployees from the companies involved were asked to as-
and recognition of companies’ human capital; relations
sess their own employer, by answering questions about
with stakeholders; corporate governance and business
whether they would recommend applying for a job with
ethics; integrity in influencing policy and efforts to fight
them to a friend, among other things.
corruption; and the prevention of social and environmen-
Enel provides employees access to a range of tools to
tal dumping in the supply and subcontracting chain. Eu-
help them establish a good work-life balance: flexible
ronext Vigeo Eiris updates its criteria for the indices every
hours, “banking” of working hours, part-time options and
six months, ensuring that the sustainability credentials of
smart working. The Group has also implemented numer-
companies listed are in line with the most recent sector
ous programs to leverage ideas.
developments.
107
Report on operations Reference
scenario
Enel and the financial markets
Gross operating margin per share (euro)
Operating income per share (euro)
Group net earnings per share (euro)
Group net ordinary earnings per share (euro)
Dividend per share (euro) (1)
Group shareholders’ equity per share (euro)
Share price - 12-month high (euro)
Share price - 12-month low (euro)
Average share price in December (euro)
Market capitalization (millions of euro) (2)
No. of shares outstanding at December 31 (millions)
(1) Dividend proposed by the Board of Directors on March 22, 2018.
(2) Calculated on average share price in December.
Enel stock weighting in:
- FTSE MIB index
- Bloomberg World Electric index
Rating
Standard & Poor’s
Outlook
Medium/long-term
Short-term
Outlook
Medium/long-term
Short-term
Outlook
Medium/long-term
Short-term
Moody’s
Fitch
(1) Figures updated to January 31, 2018.
2017
1.54
0.96
0.37
0.29
0.237
3.42
5.58
3.84
5.39
54,761
10,167
2016
1.50
0.88
0.25
0.29
0.18
3.42
4.19
3.40
4.02
40,910
10,167
Current (1) at Dec. 31, 2017
at Dec. 31, 2016
at Dec. 31, 2015
10.60%
3.96%
11.68%
3.92%
11.41%
3.26%
9.05%
3.04%
Stable
BBB+
A-2
Stable
Baa2
P2
Stable
BBB+
F2
Stable
BBB+
A-2
Stable
Baa2
P2
Stable
BBB+
F2
Stable
Positive
BBB
A-2
Stable
Baa2
P2
Stable
BBB+
F2
BBB
A-2
Stable
Baa2
P2
Stable
BBB+
F2
Economic activity in the world’s major developed and
in world trade, the recovery in commodity prices and the
emerging economies continued to expand in 2017. Growth
expansive monetary policies of central banks were some
was driven by cyclical and structural factors: the increase
of the key factors that enabled a stable and inclusive recov-
108
Annual Report 2017
ery. Among the advanced economies, the United States is
and individual investors held the remaining 18.9% (com-
experiencing the mature phase of its expansionary cycle,
pared with 22.4% at December 31, 2016).
while in the euro area the unexpected performance of 2017
The number of Environmental, Social and Governance
prompted the main monetary and statistical institutions to
(ESG) investors is increasing steadily and at December 31,
review their growth forecasts for future years. For Italy in
2017 they represent over 8.6% of the share capital (against
particular, 2017 was a positive year, with GDP expected to
8.0% at December 31, 2016).
have grown at the fastest rate since 2010.
In general, this increase reflects the greater attention being
Although the macroeconomic environment has improved,
paid by the financial market to the non-financial elements
risks remain for the global economy. The main factors in-
that play a role in the creation of long-term sustainable
clude the economic and financial effects of a possible nor-
value, an area in which Enel has taken the lead with a strat-
malization of monetary policies and a possible intensifica-
egy based on leveraging the business opportunities associ-
tion of geopolitical tensions. Furthermore, the spread of
ated with the trends of urbanization, the electrification of
protectionist policies could slow global trade, while political
demand and the resulting deep decarbonization, in order
instability in a number of countries risks delaying the imple-
to seize the opportunities deriving from the global energy
mentation of the structural reforms necessary to increase
transition now under way and to become a leader in this
their economic potential.
area.
A tangible example of this commitment was the signing of
In this economic environment, the main European equity
the letter of support for the implementation of the volun-
indices closed 2017 on a positive note. Spain’s Ibex35
tary guidelines of the Task Force on Climate-related Finan-
posted gains of 7%, while France’s CAC40 rose 9% and
cial Disclosures (TCFD) proposed by the Bank of England
Germany’s DAX30 gained 13%. The FTSE Italia All Share
and chaired by Michael Bloomberg. These guidelines are
registered a gain of 16%.
aimed at raising awareness among companies about the
disclosure of the likely financial impacts deriving from non-
The euro-area utilities segment closed the year with an in-
financial factors related to climate change.
crease of 16%.
Enel’s leadership in the ESG field also includes a focus on
human capital, which, together with purely industrial strate-
As regards Enel shares, 2017 ended with the stock price at
gic elements, contributes to the promotion of the econom-
€5.13, up 22.5% on the previous year. The Enel stock was
ic and social growth of the local communities with whom
one of the best performers among its European peers, sig-
Enel interacts and the strengthening of the roles and skills
nificantly outperforming the sector index for the euro area.
of its people.
For further information we invite you to visit the Investor
On January 25, 2017 Enel paid an interim dividend of €0.09
Relations section of our corporate website (http://www.
per share from 2016 profits and, on July 26, 2017, it paid the
enel.com/en/investors.html), which contains financial data,
balance of the dividend for that year in the amount of €0.09.
presentations, real-time updates of the share price, infor-
Total dividends distributed in 2017 amounted to €0.18 per
mation on corporate bodies and the rules of Shareholders’
share, about 13% higher than the 16 eurocents per share
Meetings, as well as periodic updates on corporate govern-
distributed in 2016.
ance issues.
With regard to 2017, on January 24, 2018 an interim divi-
dend of €0.105 was paid, while the balance of the dividend
We have also created contact centers for private investors
is scheduled for payment on July 25, 2018.
(which can be reached by phone at +39-0683054000 or by
At December 31, 2017, the Ministry for the Economy and
vestors (phone: +39-0683051; e-mail: investor.relations@
e-mail at azionisti.retail@enel.com) and for institutional in-
Finance held 23.6% of Enel, while institutional investors
enel.com).
held 57.5% (compared with 54.0% at December 31, 2016)
109
Report on operations Performance of Enel share price and the Bloomberg World Electric, Euro STOXX Utilities and FTSE Italia All Share
indices from January 1, 2017 to January 31, 2018.
6,0
EURO
5,5
5,0
4,5
4,0
3,5
3,0
Jan
17
Feb
17
Mar
17
Apr
17
May
17
Jun
17
Jul
17
Aug
17
Sep
17
Oct
17
Nov
17
Dec
17
Jan
18
Enel
Bloomberg World Electric
Euro STOXX 600 Utilities
FTSE Italia All Share
Source: Bloomberg.
110
Annual Report 2017 Consumer price indices (CPI)
%
Italy
Spain
Russia
Romania
Slovakia
India
South Africa
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Exchange rates
Euro/US dollar
Euro/British pound
Euro/Swiss franc
US dollar/Japanese yen
US dollar/Canadian dollar
US dollar/Australian dollar
US dollar/Russian ruble
US dollar/Argentine peso
US dollar/Brazilian real
US dollar/Chilean peso
US dollar/Colombian peso
US dollar/Peruvian nuevo sol
US dollar/Mexican peso
US dollar/Turkish lira
US dollar/Indian rupee
US dollar/South African rand
2017
1.2
2.0
3.7
1.3
1.3
3.3
5.3
25.6
3.5
2.2
4.4
5.9
2.8
2017
1.13
0.88
1.11
112.15
1.30
1.30
58.32
16.56
3.19
648.70
2,951.36
3.26
18.92
3.65
65.11
13.31
2016
-0.1
-0.2
7.1
-1.5
-0.5
5.0
6.3
37.3
8.8
3.8
7.5
2.8
3.6
2016
1.11
0.82
1.09
108.81
1.33
1.35
67.01
14.76
3.49
676.62
3,053.00
3.37
18.68
3.02
67.18
14.70
Change
1.3
2.2
-3.4
2.9
1.8
-1.7
-1.1
-11.7
-5.3
-1.6
-3.2
3.1
-0.8
Change
2.0%
6.5%
1.9%
3.0%
-2.1%
-3.1%
-14.9%
10.8%
-9.2%
-4.3%
-3.4%
-3.5%
1.2%
17.1%
-3.2%
-10.5%
111
Report on operations Economic and energy conditions in 2017
Economic developments
The year 2017 was marked by the strengthening of the
months of 2017, prices rose by 2.1% on an annual basis, in
global recovery and international trade. The growth pro-
line with the central bank’s target. Inflation was sustained
cess is increasingly continuous and inclusive, affecting
by extremely positive labor market conditions. As a result,
both the advanced and emerging economies, fostered by
the Federal Reserve (Fed) further reduced the supply of
cyclical and structural factors. Global demand has increa-
liquidity to the financial system with three increases in its
sed, driven by Chinese and US growth. The liquidity in the
policy rate, bringing it to 1.25%.
economic system remains exceptional, a consequence of
the accommodative monetary policies of the major cen-
The euro area has grown faster than market expectations.
tral banks, leading players in the world economic scene.
Pending structural reforms that would help raise produc-
The banking system is more solid, confidence is gradually
tivity, making growth sustainable, the expansion in 2017
increasing and market volatility is subsiding. Although the
was supported by the accommodative monetary policy
global macroeconomic picture has improved, political risks
of the European Central Bank (ECB) and the dissipation
persist, linked to separatist sentiments and international
of anti-European tensions and sentiment (e.g. the Dutch,
crises, as do economic risks, associated with the unresol-
French and German elections), which had eroded the level
ved fragilities of the system.
of confidence in the economic system. Inflationary pres-
The former include the tensions in Spain, the talks for the
sure still differs among euro-area countries and remains
renegotiation of NAFTA and those related to Brexit and
distant from the optimal level of 2%. However, upward
the deterioration in relations between the United States
pressures during 2017 prompted the ECB to announce the
and North Korea. Conversely, the results of elections in
possible end of quantitative easing.
various European countries have reduced political instabi-
lity in Europe. Structural factors include the risk linked to
Among European countries, the Italian economy – if expec-
the sustainability of the public finances in the face of the
tations are confirmed – is projected to have grown by 1.5%,
investments necessary to increase the productivity of eco-
close to the fastest pace since 2010. The expansion was
nomies. In this context, the economies of the countries in
fueled by the recovery in consumption, partially financed
which the Group is present grew, displaying resilience to
by a reduction in the precautionary saving of households.
the adverse shocks that occurred during the year. These
The labor market has shown signs of improvement: the
included natural disaster such as the flood that hit Peru,
unemployment rate, although very high, is decreasing and
the hurricane season and the earthquake in Mexico.
reached 10.8% in December, the lowest level since the
The United States, now in the advanced phase of its eco-
than in 2016, with inflation reaching a peak in April (1.9%),
nomic cycle, continued to grow at the pace registered in re-
before gradually slowing to an annual low in December
end of 2012. Prices on an annual basis rose at a faster pace
cent years. A tax reform was approved in December, which
(0.9%).
will lend new impetus to the economy, but uncertainty re-
mains concerning the protectionist orientation of the new
Spain continues to expand at a rate of more than 3%, buo-
administration and, more generally, frictions in internatio-
yed by favorable developments in consumption, which, as
nal relations. In the United States the 4th Quarter saw an
in Italy, has been sustained by reducing the savings rate.
improvement in economic indicators, with GDP growing by
Inflationary pressure was strong in the 1st Half, at an avera-
2.5% compared with 2.3% in the 3rd Quarter. The trend
ge of 2.4% on an annual basis, before declining in the 2nd
was mainly driven by consumption of goods and services,
Half of the year, which brought the annual average to 2%.
as well as by a good performance of investment and an in-
The peak of the crisis in Catalonia appears to have passed
crease in the trade balance. Despite a decline in the central
and the risks associated with the possible independence
112
Annual Report 2017 of the region now seem smaller than a few months ago.
Brazil began a gradual recovery, expanding by 2.2% in the
4th Quarter. The decline in inflationary pressures allowed
On the political level, the elections in the Netherlands and
the central bank to increase liquidity, thereby supporting
especially in France had a positive influence on stability,
the recovery, but political instability could weigh on the
which could have been further undermined by a strong rise
country’s potential growth and delay the necessary reform
in nationalist movements. In Great Britain the outcome of
process. The Chilean economy in 2017 grew more slowly
the elections heightened uncertainty. On March 29, 2017,
than in recent years, penalized by major strikes in the mi-
British Prime Minister Theresa May officially invoked Arti-
ning sector. However, the growth rate in the 3rd Quarter,
cle 50 of the Treaty on European Union, which establishes
equal to 2.2% on an annual basis, represents an impro-
the procedure for Member States to withdraw from the
vement compared with the previous quarters, as do the
European Union. However, the general election showed a
monthly data at the end of the year. Here too, as in Brazil,
Conservative party losing votes and strength, increasing
inflation continued to subside, enabling the central bank to
the uncertainty about the EU exit process, which will not
stimulate the economic system by increasing liquidity. For
be defined before the last quarter of 2018.
Colombia, 2017 was a transition year. Growth, which was
slower than in previous years, averaged 1.5% in the first
Positive economic developments also prevailed in Russia,
three quarters. Diversification remains one of the major is-
confirming the signs of improvement seen at the end of
sues facing the Colombian economy, which is still highly
2016 and in the first two quarters of 2017, with growth in
dependent on the mining sector and therefore exposed to
the 3rd Quarter at 2.5% year-on-year. Consumption and
developments in cyclical rather than structural factors. In
investment also made positive contributions, growing by
Peru, 2017 was marked by the flooding caused by El Niño,
2.8% and 4.8% respectively compared with the same pe-
which penalized growth in the early quarters of the year.
riod in 2016. Annual inflation was 2.5%, well below the
However, despite this adverse shock, the more recent
target of the Russian central bank (4%), inducing the latter
quarters were characterized by a recovery in the rate of
to implement a further cut in its policy rate, bringing it to
expansion (2.2% in the 4th Quarter) driven by household
7.8%.
consumption, exports and public investment. Mexico con-
tinued to grow at a pace in line with previous years in the
In South America the macroeconomic context was mixed,
first two quarters, thanks to the good performance of con-
but characterized by a general improvement compared
sumption despite rising inflationary pressure (6.8% on an
with the previous year. After the three quarters of reces-
annual basis). However, the figures for the 3rd Quarter and
sion in 2016, Argentina returned to growth, recording an
4th Quarter show GDP growth of 1.7% and 1.5% respec-
expansion of 3.1% in the 2nd Quarter and 3.9% in the 3rd
tively, below 2% for the first time since the 1st Quarter
Quarter. The Argentine national elections saw the streng-
of 2014. The deceleration reflected the slowdown in con-
thening of the coalition led by President Macri, fostering
sumption and exports. The renegotiation of trade agree-
political continuity and allowing the current coalition to pur-
ments with the United States and Canada (NAFTA), which
sue more forcefully the program of fiscal reforms needed
began in 2017 and will continue in 2018, has been one of
to increase economic potential and reduce the strong in-
the greatest sources of currency volatility and potential risk
flationary pressures. After 12 quarters of recession, even
to the Mexican economy.
113
Report on operations The following table shows the growth rates of GDP in the main countries in which Enel operates.
Annual real GDP growth
%
Italy
Spain
Portugal
Greece
France
Romania
Russia
Brazil
Chile
Colombia
Mexico
Peru
Canada
United States
2017
2016
1.5
3.1
2.6
1.4
1.9
6.7
1.6
1.0
1.5
1.5
2.2
2.7
3.0
2.2
1.1
3.3
1.5
-0.3
1.1
4.8
-0.4
-3.5
1.5
2.0
2.7
4.1
1.4
1.5
Source: National statistical institutes and Enel based on data from ISTAT, INE, EUROSTAT, IMF, OECD and Global Insight.
114
Annual Report 2017 International commodity prices
Oil prices were characterized by two distinct phases in
Despite the growing global attention paid to environmen-
2017: the first part of the year was marked by substantial
tal issues, the price of coal rose sharply above the levels
price stability, culminating in lows of around $45 a barrel at
registered in 2016, due mainly to three factors: the strong
the end of June, while the second phase began at the end
growth in demand in China, excessive temperatures during
of August and saw steady growth. From the point of view
the summer and numerous structural problems in Indonesia
of the fundamentals, the oil market in 2017 experienced a
and Australia that limited their exports, reducing availability.
reduction in the large supply surpluses recorded in 2014-
2016 thanks to a reduction in the level of inventories,
On the other hand, the gas market was characterized
strong world demand and a general agreement among
by the expanding role of liquefied natural gas (LNG) and
the OPEC and non-OPEC producer countries to comply
strong European demand driven by both seasonal factors
with previously agreed production cuts. All this generated
and the decline in the supply of French nuclear power in
growing pressure on the price level, with oil prices rising
the first part of the year. All of this applied upwards pres-
well above $65 a barrel at the end of the year.
sure on prices compared with the previous year.
115
Report on operations Electricity and natural gas markets
Electricity demand
Developments in electricity demand
GWh
Italy
Spain
Romania
Russia (1)
Slovakia
Argentina
Brazil (2)
Chile (2) (3)
Colombia
(1) Europe/Urals.
(2) Figure for the SIC - Sistema Interconectado Central.
(3) Gross of grid losses.
Source: Enel based on TSO figures.
2017
320,437
252,720
64,016
795,690
30,973
136,700
572,223
73,682
66,861
2016
314,261
250,099
62,707
781,110
30,103
137,278
567,585
72,958
66,150
Change
2.0%
1.0%
2.1%
1.9%
2.9%
-0.4%
0.8%
1.0%
1.1%
The year 2017 was characterized by a substantial and uni-
and 1.0% respectively, mainly due to weather effects and a
form recovery in electricity demand in almost all the coun-
recovery in consumption in all sectors. Russia posted growth
tries in which the Enel Group operates.
in 2017 (+1.9%) compared with 2016, a positive sign in consid-
In Europe, thanks to particularly hot weather during the sum-
eration of the recessionary conditions affecting the country.
mer and cold temperatures in the final part of the year, elec-
Demand growth in the South American countries continued,
tricity demand grew by 1% compared with the previous year.
with the exception of Argentina, which registered a contrac-
Economic recovery contributed to this positive result in some
tion (-0.4%) due to price increases, with slightly larger gains
sectors, such as industry, which performed well during the
than those recorded the previous year: Brazil saw an increase
2nd Half of the year. In Italy and Spain demand grew by 2.0%
of 0.8%, Colombia one of 1.1% and Chile one of 1.0%.
Italy
Electricity generation and demand in Italy
Millions of kWh
Net electricity generation:
- thermal
- hydroelectric
- wind
- geothermal
- photovoltaic
Total net electricity generation
Net electricity imports
Electricity delivered to the network
Consumption for pumping
Electricity demand
2017
2016
Change
199,500
37,530
17,492
5,785
24,811
285,118
37,760
322,878
(2,441)
320,437
190,771
43,785
17,523
5,867
21,757
279,703
37,026
316,729
(2,468)
314,261
8,729
(6,255)
(31)
(82)
3,054
5,415
734
6,149
27
6,176
4.6%
-14.3%
-0.2%
-1.4%
14.0%
1.9%
2.0%
1.9%
-1.1%
2.0%
Source: Terna - Rete Elettrica Nazionale (monthly report - December 2017).
116
Annual Report 2017
In 2017, electricity demand in Italy increased by 2.0% (to
Net electricity generation increased by 1.9% or 5,415 mil-
320,437 million kWh) compared with 2016. Of total elec-
lion kWh in 2017, to 285,118 million kWh. More specifical-
tricity demand, 88.2% was met by net domestic electricity
ly, in an environment of increased electricity demand and
generation for consumption (the same in 2016) with the
less favorable water availability as a result of drought in
remaining 11.8% being met by net electricity imports (un-
Italy, thermal generation increased by 8,729 million kWh
changed on 2016).
and photovoltaic generation jumped by 3,054 million kWh,
posting its largest ever output in 2017 as the number of
In 2017, net electricity imports increased by 734 million
plants continued to increase.
kWh, essentially reflecting the increase in demand in the
national market.
Spain
Electricity generation and demand in the peninsular market
Millions of kWh
Net electricity generation
Consumption for pumping
Net electricity imports (1)
Electricity demand
2017
248,404
(3,676)
7,992
252,720
2016
248,502
(4,819)
6,416
250,099
Change
(98)
1,143
1,576
2,621
-
23.7%
24.6%
1.0%
(1) Includes the balance of trade with the extra-peninsular system.
Source: Red Eléctrica de España (Estadística diaria del sistema eléctrico español peninsular - December 2017 report). Volumes for 2016 are updated to Febru-
ary 3, 2018.
Electricity demand in the peninsular market in 2017 rose by
velopments in exports and imports, driven mainly the shut-
1.0% compared with 2016 reaching 252,720 million kWh.
down of a number of French nuclear plants in the early part
Demand was only partially met by net domestic generation.
of the year.
Net electricity imports in 2017 increased compared with
Net electricity generation in 2017 decreased by 98 million
the previous year. This growth essentially reflected net de-
kWh to 248,404 million kWh.
Electricity generation and demand in the extra-peninsular market
Millions of kWh
Net electricity generation
Net electricity imports
Electricity demand
2017
14,220
1,179
15,399
2016
13,778
1,251
15,029
Change
442
(72)
370
3.2%
-5.8%
2.5%
Source: Red Eléctrica de España (Estadística diaria del sistema eléctrico español extrapeninsular - December 2017 report). Volumes for 2016 are updated to
January 29, 2018.
Electricity demand in the extra-peninsular market in 2017
Net electricity generation in 2017 rose by 3.2% or 442 mil-
increased by 2.5% compared with 2016, reaching 15,399
lion kWh as a result of higher demand for electricity in the
million kWh. Of total electricity demand, 92.3% was met
extra-peninsular market.
by net electricity generation in the extra-peninsular area,
with the remaining 7.7% being met by net electricity im-
ports, all from the peninsular system. The latter totaled
1,179 million kWh in 2017.
117
Report on operations
Electricity prices
Electricity prices
Italy
Spain
Russia
Slovakia
Brazil
Chile
Colombia
Average baseload price
2017 (€/MWh)
Change in baseload
price
Average peakload
price 2017 (€/MWh)
Change in peakload
price
53.9
52.2
17.2
41.0
84.3
52.4
31.3
26.2%
31.8%
11.7%
29.8%
-
-4.7%
-63.9%
61.8
57.1
20.0
56.1
151.4
126.2
60.1
28.2%
26.9%
12.4%
39.9%
-
-1.9%
-75.5%
Price developments in the main markets
Eurocents/kWh
Final market (residential) (1)
Italy
France
Portugal
Romania
Spain
Slovakia
Final market (industrial) (2)
Italy
France
Portugal
Romania
Spain
Slovakia
2017
2016
Change
0.21
0.17
0.23
0.12
0.23
0.14
0.10
0.06
0.10
0.07
0.09
0.11
0.24
0.17
0.23
0.12
0.22
0.15
0.10
0.06
0.09
0.07
0.08
0.10
-9.9%
-0.5%
-1.7%
-3.9%
2.7%
-3.0%
-2.6%
-4.5%
10.0%
1.4%
6.5%
5.6%
(1) Annual price net of taxes - annual consumption of between 2,500 kWh and 5,000 kWh.
(2) Annual price net of taxes - annual consumption of between 70,000 MWh and 150,000 MWh.
Source: Eurostat.
Electricity price developments in Italy
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
2017
2016
Power Exchange - PUN IPEX (€/MWh)
57.4
44.9
51.6
61.8
39.6
34.5
40.9
56.0
Residential user with annual consumption
of more than 1,800 kWh (€/kWh): price net
of taxes (1)
0.1
0.1
0.2
0.1
0.2
0.2
0.2
0.2
(1) The figures for 2016 refer to residential homes with subscribed power availability of up to 3 kW and annual consumption of more than 2,640 kWh.
Source: GME (Energy Markets Operator) and ARERA (Regulatory Authority for Energy, Networks and the Environment).
In 2017, electricity sales prices in Italy rose by 26.2%, main-
ers with annual consumption of more than 1,800 kWh set
ly due to the contraction in renewables generation (hydro-
by the Regulatory Authority for Energy, Networks and the
electric), which characterized the entire year, the crisis in
Environment was €0.15/kWh, which is not comparable with
French nuclear generation and the gas emergency in De-
the average price in 2016 as a result of a change in the defi-
cember 2017.
nition of the consumption brackets by the Authority.
The average annual price (net of taxes) for residential us-
118
Annual Report 2017
Natural gas markets
Natural gas demand
Millions of m3
Italy
Spain
2017
70,015
30,180
2016
66,249
27,651
Change
3,766
2,529
5.7%
9.1%
Demand for natural gas increased in 2017 in both Italy (+5.7%) and Spain (+9.1%).
Italy
Gas demand
Millions of m3
Distribution networks
Industry
Thermal generation
Other (1)
Total
2017
30,969
13,563
24,078
1,405
70,015
2016
29,998
12,693
22,156
1,402
66,249
Change
971
870
1,922
3
3,766
3.2%
6.8%
8.7%
0.2%
5.7%
(1) Includes other consumption and losses.
Source: Enel based on data from the Ministry for Economic Development and Snam Rete Gas.
Domestic demand for natural gas in 2017 totaled 70,015
(+6.8%), thanks to the economic recovery in the sector,
million cubic meters, an increase of 5.7% on the previous
and thermal generation (+8.7%), due to the decline in the
year.
availability of renewables generation.
Consumption recovered in all segments, led by industry
Price developments
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
2017
2016
Average residential user with annual
consumption of between 481 and 1,560
m3 (€/Sm3): price net of taxes
0.45
0.44
0.42
0.44
0.47
0.41
0.42
0.43
Source: ARERA (Regulatory Authority for Energy, Networks and the Environment).
The annual average sales price of natural gas in Italy increased by 1.4% in 2017.
119
Report on operations
Regulatory and rate issues
The European regulatory framework
EMIR
On May 4, 2017 the European Commission published a pro-
the “Clean Energy for all Europeans” package of measures for
posed revision of the European Market Infrastructure Regu-
proposed legislation on European climate and energy policy.
lation (EMIR). Essentially the proposal endorses monitoring
In particular, the package includes the following regula-
thresholds that, if exceeded, trigger the central clearing
tions and directives, some of which are revised versions,
obligation for OTC derivatives on the part of non-financial
others newly issued: the Electricity Regulation, the ACER
counterparties, and specifies that the clearing obligation
Regulation, a Risk Preparedness Regulation, the Energy
applies only for the asset classes for which the clearing
Union Governance Regulation, the Electricity Directive,
thresholds are exceeded. At the same time, the Commis-
the Renewable Energy Directive, the Energy Efficiency Di-
sion’s proposal also confirms the hedging exemption and
rective and the Energy Performance of Buildings Directive.
changes the method for calculating the position used in the
They are expected to come into force as from 2019.
annual comparison with the clearing threshold, basing it on
In line with the sustainability and climate change mitigation
the average month-end positions for March, April and May.
objectives, new binding targets at the EU level for 2030
Furthermore, the Commission proposes an overall simplifi-
will be introduced: 27% of gross final energy consumption
cation of the reporting requirements imposed on financial
from renewable sources, a 30% energy efficiency target
and non-financial counterparties.
and a 40% reduction in greenhouse gas emissions.
On December 14, 2017 the EU Council published its gen-
The Renewable Energy Directive introduces a stable regu-
eral approach for the negotiations with the European Com-
latory framework for investors. Member States will have to
mission and the European Parliament during the trilogue
adopt a market approach to support renewables. Incentive
process that will be conducted throughout 2018. The Coun-
mechanisms should follow harmonized principles such as
cil supported the general substance of the Commission’s
cross-border opening, the non-retroactivity of measures
proposal, offering a few proposed amendments concern-
and long-term visibility for support mechanisms (at least
ing the annual calculation of the position and simplification
three years). Administrative barriers for corporate long-
of the reporting requirements.
term PPAs to finance renewables must be removed where
Entry into force of MIFID II/
MIFIR
appropriate and authorization procedures simplified. The
Commission proposal also requires Member States to in-
crease the share of renewable resources in heating and
cooling and sets more stringent criteria for the sustainabil-
On July 1, 2016 Regulation 2016/1033/EU and Directive
ity of bioenergy.
2016/1034/EU entered force, postponing the entry into
The Electricity Regulation and Directive propose an inte-
force of the rules governing the provision of investment
grated revision of the design of the electricity market to
services in Europe (the MIFIR Regulation and the MIFID II
make the integration of renewable energy more efficient
Directive, respectively) from January 3, 2017 to January 3,
and the treatment of different generation technologies
2018. Accordingly, the deadline for transposing the legisla-
(conventional and renewable) more equitable, introduce
tion by the Member States has been postponed from July
greater granularity in trade, move market close closer
3, 2016 to July 3, 2017.
The “Clean Energy for all
Europeans” package
to real time, open the balancing market to all generation
sources and demand (through aggregation), set non-dis-
criminatory and market-based dispatching rules (elimina-
tion of priority dispatch for new renewables plants above
500 kW).
On November 30, 2016, the European Commission issued
It also introduces an opening to long-term contracting and
120
Annual Report 2017 remuneration of capacity mechanisms, subject to the re-
the Commission’s proposals. In 2018 trilogue meetings
sults of a study of European capacity adequacy and to limi-
tations in the atmospheric emissions of CO2 to access the
same. Conditions for the emergence of signs of scarcity
between the European Parliament, European Council and
European Commission will be held to prepare the final text
of the directives and regulations that comprise the Clean
are improved and price caps removed.
Energy package.
With regard to new technologies and new market players,
the package envisages measures to support the integra-
tion of storage technologies, aggregators and customer
participation (demand-side response). Other provisions
concern compulsory installation of charging points for
electric vehicles in new public buildings and the promotion
of smart grids and buildings.
The Distribution System Operators (DSOs) are recognized
as increasingly important actors in the electricity system
and the proposals include the creation of a new European
DSO entity, the introduction of harmonized principles at
the European level for grid rates, the possibility of purchas-
ing and providing flexibility services locally to solve con-
gestion problems. There are no additional requirements on
unbundling.
Finally, the package establishes the centrality of consum-
ers in the electricity market through their active participa-
tion by way of demand aggregation and demand flexibility
services (demand response), removal of price regulation,
the introduction of mandatory dynamic pricing options,
price comparison tools and basic information in electricity
bills.
The Energy Efficiency Directive establishes that Mem-
ber States should contribute to the achievement of the
European target with indicative national contributions. In
addition, proposals include extending beyond 2020 the
energy efficiency obligations of Member States for final
consumption to be met through energy efficiency obliga-
tion schemes or alternative measures.
The European Commission proposes the introduction of a
decarbonization target for 2050 in the building sector and
changes aimed at encouraging the use of smart tools like
automation and control systems and performance indica-
tors, promoting charging infrastructure for electric vehicles
and the correlation between the financing of measures
with the results achieved in energy terms.
The European Commission also proposes a new plan con-
taining a list of energy products to be evaluated, reviewed
and subjected anew to regulations containing minimum
energy efficiency requirements (including new products:
building automation and control systems, photovoltaic
panels and ICT products).
Between its presentation in 2016 and the end of 2017, the
European Parliament and European Council worked on
a number of dossiers to arrive at a common position on
”Clean Mobility” package
In 2017 the European Commission unveiled its “Clean Mo-
bility” package, containing a series of legislative propos-
als and other initiatives to make traffic safer, encourage
smart road charging, reduce CO2 emissions, air pollution
and congestion. The package consists of two parts: a first
part published in May 2017 and a second in November
2017. Additional proposals, including one on CO2 emission
standards for heavy-duty vehicles, will be published in the
1st Half of 2018.
The main initiatives in the first part of the package are
designed to encourage the adoption of road charging sys-
tems based on distance traveled to reflect more realistic
use, and emissions and pollution produced by vehicles.
More specifically, the proposal envisages the inclusion of
the external costs of noise and air pollution in road charges
in addition to advantages for zero-emission vehicles.
The second part of the package contained three primary in-
itiatives. The first initiative establishes CO2 emission stand-
ards for new cars and light vehicles up until 2025 (a 15%
reduction compared with the 2021 limits) and until 2030
(a 30% reduction). It also envisages a reward mechanism
to accelerate the transition towards low and zero-emission
vehicles. The second initiative, a proposed revision of the
Clean Vehicles Directive (Directive 2009/33/EC), provides
a clear definition of “clean vehicle” (based on combined
CO2 and air pollutant emissions thresholds) and aims to
promote clean mobility solutions in public tenders through
a system of procurement targets for Member States,
thereby offering strong demand-side stimulus and further
deployment of clean mobility solutions.
Finally, the third initiative involves an action plan and a
series of investment solutions for trans-European deploy-
ment of alternative fuels infrastructure, with the aim of in-
creasing the level of ambition of national plans presented
within the framework of the directive on the deployment
of an alternative fuels infrastructure (Directive 2014/94/
EU), increasing investment and improving consumer ac-
ceptance.
121
Report on operations The Italian regulatory
framework
The current structure of the Italian electricity market is the
result of the liberalization process begun in 1992 with Di-
rective 1992/96/EC, transposed into Law with Legislative
Decree 79/1999. This decree provided for: the liberalization
of electricity generation and sale; reserving transmission
for the industry as a whole and for specific segments.
Generation and the wholesale
market
Electricity
Wholesale electricity generation and market
Electricity generation was completely liberalized in 1999
and ancillary services to an independent network opera-
with Legislative Decree 79/1999 and can be performed by
tor; the granting of concessions for distribution to Enel and
anyone possessing a specific permit.
other companies run by local governments; the unbundling
The electricity generated can be sold wholesale on the
of network services from other activities.
organized spot market (IPEX), managed by the Energy
The introduction of Directives 2003/54/EC and 2009/72/
Markets Operator (GME), and through organized and over-
EC (transposed with Law 125/2007 and Legislative Decree
the-counter platforms for trading forward contracts. The
93/2011, respectively) in Italy lent further impetus to the
organized platform includes the Forward Electricity Mar-
process, particularly through the complete opening of the
ket (MTE), managed by the GME, in which forward elec-
retail market and the confirmation of the total independ-
tricity contracts with physical delivery are traded. Trading
ence of the national transmission network operator (already
can also be conducted in derivatives with electricity as
provided for in the decree of the Prime Minister of May 11,
their underlying are traded. The organized market for such
2004) by separating its ownership from that of other elec-
transactions is the forward market (IDEX), operated by
tricity operators.
Borsa Italiana, while financial derivatives can also be ne-
The process of liberalizing the natural gas market began
gotiated on OTC platforms.
with Directive 1998/30/EC, transposed in Italy through Leg-
Generators may also sell electricity to companies en-
islative Decree 164/2000, calling for the liberalization of the
gaged in energy trading, to wholesalers that buy electric-
import, production and sale of gas and the separation of
ity for resale at retail, and to the Acquirente Unico (Single
network infrastructure management from other activities
Buyer), whose duty is to ensure the supply of energy to
through the establishment of distinct companies. As re-
enhanced-protection-service customers.
gards the model for unbundling transport from other non-
In addition, for the purposes of the provision of dispatch-
network activities, with Resolution 515/2013/R/gas, the
ing services, which is the efficient management of the
Authority for Electricity, Gas and Water System (AEEGSI)
flow of electricity on the grid to ensure that deliveries and
mandated the transition to ownership unbundling pursuant
withdrawals are balanced, electricity generated may be
to Directive 2009/73/EC.
sold on a dedicated market, the Ancillary Services Market
With the decree of November 10, 2017 the Ministers of the
(MSD), where Terna procures the required resources from
Environment and of Economic Development adopted the
generators.
2017 National Energy Strategy. The document, in line with
The AEEGSI and the Ministry for Economic Development
the European Energy Union Plan and the Energy Roadmap
are responsible for regulating the electricity market.
2050, establishes the development targets for the energy
More specifically, with regard to dispatching services, the
sector by 2030 in terms of competitiveness, sustainability,
AEEGSI has adopted a number of measures regulating
the environment and procurement security.
plants essential to the security of the electrical system.
Under the 2018 Budget Law (Law 205 of December 27,
These plants are deemed essential based on their geo-
2017), the Authority for Electricity, Gas and Water System
graphical location, their technical features and their impor-
has become the Italian Regulatory Authority for Energy,
tance to the solution of certain critical grid issues by Terna.
Networks and Environment ( “ARERA”) and is responsible
In exchange for being required to have electricity available
for regulating the waste sector as well.
and providing binding offers, these plants receive special
The following sections discuss the general regulatory
Resolutions 910/2017/R/eel, 928/2017/R/eel and 911/2017/R/
framework and the main regulatory measures taken in 2017
eel admitted Enel Produzione’s essential plants of Assemi-
remuneration determined by the AEEGSI.
122
Annual Report 2017 ni, Brindisi Sud and Portoferraio to the cost reimbursement
the assigned products). Once fully implemented, explicit
system for 2018. Enel Produzione’s Porto Empedocle plant
participation would be open to foreign resources, the hori-
has instead been included in the multi-year cost reimburse-
zon would be four years, while the duration of the product
ment system until 2025. The remaining capacity is subject
would remain annual.
to alternative contracts.
The rules governing the capacity market must be approved
by the Ministry for Economic Development subject to no-
Since the launch of the market in 2004, the regulations
tification and approval of the mechanism by the European
have provided for a form of administered compensation
Commission.
for generation capacity. In particular, plants that make
On February 7, 2018 the European Commission issued a
their capacity available for certain periods of the year iden-
favorable opinion on the Italian mechanism for the capac-
tified in advance by the grid operator to ensure the secure
ity market, providing a number of clarifications concerning
operation of the national electrical system receive a spe-
certain features of the market design.
cial fee.
With Resolution 398/2017/R/eel, the AEEGSI, within the
In August 2011, the AEEGSI published Resolution ARG/
scope of the temporary system for the remuneration of
elt 98/11, which establishes the criteria for introducing a
generation capacity, defined the criteria for determining
market mechanism for compensating generation capac-
the “S” fee for the period from January 1, 2015 to De-
ity that replaces the current administered reimbursement.
cember 31, 2015, allocating €60 million for payment of
This mechanism involves holding auctions through which
that fee.
Terna will purchase from generators the capacity required
The AEEGSI provided for Terna SpA to recognize pay-
to ensure that the electricity system is adequately sup-
ments for 2015 by June 30, 2017.
plied in the coming years.
With Resolution 418/2017/R/eel, the AEEGSI, within the
With a decree of the Minister for Economic Development
scope of the temporary system for the remuneration of
of June 30, 2014, the capacity market operational mecha-
generation capacity, defined the criteria for determining
nism previously issued for consultation by the AEEGSI
the CAP1 fee for the period between January 1, 2016 and
was approved.
December 31, 2016. Under the provisions of that resolu-
The mechanism is based on the allotment, by auction, of
tion, the amount allocated to cover charges for payment
option contracts (reliability options) that provide for pay-
of that fee was €130 million. The AEEGSI provided for Ter-
ment of a premium, established in the auction with the
na SpA to recognize payments for 2016 by June 30, 2017.
setting of a marginal price, against which a generator un-
With Resolution 844/2017/R/eel, the AEEGSI also speci-
dertakes to return any positive difference between the
fied the criteria for determined the CAP1 fee for the pe-
price formed on the spot electricity and auxiliary services
riod between January 1, 2017 and December 31, 2017.
market and a benchmark price set ex-ante in the option
Under the provisions of that resolution, the amount allo-
contract.
cated to cover charges for payment of that fee was €117.4
The rules approved provide for a cap for the premium to
million. The AEEGSI provided for Terna SpA to recognize
be paid for existing capacity and for newly constructed
payments for 2017 by December 31, 2017.
capacity.
With Resolution 95/2015/I/eel, the Authority proposed to
On February 24, 2015, the market coupling model for the
the Ministry for Economic Development that the opening
Italian, Austrian, French and Slovenian day-ahead trading
of the capacity market be moved forward, with an initial
markets was launched. Market coupling is a mechanism
phase of implementation beginning in 2018 and ending
for integrating day-ahead markets that, in setting the elec-
in 2021, with the launch of full operation of the mecha-
tricity prices for the different segments of the European
nism. Under the AEEGSI’s proposal, during the initial
market involved, also allocates the transport capacity
phase, there would be no direct resources permitted in
available between those segments, thereby optimizing
the market, but their contribution would be measured
the use of interconnections.
for statistical purposes. During the initial implementa-
tion phase, Terna would assign annual products with an
With Resolution 326/2016/R/eel, the AEEGSI charged Ter-
increasing planning horizon of less than four years (the
na with conducting the competitive tender for assigning
period between the auction and the start of delivery of
contracts for the supply of replacement tertiary reserves
123
Report on operations in Sardinia for the period from July 1, 2016 to December
able renewable resources and distributed generation) to
31, 2018. The contracts awarded by Terna establish a re-
participate in the Ancillary Services Market (MSD) through
quirement to supply the Ancillary Services Market (MSD)
pilot projects.
at the variable cost paid to the plant for a premium estab-
lished in the competitive tender. Following the tender, all
With Resolutions 444/2016/R/eel and 800/2016/R/eel, the
of the capacity was contracted with Enel’s Sulcis plant.
AEEGSI reformed the rules governing imbalancing prices
for calculating actual imbalances, providing for the applica-
With Resolution 342/2016/E/eel, the AEEGSI ordered the
tion of a mixed single price/dual price system to consump-
start of a proceeding to adopt measures (prescriptive
tion units and production units not authorized to partici-
measures or asymmetric regulations) to prevent certain
pate in the Ancillary Services Market. The system provides
conduct by users of dispatching services in the wholesale
for the application of the single price for imbalancing in a
electricity market that could constitute market abuse pur-
bracket equal to 15% of the binding withdrawal/delivery
suant to Regulation 2011/1227/EU (REMIT).
program. For unscheduable production units, the single
With the subsequent Resolution 477/2016/E/eel, the
price system will apply.
AEEGSI reported the conduct of a number of dispatching
With Resolution 419/2017/R/eel, the AEEGSI activated as
users delivering power operating on the Ancillary Services
from September 1, 2017 the new method for calculating
Market to the Competition Authority for an investigation
aggregate zonal imbalancing – given the difference be-
of possible violations of competition rules. One of these
tween the programs of consumption units and those of
users was Enel Produzione SpA with regard to the sup-
generation units net of trade between zones in the Italian
ply of power from the Brindisi Sud plant to the wholesale
market and with foreign markets.
market. Following the report filed by the AEEGSI, on Oc-
The resolution also provided for the restoration of the
tober 6, 2016 the Competition Authority began an enquiry
single pricing mechanism for calculating the actual imbal-
involving Enel SpA and Enel Produzione SpA to determine
ances for dispatching points of all unauthorized generation
the existence of a possible abuse of a dominant position
and consumption units as well as the publication by Terna
in the Ancillary Services Market by the Brindisi Sud plant.
SpA of the preliminary sign of the aggregate zonal imbal-
The proceedings were concluded in May 2017 with the
ance more rapidly than provided for under EU regulations.
acceptance of the commitments proposed by Enel SpA
With the same resolution, the AEEGSI also introduced
and Enel Produzione without the imposition of sanctions.
with effect from July 1, 2017 the macro-zonal non-arbi-
More specifically, the commitments consist of the intro-
trage fee for unauthorized generation and consumption
duction, for years 2017-2019, of a cap on total annual reve-
units.
nue that can be generated by the Brindisi Sud plant, net of
variable costs paid under current regulations. The cap will
also apply in the event the plant is included under the cost
reimbursement system pursuant to Resolution 111/2006.
The proceedings initiated by the AEEGSI through Resolu-
tion 342/2016/E/eel were closed with the approval through
Resolution 314/2017/R/eel of the application made by Enel
Produzione for the admission of the Brindisi Sud plant to
the cost reimbursement system for 2017. The approving
resolution also provides, with regard to the commitments
made by Enel Produzione as part of the proceedings be-
fore the Competition Authority, that any amounts exceed-
ing the caps for the plant for the 2018-2019 period will be
transferred to Terna.
AEEGSI Resolution 300/2017/R/eel established the crite-
ria for permitting consumption units and production units
not already authorized (including those using unschedu-
124
Gas
Wholesale market
The extraction, import (from EU countries) and export of
natural gas have been liberalized.
According to the provisions of Legislative Decree 130/2010,
operators are permitted to hold market shares of up to
55% of domestic consumption.
The spot trading platform (the “Gas Exchange”) began op-
eration in 2010 and the AEEGSI established the balancing
market in 2011. The forward market later completed the
structure of the Italian wholesale market, joining the Gas
Exchange. As for the balancing market, the AEEGSI, imple-
menting Commission Regulation 2014/312/EU, redefined,
starting 2016, the rules for its functioning, in order to boost
the availability of flexible resources to balance the system
Annual Report 2017 and improve the set of information for users. In 2017 the
components are revised each year to take account of new
Ministry for Economic Development (MED) indicated that,
investments, depreciation and the revaluation of existing
starting 2018, the figure of market maker would be intro-
assets using the deflator for gross fixed capital formation.
duced in markets organized by the Energy Markets Opera-
With Resolution 654/2015/R/eel the AEEGSI specified the
tor (GME).
Transport, storage and regasification
Transport, storage and regasification (of LNG) are subject
to regulation by the AEEGSI, which sets the rate criteria for
engaging in these activities at the start of each regulatory
period.
Storage is carried out under a concession issued by the
MED to applicants that satisfy the requirements of Legisla-
tive Decree 164/2000. Each year, the MED issues a decree
establishing the criteria for allocating capacity through an
auction mechanism.
LNG activities are subject to the grant of a special minis-
terial permit to ensure third-party access (TPA). The MED
may grant an exemption from the TPA rules. As for regasifi-
cation, in 2017 the AEEGSI envisaged replacing the current
rate-based method for allocating capacity with a system of
auctions starting in 2018.
Transport activities, defined by regulatory criteria for rate
periods, continue to be subject to fees updated annually
by the AEEGSI. In 2017 it extended, with a few correc-
tive measures, the rate criteria for 2014-2017 to 2018-2019.
These criteria were challenged by Enel Trade consistent
with previous disputes; at this time, the dispute regard-
ing the 2010-2013 period is pending before the Council of
State and that for 2014-2017 before the Regional Adminis-
trative Court.
Distribution
Electricity
Distribution and metering
e-distribuzione provides distribution and metering services
under a 30-year concession set to expire in 2030.
The distribution rates are set by the AEEGSI at the start of
each regulatory period based on covering the total cost of
providing the services, considering operating costs, depre-
ciation and providing an appropriate return on capital.
The rate component covering operating costs is updated
annually using a price-cap mechanism (i.e. based on the
inflation rate and an annual rate of reduction of unit costs
called the X-factor). The return-on-capital and depreciation
criteria for the new rate period for electricity distribution
and metering, in force for the next eight years (2016-2023).
The rate period has been divided into two sub-periods of
four years each (NPR1 for 2016-2019 and NPR2 for 2020-
2023), with an interim revision scheduled for 2020.
For the first sub-period (NPR1), while the AEEGSI essen-
tially confirmed the general regulatory framework, it intro-
duced substantial amendments concerning the timing and
procedures for remunerating new investments in rates.
More specifically, the AEEGSI reduced the so-called “regu-
latory lag”, shortening to a maximum one year (from the
two years in the previous regulatory period) the period be-
fore new investments are recognized in rates while at the
same time eliminating the increase of one percentage point
of WACC. The latter had been introduced by the AEEGSI in
2012 to offset the financial burden imposed by the delayed
recognition of new investments.
Operators are therefore required to notify the AEEGSI by
the end of the year of their preliminary accounts of invest-
ments made during the year, enabling the AEEGSI to insert
the data in the calculation of the mandatory rate published
by the end of the year for the subsequent year. These in-
vestments are then inserted in the regulatory asset base
as from January 1 of the year following their realization.
Consequently, operators can match the revenue generated
by the investments with their amortization.
The AEEGSI also increased by five years the useful lives of
low and medium-voltage power lines that entered service
after December 31, 2007.
Finally, the level of operating costs recognized and the
procedures for returning any extra efficiency gains to cus-
tomers were also specified. More specifically, the AEEGSI
maintained the symmetric division of extra efficiency gains
and the restitution until 2019 of gains achieved and tempo-
rarily maintained to firms in the third and fourth regulatory
periods. The X-factor used in updating eligible operating
costs was set at 1.9% for distribution operations and 1%
for metering activities.
For the second sub-period (NPR2), the AEEGSI announced
the transition to rate regulation based on total costs (the
Totex method).
With Resolution 583/2015/R/com the AEEGSI revised the
method used to determine the rate of return on capital and
set a rate of 5.6% for distribution and metering activities for
125
Report on operations 2016-2018. In particular, the AEEGSI established a specific
Specifically as to issues involving the improvement of the
6-year rate period for the WACC, with a mid-period update
resilience of the electricity transmission and distribution
of the main parameters in the formula on the basis of mac-
networks, Resolution 127/2017/R/eel extended the auto-
roeconomic conditions (interest and inflation rates) in 2018.
matic indemnities for protracted service interruptions pay-
With Resolutions 188/2017/R/eel and 199/2017/R/eel, the
able to users by network operators and the methods for
AEEGSI approved the definitive reference rates for 2016,
sharing this liability among the operators once the 72 hour
which represent the level of revenue recognized for each
limit is reached.
operator on the basis of actual balance sheet data for 2015.
With Resolutions 286/2017/R/eel and 287/2017/R/eel, the
The subsequent Resolution 861/2017/R/eel modified the
AEEGSI published the provisional reference rates for elec-
TIQE, clarifying certain aspect of distribution service qual-
tricity distribution and metering for 2017 on the basis of
ity regulation, such as access by network operators to the
preliminary balance sheet data for 2016.
fund for exceptional events, the communication of voltage
According to the provisions of Resolution 654/2015/R/eel,
quality data, and the computation of the timing for com-
the definitive reference rates for 2017, which represent the
mercial quality performance of the electricity service.
level of revenue recognized for each operator, must be pub-
lished by February 28, 2018 on the basis of actual balance
With Resolution 377/2015/R/eel, the AEEGSI completed
sheet data for 2016.
the regulatory framework governing losses on the distri-
bution grid, revising the conventional loss percentages as
With regard to second-generation (2G) smart metering
from January 1, 2016 and the equalization mechanism for
systems, in its Resolution 222/2017/R/eel the AEEGSI ap-
losses to apply to distributors as from 2015. More spe-
proved e-distribuzione SpA’s plan for placing the meters in
cifically, the equalization mechanism takes account of the
service during the 2017-2031 period, designating January
geographical diversification of losses on distribution grids.
1, 2017 as the start date, and established the standard cost
based on which the efficiency incentives will be calculated.
With Resolution 268/2015/R/eel, the AEEGSI established
Resolution 646/2016/R/eel guarantees that the meter-
the Model Grid Code for transport services, which governs
ing service rates for end users will remain essentially un-
the relationship between sellers and distributors concern-
changed.
ing the guarantees given by sellers to distributors, the
Among the conditions for plan approval, the AEEGSI re-
payment terms for the transport service and the terms of
quired field monitoring of the quality of the communication
payment of the system costs and other components by dis-
between the 2G meters and users’ devices, along Chain 2,
tributors to the Energy and Environmental Services Fund
for a period of at least four months, subsequently extended
and the Energy Services Operator (GSE). The resolution
to April 30, 2018.
also provided for the elimination starting from 2016 of the
With Resolution 229/2017/R/eel, the AEEGSI provided
uncollectible portion of turnover withheld by distributors as
guidelines on the initial configuration of the 2G meters and
a result of the strengthening of the system of guarantees.
established some of the obligations of disclosure to end
As regards the calculation of the transport service guaran-
users. The subsequent Resolution 248/2017/R/eel estab-
tees, a number of different administrative court decisions
lished the procedure and timetable to make 2G metering
handed down between May 2016 and November 2017
data available to the Integrated Information System (IIS)
voided in part the AEEGSI’s provisions requiring the inclu-
and to transport users. Finally, Resolution 700/2017/R/eel
sion of guarantees to cover system charges in transport
set out the rules for using hourly delivery and withdrawal
contracts between distributors and sellers. In accordance
points equipped with 26 smart metering systems for the
with these decisions, AEEGSI Resolution 109/2017/R/eel
purposes of settlement.
established a temporary regime involving a 4.9% reduction
As regards service quality, the AEEGSI, with Resolution
in the amount of system charge guarantees (equal to an av-
646/2015/R/eel as amended, established output-based
erage percentage of the amounts not collected by sellers)
regulation for electricity distribution and metering services,
and initiated the revision of the Grid Code with consultation
including the principles for regulation for 2016-2023 (TIQE
document 597/2017/R/eel.
2016-2023) and authorized the start of trials to test the ad-
As regards the procedures and financial terms for the con-
vanced management functions for the distribution grid.
nection of generation plants to distribution and transmis-
126
Annual Report 2017 sion grids, the AEEGSI, with Resolution 581/2017/R/eel,
More specifically, the methods for determining the “refer-
updated the Integrated Grid Connection Code in order to
ence” rate subsidy (previously called “provisional”), set ex
implement the simplification measures provided for in the
ante as the average of the definitive rate subsidy levels in
Ministerial Decree of March 16, 2017 for the connection
the preceding two years, and the underlying parameters
and operation of micro-generation plants powered by re-
for calculating the “definitive” rate subsidy were revised.
newables.
The AEEGSI also envisaged an advance payment of the
rate subsidy by the end of the November 30 session.
As for the regulatory framework for private grids (specifi-
With respect to the criteria for distributing the rate sub-
cally, closed distribution systems and basic generation and
sidy, the AEEGSI provided that starting in 2017 the accru-
consumption systems), Resolution 276/2017/R/eel updated
als principle would replace the cash principle so that the
the relative Codes, adopting the provisions of Article 6(9) of
definitive rate subsidy for the reference obligation year is
Decree Law 244/2016 concerning general system charges.
applied to residual quotas for the year that are discharged
The AEEGSI, with Resolution 582/2017/R/eel, postponed
in the subsequent year.
application of the regulatory provisions on internal user
Thereafter, with Resolution 634/2017/R/efr, the AEEGSI
networks from October 1, 2017 to January 1, 2018. The
delayed by one year the introduction of the accruals prin-
subsequent Resolution 894/2017/R/eel updated the defini-
ciple, making its roll-out more gradual so that it should be
tion of consumption unit and postponed until June 30, 2018
fully in place in another four years.
the deadline for “hidden end users” to declare themselves.
AEEGSI Decision 10 of July 14, 2017 set the amount of the
Competition Authority Resolution 162/17/CIR established
subsidy for 2017 was instead set at €170.29/EEC and will
the fees for telecommunications operators to access e-
be revised based upon the final market price for the refer-
distribuzione’s electricity infrastructure to lay fiber-optic
ence period.
rate subsidy for 2016 at €191.40/EEC. The reference rate
cables, pursuant to Legislative Decree 33 of February 15,
2016. As a result e-distribuzione published the General Con-
ditions for accessing its infrastructure, Technical Rules and
Technical Standards, which incorporate the Competition
Authority’s provisions.
Reform of electricity rates for residential
customers
With Resolution 782/2016/R/eel the AEEGSI fully eliminat-
ed, with effect from January 1, 2017, the progressivity of
the distribution rate.
The resolution provides for the first steps to be taken in
Energy efficiency - White certificates
The interministerial Decree of January 11, 2017 set the
2017 to reduce the effect of progressivity on general sys-
tem charges. The system charges reform is expected to be
new energy efficiency targets for 2017-2020 and the new
completed by January 1, 2018, with complete elimination
guidelines for the functioning of the Energy Efficiency Cer-
of the progressive structure. In Report 733/2017/I/eel of
tificate (EEC or white certificates) mechanism.
November 2, 2017 to the Government and Parliament and
As to the distributor’s performance of its obligation, it was
with the Memorandum of November 30, 2017 (805/2017/I/
provided that the quota exceeding the minimum obligation
eel) requested by the Chairman of the 10th Standing Com-
of 60% must be covered by the end of the following year
mittee of the Chamber of Deputies, the AEEGSI, however,
(and not within the subsequent two years as previously
reported on the effects, starting in 2018, on the annual
allowed).
spending on electricity by residential customers owing to
Furthermore, the distributor was given the option of sat-
the rate updates following the revision of the subsidies
isfying the obligation over two sessions in the same year
for energy-intensive companies and the final phase of the
(May 31 and November 30) rather than just one, as was
reform of the general system charges for residential cus-
done previously. The decree required the AEEGSI to estab-
tomers. Based on the instructions of the Government and
lish the criteria and method for covering the distributors’
Parliament, the AEEGSI published Resolution 867/2017/R/
costs.
eel, deferring implementation of the final phase of the re-
With Resolution 435/2017/R/efr the AEEGSI approved the
form of the general system charges for residential electric-
revised rules for calculating the rate subsidy for electricity
ity customer and maintaining the current rate structures
and gas distributors starting 2017.
until December 31, 2018.
127
Report on operations Reform of general system costs structure
The AEEGSI, with Resolution 922/2017/R/eel, implemented
Resolution 481/2017/R/eel, providing that, as from January
basis of the provision of the applicable primary and sec-
ondary legislation.
1, 2018, the rates for general system costs and other com-
Enhanced-protection service is provided by sellers con-
ponents applying to all the types of contracts covered by
nected with distributors. Prices are set by the AEEGSI and
Section 2.2 of the Integrated Transmission are divided into
are updated periodically based on criteria designed to en-
“General costs in support of renewable energy and CHP”
sure that the operators’ costs are covered. More specifi-
(ASOS), “Remaining general costs” (ARIM), UC3 and UC6.
cally, the AEEGSI updates the component for covering the
The resolution implements the reform of the general sys-
operators’ costs in the enhanced-protection market (RCV)
tem costs for non-residential customers provided by Law
annually so as in ensure that their costs are covered (op-
21 of February 25, 2016.
Reform of concessions for energy-intensive
companies
As part of the reform of the general system costs for
non-residential customers, the AEEGSI, with Resolution
921/2017/R/eel, established the implementing provisions
for the grant of concessions for energy-intensive compa-
nies, as provided by the MED decree of December 21,
2017, with effect as of January 1, 2018.
The resolution envisages ASOS component rates (based
on the new grouping of general costs introduced by Reso-
lution 481/2017/R/eel) differentiated between customers
without concessions and those with, i.e. energy-intensive
customers, based on concession category, as defined by
the decree of December 21, 2017.
These provisions also had an impact on private-network
configurations.
Sales
Electricity
erating costs, delinquency charges and amortization and
depreciation) and that they receive a fair return on capi-
tal. Resolutions 816/2016/R/eel and 927/2017/R/eel estab-
lished rates for 2017 and 2018.
In recent years, the AEEGSI has adopted measures aimed
at containing operators’ credit risk, which has risen due in
particular to the economic crisis.
In 2016, the AEEGSI lent significant impetus to the devel-
opment and implementation of the Integrated Informa-
tion System (IIS). This system was established under Law
129/2010 and is designed to manage the flow of informa-
tion between gas and electricity market operators, based
upon a central database of withdrawal points.
With a number of measures, the AEEGSI has governed
various services, some of which are already active with
others at the implementation stage. For example, the
AEEGSI has sought to gradually centralize the manage-
ment of the commercial processes for contract transfer
and switching and of metering data for both sectors (elec-
tricity and gas) and, for the electricity sector only, the ag-
gregation of metering at hourly withdrawal points for the
As provided for by Directive 2003/54/EC, starting from July
purposes of monthly settlement.
1, 2007 all end users may freely choose their electricity
Thanks to the development work carried out, the IIS is
supplier on the free market or participate in regulated mar-
increasingly operating as a central hub for the exchange
kets. Law 125/2007 identified these regulated markets as
of information among all system operators, thereby facili-
the “enhanced-protection” market (for residential custom-
tating the management of certain processes. In view of
ers and small businesses with low-voltage connections)
these characteristics, Ministerial Decree 94 of May 13,
and the “safeguard services” market (for larger customers
2016 designated the IIS as the mechanism for managing
not eligible for enhanced-protection services).
the process of billing TV license fees through electricity
Free-market operators are awarded contracts to provide
bills. To cover the costs of managing this process, AEEGSI
safeguard services on a geographical basis through three-
Resolution 291/2017/R/eel established the distribution cri-
year auctions. For the 2017-2018 period, following the com-
teria to be used by the Italian Revenue Agency in calculat-
petitive procedure governed by Resolution 538/2016/R/eel,
ing the lump-sum grant payable to sellers for years 2016
Enel Energia was awarded the areas corresponding to the
and 2017; it has paid the amount owed for 2016.
regions of Liguria, Piedmont, Valle d’Aosta, Trentino-Alto
The annual competition law (Law 124/2017) was approved
Adige, Lombardy, Lazio, Puglia, Molise and Basilicata. The
on August 4, 2017, providing that the price protection mar-
financial terms applied to end users were defined on the
ket (electricity and gas) would be eliminated as of July 1,
128
Annual Report 2017 2019. The AEEGSI was given the task of regulating the
the supplier of last resort, through voluntary tenders for
safeguard service for customers previously falling under
geographically-based contracts.
the enhanced-protection category through competitive
With Resolution 465/2016/R/gas, the AEEGSI updated the
procedures by geographical area and on conditions that
rules governing public tenders for the award of last-resort
encourage switching to the free market.
services for October 1, 2016 - September 30, 2018. Fol-
The law also provides for the creation within the MED of
lowing the auctions held in September 2016, Enel Ener-
a list of electricity sellers that are authorized to sell elec-
gia was designated as supplier of last resort for 7 of the
tricity on the retail market having met certain technical,
8 areas involved in the auction (Valle d’Aosta, Piedmont
financial and reputational requirements proposed by the
and Liguria; Lombardy; Trentino-Alto Adige and Veneto;
AEEGSI.
Tuscany, Umbria and Marche; Abruzzo, Molise, Basilicata
The AEEGSI, in accordance with the law above, issued
and Puglia; Lazio and Campania; Sicily and Calabria) and as
Resolution 555/2017/R/com, requiring all sellers to include
default supplier in 3 areas out of 8 (Abruzzo, Molise, Basili-
in their portfolios offers at free market prices with condi-
cata and Puglia; Lazio and Campania; Sicily and Calabria).
tions equivalent those of the protected market (PLACET
offers), targeted at households and small businesses start-
Starting from October 1, 2013, the reform of the finan-
ing in early 2018. This was done to make it easier for end
cial terms and conditions applied to safeguard customers
users to understand and compare offers and participate in
entered force. In this situation, the AEEGSI modified the
the free market.
procedures for determining the raw material component,
indexing it fully to spot market prices, introduced compo-
On May 11, 2017, the Competition Authority, in response to
nents to ensure a gradual transition (including one spe-
reports by AIGET and Green Network SpA, initiated a pro-
cifically for the renegotiation of long-term contracts) and
ceeding against Enel SpA, Enel Energia SpA and Servizio
increased the component covering retail sales costs to
Elettrico Nazionale SpA for alleged abuse of dominant
enhance cost-reflectivity.
position on the retail electricity market for residential and
With regard to the raw material (gas) cost component, on
non-residential end users connected to the low voltage
January 24, 2014, the Regional Administrative Court of
grid. Analogous proceedings were also begun against oth-
Lombardy, in the course of an action brought by Enel En-
er operators. Unless extended, the proceeding is expected
ergia and Enel Trade, voided the resolutions by which the
to conclude by June 30, 2018.
AEEGSI changed the formula for determining (and thereby
Gas
Legislative Decree 164/2000 established that, as from
January 1, 2003, all customers may freely choose their
natural gas supplier on the free market.
However, sales companies must also offer a safeguard
service to their customers (only for residential customers
pursuant to Decree Law 69 of June 21, 2013), together
with their own commercial offers, at the regulated prices
established by the AEEGSI.
If there is no company supplying this service, the con-
tinuity of supply for small customers not in arrears on
bill payments (residential and other uses with an annual
consumption of less than 50,000 standard cubic meters)
and for users involved in providing public services shall be
ensured by the supplier of last resort. If the customer is in
arrears with bill payments or it is not possible for the sup-
plier of last resort to provide service, supply continuity is
ensured by the default distribution supplier selected, like
reducing) the QVD component for the 2010-2011 and 2011-
2012 gas years. In 2014, the AEEGSI filed an appeal with
the Council of State. In 2016, the Council of State denied
the AEEGSI’s appeal, granting the appeal of Enel Energia
and Enel Trade, finding the measures were in conflict with
the statutorily established principle of the necessary “cor-
respondence between recognized costs and actual costs”.
Resolution 737/2017/r/gas, in accordance with the Coun-
cil of State’s decision, recalculated the value of the raw
material for the October 2010 - September 2012 period.
The manner of handling the amounts resulting from the
recalculation will be addressed in a separate resolution
expected for the 2nd Half of 2018.
With regard to the definition of the component covering
natural gas supply rates, the AEEGSI also confirmed the
current procedures, with full indexing to the spot prices
reported on the Dutch Title Transfer Facility (TTF), pending
the development of greater liquidity in the Italian whole-
sale markets until September 30, 2018 or in any event un-
129
Report on operations til the elimination of the enhanced-protection market as
set by the legislature, if sooner.
Renewable energy
With regard to gas settlement, specifically the mechanism
for annually adjusting prior-period items, the AEEGSI pub-
lished Resolutions 670/2017/R/gas and 782/2017/R/gas
approving provisions for calculating the physical and finan-
cial items for the prior-period adjustment sessions starting
2013.
More specifically, a settlement mechanism was estab-
lished for the 2013-2017 period through which operators
can recover a share of the costs associated with grid loss
previously allocated in proportion to their withdrawals.
The AEEGSI has provided that, from January 1, 2018 until
the definitive settlement mechanism is in place, operators
will be paid almost all of the costs connected with grid
loss.
General industry-wide provisions
In 2015, with its Resolution 296/2015/R/com, the AEEGSI
The regulatory framework for supporting renewable energy
technologies in Italy envisages a range of remuneration
systems. Incentives for technologies other than photovolta-
ic are awarded through competitive procedures established
with Legislative Decree 28/2011, transposing Directive
2009/28/EC, and the associated implementing ministerial
decrees of July 6, 2012 and June 23, 2016. The decrees en-
visage the use of Dutch auctions and feed-in tariffs, based
on the installed capacity and technology. Specifically:
> Dutch auctions for plants with capacity of over 5 MW;
> registries for plants with capacity of less than 5 MW;
> direct access for wind plants with capacity of less than
60 kW, biomass plants of less than 200 kW and hydroe-
lectric plants of less than 250 kW.
The above incentive mechanisms will terminate when the
indicative cumulative annual cost of the incentives reaches
€5.8 billion. At November 30, 2017, the indicative cumula-
tive annual cost was €5.122 billion.
regulated the functional unbundling requirements for op-
With regard to solar generation, the incentive system pro-
erators in the electricity and gas sector. More specifically,
vided for the application of a number of Energy Accounts,
the Authority confirmed that companies must maintain a
of which Accounts I, II, III and IV (from September 19, 2005
separation between the brand, other distinguishing marks
to August 26, 2012) were based on a feed-in premium (a
(including the company name) and communication policies
rate premium over the hourly zonal price), while Energy Ac-
of distribution companies and those of the companies that
count V (from August 27, 2012) was based on a feed-in tariff
sell power that operate within the same group. Separation
(comprehensive price) and was terminated once a cost of
must also be maintained between those companies that
€6.7 billion was reached on July 6, 2013.
sell electricity on the free market and those that do so on
the enhanced-protection market, while different physical
premises, personnel and information channels must be
used for distribution and sales and for sales on the en-
hanced-protection market and those on the free market.
Between April and July 2016 the Regional Administrative
Court of Lombardy rejected the appeals lodged by Enel
Distribuzione, Enel Servizio Elettrico and Enel Energia. In
implementation of the court’s ruling, Enel Distribuzione
and Enel Servizio Elettrico modified their company name
(and the associated brand) to “e-distribuzione SpA” and
“Servizio Elettrico Nazionale SpA”.
Ministerial Decree of February 14,
2017 on “Minor islands”
The February 14, 2017 decree of the MED gave instruc-
tions for gradually covering the electricity needs of the non-
interconnected minor islands with renewable energy. The
decree envisages remuneration for energy generated from
renewable resources related to the cost of the fuel avoided
and the launch of pilot projects to integrate renewable re-
sources in the electricity systems of those islands.
The companies e-distribuzione, Servizio Elettrico Nazionale
National Energy Strategy
and Enel Energia appealed the ruling of the Regional Ad-
ministrative Court before the Council of State, which with
decision 5519/2017 denied the appeals of the two sales
companies, thereby affirming the legality of Resolution
296/2015/R/com. The appeal by e-distribuzione is pending
before the Council of State.
With the decree of November 10, 2017, the Ministers for
Economic Development and for the Environment approved
the National Energy Strategy (NES) which lays the ground-
work for energy development in Italy based on the princi-
ples of competitiveness, energy security and environmen-
tal sustainability.
130
Annual Report 2017 Specifically, the NES set a target of 55% for renewables as
Energy Efficiency
a share of electricity consumption by 2030, which should
translate into a 75 TWh increase in renewable energy pro-
duction.
The NES provides for keeping technology-neutral auctions
until 2020 as a way of supporting the development of re-
newable energy. Thereafter, renewable capacity develop-
ment will be tied to the signing of power purchase agree-
ments, which are long-term contracts between producers
and consumers, with the assistance of the State, at least
during the initial phase, to enable it to get off the ground
and develop.
Iberia
Spain
Remuneration of distribution
On March 31, 2016 the Ministry for Industry, Energy and
Tourism initiated the procedure for the introduction of a
new ministerial order that will establish the remuneration
Order IET/258/2017 of March 24, 2017 charged Endesa
with a contribution to the National Energy Efficiency Fund
of €29.3 million, corresponding to the energy savings obli-
gations for 2017.
Sales margin incorporated in
voluntary price for residential
customers (PVPC)
On November 25, 2016, Royal Decree 469/2016 was
published, establishing the method for setting the sales
margin of the voluntary price for residential customers,
thereby implementing a number of rulings issued by the
Supreme Court voiding the margin set on the basis of the
provisions of Royal Decree 216/2014.
On December 24, 2016 Ministerial Order ETU/1948/2016
was published, establishing, as from January 1, 2017, the
value of the sales margin of the PVPC for 2014, 2015, 2016
and for the future.
Electricity rates for 2017
of distribution activities for 2016, in accordance with the
On December 29, 2016, Order ETU/1976/2016 was pub-
provisions of Order IET/2735/2015. Temporarily, the remu-
lished, establishing electricity access rates for 2017. The
neration for 2015 will be retained until the new order is
existing rates were left unchanged.
approved.
That order (IET/980/2016) was published on June 16, es-
tablishing the remuneration for distribution activities for
Natural gas rates for 2017
2016. Endesa was allocated a remuneration of €2,014
On December 23, 2016, Order ETU/1977/2016 was pub-
million. In addition, the incentives for service quality and
lished, establishing the natural gas access rates for 2017.
non-technical losses for Endesa were set at €7 million and
In general, the existing rates were left unchanged, with the
€2 million respectively. That order also sets the base re-
exception of the updating of the rate of last resort (TUR),
muneration for the first regulatory period from January 1,
which was reduced by an average of 9% as a result of the
2016 to December 31, 2019.
decline in the price of raw materials.
Social Discount
On October 9, 2017, the Official State Gazette (BOE) pub-
Fee for the use of continental water
for the generation of electricity
lished Royal Decree 897/2017 concerning regulations af-
On June 10, 2017, the Official State Gazette (BOE) pub-
fecting vulnerable consumers, the Social Discount and the
lished Royal Decree Law 10/2017 adopting urgent meas-
terms and conditions for suspending the Social Discount
ures to mitigate the effects of the drought in certain catch-
for consumers with 10 kW or less of capacity. Specifically
ment basins, amending the current Water Law. More
the decree sets out three categories of customers based
specifically, the Royal Decree Law modifies the fee for the
on income level (measured using the Multiplier for the
use of continental waters for the generation of electric-
Public Income Index - IPREM), with different percentage
ity, which went from 22% to 25.5%, establishing a lower
discounts for each category.
percentage for installations up to 50 MW to offset the in-
crease in withdrawal.
131
Report on operations Renewables
Europe and North Africa
In February 2017, Ministerial Order ETU/130/2017 was pub-
lished, containing the remuneration parameters for renew-
able energy plants for 2017-2019. They are revised every
Russia
three years, as provided by Royal Decree 413/2014 regu-
Electricity market
lating generation from renewable resources. This revision
is undertaken mainly to bring investment remuneration in
line with the differences in market income projected for
the coming years, as well as with differences that occurred
in the three preceding years between actual market rev-
enue and that projected under the regulation.
In the 1st Half of 2017, the rules and procedures for a tech-
nology neutral auction for 3,000 MW of renewable energy
were issued. The auction was held on May 17. Enel Green
Power España was awarded a specific remuneration sys-
tem to develop 540 MW of wind power with COD (Cash
on Delivery) before the end of 2019. Enel Green Power
was allocated the third-highest capacity amount through
the auction.
The auction was open to the competition of all types of
renewable technologies. However almost all the capacity
awarded was wind capacity.
The auction result serves to protect the internal rate of
return of projects in low market price scenarios. However,
if the market prices are above the protection level, the pro-
jects are authorized to capture this income.
The results of the first auction, in which there were com-
petitive bids left that had not been awarded capacity and
which demonstrated the need for more renewable energy
to meet the 2020 targets, prompted the Spanish govern-
ment to organize a second auction, held on July 26, 2017.
In the second auction, Enel Green Power received 338
MW in photovoltaic capacity. As in the first auction, the
winners’ internal rate of return is protected when market
prices are low.
Between July and September 2017, the Spanish govern-
ment arranged a public consultation marking the start of
the process of drafting new network access and connec-
tion rules. Work on this new regulation will be carried out
in 2018.
132
On June 27, 2016, Government Decree 563 was pub-
lished, amending the calculation method used to deter-
mine capacity payments (DPM) that will ensure accurate
determination of those payments for 2017 and beyond.
On July 25, 2016, the terms of participation in capacity
market auctions were revised to permit demand to access
the mechanism through the reduction of consumption.
The most recent capacity auctions (results published on
September 20, 2016) set the parameters (price and qual-
ity) for 2020.
Government Decree 1458 of December 23, 2016 retained
the coefficients for penalties for the lack of availability at
the minimum levels for 2017 as well.
By the decision of January 9, 2017 the governement also
established the rates for 2017 for the Trading System Ad-
ministrator (-2.5% compared with 2016) and the System
Operator (confirming the previous year’s rates).
On March 3, 2017, the Ministry of the Economy published
the new methodology for setting the yield rate on long-term
government bonds in order to calculate capacity payments
(DPM), resulting in a rate of 10.21% (it had been 8.9%).
On June 16, 2017, the government issued a decree estab-
lishing the rules for the new capacity auctions in Crimea:
award of a 15-year capacity contract at the price estab-
lished during the tender process (with a monthly cap of
about 2 million rubles).
On June 19, 2017, the government published its general
plan for developing the electricity industry through 2035.
It consists of non-binding guidelines that will be updat-
ed every three years. The plan includes numerous data,
including the long-term demand and supply projections,
expected capacity and necessary adjustments, grid infra-
structure, and proposals for containing the environmental
impact.
On September 2, 2017, the government signed Decree
1065 regarding the capacity market (KOM) auctions for
2021: it eliminated the price cap and the indexing of the
price to the consumer price index (CPI) minus 0.1% (com-
pared with the previous CPI -1%). On September 20, 2017,
the system operator published the results of the auctions
for 2021, with prices 16-18% higher than the 2020 auc-
tions.
Annual Report 2017 The government, with its decree of December 27, 2017,
tablished more stringent rules for Unified Heat Supplier
set out the rules for the new thermal capacity (465 MW)
(UHS) in the event of non-compliance with deadlines for
tender in the Tamam area (southern Russia), to be held
payment to other suppliers and for network services.
by April 1, 2018. The winning bidder will receive a 15-year
More specifically, UHS will lose its supply license if it fails
capacity payments contract.
to pay suppliers for two consecutive billing periods as
Gas market
well as in the event of repeated violation of other contrac-
tual terms. Any violation must nevertheless be certified
by a court or the FAS.
On June 20, 2017, Antitrust Authority Decision 776/2017
on the new floor and ceiling prices for industrial custom-
ers was published. Prices rose by 3.9% over the 2015-
Romania
2016 period.
Renewables
With Government Decree 850 of May 10, 2016, the fol-
lowing changes were made to the regulations governing
Recognition of distribution
investments in rates
In March 2016, ANRE approved a new procedure for re-
cognizing investments for rate purposes, which will enter
force in 2017 and in 2016 will serve as a recommendation
renewables:
for distributors.
> the incentive system for photovoltaic installations and
small hydro systems was extended to 2024 (from 2020);
> the capacity volume targets for solar and small hydro,
which were not selected for previous auctions (2013-
2015), were achieved and reallocated until 2024 (85.8
MW for solar and 168 MW for small hydro);
> the total volume target was kept at the initial level (5,871
MW).
On June 14, 2016 the final results of the auctions for in-
vestment in renewable resources for 2016-2019 were an-
nounced, with the award of projects for wind plants only.
The procedure establishes: (i) no recognition of inefficient
investments; (ii) no recognition of costs for the works that
exceed 10% of budgeted costs; and (iii) the possibility of
modifying the annual investment plan by a maximum of
10% once it has been submitted.
In July 2017, ANRE published a letter containing the basic
principles for the calculation of the distribution rates for
the fourth regulatory cycle, including substantial changes
regarding WACC, operating expenses, regulatory asset
base, other revenue, current assets, own use and annual
adjustments. The methodology is expected to be approved
On September 29, the Government Decree on state
in April 2018.
compensation for the connection of renewable resource
plants or peat-fired plants to the grid was published. The
Rates of last resort
rules, which apply to plants with an installed capacity of
up to 25 MW, establish that compensation may not ex-
ceed 70% of the grid connection cost or in any case 15
million rubles per plant.
Antitrust regulations
On July 5, 2016, the Federal Antimonopoly Service (FAS)
issued an official warning for T Plus to cease its unfair
practices against Enel Russia in the heat market. More
specifically, the warning requires T Plus to enter into a
heat supply contract with Enel Russia for the SuGRES
plant in Yekaterinburg.
Heat market
According to the calendar for the liberalization of regulated
rates for residential customers, the percentage of electri-
city that suppliers of last resort must purchase on the free
market will be 80% in the 1st Quarter of 2017 and 90% in
the 2nd Quarter of 2017.
ANRE also approved the final rates. The regulated compo-
nent for 2017 was reduced by 6.47% owing to the decrea-
se in distribution rates. The competitive market component
(CPC) fell by about 3%-4.8% during the 1st Half of the year
compared with the 2nd Half of 2016 as a result of the de-
cline in distribution rates. In the 3rd Quarter, the rate, ho-
wever, increased by around 10.8% compared with the 1st
Half of 2017 due to rate corrections for previous periods.
Therefore Enel began legal proceedings against ANRE. Du-
ring the 4th Quarter the rates rose by approximately 9%
With a decree of December 1, 2016, the government es-
over the 3rd Quarter.
133
Report on operations As of January 1, 2018, the unregulated percentage is 100%.
and revenue for the 1st Half of 2017;
The CPC rates for the 1st Half of 2018 were raised by 0.44%
> phase 2 (starting January 1, 2018): simulation at the con-
compared with the rates for the 4th Quarter of 2017.
sumer level.
Regulatory framework for suppliers
of last resort
On June 8, 2017, ANRE approved the suspension of the
ANRE has designated 2019 as the deadline for implementa-
tion of the binomial tariffs.
Smart metering
market for the purchase of electricity for universal servi-
As part of the smart metering pilot project, at the end of
ce customers (households and small businesses) called
2016 110,000 meters had been installed. The results of the
PCSU. The suspension was in effect until August 10, 2017
pilot project were transmitted to ANRE, which is preparing
and was prompted by the limited volumes indicated in the
a cost-benefit analysis for approval of the mass roll-out
bids for the 3rd Quarter 2017 auctions. As a result of this
project for 2017-2020.
decision, the suppliers of last resort must buy electricity
In December ANRE published a draft order on the smart
on other free markets, such as the day-ahead market and
meter roll-out, envisaging a 10% cap on investment in me-
the centralized markets for bilateral contracts. In July, Enel
ters out of the distributors’ entire investment plan for 2017
officially appealed the decision.
and 2018, and a ceiling of about €61 on the total unit cost
In 2017, ANRE began revising the PCSU rules, the metho-
for customers for 2018. In addition ANRE set June 30, 2018
dology for adjusting the criteria for suppliers of last resort
as the final date for approval of the roll-out terms and con-
and the rules for the suppliers of last resort. In September,
ditions.
Enel began legal action to dispute the legality of the metho-
dology for determining the rates for suppliers of last resort.
Distribution rates for 2017
Rebranding of distribution companies
On August 16, ANRE sent electricity distribution compa-
nies a letter containing the minimum measures distributors
In December 2016, ANRE published distribution rates for
must implement with regard to rebranding.
2017, equal to an average of 98.6 lei/MWh, down about 8%
Between October and December 2016, Enel notified ANRE
compared with distribution rates in 2016.
that it had adopted a new name and logo for its distribution
In 2017, Enel’s distribution companies charged an average
companies in Romania and modified the corresponding li-
rate of 98.6 lei/MWh, about 8% lower than in 2016 (107.2
censes.
lei/MWh).
In December 2017, following the consultation on the calcu-
lation of rates, ANRE approved the rates applied as from
January 1, 2018.The average rate of Enel’s distribution
companies are 101.53 lei/MWh, about 3% higher than in
2017 (98.6 lei/MWh).
2017 binomial tariff
Renewables
The Romanian government adopted Order 24/2017, which
took effect on April 1, 2017, modifying Law 220/2008 and in-
troducing a number of changes:
> Green certificates (GCs):
-
the granting of 2 GCs for photovoltaic system gene-
ration is postponed to between January 1, 2025 and
With Decision 71 of January 26, 2017, ANRE approved the
December 31, 2030;
timetable for introducing the binomial tariff for transmission
-
the recovery of GCs from wind power generation,
and distribution services. The project will be carried out in
already postponed, is set for between January 1, 2018
two phases:
and December 31, 2025;
> phase 1 (January 1, 2017 - October 31, 2017): simulation
-
the price of the CGs can fluctuate between €29.40
at the distribution service operator (DSO) level, without
and €35, with no indexing to inflation;
affecting customers. In 2017 the DSOs monitored the
-
the GCs granted do not expire, remain valid until the
data according to the simulation calendar and transmit-
incentive period ends and can be sold only once.
ted to ANRE the analysis and impact on regulated costs
> Market:
134
Annual Report 2017 - bilateral contracts for the sale of GCs remain valid but
cannot be extended beyond their current expiry date;
United Kingdom
- creation of two anonymous trading platforms as from
September 1, 2017 for: (i) spot or forward sales of
GCs; (ii) the sale of renewable energy in combination
with GCs (not yet in operation).
> Batteries:
- GCs can be granted for green energy storage in bat-
teries.
Polonia
Capacity market
On December 28, 2017, the president signed the Power Mar-
ket Act introducing a capacity market in Poland. The first auc-
tion is to be held in 2018 for the 2021-2023 delivery period.
Subsequent auctions will be held every five years to cover a
10-year delivery period. In addition it will be possible to hold
quarterly auctions announced one year prior. Demand-side
response will be able to participate in the 5-year auctions if
adequate investment is demonstrated.
The Power Market Act must still be approved by the Euro-
pean Commission with respect to state aid rules.
The British government and Ofgem published the Smart
Systems and Flexibility Plan on July 24, 2017. The objective
is to open all markets to demand-side response, introduce
real-time ancillary services and simplify metering require-
ments.
New de-rating factors for storage for capacity market partici-
pants have been introduced starting with the 2018 auctions.
On June 13, 2017, National Grid opened a consultation on
“System Needs and Product Strategy”, followed by a prod-
ucts roadmap, published on December 19, for frequency re-
sponse and reserve balancing services.
In December 2017, the government published the draft stat-
utory instrument that transposes the Medium Combustion
Plant Directive, which introduces tighter controls on emis-
sions by generators.
Republic of Ireland and
Northern Ireland
Capacity market
Demand-side response
On November 24, 2017 the European Commission approved
the new joint capacity market for the two countries under
The transmission authority began to prepare the calls for
state aid rules. The first auction was held on December 15,
tender for demand-side response in the balancing mar-
2017, with the delivery period set for May 23 through Sep-
kets. Total demand for 2017-2018 was set at 500 MW
tember 30, 2019.
(eight hours in the summer and four hours in the winter),
The market design enables the participation of demand-side
of which 40% for summer capacity and 55% for winter ca-
response operators in a manner similar to that for genera-
pacity. The current call for tender provides for an additional
tors. The EU authorization requires demand-side response
500 MW.
Green mobility
operators to have equal access to the capacity market by
October 2020.
The green mobility law was approved on January 4, 2018,
Ancillary services
envisaging the installation of charging stations in 2018-
The ancillary services market was reformed with the goal of
2019. The goal is to install 6,400 charging stations for elec-
ensuring system stability, even in a situation of high renewa-
tric vehicles, of which 400 will be high-voltage stations,
bles penetration. New ancillary services were also estab-
and 70 service stations offering natural gas. They will be
lished, guaranteeing the same treatment for demand-side
located in 32 densely populated areas and their installation
response and conventional generation. The first call for ten-
will be public-private finance initiatives. If the installation
ders was published on December 12, 2017, with a deadline
targets are not met by the end of 2019, the local authorities
of February 8, 2018 for products with a 5-year delivery period
of those areas will be required to draw up development
starting May 1, 2018.
plans for the stations lacking. The distribution system op-
erators will be responsible for building charging stations in
the areas they cover.
135
Report on operations Greece
Renewables
Greece’s renewables incentive system ensures remunera-
tion using feed-in tariffs for all projects submitted prior to
December 31, 2015. Starting January 1, 2016 projects are
guaranteed a feed-in premium that varies by resource. In
order to raise more funds to support these incentives and
eliminate the deficit accumulated thus far, the Greek gov-
ernment introduced a component specifically to be paid by
electricity suppliers.
With Resolution 616/2017 the Greek regulator considerably
reduced the forced disconnections of wind power plants op-
erating on non-interconnected islands.
In October 2017, the system that allowed large industrial
customers to obtain remuneration for agreed service inter-
ruptibility expired. The system was reactivated starting Jan-
mitted to reaching ambitious development targets for re-
newables: 1 GW by 2020 and 4.7 GW by 2030.
In November 2017 the first tender for wind and photovolta-
ic projects was completed. Enel Green Power participated
and is awaiting the results.
Germany
Renewables
The new RES law (EEG), which entered force in January 2017,
introduces a system of auctions for most renewables tech-
nologies. Offers will specify an amount of installed capacity
each year in order to foster new lines of growth, which are:
a) for onshore wind plants, 2.8 GW per year for 2017-2019
and 2.9 GW per year after 2020 (repowering included); b) for
offshore wind plants, 15 GW by 2030. Two offers are planned
for 2017 and 2018 of 1.55 GW each; c) for photovoltaic plants,
uary 2018 through the end of 2019. The scheme is financed
to 2.5 GW per year, of which 600 MW in auctions.
by renewables operators that do not operate in the islands
through a percentage of their revenue, differentiated by
technology: wind, 2%; photovoltaic, 3.6%; and small hy-
droelectric plants, 1%.
Bulgaria
Renewables
The current system of incentives is based on feed-in tariffs
that vary by renewable resource. The mechanism is available
to photovoltaic, wind and hydroelectric plants under 10 MW
and biomass systems under 5 MW.
Since 2012 a number of measures have been introduced to
reduce the system deficit caused by increasing incentives
for renewables. These include a local tax of 20% (subse-
As demonstrated by the initials auctions conducted in 2017,
current legislation is so favorable to local communities that
participate with their projects that they were awarded most
of the available capacity. For this reason the legislation was
provisionally modified for the first two auctions in 2018 and
should lead to results that are more balanced among the
various kinds of participants.
The coalition agreement between CDU/CSU and SPD in-
cludes, among other things, further increases equal to
around 4 GW of the capacity auctions in 2019-2020.
South America
quently revoked), network access charges, increases in bal-
The Group operates in South America in Argentina, Brazil,
ancing costs, a 5% tax on revenue and limits on volumes
Chile, Colombia and Peru. Each country has its own regula-
eligible for incentives.
tory framework, the main features of which are described
As of March 2015, once the European renewable generation
below for the various business activities.
targets are reached, plants above 30 kW will no longer be
eligible for incentives.
Tunisia
Renewables
With the approval of Law 12/2015, Tunisia began to de-
velop a regulatory system to support renewable energy
with three different systems of incentives (concessions,
authorizations and self-consumption). The country is com-
136
Under the regulations established by the competent au-
thorities (regulatory authorities and ministries) in the various
countries, operators are free to make their own decisions
concerning investment in generation. Only in Argentina, fol-
lowing the change in energy policy in recent years, is there
a regulatory framework that envisages greater public control
of investments. In Brazil plans for new generation capacity
are imposed by ministerial order, and this capacity is devel-
oped through auctions open to all.
Annual Report 2017 All of the countries have a centralized dispatching system
document (in force from 1 May to 31 October 2017) will be
with a system marginal price. Usually, the merit order is cre-
authorized jointly given the time taken to implement the
ated based on variable production costs that are measured
new legislation. The generation company will sign a com-
periodically, with the exception of Colombia, where the merit
mitment contract for guaranteed availability with CAMME-
order is based on the bids of market operators.
SA, which can then transfer it on the basis of a request
Currently in Argentina and Peru, regulatory measures are in
of the SEE. The remuneration established for each gene-
place governing the formulation of the spot market price. In
ration unit will be proportionate to actual compliance with
Argentina, regulators are working to ensure greater sustain-
the contractual terms, with the value calculated at the mi-
ability in the electricity market, increase the efficiency of that
nimum price. Conversely, thermal generators will be able
market and implement a sweeping rate revision to enable
to offer additional capacity availability for bimonthly periods
operators to meet their cash needs and resume mainte-
that can be subcontracted at maximum prices.
nance of power stations and networks.
The remuneration established by Resolution 19/2017 is de-
Long-term auction mechanisms are widely used for whole-
nominated in US dollars and is converted at the exchange
sale energy and/or capacity sales. These systems guarantee
rate published by Argentina’s central bank on the last day
continuity of supply and offer greater stability to generation
before the termination of each period set by CAMMESA.
companies, with the expectation that this encourages new
investments. Long-term sales contracts are used in Chile,
In the renewables sector, the new legislation postpones
Brazil, Peru and Colombia. In Brazil, the price at which elec-
achievement of the target of meeting 8% of national elec-
tricity is sold is based on the average long-term auction pric-
tricity demand with power generated from renewable re-
es for new and existing energy. In Colombia, the price is set
sources to December 31, 2017, and establishes a series
by auction between the operators, which usually enter into
of phases for achieving 20% in 2025, setting intermediate
medium-term contracts (up to four years). Finally, a regula-
targets of 12%, 16% and 18% for 2019, 2021 and 2023
tory framework recently introduced in Chile and Peru allows
respectively. Law 27191 creates a trust fund (FODER) to
distribution companies to sign long-term contracts to sell
finance works, grant tax benefits to renewable energy
electricity on regulated end-user markets. Chile, Peru and
projects and establish grants at the national, provincial and
Brazil have also approved legislation to encourage the use
municipal levels until 2025. Large customers (with capacity
of unconventional renewable resources, which sets out the
requirements of more than 300 kW) will have to individual-
objectives for the contribution of renewable resources to the
ly meet the above goals, stipulating in the associated con-
energy mix and governs their generation.
tracts that the price shall not exceed $113/MWh, and esta-
Argentina
Rate revision and other regulatory
developments in 2017
On February 2, 2017, Resolution 19/2017 was published by
the Secretaría de Energía Eléctrica (SEE). It sets out the
guidelines for defining the rate remuneration for existing
generation plants. Resolution 19/2017 establishes remune-
ration based on capacity by technology and scale. In ad-
dition, for thermal units it also provides for the possibility
of undertaking commitments to ensure plant availability for
additional remuneration. The generation company can de-
clare its availability for each period (summer and winter),
the amount of capacity guaranteed by each generation
unit for a period of three years, differentiating supply by
blishing penalties for those who do not meet these targets.
In February 2017 the new rate rules and mechanisms were
approved.
On February 1, 2017, ENRE published Resolution 64, which
closed the RTI (Revisión Tarifaria Integral) process and esta-
blished the annual remuneration paid to Edesur SA totaling
14,539,836,941 Argentine pesos (about €830 million).
Under the new rate system, the Mercado Eléctrico Mayori-
sta limited increases in the Valor Agregado de Distribución
(VAD) with specific instructions to ENRE. The new value for
this rate component took effect on February 1, 2017, but
invoicing of the amount is initially limited to a maximum of
42% of the total. Invoicing of the full amount will only be
possible as from February 1, 2018, with an intermediate
step in November 2017 where the 42% limit is raised in
season. The only exception for 2017 is that the declaration
part.
of guaranteed availability and the seasonal winter planning
The rules also establish that ENRE shall pay Edesur and
Edenor the portion already accrued and not invoiced betwe-
137
Report on operations en February 1, 2017 and February 1, 2018 in 48 installments
assignment of about 3 GW of existing capacity.
as from February 1, 2018, which will be incorporated in the
In April 2017, a resolution introduced an indemnity mecha-
value of the VAD to be invoiced subsequently.
nism for costs incurred by hydroelectric plants as a result
The new rules also provide for updating the rates of distri-
of foregone generation due to the forced entry of thermal
bution companies on the basis of inflation and criteria for
generation plants that are theoretically outside the merit
service quality and regulation of supply.
order curve.
SEE Resolution 1085/2017 modifies, as of December 1,
2017, the way in which operators pay for electricity tran-
sport, although the remuneration has not been changed
Updated Bandeiras Tarifárias
As of November 2017, the generation cost classes (Bandei-
apart from what is already incorporated in the rate revision.
ras Tarifárias) are as follows:
It establishes that:
> “Green”: favorable hydroelectric generation conditions;
> the costs associated with the remuneration for transport
are divided in proportion to demand;
> generation companies will only pay the direct connection
> “Yellow”: $R1.00 per 100 kWh;
> “Red level-1”: $R3.00 per 100 kWh;
> “Red level-2”: $R5.00 per 100 kWh.
costs;
> CAMMESA shall propose the needed changes to the
processes covered by the measure within 90 days.
Conta de Desenvolvimento
Energético (CDE)
Brazil
Rate revision for Enel Distribución Rio
SA (formerly Ampla)
On March 14, 2017, Enel Distribución Rio SA signed a new
concession agreement (sixth revision) following public
hearings 095 and 058. At the hearings, the parties involved
discussed the regulation and application of the rate mecha-
nism by the distribution companies, leading to the approval
of the amendments discussed, which were to be incorpo-
rated in the concession agreement in accordance with De-
cree 2194/2016.
Rate revision for Enel Distribución
Ceará SA (formerly Coelce)
On April 20, 2017, ANEEL endorsed the rate revision for
Enel Distribución Ceará SA with Resolution 2.223.
Created with Law 10438/2002, the CDE is a government
fund designed to foster the development of generation
from alternative energy sources, promote the globalization
of energy services and subsidize low-income residential
customers. The fund is financed with a surcharge levied
through rates for consumers and generators.
ANEEL’s initial proposal was to reduce the rate surcharge
for the CDE by 36%, taking account of the fact that the
substantial reduction in the cost of fuels, which had already
begun in 2015, had not been promptly reflected in reduc-
tions in the rate surcharges in 2016.
Resolution 1.576 authorized distribution companies to off-
set the reduction in amounts billed (following application
of the court ruling upholding the demand of certain appel-
lants to be charged a lower CDE rate surcharge) in monthly
installments. The difference between the normal rate and
that established in the court ruling will be recovered by the
distribution companies through smaller monthly payments
to the fund.
Renewables
In April 2017, the Ministry of Energy, following up on the
measures already taken to reduce market over-contracting,
published a resolution defining the mechanism for the auc-
tion to void contracts signed in the past within the context
of reserve auctions. The auction is scheduled to take place
on August 31, 2017. A second auction for the reallocation
of terminating hydroelectric plant concessions is expected
to take place by the end of September and will involve the
Enel Distribuição Goiás rate revision
On October 17, 2017, ANEEL approved the updated rate
for Enel Distribuição Goiás through Resolution 2,317. The
annual rate revisions for Enel Distribuição Goiás mean an
average increase of 14.65% for consumers.
Specifically, this reflects the average of the increases of
12.03% and 15.89% respectively for low-voltage and high-
voltage consumers.
138
Annual Report 2017 White rate
On September 12, 2016, ANEEL approved regulation.
Distribution service quality technical
regulations
733/2016 establishing the conditions for applying the new
On December 18, 2017 CNE Resolution 706 was published,
hourly rates for low-voltage power, the so-called white rate.
setting higher distribution services quality standards.
The white rate is a new hourly rate option that changes
depending on the time of day and will differ on the basis of
the consumption level of each customer as from 2018. Ini-
tially, the new rate will apply to consumers with low-voltage
connections (127, 220, 380 or 440 V, group B) and new cus-
tomers. As from January 2020, it will be an option for any
consumer, with the exception of those who already benefit
from certain preferential rates.
Chile
Renewables
On March 30, 2017 Resolution 154 was published. It es-
tablishes the terms and conditions for the application of
the Mechanism for Open Access to the system, legislat-
ing articles 79 and 80 of the General Electrical Service
Act. The resolution, which anticipates the rules in the
Transmission Act, includes, for the first time in Chilean
law, a mechanism that permits the reservation of techni-
cal capacity for future projects in both private and public
Electricity distribution
transmission systems.
Enel is promoting a demonstration project to install 50,000
smart meters in 2016, with the ultimate goal of replacing
all existing meters (about 1.6 million) by 2020.
This investment will be recognized by Chile’s regulator
(CNE) if it recognizes the legitimacy of including the cost
of the operation in the Valor Agregado de Distribución.
In this regard, on September 5, Chilectra presented the
CNE with a study prepared by Systeple to define the cost
components of the VAD with a view to setting the rates
that will enter force on November 4, 2016.
At the same time, Chile’s parliament approved the “Ley
de equidad tarifaria”, which modifies the rate structure in
areas were generation plants are located in order to equal-
ize these areas with the urban areas where greater econo-
mies of scale can be achieved.
The “Ley de transmisión eléctrica” (Law 20.936) achieved
the objective of unifying the various electricity dispatching
centers in the country, as well as eliminating the payment
of transmission charges by generators and passing them
on to society as a whole through rates. In 2017 the regu-
lations and implementing decrees were published, with
the exception of the ancillary services regulation, which is
In April 2017, the Ministry of Public Assets published a
ministerial order modifying the conditions for concessions
for use of public lands for the development of renewables
projects. More specifically, the maximum period for the
entry into service of the plant has been extended (from 3
to 10 years) and the cost of the concession has been re-
duced considerably (eliminating payment of a double tariff
and lowering the values of the associated guarantees).
Peru
Emergency response to flooding in
March 2017
Supreme Decree 007-2017-EM, issued in response to the
heavy rains that fell in March 2017 in Peru and the damage
produced by the consequent flooding, approved immedi-
ate measures to secure the supply of electricity to custom-
ers of the public power service at the national level. These
included a suspension of service quality standards and the
declaration of a 30-day state of emergency in the SEIN.
Supreme Decree 008-2017-EM also responded to the
flooding emergency with an authorization protocol for elec-
expected to be published in 2018.
tricity imports.
In addition, along with the “Ley de transmisión eléctrica”,
Resolution 650 was published, establishing the payment
of taxes on thermal power plant emissions under the tax
reform.
139
Report on operations North and Central America
United States of America
Federal level
Following the November 2016 elections, in March 2017,
President Trump signed an executive order asking the En-
vironmental Protection Agency (EPA) to take steps to undo
the Clean Power Plan, the 2015 proposal that regulates
greenhouse gas emissions from power plants in order to
stimulate demand for renewable energy projects in the
years following regulatory compliance period that begins
in 2022.
In December 2017, the United States undertook a complete
overhaul of the federal tax code, cutting the corporate tax
rate to 21% and changing the rules on depreciation to al-
low 100% of expenditure to be depreciated in years 2018
through 2022, and reducing this percentage from 2023 to
2026.
In April 2017, US photovoltaic solar cell manufacturer Su-
niva submitted a petition with the US International Trade
Commission (USITC) to safeguard Section 201 of the Trade
Act of 1974, asserting it has suffered harm as a result of the
importation of low-priced photovoltaic cells and modules.
House Bill 2298 ends the eligibility for tax credit for all pro-
jects that had not become operational before July 1, 2017,
including Enel Green Power North America projects under
construction and in the pipeline.
Mexico
Renewables
The Energy Ministry published the requirements for the
Energía Limpia certificates that companies must meet for
the years 2018 through 2022, specifically: 5.0% for 2018;
5.8% for 2019; 7.4% for 2020; 10.9% for 2021; 13.9% for
2022.
The Comisión Reguladora de Energía (CRE) and Comisión
Federal de Electricidad (CFE) published the methodology
for calculating the regulated rate and the rates for 2018.
They will be revised each year.
In 2017 the third long-term auction was held, with 7,451
MW being awarded at an average price of 20.57 MWh/$
+ clean energy certificates (CELs). The first two auctions
were held in 2015 and 2016.
Panama
Renewables
In May, the USITC decided to move ahead with an inves-
The Panamanian government is issuing a new law on elec-
tigation to determine whether the photovoltaic products
tricity making changes to the national transmission com-
were imported into the US in such quantities as to threaten
pany, introducing a new “market participants” designation
the US photovoltaic manufacturing industry. In September,
and imposing a carbon tax on greenhouse gas emissions.
the USITC found that domestic PV production was injured
The third electricity transmission line was inaugurated on
by imports and in October it recommended three separate
October 26, 2017 and will be managed by the national dis-
remedies to President Trump. These remedies included po-
patch center. The project is expected to improve the trans-
tential tariffs and import licenses. Solar market experts pre-
port of electricity from the province of ChiriquÍ, where
dicted that the prices of PV solar panel prices will increase
Enel Fortuna is located, to Panama City.
by between $0.01 and $0.32 per watt depending on the
remedy. Under the Trade Act of 1974, the President has
the authority to accept or modify the recommendations of
the USITC. The President is expected to make a decision
Sub-Saharan Africa and
Asia
in January 2018.
State level
In April 207 Oklahoma Governor Mary Fallin signed SB 593
and HB 2298 into law. Senate Bill 593 eliminates some of
the requirements for wind energy facilities for private air-
ports and also establishes a notification system for facilities
India
Renewables
India is a federal republic composed of 29 states, each of
which has specific responsibilities in various sectors as
well as shared responsibility with the federal government
that are to be built in areas where oil and gas are found.
in the electricity sector.
140
Annual Report 2017 The Ministry of New and Renewable Energy (MNRE)
On May 18, 2017, the government announced the new
defines and implements policy for the development of
tax rates for goods and services under the Goods & Ser-
renewable energy at the national level. In addition to
vices Tax Law reform, begun in the 3rd Quarter of 2016
the Ministry, the power market is supervised at the fed-
to simplify the country’s indirect tax system, and taking
eral level by the Central Energy Regulatory Commission
effect July 1, 2017. The rate for most of the components
(CERC), which sets guidelines and standard rates, and by
needed to build renewables plants is 5%, leading to a
the State Energy Regulatory Commissions (SERC), which
slight overall increase since previously such components
implement them at the state level.
fell into tax exempt categories.
In June 2015 the government headed by Prime Minister
Narendra Modi approved a target of 175 GW of renewa-
bles capacity by 2022, including 100 GW from solar, 60
GW from wind and about 15 GW from other technologies.
This ambition target was further strengthened in October
2016, when India ratified the Paris climate agreement in
December 2015, committing itself to cut carbon emis-
sions by 33-35% (Intended Nationally Determined Contri-
bution - INDC) from their 2005 levels and to ensure that
40% of its installed capacity will be generated from non-
fossil sources by 2030.
The renewables sector is highly fragmented since each
state has its own regulatory scheme for developing new
capacity. As a general rule, each state sets non-binding
annual obligations, called Renewable Purchase Obligations
(RPOs), for the share of electricity to be generated from re-
newable resources. The state distribution companies must
meet the RPOs by buying or producing renewable energy
or by purchasing Renewable Energy Certificates (RECs).
In general, the most often used way is to buy renewable
energy through auctions. This instrument has been used
since 2010 for solar power through the Jawaharlal Nehru
National Solar Mission (JNNSM) program, whose imple-
mentation is overseen mainly by Solar Energy Corpora-
tion India (SECI), and through state auctions. Wind power,
however, has only been formally subject to auctioning
since January 2017, following the publication of the imple-
mentation directives by the MNRE in 2016; the auctions
replace the earlier system based on preferred feed-in tar-
iffs set by each state.
Usually the winners of the auctions are awarded 25-year
power purchase agreements (PPAs) at fixed rates with
SECI or Power Trading Company (PTC), which in turn sell
the electricity through power sales agreements (PSAs) to
state distribution companies (Discoms).
The federal Generation Based Incentive (GBI), which pro-
vided for premiums to be paid by Indian Renewable En-
ergy Development Agency Limited (IREDA) in addition to
the state preferred feed-in tariffs for wind plants, ceased
as of April 1, 2017.
South Africa
Renewables
In May 2011, South Africa approved a target of 17.8 GW of
installed renewable capacity by 2030 based upon the long-
term energy strategy set out in the 2010-2030 Integrated
Resource Plan. The primary tool to be used in achieving this
target is the Renewable Energy Independent Power Produc-
er Procurement Programme (REIPPPP), an auction system
launched in 2011 that seeks to install around 13 GW in new
renewable capacity between 2014 and 2020 (hydroelectric
<40 MW, concentrated solar and photovoltaic, wind, bio-
mass, biogas and landfill gas power). Currently, five rounds
(bid windows) are scheduled, four of which have already
been held, with the award of more than 5,000 MW of ca-
pacity. In 2015 an additional round – called the Expedited
Round, or Round 4.5 – was added and held for an additional
1,800 MW, which have not yet been assigned.
After a pre-qualification phase, which is concerned with
technical and financial issues, qualified projects are chosen
based upon two criteria: the bid price (weighted 70%) and
the economic development content of the project (weighted
30%). The latter is based upon a series of parameters focus-
ing on the economic development of the country, including
local content and the creation of jobs for South Africans, es-
pecially non-whites.
The winners are awarded 20-year power purchase agree-
ments (PPAs) with Eskom, the national power utility. Es-
kom’s payments are guaranteed by the government.
The program has been suspended due to Eskom’s delay in
signing the PPAs for the winners of Rounds R3.5 and R4,
while the winners of Round R4.5 have not been announced.
Negotiations are under way between Eskom, the independ-
ent power producers and the Department of Energy to re-
solve the situation.
At the end of March 2017 the public consultation on the
draft revision published in November 2016 by the South Afri-
can Department of Energy (DOE) was concluded. This draft
141
Report on operations was a revision of the Integrated Energy Plan (IEP) and the
> the Small-scale Renewable Energy Scheme creates a
Integrated Resource Plan (IRP), the long-term plans incor-
financial incentive for households or small business cu-
porating the development strategy for the country’s energy
stomers to install small-scale renewable energy systems
and electricity sectors through 2050. The final documents
(usually rooftop solar panels), for which they can receive
are expected to be published in the 1st Quarter of 2018.
Small-scale Technology Certificates (STCs). Retailers are
NERSA, the national electricity regulator, is in the process of
also required to buy these STCs in specified amounts.
revising the rules on the use of the national grid by third par-
ties (wheeling), on the granting of generation licenses and
The states have their own renewable energy policies and
on distributed generation.
some – with more ambitious targets than the federal ones
Australia
Renewables
Australia is a federal constitutional monarchy composed of
six states and two territories. The electricity sector is regulat-
ed by a collection of federal and state policies, overseen by
various actors. The primary regulators at the central level are:
the Council of Australian Governments (COAG), made up of
the federal and state energy ministers who guide the devel-
opment of energy policies; the Australian Energy Regulator
(AER), which is the economic regulator; the Australian Ener-
gy Market Commission (AEMC), which is the rule maker and
is responsible for market development; and the Australian
Energy Market Operator (AEMO), which is the system and
market operator. Each state has its own regulatory bodies.
The electricity system is divided into two primary mar-
kets: the National Electricity Market (NEM), which covers
the eastern part of the country where almost 90% of the
population resides, and the Wholesale Electricity Market
(WEM) in the west, which is much smaller. Both the NEM
and the WEM, albeit in slightly different ways, operate as
spot markets for electricity, facilitating exchange between
generators and suppliers to end users (retailers) and to
large industrial customers.
The country has a Renewable Energy Target (RET) scheme
– have introduced in recent years programs in support of
green energy. The state renewable energy targets are, for
example:
> Victoria: 25% of electricity from renewable sources by
2020 and 40% by 2025 (about 3.3 GW). Auctions began
at the end of 2017;
> Queensland: 50% by 2030. In August 2017 a tender was
launched for 400 MW of electricity and storage;
> South Australia: 50% by 2025. At the end of 2017 auc-
tions for technologically advanced renewable resources
and storage were announced.
In the last few years the regulatory framework has been
rapidly evolving to match the profound changes that have
been occurring in the electricity sector, such as the integra-
tion of renewable power plants and the closing of obsolete
coal-fueled plants.
In October 2017 the federal government introduced a new
policy for the NEM, addressing primarily the security and
reliability of the electricity system, consumer prices and
reducing emissions. Under the new policy, called the Na-
tional Energy Guarantee (NEG), retailers are required to
buy an appropriate mix of resources to provide:
> a “reliability guarantee”, to ensure the right amount of di-
spatchable energy;
> an “emissions guarantee”, to help reduce emissions in
line with Australia’s international commitments (reduc-
tion of emissions by 26-28% by 2030 compared with
that is operated in two parts:
2005).
The new policy must be approved by the states and the
operational details must still be defined. It will not be im-
plemented before the end of 2019.
> the Large-scale Renewable Energy Target (LRET), set in
2015 at 33,000 GWh (around 23% of demand) of genera-
tion by 2020, to be maintained at this level until 2030. The
LRET creates a financial incentive for renewable energy
power plants, which can produce Large-scale Generation
Certificates (LGSs) to be sold to retailers. These retailers
are required buy them in an amount equal to a certain
percentage of the electricity sold to end users, currently
around 14%;
142
Annual Report 2017 Main risks and
uncertainties
Due to the nature of its business, the Group is exposed to
See also the “Reference scenario” section for an analysis
a variety of risks, notably financial risks, industrial and envi-
of the factors that represent some of the underlying bases
ronmental risks and regulatory risk. In order to mitigate its
for these risks.
exposure to these risks, Enel conducts specific analysis,
measurement, monitoring and management activities, as
described in this section.
Strategic risks connected with developments in the
market, competitive and regulatory environment
On November 21, 2017, the Enel Group presented its Stra-
nomic variables, as well as the evolution of the regulatory
tegic Plan for 2018-2020 to the financial community. It sets
framework.
out the strategic guidelines and the performance and finan-
The 2018-2020 Strategic Plan, drawn up on the basis of
cial objectives of the Group. The document used for the
these assumptions, includes the following estimates and
presentation, “Capital Markets Day - Strategic Plan 2018-
forecasts for the years 2018, 2019, 2020 and average
2020”, is available to the public on the Enel Group website
growth in 2018-2020. The achievement of the objectives is
at www.enel.com in the Investor Relations section.
based on a set of assumptions on the occurrence of future
The Enel Group Strategic Plan is implemented through a
events and actions that the Enel Group plans to undertake,
process that involves all the Business Lines and the Coun-
including assumptions of a general and hypothetical nature
tries/Regions of the Enel Group, which prepare their action
relating to future events and actions that will not neces-
plans on the foundation of the strategic guidelines speci-
sarily occur. Accordingly, the forecasts, being based on
fied by the Parent Company. These plans are finally consoli-
hypotheses about future events and actions undertaken,
dated in the Group’s Strategic Plan.
or still to be undertaken, by management, are character-
The preparation of the Enel Strategic Plan is based, inter
ized by an inherent degree of subjectivity and uncertainty
alia, on certain assumptions concerning future events that
and, in particular, by the risk that forecast events and the
management expects will occur and actions that it intends
actions that could follow from those events may not occur
to undertake at the time the Plan is prepared, as well as
or may occur at different times and in different amounts
general assumptions about future events and manage-
from those originally planned, while events and actions
ment actions that may not necessarily occur, as they de-
that were unforeseeable at the time of preparation could
pend essentially on variables that are outside the control
instead occur. Therefore, divergences between final out-
of management. More specifically, the Strategic Plan is
comes and forecast values could be significant.
based on assumptions about scenarios and the position-
In addition, the markets and businesses in which the Group
ing of the business. The former include developments in
operates are currently experiencing gradual and growing
electricity, gas, fuel and raw materials prices, the evolution
competition and change in their competitive, technological
of electricity and gas demand in the markets where the
and regulatory contexts, with the timing and pace of these
respective Groups operate, developments in macroeco-
developments varying from country to country. As a result
143
Report on operations of these processes, the Group is exposed to increasing
sources with appropriate investment plans in a variety of
competition.
countries.
The business risks generated by the natural participation
The Group often operates in regulated markets or regulated
of the Group in such markets have been addressed by
regimes, and changes in the rules governing operations in
integrating along the value chain, with a greater drive for
such markets and regimes, and the associated instructions
technological innovation, diversification and geographical
and requirements with which the Group must comply, can
expansion. More specifically, the initiatives taken have in-
impact our operations and performance.
creased the customer base in the free market, with the
In order to mitigate the risks that such factors can engender,
aim of integrating downstream into final markets, optimiz-
Enel has forged closer relationships with local government
ing the generation mix improving the competitiveness
and regulatory bodies, adopting a transparent, collaborative
of plants through cost leadership, seeking out new high-
and proactive approach in tackling and eliminating sources
potential markets and developing renewable energy re-
of instability in regulatory arrangements.
Risks connected with CO2 emissions
In addition to being one of the factors with the largest po-
monitors the development and implementation of EU and
tential impact on Group operations, emissions of carbon
Italian legislation, diversifies its generation mix towards the
dioxide (CO2) are also one of the greatest challenges facing
the Group in safeguarding the environment.
use of low-carbon technologies and resources, with a fo-
cus on renewables and nuclear power, develops strategies
EU legislation governing the emissions trading scheme im-
to acquire allowances at competitive prices and, above all,
poses costs for the electricity industry. In order to mitigate
enhances the environmental performance of its generation
the risk factors associated with CO2 regulations, the Group
plants, increasing their energy efficiency.
Financial risks
As part of its operations, Enel is exposed to a variety of fi-
The financial risk governance system also defines a system
nancial risks that, if not appropriately mitigated, can directly
of operating limits at the Group and individual Region, Coun-
impact our performance. These include market risks, credit
try and Global Business Line levels for each risk, which are
risk and liquidity risk.
monitored periodically by risk management units. For the
The financial risk governance arrangements adopted by
Group, the system of limits constitutes a decision-making
Enel establish specific internal committees, composed of
tool to achieve its objectives.
top management and chaired by the Chief Executive Of-
For further information on the management of financial
ficers of the companies involved, which are responsible
risks, please see note 42 ”Risk management” of the con-
for policy setting and supervision of risk management, as
solidated financial statements.
well as the definition and application of specific policies at
the Group and individual Region, Country and Global Busi-
ness Line levels that establish the roles and responsibilities
for risk management, monitoring and control processes,
ensuring compliance with the principle of organizational
separation of units responsible for operations and those in
charge of monitoring and managing risk.
Market risks
The market risks to which the Group is exposed are con-
nected to the fluctuation of commodity prices, exchange
rates and interest rates.
To maintain the exposure to market risk within operating
limits, Enel also uses derivatives.
144
Annual Report 2017 Risks connected with
commodity prices and supply
continuity
Enel operates in energy markets and for this reason is ex-
posed to changes in the prices of fuel and electricity, which
can have a significant impact on its results.
panies are exposed, while translation risk is not hedged.
Appropriate operational processes ensure the definition
and implementation of appropriate hedging strategies,
which typically employ financial derivatives obtained on
OTC markets.
Interest rate risk
To mitigate this exposure, the Group has developed a strat-
The Group is exposed to the risk that changes in the level
egy of stabilizing margins by contracting for supplies of fuel
of interest rates could produce unexpected changes in net
and the delivery of electricity to end users or wholesalers
financial expense or the value of financial assets and liabili-
in advance.
ties measured at fair value.
Enel has also implemented a formal procedure that pro-
The exposure to interest rate risk derives mainly from the
vides for the measurement of the residual commodity risk,
variability of the terms of financing, in the case of new
the specification of a ceiling for maximum acceptable risk
debt, and from the variability of the cash flows in respect
and the implementation of a hedging strategy using deriva-
of interest on floating-rate debt.
tives on regulated markets and over-the-counter (OTC) mar-
The policy for managing interest rate risk seeks to contain-
kets.
ing financial expense and its volatility by optimizing the
In order to mitigate the risk of interruptions in fuel supplies,
Group’s portfolio of financial liabilities and by obtaining fi-
the Group has diversified fuel sources, using suppliers
nancial derivatives on OTC markets.
from different geographical areas.
Exchange rate risk
Credit risk
Commercial, commodity and financial transactions expose
In view of their geographical diversification, access to in-
the Group to credit risk, i.e. the possibility of a deterioration
ternational markets for the issuance of debt instruments
in the creditworthiness of our counterparties that could
and transactions in commodities, Group companies are ex-
have an adverse impact on the expected value of the credi-
posed to the risk that changes in exchange rates between
tor position and, for trade receivables only, increase aver-
the currency of account and other currencies could gener-
age collection times.
ate unexpected changes in the performance and financial
The exposure to credit risk is attributable to the following
aggregates in their respective financial statements.
types of operations:
Given the current structure of Enel, the exposure to ex-
> the sale and distribution of electricity and gas in free and
change rate risk is mainly linked to the US dollar and is at-
regulated markets and the supply of goods and services
tributable to:
(trade receivables);
> cash flows in respect of the purchase or sale of fuel or
> trading activities that involve the physical exchange of
electricity;
assets or transactions in financial instruments (the com-
> cash flows in respect of investments, dividends from for-
modity portfolio);
eign subsidiaries or the purchase or sale of equity invest-
> trading in derivatives, bank deposits and, more generally,
ments;
financial instruments (the financial portfolio).
> cash flows connected with commercial relationships;
The policy for managing credit risk associated with com-
> financial assets and liabilities.
mercial activities provides for a preliminary assessment of
The Group’s consolidated financial statements are also
the creditworthiness of counterparties and the adoption of
exposed to the exchange rate risk deriving from the con-
mitigation instruments, such as obtaining collateral or un-
version into euros of the items relating to investments
secured guarantees.
in companies whose currency of account is not the euro
In addition, the Group undertakes transactions to assign re-
(translation risk).
ceivables without recourse, which results in the complete
The exchange rate risk management policy is based on sys-
derecognition of the corresponding assets involved in the
tematically hedging the exposures to which the Group com-
assignment.
145
Report on operations Finally, with regard to financial and commodity transac-
financing. A deterioration in the credit rating could therefore
tions, risk mitigation is pursued through the diversification
restrict access to the capital market and/or increase the cost
of the portfolio (preferring counterparties with a high credit
of funding, with consequent negative effects on the perfor-
standing) and the adoption of specific standardized con-
mance and financial situation of the Group.
tractual frameworks that contain risk mitigation clauses
In 2017, Enel’s ratings from the rating agencies Moody’s and
(e.g. netting arrangements) and possibly the exchange of
Fitch did not change, while Standard & Poor’s upgraded its
cash collateral.
Liquidity risk
Liquidity risk is the risk that the Group, while solvent, would
rating from “BBB” to “BBB+”. Accordingly, at the end of the
financial year, Enel’s rating was: (i) “BBB+” with a stable out-
look for Standard & Poor’s; (ii) “BBB+” with a stable outlook
for Fitch; and (iii) “Baa2” with a stable outlook for Moody’s.
Enel’s liquidity risk management policies are designed to
not be able to discharge its obligations in a timely manner
maintain a level of liquidity sufficient to meet its obligations
or would only be able to do so on unfavorable terms owing
over a specified time horizon without having recourse to
to situations of tension or systemic crises (credit crunches,
additional sources of financing as well as to maintain a pru-
sovereign debt crises, etc.) or changes in the perception of
dential liquidity buffer sufficient to meet unexpected obli-
Group riskiness by the market.
gations. In addition, in order to ensure that the Group can
Among the factors that define the risk perceived by the
discharge its medium and long-term commitments, Enel
market, the credit rating assigned to Enel by rating agencies
pursues a borrowing strategy that provides for a diversified
plays a decisive role, since it influences its ability to access
structure of financing sources to which it can turn and a
sources of financing and the related financial terms of that
balanced maturity profile.
Country risk
By now, more than 50% of the Enel Group’s total revenue
The former include the tensions in Spain, the talks for the
is generated abroad. The substantial internationalization of
renegotiation of NAFTA and those relating to Brexit, and
the Group – which among other regions operates in South
the deterioration in relations between the United States and
America, North America, Africa and Russia – requires Enel
North Korea. In particular, in assessing risk, Brazil, while re-
to consider and assess country risk, which consists of the
maining in an intermediate class, showed a slight increase in
macroeconomic, financial, regulatory, market, social and
risk associated with socio-political factors. Political instability
geopolitical risks whose manifestation could have an ad-
in the country has delayed the implementation of structural
verse impact on income or threaten corporate assets. Enel
reforms capable of raising the country’s potential. The results
has therefore adopted a model for assessing country risk
of elections in a number of European countries reduced po-
in the countries in which it operates. In order to mitigate
litical tensions, leaving the risk unchanged at a very low level.
country risk, the model supports capital allocation and in-
vestment evaluation processes.
The economic factors include the risks associated with the
sustainability of fiscal balances in the face of the investments
The year 2017 was marked by the strengthening of the
necessary to increase productivity, or the lack of diversifica-
global recovery and international trade. The signals of more
tion of the South American countries, which increases their
buoyant activity that emerged at the end of 2016 were con-
exposure to cyclical fluctuations, or the spread of protectionist
firmed in 2017. Economies boosted by cyclical factors and
policies. From a financial point of view, the gradual normaliza-
stimulated by expansionary monetary policies grew at a
tion of central bank policies, which could increase the volatil-
rapid pace. Despite the improvement in the global environ-
ity of financial markets, should not be overlooked. The global
ment and the increase in the level of confidence, political
banking system, helped by the positive economic situation
and economic risks remain.
and as a consequence of the increasing level of regulation of
the sector, is on a more solid footing than the previous year.
146
Annual Report 2017 Industrial and environmental risks
Extreme weather events
and natural disasters in the
current climate scenario
Within the current climate scenario, the Group is exposed
to the risk of damage to assets and infrastructures caused
by extreme weather events or natural disasters and to the
risk of the consequent prolonged unavailability of these
assets. In order to mitigate these risks, the Group uses
the most advanced prevention and protection strategies,
with the concomitant aim of reducing the possible impacts
on the communities and the areas surrounding the assets:
constant monitoring and weather forecasting in the areas
where the most exposed assets are located. Furthermore,
numerous actions have been taken to increase the resil-
ience of the assets most exposed to extreme weather or
natural disasters.
climatic variables (both gradual and extreme) on Enel’s busi-
nesses. These scenarios are used to assess the possible
economic and financial impacts on the business and to
evaluate the Group’s strategy and the related risk manage-
ment and governance arrangements. Constant effort goes
into monitoring the development and implementation of
Community and national regulations, maintaining transpar-
ent and constructive relationships with local and interna-
tional regulatory authorities and bodies.
The Group is also involved in the continuous improve-
ment of the environmental impact of its existing activi-
ties through its emission reduction targets, first and fore-
most the goal of “zero-emission generation” in 2050. Enel
adopts a strategy aimed at growth through development of
increasingly low-carbon technologies and services, in line
with the COP21 objectives.
All of the areas of the Group undergo ISO 14001 certifica-
tion and potential sources of risk are monitored with the
implementation of internationally recognized Environmen-
tal Management Systems (EMS) so that any critical issues
Risks related to cyber
attacks
The era of digitization and technological innovation means
can be detected promptly.
that organizations are increasingly exposed to cybernetic
Failure to mitigate and
adapt to climate change
The fight against climate change is one of the major global
challenges, which exposes the Group to a variety of me-
dium/long-term risk factors. These include the risks related
to legislative and regulatory changes associated with the
fight against climate change. Work is also carried out to as-
sess the risks connected with the impact of gradual climate
changes (e.g. air and water temperatures) on the operation
of our assets.
Furthermore, the socio-economic transformations related
to climate change are analyzed to assess the impact they
can have on the Group’s business and activities.
In order to assess and quantify the main risks related to the
failure of climate change mitigation efforts, an analysis of
long-term climate scenarios was launched, in line with the
indications of Bloomberg’s Task Force for Climate-related
Financial Disclosures. The focus of the exercise was to
analyze the possible impacts of developments in the main
attacks, which are becoming increasingly numerous and
sophisticated, partly reflecting the changes in the context
in which they occur. The organizational complexity of the
Group and the numerous environments it encompasses
(data, people and the industrial world) expose our assets
to the risk of attacks. The Enel Group has adopted a model
for managing these risks based on a “systemic” vision
that integrates the traditional information technology sec-
tor, the operational technology field most closely linked to
the industrial sector and the Internet of Things associated
with the networking of smart “objects”. In particular, Enel
has adopted a “Cyber Security Framework” to guide and
manage cyber security activities, which provides for the in-
volvement of the business areas, the implementation of
legislative, regulatory and legal requirements and recom-
mendations, the use of the best available technologies, the
preparation of ad hoc business processes and an informed
workforce. The Framework bases strategic decisions and
design activities on a “risk-based” approach and a design
and development model that defines the appropriate se-
curity measures throughout the life cycle of applications,
147
Report on operations processes and services (cyber security by design). Enel has
tional and international communities, in order to direct an
also created its own active Cyber Emergency Readiness
industrialized response to cyber threats and incidents.
Team (CERT), which is recognized and accredited by na-
148
Annual Report 2017 Outlook
The Group’s 2018-2020 Strategic Plan, presented in No-
by 2020 has been confirmed.
vember 2017, confirms the key pillars of its strategy, with an
> Shareholder remuneration: dividend pay-out confirmed
additional evolution and acceleration of its implementation.
at 70% on Group net ordinary income from 2018. Mini-
Digitalization and customer focus remain major enabling
mum dividend per share set at €0.28 in 2018.
factors for the strategy, with a view to offering sharehol-
ders attractive returns and create sustainable long-term
2018 will see:
value for all stakeholders. Specifically, the Group’s 2018-
> the continuation of investments in digitalization, with
2020 Strategic Plan focuses on the following issues.
an acceleration of the installation of second-generation
smart meters in Italy and completion of their installa-
> Digitalization: €5.3 billion in investment to digitalize
tion in Iberia. The roll-out of the optical fibre network by
Enel’s asset base, operations and processes and enhan-
OpEn Fiber will also be accelerated;
ce connectivity, with a target of €1.9 billion in cumulati-
> the contribution of the customer focus strategy on a
ve incremental EBITDA between 2018 and 2020.
global scale, with the launch of the new customer expe-
> Customer focus: a target of €3.3 billion of EBITDA in
rience platform in Italy in particular and the acceleration
2020, of which €2.9 billion from the retail power and
of Enel X’s activities in the flexibility and electric mobi-
gas sector and €400 million from Enel X, leveraging 67
lity businesses;
million customers and almost 35 million power and gas
> substantial progress in operational efficiency, supported
customers in the unregulated market expected in 2020.
by digitalization, with a cash cost target of €10.3 billion
> Operational efficiency: a target of €1.2 billion of savings
in 2020;
in real terms in 2020 vs. 2017, of which €500 million
> the contribution of industrial growth, focused on net-
driven by increased investments in digitalization.
works and renewables, with an EBITDA growth target
> Industrial growth: shifting capital allocation towards
of €1.1 billion;
mature economies mainly in networks and renewables,
> additional progress in the simplification of the Group
with around 80% of growth capex invested in Italy, Ibe-
and active portfolio management, with the completion
ria and North and Central America.
of the restructuring of the assets in Chile and the asso-
> Group simplification & active portfolio management:
ciated reduction in minority shareholders, and comple-
continuing the streamlining of the ownership structu-
tion of the BSO (”Build, Sell and Operate”) transforma-
re of subsidiaries and rationalizing the operating com-
tion for renewables assets in Mexico.
panies in South America. Increased focus on minority
buy-outs, increasing investment target to €2.3 billion in
The progress achieved for each of the enabling factors and
2018-2020. Possibility of share buybacks of up to €2
the key pillars of the Strategic Plan permit us to confirm
billion.
the performance/financial targets for 2018. In addition, on
> Creating sustainable long-term value: thanks to the
the basis of the key elements presented above, the per-
excellent results obtained in 2017, the Group has streng-
formance and financial targets underpinning the Group’s
thened its commitment towards: SDG 4 (quality educa-
2018-2020 Strategic Plan are as follows.
tion), doubling the previous target to 800,000 beneficia-
ries; SDG 7 (clean and accessible energy), confirming
the target of 3 million beneficiaries; SDG 8 (decent work
and economic growth), for which the previous target
has been doubled to 3 million beneficiaries; and SDG 13
(climate action), for which the target of <350 gCO2/kWeq
149
Report on operations Recurring EBITDA
Net ordinary income
Minimum dividend
Pay-out
FFO/Net financial debt
billions of euro
billions of euro
euro per share
%
%
2018
~16.2
~4.1
0.28
70
27
2019
~17.2
~4.8
-
70
29
2020
CAGR 18-20
~18.2
~5.4
-
70
31
~+6%
~+15%
-
-
~+4 p.p.
150
Annual Report 2017 Other
information
Non-EU subsidiaries
At the date of approval by the Board of Directors of the
(formerly Empresa Nacional de Electricidad SA, a Chilean
financial statements of Enel SpA for 2017 – March 22, 2018
company belonging to Enel Chile); 15) Enel Generación
– the Enel Group meets the “conditions for the listing of
Perú SAA (formerly Edegel SA, a Peruvian company be-
shares of companies with control of over companies esta-
longing to Enel Américas); 16) Enel Green Power Brasil
blished and regulated under the law of non-EU countries”
Participações Ltda (a Brazilian company belonging to
(hereinafter “non-EU subsidiaries”) established by CON-
Enel Green Power); 17) Enel Green Power Chile Ltda (a
SOB with Article 15 of the Market Regulation (approved
Chilean company belonging to Enel Green Power); 18)
with Resolution 20249 of December 28, 2017).
Enel Green Power del Sur SpA (a Chilean company belon-
Specifically, we report that:
ging to Enel Green Power); 19) Enel Green Power México
> in application of the materiality criteria for the purposes
S de RL de Cv (a Mexican company belonging to Enel
of consolidation provided for in Article 15, paragraph 2,
Green Power); 20) Enel Green Power North America Inc.
of the CONSOB Market Regulation, 23 non-EU subsidia-
(a US company belonging to Enel Green Power); 21) Enel
ries of the Enel Group have been identified to which the
Kansas LLC (a US company belonging to Enel Green Po-
rules in question apply on the basis of the consolidated
wer); 22) Enel Russia PJSC (a Russian company); 23) Gas
accounts of the Enel Group at December 31, 2016.
Atacama Chile SA (a Chilean company belonging to Enel
They are: 1) Enel Distribución Rio SA (a Brazilian company
Chile);
belonging to Enel Américas); 2) Cimarron Bend Assets
> the balance sheet and income statement for the 2017
LLC (formerly Cimarron Bend Wind Project LLC, a US
financial statements of the above companies included in
company belonging to Enel Green Power); 3) Codensa
the reporting package used for the purpose of preparing
SA ESP (a Colombian company belonging to Enel Améri-
the consolidated financial statements of the Enel Group
cas); 4) Enel Distribución Ceará SA (a Brazilian company
will be made available to the public by Enel SpA (pursuant
belonging to Enel Américas); 5) Dominica Energía Limpia
to Article 15, paragraph 1a) of the Market Regulation) at
S de RL de Cv (a Mexican company belonging to Enel
least 15 days prior to the day scheduled for the Ordinary
Green Power); 6) Emgesa SA ESP (a Colombian com-
Shareholders’ Meeting called to approve the 2017 finan-
pany belonging to Enel Américas); 7) Empresa Distribu-
cial statements of Enel SpA together with the summary
idora Sur - Edesur SA (an Argentine company belonging
statements showing the essential data of the latest an-
to Enel Américas); 8) Empresa Eléctrica Panguipulli SA
nual financial statements of subsidiaries and associated
(a Chilean company belonging to Enel Green Power); 9)
companies (pursuant to the applicable provisions of Arti-
Enel Américas SA (a Chilean company resulting from the
cle 77, paragraph 2-bis, of the CONSOB Issuers Regula-
demerger of Enersis SA); 10) Enel Brasil SA (a Brazilian
tion approved with Resolution 11971 of May 14, 1999);
company belonging to Enel Américas); 11) Enel Chile SA
> the articles of association and composition and powers
(a Chilean company resulting from the demerger of Ener-
of the control bodies from all the above subsidiaries have
sis SA); 12) Enel Distribución Chile SA (formerly Chilectra
been obtained by Enel SpA and are available in updated
SA, a Chilean company belonging to Enel Chile); 13) Enel
form to CONSOB where the latter should request such
Distribución Perú SAA (formerly Empresa de Distribución
information for supervisory purposes (pursuant to Article
Eléctrica de Lima Norte SAA, a Peruvian company be-
15, paragraph 1b) of the Market Regulation);
longing to Enel Américas); 14) Enel Generación Chile SA
> Enel SpA has verified that the above subsidiaries:
151
Report on operations - provide the auditor of the Parent Company, Enel SpA,
auditor of the Parent Company, Enel SpA, of income
with information necessary to perform annual and in-
statement, balance sheet and financial data necessa-
terim audits of Enel SpA (pursuant to Article 15, para-
ry for preparation of the consolidated financial state-
graph 1 (letter c-i)) of the Market Regulation);
ments (pursuant to Article 15, paragraph 1 (letter c-ii))
- use an administrative and accounting system appro-
of the Market Regulation).
priate for regular reporting to the management and
Approval of the financial statements
The Shareholders’ Meeting to approve the financial state-
120 days from the close of the financial year, permitted un-
ments, as provided for by Article 9.2 of the bylaws of Enel
der Article 2364, paragraph 2, of the Italian Civil Code, is
SpA, shall be called within 180 days of the close of the fi-
justified by the fact that the company is required to prepare
nancial year.
consolidated financial statements.
The use of that time limit rather than the ordinary limit of
Disclosures on financial instruments
The disclosures on financial instruments required by Article
ment”, note 33 “Derivatives and hedge accounting” and note
2428, paragraph 2, no. 6-bis of the Civil Code are reported
34 “Fair value measurement” to the separate financial state-
in note 31 “Financial instruments”, note 32 “Risk manage-
ments of Enel SpA.
Transactions with related parties
For more information on transactions with related parties, please see note 35 to the separate financial statements of Enel
SpA.
Own shares
The company does not hold treasury shares nor did it engage in transactions involving own shares during the year.
152
Annual Report 2017 Atypical or unusual operations
Pursuant to the CONSOB Notice of July 28, 2006, Enel did
lating the transfer price or timing could give rise to doubts
not carry out any atypical or unusual operations in 2017.
concerning the propriety and/or completeness of disclosure,
Such operations include transactions whose significance,
conflicts of interest, preservation of company assets or pro-
size, nature of the counterparties, object, method for calcu-
tection of minority shareholders.
Subsequent events
Significant events following the close of the year are discussed in note 50 to the consolidated financial statements.
153
Report on operations 02Sustainability
The sustainable business model
In an environment of constant and rapid change, exposing
and which are a part of policies and standards of conduct
the energy industry to new risks and offering new oppor-
that are applicable throughout the Group.
tunities, Enel’s model of sustainable business leverages
It is a model that promotes sustainable development and
the synergies among the various business areas and the
is fully in line with the indications of the United Nations
outside world in order to develop innovative solutions to
Global Compact, of which Enel has been an active mem-
reducing our environmental impact, to meeting the needs
ber since 2004, reiterating the importance of increasing
of local communities and to improving safety for both
the integration of sustainability within the company’s stra-
employees and suppliers. Understanding the context in
tegic decision-making processes. Enel’s CEO has been
which Enel operates and actively listening to everyone
a member of the United Nations’ Global Compact Board
with whom we work enable us to create sustainable long-
since June 1, 2015.
term value, blending economic and social growth. It is a
A key aspect of this approach is the adoption of envi-
strategic and operational approach founded on the “Open
ronmental, social and governance (ESG) sustainability
Power” concept of openness, where sustainability and in-
indicators throughout the value chain, not only for asses-
novation are an essential combination.
sments of results achieved, but above all to drive decision-
Framing this are the principles of ethics, transparency,
making and develop a proactive stance, in line with the
anti-corruption, human rights and health and safety that
Sustainable Development Goals (SDG) 2030 of the United
have always been a distinctive feature of Enel’s operations
Nations.
Enel’s commitment to the United Nations’ Sustainable
Development Goals
On September 25, 2015, the United Nations formally adopted the new Sustainable Development Goals (SDGs) 2030
that were officially launched the next day at the Private Sector Forum held in New York City. Through the SDGs, the
United Nations called on companies to be creative and innovative in addressing the challenges of sustainable deve-
lopment, such as poverty, gender equality, clean water, clean energy and climate change. The success in achieving
the new goals will rely heavily on the policies that will be adopted by all actors involved.
The sustainability of Enel’s strategy is also confirmed by the rapid progress achieved in contributing to attaining the
17 SDGs, with a focus on four in particular:
> SDG 7 - ensuring access to affordable, reliable, sustainable and modern energy, including the promotion of energy-
efficiency services, the beneficiaries of which will include three million people primarily in Africa, Asia and South
America by 2020. In the 2015-2017 period, 1.7 million beneficiaries had been reached.
> SDG 4 - supporting projects to ensure inclusive and equitable quality education for 400,000 people by 2020. In the
2015-2017 period, about 600,000 beneficiaries had been reached, prompting us to double the goal to 800,000 bene-
ficiaries by 2020.
> SDG 8 - promoting sustained, inclusive and sustainable economic growth for 500,000 people by 2020. In the 2015-
2017 period, around 1.5 million beneficiaries had been reached, so the target was doubled again to 3 million benefi-
ciaries by 2020.
> SDG 13 - taking targeted action to achieve decarbonization by 2050. As of December 2017, specific CO2 emissions
totaled 411 g/kWheq and the target has been confirmed at <350 gCO2/kWheq by 2020.
156
Annual Report 2017 For the second time, Enel was included in the “Change
quently, it is possible to verify the degree of alignment or
the World” ranking produced by Fortune magazine, which
misalignment between external expectations and internal
classifies the world’s 50 leading companies whose opera-
priorities.
tions create a positive social impact. The commitment to
The materiality analysis, which is conducted with increasin-
decarbonization, the construction of the first geothermal
gly greater detail in terms both of issues and geographical
plant in South America (Cerro Pabellón) and the Vehicle-
scope, makes it possible to identify the company and sta-
to-Grid (V2G) hub in Denmark, which transfers unused
keholder priorities for the entire Group and for each country
power from electric vehicles to the grid, are just some of
of operations. It is also possible to obtain results with a
the activities taken into consideration. Enel is also ranked
specific focus such as the matrix for the sole stakeholder
19th in Forbes’ classification of the “500 best employers”
category of “financial community”, which is useful for iden-
in the world.
tifying issues to be discussed in the Annual Report in order
to provide integrated reporting on performance. In particu-
Non-financial information is coming under increasing scru-
lar, this analysis has pointed to the following priorities: new
tiny by investors and the financial markets, who are now
technologies, services and digitization, decarbonization of
focusing on the ability of a company to make sustainable
the energy mix, efficiency in operations, the creation of
long-term business plans that translate into concrete, me-
economic and financial value, and health and safety in the
asurable actions and better financial performance.
workplace.
Socially responsible investment funds continued growing
Based on the material analysis results, the issues to be in-
in 2017. Enel has 160 socially responsible investors (up
cluded in the reports are defined and the specific targets
from 150 in 2016), which hold about 8.6% of all Enel sha-
and objectives of the 2018-2020 Strategic Plan are set.
res in circulation (compared with 8% in 2016), equal to
Operations and projects regarding various functions and
11.3% of the float (10.5% in 2016). In absolute value, sha-
Business Lines of the Group contribute towards achieving
res held by SRI investors increased by 8%.
these targets and objectives as detailed in the 2018-2020
Priority analysis and
definition of sustainability
goals
For several years now, Enel has conducted materiality
Sustainability Plan.
As part of its Strategic Plan, Enel has identified the most
significant emerging risks:
> cyber attacks (“cyber risk”): the era of digitization and
technological innovation means that organizations are
increasingly exposed to cybernetic attacks, which are
becoming increasingly numerous and sophisticated,
analyses – based on the guidelines of the most widely
partly reflecting the changes in the context in which they
adopted standards such as the Global Reporting Initiative
occur. The organizational complexity of the Group and
(GRI) – in order to identify the Group’s intervention priori-
the numerous environments it encompasses (data, pe-
ties, the issues to consider for disclosure and which sta-
ople and the industrial world) expose our assets to the
keholder-engagement activities to strengthen. The aim is
risk of attacks. The Enel Group has adopted a model for
to map and assess the priority of the issues of interest to
managing these risks based on a “systemic” vision that
stakeholders, integrating them into the Group’s business
integrates the traditional information technology sector,
strategy and priorities for action.
the operational technology field most closely linked to
Through this analysis, the main stakeholders of the Group
the industrial sector and the Internet of Things associa-
are identified and assessed according to their importance
ted with the networking of smart “objects”;
to the company and to their priorities on the various issues
> paradigm change in the world of energy and the transfor-
approached in the numerous engagement activities. This
mation of the business model of utilities: new macroe-
information is then crosschecked with the assessments of
conomic and energy trends, technologies and actors can
the issues on which Enel intends to focus its efforts, with
potentially support and decrease the intermediation role
the respective priority value.
of the traditional business model of utilities, especially
By observing the two perspectives together, it is possible
through the combination of factors linked to digitization
to identify the issues, which, due to their relevance and
and decentralization and changes in customer needs.
priority, are essential to Enel and our stakeholders. Conse-
Enel’s strategy and “Open Power” vision represent the
157
Report on operations - Sustainability framework for responding to the challenges of the tran-
interest entities, has drafted a “Consolidated non-financial
sition towards the utility of the future. The pillars of that
statement” that covers the areas provided for in that de-
strategy are the development of new businesses, indu-
cree, accompanying the Group’s Sustainability Report.
strial growth and agility in operations (operational effi-
The reporting process involves collecting and calculating
ciency, organizational simplification, short-term remune-
specific key performance indicators of economic, envi-
ration, active portfolio management), while the central
ronmental and social sustainability in accordance with the
focus on customers and the digital transformation repre-
GRI international standards and the Electric Utilities Sector
sent the main enabling factors for the strategy.
Disclosures, as well as with the principles of accountability
Management and
reporting of non-financial
information
Enel undertakes to constantly manage and measure sustai-
of the United Nations Global Compact. More specifically, as
from 2017 the new GRI sustainability reporting standards
apply.
Projects, activities, performance and the other main re-
sults, including progress made towards the SDGs in line
with the SDG Compass, are presented in Enel’s Sustaina-
bility Report, the completeness and reliability of which are
nability performance by using and developing mechanisms
verified by an accredited external auditing firm, by the Con-
that allow for an integrated, standardized system of acti-
trol and Risk Committee and by the Corporate Governance
vities and information that are kept constantly up to date
and Sustainability Committee. The documents are appro-
based on developments in the scope of operations and re-
ved by the Board of Directors of Enel SpA and presented in
levant standards, while promoting the sharing of best prac-
the Shareholders’ Meeting.
tices and experience.
Finally, the Group is included in the leading sustainability
The Group, in implementation of the new EU (Directive
indexes, such as the Dow Jones Sustainability Index World,
2014/97/EU) and national legislation (Legislative Decree
FTSE4Good, the Carbon Disclosure Project (CDP) Climate
254/2016) that has introduced mandatory of non-financial
and the Carbon Disclosure Project (CDP) Water, the STOXX
information as from the 2017 financial year for large public-
ESG Leaders, the Euronext Vigeo Eiris and the ECPI.
Values and pillars of corporate ethics
A robust system of ethics underlies all activities of the Enel
Energia, Enel Sole, Enel Green Power, e-distribuzione,
Group. This system is embodied in a dynamic set of rules
Enel Trade) and foreign subsidiaries. The anti-bribery certi-
constantly oriented towards incorporating national and in-
fication process is expected to be completed for the main
ternational best practices that everyone who works for and
Enel Group companies in 2018-2019.
with Enel must respect and apply in their daily activities. The
system is based on specific compliance instruments: the
Code of Ethics, the Human Rights Policy, the Zero-Toleran-
ce-of-Corruption Plan, the Enel Global Compliance Program,
Code of Ethics
In 2002, Enel adopted a Code of Ethics, which expresses
the Compliance Model under Legislative Decree 231/2001
the company’s ethical responsibilities and commitments in
and any other national compliance models adopted by Group
conducting business, governing and standardizing corpora-
companies in accordance with local laws and regulations.
te conduct on the basis of standards aimed to ensure the
In 2017, Enel SpA achieved certification of the conformity
maximum transparency and fairness with all stakeholders.
of its anti-bribery management system with the internatio-
The Code of Ethics is valid in Italy and abroad, taking due
nal certification standard ISO 37001:2016 concerning anti-
account of the cultural, social and economic diversity of
bribery management systems. Also last year, analogous
the various countries in which the Group operates. Enel
efforts to achieve ISO 37001 certification were begun at
also requires that all associates and other investees and its
the Group’s main Italian (Enel Italia, Enel Produzione, Enel
main suppliers and partners adopt conduct that is in line
158
Annual Report 2017 with the general principles set out in the Code.
Programs can be reported, including in anonymous form,
Any violations or suspected violations of Enel Compliance
through a single Group-level platform (the “Ethics Point”).
Other indices
No.
Confirmed violations of the Code of Ethics (1)
2017
27
2016
21
Change
6
29.0%
(1) In 2017, an analysis was performed of violations reported in 2016. As a result, the number of verified violations reported for 2016 was changed from 18 to
21.
Compliance Model
(Legislative Decree
231/2001)
Legislative Decree 231/2001 introduced into Italian law
a system of administrative (and de facto criminal) liability
for companies for certain types of offences committed by
their directors, managers or employees on behalf of or to
the benefit of the company. Enel was the first organiza-
tion in Italy to adopt, back in 2002, this sort of compliance
model that met the requirements of Legislative Decree
231/2001 (also known as “Model 231”).
Zero-Tolerance-of-
Corruption Plan
In compliance with the tenth principle of the Global Com-
pact, according to which “businesses should work against
corruption in all its forms, including extortion and bribery”,
Enel is committed to combatting corruption. For this rea-
son, in 2006 we adopted the Zero-Tolerance-of-Corruption
(ZTC) Plan as confirmation of the Group’s commitment, as
described in both the Code of Ethics and the Model 231,
to ensure propriety and transparency in conducting com-
pany business and operations and to safeguard our image
and positioning, the work of our employees, the expecta-
tions of shareholders and all of the Group’s stakeholders.
Enel Global Compliance
Program
The Enel Global Compliance Program for the Group’s foreign
Human Rights Policy
In order to give effect to the United Nations Guiding Princi-
companies was approved by Enel in September 2016. It is a
ples on Business and Human Rights, in 2013 the Enel SpA
governance mechanism aimed at strengthening the Group’s
Board of Directors approved the Human Rights Policy,
ethical and professional commitment to preventing the com-
which was subsequently approved by all the subsidiaries
mission of crimes abroad that could result in criminal liability
of the Group. This policy sets out the commitments and
for the company and do harm to our reputation.
responsibilities in respect of human rights on the part of
The types of crime covered by the Enel Global Compliance
the employees of Enel SpA and its subsidiaries, whether
Program – which encompasses standards of conduct and
they be directors or employees in any manner of those
areas to be monitored for preventive purposes – are based
companies. Similarly, with this formal commitment, Enel
on illicit conduct that is generally considered such in most
explicitly becomes a promoter of the observance of such
countries, such as corruption, crimes against the government,
rights on the part of contractors, suppliers and business
false accounting, money laundering, violations of regulations
partners as part of its business relationships. In 2017 the
governing safety in the workplace, environmental crimes, etc.
due diligence process continued in line with international
In 2017, the process of adopting the program by the Group’s
best practice in this field.
main foreign companies was completed.
159
Report on operations - Sustainability Creating value for stakeholders
Enel’s stakeholders are individuals, groups or institutions
good indication of how the Group has created wealth for
whose contribution is needed to achieve our mission or
the following stakeholders: shareholders, lenders, emplo-
who have a stake in its pursuit.
yees and government.
The economic value created and shared by Enel gives a
Millions of euro
Revenue
Income/(Expense) from commodity risk
External costs
Gross global value added from continuing operations
Gross value added from discontinued operations
2017
74,639
578
53,680
21,537
-
21,537
1,068
2,495
4,504
3,273
10,197
2016
70,592
(133)
49,257
21,202
-
21,202
2,542
2,698
4,637
3,244
8,081
Gross global value added
distributed to:
Shareholders
Lenders
Employees
Government
Enterprises
Innovation, digitization and operating efficiency
To promote new uses of energy and new ways of mana-
tribute to sustainable business practices and to transform
ging it and making it accessible to more people in a sustai-
ideas into actual projects. In terms of these collaborations,
nable manner, Enel has made innovation and digitization key
Enel’s focus is not only on partnerships with major corpora-
aspects of our business strategy. It is a strategy that touches
tions, but also on virtuous collaborations with start-ups and
both our traditional business and the development of new
small and medium-sized enterprises that are doing excellent
technologies and new business models in a manner that
work.
levers the creativity, passion, ideas and technologies both
Enel’s commitment to digital progress and open innovation
within the organization and from the outside.
was recognized in 2017 with the Business Model Transfor-
In line with our vision of Open Power, the Group promotes
mation Award for the fourth edition of the World Open In-
an open model of innovation in facing the challenges of the
novation Conference, one of the most important events
industry throughout the various areas of the organization.
worldwide in the field organized by the Garwood Center for
It is an approach based on sharing that enables us to face
Corporate Innovation and the University of California, Berke-
the challenges in all areas of the organization with start-ups,
ley, Haas School of Business and held in San Francisco.
industrial partners, small and medium-sized enterprises, re-
Enel is currently involved in some 200 innovation projects
search centers, universities, and crowdsourcing platforms.
and 14 Global Innovation Partnerships, bringing the total
Collaborations arise within the Open Innovation ecosystem,
number of local and global innovation partnerships to 124. In
with was renamed “Open Innovability” in 2017 as an expres-
2017, we also launched three more innovation hubs (in Cali-
sion of our firm belief at Enel that innovation and sustainabi-
fornia, Russia and Spain) to further strengthen Enel’s presen-
lity are always inextricably linked. It is an ecosystem that, in
ce in some of the world’s most cutting-edge ecosystems.
2017, enabled us to launch the online platform openinnovabi-
These innovation hubs make a new model of collaboration
lity.enel.com for individuals and businesses looking to con-
possible in that the Group provides the infrastructures and
160
Annual Report 2017 a global network of businesses along with their knowledge
a drone system at the Torrevaldaliga Nord plant to provide
and experience as global industry players. We also inaugu-
environmental monitoring and security services. The drone
rated the first Innovation Lab in Catania (Italy) to stimulate
is able to fly autonomously with the aid of video-analysis al-
research and innovation in the energy industry by creating a
gorithms and the definition of three-dimensional flight paths
technology campus and a business accelerator for young pe-
via software. An anti-drone system has also been installed to
ople designed to host local, national and international start-
protect the plant from intrusions by hostile drones.
ups and research centers.
The digital revolution of grids involved improvements to
Out of these intellectual collaborations and cross-contami-
efficiency and service quality for customers in the various
nations came innovative solutions that have also led to the
countries in which Enel operates. One major example is the
filing of specific patents. One such example in the workplace
microgrid in Paratebueno (Colombia), which made it possible
health and safety area is the fabric for gloves to be used
to bring sustainable electricity to a number of villages and
when working with low voltage, which was the result of a
which will serve to test new technologies to be replicated
collaboration between the Innovation unit of Global Thermal
in other areas. In Spain, within the scope of the project “la
Generation and Istituto Italiano di Tecnologia (IIT), which led
Graciosa”, Enel has worked to demonstrate the efficacy of
to the joint filing of a patent and an innovative agreement for
storage systems in order to maximize the penetration of re-
the joint management of the related rights.
newable energy while maintaining maximum service quality
The process of change must necessarily involve the deve-
in the distribution networks. Work also continued for the Eu-
lopment of specific projects to promote a culture of inno-
ropean project RESCCUE (Resilience to cope with Climate
vation and entrepreneurship globally, and this includes the
Change in Urban Areas), in which Enel is involved through
promotional campaign co-created by employees around the
our Spanish subsidiary, Endesa. The project was launched in
world known as “#nomoreexcuses”. The goal of this cam-
order to develop innovative tools and models to improve the
paign was to identify the causes – the “excuses” of the
ability of urban areas to face current and future challenges
hashtag – of the cultural obstacles to change, and for each of
related to climate change.
these a response was given in order to stimulate a reaction
Finally, the Group is also focusing on the fields of access
to overcome them and to promote an attitude of openness
to energy, the integration of renewables into the electrical
to innovation.
system, and the use of new technologies in order to improve
The main innovation efforts in 2017 in the field of thermal
energy access in local communities by electrifying remote
generation concerned improvements to plant flexibility and
areas by combining diverse generation technologies and
efficiency and minimization of emissions and environmental
using storage systems, while also seeking solutions to en-
impact, as well as the application of advanced monitoring
hance the efficiency and flexibility of renewable resources
and diagnostics system and Internet of Things (IoT) appli-
in urban settings, as well, and developing the use of new
cations and the development of storage systems and new
renewable resources that are not currently being exploited,
business models. One such example is the installation of
with a particular emphasis on marine energy.
Renewable energy and decarbonization
of the energy mix
Combatting climate change and protecting the environment
mix, Enel is active in innovation, digitization, electric mobi-
are among the responsibilities of a global energy organiza-
lity, energy efficiency and a range of other efforts. In this
tion like Enel as we seek to achieve full decarbonization of
scenario, Enel’s commitment to the circular economy, which
electricity production by 2050, thereby contributing to the
melds innovation, competitiveness and environmental su-
United Nations Sustainable Development Goal 13 (SDG 13).
stainability, involves all of the Group’s operations in achieving
Our strategy is based on a long-term vision with concrete
these objectives. In 2017, Enel had about 85 GW in installed
targets. In addition to actions that leverage the generation
capacity, an increase of about 2 GW over 2016 due mainly
161
Report on operations - Sustainability to the start of operations of new renewable plants in Brazil,
is fully aware that the availability of this resource is seen as
Peru, and the United States.
being a critical part of future energy scenarios. Enel has long
Production in 2017 totaled about 250 TWh, a reduction of
sought to enhance the efficiency of its management of the
about 12 TWh compared with 2016, mainly due to the de-
water we use, and we conduct ongoing monitoring of all po-
consolidation of the Slovakian plants, and a number of plants
wer plants located in areas threatened by water scarcity at
in Belgium and North America, only partly offset by the ac-
the following levels of analysis:
quisition of new plants. Approximately 43% of Enel’s power
> periodic mapping of all production sites in order to iden-
generation currently comes from zero-emission sources. In
tify potential risks in terms of water availability;
terms of environmental impact, the Group has confirmed its
> assessment of the consumption of freshwater;
medium-term target for 2020 of reducing specific emissions
> measures to optimize the use of sea water and waste
of CO2 by 25% compared with 2017 (<350 g/kWheq). In ab-
solute terms, CO2 emissions have decreased slightly from
2016; however, given the reduction in total net generation for
the Group, specific CO2 emissions increased by 4% compa-
red with the previous year (411 g/kWheq).
Other specific emissions, i.e. SO2 and NOx, also increased
slightly in relation to total power generation. Particulates, ho-
water;
> monitoring of climate and vegetation data for the various
sites.
Globally, Enel returns about 99% of the water used, and only
8% of the Enel Group’s total production uses and/or consu-
mes fresh water in water-stressed areas.
In 2017, overall water consumption totaled 126 million cubic
wever, have increased compared with 2016 due to an incre-
meters, a reduction of 15% from 2016 due to the elimination
ase in coal-fired thermal generation in Russia.
of thermoelectric and nuclear power plants.
With managed capacity1 of about 2.6 GW and managed ou-
Within the scope of total consumption, more than 5% of wa-
tput of about 7 TWh, the totals came to 87.6 GW of capacity
ter is reused, an increase compared with the previous year.
and about 257 TWh of output, respectively. As a result, total
zero-emission production is approximately 45% of the total
mix, and specific CO2 emissions come to 400 g/kWheq.
Enel has implemented specific policies aimed at protecting
the environment and natural resources, at combatting clima-
te change, and at contributing to sustainable economic deve-
lopment. A key element of these policies are our internatio-
nally recognized Environment Management Systems (EMS).
Specific demand in 2017 came to 0.49 l/kWheq, a reduction
of about 11% from 2016, which is in line with Enel’s com-
mitment to reducing water consumption by 30% compared
with 2010 levels by 2020.
Preserving biodiversity
Preserving biodiversity is one of the strategic objectives
Within the scope of our nuclear technology activities, Enel
of Enel’s environmental policy. The Group promotes spe-
is publicly committed to ensuring that our plants adopt a
cific projects in the various areas in which we operate in
clear nuclear safety policy and that those facilities are ope-
order to help protect local species, their natural habitats,
rated based on standards that ensure absolute priority is
and the local ecosystems in general. These projects cover
given to safety and the protection of employees, the gene-
a vast range of areas, including: inventory and monitoring;
ral public, and the environment. The policy in respect of nu-
programs to protect specific species; methodological re-
clear safety is to encourage excellence in all plant activities
search and other studies; repopulation and reforestation;
based on a strategy that seeks to go beyond mere com-
and the construction of infrastructure supports to promote
pliance with applicable laws and regulations and to ensure
the presence and activities of various species (e.g. artifi-
the adoption of management approaches that embody the
cial nests along power distribution lines or fish ladders at
principles of continuous improvement and managing risk.
hydroelectric plants).
Water resource
management
Water is an essential part of electricity generation, and Enel
In 2017, Enel entered into a collaboration with the Interna-
tional Union for the Conservation of Nature (IUCN), a global
authority on the preservation of biodiversity, to enhance
the Group’s biodiversity action plans. The IUCN will be hel-
ping Enel to assess the biodiversity risks and opportunities
associated with our thermal and renewable-energy plants,
1 Capacity operated through joint ventures in the renewables sector in Italy, the United States and Canada.
162
Annual Report 2017 to analyze best practices in order to prevent and minimize
velop an organizational reporting framework aligned with
the impact of biodiversity at our various sites, and to de-
the United Nations Sustainable Development Goals (SDG).
Human resource management,
development and motivation
As at December 31, 2017, the total workforce of the Enel
In line with this context, the recruiting process focused on
Group numbered 62,900 employees, 49.5% of which
finding specialist profiles with high-level digital skills able
within companies in Italy. This is a net increase of 800
to support the Group in the transformation process. Hiring
employees during the year due, mainly, to the acquisition
mainly concerned the ICT, market, communication, infra-
of Enel Distribuição Goiás in Brazil and of EnerNOC and
structures, and networks areas.
eMotorWerks in North America. Of the total of 2,301 new
hires, 18% were in Italy while the remaining 82% were
The Open Power model of values and conduct, applied to
distributed across the various countries abroad.
the various aspects of operations so as to increase the en-
In 2017, Enel’s organizational model, which features a ma-
represents a point of reference for all processes of human
gagement and participation of all those who work at Enel,
trix of business lines and geographical areas, was enriched
resources and development.
with a new, global “Enel X” Division in order to manage
all products and services other than the commodities and
The qualitative and quantitative performance-evaluation
to support Enel’s new business plan, one of the pillars of
process in 2017 involved the Group’s workforce at various
which is the central importance of the customer and the
levels. More specifically, for the qualitative evaluation, 90%
development of low-carbon technologies and services.
of the workforce participated in the self-assessment stage
Enel is going through a period of transition that involves not
part in the feedback interview with their supervisors.
only the introduction of innovative technologies, but also
Quantitative appraisals, in turn, were conducted for em-
an actual cultural change that concerns everyone. In order
ployees with variable salary components, which involved
to speed up the digital transformation of the entire orga-
the assignment of targets and the assessment of those
in 2017 and 99% in the evaluation stage, while 94% took
nization, we launched a program of change management
targets.
which began with three events (in Rome, Madrid, and Bo-
gota) in order to promote the leading drivers of digitization.
In order to ensure merit is properly promoted and mana-
In September 2017, a specific survey was also conducted
gerial continuity is effective, the Enel Group also managed
with all Enel personnel, with the participation of more than
development plans in a manner aimed at promoting the
25 thousand people, who offered some 40 thousand sug-
identification and differentiation of succession profiles for
gestions, comments and proposals. The three priorities
management positions.
that emerged (“My integration in the company”, “Knowing
The process is aimed at ensuring adequate organizational
my colleagues, the organization and company procedures”
controls while identifying the most strategic positions and
and “My training program”) were addressed with specific
providing each with a list of potential successors and the
actions including the interdisciplinary organization of work,
necessary development actions to support managerial
real-time communication and constant interaction with the
growth, while also taking account of the Enel Group’s com-
various corporate functions. This new and agile organizatio-
mitments in terms of diversity and inclusion.
nal culture is focused on people, involving them and holding
In order to ensure the efficacy of this process, all of the
them accountable with a view to rapidly creating value in a
Group’s management positions are analyzed based on the
collaborative and effective effort.
main variables of analysis according to an approach aligned
with international best practices, identifying for each the
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Report on operations - Sustainability successors that are ready now, ready over the short term,
our business. More specifically, Enel promoted solutions
or in the pipeline, i.e. ready over the medium term, with a
to improve the balance between private and working life
particular emphasis on young people, on women, and on
and to support the real everyday needs of our people. The
taking advantage of international and cross-functional ex-
years 2017 was marked by significant progress in consoli-
perience.
dating the culture of work flexibility and expanding smart
Talent management also supports this process, aimed at
working, which today involves nearly 9 thousand people in
identifying development projects suited to the various indi-
the various countries in which the Group operates.
vidual, professional profiles and to the positions for which
The impact of these policies is being monitored based on a
successors have been identified.
detailed set of indicators associated with the various actions
and contexts. More specifically, Enel has set the public objec-
Following the most recent corporate-climate survey in
tive of ensuring equal representation of the sexes in the initial
2016, which involved the Group’s entire workforce (with an
stages of the selection and recruiting process (approx. 50%
84% participation rate) and which pointed to a significant
by 2020). In 2017, in line with the established trajectory, we
level of overall consensus within the organization concer-
reached the level of 35% women in the selection process.
ning the various profiles analyzed, a detailed action plan to
respond to the various needs that emerged was defined. In
support of these outcomes, the group-wide action plan for
2017 called for the implementation of some 1,500 actions
Labor relations
Enel complies with the labor laws of the various countries in
targeting the priorities identified in a range of areas: Work-
which we operate and with the International Labor Organi-
Life Balance, Lifestyle Diversity and Work Environment,
zation (ILO) conventions on labor rights (i.e. freedom of as-
Open Power Culture, Working Relationships and Organiza-
sociation and of collective bargaining, consultation, the right
tion, Health and Safety, and Meritocracy.
to strike, etc.), while systematically promoting dialog betwe-
Diversity and inclusion
Enel’s commitment to promoting diversity in all its forms
en the parties and seeking an adequate level of agreement
on and participation in company strategies by employees.
Labor relations efforts at the Group level continue to be
conducted in accordance with the model established un-
– in terms of gender, age, culture and ability – continued
der Enel’s Global Framework Agreement (GFA) signed in
in 2017.
Rome in 2013 with the Italian federations and with the
Our global “Diversity and Inclusion” policies, which were
global federations IndustriAll and Public Services Interna-
approved in 2015, promote and ensure equal treatment
tional. This agreement is based on the principles of hu-
on the sole basis of professional capabilities and skill in all
man rights, of labor rights, and of the best, most advanced
decisions that concern the employment relationship, the
systems of transnational labor relations for multinational
ability to participate in the organization without hindrance,
corporations and international organizations, including
the importance of work-life balance, and support in the
the ILO. It has also been recognized and appreciated as
daily needs of our employees in all situations that may be
an example of best practice among European and non-
encountered in the workplace. Application of these poli-
European multinationals. We have presented proposals
cies has enabled us to develop local and global projects to
for the renewal of this agreement, updated in line with
promote diversity and a common language and has incre-
the Group’s new Open Power philosophy and the values
ased awareness, throughout the organization, of the im-
underlying that philosophy, including in relations with the
portance of diversity and inclusion for individuals and for
employee-representative entities of every nation.
Responsible relations with our communities
Working in a constantly changing world in which global
environments is one of the main challenges that multina-
phenomena interact with highly diverse socio-economic
tional groups must face. Enel is committed to respecting
164
Annual Report 2017 the rights of communities and to contributing to their eco-
beneficiaries in the various countries in which we operate,
nomic and social development, interacting every day with
Enel made a concrete contribution to the social and eco-
a multitude of stakeholders. A distinctive element of this
nomic growth of our communities, from expanding infra-
effort is the definition of an approach that is both global and
structures and providing education and training programs
local in order to take account of the specific needs of each
to initiatives of social inclusion and projects to support cul-
country through listening, cooperation and understanding
ture and the economy, all in accordance with the SDGs.
of the local context.
A crucial lever in carrying out these projects has been our
This constant dialogue with the communities and the inclu-
partnerships with local non-profit organizations that promo-
sive engagement of small and medium enterprise and of
te local development through innovative, custom-designed
the various organizations operating within the communities
initiatives. In 2017 in particular, we had more than 600 part-
enable us, together, to build projects and solutions targe-
nerships throughout the world with local organizations, so-
ting shared priorities and which promote local development
cial enterprises, universities, and international associations
and the creation of shared value over the long term.
and non-governmental organizations.
In 2017, with over 1,200 projects and more than nine million
Customer management
Digitization and our focus on the customer are important
sinesses in the zootechnical and agricultural industries in
enabling factors of Enel’s strategy. Our constant com-
areas affected by earthquake or heavy snowfall. Known
mitment to ensuring the provision of energy, to providing
as Energia Impresa Abruzzo, the offering is provided solely
high-quality products and services, and to caring for our
via direct channels (i.e. physical points of sale and key ac-
customers is the distinguishing characteristic of Enel’s re-
count managers) and was also presented to the industry
lationship with our customers in the various countries in
associations.
which the Group operates. In 2017, the average number
of power and gas customers came to about 64 million, an
Our attention to the customer in providing quality services
increase over 2016.
concerns more than just the provision of electricity and/or
natural gas, extending, above all, to intangible aspects of
It is Enel’s precise responsibility to ensure the constant,
our service that relate to the perception and satisfaction
safe provision of energy to the electrical systems of the
of our customers.
nations in which we operate as a distributor. Provision
There are numerous processes aimed at ensuring custo-
quality is closely linked to the reliability and efficiency of
mers receive high-quality service. In Italy, the commercial
the transmission and distribution infrastructures, which
quality of all our channels of contact is ensured through sy-
must be able to deal with the levels of demand. In coordi-
stematic monitoring of the sales and management proces-
nation with the other entities that operate in various roles
ses in order to ensure compliance with applicable laws and
on the grid infrastructures, Enel carries out constant deve-
regulations and that we respect the privacy, freedom and
lopment and efficiency efforts aimed mainly at reducing
dignity of our customers. To this end, there is the “New
the number and duration of service interruptions.
Quality Control” model, which introduces contractual KPIs,
associated with minimum thresholds for the assignment of
Through products designed for both the residential and
bonuses and penalties, for partners that manage sales and
business markets, the company has confirmed proposals
customer-care activities. In Iberia, the Plan de Excelencia
made in recent years by providing dedicated offerings
en la Atención Comercial (Plan of Excellence in Customer
that come with a lower environmental impact and a fo-
Focus) continues to work towards improving customer-
cus on the more vulnerable segments of the population.
satisfaction indicators through call centers, physical offi-
For example, in Italy in 2017, we launched a product for
ces, and online presence, while customers in Romania are
the provision of electricity to support the recovery of bu-
now able to provide feedback through various channels,
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Report on operations - Sustainability including contact centers, the website and, since 2017, the
ces such as the installation, maintenance and repair of
“live agent” online through which customers now have a
advanced home technologies;
new channel of communication in order to manage their
> e-City, which provides integrated services to local and
utilities.
central governments, as well as connectivity solutions
such as the wholesale offering of fiber-optic services.
Enel also launched the new “Enel-X” Division in 2017 in or-
There are also two global functions: the product lab, which
der to create new services and provide innovative solutions
designs, develops and tests – with the help of customers
for customers. Four global product lines have been created:
– new products and services; and platform development,
> e-Industries, which concerns solutions aimed at large-
in order to develop Internet of Things platforms, i.e. plat-
scale customers and with a particular emphasis on fle-
forms for the management of complex processes within
xible services;
the scope of various functions with the goal of meeting
> e-Mobility, which is devoted to promoting electric mobility;
new customer needs through innovative technologies.
> e-Home, dedicated to residential customers with servi-
Customers by geographical area
Average no.
Electricity:
- Italy
- South America (1)
- Iberia
- Romania
2017
2016
Change
26,420,058
26,776,635
18,044,215
15,478,255
10,941,644
11,047,937
2,782,014
2,736,908
(356,577)
2,565,960
(106,293)
45,106
Total electricity customers
58,187,931
56,039,735
2,148,196
Natural gas:
- Italy
- Spain
Total natural gas customers
4,003,484
1,550,424
5,553,908
3,876,191
1,513,379
5,389,570
127,293
37,045
164,338
(1) The increase in customers is attributable to Brazil as a result of the acquisition of Enel Distribuição Goiás in February 2017.
-1.3%
16.6%
-1.0%
1.6%
3.8%
3.3%
2.4%
3.0%
Sustainable supply chain
At Enel, we base our procurement processes on pre-con-
sues in the evaluation process. These are:
tractual and contractual conduct centered around mutual fi-
1) Qualification system;
delity, transparency and collaboration. In addition to meeting
2) General terms and conditions;
certain quality standards, the services of our vendors must
3) Vendor ratings.
also go hand in hand with the adoption of best practices in
Enel’s global vendor-qualification system (with more than
terms of human rights, health and safety in the workplace
6,700 active qualifications as at December 31, 2017) ena-
and environmental and ethical responsibility.
bles us to accurately assess businesses that intend to par-
Our procurement procedures are designed to guarantee servi-
ticipate in tender processes and acts as a guarantee for the
ce quality in full respect of the principles of economy, effective-
company, while the vendor-rating system seeks to monitor
ness, timeliness, fairness and transparency.
vendor services in terms of the quality, timeliness and su-
In 2017, we signed new agreements with a total of about 31
stainability of contract execution.
thousand suppliers.
In 2017, we continued working on the Sustainable Procu-
Vendor management involves three essential stages,
rement project, with close collaboration between Procu-
which integrate social, environmental and governance is-
rement and the Sustainability units (at both the global and
166
Annual Report 2017 local levels), with the goal of increasing the integration of
zation across the Group of supplier selection, assessment
environmental, social and governance issues in the supply
and monitoring criteria from an ethical point of view and in
chain strategy, creating shared value with suppliers in a vi-
particular the impact on the company.
sion of a circular economy. A key element is the standardi-
Workplace health and safety
Enel considers employee health, safety and general well-
they are required to promptly report and halt any situation
being to be the most valuable asset, one to be protected
of risk or unsafe behavior. The constant commitment of us
both at work and at home, and we are committed to develo-
all, the integration of safety both in our processes and in our
ping and promoting a strong culture of safety throughout the
training, the reporting and analysis of near misses, rigor in
world in order to ensure a healthy work environment. Quality
the selection and management of contractors, controls over
and safety must go hand in hand. All of us are responsible for
quality, the sharing of experience throughout the Group and
our own health and safety and that of the people with whom
benchmarking against the leading international players are all
we interact and, as provided for in the Enel Stop Work Policy,
cornerstones to Enel’s culture of safety.
Safety indicators
No.
Injury frequency rate - Enel (1)
Injury severity rate - Enel (2)
Serious and fatal injuries at Enel
Serious injuries (3)
Fatal injuries
Total
Serious and fatal injuries at contractors
Serious injuries (3)
Fatal injuries
Total
2017
1.20
0.058
4
2
6
9
11
20
2016
1.25
0.050
5
-
5
7
5
12
Change
(0.05)
0.008
-4.0%
-16.0%
(1)
-20.0%
2
1
2
6
8
-
20.0%
28.6%
-
66.7%
(1) This indicator is calculated as the ratio between the total number of injuries and hours worked in millions, while the Lost Time Injury Frequency Rate
(LTIFR) is calculated by as the ratio between the same number of injuries and the number of hours worked/200,000.
(2) This indicator is calculated as the ratio between the total number of days of absence and hours worked in thousands, while the Lost Day Rate (LDR) is
calculated by as the ratio between the same number of days of absence and the number of hours worked/200,000.
(3) Injuries with an initial prognosis, as reported on the medical certificate issued, of greater than 30 days, or with a confidential prognosis until the actual
prognosis is released, or with an unknown prognosis that, based on an initial assessment by the company/Division concerned, is expected to exceed
30 days. Once the official prognosis is released, the related injury is considered serious only if said prognosis exceeds 30 days. Should a confidential
prognosis never be released or an unknown prognosis remain unknown, within 30 days of the event, the injury is to be deemed serious.
Workplace accident
statistics
In 2017, the Lost Time Injury Frequency Rate (LTIFR) and Lost
With regard to the employees of contractors, the LTIFR
was 0.19 (down about 6% compared with 2016) and the
LDR was 9.86 (up 16% compared with 2016).
In 2017, there were two fatal injuries involving employees
Day Rate (LDR) for Enel Group employees were 0.24 and 11.65,
of the Enel Group and 11 fatal injuries involving Enel Group
respectively. However, while the number of injuries and, con-
contractors.
sequently, the LTIFR decreased, there was a slight rise in the
Policy 106 “Classification, communication, analysis and re-
number of days lost and, as a result, an increase in the LDR.
porting of incidents” establishes the roles and procedures
167
Report on operations - Sustainability that ensure the timely reporting of accidents, analysis of
mentation of prevention and protection measures and on
their root causes, and definition and monitoring of impro-
through the execution and analysis of corrective actions.
vement plans. The policies also detail the procedures for
In 2017, new projects of safety innovation were introduced
disclosing and analyzing near misses that could have resul-
and a number of projects continued from 2016.
ted in serious harm. In accordance with these policies, all
Intrinsic Safety: a project that began in 2016, centered
serious and fatal injuries to Enel personnel and the person-
around the design, analysis and alteration of new and exi-
nel of Enel contractors and other significant, non-serious
sting machinery aimed at reducing exposure to hazardous
events have been investigated by a team of experts. Ac-
situations and workplaces.
tions for improvement emerging from this analysis are con-
Safety Jacket: the project envisages the development of a
stantly monitored until their completion, and steps have
safety jacket with integrated airbag to supplement existing
been taken in relation to contractors found to be in breach
protections against falls with a new technology that has ne-
of contract (e.g. contract termination, suspension of certi-
ver been used in an industrial setting.
fication, etc.).
Safety in tender processes
Safety is tightly integrated into Enel’s tender process, and
Drones: the company has begun the use of inspection dro-
nes in flues, furnaces and canals in order to prevent risks
related to workers accessing these areas directly.
Virtual Reality: ongoing development work on the virtual-
reality 3D simulator, a project that began in 2015. More
we closely monitor our contractors’ performance both
specifically, new virtual reality environments were develo-
upstream by way of our qualification system and ongoing
ped for operational training concerning both maintenance
as the contracts progress through numerous control pro-
and safety.
cesses.
Virtual Safety Assistant (VSA): an electronic device that
Within the vendor selection and qualification process,
uses real-time mapping of the surrounding environment
there are specific, strict rules for the selection of com-
and stored data related to specific activities to help wor-
panies based on health and safety (H&S) performance,
kers implement the prevention and protection measures
and there is also a pre-qualification audit for high-risk ac-
needed to carry out their jobs safely.
tivities.
Our vendor rating system is a consolidated process used
to monitor activities as a contract progresses. H&S per-
formance is measured using a specific indicator and, sin-
Health
The Enel Group has created a structured health manage-
ce 2015, application of a global model for vendor ratings
ment system based on preventive measures in order to
enables us to also consider the impact of any injuries to
develop a corporate culture centered on the promotion of
contractor employees as a part of the evaluation process.
the physical, emotional and organizational wellbeing and
All companies that work with the Enel Group must sha-
on establishing work-life balance. To this end, the Group
re in the various health and safety standards. The gene-
carries out local and global awareness campaigns to pro-
ral contract conditions that are valid for the entire Enel
mote healthy lifestyles, sponsors screening programs
Group include clauses dedicated to health and safety,
aimed at preventing illness, and ensures the provision of
which establish penalties in the event of violations of sa-
medical services. Global programs and initiatives are deve-
fety standards, and these may include termination of the
loped in accordance with the calendar of the World Health
contract and suspension of qualifications.
Organization and with local needs.
For this reason, contractors are involved in many initiati-
The Enel Group implements a systematic, ongoing process
ves aimed at promoting a culture of safety.
of identifying and assessing work-related stress in accor-
Infrastructure safety and
technological innovation
Innovations in technology are able to improve all H&S pro-
cesses, beginning with employee training and the imple-
dance with our policies for stress-at-work prevention and
wellbeing-at-work promotion. This enables us to identify,
prevent and manage stress in the workplace that could af-
flict either individuals or broader segments of the organiza-
tion, while also providing a series of indications aimed at
promoting a general culture of wellbeing.
168
Annual Report 2017 Development of the
Culture of Safety:
communication and
training
There were several communication campaigns concerning
hypertension, hepatitis, smoking, risk factors in cardiovascular
diseases, skin cancer, etc. These communication campaigns
were based both on the publication of news on the company’s
intranet and on specific segments on Enel TV and Enel Radio.
In 2017, we provided more than 430 thousand hours of trai-
ning, in addition to awareness-raising and training activities
in order to increase the specific skills and knowledge of
health and safety during the year, focusing on areas of par-
workers throughout the Group. The topics covered included
ticular importance to the organization. In particular this year,
online car and motorcycle safety training and safety leader-
global communication efforts focused on issues related to
ship training for management.
personal health and on the most common disorders, such as:
Net efficient capacity by primary energy source
MW
2017
2016
Change
Net efficient thermal capacity:
- coal
- CCGT
- fuel oil/gas
Total
Net efficient nuclear capacity
Net efficient renewable capacity:
- hydroelectric
- wind
- geothermal
- biomass and co-generation
- other
Total
Total net efficient capacity
Net efficient capacity by geographical area
MW
Italy
Iberia
South America
Russia
North and Central America
Romania
Greece
Bulgaria
India
South Africa
15,965
15,028
12,301
43,294
3,318
27,799
7,431
802
57
2,216
38,305
84,917
2017
27,652
22,732
20,544
8,879
3,533
534
307
42
172
522
16,103
15,100
12,251
43,454
3,318
27,425
6,532
761
57
1,132
35,907
82,679
2016
27,760
22,744
18,915
8,944
2,792
534
290
42
172
486
(138)
(72)
50
(160)
-
374
899
41
-
1,084
2,398
2,238
(108)
(12)
1,629
(65)
741
-
17
-
-
36
Change
Total net efficient capacity
84,917
82,679
2,238
-0.9%
-0.5%
0.4%
-0.4%
-
1.4%
13.8%
5.4%
-
95.8%
6.7%
2.7%
-0.4%
-0.1%
8.6%
-0.7%
26.5%
-
5.9%
-
-
7.4%
2.7%
169
Report on operations - Sustainability Net electricity generation by primary energy source
GWh
2017
2016
Change
Net thermal electricity generation:
- coal
- CCGT
- fuel oil/gas
Total
Net nuclear electricity generation
Net renewable generation:
- hydroelectric
- wind
- geothermal
- biomass and co-generation
- other
Total
Total net electricity generation
Net electricity generation by geographical area
GWh
Italy
Iberia
South America
Russia
Slovakia
North and Central America
Romania
Belgium
Greece
Bulgaria
South Africa
India
70,497
44,381
26,855
141,733
26,448
55,363
17,827
5,820
108
2,577
81,695
249,876
2017
53,518
78,618
64,627
39,830
-
9,793
1,358
-
548
103
1,156
325
72,342
40,303
29,749
142,394
33,444
60,031
18,294
6,194
226
1,229
85,974
261,812
2016
60,912
72,323
62,165
41,062
9,684
12,268
1,235
977
559
96
203
328
(1,845)
4,078
(2,894)
(661)
(6,996)
(4,668)
(467)
(374)
(118)
1,348
(4,279)
(11,936)
(7,395)
6,295
2,462
(1,232)
(9,684)
(2,475)
123
(977)
(11)
7
953
(3)
Total net electricity generation
249,876
261,812
(11,936)
-2.6%
10.1%
-9.7%
-0.5%
-20.9%
-7.8%
-2.6%
-6.0%
-52.2%
-
-5.0%
-4.6%
-12.1%
8.7%
4.0%
-3.0%
-
-20.2%
10.0%
-
-2.0%
7.3%
-
-0.9%
-4.6%
Change
170
Annual Report 2017 Other generation ratios
Generation from renewable resources (% of total)
Zero-emission generation (% of total)
ISO 14001-certified net efficient capacity (% of total)
Average efficiency of thermal plants (%) (1)
Specific emissions of CO2 from net generation (gCO2/
kWheq) (2)
Specific consumption of water for total generation
(I/kWheq) (3)
2017
32.7
43.3
99.0
40.7
411
0.49
2016
32.8
45.6
97.9
40.0
395
0.55
Change
-0.3%
-5.0%
1.1%
1.8%
4.1%
(0.1)
(2.3)
1.1
0.7
16
(0.06)
-10.9%
(1) Percentages calculated using new method that does not include oil and gas plants in Italy that are in the process of decommissioning or are marginal
among thermal plants. The figures also do not consider consumption and generation for co-generation at Russian thermal plants. The average efficiency
is calculated on the basis of the number of plants and weighted by output.
(2) Specific emissions are calculated as total emissions from simple thermal generation and co-generation of electricity and heat as a ratio of total renewables
generation, nuclear generation, simple thermal generation and co-generation of electricity and heat (including the contribution of heat in MWh equivalent).
(3) Specific consumption for generation is calculated by taking account of total consumption of water for simple thermal generation and combined electrical
and heat and nuclear generation, as a ratio of total simple thermal generation and combined thermal electrical and heat generation (including the thermal
contribution in MWh), renewables and nuclear generation.
171
Report on operations - Sustainability Related parties
As an operator in the field of generation, distribution, tran-
directly or indirectly controlled by the Italian State, the
sport and sale of electricity and the sale of natural gas,
Group’s controlling shareholder.
Enel carries out transactions with a number of companies
The table below summarizes the main types of transactions carried out with such counterparties.
Related party
Relationship
Nature of main transactions
Acquirente Unico - Single Buyer
Fully controlled (indirectly) by the Ministry for
the Economy and Finance
Purchase of electricity for the enhanced-
protection market
Cassa Depositi e Prestiti Group
Directly controlled by the Ministry for the
Economy and Finance
Sale of electricity on the Ancillary Services
Market (Terna)
Sale of electricity transport services (Eni Group)
Purchase of transport, dispatching and metering
services (Terna)
Purchase of postal services (Poste Italiane)
Purchase of fuels for generation plants and
natural gas storage and distribution services
(Eni Group)
GSE - Energy Services Operator
Fully controlled (directly) by the Ministry for the
Economy and Finance
Sale of subsidized electricity
Payment of A3 component for renewable
resource incentives
GME - Energy Markets Operator
Fully controlled (indirectly) by the
Ministry for the Economy and Finance
Sale of electricity on the Power Exchange
(GME)
Purchase of electricity on the Power Exchange
for pumping and plant planning (GME)
Leonardo Group
Directly controlled by the Ministry for the
Economy and Finance
Purchase of IT services and supply of goods
In addition, the Group conducts essentially commercial
normal market terms and conditions, which in some ca-
transactions with associated companies or companies in
ses are determined by the Regulatory Authority for Ener-
which it holds minority interests.
gy, Networks and the Environment.
Finally, Enel also maintains relationships with the pension
funds FOPEN and FONDENEL, Fondazione Enel and Enel
For more details on transactions with related parties, ple-
Cuore, an Enel non-profit company devoted to providing
ase see the discussion in note 47 to the consolidated fi-
social and healthcare assistance.
nancial statements.
All transactions with related parties were carried out on
172
Annual Report 2017 Reconciliation of shareholders’
equity and net income of Enel
SpA and the corresponding
consolidated figures
Pursuant to CONSOB Notice DEM/6064293 of July 28,
results for the year and shareholders’ equity with the corre-
2006, the following table provides a reconciliation of Group
sponding figures for the Parent Company.
Millions of euro
Income
statement
Shareholders’
equity
Income
statement
Shareholders’
equity
at Dec. 31, 2017
at Dec. 31, 2016 (1)
Financial statements - Enel SpA
2,270
27,236
1,720
26,916
Carrying amount and impairment adjustments of consolidated equity
investments
Shareholders’ equity and net income (calculated using harmonized
accounting policies) of the consolidated companies and groups and
those accounted for using the equity method, net of non-controlling
interests
Translation reserve
Goodwill
Intercompany dividends
Elimination of unrealized intercompany profits, net of tax effects and
other minor adjustments
TOTAL SHAREHOLDERS OF THE PARENT COMPANY
NON-CONTROLLING INTERESTS
CONSOLIDATED FINANCIAL STATEMENTS
(1) The figures for 2016 have been reclassified to improve the representation.
53
(76,076)
836
(77,868)
5,875
-
-
73,608
(2,614)
13,745
4,593
-
(31)
(4,471)
-
(4,138)
52
3,779
1,550
5,329
(1,104)
34,795
17,366
52,161
(410)
2,570
1,217
3,787
74,469
(1,005)
13,556
-
(1,265)
34,803
17,772
52,575
Report on operations
173
03Consolidated financial statements
Financial statements
Consolidated income statement
Millions of euro
Notes
2017
2016
of which with
related parties
of which with
related parties
Revenue
Revenue from sales and services
Other revenue and income
Costs
Electricity, gas and fuel purchases
Services and other materials
Personnel
Depreciation, amortization and impairment losses
Other operating expenses
Capitalized costs
Net income/(expense) from commodity contracts
measured at fair value
Operating income
Financial income from derivatives
Other financial income
Financial expense from derivatives
Other financial expense
Share of income/(losses) of equity investments
accounted for using the equity method
Income before taxes
Income taxes
Net income from continuing operations
Net income from discontinued operations
Net income for the year (shareholders of the Parent
Company and non-controlling interests)
Attributable to shareholders of the Parent Company
Attributable to non-controlling interests
Basic earnings/(loss) per share attributable to
shareholders of the Parent Company (euro)
Diluted earnings/(loss) per share attributable to
shareholders of the Parent Company (euro)
Basic earnings/(loss) per share from continuing operations
attributable to shareholders of the Parent Company (euro)
Diluted earnings/(loss) per share from continuing
operations attributable to shareholders of the Parent
Company (euro)
176
7.a
7.b
[Subtotal]
8.a
8.b
8.c
8.d
8.e
8.f
[Subtotal]
9
10
11
10
11
12
13
14
14
14
14
72,664
1,975
74,639
36,039
17,982
4,504
5,861
2,886
(1,847)
65,425
578
9,792
1,611
2,371
2,766
3,908
111
7,211
1,882
5,329
-
5,329
3,779
1,550
0.37
0.37
0.37
0.37
4,550
20
6,603
2,577
312
29
21
39
5,124
22
7,761
2,664
531
27
18
25
68,604
1,988
70,592
32,039
17,393
4,637
6,355
2,783
(1,669)
61,538
(133)
8,921
1,884
2,289
2,821
4,339
(154)
5,780
1,993
3,787
-
3,787
2,570
1,217
0.26
0.26
0.26
0.26
Annual Report 2017
Statement of consolidated
comprehensive income
Millions of euro
Notes
Net income for the year
Other comprehensive income recyclable to profit or loss (net of taxes)
Effective portion of change in the fair value of cash flow hedges
Share of the other comprehensive income of equity investments accounted for using the
equity method
Change in the fair value of financial assets available for sale
2017
5,329
(72)
10
(129)
2016
3,787
(34)
(18)
(24)
Change in translation reserve
(2,519)
1,952
Other comprehensive income not recyclable to profit or loss (net of taxes)
Remeasurement of net employee benefit liabilities/(assets)
Total other comprehensive income/(loss) for the year
32
Total comprehensive income/(loss) for the year
Attributable to:
- shareholders of the Parent Company
- non-controlling interests
74
(2,636)
2,693
1,968
725
(239)
1,637
5,424
3,237
2,187
177
Consolidated financial statements
at Dec. 31, 2017
at Dec. 31, 2016
of which with
related parties
of which with
related parties
76,265
124
15,929
13,556
6,665
1,558
1,609
3,892
706
120,304
2,564
13,506
879
3,945
3,053
3,044
8,290
35,281
11
155,596
958
18
135
109
Consolidated balance sheet
Millions of euro
ASSETS
Non-current assets
Property, plant and equipment
Investment property
Intangible assets
Goodwill
Deferred tax assets
Equity investments accounted for using the equity
method
Derivatives
Other non-current financial assets
Other non-current assets
Notes
15
18
19
20
21
22
23
24
25
74,937
77
16,724
13,746
6,354
1,598
702
4,002
1,064
Current assets
Inventories
Trade receivables
Income tax receivables
Derivatives
Other current financial assets
Other current assets
Cash and cash equivalents
Assets classified as held for sale
TOTAL ASSETS
[Total]
119,204
26
27
23
28
29
30
[Total]
31
2,722
14,529
577
2,309
4,614
2,695
7,021
34,467
1,970
155,641
832
11
3
162
178
Annual Report 2017
Millions of euro
Notes
LIABILITIES AND SHAREHOLDERS’ EQUITY
at Dec. 31, 2017
at Dec. 31, 2016
of which with
related parties
of which with
related parties
Equity attributable to shareholders of the Parent
Company
Share capital
Other reserves
Retained earnings/(Loss carried forward)
Non-controlling interests
Total shareholders’ equity
Non-current liabilities
Long-term borrowings
Employee benefits
Provisions for risks and charges - non-current
Deferred tax liabilities
Derivatives
Other non-current liabilities
Current liabilities
Short-term borrowings
Current portion of long-term borrowings
Provisions for risks and charges - current
Trade payables
Income tax payable
Derivatives
Other current financial liabilities
Other current liabilities
Liabilities included in disposal groups classified
as held for sale
Total liabilities
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
[Total]
32
33
34
35
21
23
36
33
33
35
37
23
38
40
[Total]
31
[Total]
63,016
10,167
3,348
21,280
34,795
17,366
52,161
10,167
5,152
19,484
34,803
17,772
52,575
42,439
893
41,336
1,072
2,407
4,821
8,348
2,998
2,003
1,894
7,000
1,210
2,585
4,981
8,768
2,532
1,856
62,058
5,372
4,384
1,433
36
89
23
89
12,671
2,365
12,688
2,921
284
2,260
954
12,462
38,735
1,729
103,480
155,641
9
37
359
3,322
1,264
12,141
40,963
-
103,021
155,596
11
28
179
Consolidated financial statements
Statement of changes in consolidated
shareholders’ equity (note 32)
Share capital and reserves attributable to shareholders of the Parent Company
Millions of euro
Share
capital
Share
premium
reserve
Legal
reserve
Other
reserves
Reserve from
translation
of financial
statements
in currencies
other than
euro
Reserve from
measurement
of cash flow
hedge financial
instruments
Reserve from
measurement
of financial
instruments AFS
At January 1, 2016
9,403
5,292
1,881
2,262
(1,956)
(1,341)
130
(551)
(2,115)
(196)
19,621
32,376
19,375
-
-
-
-
-
(24)
(24)
-
106
-
-
-
-
Distributions of dividends and interim
dividends
Allocation of net income for the
previous year
-
-
-
-
-
153
Capital increase for non-proportional
demerger of Enel Green Power
764
2,197
Transactions in non-controlling
interests
Change in scope of consolidation
Comprehensive income for the period
of which:
- other comprehensive income/(loss)
for the period
- net income/(loss) for the period
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
119
-
(136)
968
968
-
-
-
(31)
-
21
(97)
(97)
-
At December 31, 2016
10,167
7,489
2,034
2,262
(1,005)
(1,448)
Distributions of dividends
Allocation of net income for the
previous year
Transactions in non-controlling
interests
Change in scope of consolidation
Comprehensive income for the period
of which:
- other comprehensive income/(loss)
for the period
- net income/(loss) for the period
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
At December 31, 2017
10,167
7,489
2,034
2,262
(2,614)
(1,588)
180
(1,609)
(140)
(129)
3,779
1,968
(1,609)
-
(140)
-
(129)
-
(23)
(5)
(646)
(2,398)
(1,163)
(825)
1,550
(2,636)
5,329
17,366
52,161
Reserve
Reserve from
from equity
remeasurement
Equity
investments
of net liabilities/
Reserve from
Reserve from
Retained
attributable to
accounted for
(assets) of
disposal of equity
transactions in
earnings/(Loss
shareholders
using the equity
defined benefit
interests without
non-controlling
of the Parent
Non-controlling
shareholders’
plans
loss of control
interests
Company
interests
carried
forward)
method
(54)
49
(7)
(7)
-
-
-
-
-
-
-
-
-
7
7
-
Total
equity
51,751
(549)
(435)
5,424
1,637
3,787
-
1
(73)
2,693
(266)
(386)
2,187
970
1,217
-
(6)
(73)
725
(2,542)
(2,542)
(1,032)
(3,574)
(153)
-
-
-
(974)
(12)
2,064
(2,106)
(42)
17
(173)
(173)
-
-
-
1
-
-
-
-
-
60
60
-
(283)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7
-
-
-
-
-
-
-
2,570
2,570
19,484
(1,983)
3,779
21,280
(283)
(49)
3,237
667
2,570
34,803
(1,983)
-
7
-
(1,811)
3,779
34,795
(12)
(706)
(2,398)
(1,170)
17,772
52,575
(1,052)
(3,035)
Annual Report 2017
demerger of Enel Green Power
764
2,197
119
(31)
Millions of euro
Distributions of dividends and interim
dividends
Allocation of net income for the
previous year
Capital increase for non-proportional
Transactions in non-controlling
interests
Change in scope of consolidation
Comprehensive income for the period
of which:
- other comprehensive income/(loss)
for the period
- net income/(loss) for the period
Distributions of dividends
Allocation of net income for the
previous year
Transactions in non-controlling
interests
Change in scope of consolidation
of which:
- other comprehensive income/(loss)
for the period
- net income/(loss) for the period
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(136)
968
21
(97)
968
(97)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
153
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(24)
(24)
106
-
-
-
-
-
-
-
-
-
-
-
(1,609)
(140)
(129)
Comprehensive income for the period
(1,609)
(140)
(129)
At December 31, 2016
10,167
7,489
2,034
2,262
(1,005)
(1,448)
Share capital and reserves attributable to shareholders of the Parent Company
Reserve from
translation
Share
capital
Share
premium
reserve
of financial
Reserve from
statements
measurement
Reserve from
in currencies
of cash flow
measurement
Legal
Other
other than
hedge financial
of financial
reserve
reserves
euro
instruments
instruments AFS
Reserve
from equity
investments
accounted for
using the equity
method
Reserve from
remeasurement
of net liabilities/
(assets) of
defined benefit
plans
Reserve from
disposal of equity
interests without
loss of control
Reserve from
transactions in
non-controlling
interests
Retained
earnings/(Loss
carried
forward)
Equity
attributable to
shareholders
of the Parent
Company
Non-controlling
interests
Total
shareholders’
equity
At January 1, 2016
9,403
5,292
1,881
2,262
(1,956)
(1,341)
130
(54)
(551)
(2,115)
(196)
19,621
32,376
19,375
51,751
At December 31, 2017
10,167
7,489
2,034
2,262
(2,614)
(1,588)
(23)
(5)
(646)
(2,398)
(1,163)
-
-
-
-
49
(7)
(7)
-
(12)
-
-
-
-
7
7
-
-
-
1
-
17
(173)
(173)
-
(706)
-
-
-
-
60
60
-
-
-
-
(283)
-
-
-
-
-
-
-
-
-
(2,398)
(1,170)
-
-
-
-
-
-
-
-
-
7
-
-
-
-
-
-
(2,542)
(2,542)
(1,032)
(3,574)
(153)
-
-
-
(974)
(12)
2,064
(2,106)
(42)
-
-
2,570
-
2,570
19,484
(1,983)
-
-
-
(283)
(49)
3,237
667
2,570
34,803
(1,983)
-
7
-
3,779
1,968
(266)
(386)
2,187
970
1,217
(549)
(435)
5,424
1,637
3,787
17,772
52,575
(1,052)
(3,035)
-
(6)
(73)
725
-
1
(73)
2,693
-
3,779
21,280
(1,811)
3,779
34,795
(825)
1,550
(2,636)
5,329
17,366
52,161
181
Consolidated financial statements
Consolidated statement of cash flows
Millions of euro
Notes
2017
2016
of which
with related
parties
of which
with related
parties
Income before taxes for the year
Adjustments for:
Depreciation, amortization and impairment losses
Financial (income)/expense
Net income of equity investments accounted for using the equity method
Changes in net working capital:
- inventories
- trade receivables
- trade payables
- other assets/liabilities
Accruals to provisions
Utilization of provisions
Interest income and other financial income collected
Interest expense and other financial expense paid
(Income)/Expense from measurement of commodities
Income taxes paid
(Gains)/Losses on disposals
Cash flows from operating activities (A)
Investments in property, plant and equipment
Investments in intangible assets
Investments in entities (or business units) less cash and cash equivalents acquired
Disposals of entities (or business units) less cash and cash equivalents sold
(Increase)/Decrease in other investing activities
Cash flows from investing/disinvesting activities (B)
Financial debt (new long-term borrowing)
Financial debt (repayments and other net changes)
Transactions in non-controlling interests
Dividends and interim dividends paid
Cash flows from financing activities (C)
Impact of exchange rate fluctuations on cash and cash equivalents (D)
Increase/(Decrease) in cash and cash equivalents (A+B+C+D)
Cash and cash equivalents at beginning of the year (1)
Cash and cash equivalents at the end of the year (2)
7,211
5,861
2,692
(111)
(1,265)
(112)
(1,530)
65
312
353
(1,149)
2,898
(4,747)
59
8.d
10-11
12
26
27
37
10-11
10-11
13
(1,579)
(98)
10,125
(7,226)
(1,273)
(900)
216
(111)
(9,294)
12,284
15
19
5
5
33
33
32
32
5,780
6,355
2,987
154
662
413
126
(959)
(556)
1,149
106
59
772
(1,553)
21
1,544
(39)
(4,343)
(21)
10
(81)
21
(39)
(278)
(1,959)
(274)
9,847
(7,927)
(915)
(382)
1,032
105
(8,087)
2,339
(10,579)
(179)
(4,049)
(89)
(478)
(2,873)
(1,646)
(390)
(1,205)
8,326
7,121
(257)
(2,507)
(4,474)
250
(2,464)
10,790
8,326
(1) Of which cash and cash equivalents equal to €8,290 million at January 1, 2017 (€10,639 million at January 1, 2016), short-term securities equal to €36
million at January 1, 2017 (€1 million at January 1, 2016) and cash and cash equivalents pertaining to assets held for sale equal to €150 million at January
1, 2016.
(2) Of which cash and cash equivalents equal to €7,021 million at December 31, 2017 (€8,290 million at December 31, 2016), short-term securities equal
to €69 million at December 31, 2017 (€36 million at December 31, 2016) and cash and cash equivalents pertaining to assets held for sale equal to €31
million at December 31, 2016.
182
Annual Report 2017
Notes to the consolidated
financial statements
1
Form and content of the financial statements
Enel SpA has its registered office in Viale Regina Margheri-
and the consolidated statement of cash flows and the rela-
ta 137, Rome, Italy, and since 1999 has been listed on the
ted notes.
Milan stock exchange. Enel is an energy multinational and
The assets and liabilities reported in the consolidated ba-
is one of the world’s leading integrated operators in the
lance sheet are classified on a “current/non-current“ basis,
electricity and gas industries, with a special focus on Euro-
with separate reporting of assets held for sale and liabilities
pe and South America.
included in disposal groups held for sale. Current assets,
The consolidated financial statements for the period ended
which include cash and cash equivalents, are assets that are
December 31, 2017 comprise the financial statements of
intended to be realized, sold or consumed during the normal
Enel SpA, its subsidiaries and Group holdings in associates
operating cycle of the Group or in the 12 months following
and joint ventures, as well as the Group’s share of the as-
the balance sheet date; current liabilities are liabilities that
sets, liabilities, costs and revenue of joint operations (“the
are expected to be settled during the normal operating cycle
Group”). A list of the subsidiaries, associates, joint opera-
of the Group or within the 12 months following the close of
tions and joint ventures included in the scope of consolida-
the financial year.
tion is attached.
The consolidated income statement is classified on the ba-
The consolidated financial statements were approved for
sis of the nature of costs, with separate reporting of net inco-
publication by the Board on March 22, 2018.
me/(loss) from continuing operations and net income/(loss)
These financial statements have been audited by EY SpA.
from discontinued operations attributable to shareholders of
Basis of presentation
the Parent Company and to non-controlling interests.
The indirect method is used for the consolidated cash flow
The consolidated financial statements for the year ended
statement, with separate reporting of any cash flows by
December 31, 2017 have been prepared in accordance with
operating, investing and financing activities associated with
international accounting standards (International Accounting
discontinued operations.
Standards - IAS and International Financial Reporting Stan-
In particular, although the Group does not diverge from the
dards - IFRS) issued by the International Accounting Stan-
provisions of IAS 7 in the classification of items:
dards Board (IASB), the interpretations of the International Fi-
> cash flows from operating activities report cash flows
nancial Reporting Interpretations Committee (IFRIC) and the
from core operations, interest on loans granted and
Standing Interpretations Committee (SIC), recognized in the
obtained and dividends received from joint ventures or
European Union pursuant to Regulation 2002/1606/EC and in
associates;
effect as of the close of the year. All of these standards and
> investing/disinvesting activities comprise investments
interpretations are hereinafter referred to as the “IFRS-EU”.
in property, plant and equipment and intangible assets
The financial statements have also been prepared in confor-
and disposals of such assets, including the effects of
mity with measures issued in implementation of Article 9,
business combinations in which the Group acquires or
paragraph 3, of Legislative Decree 38 of February 28, 2005.
loses control of companies, as well as other minor in-
The consolidated financial statements consist of the conso-
vestments;
lidated income statement, the statement of consolidated
> cash flows from financing activities include cash flows
comprehensive income, the consolidated balance sheet, the
generated by liability management transactions, dividen-
statement of changes in consolidated shareholders’ equity
ds paid to non-controlling interests by the Parent Com-
183
Consolidated financial statements pany or other consolidated companies and the effects
circumstances. They are formulated when the carrying
of transactions in non-controlling interests that do not
amount of assets and liabilities is not easily determined
change the status of control of the companies involved;
from other sources. The actual results may therefore differ
> a separate item is used to report the impact of exchange
from these estimates. The estimates and assumptions are
rates on cash and cash equivalents and their impact on
periodically revised and the effects of any changes are re-
profit or loss is eliminated in full in order to neutralize the
flected through profit or loss if they only involve that period.
effect on cash flows from operating activities.
If the revision involves both the current and future periods,
For more information on cash flows as reported in the state-
the change is recognized in the period in which the revision
ment of cash flows, please see the note on “cash flows” in
is made and in the related future periods.
the Report on operations.
In order to enhance understanding of the financial state-
The income statement, the balance sheet and the state-
ments, the following sections examine the main items af-
ment of cash flows report transactions with related parties,
fected by the use of estimates and the cases that reflect
the definition of which is given in the next section below.
management judgments to a significant degree, undersco-
The consolidated financial statements have been prepared
ring the main assumptions used by managers in measuring
on a going concern basis using the cost method, with the
these items in compliance with the IFRS-EU. The critical
exception of items measured at fair value in accordance with
element of such valuations is the use of assumptions and
IFRS-EU, as explained in the measurement bases applied to
professional judgments concerning issues that are by their
each individual item, and of non-current assets and disposal
very nature uncertain.
groups classified as held for sale, which are measured at
Changes in the conditions underlying the assumptions and
the lower of their carrying amount and fair value less costs
judgments could have a substantial impact on future results.
to sell.
The consolidated financial statements are presented in euro,
the functional currency of the Parent Company Enel SpA. All
figures are shown in millions of euro unless stated other-
wise.
Use of estimates
Revenue recognition
Revenue from sales to customers is measured on an accrual
basis and on the basis of the fair value of the consideration
The consolidated financial statements provide comparative
received or receivable.
information in respect of the previous period.
Revenue from sales of electricity and gas to retail customers
2
Accounting policies and
measurement criteria
Use of estimates and management
judgment
is recognized at the time the electricity or gas is supplied
and includes, in addition to amounts invoiced on the basis of
periodic meter readings or volumes notified by distributors
and transporters (pertaining to the year), an estimate of the
value of electricity and gas delivered during the period but
not yet invoiced, which is equal to the difference between
the amount of electricity and gas delivered to the distribution
network and that invoiced in the period, taking account of
any network losses. The sales prices charged to end users
are applied to the volumes so determined. Revenue betwe-
en the date of the last meter reading and the end of the year
is based on estimates of the daily consumption of individual
customers calculated on the basis of their consumption re-
Preparing the consolidated financial statements under
cord, adjusted to take account of weather conditions and
IFRS-EU requires management to take decisions and make
other factors that may affect estimated consumption.
estimates and assumptions that may impact the value of
revenue, costs, assets and liabilities and the related disclo-
sures concerning the items involved as well as contingent
assets and liabilities at the balance sheet date. The estima-
Pension plans and other post-employment
benefits
Some of the Group’s employees participate in pension
tes and management’s judgments are based on previous
plans offering benefits based on their wage history and ye-
experience and other factors considered reasonable in the
ars of service.
184
Annual Report 2017 Certain employees are also eligible for other post-em-
The discount rate gross of taxes reflects current market
ployment benefit schemes.
assessments of the cost of money in relation to the period
The expenses and liabilities of such plans are calculated on
of investment and the specific risks of discounting.
the basis of estimates carried out by consulting actuaries,
who use a combination of statistical and actuarial elements
Nevertheless, possible changes in the estimation of the
in their calculations, including statistical data on past years
factors on which the calculation of such values is perfor-
and forecasts of future costs.
med could generate different recoverable values.
Other components of the estimation that are considered in-
clude mortality and withdrawal rates as well as assumptions
concerning future developments in discount rates, the rate
of wage increases, the inflation rate and trends in the cost
of medical care.
Depreciable value of certain elements of
Italian hydroelectric plants subsequent to
enactment of Law 134/2012
Law 134 of August 7, 2012 containing “urgent measures
These estimates can differ significantly from actual deve-
for growth” (published in the Gazzetta Ufficiale of August
lopments owing to changes in economic and market con-
11, 2012) introduced a sweeping overhaul of the rules go-
ditions, increases or decreases in withdrawal rates and the
verning hydroelectric concessions. Among its various provi-
lifespan of participants, as well as changes in the effective
sions, the law establishes that five years before the expira-
cost of medical care.
tion of a major hydroelectric water diversion concession and
Such differences can have a substantial impact on the
in cases of lapse, relinquishment or revocation, where there
quantification of pension costs and other related expenses.
is no prevailing public interest for a different use of the wa-
ter, incompatible with its use for hydroelectric generation,
Recoverability of non-current assets
The carrying amount of non-current assets is reviewed perio-
the competent public entity shall organize a public call for
tender for the award for consideration of the concession for
dically and wherever circumstances or events suggest that
a period ranging from 20 to a maximum of 30 years.
a review is necessary. Goodwill is reviewed at least annual-
In order to ensure operational continuity, the law also go-
ly. Such assessments of the recoverable amount of assets
verns the methods of transfer ownership of the business
are carried out in accordance with the provisions of IAS 36,
unit necessary to operate the concession, including all legal
as described in greater detail in note 20 below. The analysis
relationships relating to the concession, from the outgoing
of each group of non-current assets is unique and requires
concession holder to the new concession holder, in exchan-
management to use estimates and assumptions considered
ge for payment of a price to be determined in negotiations
prudent and reasonable in the given circumstances.
between the departing concession holder and the grantor
In particular, the recoverable amount of non-current assets
agency, taking due account of the following elements:
and goodwill is based on estimates and assumptions used
> for intake and governing works, penstocks and outflow
in order to determine the amount of cash flow and the di-
channels, which under the consolidated law governing
scount rates applied.
waters and electrical plants are to be relinquished free
The expected cash flows are prepared on the basis of the
of charge (Article 25 of Royal Decree 1775 of Decem-
most recently approved company plans and the informa-
ber 11, 1933), the revalued cost less government capital
tion available at the time of the estimation. Accordingly,
grants, also revalued, received by the concession holder
the assumptions used in estimating cash flows are based
for the construction of such works, depreciated for ordi-
on management judgments with regard, in particular, to
nary wear and tear;
future developments in, for example:
> for other property, plant and equipment, the market va-
> expected developments in electricity and gas demand;
lue, meaning replacement value, reduced by estimated
> expected availability of renewable resources;
depreciation for ordinary wear and tear.
> the generation mix of traditional generation plants, taking
While acknowledging that the new regulations introduce
account of the expected prices and availability of com-
important changes as to the transfer of ownership of the
modities (gas, coal, fuel oil, etc.);
business unit with regard to the operation of the hydroelec-
> expected sales prices of electricity and gas;
tric concession, the practical application of these principles
> macroeconomic variables such as inflation, exchange ra-
faces difficulties, given the uncertainties that do not permit
tes and discount rates.
the formulation of a reliable estimate of the value that can
185
Consolidated financial statements be recovered at the end of existing concessions (residual
Significant management judgement is required to determi-
value).
ne the amount of deferred tax assets that can be recogni-
Accordingly, management has decided it could not produce
zed, based upon the likely timing and the level of future
a reasonable and reliable estimate of residual value.
taxable profits together with future tax planning strategies
The fact that the legislation requires the new concession
and the tax rates applicable at the date of reversal. Howe-
holder to make a payment to the departing concession hol-
ver, where the Group should become aware that it is una-
der prompted management to review the depreciation sche-
ble to recover all or part of recognized tax assets in future
dules for assets classified as to be relinquished free of char-
years, the consequent adjustment would be taken to the
ge prior to Law 134/2012 (until the year ended on December
income statement in the year in which this circumstance
31, 2011, given that the assets were to be relinquished free
arises.
of charge, the depreciation period was equal to the closest
date between the term of the concession and the end of the
useful life of the individual asset), calculating depreciation
Litigation
The Enel Group is involved in various civil, administrative and
no longer over the term of the concession but, if longer,
tax disputes connected with the normal pursuit of its activi-
over the economic and technical life of the individual assets.
ties that could give rise to significant liabilities. It is not always
If additional information becomes available to enable the
objectively possible to predict the outcome of these dispu-
calculation of residual value, the carrying amounts of the as-
tes. The assessment of the risks associated with this litiga-
sets involved will be adjusted prospectively.
tion is based on complex factors whose very nature requi-
Determining the fair value of financial
instruments
The fair value of financial instruments is determined on
res recourse to management judgments, even when taking
account of the contribution of external advisors assisting the
Group, about whether to classify them as contingent liabilities
or liabilities.
the basis of prices directly observable in the market, whe-
Provisions have been recognized to cover all significant liabili-
re available, or, for unlisted financial instruments, using
ties for cases in which legal counsel feels an adverse outcome
specific valuation techniques (mainly based on present
is likely and a reasonable estimate of the amount of the loss
value) that maximize the use of observable market inputs.
can be made. Note 49 provides information on the most signi-
In rare circumstances were this is not possible, the inputs
ficant contingent liabilities of the Group.
are estimated by management taking due account of the
characteristics of the instruments being measured.
In accordance with IFRS 13, the Group includes a mea-
surement of credit risk, both of the counterparty (Credit
Valuation Adjustment or CVA) and its own (Debit Valua-
Management judgments
Identification of cash generating units
(CGUs)
In application of ”IAS 36 - Impairment of assets”, the go-
tion Adjustment or DVA), in order to adjust the fair value
odwill recognized in the consolidated financial statements
of financial instruments for the corresponding amount of
of the Group as a result of business combinations has been
counterparty risk, using the method discussed in note 45.
allocated to individual or groups of CGUs that will benefit
Changes in the assumptions made in estimating the input
from the combination. A CGU is the smallest group of as-
date could have an impact on the fair value recognized for
sets that generates largely independent cash inflows.
those instruments.
Recovery of deferred tax assets
At December 31, 2017, the consolidated financial state-
In identifying such CGUs, management took account of
the specific nature of its assets and the business in which
it is involved (geographical area, business area, regulatory
framework, etc.), verifying that the cash flows of a given
ments report deferred tax assets in respect of tax losses to
group of assets were closely independent and largely auto-
be reversed in subsequent years and income components
nomous of those associated with other assets (or groups
whose deductibility is deferred in an amount whose reco-
of assets).
very is considered by management to be highly probable.
The assets of each CGU were also identified on the basis
The recoverability of such assets is subject to the achieve-
of the manner in which management manages and moni-
ment of future profits sufficient to absorb such tax losses
tors those assets within the business model adopted. For a
and to use the benefits of the other deferred tax assets.
more extensive discussion, please see notes 4 and 5 below
186
Annual Report 2017 and the discussion in the section on “Results by business
stee if facts and circumstances indicate that there are chan-
area” in the Report on operations.
ges to one or more of the elements considered in verifying
The CGUs identified by management to which the goodwill
the existence of control.
recognized in these consolidated financial statements has
Finally, the assessment of the existence of control did not
been allocated are indicated in the section on intangible as-
find any situations of de facto control.
sets, to which the reader is invited to refer.
The number and scope of the CGUs are updated systema-
tically to reflect the impact of new business combinations
and reorganizations carried out by the Group, and to take
Determination of the existence of joint
control and of the type of joint arrangement
Under the provisions of IFRS 11, a joint arrangement is an
account of external factors that could impact the ability of
agreement where two or more parties have joint control.
groups of assets to generate independent cash flows.
Joint control exists when the decisions over the relevant
Determination of the existence of control
Under the provisions of IFRS 10, control is achieved when
activities require the unanimous consent of at least two
parties of a joint arrangement.
A joint arrangement can be configured as a joint venture
the Group is exposed, or has rights, to variable returns
or a joint operation. Joint ventures are joint arrangements
from its involvement with the investee and has the ability
whereby the parties that have joint control have rights to
to affect those returns through its power over the investee.
the net assets of the arrangement. Conversely, joint opera-
Power is defined as the current ability to direct the rele-
tions are joint arrangements whereby the parties that have
vant activities of the investee based on existing substantive
joint control have rights to the assets and obligations for
rights.
the liabilities relating to the arrangement.
The existence of control does not depend solely on ow-
In order to determine the existence of the joint control and
nership of a majority shareholding, but rather it arises from
the type of joint arrangement, management must apply
substantive rights that each investor holds over the inve-
judgment and assess its rights and obligations arising from
stee. Consequently, management must use its judgment in
the arrangement. For this purpose, the management con-
assessing whether specific situations determine substanti-
siders the structure and legal form of the arrangement, the
ve rights that give the Group the power to direct the rele-
terms agreed by the parties in the contractual arrangement
vant activities of the investee in order to affect its returns.
and, when relevant, other facts and circumstances.
For the purpose of assessing control, management analyses
Following that analysis, the Group has considered its inte-
all facts and circumstances including any agreements with
rest in Asociación Nuclear Ascó-Vandellós II as a joint ope-
other investors, rights arising from other contractual arran-
ration.
gements and potential voting rights (call options, warrants,
The Group re-assesses whether or not it has joint control if
put options granted to non-controlling shareholders, etc.).
facts and circumstances indicate that changes have occur-
These other facts and circumstances could be especially
red in one or more of the elements considered in verifying
significant in such assessment when the Group holds less
the existence of joint control and the type of the joint ar-
than a majority of voting rights, or similar rights, in the in-
rangement.
vestee.
Following such analysis of the existence of control, which
had already been done in previous years under the provi-
sions of the then-applicable IAS 27, the Group consolidated
Determination of the existence of
significant influence over an associate
Associated companies are those in which the Group exerci-
certain companies (Emgesa and Codensa) on a line-by-line
ses significant influence, i.e. the power to participate in the
basis even though it did not hold more than half of the
financial and operating policy decisions of the investee but
voting rights. That approach was maintained in the asses-
not exercise control or joint control over those policies. In
sment carried out in application of IFRS 10 on the basis
general, it is presumed that the Group has a significant in-
of the requirements discussed above, as detailed in the
fluence when it has an ownership interest of 20% or more.
attachment “Subsidiaries, associates and other significant
In order to determine the existence of significant influence,
equity investments of the Enel Group at December 31,
management must apply judgment and consider all facts
2017” to these financial statements.
and circumstances.
The Group re-assesses whether or not it controls an inve-
The Group re-assesses whether or not it has significant in-
187
Consolidated financial statements fluence if facts and circumstances indicate that there are
changes to one or more of the elements considered in ve-
Subsidiaries
rifying the existence of significant influence.
The Group controls an entity when it is exposed/has rights
to variable returns deriving from its involvement and has
Application of ”IFRIC 12 - Service
concession arrangements” to concessions
”IFRIC 12 - Service concession arrangements” applies
the ability, through the exercise of its power over the in-
vestee, to affect its returns. Power is defined as when the
investor has existing rights that give it the current ability to
to “public-to-private” service concession arrangements,
direct the relevant activities.
which can be defined as contracts under which the grantor
The figures of the subsidiaries are consolidated on a full
transfers to a concession holder the right to deliver public
line-by-line basis as from the date control is acquired until
services that give access to the main public facilities for a
such control ceases.
specified period of time in return for managing the infra-
structure used to deliver those public services.
More specifically, IFRIC 12 applies to public-to-private servi-
Consolidation procedures
ce concession arrangements if the grantor:
The financial statements of subsidiaries used to prepare
> controls or regulates what services the operator must
the consolidated financial statements were prepared at
provide with the infrastructure, to whom it must provide
December 31, 2017 in accordance with the accounting po-
them, and at what price; and
licies adopted by the Parent Company.
> controls – through ownership or otherwise – any signifi-
If a subsidiary uses different accounting policies from those
cant residual interest in the infrastructure at the end of
adopted in preparing the consolidated financial statements
the term of the arrangement.
for similar transactions and facts in similar circumstances,
In assessing the applicability of these provisions for the
appropriate adjustments are made to ensure conformity
Group, management carefully analyzed existing conces-
with Group accounting policies.
sions.
Assets, liabilities, revenue and expenses of a subsidiary
On the basis of that analysis, the provisions of IFRIC 12
acquired or disposed of during the year are included in or
are applicable to some of the infrastructure of a number
excluded from the consolidated financial statements, re-
of companies in the South America Region that operate in
spectively, from the date the Group gains control or until
Brazil (essentially Enel Distribución Rio and Enel Distribu-
the date the Group ceases to control the subsidiary.
ción Ceará SA).
Related parties
Profit or loss and the other components of other com-
prehensive income are attributed to the shareholders of the
Parent and non-controlling interests, even if this results in a
loss for non-controlling interests.
Related parties are mainly parties that have the same con-
All intercompany assets and liabilities, equity, income, ex-
trolling entity as Enel SpA, companies that directly or indi-
penses and cash flows relating to transactions between
rectly through one or more intermediaries control, are con-
entities of the Group are eliminated in full.
trolled or are subject to the joint control of Enel SpA and in
Changes in ownership interest in subsidiaries that do not
which the latter has a holding that enables it to exercise a
result in loss of control are accounted for as equity tran-
significant influence. Related parties also include entities
sactions, with the carrying amounts of the controlling and
that operate post-employment benefit plans for employe-
non-controlling interests adjusted to reflect changes in their
es of Enel SpA or its associates (specifically, the FOPEN
interests in the subsidiary. Any difference between the fair
and FONDENEL pension funds), as well as the members of
value of the consideration paid or received and the corre-
the boards of auditors, and their immediate family, and the
sponding fraction of equity acquired or sold is recognized in
key management personnel, and their immediate family, of
consolidated equity.
Enel SpA and its subsidiaries. Key management personnel
When the Group ceases to have control over a subsidiary,
comprises management personnel who have the power
any interest retained in the entity is remeasured to its fair
and direct or indirect responsibility for the planning, mana-
value, recognized through profit or loss, at the date when
gement and control of the activities of the company. They
control is lost. In addition, any amounts previously reco-
include directors.
gnized in other comprehensive income in respect of the
188
Annual Report 2017 former subsidiary are accounted for as if the Group had
Enel Produzione to EP Slovakia, which is based on various
directly disposed of the related assets or liabilities.
parameters, including the evolution of the net financial po-
Investments in joint arrangements
and associates
A joint venture is an entity over which the Group exerci-
ses joint control and has rights to the net assets of the
sition of SE, developments in energy prices in the Slovakian
market, the operating efficiency of SE as measured on the
basis of benchmarks defined in the contract and the enter-
prise value of Mochovce units 3 and 4. This value is compa-
red against the carrying amount of the investment, which is
measured on the basis of the results of that formula at the
arrangement. Joint control is the sharing of control of an ar-
closing date for the transaction of July 28, 2017.
rangement, whereby decisions about the relevant activities
require unanimous consent of the parties sharing control.
An associate is an entity over which the Group has significant
influence. Significant influence is the power to participate in
the financial and operating policy decisions of the investee
without having control or joint control over the investee.
If the investment ceases to be an associate or a joint ven-
ture, the Group recognizes any retained investment at its
fair value, through profit or loss. Any amounts previously
recognized in other comprehensive income in respect of
the former associate or joint venture are accounted for as
if the Group had directly disposed of the related assets or
The Group’s investments in its joint ventures and associa-
liabilities.
tes are accounted for using the equity method.
Under the equity method, these investments are initially
recognized at cost and any goodwill arising from the diffe-
rence between the cost of the investment and the Group’s
share of the net fair value of the investee’s identifiable as-
sets and liabilities at the acquisition date is included in the
carrying amount of the investment. Goodwill is not indivi-
If the Group’s ownership interest in an associate or a joint
venture is reduced, but the Group continues to exercise a
significant influence or joint control, the Group continues to
apply the equity method and the share of the gain or loss
that had previously been recognized in other comprehen-
sive income relating to that reduction is accounted for as
if the Group had directly disposed of the related assets or
dually tested for impairment.
liabilities.
After the acquisition date, their carrying amount is adjusted
to recognize changes in the Group’s share of profit or loss
of the associate or joint venture. The OCI of such investees
is presented as specific items of the Group’s OCI.
Distributions received from joint venture and associates re-
When a portion of an investment in an associate or joint
venture meets the criteria to be classified as held for sale,
any retained portion of an investment in the associate or
joint venture that has not been classified as held for sale is
accounted for using the equity method until disposal of the
duce the carrying amount of the investments.
portion classified as held for sale takes place.
Profits and losses resulting from transactions between the
Group and the associates or joint ventures are eliminated
to the extent of the interest in the associate or joint ven-
ture.
The financial statements of the associates or joint ventures
are prepared for the same reporting period as the Group.
When necessary, adjustments are made to bring the ac-
counting policies in line with those of the Group.
After application of the equity method, the Group determi-
Joint operations are joint arrangements whereby the par-
ties that have joint control have rights to the assets and
obligations for the liabilities relating to the arrangement.
For each joint operation, the Group recognized assets, lia-
bilities, costs and revenue on the basis of the provisions of
the arrangement rather than the participating interest held.
Translation of foreign currency items
nes whether it is necessary to recognize an impairment loss
Transactions in currencies other than the functional cur-
on its investment in an associate or joint venture. If there is
rency are recognized in these financial statements at the
such evidence, the Group calculates the amount of impai-
exchange rate prevailing on the date of the transaction.
rment as the difference between the recoverable amount of
Monetary assets and liabilities denominated in a foreign
the associate or joint venture and its carrying amount.
currency other than the functional currency are later adju-
In the case of the Slovak Power Holding BV joint venture,
sted using the balance sheet exchange rate. Non-moneta-
any impairment losses are assessed by determining the
ry assets and liabilities in foreign currency stated at cost
recoverable value using the price formula specified in the
are translated using the exchange rate prevailing on the
agreement to sell the 66% stake in Slovenské elektrárne by
date of initial recognition of the transaction. Non-monetary
189
Consolidated financial statements assets and liabilities in foreign currency stated at fair value
of acquisition any adjustment to the fair value of the net
are translated using the exchange rate prevailing on the
assets acquired previously was recognized in equity; the
date that value was determined. Any exchange rate diffe-
amount of goodwill was determined for each transaction
rences are recognized through profit or loss.
separately based on the fair values of the acquiree’s net
Translation of financial statements
denominated in a foreign currency
assets at the date of each exchange transaction.
Business combinations carried out as from January 1, 2010
are recognized on the basis of IFRS 3 (2008), which is refer-
For the purposes of the consolidated financial statements,
red to as IFRS 3 (Revised) hereafter.
all profits/losses, assets and liabilities are stated in euro,
which is the functional currency of the Parent Company,
Enel SpA.
In order to prepare the consolidated financial statements,
the financial statements of consolidated companies in fun-
ctional currencies other than the presentation currency
used in the consolidated financial statements are transla-
More specifically, business combinations are recognized
using the acquisition method, where the purchase cost
(the consideration transferred) is equal to the fair value at
the purchase date of the assets acquired and the liabilities
incurred or assumed, as well as any equity instruments is-
sued by the purchaser. The consideration transferred inclu-
des the fair value of any asset or liability resulting from a
ted into euro by applying the relevant period-end exchan-
contingent consideration arrangement.
ge rate to the assets and liabilities, including goodwill and
Costs directly attributable to the acquisition are recognized
consolidation adjustments, and the average exchange rate
through profit or loss.
for the period, which approximates the exchange rates pre-
vailing at the date of the respective transactions, to the in-
come statement items.
Any resulting exchange rate gains or losses are recognized
as a separate component of equity in a special reserve.
The gains and losses are recognized proportionately in the
income statement on the disposal (partial or total) of the
subsidiary.
Business combinations
Business combinations initiated before January 1, 2010 and
The consideration transferred is allocated by recognizing
the assets, liabilities and identifiable contingent liabilities of
the acquired company at their fair values as at the acquisi-
tion date. Any positive difference between the price paid,
measured at fair value as at the acquisition date, plus the
value of any non-controlling interests, and the net value of
the identifiable assets and liabilities of the acquiree mea-
sured at fair value is recognized as goodwill. Any negative
difference is recognized in profit or loss.
The value of non-controlling interests is determined either
in proportion to the interest held by minority shareholders
in the net identifiable assets of the acquiree or at their fair
completed within that financial year are recognized on the
value as at the acquisition date.
basis of IFRS 3 (2004).
Such business combinations were recognized using the
purchase method, where the purchase cost is equal to the
fair value at the date of the exchange of the assets ac-
quired and the liabilities incurred or assumed, plus costs
directly attributable to the acquisition. This cost was allo-
cated by recognizing the assets, liabilities and identifiable
contingent liabilities of the acquired company at their fair
values. Any positive difference between the cost of the
acquisition and the fair value of the net assets acquired
pertaining to the shareholders of the Parent Company was
recognized as goodwill. Any negative difference was re-
cognized in profit or loss. The value of non-controlling in-
In the case of business combinations achieved in stages, at
the date of acquisition of control the previously held equity
interest in the acquiree is remeasured to fair value and any
positive or negative difference is recognized in profit or loss.
Any contingent consideration is recognized at fair value at
the acquisition date. Subsequent changes to the fair value
of the contingent consideration classified as an asset or a
liability, or as a financial instrument within the scope of IAS
39, is recognized in profit or loss. If the contingent consi-
deration is not within the scope of IAS 39, it is measured
in accordance with the appropriate IFRS-EU. Contingent
consideration that is classified as equity is not re-measu-
red, and its subsequent settlement is accounted for within
terests was determined in proportion to the interest held
equity.
by minority shareholders in the net assets. In the case of
business combinations achieved in stages, at the date
If the fair values of the assets, liabilities and contingent lia-
bilities can only be calculated on a provisional basis, the bu-
190
Annual Report 2017 siness combination is recognized using such provisional va-
maximizing the use of relevant observable inputs and mini-
lues. Any adjustments resulting from the completion of the
mizing the use of unobservable inputs.
measurement process are recognized within 12 months of
the date of acquisition, restating comparative figures.
Fair value measurement
Property, plant and equipment
Property, plant and equipment is stated at cost, net of accu-
mulated depreciation and accumulated impairment losses,
For all fair value measurements and disclosures of fair va-
if any. Such cost includes expenses directly attributable to
lue, that are either required or permitted by international
bringing the asset to the location and condition necessary
accounting standards, the Group applies IFRS 13.
for its intended use.
Fair value is defined as the price that would be received to
The cost is also increased by the present value of the esti-
sell an asset or paid to transfer a liability, in an orderly tran-
mate of the costs of decommissioning and restoring the
saction, between market participants, at the measurement
site on which the asset is located where there is a legal or
date (i.e. an exit price).
constructive obligation to do so. The corresponding liability
The fair value measurement assumes that the transaction
is recognized under provisions for risks and charges. The
to sell an asset or transfer a liability takes place in the prin-
accounting treatment of changes in the estimate of these
cipal market, i.e. the market with the greatest volume and
costs, the passage of time and the discount rate is discus-
level of activity for the asset or liability. In the absence of
sed under “Provisions for risks and charges”.
a principal market, it is assumed that the transaction takes
Property, plant and equipment transferred from customers to
place in the most advantageous market to which the Group
connect them to the electricity distribution network and/or to
has access, i.e. the market that maximizes the amount
provide them with ongoing access to a supply of electricity is
that would be received to sell the asset or minimizes the
initially recognized at its fair value at the time of the transfer.
amount that would be paid to transfer the liability.
Borrowing costs that are directly attributable to the acquisi-
The fair value of an asset or a liability is measured using the
tion, construction or production of a qualifying asset, i.e. an
assumptions that market participants would use when pri-
asset that takes a substantial period of time to get ready for
cing the asset or liability, assuming that market participants
its intended use or sale, are capitalized as part of the cost of
act in their economic best interest. Market participants are
the assets themselves. Borrowing costs associated with the
independent, knowledgeable sellers and buyers who are
purchase/construction of assets that do not meet such requi-
able to enter into a transaction for the asset or the liability
rement are expensed in the period in which they are incurred.
and who are motivated but not forced or otherwise compel-
Certain assets that were revalued at the IFRS-EU transi-
led to do so.
tion date or in previous periods are recognized at their fair
When measuring fair value, the Group takes into account
value, which is considered to be their deemed cost at the
the characteristics of the asset or liability, in particular:
revaluation date.
> for a non-financial asset, a fair value measurement ta-
Where individual items of major components of property,
kes into account a market participant’s ability to generate
plant and equipment have different useful lives, the compo-
economic benefits by using the asset in its highest and
nents are recognized and depreciated separately.
best use or by selling it to another market participant that
Subsequent costs are recognized as an increase in the
would use the asset in its highest and best use;
carrying amount of the asset when it is probable that futu-
> for liabilities and own equity instruments, the fair value
re economic benefits associated with the cost incurred to
reflects the effect of non-performance risk, i.e. the risk
replace a part of the asset will flow to the Group and the
that an entity will not fulfill an obligation;
cost of the item can be measured reliably. All other costs
> in the case of groups of financial assets and financial liabi-
are recognized in profit or loss as incurred.
lities with offsetting positions in market risk or credit risk,
The cost of replacing part or all of an asset is recognized
managed on the basis of an entity’s net exposure to such
as an increase in the carrying amount of the asset and is
risks, it is permitted to measure fair value on a net basis.
depreciated over its useful life; the net carrying amount of
In measuring the fair value of assets and liabilities, the
the replaced unit is derecognized through profit or loss.
Group uses valuation techniques that are appropriate in the
Property, plant and equipment, net of its residual value, is
circumstances and for which sufficient data are available,
depreciated on a straight-line basis over its estimated use-
191
Consolidated financial statements ful life, which is reviewed annually and, if appropriate, adju-
The useful life of leasehold improvements is determined
sted prospectively. Depreciation begins when the asset is
on the basis of the term of the lease or, if shorter, on the
available for use.
duration of the benefits produced by the improvements
themselves.
The estimated useful life of the main items of property,
Land is not depreciated as it has an undetermined useful life.
plant and equipment is as follows:
Assets recognized under property, plant and equipment are
Civil buildings
20-70 years
no future economic benefit is expected from their use or
Buildings and civil works incorporated in plants
20-85 years
disposal. Any gain or loss, recognized through profit or loss,
derecognized either at the time of their disposal or when
Hydroelectric power plants:
- penstock
20-75 years
- mechanical and electrical machinery
24-40 years
- other fixed hydraulic works
25-100 years
Thermal power plants:
- boilers and auxiliary components
- gas turbine components
19-46 years
10-40 years
- mechanical and electrical machinery
10-45 years
- other fixed hydraulic works
Nuclear power plants
Geothermal power plants:
- cooling towers
- turbines and generators
- turbine parts in contact with fluid
10-66 years
60 years
10-20 years
20-30 years
10-25 years
is calculated as the difference between the net considera-
tion received in the disposal, where present, and the net
carrying amount of the derecognized assets.
Assets to be relinquished free of charge
The Group’s plants include assets to be relinquished free
of charge at the end of the concessions. These mainly re-
gard major water diversion works and the public lands used
for the operation of the thermal power plants. For Italy, the
concessions terminate between 2020 and 2040.
Within the Italian regulatory framework in force until 2011,
if the concessions are not renewed, at those dates all inta-
ke and governing works, penstocks, outflow channels and
other assets on public lands were to be relinquished free of
charge to the State in good operating condition. Accordin-
gly, depreciation on assets to be relinquished was calcula-
- mechanical and electrical machinery
20-22 years
ted over the shorter of the term of the concession and the
Wind power plants:
- towers
- turbines and generators
20-25 years
20-25 years
- mechanical and electrical machinery
15-25 years
Solar power plants:
- mechanical and electrical machinery
15-40 years
Public and artistic lighting:
- public lighting installations
- artistic lighting installations
Transmission lines
Transformer stations
Distribution plant:
- high-voltage lines
- primary transformer stations
- low- and medium-voltage lines
Meters:
18-25 years
20-25 years
20-50 years
10-60 years
30-50 years
10-60 years
23-50 years
remaining useful life of the assets.
In the wake of the legislative changes introduced with Law
134 of August 7, 2012, the assets previously classified as
assets “to be relinquished free of charge” connected with
the hydroelectric water diversion concessions are now con-
sidered in the same manner as other categories of “pro-
perty, plant and equipment” and are therefore depreciated
over the economic and technical life of the asset (where
this exceeds the term of the concession), as discussed
in the section above on the “Depreciable value of certain
elements of Italian hydroelectric plants subsequent to
enactment of Law 134/2012”, which you are invited to con-
sult for more details.
In accordance with Spanish laws 29/1985 and 46/1999,
hydroelectric power stations in Spanish territory operate
under administrative concessions at the end of which the
plants will be returned to the government in good operating
- electromechanical meters
2-27 years
condition. The terms of the concessions extend up to 2067.
- electricity balance measurement equipment
2-35 years
A number of generation companies that operate in Argen-
- electronic meters
10-20 years
tina, Brazil and Mexico hold administrative concessions
with similar conditions to those applied under the Spanish
192
Annual Report 2017 concession system. These concessions will expire in the
from the grantor (or from a third party at the direction of
period between 2017 and 2088.
the grantor) and the grantor has little discretion to avoid
Infrastructure used in the service
concession arrangement
As regards the distribution of electricity, the Group is a con-
payment. In this case, the grantor contractually guaran-
tees to pay to the operator specified or determinable
amounts or the shortfall between the amounts received
from the users of the public service and specified or de-
cession holder in Italy for this service. The concession, gran-
terminable amounts (defined by the contract), and such
ted by the Ministry for Economic Development, was issued
payments are not dependent on the usage of the infra-
free of charge and terminates on December 31, 2030. If the
structure; and/or
concession is not renewed upon expiry, the grantor is requi-
> an intangible asset, if the operator receives the right (a
red to pay an indemnity. The amount of the indemnity will be
license) to charge users of the public service provided. In
determined by agreement of the parties using appropriate
such a case, the operator does not have an unconditional
valuation methods, based on both the balance sheet value
right to receive cash because the amounts are contin-
of the assets themselves and their profitability.
gent on the extent that the public uses the service.
In determining the indemnity, such profitability will be repre-
If the Group (as operator) has a contractual right to receive
sented by the present value of future cash flows. The infra-
an intangible asset (the right to charge users of the public
structure serving the concessions is owned and available to
service), borrowing costs are capitalized using the criteria
the concession holder. It is recognized under “Property, plant
specified in the section “Property, plant and equipment”.
and equipment” and is depreciated over the useful lives of
During the operating phase of concession arrangements,
the assets.
the Group accounts for operating service payments in ac-
Enel also operates under administrative concessions for
cordance with criteria specified in the section “Revenue”.
the distribution of electricity in other countries (including
Spain and Romania). These concessions give the right to
build and operate distribution networks for an indefinite pe-
Leases
riod of time.
Infrastructure within the scope of
”IFRIC 12 - Service concession
arrangements”
The Group holds property, plant and equipment and intan-
gible assets for its various activities under lease contracts.
These contracts are analyzed on the basis of the cir-
cumstances and indicators set out in IAS 17 in order to
determine whether they constitute operating leases or fi-
nance leases.
Under a “public-to-private” service concession arrange-
A finance lease is defined as a lease that transfers substan-
ment within the scope of ”IFRIC 12 - Service concession
tially all the risks and rewards incidental to ownership of
arrangements” the operator acts as a service provider and,
the related asset to the lessee. All leases that do not meet
in accordance with the terms specified in the contract, it
the definition of a finance lease are classified as operating
constructs/upgrades infrastructure used to provide a public
leases.
service and operates and maintains that infrastructure for
On initial recognition assets held under finance leases are
the period of the concession.
recognized as property, plant and equipment and the re-
The Group, as operator, does not recognize the infrastruc-
lated liability is recognized under long-term borrowings.
ture within the scope of IFRIC 12 as property, plant and
At inception date finance leases are recognized at the lo-
equipment and it accounts for revenue and costs relating to
wer of the fair value of the leased asset and the present
construction/upgrade services as discussed in the section
value of the minimum lease payments due, including the
“Construction contracts”. In particular, the Group measures
payment required to exercise any purchase option.
the consideration received or receivable for the construc-
The assets are depreciated on the basis of their useful li-
tion/upgrading of infrastructure at its fair value and, depen-
ves. If it is not reasonably certain that the Group will acqui-
ding on the characteristics of the service concession arran-
re the assets at the end of the lease, they are depreciated
gement, it recognizes:
over the shorter of the lease term and the useful life of the
> a financial asset, if the operator has an unconditional con-
assets.
tractual right to receive cash or another financial asset
Payment made under operating lease are recognized as a
193
Consolidated financial statements cost on a straight-line basis over the lease term.
Amortization is calculated on a straight-line basis over the
Although not formally designated as lease agreements,
item’s estimated useful life, which is reassessed at least an-
certain types of contract can be considered as such if the
nually; any changes in amortization policies are reflected on a
fulfilment of the arrangement is dependent on the use of a
prospective basis. Amortization commences when the asset
specific asset (or assets) and if the arrangement conveys a
is ready for use. Consequently, intangible assets not yet avai-
right to use such assets.
lable for use are not amortized, but are tested for impairment
Investment property
at least annually.
The Group’s intangible assets have a definite useful life, with
the exception of a number of concessions and goodwill.
Investment property consists of the Group’s real estate
Intangible assets with indefinite useful lives are not amorti-
held to earn rentals and/or for capital appreciation rather
zed, but are tested for impairment annually.
than for use in the production or supply of goods and ser-
vices.
Investment property is measured at acquisition cost less
The assessment of indefinite life is reviewed annually to de-
termine whether the indefinite life continues to be supporta-
ble. If not, the change in useful life from indefinite to finite is
any accumulated depreciation and any accumulated impai-
accounted for as a change in accounting estimate.
rment losses.
Investment property, excluding land, is depreciated on a
straight-line basis over the useful lives of the assets.
Impairment losses are determined on the basis of criteria
discussed below.
Intangible assets are derecognized either at the time of their
disposal or when no future economic benefit is expected
from their use or disposal. Any gain or loss, recognized throu-
gh profit or loss, is calculated as the difference between the
net consideration received in the disposal, where present,
The breakdown of the fair value of investment property
and the net book value of the derecognized assets.
is detailed in note 45 “Assets measured at fair value”. In-
vestment property is derecognized either at the time of its
The estimated useful life of the main intangible assets, di-
stinguishing between internally generated and acquired as-
disposal or when no future economic benefit is expected
sets, is as follows:
from its use or disposal. Any gain or loss, recognized throu-
gh profit or loss, is calculated as the difference between
the net consideration received in the disposal, where pre-
sent, and the net book value of the derecognized assets.
Development costs:
- internally generated
- acquired
Intangible assets
Industrial patents and intellectual property
rights:
- internally generated
Intangible assets are identifiable assets without physical
- acquired
substance controlled by the entity and capable of generating
future economic benefits. They are measured at purchase or
Concessions, licenses, trademarks and similar
rights:
internal development cost when it is probable that the use of
- internally generated
such assets will generate future economic benefits and the
related cost can be reliably determined.
- acquired
Other:
The cost includes any directly attributable expenses neces-
- internally generated
sary to make the assets ready for their intended use.
- acquired
Internal development costs are recognized as an intangible
asset when both the Group is reasonably assured of the
technical feasibility of completing the intangible asset and
Goodwill
3-5 years
3-5 years
5 years
3-25 years
-
2-60 years
2-5 years
3-40 years
that the asset will generate future economic benefits and
Goodwill arises on the acquisition of subsidiaries and re-
it has intention and ability to complete the asset and use or
presents the excess of the consideration transferred, as
sell it.
measured at fair value at the acquisition date, and the value
Research costs are recognized as expenses.
of any non-controlling interests over the net fair value of
Intangible assets with a finite useful life are reported net of
the acquiree’s identifiable assets and liabilities. After initial
accumulated amortization and any impairment losses.
recognition, goodwill is not amortized, but is tested for re-
194
Annual Report 2017 coverability at least annually using the criteria discussed in
and impairment losses”, in an amount that shall not exceed
the section “Impairment of non-financial assets”. For the
the net carrying amount that the asset would have had if
purpose of impairment testing, goodwill is allocated, from
the impairment loss had not been recognized and deprecia-
the acquisition date, to each of the identified cash genera-
tion or amortization had been performed. The original value
ting units.
of goodwill is not restored even if in subsequent years the
Goodwill relating to equity investments in associates and
reasons for the impairment no longer obtain.
joint ventures is included in their carrying amount.
The recoverable amount of goodwill and intangible assets
Impairment of non-financial assets
with an indefinite useful life and intangible assets not yet
available for use is tested for recoverability annually or more
frequently if there is evidence suggesting that the assets
At each reporting date, non-financial assets are reviewed to
may be impaired.
determine whether there is evidence of impairment. If such
evidence exists, the recoverable amount of any involved as-
set is estimated. The recoverable amount is the higher of an
asset’s fair value less costs of disposal and its value in use.
In order to determine the recoverable amount of property,
If certain specific identified assets owned by the Group are
impacted by adverse economic or operating conditions that
undermine their capacity to contribute to the generation of
cash flows, they can be isolated from the rest of the assets
of the CGU, undergo separate analysis of their recoverability
plant and equipment, investment property, intangible assets
and are impaired where necessary.
and goodwill, the Group generally adopts the value-in-use
criterion.
The value in use is represented by the present value of the
Inventories
estimated future cash flows generated by the asset in que-
Inventories are measured at the lower of cost and net rea-
stion. Value in use is determined by discounting estimated
lizable value except for inventories involved in trading activi-
future cash flows using a pre-tax discount rate that reflects
ties, which are measured at fair value with recognition throu-
the current market assessment of the time value of money
gh profit or loss. Cost is determined on the basis of average
and the specific risks of the asset.
weighted cost, which includes related ancillary charges. Net
The future cash flows used to determine value in use are
estimated realizable value is the estimated normal selling
based on the most recent business plan, approved by the
price net of estimated costs to sell or, where applicable, re-
management, containing forecasts for volumes, revenue,
placement cost.
operating costs and investments.
For the portion of inventories held to discharge sales that
These projections cover the next five years. Consequently,
have already been made, the net realizable value is determi-
cash flows related to subsequent periods are determined on
ned on the basis of the amount established in the contract
the basis of a long-term growth rate that does not exceed
of sale.
the average long-term growth rate for the particular sector
Inventories include environmental certificates (green certifi-
and country.
The recoverable amount of assets that do not generate inde-
pendent cash flows is determined based on the cash-gene-
rating unit to which the asset belongs.
cates, energy efficiency certificates and CO2 emissions allo-
wances) that were not utilized for compliance in the reporting
period. As regards CO2 emissions allowances, inventories are
allocated between the trading portfolio and the compliance
If the carrying amount of an asset or of a cash-generating
portfolio, i.e. those used for compliance with greenhouse gas
unit to which it is allocated is higher than its recoverable
amount, an impairment loss is recognized in profit or loss
emissions requirements. Within the latter, CO2 emissions al-
lowances are allocated to sub-portfolios on the basis of the
under “Depreciation, amortization and impairment losses”.
compliance year to which they have been assigned.
Impairment losses of cash generating units are firstly char-
Inventories also include nuclear fuel stocks, use of which is
ged against the carrying amount of any goodwill attributed
determined on the basis of the electricity generated.
to it and then against the other assets, in proportion to their
Materials and other consumables (including energy commo-
carrying amount.
dities) held for use in production are not written down if it is
If the reasons for a previously recognized impairment loss
expected that the final product in which they will be incorpo-
no longer obtain, the carrying amount of the asset is resto-
rated will be sold at a price sufficient to enable recovery of
red through profit or loss, under “Depreciation, amortization
the cost incurred.
195
Consolidated financial statements Construction contracts
When the outcome of a construction contract can be esti-
mated reliably and it is probable that the contract will be
profitable, contract revenue and contract costs are recogni-
zed by reference to the stage of completion of the contract
activity at the end of the reporting period. Under this criteria,
revenue, expenses and profit are attributed in proportion to
the work completed.
When it is probable that total contract costs will exceed
total contract revenue, the expected loss on the construc-
tion contract is recognized as an expense immediately, re-
gardless of the stage of completion of the contract.
When the outcome of a construction contract cannot be
estimated reliably, contract revenue is recognized only to
the extent of contract costs incurred that are likely to be
recoverable.
The stage of completion of the contract in progress is de-
termined, using the cost-to-cost method, as a ratio betwe-
en costs incurred for work performed to the reporting date
and the estimated total contract costs. In addition to initial
amount of revenue agreed in the contract, contract revenue
includes any payments in respect of variations, claims and
incentives, to the extent that it is probable that they will re-
sult in revenue and can be reliably measured.
The amount due from customers for construction contract
is presented as an asset; the amount due to customers for
construction contract is presented as a liability.
Financial instruments
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equi-
ty instrument of another entity. Financial instruments are
recognized and measured in accordance with IAS 32 and
IAS 39.
A financial asset or liability is recognized in the consolidated
financial statements when, and only when, the Group be-
comes party to the contractual provisions of the instrument
(the trade date).
Financial instruments are classified as follows under IAS
39:
> financial assets and liabilities at fair value through profit or
loss (FVTPL);
> held-to-maturity financial assets (HTM);
> loans and receivables;
> available-for-sale financial assets (AFS);
> financial liabilities measured at amortized cost.
196
Financial assets and liabilities at fair value
through profit or loss
This category includes: securities, equity investments in en-
tities other than subsidiaries, associates and joint ventures
and investment funds held for trading or designated as at fair
value through profit or loss at the time of initial recognition.
Financial instruments at fair value through profit or loss are
financial assets and liabilities:
> classified as held for trading because acquired or incur-
red principally for the purpose of selling or repurchasing
at short term;
> designated as such upon initial recognition, under the op-
tion allowed by IAS 39 (the fair value option).
Such financial assets and liabilities are initially recognized at
fair value with subsequent gains and losses from changes in
their fair value recognized through profit or loss.
Held-to-maturity financial assets
This category comprises non-derivative financial assets with
fixed or determinable payments and fixed maturity, quoted
on an active market and not representing equity investments,
for which the Group has the positive intention and ability to
hold until maturity. They are initially recognized at fair value,
including any transaction costs, and subsequently measured
at amortized cost using the effective interest method.
Loans and receivables
This category mainly includes trade receivables and other fi-
nancial receivables. Loans and receivables are non-derivative
financial assets with fixed or determinable payments, that
are not quoted on an active market, other than those the
Group intends to sell immediately or in the short term (which
are classified as held for trading) and those that the Group,
on initial recognition, designates as either at fair value throu-
gh profit or loss or available for sale. Such assets are initially
recognized at fair value, adjusted for any transaction costs,
and are subsequently measured at amortized cost using the
effective interest method, without discounting unless ma-
terial.
Available-for-sale financial assets
This category mainly includes listed debt securities not clas-
sified as held to maturity and equity investments in other
entities (unless classified as “designated as at fair value
through profit or loss”). Available-for-sale financial assets are
non-derivative financial assets that are designated as avai-
lable for sale or are not classified as loans and receivables,
Annual Report 2017 held-to-maturity financial assets or financial assets at fair va-
lable-for-sale equity investments, such as significant adverse
lue through profit or loss.
changes in the technological, market, economic or legal en-
These financial instruments are measured at fair value with
vironment.
changes in fair value recognized in other comprehensive in-
A significant or prolonged decline in fair value constitutes
come.
objective evidence of impairment and, therefore, the fair va-
At the time of sale, or when a financial asset available for
lue loss previously recognized in other comprehensive inco-
sale becomes an investment in a subsidiary as a result of
me is reclassified from equity to income.
successive purchases, the cumulative gains and losses
The amount of the cumulative loss is the difference betwe-
previously recognized in equity are reversed to the income
en the acquisition cost and the current fair value, less any
statement.
impairment loss previously recognized in profit or loss. An
When the fair value cannot be determined reliably, these
impairment loss on an available-for-sale equity investment
assets are recognized at cost adjusted for any impairment
cannot be reversed.
losses.
If there is objective evidence of impairment for unquoted
equity instruments measured at cost because fair value can-
Impairment of financial assets
At each reporting date, all financial assets classified as loans
not be reliably measured, the amount of the impairment loss
is measured as the difference between the carrying amount
and receivables (including trade receivables), held to maturi-
and the present value of estimated future cash flows, di-
ty or available for sale, are assessed in order to determine if
scounted at the current rate of interest for a similar financial
there is objective evidence that an asset or a group of finan-
asset. Reversal of impairment are not permitted in these ca-
cial assets is impaired.
ses either.
An impairment loss is recognized if and only if such evidence
The amount of the impairment loss on a debt instrument
exists as a result of one or more events that occurred after
classified as available for sale, to be reclassified from equi-
initial recognition and that have an impact on the future cash
ty, is the cumulative fair value loss recognized in other
flows of the asset and which can be estimated reliably.
comprehensive income. Such impairment loss is reversed
Objective evidence of an impairment loss includes observa-
through profit or loss if the fair value of the debt instrument
ble data about, for example:
objectively increases as a result of an event that occurred
> significant financial difficulty of the issuer or obligor;
after the impairment loss was recognized.
> a breach of contract, such as a default or delinquency in
interest or principal payments;
> evidence that the borrower will enter bankruptcy or other
Cash and cash equivalents
This category includes deposits that are available on demand
form of financial reorganization;
or at very short term, as well as highly liquid short-term fi-
> a measurable decrease in estimated future cash flows.
nancial investments that are readily convertible into a known
Losses that are expected to arise as a result of future events
amount of cash and which are subject to insignificant risk of
are not recognized.
changes in value.
For financial assets classified as loans and receivables or
In addition, for the purpose of the consolidated statement of
held to maturity, once an impairment loss has been iden-
cash flows, cash and cash equivalents do not include bank
tified, its amount is measured as the difference between
overdrafts at period-end.
the carrying amount of the asset and the present value of
expected future cash flows, discounted at the original ef-
fective interest rate. This amount is recognized in profit or
loss.
Financial liabilities measured at amortized
cost
This category mainly includes borrowings, trade payables,
The carrying amount of trade receivable is reduced through
finance lease obligations and debt instruments.
use of an allowance account.
Financial liabilities other than derivatives are recognized
If the amount of a past impairment loss decreases and the
when the Group becomes a party to the contractual clau-
decrease can be related objectively to an event occurring af-
ses of the instrument and are initially measured at fair value
ter the impairment was recognized, the impairment is rever-
adjusted for directly attributable transaction costs. Finan-
sed through profit or loss.
cial liabilities are subsequently measured at amortized cost
Further factors are considered in case of impairment of avai-
using the effective interest rate method.
197
Consolidated financial statements Derivative financial instruments
A derivative is a financial instrument or another contract:
> whose value changes in response to the changes in an
underlying variable such as an interest rate, commodity
or security price, foreign exchange rate, a price or rate
index, a credit rating or other variable;
> that requires no initial net investment, or an initial net
investment that is smaller than would be required for a
contract with a similar response to changes in market
factors;
> that is settled at a future date.
Derivative instruments are classified as financial assets or
liabilities depending on whether their fair value is positive
or negative and they are classified as “held for trading” and
measured at fair value through profit or loss, except for those
designated as effective hedging instruments.
For more details about hedge accounting, please see note
44 “Derivatives and hedge accounting”.
All derivatives held for trading are classified as current assets
or liabilities.
Derivatives not held for trading purposes but measured at
fair value through profit or loss since they do not qualify
for hedge accounting and derivatives designated as effec-
tive hedging instruments are classified as current or non-
current on the basis of their maturity date and the Group’s
intention to hold the financial instrument until maturity or
not.
Embedded derivatives
An embedded derivative is a derivative included in a “com-
bined” contract (the so-called “hybrid instrument”) that con-
tains another non-derivative contract (the so-called “host
contract“) and gives rise to some or all of the combined con-
tract’s cash flows.
The main Group contracts that may contain embedded de-
rivatives are contracts to buy or sell non-financial items with
clauses or options that affect the contract price, volume or
maturity.
Such contracts, which do not represent financial instru-
ments to be measured at fair value, are analyzed in order
to identify any embedded derivative, which are to be sepa-
rated and measured at fair value. This analysis is performed
when the Group becomes party to the contract or when
the contract is renegotiated in a manner that significantly
changes the original associated cash flows. Embedded
derivatives are separated from the host contract and ac-
counted for as derivatives when:
198
> host contract is not a financial instrument measured at
fair value through profit or loss;
> the economic risks and characteristics of the embedded
derivative are not closely related to those of the host con-
tract;
> a separate contract with the same terms as the embed-
ded derivative would meet the definition of a derivative.
Embedded derivatives that are separated from the host con-
tract are recognized in the consolidated financial statements
at fair value with changes recognized through profit or loss
(except when the embedded derivative is part of a designa-
ted hedging relationship).
Contracts to buy or sell non-financial items
In general, contracts to buy or sell non-financial items that
are entered into and continue to be held for receipt or delive-
ry, in accordance with the Group’s normal expected purcha-
se, sale or usage requirements, do not fall within the scope
of IAS 39 and are then recognized in accordance with the
accounting treatment of such transactions (the “own use
exemption”).
Such contracts are recognized as derivatives and, as a conse-
quence, at fair value through profit or loss only if:
> they can be settled net in cash; and
> they are not entered into in accordance with the Group’s
expected purchase, sale or usage requirements.
A contract to buy or sell non-financial items is classified as
a “normal purchase or sale” if it is entered into:
> for the purpose of physical delivery;
> in accordance with the Group’s expected purchase, sale
or usage requirements.
The Group analyses all contracts to buy or sell non-financial
assets, with a specific focus on forward purchases and sa-
les of electricity and energy commodities, in order to deter-
mine if they should be classified and treated in accordance
with IAS 39 or if they have been entered into for “own use”.
Derecognition of financial assets and
liabilities
Financial assets are derecognized whenever one of the fol-
lowing conditions is met:
> the contractual right to receive the cash flows associated
with the asset expires;
> the Group has transferred substantially all the risks and
rewards associated with the asset, transferring its rights
to receive the cash flows of the asset or assuming a con-
tractual obligation to pay such cash flows to one or more
beneficiaries under a contract that meets the require-
Annual Report 2017 ments established by IAS 39 (the “pass through test”);
Employees are also enrolled in defined contribution plans un-
> the Group has not transferred or retained substantially all
der which the Group pays fixed contributions to a separate
the risks and rewards associated with the asset but has
entity (a fund) and has no legal or constructive obligation to
transferred control over the asset.
pay further contributions if the fund does not hold sufficient
Financial liabilities are derecognized when they are extingui-
assets to pay all employee benefits relating to employee ser-
shed, i.e. when the contractual obligation has been dischar-
vice in the current and prior periods. Such plans are usually
ged, cancelled or expired.
aimed to supplement pension benefits due to employees
Offsetting financial assets and liabilities
The Group offsets financial assets and liabilities when:
> there is a legally enforceable right to set off the recognized
amounts; and
> it has the intention of either settling on a net basis, or re-
post-employment. The related costs are recognized in inco-
me statement on the basis of the amount of contributions
paid in the period.
Termination benefits
alizing the asset and settling the liability simultaneously.
Liabilities for benefits due to employees for the early termi-
Employee benefits
nation of the employment relationship, both as a result of a
decision by the Group or an employee’s decision to accept
voluntary redundancy in exchange for these benefits, are re-
Liabilities related to employee benefits paid upon or after ce-
cognized at the earlier of the following dates:
asing employment in connection with defined benefit plans
> when the Group can no longer withdraw its offer of be-
or other long-term benefits accrued during the employment
nefits; and
period are determined separately for each plan, using actua-
> when the Group recognizes a cost for a restructuring that
rial assumptions to estimate the amount of the future bene-
is within the scope of IAS 37 and involves the payment of
fits that employees have accrued at the balance sheet date
termination benefits.
(the projected unit credit method). More specifically, the
The liabilities are measured on the basis of the nature of
present value of the defined benefit obligation is calculated
the employee benefits. More specifically, when the bene-
by using a discount rate determined on the basis of mar-
fits represent an enhancement of other post-employment
ket yields at the end of the reporting period on high-quality
benefits, the associated liability is measured in accordance
corporate bonds. If there is no deep market for high-quality
with the rules governing that type of benefit. Otherwise,
corporate bonds in the currency in which the bond is deno-
if the termination benefits due to employees are expected
minated, the corresponding yield of government securities
to be settled wholly before 12 months after the end of the
is used.
annual reporting period, the entity measures the liability in
The liability is recognized on an accruals basis over the ve-
accordance with the requirements for short-term employee
sting period of the related rights. These appraisals are perfor-
benefits; if they are not expected to be settled wholly before
med by independent actuaries.
12 months after the end of the annual reporting period, the
If the value of plan assets exceeds the present value of the
entity measures the liability in accordance with the require-
related defined benefit obligation, the surplus (up to the limit
ments for other long-term employee benefits.
of any cap) is recognized as an asset.
As regards the liabilities (assets) of defined benefit plans, the
cumulative actuarial gains and losses from the actuarial mea-
Provisions for risks and charges
surement of the liabilities, the return on the plan assets (net
Provisions are recognized where there is a legal or construc-
of the associated interest income) and the effect of the asset
tive obligation as a result of a past event at the end of the
ceiling (net of the associated interest income) are recognized
reporting period, the settlement of which is expected to re-
in other comprehensive income when they occur. For other
sult in an outflow of resources whose amount can be relia-
long-term benefits, the related actuarial gains and losses are
bly estimated. Where the impact is material, the accruals are
recognized through profit or loss.
determined by discounting expected future cash flows using
In the event of a change being made to an existing defined
a pre-tax discount rate that reflects the current market as-
benefit plan or the introduction of a new plan, any past servi-
sessment of the time value of money and, if applicable, the
ce cost is recognized immediately in profit or loss.
risks specific to the liability. If the provision is discounted, the
199
Consolidated financial statements periodic adjustment of the present value for the time factor
all conditions attaching to them as set by the government,
is recognized as a financial expense.
government agencies and similar bodies whether local, na-
When the Group expects some or all of the expenditure re-
tional or international.
quired to extinguish a liability will be reimbursed by a third
When loans are provided by governments at a below-mar-
party, the reimbursement is recognized as a separate asset
ket rate of interest, the benefit is regarded as a government
if such reimbursement is virtually certain.
grant. The loan is initially recognized and measured at fair
Where the liability relates to plant decommissioning and/
value and the government grant is measured as the diffe-
or site restoration, the initial recognition of the provision is
rence between the initial carrying amount of the loan and
made against the related asset and the expense is then reco-
the funds received. The loan is subsequently measured in
gnized in profit or loss through the depreciation of the asset
accordance with the requirements for financial liabilities.
involved.
Government grants are recognized in profit or loss on a sy-
Where the liability regards the treatment and storage of nu-
stematic basis over the periods in which the Group recogni-
clear waste and other radioactive materials, the provision is
zes as expenses the costs that the grants are intended to
recognized against the related operating costs.
compensate.
In the case of contracts in which the unavoidable costs of
Where the Group receives government grants in the form
meeting the obligations under the contract exceed the eco-
of a transfer of a non-monetary asset for the use of the
nomic benefits expected to be received under it (onerous
Group, it accounts for both the grant and the asset at the
contracts), the Group recognizes a provision as the lower of
fair value of the non-monetary asset received at the date
the costs of fulfilling the obligation that exceed the economic
of the transfer.
benefits expected to be received under the contract and any
Grants related to long-lived assets, including non-monetary
compensation or penalty arising from failure to fulfil it.
grants at fair value, i.e. those received to purchase, build or
Changes in estimates of accruals to the provision are reco-
otherwise acquire non-current assets (for example, an item
gnized in the income statement in the period in which the
of property, plant and equipment or an intangible asset), are
changes occur, with the exception of those in respect of
recognized on a deferred basis under other liabilities and are
the costs of decommissioning, dismantling and/or resto-
credited to profit or loss on a straight-line basis over the use-
ration resulting from changes in the timetable and costs
ful life of the asset.
necessary to extinguish the obligation or from a change
in the discount rate. These changes increase or decrease
the value of the related assets and are taken to the income
statement through depreciation. Where they increase the
value of the assets, it is also determined whether the new
carrying amount of the assets is fully recoverable. If this is
Environmental certificates
Some Group companies are affected by national regulations
governing green certificates and energy efficiency certifica-
tes (so-called white certificates), as well as the European
not the case, a loss equal to the unrecoverable amount is
“Emissions Trading System”.
recognized in the income statement.
Decreases in estimates are recognized up to the carrying
amount of the assets. Any excess is recognized immediately
in the income statement.
For more information on the estimation criteria adopted in
determining liabilities for plant dismantling and site restora-
tion, especially those associated with nuclear power plants
or the storage of waste fuel and other radioactive materials,
please see the section on the use of estimates.
Government grants
Green certificates, which now only exist outside of Italy,
accrued in proportion to electricity generated by renewable
energy plants and energy efficiency certificates accrued in
proportion to energy savings achieved that have been certi-
fied by the competent authority are treated as non-monetary
government operating grants and are recognized at fair value,
under other revenue and income, with recognition of an as-
set under other non-financial assets, if the certificates are not
yet credited to the ownership account, or under inventories,
if the certificates have already been credited to that account.
At the time the certificates are credited to the ownership ac-
count, they are reclassified from other assets to inventories.
Government grants, including non-monetary grants at fair va-
Revenue from the sale of such certificates are recognized
lue, are recognized where there is reasonable assurance that
under revenue from sales and services, with a correspon-
they will be received and that the Group will comply with
ding decrease in inventories.
200
Annual Report 2017 For the purposes of accounting for charges arising from re-
assets (or disposal groups) as held for sale, the carrying
gulatory requirements concerning green certificates, energy
amounts of such assets (or disposal groups) are measured
efficiency certificates and CO2 emissions allowances, the
Group uses the “net liability approach”.
in accordance with the IFRS-EU applicable to the specific
assets or liabilities. Non-current assets (or disposal groups)
Under this accounting policy, environmental certificates
classified as held for sale are measured at the lower of their
received free of charge and those self-produced as a re-
carrying amount and fair value less costs to sell. Impairment
sult of Group’s operations that will be used for compliance
losses for any initial or subsequent writedown of the assets
purposes are recognized at nominal value (nil). In addition,
(or disposal groups) to fair value less costs to sell and gains
charges incurred for obtaining (in the market or in some
for their reversals are included in profit or loss from continu-
other transaction for consideration) any missing certifica-
ing operations.
tes to fulfil compliance requirements for the reporting pe-
Non-current assets are not depreciated (or amortized) while
riod are recognized through profit or loss on an accruals
they are classified as held for sale or while they are part of a
basis under other operating expenses, as they represent
disposal group classified as held for sale.
“system charges” consequent upon compliance with a re-
If the classification criteria are no longer met, the Group cea-
gulatory requirement.
ses to classify non-current assets (or disposal group) as held
Non-current assets (or disposal
groups) classified as held for sale and
discontinued operations
for sale. In that case they are measured at the lower of:
> the carrying amount before the asset (or disposal group)
was classified as held for sale, adjusted for any deprecia-
tion, amortization or revaluations that would have been
recognized if the asset (or disposal group) had not been
Non-current assets (or disposal groups) are classified as held
classified as held for sale; and
for sale if their carrying amount will be recovered principally
through a sale transaction, rather than through continuing
use.
> the recoverable amount, which is equal to the greater of
its fair value net of costs of disposal and its value in use,
as calculated at the date of the subsequent decision not
This classification criteria is applicable only when non-current
to sell.
assets (or disposal groups) are available in their present con-
dition for immediate sale and the sale is highly probable.
Any adjustment to the carrying amount of a non-current as-
set that ceases to be classified as held for sale is included in
If the Group is committed to a sale plan involving loss of con-
profit or loss from continuing operations.
trol of a subsidiary and the requirements provided for under
IFRS 5 are met, all the assets and liabilities of that subsidiary
A discontinued operation is a component of the Group that
either has been disposed of, or is classified as held for sale,
are classified as held for sale when the classification criteria
and:
are met, regardless of whether the Group will retain a non-
> represents a separate major line of business or geo-
controlling interest in its former subsidiary after the sale.
graphical area of operations;
The Group applies these classification criteria as envisaged
in IFRS 5 to an investment, or a portion of an investment, in
> is part of a single coordinated plan to dispose of a sepa-
rate major line of business or geographical area of ope-
an associate or a joint venture. Any retained portion of an in-
rations; or
vestment in an associate or a joint venture that has not been
classified as held for sale is accounted for using the equity
> is a subsidiary acquired exclusively with a view to resale.
The Group presents, in a separate line item of the income
method until disposal of the portion that is classified as held
statement, a single amount comprising the total of:
for sale takes place.
Non-current assets (or disposal groups) and liabilities of di-
sposal groups classified as held for sale are presented sepa-
rately from other assets and liabilities in the balance sheet.
> the post-tax profit or loss of discontinued operations; and
> the post-tax gain or loss recognized on the measurement
to fair value less costs to sell or on the disposal of the
assets or disposal groups constituting the discontinued
The amounts presented for non-current assets or for the as-
operation.
sets and liabilities of disposal groups classified as held for
sale are not reclassified or re-presented for prior periods pre-
sented.
Immediately before the initial classification of non-current
The corresponding amount is re-presented in the income
statement for prior periods presented in the financial state-
ments, so that the disclosures relate to all operations that
are discontinued by the end of the current reporting period.
201
Consolidated financial statements If the Group ceases to classify a component as held for sale,
revenue is determined on the basis of the amounts that
the results of the component previously presented in discon-
have actually transited along the distribution network, net
tinued operations are reclassified and included in income
of estimated losses. Where provided for in the specific lo-
from continuing operations for all periods presented.
cal regulations, such revenue is adjusted to take account
Revenue
Revenue is recognized to the extent that it is probable
that the economic benefits will flow to the Group and the
amount can be reliably measured. Revenue includes only
the gross inflows of economic benefits received and re-
ceivable by the Group on its own account. Therefore, in an
of the restrictions and mandatory rates established by the
Regulatory Authority for Energy, Networks and the Envi-
ronment in Italy or the equivalent national organizations
in other countries. In particular, in setting restrictions and
mandatory rates, each authority covers the costs incurred
for investments in the network, the associated remunera-
tion based on an appropriate rate of return on capital and
the timing with which those amounts are incorporated in
agency relationship, the amount collected on behalf of the
rates;
principal are excluded from revenue.
Revenue is measured at the fair value of the consideration
received or receivable, taking into account the amount of
any trade discounts and volume rebates allowed by the
Group.
When goods or services are exchanged or swapped for go-
ods or services which are of a similar nature and value, the
exchange is not regarded as a transaction which generates
revenue.
In arrangements under which the Group will perform multi-
ple revenue-generating activities (a multiple-element arran-
gement), the recognition criteria are applied to the separa-
tely identifiable components of the transaction in order to
reflect the substance of the transaction or to two or more
transactions together when they are linked in such a way
that the commercial effect cannot be understood without
reference to the series of transactions as a whole.
More specifically, the following criteria are used depending
on the type of transaction:
> revenue from the sale of goods is recognized when the si-
gnificant risks and rewards of ownership of the goods are
transferred to the buyer and their amount can be reliably
determined;
> revenue from the sale of electricity and gas is recognized
> revenue from the rendering of services is recognized by
reference to the stage of completion of services at the
end of the reporting periods in which the services are ren-
dered. The stage of completion of the transaction is deter-
mined based on an assessment of the service rendered
as a percentage of the total services to be rendered or as
costs incurred as a proportion of the estimated total costs
of the transaction. When it is not possible to reliably deter-
mine the value of the revenue, it is recognized only to the
extent of the expenses recognized that are recoverable;
> revenue associated with construction contracts is recogni-
zed as specified in the section “Construction contracts”;
> revenue from monetary and in-kind fees for connection
to the electricity distribution network is recognized in full
upon completion of connection activities if the service
supplied is identified. If more than one separately identi-
fiable service is identified, the fair value of the total consi-
deration received or receivable is allocated to each service
and the revenue related to the service performed in the
period is recognized; in particular, if any ongoing services
(electricity distribution services) are identified, the related
revenue is generally determined by the terms of the agre-
ement with the customer or, when such an agreement
does not specify a period, over a period no longer than the
when these commodities are supplied to the customer
useful life of the transferred asset;
and regard the quantities provided during the period, even
if these have not yet been invoiced. It is determined using
> revenue from rentals and operating leases is accrued on a
straight-line basis in accordance with the substance of the
estimates as well as periodic meter readings. Where ap-
relevant agreement.
plicable, this revenue is based on the rates and related
restrictions established by law or the Regulatory Authority
for Energy, Networks and the Environment and analogous
foreign authorities during the applicable period;
Financial income and expense from
derivatives
Financial income and expense from derivatives includes:
> revenue from the transport of electricity and gas is re-
> income and expense from derivatives measured at fair va-
cognized when the services are rendered to distribution
lue through profit or loss on interest rate and exchange
customers even if they have not yet been invoiced. That
risks;
202
Annual Report 2017 > income and expense from fair value hedge derivatives on
ble temporary differences associated with investments in
interest rate risk;
subsidiaries, associates and interests in joint arrangements,
> income and expense from cash flow hedge derivatives on
when the Group can control the timing of the reversal of the
interest rate and exchange risks.
temporary differences and it is probable that the temporary
Other financial income and expense
For all financial assets and liabilities measured at amortized
Deferred tax assets are recognized for all deductible tempo-
rary differences, the carry forward of unused tax credits and
cost and interest-bearing financial assets classified as availa-
any unused tax losses, when recovery is probable, i.e. when
ble for sale, interest income and expense is recorded using
an entity expects to have sufficient future taxable income to
differences will not reverse in the foreseeable future.
the effective interest rate method. The effective interest rate
recover the asset.
is the rate that exactly discounts the estimated future cash
The recoverability of deferred tax assets is reviewed at each
payments or receipts over the expected life of the financial
period-end.
instrument or a shorter period, where appropriate, to the net
Unrecognized deferred tax assets are re-assessed at each
carrying amount of the financial asset or liability.
reporting date and they are recognized to the extent that it
Interest income is recognized to the extent that it is probable
has become probable that future taxable profits will allow
that the economic benefits will flow to the Group and the
the deferred tax asset to be recovered. Deferred taxes are
amount can be reliably measured.
recognized in profit or loss, with the exception of those in
Other financial income and expense also includes changes
respect of items recognized outside profit or loss that are
in the fair value of financial instruments other than deriva-
recognized in equity.
tives.
Income taxes
Deferred tax assets and deferred tax liabilities are offset
against current tax liabilities related to income taxes levied
by the same taxation authority that arise at the time of rever-
sal if a legally enforceable right to set-off exists.
Current income taxes
Current income taxes for the period, which are recognized
under “Income tax payable” net of payments on account,
Dividends
or under “Tax receivables” where there is a credit balance,
Dividends are recognized when the unconditional right to re-
are determined using an estimate of taxable income and in
ceive payment is established.
conformity with the applicable regulations.
Dividends and interim dividends payable to a company’s sha-
In particular, such payables and receivables are determined
reholders are recognized as changes in equity in the period in
using the tax rates and tax laws that are enacted or substan-
which they are approved by the Shareholders’ Meeting and
tively enacted as at the end of the reporting period.
the Board of Directors, respectively.
Current income taxes are recognized in profit or loss with
the exception of current income taxes related to items re-
cognized outside profit or loss that are recognized in equity.
Deferred tax items
Deferred tax liabilities and assets are calculated on the tem-
porary differences between the carrying amounts of assets
and liabilities in the financial statements and their correspon-
ding values recognized for tax purposes on the basis of tax
rates in effect on the date the temporary difference will re-
verse, which is determined on the basis of tax rates that are
enacted or substantively enacted as at end of the reporting
period.
3
Recently issued accounting
standards
New accounting standards applied in
2017
Deferred tax liabilities are recognized for all taxable tempo-
The Group adopted the following amendments to existing
rary differences, except when the deferred tax liability arises
standards with effect as from January 1, 2017.
from the initial recognition of goodwill or in respect of taxa-
> “Amendments to IAS 7 - Disclosure initiative”, issued in
203
Consolidated financial statements January 2016. The amendments apply to liabilities and as-
IFRS 9 provides for a single approach for all types of fi-
sets arising from financing activities, which are defined
nancial asset, including those containing embedded de-
as liabilities and assets for which cash flows were, or will
rivatives, under which financial assets are classified in
be, classified in the statement of cash flows as “cash
their entirety, without the application of complex subdivi-
flows from financing activities”. The amendments require
sion methods.
disclosure of changes in such liabilities/assets, distingui-
In order to determine how financial assets should be
shing between cash flow changes and non-cash varia-
classified and measured, consideration must be given to
tions (i.e. variations arising from the effect of changes in
the business model used to manage its financial assets
foreign exchange rates and changes in fair values).
and the characteristics of the contractual cash flows. In
The application of amendments did not entail substantial
this regard, a business model is the manner in which an
changes in the disclosures provided in these consolida-
entity manages its financial assets in order to generate
ted financial statements.
cash flows, i.e. collecting contractual cash flows, selling
> “Amendments to IAS 12 - Recognition of deferred tax
the financial assets or both.
assets for unrealised losses”, issued in January 2016.
Financial assets are measured at amortized cost if they
The amendments clarify the recognition of deferred tax
are held in a business model whose objective is to col-
assets in respect of debt instruments measured at fair
lect contractual cash flows and are measured at fair value
value. More specifically, the amendments clarify the
through other comprehensive income (FVTOCI) if they
requirements for recognizing deferred tax assets for
are held with the objective of both collecting contractual
unrealized losses in order to eliminate differences in ac-
cash flows and selling the assets. This category enables
counting treatment. The application of amendments did
the recognition of interest calculated using the amortized
not have an impact on these consolidated financial sta-
cost method through profit or loss and the fair value of
tements.
the financial asset through OCI.
> “Annual improvements to IFRSs 2014-2016 cycle”, issued in
Financial assets at fair value through profit or loss (FVTPL)
December 2016, limited to the amendments to “IFRS 12 -
is now a residual category that comprises financial instru-
Disclosure of interests in other entities”. The amendments
ments that are not held under one of the two business
clarify that the provisions governing disclosure under IFRS
models indicated above, including those held for trading
12, with the exception of summarized financial informa-
and those managed on the basis of their fair value.
tion, also apply to interests in entities classified as held for
As regards the classification and measurement of finan-
sale. Prior to the amendments, it was not clear whether
cial liabilities, IFRS 9 maintains the accounting treatment
the provisions of IFRS 12 were applicable to such interests.
envisaged in IAS 39, making limited amendments, for
The application of amendments did not have an impact on
which most of such liabilities are measured at amortized
these consolidated financial statements.
cost. It is still permitted to designate a financial liability as
Accounting standards taking effect at a
future date
The following new standards, amendments and interpreta-
at fair value through profit or loss if certain requirements
are met.
The standard introduces new provisions for financial liabi-
lities designated at fair value through profit or loss, under
tions take effect after December 31, 2017.
which in certain circumstances the portion of changes
> “IFRS 9 - Financial instruments”, the final version was is-
in fair value due to own credit risk shall be recognized
sued on July 24, 2014, replacing the existing “IAS 39 - Fi-
through OCI rather than profit or loss. This part of the
nancial instruments: recognition and measurement” and
standard may be applied early, without having to apply
supersedes all previous versions of the new standard.
the entire standard.
The standard will take effect as from January 1, 2018 and
Since during the financial crisis the impairment approach
early application will be permitted.
based on “incurred credit losses” had displayed clear li-
The final version of IFRS 9 incorporates the results of the
mitations connected with the deferral of the recognition
three phases of the project to replace IAS 39 concerning
of credit losses until the occurrence of a trigger event,
classification and measurement, impairment and hedge
the standard proposes a new model that gives users of
accounting.
financial statements more information on “expected cre-
As regards the classification of financial instruments,
dit losses”.
204
Annual Report 2017
In essence the model provides for:
b) “Impairment”: an analysis was conducted of impai-
a) the application of a single framework for all financial
red financial assets, with a focus on trade receivables,
assets;
which represent the majority of the Group’s credit ex-
b) the recognition of expected credit losses on an on-
posure. More specifically, in application of the simpli-
going basis and the updating of the amount of such
fied approach envisaged by the standard, those recei-
losses at the end of each reporting period, with a view
vables were sub-divided into specific clusters, taking
to reflecting changes in the credit risk of the financial
due account of the applicable legislative and regula-
instrument;
tory framework, and the impairment model based on
c) the measurement of expected losses on the basis
expected losses developed by the Group for collective
of reasonable information, obtainable without undue
assessment was applied. An analytical approach was
cost, about past events, current conditions and fore-
applied to trade receivables that management consi-
casts of future conditions;
ders significant on an individual basis and for which
d) an improvement of disclosures on expected losses
more detailed information on the increase in credit
and credit risk.
risk is available within the simplified model;
IFRS 9 also introduces a new approach to hedge ac-
c) “Hedge Accounting”: specific activities were perfor-
counting, with the aim of aligning hedge accounting
med to implement the new hedge accounting model,
more closely with risk management, establishing a more
including effectiveness testing and rebalancing hedge
principle-based approach.
relationships and analysis of the new strategies that
The new hedge accounting approach will enable entities
can be applied under IFRS 9.
to reflect their risk management activities in the financial
Upon first-time application, the effects of adoption of
statements, extending the criteria for eligibility as hedged
IFRS 9 for “Classification and Measurement” and “Im-
items to the risk components of non-financial elements, to
pairment” will be recognized in Group equity at January
net positions, to layer components and to aggregate expo-
1, 2018, while for “Hedge Accounting”, the adoption of
sures (i.e., a combination of a non-derivative exposure and a
the new provisions is prospective, with the exception of
derivative). The most significant changes regarding hedging
the available option of separating currency basis spreads
instruments compared with the hedge accounting appro-
from the hedge relations, which the Group elected to ap-
ach used in IAS 39 involve the possibility of deferring the
ply retrospectively.
time value of an option, the forward element of forward
On the basis of available information, the adoption of
contracts and currency basis spreads (i.e. “hedging costs”)
IFRS 9 as from January 1, 2018 will produce an immate-
in OCI up until the time in which the hedged element im-
rial decrease in Group equity, net of the tax effect, mainly
pacts profit or loss. IFRS 9 also eliminates the requirement
due to the adoption of the expected loss model.
for testing effectiveness under which the results of the re-
> “IFRS 15 - Revenue from contracts with customers”, is-
trospective test needed to fall with a range of 80%-125%,
sued in May 2014, including “Amendments of IFRS 15:
allowing entities to rebalance the hedging relationship if risk
effective date of IFRS 15”, issued in September 2015. The
management objectives have not changed.
new standard will replace “IAS 11 - Construction con-
Finally, IFRS 9 does not replace the provisions of IAS 39
tracts”, “IAS 18 - Revenue”, “IFRIC 13 - Customer loyalty
concerning portfolio fair value hedge accounting for inte-
programmes”, “IFRIC 15 - Agreements for the construc-
rest rate risk (“macro hedge accounting”) as that phase
tion of real estate”, “IFRIC 18 - Transfers of assets from
of the IAS 39 replacement project has been separated
customers” and “SIC 31 - Revenue - Barter transactions
and is still under discussion.
involving advertising services” and will apply to all con-
In 2017 a transition project involving the three areas of
tracts with customers, with a number of exceptions (for
application of the new standard was completed. The indi-
example, lease and insurance contracts, financial instru-
vidual project areas address the following aspects:
ments, etc.). The new standard establishes a general
a) “Classification and Measurement”: an assessment
framework for the recognition and measurement of re-
was conducted of the procedures for classifying finan-
venue based on the following fundamental principle: the
cial instruments under IAS 39 compared with the new
recognition of revenue in a manner that faithfully depicts
policies provided for under IFRS 9 (i.e. SPPI test and
the transfer of goods and services to customers in an
business model);
amount that reflects the consideration to which the enti-
205
Consolidated financial statements
ty expects to be entitled in exchange for those goods or
This decrease mainly reflects the redetermination of fees
services. The fundamental principle will be applied on the
for contracts to connect customers to the grid, partly of-
basis of five key phases (steps): the entity must identify
fset by an increase connected with the capitalization of
the contract with the customer (step 1); the entity must
contract acquisition costs net of the associated amortiza-
identify the performance obligations in the contract, re-
tion.
cognizing separable goods or services as separate obli-
> “Clarification to IFRS 15 - Revenue from contracts with
gations (step 2); the entity must then determine the tran-
customers”, issued in April 2016, introduces amendments
saction price, which is represented by the consideration
of the standard in order to clarify a number of practical
that it expects to obtain (step 3); the entity must then
expedients and topics addressed by the Joint Transition
allocate the transaction price to the individual obligations
Resource Group established by the IASB and the FASB.
identified in the contract on the basis of the individual
The aim of these amendments is to clarify a number of
price of each separable good or service (step 4); revenue
provisions of IFRS 15 without modifying the basic princi-
is recognized when (or if) each individual performance
ples of the standard. The amendments, which will take
obligation is satisfied through the transfer of the good or
effect for periods beginning on or after January 1, 2018,
service to the customer, i.e. when the customer obtains
do not affect the estimated potential impacts of the
control of the good or service (step 5).
adoption of IFRS 15.
IFRS 15 also provides for a series of notes that ensure
> “IFRS 16 - Leases”, issued in January 2016, replaces the
complete disclosure concerning the nature, amount, ti-
previous standard governing leases, IAS 17, and the as-
ming and degree of uncertainty of the revenue and cash
sociated interpretations. It establishes the criteria for the
flows associated with contracts with customers.
recognition, measurement and presentation of leases for
The standard will take effect retrospectively for periods
both the lessor and the lessee and the associated disclo-
beginning on or after January 1, 2018, with the option of
sures. Although IFRS 16 does not modify the definition
recognizing the effect in equity at January 1, 2018.
of a lease contract set out in IAS 17, the main change is
In 2017, a project begun in 2016 was completed to iden-
represented by the introduction of the concept of con-
tify the possible impact of the standard on the Group’s
trol within that definition. More specifically, in order to
consolidated financial statements. More specifically, the
determine whether a contract represents a lease, IFRS
most significant aspects for the consolidated financial
16 requires the lessee to determine whether it has the
statements that will be affected by the new provisions
right to control the use of a given assets for a specified
of IFRS 15 regard: (i) revenue in respect of certain grid
period of time. IFRS 16 eliminates the distinction betwe-
connection contracts, which was previously recognized
en operating and finance leases, as required under IAS
in profit or loss at the time of the connection, but under
17, introducing a single method for recognizing all leases.
IFRS 15 will be deferred on the basis of the nature of the
Under the new approach, the lessee must recognize:
obligation arising from the contract with the customer;
a) in the balance sheet, the assets and liabilities in re-
and ii) the capitalization of contract acquisition costs, li-
spect of all leases with a term of more than 12 months,
mited to sales commission paid to agents.
unless the underlying asset is of low value; and
With regard to presentation, the application of IFRS 15
b) in the income statement, the depreciation of the as-
will also entail a limited number of reclassifications in the
sets involved in the lease contract separately from
income statement.
the interest connected with the associated liabilities.
On the occasion of first-time application of the new stan-
For lessors, IFRS 16 essentially retains the recognition
dard, the Enel Group will elect to recognize the effect
requirements provided for under IAS 17. Accordingly, the
of the retrospective recalculation of values in equity at
lessor shall continue to classify and recognize leases as
January 1, 2018, for circumstances existing at that date,
operating or finance leases. The standard will apply for
without restating the figures for previous years presen-
periods beginning on or after January 1, 2019. The Group
ted for comparative purposes. In particular, on the basis
is assessing the potential impact of the future application
of available information, considering the circumstances
of the standard.
indicated previously, the adoption of the new IFRS 15 as
> “IFRS 17 - Insurance contracts”, issued in May 2017, es-
from January 1, 2018 will decrease Group equity, net of
sentially defines the principles for the recognition, mea-
the associated tax effect, by €3.7 billion.
surement, presentation and disclosure of insurance and
206
Annual Report 2017
reinsurance contracts issued by the company, as well as
connected with insurance to postpone the application
reinsurance contracts held by the company. IFRS 17 re-
of IFRS 9 until 2021 (“temporary exemption”); and
places IFRS 4, which did not establish a single method
- permits insurers, until the future issue of the new ac-
for recognizing insurance contracts, with the result that
counting standard for insurance contracts, to recogni-
those contracts could be recognized differently in diffe-
ze the volatility that should be caused by the applica-
rent jurisdictions and, potentially, within the same com-
tion of IFRS 9 in other comprehensive income rather
pany.
The new standard:
than through profit or loss (the “overlay approach”).
The amendments will take effect for periods beginning
-
requires the disclosure of updated information on the
on or after January 1, 2018. The Enel Group has decided
obligations, risks and performance of insurance con-
not to exercise the option for the temporary exemption
tracts;
for the application of IFRS 9 to the insurance sector.
-
increases the transparency of financial information
> “Amendments to IFRS 9: Prepayment features with
provided by insurance companies, giving the users of
negative compensation”, issued in October 2017. The
financial statements greater confidence in their under-
amendments introduce a narrow-scope exception to
standing of the insurance industry; and
the provisions of IFRS 9 for certain financial assets that
-
introduces a consistent accounting method for all in-
would otherwise have contractual cash flows represen-
surance contracts based on a single valuation model.
ted solely by payments of principal and interest but do not
The standard will take effect, subject to endorsement,
meet that condition only because the contract contains a
for periods beginning on or after January 1, 2021. The
prepayment option. More specifically, the amendments
Group is assessing the potential impact of the future ap-
establish that financial assets with a contractual clause
plication of the new standard.
that permits (or requires) the issuer to prepay a debt in-
> “Amendments to IFRS 2 - Share-based payment”, issued
strument or that permits (or requires) the holder to put a
in June 2016. The amendments:
debt instrument back to the issuer before maturity can
- clarify that the fair value of a share-based transaction
be measured at amortized cost or at fair value through
settled in cash at the measurement date (i.e. at the
other comprehensive income, subject to assessment of
grant date, at the close of each accounting period and
the business model under which the assets are held, if
at the settlement date) shall be calculated by taking
the following conditions are satisfied:
account of market conditions (e.g. a target price for
-
the entity acquires or originates the financial asset at
the shares) and non-vesting conditions, ignoring servi-
a premium or discount to the contractual par amount;
ce conditions and performance conditions other than
-
the prepayment amount substantially represents the
market conditions;
contractual par amount and accrued (but unpaid) con-
- clarify that share-based payments with net settlement
tractual interest, which may include reasonable addi-
for withholding tax obligations should be classified in
tional compensation for the early termination of the
their entirety as equity-settled transactions (if they
contract; and
would be so classified in the absence of the net set-
- when the entity initially recognizes the financial asset,
tlement feature);
the fair value of the prepayment feature is insignifi-
- establish provisions for the accounting treatment of
cant.
changes in terms and conditions that result in a chan-
In 2017 the IASB discussed the issue of the modification
ge in the classification of the transaction from cash-
or exchange of a financial liability that does not result in
settled to equity-settled.
derecognition of the liability. The discussion resulted in
The amendments will take effect for periods beginning
the addition of a section to the Basis for Conclusions of
on or after January 1, 2018. The Group does not expect
“IFRS 9 - Another issue: Modification or exchange of a
the future application of the amendments to have an im-
financial liability that does not result in derecognition”.
pact.
The IASB concluded that the requirements under IFRS
> “Amendments to IFRS 4: Applying IFRS 9 - Financial in-
9 for adjusting the amortized cost of a financial liability
struments with IFRS 4 - Insurance contracts, issued in
when a modification (or exchange) does not result in the
September 2016. The amendments:
derecognition of the financial liability are consistent with
- permit insurers whose activities are predominantly
the requirements for adjusting a financial asset when a
207
Consolidated financial statements
modification does not result in the derecognition of the
cognize a tax liability or asset in conditions of uncertainty
financial asset.
if it is probable that a taxation authority will accept an
The amendments will take effect, subject to endorse-
uncertain tax treatment, assuming that the authority will
ment, for periods beginning on or after January 1, 2019.
examine amounts it has a right to examine and have full
Early application is permitted.
knowledge of all related information when making those
> “Amendments to IAS 28 - Long-term interests in asso-
examinations. The interpretation also requires an entity
ciates and joint ventures”, issued in October 2017. The
to reassess a judgement or estimate in the presence of
amendments clarify that an entity shall apply the provi-
facts and circumstances that might change an entity’s
sions of “IFRS 9 - Financial instruments” to long-term
conclusions about the acceptability of a tax treatment or
interests in associates and joint ventures for which the
the entity’s estimate of the effect of uncertainty, or both.
equity method is not used. The amendments will take
The amendments will take effect, subject to endorse-
effect, subject to endorsement, for periods beginning on
ment, for periods beginning on or after January 1, 2019.
or after January 1, 2019. The Group is assessing the po-
The Group is assessing the potential impact of the future
tential impact of the future application of the amended
application of the provisions.
standard.
> “Annual improvements to IFRSs 2014-2016 cycle”, issued
> “Amendments to IAS 40 - Transfers of investment proper-
in December 2016, limited to the amendments of the fol-
ty”, issued in December 2016. The amendments clarify
lowing standards:
that transfers of property to or from investment property
- “IFRS 1 - First-time adoption of International Financial
shall be permitted only when there is a change in use
Reporting Standards”; the amendments eliminated
supported by evidence of that change. A change in ma-
the “short-term exemptions from IFRSs” regarding
nagement’s intentions does not in itself provide evidence
the transition to IFRS 7, IAS 19 and IFRS 10. These
of a change in use sufficient to support the transfer. The
transition provisions were only available for past re-
amendments broadened the examples of changes of use
porting periods and are therefore now no longer ap-
to include property under construction or development
plicable. The amendments will take effect for periods
and not just the transfer of completed properties. The
beginning on or after January 1, 2018;
amendments will take effect for periods beginning on or
- “IAS 28 - Investments in associates and joint ventu-
after January 1, 2018. The Group does not expect the fu-
res”; the amendments clarify that the option available
ture application of the amendments to have an impact.
to a venture capital organization (or a mutual fund, unit
> “IFRIC 22 - Foreign currency transactions and advance
trust and similar entities, including investment-linked
consideration”, issued in December 2016; the interpre-
insurance funds) to measure an investment in an as-
tation clarifies that, for the purpose of determining the
sociate or joint venture at fair value through profit or
exchange rate to be used in the initial recognition of an
loss, those entities shall make this election at initial
asset, expense or income (or part of it) the date of the
recognition separately for each associate or joint ven-
transaction is that on which the entity recognizes any
ture. Similar clarifications were made for entities that
non-monetary asset (liability) in respect of advance con-
are not investment entities and that, when they apply
sideration paid (received). If there are multiple payments
the equity method, elect to retain the fair value mea-
or receipts in advance, the entity shall determine a date
surement applied by the investment entities that re-
of the transaction for each payment or receipt of advance
present their interests in associates or joint ventures.
consideration. The amendments will take effect, subject
The amendments will apply retrospectively for periods
to endorsement, for periods beginning on or after Janua-
beginning on or after January 1, 2018.
ry 1, 2018. The Group is assessing the potential impact of
The new provisions contain formal modifications and cla-
the future application of the amended standard.
rifications of existing standards that are not expected to
> “IFRIC 23 - Uncertainty over income tax treatments”,
have a significant impact for the Group.
issued in June 2017. The interpretation clarifies how to
> “Annual improvements to IFRSs 2015-2017 cycle”, issued
apply the recognition and measurement requirements of
in December 2017; the document contains formal mo-
IAS 12 in the case of uncertainty over income tax tre-
difications and clarifications of existing standards. Each
atments. The uncertainty may regard current or deferred
of the amendments will apply, subject to endorsement,
taxation. The interpretation states that the entity shall re-
for periods beginning on or after January 1, 2019. Early
208
Annual Report 2017 application is permitted. More specifically, the following
standards were amended:
- “IFRS 3 - Business combinations”; the amendments
5
clarify that when a joint operator obtains control of a
business that is a joint operation, it shall remeasure
its previously held interest in the joint operation at fair
Main changes in the scope of
consolidation
value at the acquisition date;
- “IFRS 11 - Joint arrangements”; the amendments cla-
rify that a party that participates in, but does not have
In the two periods under review, the scope of consolidation
changed as a result of a number of transaction.
joint control of, a joint operation and obtains joint con-
trol of the joint operation that constitutes a business
2016
as defined in IFRS 3 is not required to remeasure pre-
viously held interests in the joint operation;
- “IAS 12 - Income taxes”; the amendments clarify
that an entity shall recognize the income tax conse-
quences of dividends (as defined in IFRS 9) when it
recognizes a liability to pay a dividend in profit or loss,
other comprehensive income or equity according to
where the entity originally recognized the transactions
that generated distributable profits;
- “IAS 23 - Borrowing costs”; the amendments clarify
that an entity shall include borrowings made specifi-
cally for the purpose of obtaining a qualifying asset
outstanding when the asset is ready for its intended
use or sale in the generic borrowings of the entity.
The Group is assessing the potential impact of the future
application of the provisions.
4
Restatement of comparative
disclosures
The figures presented in the comments and tables of the
notes to the financial statements are consistent and com-
parable between 2016 and 2017. No restatements of the
comparative disclosures were required.
> Disposal, completed in early March 2016, of Compos-
tilla Re, which at December 31, 2015 had been classified
as “held for sale”. The sale price was €101 million (the
company also held liquid assets of about €111 million)
and generated a gain of about €19 million;
> disposal, on May 1, 2016, of 65% of Drift Sand Wind
Project, a company operating in the wind generation
sector in the United States. The sale price was €72 mil-
lion and generated a gain of about €2 million and a reme-
asurement at fair value of the remaining 35% of about
€4 million;
> disposal, completed on July 13, 2016, of Enel Lon-
ganesi, which held the Italian assets (composed of 21
applications for onshore and offshore exploration permits
and exploration permits) in the upstream gas sector. The
maximum sales price is €30 million, of which about €7
million were collected immediately, while the right to re-
ceive the remainder (in multiple tranches) is subject to a
number of conditions, such as the start of production at
the Longanesi gas field in Emilia-Romagna, scheduled for
2019. No capital losses were recognized through profit
or loss given that its value had already been adjusted to
estimated realizable value;
> disposal, on July 28, 2016, of 50% of Slovak Power
Holding (“SPH”), which in turn holds 66% of Slovenské
elektrárne (“SE”). More specifically, Enel Produzione fi-
nalized the disposal to EP Slovakia, a subsidiary of Ener-
getický a pru˚myslový holding (“EPH”), of 50% of SPH in
execution of the contract agreed on December 18, 2015
between Enel Produzione and EP Slovakia. The total pri-
ce for the two phases, equal to €750 million (of which
€150 million paid immediately in cash), is subject to a
price adjustment mechanism, which will be calculated
by independent experts and applied at the closing of the
second phase on the basis of a number of parameters,
including the evolution of the net financial position of SE,
209
Consolidated financial statements developments in energy prices in the Slovakian market,
the operating efficiency of SE measured on the basis of
benchmarks defined in the contract and the enterprise
value of Mochovce units 3 and 4. Accordingly, the finan-
cial receivable generated by the disposal is measured at
2017
> Acquisition, on January 10, 2017, of 100% of Demand
Energy Networks, a company headquartered in the Uni-
ted States specialized in software solutions and smart
fair value through profit or loss. The same parameters de-
electricity storage systems;
scribed above were used in determining the recoverable
> acquisition, on February 10, 2017, of 100% of Más
value of the interest in the SPH joint venture;
Energía, a Mexican company operating in the renewa-
> acquisition of control, on October 1, 2016, of Distribui-
ble energy sector;
dora Eléctrica de Cundinamarca (“DEC”), previously
accounted for using the equity method, through the mer-
ger of DEC into Codensa (which had already held 49%);
> loss of control, on November 21, 2016, following chan-
ges in governance arrangements and the disposal of an
interest of 1%, for €12 million, of EGPNA Renewable
Energy Partners (“EGPNA REP”), a developer of rene-
> acquisition, on February 14, 2017, and May 4, 2017, of
94.84% and 5.04% respectively (for a total of 99.88%)
of Enel Distribuição Goiás (formerly CELG-D), an elec-
tricity distribution company operating in the Brazilian sta-
te of Goiás. For more details, see note 5.1 below;
> acquisition, on May 16, 2017, of 100% of Tynemouth
Energy Storage, a British company operating in the
wables generation projects in the United States. As from
electricity storage sector;
that date it has been accounted for using the equity me-
thod. The transaction involved the recognition of a gain
of €2 million and the recognition of income from reme-
> acquisition, on June 4, 2017, of 100% of Amec Foster
Wheeler Power (now Enel Green Power Sannio), a
company that owns two wind plants in the province of
asurement at fair value of the 50% still held by EGPNA
Avellino;
of €95 million;
> disposal, on November 30, 2016, of 100% of Enel
France, a thermal generation company in France at a pri-
ce of about zero, generating a loss of €4 million;
> loss of control, on December 20, 2016, of Enel OpEn
Fiber (now OpEn Fiber - OF) following a capital increase
by Enel and CDP Equity (“CDPE”), after which Enel and
CDPE hold an equal stake in OF, which is therefore ac-
counted for using the equity method;
> disposal, on December 28, 2016, of the Cimarron and
Lindahl wind farms to the EGPNA REP joint venture,
the starting point of a new industrial growth strategy
founded on a less capital-intensive “Build, Sell and Ope-
rate“ approach intended to accelerate the development
of project pipelines at the global level. The loss of control
generated a gain of €37 million;
> acquisition, on August 7, 2017, of 100% of the EnerNOC
Group following the acceptance of the EGPNA offer to
the previous shareholders. For more details, see note 5.2;
> acquisition, on October 25, 2017, of 100% of eMotor-
Werks, a US company operating in electric mobility
management systems. For more details, see note 5.3;
> disposal, in December 2017, by Enel Green Power North
America using a cash equity agreement, of 80% of the
Class A securities of the EGPNA subsidiary Rocky
Caney Wind. The total price in the transaction was $233
million, generating a capital gain of €4 million.
In addition to the above changes in the scope of consolida-
tion, the period also saw the following transactions, which
although they do not represent transactions involving the
acquisition or loss of control gave rise to a change in the
> disposal, on December 30, 2016, of 100% of Marcinelle
interest held by the Group in the investees:
Energie, a thermal generation company in Belgium, for
a total of about €36,5 million, all of which has been paid.
During 2016, the net asset value of Marcinelle was adju-
sted to its estimated realizable value with the recognition
of an impairment loss of about €51 million. The sales pri-
ce is subject to customer price adjustments that include
an earn-out clause.
> disposal, on February 29, 2016, of the remaining inte-
rest in Hydro Dolomiti Enel, a company operating in the
hydroelectric generation sector in Italy. The sales price
was initially estimated at €335 million. Subsequently,
following specification of a price adjustment (a negative
€22 million) in application of the contractual price formu-
la updated on the basis of the final disposal accounts, a
capital gain of €124 million was recognized;
> on March 31, 2016, the non-proportional demerger of
Enel Green Power took effect, following which – with
210
Annual Report 2017 a capital increase by Enel SpA as part of the demerger
produced a decrease in the interest pertaining to the
– the Group increased its stake in the company from
Group (from 88.04% to 70.10%) in the results of EGPE
68.29% to 100%, with the consequent reduction of
as from the time the operation took effect;
non-controlling interests;
> merger, on December 1, 2016, into Enel Américas of
> on May 3, 2016, Enel Green Power acquired the remai-
Endesa Américas and Chilectra Américas, companies
ning 40% of Maicor Wind, a company operating in the
created with the demerger of Enersis, Endesa Chile and
wind generation sector in Italy, thus becoming its sole
Chilectra. As the combined effect of exchange ratios
shareholder;
between shares and the exercise of the right of withdra-
> on July 27, 2016, Enel Green Power International, a whol-
wal by some shareholders of the companies involved in
ly-owned subsidiary of Enel, sold 60% of Enel Green
the transaction, the percentage interest in the compa-
Power España (“EGPE”) to Endesa Generación, a whol-
nies held directly or indirectly by Enel Américas changed;
ly-owned subsidiary of Endesa, which as it already held
> acquisition, on October 5, 2017, of 7.7% of Enel Dis-
the other 40% of EGPE became its sole shareholder. In
tribución Perú in a stock market transaction for a price
the consolidated financial statements, the transaction
of $80 million.
5.1 Acquisition of Enel Distribuição Goiás (formerly CELG-D)
On February 14, 2017, Enel Brasil finalized the acquisition
allocation of the purchase price, determining the definitive
of 94.84% of Enel Distribuição Goiás (formerly CELG-D),
fair value of the assets and liabilities acquired.
an electricity distribution company operating in the Brazi-
The main adjustments of the carrying amount essentially
lian state of Goiás under a concession valid until 2045. The
regarded the recognition of intangible assets (in particular,
remaining interest in Enel Distribuição Goiás was offered
those in respect of concession rights) and the associated
to current and retired employees using a procedure under
tax effects, taking account of the impact of the reverse
which Enel Brasil guaranteed the acquisition of any sha-
merger of Enel Distribuição Goiás into Enel Investimentos.
res not purchased by those employees and retirees. The
In view of the characteristics of the concession arrange-
procedure closed on May 4, 2017 and enabled the Group
ments under which it operates, the distribution activity per-
to acquire an additional 5.04% of Enel Distribuição Goiás,
formed by the company falls within the scope of application
giving it a total holding of 99.88%. The price was paid enti-
of IFRIC 12.
rely in cash. During the year, the company completed the
Determination of goodwill
Millions of euro
Net assets acquired before allocation (1)
Adjustments to allocate purchase price:
- intangible assets
- deferred tax liabilities
- employee benefit obligations
- other adjustments
- non-controlling interests
Net assets acquired after allocation
Purchase price for 94.84%
Purchase price for additional 5.04%
Cost of the acquisition
Goodwill
(1) Net assets in proportion to Enel’s stake of 99.88%.
(278)
1,234
(161)
(40)
(64)
(1)
690
665
25
690
-
211
Consolidated financial statements Accordingly, the accounts at the acquisition date were as follows:
Accounts of Enel Distribuição Goiás as at the acquisition date
Millions of euro
Property, plant and equipment
Intangible assets
Other non-current assets
Trade receivables
Inventories
Other current assets
Cash and cash equivalents
Borrowings
Employee benefits
Deferred tax liabilities
Other non-current liabilities
Provisions for risks and charges
Trade payables
Other current liabilities
Non-controlling interests
Net assets acquired
Carrying amount before
February 14, 2017
Adjustments for purchase
price allocation
Carrying amount as at
February 14, 2017
13
572
318
238
7
132
9
(326)
(43)
-
(161)
(216)
(446)
(375)
-
(278)
-
1,234
(34)
-
-
(64)
-
81
(40)
(161)
(17)
(11)
(4)
(15)
(1)
968
13
1,806
284
238
7
68
9
(245)
(83)
(161)
(178)
(227)
(450)
(390)
(1)
690
Enel Distribuição Goiás contributed €1,359 million in revenue and €37 million in operating income to 2017 results. Enel
Distribuição Goiás is part of the Brazil CGU.
5.2 Acquisition of EnerNOC
On August 7, 2017, Enel Green Power North America
at the same per share price and obtaining a 100% ownership
(“EGPNA”) completed the acquisition of 100% of the Ener-
interest in the company. The price was paid entirely in cash.
NOC Group. The transaction took place in two stages: in the
Here too the company completed the purchase price allo-
first stage, EGPNA acquired 71.61% of EnerNOC’s outstan-
cation process during the year, determining the definitive
ding shares at a price of $7.67 per share in cash following an
fair value of the assets and liabilities acquired: with an ac-
offer to shareholders for at least a majority interest in Ener-
quisition cost of €212 million, the net assets acquired were
NOC. Following the successful offer, EGPNA completed the
determined as follows.
acquisition by acquiring the shares of the other shareholders
Determination of goodwill
Millions of euro
Net assets acquired before allocation
Adjustments to allocate purchase price:
- intangible assets
- existing goodwill
- deferred tax liabilities
- other adjustments
Net assets acquired after allocation
Cost of the acquisition
(of which paid in cash)
Goodwill
212
(29)
142
(27)
(68)
(2)
16
212
212
196
Annual Report 2017 The goodwill was mainly recognized in respect of the synergies that are expected to be generated by the combination:
Accounts of the EnerNOC Group as at the acquisition date
Millions of euro
Property, plant and equipment
Intangible assets
Goodwill
Other non-current assets
Trade receivables
Cash and cash equivalents
Other current assets
Borrowings
Deferred tax liabilities
Other non-current liabilities
Trade payables
Other current liabilities
Net assets acquired
Carrying amount before
August 7, 2017
Adjustments for purchase
price allocation
Carrying amount as at
August 7, 2017
19
26
27
2
65
68
17
(90)
-
(7)
(67)
(89)
(29)
-
142
169
-
-
-
-
-
(68)
-
-
(2)
241
19
168
196
2
65
68
17
(90)
(68)
(7)
(67)
(91)
212
EnerNOC contributed €146 million in revenue and €8 million in operating income to 2017 results. EnerNOC is part of the
North America - Enel X CGU.
5.3 Acquisition of eMotorWerks
On October 25, 2017, EnerNOC acquired the California-based
remainder of €99 million was estimated on the basis of the
eMotorWerks, a leading supplier of electric vehicle charging
price adjustment agreements between the parties. In the final
stations, called JuiceBox, and the owner of JuiceNet, an Inter-
months of the year, the company completed the purchase price
net of Things (IoT) platform for the smart management of EV
allocation process, determining the definitive fair value of the
charging and other distributed energy storage facilities.
assets and liabilities acquired: with an acquisition cost of €130
The price for the acquisition was €130 million, of which €31
million, the net assets acquired were determined as follows.
million paid in cash at the time of the acquisition, while the
Determination of goodwill
Millions of euro
Net assets acquired before allocation
Adjustments to allocate purchase price:
- intangible assets
- deferred tax liabilities
Net assets acquired after allocation
Cost of the acquisition
(of which paid in cash)
Goodwill
-
49
(12)
37
130
31
93
213
Consolidated financial statements The goodwill was mainly recognized in respect of the synergies that are expected to be generated by the combination.
Accounts of the eMotorWerks Group as at the acquisition date
Millions of euro
Intangible assets
Goodwill
Other non-current assets
Inventories
Deferred tax liabilities
Other non-current liabilities
Trade payables
Net assets acquired
Carrying amount before
October 25, 2017
Adjustments for purchase
price allocation
Carrying amount as at
October 25, 2017
-
-
1
1
-
(1)
(1)
-
49
93
-
-
(12)
-
-
130
49
93
1
1
(12)
(1)
(1)
130
eMotorWerks contributed €2 million in revenue and a €1 million operating loss to 2017 results. eMotorWerks is part of the
North America - Enel X CGU.
5.4 Other minor acquisitions
Determination of goodwill
Millions of euro
Property, plant and equipment
Intangible assets
Deferred tax assets
Cash and cash equivalents
Trade receivables
Other current assets
Medium/long-term borrowings
Deferred tax liabilities
Trade payables
Other current liabilities
Net assets acquired
Cost of the acquisition
(of which paid in cash)
Goodwill/(Badwill)
Demand Energy
Networks
Más Energía
Tynemouth
Energy Storage
Amec Foster
Wheeler Power
(now Enel Green
Power Sannio)
Azovskaya WPS
and Windlife Kola
Vetro
-
30
6
2
-
1
-
(10)
(2)
(2)
25
38
30
13
-
-
-
-
-
-
-
-
(3)
-
(3)
8
8
11
2
-
-
-
-
-
-
-
-
-
2
5
4
3
46
-
-
10
1
7
(29)
-
(1)
(19)
15
10
10
(5)
-
-
-
2
-
-
-
-
-
(2)
-
2
2
-
The provisional allocation of the purchase price was completed for all of these acquisitions during the year.
214
Annual Report 2017 6
Segment information
The representation of performance and financial position by
For more information on performance and financial deve-
business area presented here is based on the approach used
lopments during the year, please see the dedicated section
by management in monitoring Group performance for the
in the Report on operations.
two periods being compared.
Segment information for 2017 and 2016
Results for 2017 (1)
Millions of euro
Italy
Iberia
South
America
Europe and
North Africa
North and
Central
America
Sub-Saharan
Africa and
Asia
Other,
eliminations
and
adjustments
Total
Revenue from third parties
37,900
19,940
13,126
2,374
1,185
Revenue from transactions
with other segments
881
54
28
Total revenue
38,781
19,994
13,154
Total costs
32,455
16,434
8,976
37
2,411
1,868
Net income/(expense)
from commodity contracts
measured at fair value
Depreciation and
amortization
537
13
26
-
1,769
1,562
1,149
Impairment losses
626
461
134
Reversals of impairment
losses
Operating income
Capital expenditure
(2)
4,470
1,812
(292)
1,842
1,105
(49)
2,970
3,002
189
83
(35)
306
307 (2)
1,802 (3
2
1,187
430
2
202
4
-
553
96
-
96
39
-
40
2
-
15
30
18
74,639
(1,002)
(984)
(638)
-
20
1
(3)
(364)
72
-
74,639
59,564
578
4,931
1,311
(381)
9,792
8,130
(1) Segment revenue includes both revenue from third parties and revenue flows between the segments. An analogous approach was taken for other
income and costs for the period.
(2) Does not include €44 million regarding units classified as “held for sale”.
(3) Does not include €325 million regarding units classified as “held for sale”.
215
Consolidated financial statements Results for 2016 (1)
Millions of euro
Italy
Iberia
South
America
Europe and
North Africa
North and
Central
America
Sub-Saharan
Africa and
Asia
Revenue from third parties
36,091
18,831
10,739
3,618
1,122
Revenue from transactions
with other segments
954
122
29
Total revenue
37,045
18,953
10,768
Total costs
30,161
15,522
7,221
180
3,798
3,030
3
1,125
291
Net income/(expense)
from commodity contracts
measured at fair value
Depreciation and
amortization
(266)
131
9
(6)
(1)
1,698
1,677
Impairment losses
650
359
Reversals of impairment
losses
Operating income
Capital expenditure
-
4,270
1,894 (2)
(240)
1,766
1,147
952
442
(1)
2,163
3,069
246
248
(18)
286
249
19
-
565
265 (3)
1,832
Other,
eliminations
and
adjustments
Total
162
70,592
29
-
29
15
-
12
7
-
(1,288)
(1,126)
(1,057)
-
56
1
(2)
(5)
304
(124)
41
-
70,592
55,183
(133)
4,890
1,726
(261)
8,921
8,552
(1) Segment revenue includes both revenue from third parties and revenue flows between the segments. An analogous approach was taken for other
income and costs for the period.
(2) Does not include €7 million regarding units classified as “held for sale”.
(3) Does not include €283 million regarding units classified as “held for sale”.
Financial position by segment
At December 31, 2017
Millions of euro
Italy
Iberia
South
America
Europe and
North Africa
North and
Central
America
Sub-Saharan
Africa and
Asia
Other,
eliminations
and
adjustments
Property, plant and
equipment
25,935 (1)
23,783
17,064
3,052
5,800
Intangible assets
1,358
15,662
11,857
Trade receivables
Other
10,073
3,033
2,340
1,697
2,432
954
731
337
194
838
193
377
749
115
29
10
54
34
(856)
(308)
Total
76,437
30,595
14,548
5,957
Operating assets
40,399 (1)
43,482
32,307
4,314 (2)
7,208 (3)
903
(1,076)
127,537
Trade payables
Sundry provisions
Other
6,847
2,843
7,170
Operating liabilities
16,860
2,738
3,592
3,225
9,555
2,790
1,325
2,451
6,566
426
101
297
782
29
254
60
20
74
824 (4)
1,065 (5)
154
(837)
527
(244)
(554)
12,806
8,437
13,227
34,470
(1) Of which €4 million regarding units classified as “held for sale”.
(2) Of which €141 million regarding units classified as “held for sale”.
(3) Of which €1,675 million regarding units classified as “held for sale”.
(4) Of which €74 million regarding units classified as “held for sale”.
(5) Of which €145 million regarding units classified as “held for sale”.
216
Annual Report 2017 At December 31, 2016
Millions of euro
Italy
Iberia
South
America
Europe and
North Africa
North and
Central
America
Sub-Saharan
Africa and
Asia
Other,
eliminations
and
adjustments
Property, plant and
equipment
Intangible assets
Trade receivables
Other
25,963
24,158
17,411
3,048
4,831
1,314
9,437
3,373
15,653
11,045
2,243
1,461
1,833
515
743
317
179
633
111
41
Operating assets
40,087 (1)
43,515
30,804
4,287
5,616 (2)
Trade payables
Sundry provisions
Other
7,605
3,122
7,126
Operating liabilities
17,853
2,155
4,096
3,042
9,293
2,445
1,039
1,980
5,464
374
127
305
806
490
25
210
725
(1) Of which €4 million regarding units classified as “held for sale”.
(2) Of which €2 million regarding units classified as “held for sale”.
780
113
18
2
913
58
18
54
130
The following table reconciles segment assets and liabilities and the consolidated figures.
Total
76,271
29,485
13,506
5,473
124,735
80
(16)
(453)
(98)
(487)
(439)
12,688
572
209
342
8,999
12,926
34,613
Millions of euro
Total assets
Equity investments accounted for using the equity method
Non-current financial assets
Long-term tax receivables included in other non-current assets
Current financial assets
Derivatives
Cash and cash equivalents
Deferred tax assets
Income tax receivables
Long-term tax receivables included in other current assets
Financial and tax assets of assets held for sale
Segment assets
Total liabilities
Long-term borrowings
Short-term borrowings
Current portion of long-term borrowings
Other current financial liabilities
Derivatives
Deferred tax liabilities
Income tax payable
Other tax payables
Financial and tax liabilities included in disposal groups classified as “held for sale”
at Dec. 31, 2017
at Dec. 31, 2016
155,641
155,596
1,598
4,002
260
4,614
3,011
7,021
6,354
577
517
150
1,558
3,892
301
3,053
5,554
8,290
6,665
879
664
5
127,537
124,735
103,480
42,439
1,894
7,000
954
5,258
8,348
284
1,323
1,510
103,021
41,336
5,372
4,384
1,264
5,854
8,768
359
1,071
-
Segment liabilities
34,470
34,613
217
Consolidated financial statements Revenue
7.a Revenues from sales and services - €72,664 million
Millions of euro
Revenue from the sale of electricity
Revenue from the transport of electricity
Fees from network operators
Transfers from institutional market operators
Revenue from the sale of natural gas
Revenue from the transport of natural gas
Revenues from fuel sales
Connection fees to electricity and gas networks
Revenue from the sale of environmental certificates
Revenue from other sales and services
Total
2017
43,433
9,973
900
1,635
3,964
570
8,340
800
566
2,483
72,664
2016
42,337
9,587
557
1,462
3,876
563
7,028
814
560
1,820
68,604
Change
2.6%
4.0%
61.6%
11.8%
2.3%
1.2%
18.7%
-1.7%
1.1%
36.4%
5.9%
1,096
386
343
173
88
7
1,312
(14)
6
663
4,060
In 2017, “Revenue from the sale of electricity” came to
ties transported, and the Enel Distribuição Goiás acquisition.
€43,433 million (€42,337 million for 2016), including €31,418
In Italy, the increase in transport revenue was due to the
million in revenue from electricity sales to end users (€29,101
greater volumes transported on the free market. However,
million for 2016), €8,820 million in revenue from wholesale
this effect was largely offset by the reduction in distribu-
electricity sales (€11,009 million for 2016), and €3,195 mil-
tion rates and in balancing mechanisms (ARERA Resolution
lion in revenue from the trading of electricity (€2,227 million
654/2015, as amended, regarding regulation of electricity
for 2016). The increase in revenue from electricity sales to
transmission, distribution and metering rates for the 2016-
end users and for the trading of electricity, which was par-
2023 regulatory period) and the reduction in revenue related
tially offset by wholesale electricity sales, was due mainly
to system charges.
to the increase in volumes handled within a landscape of
recovering average sales prices as well as to the change in
In 2017, revenue related to “Transfers from institutional mar-
exchange rates. The overall change in revenue from the sale
ket operators” came to €1,635 million, up €173 million com-
of electricity was also negatively impacted by the change in
pared with the previous year. This increase is essentially at-
consolidated companies, as the increase in revenue related
tributable to the Spanish companies, in the amount of €200
to the acquisition of Enel Distribuição Goiás in the amount
million, and due to the increase in generation from liquid
of €1,042 million was more than offset by the reduction in
fuels and the associated prices, for which the Group has the
revenue due to the deconsolidation of Slovenské elektrárne
right to reimbursements. This effect was partially offset by
(€1,225 million), EGPNA REP (€152 million), Marcinelle Ener-
the reduction in revenue from contributions received for the
gie (€102 million), and Enel France (€97 million).
generation of renewable energy, by Enel Green Power in the
amount of €35 million, due to the expiration of incentives
“Revenue from the transport of electricity” came to €9,973
related to certain geothermal and hydroelectric plants.
million in 2017, an increase of €386 million, which was
mainly concentrated in Spain, South America and Italy. In
“Revenue from the sale of natural gas” for 2017, which to-
Spain, the increase in transport revenue was related to the
taled €3,964 million (€3,876 million in 2016), increased by
use of new parameters for calculating transport rates as de-
€88 million over the previous year. This increase was essen-
fined by the ministerial Decree proposed by the Ministry for
tially due to the increase in revenue in Iberia, in the amount
Tourism and Commerce.
of €131 million, as a result, in particular, of the increase in
In South America, the increase in transport revenue was
quantities sold and of a slight increase in average per-unit
due mainly to the increase in average rates, greater quanti-
prices compared with 2016, which was partially offset by a
218
Annual Report 2017 reduction in revenue due to the deconsolidation of Marcinel-
€49 million for the sale of other fuels (€75 million in 2016).
le Energie in the amount of €39 million.
“Revenue from the transport of natural gas” totaled €570
tes” increased by €6 million due to the increase in sales of
million, increasing by €7 million (+1.2%) due above all to the
greater quantities transported in Italy.
CO2 emission rights, in the amount of €22 million, and of
energy efficiency certificates, in the amount of €8 million,
which was partially offset by a decrease of €24 million in
Finally, “Revenue from the sale of environmental certifica-
Revenue from the sale of fuels, in the amount of €8,340
sales of green certificates.
million, increased by €1,312 million related mainly to the sale
of natural gas. In 2017, this included the sale of natural gas,
The table below gives a breakdown of revenue from sales
in the amount of €8,291 million (€6,953 million in 2016) and
and services by geographical area.
Millions of euro
Italy
Europe
Iberia
France
Switzerland
Germany
Austria
Slovenia
Slovakia
Romania
Greece
Bulgaria
Belgium
Czech Republic
Hungary
Russia
Netherlands
United Kingdom
Other European countries
Americas
United States
Canada
Mexico
Brazil
Chile
Peru
Colombia
Argentina
Other South American countries
Other
Africa
Asia
Total
2017
27,935
19,032
1,333
135
2,244
290
39
54
1,067
58
9
46
-
472
1,128
4,063
648
82
693
-
359
4,687
3,473
1,167
2,103
1,364
14
79
90
72,664
2016
27,516
17,953
1,001
367
1,880
10
29
660
996
60
9
416
382
335
961
3,554
1,008
144
367
-
144
2,536
3,510
1,215
2,028
1,051
156
28
288
68,604
219
Consolidated financial statements 7.b Other revenue and income - €1,975 million
Millions of euro
Operating grants
Grants for environmental certificates
Capital grants (electricity and gas business)
Sundry reimbursements
Gains on disposal of subsidiaries, associates, joint ventures, joint
operations and non-current assets held for sale
Gains on remeasurement at fair value after changes in control
Gains on the disposal of property, plant and equipment, and
intangible assets
Service continuity bonuses
Other revenue
Total
2017
2016
Change
40
878
21
361
159
-
43
66
407
1,975
22
536
19
241
399
99
65
51
556
1,988
18
342
2
120
(240)
(99)
(22)
15
(149)
(13)
81.8%
63.8%
10.5%
49.8%
-60.2%
-
-33.8%
29.4%
-26.8%
-0.7%
“Grants for environmental certificates” increased by €342
> the recognition of a price adjustment related to the sale
million compared with the previous year due essentially to
of the Portuguese assets in 2015 in the amount of €30
the increase in grants for energy efficiency certificates, in
million.
the amount of €351 million, which was partially offset by a
reduction in grants for green certificates in the amount of
In 2017, there were no “Gains on remeasurement at fair va-
€9 million.
lue after changes in control”, whereas this aggregate came
to €99 million for the prior year.
“Sundry reimbursements” concern reimbursements from
In 2016, these gains included €95 million for the adjustment
customers and suppliers totaling €165 million (€184 million
to the present value of the assets and liabilities of the
in 2016) and insurance indemnities in the amount of €196
Group following the loss in control that took place with the
million (€57 million in 2016). The increase in revenue from
change in governance and the consequent loss of control
compensation for damages essentially refers to the arbitra-
over EGPNA REP.
tion initiated by the Group related to the Chucas wind farm,
for which the Group was awarded €100 million from the
Other revenue in the amount of €407 million (€556 million
Instituto Costarricense de Electricidad (ICE) and the Enel
in 2016) decreased by €149 million from the previous year.
Américas Group was awarded €41 million.
This decrease is mainly attributable to:
> the reduction of €94 million in lease payments related
Gains on disposals, in the amount of €159 million in 2017,
essentially to Enel Américas;
decreased by €240 million from 2016 and mainly includes
> the decrease of €50 million in other gains and revenue,
the gain of €143 million on the sale of the equity investment
€35 million of which related to Renovables de Guatema-
in the Chilean firm Electrogas.
la;
In 2016, this aggregate mainly concerned the following
> the reduction of €34 million in other revenue related to
transactions:
the electricity business, €23 million of which was related
> the gain on the sale of GNL Quintero (an associated
to the Enel Américas Group and €11 million to the decon-
company in which the Group held a 20% interest) in the
solidation of Slovenské elektrárne.
amount of €173 million;
> the gain of €124 million on the sale of Hydro Dolomiti
Enel;
> the gain of €35 million recognized by Enel Green Power
Kansas on the sale of its subsidiaries Cimarron and Lin-
dhal;
220
Annual Report 2017 Costs
8.a Electricity, gas and fuel purchases - €36,039 million
Millions of euro
Electricity
Gas
Nuclear fuel
Other fuels
Total
2017
20,011
12,654
137
3,237
36,039
2016
18,514
10,514
165
2,846
32,039
Change
8.1%
20.4%
-17.0%
13.7%
12.5%
1,497
2,140
(28)
391
4,000
Purchases of “Electricity” totaled €20,011 million in 2017,
sentially related to the reduction in volumes and in prices
increasing by €1,497 million over 2016 (8.1%). These costs
of Country Italy and to the effect of the change in conso-
include purchases made by way of bilateral agreements on
lidated companies with the deconsolidation of Slovenské
national and international markets in the amount of €7,494
elektrárne.
million (€6,801 million in 2016), energy purchases negotia-
ted on the power exchange in the amount of €6,444 million
Purchases of “Gas” increased by €2,140 million due essen-
(€4,418 million in 2016), and other purchases made on local
tially to the increase in the price of gas purchased from
and international markets and within the scope of ancillary
third parties. This change reflects the increase in average
and balancing services totaling €6,073 million (€7,295 mil-
costs in terms of both price and quantity, in addition to the
lion on 2016).
fact that, in 2016, this aggregate benefitted from the grea-
As such, the increase in costs was mainly due to the increa-
ter reductive effects of price-review agreements for a num-
se in purchases on the power exchange (particularly in Italy,
ber of provision contracts than in 2017.
Iberia and South America, the latter of which mainly due
to the consolidation of Enel Distribuição Goiás beginning
Purchases of “Other fuels” increased by €391 million, to
in February 2017). These effects were partially offset by a
€3,237 million in 2017, mainly due to the increase in con-
reduction of €1,222 million in purchases of other types, es-
sumption within a context of rising prices.
8.b Services and other materials - €17,982 million
Millions of euro
Transmission and transport
Maintenance and repairs
Telephone and postal costs
Communication services
IT services
Leases and rentals
Other services
Other materials
Total
2017
9,840
1,128
199
127
627
525
3,656
1,880
17,982
2016
9,448
1,169
190
113
442
541
3,782
1,708
17,393
Change
4.1%
-3.5%
4.7%
12.4%
41.9%
-3.0%
-3.3%
10.1%
3.4%
392
(41)
9
14
185
(16)
(126)
172
589
Costs for services and other materials, in the amount of
million in costs for transmission and transport, which was
€17,982 million in 2017, increased by €589 million com-
concentrated in Italy and in the Americas, as well as gre-
pared with 2016 due essentially to the increase of €392
ater costs for IT services in the amount of €185 million,
221
Consolidated financial statements mainly within Italy, and an increase of €105 million in costs
These effects were partially offset by a reduction of €219
incurred due to the increase in purchases of material and
million in charges for access to the transmission network,
equipment for infrastructure and grid work contracted in
particularly in Spain related to power generation, and of €78
Brazil, primarily as a result of the consolidation of Enel Di-
million due to the deconsolidation of Slovenské elektrárne.
stribuição Goiás.
8.c Personnel - €4,504 million
Millions of euro
Wages and salaries
Social security contributions
Deferred compensation benefits
Other post-employment and long-term benefits
Early retirement incentives
Other costs
Total
2017
3,152
895
104
139
76
138
2016
3,127
901
105
129
228
147
4,504
4,637
Change
0.8%
-0.7%
-1.0%
7.8%
-66.7%
-6.1%
-2.9%
25
(6)
(1)
10
(152)
(9)
(133)
Personnel costs amounted to €4,504 million in 2017, a de-
The increase in wages and salaries essentially reflects the
crease of €133 million.
increase in the average workforce in 2017.
The Group’s workforce increased by 820 employees, the
net effect of new hires and terminations (-2,111 employe-
Early retirement incentives amounted to €76 million in 2017,
es) due to early retirement incentives and, above all, of
a decrease of €152 million, mainly attributable to the lower
changes in consolidated companies (+2,931 employees)
costs (€205 million) incurred for early-retirement plans in
due essentially to the acquisitions made in 2017, and spe-
Spain (“Plan de Salida”). The reduction was only partly of-
cifically:
fset by the introduction of a similar mechanism in the newly
> the acquisition of Demand Energy in North America in
acquired Enel Distribuição Goiás in order to enhance the
January;
efficiency of the structure (€45 million).
> the acquisition of Enel Distribuição Goiás in Brazil in Fe-
bruary;
The table below shows the average number of employe-
> the acquisition of Enel Green Power Sannio in Italy in
es by category, along with a comparison with the previous
June;
year, as well as the actual numbers as of December 31,
> the acquisition of EnerNOC in North America in August;
2017.
> the acquisition of eMotorWerks in North America in Oc-
tober;
> the consolidation of Endesa Comercialização in Portugal
in November.
222
Annual Report 2017 Managers
Middle managers
White collar
Blue collar
Total
Average number (1)
Headcount (1)
2017
1,308
10,073
32,558
18,956
62,895
2016
1,329
10,185
34,373
19,401
65,288
Change
at Dec. 31, 2017
(21)
(111)
(1,815)
(446)
(2,393)
1,281
10,416
32,653
18,550
62,900
(1) For companies representing joint operations, the headcount corresponds to Enel percentage share of the total.
8.d Depreciation, amortization and impairment losses - €5,861
million
Millions of euro
Property, plant and equipment
Investment property
Intangible assets
Impairment losses
Reversals of impairment losses
Total
2017
4,119
7
805
1,311
(381)
5,861
2016
4,171
8
711
1,726
(261)
6,355
Change
-1.2%
-12.5%
13.2%
-24.0%
-46.0%
-7.8%
(52)
(1)
94
(415)
(120)
(494)
Depreciation, amortization and impairment losses for 2017
Specifically, these changes concerned the extension of the
decreased by €494 million, due mainly to a reduction in im-
useful life of turbines and generators and other mechanical
pairment losses recognized in 2017 as compared with the
and electrical machinery for wind generation plants to 30
previous year. In 2017, the Group, with the support of tech-
years, as well as the extension of the useful life of the me-
nical advisors, completed a study to assess the operating
chanical and electrical machinery of solar generation plants,
performance of its solar and wind farms, analyzing histo-
although this remained within the useful life interval alrea-
rical data on the duration and frequency of maintenance
dy adopted by the Group.
interventions prompted by technical issues, and to exami-
Moreover, as a result of a number of specific technical stu-
ne the environmental and climatic conditions to which the
dies conducted internally for hydroelectric generation plants
Group’s plants are exposed. The results of the study provi-
in Spain and Chile, the Group also found that the conditions
ded sufficient evidence to consider it reasonable to leng-
existed for the extension of the economic-technical lives
then the economic-technical lives of some components of
of certain components of schedulable hydroelectric plants.
solar and wind generation plants from the estimates made
Here too, while the new useful lives remain within the in-
in previous years.
terval already used by the Group, the average increase in
Therefore, starting from January 1, 2017, the Group revised
those lives within each category led to a reduction in depre-
the useful lives of these components based on the findings
ciation charges for the year.
of the study, taking due account of any legal constraints
The estimated overall impact of these changes in the de-
that may exist in certain jurisdictions in which the Group
preciation rates on these financial statements is a reduc-
operates and that could effectively influence the right to
tion of €128 million in depreciation charges.
exploit those assets until their economic-technical life ter-
minates.
223
Consolidated financial statements Millions of euro
Impairment losses:
- property, plant and equipment
- investment property
- intangible assets
- goodwill
- trade receivables
- assets classified as held for sale
- other assets
Total impairment losses
Reversals of impairment losses:
- property, plant and equipment
- investment property
- intangible assets
- trade receivables
- assets classified as held for sale
- other assets
Total reversals of impairment losses
2017
2016
Change
65
10
7
-
1,204
-
25
1,311
(53)
-
(9)
(310)
-
(9)
(381)
280
6
241
31
973
74
121
1,726
(2)
-
(5)
(250)
-
(4)
(261)
(215)
4
(234)
(31)
231
(74)
(96)
(415)
(51)
-
(4)
(60)
-
(5)
-76.8%
66.7%
-97.1%
-
23.7%
-
-79.3%
-24.0%
-
-
-80.0%
-24.0%
-
-
(120)
-46.0%
“Impairment losses” decreased by €415 million on the pre-
upstream-gas exploration assets, on the land owned by the
vious year.
Spanish subsidiary operating in the distribution segment
More specifically, 2016 included an adjustment to the value
(€22 million) and finally other minor items related mainly to
of rights for the use of water resources in the Chilean rivers
the renewable-energy companies.
of Neltume and Choshuenco (€273 million, of which €33
In 2017, the aggregate included impairment losses on the
million related to property, plant and equipment and €240
geothermal assets of the German investee Erdwärme
million related to intangible assets), as well as the impai-
Oberland GmbH (€42 million), which were recognized fol-
rment losses on the CGUs of Enel Green Power Romania
lowing unsuccessful exploration work.
(€130 million) and Nuove Energie (totaling €92 million, of
The impairment of trade receivables and other assets came
which €66 million for property, plant and equipment and
to €1,229 million, which, net of reversals, increased by €70
€26 million for goodwill) and the impairment losses of €51
million in 2017, particularly in Argentina and Brazil as a result
million on the assets of Marcinelle Energie, a subsidiary
of worsening economic conditions and in Italy due to the
that was then sold in November 2016, of €55 million on the
risk of default of a number of traders.
8.e Other operating expenses - €2,886 million
Millions of euro
System charges - emissions allowances
Charges for energy efficiency certificates
Charges for purchases of green certificates
Losses on disposal of property, plant and equipment, and
intangible assets
Taxes and duties
Other
Total
224
2017
392
776
35
105
1,197
381
2,886
2016
557
426
(19)
266
1,060
493
2,783
Change
-29.6%
82.2%
-
-60.5%
12.9%
-22.7%
3.7%
(165)
350
54
(161)
137
(112)
103
Annual Report 2017 Other operating expenses, totaling €2,886 million, increa-
tricity provision (€44 million) and for the change in the
sed by €103 million.
scope of consolidation in Brazil with Enel Distribuição
This was due essentially to the following:
Goiás in the amount of €18 million;
> an increase of €239 million in charges for environmental
> a decrease of €161 million in capital losses, which parti-
compliance, particularly in Italy and Romania;
cularly reflects the impairment losses in South America
> an increase of €137 million in taxes and duties, essential-
in 2016 due to the abandonment of water usage rights
ly related to taxes on thermal generation in Spain and on
for various development projects following an analysis of
nuclear generation in Catalonia following the introduction
their profitability and socio-economic impact;
of the new law 5/2017 taxing nuclear waste. This effect
> the release of the provision for disputes allocated in 2016
was amplified by the fact that, in 2016, the Group bene-
in relation to the SAPE dispute in the amount of €80 mil-
fitted from the reversal of nuclear tax set aside previously
lion following the arbitration award;
for which the law previously in effect had been deemed
> the recognition of a decrease in charges related to the
to be unconstitutional;
ruling that granted Endesa a refund of amounts paid to
> an increase in costs incurred for fines in Argentina for
finance the “bono social” in 2014, 2015 and 2016, the
failure to reach the established quality standards in elec-
impact of which was €222 million.
8.f Capitalized costs - €(1,847) million
Millions of euro
Personnel
Materials
Other
Total
2017
(780)
(618)
(449)
2016
(730)
(544)
(395)
(50)
(74)
(54)
(1,847)
(1,669)
(178)
Change
6.8%
-13.6%
-13.7%
-10.7%
Capitalized costs consist of €780 million in personnel costs,
regard the development and implementation of major in-
€618 million in materials costs, and €449 million in service
vestments, mainly in the renewables and distribution sec-
costs (compared with €730 million, €544 million, and €395
tors.
million, respectively, for 2016). Capitalized costs mainly
9. Net income/(expense) from commodity contracts measured
at fair value - €578 million
Net income from the management of commodity risk
> net income on derivatives at fair value through profit or
amounted to €578 million for 2017 (as compared with a
loss in the amount of €332 million (compared with net
net expense of €133 million in 2016), which may be broken
income of €477 million in 2016).
down as follows:
For more information on derivatives, see note 44, “Deriva-
> net income on cash flow hedge derivatives in the amount
tives and hedge accounting”.
of €246 million (compared with net expense of €610 mil-
lion in 2016);
225
Consolidated financial statements Millions of euro
Income:
- income from cash flow hedge derivatives
- income from derivatives at fair value through profit or loss
Total income
Expense:
- expense on cash flow hedge derivatives
- expense on derivatives at fair value through profit or loss
Total expenses
NET INCOME/(EXPENSE) FROM COMMODITY
CONTRACTS MEASURED AT FAIR VALUE
2017
2016
Change
284
1,288
1,572
(38)
(956)
(994)
578
14
974
988
(624)
(497)
(1,121)
(133)
270
314
584
586
(459)
127
711
-
32.2%
59.1%
-93.9%
-92.4%
-11.3%
-
10. Net financial income/(expense) from derivatives - €(1,155)
million
Millions of euro
Income:
- income from cash flow hedge derivatives
- income from derivatives at fair value through profit or loss
- income from fair value hedge derivatives
Total income
Expense:
- expense on cash flow hedge derivatives
- expense on derivatives at fair value through profit or loss
- expense on fair value hedge derivatives
Total expenses
TOTAL FINANCIAL INCOME/(EXPENSE) FROM
DERIVATIVES
2017
2016
Change
728
847
36
1,611
(2,171)
(552)
(43)
(2,766)
475
1,369
40
1,884
(1,141)
(1,620)
(60)
(2,821)
253
(522)
(4)
(273)
(1,030)
1,068
17
55
53.3%
-38.1%
-10.0%
-14.5%
-90.3%
-65.9%
-28.3%
-1.9%
(1,155)
(937)
(218)
-23.3%
Net expense from derivatives on interest and exchange
loss in the amount of €295 million (compared with a net
rates amounted to €1,155 million for 2017 (as compared
expense of €251 million in 2016);
with a net expense of €937 million in 2016), which may be
> net expense on fair value hedge derivatives in the amount
broken down as follows:
of €7 million (compared with net expense of €20 million
> net expense on cash flow hedge derivatives in the
in 2016).
amount of €1,443 million (compared with a net expense
For more information on derivatives, see note 44, “Deriva-
of €666 million in 2016);
tives and hedge accounting”.
> net income on derivatives at fair value through profit or
226
Annual Report 2017 11. Other net financial income/(expense) - €(1,537) million
Other financial income
Millions of euro
Interest income from financial assets (current and non-
current):
- interest income at effective rate on non-current securities
and receivables
- interest income at effective rate on short-term financial
investments
Total interest income at the effective interest rate
Financial income on non-current securities at fair value
through profit or loss
Exchange gains
Income on equity investments
Other income
TOTAL FINANCIAL INCOME
2017
2016
Change
52
132
184
-
1,852
54
281
2,371
45
179
224
-
1,776
9
280
2,289
7
15.6%
(47)
(40)
-
76
45
1
82
-26.3%
-17.9%
-
4.3%
-
0.4%
3.6%
Other financial income, in the amount of €2,371 million,
tax rate related, primarily, to the deconsolidation of Slo-
increased by €82 million compared with the previous year
venské elektrárne;
due to:
> an increase of €45 million in income on equity in-
> an increase in exchange gains in the amount of €76 mil-
vestments in other companies, which totaled €54 mil-
lion, reflecting the impact, above all, of trends in exchan-
lion in 2017 due essentially to the gain on the sale of
ge rates on net financial debt denominated in currencies
the investment in the Indonesian firm Bayan Resources
other than the euro;
(€52 million).
> a €40 million decrease in interest income at the effective
Other financial expense
Millions of euro
Interest expense on financial debt (current and non-
current):
- interest on bank borrowings
- interest expense on bonds
- interest expense on other borrowings
Total interest expense
Exchange losses
Accretion of post-employment and other employee
benefits
Accretion of other provisions
Charges on equity investments
Other expenses
2017
2016
Change
357
1,987
95
2,439
820
72
190
-
387
405
2,135
138
2,678
947
79
286
-
349
(48)
(148)
(43)
(239)
(127)
(7)
(96)
-
38
TOTAL FINANCIAL EXPENSE
3,908
4,339
(431)
-11.9%
-6.9%
-31.2%
-8.9%
-13.4%
-8.9%
-33.6%
-
10.9%
-9.9%
Other financial expense amounted to €3,908 million, a total
following factors in particular:
decrease of €431 million on 2016. The change reflects the
> a decrease of €148 million in interest expense on bon-
227
Consolidated financial statements ds, attributable mainly to Enel SpA (€106 million) and to
- an increase in charges recognized by Enel Finance In-
the Enersis Américas Group (€54 million). These effects
ternational (€109 million) following the early redemption
were partially offset by an increase in interest expense
of bonds based on the “make whole call option” allo-
for Enel Finance International (€24 million);
wed for under the original financing agreement;
> a €48 million reduction in interest expense on bank bor-
- a reduction in capitalized interest (€75 million);
rowings related, above all, to long-term financing (€53
- an increase in other financial expenses related to the
million);
acquisition of Enel Distribuição Goiás (€55 million) and
> a decrease of €43 million in interest expense on other
in charges on revolving lines of credit (€37 million)
borrowing related mainly to interest expense on medium
attributable essentially to Enel Finance International
and long-term tax-partnership payables (€33 million);
(€22 million) and Enel SpA (€18 million);
> a decrease of €127 million in exchange losses;
- a decrease of €255 million in impairment losses on
> a decrease of €96 million in charges for the accretion of
financial receivables related mainly to the fair value
other provisions, mainly related to the reduction of in-
adjustment to the financial receivable arising as a
terest expense on the early-retirement provision in the
result of the sale of the 50% stake in Slovak Power
amount of €58 million, which was concentrated in Spain
Holding following an update to the pricing formula in-
(€47 million), and to the reduction in charges for the de-
cluded in the agreements with EPH, which resulted in
commissioning fund in the amount of €48 million fol-
the recognition of €220 million in charges in 2016 and
lowing the deconsolidation of Slovenské elektrárne;
in 2017 in an upward adjustment of €34 million.
> a €38 million increase in other financial expenses (€387
million in 2017 compared with €349 million in 2016), due
essentially to:
12. Share of income/(losses) of equity investments accounted
for using the equity method - €111 million
Millions of euro
Share of income of associates
Share of losses of associates
Total
2017
225
(114)
111
2016
115
(269)
(154)
Change
95.7%
-57.6%
-
110
155
265
The share of income on equity investments accounted for
€219 million in 2016 following changes in the parameters
using the equity method increased by €265 million compa-
used to determine the pricing formula as defined in the
red with the previous year. This change was mainly due to
agreements with EPH, but was then increased by €27 mil-
the adjustment in the value of the 50% interest in Slovak
lion to take account of earnings for the year.
Power Holding (€246 million), which was written down by
13. Income taxes - €1,882 million
Millions of euro
Current taxes
Adjustments for income taxes relating to prior years
Total current taxes
Deferred tax liabilities
Deferred tax assets
TOTAL
228
2017
1,926
(59)
1,867
(169)
184
1,882
2016
1,695
1
1,696
(312)
609
1,993
Change
13.6%
-
10.1%
-45.8%
-70%
-5.6%
231
(60)
171
143
(425)
(111)
Annual Report 2017 Income taxes for 2017 amounted to €1,882 million, compa-
These reductions in taxation were partially offset by greater
red with a balance of €1,993 million in 2016.
pre-tax income in 2017 compared with the previous year
The €111 million reduction in income taxes for 2017 as
rates different from the theoretical rates (in 2016, the gains
compared with the previous year was mainly due to the
on Hydro Dolomiti Enel and GNL Quintero, in addition to
following factors:
the adjustments in the value of the assets of Slovak Power
> a reduction in current taxes in Italy due to the corporate
Holding; in 2017, the gain on the sale of Electrogas in par-
and to the different weight of transactions subject to tax
tax rate being reduced from 27.5% to 24%;
ticular).
> an adjustment to deferred taxes for US companies (€173
million) following tax reform in December 2017, which re-
For more on developments in deferred tax liabilities, see
duced the corporate tax rate from 35% to 21%;
note 21.
> the recognition of deferred tax assets in Argentina due
to improved earnings forecasts for the companies in that
The following table provides a reconciliation of the theoreti-
country.
Millions of euro
Income before taxes
Theoretical taxes
Change in tax effect on impairment losses, capital gains and negative
goodwill
Additional taxes for change in tax rate on temporary fiscal differences
during the year
Recognition of deferred tax assets in Argentina
Impact on deferred taxation of changes in tax rates
IRAP
Other differences, effect of different tax rates abroad compared with the
theoretical rate in Italy, and other minor items
Total
cal tax rate and the effective tax rate:
27.5%
24.0%
2017
7,211
1,731
(6)
-
(60)
(182)
231
168
1,882
2016
5,780
1,590
118
44
-
55
208
(22)
1,993
14. Basic and diluted earnings per share
Both metrics are calculated on the basis of the average num-
shares, adjusted for the diluting effect of outstanding stock
ber of ordinary shares in the period, equal to 10,166,679,946
options (none in both periods).
Net income from continuing operations attributable to
shareholders of the Parent Company (millions of euro)
Net income from discontinued operations attributable to
shareholders of the Parent Company (millions of euro)
Net income attributable to shareholders of the Parent
Company (millions of euro)
Number of ordinary shares
Dilutive effect of stock options
Basic and diluted earnings per share (euro)
Basic and diluted earnings from continuing operations per
share (euro)
Basic and diluted earnings from discontinued operations per
share (euro)
2017
3,780
-
2016
2,570
-
Change
1,210
47.1%
-
3,779
2,570
1,210
10,166,679,946
9,975,849,408
190,830,538
-
0.37
0.37
-
-
0.26
0.26
-
-
0.11
0.11
-
-
47.1%
1.9%
-
42.3%
42.3%
-
229
Consolidated financial statements 15. Property, plant and equipment - €74,937 million
The breakdown of and changes in property, plant and equipment for 2017 are shown below.
Millions of euro
Cost
Accumulated depreciation and
impairment
Balance at Dec. 31, 2016
Capital expenditure
Assets entering service
Exchange rate differences
Change in consolidated companies
Disposals
Depreciation
Impairment losses
Reversals of impairment losses
Other changes
Reclassifications to/from assets held
for sale
Total changes
Cost
Accumulated depreciation and
impairment
Balance at Dec. 31, 2017
Land
660
-
660
1
20
(23)
-
(3)
-
(1)
-
(5)
-
(11)
649
-
649
Buildings
Plant and machinery
Industrial and commercial
equipment
Other assets
Leased assets
Leasehold improvements
and advances
Assets under construction
9,224
5,098
4,126
29
485
(167)
(18)
(11)
(148)
(6)
-
(19)
(28)
117
9,425
5,182
4,243
152,781
89,790
62,991
1,003
4,860
(1,887)
(222)
(38)
(3,782)
(32)
53
28
(632)
(649)
154,013
91,671
62,342
414
335
79
26
21
(3)
-
(2)
(27)
(1)
-
58
-
72
491
340
151
1,336
1,066
270
46
67
(20)
9
(6)
(79)
-
-
-
12
29
1,321
1,022
299
1,015
285
730
1
55
(14)
(46)
17
-
-
-
-
-
13
1,054
311
743
402
253
149
9
22
(1)
(1)
(31)
-
-
-
-
-
(2)
429
282
147
7,260
7,260
5,742
(5,530)
(559)
3
(45)
(25)
67
(550)
(897)
6,363
6,363
-
-
-
-
Total
173,092
96,827
76,265
6,857
-
(2,674)
(228)
(106)
(4,113)
(65)
53
158
(1,210)
(1,328)
173,745
98,808
74,937
Plant and machinery includes assets to be relinquished
tricity distribution network in South America totaling €3,453
free of charge with a net carrying amount of €8,702 million
million (€3,630 million at December 31, 2016).
(€9,459 million at December 31, 2016), largely regarding po-
wer plants in Iberia and South America amounting to €4,624
For more information on leased assets, see note 17 below.
million (€5,280 million at December 31, 2016) and the elec-
230
Annual Report 2017 15. Property, plant and equipment - €74,937 million
The breakdown of and changes in property, plant and equipment for 2017 are shown below.
Millions of euro
Cost
Accumulated depreciation and
impairment
Balance at Dec. 31, 2016
Capital expenditure
Assets entering service
Exchange rate differences
Change in consolidated companies
Disposals
Depreciation
Impairment losses
Other changes
for sale
Total changes
Cost
Reversals of impairment losses
Reclassifications to/from assets held
Accumulated depreciation and
impairment
Balance at Dec. 31, 2017
Land
660
-
-
-
-
-
-
660
1
20
(23)
(3)
(1)
(5)
(11)
649
649
9,224
5,098
4,126
29
485
(167)
(18)
(11)
(148)
(6)
-
(19)
(28)
117
9,425
5,182
4,243
152,781
89,790
62,991
1,003
4,860
(1,887)
(222)
(38)
(3,782)
(32)
53
28
(632)
(649)
154,013
91,671
62,342
414
335
79
26
21
(3)
-
(2)
(27)
(1)
58
-
-
72
491
340
151
Buildings
Plant and machinery
equipment
Industrial and commercial
Other assets
Leased assets
Leasehold improvements
Assets under construction
and advances
1,336
1,066
270
46
67
(20)
9
(6)
(79)
-
-
12
-
29
1,321
1,022
299
1,015
285
730
1
55
(14)
-
-
(46)
-
-
17
-
13
1,054
311
743
402
253
149
9
22
(1)
-
(1)
(31)
-
-
-
-
(2)
429
282
147
7,260
-
7,260
5,742
(5,530)
(559)
3
(45)
-
(25)
-
67
(550)
(897)
6,363
-
6,363
Total
173,092
96,827
76,265
6,857
-
(2,674)
(228)
(106)
(4,113)
(65)
53
158
(1,210)
(1,328)
173,745
98,808
74,937
231
Consolidated financial statements The types of capital expenditure made during 2017 are sum-
decreased by €411 million from 2016, a decrease that was
marized below. These expenditures, totaling €6,857 million,
particularly concentrated in wind and solar power plants.
Millions of euro
Power plants:
- thermal
- hydroelectric
- geothermal
- nuclear
- alternative energy sources
Total power plants
Electricity distribution networks
Land, buildings, and other assets and equipment
TOTAL
2017
577
450
224
127
2,819
4,197
2,627
33
6,857
2016
694
551
265
115
3,407
5,032
2,558
47
7,637
Capital expenditure on power plants amounted to €4,197
In order to verify the robustness of the value in use identi-
million, a decrease of €853 million on the previous year,
fied for those CGUs, sensitivity analyses were conducted
essentially reflecting decreased investment in alternative
for the main value drivers, and in particular WACC, the
energy plants in Chile and South Africa following the com-
long-term growth rate and EBITDA, assuming individual
pletion and start of operations of power plants in 2016. Ca-
changes in each assumption of up to 5% of the value used
pital expenditure on power plants mainly concerned wind
in the tests. Within that range of variation, it was found
farms, in the amount of €1,823 million, and photovoltaic
that:
plants, in the amount of €991 million.
> for the Enel Produzione CGU, the main value drivers
Capital expenditure on the electricity distribution grid
were essentially in line with the breakeven levels;
came to €2,627 million, an increase of €69 million over the
> for the Enel Russia CGU, achieving the breakeven levels
previous year, and mainly concerned improvements to ser-
for the main value drivers is expected upon reaching a
vice quality and the installation of next-generation meters
pre-tax WACC of 15.34%, a growth rate of -0.8% and
in Iberia, as well as work on the distribution grid in Brazil.
EBITDA of 7.6%.
The change in consolidated companies for 2017 mainly
Reclassifications to/from assets held for sale include – in
concerned the deconsolidation of EGPNA Rocky Caney
accordance with IFRS 5 – €1,169 million for the carrying
Wind (€305 million) following its sale in December 2017,
amount of three operating plants and five plants under
the effects of which were only partially offset by the incre-
construction in Mexico for which Enel Green Power has
ase resulting from the acquisitions of Enel Green Power
signed agreements for the sale of an 80% stake in share
Sannio (€46 million), EnerNOC (€19 million), and Enel Di-
capital (“Kino Project”), as well as €41 million for the Ka-
stribuição Goiás (€13 million).
fireas wind farm, for which Enel Green Power Hellas has
signed an agreement for its sale.
Impairment losses on property, plant and equipment
amounted to €65 million. For a more detailed analysis, see
Other changes include, among other items, the effect of
note 8.d.
the capitalization of interest on specific loans for capital
As at December 31, 2017, tests for the reversal of impai-
expenditure in the amount of €167 million (€201 million in
rment losses were conducted for the assets of a number
2016), as detailed in the following table.
of CGUs (Enel Russia, Enel Green Power Hellas, and Enel
Produzione) that had previously been written down.
232
Annual Report 2017 Millions of euro
Enel Green Power SpA
PH Chucas SA
Enel Green Power Brasil
Enel Green Power North
America
Enel Green Power México
Enel Green Power South Africa
Enel Green Power Chile
Enel Américas Group
Enel Chile Group
Endesa Group
Enel Produzione
Enel Trade
Total
2017
Rate (%)
2016
Rate (%)
Change
14
1
84
10
12
7
13
7
6
8
5
-
167
4.8%
6.1%
6.8%
1.3%
4.6%
7.8%
4.3%
9.0%
7.1%
2.1%
4.8%
-
21
7
49
11
12
17
29
28
4
8
13
2
5.2%
6.1%
9.5%
1.6%
5.0%
5.9%
4.1%
18.1%
9.0%
2.6%
4.8%
0.4%
(7)
(6)
35
(1)
-
(10)
(16)
(21)
2
-
(8)
(2)
-33.3%
-85.7%
71.4%
-9.1%
-
-58.8%
-55.2%
-75.0%
50.0%
-
-61.5%
-
201 (1)
(34)
-16.9%
(1) Figure does not include €41 million for the period in which Slovenské elektrárne was reclassified as held for sale.
At December 31, 2017, contractual commitments to purchase property, plant and equipment amounted to €551 million.
16. Infrastructure within the scope of “IFRIC 12 - Service
concession arrangements”
Service concession arrangements, which are recognized in
The following table summarizes the salient details of those
accordance with IFRIC 12, regard certain infrastructure ser-
concessions:
ving concessions for electricity distribution in Brazil.
Millions of euro
Grantor
Activity Country
Concession
period
Concession
period
remaining
Renewal
option
Amount
recognized
among financial
assets at Dec. 31,
2017
Amount
recognized
among intangible
assets at Dec. 31,
2017
Enel Distribución Rio
Brazilian
government
Electricity
distribution
Enel Distribución
Ceará
Brazilian
government
Electricity
distribution
Enel Green Power
Mourão
Brazilian
government
Power
generation
Enel Green Power
Paranapanema
Brazilian
government
Power
generation
Enel Distribuição
Goiás
Brazilian
government
Electricity
distribution
Enel Green Power
Projetos I
Brazilian
government
Power
generation
Total
Brazil
1997-2026
9 years
Brazil
1998-2028
10 years
Brazil
2016-2046
28 years
Brazil
2016-2046
28 years
Brazil
2015-2045
28 years
Brazil
2017-2047
30 years
Yes
Yes
No
No
No
No
721
348
7
34
25
357
1,492
913
771
-
-
531
-
2,215
The value of the assets at the end of the concessions
fair value. For more information, see note 45 “Assets me-
classified under financial assets has been measured at
asured at fair value”.
233
Consolidated financial statements 17. Leases
The Group, in the role of lessee, has entered into finance lea-
the Ventanilla combined-cycle plant (with a duration of eight
se agreements. They include certain assets which the Group
years remunerated at an annual rate of Libor + 1.75%), as
is using in Spain, Peru, Italy and Greece. In Spain, the assets
well as an agreement that financed construction of a new
relate to a 25-year tolling agreement (18 years remaining) for
open-cycle system at the Santa Rosa plant (with a duration
which an analysis pursuant to IFRIC 4 identified an embed-
of nine years and annual interest of Libor + 1.75%).
ded finance lease, under which Endesa has access to the
The other lease agreements regard wind plants that the
generation capacity of a combined-cycle plant for which the
Group uses in Italy (expiring in 2030-2031 and with a di-
toller, Elecgas, has undertaken to transform gas into electri-
scount rate of between 4.95% and 5.5%).
city in exchange for a toll at a rate of 9.62%.
The carrying amount of assets held under finance leases is
In Peru, leases concern agreements related to financing for
reported in the following table:
Millions of euro
Property, plant and equipment
Intangible assets
Total
2017
743
-
743
2016
730
-
730
Change
1.8%
-
1.8%
13
-
13
The following table reconciles total future minimum lease payments and the present value, broken down by maturity.
Millions of euro
Periods
Within 1 year
Between 1 and 5 years
Beyond 5 years
Total
Finance cost
Present value of minimum lease payments
Future minimum
payments
Present value of
future minimum
payments
Future minimum
payments
Present value of
future minimum
payments
at Dec. 31, 2017
at Dec. 31, 2016
88
326
573
987
(293)
694
58
210
426
694
108
338
625
1,071
(326)
745
75
217
453
745
The Group, in the role of lessee, has entered also into ope-
Costs for operating leases are broken down in the fol-
rating lease agreements regarding the use of certain assets
lowing table into minimum payments, contingent rents
for industrial purposes. The associated lease payments are
and sublease payments.
expensed under “Services and other materials”.
234
Annual Report 2017 Millions of euro
Minimum lease payments
Contingent rents
Sublease payments
Total
The future minimum lease payments due by the Group under such leases break down by maturity as follows:
Millions of euro
Periods
Within 1 year
Beyond 1 year and within 5 years
Beyond 5 years
Total
2017
958
-
-
958
2017
163
539
256
958
18. Investment property - €77 million
Investment property at December 31, 2017 amounted to €77 million, a decrease of €47 million compared with 2016.
Millions of euro
Cost
Accumulated depreciation and impairment
Balance at Dec. 31, 2016
Assets entering service
Exchange rate differences
Change in consolidated companies
Depreciation
Impairment losses
Other changes
Total changes
Cost
Accumulated depreciation and impairment
Balance at Dec. 31, 2017
2017
167
43
124
-
(1)
(39)
(7)
(10)
10
(47)
121
44
77
The Group’s investment property consists of properties in
The change for the year is mainly attributable to the sale of
Italy, Spain and Chile, which are free of restrictions on the
the company Nueva Marina in Spain.
realizability of the investment property or the remittance of
For more details on the valuation of investment property,
income and proceeds of disposal. In addition, the Group has
see notes 45, “Assets measured at fair value”, and 45.1,
no contractual obligations to purchase, construct or develop
“Fair value of other assets”.
investment property or for repairs, maintenance or enhan-
cements.
235
Consolidated financial statements 19. Intangible assets - €16,724 million
A breakdown of and changes in intangible assets for 2017 are shown below.
Development
costs
Industrial patents
and intellectual
property rights
Concessions,
licenses,
trademarks and
similar rights
Service
concession
arrangements
3,213
13,910
3,946
Assets under
development
and advances
Total
711
23,431
Other
1,632
Millions of euro
Cost
Accumulated
amortization and
impairment
Balance at Dec. 31,
2016
Investments
Assets entering service
Exchange rate
differences
Change in consolidated
companies
Disposals
Amortization
Impairment losses
Reversals of impairment
losses
Other changes
Reclassifications from/to
assets held for sale
Total changes
Cost
Accumulated
amortization and
impairment
Balance at Dec. 31,
2017
19
19
-
3
7
(1)
-
(9)
(4)
(1)
-
14
-
9
31
22
9
2,586
1,647
1,991
1,259
-
7,502
627
103
61
(6)
(1)
2
(193)
(1)
-
(284)
-
(319)
2,148
12,263
1,955
10
10
(726)
1,234
-
(200)
-
9
(24)
(38)
275
731
-
(371)
572
(6)
(235)
-
-
(432)
-
259
373
23
119
(32)
220
(8)
(187)
-
-
333
-
468
14,171
4,840
3,060
711
403
(197)
15,929
1,273
-
(13)
(1,149)
-
(1)
-
(5)
-
(32)
(52)
103
814
2,025
(22)
(819)
(7)
9
(425)
(90)
795
25,064
1,840
1,633
2,626
2,219
-
8,340
308
12,538
2,214
841
814
16,724
“Industrial patents and intellectual property rights” re-
clude the costs incurred for the acquisition of customers by
late mainly to costs incurred in purchasing software and
the foreign electricity distribution and gas sales companies.
open-ended software licenses. The most important appli-
Amortization is calculated on a straight-line basis over the
cations relate to invoicing and customer management, the
term of the average period of the relationship with custo-
development of Internet portals and the management of
mers or of the concessions.
company systems. Amortization is calculated on a straight-
The following table reports service concession arrange-
line basis over the asset’s residual useful life (on average
ments that do not fall within the scope of IFRIC 12 and had
between three and five years).
a balance as at December 31, 2017.
“Concessions, licenses, trademarks and similar rights” in-
236
Annual Report 2017 -
-
-
-
5,678
5,673
1,514
1,839
1,641
1,667
612
548
Millions of euro
Grantor
Activity
Country
Concession
period
Concession
period
remaining
Renewal
option
at Dec. 31,
2017
Initial fair
value
Endesa Distribución
Eléctrica
Electricity
distribution
-
Spain
Indefinite
Indefinite
Codensa
Republic of
Colombia
Electricity
distribution
Colombia
Indefinite
Indefinite
Enel Distribución Chile
(formerly Chilectra)
Republic of
Chile
Electricity
distribution
Chile
Indefinite
Indefinite
Enel Distribución Perú
(formerly Empresa de
Distribución Eléctrica de
Lima Norte)
e-distribut¸ie Muntenia
Republic of Peru
Romanian
Ministry for the
Economy
Electricity
distribution
Electricity
distribution
Peru
Indefinite
Indefinite
Romania
2005-2054
36 years
Yes
142
191
The item includes assets with an indefinite useful life in
in the amount of €1,806 million, as well as of Enel X group
the amount of €9,445 million (€9,776 million at Decem-
in North America (EnerNOC, €168 million; eMotorWerks,
ber 31, 2016), essentially accounted for by concessions for
€49 million; and Demand Energy Networks, €30 million).
distribution activities in Spain (€5,678 million), Colombia
These effects were only partially offset by the sale of
(€1,514 million), Chile (€1,641 million), and Peru (€612 mil-
EGPNA Rocky Caney Wind (€28 million).
lion), for which there is no statutory or currently predictable
expiration date. On the basis of the forecasts developed,
“Impairment losses” amounted to €7 million in 2017. For
cash flows for each CGU, with which the various conces-
more information, see note 8.d.
sions are associated, are sufficient to recover the carrying
amount. The change during the year is essentially attribu-
“Reclassifications to/from assets held for sale” include – in
table to changes in exchange rates. For more information
accordance with IFRS 5 – €52 million for intangible assets
on service concession arrangements, see note 24.
related to the Greek wind farm Kafireas and €38 million for
the Mexican plants in the “Kino Project”.
Changes in consolidated companies in 2017 mainly con-
cerned the acquisition of Enel Distribuição Goiás in Brazil,
237
Consolidated financial statements Impairment
CGU
from/to assets
losses
reclassification
held for sale Other changes
Reclassifications
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,615)
1,209
276
561
530
945
94
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
-
-
-
-
-
-
-
-
-
-
-
-
(38)
(11)
at Dec. 31, 2017
Net carrying
amount
Cumulative
impairment
(2,392)
-
-
-
-
-
-
-
-
-
-
-
(11)
(13)
8,764
-
1,209
276
561
530
945
56
95
292
579
23
413
3
Cost
11,156
-
1,209
276
561
530
945
56
106
292
579
23
426
3
(38)
(6)
16,162
(2,416)
13,746
20. Goodwill - €13,746 million
Goodwill amounted to €13,746 million, an increase of €190 million over the previous year.
Millions of euro
Iberia (1)
South America (2)
Chile
Argentina
Peru
Colombia
Brazil
Central America
Enel Green Power North America
North America - Enel X
Market Italy (3)
Enel Green Power
Romania (4)
Tynemouth Energy
Total
at Dec. 31, 2016
Change in scope
of consol.
Exchange rate diff.
Cumulative
impairment
Net carrying
amount
Cost
11,156
3,645
-
-
-
-
-
-
132
-
579
23
437
-
(2,392)
-
-
-
-
-
-
-
(11)
-
-
-
(13)
-
8,764
3,645
-
-
-
-
-
-
121
-
579
23
424
-
-
10
-
-
-
-
-
-
-
302
-
-
-
3
-
(45)
-
-
-
-
-
-
(15)
(10)
-
-
(11)
-
(81)
15,972
(2,416)
13,556
315
(1) Includes Endesa and Enel Green Power España.
(2) Includes South America and Enel Green Power Latin America.
(3) Includes Enel Energia.
(4) Includes e-distribut¸ie Muntenia, Enel Energie Muntenia and Enel Green Power Romania.
Changes in consolidated companies mainly concern the
led to the reallocation of the goodwill previously assigned
acquisitions in North America within the Enel X business
to them, under the provisions of IAS 36.87. The analysis
(EnerNOC, €196 million; eMotorWerks, €93 million; and
became necessary in order to take account of the Group’s
Demand Energy Networks, €13 million).
reorganization, especially with regard to business con-
ducted outside Italy. More specifically, in addition to the
Reclassification from/to assets held for sale, which
integration of the renewables and traditional sectors in the
amounted to €38 million, regards the goodwill associated
various countries and recent reorganization of the Group,
with the Central America CGU allocated to the “Kino” wind
the criterion underlying this reallocation can be seen in the
farms in Mexico which during the year qualified for such
following changes:
classification under IFRS 5.
> as concerns Italy, a separation by legal entity: i) as a re-
sult of the corporate separation of the former monopoly
The criteria used to identify the cash generating units
(Enel SpA) over the years in response to legislative and
(CGUs) were essentially based – in line with manage-
regulatory measures; ii) based on the materiality of busi-
ment’s strategic and operational vision – on the specific
nesses conducted by the Group within Italy that did not
characteristics of their business, on the operational rules
permit the recognition of a single CGU;
and regulations of the markets in which Enel operates and
> a separation by Country outside Italy: i) as a result of
on the corporate organization, as well as on the level of
the acquisitions of companies or other business combi-
reporting monitored by management.
nations since 2005 as a part of the gradual process of
In 2017, we conducted a reassessment of CGUs, which
internationalization of the Group; ii) taking account of
238
Annual Report 2017 20. Goodwill - €13,746 million
Goodwill amounted to €13,746 million, an increase of €190 million over the previous year.
Millions of euro
Iberia (1)
South America (2)
Chile
Argentina
Peru
Colombia
Brazil
Central America
North America - Enel X
Market Italy (3)
Enel Green Power
Romania (4)
Tynemouth Energy
Total
Cost
11,156
3,645
-
-
-
-
-
-
-
-
132
579
23
437
Cumulative
Net carrying
impairment
amount
(2,392)
8,764
3,645
10
(45)
-
-
-
-
-
-
-
-
-
-
-
(13)
-
-
-
-
-
-
-
-
579
23
424
-
-
-
-
-
-
-
-
-
-
-
302
3
315
-
-
-
-
-
-
-
-
-
-
(15)
(10)
(11)
(81)
Enel Green Power North America
(11)
121
15,972
(2,416)
13,556
(1) Includes Endesa and Enel Green Power España.
(2) Includes South America and Enel Green Power Latin America.
(3) Includes Enel Energia.
(4) Includes e-distribut¸ie Muntenia, Enel Energie Muntenia and Enel Green Power Romania.
at Dec. 31, 2016
of consol.
Exchange rate diff.
Change in scope
Impairment
losses
CGU
reclassification
Reclassifications
from/to assets
held for sale Other changes
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,615)
1,209
276
561
530
945
94
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(38)
-
-
-
-
-
-
-
5
-
-
-
-
-
-
(11)
-
-
-
-
-
Cumulative
impairment
(2,392)
-
-
-
-
-
-
-
(11)
-
-
-
(13)
-
at Dec. 31, 2017
Net carrying
amount
8,764
-
1,209
276
561
530
945
56
95
292
579
23
413
3
Cost
11,156
-
1,209
276
561
530
945
56
106
292
579
23
426
3
(38)
(6)
16,162
(2,416)
13,746
the current Country model, in which we are seeing an
mated by calculating the value in use of the CGUs using
increasing interdependency in cash flows between the
discounted cash flow models, which involve estimating
various businesses in a given geographical area under
expected future cash flows and applying an appropriate di-
the responsibility of the Country Manager and in the or-
scount rate, selected on the basis of market inputs such as
ganization models implemented.
risk-free rates, betas and market-risk premiums.
Therefore, compared with the previous year:
Cash flows were determined on the basis of the best in-
> in Spain, the Endesa and EGP España CGUs have been
formation available at the time of the estimate, taking ac-
merged;
count of the specific risks of each CGU, and drawn:
> in Romania, the Romania and EGP Romania CGUs have
> for the explicit period, from the 5-year business plan ap-
been merged;
proved by the Board of Directors of the Parent Company
> in South America, the previous CGUs based on sharehol-
on November 20, 2017, containing forecasts for volumes,
ding structure, i.e. “South America (formerly Endesa)”
revenue, operating costs, capital expenditure, industrial
and “EGP Latin America”, have been reallocated geo-
and commercial organization and developments in the
graphically. The reallocation was carried out on the basis
main macroeconomic variables (inflation, nominal inte-
of the associated fair values. The Group also carried out
rest rates and exchange rates) and commodity prices.
impairment tests prior to the reallocation of goodwill,
The explicit period of cash flows considered in impai-
which found no evidence of impairment.
rment testing differs in accordance with the specific fe-
atures and business cycles of the various CGUs being
The recoverable value of the goodwill recognized was esti-
tested. These differences are generally associated with
239
Consolidated financial statements the different average times needed to build and bring into
the long-term rate of growth in electricity and/or inflation
service the plant and other works that characterize the
(depending on the country and business involved) and in
investments of the specific businesses that make up the
any case no higher than the average long-term growth rate
CGU (conventional thermal generation, nuclear power,
of the reference market. The value in use calculated as de-
renewables, distribution, etc.);
scribed above was found to be greater than the amount
> for subsequent years, from assumptions concerning
recognized on the balance sheet.
long-term developments in the main variables that de-
In order to verify the robustness of the value in use of the
termine cash flows, the average residual useful life of
CGUs, sensitivity analyses were conducted for the main
assets or the duration of the concessions.
drivers of the values, in particular WACC, the long-term
More specifically, the terminal value was calculated as a
growth rate and margins, the outcomes of which fully sup-
perpetuity or annuity with a nominal growth rate equal to
ported that value.
Millions of euro
Amount
Growth rate (1)
Pre-tax WACC
discount rate (2)
Explicit period
of cash flows
Terminal value (3)
Amount
Growth rate (1)
Pre-tax WACC
discount rate (2)
Explicit period
of cash flows
Terminal value (3)
Iberia (4)
8,764
1.65%
6.87%
5 years
Perpetuity/19 years
at Dec. 31, 2017
at Dec. 31, 2016
Enel Green Power España
Endesa - South America (5)
Chile
Argentina
Peru
Colombia
Brazil
Central America
Enel Green Power Latin America (6)
North America
North America - Enel X
Enel Energia (7)
Market Italy
Enel Green Power
Romania (8)
Tynemouth Energy
-
-
1,209
276
561
530
945
56
-
95
292
-
579
23
413
3
-
-
2.94%
8.58%
3.38%
2.92%
3.99%
1.42%
-
2.31%
2.31%
-
0.73%
1.89%
2.40%
-
-
-
-
-
-
-
7.43%
5 years
Perpetuity/23 years
18.67%
5 years
Perpetuity/29 years
6.90%
9.31%
5 years
Perpetuity/27 years
5 years
Perpetuity/29 years
10.01%
5 years
Perpetuity/26 years
8.24%
5 years
26 years
-
6.44%
10.35%
-
-
5 years
5 years
-
-
25 years
15 years
-
10.83%
5 years
15 years
7.28%
6.66%
-
5 years
Perpetuity/22 years
5 years
Perpetuity/19 years
-
-
(1) Perpetual growth rate for cash flows after the explicit forecast period.
(2) Pre-tax WACC calculated using the iterative method: the discount rate that ensures that the value in use calculated with pre-tax cash flows is equal
to that calculated with post-tax cash flows discounted with the post-tax WACC.
(3) The terminal value has been estimated on the basis of a perpetuity or an annuity with a rising yield for the years indicated in the column.
(4) Includes Endesa and Enel Green Power España.
(5) Goodwill allocated to the Chile, Argentina, Peru, Colombia and Brazil CGUs.
(6) Goodwill allocated to the Chile, Argentina, Peru, Colombia, Brazil and Central America CGUs.
(7) Goodwill allocated to the Market Italy CGU.
(8) Includes e-distribut¸ie Muntenia, Enel Energie Muntenia and Enel Green Power Romania.
240
8,607
157
3,285
-
-
-
-
-
-
-
-
-
360
121
579
23
424
1.40%
1.60%
2.71%
-
-
-
-
-
-
-
-
-
3.27%
2.20%
0.23%
1.50%
2.00%
5 years
5 years
5 years
Perpetuity
13 years
Perpetuity
7.78%
7.99%
8.83%
-
-
-
-
-
-
-
-
-
8.72%
6.03%
8.49%
7.24%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12.16%
5 years
15 years
5 years
5 years
21 years
21 years
5 years
5 years
Perpetuity/16 years
Perpetuity
Annual Report 2017 The table below reports the composition of the main go-
tes applied and the time horizon over which the expected
odwill values according to the company to which the cash-
cash flows have been discounted.
generating unit (CGU) belongs, along with the discount ra-
Millions of euro
Amount
Growth rate (1)
discount rate (2)
of cash flows
Terminal value (3)
Amount
Growth rate (1)
Pre-tax WACC
Explicit period
Pre-tax WACC
discount rate (2)
Explicit period
of cash flows
Terminal value (3)
at Dec. 31, 2017
at Dec. 31, 2016
Iberia (4)
8,764
1.65%
6.87%
5 years
Perpetuity/19 years
Enel Green Power España
Endesa - South America (5)
Chile
Argentina
Peru
Colombia
Brazil
Central America
Enel Green Power Latin America (6)
North America
North America - Enel X
Enel Energia (7)
Market Italy
Enel Green Power
Romania (8)
Tynemouth Energy
1,209
7.43%
5 years
Perpetuity/23 years
-
-
-
-
276
561
530
945
56
95
292
579
23
413
3
-
-
-
-
-
2.94%
8.58%
3.38%
2.92%
3.99%
1.42%
2.31%
2.31%
0.73%
1.89%
2.40%
-
-
-
-
-
18.67%
5 years
Perpetuity/29 years
6.90%
9.31%
5 years
Perpetuity/27 years
5 years
Perpetuity/29 years
10.01%
5 years
Perpetuity/26 years
8.24%
5 years
26 years
6.44%
10.35%
5 years
5 years
25 years
15 years
10.83%
5 years
15 years
7.28%
6.66%
5 years
Perpetuity/22 years
5 years
Perpetuity/19 years
-
-
-
-
-
-
-
-
-
-
8,607
157
3,285
-
-
-
-
-
-
360
121
-
579
-
23
424
-
1.40%
1.60%
2.71%
-
-
-
-
-
-
3.27%
2.20%
-
0.23%
-
1.50%
2.00%
-
7.78%
7.99%
8.83%
-
-
-
-
-
-
8.72%
6.03%
-
12.16%
-
8.49%
7.24%
-
5 years
5 years
5 years
-
-
-
-
-
-
5 years
5 years
-
5 years
-
5 years
5 years
-
Perpetuity
13 years
Perpetuity
-
-
-
-
-
-
21 years
21 years
-
15 years
-
Perpetuity/16 years
Perpetuity
-
(1) Perpetual growth rate for cash flows after the explicit forecast period.
(2) Pre-tax WACC calculated using the iterative method: the discount rate that ensures that the value in use calculated with pre-tax cash flows is equal
to that calculated with post-tax cash flows discounted with the post-tax WACC.
At December 31, 2017, the impairment tests of the CGUs
€26 million in the Nuove Energie CGU and €5 million in the
(3) The terminal value has been estimated on the basis of a perpetuity or an annuity with a rising yield for the years indicated in the column.
to which goodwill had been allocated found no evidence of
Enel Green Power Bulgaria CGU.
impairment, while in 2016 they had found impairment of
(4) Includes Endesa and Enel Green Power España.
(5) Goodwill allocated to the Chile, Argentina, Peru, Colombia and Brazil CGUs.
(6) Goodwill allocated to the Chile, Argentina, Peru, Colombia, Brazil and Central America CGUs.
(7) Goodwill allocated to the Market Italy CGU.
(8) Includes e-distribut¸ie Muntenia, Enel Energie Muntenia and Enel Green Power Romania.
241
Consolidated financial statements 21. Deferred tax assets and liabilities - €6,354 million and
€8,348 million
The following table details changes in deferred tax assets
The table also reports the amount of deferred tax assets
and liabilities by type of timing difference and calculated ba-
that, where allowed, can be offset against deferred tax lia-
sed on the tax rates established by applicable regulations.
bilities.
Millions of euro
Deferred tax assets:
- differences in the value of intangible assets,
property, plant and equipment
- accruals to provisions for risks and charges and
impairment losses with deferred deductibility
- tax loss carried forward
- measurement of financial instruments
- employee benefits
- other items
Total
Deferred tax liabilities:
- differences on non-current and financial assets
- measurement of financial instruments
- other items
Total
Non-offsettable deferred tax assets
Non-offsettable deferred tax liabilities
Excess net deferred tax liabilities after any
offsetting
Increase/(Decrease) taken to
income statement
Increase/(Decrease)
taken to equity
Change in scope of
consolidation
Other changes Exchange rate differences
held for sale
Reclassifications of assets
at Dec. 31, 2016
at Dec. 31, 2017
1,796
1,521
81
722
637
1,908
6,665
6,451
385
1,932
8,768
(157)
(56)
95
6
1
57
(54)
(212)
(4)
192
(24)
-
-
-
(36)
(23)
(2)
(61)
-
(143)
3
(140)
-
-
-
-
-
7
7
223
-
33
256
-
-
-
-
-
-
-
-
-
-
-
(22)
(26)
(9)
(2)
(11)
(35)
(105)
(335)
(1)
(58)
(394)
-
-
-
-
-
-
(98)
(98)
(76)
(42)
(118)
1,617
1,439
167
690
604
1,837
6,354
6,051
237
2,060
8,348
3,455
3,297
2,152
At December 31, 2017, deferred tax assets, recognized
€2,286 million because, on the basis of current estimates
when there is a reasonable certainty of their recoverabili-
of future taxable income, it is not certain that such assets
ty, totaled €6,354 million (€6,665 million at December 31,
will be recovered.
2016).
Deferred tax assets decreased by €311 million during the
Deferred tax liabilities amounted to €8,348 million at De-
year due mainly to the tax effect related to components
cember 31, 2017 (€8,768 million at December 31, 2016).
of income not recognized for fiscal purposes, particularly
They essentially include the determination of the tax ef-
concerning derivative instruments and provisions for risks,
fects of the value adjustments to assets acquired as part of
reversals for the period, and reclassifications of the assets
the final allocation of the cost of acquisitions made in the
held for sale of the Mexican companies.
various years and the deferred taxation in respect of the dif-
This decrease was only partially offset by the increase in
ferences between depreciation charged for tax purposes,
deferred tax assets on past losses in Argentina in light of
including accelerated depreciation, and depreciation based
the improved earnings forecasts for the companies in that
on the estimated useful lives of assets.
country.
It should also be noted that no deferred tax assets were
Deferred tax liabilities decreased by a total of €420 million,
recorded in relation to prior tax losses in the amount of
particularly in the United States following the reduction in
242
Annual Report 2017 Millions of euro
Deferred tax assets:
- differences in the value of intangible assets,
property, plant and equipment
- accruals to provisions for risks and charges and
impairment losses with deferred deductibility
- tax loss carried forward
- measurement of financial instruments
- employee benefits
- other items
Total
Deferred tax liabilities:
- differences on non-current and financial assets
- measurement of financial instruments
- other items
Total
Non-offsettable deferred tax assets
Non-offsettable deferred tax liabilities
Excess net deferred tax liabilities after any
offsetting
1,796
1,521
81
722
637
1,908
6,665
6,451
385
1,932
8,768
(157)
(56)
95
6
1
57
(54)
(212)
(4)
192
(24)
-
-
-
(36)
(23)
(2)
(61)
(143)
-
3
(140)
Increase/(Decrease) taken to
Increase/(Decrease)
income statement
taken to equity
Change in scope of
consolidation
Other changes Exchange rate differences
Reclassifications of assets
held for sale
at Dec. 31, 2016
at Dec. 31, 2017
-
-
-
-
-
7
7
223
-
33
256
-
-
-
-
-
-
-
-
-
-
-
(22)
(26)
(9)
(2)
(11)
(35)
(105)
(335)
(1)
(58)
(394)
-
-
-
-
-
(98)
(98)
(76)
-
(42)
(118)
1,617
1,439
167
690
604
1,837
6,354
6,051
237
2,060
8,348
3,455
3,297
2,152
the corporate income tax rate from 35% to 21% as part
These decreases were only partially offset by deferred tax
of the tax reform there (€173 million), as well as for the
liabilities for the acquired companies EnerNOC, Enel Distri-
reclassification to available for sale of deferred tax assets
buição Goiás, eMotorWerks, and Demand Energy following
associated with the Mexican companies (€118 million) and
allocation of the price paid (for a total of €251 million).
the impact of currency differences.
243
Consolidated financial statements 22. Equity investments accounted for using the equity method -
€1,598 million
Investments in joint arrangements and associated companies accounted for using the equity method are as follows.
Millions of euro
Joint arrangements
EGPNA Renewable Energy Partners
Rocky Caney Holding
OpEn Fiber
Slovak Power Holding
Enel F2i Solare Italia (formerly Ultor)
Tejo Energia Produção e Distribuição de
Energia Eléctrica
RusEnergoSbyt
Energie Electrique de Tahaddart
Drift Sand Wind Project
Electrogas
Transmisora Eléctrica de Quillota
Centrales Hidroeléctricas de Aysén
PowerCrop
Enel Green Power Bungala
Associates
Elica 2
CESI
Tecnatom
Suministradora Eléctrica de Cádiz
Compañía Eólica Tierras Altas
Other
Total
% held
Income effect
Change in scope
of consol.
Reclassifications from/to
Dividends
assets held for sale
Other changes
% held
at Dec. 31, 2016
at Dec. 31, 2017
50.0%
-
50.0%
50.0%
50.0%
43.8%
49.5%
32.0%
35.0%
42.5%
50.0%
51.0%
50.0%
-
30.0%
42.7%
45.0%
33.5%
35.6%
402
-
355
156
164
71
71
31
20
17
12
9
2
-
45
42
34
17
13
97
1,558
64
-
(13)
27
(1)
10
41
7
10
-
1
(6)
(4)
(2)
-
5
(4)
1
1
(26)
111
3
39
-
-
-
-
-
-
8
(17)
-
-
-
-
-
-
-
-
-
(2)
31
(9)
(70)
(6)
-
-
-
-
-
-
-
-
-
-
-
-
-
(1)
(5)
(2)
(10)
(103)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(6)
(6)
(65)
-
1
7
-
1
(6)
(2)
(6)
-
(1)
3
14
15
(1)
4
-
-
-
43
7
404
39
343
190
163
73
36
30
32
-
12
6
12
13
49
46
29
13
12
96
1,598
50.0%
20.0%
50.0%
50.0%
50.0%
43.8%
49.5%
32.0%
50.0%
-
50.0%
51.0%
50.0%
50.0%
30.0%
42.7%
45.0%
33.5%
35.6%
Income effects include the profits and losses recognized
It should also be noted that application of the equity me-
by the companies in proportion to the interest that the Enel
thod to the investments in RusEnergoSbyt and PowerCrop
Group holds.
incorporates implicit goodwill of €27 million and €9 million,
Changes in the scope of consolidation mainly reflect:
No evidence of impairment was found for equity in-
> the 20% interest in EGPNA Rocky Caney following the
vestments measured using the equity method.
respectively.
sale of the remaining 80%, which resulted in deconso-
lidation;
> sale of the 42.5% interest held in the Chilean firm Elec-
trogas.
244
Annual Report 2017 22. Equity investments accounted for using the equity method -
€1,598 million
Investments in joint arrangements and associated companies accounted for using the equity method are as follows.
Millions of euro
Joint arrangements
EGPNA Renewable Energy Partners
Rocky Caney Holding
OpEn Fiber
Slovak Power Holding
Enel F2i Solare Italia (formerly Ultor)
Tejo Energia Produção e Distribuição de
Energia Eléctrica
RusEnergoSbyt
Energie Electrique de Tahaddart
Drift Sand Wind Project
Electrogas
Transmisora Eléctrica de Quillota
Centrales Hidroeléctricas de Aysén
Enel Green Power Bungala
PowerCrop
Associates
Elica 2
CESI
Tecnatom
Other
Total
Suministradora Eléctrica de Cádiz
Compañía Eólica Tierras Altas
50.0%
-
50.0%
50.0%
50.0%
43.8%
49.5%
32.0%
35.0%
42.5%
50.0%
51.0%
50.0%
-
30.0%
42.7%
45.0%
33.5%
35.6%
402
-
355
156
164
71
71
31
20
17
12
9
2
-
45
42
34
17
13
97
1,558
64
-
(13)
27
(1)
10
41
7
10
-
1
(6)
(4)
(2)
(4)
-
5
1
1
(26)
111
3
39
8
(17)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2)
31
% held
Income effect
Change in scope
of consol.
Dividends
Reclassifications from/to
assets held for sale
at Dec. 31, 2016
Other changes
% held
at Dec. 31, 2017
-
-
-
-
-
(9)
(70)
(6)
-
-
-
-
-
-
-
(1)
-
(5)
(2)
(10)
(103)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(6)
(6)
(65)
-
1
7
-
1
(6)
(2)
(6)
-
(1)
3
14
15
4
-
(1)
-
-
43
7
404
39
343
190
163
73
36
30
32
-
12
6
12
13
49
46
29
13
12
96
1,598
50.0%
20.0%
50.0%
50.0%
50.0%
43.8%
49.5%
32.0%
50.0%
-
50.0%
51.0%
50.0%
50.0%
30.0%
42.7%
45.0%
33.5%
35.6%
245
Consolidated financial statements The following tables provide a summary of financial infor-
Group not classified as held for sale in accordance with
mation for each joint arrangement and associate of the
IFRS 5.
Millions of euro
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Shareholders’ equity
at Dec. 31, 2017 at Dec. 31, 2016
at Dec. 31, 2017
at Dec. 31, 2016
at Dec. 31, 2017 at Dec. 31, 2016
at Dec. 31, 2017 at Dec. 31, 2016 at Dec. 31, 2017 at Dec. 31, 2016 at Dec. 31, 2017 at Dec. 31, 2016 at Dec. 31, 2017 at Dec. 31, 2016
Joint arrangements
Centrales Hidroeléctricas
de Aysén
OpEn Fiber
Enel F2i Solare Italia
(formerly Ultor)
RusEnergoSbyt
Tejo Energia Produção e
Distribuição de Energia
Eléctrica
Energie Electrique de
Tahaddart
PowerCrop
Associates
Tecnatom
Suministradora Eléctrica
de Cádiz
Compañía Eólica Tierras
Altas
11
699
77
4
250
93
37
74
71
29
22
769
279
6
277
111
40
77
74
35
-
-
163
138
149
27
89
59
24
6
1
240
70
213
134
32
41
58
18
2
11
699
240
142
399
120
126
133
95
35
23
1,009
349
219
411
143
81
135
92
37
129
163
247
168
164
-
-
-
-
10
-
25
23
2
-
-
-
139
9
1
31
23
1
-
-
-
127
102
16
111
43
34
1
299
5
4
129
84
36
61
26
17
2
-
-
-
127
231
26
111
68
57
3
5
299
143
129
45
62
57
40
3
11
699
240
15
94
15
65
38
32
18
710
206
90
98
19
78
52
34
246
Annual Report 2017 Millions of euro
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Shareholders’ equity
at Dec. 31, 2017 at Dec. 31, 2016
at Dec. 31, 2017
at Dec. 31, 2016
at Dec. 31, 2017 at Dec. 31, 2016
at Dec. 31, 2017 at Dec. 31, 2016 at Dec. 31, 2017 at Dec. 31, 2016 at Dec. 31, 2017 at Dec. 31, 2016 at Dec. 31, 2017 at Dec. 31, 2016
Joint arrangements
Centrales Hidroeléctricas
de Aysén
OpEn Fiber
Enel F2i Solare Italia
(formerly Ultor)
RusEnergoSbyt
Tejo Energia Produção e
Distribuição de Energia
Eléctrica
Energie Electrique de
Tahaddart
PowerCrop
Associates
Tecnatom
Suministradora Eléctrica
de Cádiz
Compañía Eólica Tierras
Altas
11
699
77
4
250
93
37
74
71
29
22
769
279
6
277
111
40
77
74
35
-
-
163
138
149
27
89
59
24
6
1
240
70
213
134
32
41
58
18
2
11
699
240
142
399
120
126
133
95
35
23
1,009
349
219
411
143
81
135
92
37
-
-
-
-
-
-
139
-
129
163
10
-
25
23
2
9
1
31
23
1
-
-
-
127
102
16
111
43
34
1
5
299
4
129
84
36
61
26
17
2
-
-
-
127
231
26
111
68
57
3
5
299
143
129
11
699
240
15
18
710
206
90
247
168
164
45
62
57
40
3
94
15
65
38
32
98
19
78
52
34
247
Consolidated financial statements Millions of euro
Total revenue
Income before taxes
Net income from continuing operations
at Dec. 31, 2017 at Dec. 31, 2016
at Dec. 31, 2017
at Dec. 31, 2016
at Dec. 31, 2017
at Dec. 31, 2016
Joint arrangements
Centrales Hidroeléctricas
de Aysén
OpEn Fiber
Enel F2i Solare Italia
(formerly Ultor)
-
-
7
-
15
26
RusEnergoSbyt
2,515
1,991
Tejo Energia Produção e
Distribuição de Energia
Eléctrica
Energie Electrique de
Tahaddart
PowerCrop
Associates
Tecnatom
Suministradora Eléctrica
de Cádiz
Compañía Eólica Tierras
Altas
23. Derivatives
267
207
56
-
57
5
11
56
-
88
15
8
(11)
(11)
7
106
34
30
(5)
(9)
3
2
(6)
(11)
5
86
31
28
(4)
1
8
(2)
(11)
(11)
7
85
23
21
(4)
(9)
3
1
(6)
(9)
5
69
22
19
(4)
1
8
(1)
Millions of euro
Non-current
Current
Derivative financial assets
Derivative financial liabilities
702
2,998
1,609
2,532
2,309
2,260
3,945
3,322
at Dec. 31, 2017
at Dec. 31, 2016
at Dec. 31, 2017
at Dec. 31, 2016
For more information on derivatives classified as non-current financial assets, please see note 44 for hedging derivatives
and trading derivatives.
248
Annual Report 2017 24. Other non-current financial assets - €4,002 million
Millions of euro
Equity investments in other companies
measured at fair value
Equity investments in other companies
Receivables and securities included in
net financial debt (see note 24.1)
Service concession arrangements
Non-current prepaid financial expense
Total
at Dec. 31, 2017
at Dec. 31, 2016
Change
6
52
2,444
1,476
24
4,002
149
47
2,621
1,022
53
3,892
(143)
5
(177)
454
(29)
110
-96.0%
10.6%
-6.8%
44.4%
-54.7%
2.8%
Total non-current financial assets increased by €110 million
for which the market value is not readily measurable; there-
in 2017 as compared with the previous year. In particular,
fore, in the absence of expected sales of these investments,
the change reflects an increase in receivables included in
they have been measured at purchase cost and adjusted for
net financial debt, as discussed in note 24.1, and service
any impairment.
concession agreements related mainly to the consolidation
Equity investments in other companies measured at fair
of Enel Distribuição Goiás.
value and at cost break down as follows:
Equity investments in other companies include investments
Millions of euro
% held
% held
Bayan Resources
Echelon
Galsi
Other
Total
at Dec. 31, 2017
at Dec. 31, 2016
7.1%
17.6%
-
1
17
40
58
10.0%
7.1%
17.6%
139
1
17
39
196
Change
(139)
-
-
1
(138)
The change on the previous year essentially reflects the
to the licensing authorities for the construction and/or
sale of Bayan Resources, a Indonesian company listed on
improvement of public-service infrastructures involved in
the local Indonesian market that operates in the coal-ex-
concession arrangements, which have been recognized in
traction industry.
accordance with IFRIC 12.
Service concession arrangements concern amounts paid
249
Consolidated financial statements 24.1 Other non-current financial assets included in net financial debt
Millions of euro
Securities held to maturity
Financial investments in funds or portfolio management
products at fair value through profit or loss
Securities available for sale
Financial receivables in respect of Spanish electrical system
deficit
Other financial receivables
Total
at Dec. 31, 2017
at Dec. 31, 2016
Change
-
-
382
3
2,059
2,444
-
-
440
15
2,166
2,621
-
-
-
-
(58)
-13.2%
(12)
(107)
(177)
-80.0%
-4.9%
-6.8%
Securities held to maturity and available for sale, as well
vironment in Italy with Resolution 157/2012, of costs incur-
as financial investments in funds or portfolio management
red with the termination of the Electrical Worker Pension
products, represent the financial instruments in which the
Fund in the total amount of €225 million at December 31,
Dutch insurance companies invest a portion of their liqui-
2017 (€280 million at December 31, 2016).
dity.
These decreases were only partly offset by the following
increases:
Other financial receivables decreased by €107 million in
> an increase of €24 million in the financial receivables from
2017 compared with the previous year. The change mainly
EGPNA REP Wind Holdings related to the financing for
reflects the following factors:
development of the new wind farms by the joint venture;
> a decrease of €78 million in the receivable for CO2 emis-
sions allowances connected with “new-entrant” plants;
> an increase of €34 million in relation to the receivable
emerging from the sale of the 50% stake in Slovak Po-
> the reclassification to short term of €44 million of the re-
wer Holding. This receivable has been measured at fair
ceivable in respect of the Energy & Environmental Servi-
value, which was determined based on the pricing for-
ces Fund (formerly the Electricity Equalization Fund), the
mula contained in the agreements with EPH and which
balance of which was €296 million as at December 31,
takes account of a number of parameters, including the
2017 (compared with €340 million at December 31, 2016),
evolution of Slovenské elektrárne’s net financial position,
concerning the reimbursement of costs incurred with the
trends in energy prices on the Slovakian market, the levels
early replacement of electromechanical meters;
of operating efficiency of Slovenské elektrárne based on
> the reclassification to short term of €55 million of the re-
benchmarks established in the agreement, and the enter-
ceivable in respect of the reimbursement, provided for by
prise value of Mochovce units 3 and 4.
the Regulatory Authority for Energy, Networks and the En-
25. Other non-current assets - €1,064 million
Millions of euro
Receivables from institutional market operators
Other receivables
Total
at Dec. 31, 2017
at Dec. 31, 2016
Change
200
864
1,064
106
600
706
94
264
358
88.7%
44.0%
50.7%
Receivables from institutional market operators totaled
payments in the Spanish market, as described in relation
€200 million as at December 31, 2017, and increased
to revenue.
mainly due to recognition of certain positive equalization
250
Annual Report 2017 At December 31, 2017, other receivables mainly regarded
Distribuição Goiás and, in particular (€266 million), the re-
tax receivables in the amount of €261 million (€301 million
ceivable held by this company from Fundo de Aporte a
at December 31, 2016), security deposits in the amount of
Enel Distribuição Goiás (FUNAC) created by the State of
€189 million (€157 million at the end of 2016), and non-mo-
Goiás in order to compensate the Brazilian company in the
netary grants to be received in respect of green certificates
event of disputes arising from operations conducted prior
totaling €61 million (€51 million at December 31, 2016).
to the privatization process of Electrobras.
The change for the year reflects the consolidation of Enel
26. Inventories - €2,722 million
Millions of euro
Raw materials, consumables and supplies:
- fuel
- materials, equipment and other inventories
Total
Environmental certificates:
- CO2 emissions allowances
- green certificates
- white certificates
Total
Buildings available for sale
Payments on account
TOTAL
at Dec. 31, 2017
at Dec. 31, 2016
Change
1,215
1,136
2,351
287
14
1
302
62
7
1,119
812
1,931
412
7
-
419
65
149
2,722
2,564
96
324
420
8.6%
39.9%
21.8%
(125)
-30.3%
7
1
(117)
(3)
(142)
158
-
-
-27.9%
-4.6%
-95.3%
6.2%
Raw materials, consumables and supplies, in the amount
of LV/MV materials to be used in maintenance and operations.
of €2,351 million at December 31, 2017 (€1,931 million in
2016), consist of fuel inventories to cover the requirements
Conversely, CO2 emissions rights declined.
The reduction in payments on account is related almost
of the generation companies and trading activities, as well
entirely to gas purchased on account by Enel Trade in 2016
as materials and equipment for the operation, maintenance
under the take-or-pay formula, which was used in its enti-
and construction of plants and distribution networks.
rety during 2017.
The overall increase in inventories for the year (€158 million)
The buildings available for sale are related to remaining
was mainly due to the increase in purchases of second-gene-
units from the Group’s real estate portfolio and are prima-
ration meters in execution of the Open Meter plan as well as
rily civil buildings.
27. Trade receivables - €14,529 million
Millions of euro
Customers:
- sale and transport of electricity
- distribution and sale of natural gas
- other activities
Total customer receivables
Trade receivables due from associates and joint arrangements
TOTAL
at Dec. 31, 2017
at Dec. 31, 2016
Change
11,123
2,029
1,234
14,386
143
14,529
10,488
1,645
1,258
13,391
115
13,506
635
384
(24)
995
28
1,023
6.1%
23.3%
-1.9%
7.4%
24.3%
7.6%
Trade receivables from customers are recognized net of
million at the end of the year, as compared with an opening
allowances for doubtful accounts, which totaled €2,402
balance of €2,028 million. More specifically, the increase
251
Consolidated financial statements for the period was mainly due to the increase in receiva-
and the rate increases recognized especially in Argentina.
bles recognized in Italy from traders and customers as well
For more details on trade receivables, see note 41, “Finan-
as, in South America, to the greater quantities sold and
cial instruments”.
transported, the consolidation of Enel Distribuição Goiás,
28. Other current financial assets - €4,614 million
Millions of euro
Current financial assets included in debt
Other
Total
at Dec. 31, 2017
at Dec. 31, 2016
Change
4,458
156
4,614
2,924
129
3,053
1,534
27
1,561
52.5%
20.9%
51.1%
28.1 Other current financial assets included in debt - €4,458 million
Millions of euro
at Dec. 31, 2017
at Dec. 31, 2016
Change
Short-term portion of long-term financial receivables
1,094
Receivables for factoring
Securities measured at FVTPL
Securities held to maturity
Securities available for sale
Financial receivables and cash collateral
Other
Total
42
-
-
69
2,664
589
4,458
767
128
1
-
35
1,082
911
2,924
327
(86)
(1)
-
34
1,582
(322)
1,534
42.6%
-67.2%
-
-
97.1%
-
-35.3%
52.5%
Other current financial assets included in net financial debt
fically, at the end of 2017, the increase in receivables for the
totaled €4,458 million (€2,924 million at December 31,
extra-peninsular deficit of €304 million (a debtor position of
2016). The change mainly concerns the increase in financial
€296 million in 2016) was only partly offset by the reduction
receivables recognized by Enel SpA and Enel Finance In-
of €35 million in the peninsular deficit.
ternational following the increase in cash collateral paid to
This increase reflected differences in the way the Spanish
counterparties for over-the-counter derivative contracts on
rate deficit is covered by system operators through the va-
interest and exchange rates.
rious periodic settlements (monthly).
The short-term portion of long-term financial receivables in-
The residual item “Other” reports a decrease of €322 mil-
creased by €327 million due mainly to the increase of €269
lion in financial receivables as a result of the collection of
million in financial receivables in respect of the Spanish
receivables recognized in 2016 by EGPNA for taxable gains
electrical system for financing the rate deficit. More speci-
and related to the sale of Cimarron Bend and Lindhal.
252
Annual Report 2017 29. Other current assets - €2,695 million
Millions of euro
Receivables from institutional market operators
Advances to suppliers
Receivables due from employees
Receivables due from others
Sundry tax receivables
Accrued operating income and prepaid expenses
Revenue for construction contracts
at Dec. 31, 2017
at Dec. 31, 2016
Change
853
217
20
872
517
150
66
1,025
188
37
913
664
146
71
(172)
29
(17)
(41)
(147)
4
(5)
(349)
-16.8%
15.4%
-45.9%
-4.5%
-22.1%
2.7%
-7.0%
-11.5%
Total
2,695
3,044
Receivables from institutional market operators include recei-
Including the portion of receivables classified as long-term
vables in respect of the Italian system in the amount of €575
in the amount of €200 million (€106 million in 2016), recei-
million (€862 million at December 31, 2016) and the Spanish
vables due from institutional market operators at December
system in the amount of €260 million (€147 million at De-
31, 2017 totaled €1,053 million (€1,131 million at December
cember 31, 2016). The reduction in this item for the period,
31, 2016), with payables of €5,029 million (€4,966 million at
recognized by the Italian company operating in the sale of
December 31, 2016).
electricity on the regulated market, is mainly the result of col-
The reduction of €147 million in sundry tax receivables is due
lection of the receivable on white certificates in 2016 and of
to the decreased receivable for value-added tax, particularly
the receivable resulting from the assessment of the equaliza-
in Italy as a result of the split-payment mechanism introduced
tion of energy purchases.
into Italian tax law.
30. Cash and cash equivalents - €7,021 million
Cash and cash equivalents, detailed in the table below, are
essentially in respect of deposits pledged to secure tran-
not restricted by any encumbrances, apart from €80 million
sactions carried out.
Millions of euro
Bank and post office deposits
Cash and cash equivalents on hand
Other liquid investments
Total
at Dec. 31, 2017
at Dec. 31, 2016
Change
6,486
343
192
7,021
7,777
298
215
8,290
(1,291)
45
(23)
(1,269)
-16.6%
15.1%
-10.7%
-15.3%
253
Consolidated financial statements
31. Assets and disposal groups classified as held for sale -
€1,970 million and €1,729 million
Changes in assets held for sale during 2017 may be broken down as follows.
Millions of euro
Property, plant and equipment
Intangible assets
Goodwill
Deferred tax assets
Investments accounted for using the
equity method
Non-current financial assets
Other non-current assets
Cash and cash equivalents and current
assets
Total
Reclassification
from/to current
and non-current
assets
1,210
90
38
98
6
-
3
232
1,677
at
Dec. 31, 2016
6
-
-
-
-
5
-
-
11
Changes in liabilities in 2017 were as follows.
Millions of euro
Disposals and
changes in
consolidation
Impairment
losses
Other
changes
at
Dec. 31, 2017
2
-
-
-
-
-
-
-
2
-
-
-
-
-
-
-
-
-
283
1,501
(3)
-
11
-
(5)
(1)
(5)
280
87
38
109
6
-
2
227
1,970
Long-term borrowings
Post-employment and other employee
benefits
Provisions for risks and charges, non-
current portion
Deferred tax liabilities
Non-current financial liabilities
Other non-current liabilities
Short-term borrowings
Other current financial liabilities
Provisions for risks and charges, current
portion
Trade payables and other current liabilities
Total
at
Dec. 31, 2016
Reclassification
from/to current and
non-current assets
Disposals and
changes in
consolidation Other changes
at
Dec. 31, 2017
-
-
-
-
-
-
-
-
-
-
-
416
-
-
118
-
58
980
1
-
316
1,889
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5)
-
-
-
1
-
416
-
-
113
-
58
980
2
-
(156)
(160)
160
1,729
Assets and liabilities held for sale at December 31, 2017
those (including net working capital) in respect of the
therefore amount to €1,970 million and €1,729 million re-
eight projects and the loans obtained by the Group in
spectively and regard:
order to build the plants;
> eight Mexican project companies that own three opera-
> the project companies associated with the Kafireas wind
tional plants and five plants under construction for which
farm, for which Enel Green Power Hellas has signed a
Enel Green Power has signed agreements for the sale of
joint venture agreement (JVA) with a partner that governs
80% of their share capital (“Kino Project”). More speci-
the terms and management of 100% of the projects con-
fically, the assets falling within the scope of IFRS 5 are
nected with that wind farm.
254
Annual Report 2017 32. Shareholders’ equity - €52,161 million
32.1 Equity attributable to shareholders of the Parent Company - €34,795
million
Share capital - €10,167 million
At December 31, 2017, the share capital of Enel SpA – con-
sidering that as at December 31, 2016 there were no ap-
proved stock option plans (and thus no options exercised) –
amounted to €10,166,679,946 fully subscribed and paid up,
represented by the same number of ordinary shares with a
Reserve from translation of financial
statements in currencies other than euro -
€(2,614) million
The decrease for the year, equal to €1,609 million, is due to
the net appreciation of the functional currency against the fo-
reign currencies used by subsidiaries.
par value of €1.00 each.
At December 31, 2017, based on the shareholders regi-
ster and the notices submitted to CONSOB and received
by the company pursuant to Article 120 of Legislative
Reserve from measurement of cash flow
hedge financial instruments -
€(1,588) million
This includes the net charges recognized in equity from the
Decree 58 of February 24, 1998, as well as other avai-
measurement of cash flow hedge derivatives. The cumulative
lable information, the only shareholders with interests of
tax effect is equal to €456 million.
greater than 3% in the company’s share capital were the
Ministry for the Economy and Finance (with a 23.585%
stake) and BlackRock Inc. (with a 5.615% stake held at
August 15, 2017 through subsidiaries for asset manage-
ment purposes).
Other reserves - €3,348 million
Share premium reserve - €7,489 million
Pursuant to Article 2431 of the Italian Civil Code, the share
premium reserve contains, in the case of the issue of sha-
res at a price above par, the difference between the issue
price of the shares and their par value, including those re-
sulting from conversion from bonds. The reserve, which is
a capital reserve, may not be distributed until the legal re-
serve has reached the threshold established under Article
2430 of the Italian Civil Code.
Legal reserve - €2,034 million
The legal reserve is formed of the part of net income that,
pursuant to Article 2430 of the Italian Civil Code, cannot be
distributed as dividends.
Other reserves - €2,262 million
These include €2,215 million related to the remaining portion
of the value adjustments carried out when Enel was transfor-
med from a public entity to a joint-stock company.
Pursuant to Article 47 of the Uniform Income Tax Code (Testo
Unico Imposte sul Reddito), this amount does not constitute
taxable income when distributed.
Reserve from measurement of financial
instruments available for sale - €(23) million
This includes net unrealized income from the measurement at
fair value of financial assets.
The negative change of €129 million for the year is mainly at-
tributable to the sale of the 10% stake in Bayan Resources.
There is no cumulative tax effect on the reserve in view of
the tax rules in the countries in which those instruments
are held.
Reserve from equity investments
accounted for using the equity method -
€(5) million
The reserve reports the share of comprehensive income to
be recognized directly in equity of companies accounted for
using the equity method. The cumulative tax effect is equal to
€17 million.
Reserve from remeasurement of net
liabilities/(assets) of defined benefit plans -
€(646) million
The reserve, which was created in previous years, includes
all actuarial gains and losses, net of tax effects. The chan-
ge is attributable to the decrease in net actuarial losses
recognized during the period, mainly reflecting changes in
the discount rate. The cumulative tax effect is equal to €94
million.
Reserve from disposal of equity interests
without loss of control - €(2,398) million
This item mainly reports:
> the gain posted on the public offering of Enel Green Po-
255
Consolidated financial statements wer shares, net of expenses associated with the dispo-
in companies already controlled in South America (genera-
sal and the related taxation;
ted in previous years by the purchase of additional stakes
> the sale of minority interests recognized as a result of
in Enel Distribución Rio, Ampla Investimentos e Serviços,
the Enersis capital increase;
Eléctrica Cabo Blanco, Enel Distribución Ceará, Generan-
> the capital loss, net of expenses associated with the di-
des Perú, Enersis, Endesa Latinoamérica and Enel Green
sposal and the related taxation, from the public offering
Power SpA) exceeds the value of the equity acquired.
of 21.92% of Endesa;
The change for the period, equal to €7 million, regards the
> the income from the disposal of the minority interest
income from the purchase of a non-controlling interest in
in Enel Green Power North America Renewable Energy
Enel Distribución Perú.
Partners;
> the effects of the merger into Enel Américas of Endesa
Américas and Chilectra Américas;
> the disposal to third parties of a minority interest without
loss of control in Enel Green Power North America Rene-
wable Energy Partners.
Reserve from transactions in non-
controlling interests - €(1,163) million
The reserve reports the amount by which the purchase
price in purchases from third parties of additional stakes
Retained earnings and loss carried forward -
€21,280 million
The reserve reports earnings from previous years that have
not been distributed or allocated to other reserves.
The table below shows the changes in gains and losses
recognized directly in other comprehensive income, inclu-
ding non-controlling interests, with specific reporting of
the related tax effects.
at Dec. 31, 2016
Change
at Dec. 31, 2017
Of which
shareholders
of the Parent
Company
Of which
non-
controlling
interests
Total
Gains/
(Losses)
recognized
in equity for
the year
Released
to income
statement Taxes Total
Of which
shareholders
of the Parent
Company
Of which
non-
controlling
interests Total
Of which
shareholders
of the Parent
Company
Of which
non-
controlling
interests
(2,903)
(988)
(1,915)
(2,519)
-
-
(2,519)
(1,609)
(910) (5,422)
(2,597)
(2,825)
(1,731)
(1,438)
(293)
(1,417)
1,278
67
(72)
(140)
68 (1,803)
(1,578)
(225)
105
106
(1)
(14)
(118)
3
(129)
(129)
-
(24)
(23)
(1)
(62)
(61)
(1)
4
8
(2)
10
7
3
(52)
(54)
2
(927)
(724)
(203)
99
-
(25)
74
60
14
(854)
(664)
(189)
(5,518)
(3,105)
(2,413)
(3,847)
1,168
43 (2,636)
(1,811)
(825) (8,154)
(4,916)
(3,238)
Millions of euro
Reserve from
translation
of financial
statements in
currencies other
than euro
Reserve from
measurement
of cash flow
hedge financial
instruments
Reserve from
measurement
of financial
instruments
available for sale
Share of OCI
of associates
accounted for
using the equity
method
Remeasurements
of net employee
benefit liabilities/
(assets)
Total gains/
(losses)
recognized in
equity
256
Annual Report 2017 32.2 Dividends
Net dividends paid in 2016
Dividends for 2015
Interim dividends for 2016 (1)
Special dividends
Total dividends paid in 2016
Net dividends paid in 2017
Dividends for 2016
Interim dividends for 2017 (2)
Special dividends
Total dividends paid in 2017
Amount distributed
(millions of euro)
Dividend
per share (euro)
1,627
-
-
1,627
1,830
-
-
1,830
0.16
-
-
0.16
-
0.18
-
-
0.18
(1) Approved by the Board of Directors on November 10, 2016 and paid as from January 25, 2017 (interim dividend of €0.09 per share for a total of €915
million).
(2) Approved by the Board of Directors on November 8, 2017 and paid as from January 24, 2018 (interim dividend of €0.105 per share for a total of €1,068
million).
At its meeting of November 8, 2017, of the Board of Di-
ry return for shareholders and ensure access to external
rectors approved the distribution of an interim dividend of
sources of financing, in part by maintaining an adequate
€0.105 per share, for a total of €1,068 million. That interim
rating.
dividend, gross of any withholding tax, was paid as of Ja-
In this context, the Group manages its capital structure
nuary 24, 2018.
Capital management
The Group’s objectives for managing capital comprise sa-
feguarding the business as a going concern, creating value
for stakeholders and supporting the development of the
and adjusts that structure when changes in economic con-
ditions so require. There were no substantive changes in
objectives, policies or processes in 2017.
To this end, the Group constantly monitors developments
in the level of its debt in relation to equity. The situation
at December 31, 2017 and 2016 is summarized in the fol-
Group. In particular, the Group seeks to maintain an ade-
lowing table.
quate capitalization that enables it to achieve a satisfacto-
Millions of euro
Non-current financial position
Net current financial position
Non-current financial receivables and long-term securities
Net financial debt
Equity attributable to shareholders of the Parent Company
Non-controlling interests
Shareholders’ equity
Debt/equity ratio
at Dec. 31, 2017
at Dec. 31, 2016
42,439
(2,585)
(2,444)
37,410
34,795
17,366
52,161
0.72
41,336
(1,162)
(2,621)
37,553
34,803
17,772
52,575
0.71
See note 39 for a breakdown of the individual items in the table.
Change
1,103
(1,423)
177
(143)
(8)
(406)
(414)
-
257
Consolidated financial statements 32.3 Non-controlling interests - €17,366 million
The following table reports the composition of non-controlling interests by Division.
Millions of euro
Non-controlling interests
Net income attributable
to non-controlling interests
Italy
Iberia
South America
Europe and North Africa
North and Central America
Sub-Saharan Africa and Asia
Total
at Dec. 31, 2017
at Dec. 31, 2016
at Dec. 31, 2017
at Dec. 31, 2016
4
6,954
8,934
1,002
387
85
4
6,957
9,307
1,017
409
78
-
396
1,020
67
60
7
-
352
662
99
104
1
17,366
17,772
1,550
1,217
The decrease in non-controlling interests mainly reflects
and Endesa, only partly offset by the recognition of net in-
exchange rate effects and dividends from South America
come for the year.
33. Borrowings
Millions of euro
Non-current
Current
Long-term borrowings
Short-term borrowings
Total
at Dec. 31, 2017
at Dec. 31, 2016
at Dec. 31, 2017
at Dec. 31, 2016
42,439
-
42,439
41,336
-
41,336
7,000
1,894
8,894
4,384
5,372
9,756
For more details on the nature of borrowings, please see note 41 “Financial instruments”.
258
Annual Report 2017 34. Employee benefits - €2,407 million
The Group provides its employees with a variety of bene-
bargaining agreement prior to the changes introduced
fits, including deferred compensation benefits, additional
with the framework agreement noted earlier and (ii) for
months’ pay for having reached age limits or eligibility for
employees of the former Catalan companies (Fecsa/En-
old-age pension, loyalty bonuses for achievement of senio-
her/HidroEmpordà). Both are defined benefit plans and
rity milestones, supplemental retirement and healthcare
benefits are fully ensured, with the exception of the for-
plans, residential electricity discounts and similar benefits.
mer plan for benefits in the event of the death of a reti-
More specifically:
red employee. Finally, the Brazilian companies have also
> for Italy, the item “pension benefits” regards estimated
established defined benefit plans;
accruals made to cover benefits due under the supple-
> the item “electricity discount” comprises benefits regar-
mental retirement schemes of retired executives and the
ding electricity supply associated with foreign compa-
benefits due to personnel under law or contract at the
nies. For Italy, that benefit, which was granted until the
time the employment relationship is terminated. For the
end of 2015 to retired employees only, was unilaterally
foreign companies, the item reports post-employment
cancelled;
benefits, of which the most material regard the pension
> the item “health insurance” reports benefits for current
benefit schemes of Endesa in Spain, which break down
or retired employees covering medical expenses;
into three types that differ on the basis of employee se-
> the item “other benefits” mainly regards the loyalty bo-
niority and company. In general, under the framework
nus, which is adopted in various countries and for Italy
agreement of October 25, 2000, employees participa-
is represented by the estimated liability for the benefit
te in a specific defined contribution pension plan and,
entitling employees covered by the electricity workers
in cases of disability or death of employees in service,
national collective bargaining agreement to a bonus for
a defined benefit plan which is covered by appropriate
achievement of seniority milestones (25th and 35th year
insurance policies. In addition, Endesa has two other
of service). It also includes other incentive plans, which
limited-enrollment plans (i) for current and retired Endesa
provide for the award to certain company managers of a
employees covered by the electricity industry collective
monetary bonus subject to specified conditions.
259
Consolidated financial statements The following table reports changes in the defined benefit
2016, respectively, as well as a reconciliation of that obliga-
obligation for post-employment and other long-term em-
tion with the actuarial liability.
ployee benefits at December 31, 2017 and December 31,
Millions of euro
2017
2016
2016
Pension
benefits
Electricity
discount
Health
insurance
Other
benefits
Total
Pension
benefits
Electricity
discount
Health
insurance
Other
benefits
CHANGES IN ACTUARIAL OBLIGATION
Actuarial obligation at the start of the year
2,440
847
231
284
3,802
Current service cost
Interest expense
Actuarial (gains)/losses arising from changes in
demographic assumptions
Actuarial (gains)/losses arising from changes in financial
assumptions
Experience adjustments
Past service cost
(Gains)/Losses arising from settlements
Exchange differences
Employer contributions
Employee contributions
Benefits paid
Other changes
Liabilities classified as held for sale
Actuarial obligation at year end (A)
CHANGES IN PLAN ASSETS
Fair value of plan assets at the start of the year
Interest income
Expected return on plan assets excluding amounts
included in interest income
Exchange differences
Employer contributions
Employee contributions
Benefits paid
Other payments
Change in scope of consolidation
Fair value of plan assets at year end (B)
EFFECT OF ASSET CEILING
Asset ceiling at the start of the year
Interest income
Changes in asset ceiling
Exchange differences
Change in scope of consolidation
Asset ceiling at year end (C)
17
118
2
54
(35)
5
-
(124)
-
1
(226)
161
-
2,413
1,272
83
53
(94)
142
1
(226)
-
86
1,317
54
4
16
(9)
-
65
5
16
-
30
(138)
-
-
(1)
-
-
(22)
2
-
739
-
-
-
-
22
-
(22)
-
-
-
-
-
-
-
-
-
5
11
(2)
3
15
-
-
(12)
-
-
(12)
14
-
253
-
-
-
-
12
-
(12)
-
-
-
-
-
-
-
-
-
47
7
(1)
2
(5)
-
-
(6)
-
-
74
152
(1)
89
(163)
5
-
(143)
-
1
(79)
(339)
5
-
182
-
254
3,659
-
-
-
-
23
-
(23)
-
-
-
-
-
-
-
-
-
1,272
83
53
(94)
199
1
(283)
-
86
1,317
54
4
16
(9)
-
65
2,126
14
108
221
126
2
9
1
2
-
1
(194)
24
-
2,440
1,110
75
40
104
136
1
-
-
(194)
1,272
(20)
57
5
13
-
55
729
4
19
97
22
-
-
-
-
-
1
3
-
(28)
847
28
(28)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
3,337
73
145
347
13
147
1
3
2
-
1
(298)
32
-
3,802
1,110
75
40
104
200
1
-
-
(258)
1,272
(20)
57
5
13
-
55
285
50
10
(14)
(62)
284
22
(22)
7
1
1
-
6
-
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
197
5
11
(2)
19
(4)
1
14
-
-
-
(14)
4
-
231
14
(14)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Net liability in balance sheet (A-B+C)
1,161
739
253
254
2,407
1,223
847
231
284
2,585
260
Annual Report 2017
Millions of euro
2017
2016
2016
Pension
benefits
Electricity
discount
Health
insurance
Other
benefits
Total
Pension
benefits
Electricity
discount
Health
insurance
Other
benefits
(124)
(1)
(12)
(6)
(143)
CHANGES IN ACTUARIAL OBLIGATION
Actuarial obligation at the start of the year
Current service cost
Interest expense
Actuarial (gains)/losses arising from changes in
demographic assumptions
Actuarial (gains)/losses arising from changes in financial
(Gains)/Losses arising from settlements
assumptions
Experience adjustments
Past service cost
Exchange differences
Employer contributions
Employee contributions
Benefits paid
Other changes
Liabilities classified as held for sale
Actuarial obligation at year end (A)
CHANGES IN PLAN ASSETS
Fair value of plan assets at the start of the year
Interest income
Expected return on plan assets excluding amounts
included in interest income
Exchange differences
Employer contributions
Employee contributions
Benefits paid
Other payments
Change in scope of consolidation
Fair value of plan assets at year end (B)
EFFECT OF ASSET CEILING
Asset ceiling at the start of the year
Interest income
Changes in asset ceiling
Exchange differences
Change in scope of consolidation
Asset ceiling at year end (C)
2,440
17
118
54
(35)
5
2
1
-
-
-
(226)
161
2,413
1,272
83
53
(94)
142
1
(226)
-
86
1,317
54
4
16
(9)
-
65
847
5
16
30
(138)
(22)
2
-
739
22
(22)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(79)
(339)
254
3,659
12
23
(12)
(23)
(283)
47
7
(1)
2
(5)
5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
74
152
(1)
89
(163)
5
-
-
1
182
-
1,272
83
53
(94)
199
1
1,317
-
86
54
4
16
(9)
-
65
5
11
(2)
3
15
(12)
14
253
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
231
284
3,802
2,126
729
197
14
108
2
221
9
1
2
126
-
1
(194)
24
-
2,440
1,110
75
40
104
136
1
(194)
-
-
1,272
57
5
(20)
13
-
55
4
19
-
97
22
-
-
1
-
-
(28)
3
-
847
-
-
-
-
28
-
(28)
-
-
-
-
-
-
-
-
-
5
11
(2)
19
(4)
1
-
14
-
-
(14)
4
-
231
-
-
-
-
14
-
(14)
-
-
-
-
-
-
-
-
-
285
50
7
1
10
(14)
1
-
6
-
-
(62)
1
-
284
-
-
-
-
22
-
(22)
-
-
-
-
-
-
-
-
-
Total
3,337
73
145
1
347
13
3
2
147
-
1
(298)
32
-
3,802
1,110
75
40
104
200
1
(258)
-
-
1,272
57
5
(20)
13
-
55
Net liability in balance sheet (A-B+C)
1,161
739
253
254
2,407
1,223
847
231
284
2,585
261
Consolidated financial statements
Millions of euro
(Gains)/Losses charged to profit or loss
Service cost and past service cost
Net interest expense
(Gains)/Losses arising from settlements
Actuarial (gains)/losses on other long-term benefits
Other changes
Total
Millions of euro
Change in (gains)/losses in OCI
Return on plan assets excluding amounts included in interest income
Actuarial (gains)/losses on defined benefit plans
Changes in asset ceiling excluding amounts included in interest income
Other changes
Total
2017
2016
40
73
-
39
(4)
148
34
78
2
42
(4)
152
2017
2016
(53)
(71)
16
9
(99)
(40)
365
(20)
(9)
296
The change in cost recognized through profit or loss was
the year is reported net of the fair value of plan assets,
equal to €4 million. The impact on profit or loss is therefore
amounting to €1,317 million at December 31, 2017. Those
essentially in line with 2016.
assets, which are entirely in Spain and Brazil, break down
The liability recognized in the balance sheet at the end of
as follows.
2017
4%
37%
5%
-
-
54%
100%
2016
2%
35%
5%
1%
-
57%
100%
Investments quoted in active markets
Equity instruments
Fixed-income securities
Investment property
Other
Unquoted investments
Assets held by insurance undertakings
Other
Total
262
Annual Report 2017 The main actuarial assumptions used to calculate the liabi-
which are consistent with those used the previous year, are
lities in respect of employee benefits and the plan assets,
set out in the following table.
Italy
Iberia
South
America
Other
Italy
Iberia
South
America
Other
Discount rate
Inflation rate
Rate of wage
increases
0.20%-
1.50%
1.50%
1.50%-
3.50%
2017
0.65%-
1.67%
2.00%
2.00%
Rate of increase in
healthcare costs
Expected rate of
return on plan assets
2.50%
3.20%
-
1.65%
5.00%-
9.93%
3.00%-
4.25%
3.00%-
7.38%
3.00%-
8.00%
9.72%-
9.78%
1.50%-
7.18%
1.50%-
4.22%
3.00%-
4.22%
-
-
0.30%-
1.40%
1.40%
1.40%-
3.40%
2016
0.64%-
1.75%
2.00%
2.00%
2.40%
3.20%
-
1.74%
4.70%-
12.31%
3.00%-
6.00%
3.00%-
9.19%
3.50%-
9.19%
12.20%-
12.31%
1.40%-
8.36%
1.40%-
4.84%
2.90%-
4.84%
-
-
The following table reports the outcome of a sensitivity
of the year in the actuarial assumptions used in estimating
analysis that demonstrates the effects on the defined be-
the obligation.
nefit obligation of changes reasonably possible at the end
Millions of euro
Pension
benefits
Electricity
discount
Health
insurance
Other
benefits
Pension
benefits
Electricity
discount
Health
insurance
Other
benefits
at Dec. 31, 2017
at Dec. 31, 2016
Decrease of 0.5% in
discount rate
Increase of 0.5% in
discount rate
Increase of 0.5% in
inflation rate
Decrease of 0.5% in
inflation rate
Increase of 0.5% in
remuneration
Increase of 0.5% in
pensions currently being
paid
Increase of 1% in
healthcare costs
Increase of 1 year in life
expectancy of active
and retired employees
155
(121)
(20)
47
32
35
-
54
60
(55)
(63)
61
(1)
(1)
-
25
15
(18)
(14)
12
-
-
28
147
4
159
75
12
4
(10)
(136)
(69)
(15)
(10)
(9)
30
74
2
2
1
1
(3)
-
(3)
(20)
(67)
(18)
(10)
8
12
-
50
-
-
-
12
-
-
20
5
1
(3)
-
(3)
The sensitivity analysis used an approach that extrapolates
The contributions expected to be paid into defined benefit
the effect on the defined benefit obligation of reasonable
plans in the subsequent year amount to €34 million.
changes in an individual actuarial assumption, leaving the
other assumptions unchanged.
263
Consolidated financial statements The following table reports expected benefit payments in the coming years for defined benefit plans.
Millions of euro
Within 1 year
In 1-2 years
In 2-5 years
More than 5 years
at Dec. 31, 2017
at Dec. 31, 2016
197
184
591
1,030
204
186
589
1,058
35. Provisions for risks and charges - €6,031 million
Millions of euro
Accruals
Reversals Utilization
Unwinding of
interest
Change in scope
of consolidation
Translation
adjustment
Other
Millions of euro
Provision for litigation, risks and other charges:
- nuclear decommissioning
- retirement, removal and site restoration
- litigation
- environmental certificates
- taxes and duties
- other
Total
Provision for early retirement incentives
TOTAL
at Dec. 31,
2016
Provision for
litigation, risks and
other charges:
- nuclear
decommissioning
567
-
-
-
- retirement,
removal and site
restoration
- litigation
- environmental
certificates
- taxes and duties
- other
Total
Provision for
early retirement
incentives
TOTAL
264
789
734
7
346
1,629
4,072
2,342
6,414
32
138
29
60
374
633
48
681
(16)
(139)
(4)
(28)
(274)
(461)
(41)
(92)
(3)
(59)
(193)
(388)
(40)
(501)
(422)
(810)
at Dec. 31, 2017
at Dec. 31, 2016
Non-current
Current
Non-current
Current
538
814
861
-
300
778
3,291
1,530
4,821
-
64
70
29
23
637
823
387
1,210
567
754
698
-
290
770
3,079
1,902
4,981
-
35
36
7
56
859
993
440
1,433
at Dec. 31,
2017
7
12
40
-
9
109
177
5
182
-
-
(36)
538
(11)
168
-
2
58
217
-
217
(16)
(79)
-
(4)
129
161
-
(3)
(57)
(231)
(156)
20
-
(156)
(16)
4
878
931
29
323
1,415
4,114
1,917
6,031
Annual Report 2017 Nuclear decommissioning provision
At December 31, 2017, the provision reflected solely the
Provision for environmental
certificates
costs that will be incurred at the time of decommissioning
The provision for “environmental certificates” covers costs
of nuclear plants by Endesa in respect of Enresa, a Spanish
in respect of shortfalls in the environmental certificates
public enterprise responsible for such activities in accordan-
need for compliance with national or supranational envi-
ce with Royal Decree 1349/2003 and Law 24/2005. Quan-
ronmental protection requirements and mainly regards Enel
tification of the costs is based on the standard contract
Energia and Enel Produzione.
between Enresa and the electricity companies approved by
the Ministry for the Economy in September 2001, which re-
gulates the retirement and closing of nuclear power plants.
The time horizon envisaged, three years, corresponds to
the period from the termination of power generation to the
transfer of plant management to Enresa (so-called post-ope-
rational costs) and takes into account, among the various
assumptions used to estimate the amount, the quantity of
unused nuclear fuel expected at the date of closure of each
of the Spanish nuclear plants on the basis of the provisions
of the concession agreement.
Non-nuclear plant retirement and site
restoration provision
Provision for charges in respect of
taxes and duties
The provision for “charges in respect of taxes and duties”
reports the estimated liability deriving from tax disputes
concerning direct and indirect taxes. The balance of the pro-
vision also includes the provision for current and potential
disputes concerning local property tax – whether the Im-
posta Comunale sugli Immobili (“ICI”) or the new Imposta
Municipale Unica (“IMU”) – in Italy. The Group has taken
due account of the criteria introduced with circular 6/2012 of
the Public Land Agency (which resolved interpretive issues
concerning the valuation methods for movable assets con-
sidered relevant for property registry purposes, including
The provision for “non-nuclear plant retirement and site
certain assets typical to generation plants, such as turbines)
restoration” represents the present value of the estimated
in estimating the liability for such taxes, both for the purpo-
cost for the retirement and removal of non-nuclear plants
ses of quantifying the probable risk associated with pending
where there is a legal or constructive obligation to do so.
litigation and generating a reasonable valuation of probable
The provision mainly regards the Endesa Group, Enel Produ-
future charges on positions that have not yet been assessed
zione and the companies in South America.
by Land Agency offices and municipalities.
Litigation provision
Other provisions
The “litigation” provision covers contingent liabilities in re-
“Other” provisions cover various risks and charges, mainly
spect of pending litigation and other disputes. It includes
in connection with regulatory disputes and disputes with
an estimate of the potential liability relating to disputes that
local authorities regarding various duties and fees or other
arose during the period, as well as revised estimates of the
charges.
potential costs associated with disputes initiated in prior pe-
The decrease of €214 million for the year is mainly due to
riods. The estimates are based on the opinions of internal
the reversal of provisions for the dispute with the Region
and external legal counsel. The balance for litigation mainly
of Sardinia concerning the Tirso 1 and Tirso 2 plants, the re-
regards disputes concerning service quality and disputes
versal of the provision recognized by Enel Trade for onerous
with employees, end users or suppliers of the companies in
contracts for the supply of natural gas and the reversal of the
Spain (€201 million), Italy (€199 million) and South America
risk provision recognized for regulatory disputes concerning
(€520 million).
the self-consumption of power generators in Spain.
The increase compared with the previous year, equal to
€197 million, mainly reflects the change in the scope of
consolidation with the acquisition of Enel Distribuição Goiás
and provisions for disputes with employees, partly offset by
reversals and uses, primarily in Iberia and Italy.
Provision for early retirement
incentives
The “provision for early retirement incentives” includes the
estimated charges related to binding agreements for the vo-
265
Consolidated financial statements luntary termination of employment contracts in response to
In Spain, the provisions regard the expansion, in 2015, of
organizational needs. The reduction of €425 million for the
the Acuerdo de Salida Voluntaria (ASV) introduced in Spain
year reflects, among other factors, uses for incentive provi-
in 2014. The ASV mechanism was agreed in Spain in con-
sions established in Spain and Italy in previous years.
nection with Endesa’s restructuring and reorganization plan,
In Italy, the latter is largely associated with the union-com-
which provides for the suspension of the employment con-
pany agreements signed in September 2013 and Decem-
tract with tacit annual renewal. With regard to that plan, on
ber 2015, implementing, for a number of companies in Italy,
December 30, 2014, the company had signed an agreement
the mechanism provided for under Article 4, paragraphs 1-7
with union representatives in which it undertook to not exer-
ter, of Law 92/2012 (the Fornero Act). The latter agreement
cise the option to request a return to work at subsequent
envisages the voluntary termination, in Italy, of about 6,100
annual renewal dates for the employees participating in the
employees in 2016-2020.
mechanism.
36. Other non-current liabilities - €2,003 million
Millions of euro
Accrued operating expenses and deferred income
Other items
Total
at Dec. 31, 2017
at Dec. 31, 2016
Change
929
1,074
2,003
973
883
1,856
(44)
191
147
-4.5%
21.6%
7.9%
At December 31, 2017 the item was essentially accounted
million, and the reclassification from the early retirement
for by revenue for electricity and gas connections and
incentive provision of amounts to be paid to employees
grants received in respect of specific assets. The increase
who terminated their employment in implementation of
in “Other items” mainly regarded an increase in a number
the provisions of Article 4 of Law 92/2012 (€87 million net
of regulatory liabilities in Argentina and Brazil, totaling €113
of payments made).
37. Trade payables - €12,671 million
The item amounted to €12,671 million (€12,688 million in
More specifically, trade payables falling due in less than
2016) and includes payables in respect of electricity supplies,
12 months amounted to €11,965 million (€12,230 million
fuel, materials, equipment associated with tenders and other
in 2016), while those falling due in more than 12 months
services.
amounted to €706 million (€458 million in 2016).
38. Other current financial liabilities - €954 million
at Dec. 31, 2017
at Dec. 31, 2016
Change
857
97
954
842
422
1,264
15
(325)
(310)
1.8%
-77.0%
-24.5%
Millions of euro
Deferred financial liabilities
Other items
Total
266
Annual Report 2017 The decrease in other current financial liabilities mainly re-
to the financial statements for more information.
flects a decline in financial debt (€296 million) as a result of
“Deferred financial liabilities” regard accrued expense on
the change in the method used to finance the rate deficit in
bonds.
the Spanish electrical system. See note 28.1 in these notes
39. Net financial position and long-term financial receivables
and securities - €37,410 million
The following table shows the net financial position and long-term financial receivables and securities on the basis of the
items on the consolidated balance sheet.
Millions of euro
Long-term borrowings
Short-term borrowings
Other current financial payables (1)
Current portion of long-term borrowings
Other non-current financial assets included in debt
Other current financial assets included in debt
Cash and cash equivalents
Total
Notes at Dec. 31, 2017
at Dec. 31, 2016
Change
41
41
41
24.1
28.1
30
42,439
1,894
-
7,000
(2,444)
(4,458)
(7,021)
37,410
41,336
1,103
2.7%
5,372
296
4,384
(2,621)
(2,924)
(8,290)
37,553
(3,478)
-64.7%
(296)
2,616
177
(1,534)
1,269
(143)
-
59.7%
6.8%
52.5%
15.3%
-0.4%
(1) Includes current financial payables included in other current financial liabilities.
267
Consolidated financial statements
Pursuant to the CONSOB instructions of July 28, 2006, the
financial debt as provided for in the presentation methods
following table reports the net financial position at Decem-
of the Enel Group.
ber 31, 2017, and December 31, 2016, reconciled with net
at Dec. 31, 2017
at Dec. 31, 2016
Change
343
6,486
192
69
7,090
3,253
42
1,094
4,389
(249)
(889)
(1,346)
(5,429)
(225)
(756)
(8,894)
2,585
(8,310)
(32,285)
(1,844)
(42,439)
(39,854)
2,444
(37,410)
298
7,777
215
36
8,326
1,993
128
767
2,888
(909)
(3,059)
(749)
(3,446)
(189)
(1,700)
(10,052)
1,162
(7,446)
(32,401)
(1,489)
(41,336)
(40,174)
2,621
(37,553)
45
15.1%
(1,291)
-16.6%
(23)
33
-10.7%
91.7%
(1,236)
-14.8%
1,260
63.2%
(86)
327
1,501
660
2,170
(597)
-67.2%
42.6%
52.0%
72.6%
70.9%
-79.7%
(1,983)
-57.5%
(36)
944
1,158
1,423
(864)
116
(355)
(1,103)
320
(177)
143
-19.0%
-55.5%
11.5%
-
-11.6%
0.4%
-23.8%
-2.7%
0.8%
-6.8%
0.4%
Millions of euro
Cash and cash equivalents on hand
Bank and post office deposits
Other investments of liquidity
Securities
Liquidity
Short-term financial receivables
Factoring receivables
Short-term portion of long-term financial receivables
Current financial receivables
Short-term bank debt
Commercial paper
Short-term portion of long-term bank debt
Bonds issued (short-term portion)
Other borrowings (short-term portion)
Other short-term financial payables (1)
Total short-term financial debt
Net short-term financial position
Debt to banks and financing entities
Bonds
Other borrowings
Long-term financial position
NET FINANCIAL POSITION as per CONSOB instructions
Long-term financial receivables and securities
NET FINANCIAL DEBT
(1) Includes current financial payables included in other current financial liabilities.
268
Annual Report 2017 40. Other current liabilities - €12,462 million
Millions of euro
Payables due to customers
Payables due to institutional market operators
Payables due to employees
Other tax payables
Payables due to social security institutions
Contingent consideration
Payables for put options granted to minority shareholders
Current accrued expenses and deferred income
Payables for acquisition of equity investments
Liabilities for construction contracts
Payables for dividends
Other
Total
at Dec. 31, 2017 at Dec. 31, 2016
Change
1,824
4,765
422
1,323
218
56
1
302
-
364
1,541
1,646
1,785
4,617
436
1,071
215
85
403
325
-
358
1,410
1,436
12,462
12,141
39
148
(14)
252
3
(29)
(402)
(23)
-
6
131
210
321
2.2%
3.2%
-3.2%
23.5%
1.4%
-34.1%
-
-7.1%
-
1.7%
9.3%
14.6%
2.6%
“Payables due to customers” include €984 million (€1,038
million (€1,285 million at December 31, 2016) and on the
million at December 31, 2016) in security deposits rela-
South American market amounting to €324 million (€263
ted to amounts received from customers in Italy as part
million at December 31, 2016).
of electricity and gas supply contracts. Following the fina-
“Contingent consideration” regards a number of investe-
lization of the contract, deposits for electricity sales, the
es held primarily by Enel Green Power Brasil Participações
use of which is not restricted in any way, are classified as
whose fair value was determined on the basis of the terms
current liabilities given that the company does not have an
and conditions of the contractual agreements between the
unconditional right to defer repayment beyond 12 months.
parties.
“Payables due to institutional market operators” include
The item “Payables for put options granted to minority
payables arising from the application of equalization me-
shareholders” had decreased to nearly zero at December
chanisms to electricity purchases on the Italian market
31, 2017, with €401 million attributable to the liability in re-
amounting to €3,042 million (€3,069 million at December
spect of the put option on 13.6% of e-distribut¸ie Muntenia
31, 2016), on the Spanish market amounting to €1,399
and Enel Energie Muntenia, which was paid in 2017.
41. Financial instruments
This note provide disclosure necessary for users to assess the significance of financial instruments for the company's
financial position and performance.
269
Consolidated financial statements 41.1 Financial assets by category
The following table reports the carrying amount for each
showing hedging derivatives and derivatives measured at
category of financial asset provided for under IAS 39, bro-
fair value through profit or loss separately.
ken down into current and non-current financial assets,
Millions of euro
Non-current
Current
Notes at Dec. 31, 2017
at Dec. 31, 2016 at Dec. 31, 2017 at Dec. 31, 2016
Loans and receivables
Available-for-sale financial assets
Financial assets held to maturity
Financial assets at fair value through profit or loss
Financial assets designated upon initial recognition (fair
value option)
Derivative financial assets at FVTPL
Assets held for trading
Total financial assets at fair value through profit or
loss
Derivative financial assets designated as hedging
instruments
Fair value hedge derivatives
Cash flow hedge derivatives
Total derivative financial assets designated as
hedging instruments
TOTAL
41.1.1
41.1.2
41.1.3
41.1.4
41.1.4
41.1.4
41.1.5
41.1.5
2,062
1,916
2,181
1,658
-
-
17
-
17
23
662
685
4,680
-
-
21
-
21
36
1,552
1,588
5,448
25,939
24,684
85
-
-
1,982
-
35
-
-
3,027
1
1,982
3,028
-
327
327
1
917
918
28,333
28,665
For more information on fair value measurement, please see note 45 “Assets measured at fair value”.
41.1.1 Loans and receivables
The following table shows loans and receivables by nature, broken down into current and non-current financial assets.
Millions of euro
Non-current
Current
Notes at Dec. 31, 2017
at Dec. 31, 2016
Notes
at Dec. 31, 2017 at Dec. 31, 2016
Cash and cash equivalents
Trade receivables
27
Short-term portion of long-term financial
receivables
Receivables for factoring
Cash collateral
Other financial receivables
24.1
Total
-
-
-
-
-
2,062
2,062
-
-
-
-
-
30
27
28.1
28.1
28.1
2,181
28.1
7,021
14,529
1,094
42
2,664
589
8,290
13,506
767
128
1,082
911
2,181
25,939
24,684
Trade receivables from customers at December 31, 2017
rment losses, which amounted to €2,402 million at the end
amounted to €14,529 million (€13,506 million at December
of the year, compared with the opening balance of €2,028
31, 2016) and are recognized net of allowances for impai-
million.
270
Annual Report 2017 The table below shows impairment losses on trade receivables.
Millions of euro
Trade receivables
Gross value
Allowances for impairment
Net value
The table below shows changes in these allowances during the year.
Millions of euro
Opening balance at January 1, 2016
Charge for the year
Utilized
Unused amounts reversed
Other changes
Closing balance at December 31, 2016
Opening balance at January 1, 2017
Charge for the year
Utilized
Unused amounts reversed
Other changes
Closing balance at December 31, 2017
at Dec. 31, 2017
at Dec. 31, 2016
16,931
(2,402)
14,529
15,534
(2,028)
13,506
2,085
873
(548)
(151)
(231)
2,028
2,028
1,204
(601)
(310)
81
2,402
Note 42 “Risk management” provides additional information on the ageing of receivables past due but not impaired.
41.1.2 Available-for-sale financial assets
The following table shows Available-for-sale financial assets by nature, broken down into current and non-current financial
assets.
Millions of euro
Non-current
Current
Notes at Dec. 31, 2017
at Dec. 31, 2016
Notes
at Dec. 31, 2017 at Dec. 31, 2016
Equity investments in other companies
Available-for-sale securities
Service concession arrangements
Total
24
24.1
24
58
382
1,476
1,916
24
28.1
196
440
1,022
1,658
-
69
16
85
Changes in financial assets available for sale
Millions of euro
Opening balance at January 1, 2017
Increases
Decreases
Changes in fair value through OCI
Reclassifications
Other changes
Closing balance at December 31, 2017
Non-current
1,658
-
(1)
-
215
44
1,916
-
35
-
35
Current
35
-
-
-
13
37
85
271
Consolidated financial statements 41.1.3 Financial assets held to maturity
There were no financial assets held to maturity.
41.1.4 Financial assets at fair value through profit or loss
The following table shows financial assets at fair value through profit or loss by nature, broken down into current and non-
current financial assets.
Millions of euro
Non-current
Current
Derivatives at FVTPL
Securities held for trading
Financial investments in funds
Total financial assets designated upon initial
recognition (fair value option)
TOTAL
Notes
44
24.1
at
Dec. 31, 2017
at
Dec. 31, 2016
17
-
-
-
17
21
-
-
-
21
Notes
44
28.1
at
Dec. 31, 2017
at
Dec. 31, 2016
1,982
3,027
-
-
-
1
-
-
1,982
3,028
41.1.5 Derivative financial assets designated as hedging instruments
For more information on derivative financial assets, please see note 44 “Derivatives and hedge accounting”.
41.2 Financial liabilities by category
The following table shows the carrying amount for each
showing hedging derivatives and derivatives measured at
category of financial liability provided for under IAS 39, bro-
fair value through profit or loss separately.
ken down into current and non-current financial liabilities,
Millions of euro
Non-current
Current
Financial liabilities measured at amortized cost
Financial liabilities at fair value through profit or loss
Derivative financial liabilities at FVTPL
Total financial liabilities at fair value through profit
or loss
Derivative financial liabilities designated as hedging
instruments
Fair value hedge derivatives
Cash flow hedge derivatives
Total derivative financial liabilities designated as
hedging instruments
TOTAL
Notes
41.2.1
41.4
41.4
41.4
at
Dec. 31, 2017
at
Dec. 31, 2016
at
Dec. 31, 2017
at
Dec. 31, 2016
42,439
41,336
21,565
22,444
21
21
7
2,970
2,977
45,437
22
22
15
2,495
2,510
43,968
1,980
3,016
1,980
3,016
6
274
280
1
305
306
23,825
25,766
For more information on fair value measurement, please see note 46 “Liabilities measured at fair value”.
272
Annual Report 2017 41.2.1 Financial liabilities measured at amortized cost
The following table shows financial liabilities at amortized cost by nature, broken down into current and non-current finan-
cial liabilities.
Millions of euro
Long-term borrowings
Short-term borrowings
Trade payables
Total
41.3 Borrowings
Non-current
Current
Notes
at Dec. 31, 2017 at Dec. 31, 2016
Notes
at Dec. 31, 2017 at Dec. 31, 2016
41.3
42,439
41,336
37
-
-
-
-
42,439
41,336
41.3
41.3
37
7,000
1,894
12,671
21,565
4,384
5,372
12,688
22,444
41.3.1 Long-term borrowings (including the portion falling due within 12 months) - €49,439
million
The following table reports the carrying amount and fair va-
and the associated market data at the reporting date, inclu-
lue for each category of debt, including the portion falling
ding the credit spreads of Enel SpA.
due within 12 months. For listed debt instruments, the fair
value is given by official prices, while for unlisted debt in-
The table reports the situation of long-term borrowings and
struments, fair value is determined using valuation techni-
repayment schedules at December 31, 2017, broken down
ques appropriate for each category of financial instrument
by type of borrowing and interest rate.
Millions of euro
Nominal
value
Carrying
amount
Current
portion
Portion
due in
more than
12 months
Fair
value
Nominal
value
Carrying
amount
Current
portion
Portion due
in more
than 12
months
Changes
in carrying
amount
Fair
value
at Dec. 31, 2017
at Dec. 31, 2016
Bonds:
- listed, fixed rate
25,862
25,275
4,679
20,596 29,561
26,426
25,770
1,583
24,187 30,332
- listed, floating rate
2,942
2,926
684
2,242
3,201
3,338
3,320
376
2,944
3,673
(495)
(394)
- unlisted, fixed rate
8,532
8,458
- unlisted, floating rate
1,055
1,055
-
66
8,458
9,257
5,660
5,619
1,422
4,197
6,240
2,839
989
1,051
1,138
1,138
65
1,073
1,132
(83)
Total bonds
38,391
37,714
5,429
32,285 43,070
36,562
35,847
3,446
32,401 41,377
1,867
Bank borrowings:
- fixed rate
- floating rate
1,545
1,533
293
1,240
4,155
1,283
1,278
8,146
8,116
1,053
7,063
8,445
6,951
6,902
- use of revolving credit lines
8
7
-
7
7
15
15
152
597
-
1,126
1,372
255
6,305
7,187
1,214
15
15
(8)
Total bank borrowings
9,699
9,656
1,346
8,310 12,607
8,249
8,195
749
7,446
8,574
1,461
Non-bank borrowings:
- fixed rate
- floating rate
Total non-bank
borrowings
Total fixed-rate
borrowings
Total floating-rate
borrowings
1,884
1,865
223
204
198
27
1,667
2,149
1,549
1,548
177
231
130
130
159
30
1,389
1,565
100
138
317
74
2,107
2,069
225
1,844
2,380
1,679
1,678
189
1,489
1,703
391
37,823
37,131
5,170
31,961 45,122
34,918
34,215
3,316
30,899 39,509
2,916
12,374
12,308
1,830
10,478 12,935
11,572
11,505
1,068
10,437 12,145
803
TOTAL
50,197
49,439
7,000
42,439 58,057
46,490
45,720
4,384
41,336 51,654
3,719
273
Consolidated financial statements The balance for bonds is reported net of €860 million in
The table below reports long-term financial debt by cur-
respect of the unlisted floating-rate “Special series of bon-
rency and interest rate.
ds reserved for employees 1994-2019”, which the Parent
Company holds in portfolio.
Long-term financial debt by currency and interest rate
Millions of euro
Carrying amount
Nominal value
Carrying amount
Nominal value
Current average
nominal interest
rate
Current effective
interest rate
at Dec. 31, 2017
at Dec. 31, 2016
at Dec. 31, 2017
Euro
US dollar
Pound sterling
Colombian peso
Brazilian real
Swiss franc
Chilean peso/UF
Peruvian sol
Russian ruble
Japanese yen
Other currencies
25,925
13,521
4,786
1,618
1,201
687
465
385
245
233
373
26,449
13,658
4,835
1,618
1,230
688
475
385
245
233
381
Total non-euro currencies
TOTAL
23,514
49,439
23,748
50,197
3.4%
4.9%
6.1%
8.3%
9.5%
2.4%
7.1%
6.3%
10.6%
2.4%
3.8%
5.0%
6.2%
8.3%
9.6%
2.4%
7.2%
6.3%
10.6%
2.5%
25,546
26,127
9,879
4,955
1,872
1,088
539
490
437
295
255
364
20,174
45,720
9,978
5,011
1,872
1,098
540
501
437
295
255
376
20,363
46,490
Long-term financial debt denominated in currencies other
largely attributable to new borrowing in US dollars by Enel
than the euro increased by €3,340 million. The change is
Finance International.
Change in the nominal value of long-term debt
Millions of euro
value Repayments
Nominal
Change in
own bonds
Change in
scope of
consolidation
Exchange
offer
New
financing
Exchange
differences
at Dec. 31,
2016
Reclassification
from/to assets/
(liabilities) held
for sale
Nominal
value
at Dec. 31,
2017
Bonds
36,562
(4,878)
Borrowings
9,928
(1,357)
(19)
-
Total financial
debt
46,490
(6,235)
(19)
-
230
230
-
-
-
8,992
(1,850)
(416)
38,391
3,292
(287)
-
11,806
12,284
(2,137)
(416)
50,197
Compared with December 31, 2016, the nominal value of
February 2017 of the Brazilian distribution company Enel
long-term debt at December 31, 2017 increased by €3,707
Distribuição Goiás, partly offset by the decrease in debt as-
million, the net effect of €12,284 million in new borrowings
sociated with the disposal in November 2017 of the Caney
and €230 million from the change in the scope of consoli-
River and Rocky Ridge wind farms in the United States.
dation, partly offset by repayments of €6,235 million and
exchange differences of €2,137 million, as well as the re-
The main repayments in 2017 concerned bonds in the
classification to “assets/liabilities held for sale” of the debt
amount of €4,878 million and borrowings totaling €1,357
associated with the Mexican project companies (the “Kino
million.
Project”). The change in the scope of consolidation mainly
reflects the increase in debt following the acquisition in
More specifically, the main bonds maturing in 2017 included:
274
Annual Report 2017
> a fixed-rate bond (€909 million) issued by Enel SpA, ma-
> €224 million in respect of subsidized loans of e-distribu-
turing in June 2017;
zione and Enel Produzione;
> a fixed-rate bond (€637 million) issued by Enel Finance
> €123 million in respect of bank borrowings of Endesa, of
International, maturing in July 2017;
which €13 million in subsidized loans;
> a fixed-rate bond in US dollars (the equivalent of €1,254
> €131 million in respect of bank borrowings of Enel Green
million) issued by Enel Finance International, maturing in
Power SpA, of which €40 million in subsidized loans;
September 2017;
> the equivalent of €57 million in respect of bank bor-
> bonds (the equivalent of €479 million) issued by a num-
rowings of Enel Russia, of which €12 million in subsidi-
ber of South American companies, maturing in 2017.
zed loans;
> the equivalent of €107 million in respect of loans of Enel
In addition, in August 2017 Enel Finance International re-
Green Power North America;
purchased bonds it had issued in US dollars with an original
> the equivalent of €467 million in respect of loans of com-
maturity of October 2019. The transaction was part of the
panies in South America.
strategy to optimize the structure of the Enel Group’s lia-
bilities.
The main new borrowing carried out in 2017 involved bonds
in the amount of €8,992 million and borrowings of €3,292
The main repayments of borrowings in the year included
million.
the following:
275
Consolidated financial statements The table below shows the main characteristics of financial transactions carried out in 2017.
Issuer/Borrower
Issue/Grant
date
Amount in
millions of
euro
Currency
Interest rate
Interest rate
type
Maturity
Bonds
Enel Finance
International
Enel Finance
International
Enel Finance
International
Enel Finance
International
Enel Finance
International
Enel Finance
International
Enel Finance
International
Enel Finance
International
16.01.2017
1,250
€
1.14%
Fixed rate
16.09.2024
03.03.2017
192
CHF
0.55%
Fixed rate
03.09.2024
25.05.2017
1,668
USD
2.88%
Fixed rate
25.05.2022
25.05.2017
1,668
USD
3.62%
Fixed rate
25.05.2027
25.05.2017
834
USD
4.75%
Fixed rate
25.05.2047
06.10.2017
1,042
USD
2.75%
Fixed rate
06.04.2023
06.10.2017
1,042
USD
3.50%
Fixed rate
06.04.2028
Enel Distribución Rio
15.12.2017
06.10.2017
417
149
USD
4.75%
Fixed rate
25.05.2047
BRL CDI + 1.14% Floating rate
15.12.2020
Total bonds
Bank borrowings
Total bank borrowings
Enel Distribución
Ceará
15.12.2017
87
BRL CDI + 0.80% Floating rate
15.12.2022
8,349
150
450
200
Enel SpA
27.04.2017
Enel SpA
15.06.2017
Enel SpA
10.07.2017
Euribor 3M +
37.5 bps
Euribor 6M+
33.5 bps
Euribor 6M +
20 bps
€
€
€
Floating rate
27.04.2020
Floating rate
15.07.2020
Floating rate
26.06.2021
Enel SpA
10.07.2017
189
USD
Libor 3M+
71.8 bps
Floating rate
12.07.2021
Endesa
18.01.2017
Endesa
20.02.2017
Enel Green Power
Projetos I
09.11.2017
150
150
211
1,500
Euribor 6M +
38 bps
Euribor 6M +
39 bps
€
€
Floating rate
18.01.2029
Floating rate
20.02.2029
USD
3.19%
Fixed rate
08.11.2019
During 2017, Enel SpA and Enel Finance International
ned by covenants that are commonly adopted in interna-
agreed a €10 billion revolving credit line with a pool of
tional business practice. These liabilities primarily regard
banks maturing in December 2022. The facility, which re-
the bond issues carried out within the framework of the
places an existing €9.44 billion credit line renegotiated in
Global/Euro Medium-Term Notes program, issues of su-
2015 with a five-year maturity, was undrawn at December
bordinated unconvertible hybrid bonds (so-called “hybrid
31, 2017.
bonds”) and loans granted by banks and other financial
institutions (including the European Investment Bank and
The Group’s main long-term financial liabilities are gover-
Cassa Depositi e Prestiti SpA).
276
Annual Report 2017 The main covenants regarding bond issues carried out
the establishment of mortgages, liens or other encum-
within the framework of the Global/Euro Medium-Term
brances on all or part of their respective assets, with the
Notes program of (i) Enel and Enel Finance International
exception of expressly permitted encumbrances;
NV (including the Green Bonds of Enel Finance Internatio-
> disposals clauses, under which the borrower and, in
nal NV guaranteed by Enel SpA, which are used to finance
some cases, the guarantor may not dispose of their as-
the Group’s so-called eligible green projects) and of (ii) En-
sets or operations, with the exception of expressly per-
desa Capital SA and International Endesa BV, can be sum-
mitted disposals;
marized as follows:
> pari passu clauses, under which the payment underta-
> negative pledge clauses under which the issuer and the
kings of the borrower have the same seniority as its other
guarantor may not establish or maintain mortgages, liens
unsecured and unsubordinated payment obligations;
or other encumbrances on all or part of its assets or reve-
> change of control clauses, under which the borrower
nue to secure certain financial liabilities, unless the same
and, in some cases, the guarantor could be required to
encumbrances are extended equally or pro rata to the
renegotiate the terms and conditions of the financing or
bonds in question;
make compulsory early repayment of the loans granted;
> pari passu clauses, under which the bonds and the as-
> rating clauses, which provide for the borrower or the gua-
sociated security constitute a direct, unconditional and
rantor to maintain their rating above a certain specified
unsecured obligation of the issuer and the guarantor and
level;
are issued without preferential rights among them and
> cross-default clauses, under which the occurrence of a
have at least the same seniority as other present and fu-
default event in respect of a specified financial liability
ture unsubordinated and unsecured bonds of the issuer
(above a threshold level) of the issuer or, in some cases,
and the guarantor;
the guarantor constitutes a default in respect of the liabi-
> cross-default clauses, under which the occurrence of a
lities in question, which become immediately repayable.
default event in respect of a specified financial liability
(above a threshold level) of the issuer, the guarantor or,
In some cases the covenants are also binding for the signi-
in some cases, “significant” subsidiaries constitutes a
ficant companies or subsidiaries of the obligated parties.
default in respect of the liabilities in question, which be-
All the financial borrowings considered specify “events of
come immediately repayable.
default” typical of international business practice, such as,
for example, insolvency, bankruptcy proceedings or the en-
In 2017, Enel Finance International NV issued a number of
tity ceases trading.
bonds on the US market with guarantees from Enel. Their
In addition, the guarantees issued by Enel in the interest of
main covenants are the same as those for bond issues car-
e-distribuzione SpA for certain loans to e-distribuzione SpA
ried out under the Euro Medium-Term Notes program.
from Cassa Depositi e Prestiti SpA require that at the end
The main covenants covering Enel’s hybrid bonds can be
of each six-month measurement period Enel’s net consoli-
summarized as follows:
dated financial debt shall not exceed 4.5 times annual con-
> subordination clauses, under which each hybrid bond is
solidated EBITDA.
subordinate to all other bonds issued by the company
Finally, the debt of Enel Américas SA and the other South
and has the same seniority with all other hybrid financial
American subsidiaries (notably Enel Generación Chile SA)
instruments issued, being senior only to equity instru-
contain covenants and events of default typical of interna-
ments;
tional business practice.
> prohibition on mergers with other companies, the sale
or leasing of all or a substantial part of the company’s
assets to another company, unless the latter succeeds in
all obligations of the issuer.
The main covenants envisaged in the loan contracts of Enel
and Enel Finance International NV and the other Group
companies can be summarized as follows:
> negative pledge clauses, under which the borrower and,
in some cases, the guarantor are subject to limitations on
277
Consolidated financial statements The following table reports the impact on gross long-term debt of hedges established to mitigate exchange risk.
Hedged long-term financial debt by currency
Millions of euro
at Dec. 31, 2017
at Dec. 31, 2016
Initial debt structure
Impact of hedge
Debt structure after
hedging
Initial debt structure
Impact of hedge
Debt structure after hedging
Carrying amount
Nominal amount
25,546
26,127
9,879
4,955
1,872
1,088
539
490
437
295
255
364
20,174
45,720
9,978
5,011
1,872
1,098
540
501
437
295
255
376
20,363
46,490
%
56.2
21.5
10.8
4.0
2.4
1.2
1.1
0.9
0.6
0.5
0.8
43.8
100.0
12,220
(6,889)
(5,011)
276
(540)
112
(255)
87
-
-
-
-
(12,220)
38,347
3,089
1,872
1,374
-
-
-
501
437
407
463
8,143
46,490
%
82.5
-
6.6
-
4.0
3.0
1.1
0.9
0.9
-
1.0
17.5
100.0
Euro
US dollar
Pound sterling
Colombian peso
Brazilian real
Swiss franc
Chilean peso/UF
Peruvian sol
Russian ruble
Japanese yen
Other currencies
Total non-euro
currencies
TOTAL
Carrying amount Nominal amount
25,925
13,521
4,786
1,618
1,201
687
465
385
245
233
373
26,449
13,658
4,835
1,618
1,230
688
475
385
245
233
381
%
52.7
27.2
9.6
3.2
2.5
1.4
0.9
0.8
0.5
0.5
0.7
15,144
(10,577)
(4,835)
29
977
(688)
-
-
100
(233)
83
41,593
3,081
-
1,647
2,207
-
475
385
345
-
464
%
82.9
6.1
-
3.3
4.4
-
0.9
0.8
0.7
-
0.9
23,514
49,439
23,748
50,197
47.3
100.0
(15,144)
-
8,604
50,197
17.1
100.0
The amount of floating-rate debt that is not hedged against
the income statement (raising borrowing costs) in the
interest rate risk is the main risk factor that could impact
event of an increase in market interest rates.
Millions of euro
Floating rate
Fixed rate
Total
2017
2016
Pre-hedge
% Post-hedge
% Pre-hedge
% Post-hedge
14,268
37,823
52,091
27.4
72.6
11,358
40,733
52,091
21.8
78.2
17,240
34,918
52,158
33.1
66.9
14,667
37,491
52,158
%
28.1
71.9
At December 31, 2017, 27.4% of financial debt was floating
purposes but ineligible for hedge accounting, 78% of net
rate (33.1% at December 31, 2016). Taking account of hed-
financial debt was hedged (72% hedged at December 31,
ges of interest rates considered effective pursuant to the
2016).
IFRS-EU, 21.8% of net financial debt (28.1% at December
31, 2016) was exposed to interest rate risk. Including in-
These results are in line with the limits established in the
terest rate derivatives treated as hedges for management
risk management policy.
278
Annual Report 2017 The following table reports the impact on gross long-term debt of hedges established to mitigate exchange risk.
Hedged long-term financial debt by currency
Millions of euro
Euro
US dollar
Pound sterling
Colombian peso
Brazilian real
Swiss franc
Chilean peso/UF
Peruvian sol
Russian ruble
Japanese yen
Other currencies
Total non-euro
currencies
TOTAL
Carrying amount Nominal amount
25,925
13,521
4,786
1,618
1,201
687
465
385
245
233
373
26,449
13,658
4,835
1,618
1,230
688
475
385
245
233
381
%
52.7
27.2
9.6
3.2
2.5
1.4
0.9
0.8
0.5
0.5
0.7
23,514
49,439
23,748
50,197
47.3
100.0
15,144
(10,577)
(4,835)
29
977
(688)
100
(233)
83
-
-
-
(15,144)
41,593
3,081
1,647
2,207
-
-
-
475
385
345
464
8,604
50,197
%
82.9
6.1
3.3
4.4
-
-
0.9
0.8
0.7
-
0.9
17.1
100.0
at Dec. 31, 2017
at Dec. 31, 2016
Initial debt structure
Impact of hedge
Initial debt structure
Impact of hedge
Debt structure after hedging
Debt structure after
hedging
Carrying amount
Nominal amount
25,546
26,127
9,879
4,955
1,872
1,088
539
490
437
295
255
364
20,174
45,720
9,978
5,011
1,872
1,098
540
501
437
295
255
376
20,363
46,490
%
56.2
21.5
10.8
4.0
2.4
1.2
1.1
0.9
0.6
0.5
0.8
43.8
100.0
12,220
(6,889)
(5,011)
-
276
(540)
-
-
112
(255)
87
(12,220)
-
38,347
3,089
-
1,872
1,374
-
501
437
407
-
463
8,143
46,490
%
82.5
6.6
-
4.0
3.0
-
1.1
0.9
0.9
-
1.0
17.5
100.0
279
Consolidated financial statements 41.3.2 Short-term borrowings - €1,894 million
At December 31, 2017 short-term borrowings amounted to €1,894 million, a decrease of €3,478 million on December 31,
2016. They break down as follows.
Millions of euro
Short-term bank borrowings
Commercial paper
Cash collateral on derivatives and other financing
Other short-term borrowings (1)
Short-term borrowings
at Dec. 31, 2017
at Dec. 31, 2016
249
889
449
307
1,894
909
3,059
1,286
118
5,372
Change
(660)
(2,170)
(837)
189
(3,478)
(1) Does not include current financial debt included in other current financial liabilities.
Short-term bank borrowings amounted to €249 million.
At December 31, 2017 issues under these programs to-
The payables represented by commercial paper relate to
taled €889 million pertaining to International Endesa BV.
issues outstanding at the end of December 2017 under
The substantial €2,170 million decline regards the con-
the €6,000 million program launched in November 2005
traction in the exposure of Enel Finance International as
by Enel Finance International and guaranteed by Enel SpA,
a result of a decrease in issues during the year and the
which was renewed in April 2010, as well as the €3,000
reclassification to “assets/liabilities held for sale” of the
million program of International Endesa BV and that of Enel
debt associated with the Mexican project companies (the
Américas and Enel Generación Chile of $400 million (equal
“Kino Project”).
to €334 million).
41.4 Derivative financial liabilities
For more information on derivative financial liabilities, please see note 44 “Derivatives and hedge accounting”.
41.5 Net gains and losses
The following table shows net gains and losses by category of financial instruments, excluding derivatives.
Millions of euro
2017
2016
Of which
impairment/
reversal
of impairment
Net gains/
(losses)
Of which
impairment/
reversal
of impairment
Net gains/
(losses)
Available-for-sale financial assets measured at fair value
Available-for-sale financial assets measured at amortized cost
Financial assets held to maturity
Loans and receivables
Financial assets at FVTPL
Financial assets held for trading
Financial assets designated upon initial recognition (fair value option)
Total financial assets at FVTPL
Financial liabilities measured at amortized cost
Financial liabilities at FVTPL
Financial liabilities held for trading
Financial liabilities designated upon initial recognition (fair value option)
Total financial liabilities at FVTPL
81
1
-
(701)
-
-
-
(1,054)
1
-
1
-
-
-
59
7
(1)
-
-
-
(870)
(595)
(764)
-
-
-
-
-
-
-
1
(1)
-
(1,873)
-
-
-
-
-
-
-
-
-
-
For more details on net gains and losses on derivatives, please see note 10 “Net financial income/(expense) from derivatives”.
280
Annual Report 2017 42. Risk management
Financial risk management
governance and objectives
As part of its operations, the Enel Group is exposed to a
variety of financial risks, notably market risks (including in-
terest rate risk, exchange risk and commodity risk), credit
risk and liquidity risk.
As noted in the section “Main risks and uncertainties”, the
Group’s governance arrangements for financial risks inclu-
de internal committees and the establishment of specific
policies and operational limits. Enel’s primary objective is
to mitigate financial risks appropriately so that they do not
give rise to unexpected changes in results.
Market risks
Market risks are mainly composed of interest rate risk,
exchange risk and commodity price risk. The sources of
Enel’s exposure to market risks have not changed since
the previous year.
Interest rate risk is primarily generated by the use of finan-
cial instruments. The main financial liabilities held by the
Group include bonds, bank borrowings, other borrowings,
commercial paper, derivatives, cash deposits received to
secure commercial or derivatives transactions (guaran-
tees received, cash collateral), liabilities for construction
contracts and trade payables. The main financial assets
held by the Group include financial receivables, factoring
receivables, derivatives, cash deposits made to secure
commercial or derivatives transactions (guarantees pled-
ged, cash collateral), cash (and cash equivalents), receiva-
bles for construction contracts and trade receivables.
The main purpose of those financial instruments is to sup-
port the operations of the Group. For more details, please
see note 41 “Financial instruments”.
Exchange risk is generated by transactions in fuels and
power, industrial investments, dividends from investe-
es, commercial transactions and the use of financial in-
struments. The consolidated financial statements of the
Group are also exposed to translation risk.
The Group’s policies for managing market risks provide for
the mitigation of the effects on performance of changes
in interest rates and exchange rates with the exclusion
of translation risk (consolidated financial statements). This
objective is achieved at the source of the risk, through the
diversification of both the nature of the financial instru-
ments and the sources of revenue, and by modifying the
risk profile of specific exposures with derivatives entered
into on over-the-counter (OTC) markets or with specific
commercial agreements.
The risk of fluctuations in commodity prices is generated
by the volatility of those prices and existing structural cor-
relations between them, which creates uncertainty about
the margin on transactions in fuels and energy. Price de-
velopments are observed and analyzed in order to develop
the Group’s industrial, financial and commercial strategies
and policies.
In order to contain the effects of such fluctuations and
stabilize margins, in accordance with the Group’s policies
and operational limits established with the risk gover-
nance arrangements, Enel develops and plans strategies
that impact the various stages of the industrial process
associated with the production and sale of electricity and
gas (such as advance sourcing and long-term commercial
agreements) and risk mitigation plans and techniques for
hedging risks with derivatives.
As part of its governance of market risks, Enel regularly
monitors the size of the OTC derivatives portfolio in rela-
tion to the threshold values set by regulators for the ac-
tivation of clearing obligations (EMIR – European Market
Infrastructure Regulation – 648/2012 of the European Par-
liament and of the Council). During 2017, no overshoot of
those threshold values was detected.
Interest rate risk
Interest rate risk primarily manifests itself as unexpected
changes in charges on financial liabilities, if indexed to flo-
ating rates and/or exposed to the uncertainty of financial
terms and conditions in negotiating new debt instruments,
or as an unexpected change in the value of financial instru-
ments measured at fair value (such as fixed-rate debt).
The Enel Group mainly manages interest rate risk through
the definition of an optimal financial structure, with the
dual goal of stabilizing borrowing costs and containing the
cost of funds. This goal is pursued through the diversifica-
tion of the portfolio of financial liabilities by contract type,
281
Consolidated financial statements maturity and interest rate, and modifying the risk profile of
dexing criteria for floating-rate financial liabilities.
specific exposures using OTC derivatives, mainly interest
Some structured borrowings have multi-stage cash flows
rate swaps and interest rate options. The term of such de-
hedged by interest rate swaps that at the reporting date,
rivatives does not exceed the maturity of the underlying
and for a limited time, provide for the exchange of fixed-
financial liability, so that any change in the fair value and/
rate interest flows.
or expected cash flows of such contracts is offset by a
Interest rate options involve the exchange of interest dif-
corresponding change in the fair value and/or cash flows
ferences calculated on a notional principal amount once
of the hedged position.
certain thresholds (strike prices) are reached. These th-
Proxy hedging techniques may be used in a number of re-
resholds specify the effective maximum rate (cap) or the
sidual circumstances, when the hedging instruments for
minimum rate (floor) to which the synthetic financial in-
the risk factors are not available on the market or are not
strument will be indexed as a result of the hedge. Certain
sufficiently liquid. For the purpose of EMIR compliance, in
hedging strategies provide for the use of combinations
order to test the actual effectiveness of the hedging tech-
of options (collars) that establish the minimum and maxi-
niques adopted, the Group subjects its hedge portfolios to
mum rates at the same time. In this case, the strike prices
periodic statistical assessment.
are normally set so that no premium is paid on the con-
tract (zero cost collars).
Using interest rate swaps, the Enel Group agrees with
Such contracts are normally used when the fixed interest
the counterparty to periodically exchange floating-rate in-
rate that can be obtained in an interest rate swap is con-
terest flows with fixed-rate flows, both calculated on the
sidered too high with respect to market expectations for
same notional principal amount.
future interest rate developments. In addition, interest
Floating-to-fixed interest rate swaps transform floating-
rate options are also considered most appropriate in pe-
rate financial liabilities into fixed-rate liabilities, thereby
riods of greater uncertainty about future interest rate de-
neutralizing the exposure of cash flows to changes in in-
velopments because they make it possible to benefit from
terest rates.
any decrease in interest rates.
Fixed-to-floating interest rate swaps transform fixed-rate
financial liabilities into floating-rate liabilities, thereby neu-
The following table reports the notional amount of interest
tralizing the exposure of their fair value to changes in in-
rate derivatives at December 31, 2017 and December 31,
terest rates.
2016 broken down by type of contract.
Floating-to-floating interest rate swaps transform the in-
Millions of euro
Notional amount
Floating-to-fixed interest rate swaps
Fixed-to-floating interest rate swaps
Fixed-to-fixed interest rate swaps
Floating-to-floating interest rate swaps
Interest rate options
Total
2017
11,166
884
-
165
50
2016
11,526
853
-
165
50
12,265
12,594
For more details on interest rate derivatives, please see note 44 “Derivatives and hedge accounting”.
Interest rate risk sensitivity analysis
Enel analyzes the sensitivity of its exposure by estimating
ves or in the financial expense associated with unhedged
the effects of a change in interest rates on the portfolio of
gross debt.
financial instruments.
These market scenarios are obtained by simulating parallel
More specifically, sensitivity analysis measures the poten-
increases and decreases in the yield curve as at the repor-
tial impact on profit or loss and on equity of market scena-
ting date.
rios that would cause a change in the fair value of derivati-
There were no changes introduced in the methods and as-
282
Annual Report 2017 sumptions used in the sensitivity analysis compared with
before tax would be affected by a change in the level of
the previous year.
interest rates as follows.
With all other variables held constant, the Group’s profit
Millions of euro
2017
Change in financial expense on gross long-term
floating-rate debt after hedging
Change in fair value of derivatives classified as
non-hedging instruments
Change in fair value of derivatives designated
as hedging instruments
Cash flow hedges
Fair value hedges
Pre-tax impact on profit or loss
Pre-tax impact on equity
Basis points
Increase
Decrease
Increase
Decrease
25
25
25
25
24
8
-
(3)
(24)
(8)
-
3
-
-
107
-
-
-
(107)
-
Exchange risk
Exchange risk mainly manifests itself as unexpected chan-
than the currency of account into an equivalent liability in
ges in the financial statement items associated with tran-
the currency of account.
sactions denominated in a currency other than the currency
Currency forwards are contracts in which the counter-
of account. The Group’s exposure is connected with the
parties agree to exchange principal amounts denomina-
purchase or sale of fuels and power, investments (cash
ted in different currencies at a specified future date and
flows for capitalized costs), dividends and the purchase or
exchange rate (the strike). Such contracts may call for the
sale of equity investments, commercial transactions and
actual exchange of the two principal amounts (deliverable
financial assets and liabilities.
forwards) or payment of the difference generated by diffe-
In order to minimize the exposure to exchange risk, Enel
rences between the strike exchange rate and the prevai-
implements diversified revenue and cost sources geo-
ling exchange rate at maturity (non-deliverable forwards).
graphically, and uses indexing mechanisms in commercial
In the latter case, the strike rate and/or the spot rate may
contracts. Enel also uses various types of derivative, typi-
be determined as averages of the rates observed in a given
cally on the OTC market.
period.
The derivatives in the Group’s portfolio of financial instru-
Currency swaps are contracts in which the counterparties
ments include cross currency interest rate swaps, currency
enter into two transactions of the opposite sign at different
forwards and currency swaps. The term of such contracts
future dates (normally one spot, the other forward) that pro-
does not exceed the maturity of the underlying instrument,
vide for the exchange of principal denominated in different
so that any change in the fair value and/or expected cash
currencies.
flows of such instruments offsets the corresponding chan-
ge in the fair value and/or cash flows of the hedged posi-
The following table reports the notional amount of transac-
tion.
tions outstanding at December 31, 2017 and December 31,
Cross currency interest rate swaps are used to transform
2016, broken down by type of hedged item.
a long-term financial liability denominated in currency other
283
Consolidated financial statements Millions of euro
Notional amount
Cross currency interest rate swaps (CCIRSs) hedging debt denominated in
currencies other than the euro
Currency forwards hedging exchange risk on commodities
Currency forwards hedging future cash flows in currencies other than the euro
Currency swaps hedging commercial paper
Currency forwards hedging loans
Other currency forwards
Total
2017
19,004
3,526
6,319
-
-
300
29,149
2016
14,973
2,887
6,036
-
-
1,014
24,910
More specifically, these include:
of account connected with the purchase of investment
> CCIRSs with a notional amount of €19,004 million to hed-
goods in the renewables and infrastructure and networks
ge the exchange risk on debt denominated in currencies
sectors (new generation digital meters), on operating ex-
other than the euro (€14,973 million at December 31,
penses for the supply of cloud services and on revenue
2016);
from the sale of renewable energy.
> currency forwards with a total notional amount of €9,845
million used to hedge the exchange risk associated with
At December 31, 2017, 47% (44% at December 31, 2016)
purchases and sales of natural gas, purchases of fuel and
of Group long-term debt was denominated in currencies
expected cash flows in currencies other than the euro
other than the euro.
(€8,923 million at December 31, 2016);
Taking account of hedges of exchange risk, the percentage
> other currency forwards which include OTC derivatives
of debt not hedged against that risk amounted to 17% at
transactions carried out to mitigate exchange risk on ex-
December 31, 2017 (18% at December 31, 2016).
pected cash flows in currencies other than the currency
Exchange risk sensitivity analysis
The Group analyses the sensitivity of its exposure by esti-
These scenarios are obtained by simulating the apprecia-
mating the effects of a change in exchange rates on the
tion/depreciation of the euro against all of the currencies
portfolio of financial instruments.
compared with the value observed as at the reporting date.
More specifically, sensitivity analysis measures the poten-
There were no changes in the methods or assumptions
tial impact on profit or loss and equity of market scenarios
used in the sensitivity analysis compared with the previous
that would cause a change in the fair value of derivatives or
year.
in the financial expense associated with unhedged gross
With all other variables held constant, the profit before tax
medium/long-term debt.
would be affected by changes in exchange rates as follows.
Millions of euro
2017
Pre-tax impact on profit or loss
Pre-tax impact on equity
Exchange rate
Increase
Decrease
Increase
Decrease
Change in financial expense on gross long-term debt
denominated in currencies other than the euro after
hedging
Change in fair value of derivatives classified as non-
hedging instruments
Change in fair value of derivatives designated as
hedging instruments
Cash flow hedges
Fair value hedges
284
10%
10%
10%
10%
-
-
544
(663)
-
-
-
-
-
-
-
-
(2,413)
2,946
-
-
Annual Report 2017 Commodity risk
The risk of fluctuations in the price of commodities is
struments for the specific risk factors generating the expo-
mainly associated with the purchase and sale of electricity
sure are not available on the market or are not sufficiently li-
and fuels at variable prices (e.g. indexed bilateral contracts,
quid. In addition, Enel uses portfolio hedging techniques to
transactions on the spot market, etc.).
assess opportunities for netting intercompany exposures.
The exposures on indexed contracts are quantified by bre-
The Group mainly uses plain vanilla derivatives for hedging
aking down the contracts that generate exposure into the
(more specifically, forwards, swaps, options on commodi-
underlying risk factors.
ties, futures, contracts for differences).
As regards electricity sold by the Group, Enel mainly uses
Enel also engages in proprietary trading in order to main-
fixed-price contracts in the form of bilateral physical con-
tain a presence in the Group’s reference energy commo-
tracts (PPAs) and financial contracts (e.g. contracts for dif-
dity markets. These operations consist in taking on expo-
ferences, VPP contracts, etc.) in which differences are paid
to the counterparty if the market electricity price exceeds
sures in energy commodities (oil products, gas, coal, CO2
certificates and electricity) using financial derivatives and
the strike price and to Enel in the opposite case. The resi-
physical contracts traded on regulated and over-the-counter
dual exposure in respect of the sale of energy on the spot
markets, optimizing profits through transactions carried out
market not hedged with such contracts is aggregated by
on the basis of expected market developments.
uniform risk factors that can be managed with hedging
The following table reports the notional amount of outstan-
transactions on the market. Proxy hedging techniques may
ding transactions at December 31, 2017 and December 31,
be used for the industrial portfolios when the hedging in-
2016, broken down by type of instrument.
Millions of euro
Notional amount
Forward and futures contracts
Swaps
Options
Embedded derivatives
Total
2017
24,824
4,584
422
-
29,830
2016
28,197
6,195
308
-
34,700
For more details, please see note 44 “Derivatives and hedge accounting”.
Commodity risk sensitivity analysis
The following table presents the results of the analysis of
the fuel scenario and the basket of formulas used in the
sensitivity to a reasonably possible change in the commodi-
contracts is mainly attributable to the change in the price
ty prices underlying the valuation model used in the scena-
of gas and petroleum products and, to a lesser extent,
rio at the same date, with all other variables held constant.
The impact on pre-tax profit of shifts of +10% and -10%
of electricity and CO2. The impact on equity of the same
shifts in the price curve is primarily due to changes in the
in the price curve for the main commodities that make up
prices of coal and electricity and, to a lesser extent, CO2.
Millions of euro
2017
Pre-tax impact on profit or loss
Pre-tax impact on equity
Commodity price
Increase
Decrease
Increase
Decrease
Change in the fair value of trading derivatives on
commodities
Change in the fair value of derivatives on
commodities designated as hedging instruments
10%
10%
23
-
(18)
-
-
67
-
(65)
285
Consolidated financial statements Credit risk
The Group’s commercial, commodity and financial opera-
The policy for managing credit risk associated with com-
tions expose it to credit risk, i.e. the possibility that a dete-
mercial activities provides for a preliminary assessment of
rioration in the creditworthiness of a counterparty has an
the creditworthiness of counterparties and the adoption of
adverse impact on the expected value of the creditor posi-
mitigation instruments, such as obtaining collateral or unse-
tion or, for trade payables only, increase average collection
cured guarantees.
times.
In addition, the Group undertakes transactions to assign re-
Accordingly, the exposure to credit risk is attributable to the
ceivables without recourse, which results in the complete
following types of operations:
derecognition of the corresponding assets involved in the
> the sale and distribution of electricity and gas in free and
assignment, as the risks and rewards associated with them
regulated markets and the supply of goods and services
have been transferred.
(trade receivables);
Finally, with regard to financial and commodity transac-
> trading activities that involve the physical exchange of
tions, risk mitigation is pursued with a uniform system
assets or transactions in financial instruments (the com-
for assessing counterparties at the Group level, including
modity portfolio);
implementation at the level of Regions/Countries/Global
> trading in derivatives, bank deposits and, more generally,
Business Lines, as well as with the adoption of specific
financial instruments (the financial portfolio).
standardized contractual frameworks that contain risk miti-
In order to minimize credit risk, credit exposures are mana-
gation clauses (e.g. netting arrangements) and possibly the
ged at the Region/Country/Business Line level by different
exchange of cash collateral.
units, thereby ensuring the necessary segregation of risk
management and control activities. Monitoring of the con-
solidated exposure is carried out by Enel SpA.
Concentration of customer credit risk
Trade receivables are generated by the Group’s operations
In addition, at the Group level the policy provides for the
in many Regions and Countries with a base of customers
use of uniform criteria – in all the main Regions/Countries/
and counterparties that is highly diversified, whether geo-
Global Business Lines and at the consolidated level – in me-
graphically, sectorally or by size (corporate, residential and
asuring commercial credit exposures in order to promptly
government customers). Through its subsidiaries, Enel has
identify any deterioration in the quality of outstanding recei-
more than 60 million customers or counterparties with
vables and any mitigation actions to be taken.
whom it has generally granular credit exposures.
Financial assets past due but not impaired
Millions of euro
Impaired trade receivables
Not past due and not impaired trade receivables
Past due but not impaired trade receivables:
- less than 3 months
- from 3 months to 6 months
- from 6 months to 12 months
- from 12 months to 24 months
- more than 24 months
Total
286
2017
2,402
10,425
4,105
1,779
444
349
343
1,190
16,932
2016
2,028
10,006
3,499
1,349
288
334
500
1,028
15,533
Annual Report 2017 Liquidity risk
Liquidity risk manifests itself as uncertainty about the
ble committed credit lines and a portfolio of highly liquid
Group’s ability to discharge its obligations associated with
assets.
financial liabilities that are settled by delivering cash or ano-
In the long term, liquidity risk is mitigated by maintaining a
ther financial asset.
balanced maturity profile for our debt, access to a range of
Enel manages liquidity risk by implementing measures to
sources of funding on different markets, in different curren-
ensure an appropriate level of liquid financial resources, mi-
cies and with diverse counterparties.
nimizing the associated opportunity cost and maintaining a
The mitigation of liquidity risk enables the Group to main-
balanced debt structure in terms of its maturity profile and
tain a credit rating that ensures access to the capital market
funding sources.
and limits the cost of funds, with a positive impact on its
In the short term, liquidity risk is mitigated by maintaining
performance and financial position.
an appropriate level of unconditionally available resources,
including liquidity on hand and short-term deposits, availa-
The Group holds the following undrawn lines of credit.
Millions of euro
at Dec. 31, 2017
at Dec. 31, 2016
Committed credit lines
Uncommitted credit lines
Commercial paper
Total
Expiring within
one year
Expiring beyond
one year
Expiring within
one year
Expiring beyond
one year
245
360
7,464
8,069
13,761
1
-
13,762
176
448
6,320
6,944
14,214
19
-
14,233
Maturity analysis
The table below summarizes the maturity profile of the Group’s long-term debt.
Millions of euro
Maturing in
Less than 3
months
From 3
months to 1
year
2019
2020
2021
2022
Beyond
Bonds:
- listed, fixed rate
- listed, floating rate
- unlisted, fixed rate
- unlisted, floating rate
Total bonds
Bank borrowings:
- fixed rate
- floating rate
- use of revolving credit lines
Total bank borrowings
Non-bank borrowings:
- fixed rate
- floating rate
Total non-bank borrowings
2,506
500
-
-
2,173
184
-
66
2,098
2,173
1,320
229
-
229
115
-
177
168
-
111
3,006
2,423
2,556
2,465
1,599
73
93
-
166
53
7
60
220
960
-
398
797
-
1,180
1,195
145
20
165
164
30
194
340
1,374
7
1,721
176
30
206
133
1,067
-
1,200
173
40
213
2,254
306
1,291
97
3,948
53
545
-
598
174
16
190
TOTAL
3,232
3,768
3,945
4,392
3,012
4,736
12,751
1,274
7,167
525
21,717
316
3,280
-
3,596
980
61
1,041
26,354
287
Consolidated financial statements Commitments to purchase commodities
In conducting its business, the Enel Group has entered into
The following table reports the undiscounted cash flows
contracts to purchase specified quantities of commodities
associated with outstanding commitments at December
at a certain future date for its own use, which qualify for the
31, 2017.
own use exemption provided for under IAS 39.
Millions of euro
Commitments to purchase commodities:
- electricity
- fuels
Total
at Dec. 31, 2017
2015-2019
2020-2024
2025-2029
Beyond
79,163
42,302
121,465
19,475
24,671
44,146
14,596
10,764
25,360
14,163
5,222
19,385
30,929
1,645
32,574
43. Offsetting financial assets and financial liabilities
At December 31, 2017, the Group did not hold offset posi-
policy to settle financial assets and liabilities on a net basis.
tions in assets and liabilities, as it is not the Enel Group’s
44. Derivatives and hedge accounting
The following tables show the notional amount and the
The notional amount of a derivative contract is the amount
fair value of derivative financial assets and derivative finan-
on the basis of which cash flows are exchanged. This
cial liabilities eligible for hedge accounting or measured a
amount can be expressed as a value or a quantity (for exam-
FVTPL, classified on the basis of the type of hedge rela-
ple tons, converted into euros by multiplying the notional
tionship and the hedged risk, broken down into current and
amount by the agreed price). Amounts denominated in cur-
non-current instruments.
rencies other than the euro are converted at the end-year
exchange rates provided by the European Central Bank.
Millions of euro
Non-current
Current
Notional amount
Fair value
Notional amount
Fair value
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
Fair value hedge
derivatives:
- on interest rates
Total
Cash flow hedge
derivatives:
- on interest rates
- on exchange rates
- on commodities
Total
Trading derivatives:
- on interest rates
- on exchange rates
- on commodities
Total
TOTAL DERIVATIVE
FINANCIAL ASSETS
288
827
827
780
3,644
367
4,791
394
134
177
705
848
848
379
8,057
99
8,535
50
120
69
239
23
23
5
594
63
662
3
5
9
17
36
36
3
1,531
18
1,552
3
7
11
21
-
-
20
20
127
1,130
1,975
3,232
-
4,442
12,909
17,351
17
3,561
1,869
5,447
-
3,246
15,539
18,785
-
-
1
45
281
327
-
80
1,902
1,982
1
1
-
464
453
917
-
70
2,957
3,027
6,323
9,622
702
1,609
20,583
24,252
2,309
3,945
Annual Report 2017 Millions of euro
Non-current
Current
Notional amount
Fair value
Notional amount
Fair value
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
Fair value hedge
derivatives:
- on interest rates
- on exchange rates
- on commodities
Total
Cash flow hedge
derivatives:
- on interest rates
- on exchange rates
- on commodities
Total
Trading derivatives:
- on interest rates
- on exchange rates
- on commodities
Total
TOTAL DERIVATIVE
FINANCIAL LIABILITIES
-
63
-
63
-
106
-
106
9,899
15,756
368
11,042
5,686
352
26,023
17,080
88
326
18
432
88
37
64
189
-
7
-
7
556
2,375
39
2,970
9
10
2
21
-
15
-
15
695
1,764
36
2,495
13
5
4
22
-
35
-
35
50
2,096
1,114
3,260
100
1,474
12,902
14,476
-
7
4
11
31
457
1,096
1,584
119
3,633
15,608
19,360
-
6
-
6
1
114
159
274
65
38
1,877
1,980
-
1
-
1
1
88
216
305
73
62
2,881
3,016
26,518
17,375
2,998
2,532
17,771
20,955
2,260
3,322
44.1 Derivatives designated as hedging instruments
Derivatives are initially recognized at fair value, at the trade
ted with long-term debt denominated in a currency other
date of the contract, and are subsequently re-measured at
than the currency of account or the functional currency
fair value.
in which the company holding the financial liability opera-
The method for recognizing the resulting gain or loss de-
tes; iii) changes in the price of fuels and non-energy com-
pends on whether the derivative is designated as a hedging
modities denominated in a foreign currency; iv) changes
instrument, and if so, the nature of the item being hedged.
in the price of forecast electricity sales at variable prices;
Hedge accounting is applied to derivatives entered into in
v) changes in the price of transactions in coal and petro-
order to reduce risks such as interest rate risk, exchange risk,
leum commodities; vi) changes in the prices of capital
commodity risk, credit risk and equity risk when all the crite-
goods; vii) changes in operating expenses; and viii) chan-
ria provided for under IAS 39 are met.
ges in revenue from the sale of electricity;
At the inception of the transaction, the Group documents
> fair value hedge derivatives involving the hedging of ex-
the relationship between hedging instruments and hedged
posures to changes in the fair value of an asset, a liability
items, as well as its risk management objectives and stra-
or a firm commitment attributable to a specific risk;
tegy. The Group also analyzes, both at hedge inception and
> derivatives hedging a net investment in a foreign ope-
on an ongoing systematic basis, the effectiveness of hedges
ration (NIFO), involving the hedging of exposures to
using prospective and retrospective tests in order to deter-
exchange rate volatility associated with investments in
mine whether hedging instruments are highly effective in
foreign entities.
offsetting changes in the fair values or cash flows of hedged
For more details on the nature and the extent of risks arising
items.
from financial instruments to which the company is expo-
Depending on the nature of the risks to which it is exposed,
sed, please see note 42 “Risk management”.
the Group designates derivatives as hedging instruments in
one of the following hedge relationships:
> cash flow hedge derivatives in respect of the risk of: i)
Cash flow hedges
Cash flow hedges are used in order to hedge the Group’s
changes in the cash flows associated with long-term flo-
exposure to changes in future cash flows that are attributa-
ating-rate debt; ii) changes in the exchange rates associa-
ble to a particular risk associated with an asset, a liability or
289
Consolidated financial statements a highly probable transaction that could affect profit or loss.
The Group currently uses these hedge relationships to mini-
The effective portion of changes in the fair value of derivati-
mize the volatility of profit or loss.
ves that are designated and qualify as cash flow hedges is
recognized in other comprehensive income. The gain or loss
relating to the ineffective portion is recognized immediately
in the income statement.
Amounts accumulated in equity are reclassified to profit or
loss in the period when the hedged item affects profit or
loss.
When a hedging instrument expires or is sold, or when a
hedge no longer meets the criteria for hedge accounting but
the hedged item has not expired or been cancelled, any cu-
mulative gain or loss existing in equity at that time remains
in equity and is recognized when the forecast transaction is
ultimately recognized in the income statement.
When a forecast transaction is no longer expected to occur,
the cumulative gain or loss that was reported in equity is
immediately transferred to profit or loss.
Fair value hedges
Fair value hedges are used to protect the Group against ex-
posures to adverse changes in the fair value of assets, liabili-
ties or firm commitments attributable to a particular risk that
could affect profit or loss.
Changes in the fair value of derivatives that qualify and are
designated as hedging instruments are recognized in the in-
come statement, together with changes in the fair value of
the hedged item that are attributable to the hedged risk.
If the hedge is ineffective or no longer meets the criteria for
hedge accounting, the adjustment to the carrying amount
of a hedged item for which the effective interest method is
used is amortized to profit or loss over the period to maturity.
The Group currently makes marginal use of such hedge re-
lationships to seize opportunities associated with general
developments in the yield curve.
44.1.1 Hedge relationships by type of risk hedged
Interest rate risk
The following table shows the notional amount and the fair
transactions outstanding as at December 31, 2017 and De-
value of the hedging instruments on the interest rate risk of
cember 31, 2016, broken down by type of hedge.
Millions of euro
Hedging instrument
Interest rate swaps
Interest rate swaps
Interest rate swaps
Total
Fair value
Notional amount
Fair value Notional amount
Hedged item
at Dec. 31, 2017
at Dec. 31, 2016
Fixed-rate
borrowings
Floating-rate
borrowings
Floating-rate financial
receivables
22
812
35
853
(550)
10,799
(691)
11,484
-
(528)
72
-
-
11,683
(656)
12,337
290
Annual Report 2017 The following table shows the notional amount and the fair
cember 31, 2017 and December 31, 2016, broken down by
value of hedging derivatives on interest rate risk as at De-
type of hedge.
Millions of euro
Notional amount
Fair value assets
Notional amount
Fair value liabilities
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
Fair value hedge
derivatives:
- interest rate swaps
827
868
23
37
-
-
-
-
Cash flow hedge
derivatives:
- interest rate swaps
907
396
Total interest rate
derivatives
1,734
1,264
6
29
3
40
9,949
11,073
(557)
(696)
9,949
11,073
(557)
(696)
The notional amount of derivatives classified as hedging in-
The improvement in the fair value of €128 million mainly
struments at December 31, 2017 came to €11,683 million,
reflects the rise in the long-term segment of the yield curve
with a corresponding negative fair value of €528 million.
during the year.
The notional amount decreased by €654 million. More spe-
cifically, interest rate swaps with a total value of €1,089
Cash flow hedge derivatives
million expired, while new derivatives amounted to €666
million. The value also reflects the reduction in the notional
The following table shows the cash flows expected in co-
ming years from cash flow hedge derivatives on interest
amount of amortizing interest rate swaps.
rate risk.
Millions of euro
Fair value
at Dec. 31,
2017
Cash flow hedge derivatives on interest
rates:
Distribution of expected cash flows
2018
2019
2020
2021
2022
Beyond
- positive fair value
- negative fair value
6
(557)
1
(93)
3
2
(113)
(109)
1
(88)
-
(61)
-
(131)
The following table shows the impact of reserves from cash flow hedge derivatives on interest rate risk on equity during
the period, gross of tax effects.
Millions of euro
Opening balance at January 1, 2016
Changes in fair value recognized in equity (OCI)
Changes in fair value recognized in profit or loss
Closing balance at December 31, 2016
Opening balance at January 1, 2017
Changes in fair value recognized in equity (OCI)
Changes in fair value recognized in profit or loss
Closing balance at December 31, 2017
(442)
(361)
35
(768)
(768)
99
52
(617)
291
Consolidated financial statements Exchange risk
The following table shows the notional amount and the fair
transactions outstanding as at December 31, 2017 and De-
value of the hedging instruments on the exchange risk of
cember 31, 2016, broken down by type of hedged item.
Millions of euro
Hedging instrument
Cross currency interest rate swaps (CCIRSs)
Cross currency interest rate swaps (CCIRSs)
Cross currency interest rate swaps (CCIRSs)
Currency forwards
Currency forwards
Currency forwards
Total
Hedged asset
Fixed-rate
borrowings
Floating-rate
borrowings
Future cash flows
denominated in
foreign currencies
Future commodity
purchases
denominated in
foreign currencies
Future cash flows
denominated in
foreign currencies
Purchases of
investment goods
and other
Fair value Notional amount
Fair value Notional amount
at Dec. 31, 2017
at Dec. 31, 2016
(1,720)
17,616
148
(16)
977
(4)
(29)
321
(69)
13,988
650
335
(130)
3,076
120
2,091
30
(9)
(1,863)
552
1
38
183
22,725
(57)
127
772
17,874
Cash flow hedges and fair value hedges include:
> currency forwards with a notional amount of €183 million
> CCIRSs with a notional amount of €17,616 million used to
and a negative fair value of €9 million in respect of OTC
hedge the exchange risk on fixed-rate debt denominated
transactions to mitigate the exchange risk on expected
in currencies other than the euro, with a negative fair va-
cash flows in currencies other than the currency of ac-
lue of €1,720 million;
count connected with the purchase of investment goods
> CCIRSs with a notional amount of €1,298 million used to
in the renewables and infrastructure and networks sec-
hedge the exchange risk on floating-rate debt denomina-
tors (new generation digital meters), on operating expen-
ted in currencies other than the euro, with a negative fair
ses for the supply of cloud services and on revenue from
value of €33 million;
the sale of renewable energy.
> currency forwards with a notional amount of €3,628 mil-
lion used to hedge the exchange risk associated with
The following table reports the notional amount and fair va-
purchases of natural gas, purchases of fuel and expected
lue of foreign exchange derivatives at December 31, 2017
cash flows in currencies other than the euro, with a ne-
and December 31, 2016, broken down by type of hedge.
gative fair value of €100 million;
Millions of euro
Notional amount
Fair value assets
Notional amount
Fair value liabilities
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
Fair value hedge
derivatives:
- currency forwards
- CCIRSs
Cash flow hedge
derivatives:
- currency forwards
- CCIRSs
Total exchange derivatives
292
-
-
-
-
747
4,028
4,775
2,521
9,097
11,618
-
-
32
607
639
-
-
4
93
7
106
-
(13)
(1)
(15)
141
1,854
1,995
3,060
14,793
17,950
373
5,770
6,256
(142)
(2,347)
(2,502)
(76)
(1,776)
(1,868)
Annual Report 2017 The notional amount of CCIRSs at December 31, 2017
The notional value of currency forwards at December 31,
amounted to €18,914 million (€14,973 million at December
2017 amounted to €3,807 million (€2,894 million at Decem-
31, 2016), an increase of €3,941 million. Cross currency in-
ber 31, 2016), an increase of €913 million. The exposure to
terest rate swaps with a total value of €1,513 million expi-
exchange risk, especially that associated with the US dollar,
red, while cross currency interest rate swaps with a value
is mainly due to purchases of natural gas, purchase of fuel
of €1,660 were closed early. New derivatives amounted to
and cash flows in respect of investments. Changes in the
€7,896 million, of which €2,501 million and €4,169 million in
notional amount are connected with normal developments
respect of bond issues denominated in US dollars in May
in operations.
and October 2017, respectively. The value also reflects deve-
lopments in the exchange rate of the euro against the main
Cash flow hedge derivatives
other currencies, which caused their notional amount to de-
The following table shows the cash flows expected in coming
years from cash flow hedge derivatives on exchange risk.
crease by €782 million.
Millions of euro
Fair value
at Dec. 31,
2017
Distribution of expected cash flows
2018
2019
2020
2021
2022
Beyond
Cash flow hedge derivatives on exchange rates:
- positive fair value
- negative fair value
638
(2,488)
81
(52)
138
(174)
66
71
53
38
44
(46)
493
268
The following table shows the impact of reserves from cash flow hedge derivatives on exchange risk on equity during the
period, gross of tax effects.
Millions of euro
Opening balance at January 1, 2016
Changes in fair value recognized in equity (OCI)
Changes in fair value recognized in profit or loss
Closing balance at December 31, 2016
Opening balance at January 1, 2017
Changes in fair value recognized in equity (OCI)
Changes in fair value recognized in profit or loss
Closing balance at December 31, 2017
(614)
(508)
(230)
(1,341)
(1,341)
(211)
(88)
(1,640)
293
Consolidated financial statements Commodity risk
Millions of euro
Notional amount
Fair value assets
Notional amount
Fair value liabilities
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
Fair value hedge derivatives
Derivatives on power:
- swaps
- forwards/futures
- options
Total derivatives on power
Cash flow hedge derivatives
Derivatives on power:
- swaps
- forwards/futures
- options
Total derivatives on power
Derivatives on coal:
- swaps
- forwards/futures
- options
-
-
-
-
458
116
-
574
-
-
-
-
21
87
-
108
525
380
-
-
-
-
Total derivatives on coal
525
380
Derivatives on gas and oil:
- swaps
- forwards/futures
- options
45
161
1,036
1,259
-
-
Total derivatives on gas and oil
1,081
1,420
Derivatives on CO2:
- swaps
- forwards/futures
- options
Total derivatives on CO2
TOTAL DERIVATIVES ON
COMMODITIES
-
162
-
162
-
60
-
60
-
-
-
-
39
11
-
50
84
-
-
84
12
130
-
142
-
68
-
68
-
-
-
-
5
10
-
15
247
-
-
247
44
149
-
193
-
16
-
16
-
-
-
-
238
545
-
783
18
-
-
18
-
681
-
681
-
-
-
-
-
4
-
4
4
590
-
594
1
-
-
1
13
744
-
757
-
96
-
96
-
-
-
-
(22)
(102)
-
(124)
(1)
-
-
(1)
-
(73)
-
(73)
-
-
-
-
-
-
-
-
-
(66)
-
(66)
-
-
-
-
(2)
(180)
-
(182)
-
(4)
-
(4)
2,342
1,968
344
471
1,482
1,452
(198)
(252)
The table reports the notional amount and fair value of deri-
in-one hedges).
vatives hedging the price risk on commodities at December
Cash flow hedge derivatives on commodities included in
31, 2017 and at December 31, 2016, broken down by type
liabilities regard derivatives on power in the amount of
of hedge. The positive fair value of cash flow hedge deri-
€124 million, derivatives on gas and oil commodities in the
vatives on commodities regards derivatives on gas and oil
amount of €73 million and, to a marginal extent, derivatives
commodities in the amount of €142 million, hedges of coal
on coal (€1 million).
purchases requested by the generation companies in the
amount of €84 million, and, to a lesser extent, derivatives
Cash flow hedge derivatives
on CO2 (€68 million) and power (€50 million). The first cate-
gory primarily regards hedges of fluctuations in the price of
The following table shows the cash flows expected in co-
ming years from cash flow hedge derivatives on commo-
natural gas, for both purchases and sales, carried out for oil
dity risk.
commodities and gas products with physical delivery (all-
294
Annual Report 2017 Millions of euro
Cash flow hedge derivatives on
commodities:
- positive fair value
- negative fair value
Fair value
at Dec. 31,
2017
Distribution of expected cash flows
2018
2019
2020
2021
2022
Beyond
344
(198)
280
(159)
28
(39)
15
-
-
-
-
-
21
-
The following table shows the impact of reserves from cash flow hedge derivatives on commodity risk on equity during
the period, gross of tax effects.
Millions of euro
Opening balance at January 1, 2016
Changes in fair value recognized in equity (OCI)
Changes in fair value recognized in profit or loss
Closing balance at December 31, 2016
Opening balance at January 1, 2017
Changes in fair value recognized in equity (OCI)
Changes in fair value recognized in profit or loss
Closing balance at December 31, 2017
(622)
137
830
345
345
409
(513)
241
295
Consolidated financial statements 44.2 Derivatives at fair value through profit or loss
The following table shows the notional amount and the fair value of derivatives at FVTPL as at December 31, 2017 and
December 31, 2016.
Millions of euro
Notional amount
Fair value assets
Notional amount
Fair value liabilities
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
Derivatives at FVTPL
Derivatives on interest rates:
- interest rate swaps
- interest rate options
Derivatives on exchange rates:
- currency forwards
- CCIRSs
Derivatives on commodities
Derivatives on power:
- swaps
- forwards/futures
- options
394
-
50
-
4,576
3,366
-
-
776
3,439
7
1,105
5,820
16
Total derivatives on power
4,222
6,941
Derivatives on coal:
- swaps
- forwards/futures
- options
Total derivatives on coal
Derivatives on gas and oil:
- swaps
- forwards/futures
- options
Total derivatives on gas and oil
Derivatives on CO2:
- swaps
- forwards/futures
- options
Total derivatives on CO2
Derivatives on other:
- swaps
- forwards/futures
- options
Total derivatives on other
Embedded derivatives
369
29
-
398
534
7,653
181
8,368
-
97
1
98
-
-
-
-
-
1,077
103
-
1,180
616
6,591
125
7,332
-
155
-
155
-
-
-
-
-
3
-
85
-
125
457
9
591
86
1
-
87
125
823
254
3
-
77
-
138
50
157
50
1,759
3,670
90
-
(68)
(6)
(46)
(2)
(79)
(7)
(67)
-
163
1,005
14
608
3,500
16
1,169
5,705
23
(107)
(522)
(5)
(172)
(1,033)
(9)
1,182
4,124
6,897
(634)
(1,214)
387
15
-
402
205
941
177
1,202
1,323
-
30
1
31
-
-
-
-
-
-
61
-
61
-
-
-
-
-
294
1,069
(57)
(409)
4
-
93
1
-
-
(2)
(1)
298
1,163
(57)
(412)
629
7,483
216
8,328
572
6,648
143
(123)
(732)
(293)
(109)
(853)
(245)
7,363
(1,148)
(1,207)
-
79
1
80
90
-
-
90
-
6
243
-
249
-
-
-
-
-
-
(34)
(1)
(35)
(5)
-
-
(5)
-
(3)
(49)
-
(52)
-
-
-
-
-
TOTAL DERIVATIVES
18,056
19,024
1,999
3,048
14,957
19,549
(2,001)
(3,038)
At December 31, 2017 the notional amount of derivatives
on exchange rates was €6,425 million. The decrease in their
on interest rates came to €582 million. The fair value of a
notional value and the rise in the associated net fair value
negative €71 million improved by €12 million on the previous
of €27 million mainly reflected normal operations and deve-
year, mainly due to the rise in the long-term segment of the
lopments in exchange rates.
yield curve.
At December 31, 2017, the notional amount of derivatives
At December 31, 2017, the notional amount of derivatives
on commodities came to €26,006 million. The fair value
296
Annual Report 2017 of trading derivatives on commodities classified as assets
These values include transactions that, although established
mainly reflects the market valuation of hedges of gas and
for hedging purposes, did not meet the requirements for
oil amounting to €1,202 million and derivatives on power
hedge accounting.
amounting to €591 million.
The “Other” category includes hedges using weather deri-
The fair value of trading derivatives on commodities classified
vatives. In addition to commodity risk, the Group companies
as liabilities mainly regards hedges of gas and oil amounting
are also exposed to changes in volumes associated with
to €1,148 million and derivatives on power amounting to
weather conditions (for example, temperature impacts the
€634 million.
consumption of gas and power).
45. Assets measured at fair value
The Group determines fair value in accordance with IFRS
> Level 3, where the fair value is determined on the basis
13 whenever such measurement is required by the inter-
of unobservable inputs.
national accounting standards as a recognition or measu-
This note also provides detailed disclosures concerning the
rement criterion.
valuation techniques and inputs used to perform these me-
Fair value is defined as the price that would be received to
asurements.
sell an asset or paid to transfer a liability, in an orderly tran-
To that end:
saction, between market participants, at the measurement
> recurring fair value measurements of assets or liabilities
date (i.e. an exit price).
are those required or permitted by the IFRS in the balan-
The best proxy of fair value is market price, i.e. the current
ce sheet at the close of each period;
publically available price actually used on a liquid and active
> non-recurring fair value measurements are those requi-
market.
red or permitted by the IFRS in the balance sheet in par-
The fair value of assets and liabilities is classified in ac-
ticular circumstances.
cordance with the three-level hierarchy described below,
For general information or specific disclosures on the ac-
depending on the inputs and valuation techniques used in
counting treatment of these circumstances, please see
determining their fair value:
note 2 “Accounting policies and measurement criteria”.
> Level 1, where the fair value is determined on the basis
of quoted prices (unadjusted) in active markets for iden-
The following table shows, for each class of assets mea-
tical assets or liabilities that the entity can access at the
sured at fair value on a recurring or non-recurring basis in
measurement date;
the financial statements, the fair value measurement at the
> Level 2, where the fair value is determined on the basis
end of the reporting period and the level in the fair value
of inputs other than quoted prices included within Level
hierarchy into which the fair value measurements of those
1 that are observable for the asset or liability, either di-
assets are classified.
rectly (such as prices) or indirectly (derived from prices);
297
Consolidated financial statements Level 1 Level 2
Level 3
Millions of euro
Non-current assets
Current assets
Equity investments in other companies measured
at fair value
Service concession arrangements
Securities available for sale
Notes
24
24
24.1
Loans and receivables measured at fair value
24 and 28
Other investments of liquidity at fair value
Cash flow hedge derivatives:
- on interest rates
- on exchange rates
- on commodities
Fair value hedge derivatives:
- on interest rates
Trading derivatives:
- on interest rates
- on exchange rates
- on commodities
Inventories measured at fair value
Contingent consideration
Other assets measured at fair value
Assets classified as held for sale
30
44
44
44
44
44
44
44
26
25
25
31
Fair
value
6
1,476
382
49
-
5
594
63
23
3
5
9
-
23
5
4
Level 1 Level 2
Level 3
4
-
382
-
-
-
-
41
-
-
-
3
-
-
-
-
-
1,476
-
15
-
5
594
22
23
3
5
6
-
23
5
-
2
-
-
34
-
-
-
-
-
-
-
-
-
-
-
4
Fair
value
-
16
69
41
-
-
69
41
-
16
-
-
203
101
102
1
45
-
-
281
216
-
-
80
-
-
-
1
45
65
-
-
80
1,902
902
1,000
45
-
-
-
1
-
-
-
44
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The fair value of “Equity investments in other companies” is
of the period (such as interest rates, exchange rates, volatili-
determined for listed companies on the basis of the quoted
ty), discounting expected future cash flows on the basis of
price set on the closing date of the year, while that for unli-
the market yield curve and translating amounts in currencies
sted companies is based on a reliable valuation of the relevant
other than the euro using exchange rates provided by the Eu-
assets and liabilities.
ropean Central Bank. For contracts involving commodities,
the measurement is conducted using prices, where available,
“Service concession arrangements” concern electricity di-
for the same instruments on both regulated and unregulated
stribution operations in Brazil, mainly by Enel Distribución Rio,
markets.
Enel Distribución Ceará and Enel Distribuição Goiás and are
accounted for in accordance with IFRIC 12. Fair value was
In accordance with the new international accounting stan-
estimated as the net replacement cost based on the most re-
dards, in 2013 the Group included a measurement of credit
cent rate information available and on the general price index
risk, both of the counterparty (Credit Valuation Adjustment
for the Brazilian market.
or CVA) and its own (Debit Valuation Adjustment or DVA),
“Loans and receivables measured at fair value” include (reco-
the corresponding amount of counterparty risk. More speci-
gnized in level 3) the receivable from the disposal of Slovak
fically, the Group measures CVA/DVA using a Potential Futu-
Power Holding of €189 million at December 31, 2017. The fair
re Exposure valuation technique for the net exposure of the
value is determined on the basis of the price formula speci-
position and subsequently allocating the adjustment to the
in order to adjust the fair value of financial instruments for
fied in the contract.
individual financial instruments that make up the overall port-
folio. All of the inputs used in this technique are observable
The fair value of derivative contracts is determined using the
on the market.
official prices for instruments traded on regulated markets.
The notional amount of a derivative contract is the amount on
The fair value of instruments not listed on a regulated market
which cash flows are exchanged. This amount can be expres-
is determined using valuation methods appropriate for each
sed as a value or a quantity (for example tons, converted into
type of financial instrument and market data as of the close
euros by multiplying the notional amount by the agreed price).
298
Annual Report 2017 Amounts denominated in currencies other than the euro are
exposure. For listed debt instruments, the fair value is given
converted into euros at the year-end exchange rates provided
by official prices. For unlisted instruments the fair value is de-
by the European Central Bank.
termined using appropriate valuation techniques for each ca-
The notional amounts of derivatives reported here do not ne-
tegory of financial instrument and market data at the closing
cessarily represent amounts exchanged between the parties
date of the year, including the credit spreads of Enel SpA.
and therefore are not a measure of the Group’s credit risk
45.1 Fair value of other assets
For each class of assets not measured at fair value on a
riod and the level in the fair value hierarchy into which the
recurring basis but whose fair value must be reported, the
fair value measurements of those assets are classified.
following table reports the fair value at the end of the pe-
Millions of euro
Non-current assets
Current assets
Notes
Fair value
Level 1
Level 2
Level 3 Fair value
Level 1
Level 2
Level 3
Loans and receivables
24 and 28
Investment property
Equity investments in
other companies
Inventories
18
24
26
649
111
34
62
-
-
-
-
5
-
-
-
644
111
34
62
102
-
-
-
-
-
-
-
-
-
-
-
102
-
-
-
The table reports the fair value of investment property and
The largest aggregate is “Loans and receivables”, which es-
inventories of real estate not used in the business in the
sentially reports the receivables of e-distribuzione for the eli-
amount of €111 million and €62 million respectively. The
mination of the Electrical Workers Pension Fund and for the
amounts were calculated with the assistance of appraisals
reimbursement of charges connected with the early retire-
conducted by independent experts, who used different me-
ment of electromechanical meters.
thods depending on the specific assets involved.
299
Consolidated financial statements 46. Liabilities measured at fair value
The following table reports for each class of liabilities me-
end of the reporting period and the level in the fair value
asured at fair value on a recurring or non-recurring basis in
hierarchy into which the fair value measurements are ca-
the financial statements the fair value measurement at the
tegorized.
Millions of euro
Non-current liabilities
Current liabilities
Notes Fair value
Level 1 Level 2
Level 3 Fair value
Level 1
Level 2
Level 3
Cash flow hedge derivatives:
- on interest rates
- on exchange rates
- on commodities
Fair value hedge derivatives:
- on interest rates
- on exchange rates
- on commodities
Trading derivatives:
- on interest rates
- on exchange rates
- on commodities
44
44
44
44
44
44
44
44
44
Contingent consideration
36 and 40
556
2,375
39
-
-
12
556
2,375
27
-
7
-
9
10
2
9
-
-
-
-
-
1
-
-
7
-
9
10
1
9
-
-
-
-
-
-
-
-
-
-
1
114
159
-
6
-
65
38
-
-
21
-
-
-
-
-
1
114
138
-
6
-
65
38
1,877
774
1,098
23
-
23
-
-
-
-
-
-
-
-
5
-
Contingent consideration regards a number of equity in-
tracts, measurement uses certified historical data on the
vestments held by the Group in North America, whose
underlying variables. For example, an HDD (“Heating De-
fair value was determined on the basis of the contractual
gree Days”) derivative on a given measurement station in-
terms and conditions.
dicated in the derivative contract is measured at fair value
by calculating the difference between the agreed strike
The fair value of derivatives on commodities classified as
and the historical average of the same variable observed
level 3 regards the measurement of hedging derivatives
at the same station.
on weather indices (weather derivatives). For these con-
46.1 Fair value of other liabilities
For each class of liabilities not measured at fair value in the
riod and the level in the fair value hierarchy into which the
balance sheet but whose fair value must be reported, the
fair value measurements of those liabilities are classified.
following table reports the fair value at the end of the pe-
Millions of euro
Bonds:
- fixed rate
- floating rate
Bank borrowings:
- fixed rate
- floating rate
Non-bank borrowings:
- fixed rate
- floating rate
Total
300
Notes
Fair value
Level 1
Level 2
Level 3
41.3.1
41.3.1
41.3.1
41.3.1
41.3.1
41.3.1
38,818
4,252
4,155
8,452
2,149
231
58,057
35,739
667
-
-
-
-
36,406
3,079
3,585
4,155
8,452
2,149
231
21,651
-
-
-
-
-
-
-
Annual Report 2017 47. Related parties
As an operator in the field of generation, distribution, tran-
The table below summarizes the main types of transac-
sport and sale of electricity and the sale of natural gas, Enel
tions carried out with such counterparties.
carries out transactions with a number of companies directly
or indirectly controlled by the Italian State, the Group’s con-
trolling shareholder.
Related party
Relationship
Nature of main transactions
Acquirente Unico - Single Buyer
Fully controlled (indirectly) by the Ministry for the
Economy and Finance
Purchase of electricity for the enhanced-
protection market
Cassa Depositi e Prestiti Group
Directly controlled by the Ministry for the
Economy and Finance
GSE - Energy Services Operator
Fully controlled (directly) by the
Ministry for the Economy and Finance
GME - Energy Markets Operator
Fully controlled (indirectly) by the
Ministry for the Economy and Finance
Sale of electricity on the Ancillary Services
Market (Terna)
Sale of electricity transport services (Eni Group)
Purchase of transport, dispatching and metering
services (Terna)
Purchase of postal services (Poste Italiane)
Purchase of fuels for generation plants and
natural gas storage and distribution services
(Eni Group)
Sale of subsidized electricity
Payment of A3 component for renewable
resource incentives
Sale of electricity on the Power Exchange
(GME)
Purchase of electricity on the Power Exchange
for pumping and plant planning (GME)
Leonardo Group
Directly controlled by the Ministry for the
Economy and Finance
Purchase of IT services and supply of goods
In addition, the Group conducts essentially commercial
All transactions with related parties were carried out on
transactions with associated companies or companies in
normal market terms and conditions, which in some cases
which it holds minority interests.
are determined by the Regulatory Authority for Energy,
Finally, Enel also maintains relationships with the pension
Networks and the Environment.
funds FOPEN and FONDENEL, as well as Fondazione Enel
and Enel Cuore, an Enel non-profit company devoted to
providing social and healthcare assistance.
301
Consolidated financial statements The following tables summarize transactions with related
outstanding at December 31, 2017 and December 31,
parties, associated companies and joint arrangements
2016 and carried out during the period.
Millions of euro
Acquirente Unico
Cassa Depositi e
Prestiti Group
GME
GSE
Other
Key
management
personnel
Total 2017
arrangements
Overall total 2017
% of total
Associates and joint
Total in financial
statements
1
-
-
-
-
-
5
-
-
1
1,767
2,668
443
-
-
2
-
89
3
-
4
115
-
-
-
-
-
-
-
-
-
-
-
3,345
2,458
1,636
-
4
-
-
75
524
-
-
2,340
3
32
-
Acquirente Unico
Cassa Depositi e
Prestiti Group
GME
GSE
Other
Key
management
personnel
Total at Dec. 31, 2017
Associates and joint
arrangements
Overall total
at Dec. 31, 2017
Total in financial
statements
% of total
-
-
-
-
-
-
77
-
-
-
-
-
682
110
-
-
-
-
-
-
-
-
-
280
-
-
526
-
24
-
-
893
543
10
-
89
360
208
46
57
-
129
-
-
-
977
-
-
-
-
-
-
34
-
1
-
6
-
11
-
-
-
108
23
6
-
-
-
-
-
-
-
-
-
-
-
-
-
4,968
5
-
7,443
2,535
531
32
1
893
2,323
694
154
-
-
6
10
-
89
748
231
52
156
17
18
318
129
-
(5)
24
138
3
8
11
30
-
42
27
9
-
-
-
-
5,124
22
18
7,761
2,664
531
27
25
2,365
832
3
162
11
36
893
37
9
89
748
231
52
72,664
1,975
2,371
36,039
17,982
2,886
578
3,908
14,529
4,614
2,695
2,309
2,003
42,439
12,671
12,462
2,260
7,000
7.1%
1.1%
0.8%
21.5%
14.8%
18.4%
4.7%
0.6%
5.7%
0.1%
6.0%
0.5%
1.8%
2.1%
18.7%
0.3%
0.4%
1.3%
Income statement
Revenue from sales and services
Other revenue and income
Other financial income
Purchases of electricity, gas and
fuel
Costs for services and other
materials
Other operating expenses
Net income/(expense) from
commodity risk management
Other financial expense
Millions of euro
Balance sheet
Trade receivables
Other current financial assets
Other current assets
Derivative assets
Other non-current liabilities
Long-term borrowings
Trade payables
Other current liabilities
Current derivative liabilities
Current portion of long-term
borrowings
Other information
Guarantees issued
Guarantees received
Commitments
302
Annual Report 2017 Revenue from sales and services
1,767
2,668
443
89
Income statement
Other revenue and income
Other financial income
Purchases of electricity, gas and
fuel
materials
Costs for services and other
Other operating expenses
Net income/(expense) from
commodity risk management
Other financial expense
Millions of euro
Balance sheet
Trade receivables
Other current financial assets
Other current assets
Derivative assets
Other non-current liabilities
Long-term borrowings
Trade payables
Other current liabilities
Current derivative liabilities
Current portion of long-term
borrowings
Other information
Guarantees issued
Guarantees received
Commitments
3,345
2,458
1,636
75
524
2,340
115
1
-
-
-
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
280
2
-
3
32
-
526
24
-
-
-
893
543
10
-
89
360
208
46
-
-
-
-
-
5
1
-
-
-
-
-
-
-
-
-
-
57
129
3
-
4
-
-
-
1
6
-
-
-
-
-
-
108
23
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
77
34
682
110
977
11
Millions of euro
Acquirente Unico
GME
Prestiti Group
GSE
Other
personnel
Cassa Depositi e
Key
management
Total 2017
Associates and joint
arrangements
Overall total 2017
Total in financial
statements
% of total
4,968
5
-
7,443
2,535
531
32
1
156
17
18
318
129
-
(5)
24
5,124
22
18
7,761
2,664
531
27
25
72,664
1,975
2,371
36,039
17,982
2,886
578
3,908
7.1%
1.1%
0.8%
21.5%
14.8%
18.4%
4.7%
0.6%
Acquirente Unico
GME
Prestiti Group
GSE
Other
personnel
Total at Dec. 31, 2017
Associates and joint
arrangements
Overall total
at Dec. 31, 2017
Total in financial
statements
% of total
Cassa Depositi e
Key
management
694
-
154
-
6
893
2,323
10
-
89
748
231
52
138
3
8
11
30
-
42
27
9
-
-
-
-
14,529
4,614
2,695
2,309
2,003
42,439
12,671
12,462
2,260
7,000
832
3
162
11
36
893
2,365
37
9
89
748
231
52
5.7%
0.1%
6.0%
0.5%
1.8%
2.1%
18.7%
0.3%
0.4%
1.3%
303
Consolidated financial statements Millions of euro
Acquirente Unico
Cassa Depositi e
Prestiti Group
GME
GSE
Other
Key
management
personnel
Total 2016
arrangements
Overall total 2016
% of total
Associates and joint
Total in financial
statements
Income statement
Revenue from sales and services
Other revenue and income
Other financial income
Purchases of electricity, gas and
fuel
Costs for services and other
materials
Other operating expenses
Net income/(expense) from
commodity risk management
Other financial expense
Millions of euro
Balance sheet
Trade receivables
Other current financial assets
Other current assets
Derivative assets
Other non-current liabilities
Long-term borrowings
Trade payables
Other current liabilities
Current derivative liabilities
Current portion of long-term
borrowings
Other information
Guarantees issued
Guarantees received
Commitments
46
-
-
4
-
2
4
-
-
1
1,486
2,190
468
1
-
1
17
90
3
-
-
139
-
-
-
-
-
-
-
-
-
-
-
3,169
1,769
1,319
-
3
-
-
75
309
-
-
2,259
-
5
12
Acquirente Unico
Cassa Depositi e
Prestiti Group
GME
GSE
Other
Key
management
personnel
Total at Dec. 31, 2016
Associates and joint
arrangements
Overall total
at Dec. 31, 2016
Total in financial
statements
% of total
8
-
-
-
-
-
301
-
-
-
-
-
638
372
-
-
-
-
-
-
-
-
-
280
-
-
477
-
15
-
-
1,072
490
3
-
89
262
261
72
27
9
92
-
-
-
1,239
-
-
-
-
-
-
57
-
1
-
6
-
18
21
-
-
80
32
9
-
-
-
-
-
-
-
-
-
-
-
-
-
4,280
9
17
6,259
2,477
312
5
13
1,072
2,757
870
108
9
-
6
24
-
89
622
293
81
270
11
4
344
100
-
24
26
88
126
1
18
17
-
164
4
11
-
-
-
-
4,550
20
21
6,603
2,577
312
29
39
1,072
2,921
958
135
109
18
23
28
11
89
622
293
81
68,604
1,988
2,289
32,039
17,393
2,783
(133)
4,339
13,506
3,053
3,044
3,945
1,856
41,336
12,688
12,141
3,322
4,384
6.6%
1.0%
0.9%
20.6%
14.8%
11.2%
-21.8%
0.9%
7.1%
4.4%
3.6%
0.5%
1.2%
2.6%
23.0%
0.2%
0.3%
2.0%
In November 2010, the Board of Directors of Enel SpA ap-
implementation of the provisions of Article 2391-bis of the
proved a procedure governing the approval and execution
Italian Civil Code and the implementing regulations issued
of transactions with related parties carried out by Enel SpA
by CONSOB. In 2017, no transactions were carried out for
directly or through subsidiaries. The procedure (available
which it was necessary to make the disclosures required in
at www.enel.com/investors/bylaws-rules-and-policies/tran-
the rules on transactions with related parties adopted with
sactions-with-related-parties) sets out rules designed to en-
CONSOB Resolution 17221 of March 12, 2010, as amended
sure the transparency and procedural and substantive pro-
with Resolution 17389 of June 23, 2010.
priety of transactions with related parties. It was adopted in
304
Annual Report 2017 Revenue from sales and services
1,486
2,190
468
3,169
1,769
1,319
Income statement
Other revenue and income
Other financial income
Purchases of electricity, gas and
fuel
materials
Costs for services and other
Other operating expenses
Net income/(expense) from
commodity risk management
Other financial expense
Millions of euro
Balance sheet
Trade receivables
Other current financial assets
Other current assets
Derivative assets
Other non-current liabilities
Long-term borrowings
Trade payables
Other current liabilities
Current derivative liabilities
Current portion of long-term
borrowings
Other information
Guarantees issued
Guarantees received
Commitments
46
-
-
-
3
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
75
309
-
-
-
-
-
-
-
-
-
-
-
-
280
2,259
1
17
-
5
12
15
-
-
-
3
-
89
1,072
490
262
261
72
8
301
477
638
372
1,239
4
-
2
4
-
-
1
-
-
-
-
-
-
-
-
-
27
9
92
90
3
-
-
-
-
-
139
57
1
-
-
6
-
-
-
18
21
80
32
9
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Millions of euro
Acquirente Unico
GME
Prestiti Group
GSE
Other
personnel
Cassa Depositi e
Key
management
Total 2016
Associates and joint
arrangements
Overall total 2016
Total in financial
statements
% of total
4,280
9
17
6,259
2,477
312
5
13
270
11
4
344
100
-
24
26
4,550
20
21
6,603
2,577
312
29
39
68,604
1,988
2,289
32,039
17,393
2,783
(133)
4,339
6.6%
1.0%
0.9%
20.6%
14.8%
11.2%
-21.8%
0.9%
Acquirente Unico
GME
Prestiti Group
GSE
Other
personnel
Total at Dec. 31, 2016
Associates and joint
arrangements
Overall total
at Dec. 31, 2016
Total in financial
statements
% of total
Cassa Depositi e
Key
management
870
9
108
-
6
1,072
2,757
24
-
89
622
293
81
88
126
1
18
17
-
164
4
11
-
-
-
-
13,506
3,053
3,044
3,945
1,856
41,336
12,688
12,141
3,322
4,384
958
135
109
18
23
1,072
2,921
28
11
89
622
293
81
7.1%
4.4%
3.6%
0.5%
1.2%
2.6%
23.0%
0.2%
0.3%
2.0%
305
Consolidated financial statements 48. Contractual commitments and guarantees
The commitments entered into by the Enel Group and the guarantees given to third parties are shown below.
Millions of euro
Guarantees given:
at Dec. 31, 2017
at Dec. 31, 2016
Change
- sureties and other guarantees granted to third parties
8,171
8,123
48
Commitments to suppliers for:
- electricity purchases
- fuel purchases
- various supplies
- tenders
- other
Total
TOTAL
79,163
42,302
3,119
3,334
2,912
130,830
139,001
63,407
47,305
1,309
1,846
3,751
117,618
125,741
15,756
(5,003)
1,810
1,488
(839)
13,212
13,260
For more details on the expiry of commitments and guarantees, please see the section “Commitments to purchase com-
modities” in note 42.
306
Annual Report 2017 49. Contingent assets and liabilities
The following reports the main contingent assets and liabi-
vate actors who had already participated as injured parties in
lities at December 31, 2017, which are not recognized in the
the criminal case asked the Venice Court of Appeal to order
financial statements as they do not meet the requirements
Enel SpA and Enel Produzione to pay civil damages for harm
provided for in IAS 37.
Porto Tolle thermal plant
- Air pollution - Criminal
proceedings against Enel
directors and employees
caused by the emissions from the Porto Tolle power station.
The amount of damages requested for economic and envi-
ronmental losses was about €100 million, which Enel con-
tested. During 2013, an agreement was reached – with no
admission of liability by Enel/Enel Produzione – with the pu-
blic entities of Emilia Romagna to express social solidarity in
line with the general sustainability policies of the Group. The
suits with the Ministry and private parties (environmental
associations and a number of resident individuals, who have
The Court of Adria, in a ruling issued on March 31, 2006,
received no payments from Enel during the proceedings)
convicted former directors and employees of Enel for a
remain open. On July 10, 2014, the decision of the Venice
number of incidents of air pollution caused by emissions
Court of Appeal was filed ordering the defendants, jointly
from the Porto Tolle thermoelectric plant. The decision
with Enel/Enel Produzione, to pay damages in the amount
held the defendants and Enel (as a civilly liable party) join-
of €312,500, plus more than €55,000 in legal expenses. The
tly liable for the payment of damages for harm to multiple
Ministry’s request for calculation of the amount of damages
parties, both natural persons and public authorities. Dama-
it claimed it was owed was deemed inadmissible, as groun-
ges for a number of mainly private parties (individuals and
ds for barring such action arose in the course of the criminal
environmental associations), were set at the amount of
proceedings. In the meantime the Court issued a general
€367,000. The calculation of the amount of damages owed
conviction with damages to be awarded in a separate de-
to certain public entities (Ministry for the Environment, a
cision and ordered payment of legal costs. Enel ledged an
number of public entities of Veneto and Emilia Romagna,
appeal with the Court of Cassation in February 2015 of the
including the area’s park agencies) was postponed to a la-
ruling of the Venice Court of Appeal of July 10, 2014 and is
ter civil trial, although a “provisional award” of about €2.5
currently waiting for the date of the hearing to be set.
million was immediately due.
In August 2011, the Public Prosecutor’s Office of Rovigo
An appeal was lodged against the ruling of the Court of
asked that a number of directors, former directors, offi-
Adria and on March 12, 2009, the Court of Appeal of Veni-
cers, former officers and employees of Enel and Enel Pro-
ce partially reversed the lower court decision. It found that
duzione be remanded for trial on the charge of willful omis-
the former directors had not committed a crime and that
sion to take precautionary actions to prevent a disaster in
there was no environmental damage and therefore ordered
respect of the alleged emissions from the Porto Tolle plant.
recovery of the provisional award already paid. The prose-
Subsequently, the public prosecutor filed charges of will-
cutors and the civil claimants lodged an appeal against the
fully causing a disaster. During 2012, the pre-trial hearing
ruling with the Court of Cassation. In a ruling on January 11,
judge of Rovigo, granting the request of the Public Pro-
2011, the Court of Cassation granted the appeal, overturning
secutor’s Office of Rovigo, ordered the committal for trial
the decision of the Venice Court of Appeal, and referred the
of all of the accused for both offences. The Ministry for
case to the civil section of the Venice Court of Appeal to rule
the Environment, the Ministry of Health and other actors,
as regards payment of damages and the division of such
mainly local authorities in Emilia Romagna and Veneto, as
damages among the accused. As regards amounts paid to a
well as the park agencies of the area, joined the case as
number of public entities in Veneto, Enel has already made
injured parties, seeking unspecified damages from the
payment under a settlement agreement reached in 2008.
above individuals, without citing Enel or Enel Produzione
With a suit lodged in July 2011, the Ministry for the Envi-
as liable parties. During 2013, as part of the agreement
ronment, the public entities of Emilia Romagna and the pri-
mentioned earlier, most of the public entities withdrew
307
Consolidated financial statements their suits.
parties and associations acting in the criminal proceeding
At the hearing of March 31, 2014, the Court issued its ru-
to recover damages; and (ii) granted most of the claims fi-
ling of first instance, acquitting all of the accused of the
led by the private parties acting to recover damages, refer-
charge of willful omission to take precautionary safety me-
ring the latter to the civil courts for quantification without
asures, also acquitting the accused of the charge of willful-
granting a provisional award. The convicted employees and
ly causing a disaster, with the exception of the two former
Enel Produzione SpA as the civil part appealed the ruling.
Chief Executive Officers of Enel SpA. The former Chief
The employee for whom the offense was time-barred also
Executive Officers were then ordered to pay unspecified
appealed.
damages in a separate civil action, with a total provisional
Criminal proceedings were held before the Courts of Reg-
ruling of €410,000 and payment of court costs for the re-
gio Calabria and Vibo Valentia against a number of emplo-
maining civil parties to the action.
yees of Enel Produzione for the offense of illegal waste
Following the appeal, the appellate level of the proceeding
disposal in connection with alleged violations concerning
before the Court of Appeals of Venice was completed on
the disposal of waste from the Brindisi plant. Enel Produ-
January 18, 2017 with the acquittal of all defendants on the
zione has not been cited as a liable party for civil damages.
grounds that “no crime was committed”. The prosecution
The criminal proceedings before the Court of Reggio Cala-
appealed the acquittal of the three former Chief Executi-
bria ended with the hearing of June 23, 2016. The court ac-
ve Officers before the Court of Cassation, with the appeal
quitted nearly all of the Enel defendants of the main char-
being rejected by the court as inadmissible on January 10,
ges because no crime was committed. Just one case was
2018.
Brindisi Sud thermal
generation plant - Criminal
proceedings against Enel
employees
A criminal proceeding was held before the Court of Brindi-
si concerning the Brindisi Sud thermal plant. A number of
employees of Enel Produzione – cited in 2012 as a liable
party in civil litigation – have been accused of causing cri-
minal damage and dumping of hazardous substances with
regard to the alleged contamination of land adjacent to the
plant with coal dust as a result of actions between 1999
and 2011. At the end of 2013, the accusations were exten-
ded to cover 2012 and 2013. As part of the proceeding,
injured parties, including the Province and City of Brindisi,
have submitted claims for total damages of about €1.4 bil-
lion. In its decision of October 26, 2016, the Court of Brin-
disi: (i) acquitted nine of the thirteen defendants (employe-
es/managers of Enel Produzione) for not having committed
the offense; (ii) ruled that it did not have to proceed as the
dismissed under the statute of limitations. Similarly, all of
the remaining charges involving minor offenses were di-
smissed under the statute of limitations. The proceedings
before the Court of Vibo Valentia were adjourned to April
19, 2018, in order to hear the testimony of the final witnes-
ses called by the other defendants.
Brindisi Sud thermal
generation plant - Seizure
of plant
For more details on the case, please see the presentation
in “Significant events in 2017” in the Report on operations
and in note 50 “Events after the reporting period”.
Out-of-court disputes and
litigation connected with
the blackout of September
28, 2003
offense was time-barred for two of the defendants; (and
In the wake of the blackout that occurred on September
iii) convicted the remaining two defendants, sentencing
28, 2003, numerous claims were filed against Enel Distri-
them with all the allowances provided for by law to nine
buzione (now e-distribuzione) for automatic and other in-
months’ imprisonment. With regard to payment of dama-
demnities for losses. These claims gave rise to substantial
ges, the Court’s ruling also: (i) denied all claims of public
litigation before justices of the peace, mainly in the regions
308
Annual Report 2017 of Calabria, Campania and Basilicata, with a total of some
120,000 proceedings. Charges in respect of such indem-
nities could be recovered in part under existing insurance
policies. Most of the initial rulings by these judges found in
favor of the plaintiffs, while appellate courts have nearly all
found in favor of Enel Distribuzione. The Court of Cassation
has also consistently ruled in favor of Enel Distribuzione. At
December 31, 2017 pending cases numbered about 8,100.
In addition, in view of the rulings in Enel’s favor by both the
courts of appeal and the Court of Cassation, the flow of
new claims has come to a halt. Beginning in 2012, a num-
ber of actions for recovery were initiated, which continue,
to obtain repayment of amounts paid by Enel in execution
of the rulings in the courts of first instance.
In May 2008, Enel served its insurance company (Catto-
lica) a summons to ascertain its right to reimbursement
of amounts paid in settlement of unfavorable rulings. The
case also involved a number of reinsurance companies in
the proceedings, which have challenged Enel’s claim. In
a ruling of October 21, 2013, the Court of Rome granted
Enel’s petition, finding the insurance coverage to be valid
and ordering Cattolica, and consequently the reinsurance
companies, to hold Enel harmless in respect of amounts
paid or to be paid to users and their legal counsel as well
as, within the limits established by the policies, to pay de-
fense costs.
Subsequently, Cattolica appealed the ruling of the court of
first instance of October 21, 2013, before the Rome Court
of Appeal, asking that it be overturned. At the hearing of
February 23, 2018, the judge issued the deadline for the
exchange of closing arguments and took the case for jud-
gement.
On the basis of the ruling of October 21, 2013, in Octo-
ber 2014, Enel filed suit against Cattolica with the Court
of Rome to obtain a quantification and payment of the
amounts due to Enel from Cattolica. At the hearing of Oc-
tober 3, 2016, the court denied the counterparties’ petition
for a suspension of the proceeding pending completion of
the appeals process, adjourning the case for the examina-
tion of motions to July 4, 2017. In a ruling of July 12, 2017
the court decided on the basis of the preliminary briefs to
adjourn the suit until November 25, 2019 for a decision.
Enel Energia and Servizio
Elettrico Nazionale
antitrust proceeding
With measure 26581 notified on May 11, 2017, the Com-
petition Authority began proceedings for alleged abuse of
a dominant position against Enel SpA (Enel), Enel Energia
SpA (EE) and Servizio Elettrico Nazionale SpA (SEN), con-
ducting inspections on the same date to acquire documen-
tation at certain offices of these companies, Enel Italia Srl
and the Punto Enel in Catania.
The proceeding was initiated on the basis of reports made
by the Italian Association of Energy Wholesalers and Tra-
ders (AIGET), the company Green Network SpA (GN), and
reports from individual consumers received by the Compe-
tition Authority, especially since the second half of 2016.
According to the allegations formulated by the Competi-
tion Authority in the measure, the Enel Group, as an inte-
grated actor in the distribution and sale of power on the re-
gulated market, has engaged (in a market in the middle of
a crucial transition phase towards the complete opening to
competition of retail markets of low-voltage domestic and
non-domestic customers) in an exclusionary strategy using
a series of non-replicable commercial stratagems capable
of hindering their non-integrated competitors to the benefit
of the Group’s company operating on the free market, i.e.
Enel Energia.
Enel and the other Group companies involved in the
proceeding, while not admitting the disputed conduct,
submitted commitments to address the anti-competitive
concerns expressed by Competition Authority in the mea-
sure initiating the proceeding.
With measures adopted on November 8, 2017, the Com-
petition Authority rejected the commitments submitted,
arguing that there is an interest in ascertaining the merits
of the disputed conduct. Consequently, the proceeding
will continue with the ordinary preliminary enquiry, in
which the companies involved may file briefs and present
their position in relation to the objections formulated by
the Authority.
The time limit for closing the proceeding is June 30, 2018.
309
Consolidated financial statements BEG litigation
Following an arbitration proceeding initiated by BEG SpA
in Italy, Enelpower obtained a ruling in its favor in 2002,
which was upheld by the Court of Cassation in 2010,
which entirely rejected the complaint with regard to alle-
ged breach by Enelpower of an agreement concerning the
construction of a hydroelectric power station in Albania.
Subsequently, BEG, acting through its subsidiary Albania
BEG Ambient, filed suit against Enelpower and Enel SpA
in Albania concerning the matter, obtaining a ruling from
a petition with the Albanian Court of Cassation, asking for
the ruling issued by the District Court of Tirana on March
24, 2009 to be voided. The proceeding is still pending.
Proceedings undertaken by
Albania BEG Ambient Shpk
to obtain enforcement of the
ruling of the District Court of
Tirana of March 24, 2009
the District Court of Tirana, upheld by the Albanian Court
of Cassation, ordering Enelpower and Enel to pay tortious
France
damages of about €25 million for 2004 as well as an un-
specified amount of tortious damages for subsequent ye-
ars. Following the ruling, Albania BEG Ambient demanded
payment of more than €430 million from Enel.
The European Court of Human Rights, with which Enelpo-
wer SpA and Enel SpA had filed an appeal for violation of
the right to a fair trial and the rule of law by the Republic
of Albania, rejected the petition as inadmissible. The ruling
was purely procedural and did not address the substance
of the suit.
With a ruling of June 16, 2015, the first level was com-
pleted in the additional suit lodged by Enelpower SpA
and Enel SpA with the Court of Rome asking the Court to
ascertain the liability of BEG SpA for having evaded com-
pliance with the arbitration ruling issued in Italy in favor of
Enelpower SpA through the legal action taken by Albania
BEG Ambient Shpk. With this action, Enelpower SpA and
Enel SpA asked the Court to find BEG liable and order it to
pay damages in the amount that the other could be requi-
red to pay to Albania BEG Ambient Shpk in the event of
the enforcement of the sentence issued by the Albanian
courts. With the ruling, the Court of Rome found that BEG
SpA did not have standing to be sued, or alternatively, that
the request was not admissible for lack of an interest for
Enel SpA and Enelpower SpA to sue, as the Albanian ruling
In February 2012, Albania BEG Ambient filed suit against
Enel SpA and Enelpower SpA with the Tribunal de Grande
Instance in Paris in order to render the ruling of the Alba-
nian court enforceable in France. Enel SpA and Enelpower
SpA challenged the suit.
Following the beginning of the case before the Tribunal de
Grande Instance, again at the initiative of BEG Ambient,
between 2012 and 2013 Enel France was served with two
“Saise Conservatoire de Créances” (orders for the precau-
tionary attachment of receivables) to conserve any receiva-
bles of Enel SpA in respect of Enel France.
On January 29, 2018, the Tribunal de Grande Instance is-
sued a ruling in favor of Enel and Enelpower, denying Al-
bania BEG Ambient Shpk the recognition and enforcement
of the Tirana court’s ruling in France for lack of the requi-
rements under French law for the purposes of granting
exequatur. Among other issues, the Tribunal de Grande
Instance ruled that: (i) the Albanian ruling conflicted with
an existing decision, in this case the arbitration ruling of
2002 and that (ii) the fact that BEG sought to obtain in Al-
bania what it was not able to obtain in the Italian arbitration
proceeding, resubmitting the same claim through Albania
BEG Ambient Shpk, represented fraud.
Albania BEG Ambient Shpk appealed the ruling and the
proceeding is at its preliminary stages.
had not yet been declared enforceable in any court. The
State of New York
Court ordered the setting off of court costs. Enel SpA and
Enelpower SpA appealed the ruling before the Rome Court
of Appeal, asking that it be overturned in full. The next he-
aring is scheduled for November 14, 2018.
On November 5, 2016, Enel SpA and Enelpower SpA filed
In March 2014, Albania BEG Ambient Shpk filed suit
against Enel SpA and Enelpower SpA in New York to ren-
der the ruling of the Albanian court enforceable in the State
of New York.
On April 22, 2014, in response to a motion filed by Enel
and Enelpower, the court revoked the previous ruling is-
310
Annual Report 2017 sued with no hearing of the parties against the compa-
ding the revocation of the preliminary injunctions.
nies freezing assets of around $600 million (about €487
At the end of July 2014, Albania BEG Ambient Shpk filed
million). On April 27, 2015, Enel SpA and Enelpower SpA
suit with the Court of Amsterdam to render the ruling of
asked for the case to be transferred from the New York
the Albanian court enforceable in the Netherlands. On
state courts to the federal courts. In a ruling of March 10,
June 29, 2016, the court filed its judgment, which: (i) ruled
2016, the federal court referred the case to the New York
that the Albanian ruling meet the requirements for recogni-
state court. Enel SpA and Enelpower SpA appealed the de-
tion and enforcement in the Netherlands; (ii) ordered Enel
cision denying the pleading that the New York state courts
and Enelpower to pay €433,091,870.00 to Albania BEG
had no jurisdiction. In a unanimous decision of February 8,
Ambient Shpk, in addition to costs and ancillary charges of
2018, the Appellate Court of the State of New York upheld
€60,673.78; and (iii) denied Albania BEG Ambient Shpk’s
the appeal of Enel SpA and Enelpower SpA, rejecting the
request to declare the ruling provisionally enforceable. On
argument that the Court of New York had jurisdiction over
July 14, 2016, Albania BEG Ambient Shpk filed an appeal
the request for enforcement submitted by Albania BEG
for a precautionary seizure on the basis of the Court of
Ambient Shpk.
The Netherlands
On June 2, 2014 Albania BEG Ambient Shpk obtained an
order from the court in the Hague, based upon the preli-
minary injunction, freezing up to €440 million held with a
number of entities and the establishment of a lien on the
shares of two subsidiaries of Enel SpA in that country. Enel
SpA and Enelpower SpA challenged that ruling and on July
1, 2014, the Dutch court, in granting the petition of Enel
and Enelpower, provisionally determined the value of the
suit at €25 million and ordered the removal of the prelimi-
nary injunction subject to the issue of a bank guarantee in
the amount of €25 million by Enel and Enelpower. Enel and
Enelpower have appealed this ruling.
On July 3, 2014, Albania BEG Ambient Shpk petitioned for
a second precautionary freeze of assets with no hearing of
the parties. Following the hearing of August 28, 2014, the
Hague Court granted a precautionary freeze of €425 mil-
lion on September 18, 2014. Enel and Enelpower appealed
that measure.
In a ruling of February 9, 2016, the Hague Court of Appeal
upheld the appeals, ordering the revocation of the prelimi-
nary injunctions subject to the pledging of a guarantee by
Enel of €440 million and a counter-guarantee by Albania
BEG Ambient Shpk of about €50 million (the estimated va-
lue of the losses of Enel and Enelpower from the seizure of
assets and the pledge of bank guarantees). Enel’s guaran-
tee was issued on March 30, 2016. Albania BEG Ambient
Shpk did not issue its counter-guarantee.
On April 4, 2016, Albania BEG Ambient Shpk appealed the
Amsterdam’s decision of June 29, 2016 in the amount of
€440 million with a number of entities and the seizure of
the shares of three companies controlled by Enel SpA in
the Netherlands. Enel appealed and in a ruling of August
26, 2016, the Court of Amsterdam decided that the pre-
cautionary measures issued in 2014 and 2016 would be re-
voked if Albania BEG Ambient Shpk did not provide a bank
guarantee of €7 million to Enel and Enelpower by October
21, 2016. Albania BEG Ambient Shpk did not provide the
guarantee and, accordingly, the seizures of the assets of
Enel and Enelpower in the Netherlands were revoked and
no longer effective as from October 21, 2016. Albania BEG
Ambient Shpk appealed the decision of August 26, 2016
but the proceeding was suspended under an agreement
between the parties pending the ruling of the Dutch Court
of Cassation in the proceeding over the precautionary me-
asures (which was then issued on June 23, 2017). The
appeal against the decision of August 26, 2016 therefore
remains suspended in the absence of a specific request by
one of the parties. The suspension has had no impact on
the fact that the seizures of assets in the Netherlands have
not been in effect since October 2016.
On June 29, 2016, Enel and Enelpower filed appeals
against the ruling of the Court of Amsterdam issued on the
same date. The appeal has full de novo effect. The Court
of Appeal will re-examine the entire subject of the dispute.
Accordingly, Enel and Enelpower will be able to present
their defense in its entirety. On September 27, 2016, Alba-
nia BEG Ambient also appealed the court’s ruling of June
29, 2016, to request the reversal of its partial loss on the
merits. On April 11, 2017, the Amsterdam Court of Appeal
granted the request of Enel and Enelpower to join to two
ruling of February 9, 2016 before the Court of Cassation in
pending appeals.
the Netherlands, which in a ruling of June 23, 2017, denied
the appeal of Albania BEG Ambient Shpk, definitively deci-
On January 29, 2018, oral arguments in the appellate pro-
ceeding were held, following which the Court allowed
311
Consolidated financial statements Enel and Enelpower to place in evidence the decision with
which the Tribunal de Grande Instance of Paris denied
exequatur of the Albanian ruling in France. The decision
of the Amsterdam Court of Appeal will be issued on July
17, 2018.
Ireland
Albania BEG Ambient Shpk also filed suit in Ireland to ren-
der the ruling of the Court of Tirana enforceable in this
country. The High Court issued a ruling on March 8, 2016
upholding the defense of Enel and Enelpower, finding that
the country had no jurisdiction. On March 31, 2017, Albania
BEG Ambient Shpk filed an expedited appeal against the
ruling of March 8, 2016 finding that Ireland had no jurisdic-
tion. Enel and Enelpower responded to the appeal filing on
April 7, 2017.
In a ruling of February 26, 2018, the Irish court denied the
appeal of Albania BEG Ambient Shpk.
Luxembourg
In Luxembourg, again at the initiative of Albania BEG Am-
bient Shpk, JP Morgan Bank Luxembourg SA was also ser-
ved with an order for the precautionary attachment of any
receivables of Enel SpA. In parallel Albania BEG Ambient
Shpk filed a claim to obtain enforcement of the ruling of the
Court of Tirana in that country. The proceeding is still under
way and briefs are being exchanged between the parties.
No ruling has been issued.
Violations of Legislative
Decree 231/2001
CIEN litigation - Brazil
In 1998 the Brazilian company CIEN (now Enel CIEN) signed
an agreement with Tractebel for the delivery of electricity
from Argentina through its Argentina-Brazil interconnection
line. As a result of Argentine regulatory changes introduced
as a consequence of the economic crisis in 2002, CIEN was
unable to make the electricity available to Tractebel. In Octo-
ber 2009, Tractebel sued CIEN, which submitted its defense.
CIEN cited force majeure as a result of the Argentine crisis
as the main argument in its defense. Out of court, Tractebel
has indicated that it plans to acquire 30% of the intercon-
nection line involved in the dispute. In March 2014, the court
granted CIEN’s motion to suspend the proceedings in view
of the existence of other litigation pending between the
parties. The amount involved in the dispute is estimated at
about R$118 million (about €27 million), plus unspecified da-
mages. For analogous reasons, in May 2010 Furnas also filed
suit against CIEN for failure to deliver electricity, requesting
payment of about R$520 million (about €121 million), in ad-
dition to unspecified damages. In alleging non-performance
by CIEN, Furnas is also seeking to acquire ownership (in this
case 70%) of the interconnection line. CIEN’s defense is si-
milar to the earlier case. The claims put forth by Furnas were
rejected by the trial court in August 2014. Furnas lodged an
appeal against the latter decision, while CIEN also lodged an
appeal and the proceeding is under way.
Cibran litigation - Brazil
Companhia Brasileira de Antibióticos (“Cibran”) has filed
six suits against Enel Distribución Rio (formerly Ampla) to
obtain damages for alleged losses incurred as a result of
the interruption of electricity service by the Brazilian distri-
On July 14, 2017, Enel Green Power SpA received notice
bution company between 1987 and 2002, in addition to
of charges brought before the Court of Ancona for alleged
non-pecuniary damages. The Court ordered a unified tech-
violation of Legislative Decree 231/2001 concerning the
nical appraisal for those cases, the findings of which were
administrative liability of legal persons. The proceeding
partly unfavorable to Enel Distribución Rio. The latter chal-
was begun for the alleged commission by an agent of the
lenged the findings, asking for a new study, which led to
company, in the company’s interest, of the offence of de-
the denial of part of Cibran’s petitions. Cibran subsequently
struction of a natural habitat in a protected area. The case
appealed the decision and the ruling was in favor of Enel
has been joined with a separate proceeding involving the
Distribución Rio.
same agent and two other defendants for the same alleged
The first suit, filed in 1999 and regarding the years from
offences. The court has set the dates for hearings of the
1994 to 1999, was adjudicated in September 2014 when
witnesses.
312
the court of first instance issued a ruling against Enel Di-
stribución Rio, levying a penalty of about R$200,000 (about
Annual Report 2017 €46,000) as well as other damages to be quantified at a
later stage. Enel Distribución Rio appealed the ruling and
the appeal was upheld by the Tribunal de Justiça. In respon-
se, on December 16, 2016, Cibran filed an appeal (recurso
Enel Distribuição Goiás
AGM - Brazil
especial) before the Superior Tribunal de Justiça, and the
In 1993, Enel Distribuição Goiás, the Association of Muni-
proceeding is under way.
cipalities of Goiás (AGM), the State of Goiás and the Bank
With regard to the second case, filed in 2006 and regar-
of Goiás reached an agreement (convenio) for the payment
ding the years from 1987 to 2002, on June 1, 2015, the
of municipal debts to Enel Distribuição Goiás through the
courts issued a ruling ordering Enel Distribución Rio to pay
transfer of the portion of ICMS - Imposto sobre Circulação
R$80,000 (about €18,000) in non-pecuniary damages as
de Mercadorias e Serviços (VAT) that the State would have
well as R$96,465,103 (about €22 million) in pecuniary da-
transferred to those governments. In 2001 the parties to
mages, plus interest. On July 8, 2015 Enel Distribución Rio
the agreement were sued by the individual municipal go-
appealed the decision with the Tribunal de Justiça of Rio de
vernments to obtain a ruling that the agreement was invalid,
Janeiro and the parties are awaiting a ruling.
a position then upheld by the Supreme Federal Court on the
Decisions are still pending with regard to the remaining
grounds of the non-participation of the local governments
four suits. The value of all the disputes is estimated at
themselves in the agreement process. In September 2004,
about R$445 million (about €124 million).
Coperva litigation - Brazil
Enel Distribuição Goiás reached a settlement with 23 muni-
cipalities. Between 2007 and 2008, Enel Distribuição Goiás
was again sued on numerous occasions (there are currently
113 pending suits) seeking the restitution of amounts paid
under the agreement. Despite the ruling that the agreement
As part of the project to expand the grid in rural areas of
was void, Enel Distribuição Goiás argues that the payment
Brazil, in 1982 Enel Distribución Ceará SA (formerly Coel-
of the debts on the part of the local governments is legi-
ce), then owned by the Brazilian government and now an
timate, as electricity was supplied in accordance with the
Enel Group company, had entered into contracts for the
supply contracts and, accordingly, the claims for restitution
use of the grids of a number of cooperatives established
of amounts paid should be denied. The total value of the
specifically to pursue the expansion project. The contracts
suits is equal to about R$1 billion (about €277 million).
provided for the payment of a monthly fee by Enel Distri-
It is important to note that, as part of the privatization of Enel
bución Ceará SA, which was also required to maintain the
Distribuição Goiás, a tax relief mechanism was introduced
networks.
that allows Enel Distribuição Goiás to offset its ICMS (VAT)
Those contracts, between cooperatives established in spe-
liability with a tax credit in respect of investments by Enel
cial circumstances and the then public-sector company, do
Distribuição Goiás in the development and maintenance of
not specifically identify the grids governed by the agree-
its grid. The value of the tax credits is limited to the liabilities
ments, which has prompted a number of the cooperatives
of Enel Distribuição Goiás accrued until January 27, 2015,
to sue Enel Distribución Ceará SA asking for, among other
including those referred to in the litigation.
things, a revision of the fees agreed in the contracts. The-
se actions include the suit filed by Cooperativa de Eletrifi-
cação Rural do V do Acarau Ltda (“Coperva”) with a value
of about R$203 million (about €56 million). Enel Distribu-
El Quimbo - Colombia
ción Ceará SA was granted rulings in its favor from the trial
A number of legal actions (“acciones de grupo” and “ac-
court and the court of appeal, but Coperva filed a further
ciones populares”) brought by residents and fishermen in
appeal (Embargo de Aclaración), which was denied in a ru-
the affected area are pending with regard to the El Quim-
ling of January 11, 2016. Coperva lodged an extraordinary
bo project for the construction of a 400 MW hydroelectric
appeal before the Superior Tribunal de Justiça on February
plant in the region of Huila (Colombia). More specifically,
3, 2016. The proceedings are currently under way.
the first acción de grupo, currently in the preliminary stage,
was brought by around 1,140 residents of the municipality of
Garzón, who claim that the construction of the plant would
reduce their business revenue by 30%. A second action
313
Consolidated financial statements was brought, between August 2011 and December 2012,
nary injunction in August 2017, in the absence of contrary
by residents and businesses/associations of five municipa-
court rulings the El Quimbo plant is continuing to generate
lities of Huila claiming damages related to the closing of a
electricity as the oxygenation system installed by Emgesa
bridge (Paso El Colegio). With regard to acciones popula-
has so far demonstrated that it can maintain the oxygen le-
res, or class action lawsuits, in 2008 a suit was filed by a
vels required by the court. The proceeding is currently stal-
number of residents of the area demanding, among other
led as the court evaluates a proposed settlement between
things, that the environmental permit be suspended. Ano-
the parties, submitted on November 27, 2017, which has
ther acción popular was brought by a number of fish farming
also been notified to the competent authorities. On January
companies over the alleged impact that filling the El Quimbo
24, 2018, the Court of Huila rejected the settlement agree-
basin would have on fishing in the Betania basin downstre-
ment, a ruling that has been appealed by the parties.
am from Quimbo. In February 2015, the Court ordered the
precautionary suspension of filling operations until a number
of specific requirements have been met.
The precautionary suspension was subsequently modified
to permit filling to proceed, which began on June 30, 2015.
However, on July 17, 2015 Emgesa received a notice mo-
difying the precautionary measure to prohibit generation
activities until ANLA (the national environmental authority)
certifies that the company removed the biomass and forest
waste from the El Quimbo reservoir basin.
Pending the ruling, as an energy emergency has been de-
clared, the Ministry of Energy issued a decree authorizing
Emgesa to begin generation. On December 16, 2015, the
Constitutional Court ruled that the Presidential Decree was
unconstitutional and as from that date Emgesa suspended
electricity generation.
On December 24, 2015, the Ministerio de Minas y Energía
and the AUNAP (the authority for agriculture and fishing) fi-
led a joint motion asking the criminal court to authorize ge-
neration as a precautionary measure. On January 8, 2016,
the court granted the precautionary measure requested by
the Ministry and the AUNAP, authorizing the temporary and
immediate resumption of generation at El Quimbo. The pre-
cautionary measure granted by the court would remain in
force until the Huila court issued a ruling on the substance of
the case, i.e. the revocation or upholding of the precautionary
measure previously issued by the local administrative court.
With a decision of February 22, 2016, the Huila court issued
a ruling allowing generation to continue for six months. The
court ordered Emgesa to prepare a technical design that
would ensure compliance with oxygen level requirements
and to provide collateral of about 20,000,000,000 Colom-
bian pesos (about €5.5 million). In a ruling of the Administra-
tive Court of Huila of April 11, 2016 the temporary revocation
of the precautionary injunction was upheld for a period of
six months until October 16, 2016, which was subsequently
extended for a further six months as from February 2017.
Following the deadline for the suspension of the precautio-
314
Nivel de Tensión Uno
proceedings - Colombia
This dispute involves an “acción de grupo” brought by Cen-
tro Médico de la Sabana hospital and other parties against
Codensa seeking restitution of allegedly excess rates. The
action is based upon the alleged failure of Codensa to ap-
ply a subsidized rate that they claim the users should have
paid as Tensión Uno category users (voltage of less than 1
kV) and owners of infrastructure, as established in Reso-
lution 82/2002, as amended by Resolution 97/2008. The
suit is at a preliminary stage. The estimated value of the
proceeding is about 337 billion Colombian pesos (about
€96 million).
Emgesa and Codensa
arbitration proceedings -
Colombia
On December 4, 2017, Enel Américas SA was notified by
the Grupo Energía di Bogotá (“GEB”) (which holds about
51.5% of Emgesa and Codensa) of the start of arbitration
proceedings before the Arbitration Board of Bogotá to re-
solve the dispute between the parties concerning the di-
stribution of net profit for 2016 for Emgesa and Codensa.
GEB alleges that the “Framework Investment Agreement”
(a shareholders’ agreement) had been breached for the fai-
lure to distribute 100% of the profits.
GEB has filed a claim of about 63,619,000,000 Colombian
pesos (about €18 million) for Codensa and 82,820,000,000
Colombian pesos (about €23 million) for Emgesa.
Annual Report 2017 SAPE (formerly Electrica)
arbitration proceedings -
Romania
On April 20, 2016, SAPE submitted a request for arbitration
before the International Chamber of Commerce in Paris in
respect of Enel SpA and Enel Investment Holding BV con-
cerning an alleged contractual breach for failure to distribu-
te dividends from e-distribut¸ie Muntenia and Enel Energie
Muntenia. In September 2016, SAPE modified its arbitra-
tion claims, suing Enel Energie Muntenia and e-distribut¸ie
Muntenia as well and revising its monetary claim to about
€56 million. On May 22, 2017, SAPE again modified its
claim, quantifying it in the amount of about €110 million
plus interest. The parties are exchanging briefs.
Gabcˇíkovo dispute -
Slovakia
Slovenské elektrárne (“SE”) is involved in a number of
cases before the national courts concerning the 720 MW
Gabcˇíkovo hydroelectric plant, which is administered by Vo-
dohospodárska Výsatavba Štátny Podnik (“VV”) and whose
operation and maintenance, as part of the privatization of
SE in 2006, had been entrusted to SE for a period of 30
years under a management agreement (the VEG Operating
Agreement).
Immediately after the closing of the privatization, the Public
Procurement Office (PPO) filed suit with the Court of Bra-
tislava seeking to void the VEG Operating Agreement on
the basis of alleged violations of the regulations governing
public tenders, qualifying the contract as a service contract
and as such governed by those regulations. In November
2011 the trial court ruled in favor of SE, whereupon the PPO
immediately appealed the decision.
In parallel with the PPO action, VV also filed a number of
suits, asking in particular for the voidance of the VEG Ope-
rating Agreement.
On December 12, 2014, VV withdrew unilaterally from the
VEG Operating Agreement, notifying its termination on
March 9, 2015, for breach of contract. On March 9, 2015,
ring of June 29, 2016, the Supreme Court denied the appe-
al. SE then appealed the ruling to the Constitutional Court,
which denied the appeal on January 18, 2017.
In addition, SE lodged a request for arbitration with the
Vienna International Arbitral Centre (VIAC) under the VEG
Indemnity Agreement. Under that accord, which had been
signed as part of the privatization between the National Pro-
perty Fund (now MH Manazment) of the Slovak Republic
and SE, the latter is entitled to an indemnity in the event of
the early termination of the VEG Operating Agreement for
reasons not attributable to SE. The arbitration court rejected
the objection that it did not have jurisdiction and the arbi-
tration proceeding continued to examine the merits of the
case, with a ruling on the amount involved being deferred
to any subsequent proceeding. On June 30, 2017, the ar-
bitration court issued its ruling denying the request of SE.
In parallel with the arbitration proceeding launched by SE,
both VV and the National Property Fund (now MH Ma-
nazment) filed suits, currently pending, in the Slovakian
courts to void the VEG Indemnity Agreement owing to the
alleged connection of the latter with the VEG Operating
Agreement. With regard to the proceeding brought by VV
against SE, on September 27, 2017, a hearing was held be-
fore the Court of Bratislava in which the judge denied the
request of the plaintiff for procedural reasons. In addition,
at the local level, SE was sued by VV for alleged unjustified
enrichment (estimated at about €360 million plus interest)
for the period from 2006 to 2015. The exchange-of-briefs
phase of the proceeding was held and on February 2, 2018
SE filed counter-claims for the proceedings concerning
2010, 2013 and 2014. Finally, in another proceeding before
the Court of Bratislava, VV asked for SE to return the fee
for the transfer from SE to VV of the technology assets of
the Gabcˇíkovo plant as part of the privatization, with a va-
lue of about €43 million plus interest. The hearing was held
on December 4, 2017 and the judge set a deadline for the
exchange of further briefs between the parties.
Precautionary
administrative proceeding
and Chucas arbitration
the decision of the appeals court overturned the ruling of
PH Chucas SA (“Chucas”) is a special purpose entity esta-
the trial court and voided the contract as part of the action
blished by Enel Green Power Costa Rica SA after it won
pursued by the PPO. SE lodged an extraordinary appeal
a tender organized in 2007 by the Instituto Costarricense
against that decision before the Supreme Court. At a hea-
de Electricidad (“ICE”) for the construction of a 50 MW
315
Consolidated financial statements hydroelectric plant and the sale of the power generated by
the plaintiff’s claims to be denied, filed a counter-claim
the plant to ICE under a build, operate and transfer contract
to obtain confirmation of termination of contract for non-
(“BOT”). The agreement provides for Chucas to build and
performance, asking for damages of at least $38 million
operate the plant for 20 years, before transferring it to ICE.
(about €30 million). The hearing was held in February 2018
Under the BOT contract, the plant should have entered
and the exchange of final pleadings is under way.
service on September 26, 2014. For a number of rea-
sons, including flooding, landslides and similar events,
the project experienced cost overruns and delays, with
a consequent delay in meeting the obligation to deliver
electricity. In view of these developments, in 2012 and
2013 Chucas submitted an administrative petition to ICE
to recover the higher costs incurred and obtain a postpo-
nement of the entry into service of the plant. ICE denied
the petition in 2015 and in fact levied two fines of about
$9 million (about €7 million) for the delays in entering
service. Following the precautionary appeal of Chucas,
payment of the fines was suspended. The plant entered
service in December 2016.
In addition, as ICE had rejected the administrative peti-
tion, on May 27, 2015, under the provisions of the BOT
contract, Chucas initiated an arbitration proceeding before
the Cámara Costarricense-Norteamericana de Comercio
(AMCHAM CICA) seeking reimbursement of the additio-
nal costs incurred to build the plant and as a result of the
delays in completing the project as well as voidance of the
fine levied by ICE. In a decision issued in December 2017,
the arbitration board ruled in Chucas’ favor, granting reco-
gnition of the additional costs in the amount of about $113
million (about €91 million) and legal costs and ruling that
the fines should not be paid. ICE appealed the arbitration
ruling in the local courts and the proceeding is in a prelimi-
nary stage.
In addition, on October 3, 2015, in consideration of the
violation of a number of contractual obligations (including
failure to meet the deadline to complete the works) on the
part of FCC Construcción América SA and FCC Construc-
ción SA (FCC) – which had been engaged to build some
of the works for the hydroelectric plant – Chucas notified
the parties that it was terminating the contract for breach,
enforcing the guarantees issued to it. However, the gua-
rantees have not yet been paid pending resolution of a
precautionary proceeding initiated by FCC on October 27,
2015, at the International Court of Arbitration in Paris. In a
filing of March 10, 2017, FCC requested a ruling that the
contract had been terminated without cause and asked
for damages of about $27 million (about €22 million). In
a brief filed in May 2017, Chucas, in addition to asking for
316
Tax litigation in Brazil
Withholding tax - Enel
Distribución Rio SA
In 1998, Enel Distribución Rio SA financed the acquisition of
Enel Distribución Ceará SA with the issue of bonds in the
amount of $350 million (“Fixed Rate Notes” - FRN) subscri-
bed by its Panamanian subsidiary, which had been establi-
shed to raise funds abroad. Under the special rules then in
force, subject to maintaining the bond until 2008, the inte-
rest paid by Enel Distribución Rio SA to its subsidiary was
not subject to withholding tax in Brazil.
However, the financial crisis of 1998 forced the Panama-
nian company to refinance itself with its Brazilian parent,
which for that purpose obtained loans from local banks.
The tax authorities considered this financing to be the
equivalent of the early extinguishment of the bond, with
the consequent loss of entitlement to the exemption from
withholding tax.
In December 2005, Enel Distribución Rio SA carried out a
spin-off that involved the transfer of the residual FRN debt
and the associated rights and obligations.
On November 6, 2012, the Câmara Superior de Recursos
Fiscais (the highest level of administrative courts) issued
a ruling against Enel Distribución Rio SA, for which the
company promptly asked that body for clarifications. On
October 15, 2013, Enel Distribución Rio SA was notified
of the denial of the request for clarification (“Embargo de
Declaración”), thereby upholding the previous adverse
decision. The company provided security for the debt and
on June 27, 2014 continued litigation before the ordinary
courts (“Tribunal de Justiça”).
In December 2017, the court appointed an expert to examine
the issue in greater detail in support of the future ruling.
The amount involved in the dispute at December 31, 2017
was about €312 million.
Annual Report 2017 ICMS - Enel Distribución Rio
SA and Enel Distribución
Ceará SA
The States of Rio de Janeiro and Ceará issued a number of
tax assessments against Enel Distribución Rio SA (for the
years 1996-1999 and 2007-2014) and Enel Distribución Ceará
(for the years 2003, 2004 and 2006-2011), challenging the
deduction of ICMS (Imposto sobre Circulação de Mercado-
rias e Serviços) in relation to the purchase of certain non-
current assets. The companies challenged the assessments,
arguing that they correctly deducted the tax and asserting
that the assets, the purchase of which generated the ICMS,
are intended for use in their electricity distribution activities.
The companies are continuing to defend their actions at the
various levels of adjudication.
The amount involved in the disputes totaled approximately
€69 million at December 31, 2017.
Withholding tax - Endesa
Brasil
The overall amount involved in the dispute at December 31,
2017 was about €69 million.
Tax litigation in Spain
Income taxes - Enel Green
Power España SL
On June 7, 2017, the Spanish tax authorities issued a notice
of assessment to Enel Green Power España SL, contesting
the treatment of the merger of Enel Unión Fenosa Reno-
vables SA (“EUFER”) into Enel Green Power España SL in
2011 as a tax neutral transaction, asserting that the transac-
tion had no valid economic reason.
On July 6, 2017, the company appealed the assessment at
the first administrative level (Tribunal Económico-Admini-
strativo Central - TEAC), defending the appropriateness of
the tax treatment applied to the merger. During the procee-
ding, the company will provide all the supporting documen-
tation demonstrating the synergies achieved as a result of
the merger in order to prove the existence of a valid econo-
mic reason for the transaction.
On November 4, 2014, the Brazilian tax authorities issued an
The total value involved in the proceeding as at Decem-
assessment against Endesa Brasil SA (now Enel Brasil SA)
ber 31, 2017 was about €88 million. This amount has been
alleging the failure to apply withholding tax to payments of
secured with bank guarantees to obtain a suspension of
allegedly higher dividends to non-resident recipients.
collection efforts.
More specifically, in 2009, Endesa Brasil, as a result of the
first-time application of the IFRS-IAS, had cancelled goodwill,
recognizing the effects in equity, on the basis of the correct
application of the accounting standards it had adopted. The
Brazilian tax authorities, however, asserted – during an au-
dit – that the accounting treatment was incorrect and that
the effects of the cancellation should have been recognized
through profit or loss. As a result, the corresponding value
(about €202 million) was reclassified as a payment of income
to non-residents and, therefore, subject to withholding tax
of 15%.
It should be noted that the accounting treatment adopted by
the company was agreed with the external auditor and also
confirmed by a specific legal opinion issued by a local firm
specializing in corporate law.
On December 2, 2014, the company appealed the initial ru-
ling, arguing that its accounting treatment was correct.
In July 2016, the dispute was ruled at first instance in favor
of the tax authorities. Endesa Brasil will therefore appeal the
decision to the second level of administrative jurisdiction.
317
Consolidated financial statements 50. Events after the reporting period
Issue of new Green Bond
in Europe for €1,250 million
investors exposure to companies that are best placed to
seize the opportunities presented by the challenge of cli-
mate change;
> ECPI Euro ESG Equity Index, which is composed of the
On January 9, 2018, Enel Finance International successful-
320 companies with the largest market capitalization in
ly placed its second Green Bond on the European market.
the Eurozone market that meet ECPI ESG criteria;
It is reserved for institutional investors and is backed by a
> ECPI World ESG Equity Index, a broad benchmark re-
guarantee issued by Enel.
presentative of developed market companies that meet
The issue amounts to a total of €1,250 million and provides
ECPI ESG criteria.
for repayment in a single instalment at maturity on Sep-
The ECPI Index series provides an essential tool to analyze
tember 16, 2026 and the payment of a fixed-rate coupon
companies’ risk and performance regarding their ESG-rela-
equal to 1.125%, payable annually in arrears in the month of
ted activities and to assess the performance of sustainabi-
September as from September 2018. The issue price was
lity-driven asset managers. The socially responsible criteria
set at 99.184% and the effective yield at maturity is equal
used to select the indices’ constituents enable investors to
to 1.225%.
express their interest in sustainability issues and to move
The transaction has received orders amounting to approxi-
them up the corporate agenda.
mately €3 billion, with the significant participation of Social-
ly Responsible Investors (“SRI”), enabling the Enel Group
to continue to diversify its investor base. The net proceeds
of the issue – carried out under the “€35,000,000,000 Euro
Medium-Term Notes Program” – will be used to finance
and/or refinance, in whole or in part, the eligible green
projects of the Enel Group identified and/or to be identified
in accordance with the “Green Bond Principles” published
by the International Capital Market Association (ICMA).
Enel confirmed in ECPI
Sustainability Indices
Memorandum of
understanding with PwC
On January 25, 2018, Enel X and PwC signed a memo-
randum of understanding for the development of corpora-
te electric mobility with a program of testing and experi-
mental projects. The agreement has a term of about three
years and provides for a preliminary phase of studies and
analysis, followed by the implementation of pilot projects
in the field.
The objective is to foster the sustainable development of
the transport sector, in particular the business sector, ex-
On January 23, 2018, Enel was confirmed for the tenth time
ploiting the potential offered by electric mobility in terms
in the ECPI Sustainability Index series, which assess com-
of reducing atmospheric pollution and fleet management
panies on the basis of their environmental, social and go-
costs. The test will be carried out with the PwC fleet with
vernance (ESG) performance. Enel’s inclusion in the index
the aim of overturning the idea that electric vehicles can
is recognition of its clear long-term strategic view, sound
only be used by private individuals and in urban areas. PwC
operational management practices and positive work in
will also provide Enel X with its expertise in the field of elec-
tackling social and environmental needs. Enel’s Spanish
tric mobility and fleet management for the development of
subsidiary Endesa has also been included in ECPI Indices.
innovative solutions in managing corporate fleets. In fact, e-
Enel has been included in four of ECPI’s Indices:
cars could easily become part of the corporate world, given
> ECPI Global Renewable Energy Equity Index, which se-
that almost half of company vehicles travel less than 100
lects the 40 highest ESG-rated companies active in the
kilometers a day, well below the average range of electric
production or trading of energy from renewable sources;
models on the market. The agreement between Enel and
> ECPI Global Climate Change Equity Index, which offers
PwC will therefore enable them to share their respective
318
Annual Report 2017 know-how and spread the culture of electric cars in cor-
the Spanish companies Elawan Energy and Genera Avante
porate fleets among the companies in the PwC network
for a total price of €178 million.
in Italy.
Agreement to supply
power in Nevada
On January 25, 2018, Enel Green Power North America
(“EGPNA”) signed a Power Purchase Agreement (PPA) with
Wynn Las Vegas whereby the resort, located on the world-
famous Las Vegas Strip, will buy the energy produced by
EGPNA’s new 27 MW Wynn Solar Facility at Stillwater. The
new solar project, currently under construction in Nevada,
Following the closing, which is scheduled to take place in
the 1st Half of 2018 and subject to a series of normal con-
ditions for this type of transaction, the installed capacity of
EGPE in Spain will exceed 1,806 MW, of which 1,749 MW
of wind power (about 8% of total installed wind capacity in
Spain), 43 MW of mini-hydro and 14 MW from other rene-
wable resources.
Partnership agreement in
Canada
is expected to start production by the 1st Half of 2018.
On February 7, 2018, Enel Green Power North America
The investment in the construction of the new, 160-acre
(“EGPNA”) signed a partnership agreement with Alber-
solar PV facility amounts to approximately $40 million, in
ta Investment Management Corporation under which the
line with the investment outlined in Enel’s current Strate-
Group will sell 49% of the shares in the 115 MW Riverview
gic Plan. The total output that will be produced by the PV
Wind and the 30.6 MW Phase 2 of Castle Rock Ridge wind
plant and sold under the PPA with the Las Vegas resort is
farms, both to be built in Alberta, Canada. The total price
expected to amount to over 43,900 MWh annually.
for the transaction, which will be paid upon closing of the
Yankee Bond Award 2017
deal, will be determined at commercial operation of the
wind farm, which is expected by the end of 2019. Following
the closing of the transaction, EGPNA will manage, operate
and maintain both wind farms while retaining a 51% majo-
On January 31, 2018, Enel was recognized by International
rity ownership of the interest in the projects.
Financing Review (IFR), a leading provider of global capital
Riverview Wind and Phase 2 of Castle Rock Ridge, which
markets intelligence, with the 2017 Yankee Bond Award for
is an expansion of EGPNA’s existing 76.2 MW Castle Rock
its $5 billion triple-tranche bond issued in May 2017, which
Ridge wind farm, are both located in Pincher Creek, Alber-
is the largest ever US bond issued by an Italian corporate.
ta. The overall investment in the construction of the two
IFR praised Enel for the outstanding execution and pricing
wind farms, which are due to enter into service by the end
of the deal, the company’s first US dollar foray since 2013.
of 2019, amounts to about $170 million. Once operational,
The transaction followed a concerted marketing approach
the two facilities are expected to generate around 555
implemented over more than four years, during which Enel
GWh per year, more than doubling the Group’s capacity in
updated US investors on a regular basis, making them awa-
Canada, which currently stands at more than 103 MW.
re of the fundamental strengths of Enel’s business.
The two wind farms will supply their power and renewa-
Agreement for acquisition
of Parques Eólicos
Gestinver
ble energy credits to the Alberta Electric System Operator
(“AESO”) under two 20-year Renewable Energy Support
Agreements that were awarded to Enel in December 2017
in the first tender under the Province’s Renewable Electri-
city Program.
On February 2, 2018 Enel Green Power España (“EGPE”)
signed an agreement to purchase 100% of Parques Eólicos
Gestinver, a company that owns five wind plants in Galicia
and Catalonia with a total capacity of about 132 MW, from
Contract to supply demand
response services in Japan
On February 8, 2018, Enel X, acting through its US demand
319
Consolidated financial statements response services company EnerNOC, was awarded the
to install electric charging stations at tourist accommoda-
delivery of 165 MW of demand response resources in Ja-
tions using tailored commercial solutions and on research
pan following the completion of a tender for balancing re-
and design for replicable solutions to be extended to other
serves launched by a group of Japanese utilities.
areas of the Italian peninsula.
As a result of this award, which confirms Enel as the lar-
Enel will also experiment with electric mobility systems in
gest independent demand response aggregator in Japan,
metropolitan areas and in the main tourist cities, including
the Group will nearly triple its virtual power plant in the Ja-
arrangements in partnership with other operators in the in-
panese market, reaching approximately 165 MW from the
dustry.
current 60 MW, equivalent to a market share of 17%, when
the new programs begin in July 2018.
Fortaleza - Brazil
2018 Corporate Governance
Award
On February 12, 2018, Ethical Boardroom, a leading specia-
lized UK magazine, recognized Enel with the 2018 Corpora-
te Governance Award for Europe in the “Utilities” industry
sector. The magazine, which covers and analyzes global
governance issues, praised Enel’s sustainability standards
and corporate governance best practices. Enel was nomi-
nated for the award by the magazine’s readers, which inclu-
de top executives from leading global listed companies and
sustainability analysts from major institutional investors.
Enel is the only Italian company in this year’s Ethical Boar-
droom corporate governance awards edition.
Memorandum of
understanding for
sustainable mobility in the
tourist industry in Italy
The company Petroleo Brasileiro SA (“Petrobras”), the gas
supplier for the Fortaleza plant (Central Geradora Termelétri-
ca Fortaleza - “CGTF”) in Brazil, announced its intention to
terminate the contract between the parties on the basis
of an alleged economic-financial imbalance in consideration
of current market conditions. The contract was signed in
2003 as part of the “Thermoelectric priority program” esta-
blished by the Brazilian government to increase thermal
generation and enhance supply security in the country. The
program provided for the Brazilian State to be the guarantor
of the supply of gas at regulated prices determined by the
Ministry of Finance, Mines and Energy.
CGTF, in order to guarantee electricity security in Brazil,
started legal action against Petrobras and at the end of
2017 obtained a precautionary injunction from the courts
that suspended the termination of the contract, which was
declared to be still in effect.
At the end of January 2018, CGTF received the arbitration
request from Petrobras concerning the disputes described
above and this proceeding is in the preliminary stages.
Subsequently, on February 27, 2018, the court decided to
extinguish the action initiated by CFTG before the ordinary
courts and, consequently, to revoke the precautionary in-
On February 15, 2018, Enel and the Ministry for Cultural
junction that had allowed the supply of gas.
Heritage signed a memorandum of understanding for the
promotion and development of the use of electricity for su-
CGTF has challenged this last decision in order to restore
the gas supply, confident that the court recognizes Petro-
stainable mobility in the tourism sector.
bras’ obligation to perform the contract.
The memorandum is a strategic lever for increasing public
awareness of the benefits of electric mobility. It will also
permit the creation of an institutional framework for subse-
quent commercial agreements with trade associations for
the installation of electric charging infrastructure at tourist
facilities and the launch of projects in the main tourist cities.
Enel, through Enel X, the Group company dedicated to the
development of innovative products and services, will colla-
borate with trade associations and tourism industry bodies
Construction of new wind
farm in the United States
Enel, acting through its US renewable energy company
Enel Green Power North America, has started construction
of Diamond Vista wind farm, which will have an installed ca-
320
Annual Report 2017 pacity of around 300 MW and will be located in Marion and
Dickinson Counties, in Kansas. Once completed, Diamond
Vista will further secure Enel’s position as the largest wind
operator in the state with some 1,400 MW of operational
Seizure of Brindisi power
station
wind capacity.
With a measure issued on March 16, 2018, the Prosecutor’s
The Diamond Vista wind project will sell its power to three
Office of Lecce confirmed the measure issued on Decem-
large customers, including the global manufacturing com-
ber 18, 2017 and, as a result, ordered the enforcement of
pany Kohler Co.
the precautionary seizure of €523.3 million by the Finance
The planned investment in the construction of Diamond
Police of Taranto.
Vista amounts to about $400 million and is part of the in-
The Finance Police notified that measure on March 19,
vestment outlined in the Enel Group’s current Strategic
2018, giving a time limit of March 21, 2018, for the identifi-
Plan. The project is financed through the Enel Group’s own
cation/opening of a current account with a bank recognized
resources. The project is expected to enter into service by
by the Fondo Unico di Giustizia (Single Justice Fund).
the end of 2018 and, once fully operational, will be able to
The company is complying with the order.
generate around 1,300 GWh annually.
e-distribuzione wins tender
of Ministry for Economic
Development for the
construction of smart grids
e-distribuzione has won a national call for tenders for elec-
tricity infrastructure for the construction of smart grids for
the distribution of electricity in the less developed regions,
for which the Ministry for Economic Development has allo-
cated €80 million to the National Operational Programme
(NOP) on “Enterprises and Competitiveness” 2014-2020.
The tender calls for the construction, upgrading, efficiency
enhancement and strengthening of electricity distribution
infrastructure, or smart grids, in order to directly increase
the share of electricity demand met by distributed gene-
ration from renewables. To reach this goal, e-distribuzione
was awarded all of the resources currently allocated by the
Ministry for Economic Development to finance the initiati-
ve, with 21 projects admitted for funding (grants for 100%
of costs) totaling €80 million, with two projects worth €7
million in Basilicata, seven projects worth €29 million in
Campania and 12 projects worth €44 million in Sicily.
321
Consolidated financial statements Declaration of the Chief
Executive Officer and the officer
responsible for the preparation
of the consolidated financial
reports of the Enel Group
322
Annual Report 2017 Declaration of the Chief Executive Officer and the officer responsible for the preparation of the
consolidated financial reports of the Enel Group at December 31, 2017, pursuant to the provi-
sions of Article 154-bis, paragraph 5, of Legislative Decree 58 of February 24, 1998 and Article
81-ter of CONSOB Regulation 11971 of May 14, 1999
1. The undersigned Francesco Starace and Alberto De Paoli, in their respective capacities as Chief Executive Officer
and officer responsible for the preparation of the financial reports of Enel SpA, hereby certify, taking account of the
provisions of Article 154-bis, paragraphs 3 and 4, of Legislative Decree 58 of February 24, 1998:
a. the appropriateness with respect to the characteristics of the Enel Group and
b. the effective adoption of
the administrative and accounting procedures for the preparation of the consolidated financial statements of the Enel
Group in the period between January 1, 2017 and December 31, 2017.
2. In this regard, we report that:
a. the appropriateness of the administrative and accounting procedures used in the preparation of the consolidated
financial statements of the Enel Group has been verified in an assessment of the internal control system for
financial reporting. The assessment was carried out on the basis of the guidelines set out in the “Internal Controls
- Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO);
b. the assessment of the internal control system for financial reporting did not identify any material issues.
3. In addition, we certify that the consolidated financial statements of the Enel Group at December 31, 2017:
a. have been prepared in compliance with the international accounting standards recognized in the European Union
pursuant to Regulation 2002/1606/EC of the European Parliament and of the Council of July 19, 2002;
b. correspond to the information in the books and other accounting records;
c. provide a true and fair representation of the performance and financial position of the issuer and the companies
included in the scope of consolidation.
4. Finally, we certify that the Report on operations, included in the Annual Report 2017 and accompanied by the
consolidated financial statements of the Enel Group at December 31, 2017, contains a reliable analysis of operations
and performance, as well as the situation of the issuer and the companies included in the scope of consolidation,
together with a description of the main risks and uncertainties to which they are exposed.
Rome, March 22, 2018
Francesco Starace
Alberto De Paoli
Chief Executive Officer of Enel SpA
Officer responsible for the preparation
of the financial reports of Enel SpA
323
Consolidated financial statements 04Financial statements of Enel SpA
Notes
4.a
4.b
2017
2016
of which with
related parties
of which with
related parties
119,973,169
117,964,169
196,643,777
196,280,057
12,536,313
11,816,934
9,861,498
9,069,283
[Subtotal]
132,509,482
206,505,275
5.a
5.b
5.c
5.d
5.e
527,618
397,627
584,840
164,647,974
83,362,136
151,952,810
77,696,819
173,833,672
15,386,821
166,399,594
448,085,594
19,640,692
1,042,212
16,599,951
108,251
[Subtotal]
374,036,777
(241,527,295)
783,622,789
(577,117,514)
6
7
8
7
8
3,032,755,082
3,032,046,630
2,882,499,648
2,876,316,848
2,682,999,217
1,639,718,234
2,786,671,950
1,239,467,879
409,494,784
157,113,888
556,019,345
146,646,523
2,901,726,027
835,546,371
3,126,763,778
466,545,748
872,053,419
71,712,486
979,163,840
54,073,673
[Subtotal]
2,351,469,637
2,109,942,342
9
(160,045,845)
2,269,988,187
2,119,263,325
1,542,145,811
(177,792,922)
1,719,938,733
Financial
statements
Income statement
Euro
Revenue
Revenue from services
Other revenue and income
Costs
Purchases of consumables
Services, leases and rentals
Personnel
Depreciation, amortization and impairment losses
Other operating expenses
Operating income
Income from equity investments
Financial income from derivatives
Other financial income
Financial expense from derivatives
Other financial expense
Income before taxes
Income taxes
NET INCOME FOR THE YEAR
326
Annual Report 2017 Statement of comprehensive income
Euro
Notes
Net income for the year
Other comprehensive income recyclable to profit or loss (net of taxes)
2017
2016
2,269,988,187
1,719,938,733
Effective portion of change in the fair value of cash flow hedges
38,191,311
(98,254,561)
Income/(Loss) recognized directly in equity recyclable to profit or loss
38,191,311
(98,254,561)
Other comprehensive income not recyclable to profit or loss (net of taxes)
Remeasurement of employee benefit liabilities
(5,419,377)
(11,273,042)
Income/(Loss) recognized directly in equity not recyclable to profit or loss
(5,419,377)
(11,273,042)
Income/(Loss) recognized directly in equity
22
32,771,934
(109,527,603)
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD
2,302,760,121
1,610,411,130
327
Financial statements of Enel SpA Balance sheet
Euro
ASSETS
Notes
at Dec. 31, 2017
at Dec. 31, 2016
of which with
related parties
of which with
related parties
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Equity investments
Derivatives
Other non-current financial assets
Other non-current assets
Current assets
Trade receivables
Income tax receivables
Derivatives
Other current financial assets
Other current assets
Cash and cash equivalents
10
11
12
10,130,911
31,499,091
298,564,422
8,859,467
18,440,490
370,298,399
13
42,811,272,440
42,793,374,282
14
15
16
1,455,620,268
911,987,785
2,469,135,121
953,412,489
16,520,527
52,883,343
26,612,507
147,703,070
138,750,969
186,999,080
153,765,974
[Total]
44,771,310,729
45,899,990,182
236,901,820
228,047,369
255,046,164
247,815,639
265,116,255
212,324,448
111,187,134
98,089,135
480,063,926
18,842,181
4,350,254,731
2,185,263,224
4,220,574,127
3,047,741,908
451,717,926
435,163,901
298,790,729
260,724,520
17
18
14
19
20
21
2,489,231,277
[Total]
7,904,409,143
3,037,878,236
8,504,677,630
TOTAL ASSETS
52,675,719,872
54,404,667,812
328
Annual Report 2017 Euro
Notes
LIABILITIES AND SHAREHOLDERS’ EQUITY
at Dec. 31, 2017
at Dec. 31, 2016
of which with
related parties
of which with
related parties
Shareholders’ equity
Share capital
Other reserves
Retained earnings/(Loss carried forward)
Net income for the year (1)
10,166,679,946
11,442,355,799
4,424,283,417
1,202,486,793
TOTAL SHAREHOLDERS’ EQUITY
22
27,235,805,955
10,166,679,946
11,409,583,162
4,534,347,074
804,937,538
26,915,547,720
Non-current liabilities
Long-term borrowings
Employee benefits
Provisions for risks and charges
Deferred tax liabilities
Derivatives
Other non-current liabilities
Current liabilities
Short-term borrowings
Current portion of long-term borrowings
Trade payables
Derivatives
Other current financial liabilities
Other current liabilities
23
24
25
12
14
26
10,780,028,411
1,200,000,000
13,664,164,147
1,200,000,000
273,380,648
43,060,382
168,341,991
285,581,064
67,712,242
246,395,098
2,270,128,975
28,238,268
3,082,463,484
746,835,995
11,486,594
9,283,268
35,665,460
33,077,332
[Subtotal]
13,546,427,001
17,381,981,495
23
23
27
14
28
30
5,397,181,835
4,896,380,309
6,184,078,839
4,267,908,087
3,653,698,811
973,290,366
136,749,208
73,724,909
149,913,241
68,088,313
175,573,958
13,057,571
555,974,838
464,162,608
465,099,793
28,593,746
549,580,628
81,565,385
2,065,183,311
428,216,349
1,694,300,685
543,742,274
TOTAL LIABILITIES
25,439,913,917
[Subtotal]
11,893,486,916
10,107,138,597
27,489,120,092
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
52,675,719,872
54,404,667,812
(1) For 2017, net income for the year of €2,270 million (€1,720 million in 2016) is reported net of the interim dividend of €1,068 million (€915 million in 2016).
329
Financial statements of Enel SpA Statement of changes
in shareholders’ equity
Share capital and reserves (Note 22)
Euro
At January 1, 2016
Other changes
Allocation of 2015 net income:
- distribution of dividends
- legal reserve
- retaining earnings
Capital increase
2016 interim dividend (1)
Comprehensive income for the year:
- income/(loss) recognized directly
in equity
- net income for the year
Share capital
Share premium reserve
Legal reserve
Reserve pursuant to
Law 292/1993
employee benefit plan
measurement of financial
Retained earnings/(Loss
Total shareholders’
liabilities/(assets)
instruments
carried forward) Net income for the year
equity
9,403,357,795
5,292,076,658
1,880,671,559
2,215,444,500
68,243,876
(15,930,702)
(277,999,841)
5,303,025,796
1,010,654,499
24,879,544,140
Reserve from
remeasurement of net
Reserve from
-
-
-
-
-
-
-
-
763,322,151
2,203,939,405
-
-
-
-
-
-
-
-
152,664,429
-
-
-
-
-
-
-
-
-
-
-
-
-
At December 31, 2016
10,166,679,946
7,496,016,063
2,033,335,988
2,215,444,500
(27,203,744)
(376,254,402)
4,534,347,074
804,937,538
26,915,547,720
At January 1, 2017
Other changes
Allocation of 2016 net income:
- distribution of dividends
- legal reserve
- retaining earnings
Capital increase
2017 interim dividend (2)
Comprehensive income for the year:
- income/(loss) recognized directly
in equity
- net income for the year
10,166,679,946
7,496,016,063
2,033,335,988
2,215,444,500
(27,203,744)
(376,254,402)
4,534,347,074
804,937,538
26,915,547,720
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total at December 31, 2017
10,166,679,946
7,496,016,063
2,033,335,988
2,215,444,500
68,245,460
(32,623,121)
(338,063,091)
4,424,283,417
1,202,486,793
27,235,805,955
(1) Approved by the Board of Directors on November 10, 2016 and paid as from January 25, 2017.
(2) Approved by the Board of Directors on November 8, 2017 and paid as from January 24, 2018.
Other
sundry
reserves
881
68,244,757
68,244,757
703
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(813,334,396)
(813,334,396)
(1,626,668,792)
(152,664,429)
44,655,674
(44,655,674)
2,967,261,556
(915,001,195)
(915,001,195)
(11,273,042)
(98,254,561)
(109,527,603)
1,719,938,733
1,719,938,733
(203,333,599)
(711,667,596)
(915,001,195)
93,269,942
(93,269,942)
(1,067,501,394)
(1,067,501,394)
(5,419,377)
38,191,311
32,771,934
2,269,988,187
2,269,988,187
881
-
-
-
-
-
703
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
330
Annual Report 2017 Share capital and reserves (Note 22)
Share capital
Share premium reserve
Legal reserve
Law 292/1993
Reserve pursuant to
Other
sundry
reserves
Reserve from
remeasurement of net
employee benefit plan
liabilities/(assets)
Reserve from
measurement of financial
instruments
Retained earnings/(Loss
carried forward) Net income for the year
Total shareholders’
equity
9,403,357,795
5,292,076,658
1,880,671,559
2,215,444,500
68,243,876
(15,930,702)
(277,999,841)
5,303,025,796
1,010,654,499
24,879,544,140
881
-
-
-
-
-
-
-
68,244,757
68,244,757
703
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(11,273,042)
(98,254,561)
-
-
-
-
881
(813,334,396)
(813,334,396)
(1,626,668,792)
-
(152,664,429)
44,655,674
(44,655,674)
-
-
-
-
-
-
-
2,967,261,556
(915,001,195)
(915,001,195)
-
(109,527,603)
1,719,938,733
1,719,938,733
(27,203,744)
(376,254,402)
4,534,347,074
804,937,538
26,915,547,720
(27,203,744)
(376,254,402)
4,534,347,074
804,937,538
26,915,547,720
-
-
-
-
-
-
-
-
-
-
-
-
(5,419,377)
38,191,311
-
-
-
-
703
(203,333,599)
(711,667,596)
(915,001,195)
-
-
93,269,942
(93,269,942)
-
-
-
-
-
-
-
-
(1,067,501,394)
(1,067,501,394)
-
32,771,934
2,269,988,187
2,269,988,187
Euro
At January 1, 2016
Other changes
Allocation of 2015 net income:
- distribution of dividends
- legal reserve
- retaining earnings
Capital increase
2016 interim dividend (1)
Comprehensive income for the year:
- income/(loss) recognized directly
in equity
- net income for the year
At January 1, 2017
Other changes
Allocation of 2016 net income:
- distribution of dividends
- legal reserve
- retaining earnings
Capital increase
2017 interim dividend (2)
Comprehensive income for the year:
- income/(loss) recognized directly
in equity
- net income for the year
152,664,429
763,322,151
2,203,939,405
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
At December 31, 2016
10,166,679,946
7,496,016,063
2,033,335,988
2,215,444,500
10,166,679,946
7,496,016,063
2,033,335,988
2,215,444,500
Total at December 31, 2017
10,166,679,946
7,496,016,063
2,033,335,988
2,215,444,500
68,245,460
(32,623,121)
(338,063,091)
4,424,283,417
1,202,486,793
27,235,805,955
(1) Approved by the Board of Directors on November 10, 2016 and paid as from January 25, 2017.
(2) Approved by the Board of Directors on November 8, 2017 and paid as from January 24, 2018.
331
Financial statements of Enel SpA Statement of cash flows
Euro
Notes
Income before taxes
Adjustments for:
Amortization and impairment losses of intangible assets
and property, plant and equipment
Exchange rate adjustments of foreign currency assets
and liabilities
Accruals to provisions
Dividends from subsidiaries, associates and other
companies
2017
2016
of which with
related parties
of which with
related parties
2,109,942,342
1,542,145,811
5.d
15,386,821
16,085,594
(231,638,389)
37,912,889
(353,311,142)
23,768,717
6
(3,032,755,082)
(3,032,046,630)
(2,882,499,648)
(2,876,316,848)
Net financial (income)/expense
905,461,585
(889,403,744)
1,122,415,365
(865,494,981)
(Gains)/Losses from disposals and other non-monetary
items
Cash flows from operating activities before changes
in net current assets
Increase/(Decrease) in provisions
-
432,000,000
(195,689,834)
(74,765,165)
(99,395,303)
(15,363,660)
(Increase)/Decrease in trade receivables
17
18,144,344
19,768,270
28,356,606
29,925,376
(Increase)/Decrease in other financial and non-financial
assets/liabilities
886,354,164
(1,526,661,213)
1,404,233,678
(522,698,024)
Increase/(Decrease) in trade payables
27
(13,164,033)
5,636,596
(14,106,282)
8,843,510
Interest income and other financial income collected
1,134,440,570
325,498,532
1,047,226,510
541,234,816
Interest expense and other financial expense paid
(1,823,403,773)
(716,621,016)
(1,806,973,424)
(365,049,730)
6
2,976,903,441
2,976,194,989
2,882,499,648
2,876,316,848
(443,549,585)
2,465,270,129
(915,300,136)
2,511,177,637
10-11
(29,716,867)
(29,716,867)
(22,087,927)
(22,158,868)
(17,898,158)
(17,898,158)
(386,599,202)
(386,599,202)
-
(47,615,025)
989,235,387
(992,598,185)
-
(408,687,129)
50,000,000
(3,847,804,205)
(2,854,462,654)
(26,612,508)
1,803,737,509
44,836,206
1,721,306,401
1,511,596,115
(1,358,393,143)
1,409,771,529
13
13
23
23
22
22
(1,829,783,012)
-
(2,966,302,063)
(548,646,959)
21
21
3,037,878,236
2,489,231,277
(1,626,668,107)
(10,847,528)
(4,989,975,474)
(2,887,484,966)
5,925,363,202
3,037,878,236
Dividends from subsidiaries, associates and other
companies
Income taxes paid (consolidated taxation mechanism)
Cash flows from operating activities (a)
Investments in property, plant and equipment and
intangible assets
Investments in equity investments
Disposals of equity investments
Cash flows from investing/disinvesting activities (b)
Financial debt (new long-term borrowing)
Financial debt (repayments)
Net change in long-term financial payables/(receivables)
Net change in short-term financial payables/(receivables)
Dividends paid
Increase in capital and reserves
Cash flows from financing activities (c)
Increase/(Decrease) in cash and cash equivalents
(a+b+c)
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
332
Annual Report 2017 Notes to the separate
financial statements
1
Form and content of the
financial statements
- Global Purchasing;
- Global ICT.
Enel SpA is a corporation (società per azioni) that operates
in the electricity and gas sector and has its registered office
in Viale Regina Margherita 137, Rome, Italy.
In its capacity as holding company, Enel SpA sets the stra-
tegic objectives for the Group and its subsidiaries and co-
ordinates their activities. The activities that Enel SpA per-
forms in respect of the other Group companies as part of
its management and coordination function, including with
regard to the company’s organizational structure, can be
summarized as follows:
Within the Group, Enel SpA meets liquidity requirements
primarily through cash flows generated by ordinary opera-
tions and the use of a range of sources of funds, while
managing any excess liquidity appropriately.
As the Parent Company, Enel SpA has prepared the conso-
lidated financial statements of the Enel Group for the year
ending December 31, 2017, which form an integral part of
this Annual Report pursuant to Article 154-ter, paragraph 1,
of the Consolidated Law on Financial Intermediation (Legi-
slative Decree 58 of February 24, 1998).
> Holding company functions, associated with the coor-
dination of governance processes at the Group level:
- Administration, Finance and Control;
- Human Resources and Organization;
- Communications;
- Legal and Corporate Affairs;
-
Innovation and Sustainability;
- European Affairs;
- Audit;
> Global Business Line functions, which are responsi-
ble for coordination and development of their business
in all the geographical areas in which the Group opera-
tes:
- Global Infrastructure and Networks;
- Global Thermal Generation;
- Global Renewable Energy;
- Global Trading;
- Global Enel X;
> Global service functions, which are responsible at the
Group level for coordinating all information technology
and purchasing activities:
On March 22, 2018, the Board authorized the publication of
these financial statements at December 31, 2017.
These financial statements have undergone statutory audi-
ting by EY SpA.
Basis of presentation
The separate financial statements for the year ended De-
cember 31, 2017 have been prepared in accordance with
international accounting standards (International Accounting
Standards - IAS and International Financial Reporting Stan-
dards - IFRS) issued by the International Accounting Stan-
dards Board (IASB), the interpretations of the International
Financial Reporting Interpretations Committee (IFRIC) and
the Standing Interpretations Committee (SIC), recognized in
the European Union pursuant to Regulation 2002/1606/EC
and in effect as of the close of the year. All of these stan-
dards and interpretations are hereinafter referred to as the
“IFRS-EU”.
The financial statements have also been prepared in confor-
mity with measures issued in implementation of Article 9,
paragraph 3, of Legislative Decree 38 of February 28, 2005.
The financial statements consist of the income statement,
the statement of comprehensive income, the balance sheet,
333
Financial statements of Enel SpA the statement of changes in shareholders’ equity and the
tion of the consolidated financial statements, to which the
statement of cash flows and the related notes.
reader should refer for more information, with the excep-
The assets and liabilities reported in the balance sheet are
tion of those regarding equity investments in subsidiaries,
classified on a “current/non-current” basis with separate re-
associated companies and joint ventures.
porting of assets held for sale and liabilities included in dispo-
Subsidiaries are all entities over which Enel SpA has con-
sal groups held for sale, if any. Current assets, which include
trol. The company controls an entity when it is exposed to
cash and cash equivalents, are assets that are intended to
or has rights to variable returns deriving from its involve-
be realized, sold or consumed during the normal operating
ment and has the ability, through the exercise of its power
cycle of the company or in the 12 months following the close
over the investee, to affect its returns. Power is defined as
of the financial year; current liabilities are liabilities that are
having the concrete ability to direct the significant activi-
expected to be settled during the normal operating cycle of
ties of the entity by virtue of the existence of substantive
the company or within the 12 months following the close of
rights.
the financial year.
Associates comprise those entities in which Enel SpA has
The income statement is classified on the basis of the na-
a significant influence. Significant influence is the power to
ture of costs, with separate reporting of net income/(loss)
participate in the financial and operating policy decisions
from continuing operations and net income/(loss) from any
of investees but not exercise control or joint control over
discontinued operations.
those entities.
The indirect method is used for the statement of cash flows,
Joint ventures are entities over which Enel SpA exercises
with separate reporting of any cash flows by operating, inve-
joint control and has rights to the net assets of the entities.
sting and financing activities associated with discontinued
Joint control means sharing control of an arrangement,
operations, if any.
which only exists when the decisions over the relevant
The income statement, the balance sheet and the state-
activities require the unanimous consent of all the parties
ment of cash flows report transactions with related parties,
that share control.
the definition of which is given in the section “Accounting
Equity investments in subsidiaries, associates and joint
policies and measurement criteria” for the consolidated fi-
ventures are measured at cost. Cost is adjusted for any im-
nancial statements.
pairment losses, which are reversed where the reasons for
The financial statements have been prepared on a going
their recognition no longer obtain. The carrying amount re-
concern basis using the cost method, with the exception of
sulting from the reversal may not exceed the original cost.
items measured at fair value in accordance with IFRS, as ex-
Where the loss pertaining to Enel SpA exceeds the carrying
plained in the measurement bases applied to each individual
amount of the investment and the company is obligated to
item in the consolidated financial statements.
perform the legal or constructive obligations of the inve-
The financial statements are presented in euro, the functio-
stee or in any event to cover its losses, the excess with
nal currency of the company, and the figures shown in the
respect to the carrying amount is recognized in liabilities in
notes are reported in millions of euro unless stated other-
the provision for risks and charges.
wise.
In the case of a disposal, without economic substance,
The financial statements provide comparative information in
of an investment to an entity under common control, any
respect of the previous period.
difference between the consideration received and the
2
Accounting policies and
measurement criteria
carrying amount of the investment is recognized in equity.
Dividends from equity investments are recognized in pro-
fit or loss when the shareholder’s right to receive them is
established.
Dividends and interim dividends payable to third parties
are recognized as changes in equity at the date they are
approved by the Shareholders’ Meeting and the Board of
The accounting policies and measurement criteria are the
Directors, respectively.
same, where applicable, as those adopted in the prepara-
334
Annual Report 2017 Use of estimates and management
judgments
3
The use of estimates and management judgements adop-
ted in preparing the separate financial statements are the
Recent accounting standards
same, where applicable, as those adopted in the preparation
For information on recent accounting standards, please re-
of the consolidated financial statements, which readers are
fer to the corresponding section of the notes to the conso-
invited to consult, with the exception of the measurement
lidated financial statements.
of equity investments, which is discussed below.
Recoverability of equity investments
The company assesses the presence of evidence of im-
pairment of each equity investment at least once a year,
consistent with its strategy for managing the legal entities
within the Group. If such evidence is found, the assets
involved undergo impairment testing. The processes and
procedures for determining the recoverable value of each
equity investment are based on assumptions that can be
complex and whose nature requires management to use
its judgment, especially as regards the identification of
evidence of impairment, the forecasting of future profi-
tability over the horizon of the Group business plan, the
determination of the normalized cash flows underlying the
estimation of terminal value and the determination of long-
term growth rates and discount rates applied to forecasts
of future cash flows.
As regards the application of the new standards “IFRS 9
- Financial instruments” and “IFRS 15 - Revenue from con-
tracts with customers”, the projects begun in 2016 to iden-
tify the impact of their adoption were completed in 2017.
Upon first-time application, the effects of the adoption of
IFRS 9 associated with “Classification and measurement”
and “Impairment” will be recognized in shareholders’ equi-
ty at January 1, 2018, while the adoption of the “Hedge
accounting” provisions is prospective, with the exception
of the option of separating the currency basis spreads from
the hedge relationship, which the Group opted to apply re-
trospectively.
On the basis of the analysis conducted, the adoption as
from January 1, 2018 of IFRS 9 will produce, net of the
associated tax effects, an immaterial reduction in sharehol-
ders’ equity, mainly associated with the adoption of the
expected loss model.
As regards the application of IFRS 15, no significant cir-
cumstances that would be impacted by the new provisions
have emerged.
335
Financial statements of Enel SpA Information on the income statement
Revenue
4.a Revenue from services - €120 million
Revenue from services breaks down as follows.
Millions of euro
Services
Group companies
Non-Group counterparties
Total revenue from services
2017
2016
Change
118
2
120
197
-
197
(79)
2
(77)
Revenue from services, in the amount of €120 million,
remuneration model adopted by the Parent Company du-
include €118 million for services provided to subsidiaries
ring the year.
within the scope of the company’s management and co-
Revenue from services breaks down by geographical area
ordination functions and for the billing of costs of various
as follows:
nature incurred in relation to subsidiaries.
> €75 million in Italy (€129 million in 2016);
The overall decrease of €77 million was due mainly to the
> €25 million in the European Union (€46 million in 2016);
reduction in management and technical fees, which re-
> €7 million in non-EU Europe (€13 million in 2016);
flects a number of balancing payments related to financial
> €13 million in other countries (€9 million in 2016).
years 2015 and 2016, as well as to application of the new
4.b Other revenue and income - €13 million
Other revenue and income, in the amount of €13 million
for the year under review and for the previous year, and
in 2017, is essentially related to seconded personnel, both
increased by €3 million (€10 million in 2016).
336
Annual Report 2017 Costs
5.a Purchases of consumables - €1 million
Purchases of consumables, in the amount of €1 million, remained unchanged from the previous year.
5.b Services, leases and rentals - €165 million
Costs for services, leases and rentals break down as follows.
Millions of euro
Services
Leases and rentals
Total services, leases and rentals
2017
149
16
165
2016
135
17
152
Change
14
(1)
13
Costs for services, totaling €149 million, include costs for
were partially offset by the recognition of past items in 2017.
services provided by third parties in the amount of €79 mil-
Costs for services provided by Group companies increased
lion (€73 million in 2016) and costs for services provided by
by €8 million due mainly to an increase in costs for IT ser-
Group companies in the amount of €70 million (€62 million
vices, personal services, and facility-management services
in 2016). More specifically, the €6 million increase in costs
provided by the subsidiary Enel Italia Srl (€4 million).
for services provided by third parties was mainly due both
Costs for leases and rentals mainly concern costs for lea-
to the increase in costs incurred for strategic, management
sing assets from the subsidiary Enel Italia Srl and decrea-
and organizational consulting and to greater costs for adver-
sed by €1 million compared with the previous year.
tising, marketing, promotional and press materials, which
5.c Personnel - €174 million
Personnel costs break down as follows.
Millions of euro
Wages and salaries
Social security costs
Post-employment benefits
Other long-term benefits
Other costs and other incentive plans
Total personnel costs
Notes
24
24
25
2017
108
34
9
20
3
174
2016
108
35
7
14
2
166
Change
-
(1)
2
6
1
8
Personnel costs, in the amount of €174 million, increased by
The table below shows the average number of employees
€8 million compared with 2016 due mainly to the increase
by category, compared with the previous year, and the ac-
in costs for other long term benefits (of which €5 million
tual number of employees at December 31, 2017.
in long-term incentive plans) and post-employment benefits
for defined benefit plans (€2 million).
337
Financial statements of Enel SpA Managers
Middle managers
White collar
Total
Average number
Headcount
2017
239
565
367
1,171
2016
240
539
356
1,135
Change
at Dec. 31, 2017
(1)
26
11
36
248
623
375
1,246
5.d Depreciation, amortization and impairment losses - €15
million
Millions of euro
Depreciation
Amortization
Impairment losses
Reversals of impairment losses
Total depreciation, amortization and impairment losses
2017
2016
Change
4
11
-
-
15
4
12
474
42
448
-
(1)
(474)
(42)
(433)
Depreciation, amortization and impairment losses, in the
In 2016, in addition to depreciation and amortization, the ag-
amount of €15 million (€448 million in 2016), decreased by
gregate included the impairment loss on the investment in
€433 million compared with the previous year. In 2017, the
Enel Produzione SpA (€474 million) and the reversal of im-
aggregate was related solely to depreciation (€4 million) and
pairment on the investment in Enel Trade SpA (€42 million),
amortization (€11 million), which remained essentially un-
which had been recognized based on the impairment tests
changed compared with the previous year.
conducted on the investments.
5.e Other operating expenses - €20 million
Other operating expenses, totaling €20 million, increased
As a result, the operating loss came to €242 million, an
by €3 million compared with the previous year due essen-
improvement of €335 million compared with the previous
tially to an increase in entertainment expenses.
year.
6. Income from equity investments - €3,033 million
Income from equity investments, in the amount of €3,033
the previous year due, in part, to the effect of advances on
million in 2017, represents dividends and advances on di-
dividends approved by the subsidiaries Enel Américas and
vidends approved by subsidiaries and associates in the
Enel Chile following the reorganization that involved the
amount of €3,032 million and by other shareholdings in the
Group’s businesses in South America.
amount of €1 million. This is an increase of €151 million over
338
Annual Report 2017 Millions of euro
Dividends from subsidiaries and associates
Enel Produzione SpA
e-distribuzione SpA
Enel.Factor SpA
Enel Italia Srl
Enel Energia SpA
Servizio Elettrico Nazionale SpA
Enel Green Power SpA
Enel Iberia Srl
Enel Sole Srl
Enel Américas SA
Enel Chile SA
CESI SpA
Dividends from other companies
Emittenti Titoli SpA
Empresa Propietaria de la Red SA
2017
3,032
-
1,448
3
23
679
80
50
677
15
25
31
1
1
-
1
2016
2,876
304
1,610
3
-
358
-
50
550
-
-
-
1
6
6
-
Total income from equity investments
3,033
2,882
Change
156
(304)
(162)
-
23
321
80
-
127
15
25
31
-
(5)
(6)
1
151
339
Financial statements of Enel SpA 7. Net financial income/(expense) from derivatives - €(219)
million
This item breaks down as follows.
Millions of euro
Income from derivatives:
- on behalf of Group companies:
- income from derivatives at fair value through profit or loss
- on behalf of Enel SpA:
- income from fair value hedge derivatives
- income from cash flow hedge derivatives
- income from derivatives at fair value through profit or loss
Total income from derivatives
Expenses on derivatives:
- on behalf of Group companies:
- expense on derivatives at fair value through profit or loss
- on behalf of Enel SpA:
- expense on fair value hedge derivatives
- expense on cash flow hedge derivatives
- expense on derivatives at fair value through profit or loss
Total expenses on derivatives
TOTAL FINANCIAL INCOME/(EXPENSE) FROM
DERIVATIVES
2017
2,533
2,533
150
32
108
10
2,683
2,523
2,523
379
30
341
8
2,902
(219)
2016
Change
2,515
2,515
272
32
158
82
2,787
2,520
2,520
607
27
497
83
3,127
(340)
18
18
(122)
-
(50)
(72)
(104)
3
3
(228)
3
(156)
(75)
(225)
121
The net expense on derivatives totals €219 million (as com-
were entered into on behalf of Enel SpA on both interest
pared with €340 million in 2016) and essentially represents
rates and exchange rates.
the net expense on derivatives entered into on behalf of
Enel SpA.
For more details on derivatives, see note 31 “Financial
The improvement of €121 million compared with the pre-
instruments” and note 33 “Derivatives and hedge ac-
vious year is essentially due to the decrease in net expense
counting”.
on cash flow hedge derivatives (€106 million), all of which
340
Annual Report 2017 8. Other net financial income/(expense) - €(462) million
This item breaks down as follows.
Millions of euro
Other financial income
Interest income
Interest income on long-term financial assets
Interest income on short-term financial assets
Total
Positive exchange rate differences
Income on fair value hedges - post-hedge adjustment
Other
Total other financial income
Other financial expense
Interest expense
Interest expense on bank borrowings
Interest expense on bonds
Interest expense on other borrowings
Total
Negative exchange rate differences
Interest expense on defined benefit plans and other long-
term employee benefits
Other
Total other financial expense
TOTAL OTHER NET FINANCIAL INCOME/(EXPENSE)
2017
2016
Change
2
30
32
238
13
127
410
55
735
70
860
5
4
3
872
(462)
4
42
46
398
8
104
556
32
840
54
926
44
6
3
979
(423)
(2)
(12)
(14)
(160)
5
23
(146)
23
(105)
16
(66)
(39)
(2)
-
(107)
(39)
Other net financial expense amounted to €462 million,
€124 million. The increase of €39 million in other net finan-
mainly reflecting interest expense on borrowings in the
cial expense compared with 2016 was due mainly to the
amount of €860 million, which was partially offset by positi-
€160 million decrease in positive exchange rate differences
ve exchange rate differences in the amount of €238 million,
on hedged loans in foreign currencies, which were affected
interest income on short and long-term financial assets to-
by the trends in the euro against the dollar and the pound
taling €32 million, and other financial income on guarantees
sterling. These effects were partially offset by the decrease
granted on behalf of Group companies in the amount of
in interest expense on bonds in the amount of €105 million.
9. Income taxes - €(160) million
Millions of euro
Current taxes
Deferred tax income
Deferred tax expense
Total taxes
2017
(162)
4
(2)
(160)
2016
(184)
6
-
(178)
Change
22
(2)
(2)
18
Income taxes for 2017 showed a creditor position of €160
before taxes due to the exclusion of 95% of the dividends
million, mainly as a result of the reduction in the tax base
received from the subsidiaries and the deductibility of Enel
for the corporate income tax (IRES) compared with income
SpA’s interest expense for the Group in accordance with
341
Financial statements of Enel SpA corporate income tax law (Article 96 of the Uniform Income
The following table reconciles the theoretical tax rate with
Tax Code).
the effective tax rate.
The €18 million difference compared with the previous year
(when the creditor position was €178 million) is attributable
to the increase in estimated taxable income.
Millions of euro
Income before taxes
Theoretical corporate income taxes (IRES)
Tax decreases:
- dividends on equity investments, collected
- dividends from equity investments, not collected
- uses of provisions
- other
Tax increases:
- writedowns/(writebacks) for the year
- accruals to provisions
- prior-year expense
- other
2017
2,110
506
(678)
(13)
(16)
-
-
12
2
23
Total current corporate income taxes (IRES)
(164)
IRAP
Difference on estimated income taxes from prior
years
Definitive withholdings on dividends from
foreign shareholdings
Total deferred tax items
- of which impact of change in tax rate
- of which changes for the year
- of which difference of prior-year estimates
TOTAL INCOME TAXES
-
-
2
2
-
4
(2)
(160)
% rate
24.0%
-32.1%
-0.6%
-0.8%
-
-
0.6%
0.1%
1.1%
-7.8%
-
-
0.1%
0.1%
% rate
27.5%
-48.8%
-
-0.8%
-0.5%
7.7%
0.5%
0.2%
1.6%
-12.6%
-
0.7%
-
0.4%
2016
1,542
424
(753)
-
(13)
(7)
119
7
3
25
(195)
-
11
-
6
1
5
-
-7.6%
(178)
-11.5%
342
Annual Report 2017 Information on the balance sheet
Assets
10. Property, plant and equipment - €10 million
Developments in property, plant and equipment for 2016 and 2017 are set out in the table below.
Millions of euro
Cost
Accumulated depreciation
Balance at Dec. 31, 2015
Capital expenditure
Depreciation
Total changes
Cost
Accumulated depreciation
Balance at Dec. 31, 2016
Capital expenditure
Depreciation
Total changes
Cost
Accumulated depreciation
Balance at Dec. 31, 2017
Land
Buildings
Plant and
machinery
Industrial and
commercial
equipment
Other
assets
Leasehold
improvements
1
-
1
-
-
-
1
-
1
-
-
-
1
-
1
3
(2)
1
-
-
-
3
(2)
1
-
-
-
3
(2)
1
3
(3)
-
-
-
-
3
(3)
-
-
-
-
3
(3)
-
5
(5)
-
-
-
-
5
(5)
-
-
-
-
5
(5)
-
19
(18)
1
1
(1)
-
20
35
(31)
4
5
(3)
2
40
Total
66
(59)
7
6
(4)
2
72
(19)
(34)
(63)
1
4
(1)
3
24
(20)
4
6
1
(3)
(2)
41
(37)
4
9
5
(4)
1
77
(67)
10
Property, plant and equipment totaled €10 million, an incre-
for the same period (€4 million). Capital expenditure related
ase of €1 million compared with the previous year, essen-
to other assets refer to hardware systems, while leasehold
tially attributable to the positive net balance between capi-
improvements regard the renovation and redevelopment of
tal expenditure during the year (€5 million) and depreciation
a number of buildings housing Enel SpA’s headquarters.
343
Financial statements of Enel SpA 11. Intangible assets - €31 million
Intangible assets, all of which have a finite useful life, break down as follows.
Millions of euro
Balance at Dec. 31, 2015
Investments
Assets entering service
Amortization
Total changes
Balance at Dec. 31, 2016
Investments
Assets entering service
Amortization
Total changes
Balance at Dec. 31, 2017
Industrial patents and
intellectual property rights
Other intangible assets
under development
14
9
-
(12)
(3)
11
24
7
(11)
20
31
-
7
-
-
7
7
-
(7)
-
(7)
-
Total
14
16
-
(12)
4
18
24
-
(11)
13
31
Industrial patents and intellectual property rights, in the
related to the evolution of software associated with exi-
amount of €31 million at December 31, 2017, relate mainly
sting systems and the development of new systems, whi-
to costs incurred in purchasing software as well as related
le assets entering service refer mainly to the Evolution for
evolutionary maintenance. Amortization is calculated on a
Energy (E4E) project, which was undertaken at the global
straight-line basis over the item’s residual useful life (three
level to harmonize and integrate processes and systems to
years on average).
support the Global Business Lines and the Administration,
The amount of the item increased by €20 million as compa-
Finance and Control, and Global Procurement functions, as
red with the previous year, attributable to investments for
well as other projects connected with the evolution of sof-
the year amounting to €24 million and assets entering ser-
tware associated with existing systems.
vice in the amount of €7 million, which were partially offset
Other intangible assets under development had a zero ba-
by amortization for the year of €11 million. More specifical-
lance as at December 31, 2017.
ly, investments concerned information-technology projects
344
Annual Report 2017 12. Deferred tax assets and liabilities - €299 million and
€168 million
Changes in deferred tax assets and deferred tax liabilities, grouped by type of temporary difference, are shown below.
Millions of euro
Increase/(Decrease)
taken to income
statement
at Dec. 31,
2016
Total
Increase/(Decrease)
taken to equity
Other
changes
at Dec. 31,
2017
Deferred tax assets
Nature of temporary differences:
- provisions for risks and charges and impairment
losses
- derivatives
- costs for capital increase
- other items
Total deferred tax assets
Deferred tax liabilities
Nature of temporary differences:
- measurement of financial instruments
- other items
Total deferred tax liabilities
Excess net deferred IRES tax assets after any
offsetting
Excess net deferred IRAP tax liabilities after any
offsetting
6
299
2
63
370
239
7
246
169
(45)
(1)
-
-
(3)
(4)
-
(2)
(2)
-
(69)
-
2
(67)
(76)
-
(76)
-
-
-
-
-
-
-
-
Total
5
230
2
62
299
163
5
168
162
(31)
Deferred tax assets totaled €299 million (€370 million at De-
The amount of deferred tax assets and liabilities was de-
cember 31, 2016), a decrease of €71 million compared with
termined by applying a rate of 24% for IRES. IRAP was ap-
the previous year, which was due mainly to the recognition
plied only on deferred tax liabilities at a rate of 5.57% (taking
of deferred tax assets connected with the fair value measu-
account of the business conducted by the company). The
rement of cash flow hedge operations.
amount of deferred tax assets was determined without ap-
Deferred tax liabilities totaled €168 million (€246 million at
plying IRAP as in the coming years we do not expect to earn
December 31, 2016), a decrease of €78 million, due essen-
income subject to IRAP sufficient to reverse the temporary
tially to the recognition of deferred taxes on the fair value
deductible differences.
measurement of cash flow hedge financial instruments.
13. Equity investments - €42,811 million
The table below shows the changes during the year for each
in subsidiaries, joint ventures, associates, and other com-
investment, with the corresponding values at the beginning
panies.
and end of the year, as well as the list of investments held
345
Financial statements of Enel SpA Millions of euro
Original cost
(Writedowns)/
Revaluations
Other changes -
IFRIC 11 & IFRS 2
Carrying amount
% holding
at Dec. 31, 2016
Acquisitions/
(Disposals)/
(Liquidations)/
(Repayments)
Formation/
Contributions (+/-)/
Changes in 2017
Demergers (+/-)/
Mergers (+/-)
Net change
Original cost
Revaluations
IFRS 2
Other changes -
(Writedowns)/
IFRIC 11 &
Carrying
amount
% holding
at Dec. 31, 2017
A) Subsidiaries
Enel Produzione SpA
Enel Ingegneria e Ricerca
SpA
e-distribuzione SpA
Servizio Elettrico
Nazionale SpA
Enel Trade SpA
Enel Green Power SpA
Enel X Srl
Enel Investment Holding
BV
Enelpower SpA
Enel Global Thermal
Generation Srl
Enel Energia SpA
Enel Iberia Srl
Enel South America Srl
Enel.Factor SpA
Enel Sole Srl
Enel Italia Srl
Enel Innovation Hubs Srl
Enel M@p Srl
Enel Finance
International NV
Tynemouth Energy
Storage Limited
Enel Américas SA
Enel Chile SA
4,892
86
4,054
110
1,401
6,538
-
8,498
189
-
1,321
18,300
-
18
5
525
70
-
2,397
-
-
-
(986)
(84)
-
-
(208)
-
-
(4,473)
(159)
-
(8)
-
-
-
-
(41)
(54)
-
-
-
-
-
4
1
2
-
1
2
-
-
-
-
-
-
-
-
-
3
-
-
-
-
-
-
3,910
3
4,056
110
1,194
6,540
-
4,025
30
-
1,313
18,300
-
18
5
487
16
-
2,397
-
-
-
Total subsidiaries
48,404
(6,013)
13
42,404
365
365
23
23
-
-
-
5
1
-
6
-
-
-
-
-
-
-
(5)
-
-
(5)
-
-
-
-
-
-
-
-
-
-
-
365
365
23
23
-
-
-
-
1
-
1
B) Joint ventures
OpEn Fiber SpA
Total joint ventures
C) Associates
CESI SpA
Total associates
D) Other companies
Empresa Propietaria de
la Red SA
Red Centroamericana de
Telecomunicaciones SA
Compañía de
Transmisión del
Mercosur SA
Elcogas SA
Emittenti Titoli SpA in
liquidation
Idrosicilia SpA
Total other companies
TOTAL EQUITY
INVESTMENTS
346
100,0
100,0
100,0
100,0
100,0
100,0
-
100,0
100,0
-
100,0
100,0
-
100,0
100,0
100,0
100,0
-
100,0
-
-
-
50,0
42,7
-
-
-
4,3
10,0
1,0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12
-
5
-
-
17
-
-
-
-
-
-
-
-
-
-
-
48,798
(6,018)
13
42,793
17
48,816
(6,018)
13
42,811
(4,587)
4,587
(5)
-
-
-
-
-
-
-
-
5
1
-
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
3
(3)
3
(3)
(4,587)
2,822
1,760
(5)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
5
-
(4,587)
(5)
12
2,822
1,760
13
5
1
-
-
-
-
-
-
-
-
-
-
-
-
5
5
-
-
-
-
-
-
-
-
-
5
18
4,895
83
4,054
110
1,401
6,538
8,498
189
5
1
18
-
-
525
70
12
2,397
5
2,822
1,760
1,321
13,713
365
365
23
23
5
-
-
5
1
-
(986)
(84)
(208)
(4,473)
(159)
(8)
(41)
(54)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5)
11
(5)
4
1
2
-
1
2
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,913
-
4,056
110
1,194
6,540
5
4,025
30
1
18
-
-
16
12
487
2,397
5
2,822
1,760
1,313
13,713
365
365
23
23
5
-
-
-
1
-
6
100.0
-
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
-
-
100.0
100.0
100.0
100.0
100.0
51.8
60.6
50.0
42.7
11.1
11.1
-
4.3
10.0
1.0
48,417
(6,013)
13
42,417
Annual Report 2017 Millions of euro
Original cost
Revaluations
IFRIC 11 & IFRS 2
Carrying amount
% holding
(Writedowns)/
Other changes -
at Dec. 31, 2016
Acquisitions/
(Disposals)/
(Liquidations)/
(Repayments)
Formation/
Contributions (+/-)/
Demergers (+/-)/
Changes in 2017
Mergers (+/-)
Net change
Original cost
(Writedowns)/
Revaluations
Other changes -
IFRIC 11 &
IFRS 2
Carrying
amount
% holding
at Dec. 31, 2017
A) Subsidiaries
Enel Produzione SpA
Enel Ingegneria e Ricerca
SpA
e-distribuzione SpA
Servizio Elettrico
Nazionale SpA
Enel Trade SpA
Enel Green Power SpA
Enel X Srl
BV
Enel Investment Holding
Enelpower SpA
Enel Global Thermal
Generation Srl
Enel Energia SpA
Enel Iberia Srl
Enel South America Srl
Enel.Factor SpA
Enel Sole Srl
Enel Italia Srl
Enel Innovation Hubs Srl
Enel M@p Srl
Enel Finance
International NV
Tynemouth Energy
Storage Limited
Enel Américas SA
Enel Chile SA
B) Joint ventures
OpEn Fiber SpA
Total joint ventures
C) Associates
CESI SpA
Total associates
D) Other companies
Empresa Propietaria de
la Red SA
Red Centroamericana de
Telecomunicaciones SA
Compañía de
Transmisión del
Mercosur SA
Elcogas SA
Emittenti Titoli SpA in
liquidation
Idrosicilia SpA
Total other companies
TOTAL EQUITY
INVESTMENTS
4,892
86
4,054
110
1,401
6,538
8,498
189
1,321
18,300
18
5
525
70
2,397
365
365
23
23
-
-
-
-
-
-
-
-
-
-
5
1
-
6
(986)
(84)
(208)
(4,473)
(159)
(8)
(41)
(54)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5)
(5)
4
1
2
-
1
2
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,910
3
4,056
110
1,194
6,540
4,025
30
1,313
18,300
18
5
487
16
-
-
-
-
-
-
-
-
-
-
-
1
-
1
365
365
23
23
100,0
100,0
100,0
100,0
100,0
100,0
100,0
100,0
100,0
100,0
100,0
100,0
100,0
100,0
50,0
42,7
4,3
10,0
1,0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12
5
17
2,397
100,0
Total subsidiaries
48,404
(6,013)
13
42,404
48,798
(6,018)
13
42,793
17
-
-
-
-
-
-
5
-
-
1
-
(4,587)
4,587
-
(5)
-
-
-
-
-
-
-
1
-
-
-
-
-
-
-
-
-
-
-
1
3
(3)
-
-
-
-
-
-
-
-
-
-
(4,587)
-
-
-
-
-
-
-
2,822
1,760
(5)
-
-
-
-
5
-
-
-
-
-
5
-
3
(3)
-
-
-
-
5
-
-
1
-
(4,587)
-
-
(5)
-
-
12
-
5
2,822
1,760
13
-
-
-
-
5
-
-
-
-
-
5
18
4,895
83
4,054
110
1,401
6,538
5
8,498
189
1
1,321
13,713
-
18
-
525
70
12
2,397
5
2,822
1,760
(986)
(84)
-
-
(208)
-
-
(4,473)
(159)
-
(8)
-
-
-
-
(41)
(54)
-
-
-
-
-
4
1
2
-
1
2
-
-
-
-
-
-
-
-
-
3
-
-
-
-
-
-
3,913
-
4,056
110
1,194
6,540
5
4,025
30
1
1,313
13,713
-
18
-
487
16
12
2,397
5
2,822
1,760
48,417
(6,013)
13
42,417
365
365
23
23
5
-
-
5
1
-
11
-
-
-
-
-
-
-
(5)
-
-
(5)
-
-
-
-
-
-
-
-
-
-
-
365
365
23
23
5
-
-
-
1
-
6
48,816
(6,018)
13
42,811
100.0
-
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
-
100.0
-
100.0
100.0
100.0
100.0
100.0
51.8
60.6
50.0
42.7
11.1
11.1
-
4.3
10.0
1.0
347
Financial statements of Enel SpA The table below reports changes in equity investments in 2017.
Millions of euro
Increases
Merger of Enel Ingegneria e Ricerca SpA into Enel Produzione SpA
Acquisition of the entire share capital of Tynemouth Energy Storage Limited
Formation of Enel eS Srl (renamed Enel X Srl) and subsequent assignment of the equity investment
held by Enel SpA in Enel Sole Srl
Formation of Enel South America Srl by way of the partial cross-border, intra-European demerger of
Enel Iberoamérica Srl (renamed Enel Iberia Srl)
Merger of Enel South America Srl into Enel SpA - Direct investment in Enel Américas SA
Merger of Enel South America Srl into Enel SpA - Direct investment in Enel Chile SA
Merger of Enel South America Srl into Enel SpA - Direct investment in Empresa Propietaria de la
Red SA
Merger of Enel South America Srl into Enel SpA - Direct investment in Red Centroamericana de
Telecomunicaciones SA
Merger of Enel South America Srl into Enel SpA - Direct investment in Compañía de Transmisión
del Mercosur SA
Acquisition of the entire share capital of Enel M@p from e-distribuzione
Formation of Enel Global Thermal Generation Srl
Total increases
Decreases
Merger of Enel Ingegneria e Ricerca SpA into Enel Produzione SpA
Assignment of the equity investment in Enel Sole Srl held by Enel SpA to Enel X Srl
Partial cross-border, intra-European demerger of Enel Iberoamérica Srl (renamed Enel Iberia Srl) in
favor of the newly formed Enel South America Srl
Merger of Enel South America Srl into Enel SpA
Total decreases
NET CHANGE
3
5
5
4,587
2,822
1,760
5
-
-
12
1
9,200
(3)
(5)
(4,587)
(4,587)
(9,182)
18
In 2017, the value of investments in subsidiaries, joint ven-
created in order to capitalize on the transformation of
tures, associated and other companies increased by €18
the energy industry, seeks to understand and meet the
million as a result of:
needs of Enel customers around the world, exploring
> the acquisition in May 2017, for €5 million (including
opportunities in new technologies in order to develop
a number of expected price adjustments), of the enti-
innovative products focused on the needs of consumers
re share capital of Tynemouth Energy Storage Limited
and on digital, non-commodity solutions. The company
from Element Power, a European company specialized
will specifically focus on electric mobility, Vehicle-to-
in the development and operation of energy projects.
Grid projects, recharging infrastructures, energy effi-
The company holds a stand-alone project for a battery
ciency management, batteries and energy-optimization
energy storage system (BESS) in Newcastle, England.
platforms, public lighting, and distributed generation sy-
The project, which is ready for construction, is to be carri-
stems. To this end, on November 1, 2017, the Parent
ed out by Enel’s Global Thermal Generation Division, will
Company, Enel SpA, subscribed a capital increase in
use lithium-ion batteries with a capacity of 25 MW (12.5
kind plus the share premium for a total value of €5 million
MWh), and is to be completed in early 2018;
(of which €1 million in share capital and €4 million in sha-
> the formation, on June 5, 2017, of Enel eS Srl (subse-
re premium) by assigning the entirety of the investment
quently renamed Enel X Srl) by paying in €50,000 of
held in Enel Sole Srl;
share capital held entirely by Enel SpA. This company,
> the acquisition, on November 16, 2017, of the entire sha-
348
Annual Report 2017 re capital of Enel M@p Srl from e-distribuzione SpA for a
register. Following this merger, conducted without the
payment of €12 million;
exchange of shares and so with no increase in capital for
> the formation, on November 20, 2017, of Enel Global
the surviving company, Enel SpA will be able to benefit
Thermal Generation Srl by subscribing and paying in the
from direct control of the Chilean companies Enel Améri-
entire share capital in the amount of €1 million.
cas SA and Enel Chile SA, which represent the lion’s sha-
Other operations in 2017 did not result in changes in the
re of the Group’s business in South America as a result
overall value of the equity investments held by Enel SpA.
of shorting the chain of control. The merger also resulted
Of particular note were the following:
in Enel SpA holding an 11.11% direct investment in both
> the merger of Enel Ingegneria e Ricerca SpA into Enel
Empresa Propietaria de la Red SA and Red Centroame-
Produzione SpA effective on January 1, 2017;
ricana de Telecomunicaciones SA, as well as a 0.0001%
> the formation, on June 8, 2017, of Enel South America
direct investment in Compañía de Transmisión del Mer-
Srl, an Italian company based in Rome (Viale Regina Mar-
cosur SA.
gherita 137) established as a result of the partial cross-
border, intra-European demerger of Enel Iberoamérica
The share certificates for Enel SpA’s investments in Ita-
Srl (subsequently renamed Enel Iberia Srl) and wholly
lian subsidiaries are held in custody at Monte dei Paschi
owned by Enel SpA;
di Siena.
> the merger of Enel South America Srl into Enel SpA in
The following table reports the share capital and sharehol-
November 2017, effective retroactively for accounting and
ders’ equity of the investments in subsidiaries, joint ven-
tax purposes to June 8, 2017, the date on which Enel
tures, associates and other companies at December 31,
South America Srl was listed with the Rome company
2017.
349
Financial statements of Enel SpA Head office
Currency
Share capital
Shareholders’
equity
(millions of
euro)
Prior year
income/(loss)
(millions of euro) % holding
Carrying
amount
(millions of
euro)
A) Subsidiaries
Enel Produzione SpA
e-distribuzione SpA
Servizio Elettrico Nazionale
SpA
Enel Trade SpA
Enel Green Power SpA
Enel X Srl
Rome
Rome
Rome
Rome
Rome
Rome
Enel Investment Holding BV
Amsterdam
Enelpower SpA
Enel Global Thermal
Generation Srl
Enel Energia SpA
Enel Iberia Srl
Enel.Factor SpA
Enel Italia Srl
Enel Innovation Hubs Srl
Enel M@p Srl
Milan
Rome
Rome
Madrid
Rome
Rome
Rome
Rome
Enel Finance International NV
Amsterdam
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
Euro
1,800,000,000
2,600,000,000
10,000,000
90,885,000
3,971
4,454
210
527
272,000,000
6,601
1,050,000
(8)
1,593,050,000
3,282
2,000,000
1,000,000
30
1
229
100.0
3,913
1,332
100.0
4,056
101
(19)
58
(13)
140
-
-
100.0
110
100.0
1,194
100.0
6,540
100.0
5
100.0
4,025
100.0
100.0
30
1
302,039
1,872
793
100.0
1,313
336,142,500
16,448
1,130
100.0
13,713
12,500,000
50,000,000
1,000,000
100,000
52
400
21
2
3
16
1
2
100.0
100.0
100.0
100.0
18
487
16
12
1,478,810,371
1,863
(96)
100.0
2,397
Tynemouth Energy Storage
Limited
London
Pound
sterling
2
Enel Américas SA
Santiago
US dollar
6,763,204,424
Enel Chile SA
Santiago Chilean peso 2,229,108,974,538
2
5,813
1,856
-
100.0
5
1,072
378
51.8
60.6
2,822
1,760
Milan
Euro
250,000,000
699
(11)
50.0
365
B) Joint ventures
OpEn Fiber SpA
C) Associates
CESI SpA
D) Other companies
Empresa Propietaria de la
Red SA
Red Centroamericana de
Telecomunicaciones SA
Milan
Euro
8,550,000
111
Panama
US dollar
58,500,000
105
Panama
US dollar
2,700,000
1
Compañía de Transmisión del
Mercosur SA
Buenos
Aires
Argentine
peso
14,012,000
Elcogas SA
Puertollano
Euro
809,690
Emittenti Titoli SpA in
liquidation (1)
Idrosicilia SpA (1)
Milan
Milan
Euro
Euro
4,264,000
22,520,000
(25)
(109)
12
47
(1) The figures for share capital, shareholders’ equity and net income refer to the financial statements at December 31, 2016.
350
7
5
-
(8)
3
1
1
42.7
23
11.1
11.1
-
4.3
10.0
1.0
5
-
-
-
1
-
Annual Report 2017 The carrying amounts of the equity investments in Enel
and models used for the assessments were consistent,
Investment Holding BV, Enel Trade SpA, Enel X Srl, Enel
to the extent compatible, with those used for impairment
Italia Srl, Enel Finance International NV and Enel M@p Srl
testing in the consolidated financial statements. The
are considered to be recoverable even though they indivi-
exercise found a larger value for the equity investments
dually exceed the value of their respective shareholders’
that was not reflected in book shareholders’ equity, the-
equity at December 31, 2017. This circumstance is not
reby confirming that the value of the equity investments
felt to represent an impairment loss in respect of the in-
was fully recoverable;
vestment but rather a temporary mismatch between the
> in the case of Enel Finance International NV, it is attribu-
two amounts. More specifically:
table to the negative developments in the fair value of a
> in the case of Enel Italia Srl, it is attributable to the re-
number of items in shareholders’ equity.
troactive application of ”IAS 19 - Employee benefits”
in 2013, which involved the recognition of net actuarial
It should also be noted that these shareholdings have pas-
losses and the consequent impact on the companies’
sed their related impairment tests.
shareholders’ equity. As these losses are not monetary
in nature, they will be recovered in future years with no
Equity investments in other companies at December 31,
cash outflow for the subsidiary;
2017, all regard unlisted companies and are measured at
> in the cases of Enel Trade SpA, Enel Investment Holding
cost, as the fair value cannot be reliably determined.
BV, Enel M@p Srl and Enel X Srl, the negative difference
The investment in Elcogas was completely written off in
between the carrying amount of the equity investments
2014 and, since January 1, 2015, the company, in which
and their shareholders' equity represented a trigger
Enel has a stake of 4.3%, has been in liquidation. The pro-
event, following which an impairment testing exercise
fit participation loan of €6 million granted in 2014 has also
determined the equity value of the investments on the
been written down to take account of accumulated losses.
basis of expected future cash flows. The assumptions
Millions of euro
Equity investments in unlisted companies measured at cost
Empresa Propietaria de la Red SA
Red Centroamericana de Telecomunicaciones SA
Compañía de Transmisión del Mercosur SA
Elcogas SA
Emittenti Titoli SpA in liquidation
Idrosicilia SpA
at Dec. 31, 2017
at Dec. 31, 2016
6
5
-
-
-
1
-
1
-
-
-
-
1
-
14. Derivatives - €1,456 million, €111 million, €2,270 million,
€176 million
Millions of euro
Non-current
Current
at Dec. 31, 2017
at Dec. 31, 2016
at Dec. 31, 2017
at Dec. 31, 2016
Derivative financial assets
Derivative financial liabilities
1,456
2,270
2,469
3,082
111
176
480
556
For more details about the nature, recognition and classi-
see notes 31, “Financial instruments”, and 33, “Derivati-
fication of derivative financial assets and liabilities, please
ves and hedge accounting”.
351
Financial statements of Enel SpA 15. Other non-current financial assets - €16 million
The aggregate is composed of the following.
Millions of euro
Prepaid financial expense
Other non-current financial assets
included in debt
Total
Notes
at Dec. 31, 2017
at Dec. 31, 2016
Change
15.1
10
6
16
21
32
53
(11)
(26)
(37)
Prepaid financial expense refers to transaction costs on
compared with the previous year reflects the difference
the new €10 billion revolving credit facility established on
between the residual costs on the credit facility that was
December 18, 2017, between Enel SpA, Enel Finance In-
closed in advance and the transaction costs for the new
ternational, and Mediobanca following the closure of the
facility. Acquisition of the new, five-year credit facility has
existing credit facility established on April 10, 2010, and
resulted in a general reduction in cost.
renegotiated in 2013 and 2015. The change of €11 million
15.1 Other non-current financial assets included in debt - €6 million
Millions of euro
Financial receivables
Notes
at Dec. 31, 2017
at Dec. 31, 2016
Change
Due from subsidiaries
31.1.1
Other financial receivables
Total
-
6
6
27
5
32
(27)
1
(26)
Other non-current financial assets included in debt totaled
es, which only included the receivable resulting from Enel
€6 million as at December 31, 2017, and related solely to
Italia Srl taking over its portion of financial debt.
loans to employees.
In 2017, this receivable was reclassified among current fi-
The €26 million decrease compared with the previous year
nancial assets.
was due to the reduction in amounts due from subsidiari-
16. Other non-current assets - €148 million
This item breaks down as follows.
Millions of euro
Tax receivables
Receivable from subsidiaries for assumption of
supplementary pension plan liabilities
Total
352
at Dec. 31, 2017
at Dec. 31, 2016
Change
9
139
148
34
154
188
(25)
(15)
(40)
Annual Report 2017 Tax receivables regard the tax credit in respect of the claim
refers to receivables in respect of the assumption by Group
for reimbursement submitted by Enel SpA on its own behalf
companies of their share of the supplementary pension plan.
for 2003 and on its own behalf and as the consolidating com-
The terms of the agreement state that the Group companies
pany for 2004-2011 for excess income tax paid as a result of
concerned are to reimburse the costs of extinguishing de-
not partially deducting IRAP in calculating taxable income for
fined benefit obligations of the Parent Company, which are
IRES purposes. The decrease of €25 million compared with
recognized under employee benefits.
the previous year was essentially due to the reimbursement
On the basis of actuarial forecasts made using current as-
by the Revenue Agency, both principal and interest, of the
sumptions, the portion due beyond five years of these recei-
receivable related to 2011.
vables from subsidiaries for assumption of supplementary
pension plan liabilities came to €76 million (€90 million at
Receivable from subsidiaries for assumption of supplemen-
December 31, 2016).
tary pension plan liabilities, in the amount of €139 million,
17. Trade receivables - €237 million
The item breaks down as follows.
Millions of euro
Trade receivables:
- due from subsidiaries
- due from non-Group customers
Total
at Dec. 31, 2017
at Dec. 31, 2016
Change
208
29
237
229
26
255
(21)
3
(18)
Trade receivables, which totaled €237 million, consist of
€21 million reflects the trend in revenue related to these
receivables due from subsidiaries (€208 million) and non-
services.
Group customers (€29 million).
Receivables from non-Group customers concern services
Trade receivables due from subsidiaries primarily regard
of various nature and totaled €29 million, which is essen-
the management and coordination services and other ac-
tially unchanged from December 31, 2016.
tivities performed by Enel SpA on behalf of Group compa-
Trade receivables due from subsidiaries break down as fol-
nies. Compared with December 31, 2016, the decrease of
lows.
353
Financial statements of Enel SpA Millions of euro
Subsidiaries
Enel Iberia Srl
Enel Produzione SpA
e-distribuzione SpA
Enel Green Power SpA
Enel Américas SA
Endesa SA
Servizio Elettrico Nazionale SpA
Enel Trade SpA
Enel Energia SpA
Enel Italia Srl
Enel Green Power North America Inc.
Enel X Srl
Enel Russia PJSC
Endesa Distribución Eléctrica SL
Endesa Generación SA
Endesa Energía SA
Enel Romania Srl
Enel Brasil SA
Enel Distribución Perú SAA
Enel Generación Perú SAA
Unión Eléctrica de Canarias Generación SAU
Other
Total
at Dec. 31, 2017
at Dec. 31, 2016
Change
1
13
33
3
3
4
1
1
1
18
1
2
16
27
10
4
4
25
6
6
3
26
208
2
16
34
16
4
-
4
4
10
9
1
-
17
36
20
5
4
13
5
5
5
19
229
(1)
(3)
(1)
(13)
(1)
4
(3)
(3)
(9)
9
-
2
(1)
(9)
(10)
(1)
-
12
1
1
(2)
7
(21)
Trade receivables by geographical area are shown below.
Millions of euro
Italy
EU
Non-EU Europe
Other
Total
at Dec. 31, 2017
at Dec. 31, 2016
Change
77
97
17
46
237
96
103
6
50
255
(19)
(6)
11
(4)
(18)
18. Income tax receivables - €265 million
Income tax receivables at December 31, 2017 amounted
receivable with respect to the consolidated IRES return for
to €265 million and essentially regard the company’s IRES
2016 (€98 million).
credit for estimated current taxes (€165 million) and the
354
Annual Report 2017 19. Other current financial assets - €4,350 million
This item can be broken down as follows.
Millions of euro
Other current financial assets included in debt
Other sundry current financial assets
Total
Notes
19.1
at Dec. 31, 2017
at Dec. 31, 2016
Change
4,085
265
4,350
3,912
309
4,221
173
(44)
129
19.1 Other current financial assets included in debt - €4,085 million
Millions of euro
Notes
at Dec. 31, 2017
at Dec. 31, 2016
Change
Financial receivables due from Group companies:
- short-term financial receivables (intercompany current
accounts)
- current portion of receivables for assumption of loans
Financial receivables due from others:
- current portion of long-term financial receivables
- other financial receivables
31.1.1
31.1.1
- cash collateral for margin agreements on OTC derivatives
31.1.1
Total
1,984
27
1
(1)
2,074
4,085
2,849
45
1
5
1,012
3,912
(865)
(18)
-
(6)
1,062
173
Other current financial assets included in debt, amounting
due from Group companies on the intercompany current
to €4,085 million at December 31, 2017, refer to financial
account (€865 million).
receivables due from Group companies (€2,011 million)
Financial receivables due from others increased by €1,056
and financial receivables due from others (€2,074 million).
million, essentially attributable to the increase in cash col-
Financial receivables due from Group companies decrea-
lateral paid to counterparties for over-the-counter derivati-
sed by €883 million compared with December 31, 2016,
ves on interest rates and exchange rates.
due to the decline in in short-term financial receivables
20. Other current assets - €452 million
At December 31, 2017, the item broke down as follows.
Millions of euro
Tax receivables
Other receivables due from Group companies
Receivables due from others
Total
at Dec. 31, 2017
at Dec. 31, 2016
Change
10
435
7
452
34
261
4
299
(24)
174
3
153
With respect to December 31, 2016, other current assets
(now a payable balance of €90 million as at December 31,
show an overall increase of €153 million.
2017).
Tax receivables amounted to €10 million, primarily including
Other receivables due from Group companies essentially
receivables with respect to prior-year income taxes (€8 mil-
regard VAT receivables in respect of participating in the
lion). The €24 million decrease compared with the previous
Group VAT mechanism (€348 million), IRES receivables in
year is essentially attributable to the VAT receivable (€27
respect of the Group companies participating in the conso-
million) recognized by the Group as at December 31, 2016
lidated taxation mechanism (€33 million), and receivables
355
Financial statements of Enel SpA for the interim dividend approved in 2017 by the subsidia-
interim dividends (totaling €52 million), and the reduction in
ries Enel Américas SA and Enel Chile SA (€24 million and
intragroup receivables related to the Italian IRES tax conso-
€28 million, respectively), which was collected in January
lidation (€175 million).
2018. The increase of €174 million compared with Decem-
Receivables due from others, in the amount of €7 million
ber 31, 2016 was essentially due to the greater VAT recei-
as at December 31, 2107, were essentially in line with the
vables in respect of participating in the Group VAT mecha-
figure for 2016 (€4 million).
nism (€295 million), the aforementioned receivables for the
21. Cash and cash equivalents - €2,489 million
Cash and cash equivalents, detailed in the table below, are
essentially in respect of deposits pledged to secure tran-
not restricted by any encumbrances, apart from €4 million
sactions carried out.
Millions of euro
Bank and post office deposits
Cash and cash equivalents on hand
Total
at Dec. 31, 2017
at Dec. 31, 2016
2,489
-
2,489
3,038
-
3,038
Change
(549)
-
(549)
Cash and cash equivalents amounted to €2,489 million,
payment of dividends during 2016 as approved by the Enel
a decrease of €549 million compared with December 31,
SpA shareholders on May 4, 2017, as well as normal opera-
2016, due to the impact of the redemption and repurchase
tions connected with the central treasury function perfor-
of a number of bonds, new long-term bank borrowings, the
med by the Parent Company.
Liabilities and equity
22. Shareholders’ equity - €27,236 million
Shareholders’ equity amounted to €27,236 million, up €320
reholders on May 4, 2017, and the interim dividend for 2017
million compared with December 31, 2016. The increase is
approved by the Board of Directors on November 8, 2017,
attributable to net income for the year (€2,303 million), the
and paid as from January 24, 2018 (€0.105 per share, for a
distribution of the dividend for 2016 in the amount of €0.09
total of €1,068 million).
per share (for a total of €915 million), as approved by the sha-
Share capital - €10,167 million
At December 31, 2017, the share capital of Enel SpA
nomy and Finance (with a 23.585% stake) and BlackRock
amounted to €10,166,679,946 fully subscribed and paid
Inc. (with a 5.615% stake held through subsidiaries as of Au-
up, represented by that same number of ordinary shares
gust 15, 2017, for the purposes of asset management).
with a par value of €1.00 each. This figure for Enel SpA
share capital is therefore unchanged compared with the
€10,166,679,946 of December 31, 2016.
At December 31, 2017, based on the shareholder register and
Other reserves - €11,443 million
Share premium reserve - €7,496 million
The share premium reserve as at December 31, 2017 is
taking account of CONSOB’s instructions to the company
unchanged compared with the previous year.
in accordance with Article 120 of Italian Legislative Decree
58 of February 24, 1998, and all other information available,
the only shareholders with interests of greater than 3% in
Legal reserve - €2,034 million
The legal reserve, equal to 20.0% of share capital, is un-
the company’s share capital were the Italian Ministry of Eco-
changed compared with the previous year.
356
Annual Report 2017 Reserve pursuant to Law 292/1993 -
€2,215 million
The reserve shows the remaining portion of the value
Reserve from measurement of financial
instruments - €(338) million
At December 31, 2017, the item was entirely represented
adjustments carried out when Enel was transformed from
by the reserve from measurement of cash flow hedge de-
a public entity to a joint-stock company.
rivatives with a negative value of €338 million (net of the
In the case of a distribution of this reserve, the tax tre-
positive tax effect of €66 million).
atment for capital reserves as defined by Article 47 of the
Uniform Income Tax Code shall apply.
Other sundry reserves - €68 million
Other reserves include €19 million related to the reserve
for capital grants, which reflects 50% of the grants recei-
ved from Italian public entities and EU bodies in application
of related laws for new works (pursuant to Article 55 of
Presidential Decree 917/1986), which is recognized in equi-
ty in order to take advantage of tax deferment benefits.
It also includes €29 million in respect of the stock option
reserve and €20 million for other reserves.
Reserve from remeasurement of net
employee benefit plan liabilities/(assets) -
€(32) million
At December 31, 2017, the employee benefit plan reserve
amounted to €32 million (net of the positive tax effect of €8 mil-
lion). The reserve includes actuarial gains and losses recogni-
zed directly in equity, as the corridor approach is no longer per-
mitted under the new version of ”IAS 19 - Employee benefits”.
The table below provides a breakdown of changes in the
reserve from measurement of financial instruments and
the reserve from measurement of defined benefit plan lia-
bilities/assets in 2016 and 2017.
Gross gains/
(losses)
recognized in
equity for the
year
Gross
released
to income
statement
at Jan. 1,
2016
Taxes
at Dec. 31,
2016
Gross gains/
(losses)
recognized in
equity for the
year
Gross
released
to income
statement
Taxes
(277)
(479)
339
41
(376)
(201)
232
(16)
(15)
-
4
(27)
(7)
-
(293)
(494)
339
45
(403)
(208)
232
at Dec. 31,
2017
7
2
9
(338)
(32)
(370)
Millions of euro
Reserve from
measurement
of cash flow
hedge financial
instruments
Reserve from
remeasurement
of net employee
benefit plan
liabilities/(assets)
Gains/(Losses)
recognized
directly in equity
Retained earnings/(Loss carried forward) - €4,424 million
For 2017, the item shows a decrease of €110 million, attribu-
amount of €203 million for the distribution of dividends to
table to the resolution of the Shareholders’ Meeting of May
shareholders and the allocation to retained earnings of part
4, 2017, which provided for the use of this reserve in the
of the net income for 2016, equal to €93 million.
Net income for the year - €1,202 million
Net income for 2017, net of the interim dividend for 2017 of
The table below shows the availability of shareholders’
€0,105 per share (for a total of €1,068 million), amounted
equity for distribution.
to €1,202 million.
357
Financial statements of Enel SpA Millions of euro
Share capital
Capital reserves:
- share premium reserve
Income reserves:
- legal reserve
- reserve pursuant to Law 292/1993
- reserve from measurement of financial instruments
- reserve for capital grants
- stock option reserve
- reserve from remeasurement of employee benefit
plan liabilities
- other
Retained earnings/(Loss carried forward)
Total
of which amount available for distribution
at Dec. 31, 2017
Possible uses
Amount available
10,167
7,496
2,034
2,215
(338)
19
29
(32)
20
4,424
26,034
ABC
B
ABC
ABC
ABC
ABC
ABC
7,496
2,215
19
29 (1) (2)
20
4,424
14,203
14,200
A: for capital increases.
B: to cover losses.
C: for distribution to shareholders.
(1) Regards lapsed options.
(2) Not distributable in the amount of €3 million regarding options granted by the Parent Company to employees of subsidiaries that have lapsed.
There are no restrictions on the distribution of the reserves
Enel’s goals in capital management are focused on the crea-
pursuant to Article 2426, paragraph 1(5) of the Italian Civil
tion of value for shareholders, safeguarding the interests of
Code since there are no unamortized start-up and expansion
stakeholders and ensuring business continuity, as well as on
costs or research and development costs, or departures pur-
maintaining sufficient capitalization to ensure cost-effective
suant to Article 2423, paragraph 4, of the Italian Civil Code.
access to outside sources of financing, so as to adequately
Note that, in the three previous years, the available reserve
support growth in the Group’s business.
denominated “retained earnings/(loss carried forward) has
been used in the amount of €1,862 million for the distribution
of dividends to shareholders.
358
Annual Report 2017 22.1 Dividends
The table below shows the dividends paid by the company in 2016 and 2017.
Amount distributed (in millions of euro)
Net dividend per share (in euro)
Dividends paid in 2016
Dividends for 2015
Interim dividend for 2016 (1)
Special dividends
Total dividends paid in 2016
Dividends paid in 2017
Dividends for 2016
Interim dividend for 2017 (2)
Special dividends
Total dividends paid in 2017
1,627
-
-
1,627
1,830
-
-
1,830
0.16
-
-
0.16
0.18
-
-
0.18
(1) Approved by the Board of Directors on November 10, 2016, and paid as from January 25, 2017 (interim dividend per share of €0.09 for a total of €915
million).
(2) Approved by the Board of Directors on November 8, 2017, and paid as from January 24, 2018 (interim dividend per share of €0.105 for a total of €1,068
million).
The dividend for 2017, equal to €0.237 per share, amounting
the effects of the distribution of this dividend for 2017 to
to a total of €2,410 million (of which €0.105 per share, for
shareholders, with the exception of liabilities due to sha-
a total of €1,068 million, already paid as an interim divi-
reholders for the 2017 interim dividend approved by the
dend as from January 24, 2018), has been proposed to and
Board of Directors on November 8, 2017, and paid as from
resolved by the Shareholders’ Meeting of May 24, 2018,
January 24, 2018.
at a single call. These financial statements do not reflect
22.2 Capital management
The company’s objectives for managing capital comprise
In this context, the company manages its capital structure
safeguarding the business as a going concern, creating va-
and adjusts that structure when changes in economic con-
lue for stakeholders and supporting the development of
ditions so require. There were no substantive changes in
the Group. In particular, the Group seeks to maintain an
objectives, policies or processes in 2017.
adequate capitalization that enables it to achieve a satisfac-
To this end, the company constantly monitors deve-
tory return for shareholders and ensure access to external
lopments in the level of its debt in relation to equity. The
sources of financing, in part by maintaining an adequate
situation at December 31, 2017 and 2016 is summarized in
rating.
Millions of euro
Non-current financial position
Net short-term financial position
Non-current financial receivables and long-term securities
Net financial debt
Shareholders’ equity
Debt/equity ratio
the following table.
at Dec. 31, 2017
at Dec. 31, 2016
(10,780)
(2,477)
6
(13,251)
27,236
(0.49)
(13,664)
(207)
32
(13,839)
26,916
(0.51)
Change
2,884
(2,270)
(26)
588
320
0.02
359
Financial statements of Enel SpA 23. Borrowings - €10,780 million, €3,654 million, €5,397 million
Millions of euro
Non-current
Current
at Dec. 31, 2017
at Dec. 31, 2016
at Dec. 31, 2017
at Dec. 31, 2016
Long-term borrowings
Short-term borrowings
10,780
-
13,664
-
3,654
5,397
973
6,184
For more details about the nature, recognition and classification of borrowings, please see note 31, “Financial instruments”.
24. Employee benefits - €273 million
The company provides its employees with a variety of be-
benefits under defined benefit plans and other long-term
nefits, including termination benefits, additional months’
benefits to which employees are entitled by law, by con-
pay, indemnities in lieu of notice, loyalty bonuses for achie-
tract, or under other forms of employee incentive schemes.
vement of seniority milestones, supplementary pension
These obligations, in accordance with IAS 19, were deter-
plans, supplementary healthcare plans, additional indemni-
mined using the projected unit credit method.
ty for FOPEN pension contributions, FOPEN pension con-
The following table reports the change during the year in
tributions in excess of deductible amount and personnel
the defined benefit obligation, as well as a reconciliation of
incentive plans.
the defined benefit obligation with the obligation recogni-
zed at December 31, 2017, and December 31, 2016.
The item includes accruals made to cover post-employment
Millions of euro
2017
2016
Pension
benefits
Electricity
discount
Health
insurance
Other
benefits
Total
Pension
benefits
Electricity
discount
Health
insurance
Other
benefits
Total
222
-
3
-
(1)
2
(25)
(1)
200
-
-
-
-
-
-
-
-
-
40
2
1
-
-
6
(2)
(2)
45
24
20
-
-
-
-
286
22
4
-
(1)
8
(14)
(41)
(2)
(5)
28
273
230
-
5
1
10
1
(26)
1
222
-
-
-
-
-
-
-
-
-
37
1
1
(1)
3
1
(3)
1
40
24
14
-
-
-
-
291
15
6
-
13
2
(15)
(44)
1
3
24
286
CHANGES IN
ACTUARIAL
OBLIGATION
Actuarial obligation at
January 1
Current service cost
Interest expense
Actuarial (gains)/
losses arising from
changes in demographic
assumptions
Actuarial (gains)/losses
arising from changes in
financial assumptions
Experience adjustments
Other payments
Other changes
Actuarial obligation at
December 31
360
Annual Report 2017 Millions of euro
(Gains)/Losses charged to profit or loss
Service cost
Interest expense
(Gains)/Losses arising from settlements
Total
Millions of euro
Remeasurement (gains)/losses in OCI
Actuarial (gains)/losses on defined benefit plans
Other changes
Total
2017
22
4
-
26
2017
7
-
7
2016
15
6
-
21
2016
15
-
15
The current service cost for employee benefits in 2017
The main actuarial assumptions used to calculate the liabilities
amounted to €22 million, recognized under personnel costs
arising from employee benefits, which are consistent with tho-
(€15 million in 2015), while the interest cost from the accretion
se used the previous year, are set out below.
of the liability amounted to €4 million (€6 million in 2016).
Discount rate
Rate of wage increases
Rate of increase in healthcare costs
2017
0.20%-1.50%
1.50%-3.50%
2.50%
2016
0.30%-1.40%
1.40%-3.40%
2.40%
The following table reports the outcome of a sensitivity
at the end of the year in the actuarial assumptions used in
analysis that demonstrates the effects on the liability for
estimating the obligation.
healthcare plans as a result of changes reasonably possible
Millions of euro
Healthcare
plans: ASEM
An increase
of 0.5% in
discount rate
A decrease
of 0.5% in
discount rate
An increase of
0.5% in
inflation rate
An increase
of 0.5% in
remuneration
An increase of
0.5% in pensions
currently being
paid
An increase of
1% in healthcare
costs
An increase of
1 year in life
expectancy of
active and retired
employees
(3)
3
3
-
-
7
-
25. Provisions for risks and charges - €43 million
Provisions for risks and charges cover probable potential
from court judgments and other dispute settlements for the
liabilities that could arise from legal proceedings and other
year and an update of the estimates for positions arising in
disputes, without considering the effects of rulings that are
previous years not related to the transferred business units.
expected to be in the company’s favor and those for which
any charge cannot be quantified with reasonable certainty.
The following table shows changes in provisions for risks
In determining the balance of the provision, we have ta-
and charges.
ken account of both the charges that are expected to result
361
Financial statements of Enel SpA Millions of euro
Accruals
Reversals
Utilization
Total
Taken to income statement
at Dec. 31, 2016
at Dec. 31, 2017
of which
current portion
Provision for litigation, risks and
other charges:
- litigation
- other
Total
Provision for early retirement
incentives
TOTAL
12
28
40
28
68
1
6
7
-
7
(2)
-
(2)
-
(2)
-
(23)
(23)
(4)
(27)
11
11
22
21
43
7
8
15
2
17
The €1 million decrease in the provision for litigation re-
effect of utilizations and accruals for the year and related
flects amounts released to the income statement following
to sundry risks.
the settlement of a number of disputes, which were par-
The decrease of €7 million in the provision for early retire-
tially offset by new accruals for pending suits.
ment incentives is essentially attributable to payments in
The provision covers disputes in Italy and essentially re-
2017 of voluntary terminations under Article 4 of the Forne-
gards labor litigation (€8 million) and litigation concerning
ro Act, as well as to transfers of personnel from Enel SpA to
tender contracts (€2 million).
other companies of the Group, which resulted in the intra-
The decrease of €17 million in other provisions is the net
group transfer of the related portions of this provision.
26. Other non-current liabilities - €12 million
Other non-current liabilities amounted to €12 million (€36
by the recognition of non-current tax receivables (note 16).
million at December 31, 2016). They essentially regard the
The decrease of €24 million is essentially attributable to the
debt towards Group companies that initially arose following
payment to the consolidated companies of the reimburse-
Enel SpA’s application (submitted in its capacity as the con-
ment of the receivable for 2011 received from the Revenue
solidating company) for reimbursement for 2004-2011 of
Agency in 2017. The amount of the liability at December 31,
the additional income taxes paid as a result of not deduc-
2017 reflects the updating of the interest accrued on the
ting part of IRAP in computing taxable income for IRES pur-
residual receivable.
poses. The liability in respect of the subsidiaries is balanced
27. Trade payables - €137 million
Millions of euro
Trade payables:
- due to third parties
- due to Group companies
Total
at Dec. 31, 2017
at Dec. 31, 2016
Change
66
71
137
83
67
150
(17)
4
(13)
Trade payables mainly include payables for the provision of
Trade payables due to subsidiaries at December 31, 2017,
services and other activities performed in 2017, and compri-
break down as follows.
se payables due to third parties of €66 million (€83 million
at December 31, 2016) and payables due to Group compa-
nies of €71 million (€67 million at December 31, 2016).
362
Annual Report 2017 Millions of euro
Subsidiaries
Enel Produzione SpA
e-distribuzione SpA
Enel Ingegneria e Ricerca SpA
Servizio Elettrico Nazionale SpA
Enel Trade SpA
Enel Green Power SpA
Enel Italia Srl
Enel Iberia Srl
Enel.Factor SpA
Endesa SA
Enel Russia PJSC
Other
Total
at Dec. 31, 2017
at Dec. 31, 2016
Change
1
1
-
-
1
1
35
21
2
3
-
6
71
1
-
1
1
1
-
41
10
1
2
3
6
67
-
1
(1)
(1)
-
1
(6)
11
1
1
(3)
-
4
Trade payables break down by geographical area as follows.
Millions of euro
Suppliers:
Italy
EU
Non-EU Europe
Other
Total
at Dec. 31, 2017
at Dec. 31, 2016
Change
99
31
4
3
137
119
20
7
4
150
(20)
11
(3)
(1)
(13)
28. Other current financial liabilities - €465 million
Other current financial liabilities mainly regard interest expense accrued on debt outstanding at year end.
Millions of euro
Deferred financial liabilities
Other items
Total
Notes
31.2.1
31.2.1
at Dec. 31, 2017
at Dec. 31, 2016
Change
450
15
465
501
49
550
(51)
(34)
(85)
More specifically, deferred financial liabilities consist of in-
the following year, comprising both financial expense on
terest expense accrued on financial debt, while the other
hedge derivatives on commodity exchange rates and inte-
items essentially include amounts due to Group companies
rest expense on intercompany current accounts.
that accrued as of December 31, 2017, but to be settled in
363
Financial statements of Enel SpA 29. Net financial position and long-term financial receivables and
securities - €13,251 million
The following table shows the net financial position and long-term financial receivables and securities on the basis of the
items on the balance sheet.
Millions of euro
Long-term borrowings
Short-term borrowings
Current portion of long-term borrowings
Non-current financial assets included in
debt
Current financial assets included in debt
Cash and cash equivalents
Total
Notes
at Dec. 31, 2017
at Dec. 31, 2016
23
23
23
15.1
19.1
21
10,780
5,397
3,654
6
4,085
2,489
13,251
13,664
6,184
973
32
3,912
3,038
13,839
Change
(2,884)
(787)
2,681
(26)
173
(549)
(588)
Pursuant to the CONSOB instructions of July 28, 2006, the
ber 31, 2017, reconciled with net financial debt as reported
following table reports the net financial position at Decem-
in the Report on operations.
at Dec. 31, 2017
at Dec. 31, 2016
Change
of which with
related parties
of which with
related parties
2,489
2,489
4,085
(245)
(3,654)
(5,152)
(9,051)
(2,477)
(1,039)
(8,541)
(1,200)
(10,780)
(10,780)
(13,257)
6
(13,251)
2,011
(4,896)
2,894
(4,268)
3,038
3,038
3,912
(810)
(973)
(5,374)
(7,157)
(207)
(50)
(12,414)
(1,200)
(13,664)
(13,664)
(13,871)
-
32
27
(13,839)
(549)
(549)
173
565
(2,681)
222
(1,894)
(2,270)
(989)
3,873
-
2,884
2,884
614
(26)
588
Millions of euro
Bank and post office deposits
Liquidity
Current financial receivables
Short-term bank debt
Short-term portion of long-term bank debt
Other short-term financial payables
Short-term financial debt
Net short-term financial position
Long-term bank debt
Bonds
Other long-term debt
Long-term borrowings
Non-current financial position
NET FINANCIAL POSITION as per CONSOB
instructions
Long-term financial receivables
NET FINANCIAL DEBT
364
Annual Report 2017 30. Other current liabilities - €2,065 million
Other current liabilities mainly concern payables due to tax
interim dividend for 2017 approved by the Enel SpA Bo-
authorities and to the Group companies participating in the
ard of Directors on November 8, 2017, and paid as from
consolidated IRES taxation mechanism and the Group VAT
January 24, 2018 (€1,068 million in 2017 and €915 million
system, as well as the liability due to shareholders for the
in 2016).
Millions of euro
Tax payables
Payables due to Group companies
Payables due to employees,
recreational/assistance associations
Payables due to social security
institutions
Payables due to customers for
security deposits and reimbursements
Other
Total
at Dec. 31, 2017
at Dec. 31, 2016
502
428
27
12
2
1,094
2,065
184
544
30
12
1
923
1,694
Change
318
(116)
(3)
-
1
171
371
Tax payables amounted to €502 million and essentially re-
tion mechanism (€457 million at December 31, 2016) and
gard amounts due to tax authorities for consolidated IRES
€252 million in respect of Group VAT (€86 million at Decem-
(€405 million) and for Group VAT for the 4th Quarter of 2017
ber 31, 2016). The decrease of €116 million reflects deve-
(€90 million). The increase of €318 million compared with
lopments in the debtor positions noted above.
the previous year was mainly due to the increase in taxes
The item “Other”, equal to €1,094 million, includes €1,068
payable for consolidated IRES (€228 million) and for Group
million (€915 million at December 31, 2016) for the liability
VAT (€90 million).
due to shareholders for the interim dividend to be paid as
Payables due to Group companies amounted to €428 mil-
from January 24, 2018 (€0.105 per share for 2017 and €0.09
lion. They essentially consist of €175 million in payables in
per share for 2016).
respect of the IRES liability under the consolidated taxa-
365
Financial statements of Enel SpA 31. Financial instruments
31.1 Financial assets by category
The following table shows the carrying amount for each ca-
parately hedging derivatives and derivatives measured at
tegory of financial assets provided by IAS 39, broken down
fair value through profit or loss.
into current and non-current financial assets, showing se-
Millions of euro
Non-current
Current
Notes
at Dec. 31, 2017
at Dec. 31, 2016
at Dec. 31, 2017
at Dec. 31, 2016
Loans and receivables
Financial assets available for sale
31.1.1
31.1.2
Financial assets at fair value through profit or
loss
Derivative financial assets at FVTPL
Total
Derivative financial assets designated as
hedging instruments
Cash flow hedge derivatives
Fair value hedge derivatives
Total
TOTAL
33
33
33
16
6
940
940
501
15
516
1,478
53
1
1,691
1,691
751
27
778
2,523
7,076
-
111
111
-
-
-
7,514
-
480
480
-
-
-
7,187
7,994
For more details on the recognition and classification of current and non-current derivative financial assets, please see note
33 “Derivatives and hedge accounting”.
31.1.1 Loans and receivables
The following table shows loans and receivables by nature, broken down into current and non-current financial assets.
Millions of euro
Non-current
Current
Notes
at Dec. 31,
2017
at Dec. 31,
2016
Cash and cash equivalents
Trade receivables
Financial receivables due from Group companies
Receivables for assumption of share of financial debt
15.1
Receivables on intercompany current accounts
Current portion of receivables for assumption of loans
19.1
Other financial receivables
Total
Financial receivables due from others
Current portion of long-term financial receivables
Cash collateral for margin agreements on OTC derivatives
Other financial receivables
Total
TOTAL
-
-
-
-
-
-
-
-
-
16
16
16
-
-
27
-
-
-
27
-
-
26
26
53
Notes
21
17
at Dec. 31,
2017
at Dec. 31,
2016
2,489
237
3,038
255
-
-
19.1
1,984
2,849
27
174
45
154
2,185
3,048
1
2,074
90
2,165
7,076
1
1,012
160
1,173
7,514
19.1
The primary changes compared with 2016 regarded:
lion, essentially attributable to the redemption and repur-
> a decrease in “Cash and cash equivalents” of €549 mil-
chase of a number of bonds, the payment of dividends
366
Annual Report 2017 for 2016 and to the normal central treasury functions per-
> an increase of “Financial receivables due from others”
formed by Enel SpA;
totaling €982 million, mainly as a result of an increase
> a decrease in “Financial receivables due from Group
in cash collateral paid to counterparties for OTC deriva-
companies” totaling €863 million, largely reflecting the
tives transactions on interest rates and exchange rates
decrease in receivables on the intercompany current ac-
(€1,062 million).
count held with Group companies (€865 million);
31.1.2 Financial assets available for sale
Financial assets available for sale amounted to €6 million
2017 following the merger into Enel SpA of Enel South
(€1 million at December 31, 2016) and are represented
America Srl, and in Emittenti Titoli SpA (€1 million). Both
by equity investments held by Enel SpA in Empresa Pro-
investments are classified as “Equity investments in other
pietaria de la Red SA (€5 million), which was acquired in
entities” and carried at cost.
31.2 Financial liabilities by category
The following table shows the carrying amount for each
ing separately hedging derivatives and derivatives measu-
category of financial liabilities provided by IAS 39, broken
red at fair value through profit or loss.
down into current and non-current financial liabilities, show-
Millions of euro
Non-current
Current
Financial liabilities measured at amortized
cost
Financial liabilities at fair value through
profit or loss
Derivative financial liabilities at FVTPL
Total
Derivative financial liabilities designated as
hedging instruments
Cash flow hedge derivatives
Total
TOTAL
Notes
at Dec. 31, 2017
at Dec. 31, 2016
at Dec. 31, 2017
at Dec. 31, 2016
31.2.1
10,780
13,664
9,653
7,857
33
33
943
943
1,327
1,327
13,050
1,703
1,703
1,379
1,379
16,746
176
176
-
-
556
556
-
-
9,829
8,413
For more details on the recognition and classification of cur-
For more details about fair value measurement, please see
rent and non-current derivative financial liabilities, please
note 34 “Fair value measurement”.
see note 33 “Derivatives and hedge accounting”.
31.2.1 Financial liabilities measured at amortized cost
The following table shows financial liabilities at amortized cost by nature, broken down into current and non-current finan-
cial liabilities.
Millions of euro
Non-current
Current
Notes
at Dec. 31, 2017
at Dec. 31, 2016
Notes
at Dec. 31, 2017
at Dec. 31, 2016
Long-term borrowings
23
10,780
13,664
Short-term borrowings
Trade payables
Other current financial liabilities
-
-
-
-
-
-
23
27
28
Total
10,780
13,664
3,654
5,397
137
465
9,653
973
6,184
150
550
7,857
367
Financial statements of Enel SpA Borrowings
Long-term borrowings (including the portion falling
due within 12 months) - €14,434 million
Long-term borrowings, which refer to bonds, bank bor-
cember 31, 2017, including the portion falling due within 12
rowings and loans from Group companies, denominated in
months, grouped by type of borrowing and type of interest
euros and other currencies, including the portion falling due
rate. For listed debt instruments, the fair value is given by offi-
within 12 months (equal to €3,654 million), amounted to
cial prices. For unlisted debt instruments, fair value is determi-
€14,434 million at December 31, 2017.
ned using valuation techniques appropriate for each category
The following table shows the nominal values, carrying
of financial instrument and the associated market data for the
amounts and fair values of long-term borrowings at De-
reporting date, including the credit spreads of the Group.
Millions of euro
Nominal
value
Carrying
amount
Current
portion
Portion
due in
more than
12 months Fair value
Nominal
value
Carrying
amount
Current
portion
Portion
due in
more than
12 months
Fair
value
Carrying
amount
at Dec. 31, 2017
at Dec. 31, 2016
Change
Bonds:
- fixed rate
10,447
10,390
3,088
7,302
11,880
11,584
11,502
908
10,594
13,117
(1,112)
- floating rate
1,805
1,805
566
1,239
1,767
1,888
1,885
65
1,820
1,858
(80)
Total
12,252
12,195
3,654
8,541
13,647
13,472
13,387
973
12,414
14,975
(1,192)
Bank
borrowings:
- fixed rate
-
-
- floating rate
1,039
1,039
Total
1,039
1,039
Loans from
Group
companies:
- fixed rate
1,200
1,200
- floating rate
-
-
Total
1,200
1,200
-
-
-
-
-
-
-
-
1,039
1,043
1,039
1,043
-
50
50
-
50
50
1,200
1,540
1,200
1,200
-
-
-
-
1,200
1,540
1,200
1,200
-
-
-
-
-
-
-
50
50
-
50
50
1,200
1,575
-
-
1,200
1,575
-
989
989
-
-
-
Total fixed-rate
borrowings
Total floating-
rate borrowings
11,647
11,590
3,088
8,502
13,420
12,784
12,702
908
11,794
14,692
(1,112)
2,844
2,844
566
2,278
2,810
1,938
1,935
65
1,870
1,908
909
TOTAL
14,491
14,434
3,654
10,780
16,230
14,722
14,637
973
13,664
16,600
(203)
The balance for bonds is reported net of €860 million in re-
please see note 32 “Risk management”, while for more
spect of the unlisted floating-rate “Special series of bonds
about fair value measurement inputs, please see note 34
reserved for employees 1994-2019”, which Enel SpA holds
“Fair value measurement”.
in its portfolio.
The table below shows long-term borrowings by currency
For more details about the maturity analysis of borrowings,
and interest rate.
368
Annual Report 2017 Long-term borrowings by currency and interest rate
Millions of euro
Carrying amount
Nominal value
Current average
nominal interest rate
Current effective
interest rate
at Dec. 31, 2016
at Dec. 31, 2017
at Dec. 31, 2017
Euro
US dollar
Pound sterling
Total non-euro
currencies
TOTAL
11,113
1,168
2,356
3,524
14,637
10,939
1,218
2,277
3,495
14,434
10,961
1,232
2,298
3,530
14,491
4.6%
7.7%
6.5%
4.8%
8.1%
6.7%
The table below reports changes in the nominal value of long-term debt.
Millions of euro
Nominal value
Repayments New borrowing
Own bonds
repurchased
Exchange
differences
at Dec. 31, 2016
Bonds
Bank borrowings
Loans from Group
companies
Total
13,472
50
1,200
14,722
(974)
-
-
(974)
-
999
-
999
(19)
-
-
(19)
(227)
(10)
-
(237)
Nominal value
at Dec. 31, 2017
12,252
1,039
1,200
14,491
Compared with December 31, 2016, the nominal value of
rate bonds of the “Special series of bonds reserved for
long-term debt decreased by €231 million, reflecting:
employees 1994-2019”;
> the redemption of the residual portion amounting to
> the recognition of exchange gains of €237 million;
€909 million of a bond issued in 2007 in the amount of
> new long-term bank borrowings totaling €999 million.
€1,500 million, which was partially redeemed in 2016;
> the redemption of four tranches of INA and ANIA bonds
The table below reports the characteristics of the bank bor-
in the total amount of €65 million;
rowings obtained in 2017.
> the repurchase of €19 million in own unlisted floating-
New borrowings
Type of loan
Counterparty
Issue date
Bank borrowings
UBI Banca SpA
27.04.2017
Bank borrowings
UniCredit SpA
15.06.2017
Bank borrowings
UniCredit SpA
10.07.2017
Bank borrowings
Bank of America
10.07.2017
Total
Amount
financed
(millions of
euro)
150
450
200
199
999
Currency
Interest rate
(%)
Type of
interest rate
Due date
EUR 3M +
37.5 bps
EUR 6M +
33.5 bps
EUR 6M + 20
bps
€
€
€
Floating rate
27.04.2020
Floating rate
15.07.2020
Floating rate
26.06.2021
USD
Libor 3M +
71.8 bps
Floating rate
12.07.2021
In 2017 the following borrowings were obtained:
due in 2020 (at December 31, 2016, the line was drawn
> a three-year loan from UBI Banca SpA amounting to €150
in the amount of €50 million);
million;
> a new loan from UniCredit SpA amounting to €200 mil-
> an additional drawing of €450 million on the financing
lion and falling due in 2021;
obtained from UniCredit SpA the previous year, falling
> a loan denominated in US dollars from Bank of Ameri-
369
Financial statements of Enel SpA ca amounting to the equivalent of €199 million at the
The main covenants for the Revolving Facility Agreement
exchange rate at the time the loan was granted ($227
and the loan agreements between Enel SpA and UniCredit
million) falling due in 2021.
SpA are substantially similar and can be summarized as
follows:
The main long-term borrowings of Enel SpA are governed
> negative pledge clauses, under which the borrower and,
by covenants that are commonly adopted in international
in some cases, significant subsidiaries may not establish
business practice. These borrowings are mainly represen-
mortgages, liens or other encumbrances on all or part of
ted by the bond issues carried out within the framework
their respective assets to secure certain financial liabili-
of the Global/Euro Medium-Term Notes program, issues
ties, with the exception of expressly permitted encum-
of subordinated unconvertible hybrid bonds, the Revolving
brances;
Facility Agreement agreed on December 18, 2017 by Enel
> disposals clauses, under which the borrower and, in
SpA and Enel Finance International NV with a pool of banks
some cases, the subsidiaries of Enel may not dispose
of up to €10 billion and the loans granted by UniCredit SpA.
of their assets or a significant portion of their assets or
The main covenants in respect of the bond issues in the
operations, with the exception of expressly permitted di-
Global/Euro Medium-Term Notes program of Enel SpA and
sposals;
Enel Finance International NV (including the Green Bon-
> pari passu clauses, under which the payment underta-
ds of Enel Finance International NV guaranteed by Enel
kings of the borrower have the same seniority as its other
SpA, which are used to finance the Group’s eligible green
unsecured and unsubordinated payment obligations;
projects) can be summarized as follows:
> change of control clauses, which are triggered in the
> negative pledge clauses under which the issuer and the
event (i) control of Enel is acquired by one or more par-
guarantor may not establish or maintain (except under
ties other than the Italian State or (ii) Enel or any of its
statutory requirement) mortgages, liens or other encum-
subsidiaries transfer a substantial portion of the Group’s
brances on all or part of its assets or revenue, to secure
assets to parties outside the Group such that the finan-
certain financial borrowings, unless the same restrictions
cial reliability of the Group is significantly compromised.
are extended equally or pro rata to the bonds in question;
The occurrence of one of the two circumstances may
> pari passu clauses, under which bonds and the asso-
give rise to (a) the renegotiation of the terms and condi-
ciated guarantees constitute a direct, unconditional and
tions of the financing or (b) compulsory early repayment
unsecured obligation of the issuer and the guarantor,
of the financing by the borrower;
do not grant preferential rights among them and have
> cross-default clauses, under which the occurrence of a
at least the same seniority as other present and future
default event in respect of a specified financial liability
unsubordinated and unsecured bonds of the issuer and
(above a threshold level) of the borrower or significant
the guarantor;
subsidiaries constitutes a default in respect of the liabi-
> cross-default clauses, under which the occurrence of a
lities in question, which may become immediately repa-
default event in respect of a specified financial liability
yable.
(above a threshold level) of the issuer, the guarantor or
In 2017, Enel Finance International NV issued a number of
significant subsidiaries constitutes a default in respect of
bonds guaranteed by Enel SpA on the US market. Their
the liabilities in question, which may become immedia-
main covenants are the same as those of the bonds issued
tely repayable.
under the Euro Medium-Term Notes program.
The main covenants covering the hybrid bonds of Enel SpA
All the financial borrowings considered specify “events of
can be summarized as follows:
default” typical of international business practice, such as,
> subordination clauses: each hybrid bond is subordinate
for example, insolvency, bankruptcy proceedings or the en-
to all other bonds of the issuer and has the same se-
tity ceases trading.
niority as other hybrid financial instruments issued and
None of the covenants indicated above has been triggered
greater seniority than equity instruments;
to date.
> prohibition on mergers with other companies, the sale
or leasing of all or a substantial part of the company’s
Finally, following the partial, non-proportional demerger
assets to another company, unless the latter succeeds in
of Enel Green Power SpA (“EGP”) to Enel SpA, as from
all obligations of the issuer.
the final moment of March 31, 2016, certain balance sheet
370
Annual Report 2017 items and legal relationships of EGP were assigned to Enel
as the guarantor, typical of international business practice.
SpA. The legal relationships included guarantees issued
by EGP on behalf of its subsidiaries in respect of commit-
Debt structure after hedging
ments assumed in loan transactions. Those guarantees
and the associated loan contracts include certain cove-
nants and “events of default”, some borne by Enel SpA
The following table shows the effect of the hedges of fo-
reign currency risk on the gross long-term debt structure
(including portions maturing in the next 12 months).
Millions of euro
at Dec. 31, 2017
at Dec. 31, 2016
Initial debt structure
Carrying
amount
Nominal
amount
10,939
10,961
1,218
2,277
1,232
2,298
%
75.6
8.5
15.9
Euro
US dollar
Pound sterling
Debt
structure
after
hedging
Hedged
debt
Initial debt structure
Carrying
amount
Nominal
amount
3,530
14,491
11,113
11,153
(1,232)
(2,298)
-
-
1,168
2,356
1,186
2,383
Debt
structure
after
hedging
Hedged
debt
%
75.8
8.0
16.2
3,569
14,722
(1,186)
(2,383)
-
-
Total
14,434
14,491
100.0
-
14,491
14,637
14,722
100.0
-
14,722
The following table shows the effect of the hedges of interest rate risk on the gross long-term debt outstanding at the
reporting date.
Gross long-term debt
%
Floating rate
Fixed rate
Total
at Dec. 31, 2017
at Dec. 31, 2016
Before hedging
After hedging
Before hedging
After hedging
19.6
80.4
100.0
24.2
75.8
100.0
13.2
86.8
100.0
17.7
82.3
100.0
Short-term borrowings - €5,397 million
The following table shows short-term borrowings at December 31, 2017, by nature.
Millions of euro
Borrowings from non-Group counterparties
Bank borrowings
Short-term bank borrowings (ordinary current account)
Cash collateral for CSAs on OTC derivatives received
Total
Borrowings from Group counterparties
Short-term borrowings from Group companies (on intercompany current
account)
Total
TOTAL
at Dec. 31, 2017
at Dec. 31, 2016
Change
120
125
256
501
4,896
4,896
5,397
808
1
1,107
1,916
4,268
4,268
6,184
(688)
124
(851)
(1,415)
628
628
(787)
Short-term borrowings amounted to €5,397 million (€6,184
> the €688 million decrease in liabilities to banks for short-
million in 2016), down €787 million over the previous year,
term loans received;
mainly due to:
> the €851 million decrease in cash collateral received
371
Financial statements of Enel SpA from counterparties for transactions in OTC derivatives
It should be specified that the fair value of current bor-
on interest rates and exchange rates;
rowings equals their carrying amount as the impact of di-
> the €628 million increase in “Short-term borrowings
scounting is not significant.
from Group companies” attributable to the deterioration
in the debtor position on the intercompany current ac-
count held with subsidiaries.
31.2.2 Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss, bro-
million) financial liabilities, refer solely to derivative financial
ken down into non-current (€943 million) and current (€176
liabilities.
31.2.3 Net gains and losses
The following table shows net gains and losses by category of financial instruments, excluding derivatives.
Millions of euro
Available for sale financial assets
Loans and receivables
at Dec. 31, 2017
at Dec. 31, 2016
at Dec. 31, 2017
Net gains/(losses)
of which: impairment/reversal of
impairment
1
2
6
-
1
Financial liabilities measured at amortized cost
(546)
(510)
For more details on net gains and losses on derivatives, please see note 7 “Net financial income/(expense) from derivatives“.
32. Risk management
32.1 Financial risk management objectives and policies
As part of its operations, the company is exposed to a varie-
Line levels that establish the roles and responsibilities for
ty of financial risks, notably market risks (including interest
risk management, monitoring and control processes, ensu-
rate risk and exchange risk), credit risk and liquidity risk.
ring compliance with the principle of organizational separa-
tion of units responsible for operations and those in charge
The financial risk governance arrangements adopted by
of monitoring and managing risk.
Enel establish specific internal committees, composed of
The financial risk governance system also defines a sy-
top management and chaired by the Chief Executive Offi-
stem of operating limits at the Group and individual Re-
cers of the companies involved, which are responsible for
gion, Country and Global Business Line levels for each risk,
policy setting and supervision of risk management, as well
which are monitored periodically by risk management units.
as the definition and application of specific policies at the
For the Group, the system of limits constitutes a decision-
Group and individual Region, Country and Global Business
making tool to achieve its objectives.
32.2 Market risks
Market risk is the risk that the value of financial and non-
risk of changes in interest rates and exchange rates.
financial assets or liabilities and the associated expected
cash flows could change owing to changes in market pri-
Interest rate risk and exchange risk are primarily generated
ces.
by the presence of financial instruments.
As part of its operations as an industrial holding company,
The main financial liabilities held by the company include
Enel SpA is exposed to different market risks, notably the
bonds, bank borrowings, other borrowings, derivatives,
372
Annual Report 2017 cash collateral for derivatives transactions and trade paya-
on which cash flows are exchanged. This amount can be
bles. The main purpose of those financial instruments is to
expressed as a value or a quantity (for example tons, con-
finance the operations of the company.
verted into euro by multiplying the notional amount by the
The main financial assets held by the Group include finan-
agreed price).
cial receivables, derivatives, cash collateral for derivatives
The notional amounts of derivatives reported here do not
transactions, cash and short-term deposits and trade recei-
represent amounts exchanged between the parties and
vables.
therefore are not a measure of the company’s credit risk
For more details, please see note 31 “Financial instru-
exposure.
ments”.
The source of exposure to interest rate risk and exchange
risk did not change with respect to the previous year.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of chan-
As the Parent Company, Enel SpA centralizes some treasury
ges in market interest rates.
management functions and access to financial markets with
regard to financial derivatives contracts on interest rates and
Interest rate risk for the company manifests itself as a change
exchange rates. As part of this activity, Enel SpA acts as an
in the flows associated with interest payments on floating-
intermediary for Group companies with the market, taking
rate financial liabilities, a change in financial terms and condi-
positions that, while they can be substantial, do not however
tions in negotiating new debt instruments or as an adverse
represent an exposure to markets risks for Enel SpA.
change in the value of financial assets/liabilities measured at
fair value, which are typically fixed-rate debt instruments.
During 2017, no overshoots of the threshold values set by
Interest rate risk is managed with the dual goals of reducing
regulators for the activation of clearing obligations (EMIR –
the amount of debt exposed to interest rate fluctuations and
European Market Infrastructure Regulation – 648/2012 of
containing the cost of funds, limiting the volatility of results.
the European Parliament) were detected.
This goal is pursued through the strategic diversification of
the portfolio of financial liabilities by contract type, maturity
The volume of transactions in financial derivatives outstan-
and interest rate, and modifying the risk profile of specific
ding at December 31, 2017, is reported below, with specifi-
exposures using OTC derivatives, mainly interest rate swaps.
cation of the notional amount of each class of instrument.
The notional amount of outstanding contracts is reported be-
The notional amount of a derivative contract is the amount
low.
Millions of euro
Notional amount
Interest rate derivatives
Interest rate swaps
Total
at Dec. 31, 2017
at Dec. 31, 2016
20,599
20,599
22,377
22,377
The term of such contracts does not exceed the maturity
end of the year was €20,599 million (€22,377 million at
of the underlying financial liability, so that any change in
December 31, 2016), of which €1,329 million (essentially
the fair value and/or cash flows of such contracts is offset
unchanged on December 31, 2016) in respect of hedges of
by a corresponding change in the fair value and/or cash
the company’s share of debt, and €9,635 million (€10,524
flows of the underlying position.
million at December 31, 2016) in respect of hedges of the
Interest rate swaps normally provide for the periodic
debt of Group companies with the market intermediated in
exchange of floating-rate interest flows for fixed-rate inte-
the same notional amount with those companies.
rest flows, both of which are calculated on the basis of the
notional principal amount.
For more details on interest rate derivatives, please see
note 33 “Derivatives and hedge accounting”.
The notional amount of open interest rate swaps at the
373
Financial statements of Enel SpA The amount of floating-rate debt that is not hedged against
More specifically, sensitivity analysis measures the poten-
interest rate risk is the main risk factor that could impact
tial impact of market scenarios on equity, for the cash flow
the income statement (raising borrowing costs) in the
hedge component, and on profit or loss, for the fair value
event of an increase in market interest rates.
hedge component, for derivatives that are not eligible for
At December 31, 2017, 19.6% of gross long-term finan-
hedge accounting and for the portion of gross long-term
cial debt was floating rate (13.2% at December 31, 2016).
debt not hedged using derivative financial instruments.
Taking account of hedges of interest rates considered ef-
These scenarios are represented by parallel increases and
fective pursuant to the IAS 39, 75.8% of gross long-term
decreases in the yield curve as at the reporting date.
financial debt was hedged at December 31, 2017 (82.3%
There were no changes in the methods and assumptions
at December 31, 2016). Including derivatives treated as
used in the sensitivity analysis compared with the previous
hedges for management purposes but ineligible for hedge
year.
accounting, the ratio is essentially unchanged.
Interest rate risk sensitivity analysis
The company analyses the sensitivity of its exposure by
estimating the effects of a change in interest rates on the
portfolio of financial instruments.
With all other variables held constant, the company’s profit
before tax would be affected as follows.
Millions of euro
Change in financial
expense on gross long-
term floating-rate debt in
foreign currency
Change in fair value of
derivatives classified as
non-hedging instruments
Change in fair value of
derivatives designated
as hedging instruments
Cash flow hedges
Fair value hedges
Basis
points
25
25
25
25
at Dec. 31, 2017
at Dec. 31, 2016
Pre-tax impact
on profit or loss
Pre-tax impact
on equity
Pre-tax impact
on profit or loss
Pre-tax impact
on equity
Increase
Decrease
Increase
Decrease
Increase
Decrease
Increase
Decrease
9
6
-
(2)
(9)
(6)
-
2
-
-
11
-
-
-
(11)
-
7
7
-
(5)
(7)
(7)
-
5
-
-
13
-
-
-
(13)
-
Exchange risk
Exchange risk is the risk that the fair value or future cash
In order to minimize exposure to changes in exchange
flows of a financial instrument will fluctuate because of
rates, the company normally uses a variety of OTC de-
changes in exchange rates.
rivatives such as currency forwards and cross currency
interest rate swaps. The term of such contracts does not
For Enel SpA, the main source of exchange risk is the
exceed the maturity of the underlying exposure.
presence of monetary financial instruments denominated
in a currency other than the euro, mainly bonds denomi-
Currency forwards are contracts in which the counterpar-
nated in foreign currency.
ties agree to exchange principal amounts denominated in
The exposure to exchange risk did not change with re-
different currencies at a specified future date and exchan-
spect to the previous year.
ge rate (the strike). Such contracts may call for the actual
For more details, please see note 31 “Financial instru-
exchange of the two amounts (deliverable forwards) or
ments”.
374
payment of the difference between the strike exchange
Annual Report 2017 rate and the prevailing exchange rate at maturity (non-
rest rate swaps in that they provide both for the periodic
deliverable forwards).
exchange of cash flows and the final exchange of princi-
Cross currency interest rate swaps are used to transform
pal.
a long-term fixed- or floating-rate liability in foreign cur-
The following table reports the notional amount of tran-
rency into an equivalent floating- or fixed-rate liability in
sactions outstanding at December 31, 2017 and Decem-
euros. In addition to having notionals denominated in
ber 31, 2016, broken down by type of hedged item.
different currencies, these instruments differ from inte-
Millions of euro
Notional amount
at Dec. 31, 2017
at Dec. 31, 2016
Foreign exchange derivatives
Currency forwards:
- hedging exchange risk on commodities
- hedging future cash flows
- other currency forwards
Cross currency interest rate swaps
Total
5,410
3,664
1,190
556
15,527
20,937
5,399
4,507
196
696
22,668
28,067
More specifically, these include:
in foreign currency that is denominated in the currency of
> currency forward contracts with a total notional amount
account or the functional currency of the company, the debt
of €3,664 million (€4,507 million at December 31, 2016),
is fully hedged using cross currency interest rate swaps.
of which €1,832 million to hedge the exchange risk asso-
ciated with purchases of energy commodities by Group
companies, with matching transactions with the market;
> currency forward contracts with a notional amount of
Exchange risk sensitivity analysis
The company analyses the sensitivity of its exposure by
estimating the effects of a change in exchange rates on the
€1,190 million (€196 million at December 31, 2016), to
portfolio of financial instruments.
hedge the exchange risk associated with other expected
cash flows in currencies other than the euro, of which
€595 million in market transactions;
> currency forward contracts with a notional amount of
€556 million (€696 million at December 31, 2016), to
hedge the exchange rate risk on investment spending, of
which €278 million in market transactions;
> cross currency interest rate swaps with a notional
amount of €15,527 million (€22,668 million at December
31, 2016), to hedge the exchange risk on the debt of Enel
SpA or other Group companies denominated in curren-
More specifically, sensitivity analysis measures the poten-
tial impact of market scenarios on equity, for the cash flow
hedge component, and on profit or loss, for the fair value
hedge component, for derivatives that are not eligible for
hedge accounting and for the portion of gross long-term
debt not hedged using derivative financial instruments.
These scenarios are represented by the appreciation/de-
preciation of the euro against all of the foreign currencies
compared with the value observed as at the reporting date.
There were no changes in the methods and assumptions
used in the sensitivity analysis compared with the previous
cies other than the euro.
year.
With all other variables held constant, the profit before tax
For more details, please see note 33 “Derivatives and hed-
would be affected as follow.
ge accounting”.
An analysis of the Group’s debt shows that 24.4% of gross
medium and long-term debt (24.2% at December 31, 2016)
is denominated in currencies other than the euro.
Considering exchange rate hedges and the portion of debt
375
Financial statements of Enel SpA Millions of euro
at Dec. 31, 2017
at Dec. 31, 2016
Pre-tax impact
on profit or loss
Pre-tax impact
on equity
Pre-tax impact
on profit or loss
Pre-tax impact
on equity
Exchange
rate
Appreciation
of euro
Depreciation
of euro
Appreciation
of euro
Depreciation
of euro
Appreciation
of euro
Depreciation
of euro
Appreciation
of euro
Depreciation
of euro
Change in financial
expense on gross long-
term floating-rate debt
in foreign currency after
hedging
Change in fair value of
derivatives classified as
non-hedging instruments
Change in fair value of
derivatives designated
as hedging instruments
Cash flow hedges
Fair value hedges
32.3 Credit risk
10%
10%
10%
10%
-
5
-
-
-
(6)
-
-
-
-
-
-
(431)
-
526
-
-
-
-
-
-
-
-
-
-
-
-
-
(462)
-
564
-
Credit risk is represented by the possibility of a deteriora-
ring risks under the policies and procedures outlined in the
tion in the creditworthiness of a counterparty in a financial
governance rules for managing the Group’s risks, which are
transaction that could have an adverse impact on the cre-
also designed to ensure prompt identification of possible
ditor position. The company is exposed to credit risk from
mitigation actions to be taken.
its financial activities, including transactions in derivatives
Within this general framework, Enel entered into margin
(typically on financial or commodity underlyings), deposits
agreements with the leading financial institutions with
with banks and financial institutions, foreign exchange tran-
which it operates that call for the exchange of cash collate-
sactions and other financial instruments.
ral, which significantly mitigates the exposure to counter-
The sources of exposure to credit risk did not change with
party risk.
respect to the previous year.
The company’s management of credit risk is based on the
At December 31, 2017, the exposure to credit risk, represen-
selection of counterparties from among leading Italian and
ted by the carrying amount of financial assets net of related
international financial institutions with high credit standing
provisions for impairment as well as derivatives with a positive
considered solvent both by the market and on the basis
fair value, net of any cash collateral held, amounted to €8,392
of internal assessments, diversifying the exposure among
million (€9,388 million at December 31, 2016). Of the total,
them. Credit exposures and associated credit risk are regu-
€3,403 million regard receivables in respect of Group com-
larly monitored by the departments responsible for monito-
panies and €2,489 million regard cash and cash equivalents.
Millions of euro
Non-current financial receivables
Other non-current financial assets
Trade receivables
Current financial receivables
Other current financial assets
Financial derivatives
Cash and cash equivalents
Total
376
at Dec. 31, 2017
at Dec. 31, 2016
Change
of which Group
of which Group
-
5
237
2,011
2,339
1,311
2,489
8,392
-
-
208
2,011
174
1,010
-
3,403
27
5
255
2,894
1,327
1,842
3,038
9,388
27
-
229
2,894
154
973
-
4,277
(27)
-
(18)
(883)
1,012
(531)
(549)
(996)
Annual Report 2017 32.4 Liquidity risk
Liquidity risk is the risk that the company will encounter diffi-
sources in terms of instruments, markets/currencies and
culty in meeting obligations associated with financial liabilities
counterparties.
that are settled by delivering cash or another financial asset.
The objectives of liquidity risk management policies are:
At December 31, 2017 Enel SpA had a total of about
> ensuring an appropriate level of liquidity for the Group,
€2,489 million in cash or cash equivalents (€3,038 mil-
minimizing the associated opportunity cost;
lion at December 31, 2016), and committed lines of cre-
> maintaining a balanced debt structure in terms of the ma-
dit amounting to €5,800 million (of which none had been
turity profile and funding sources.
drawn) maturing in more than one year (€6,170 million at
In the short term, liquidity risk is mitigated by maintaining
December 31, 2016).
an appropriate level of unconditionally available resources,
including cash and short-term deposits, available commit-
ted credit lines and a portfolio of highly liquid assets.
In the long term, liquidity risk is mitigated by maintaining
Maturity analysis
The table below summarizes the maturity profile of the
company’s financial liabilities based on contractual undi-
a balanced debt maturity profile and diversifying funding
scounted payments.
Millions of euro
Maturing in
Less than 3
months
Between 3 months
and 1 year
Between 1 and 2
years
Between 2 and 5
years
Over 5 years
Bonds:
- fixed rate
- floating rate
Total
Bank borrowings:
- fixed rate
- floating rate
Total
Loans from Group companies:
- fixed rate
- floating rate
Total
TOTAL
2,498
500
2,998
-
-
-
-
-
-
590
66
656
-
-
-
-
-
-
1,867
229
2,096
-
-
-
-
-
-
1,999
235
2,234
-
1,039
1,039
-
-
-
2,998
656
2,096
3,273
3,436
775
4,211
-
-
-
1,200
-
1,200
5,411
377
Financial statements of Enel SpA 32.5 Offsetting financial assets and financial liabilities
The following table reports the net financial assets and
and to guarantee transactions involving derivatives, Enel
liabilities. More specifically, it shows that there are no
SpA has entered into margin agreements with leading fi-
netting arrangements for derivatives in the financial state-
nancial institutions that call for the exchange of cash colla-
ments since the company does not plan to set-off assets
teral, broken down as shown in the table.
and liabilities. As envisaged by current market regulations
Millions of euro
at Dec. 31, 2017
(a)
(b)
(c)=(a)-(b)
(d)
(e)=(c)-(d)
Correlated amounts not set off in
the balance sheet
(d)(i),(d)(ii)
(d)(iii)
Gross amounts
of recognized
financial assets/
(liabilities) set off
in the balance
sheet
Net amounts of
financial assets/
(liabilities)
presented in the
balance sheet
Gross amounts
of recognized
financial assets/
(liabilities)
Net portion of
financial assets/
(liabilities)
guaranteed with
cash collateral
Net amount of
financial assets/
(liabilities)
Financial
instruments
FINANCIAL ASSETS
Derivative financial assets:
- on interest rate risk
- on exchange risk
Total derivative financial
assets
TOTAL FINANCIAL ASSETS
FINANCIAL LIABILITIES
Derivative financial liabilities:
- on interest rate risk
- on exchange risk
Total derivative financial
liabilities
TOTAL FINANCIAL LIABILITIES
TOTAL NET FINANCIAL
ASSETS/(LIABILITIES)
420
1,147
1,567
1,567
(608)
(1,838)
(2,446)
(2,446)
(879)
-
-
-
-
-
-
-
-
-
420
1,147
1,567
1,567
(608)
(1,838)
(2,446)
(2,446)
(879)
-
-
-
-
-
-
-
-
-
(46)
(552)
(598)
(598)
608
1,808
2,416
2,416
1,818
374
595
969
969
-
(30)
(30)
(30)
939
378
Annual Report 2017 33. Derivatives and hedge accounting
The following tables report the notional amount and fair
on the basis of which cash flows are exchanged. This
value of derivative financial assets and liabilities by type
amount can be expressed as a value or a quantity (for exam-
of hedge relationship and hedged risk, broken down into
ple tons, converted into euros by multiplying the notional
current and non-current derivative financial assets and lia-
amount by the agreed price). Amounts denominated in cur-
bilities.
rencies other than the euro are converted at the end-year
The notional amount of a derivative contract is the amount
exchange rates provided by the European Central Bank.
Millions of euro
Non-current
Current
Notional amount
Fair value
Notional amount
Fair value
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016 Change
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016 Change
Derivatives designated
as hedging instruments
Cash flow hedges:
- on exchange risk
Total cash flow hedges
Fair value hedges:
- on interest rate risk
Total fair value hedges
Derivatives at FVTPL:
- on interest rate risk
- on exchange risk
Total derivatives at
FVTPL
TOTAL DERIVATIVE
FINANCIAL ASSETS
2,327
2,327
2,517
2,517
800
800
800
800
9,586
5,632
10,497
7,860
501
501
15
15
405
535
751
751
(250)
(250)
27
27
(12)
(12)
-
-
-
-
-
-
-
-
527
1,164
(122)
(629)
50
27
2,419
3,718
15,218
18,357
940
1,691
(751)
2,469
3,745
18,345
21,674
1,456
2,469 (1,013)
2,469
3,745
-
-
-
-
1
110
111
111
-
-
-
-
1
-
-
-
-
-
479
(369)
480
(369)
480
(369)
Millions of euro
Non-current
Current
Notional amount
Fair value
Notional amount
Fair value
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016 Change
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016 Change
Derivatives designated
as hedging instruments
Cash flow hedges:
- on interest rate risk
- on exchange risk
Total cash flow hedges
Derivatives at FVTPL:
390
2,501
2,891
390
2,394
2,784
- on interest rate risk
9,624
10,535
- on exchange risk
5,632
7,860
135
1,192
1,327
408
535
154
1,225
1,379
(19)
(33)
(52)
-
-
-
-
-
-
530
(122)
150
127
1,173
(638)
2,425
3,718
Total derivatives at
FVTPL
TOTAL DERIVATIVE
FINANCIAL LIABILITIES
15,256
18,395
943
1,703
(760)
2,575
3,845
18,147
21,179
2,270
3,082
(812)
2,575
3,845
-
-
-
66
110
176
176
-
-
-
-
-
-
74
(8)
482
(372)
556
(380)
556
(380)
379
Financial statements of Enel SpA 33.1 Hedge accounting
Derivatives are initially recognized at fair value, on the trade
date of the contract and are subsequently re-measured at
their fair value.
The method of recognizing the resulting gain or loss de-
ble to a particular risk associated with an asset, a liability or
a highly probable transaction that could affect profit or loss.
The effective portion of changes in the fair value of deriva-
tives that are designated and qualify as cash flow hedges
is recognized in other comprehensive income. The gain or
loss relating to the ineffective portion is recognized imme-
pends on whether the derivative is designated as a hed-
diately in the income statement.
ging instrument, and if so, the nature of the item being
hedged.
Hedge accounting is applied to derivatives entered into in
order to reduce risks such as interest rate risk, exchange
risk, commodity risk, credit risk and equity risk when all the
criteria provided for under IAS 39 are met.
At the inception of the transaction, the company docu-
ments the relationship between hedging instruments and
hedged items, as well as its risk management objectives
and strategy. The company also analyzes, both at hedge
Amounts accumulated in equity are reclassified to profit or
loss in the period when the hedged item affects profit or loss.
When a hedging instrument expires or is sold, or when a
hedge no longer meets the criteria for hedge accounting
but the hedged item has not expired or been cancelled,
any cumulative gain or loss existing in equity at that time
remains in equity and is recognized when the forecast tran-
saction is ultimately recognized in the income statement.
When a forecast transaction is no longer expected to occur,
the cumulative gain or loss that was reported in equity is
inception and on an ongoing systematic basis, the effec-
immediately transferred to profit or loss.
tiveness of hedges using prospective and retrospective
tests in order to determine whether hedging instruments
The company currently uses these hedge relationships to
are highly effective in offsetting changes in the fair values
minimize the volatility of profit or loss.
or cash flows of hedged items.
Depending on the nature of the risks to which it is expo-
sed, the company designates derivatives as hedging in-
Fair value hedges
Fair value hedges are used to protect the company against
struments in one of the following hedge relationships:
exposures to adverse changes in the fair value of assets,
> cash flow hedge derivatives in respect of the risk of: i)
liabilities or firm commitments attributable to a particular
changes in the cash flows associated with long-term flo-
risk that could affect profit or loss.
ating-rate debt; ii) changes in the exchange rates associa-
Changes in the fair value of derivatives that qualify and are
ted with long-term debt denominated in a currency other
designated as hedging instruments are recognized in the
than the currency of account or the functional currency
income statement, together with changes in the fair value
in which the company holding the financial liability opera-
of the hedged item that are attributable to the hedged risk.
tes; iii) changes in the price of fuels, non-energy commo-
If the hedge is ineffective or no longer meets the crite-
dities and services denominated in a foreign currency;
ria for hedge accounting, the adjustment to the carrying
> fair value hedge derivatives involving the hedging of ex-
amount of a hedged item for which the effective interest
posures to changes in the fair value of an asset, a liability
method is used is amortized to profit or loss over the pe-
or a firm commitment attributable to a specific risk;
riod to maturity.
> derivatives hedging a net investment in a foreign ope-
ration (NIFO), involving the hedging of exposures to
The company currently makes use of such hedge rela-
exchange rate volatility associated with investments in
tionships to seize opportunities associated with general
foreign entities.
developments in the yield curve.
For more details on the nature and the extent of risks ari-
sing from financial instruments to which the company is
exposed, please see note 32 “Risk management”.
Cash flow hedges
Cash flow hedges are used in order to hedge the company’s
exposure to changes in future cash flows that are attributa-
Hedge of a net investment in a foreign
operation (NIFO)
Hedges of net investments in foreign operations, with a fun-
ctional currency other than the euro, are hedges of the im-
pact of changes in exchange rates in respect of investments
in foreign entities. The hedge instrument is a liability denomi-
nated in the same currency as the investment. The foreign
380
Annual Report 2017 exchange differences of the hedged item and the hedge are
The company does not currently hold any hedges of net in-
accumulated each year in equity until the disposal of the in-
vestments in a foreign operation.
vestment, at which time the foreign exchange differences
are transferred to profit or loss.
For more on the fair value measurement of derivatives, plea-
se see note 34 “Fair value measurement”.
Hedge relationships by type of risk hedged
33.1.1 Interest rate risk
The following table shows the notional amount and the fair
of transactions outstanding as at December 31, 2017 and
value of the hedging instruments on the interest rate risk
December 31, 2016, broken down by type of hedged item.
Millions of euro
Fair
value
Notional
amount
Fair
value
Notional
amount
Hedging instrument
Hedged item
at Dec. 31, 2017
at Dec. 31, 2016
Interest rate swaps
Interest rate swaps
Total
Floating-rate
borrowings
Fixed-rate
borrowings
(135)
15
(120)
390
800
1,190
(154)
27
(127)
390
800
1,190
The interest rate swaps outstanding at the end of the year
cash flow hedge derivatives refer to the hedging of certain
and designated as hedging instruments function as a cash
floating-rate bonds issued since 2001.
flow hedge and fair value hedge for the hedged item. More
The following table shows the notional amount and the fair
specifically, fair value hedge derivatives relate to the hedging
value of hedging derivatives on interest rate risk as at De-
of the part of the change in the fair value of a hybrid bond
cember 31, 2017 and December 31, 2016, broken down by
issued in September 2013 that is linked to changes in inte-
type of hedge.
rest rates, hedged in the amount of €800 million, while the
Millions of euro
Notional amount
Fair value assets
Notional amount
Fair value liabilities
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
Cash flow hedge
derivatives:
- interest rate swaps
Fair value hedge
derivatives:
- interest rate swaps
Total interest rate
derivatives
-
-
800
800
800
-
-
800
800
800
-
-
15
15
15
-
-
27
27
27
390
390
-
-
390
390
-
-
(135)
(135)
(154)
(154)
-
-
-
-
390
390
(135)
(154)
The notional amount of the interest rate swaps at Decem-
The improvement in the fair value of derivatives compared
ber 31, 2017 came to €1,190 million (€1,190 million at De-
with the previous year is mainly attributable to the rise in
cember 31, 2016) with a corresponding negative fair value
the long-term segment of the yield curve over the course
of €120 million (negative €127 million at December 31,
of 2017.
2016).
381
Financial statements of Enel SpA Cash flow hedge derivatives
The following table shows the cash flows expected in coming years from cash flow hedge derivatives.
Millions of euro
Cash flow hedge derivatives
on interest rates:
- positive fair value
- negative fair value
Fair value
at Dec. 31,
2017
Distribution of expected cash flows
2018
2019
2020
2021
2022
Beyond
-
(135)
-
(15)
-
(14)
-
(13)
-
(13)
-
(12)
-
(83)
The following table shows the impact of cash flow hedge derivatives on interest rate risk on equity during the period, gross
of tax effects.
Millions of euro
Opening balance at January 1
Changes in fair value recognized in equity (OCI)
Changes in fair value recognized in profit or loss - recycling
Changes in fair value recognized in profit or loss - ineffective portion
Closing balance at December 31
2017
(110)
-
12
-
(98)
2016
(87)
-
(23)
-
(110)
Fair value hedge derivatives
The following table shows the cash flows expected in coming years from fair value hedge derivatives.
Millions of euro
Fair value
Distribution of expected cash flows
at Dec. 31, 2017
2018
2019
2020
2021
2022
Beyond
Fair value hedge
derivatives:
- positive fair value
- negative fair value
15
-
15
-
33
-
-
-
-
-
-
-
-
-
33.1.2 Exchange risk
The following table shows the notional amount and the fair
sactions outstanding as at December 31, 2017 and Decem-
value of the hedging instruments on exchange risk of tran-
ber 31, 2016, broken down by type of hedged item.
Millions of euro
Fair value
Notional amount
Fair value
Notional amount
Hedging instrument
Hedged item
at Dec. 31, 2017
at Dec. 31, 2016
Cross currency interest rate swaps
(CCIRSs)
Cross currency interest rate swaps
(CCIRSs)
Fixed-rate
borrowings
Floating-rate
borrowings
Total
(679)
(12)
(691)
4,639
189
4,828
(474)
-
(474)
4,911
-
4,911
The cross currency interest rate swaps outstanding at the
cifically, these derivatives hedge fixed-rate bonds denomi-
end of the year and designated as hedging instruments fun-
nated in foreign currencies and floating-rate borrowing in
ction as a cash flow hedge for the hedged item. More spe-
US dollars obtained from Bank of America in 2017.
382
Annual Report 2017 The following table shows the notional amount and the
31, 2017 and December 31, 2016, broken down by type of
fair value of derivatives on exchange risk as at December
hedge.
Millions of euro
Notional amount
Fair value assets
Notional amount
Fair value liabilities
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
Cash flow hedge
derivatives:
- forwards
- options
- cross currency interest
rate swaps
Total foreign exchange
derivatives
2,327
2,517
501
751
2,501
2,394
(1,192)
(1,225)
-
-
-
-
2,327
2,517
2,327
2,517
-
-
501
501
-
-
-
-
-
-
-
-
-
-
751
2,501
2,394
(1,192)
(1,225)
751
2,501
2,394
(1,192)
(1,225)
The notional amount of the cross current interest rate
US dollar, as well as a new hedge of exchange rates with a
swaps at December 31, 2017 came to €4,828 million
notional amount of €189 million.
(€4,911 million at December 31, 2016) with a correspon-
ding negative fair value of €691 million (a negative €474
million at December 31, 2016).
Cash flow hedge derivatives
The following table shows the cash flows expected in co-
The change in the value of the notional amount and the
ming years from cash flow hedge derivatives on exchange
associated fair value of derivatives mainly reflects the ap-
risk.
preciation of the euro against the pound sterling and the
Millions of euro
Fair value
at Dec. 31,
2017
Distribution of expected cash flows
2018
2019
2020
2021
2022
Beyond
Cash flow hedge
derivatives on exchange
rates:
- positive fair value
- negative fair value
501
(1,192)
83
(69)
85
(243)
48
(50)
47
(85)
46
(37)
461
(684)
The following table shows the impact of cash flow hedge derivatives on exchange risk on equity during the period, gross
of tax effects.
Millions of euro
Opening balance at January 1
Changes in fair value recognized in equity (OCI)
Changes in fair value recognized in profit or loss - recycling
Changes in fair value recognized in profit or loss - ineffective portion
Closing balance at December 31
2017
(326)
-
20
-
(306)
2016
(208)
-
(118)
-
(326)
383
Financial statements of Enel SpA 33.2 Derivatives at fair value through profit or loss
The following table shows the notional amount and the fair value of derivatives at FVTPL as at December 31, 2017 and
December 31, 2016.
Millions of euro
Notional amount
Fair value assets
Notional amount
Fair value liabilities
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
at Dec. 31,
2017
at Dec. 31,
2016
Derivatives at FVTPL on
interest rates
Interest rate swaps
Derivatives at FVTPL on
exchange rates
Forwards
Cross currency interest
rate swaps
Total derivatives at
FVTPL
9,635
9,635
8,052
2,702
10,524
10,524
11,577
2,699
5,350
8,878
405
405
645
123
522
527
527
1,644
158
9,774
9,774
8,057
2,708
10,663
10,663
11,577
2,699
(473)
(473)
(645)
(122)
(604)
(604)
(1,656)
(158)
1,486
5,349
8,878
(523)
(1,498)
17,687
22,101
1,050
2,171
17,831
22,240
(1,118)
(2,260)
At December 31, 2017, the notional amount of derivatives
lion (€2,699 million at December 31, 2016), relate mainly to
at fair value through profit or loss on interest rates and fo-
OTC derivatives entered into to mitigate the exchange risk
reign exchange rates came to €35,518 million (€44,341 mil-
associated with the prices of energy commodities within
lion at December 31, 2016) corresponding to a negative fair
the provisioning process of Group companies and matched
value of €68 million (a negative €89 million at December
with market transactions. They also hedge the expected
31, 2016).
cash flows in currencies other than the currency of account
The decrease compared with the previous year in the notio-
connected with the acquisition of non-energy commodities
nal amount of derivatives at fair value through profit or loss
and investment goods in the sectors of renewable energy
reflects €7,045 million from a decline in forex operations
sector and infrastructure and networks (new generation
and a decrease of €1,778 million in the notional amount of
digital meters) and the expected cash flows in currencies
interest rate swaps.
other than the euro connected with operating expenses for
Interest rate swaps at the end of the year refer primarily
the provision of cloud services. The change in the notional
to hedges of the debt of the Group companies with the
amount and the fair value as compared with the previous
market and intermediated in the same notional amount
year is associated with normal operations.
with those companies in the amount of €9,635 million. The
Cross currency interest rate swaps, with a notional amount
overall notional amount shows a decline of €1,778 million
of €5,350 million (€8,878 million at December 31, 2016),
on the previous year. More specifically, the decline of €889
relate to hedges of exchange risk on the debt of the Group
million in the notional amount of interest rate swaps with
companies denominated in currencies other than the euro
the market is attributable to the closure of pre-hedge in-
and matched with market transactions. The decline in the
terest rate swaps in respect of the issue of a Green Bond
notional amount of cross currency interest rate swaps of
of €1,000 million, interest rate swaps reaching their natu-
€3,528 million is mainly due to the early closure of cross
ral expiry date of €27 million, new interest rate swaps of
currency interest rate swaps in the amount of €1,660 mil-
€344 million and the decline of €206 million in the notional
lion in respect of the repurchase by Enel Finance Interna-
amount of amortizing interest rate swaps.
tional of its own bonds issued in US dollars and to cross
Compared with December 31, 2016, the overall change
currency interest rate swaps that expired naturally in the
in the fair value (a positive €9 million) is largely connected
amount of €1,423 million. The value also reflects deve-
with the rise in the long-term segment of the yield curve
lopments in the exchange rate of the euro against the other
over the course of the year.
major currencies.
Forward contracts, with a notional amount of €2,702 mil-
384
Annual Report 2017 34. Fair value measurement
The company measures fair value in accordance with IFRS
propriate for each type of financial instrument and market
13 whenever required by international accounting stan-
data as of the close of the period (such as interest rates,
dards.
exchange rates, volatility), discounting expected future
Fair value is defined as the price that would be received to
cash flows on the basis of the market yield curve and tran-
sell an asset or paid to transfer a liability. The best estima-
slating amounts in currencies other than the euro using
te is the market price, i.e. its current price, publicly availa-
exchange rates provided by the European Central Bank.
ble and effectively traded on an active, liquid market.
For contracts involving commodities, the measurement
The fair value of assets and liabilities is categorized into a
is conducted using prices, where available, for the same
fair value hierarchy that provides three levels defined as
instruments on both regulated and unregulated markets.
follows on the basis of the inputs to valuation techniques
In accordance with the new international accounting stan-
used to measure fair value:
dards, in 2013 the Group included a measurement of credit
> Level 1: quoted prices (unadjusted) in active markets for
risk, both of the counterparty (Credit Valuation Adjustment
identical assets or liabilities to which the company has
or CVA) and its own (Debit Valuation Adjustment or DVA),
access at the measurement date;
in order to adjust the fair value of financial instruments for
> Level 2: inputs other than quoted prices included within
the corresponding amount of counterparty risk.
level 1 that are observable for the asset or liability, either
More specifically, the Group measures CVA/DVA using
directly (that is, as prices) or indirectly (that is, derived
a Potential Future Exposure valuation technique for the
from prices);
net exposure of the position and subsequently allocating
> Level 3: inputs for the asset or liability that are not based
the adjustment to the individual financial instruments that
on observable market data (that is, unobservable inputs).
make up the overall portfolio. All of the inputs used in this
In this note, the relevant disclosures are provided in order
technique are observable on the market. Changes in the
to assess the following:
assumptions underlying the estimated inputs could have
> for assets and liabilities that are measured at fair value on
an effect on the fair value reported for such instruments.
a recurring or non-recurring basis in the balance sheet af-
The notional amount of a derivative contract is the amount
ter initial recognition, the valuation techniques and inputs
on which cash flows are exchanged. This amount can be
used to develop those measurements; and
expressed as a value or a quantity (for example tons, con-
> for recurring fair value measurements using significant
verted into euros by multiplying the notional amount by
unobservable inputs (Level 3), the effect of the measure-
the agreed price).
ments on profit or loss or other comprehensive income
Amounts denominated in currencies other than the euro
for the period.
For this purpose:
are converted into euros at the exchange rate provided by
the European Central Bank.
> recurring fair value measurements are those that IFRSs
The notional amounts of derivatives reported here do not
require or permit in the balance sheet at the end of each
necessarily represent amounts exchanged between the
reporting period;
parties and therefore are not a measure of the company’s
> non-recurring fair value measurements are those that
credit risk exposure.
IFRSs require or permit in the balance sheet in particular
For listed debt instruments, the fair value is given by of-
circumstances.
ficial prices. For unlisted instruments the fair value is de-
termined using appropriate valuation techniques for each
The fair value of derivative contracts is determined using
category of financial instrument and market data at the
the official prices for instruments traded on regulated mar-
closing date of the year, including the credit spreads of
kets. The fair value of instruments not listed on a regu-
Enel SpA.
lated market is determined using valuation methods ap-
385
Financial statements of Enel SpA 34.1 Assets measured at fair value in the balance sheet
The following table shows, for each class of assets measu-
the reporting period and the level in the fair value hierarchy
red at fair value on a recurring or non-recurring basis in the
into which the fair value measurements are categorized.
balance sheet, the fair value measurement at the end of
Millions of euro
Non-current assets
Current assets
Fair value
at Dec. 31,
2017
Notes
Level 1
Level 2
Level 3
Fair value
at Dec. 31,
2017
Level 1
Level 2
Level 3
Derivatives
Cash flow hedge derivatives:
- on exchange risk
Total
Fair value hedge derivatives:
- on interest rate risk
Total
Fair value through profit or loss:
- on interest rate risk
- on exchange risk
Total
TOTAL
33
33
33
33
501
501
15
15
405
535
940
1,456
-
-
-
-
-
-
-
-
501
501
15
15
405
535
940
1,456
-
-
-
-
-
-
-
-
-
-
-
-
1
110
111
111
-
-
-
-
-
-
-
-
-
-
-
-
1
110
111
111
-
-
-
-
-
-
-
-
34.2 Liabilities measured at fair value in the balance sheet
The following table reports, for each class of liabilities
the end of the reporting period and the level in the fair
measured at fair value on a recurring or non-recurring ba-
value hierarchy into which the fair value measurements
sis in the balance sheet, the fair value measurement at
are categorized.
Millions of euro
Non-current liabilities
Current liabilities
Fair value
at Dec. 31,
2017
Notes
Level 1
Level 2
Level 3
Fair value
at Dec. 31,
2017
Level 1
Level 2
Level 3
33
33
33
33
135
1,192
1,327
408
535
943
2,270
-
-
-
-
-
-
-
135
1,192
1,327
408
535
943
2,270
-
-
-
-
-
-
-
-
-
-
66
110
176
176
-
-
-
-
-
-
-
-
-
-
66
110
176
176
-
-
-
-
-
-
-
Derivatives
Cash flow hedge derivatives:
- on interest rate risk
- on exchange risk
Total
Fair value through profit or loss:
- on interest rate risk
- on exchange risk
Total
TOTAL
386
Annual Report 2017 34.3 Liabilities not measured at fair value in the balance sheet
The following table shows, for each class of liabilities not
the reporting period and the level in the fair value hierarchy
measured at fair value in the balance sheet but for which
into which the fair value measurements are categorized.
the fair value shall be disclosed, the fair value at the end of
Millions of euro
Liabilities
Notes
31.2.1
31.2.1
31.2.1
31.2.1
Bonds:
- fixed rate
- floating rate
Total
Bank borrowings:
- fixed rate
- floating rate
Total
Loans from Group companies:
- fixed rate
- floating rate
Total
TOTAL
Fair value
at Dec. 31, 2017
Level 1
Level 2
Level 3
11,880
1,767
13,647
-
1,043
1,043
1,540
-
1,540
16,230
11,880
572
12,452
-
-
-
-
-
-
12,452
-
1,195
1,195
-
1,043
1,043
1,540
-
1,540
3,778
-
-
-
-
-
-
-
-
-
-
387
Financial statements of Enel SpA 35. Related parties
Related parties have been identified on the basis of the
In November 2010, the Board of Directors of Enel SpA
provisions of international accounting standards and the
approved a procedure governing the approval and exe-
applicable CONSOB measures.
cution of transactions with related parties carried out by
Enel SpA directly or through subsidiaries. The procedure
The transactions Enel SpA entered into with its subsidiaries
(available at www.enel.com/investors/bylaws-rules-and-
mainly involved the provision of services, the sourcing and
policies/transactions-with-related-parties) sets out rules
employment of financial resources, insurance coverage,
designed to ensure the transparency and procedural and
human resource management and organization, legal and
substantive propriety of transactions with related parties.
corporate services, and the planning and coordination of
It was adopted in implementation of the provisions of Arti-
tax and administrative activities.
cle 2391-bis of the Italian Civil Code and the implementing
regulations issued by CONSOB. In 2017, no transactions
All the transactions are part of routine operations, are carri-
were carried out for which it was necessary to make the
ed out in the interest of the company and are settled on an
disclosures required in the rules on transactions with re-
arm’s length basis, i.e. on the same market terms as agree-
lated parties adopted with CONSOB Resolution 17221 of
ments entered into between two independent parties.
March 12, 2010, as amended with Resolution 17389 of
Finally, the Enel Group’s corporate governance rules, which
June 23, 2010.
are discussed in greater detail in the Report on Corporate
The following tables summarize commercial, financial and
Governance and Ownership Structure available on the com-
other relationships between the company and related parties.
pany’s website (www.enel.com), establish conditions for en-
suring that transactions with related parties are performed in
accordance with procedural and substantive propriety.
388
Annual Report 2017 Commercial and other relationships
2017
Millions of euro
Receivables
Payables
Goods
Services
Goods
Services
at Dec. 31, 2017
at Dec. 31, 2017
2017
2017
Costs
Revenue
Subsidiaries
Codensa SA ESP
Central Geradora Termelétrica Fortaleza
SA
Enel Generación Perú SAA
Enel Américas SA
Enel Chile SA
Enel Distribución Perú SAA
Enel Generación Piura SA
Enel Brasil SA
Enel X Srl
Endesa Distribución Eléctrica SL
Endesa Generación SA
Endesa Red SA
Endesa SA
e-distribut¸ie Banat SA
e-distribut¸ie Dobrogea SA
e-distribut¸ie Muntenia SA
e-distribuzione SpA
Enel Distribución Chile SA
Enel Energia SpA
Enel Energie Muntenia SA
Enel Energie SA
Enel Iberia Srl
Enel Green Power SpA
Enel Green Power North America Inc.
Enel Innovation Hubs Srl
Enel Russia PJSC
Enel Produzione SpA
Enel Romania Srl
Enel Italia Srl
Servizio Elettrico Nazionale SpA
Enel Sole Srl
Enel Trade SpA
Enel.Factor SpA
Endesa Energía SA
Energía Nueva Energía Limpia México S
de RL de Cv
Gas y Electricidad Generación SAU
OpEn Fiber SpA
RusEnergoSbyt LLC
Slovenské elektrárne AS
Tynemouth Energy Storage Limited
Unión Eléctrica de Canarias Generación
SAU
3Sun Srl
Total
Other related parties
CESI SpA
Enel Cuore Onlus
Eni
GSE
Fondazione Centro Studi Enel
Monte dei Paschi di Siena
Total
TOTAL
-
1
6
27
30
6
1
25
2
27
10
1
4
4
4
7
124
1
204
1
1
1
10
1
-
16
59
4
30
158
5
1
-
4
1
3
1
-
17
-
3
-
800
-
-
-
1
1
-
2
1
-
-
-
-
-
-
-
-
1
-
-
3
-
-
-
164
-
-
-
-
22
1
1
1
-
97
-
86
-
8
100
3
-
-
-
-
-
-
1
-
19
508
-
-
1
1
-
1
3
802
511
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
1
-
-
-
2
-
-
-
-
11
1
-
-
-
1
-
66
-
-
-
-
-
-
-
-
-
-
-
-
-
83
1
-
-
-
-
-
1
84
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
2
1
-
-
12
2
6
2
1
5
1
1
2
34
1
2
-
-
1
8
-
-
8
13
1
15
1
-
1
-
3
-
1
-
1
-
-
1
-
127
-
1
-
-
2
-
3
130
389
Financial statements of Enel SpA 2016
Millions of euro
Receivables
Payables
Goods
Services
Goods
Services
Costs
Revenue
at Dec. 31,
2016
at Dec. 31,
2016
2016
2016
Subsidiaries
Central Geradora Termelétrica Fortaleza SA
Enel Generación Perú SAA
Enel Distribución Perú SAA
Enel Generación Piura SA
Enel Brasil SA
Endesa Distribución Eléctrica SL
Endesa Generación SA
Enel Latinoamérica SA
Endesa SA
e-distribut¸ie Banat SA
e-distribut¸ie Dobrogea SA
e-distribut¸ie Muntenia SA
e-distribuzione SpA
Enel Energia SpA
Enel Iberia Srl
Enel Green Power SpA
Enel Green Power North America Inc.
Enel Ingegneria e Ricerca SpA
Enel Russia PJSC
Enel Produzione SpA
Enel Romania Srl
Enel Italia Srl
Servizio Elettrico Nazionale SpA
Enel Sole Srl
Enel Trade SpA
Enel.Factor SpA
Enel.si Srl
Endesa Energía SA
Enel Américas SA
Gas y Electricidad Generación SAU
RusEnergoSbyt LLC
Slovenské elektrárne AS
Unión Eléctrica de Canarias Generación SAU
3Sun Srl
Total
Other related parties
GSE
Fondazione Centro Studi Enel
Total
TOTAL
390
1
5
6
1
13
36
20
-
-
3
2
6
132
120
2
16
1
-
17
67
5
61
51
4
57
1
-
5
4
3
1
17
5
-
662
1
-
1
-
-
-
-
-
1
1
1
2
-
-
-
263
37
10
15
1
12
3
186
-
55
20
5
2
2
1
-
-
-
-
-
-
28
645
-
-
-
663
645
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
1
1
-
-
-
-
-
10
-
-
-
1
-
-
64
-
-
-
-
-
-
-
-
-
-
-
-
78
-
-
-
78
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
3
3
1
7
18
17
-
1
2
1
3
53
16
1
20
-
-
5
24
1
10
4
1
3
-
-
1
1
2
-
1
4
-
204
-
1
1
205
Annual Report 2017 Financial relationships
2017
Millions of euro
Receivables
Payables
Guarantees
Costs
Revenue
Dividends
at Dec. 31, 2017
2017
Subsidiaries
Concert Srl
Enel Américas SA
Enel Chile SA
e-distribuzione SpA
Enel X Srl
Enel Energia SpA
Enel Iberia Srl
Enel Finance International NV
Enel Green Power North America
Inc.
Enel Green Power SpA
Enel Green Power Perú SA
Enel Green Power Development Srl
Enel Investment Holding BV
Enel M@P Srl
Enel Produzione SpA
Enel Italia Srl
Servizio Elettrico Nazionale SpA
Enel Sole Srl
Enel Trade Romania Srl
Enel Trade SpA
Enel Trade d.o.o.
Enel.Factor SpA
Enel Innovation Hubs Srl
Enel.si Srl
Enelpower SpA
Nuove Energie Srl
OpEn Fiber SpA
Enel X Italia SpA
Tynemouth Energy Storage Limited
Total
Other related parties
CESI SpA
Total
TOTAL
-
-
-
1,759
6
7
1
756
-
161
-
-
-
3
192
35
114
1
-
105
-
18
-
8
-
23
-
-
6
2
-
-
-
-
1,007
-
-
-
-
3,765
-
1,806
-
-
-
-
33
-
-
-
-
-
-
84
-
8
1
3,735
28,196
679
1,268
-
4
-
2
1
-
523
16
-
60
-
46
12,994
-
-
-
1
2,141
123
1,402
277
5
761
1,578
-
-
16
-
37
-
-
2
-
1
-
1
18
1
87
300
-
10
-
57
11
-
-
-
30
1
-
-
-
97
-
-
-
-
-
-
-
-
-
-
68
6
-
1
-
75
12
7
1
-
265
-
-
-
-
-
1
-
-
-
-
25
31
1,448
-
679
677
-
-
50
-
-
-
-
-
23
80
15
-
-
-
3
-
-
-
-
-
-
-
3,195
6,166
52,752
908
1,797
3,031
-
-
-
-
-
-
-
-
-
-
1
1
3,195
6,166
52,752
908
1,797
3,032
391
Financial statements of Enel SpA 2016
Millions of euro
Receivables
Payables
Guarantees
Costs
Revenue
Dividends
at Dec. 31, 2016
2016
Subsidiaries
Concert Srl
e-distribuzione SpA
Enel Energia SpA
Enel Iberia Srl
-
1,898
6
1
2
13
791
1
-
3,725
1,733
54
Enel Finance International NV
733
4,407
23,131
3
-
-
588
5
24
-
1
636
94
334
1
-
28
-
91
-
14
-
20
-
-
28
3
-
-
-
-
53
18
10,596
-
-
2
-
30
-
-
70
-
-
30
2
1
2,412
94
1,701
231
7
-
-
16
-
37
-
-
2
-
1
-
1
7
1
86
123
-
-
1,369
1,579
208
124
-
1,610
358
550
-
-
-
-
50
-
-
-
-
304
-
-
-
-
-
-
3
-
-
-
-
-
-
-
-
13
-
-
178
-
96
-
3
-
-
-
-
19
-
-
-
-
-
84
6
1
1,068
-
18
-
33
6
-
-
-
29
6
7
1
-
-
3
-
-
-
-
-
-
-
-
2
-
-
-
-
-
-
2
521
-
-
4,505
6,761
45,568
-
-
-
-
-
-
1,386
2,875
-
-
1
1
4,505
6,761
45,568
521
1,386
2,876
Enel Green Power Chile Ltda
Enel Green Power International BV
Enel Green Power North America Inc.
Enel Green Power SpA
Enel Green Power Perú SA
Enel Ingegneria e Ricerca SpA
Enel Investment Holding BV
Enel M@P Srl
Enel Produzione SpA
Enel Italia Srl
Servizio Elettrico Nazionale SpA
Enel Sole Srl
Enel Trade Romania Srl
Enel Trade SpA
Enel Trade d.o.o.
Enel.Factor SpA
Enel Innovation Hubs Srl
Enel.si Srl
Enelpower SpA
Nuove Energie Srl
OpEn Fiber SpA
Enel X Italia SpA
3Sun Srl
Total
Other related parties
CESI SpA
Total
TOTAL
392
Annual Report 2017 The impact of transactions with related parties on the balance sheet, income statement and cash flows is reported in the
following tables.
Impact on balance sheet
Millions of euro
Total Related parties
% of total
Total Related parties
% of total
at Dec. 31, 2017
at Dec. 31, 2016
Assets
Derivatives - non-current
Other non-current financial assets
Other non-current assets
Trade receivables
Derivatives - current
Other current financial assets
Other current assets
Liabilities
Long-term borrowings
Derivatives - non-current
Other non-current liabilities
Short-term borrowings
Trade payables
Derivatives - current
Other current financial liabilities
1,456
16
148
237
111
4,350
453
10,780
2,270
12
5,397
137
176
465
912
-
139
228
98
2,185
435
1,200
28
9
4,896
74
13
29
62.6%
2,469
-
93.9%
96.2%
88.3%
50.2%
96.0%
11.1%
1.2%
75.0%
90.7%
54.0%
7.4%
6.2%
53
188
255
480
4,221
299
13,664
3,082
36
6,184
150
556
550
Other current liabilities
2,065
428
20.7%
1,694
953
27
154
248
19
3,048
261
1,200
747
33
4,268
68
464
82
544
38.6%
50.9%
81.9%
97.3%
4.0%
72.2%
87.3%
8.8%
24.2%
91.7%
69.0%
45.3%
83.5%
14.9%
32.1%
Impact on income statement
Millions of euro
Total Related parties
% of total
Total Related parties
% of total
Revenue
Services and other operating expenses
Income from equity investments
Financial income on derivatives
Other financial income
Financial expense on derivatives
Other financial expense
Impact on cash flows
Millions of euro
2017
2016
133
359
3,033
2,683
410
2,902
872
130
84
3,032
1,640
157
836
72
97.7%
23.4%
100.0%
61.1%
38.3%
28.8%
8.3%
207
335
2,882
2,787
556
3,127
979
205
78
2,876
1,239
147
467
54
99.0%
23.3%
99.8%
44.5%
26.4%
14.9%
5.5%
Total Related parties
% of total
Total Related parties
% of total
2017
2016
Cash flows from operating activities
2,465
(2,838)
-
2,511
(1,173)
-46.7%
Cash flows from investing/disinvesting
activities
Cash flows from financing activities
(48)
(2,966)
(48)
1,485
100.0%
-50.1%
(409)
(4,989)
(409)
1,455
100.0%
-29.2%
393
Financial statements of Enel SpA 36. Contractual commitments and guarantees
Millions of euro
Sureties and guarantees given:
- third parties
- subsidiaries
Total
at Dec. 31, 2017
at Dec. 31, 2016
Change
36
52,752
52,788
347
45,568
45,915
(311)
7,184
6,873
Sureties granted to third parties essentially regard guaran-
co (Single Buyer) on behalf of Servizio Elettrico Nazionale
tees issued by the Parent Company to INPS for employees
for obligations under the electricity purchase contract;
participating in the structural staff reduction plan Article 4 of
> €713 million issued to INPS on behalf of various Group
Law 92/2012) as well as a bank surety issued in favor of Ban-
companies whose employees elected to participate
co Centroamericano de Integración Economica (BCIE) of €26
in the structural staff reduction plan (Article 4 of Law
million, acquired following the merger of Enel South America
92/2012);
into Enel SpA. The decrease compared with the previous year
> €600 million issued to Terna on behalf of e-distribuzione,
is due to the agreement that led to the extinguishment of
Enel Trade, Enel Produzione, Enel Green Power and Enel
the guarantee issued in the sale of real estate assets (€346
Energia in respect of agreements for electricity transmis-
million) with the concomitant issue of a new parent company
sion services;
guarantee on behalf of Enel Italia.
> €331 million issued to Snam Rete Gas on behalf of Enel
Trade and Enel.si for gas transport capacity;
Other sureties and guarantees issued on behalf of subsidia-
> €330 million as counter-guarantees in favor of the banks
ries include:
that guaranteed the Energy Markets Operator (GME) on
> €27,216 million issued on behalf of Enel Finance Inter-
behalf of Enel Trade and Enel Produzione;
national securing bonds denominated in dollars, pounds,
> €50 million issued to RWE Supply & Trading GmbH on
euros and yen as part of the €35 billion Global Medium-
behalf of Enel Trade for electricity purchases;
Term Notes program;
> €50 million issued to E.ON on behalf of Enel Trade for
> €6,584.92 million issued on behalf of various compa-
trading on the electricity market;
nies controlled by Enel Green Power, mainly acquired in
> €32 million issued to Wingas GmbH & CO.KG on behalf
Group reorganization operations;
of Enel Trade for the supply of gas;
> €3,040 million issued to the European Investment Bank
> €33 million issued on behalf of Enel Italia to Excelsia
(EIB) for loans granted to e-distribuzione, Enel Produzio-
Nove for the performance of obligations under rental
ne, Enel Green Power and Enel Sole;
contracts;
> €1,552 issued to the tax authorities in respect of parti-
> €8,682 million issued to various beneficiaries as part of
cipation in the Group VAT procedure on behalf of Enel
financial support activities by the Parent Company on be-
Italia, Enel Innovation Hubs, Enel Trade, Enel Produzione,
half of subsidiaries.
Enelpower, Servizio Elettrico Nazionale, Nuove Energie,
Enel.si, Enel Green Power, Enel Sole, Energy Hydro Piave
Compared with December 31, 2016, the increase in other su-
and Enel X Italia;
reties and guarantees issued on behalf of subsidiaries mainly
> €980 million issued on behalf of Enel Finance Internatio-
reflects the issue of bonds. As part of the Enel Group finance
nal to secure the Euro commercial paper program;
strategy and the refinancing strategy for maturing consolida-
> €1,407 million in favor of Cassa Depositi e Prestiti issued
ted debt, the Enel Board of Directors approved the issue by
on behalf of e-distribuzione, which received the Enel Grid
December 31, 2018 of one or more bonds to be placed with
Efficiency II loan;
institutional investors. Enel Finance International launched
> €1,150 million issued by Enel SpA to the Acquirente Uni-
multiple multi-tranche bond issues in the US and international
394
Annual Report 2017 markets, with the issues guaranteed by Enel and reserved for
granted letters of patronage to a number of Group compa-
institutional investors.
nies, essentially for assignments of receivables.
In its capacity as the Parent Company, Enel SpA has also
37. Contingent assets and liabilities
Please see note 49 to the consolidated financial statements for information on contingent assets and liabilities.
38. Events after the reporting date
On January 1, 2018 the Global Business Lines and the Glo-
> seize opportunities to grow their businesses in interna-
bal services functions (hereinafter “Global Structures”), i.e.
tional markets.
Global Infrastructure & Networks, Global Thermal Genera-
In this context, Enel SpA retains its role as an industrial hol-
tion and Global Procurement, which previously operated
ding company, focusing its activities on the management
in Enel SpA, were transferred to the wholly-owned Italian
and coordination of Group companies; providing strategic
subsidiaries Enel M@p Srl, Enel Global Thermal Generation
policy guidance for operations, remunerated exclusively
Srl and Enel Italia Srl.
through dividends from subsidiaries; providing institutional
The corporate reorganization of the Global Structures gives
services through its staff functions on behalf of subsidiaries
the Group a uniform organizational and corporate structu-
(remunerated through an “institutional services” contract).
re in which each Global Structure can seek maximum ef-
ficiency and focus more clearly on its activities, within the
On March 8, the subsidiary e-distribuzione SpA was reca-
framework of a “Global Hub” model. In other words, the
pitalized through the partial waiver of a financial receivable
organizational units can:
due from that company on the intercompany current ac-
> perform their activities in an operating company other
count in the amount of €2,275 million, which was allocated
than Enel SpA;
by the latter to a specific available equity reserve.
> deliver technical services at the global level to Group
companies with the context of a uniform business, pur-
Please see note 50 to the consolidated financial statements
suing effectiveness and efficiency objectives while ensu-
for information on other events after the reporting date.
ring legal and accounting clarity;
395
Financial statements of Enel SpA 39. Fees of audit firm pursuant
to Article 149-duodecies of the
CONSOB “Issuers Regulation”
Fees paid in 2017 by Enel SpA and its subsidiaries at De-
ble, pursuant to the provisions of Article 149-duodecies of
cember 31, 2017 to the audit firm and entities belonging to
the CONSOB “Issuers Regulation”.
its network for services are summarized in the following ta-
Entity providing the service
Fees (millions of euro)
of which:
- EY SpA
- Entities of Ernst & Young Global Limited
network
of which:
- EY SpA
- Entities of Ernst & Young Global Limited
network
of which:
- EY SpA
- Entities of Ernst & Young Global Limited
network
of which:
- EY SpA
- Entities of Ernst & Young Global Limited
network
of which:
- EY SpA
- Entities of Ernst & Young Global Limited
network
of which:
- EY SpA
- Entities of Ernst & Young Global Limited
network
2.3
-
0.7
-
-
-
3.0
2.8
11.6
1.2
1.8
-
0.8
18.2
21.2
Type of service
Enel SpA
Auditing
Certification services
Other services
Total
Enel SpA subsidiaries
Auditing
Certification services
Other services
Total
TOTAL
396
Annual Report 2017 Declaration of the Chief
Executive Officer and the
officer responsible for the
preparation of the financial
reports of Enel SpA
397
Financial statements of Enel SpA Declaration of the Chief Executive Officer and the officer responsible for the preparation of
the financial reports of Enel SpA at December 31, 2017, pursuant to the provisions of Article
154-bis, paragraph 5, of Legislative Decree 58 of February 24, 1998 and Article 81-ter of
CONSOB Regulation no. 11971 of May 14, 1999
1. The undersigned Francesco Starace and Alberto De Paoli, in their respective capacities as Chief Executive Officer and
officer responsible for the preparation of the financial reports of Enel SpA, hereby certify, taking account of the provi-
sions of Article 154-bis, paragraphs 3 and 4, of Legislative Decree 58 of February 24, 1998:
a. the appropriateness with respect to the characteristics of the company and
b. the effective adoption of
the administrative and accounting procedures for the preparation of the separate financial statements of Enel SpA in
the period between January 1, 2017 and December 31, 2017.
2. In this regard, we report that:
a. the appropriateness of the administrative and accounting procedures used in the preparation of the separate finan-
cial statements of Enel SpA has been verified in an assessment of the internal control system for financial reporting.
The assessment was carried out on the basis of the guidelines set out in the “Internal Controls - Integrated Fra-
mework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO);
b. the assessment of the internal control system for financial reporting did not identify any material issues.
3. In addition, we certify that separate financial statements of Enel SpA at December 31, 2017:
a. have been prepared in compliance with the international accounting standards recognized in the European Union
pursuant to Regulation 2002/1606/EC of the European Parliament and of the Council of July 19, 2002;
b. correspond to the information in the books and other accounting records;
c. provide a true and fair representation of the performance and financial position of the issuer.
4. Finally, we certify that the Report on operations, included in the Annual Report 2017 and accompanied by the financial
statements of Enel SpA at December 31, 2017, contains a reliable analysis of operations and performance, as well as
the situation of the issuer, together with a description of the main risks and uncertainties to which it is exposed.
Roma, March 22, 2018
Francesco Starace
Alberto De Paoli
Chief Executive Officer of Enel SpA
Officer responsible for the preparation
of the financial reports of Enel SpA
398
Annual Report 2017 399
Declaration of the Chief Executive Officer and the officer responsible 05Reports
400
Annual Report 2017 401
Reports Report of the Board of
Auditors to the Shareholders’
Meeting of Enel SpA
402
Annual Report 2017 Report of the Board of Auditors to the shareholders’ meeting of Enel SpA called to approve
the financial statements for 2017 (pursuant to Article 153 of Legislative Decree 58/1998)
Shareholders,
During the year ended December 31, 2017 we performed the oversight activities envisaged by law at Enel SpA (hereinafter
also “Enel” or the “company”). In particular, pursuant to the provisions of Article 149, paragraph 1, of Legislative Decree
58 of February 24, 1998 (hereinafter the “Consolidated Law on Financial Intermediation”) and Article 19, paragraph 1 of
Legislative Decree 39 of January 27, 2010, as amended by Legislative Decree 135 of July 17, 2016 (hereinafter “Decree
39/2010”), we monitored:
> compliance with the law and the corporate bylaws as well as compliance with the principles of sound administration in
the performance of the company’s business;
> the company’s financial reporting process and the adequacy of the administrative and accounting system, as well as the
reliability of the latter in representing operational events;
> the statutory audit of the annual statutory and consolidated accounts and the independence of the audit firm;
> the adequacy and effectiveness of the internal control and risk management system;
> the adequacy of the organizational structure of the company, within the scope of our responsibilities;
> the implementation of the corporate governance rules as provided for by the Corporate Governance Code for Listed
Companies (hereinafter, the “Corporate Governance Code”), which the company has adopted;
> the appropriateness of the instructions given by the company to its subsidiaries to enable Enel to meet statutory public
disclosure requirements.
In performing our checks and assessments of the above issues, we did not find any particular issues to report.
In compliance with the instructions issued by CONSOB with Communication DEM/1025564 of April 6, 2001, as amended,
we report the following:
> we monitored compliance with the law and the bylaws and we have no issues to report;
> on a quarterly basis, we received adequate information from the Chief Executive Officer, as well as through our participa-
tion in the meetings of the Board of Directors of Enel, on activities performed, general developments in operations and
the outlook, and on transactions with the most significant impact on performance or the financial position carried out by
the company and its subsidiaries. We report that the actions approved and implemented were in compliance with the
law and the bylaws and were not manifestly imprudent, risky, in potential conflict of interest or in contrast with the reso-
lutions of the Shareholders’ Meeting or otherwise prejudicial to the integrity of the company’s assets. For a discussion
of the features of the most significant transactions, please see the Report on Operations accompanying the separate
financial statements of the company and the consolidated financial statements of the Enel Group for 2017 (in the section
“Significant events in 2017”);
> we did not find any atypical or unusual transactions conducted with third parties, Group companies or other related
parties;
> in the section “Related parties” of the notes to the separate 2017 financial statements of the company, the directors
describe the main transactions with related parties – the latter being identified on the basis of international accounting
standards and the instructions of CONSOB – carried out by the company, to which readers may refer for details on the
transactions and their financial impact. They also detail the procedures adopted to ensure that related-party transactions
are carried out in accordance with the principles of transparency and procedural and substantive fairness. The transac-
tions were carried out in compliance with the approval and execution processes set out in the related procedure – adop-
ted in compliance with the provisions of Article 2391-bis of the Italian Civil Code and the implementing regulations issued
by CONSOB – described in the Report on Corporate Governance and Ownership Structure for 2017. All transactions with
related parties reported in the notes to the separate 2017 financial statements of the company were executed as part of
ordinary operations in the interest of the company and settled on market terms and conditions;
> the company declares that it has prepared its statutory financial statements for 2017 on the basis of international ac-
403
Reports counting standards (IAS/IFRS) – and the interpretations issued by the IFRIC and the SIC – endorsed by the European
Union pursuant to Regulation 2002/1606/EC and in force at the close of 2017, as well as the provisions of Legislative De-
cree 38 of February 28, 2005 and its related implementing measures, as it did the previous year. The company’s separate
financial statements for 2017 have been prepared on a going-concern basis using the cost method, with the exception of
items that are measured at fair value under the IFRS-EU, as indicated in the accounting policies for the individual items
of the consolidated financial statements. The notes to the company’s separate financial statements also refer readers to
the consolidated financial statements for information on the accounting standards and measurement criteria adopted,
with the exception of equity investments in subsidiaries, associates and joint ventures, which are carried in the com-
pany’s separate financial statements at purchase costs adjusted for any impairment losses. The notes to the company’s
separate financial statements also refer readers to the consolidated financial statements for information on recently
issued accounting standards. The separate financial statements for 2017 of the company underwent the statutory audit
by the audit firm, EY SpA, which issued an unqualified opinion, including with regard to the consistency of the Report on
operations and certain information in the Report on Corporate Governance and Ownership Structure with the financial
statements, as well as the compliance of the Report on Operations with the provisions of law, pursuant to Article 14 of
Decree 39/2010 and Article 10 of Regulation 2014/537/EU. The report of EY SpA also includes:
- a discussion of key aspects of the audit report on the company’s financial statements; and
-
the declaration provided pursuant to Article 14, paragraph 2(e) of Decree 39/2010 stating that the audit firm did not
identify any significant errors in the contents of the Report on operations;
> the company declares that it has also prepared the consolidated financial statements of the Enel Group for 2017 on
the basis of international accounting standards (IAS/IFRS) – and the interpretations issued by the IFRIC and the SIC –
endorsed by the European Union pursuant to Regulation 2002/1606/EC and in force at the close of 2017, as well as the
provisions of Legislative Decree 38 of February 28, 2005 and its related implementing measures, as it did the previous
year. The 2017 consolidated financial statements of the Enel Group are also prepared on a going-concern basis using the
cost method, with the exception of items that are measured at fair value under the IFRS-EU (as indicated in the discus-
sion of measurement criteria for the individual items) and non-current assets (or disposal groups) classified as held for
sale, which are measured at the lower of carrying amount and fair value less costs to sell. The notes to the consolidated
financial statements provide a detailed discussion of the accounting standards and measurement criteria adopted. As re-
gards recently issued accounting standards, the notes to the consolidated financial statements discuss (i) new standards
applied in 2017, which according to the notes did not have a material impact in the year under review; and (ii) standards
that will apply in the future. The consolidated financial statements for 2017 of the Enel Group underwent statutory audit
by the audit firm EY SpA, which issued an unqualified opinion, including with regard to the consistency of the Report on
operations and certain information in the Report on Corporate Governance and Ownership Structure with the financial
statements, as well as the compliance of the Report on operations with the provisions of law, pursuant to Article 14 of
Decree 39/2010 and Article 10 of Regulation 2014/537/EU. The report of EY SpA also includes:
- a discussion of key aspects of the audit report on the consolidated financial statements; and
-
the declaration provided pursuant to Article 14, paragraph 2(e) of Decree 39/2010 and Article 4 of CONSOB Regulation
20267 (implementing Legislative Decree 254 of December 30, 2016) concerning, respectively, a statement that the
audit firm did not identify any significant errors in the contents of the Report on operations and that it verified that the
Board of Directors had approved the non-financial statement.
Under the terms of its engagement, EY SpA also issued unqualified opinions on the financial statements for 2017 of the
most significant Italian companies of the Enel Group. Moreover, during periodic meetings with the representatives of the
audit firm, EY SpA, the latter did not raise any issues concerning the reporting packages of the main foreign companies
of the Enel Group, selected by the auditors on the basis of the work plan established for the auditing of the consolidated
financial statements of the Enel Group, that would have a sufficiently material impact to be reported in the opinion on
those financial statements;
> taking due account of the recommendations of the European Securities and Markets Authority issued on January 21,
2013, and most recently confirmed with the Public Statement of October 27, 2015, to ensure greater transparency con-
cerning the methods used by listed companies in testing goodwill for impairment, in line with the recommendations
404
Annual Report 2017 contained in the joint Bank of Italy - CONSOB - ISVAP document 4 of March 3, 2010, and in the light of indications of
CONSOB in its Communication 7780 of January 28, 2016, the compliance of the impairment testing procedure with the
provisions of IAS 36 was expressly approved by the Board of Directors of the company, having obtained a favorable opi-
nion in this regard from the Control and Risk Committee in March 2018, i.e. prior to the date of approval of the financial
statements for 2017;
> we examined the Board of Directors’ proposal for the allocation of net income for 2017 and the distribution of available
reserves and have no comments in this regard;
> we note that the Board of Directors of the company certified, following appropriate checks by the Control and Risk
Committee and the Board of Auditors in March 2018, that as at the date on which the 2017 financial statements were
approved, the Enel Group continued to meet the conditions established by CONSOB (set out in Article 15 of the Market
Rules, approved with Resolution 20249 of December 28, 2017) concerning the accounting transparency and adequacy
of the organizational structures and internal control systems that subsidiaries established and regulated under the law of
non-EU countries must comply with so that Enel shares can continue to be listed on regulated markets in Italy;
> we monitored, within the scope of our responsibilities, the adequacy of the organizational structure of the company (and
the Enel Group as a whole), obtaining information from department heads and in meetings with the boards of auditors
or equivalent bodies of a number of the main Enel Group companies in Italy and abroad, for the purpose of the recipro-
cal exchange of material information. As from the second Half of 2014, the organizational structure of the Enel Group is
based on a matrix of Global Business Lines and geographical areas. Taking account of the changes implemented in 2017,
it is organized into: (i) Global Business Lines, which are responsible for managing and developing assets, optimizing their
performance and the return on capital employed in the various geographical areas in which the Group operates. The Glo-
bal Business Lines are: Infrastructure and Networks, Renewable Energy, Thermal Generation, Trading and E-Solutions;
(ii) Regions and Countries, which are responsible for managing relationships with local institutional bodies, regulatory
authorities and the media, as well as the development of the customer base with regard to the sale of electricity and gas,
in each of the countries in which the Group is present, while also providing staff and other service support to the Global
Business Lines. Regions and Countries comprise: Italy, Iberia, Europe and North Africa, South America, North and Cen-
tral America, and Sub-Saharan Africa and Asia; (iii) Global service functions, which are responsible for managing informa-
tion and communication technology activities and procurement at the Group level; and (iv) Holding company functions,
which are responsible for managing governance processes at the Group level. They include: Administration, Finance and
Control, Human Resources and Organization, Communications, Legal and Corporate Affairs, Audit, European Affairs, and
Innovation and Sustainability. The Board of Auditors feels that the organizational system described above is adequate
to support the strategic development of the company and the Enel Group and is consistent with control requirements;
> during meetings with the boards of auditors or equivalent bodies of a number of the Group’s main companies in Italy and
abroad, no material issues emerged that would require reporting here;
> we monitored the independence of the audit firm EY SpA, having received from them specific written confirmation today
that they met that requirement (pursuant to the provisions of Article 6, paragraph 2(a), of Regulation 2014/ 537/EU) and
having discussed the substance of that declaration with the audit partner. In this regard, we also monitored – as provided
for under Article 19, paragraph 1(e), of Decree 39/2010 – the nature and the scale of non-audit services provided to the
company and other Enel Group companies by EY SpA and the entities belonging to its network, the fees for which are
reported in the notes to the financial statements of the company. Following our examinations, the Board of Auditors feels
that there are no critical issues concerning the independence of the audit firm EY SpA. We held periodic meetings with
the representatives of the audit firm, pursuant to Article 150, paragraph 3, of the Consolidated Law on Financial Interme-
diation, and no material issues emerged that would require mention in this report.
As regards the provisions of Article 11 of Regulation 2014/537/EU, EY SpA today provided the Board of Auditors with
the “additional report” for 2017 on the results of the statutory audit carried out, which indicates no significant difficulties
encountered during the audit or any significant shortcomings in the internal control system for financial reporting or the
Enel accounting system. The Board of Auditors then transmitted that report to the Board of Directors, in accordance with
Article 19, paragraph 1(a), of Decree 39/2010.
The audit firm also reported that it did not prepare any management letter for 2017;
405
Reports > we monitored the financial reporting process, the appropriateness of the administrative and accounting system and its
reliability in representing operational events, as well as compliance with the principles of sound administration in the per-
formance of the company’s business and we have no comments in that regard. We conducted our checks by obtaining
information from the head of the Administration, Finance and Control department (taking due account of the head’s role
as the officer responsible for the preparation of the company’s financial reports), examining company documentation and
analyzing the findings of the examination performed by EY SpA. The Chief Executive Officer and the officer responsible
for the preparation of the financial reports of Enel issued a statement (regarding the company’s 2017 financial state-
ments) certifying (i) the appropriateness with respect to the characteristics of the company and the effective adoption of
the administrative and accounting procedures used in the preparation of the financial statements; (ii) the compliance of
the content of the financial reports with international accounting standards endorsed by the European Union pursuant
to Regulation 2002/1606/EC; (iii) the correspondence of the financial statements with the information in the books and
other accounting records and their ability to provide a true and fair representation of the performance and financial po-
sition of the company; and (iv) that the Report on operations accompanying the financial statements contains a reliable
analysis of operations and performance, as well as the situation of the issuer, together with a description of the main
risks and uncertainties to which it is exposed. The statement also affirmed that the appropriateness of the administrative
and accounting procedures used in the preparation of the financial statements of the company had been verified in an
assessment of the internal control system for financial reporting (supported by the findings of the independent testing
performed by a qualified external advisor and the company’s Audit department, with each focusing on their respective
areas of responsibility on the basis of the different nature of the various checks) and that the assessment of the internal
control system did not identify any material issues. An analogous statement was prepared for the consolidated financial
statements for 2017 of the Enel Group;
> we monitored the adequacy and effectiveness of the internal control system, primarily through periodic meetings with
the head of the Audit department of the company and holding most of the meetings jointly with the Control and Risk
Committee as well as with the participation of all members of the Board of Auditors in the sole meeting of the Control
and Risk Committee not held jointly with the Board of Auditors. In the light of our examination and in the absence of si-
gnificant issues, the internal control and risk management system can be considered adequate and effective. In February
2018, the Board of Directors of the company expressed an analogous assessment of the situation and also noted, in
November 2017, that the main risks associated with the strategic targets set out in the 2018-2022 Business Plan were
compatible with the management of the company in a manner consistent with those targets;
> in 2017 we received numerous complaints, most of which based on press reports, from a single shareholder holding one
share concerning 11 events deemed censurable by that shareholder pursuant to Article 2408 of the Italian Civil Code. In
this regard, the Board of Auditors, having conducted appropriate enquiries with the support of the Audit department and
the competent company units, found no irregularities to report and notified the shareholder of our findings. No petitions
were received by the Board of Auditors during 2017;
> we monitored the effective implementation of the Corporate Governance Code, which the company has adopted, ve-
rifying the compliance of Enel’s governance arrangements with the recommendations of the Code. Detailed information
on the company’s corporate governance system can be found in the Report on Corporate Governance and Ownership
Structure for 2017. In March and June 2017 and March 2018, the Board of Auditors verified that the Board of Directors,
in evaluating the independence of non-executive directors, correctly applied the assessment criteria specified in the
Corporate Governance Code and the principle of the priority of substance over form set out in that Code, adopting a tran-
sparent procedure, the details of which are discussed in the Report on Corporate Governance and Ownership Structure
for 2017. In March and September 2017 and March 2018, the Board of Auditors conducted a “self-assessment” of the
independence of its members. On those occasions, the Board of Auditors verified that the Chairman Sergio Duca and
the standing auditor Romina Guglielmetti met the independence requirements established by the Consolidated Law on
Financial Intermediation and the Corporate Governance Code with regard to directors. In September 2017 and March
2018, the Board of Auditors found that the standing auditor Roberto Mazzei, while no longer meeting the independence
requirements provided for in the Corporate Governance Code for directors (following the hiring of a close family member
as head of the “Global Brand and Advertising Management” unit within Enel’s Communications department), continues
406
Annual Report 2017 to meet the independence requirements of the Consolidated Law on Financial Intermediation with regard to the mem-
bers of the boards of auditors of listed companies;
> we monitored the first-time adoption of the provisions of Legislative Decree 254 of December 30, 2016 (hereinafter “De-
cree 254”) concerning the disclosure of non-financial and diversity information by certain large undertakings and groups.
In performing that activity, we monitored the adequacy of the organizational, administrative, reporting and control system
established by the company in order to enable the accurate representation in the consolidated non-financial statement
for 2017 of the activity of the Enel Group, its results and its impacts in the non-financial areas referred to in Article 3,
paragraph 1, of Decree 254, and have no comments in this regard. The audit firm, EY SpA, issued, pursuant to Article 3,
paragraph 10, of Decree 254 and Article 5 of CONSOB Regulation 20267 of January 18, 2018, its certification of the con-
formity of the information provided in the consolidated non-financial statement with the requirements of applicable law;
> since the listing of its shares, the company has adopted specific rules (most recently amended in March 2017) for the
internal management and processing of confidential information, which also set out the procedures for the disclosure of
documentation and information concerning the company and the Group, with specific regard to inside information. Those
rules (which can be consulted on the corporate website) contain appropriate provisions directed at subsidiaries to enable
Enel to comply with statutory public disclosure requirements, pursuant to Article 114, paragraph 2, of the Consolidated
Law on Financial Intermediation;
> in 2002 the company also adopted (and has subsequently updated) a Code of Ethics (also available on the corporate
website) that expresses the commitments and ethical responsibilities involved in the conduct of business, regulating
and harmonizing corporate conduct in accordance with standards of maximum transparency and fairness with respect
to all stakeholders;
> with regard to the provisions of Legislative Decree 231 of June 8, 2001 – which introduced into Italian law a system of
administrative (in fact criminal) liability for companies for certain types of offences committed by its directors, managers
or employees on behalf of or to the benefit of the company – since July 2002 Enel has adopted a compliance program
consisting of a “general part” and various “special parts” concerning the different offences specified by Legislative
Decree 231/2001 that the program is intended to prevent. For a description of the manner in which the model has been
adapted to the characteristics of the various Italian companies of the Group, as well as a description of the purposes of
the “Enel Global Compliance Program” for the Group’s foreign companies, please see the Report on Corporate Gover-
nance and Ownership Structure for 2017.
The structure that monitors the operation and compliance with the program and is responsible for updating it (hereinafter,
“the Supervisory Body”) is a collegial body. In 2017 it was composed of three external members with specific professio-
nal expertise on corporate organization matters, and the heads of the Audit and Legal and Corporate Affairs departments.
In December 2017, the Board of Directors of the company changed the overall number of members of the Supervisory
Body to three in the light of the request of the heads of the Audit and Legal and Corporate Affairs departments to resign
as members of that body in order to further enhance the role of the external members with a view to ensuring the full
autonomy and independence of the body’s activity. The Board of Auditors received adequate information on the main
activities carried out in 2017 by the Supervisory Body, including in meetings with the members of that body. Our exami-
nation of those activities found no facts or situations that would require mention in this report;
> in 2017, the Board of Auditors issued the following opinions:
- a favorable opinion at the meeting of January 30, 2017, concerning the 2017 Audit Plan in accordance with the pro-
visions of Article 7.C.1, letter c) of the Corporate Governance Code, preliminary to the resolutions pertaining to the
Board of Directors in that regard;
- a favorable opinion at the meeting of July 13, 2017, pursuant to Article 2389, paragraph 3, of the Italian Civil Code,
concerning the level of the remuneration of the members of the various committees established within the Board of
Directors following the appointment of the latter body by the Shareholders’ Meeting of May 4, 2017;
- a favorable opinion at the meeting of July 13, 2017 on the attendance fees paid to the magistrate of the State Audit
Court delegated to monitor the finance operations of Enel for participating in the meetings of the corporate bodies;
- a favorable opinion at the meeting of November 8, 2017, pursuant to Article 2389, paragraph 3, of the Italian Civil
Code, concerning the remuneration and job conditions of the Chairman of the Board and the Chief Executive Officer/
407
Reports General Manager during the 2017-2019 term;
-
a favorable opinion at the meeting of November 8, 2017, on the findings of the audit firm, EY SpA, in its report on the
major issues that arose in the statutory audit in 2016, in accordance with the provisions of Article 7.C.1, letter e) of the
Corporate Governance Code, preliminary to the assessments pertaining to the Board of Directors in that regard;
> a report on the fixed and variable compensation accrued by those who served as Chairman of the Board of Directors,
Chief Executive Officer/General Manager and other directors in 2017 for their respective positions and any compen-
sation instruments awarded to them will be contained in the Remuneration Report referred to in Article 123-ter of the
Consolidated Law on Financial Intermediation (on the basis of the draft of that document made available to the Board
of Auditors), which will be submitted for the approval of the Board of Directors, acting on a proposal of the Nomination
and Compensation Committee, and published in compliance with the time limits established by law. The design of these
compensation instruments is in line with best practices, complying with the principle of establishing a link with appropria-
te financial and non-financial performance targets and pursuing the creation of shareholder value over the medium and
long term. The proposals to the Board of Directors concerning such forms of compensation and the determination of the
associated parameters were prepared by the Nomination and Compensation Committee, which is made up entirely of
independent directors, drawing on the findings of benchmarking analyses, including at the international level, conducted
by an independent consulting firm. Finally, the Remuneration Report referred to in Article 123-ter of the Consolidated Law
on Financial Intermediation will contain, in compliance with the applicable CONSOB regulations, specific disclosures on
the remuneration earned in 2017 by key management personnel.
The Board of Auditors’ oversight activity in 2017 was carried out in 22 meetings (14 of which held jointly with the Control
and Risk Committee) and with participation in the 15 meetings of the Board of Directors, and, together or through the
Chairman, in the sole meeting of the Control and Risk Committee not held jointly with the Board of Auditors, in the 8 me-
etings of the Nomination and Compensation Committee, in the 4 meetings of the Related Parties Committee and in the 8
meetings of the Corporate Governance and Sustainability Committee. The delegated magistrate of the State Audit Court
participated in the meetings of the Board of Auditors and those of the Board of Directors.
During the course of this activity and on the basis of information obtained from EY SpA, no omissions, censurable facts,
irregularities or other significant developments were found that would require reporting to the regulatory authorities or
mention in this report.
Based on the oversight activity performed and the information exchanged with the independent auditors EY SpA, we re-
commend that you approve the company’s financial statements for the year ended December 31, 2017 in conformity with
the proposals of the Board of Directors.
Rome, April 17, 2018
The Board of Auditors
Chairman
Sergio Duca
Auditor
Romina Guglielmetti
Auditor
Roberto Mazzei
408
Annual Report 2017 409
Reports Report of the independent
audit firm on the 2017
financial statements
of Enel SpA
410
Annual Report 2017 EY S.p.A.
Via Po, 32
00198 Roma
Tel: +39 06 324751
Fax: +39 06 32475504
ey.com
Independent audit or ’s repor t pursuant to art icle 14 of Legislat ive
Decree n. 39, dat ed 27 J anuary 2010 and art icle 10 of EU Regulat ion
n. 537/ 2014
(Translat ion from t he original It alian t ext )
To t he Shareholders of
Enel S.p.A.
Report on t he Audit of t he Financial Stat ement s
Opinion
We have audited the financial statements of Enel S.p.A. (the Company), which comprise the balance
sheet as at December 31, 2017, and t he statement of income, the statement of comprehensive
income, the statement of changes in shareholders’ equity and the statement of cash flows for the year
t hen ended, and notes to t he financial statement s, including a summary of significant account ing
policies.
In our opinion, the financial statements give a true and fair view of the financial position of the
Company as at December 31, 2017, and of its financial performance and its cash flows for the year
t hen ended in accordance wit h International Financial Report ing Standards as adopted by t he
European Union and with the regulations issued for implementing art. 9 of Legislative Decree n.
38/ 2005.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our
responsibilit ies under t hose standards are further described in t he Auditor’s Responsibilities for the
Audit of the Financial Statement s section of our report. We are independent of the Company in
accordance with the regulat ions and standards on ethics and independence applicable to audits of
financial statements under Italian Laws. We believe t hat t he audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Key Audit Mat t ers
Key audit matters are t hose matters t hat , in our professional judgment , were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on t hese matters.
EY S.p.A.
Sede Legale: Via Po, 32 - 00198 Roma
Capit ale Sociale deliberat o Eur o 3.250.000 ,00, sot t oscr it t o e ver sat o Eur o 3.100.0 00,00 i.v.
Iscr it t a alla S.O. del Regist r o delle Impr ese pr esso la C.C.I.A.A. di Roma
Codice fiscale e numer o di iscr izione 00434000584 - numer o R.E.A. 250904
P.IVA 00891231003
Iscr it t a al Regist r o Revisor i Legali al n. 70945 Pubblicat o sulla G.U. Suppl. 13 - IV Ser ie Speciale del 17/ 2/ 1998
Iscr it t a all’Albo Speciale delle societ à di r evisione
Consob al progr essivo n. 2 deliber a n.10831 del 16/ 7/ 1997
A member firm of Ernst & Young Global Limit ed
411
Reports We identified t he following key audit matters:
Key Audit Mat t er
Audit Response
Recoverabilit y of equit y invest ment s
The financial statements as of December 31,
2017 include wit hin non-current assets equit y
investments for Euro 42.811 million.
The Directors annually assess for impairment
indicat ors each equit y investment , consist ent
wit h t he st rat egy for managing legal ent it ies
wit hin t he Group and, if such indicat ors exist ,
perform an impairment test on t hese assets.
The processes and methodologies implement ed
for det ermining t he recoverable amount of each
equity investment are based on complex
assumpt ions which, due t o t heir nat ure, require
t he Directors t o exercise t heir judgment . Such
judgment relat es, primarily, to the ident ificat ion
of impairment indicators, the cash flow
projections deriving from t he Indust rial Plan
2018-2022 and the determination of the long-
t erm growth rat es and the discount rates
applied t o such projections.
The disclosures related t o t he impairment of
equity investments are included in Note 2.
“ Accounting policies and measurement criteria -
Recoverabilit y of equit y invest ment s” and Note
13. “ Equit y Invest ment s” .
Our audit procedures in response t o t his Key
Audit Matt er included, among ot hers:
• Assessment of t he impairment process for
equit y investments and relat ed cont rols
implement ed by t he Company;
• Assessment of t he criteria adopted t o
ident ify impairment indicat ors;
• Assessment of t he key assumptions
underlying the Industrial Plan 2018-2022
and future cash flows, including the
comparison with indust ry dat a and forecasts;
• Assessment of t he consistency of t he cash
flow projections for each equit y investment
with the Industrial Plan 2018-2022;
• Assessment of t he management’s abilit y to
make accurat e projections, t hrough t he
comparison of t he act ual result s wit h t he
previous forecasts.
In performing our procedures we engaged our
valuat ion experts in order t o verify the
met hodologies used in t he process, t he
mathematical accuracy of the model, the
reasonableness of t he long-term growt h rates
and the discount rates.
Lastly, we reviewed the adequacy of the
disclosures provided in t he notes t o t he financial
statement s relating t his Key Audit Matt er.
Responsibilit ies of Direct ors and Those Charged wit h Governance for t he Financial
St at ement s
The Directors are responsible for the preparation of the financial statements that give a true and fair
view in accordance with International Financial Reporting Standards as adopted by the European
Union and with the regulations issued for implementing art. 9 of Legislative Decree n. 38/ 2005, and,
within the terms provided by the law, for such internal control as they determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due
to fraud or error.
2
412
Annual Report 2017 The Directors are responsible for assessing the Company’s ability to continue as a going concern and,
when preparing the financial statements, for the appropriateness of the going concern assumption,
and for appropriate disclosure t hereof. The Directors prepare t he financial statement s on a going
concern basis unless t hey eit her intend to liquidate t he Company or to cease operations, or have no
realist ic alternative but to do so.
The stat utory audit committee (“ Collegio Sindacale” ) is responsible, within the terms provided by the
law, for overseeing t he Company’s financial report ing process.
Audit or’s Responsibilit ies for t he Audit of t he Financial St atement s
Our objectives are to obtain reasonable assurance about whether t he financial statements as a whole
are free from material misstatement , whet her due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
t hat an audit conducted in accordance with International Standards on Auditing (ISA Italia) will always
detect a material misstatement when it exist s. Misstatements can arise from fraud or error and are
considered material if, individually or in aggregate, t hey could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with International Standards on Auditing (ISA Italia), we have
exercised professional judgment and maintained professional skept icism t hroughout t he audit . In
addition:
• we have identified and assessed t he risks of material misstatement of t he financial statement s,
whether due to fraud or error, designed and performed audit procedures responsive to t hose
risks, and obtained audit evidence t hat is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or t he override of internal cont rol;
• we have obtained an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on t he effect iveness of t he Company’s internal cont rol;
• we have evaluated the appropriateness of accounting policies used and the reasonableness of
account ing est imates and related disclosures made by t he Directors;
• we have concluded on the appropriateness of Directors’ use of the going concern basis of
account ing and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions t hat may cast significant doubt on t he Company’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attent ion in our auditor’s report to the related disclosures in t he financial statements or, if
such disclosures are inadequate, to consider this matter in forming our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Company to cease to continue as a going concern;
• we have evaluated the overall presentation, st ruct ure and content of t he financial statement s,
including t he disclosures, and whether t he financial statement s represent t he underlying
t ransactions and event s in a manner that achieves fair presentation.
3
413
Reports We have communicated wit h t hose charged wit h governance, ident ified at an appropriate level as
required by ISA Italia, regarding, among ot her matters, t he planned scope and t iming of the audit and
significant audit findings, including any significant deficiencies in internal cont rol t hat we identify
during our audit .
We have provided those charged with governance with a statement that we have complied wit h the
ethical and independence requirements applicable in Italy, and we have communicated with them all
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From t he matters communicated wit h t hose charged wit h governance, we have determined those
matters that were of most significance in t he audit of the financial statements of t he current period
and are t herefore t he key audit matters. We have described these matters in our auditor’s report .
Addit ional informat ion pursuant t o art icle 10 of EU Regulat ion n. 537/ 14
The shareholders of Enel S.p.A., in the general meeting held on April 27, 2011, engaged us to
perform the audits of the financial statements for each of the years ending December 31, 2011 to
December 31, 2019.
We declare that we have not provided prohibited non-audit services, referred to article 5, par. 1, of EU
Regulation n. 537/ 2014, and that we have remained independent of the Company in conducting the
audit .
We confirm that the opinion on the financial statements included in t his report is consistent wit h t he
content of t he additional report to t he audit committee (Collegio Sindacale) in t heir capacity as audit
committee, prepared pursuant to article 11 of the EU Regulation n. 537/ 2014.
Report on compliance wit h ot her legal and regulatory requirement s
Opinion pursuant t o art icle 14, paragraph 2, subparagraph e) of Legislat ive Decree
n. 39 dat ed 27 January 2010 and of art icle 123-bis, paragraph 4 of Legislat ive
Decree n. 58, dat ed 24 February 1998
The Directors of Enel S.p.A. are responsible for the preparation of the Report on Operations and of
the Report on Corporate Governance and Ownership Structure of Enel S.p.A. as at December 31,
2017, including their consistency wit h the related financial statements and their compliance with the
applicable laws and regulations.
We have performed the procedures required under audit standard (SA Italia) n. 720B, in order to
express an opinion on t he consistency of t he Report on Operat ions and of specific informat ion
included in the Report on Corporate Governance and Ownership Structure as provided for by article
123-bis, paragraph 4, of Legislative Decree n. 58, dated 24 February 1998, with the financial
statements of Enel S.p.A. as at December 31,2017 and on their compliance with the applicable laws
and regulations, and in order to assess whether they contain material misstatements.
4
414
Annual Report 2017 In our opinion, the Report on Operations and the above mentioned specific information included in
t he Report on Corporate Governance and Ownership St ruct ure are consistent wit h the financial
statements of Enel S.p.A. as at December 31, 2017and comply wit h the applicable laws and
regulations.
With reference to the statement required by art. 14, paragraph 2, subparagraph e) of Legislative
Decree n. 39, dated 27 January 2010, based on our knowledge and understanding of the entity and
its environment obtained t hrough our audit , we have no matters to report.
St at ement pursuant t o art icle 4 of Consob Regulat ion implement ing Legislat ive
Decree n. 254, dated 30 December 2016
The Directors of Enel S.p.A. are responsible for the preparation of the non-financial information
pursuant to Legislative Decree n. 254, dated 30 December 2016. We have verified that non-financial
informat ion have been approved by Directors.
Pursuant to article 3, paragraph 10, of Legislative Decree n. 254, dated 30 December 2016, such
non-financial informat ion are subject to a separate compliance report signed by us.
Rome, April 17, 2018
EY S.p.A.
Signed by: Massimo Antonelli, partner
This report has been translated into the English language solely for the convenience of
international readers.
5
415
Reports Report of the independent
audit firm on the 2017
consolidated financial
statements of the Enel Group
416
Annual Report 2017 EY S.p.A.
Via Po, 32
00198 Roma
Tel: +39 06 324751
Fax: +39 06 32475504
ey.com
Independent audit or ’s repor t pursuant to art icle 14 of Legislat ive
Decree n. 39, dat ed 27 J anuary 2010 and art icle 10 of EU Regulat ion
n. 537/ 2014
(Translat ion from t he original It alian t ext )
To t he Shareholders of
Enel S.p.A.
Report on t he Audit of t he Consolidat ed Financial Stat ement s
Opinion
We have audited the consolidated financial statements of t he Enel Group (the Group), which comprise
t he balance sheet as at December 31, 2017, t he income statement , the statement of comprehensive
income, the statement of changes in shareholders’ equity, the statement of cash flows for the year
then ended, and the notes to the consolidated financial statements, including a summary of
significant account ing policies.
In our opinion, the consolidated financial statements give a t rue and fair view of the financial position
of the Group as at December 31, 2017, and of its financial performance and its cash flows for the
year then ended in accordance with International Financial Reporting Standards as adopted by the
European Union and with the regulations issued for implementing art. 9 of Legislative Decree n.
38/ 2005.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our
responsibilit ies under t hose standards are further described in t he Auditor’s Responsibilities for the
Audit of the Consolidated Financial Statement s section of our report. We are independent of Enel
S.p.A. in accordance wit h t he regulations and standards on ethics and independence applicable to
audits of financial statements under Italian Laws. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Key Audit Mat t ers
Key audit matters are t hose matters t hat , in our professional judgment , were of most significance in
our audit of t he consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion t hereon, and we do not provide a separate opinion on t hese matters.
EY S.p.A.
Sede Legale: Via Po, 32 - 00198 Roma
Capit ale Sociale deliberat o Eur o 3.250.000 ,00, sot t oscr it t o e ver sat o Eur o 3.100.0 00,00 i.v.
Iscr it t a alla S.O. del Regist r o delle Impr ese pr esso la C.C.I.A.A. di Roma
Codice fiscale e numer o di iscr izione 00434000584 - numer o R.E.A. 250904
P.IVA 00891231003
Iscr it t a al Regist r o Revisor i Legali al n. 70945 Pubblicat o sulla G.U. Suppl. 13 - IV Ser ie Speciale del 17/ 2/ 1998
Iscr it t a all’Albo Speciale delle societ à di r evisione
Consob al progr essivo n. 2 deliber a n.10831 del 16/ 7/ 1997
A member firm of Ernst & Young Global Limit ed
417
Reports We identified t he following key audit matters:
Key Audit Mat t er
Audit Response
Our audit procedures in response t o t his Key
Audit Matt er included, among ot hers:
• Assessment of t he impairment process of
non-current asset s and related cont rols
implemented by the Group;
• Assessment of t he criteria adopted t o
ident ify t he CGUs and t he reconciliat ion of
t heir carrying amount s t o t he consolidat ed
financial statement s;
• Assessment of t he key assumptions
underlying the Industrial Plan 2018-2022
and relevant future cash flows, including the
comparison with indust ry dat a and forecasts;
• Assessment of t he consistency of t he cash
flow projections for each CGU with the
Industrial Plan 2018-2022;
• Assessment of t he management’s abilit y to
make accurat e projections, t hrough t he
comparison of t he act ual result s wit h t he
previous forecasts.
In performing our procedures we engaged our
valuat ion experts in order t o verify the
met hodologies used in t he process, t he
mathematical accuracy of the model, the
reasonableness of t he long-term growt h rates
and the discount rates as well as t he result s of
t he sensit ivit y analysis performed by the
management .
Lastly, we reviewed the adequacy of the
disclosures provided in t he notes t o t he financial
statement s relating t his Key Audit Matt er.
Recoverabilit y of non-current asset s
The consolidated financial statements include,
wit hin t he non-current assets balance, Propert y,
Plant and Equipment for Euro 74.937 million,
Intangible Assets for Euro 16.724 million and
Goodwill for Euro 13.746 million.
The Directors tested for impairment the carrying
values of the Cash Generat ing Unit s (CGUs) as of
t he balance sheet dat e, which include goodwill,
intangible assets with indefinite useful lives and
other non-current assets where indication of
impairment were noted.
The process adopt ed by management and t he
met hodologies for assessing and determining t he
recoverable amount of each CGU are sometimes
based on complex assumptions which, due to
t heir nature, require t he Direct ors to exercise
t heir judgment. Such a judgment relat es,
primarily, to the cash flow projections deriving
from the Indust rial Plan 2018-2022 as well as
from t he det erminat ion of t he long-t erm growth
rates and t he discount rat es applied t o t hese
projections.
In relation to the above, t he key assumptions
made by the Directors relate to future economic
t rends, including fut ure t rends of t he elect ricit y
and gas demand and t he related expected prices,
the availability of renewable resources as well as
certain assumpt ions such as inflat ion, exchange
and interest rates.
Because of the judgment required and t he
complexit y of assumptions used to estimate the
recoverable amount of t he non-current asset s,
we ident ified t his area as a Key Audit Mat ter.
The disclosures related to the impairment of non-
current assets are included in Note 2.
“ Accounting policies and measurement criteria -
Recoverabilit y of non-current asset s” , Note 15.
“ Propert y, Plant and Equipment ” and Note 20.
“ Goodwill” .
2
418
Annual Report 2017 Key Audit Mat t er
Audit Response
Revenues from unbilled sale of elect ricit y and
gas
Revenues from sales of elect ricit y and gas t o
retail cust omers are recognized upon delivery
and include, in addition to amount s invoiced
based on periodic met er readings or on t he
volumes notified by distributors and
t ransport ers, an est imat e of t he elect ricit y and
gas delivered during the year but not yet
invoiced. Revenues accrued between the date of
t he last met er reading and year-end are based
on estimates of the daily consumption of
cust omers, primarily det ermined on their
historical information, adjusted to reflect the
climate factors or other mat ters that may affect
t he estimated consumpt ion.
Because of the complexit y of assumptions used
t o est imat e t he revenues from unbilled sale of
electricity and gas, we identified this area as a
Key Audit Matt er.
The disclosures related to the revenues from
unbilled sale of elect ricit y and gas are included
in Note 2. “ Accounting policies and
measurement criteria – Use of est imates –
Revenue Recognition” .
Our audit procedures in response t o t his Key
Audit Matt er included, among ot hers:
• assessment of t he process related t o t he
recognition of revenues from sales of
elect ricit y and gas and related key cont rols,
including Information Technology controls,
implement ed by t he entities within the
Group;
•
• assessment of t he algorit hms and data in t he
ERP systems of such Group ent it ies, also with
the support of our Information Technology
specialists;
testing of a sample of data used by
management t o determine the accrued
revenues, including, whenever applicable,
t he comparison of quant it ies ent ered int o t he
network as made available by t ransport ers
and dist ributors;
look-back analysis of prior est imat es against
actual data subsequent ly reported.
•
Lastly, we reviewed the adequacy of the
disclosures provided in t he notes t o t he financial
statement s relating t his Key Audit Matt er.
3
419
Reports Key Audit Mat t er
Legal proceedings
Audit Response
The Group is involved in several civil,
administrative and tax disputes arising from
the normal course of business, for which final
outcomes cannot be easily predicted and could
pot ent ially result s in significant liabilities.
The assessment of the risks associated with
t he litigations is based on complex
assumpt ions, which, by t heir nat ure, require
t he use of the Direct ors’ judgment . Such
judgment relat es, primarily, to the assessment
of the uncertainties connect ed t o t he
prediction of t he outcome of t he proceedings
and to the adequacy of the disclosures in the
financial statement s; it is also based on t he
assessment made by internal and ext ernal
legal counsels.
Because of the judgment required, t he
mat erialit y of such litigat ions and t he
complexit y of t he assessment process, we
ident ified t his area as a Key Audit Matt er.
The disclosures related t o legal proceedings
are included in Note 2. “ Account ing policies
and measurement criteria – Use of estimat es –
Litigat ion” and Note 49. “ Cont ingent liabilities
and asset s” .
Our audit procedures in response t o t his Key
Audit Matt er included, among ot hers:
• assessment of t he process and relevant
cont rols implemented to identify legal and
t ax lit igations, and pending administ rative
proceedings;
• assessment of t he assumpt ions used in the
valuation of potential legal and tax risks
performed by the legal and t ax departments
wit hin t he Group;
inquiry with the legal and tax departments
regarding the status of the most significant
disputes and inspect ion of t he key relevant
document at ion, also with the support of our
t ax and legal experts;
•
• analysis of the external confirmations
received from the external legal and tax
counsels assisting the Group ent ities involved
in such disputes, and assessment of t he
consistency of the information obtained with
t he risk assessment performed by
management and t he legal and t ax
departments.
Lastly, we reviewed the adequacy of the
disclosures provided in t he notes t o t he financial
statement s relating t his Key Audit Matt er.
4
420
Annual Report 2017 Key Audit Mat t er
Audit Response
Impact of t he first t ime adopt ion of IFRS 15
“ Revenue from cont ract s with customers”
Effective January 1, 2018, the Group adopted
t he int ernat ional accounting standard IFRS 15
“ Revenue from cont ract s with cust omers” . The
new standard introduces, among others, a new
framework for the recognition and
measurement of revenues based on t he
t ransfer of t he cont rol over goods and services
t o t he clients for an amount t hat reflect s t he
expect ed consideration in exchange for t hose
goods and services. The new standard
introduces, additionally, new revenue
recognition criteria for separate performance
obligations or t he combination of such
obligations for recognizing revenues.
At the transition date, the Group elected to
adopt t he modified ret rospective application
criteria and recognize ret rospectively t he
cumulated effect deriving from t he adopt ion as
an adjustment t o t he opening balance of Equit y
as of January 1, 2018, for circumstances that
existed at that dat e, which does not require t he
restatement of previously reported figures.
The Group identified as most significant
impacts from the application of the new
standard the deferral of revenues deriving from
certain connect ion arrangement s t o the elect ric
network, and t he recognition as an asset of t he
increment al cost s of obtaining a cont ract wit h
cust omers only relat ed t o agent s sale
commissions.
The impact s ment ioned above will drive a
decrease of the Net Equity of the Group for
Euro 3.7 billion as of January 1, 2018, net of
t ax effect.
Because of the significance of the expect ed
impacts deriving from the adoption of the new
standard and the significance of the related
disclosures, we identified this area as a Key
Audit Matt er.
The disclosures related to the adoption of the
accounting st andard IFRS 15 are included in
Note 3. “ Accounting st andards t aking effect at
a future date” .
Our audit procedures in response t o t his Key
Audit Matt er included, among ot hers:
• assessment of t he analysis performed by t he
Directors aimed at identifying the differences
from the previous accounting standards, as
well as the relevant key controls;
• assessment of t he informat ion collect ed by
the management from the Italian and foreign
components through specific quest ionnaires
aimed at ident ifying t he different t ypes of
arrangement s and such det ails relevant for
t he provisions of the new standard IFRS 15;
• assessment of t he impacts identified by
management as a result of obt aining the
above mentioned questionnaires, and the
benchmarking analysis against t he indust ry
practice;
• assessment of t he main t ypes of
arrangement s, and of the arrangements
executed with key customers of t he Group;
• assessment of t he consist ency, on a sample
basis, of the informat ion collected by t he
Group from cont ract s with cust omers,
including the relevant amounts;
• assessment of t he process adopt ed by t he
Group to measure revenues in accordance
wit h IFRS 15 for those cont racts impacted by
t he new standard, and relevant key cont rols;
• assessment of adequacy of the t ransition
method to the new standard at the date of
first adopt ion;
• complet eness check of t he informat ion
collected from t he component s and t esting of
t he mathemat ical accuracy of t he impacts
from t he first t ime adoption of t he new
standard.
Lastly, we reviewed the adequacy of the
disclosures provided in t he notes t o t he financial
statement s relating t his Key Audit Matt er.
5
421
Reports Responsibilit ies of Direct ors and Those Charged wit h Governance for t he
Consolidat ed Financial St atement s
The Directors are responsible for the preparation of the consolidated financial statements that give a
t rue and fair view in accordance with International Financial Report ing Standards as adopted by t he
European Union and with the regulations issued for implementing art. 9 of Legislative Decree n.
38/ 2005, and, wit hin the terms provided by the law, for such internal control as they determine is
necessary to enable t he preparation of financial statements t hat are free from material misstatement,
whether due to fraud or error.
The Directors are responsible for assessing the Group’s ability to continue as a going concern and,
when preparing the consolidated financial statements, for the appropriateness of the going concern
assumption, and for appropriate disclosure thereof. The Directors prepare the consolidated financial
statement s on a going concern basis unless t hey either intend to liquidate t he Parent Company Enel
S.p.A. or to cease operations, or have no realistic alternative but to do so.
The stat utory audit committee (“ Collegio Sindacale” ) is responsible, within the terms provided by the
law, for overseeing the Group’s financial reporting process.
Audit or’s Responsibilit ies for t he Audit of t he Consolidat ed Financial St atement s
Our objectives are to obtain reasonable assurance about whether t he consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report t hat includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with International Standards on Auditing
(ISA Italia) will always detect a material misstatement when it exist s. Misstatements can arise from
fraud or error and are considered material if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated
financial statement s.
As part of an audit in accordance with International Standards on Auditing (ISA Italia), we have
exercised professional judgment and maintained professional skept icism t hroughout t he audit . In
addition:
• we have identified and assessed the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, designed and performed audit procedures responsive
to those risks, and obtained audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or t he override of internal cont rol;
• we have obtained an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on t he effect iveness of t he Group’s internal cont rol;
• we have evaluated the appropriateness of accounting policies used and the reasonableness of
account ing est imates and related disclosures made by t he Directors;
• we have concluded on the appropriateness of Directors’ use of the going concern basis of
account ing and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions t hat may cast significant doubt on t he Group’s ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to consider this matter in forming our opinion. Our conclusions are
6
422
Annual Report 2017 based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to cont inue as a going concern;
• we have evaluated the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whet her the consolidated financial statements
represent the underlying transact ions and events in a manner t hat achieves fair presentation.
• we have obtained sufficient appropriate audit evidence regarding the financial information of the
entities within the Group to express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
We have communicated wit h t hose charged wit h governance, ident ified at an appropriate level as
required by ISA Italia, regarding, among ot her matters, t he planned scope and t iming of the audit and
significant audit findings, including any significant deficiencies in internal cont rol t hat we identify
during our audit .
We have provided those charged with governance with a statement that we have complied wit h the
ethical and independence requirements applicable in Italy, and we have communicated with them all
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From t he matters communicated wit h t hose charged wit h governance, we have determined those
matters that were of most significance in t he audit of the financial statements of t he current period
and are t herefore t he key audit matters. We have described these matters in our auditor’s report .
Addit ional informat ion pursuant t o art icle 10 of EU Regulat ion n. 537/ 14
The shareholders of Enel S.p.A., in the general meeting held on April 29, 2011, engaged us to
perform the audits of t he consolidated financial statements for each of t he years ending December
31, 2011 to December 31, 2019.
We declare that we have not provided prohibited non-audit services, referred to article 5, par. 1, of EU
Regulation n. 537/ 2014, and that we have remained independent of the Company in conducting the
audit .
We confirm that the opinion on the consolidated financial statements included in this report is
consistent wit h t he content of t he addit ional report to t he audit committee (Collegio Sindacale) in
their capacity as audit committee, prepared pursuant to article 11 of the EU Regulation n. 537/ 2014 .
7
423
Reports Report on compliance wit h ot her legal and regulatory requirement s
Opinion pursuant t o art icle 14, paragraph 2, subparagraph e) of Legislat ive Decree
n. 39 dat ed 27 January 2010 and of art icle 123-bis, paragraph 4 of Legislat ive
Decree n. 58, dat ed 24 February 1998
The Directors of Enel S.p.A. are responsible for the preparation of the Report on Operations and of
the Report on Corporate Governance and Ownership Structure of Enel S.p.A. as at December 31,
2017, including t heir consistency wit h the related consolidated financial statement s and t heir
compliance with the applicable laws and regulations.
We have performed the procedures required under audit standard (SA Italia) n. 720B in order to
express an opinion on t he consistency of t he Report on Operat ions and of specific informat ion
included in the Report on Corporate Governance and Ownership Structure as provided for by article
123-bis, paragraph 4 of Legislative Decree n. 58, dated 24 February 1998, with the consolidated
financial statements of the Enel Group as at December 31, 2017 and on their compliance with the
applicable laws and regulations, and in order to assess whether they contain material misstatements.
In our opinion, the Report on Operations and the above mentioned specific information included in
t he Report on Corporate Governance and Ownership St ruct ure are consistent wit h the consolidated
financial statements of the Enel Group as at December 31, 2017 and comply with the applicable laws
and regulations.
With reference to the statement required by art. 14, paragraph 2, subparagraph e) of Legislative
Decree n. 39, dated 27 January 2010, based on our knowledge and understanding of the entity and
its environment obtained t hrough our audit , we have no matters to report.
St at ement pursuant t o art icle 4 of Consob Regulat ion implement ing Legislat ive
Decree n. 254, dated 30 December 2016
The Directors of Enel S.p.A. are responsible for the preparation of the non-financial information
pursuant to Legislative Decree n. 254, dated 30 December 2016. We have verified that non-financial
informat ion have been approved by Directors.
Pursuant to article 3, paragraph 10, of Legislative Decree n. 254, dated 30 December 2016, such
non-financial informat ion are subject to a separate compliance report signed by us.
Rome, April 17, 2018
EY S.p.A.
Signed by: Massimo Antonelli, partner
This report has been translated into the English language solely for the convenience of
international readers.
8
424
Annual Report 2017 425
Reports Summary of the resolutions of
the Ordinary and Extraordinary
Shareholders’ Meeting
The Shareholders’ Meeting of Enel SpA held in Rome in single call on May 24, 2018 at the Enel Conference Center at 125,
Viale Regina Margherita, adopted the following resolutions during the ordinary session:
1. approved the financial statements of Enel SpA for the year ended December 31, 2017, having acknowledged the
results of the consolidated financial statements of the Enel Group, which closed with Group’s net income of €3,779
million, together with the consolidated non-financial statement, both referred to the financial year 2017;
2. resolved:
(i)
to allocate Enel SpA’s net income for the year 2017, amounting to €2,269,988,186.84, as follows:
a) to earmark for the distribution to the shareholders:
• €0.105 for each of the 10,166,679,946 ordinary shares in circulation on the ex-dividend date, to cover the inte-
rim dividend payable from January 24, 2018, the ex-dividend date of coupon no. 27 having fallen on January
22, 2018 and the “record date” (i.e. the date of the title to the payment of the dividend) on January 23, 2018,
for an overall amount of €1,067,501,394.33;
• €0.118 for each of the 10,166,679,946 ordinary shares in circulation on July 23, 2018 (i.e. on the scheduled
ex-dividend date), as the balance of the dividend, for an overall amount of €1,199,668,233.63;
b) to earmark for “retained earnings” the remaining part of the net income, for an overall amount of €2,818,558.88;
(ii)
to earmark for the distribution to the shareholders, always as the balance of the dividend, also a part of the avai-
lable reserve named “retained earnings” allocated in the financial statements of Enel SpA (amounting as of De-
cember 31, 2017 to €4,424,283,417.19), for an amount of €0.014 for each of the 10,166,679,946 ordinary shares
in circulation on July 23, 2018 (i.e. on the scheduled ex-dividend date), for an overall amount of €142,333,519.24;
paying, before withholding tax, if any, the overall balance of the dividend of €0.132 per ordinary share – of which €0.118
as distribution of part of the remaining 2017 net income and €0.014 as partial distribution of the available reserve na-
med “retained earnings” – as from July 25, 2018, with the ex-dividend date of coupon no. 28 falling on July 23, 2018
and the “record date” (i.e. the date of the title to the payment of the dividend) coinciding with July 24, 2018;
3. resolved:
(i)
to revoke the resolution concerning the authorization for the acquisition and the disposal of own shares approved
by the Ordinary Shareholders’ Meeting held on May 4, 2017;
(ii)
to authorize the Board of Directors to acquire, in one or more instalments and for a period of eighteen months
starting from the date of the Shareholders’ Meeting resolution, a maximum number of 500 million ordinary
shares of the company, representing approximately 4.92% of the share capital of Enel SpA, up to a maximum
amount of €2 billion; and
(iii)
to authorize the Board of Directors to dispose, in one or more instalments and for an unlimited period of time, of all or
part of the own shares held in portfolio, also before having reached the maximum amount of shares that can be pur-
chased, as well as, as the case may be, to buy-back the shares, provided that the own shares held by the company
and, if applicable, by its subsidiaries, do not exceed the limit set by above-mentioned authorization to the purchase;
426
Annual Report 2017 4. resolved:
(i)
to approve an increase of the fees due to the audit company EY SpA for the statutory audit of Enel SpA with
reference to the financial years from 2011 to 2019 – as resolved by the Ordinary Shareholders’ Meeting held on
April 29, 2011 – since “circumstances exceptional and/or unforeseeable” at the moment of the appointment of
EY SpA have occurred, in accordance with the provisions of CONSON Communication 96003556 of April 18,
1996;
(ii)
consequently, to grant the audit company EY SpA, within the framework of the performance of the statutory
audit of the annual financial statements of Enel SpA and the consolidated financial statements of the Enel Group
as of December 31, 2018 and as of December 31, 2019:
• an increase of €25,000 per year (equal to 560 working hours) for the drafting of the audit report on the basis
of the new contents requested by Article 10 of Regulation 2014/537/EU;
• an increase of €15,000 per year (equal to 336 working hours) for the drafting of the additional report to
be submitted to the Board of Statutory Auditors (in its capacity as audit committee pursuant to Article 19,
paragraph 2, letter a), of Legislative Decree 39 of January 27, 2010, as amended by Legislative Decree 135
of July 17, 2016);
• an increase of €25,000 per year (equal to 560 working hours) for the issuance of the opinion on the com-
pliance of the management report and of certain information contained in the report on corporate gover-
nance of Enel SpA with the applicable laws;
5. approved the Long-term Incentive Plan for 2018 reserved to the management of Enel SpA and/or of its subsidiaries
pursuant to Article 2359 of the Italian Civil Code, whose features are described in the relevant information document
prepared pursuant to Article 84-bis, paragraph 1, of the Issuers Regulation adopted by CONSOB with Resolution
11971/1999, and to grant the Board of Directors, with the faculty to sub-delegate, all powers necessary for the actual
implementation of the aforesaid Plan;
6. resolved in favor of the first section of the remuneration report drawn up pursuant to Article 123-ter of Legislative
Decree 58 dated February 24, 1998, and Article 84-quater of the Issuers Regulation adopted by CONSOB with Re-
solution 11971/1999, containing the description of the policy for the remuneration of directors, general manager and
executives with strategic responsibilities adopted by Enel SpA for the financial year 2018, as well as the procedures
used for the adoption and implementation of such policy.
In the extraordinary session, the Shareholders’ Meeting resolved:
(i)
the repeal of Article 31 of the corporate bylaws, which includes a transitional clause limiting timewise the appli-
cation of the provisions that ensure gender balance in the composition of the Board of Directors and Board of
Statutory Auditors;
(ii)
the amendment of Article 21 of the corporate bylaws, which aims to incorporate and clarify – in line with the
practice followed by the company since the listing of its shares – the power of the Board of Directors to establish
internal committees with proposing and/or consultative functions.
427
Reports 06Attachments
Subsidiaries, associates
and other significant equity
investments of the Enel Group
at December 31, 2017
In compliance with CONSOB Notice DEM/6064293 of July 28, 2006 and Article 126 of CONSOB Resolution 11971 of May
14, 1999, a list of subsidiaries and associates of Enel SpA at December 31, 2017, pursuant to Article 2359 of the Italian Civil
Code, and of other significant equity investments is provided below. Enel has full title to all investments.
The following information is included for each company: name, registered office, share capital, currency in which share
capital is denominated, activity, method of consolidation, Group companies that have a stake in the company and their
respective ownership share, and the Group’s ownership share.
430
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Parent Company
Enel SpA
Rome
Italy
10,166,679,946.00
EUR
Holding company
Holding company
100.00%
Subsidiaries
(Cataldo) Hydro Power
New York
USA
-
USD
Electricity generation
Equity
Hydro
50.00%
50.00%
Associates
(New York)
from renewable
resources
Development
Group Acquisition
LLC
Pyrites Hydro
50.00%
LLC
Società di sviluppo
Milan
Italy
37,419,179.00
EUR
Energy and
-
Enel Produzione
17.65%
17.65%
realizzazione e gestione
del gasdotto Algeria-
Italia via Sardegna SpA
(”in breve Galsi
SpA”)
infrastructure
engineering
SpA
3-101-665717 SA
San José
Costa Rica
10,000.00
CRC
Electricity generation
Line-by-line
PH Chucas SA
100.00%
65.00%
from renewable
resources
3Sun Srl
Catania
Italy
35,205,984.00
EUR
Plant development,
Line-by-line
Enel Green
100.00%
100.00%
design, construction
and operation
Power SpA
Activation Energy
-
Ireland
100,000.00
EUR
Renewable energy
Line-by-line
EnerNOC Ireland
100.00%
100.00%
Limited
Limited
Adams Solar PV
Johannesburg South Africa
10,000,000.00
ZAR
Electricity generation
Line-by-line
Enel Green
60.00%
60.00%
Project Two (RF) (Pty)
Ltd
from renewable
resources
Power RSA (Pty)
Ltd
Adria Link Srl
Gorizia
Italy
500,000.00
EUR
Design, construction
Equity
Enel Produzione
33.33%
33.33%
and operation of
merchant lines
SpA
Agassiz Beach LLC
Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
(Minnesota)
from renewable
resources
Wind LLC
Agatos Green Power
Rome
Italy
10,000.00
EUR
Electricity generation
Line-by-line
Enel Green
80.00%
80.00%
Trino
from renewable
resources
Power Solar
Energy Srl
Agrupación Acefhat
Barcelona
Spain
793,340.00
EUR
Design and services
-
Endesa
16.67%
11.69%
AIE
Distribución
Eléctrica SL
Aguilón 20 SA
Zaragoza
Spain
2,682,000.00
EUR
Electricity generation
Line-by-line
Enel Green
51.00%
35.75%
from renewable
resources
Power España SL
Alba Energia Ltda
Rio de Janeiro Brazil
15,061,880.00
BRL
Plant development,
Line-by-line
Enel Green
100.00%
100.00%
design, construction
and operation
Power Brasil
Participações
Ltda
Albany Solar LLC
Delaware
USA
-
USD
Electricity generation
Line-by-line
Aurora
100.00%
51.00%
from renewable
resources
Distributed Solar
LLC
Almeyda Solar SpA
Santiago
Chile
1,736,965,000.00
CLP
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power Chile Ltda
Almussafes Servicios
Valencia
Spain
3,010.00
EUR
Management and
Line-by-line
Enel Green
100.00%
70.10%
Energéticos SL
maintenance of power
Power España SL
plants
Alpe Adria Energia Srl Udine
Italy
450,000.00
EUR
Design, construction
Line-by-line
Enel Produzione
100.00%
100.00%
and operation of
merchant lines
SpA
Altomonte FV Srl
Rome
Italy
5,100,000.00
EUR
Electricity generation
Equity
Enel F2i Solare
100.00%
50.00%
from renewable
resources
Italia SpA
431
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Alvorada Energia SA
Rio de Janeiro Brazil
17,117,415.92
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
and sale
Power Brasil
Participações
Ltda
Annandale Solar LLC Delaware
USA
-
USD
Electricity generation
Line-by-line
Aurora
100.00%
51.00%
from renewable
resources
Distributed Solar
LLC
Apiacás Energia SA
Rio de Janeiro Brazil
21,216,846.33
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Power Brasil
Participações
Ltda
Aquenergy Systems
Greenville
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
LLC
(South Carolina)
from renewable
resources
Hydro Holdings
LLC
Aragonesa de
Teruel
Spain
60,100.00
EUR
Electricity generation
Line-by-line
Endesa Red SA 100.00%
70.10%
Actividades Energéticas
SA
Asociación Nuclear
Tarragona
Spain
19,232,400.00
EUR
Management and
Joint operation
Endesa
85.41%
59.87%
Ascó-Vandellós II AIE
maintenance of power
Generación SA
plants
Athonet Smartgrid Srl Bolzano
Italy
14,285.71
EUR
Research, development
Equity
Enel X Srl
30.00%
30.00%
Atwater Solar LLC
Delaware
USA
Aurora Distributed
Wilmington
USA
Solar LLC
(Delaware)
Aurora Land Holdings
Delaware
USA
LLC
Aurora Solar Holdings
Delaware
USA
LLC
Autumn Hills LLC
Delaware
USA
-
-
-
-
-
and design
USD
Electricity generation
Line-by-line
Aurora
100.00%
51.00%
from renewable
resources
Distributed Solar
LLC
USD
Electricity generation
Line-by-line
Aurora Solar
51.00%
51.00%
from renewable
resources
Holdings LLC
USD
Electricity generation
Line-by-line
Enel Kansas LLC 100.00%
100.00%
from renewable
resources
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
from renewable
resources
Wind LLC
Avikiran Energy India
Gurugram
India
100,000.00
INR
Electricity generation
Line-by-line
BLP Energy
100.00%
76.56%
Private Limited
(Haryana)
and sale from
renewable resources
Private Limited
Avikiran Solar India
Haryana
India
100,000.00
INR
Electricity generation
Line-by-line
BLP Energy
100.00%
76.56%
Private Llimited
from renewable
resources
Private Limited
Aysén Energía SA
Santiago
Chile
4,900,100.00
CLP
Electricity activities
Equity
Centrales
99.00%
18.54%
Hidroeléctricas de
Aysén SA
Enel Generación
0.51%
Chile SA
Aysén Transmisión SA Santiago
Chile
22,368,000.00
CLP
Electricity generation
Equity
Centrales
99.00%
18.54%
and sale
Hidroeléctricas de
Aysén SA
Enel Generación
0.51%
Chile SA
Azovskaya WPS
Moscow
Russia
10,000.00
RUB
-
Line-by-line
Enel Rus Wind
100.00%
56.43%
Burlington
USA
-
USD
Electricity generation
Held for sale
Enel Green
10.00%
100.00%
(Vermont)
from renewable
resources
Power North
America Inc.
Generation LLC
Sweetwater
90.00%
Hydroelectric LLC
Limited Liability
Company
Barnet Hydro
Company LLC
432
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Baylio Solar SLU
Seville
Spain
3,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
Consolidation
%
Group %
holding
70.10%
Beaver Falls Water
Philadelphia
USA
Power Company
(Pennsylvania)
Beaver Valley
Holdings LLC
Philadelphia
USA
(Pennsylvania)
Beaver Valley Power
Philadelphia
USA
Company LLC
(Pennsylvania)
-
-
-
from renewable
resources
Power España SL
USD
Electricity generation
Line-by-line
Beaver Valley
67.50%
67.50%
from renewable
resources
Holdings LLC
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
from renewable
resources
Hydro Holdings
LLC
Bioenergy Casei
Rome
Italy
100,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Gerola Srl
from renewable
resources
Power SpA
Black River Hydro
New York
USA
-
USD
Electricity generation
Equity
(Cataldo) Hydro
75.00%
62.50%
Assoc
(New York)
from renewable
resources
Power Associates
Enel Green
Power North
25.00%
America Inc.
BLP Energy Private
New Delhi
India
50,000,000.00
INR
Electricity generation
Line-by-line
Enel Green
76.56%
76.56%
Limited
from renewable
resources
Power
Development Srl
BLP Vayu (Project 1)
Haryana
India
7,500,000.00
INR
Electricity generation
Line-by-line
BLP Energy
100.00%
76.56%
Private Limited
from renewable
resources
Private Limited
BLP Vayu (Project 2)
Haryana
India
45,000,000.00
INR
Electricity generation
Line-by-line
BLP Energy
100.00%
76.56%
Private Limited
from renewable
resources
Private Limited
BLP Wind Project
New Delhi
India
5,000,000.00
INR
Electricity generation
Line-by-line
BLP Energy
100.00%
76.56%
(Amberi) Private
Limited
from renewable
resources
Private Limited
Boiro Energía SA
Boiro
Spain
601,010.00
EUR
Electricity generation
Equity
Enel Green
40.00%
28.04%
from renewable
resources
Power España SL
Bondia Energia Ltda
Rio de Janeiro Brazil
2,000,000.00
BRL
Plant development,
Line-by-line
Enel Green
100.00%
100.00%
Boott Hydropower
Boston
USA
LLC
(Massachusetts)
Bp Hydro Associates Boise
USA
(Idaho)
-
-
design, construction
and operation
Power Brasil
Participações
Ltda
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
from renewable
resources
Hydro Holdings
LLC
USD
Electricity generation
Line-by-line
Chi Idaho LLC
68.00%
100.00%
from renewable
resources
Enel Green
32.00%
Bp Hydro Finance
Salt Lake City
USA
-
USD
Electricity generation
Line-by-line
Partnership
(Utah)
from renewable
resources
Power North
America Inc.
Bp Hydro
Associates
75.92%
100.00%
Enel Green
24.08%
Power North
America Inc.
Buffalo Dunes Wind
Topeka
USA
-
USD
Electricity generation
Line-by-line
EGPNA
75.00%
75.00%
Project LLC
(Kansas)
from renewable
resources
Development
Holdings LLC
Bungala One FinCo
Sydney
Australia
1,000.00
AUD
Electricity generation
Equity
Bungala One
100.00%
50.00%
(Pty) Ltd
from renewable
resources
Property (Pty)
Ltd
Bungala One
Sydney
Australia
100.00
AUD
Renewable energy
Equity
Enel Green
50.00%
50.00%
Operation Holding
Trust
Power Bungala
(Pty) Ltd
433
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Bungala One
Sydney
Australia
100.00
AUD
Electricity generation
Equity
Enel Green
50.00%
Operations Holding
(Pty) Ltd
from renewable
resources
Power Bungala
(Pty) Ltd
Consolidation
%
Group %
holding
50.00%
Bungala One
Sydney
Australia
1,000.00
AUD
Electricity generation
Equity
Bungala One
100.00%
50.00%
Operations (Pty) Ltd
from renewable
resources
Operations
Holding (Pty) Ltd
Bungala One
Sydney
Australia
-
AUD
Renewable energy
Equity
Bungala One
100.00%
50.00%
Operations Trust
Operations
Holding (Pty) Ltd
Bungala One Property
Sydney
Australia
1,000.00
AUD
Electricity generation
Equity
Bungala One
100.00%
50.00%
(Pty) Ltd
from renewable
resources
Property Holding
(Pty) Ltd
Bungala One Property
Sydney
Australia
100.00
AUD
Electricity generation
Equity
Enel Green
50.00%
50.00%
Holding (Pty) Ltd
from renewable
resources
Power Bungala
(Pty) Ltd
Bungala One Property
Sydney
Australia
100.00
AUD
Electricity generation
Equity
Enel Green
50.00%
50.00%
Holding Trust
from renewable
resources
Power Bungala
(Pty) Ltd
Bungala One Property
Sydney
Australia
-
AUD
Electricity generation
Equity
Bungala One
100.00%
50.00%
Trust
from renewable
resources
Property Holding
(Pty) Ltd
Bungala Two FinCo
Sydney
Australia
-
AUD
Electricity generation
Equity
Bungala Two
100.00%
50.00%
(Pty) Ltd
from renewable
resources
Property (Pty) Ltd
Bungala Two
Sydney
Australia
-
AUD
Electricity generation
Equity
Enel Green
50.00%
50.00%
Operations Holding
(Pty) Ltd
from renewable
resources
Power Bungala
(Pty) Ltd
Bungala Two
Sydney
Australia
-
AUD
Renewable energy
Equity
Enel Green
50.00%
50.00%
Operations Holding
Trust
Power Bungala
(Pty) Ltd
Bungala Two
Sydney
Australia
-
AUD
Renewable energy
Equity
Bungala Two
100.00%
50.00%
Operations (Pty) Ltd
Operations
Holding (Pty) Ltd
Bungala Two
Sydney
Australia
-
AUD
Renewable energy
Equity
Bungala Two
100.00%
50.00%
Operations Trust
Operations
Holding (Pty) Ltd
Bungala Two Property
Sydney
Australia
-
AUD
Electricity generation
Equity
Enel Green
50.00%
50.00%
Holding (Pty) Ltd
from renewable
resources
Power Bungala
(Pty) Ltd
Bungala Two Property
Sydney
Australia
-
AUD
Renewable energy
Equity
Enel Green
50.00%
50.00%
Holding Trust
Power Bungala
(Pty) Ltd
Bungala Two Property
Sydney
Australia
-
AUD
Renewable energy
Equity
Bungala Two
100.00%
50.00%
(Pty) Ltd
Property Holding
(Pty) Ltd
Bungala Two Property
Sydney
Australia
1.00
AUD
Renewable energy
Equity
Bungala Two
100.00%
50.00%
Trust
Property Holding
(Pty) Ltd
Business Venture
Lombardy East South Africa
1,000.00
ZAR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Investments 1468
(Pty) Ltd
Bypass Limited LLC
Boise
USA
(Idaho)
Canastota Wind
Wilmington
USA
Power LLC
(Delaware)
Caney River Wind
Topeka
USA
Project LLC
(Kansas)
-
-
-
from renewable
resources
Power RSA (Pty)
Ltd
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
from renewable
resources
Hydro Holdings
LLC
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
USD
Electricity generation
Equity
Rocky Caney
100.00%
20.00%
from renewable
resources
Wind LLC
434
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
Carbopego -
Abrantes
Portugal
50,000.00
EUR
Fuel supply
Abastecimientos e
Combustíveis SA
Consolidation
method
Equity
Held by
Endesa
Generación
Portugal SA
%
holding
0.01%
Group %
holding
35.05%
Endesa
49.99%
Generación SA
Carodex (Pty) Ltd
Houghton
South Africa
116.00
ZAR
Electricity generation
Line-by-line
Enel Green
98.49%
98.49%
from renewable
resources
Power RSA (Pty)
Ltd
Cascade Energy
Delaware
USA
-
USD
Renewable energy
Line-by-line
EGP Energy
100.00%
100.00%
Storage LLC
Storage Holdings
LLC
Castiblanco Solar SL
Valencia
Spain
3,000.00
EUR
Photovoltaic systems
Line-by-line
Enel Green
100.00%
70.10%
Power España SL
Castle Rock Ridge
Calgary
Canada
-
CAD
Electricity generation
Line-by-line
Enel Alberta
0.10%
100.00%
Limited Partnership
(Alberta)
from renewable
resources
Wind Inc.
Enel Green
99.90%
Power Canada
Inc.
Central Costanera SA Buenos Aires
Argentina
701,988,378.00
ARS
Electricity generation
Line-by-line
Enel Argentina
75.68%
39.16%
and sale
SA
Central Dock Sud SA Buenos Aires
Argentina
35,595,178,229.00
ARS
Electricity generation,
Line-by-line
Enel Argentina
0.25%
20.85%
transmission and
distribution
SA
Inversora Dock
69.99%
Sud SA
Central Geradora
Caucaia
Brazil
151,940,000.00
BRL
Thermal generation
Line-by-line
Enel Brasil SA
100.00%
51.61%
Termelétrica Fortaleza
SA
plants
Central Hidráulica
Seville
Spain
364,210.00
EUR
Plant operation
Equity
Enel Green
33.30%
23.34%
Güejar-Sierra SL
Power España SL
Central Térmica de
Madrid
Spain
595,000.00
EUR
Plant operation
Equity
Endesa
33.33%
23.36%
Anllares AIE
Generación SA
Central Vuelta de
Buenos Aires
Argentina
500,000.00
ARS
Electrical facilities
Equity
Central
1.30%
9.80%
Obligado SA
construction
Costanera SA
Central Dock
6.40%
Sud SA
Enel Generación
33.20%
El Chocón SA
Centrales
Santiago
Chile
158,975,665,182.00
CLP
Design
Equity
Enel Generación
51.00%
18.54%
Hidroeléctricas de
Aysén SA
Chile SA
Centrales Nucleares
Madrid
Spain
-
EUR
Plant operation
Equity
Endesa
23.57%
16.76%
Almaraz-Trillo AIE
Generación SA
Nuclenor SA
0.69%
Centrum Pre Vedu a
Kalná nad
Slovakia
6,639.00
EUR
Research and
Equity
Slovenské
100.00%
33.00%
Vyskum Sro
Hronom
development
in sciences and
engineering
elektrárne AS
Milan
Italy
8,550,000.00
EUR
Testing, inspection and
Equity
Enel SpA
42.70%
42.70%
CESI - Centro
Elettrotecnico
Sperimentale Italiano
Giacinto Motta SpA
Champagne Storage
Wilmington
USA
LLC
(Delaware)
Cherokee Falls
Delaware
USA
Hydroelectric Project
LLC
Chi Black River LLC Wilmington
USA
(Delaware)
-
-
-
certification services,
engineering and
consulting services
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
435
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Chi Idaho LLC
Wilmington
USA
(Delaware)
Chi Minnesota Wind
Wilmington
USA
LLC
(Delaware)
-
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
Chi Operations Inc.
Wilmington
USA
100.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
(Delaware)
from renewable
resources
Power North
America Inc.
Chi Power Inc.
Wilmington
USA
100.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
(Delaware)
from renewable
resources
Power North
America Inc.
Chi Power Marketing
Wilmington
USA
100.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Inc.
(Delaware)
from renewable
resources
Power North
America Inc.
Chi West LLC
Wilmington
USA
100.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
(Delaware)
from renewable
resources
Power North
America Inc.
Chinango SAC
Lima
Peru
294,249,298.00
PEN
Electricity generation,
Line-by-line
Enel Generación
80.00%
34.64%
Chisago Solar LLC
Delaware
USA
Chisholm View II
Delaware
USA
Holding LLC
Chisholm View Wind
Delaware
USA
Project II LLC
Chisholm View Wind
Oklahoma City
USA
Project LLC
(Oklahoma)
Cimarron Bend Assets
Wilmington
USA
LLC
(Delaware)
Cimarron Bend Wind
Delaware
USA
Holdings I LLC
Cimarron Bend Wind
Delaware
USA
Holdings LLC
Cimarron Bend Wind
Delaware
USA
Project I LLC
Cimarron Bend Wind
Delaware
USA
Project II LLC
Cimarron Bend Wind
Wilmington
USA
Project III LLC
(Delaware)
-
-
-
-
-
-
-
-
-
-
sale and transmission
Perú SAA
USD
Electricity generation
Line-by-line
Aurora
100.00%
51.00%
from renewable
resources
Distributed Solar
LLC
USD
Electricity generation
Line-by-line
Enel Kansas LLC 100.00%
100.00%
from renewable
resources
USD
Electricity generation
Line-by-line
Chisholm View II
100.00%
51.00%
from renewable
resources
Holding LLC
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
from renewable
resources
Wind Holdings
LLC
USD
Electricity generation
Equity
Cimarron Bend
49.00%
50.00%
from renewable
resources
Wind Project
I LLC
Cimarron Bend
49.00%
Wind Project II
LLC
Cimarron Bend
1.00%
Wind Project III
LLC
Enel Kansas LLC
1.00%
USD
Electricity generation
Equity
Cimarron Bend
100.00%
50.00%
from renewable
resources
Wind Holdings
LLC
USD
Electricity generation
Equity
EGPNA Preferred
100.00%
50.00%
from renewable
resources
Wind Holdings
LLC
USD
Electricity generation
Line-by-line
Cimarron Bend
100.00%
50.00%
from renewable
resources
Wind Holdings
I LLC
USD
Electricity generation
Equity
Cimarron Bend
100.00%
50.00%
from renewable
resources
Wind Holdings
I LLC
USD
Electricity generation
Line-by-line
Enel Kansas LLC 100.00%
100.00%
from renewable
resources
Codensa SA ESP
Bogotá DC
Colombia
13,514,515,800.00
COP
Electricity distribution
Line-by-line
Enel Américas
48.41%
25.07%
and sale
SA
Cogeneración El Salto
Zaragoza
Spain
36,060.73
EUR
Cogeneration of
-
Enel Green
20.00%
14.02%
SL
electricity and heat
Power España SL
Cogent Energy Inc.
Delaware
USA
100,000.00
USD
Renewable energy
Line-by-line
EnerNOC Inc.
100.00%
100.00%
436
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Comercializadora
Cadiz
Spain
600,000.00
EUR
Electricity transmission,
Equity
Endesa Red SA 33.50%
Eléctrica de Cádiz SA
distribution and sale
Consolidation
%
Group %
holding
23.48%
Compagnia Porto di
Rome
Italy
24,372,000.00
EUR
Construction of port
Equity
Enel Produzione
25.00%
25.00%
Civitavecchia SpA
infrastructure
SpA
Compañía de
Buenos Aires
Argentina
14,012,000.00
ARS
Electricity generation,
Line-by-line
Enel CIEN SA
100.00%
51.61%
Transmisión del
Mercosur Ltda - CTM
transmission and
distribution
Enel SpA
0.00%
Compañía Energética
Lima
Peru
2,886,000.00
PEN
Hydroelectric projects
Line-by-line
Enel Perú SAC
100.00%
51.80%
Veracruz SAC
Compañía Eólica
Soria
Spain
13,222,000.00
EUR
Wind plants
Equity
Enel Green
37.51%
26.29%
Tierras Altas SA
Power España SL
Concert Srl
Rome
Italy
10,000.00
EUR
Product, plant and
Line-by-line
Enel Produzione
100.00%
100.00%
equipment certification
SpA
Coneross Power
Greenville
USA
110,000.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Corporation Inc.
(South Carolina)
Consolidated Hydro
Wilmington
USA
New Hampshire LLC
(Delaware)
Consolidated Hydro
Wilmington
USA
New York LLC
(Delaware)
Consolidated Hydro
Wilmington
USA
Southeast LLC
(Delaware)
-
-
-
from renewable
resources
Power North
America Inc.
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
from renewable
resources
Hydro Holdings
LLC
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
Consolidated Pumped
Wilmington
USA
550,000.00
USD
Electricity generation
Line-by-line
Enel Green
81.82%
81.82%
Storage Inc.
(Delaware)
from renewable
resources
Power North
America Inc.
Consorcio Eólico
Cadiz
Spain
200,000.00
EUR
Wind plants
Equity
Enel Green
50.00%
35.05%
Marino Cabo de
Trafalgar SL
(in liquidation)
Power España SL
Construction Lab Ltd Airport City
Israel
10,000.00
EUR
Legal services
Line-by-line
Enel Innovation
50.00%
50.00%
Hubs Srl
Copenhagen Hydro
Wilmington
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
LLC
(Delaware)
from renewable
resources
Hydro Holdings
LLC
Corporación Eólica de
Zaragoza
Spain
1,021,600.00
EUR
Electricity generation
Equity
Enel Green
25.00%
17.53%
Zaragoza SL
from renewable
resources
Power España SL
Danax Energy
Houghton
South Africa
100.00
ZAR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
(Pty) Ltd
from renewable
resources
Power RSA (Pty)
Ltd
De Rock’l Srl
Bucharest
Romania
5,629,000.00
RON
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power Romania
Srl
Enel Green
Power SpA
0.00%
Dehesa de Los
Seville
Spain
3,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
70.10%
Guadalupes Solar SLU
from renewable
resources
Power España SL
Demand Energy
Washington
USA
171,689.00
USD
Services
Line-by-line
Enel Green
100.00%
100.00%
Networks Inc.
DC
Power North
America Inc.
Depuración
Boiro
Spain
600,000.00
EUR
Electricity generation
Equity
Enel Green
40.00%
28.04%
Destilación Reciclaje SL
from renewable
resources
Power España SL
Desarrollo de Fuerzas
Mexico City
Mexico
33,101,350.00
MXN
Electricity generation
Line-by-line
Enel Green
99.99%
100.00%
Renovables S de RL
de Cv
from renewable
resources
Power México S
de RL de Cv
Energía Nueva
0.01%
Energía Limpia
México S de RL
de Cv
437
Attachments Company name
Headquarters Country
Share capital
Currency Activity
Consolidation
method
Diego de Almagro
Santiago
Chile
351,604,338.00
CLP
Electricity generation
Line-by-line
Matriz SpA
from renewable
resources
%
holding
Group %
holding
100.00%
100.00%
Held by
Empresa
Eléctrica
Panguipulli SA
Dietrich Drop LLC
Delaware
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
from renewable
resources
Hydro Holdings
LLC
Distribuidora de
Barcelona
Spain
108,240.00
EUR
Electricity distribution
Line-by-line
Endesa Red SA
55.00%
70.10%
Energía Eléctrica del
Bages SA
and sale
Hidroeléctrica de
45.00%
Catalunya SL
Distribuidora Eléctrica
Tenerife
Spain
12,621,210.00
EUR
Electricity purchase,
Line-by-line
Endesa Red SA 100.00%
70.10%
del Puerto de La Cruz
SA
transmission and
distribution
Distrilec Inversora SA Buenos Aires
Argentina
497,610,000.00
ARS
Holding company
Line-by-line
Enel Américas
51.50%
26.68%
SA
Dodge Center
Delaware
USA
-
USD
Electricity generation
Line-by-line
Aurora
100.00%
51.00%
Distributed Solar LLC
from renewable
resources
Distributed Solar
LLC
Dolores Wind
Mexico City
Mexico
100.00
MXN
Electricity generation
Line-by-line
Enel Rinnovabile
99.00%
100.00%
Sa de Cv
from renewable
resources
SA de Cv
Hidroelectricidad
1.00%
del Pacífico S de
RL de Cv
Dominica Energía
Mexico City
Mexico
279,282.24
MXN
Electricity generation
Held for sale
Enel Green
0.04%
100.00%
Limpia S de RL de Cv
from renewable
resources
Power Guatemala
SA
Enel Green
99.96%
Power México S
de RL de Cv
Drift Sand Wind
Delaware
USA
Holdings LLC
Drift Sand Wind
Delaware
USA
Project LLC
-
-
USD
Electricity generation
Equity
Enel Kansas LLC 35.00%
50.00%
from renewable
resources
USD
Electricity generation
Equity
Drift Sand Wind
100.00%
50.00%
from renewable
resources
Holdings LLC
e-distribut¸ie Banat
Timisoara
Romania
382,158,580.00
RON
Electricity distribution
Line-by-line
Enel Investment
51.00%
51.00%
SA
Holding BV
e-distribut¸ie Dobrogea
Constant‚a
Romania
280,285,560.00
RON
Electricity distribution
Line-by-line
Enel Investment
51.00%
51.00%
SA
Holding BV
e-distribut¸ie Muntenia
Bucharest
Romania
271,635,250.00
RON
Electricity distribution
Line-by-line
Enel Investment
78.00%
78.00%
SA
Holding BV
e-distribuzione SpA
Rome
Eastwood Solar LLC
Delaware
Italy
USA
2,600,000,000.00
-
EUR
USD
Electricity distribution
Line-by-line
Enel SpA
100.00%
100.00%
Electricity generation
Line-by-line
Aurora
100.00%
51.00%
from renewable
resources
Distributed Solar
LLC
EGP BioEnergy Srl
Rome
Italy
1,000,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power Puglia Srl
EGP Diamond Vista
Wilmington
USA
1.00
USD
Electricity generation
Line-by-line
Enel Kansas LLC 100.00%
100.00%
Wind Project LLC
(Delaware)
from renewable
resources
EGP Energy Storage
Delaware
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Holdings LLC
from renewable
resources
Power North
America Inc.
EGP Geronimo
Wilmington
USA
1,000.00
USD
Holding company
Line-by-line
Enel Green
100.00%
100.00%
Holdings
Inc.
(Delaware)
Power North
America Inc.
EGP Nevada Power
Delaware
USA
-
USD
Renewable energy
Line-by-line
Enel Green
100.00%
100.00%
LLC
438
Power North
America Inc.
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
EGP Salt Wells Solar
Delaware
USA
LLC
EGP San Leandro
Delaware
USA
Microgrid I LLC
EGP Solar 1 LLC
Wilmington
USA
(Delaware)
EGP Stillwater Solar
Wilmington
USA
LLC
(Delaware)
EGP Stillwater
Solar PV II LLC
Delaware
USA
EGP Timber Hills
Los Angeles
USA
Project LLC
(California)
EGPNA Development
Wilmington
USA
Holdings LLC
(Delaware)
EGPNA Hydro
Holdings LLC
Delaware
USA
EGPNA Preferred
Delaware
USA
Holdings II LLC
EGPNA Preferred
Delaware
USA
Wind Holdings LLC
EGPNA Renewable
Delaware
USA
Energy Partners LLC
EGPNA REP
Holdings LLC
Delaware
USA
EGPNA REP Hydro
Delaware
USA
Holdings LLC
EGPNA REP Solar
Delaware
USA
Holdings LLC
EGPNA REP Wind
Delaware
USA
Holdings LLC
EGPNA Wind
Wilmington
USA
Holdings 1 LLC
(Delaware)
El Dorado Hydro LLC Los Angeles
USA
(California)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
from renewable
resources
Solar Holdings
LLC
USD
Electricity generation
Equity
Enel Stillwater
100.00%
50.00%
from renewable
resources
LLC
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
USD
Electricity generation
Line-by-line
Padoma Wind
100.00%
100.00%
from renewable
resources
Power LLC
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America
Development LLC
USD
Holding company
Line-by-line
Enel Green
100.00%
100.00%
Power North
America Inc.
USD
Holding company
Line-by-line
Enel Green
100.00%
100.00%
Power North
America Inc.
USD
Holding company
Equity
EGPNA REP
100.00%
50.00%
Wind Holdings
LLC
USD
Joint venture
Equity
EGPNA REP
50.00%
50.00%
Holdings LLC
USD
Holding company
Line-by-line
Enel Green
100.00%
100.00%
Power North
America Inc.
USD
Holding company
Equity
EGPNA
100.00%
50.00%
Renewable
Energy Partners
LLC
USD
Holding company
Equity
EGPNA
100.00%
50.00%
Renewable
Energy Partners
LLC
USD
Electricity generation
Equity
EGPNA
100.00%
50.00%
from renewable
resources
Renewable
Energy Partners
LLC
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
from renewable
resources
Wind Holdings
LLC
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
from renewable
resources
Hydro Holdings
LLC
EL Paso Solar
Bogotá DC
Colombia
300,000,000.00
COP
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
SAS ESP
Power Colombia
SAS ESP
Elcogas SA
Puertollano
Spain
809,690.40
EUR
Electricity generation
Equity
Endesa
40.99%
33.05%
Generación SA
Enel SpA
4.32%
439
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Elcomex Solar Energy
Constant‚a
Romania
4,590,000.00
RON
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Srl
from renewable
resources
Power Romania
Srl
Enel Green
0.00%
Power SpA
Elecgas SA
Santarem
Portugal
50,000.00
EUR
Combined-cycle
Equity
Endesa
50.00%
35.05%
(Pego)
electricity generation
Generación
Portugal SA
Electra Capital (RF)
Johannesburg South Africa
10,000,000.00
ZAR
Electricity generation
Line-by-line
Enel Green
60.00%
60.00%
(Pty) Ltd
from renewable
resources
Power RSA (Pty)
Ltd
Eléctrica de Jafre SA Girona
Spain
165,876.00
EUR
Electricity distribution
Equity
Endesa Red SA
52.54%
70.10%
and sale
Hidroeléctrica de
47.46%
Catalunya SL
Eléctrica de Lijar SL
Cadiz
Spain
1,081,820.00
EUR
Electricity transmission
Equity
Endesa Red SA 50.00%
35.05%
and distribution
Eléctrica Del Ebro SA
Tarragona
Spain
500,000.00
EUR
Electricity supply
Line-by-line
Endesa Red SA 100.00%
70.10%
(Sociedad Unipersonal)
Electricidad de Puerto
Cadiz
Spain
6,611,130.00
EUR
Electricity distribution
Equity
Endesa Red SA
50.00%
35.05%
Real SA
and sale
Elk Creek Hydro LLC Delaware
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
Emgesa SA ESP
Bogotá DC
Colombia
655,222,310,000.00
COP
Electricity generation
Line-by-line
Enel Américas
48.48%
25.11%
and sale
SA
Emittenti Titoli SpA
Milan
Italy
5,200,000.00
EUR
-
-
Enel SpA
10.00%
10.00%
(in liquidation)
eMotor Werks Inc.
Wilmington
USA
-
USD
Renewable energy
Line-by-line
EnerNOC Inc.
100.00%
100.00%
(Delaware)
Empresa Carbonífera
Madrid
Spain
18,030,000.00
EUR
Mining
Line-by-line
del Sur SA
Endesa
Generación SA
100.00%
70.10%
Empresa de
Santiago
Chile
250,428,941.00
CLP
Electricity transmission Line-by-line
Empresa
0.10%
60.07%
Transmisión Chena SA
Eléctrica de
Colina Ltda
Enel Distribución
Chile SA
99.90%
Empresa Distribuidora
Buenos Aires
Argentina
898,590,000.00
ARS
Electricity distribution
Line-by-line
Distrilec
56.36%
37.34%
Sur SA - Edesur
and sale
Inversora SA
Empresa Eléctrica de
Santiago
Chile
82,222,000.00
CLP
Electricity generation,
Line-by-line
Enel Distribución
100.00%
60.07%
Colina Ltda
transmission and
distribution
Chile SA
Luz Andes Ltda
0.00%
Empresa Eléctrica
Santiago
Chile
48,038,937.00
CLP
Electricity generation
Line-by-line
Enel Green
99.96%
100.00%
Enel Argentina
43.10%
SA
Panguipulli SA
from renewable
resources
Power Chile Ltda
Enel Green
0.04%
Power Latin
America SA
Empresa Eléctrica
Santiago
Chile
175,774,920,733.00
CLP
Electricity generation,
Line-by-line
Enel Generación
92.65%
33.69%
Pehuenche SA
transmission and
distribution
Chile SA
Empresa Nacional de
Santiago
Chile
12,647,752,517.00
CLP
Electricity generation
Line-by-line
Enel Green
51.00%
51.00%
Geotermia SA
from renewable
resources
Power Chile Ltda
Empresa Propietaria
Panama
Panama
58,500,000.00
USD
Electricity transmission
-
Enel SpA
11.11%
11.11%
de La Red SA
and distribution
440
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Endesa Capital SA
Madrid
Spain
60,200.00
Endesa
Oporto
Portugal
250,000.00
EUR
EUR
Comercialização de
Energia SA
Finance company
Line-by-line
Endesa SA
100.00%
70.10%
Electricity generation
Line-by-line
Endesa Energía
100.00%
70.10%
and sale
SA
Endesa Distribución
Barcelona
Spain
1,204,540,060.00
EUR
Electricity distribution
Line-by-line
Endesa Red SA 100.00%
70.10%
Eléctrica SL
Endesa Energía SA
Madrid
Spain
12,981,860.00
EUR
Marketing of energy
Line-by-line
Endesa SA
100.00%
70.10%
products
Endesa Energía XXI
Madrid
Spain
2,000,000.00
EUR
Marketing and energy-
Line-by-line
Endesa Energía
100.00%
70.10%
SL
related services
SA
Endesa Financiación
Madrid
Spain
4,621,003,006.00
EUR
Finance company
Line-by-line
Endesa SA
100.00%
70.10%
Filiales SA
Endesa Generación
Seville
Spain
63,107.00
EUR
Electricity generation
Line-by-line
Endesa SA
100.00%
70.10%
II SA
Endesa Generación
Seville
Spain
60,000.00
EUR
Subholding company in
Line-by-line
Endesa
100.00%
70.10%
Nuclear SA
the nuclear sector
Generación SA
Endesa Generación
Paço de Arcos
Portugal
50,000.00
EUR
Electricity generation
Line-by-line
Endesa Energía
0.20%
70.10%
Portugal SA
(Oeiras)
SA
Endesa
99.20%
Generación SA
Enel Green
0.40%
Power España SL
Energías de
0.20%
Aragón II SL
Endesa Generación
Seville
Spain
1,940,379,737.02
EUR
Electricity generation
Line-by-line
Endesa SA
100.00%
70.10%
SA
and sale
Endesa Ingeniería
Seville
Spain
1,000,000.00
EUR
Consulting and
Line-by-line
Endesa Red SA 100.00%
70.10%
SLU
engineering services
Endesa Medios y
Madrid
Spain
89,999,790.00
EUR
Services
Line-by-line
Endesa SA
100.00%
70.10%
Sistemas SL
(Sociedad Unipersonal)
Endesa Operaciones
Barcelona
Spain
10,138,580.00
EUR
Services
Line-by-line
Endesa Energía
100.00%
70.10%
2.00
GBP
Trading
Line-by-line
Endesa SA
100.00%
70.10%
SA
Enel Alberta Wind Inc. Calgary
Canada
16,251,021.00
(Alberta)
719,901,728.28
1,270,502,540.40
EUR
EUR
CAD
Electricity distribution
Line-by-line
Endesa SA
100.00%
Holding company
Line-by-line
Enel Iberia Srl
70.10%
70.10%
70.10%
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power Canada
Inc.
Enel Américas SA
Santiago
Chile
3,575,339,011,549.00 CLP
Holding company -
Line-by-line
Enel SpA
51.80%
51.80%
Electricity generation
and distribution
Enel Argentina SA
Buenos Aires
Argentina
514,530,000.00
ARS
Holding company
Line-by-line
Enel Américas
99.88%
51.74%
SA
Gas Atacama
0.12%
Chile SA
Enel Bella Energy
Wilmington
USA
-
USD
Renewable energy
Line-by-line
EGP Energy
100.00%
100.00%
Storage LLC
(Delaware)
Storage
Holdings LLC
Enel Brasil SA
Rio de Janeiro Brazil
6,276,994,956.09
BRL
Holding company
Line-by-line
Enel Américas
97.73%
51.61%
SA
Enel Generación
2.27%
Perú SAA
Enel Chile SA
Santiago
Chile
2,229,108,974,538.00 CLP
Holding company -
Line-by-line
Enel SpA
60.62%
60.62%
Electricity generation
and distribution
441
Y Servicios
Comerciales SL
Endesa Power Trading
London
Ltd
Endesa Red SA
Barcelona
Endesa SA
Madrid
United
Kingdom
Spain
Spain
Attachments
Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Enel CIEN SA
Rio de Janeiro Brazil
285,050,000.00
BRL
Electricity generation,
Line-by-line
Enel Brasil SA
100.00%
Consolidation
%
Group %
holding
51.61%
Enel Cove Fort II LLC Wilmington
USA
(Delaware)
Enel Cove Fort LLC Wilmington
USA
(Delaware)
-
-
transmission and
distribution
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
USD
Electricity generation
Equity
Enel Geothermal
100.00%
50.00%
from renewable
resources
LLC
Enel Distribución
Fortaleza
Brazil
615,946,885.77
BRL
Electricity distribution
Line-by-line
Enel Brasil SA
74.05%
38.22%
Ceará SA
Enel Distribución Chile
Santiago
Chile
230,137,980,270.00
CLP
Holding company -
Line-by-line
Enel Chile SA
99.09%
60.07%
SA
Electricity distribution
Enel Distribución Perú
Lima
Peru
638,563,900.00
PEN
Electricity distribution
Line-by-line
Enel Perú SAC
83.15%
43.09%
SAA
and sale
Enel Distribución
Rio de Janeiro Brazil
2,498,230,386.65
BRL
Electricity distribution
Line-by-line
Enel Brasil SA
99.79%
51.42%
Rio SA
and sale
Enel Distribuição
Goiás
Brazil
5,075,679,362.52
BRL
Electricity transmission,
Line-by-line
Enel
99.93%
51.57%
Goiás
distribution and sale
Investimentos SA
Enel Energia SpA
Rome
Italy
302,039.00
EUR
Sale of gas and
Line-by-line
Enel SpA
100.00%
100.00%
electricity
Enel Energía
Mexico City
Mexico
10,000.10
MXN
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
SA de Cv
Enel Energie
Muntenia SA
from renewable
resources
Power Mexico S
de RL de Cv
Energía Nueva
1.00%
de Iguu S de RL
de Cv
Bucharest
Romania
37,004,350.00
RON
Electricity sales
Line-by-line
Enel Investment
78.00%
78.00%
Holding BV
Enel Energie SA
Bucharest
Romania
140,000,000.00
RON
Electricity sales
Line-by-line
Enel Investment
51.00%
51.00%
Holding BV
Enel Energy South
Gauteng
South Africa
100.00
ZAR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Africa
from renewable
resources
Power SpA
Enel F2i Solare Italia
Rome
Italy
5,100,000.00
EUR
Electricity generation
Equity
Marte Srl
50.00%
50.00%
SpA
Enel Finance
Amsterdam
Netherlands
1,478,810,371.00
EUR
Holding company
Line-by-line
Enel SpA
100.00%
100.00%
International NV
Enel Fortuna SA
Panama
Panama
100,000,000.00
USD
Electricity generation
Line-by-line
Enel Green
50.06%
50.06%
from renewable
resources
Power Panama
SA
Enel Generación Chile
Santiago
Chile
552,777,320,871.00
CLP
Electricity generation,
Line-by-line
Enel Chile SA
59.98%
36.36%
SA
transmission and
distribution
Enel Generación El
Buenos Aires
Argentina
298,584,050.00
ARS
Electricity generation
Line-by-line
Enel Argentina
8.67%
34.02%
Chocón SA
and sale
SA
Enel Generación Perú
Lima
SAA
Enel Generación Piura
Lima
SA
Peru
Peru
2,545,960,353.20
PEN
Electricity generation,
Line-by-line
Enel Perú SAC
83.60%
43.30%
distribution and sales
73,982,594.00
PEN
Electricity generation
Line-by-line
Enel Perú SAC
96.50%
49.99%
Hidroinvest SA
59.00%
Enel Generación SA
Mexico City
Mexico
2,000,100.00
MXN
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
de Cv
Enel Geothermal LLC Wilmington
USA
-
USD
Electricity generation
Equity
(Delaware)
from renewable
resources
Power México S
de RL de Cv
Energía Nueva
1.00%
de Iguu S de RL
100.00%
50.00%
de Cv
EGPNA
Renewable
Energy Partners
LLC
442
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
Consolidation
method
Enel Global Thermal
Rome
Italy
1,000,000.00
EUR
Business consulting,
Line-by-line
Held by
Enel SpA
%
holding
Group %
holding
100.00%
100.00%
Generation Srl
administrative
and management
consulting and
corporate planning
Enel Green Power
Newfoundland Canada
1,000.00
CAD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
Newfoundland and
Labrador Inc.
from renewable
resources
Wind Holdings
LLC
Enel Green Power
Rome
Italy
10,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Africa Srl
Power SpA
Enel Green Power
Buenos Aires
Argentina
100,000.00
ARS
Electricity generation
Line-by-line
Enel Green
5.00%
100.00%
Argentina SA
from renewable
resources
Power Latin
America SA
Enel Green Power
Sydney
Australia
100.00
AUD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Australia (Pty) Ltd
from renewable
resources
Power SpA
Enel Green Power
Sydney
Australia
100.00
AUD
Renewable energy
Line-by-line
Enel Green
100.00%
100.00%
Australia Trust
Power SpA
Enel Green Power
Niterói
Brazil
1,000,000.00
BRL
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
Enel Green
95.00%
Power SpA
Boa Vista Eólica SA
(Rio de Janeiro)
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green
1.00%
Power
Desenvolvimento
Ltda
Enel Green Power
Rio de Janeiro Brazil
-
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Bom Jesus da Lapa
Solar SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Rio de Janeiro Brazil
4,024,724,678.00
BRL
Holding company
Line-by-line
Enel Green
0.01%
100.00%
Brasil Participações
Ltda
Power Latin
America SA
Enel Green
99.99%
Power SpA
Enel Green Power
Sofia
Bulgaria
35,231,000.00
BGN
Plant construction,
Line-by-line
Enel Green
100.00%
100.00%
Bulgaria EAD
operation and
maintenance
Power SpA
Enel Green Power
Sydney
Australia
100.00
AUD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Bungala (Pty) Ltd
from renewable
resources
Power Australia
(Pty) Ltd
Enel Green Power
Sydney
Australia
-
AUD
Renewable energy
Line-by-line
Enel Green
100.00%
100.00%
Bungala Trust
Power Australia
(Pty) Ltd
Enel Green Power
Rio de Janeiro Brazil
76,000,000.00
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Cabeça de Boi SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Goiania
Brazil
6,433,983,585.00
BRL
Electricity generation
Line-by-line
Enel Brasil SA
99.75%
51.48%
Cachoeira Dourada SA
and sale
Enel Green Power
Rome
Italy
10,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Calabria Srl
from renewable
resources
Power SpA
Enel Green Power
Montreal
Canada
85,681,857.00
CAD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Canada Inc.
(Quebec)
from renewable
resources
Power North
America Inc.
Enel Green Power
Santiago
Chile
842,086,000.00
USD
Electricity generation
Line-by-line
Enel Green
99.99%
100.00%
Chile Ltda
from renewable
resources
Power Latin
America SA
Hydromac
Energy Srl
0.01%
443
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Enel Green Power
Bogotá DC
Colombia
468,138,000.00
COP
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Colombia SAS ESP
from renewable
resources
Power SpA
Enel Green Power
San José
Costa Rica
27,500,000.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Costa Rica SA
from renewable
resources
Power SpA
Enel Green Power
Rio de Janeiro Brazil
144,640,892.85
BRL
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
Cristal Eólica SA
and sale from
renewable resources
Power Brasil
Participações
Ltda
Enel Green
1.00%
Power
Desenvolvimento
Ltda
Enel Green Power
Rio de Janeiro Brazil
1,000,000.00
BRL
Electricity generation
Line-by-line
Enel Green
99.90%
99.90%
Cristalândia I Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Rio de Janeiro Brazil
1,000,000.00
BRL
Electricity generation
Line-by-line
Enel Green
99.90%
99.90%
Cristalândia II Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Rio de Janeiro Brazil
70,000,000.00
BRL
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
Damascena Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green
1.00%
Power
Desenvolvimento
Ltda
Enel Green Power
Santiago
Chile
353,605,313.37
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
del Sur SpA
(formerly Parque Eólico
Renaico SpA)
and sale from
renewable resources
Power Chile Ltda
Enel Green
0.00%
Power Latin
America SA
Enel Green Power
Rio de Janeiro Brazil
70,379,344.85
BRL
Electricity generation
Line-by-line
Enel Green
99.90%
99.90%
Delfina A Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Rio de Janeiro Brazil
23,054,973.26
BRL
Electricity generation
Line-by-line
Enel Green
99.90%
99.90%
Delfina B Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Rio de Janeiro Brazil
7,298,322.77
BRL
Electricity generation
Line-by-line
Enel Green
99.90%
99.90%
Delfina C Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Rio de Janeiro Brazil
24,624,368.53
BRL
Electricity generation
Line-by-line
Enel Green
99.90%
99.90%
Delfina D Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Rio de Janeiro Brazil
24,623,467.93
BRL
Electricity generation
Line-by-line
Enel Green
99.90%
99.90%
Delfina E Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Rio de Janeiro Brazil
13,900,297.00
BRL
Electricity generation
Line-by-line
Enel Green
99.99%
100.00%
Desenvolvimento Ltda
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green
0.01%
Power Latin
America SA
444
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Enel Green Power
Rome
Italy
20,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Development Srl
from renewable
resources
Power SpA
Enel Green Power
Rio de Janeiro Brazil
135,000,000.00
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Dois Riachos Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Quito
Ecuador
26,000.00
USD
Electricity generation
Line-by-line
Enel Green
0.10%
100.00%
Ecuador SA
from renewable
resources
Power Latin
America SA
Enel Green Power
Cairo
Egypt
250,000.00
EGP
Management,
Line-by-line
Enel Green
100.00%
100.00%
Enel Green
99.90%
Power SpA
Egypt SAE
operation and
maintenance of all
types of generation
plant and their
distribution grids
Power SpA
Enel Green Power
Rio de Janeiro Brazil
177,500,000.00
BRL
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
Emiliana Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green
1.00%
Power
Desenvolvimento
Ltda
Enel Green Power
Madrid
Spain
11,152.74
EUR
Electricity generation
Line-by-line
Endesa
100.00%
70.10%
España SL
from renewable
resources
Generación SA
Enel Green Power
Rio de Janeiro Brazil
135,000,000.00
BRL
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
Esperança Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green
1.00%
Power
Desenvolvimento
Ltda
Enel Green Power
Rio de Janeiro Brazil
62,000,000.00
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Fazenda SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Rome
Italy
10,000,000.00
EUR
Electricity generation
Line-by-line
Enel Green
70.00%
70.00%
Finale Emilia Srl
from renewable
resources
Power SpA
Enel Green Power
Munich
Germany
25,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Germany GmbH
and sale
Power SpA
Enel Green Power
Amsterdam
Netherlands
10,000.00
EUR
Holding company
Line-by-line
Enel Green
100.00%
100.00%
Global Investment BV
Power SpA
Enel Green Power
Tenerife
Spain
3,012.00
EUR
Electricity generation
Line-by-line
Enel Green
65.00%
45.57%
Granadilla SL
from renewable
resources
Power España SL
Enel Green Power
Guatemala
Guatemala
100,000.00
GTQ
Holding company
Line-by-line
Enel Green
98.00%
100.00%
Guatemala SA
City
Power SpA
Energía y
2.00%
Servicios South
America SpA
Enel Green Power
Maroussi
Greece
7,852,850.00
EUR
Holding company -
Line-by-line
Enel Green
100.00%
100.00%
Hellas SA
Energy services
Power SpA
Enel Green Power
Maroussi
Greece
600,000.00
EUR
Electricity generation,
Line-by-line
Enel Green
100.00%
100.00%
Hellas Supply AS
transport, sale and
trading
Power Hellas SA
445
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Enel Green Power
Maroussi
Greece
23,599,641.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Hellas Wind Parks Of
South Evia SA
Power Hellas SA
Enel Green Power
Rio de Janeiro Brazil
-
BRL
Electricity generation
Line-by-line
Enel Green
99.99%
99.99%
Horizonte MP Solar SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Rio de Janeiro Brazil
1,639,346.69
BRL
Electricity generation
Line-by-line
Enel Green
99.90%
99.90%
Ituverava Norte Solar
SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Rio de Janeiro Brazil
1,639,346.69
BRL
Electricity generation
Line-by-line
Enel Green
99.90%
99.90%
Ituverava Solar SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Rio de Janeiro Brazil
8,513,128.89
BRL
Electricity generation
Line-by-line
Enel Green
99.90%
99.90%
Ituverava Sul Solar SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Rio de Janeiro Brazil
165,000,000.00
BRL
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
Joana Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green
1.00%
Power
Desenvolvimento
Ltda
Enel Green Power
Nairobi
Kenya
100,000.00
KES
Electricity generation,
Line-by-line
Enel Green
1.00%
100.00%
Kenya Limited
transmission,
distribution, sale and
purchase
Power RSA (Pty)
Ltd
Enel Green
99.00%
Power SpA
Enel Green Power
Santiago
Chile
827,205,371.00
USD
Holding company
Line-by-line
Enel Green
0.09%
100.00%
Latin America SA
Power SpA
Hydromac
Energy Srl
99.91%
Enel Green Power
Rio de Janeiro Brazil
70,000,000.00
BRL
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
Maniçoba Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green
1.00%
Power
Desenvolvimento
Ltda
Enel Green Power
Mexico City
Mexico
2,399,774,165.00
MXN
Holding company
Line-by-line
Enel Green
0.00%
100.00%
México S de RL de Cv
Power Latin
America SA
Enel Green
100.00%
Power SpA
Enel Green Power
Rio de Janeiro Brazil
167,000,000.00
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Modelo I Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Rio de Janeiro Brazil
147,800,000.00
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Modelo II Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
-
Morocco
1,000,000.00
MAD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Morocco SARLAU
446
from renewable
resources
Power SpA
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
Enel Green Power
Niterói
Brazil
1,000,000.00
BRL
Electricity generation
Line-by-line
Enel Green
Consolidation
%
holding
99.00%
Group %
holding
99.00%
Morro do Chapéu I
(Rio de Janeiro)
Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Niterói
Brazil
1,000,000.00
BRL
Electricity generation
Line-by-line
Enel Green
99.00%
99.00%
Morro do Chapéu II
(Rio de Janeiro)
Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Rio de Janeiro Brazil
8,513,128.89
BRL
Electricity generation
Line-by-line
Enel Green
99.90%
99.90%
Mourão SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Windhoek
Namibia
100.00
NAD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Namibia (Pty) Ltd
from renewable
resources
Power SpA
Enel Green Power
Wilmington
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
North America
(Delaware)
Development LLC
from renewable
resources
Power SpA
Enel Green Power
Wilmington
USA
50.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
North America Inc.
(Delaware)
Enel Green Power
Rio de Janeiro Brazil
Nova Lapa Solar SA
Enel Green Power
Rio de Janeiro Brazil
Nova Olinda B Solar SA
Enel Green Power
Rio de Janeiro Brazil
Nova Olinda C Solar SA
Enel Green Power
Rio de Janeiro Brazil
Nova Olinda Norte
Solar SA
Enel Green Power
Rio de Janeiro Brazil
Nova Olinda Sul Solar
SA
-
-
-
-
-
from renewable
resources
Power SpA
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power Brasil
Participações
Ltda
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power Brasil
Participações Ltda
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power Brasil
Participações
Ltda
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power Brasil
Participações
Ltda
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Panama
Panama
3,000.00
USD
Holding company
Line-by-line
Enel Green
100.00%
100.00%
Panama SA
Power SpA
Enel Green Power
Rio de Janeiro Brazil
1,000.00
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Paranapanema SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green Power
Rome
Italy
10,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Partecipazioni Speciali
Srl
from renewable
resources
Power SpA
Enel Green Power
Rio de Janeiro Brazil
178,670,000.00
BRL
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
Pau Ferro Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green
1.00%
Power
Desenvolvimento
Ltda
447
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
Enel Green Power
Rio de Janeiro Brazil
230,000,000.00
BRL
Electricity generation
Line-by-line
Enel Green
Consolidation
%
holding
99.00%
Group %
holding
100.00%
Pedra do Gerônimo
Eólica SA
from renewable
resources
Enel Green Power
Lima
Peru
387,009,088.00
PEN
Electricity generation
Line-by-line
Perú SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green
1.00%
Power
Desenvolvimento
Ltda
Empresa
Eléctrica
Panguipulli SA
0.00%
100.00%
Enel Green
100.00%
Power SpA
Enel Green Power
Rio de Janeiro Brazil
144,640,892.85
BRL
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
Primavera Eólica SA
and sale from
renewable resources
Power Brasil
Participações
Ltda
Enel Green
1.00%
Power
Desenvolvimento
Ltda
Enel Green Power
Niterói
Brazil
1,000.00
BRL
Trading
Line-by-line
Enel Brasil SA
100.00%
51.61%
Projetos I SA
(Rio de Janeiro)
Enel Green Power
Rome
Italy
1,000,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Puglia Srl
from renewable
resources
Power SpA
Enel Green Power RA
Cairo
Egypt
15,000,000.00
EGP
Design, decision,
Line-by-line
Enel Green
100.00%
100.00%
SAE
Enel Green Power
Romania Srl
Rusu de Sus
(Nus‚ eni)
operation and
maintenance of
generation plants of
all types and their
distribution grids
Power Egypt
SAE
Romania
2,430,631,000.00
RON
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power SpA
Enel Green Power
Johannesburg South Africa
1,000.00
ZAR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
RSA (Pty) Ltd
from renewable
resources
Power
Development Srl
Enel Green Power
Johannesburg South Africa
120.00
ZAR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
RSA 2 (Pty) Ltd
from renewable
resources
Power RSA (Pty)
Ltd
Enel Green Power
Niterói
Brazil
14,412,120.00
BRL
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
Salto Apiacás SA
(Rio de Janeiro)
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green
1.00%
Power
Desenvolvimento
Ltda
Enel Green Power San
Rome
Italy
10,000.00
EUR
Electricity generation
Equity
Altomonte FV
80.00%
40.00%
Gillio Srl
from renewable
resources
Srl
Enel Green Power
Rome
Italy
750,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Sannio
Power SpA
Enel Green Power
Niterói
Brazil
1,000,000.00
BRL
Electricity generation
Line-by-line
Enel Green
99.00%
99.00%
São Abraão Eólica SA
(Rio de Janeiro)
from renewable
resources
Power Brasil
Participações
Ltda
448
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
Enel Green Power
Rio de Janeiro Brazil
144,640,892.85
BRL
Electricity generation
Line-by-line
Enel Green
Consolidation
%
holding
99.00%
Group %
holding
100.00%
São Judas Eólica SA
and sale from
renewable resources
Power Brasil
Participações
Ltda
Enel Green
1.00%
Power
Desenvolvimento
Ltda
Enel Green Power
Cairo
Egypt
15,000,000.00
EGP
Design, decision,
Line-by-line
Enel Green
100.00%
100.00%
SHU SAE
management, operation
and maintenance of
generation plants of
all types and their
distribution grids
Power Egypt
SAE
Enel Green Power
Singapore
Singapore
50,000.00
SGD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Singapore Pte Ltd
from renewable
resources
Power SpA
Enel Green Power
Rome
Italy
10,000.00
EUR
Plant development,
Line-by-line
Enel Green
100.00%
100.00%
Solar Energy Srl
design, construction
and operation
Power SpA
Enel Green Power
Rome
Italy
272,000,000.00
EUR
Electricity generation
Line-by-line
Enel SpA
100.00%
100.00%
SpA
from renewable
resources
Enel Green Power
Turin
Italy
250,000.00
EUR
Electricity generation
Equity
Altomonte FV
60.00%
30.00%
Strambino Solar Srl
from renewable
resources
Srl
Enel Green Power
Rio de Janeiro Brazil
125,765,000.00
BRL
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
Tacaicó Eólica SA
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green
1.00%
Power
Desenvolvimento
Ltda
Enel Green Power
Cairo
Egypt
15,000,000.00
EGP
Design, decision,
Line-by-line
Enel Green Power
100.00%
100.00%
Tefnut SAE
management, operation
Egypt SAE
and maintenance of
generation plants of
all types and their
distribution grids
Enel Green Power
Istanbul
Turkey
61,654,658.00
TRY
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Turkey Enerjì Yatirimlari
Anonìm S¸ ìrketì
from renewable
resources
Power SpA
Enel Green Power
Montevideo
Uruguay
400,000.00
UYU
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Uruguay SA
from renewable
resources
Power SpA
Enel Green Power
Rome
Italy
1,200,000.00
EUR
Electricity generation
Line-by-line
Enel Green
51.00%
51.00%
Villoresi Srl
from renewable
resources
Power SpA
Enel Green Power
Lusaka
Zambia
15,000.00
ZMW
Electricity sales
Line-by-line
Enel Green
99,.00%
100.00%
Zambia Limited
Power Africa Srl
Enel Green
1.00%
Power RSA (Pty)
Ltd
Enel Iberia Srl
Madrid
Enel Innovation Hubs
Rome
Spain
Italy
336,142,500.00
1,000,000.00
EUR
EUR
Holding company
Line-by-line
Enel SpA
100.00%
100.00%
Civil and mechanical
Line-by-line
Enel SpA
100.00%
100.00%
Srl
engineering, water
systems
Enel Insurance NV
Amsterdam
Netherlands
60,000.00
EUR
Holding company
Line-by-line
Enel Investment
100.00%
100.00%
Holding BV
Enel Investimentos
Niterói
Brazil
3,868,678,819.00
BRL
Holding company
Line-by-line
Enel Brasil SA
100.00%
51.61%
SA
(Rio de Janeiro)
Enel Investment
Amsterdam
Netherlands
1,593,050,000.00
EUR
Holding company
Line-by-line
Enel SpA
100.00%
100.00%
Holding BV
449
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Enel Italia Srl
Rome
Italy
50,000,000.00
EUR
Personnel
Line-by-line
Enel SpA
100.00%
100.00%
administration
activities, information
technology, real estate
and business services
Enel Kansas LLC
Wilmington
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
(Delaware)
from renewable
resources
Power North
America Inc.
Enel M@P Srl
Rome
Italy
100,000.00
EUR
Metering, remote
Line-by-line
Enel SpA
100.00%
100.00%
control and connectivity
services via power line
communication
Enel Minnesota
Minneapolis
USA
Holdings LLC
(Minnesota)
Enel Nevkan Inc.
Wilmington
USA
(Delaware)
-
-
USD
Electricity generation
Line-by-line
EGP Geronimo
100.00%
100.00%
from renewable
resources
Holding Inc.
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
Enel Oil & Gas España
Madrid
Spain
33,000.00
EUR
Prospecting and
Line-by-line
Enel X Italia SpA 100.00%
100.00%
SL
development of
hydrocarbon fields
Enel Perú SAC
Lima
Peru
5,361,789,105.00
PEN
Holding company
Line-by-line
Enel Américas
100.00%
51.80%
SA
Enel Productie Srl
Bucharest
Romania
20,210,200.00
RON
Electricity generation
Line-by-line
Enel Investment
100.00%
100.00%
Holding BV
Enel Produzione SpA Rome
Italy
1,800,000,000.00
Enel Rinnovabile SA
Mexico City
Mexico
100.00
EUR
MXN
Electricity generation
Line-by-line
Enel SpA
100.00%
100.00%
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
de Cv
Power Global
Investment BV
Enel Green
1.00%
Power México S
de RL de Cv
Enel Romania SA
Judetul Ilfov
Romania
200,000.00
RON
Business services
Line-by-line
Enel Investment
100.00%
100.00%
Holding BV
Enel Rus Wind
Moscow
Russia
350,000.00
RUB
Energy services
Line-by-line
Enel Russia
100.00%
56.43%
Generation LLC
PJSC
Enel Russia PJSC
Ekaterinburg
Russia
35,371,898,370.00
RUB
Electricity generation
Line-by-line
Enel Investment
56.43%
56.43%
Holding BV
Enel Salt Wells LLC Wilmington
USA
-
USD
Electricity generation
Equity
Enel Geothermal
100.00%
50.00%
(Delaware)
from renewable
resources
LLC
Enel Saudi Arabia
Al-Khobar
Saudi Arabia
5,000,000.00
SAR
Management of
Line-by-line
e-distribuzione
60.00%
60.00%
Limited
SpA
activities associated
with participation
in tenders called
by the SEC for the
development of smart
metering and grid
automation
Enel Servicii Comune
Bucharest
Romania
33,000,000.00
RON
Energy services
Line-by-line
e-distribut¸ie
50.00%
51.00%
SA
Banat SA
e-distribut¸ie
50.00%
Dobrogea SA
Enel Sole Srl
Rome
Italy
4,600,000.00
EUR
Public lighting systems
Line-by-line
Enel X Srl
100.00%
100.00%
and services
450
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
Enel Soluções
Niterói
Brazil
5,000,000.00
BRL
Electricity generation
Line-by-line
Enel Green
Consolidation
%
holding
99.99%
Group %
holding
100.00%
Energéticas Ltda
(Rio de Janeiro)
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green
0.01%
Power
Desenvolvimento
Ltda
Enel Soluções SA
Rio de Janeiro Brazil
15,733,466.45
BRL
Electricity activities
Line-by-line
Central Geradora
0.01%
51.61%
Termelétrica
Fortaleza SA
Enel Brasil SA
99.99%
Enel Stillwater LLC
Wilmington
USA
-
USD
Electricity generation
Equity
Enel Geothermal
100.00%
50.00%
(Delaware)
from renewable
resources
LLC
Enel Surprise Valley
Wilmington
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
LLC
(Delaware)
from renewable
resources
Power North
America Inc.
Enel Texkan Inc.
Wilmington
USA
-
USD
Electricity generation
Line-by-line
Chi Power Inc.
100.00%
100.00%
(Delaware)
from renewable
resources
Enel Trade d.o.o.
Zagabria
Croatia
2,240,000.00
Enel Trade Romania
Bucharest
Romania
21,250,000.00
HRK
RON
Electricity trading
Line-by-line
Enel Trade SpA 100.00%
100.00%
Electricity sourcing and
Line-by-line
Enel Trade SpA 100.00%
100.00%
Srl
trading
Enel Trade Serbia
Beograd
Serbia
300,000.00
EUR
Electricity trading
Line-by-line
Enel Trade SpA 100.00%
100.00%
d.o.o.
Enel Trade SpA
Rome
Italy
90,885,000.00
EUR
Fuel trading and
Line-by-line
Enel SpA
100.00%
100.00%
logistics
Enel Trading Argentina
Buenos Aires
Argentina
14,010,014.00
ARS
Electricity trading
Line-by-line
Enel Américas
55.00%
51.78%
Srl
SA
Enel Argentina
45.00%
SA
Enel Trading North
-
USA
10,000,000.00
USD
Trading
Line-by-line
Enel Green
100.00%
100.00%
America LLC
Power North
America Inc.
Enel X Canada Inc.
Vancouver
Canada
1,000.00
Enel X International
Rome
Srl
Enel X Italia SpA
Enel X Mobility Srl
Enel X Srl
Enel.Factor SpA
Enel.si Srl
Rome
Rome
Rome
Rome
Rome
Italy
Italy
Italy
Italy
Italy
Italy
100,000.00
200,000,000.00
100,000.00
1,050,000.00
12,500,000.00
5,000,000.00
CAD
EUR
EUR
EUR
EUR
EUR
EUR
Holding company
Line-by-line
EnerNOC Ltd
100.00%
100.00%
Holding company
Line-by-line
Enel X Srl
100.00%
100.00%
Upstream gas
Line-by-line
Enel X Srl
100.00%
100.00%
Electric mobility
Line-by-line
Enel X Srl
100.00%
100.00%
Holding company
Line-by-line
Enel SpA
100.00%
100.00%
Factoring
Line-by-line
Enel SpA
100.00%
100.00%
Plant engineering and
Line-by-line
Enel Energia SpA 100.00%
100.00%
energy services
Enelco SA
Athens
Greece
60,108.80
EUR
Plant construction,
Line-by-line
Enel Investment
75.00%
75.00%
operation and
maintenance
Holding BV
Enelpower Contractor
Riyadh
Saudi Arabia
5,000,000.00
SAR
Plant construction,
Line-by-line
Enelpower SpA 51.00%
51.00%
and Development
Saudi Arabia Ltd
operation and
maintenance
Enelpower do Brasil
Rio de Janeiro Brazil
1,242,000.00
BRL
Electrical engineering
Line-by-line
Enel Green
99.99%
100.00%
Ltda
Power Brasil
Participações
Ltda
Enel Green
0.01%
Power Latin
America SA
Enelpower SpA
Milan
Italy
2,000,000.00
EUR
Engineering and
Line-by-line
Enel SpA
100.00%
100.00%
construction
451
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Energética de Rosselló
Barcelona
Spain
3,606,060.00
EUR
Cogeneration of
Equity
Enel Green
27.00%
AIE
electricity and heat
Power España SL
Consolidation
%
Group %
holding
18.93%
Energética Monzón
Lima
Peru
6,463,000.00
PEN
Electricity generation
Line-by-line
SAC
from renewable
resources
0.00%
100.00%
Empresa
Eléctrica
Panguipulli SA
Enel Green
100.00%
Power Perú SA
Energia Eléctrica del
Tarragona
Spain
96,160.00
EUR
Electricity generation
Line-by-line
Eléctrica
100.00%
70.10%
Ebro SA (Sociedad
Unipersonal)
and supply
del Ebro SA
(Sociedad
Unipersonal)
Energia Eolica Srl
Rome
Italy
4,840,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power SpA
Energía Global de
Mexico City
Mexico
50,000.00
MXN
Electricity generation
Line-by-line
Enel Green
99.00%
99.00%
México (Enermex) SA
de Cv
from renewable
resources
Power SpA
Energía Global
San José
Costa Rica
10,000.00
CRC
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Operaciones SA
from renewable
resources
Power Costa
Rica SA
Energía Limpia de
Mexico City
Mexico
296,822.00
MXN
Electricity generation
Held for sale
Enel Green
99.99%
100.00%
Amistad S de RL
de Cv
from renewable
resources
Power México S
de RL de Cv
Energía Limpia de Palo
Mexico City
Mexico
673,583,489.00
MXN
Electricity generation
Held for sale
Enel Green
99.99%
100.00%
Alto S de RL de Cv
from renewable
resources
Power México S
de RL de Cv
Hidroelectricidad
0.01%
del Pacífico S de
RL de Cv
Energía Marina SpA
Santiago
Chile
2,404,240,000.00
CLP
Electricity generation
Equity
Enel Green
25.00%
25.00%
from renewable
resources
Power Chile Ltda
Energía Nueva
Mexico City
Mexico
51,879,307.00
MXN
Electricity generation
Line-by-line
Enel Green
99.90%
99.91%
de Iguu S de RL de Cv
from renewable
resources
Power México S
de RL de Cv
Hidroelectricidad
0.01%
del Pacífico S de
RL de Cv
Energía Nueva
0.01%
Energía Limpia
México S de RL
de Cv
Energía Nueva
Mexico City
Mexico
5,339,650.00
MXN
Electricity generation
Line-by-line
Enel Green
0.04%
100.00%
Energía Limpia México
S de RL de Cv
from renewable
resources
Power Guatemala
SA
Enel Green
99.96%
Power SpA
Energía y Servicios
Santiago
Chile
1,000,000.00
CLP
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
South America SpA
from renewable
resources
Power SpA
Energías Alternativas
Las Palmas de
Spain
546,919.10
EUR
Electricity generation
Line-by-line
Enel Green
54.95%
38.52%
del Sur SL
Gran Canaria
from renewable
resources
Power España SL
Energías de Aragón
Zaragoza
Spain
3,200,000.00
EUR
Electricity transmission,
Line-by-line
Endesa Red SA 100.00%
70.10%
I SL
distribution and sale
Energías de Aragón
Zaragoza
Spain
18,500,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
70.10%
II SL
Power España SL
Energías de Graus SL Barcelona
Spain
1,298,160.00
EUR
Hydroelectric plants
Line-by-line
Enel Green
66.67%
46.74%
Power España SL
452
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
Energías Especiales
La Coruña
Spain
270,450.00
EUR
Electricity generation
Line-by-line
Enel Green
Consolidation
%
holding
77.00%
Group %
holding
53.98%
de Careón SA
from renewable
resources
Power España SL
Energías Especiales
Madrid
Spain
963,300.00
EUR
Electricity generation
Line-by-line
Enel Green
80.00%
56.08%
de Peña Armada SA
from renewable
resources
Power España SL
Energías Especiales
Madrid
Spain
1,722,600.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
70.10%
del Alto Ulla SA
from renewable
resources
Power España SL
Energías Especiales
Torre del Bierzo Spain
1,635,000.00
EUR
Electricity generation
Equity
Enel Green
50.00%
35.05%
del Bierzo SA
from renewable
resources
Power España SL
Energías Renovables
Mexico City
Mexico
656,615,400.00
MXN
Electricity generation
Line-by-line
Enel Green
99.99%
100.00%
La Mata SAPI de Cv
from renewable
resources
Power México S
de RL de Cv
Energie Electrique de
Tangier
Morocco
750,400,000.00
MAD
Combined-cycle
Equity
Energía Nueva
0.01%
de Iguu S de RL
de Cv
Endesa
32.00%
22.43%
Tahaddart SA
generation plants
Generación SA
Energotel AS
Bratislava
Slovakia
2,191,200.00
EUR
Operation of optical
Equity
Slovenské
20.00%
6.60%
fiber network
elektrárne AS
ENergy Hydro Piave
Soverzene
Italy
800,000.00
EUR
Electricity purchasing
Line-by-line
Enel Produzione
51.00%
51.00%
Srl
and sale
SpA
Energy Response
Melbourne
Australia
630,451.00
AUD
Renewable energy
Line-by-line
EnerNOC
100.00%
100.00%
Holdings (Pty) Ltd
Australia (Pty) Ltd
Enerlive Srl
Rome
Italy
6,520,000.00
EUR
Electricity generation
Line-by-line
Maicor Wind Srl 100.00%
100.00%
from renewable
resources
EnerNOC Australia
Melbourne
Australia
1,937,248.00
AUD
Renewable energy
Line-by-line
EnerNOC Inc.
100.00%
100.00%
(Pty) Ltd
EnerNOC Brasil
São Paulo
Brazil
117,240.00
BRL
Renewable energy
Line-by-line
EnerNOC Ireland
0.00%
Gerenciamento de
Energia
Holding Limited
EnerNOC Energy
Marathon
India
20,000,000.00
INR
Renewable energy
Line-by-line
EnerNOC Inc.
50.00%
100.00%
Intelligence Software
Chamber - A
Private Limited
EnTech Utility
50.00%
Service Bureau
Inc.
EnerNOC Federal LLC Delaware
USA
5,000.00
EnerNOC GmbH
Darmstadt
Germany
25,000.00
EnerNOC Inc.
Delaware
USA
1,000.00
USD
EUR
USD
Renewable energy
Line-by-line
EnerNOC Inc.
100.00%
100.00%
Renewable energy
Line-by-line
EnerNOC Inc.
100.00%
100.00%
Renewable energy
Line-by-line
Enel X
100.00%
100.00%
Ireland
100,000.00
EUR
Renewable energy
Line-by-line
EnerNOC Inc.
100.00%
100.00%
International Srl
Ireland
100,000.00
EUR
Renewable energy
Line-by-line
EnerNOC Ireland
100.00%
100.00%
EnerNOC Ireland
Holding Limited
EnerNOC Ireland
Limited
-
-
EnerNOC Japan K.K.
Tokyo
EnerNOC Korea
Seoul
Japan
Korea
13,200.00
120,000.00
Limited
EnerNOC Ltd
Oakville
Canada
-
EnerNOC New
Wellington
New Zealand
313,606.00
Zealand Limited
JPY
KRW
CAD
AUD
Renewable energy
Line-by-line
EnerNOC Inc.
60.00%
60.00%
Renewable energy
Line-by-line
EnerNOC Inc.
100.00%
100.00%
Holding Limited
Renewable energy
Line-by-line
EnerNOC Inc.
100.00%
100.00%
Renewable energy
Line-by-line
Energy
100.00%
100.00%
Response
Holdings (Pty) Ltd
EnerNOC Polska sp
Warsaw
Poland
100.00
EUR
Renewable energy
Line-by-line
EnerNOC Ireland
100.00%
100.00%
Z oo
Holding Limited
EnerNOC (Pty) Ltd
Melbourne
Australia
9,880.00
AUD
Renewable energy
Line-by-line
Energy
100.00%
100.00%
Response
Holdings (Pty) Ltd
EnerNOC Taiwan Ltd
Taipei City
Taiwan
44,776,120.00
EUR
Renewable energy
Line-by-line
EnerNOC Ireland
67.00%
67.00%
EnerNOC UK II Limited London
United
Kingdom
1,000.00
GBP
Renewable energy
Line-by-line
EnerNOC UK
100.00%
100.00%
Holding Limited
Limited
453
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
EnerNOC UK Limited
London
EnTech (China)
-
Information Technology
Co Ltd
United
Kingdom
China
100,000.00
GBP
Renewable energy
Line-by-line
EnerNOC Inc.
100.00%
100.00%
1,500.00
EUR
Renewable energy
Equity
EnerNOC UK II
50.00%
50.00%
Limited
EnTech Utility Service
Delaware
USA
1,500.00
USD
Renewable energy
Line-by-line
EnerNOC Inc.
100.00%
100.00%
Bureau Inc.
Eólica del Noroeste
La Coruña
Spain
36,100.00
EUR
Plant development and
Line-by-line
Enel Green
51.00%
35.75%
SL
construction
Power España SL
Eólica del Principado
Oviedo
Spain
60,000.00
EUR
Electricity generation
Equity
Enel Green
40.00%
28.04%
SAU
from renewable
resources
Power España SL
Eólica Fazenda
Niterói
Brazil
7,859,906.00
BRL
Wind plants
Line-by-line
Enel Brasil SA
100.00%
51.58%
Nova - Generação e
(Rio de Janeiro)
Comercialização de
Energia SA
Eólica Valle del Ebro
Zaragoza
Spain
5,559,340.00
EUR
Electricity generation
Line-by-line
Enel Green
50.50%
35.40%
SA
from renewable
resources
Power España SL
Eólica Zopiloapan
Mexico City
Mexico
1,877,201.54
MXN
Electricity generation
Line-by-line
Enel Green
56.98%
96.48%
SAPI de Cv
from renewable
resources
Power México S
de RL de Cv
Enel Green
39.50%
Power
Partecipazioni
Speciali Srl
Eólicas de Agaete SL
Las Palmas de
Spain
240,400.00
EUR
Electricity generation
Line-by-line
Enel Green
80.00%
56.08%
Gran Canaria
from renewable
resources
Power España SL
Eólicas de
Las Palmas de
Spain
216,360.00
EUR
Electricity generation
Line-by-line
Enel Green
55.00%
38.56%
Fuencaliente SA
Gran Canaria
from renewable
resources
Power España SL
Eólicas de
Fuerteventura
Spain
-
EUR
Electricity generation
Equity
Enel Green
40.00%
28.04%
Fuerteventura AIE
(Las Palmas)
from renewable
resources
Power España SL
Eólicas de La
Patagonia SA
Buenos Aires
Argentina
480,930.00
ARS
Electricity generation
-
Enel Green
50.00%
35.05%
from renewable
resources
Power España SL
Eólicas de Lanzarote
Las Palmas de
Spain
1,758,000.00
EUR
Electricity generation
Equity
Enel Green
40.00%
28.04%
SL
Gran Canaria
and distribution
Power España SL
Eólicas de Tenerife
Santa Cruz de
Spain
420,708.40
EUR
Electricity generation
Equity
Enel Green
50.00%
35.05%
AIE
Tenerife
from renewable
resources
Power España SL
Eólicas de Tirajana
Las Palmas de
Spain
-
EUR
Electricity generation
Line-by-line
Enel Green
60.00%
42.06%
AIE
Gran Canaria
from renewable
resources
Power España SL
Empresa Energía SA
Cadiz
Spain
2,500,000.00
Erdwärme Oberland
Munich
Germany
154,011.00
EUR
EUR
Electricity supply
Equity
Endesa Red SA 50.00%
Electricity generation
Line-by-line
Enel Green
85.17%
35.05%
85.17%
GmbH
from renewable
resources
Power SpA
Erecosalz SL
Zaragoza
Spain
18,030.36
EUR
Electricity generation
-
Enel Green
33.00%
23.13%
from renewable
resources
Power España SL
Essex Company LLC
Boston
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
(Massachusetts)
from renewable
resources
Hydro Holdings
LLC
Estrellada SA
Montevideo
Uruguay
448,000.00
UYU
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power Uruguay
SA
Explotaciones Eólicas
Zaragoza
Spain
3,505,000.00
EUR
Electricity generation
Line-by-line
Enel Green
70.00%
49.07%
de Escucha SA
from renewable
resources
Power España SL
Explotaciones Eólicas
Teruel
Spain
3,230,000.00
EUR
Electricity generation
Line-by-line
Enel Green
73.60%
51.59%
El Puerto SA
from renewable
resources
Power España SL
Explotaciones Eólicas
Zaragoza
Spain
100,000.00
EUR
Electricity generation
Line-by-line
Enel Green
51.00%
35.75%
Santo Domingo de
Luna SA
454
from renewable
resources
Power España SL
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
Explotaciones Eólicas
Zaragoza
Spain
5,488,500.00
EUR
Electricity generation
Line-by-line
Enel Green
Consolidation
%
holding
65.00%
Group %
holding
45.57%
Saso Plano SA
from renewable
resources
Power España SL
Explotaciones Eólicas
Zaragoza
Spain
8,046,800.00
EUR
Electricity generation
Line-by-line
Enel Green
90.00%
63.09%
Sierra Costera SA
from renewable
resources
Power España SL
Explotaciones Eólicas
Zaragoza
Spain
4,200,000.00
EUR
Electricity generation
Line-by-line
Enel Green
90.00%
63.09%
Sierra La Virgen SA
from renewable
resources
Power España SL
Florence Hills LLC
Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
(Minnesota)
from renewable
resources
Wind LLC
Fowler Hydro LLC
Delaware
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
Fulcrum LLC
Boise
(Idaho)
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
from renewable
resources
Hydro Holdings
LLC
Furatena Solar 1 SLU Seville
Spain
3,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
70.10%
from renewable
resources
Power España SL
Garob Wind Farm
Gauteng
South Africa
100.00
ZAR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
(Pty) Ltd
from renewable
resources
Power RSA (Pty)
Ltd
Gas Atacama Chile
Santiago
Chile
589,318,016,243.00
CLP
Electricity generation
Line-by-line
Enel Chile SA
2.63%
37.00%
SA
Gas y Electricidad
Palma de
Spain
213,775,700.00
EUR
Electricity generation
Line-by-line
Generación SAU
Mallorca
Enel Generación
97.37%
Chile SA
Endesa
Generación SA
100.00%
70.10%
Gasoducto Atacama
Santiago
Chile
208,173,124.00
USD
Natural gas transport
Line-by-line
Enel Generación
0.03%
37.00%
Argentina SA
Chile SA
Gas Atacama
99.97%
Chile SA
Gasoducto Atacama
Buenos Aires
Argentina
-
ARS
Natural gas transport
Line-by-line
Gasoducto
100.00%
37.00%
Argentina SA Sucursal
Argentina
Atacama
Argentina SA
Gauley Hydro LLC
Wilmington
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
(Delaware)
Willison
(Vermont)
Gauley River
Management
Corporation
from renewable
resources
Power North
America Inc.
USA
1.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
Gauley River Power
Willison
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
Partners LLC
(Vermont)
from renewable
resources
Hydro Holdings
LLC
Generadora de
Occidente Ltda
Guatemala
Guatemala
16,261,697.33
GTQ
Electricity generation
Line-by-line
Enel Green
1.00%
100.00%
City
from renewable
resources
Power Guatemala
SA
Generadora Eólica
Panama
Panama
10,000.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Alto Pacora SA
from renewable
resources
Power Panama
SA
Generadora Estrella
Panama
Panama
10,000.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Solar SA
from renewable
resources
Power Panama
SA
Generadora
Panama
Panama
10,000.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Fotovoltaica Chiriquí SA
from renewable
resources
Power Panama
SA
Enel Green
99.00%
Power SpA
455
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Generadora
Guatemala
Guatemala
3,820,000.00
GTQ
Electricity generation
Line-by-line
Enel Green
0.01%
100.00%
Montecristo SA
City
from renewable
resources
Power Guatemala
SA
Enel Green
99.99%
Power SpA
Generadora Solar
Panama
Panama
10,000.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Caldera SA
from renewable
resources
Power Panama
SA
Generadora Solar
Panama
Panama
10,000.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Tolé SA
from renewable
resources
Power Panama
SA
Geotérmica del Norte
Santiago
Chile
326,577,419,702.00
CLP
Electricity generation
Line-by-line
Enel Green
84.59%
84.59%
SA
from renewable
resources
Power Chile Ltda
Gibson Bay Wind
Johannesburg South Africa
1,000.00
ZAR
Electricity generation
Line-by-line
Enel Green
60.00%
60.00%
Farm (RF) (Pty) Ltd
from renewable
resources
Power RSA (Pty)
Ltd
Global Energy
Delaware
USA
100,000.00
USD
Renewable energy
Line-by-line
EnerNOC Inc.
100.00%
100.00%
Partners Inc.
Global Energy
Partners LLC
Delaware
USA
-
USD
Renewable energy
Line-by-line
Global Energy
100.00%
100.00%
Partners Inc.
Gnl Chile SA
Santiago
Chile
3,026,160.00
USD
Design and LNG supply Equity
Enel Generación
33.33%
12.12%
Chile SA
Goodwell Wind
Wilmington
USA
-
USD
Electricity generation
Equity
Origin Goodwell
100.00%
50.00%
Project LLC
(Delaware)
from renewable
resources
Holdings LLC
Goodyear Lake Hydro
Delaware
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
LLC
from renewable
resources
Power North
America Inc.
Gorona del Viento El
Valverde de El
Spain
30,936,736.00
EUR
Development and
Equity
Unión Eléctrica
23.21%
16.27%
Hierro SA
Hierro
maintenance of El
Hierro generation plant
de Canarias
Generación SAU
Guadarranque Solar 4
Seville
Spain
3,006.00
EUR
Electricity generation
Line-by-line
Endesa
100.00%
70.10%
SL Unipersonal
from renewable
resources
Generación II SA
GV Energie
Bucharest
Romania
1,145,400.00
RON
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Rigenerabili ITAL-RO
Srl
from renewable
resources
Power Romania
Srl
Enel Green
0.00%
Power SpA
Hadley Ridge LLC
Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
(Minnesota)
from renewable
resources
Wind LLC
Hastings Solar LLC
Delaware
USA
-
USD
Electricity generation
Line-by-line
Aurora
100.00%
51.00%
from renewable
resources
Distributed Solar
LLC
Hidroeléctrica de
Barcelona
Spain
126,210.00
EUR
Electricity transmission
Line-by-line
Endesa Red SA 100.00%
70.10%
Catalunya SL
and distribution
Hidroeléctrica de
Lugo
Spain
1,608,200.00
EUR
Electricity generation
Equity
Enel Green
30.00%
21.03%
Ourol SL
from renewable
resources
Power España SL
Hidroeléctrica Don
San José
Costa Rica
10,000.00
CRC
Electricity generation
Line-by-line
Enel Green
65.00%
65.00%
Rafael SA
from renewable
resources
Power Costa
Rica SA
Hidroelectricidad del
Mexico City
Mexico
30,890,736.00
MXN
Electricity generation
Line-by-line
Enel Green
99.99%
99.99%
Pacífico S de RL de Cv
from renewable
resources
Power México S
de RL de Cv
Hidroflamicell SL
Barcelona
Spain
78,120.00
EUR
Electricity distribution
Line-by-line
Hidroeléctrica de
75.00%
52.58%
and sale
Catalunya SL
456
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Hidroinvest SA
Buenos Aires
Argentina
55,312,093.00
ARS
Holding company
Line-by-line
Enel Américas
41.94%
Consolidation
%
Group %
holding
50.06%
SA
Enel Argentina
54.76%
SA
Hidromondego -
Lisbon
Portugal
3,000.00
EUR
Hydroelectric power
Line-by-line
Endesa
10.00%
70.10%
Hidroeléctrica do
Mondego Lda
Generación
Portugal SA
Endesa
90.00%
Generación SA
High Shoals LLC
Delaware
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
from renewable
resources
Hydro Holdings
LLC
High Street
Melbourne
Australia
-
AUD
Renewable energy
Line-by-line
Energy
100.00%
100.00%
Corporation (Pty) Ltd
Response
Holdings (Pty) Ltd
Highfalls Hydro
Wilmington
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Company Inc.
(Delaware)
HillTopper Wind
Wilmington
USA
Holdings LLC
(Delaware)
HillTopper Wind
Dover
USA
Power LLC
(Delaware)
-
-
from renewable
resources
Power North
America Inc.
USD
Renewable energy
Line-by-line
Enel Kansas LLC 70.00%
70.00%
USD
Wind power
Line-by-line
HillTopper Wind
100.00%
70.00%
Holdings LLC
Hispano Generación
Jerez de los
Spain
3,500.00
EUR
Electricity generation
Line-by-line
Enel Green
51.00%
35.75%
de Energía Solar SL
Caballeros
(Badajoz)
from renewable
resources
Power España SL
Hope Creek LLC
Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
(Minnesota)
from renewable
resources
Wind LLC
Hydro Development
Albany
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
Group Acquisition LLC
(New York)
Hydro Energies
Corporation
Willison
(Vermont)
from renewable
resources
Hydro Holdings
LLC
USA
5,000.00
USD
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
Hydrogen Park -
Venice
Italy
245,000.00
EUR
Development of
Line-by-line
Enel Produzione
65.85%
65.85%
Marghera per
l’idrogeno Scrl
Hydromac Energy Srl Rome
I-EM Srl
Turin
Italy
Italy
studies and projects for
the use of hydrogen
SpA
18,000.00
EUR
Holding company
Line-by-line
Enel Green
100.00%
100.00%
Power SpA
28,571.43
EUR
Design and
Equity
Enel X Srl
30.00%
30.00%
development
Ingendesa do Brasil
Rio de Janeiro Brazil
500,000.00
BRL
Design, engineering
Line-by-line
Enel Generación
1.00%
36.99%
Ltda (in liquidation)
and consulting
Chile SA
Inkolan Información y
Bilbao
Spain
84,140.00
EUR
Information on
Equity
Coordinación de obras
AIE
infrastructure of Inkolan
associates
Gas Atacama
99.00%
Chile SA
Endesa
Distribución
Eléctrica SL
12.50%
8.76%
International Endesa
Amsterdam
Netherlands
15,428,520.00
EUR
Holding company
Line-by-line
Endesa SA
100.00%
70.10%
BV
International
Rome
Italy
24,000.00
EUR
Training
-
Enel Italia Srl
13.04%
13.04%
Multimedia University
Srl (in liquidation)
Inversora Codensa
Bogotá DC
Colombia
5,000,000.00
COP
Electricity transmission
Line-by-line
Codensa SA ESP 100.00%
25.07%
SAS
and distribution
Inversora Dock Sud
Buenos Aires
Argentina
241,490,000.00
ARS
Holding company
Line-by-line
Enel Américas
57.14%
29.60%
SA
SA
Isamu Ikeda Energia
Rio de Janeiro Brazil
61,474,475.77
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
SA
and sale
Power Brasil
Participações
Ltda
457
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Italgest Energy (Pty)
Johannesburg South Africa
1,000.00
ZAR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Ltd
from renewable
resources
Power RSA (Pty)
Ltd
Jack River LLC
Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
(Minnesota)
from renewable
resources
Wind LLC
Jessica Mills LLC
Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
(Minnesota)
from renewable
resources
Wind LLC
JuiceNet GmbH
Berlin
Germany
25,000.00
EUR
Renewable energy
Line-by-line
eMotor Werks
100.00%
100.00%
Inc.
JuiceNet Ltd
London
United
Kingdom
1.00
GBP
-
Line-by-line
eMotor Werks
100.00%
100.00%
Inc.
Julia Hills LLC
Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
(Minnesota)
from renewable
resources
Wind LLC
Kalenta SA
Maroussi
Greece
4,359,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power Solar
Energy Srl
Kavacik Eolìco Enerjì
Istanbul
Turkey
9,000,000.00
TRY
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Elektrìc Üretìm ve
Tìcaret Anonìm S¸ ìrketì
from renewable
resources
Power Turkey
Enerjì Yatirimlari
Anonìm S¸ ìrketì
Kelley’s Falls LLC
Delaware
USA
-
USD
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
Kings River Hydro
Wilmington
USA
100.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Company Inc.
(Delaware)
from renewable
resources
Power North
America Inc.
Kingston Energy
Wilmington
USA
-
USD
Renewable energy
Line-by-line
EGP Energy
100.00%
100.00%
Storage LLC
(Delaware)
Storage Holdings
LLC
Kinneytown Hydro
Wilmington
USA
100.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Company Inc.
(Delaware)
from renewable
resources
Power North
America Inc.
Kino Contractor SA
Mexico City
Mexico
100.00
MXN
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
de Cv
from renewable
resources
Power México S
de RL de Cv
Kino Facilities
Mexico City
Mexico
100.00
MXN
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
Manager SA de Cv
from renewable
resources
Power México S
de RL de Cv
Hidroelectricidad
1.00%
del Pacífico S de
RL de Cv
Hidroelectricidad
1.00%
del Pacífico S de
RL de Cv
Kirklarelì Eolìko Enerjì
Istanbul
Turkey
5,250,000.00
TRY
-
Line-by-line
Enel Green
100.00%
100.00%
Elektrìk Üretìm ve
Tìcaret Anonìm S¸ ìrketì
Power Turkey
Enerjì Yatirimlari
Anonìm S¸ ìrketì
Kongul Enerjì Sanayi
Istanbul
Turkey
125,000,000.00
TRY
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
ve Tìcaret Anonìm
S¸ ìrketì
from renewable
resources
Power Turkey
Enerjì Yatirimlari
Anonìm S¸ ìrketì
Kromschroeder SA
Barcelona
Spain
627,126.00
EUR
Services
Equity
Endesa Medios
29.26%
20.51%
y Sistemas
SL (Sociedad
Unipersonal)
La Pereda CO2 AIE
Oviedo
Spain
224,286.00
EUR
Services
Equity
Endesa
33.33%
23.36%
Generación SA
458
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
LaChute Hydro
Wilmington
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
Company LLC
(Delaware)
from renewable
resources
Hydro Holdings
LLC
Consolidation
%
Group %
holding
50.00%
Lake Emily Solar LLC Delaware
USA
-
USD
Electricity generation
Line-by-line
Aurora
100.00%
51.00%
from renewable
resources
Distributed Solar
LLC
Lake Pulaski Solar
Delaware
USA
-
USD
Electricity generation
Line-by-line
Aurora
100.00%
51.00%
LLC
Land Run Wind
Wilmington
USA
Project LLC
(Delaware)
Lawrence Creek Solar
Minneapolis
USA
LLC
(Minnesota)
-
-
from renewable
resources
Distributed Solar
LLC
USD
Renewable energy
Line-by-line
Sundance Wind
100.00%
100.00%
Project LLC
USD
-
Line-by-line
Aurora
100.00%
51.00%
Distributed Solar
LLC
Lindahl Wind
Holdings LLC
Delaware
USA
-
USD
Electricity generation
Line-by-line
EGPNA Preferred
100.00%
50.00%
from renewable
resources
Wind Holdings
LLC
Lindahl Wind Project
Delaware
USA
-
USD
Electricity generation
Equity
Lindahl Wind
100.00%
50.00%
LLC
from renewable
resources
Holdings LLC
Little Elk Wind
Delaware
USA
-
USD
Electricity generation
Line-by-line
Enel Kansas LLC 100.00%
100.00%
Holdings LLC
from renewable
resources
Little Elk Wind Project
Oklahoma City
USA
-
USD
Electricity generation
Line-by-line
Little Elk Wind
100.00%
100.00%
LLC
(Oklahoma)
from renewable
resources
Holdings LLC
Littleville Power
Boston
USA
1.00
USD
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
Company Inc.
(Massachusetts)
from renewable
resources
Power North
America Inc.
Llano Sánchez Solar
Panama
Panama
10,000.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Power One SA
from renewable
resources
Power Panama
SA
Llano Sánchez Solar
Panama
Panama
10,000.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Power Cuatro SA
from renewable
resources
Power Panama
SA
Llano Sánchez Solar
Panama
Panama
10,000.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Power Tres SA
from renewable
resources
Power Panama
SA
LLC Azovskaya VES Moscow
Russia
10,000.00
RUB
Electricity generation
Line-by-line
Enel Russia
100.00%
56.43%
Lone Pine Wind Inc.
Lone Pine Wind
Project LP
-
-
Canada
-
CAD
Renewable energy
Line-by-line
Enel Green
10.00%
10.00%
from renewable
resources
PJSC
Power Canada
Inc.
Canada
-
CAD
Renewable energy
Line-by-line
Enel Green
10.00%
10.00%
Power Canada
Inc.
Lower Saranac Hydro
Delaware
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
Partners LLC
from renewable
resources
Hydro Holdings
LLC
Lower Saranac Hydro
Delaware
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
LLC
from renewable
resources
Power North
America Inc.
Lower Valley LLC
Delaware
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
Lowline Rapids LLC
Delaware
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
from renewable
resources
Hydro Holdings
LLC
Luz Andes Ltda
Santiago
Chile
1,224,348.00
CLP
Electricity transmission,
Line-by-line
Enel Chile SA
0.10%
60.07%
distribution and sale
and fuels
Enel Distribución
99.90%
Chile SA
459
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Maicor Wind Srl
Rome
Italy
20,850,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power SpA
Marte Srl
Rome
Italy
5,100,000.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power SpA
Marudhar Wind
Gurgaon
India
100,000.00
INR
Electricity transmission,
Line-by-line
BLP Energy
99.00%
75.79%
Energy Private Limited
distribution and sale
Private Limited
Más Energía S de RL
Mexico City
Mexico
100.00
MXN
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
de Cv
from renewable
resources
Power México S
de RL de Cv
Hidroelectricidad
1.00%
del Pacífico S de
RL de Cv
Mascoma Hydro
Concord
USA
1.00
USD
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
Corporation
(New
Hampshire)
from renewable
resources
Power North
America Inc.
Mason Mountain
Wilmington
USA
-
USD
Electricity generation
Line-by-line
Padoma Wind
100.00%
100.00%
Wind Project LLC
(Delaware)
from renewable
resources
Power LLC
Matrigenix
(Pty) Ltd
Houghton
South Africa
1,000.00
ZAR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power RSA (Pty)
Ltd
Medidas Ambientales
Medina de
Spain
60,100.00
EUR
Environmental studies Equity
Nuclenor SA
50.00%
17.53%
SL
Pomar (Burgos)
Metro Wind LLC
Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
(Minnesota)
from renewable
resources
Wind LLC
Mexicana de
Mexico City
Mexico
181,728,901.00
MXN
Electricity generation
Line-by-line
Enel Green
99.99%
99.99%
Hidroelectricidad
Mexhidro S de RL
de Cv
from renewable
resources
Power México S
de RL de Cv
Mibgas SA
Madrid
Spain
3,000,000.00
Mill Shoals Hydro
Wilmington
USA
-
Company I LLC
(Delaware)
EUR
USD
Gas market operator
-
Endesa SA
1.35%
0.95%
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
Minicentrales
Zaragoza
Spain
1,202,000.00
EUR
Hydroelectric plants
-
Enel Green
15.00%
10.52%
del Canal de las
Bárdenas AIE
Power España SL
Minicentrales
Zaragoza
Spain
1,820,000.00
EUR
Hydroelectric plants
Equity
Enel Green
36.50%
25.59%
del Canal Imperial-
Gallur SL
Power España SL
Mira Energy (Pty) Ltd Houghton
South Africa
100.00
ZAR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power RSA (Pty)
Ltd
Missisquoi Associates
Los Angeles
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
LLC
(California)
from renewable
resources
Hydro Holdings
LLC
Montrose Solar LLC
Delaware
USA
-
USD
Electricity generation
Line-by-line
Aurora
100.00%
51.00%
from renewable
resources
Distributed Solar
LLC
Navalvillar S olar SL
Valencia
Spain
3,000.00
EUR
Photovoltaic systems
Line-by-line
Enel Green
100.00%
70.10%
Power España SL
Nevkan Renewables
Wilmington
USA
-
USD
Electricity generation
Line-by-line
Enel Nevkan Inc. 100.00%
100.00%
LLC
(Delaware)
from renewable
resources
Newbury Hydro
Delaware
USA
-
USD
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
Company LLC
from renewable
resources
Power North
America Inc.
Ngonye Power
Lusaka
Zambia
10,000.00
ZMW
Electricity sales
Line-by-line
Enel Green
80.00%
80.00%
Company Limited
Power Africa Srl
460
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
Nojoli Wind Farm (RF)
Johannesburg South Africa
10,000,000.00
ZAR
Electricity generation
Line-by-line
Enel Green
Consolidation
%
holding
60.00%
Group %
holding
60.00%
(Pty) Ltd
North Canal
Waterworks
Boston
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
(Massachusetts)
from renewable
resources
Power North
America Inc.
from renewable
resources
Power RSA (Pty)
Ltd
Northwest Hydro
Wilmington
USA
-
USD
Electricity generation
Line-by-line
Chi West LLC
100.00%
100.00%
LLC
(Delaware)
from renewable
resources
Notch Butte Hydro
Wilmington
USA
100.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Company Inc.
(Delaware)
from renewable
resources
Power North
America Inc.
Nuclenor SA
Burgos
Spain
102,000,000.00
EUR
Nuclear plants
Equity
Endesa
50.00%
35.05%
Generación SA
Nuove Energie Srl
Porto
Italy
5,204,028.73
EUR
Construction and
Line-by-line
Enel Trade SpA 100.00%
100.00%
Empedocle
management of
LNG regasification
infrastructure
Nxuba Wind Farm
Gauteng
South Africa
1,000.00
ZAR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
(Pty) Ltd
from renewable
resources
Power RSA 2
(Pty) Ltd
NYC Storage (353
Wilmington
USA
1.00
USD
-
Line-by-line
Demand Energy
100.00%
100.00%
Chester) SPE LLC
(Delaware)
Networks Inc.
Ochrana A
Mochovce
Slovakia
33,193.92
EUR
Security services
Equity
Slovenské
100.00%
33.00%
Bezpecnost Se AS
elektrárne AS
OGK-5 Finance LLC Moscow
Russia
10,000,000.00
RUB
Finance company
Line-by-line
Enel Russia
100.00%
56.43%
PJSC
OpEn Fiber SpA
Milan
Italy
250,000,000.00
EUR
Installation,
Equity
Enel SpA
50.00%
50.00%
maintenance and repair
of electronic plant
Origin Goodwell
Wilmington
USA
-
USD
Electricity generation
Equity
EGPNA Wind
100.00%
50.00%
Holdings LLC
(Delaware)
from renewable
resources
Holdings 1 LLC
Origin Wind Energy
Wilmington
USA
-
USD
Electricity generation
Equity
Origin Goodwell
100.00%
50.00%
LLC
(Delaware)
from renewable
resources
Holdings LLC
Osage Wind Holdings
Delaware
USA
-
USD
Electricity generation
Line-by-line
Enel Kansas
50.00%
50.00%
LLC
from renewable
resources
LLC
Osage Wind LLC
Delaware
USA
-
USD
Electricity generation
Line-by-line
Osage Wind
100.00%
50.00%
from renewable
resources
Holdings LLC
Ottauquechee Hydro
Wilmington
USA
100.00
USD
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
Company Inc.
(Delaware)
from renewable
resources
Power North
America Inc.
Ovacik Eolìko Enerjì
Istanbul
Turkey
11,250,000.00
TRY
-
Line-by-line
Enel Green
100.00%
100.00%
Elektrìk Üretìm ve
Tìcaret Anonìm S¸ ìrketì
Power Turkey
Enerjì Yatirimlari
Anonìm S¸ ìrketì
Oxagesa AIE
Teruel
Spain
6,010.00
EUR
Cogeneration of
Equity
Enel Green
33.33%
23.36%
electricity and heat
Power España SL
Oyster Bay Wind
Cape Town
South Africa
1,000.00
ZAR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Farm (Pty) Ltd
from renewable
resources
Power RSA (Pty)
Ltd
P.V. Huacas SA
San José
Costa Rica
10,000.00
CRC
Electricity generation
Line-by-line
Enel Green
65.00%
65.00%
from renewable
resources
Power Costa
Rica SA
Padoma Wind Power
Los Angeles
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
LLC
(California)
from renewable
resources
Power North
America Inc.
Palo Alto Farms Wind
Dallas
USA
-
USD
Electricity generation
Line-by-line
Enel Kansas LLC 100.00%
100.00%
Project LLC
(Texas)
from renewable
resources
461
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Paravento SL
Lugo
Spain
3,006.00
EUR
Electricity generation
Line-by-line
Enel Green
90.00%
Consolidation
%
Group %
holding
63.09%
from renewable
resources
Power España SL
Parc Eòlic La Tossa-La
Madrid
Spain
1,183,100.00
EUR
Electricity generation
Equity
Enel Green
30.00%
21.03%
Mola D’en Pascual SL
from renewable
resources
Power España SL
Parc Eòlic Los Aligars
Madrid
Spain
1,313,100.00
EUR
Electricity generation
Equity
Enel Green
30.00%
21.03%
SL
from renewable
resources
Power España SL
Parque Amistad II SA
Mexico City
Mexico
100.00
MXN
Electricity generation
Line-by-line
Enel Rinnovabile
99.00%
100.00%
de Cv
from renewable
resources
SA de Cv
Hidroelectricidad
1.00%
del Pacífico S de
RL de Cv
Parque Amistad III SA
Mexico City
Mexico
100.00
MXN
Electricity generation
Line-by-line
Enel Rinnovabile
99.00%
100.00%
de Cv
from renewable
resources
SA de Cv
Hidroelectricidad
1.00%
del Pacífico S de
RL de Cv
Parque Amistad IV SA
Mexico City
Mexico
100.00
MXN
Electricity generation
Line-by-line
Enel Rinnovabile
99.00%
100.00%
de Cv
from renewable
resources
SA de Cv
Hidroelectricidad
1.00%
del Pacífico S de
RL de Cv
Parque Eólico A
Santiago de
Spain
5,857,586.40
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
70.10%
Capelada SL
Compostela
(Sociedad Unipersonal)
from renewable
resources
Power España SL
Parque Eólico
Las Palmas de
Spain
1,603,000.00
EUR
Electricity generation
Line-by-line
Enel Green
80.00%
56.08%
Carretera de Arinaga
Gran Canaria
SA
from renewable
resources
Power España SL
Parque Eólico de
La Coruña
Spain
3,606,000.00
EUR
Electricity generation
Line-by-line
Enel Green
75.00%
52.58%
Barbanza SA
from renewable
resources
Power España SL
Parque Eólico de
Madrid
Spain
120,400.00
EUR
Electricity generation
Line-by-line
Enel Green
50.16%
35.16%
Belmonte SA
from renewable
resources
Power España SL
Parque Eólico de San
La Coruña
Spain
552,920.00
EUR
Electricity generation
Line-by-line
Enel Green
82.00%
57.48%
Andrés SA
from renewable
resources
Power España SL
Parque Eólico
Las Palmas de
Spain
901,500.00
EUR
Electricity generation
Line-by-line
Enel Green
66.33%
46.50%
de Santa Lucía SA
Gran Canaria
from renewable
resources
Power España SL
Parque Eólico Delfina
Rio de Janeiro Brazil
6,963,977.00
BRL
Electricity generation
Line-by-line
Enel Green
99.99%
100.00%
Ltda
from renewable
resources
Power Brasil
Participações
Ltda
Enel Green
0.01%
Power
Desenvolvimento
Ltda
Parque Eólico Farlan
Madrid
Spain
3,006.00
EUR
Wind plants
Line-by-line
Enel Green
100.00%
70.10%
SL
Power España SL
Parque Eólico Finca
Las Palmas de
Spain
3,810,340.00
EUR
Plant construction and
Line-by-line
Enel Green
90.00%
63.09%
de Mogán SA
Gran Canaria
operation
Power España SL
Parque Eólico Montes
Madrid
Spain
6,540,000.00
EUR
Plant construction and
Line-by-line
Enel Green
75.50%
52.93%
de Las Navas SA
operation
Power España SL
Parque Eólico
Madrid
Spain
3,006.00
EUR
Wind plants
Line-by-line
Enel Green
100.00%
70.10%
Muniesa SL
462
Power España SL
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Parque Eólico Punta
Tenerife
Spain
528,880.00
EUR
Electricity generation
Line-by-line
Enel Green
52.00%
Consolidation
%
Group %
holding
36.45%
de Teno SA
from renewable
resources
Power España SL
Parque Eólico Sierra
Soria
Spain
7,193,970.00
EUR
Electricity generation
Line-by-line
Enel Green
58.00%
40.66%
del Madero SA
from renewable
resources
Power España SL
Parque Eólico Taltal
Santiago
Chile
20,878,010,000.00
CLP
Electricity generation
Line-by-line
Enel Green
99.99%
100.00%
SA
from renewable
resources
Power Chile Ltda
Enel Green
0.01%
Power Latin
America SA
Parque Eólico Valle
Santiago
Chile
566,096,564.00
CLP
Electricity generation
Line-by-line
Enel Green
99.99%
100.00%
de los Vientos SA
from renewable
resources
Power Chile Ltda
Enel Green
0.01%
Power Latin
America SA
Parque Salitrillos SA
Mexico City
Mexico
100.00
MXN
Electricity generation
Held for sale
Enel Green
99.00%
100.00%
de Cv
from renewable
resources
Power México S
de RL de Cv
Hidroelectricidad
1.00%
del Pacífico S de
RL de Cv
Parque Solar Cauchari
San Salvador
Argentina
500,000.00
ARS
Electricity generation
Line-by-line
Enel Green
95.00%
100.00%
IV SA
de Jujuy
from renewable
resources
Power Argentina
SA
Enel Green
5.00%
Power Latin
America SA
Parque Talinay
Santiago
Chile
66,092,165,171.00
CLP
Electricity generation
Line-by-line
Enel Green
61.37%
95.94%
Oriente SA
from renewable
resources
Power Chile Ltda
Enel Green
34.57%
Power SpA
Paynesville Solar LLC Delaware
USA
-
USD
Electricity generation
Line-by-line
Aurora
100.00%
51.00%
from renewable
resources
Distributed Solar
LLC
Pegop - Energia
Abrantes
Portugal
50,000.00
EUR
Electricity generation
Equity
Endesa
0.02%
35.05%
Eléctrica SA
Pelzer Hydro
Company LLC
Wilmington
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
(Delaware)
from renewable
resources
Hydro Holdings
LLC
Generación
Portugal SA
Endesa
49.98%
Generación SA
Pereda Power SL
La Pereda
Spain
5,000.00
EUR
Development of
Line-by-line
Endesa
70.00%
49.07%
(Mieres)
generation activities
Generación II SA
PH Chucas SA
San José
Costa Rica
100,000.00
CRC
Electricity generation
Line-by-line
Enel Green
40.31%
65.00%
from renewable
resources
Power Costa
Rica SA
Enel Green
24.69%
Power SpA
PH Don Pedro SA
San José
Costa Rica
100,001.00
CRC
Electricity generation
Line-by-line
Enel Green
33.44%
33.44%
from renewable
resources
Power Costa
Rica SA
PH Guacimo SA
San José
Costa Rica
50,000.00
CRC
Electricity generation
Line-by-line
Enel Green
65.00%
65.00%
from renewable
resources
Power Costa
Rica SA
463
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
PH Río Volcán SA
San José
Costa Rica
100,001.00
CRC
Electricity generation
Line-by-line
Enel Green
34.32%
Consolidation
%
Group %
holding
34.32%
from renewable
resources
Power Costa
Rica SA
Pincher Creek LP
Alberta
Canada
-
CAD
Renewable energy
Line-by-line
Enel Alberta
99.00%
100.00%
Wind Inc.
Enel Green
1.00%
Power Canada
Inc.
Pine Island
Delaware
USA
-
USD
Electricity generation
Line-by-line
Aurora
100.00%
51.00%
Distributed Solar LLC
from renewable
resources
Distributed Solar
LLC
Planta Eólica Europea
Seville
Spain
1,198,530.00
EUR
Electricity generation
Line-by-line
Enel Green
56.12%
39.34%
SA
from renewable
resources
Power España SL
PowerCrop
Bologna
Italy
100,000.00
EUR
Electricity generation
Equity
PowerCrop Srl
100.00%
50.00%
Macchiareddu Srl
from renewable
resources
PowerCrop Russi Srl
Bologna
Italy
100,000.00
EUR
Electricity generation
Equity
PowerCrop Srl
100.00%
50.00%
from renewable
resources
PowerCrop Srl
Bologna
Italy
4,000,000.00
EUR
Electricity generation
Equity
Enel Green
50.00%
50.00%
from renewable
resources
Power SpA
Prairie Rose
Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Prairie Rose
100.00%
50.00%
Transmission LLC
(Minnesota)
from renewable
resources
Wind LLC
Prairie Rose Wind
New York
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
LLC
(New York)
from renewable
resources
Wind Holdings
LLC
Primavera Energia SA Rio de Janeiro Brazil
36,965,444.64
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
and sale
Power Brasil
Participações
Ltda
Productor Regional
Valladolid
Spain
3,088,398.00
EUR
Plant development and
Line-by-line
Enel Green
100.00%
70.10%
de Energía Renovable
III SA
construction
Power España SL
Productor Regional de
Valladolid
Spain
710,500.00
EUR
Plant development and
Line-by-line
Enel Green
100.00%
70.10%
Energía Renovable SA
Productora
de Energías SA
Barcelona
Spain
30,050.00
EUR
Hydroelectric plants
Equity
Enel Green
30.00%
21.03%
Power España SL
construction
Power España SL
Promociones
Ponferrada
Spain
12,020.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
70.10%
Energéticas del Bierzo
SL
Proveedora de
Electricidad de
Occidente S de RL
de Cv
Mexico City
Mexico
89,708,835.00
MXN
Electricity generation
Line-by-line
Enel Green
99.99%
99.99%
from renewable
resources
Power México S
de RL de Cv
from renewable
resources
Power España SL
Proyecto Almería
Madrid
Spain
601,000.00
EUR
Desalinization and
Equity
Endesa SA
45.00%
31.55%
Mediterráneo SA
water supply
Proyecto Solar Don
Mexico City
Mexico
100.00
MXN
Electricity generation
Held for sale
Enel Green
1.00%
100.00%
José SA de Cv
from renewable
resources
Power Guatemala
SA
Proyecto Solar
Mexico City
Mexico
100.00
MXN
Electricity generation
Held for sale
Enel Green
1.00%
100.00%
Villanueva Tres SA
de Cv
from renewable
resources
Power Guatemala
SA
Enel Green
99.00%
Power México S
de RL de Cv
Enel Green
99.00%
Power México S
de RL de Cv
464
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Proyectos de Energía
Mexico City
Mexico
147,375,734.00
MXN
Renewable energy
Line-by-line
Enel Green
99.00%
100.00%
Sol y Viento 1 SA de Cv
Power SpA
Energía y
1.00%
Servicios South
America SpA
Proyectos de Energía
Mexico City
Mexico
288,584,564.00
MXN
Renewable energy
Line-by-line
Enel Green
99.00%
100.00%
Sol y Viento 2 SA de Cv
Power SpA
Energía y
1.00%
Servicios South
America SpA
Proyectos de Energía
Mexico City
Mexico
324,082,368.00
MXN
Renewable energy
Line-by-line
Enel Green
99.00%
100.00%
Sol y Viento 3 SA de Cv
Power SpA
Energía y
1.00%
Servicios South
America SpA
Proyectos de Energía
Mexico City
Mexico
116,428,613.00
MXN
Renewable energy
Line-by-line
Enel Green
99.00%
100.00%
Sol y Viento 4 SA de Cv
Power SpA
Energía y
1.00%
Servicios South
America SpA
Proyectos de Energía
Mexico City
Mexico
139.00
MXN
Renewable energy
Line-by-line
Enel Green
99.00%
100.00%
Sol y Viento 5 SA de Cv
Power SpA
Energía y
1.00%
Servicios South
America SpA
Proyectos de Energía
Mexico City
Mexico
139.00
MXN
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
Sol y Viento 6 SA de Cv
from renewable
resources
Power SpA
Energía y
1.00%
Servicios South
America SpA
Proyectos de Energía
Mexico City
Mexico
139.00
MXN
Renewable energy
Line-by-line
Enel Green
99.00%
100.00%
Sol y Viento 7 SA de Cv
Power SpA
Energía y
1.00%
Servicios South
America SpA
Proyectos de Energía
Mexico City
Mexico
139.00
MXN
Electricity generation
Line-by-line
Enel Green
99.00%
100.00%
Sol y Viento 8 SA de Cv
from renewable
resources
Power SpA
Energía y
1.00%
Servicios South
America SpA
Proyectos
Alicante
Spain
180,000.00
EUR
Electricity generation
Equity
Enel Green
33.33%
23.36%
Universitarios de
Energías Renovables
SL
from renewable
resources
Power España SL
Proyectos y
Lima
Peru
1,000.00
PEN
Electricity generation
Line-by-line
Enel Green
0.10%
100.00%
Soluciones Renovables
SAC
Power Latin
America SA
Enel Green
99.90%
Power
Partecipazioni
Speciali Srl
PT Enel Green Power
Jakarta
Indonesia
10,000,000.00
USD
Electricity generation
Line-by-line
Enel Green
90.00%
90.00%
Optima Way Ratai
from renewable
resources
Power SpA
Pulida Energy (RF)
Houghton
South Africa
10,000,000.00
ZAR
Electricity generation
Line-by-line
Enel Green
52.70%
52.70%
(Pty) Ltd
from renewable
resources
Power RSA (Pty)
Ltd
465
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Pyrites Hydro LLC
New York
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
(New York)
from renewable
resources
Hydro Holdings
LLC
Quatiara Energia SA
Rio de Janeiro Brazil
16,566,510.61
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Power Brasil
Participações
Ltda
Rattlesnake Creek
Lincoln
USA
-
USD
Electricity generation
Line-by-line
Enel Kansas LLC 100.00%
100.00%
Wind Project LLC
(Nebraska)
from renewable
resources
Reaktortest Sro
Trnava
Slovakia
66,389.00
EUR
Research and
Equity
Slovenské
49.00%
16.17%
development
elektrárne AS
Red Centroamericana
Panama
Panama
2,700,000.00
USD
Telecommunications
-
Enel SpA
11.11%
11.11%
de Telecomunicaciones
Delaware
USA
-
USD
Renewable energy
Line-by-line
Enel Green
100.00%
100.00%
SA
Red Dirt Wind
Holdings I LLC
Red Dirt Wind
Holdings LLC
Delaware
USA
Red Dirt Wind Project
Delaware
USA
LLC
-
-
USD
Renewable energy
Line-by-line
Enel Kansas LLC 100.00%
100.00%
USD
Renewable energy
Line-by-line
Red Dirt Wind
30.00%
100.00%
Power North
America Inc.
Holdings I LLC
Red Dirt Wind
70.00%
Holdings LLC
Retfinskaya GRES
Reftinskiy
Russia
10,000.00
RUB
Electricity generation
Line-by-line
Enel Russia
100.00%
56.43%
and sale
PJSC
Reftinskaya GRES
Asbest
Russia
10,000.00
RUB
-
Line-by-line
Enel Russia
100.00%
56.43%
Limited Liability
Company
PJSC
Renovables de
Guatemala City Guatemala
1,924,465,600.00
GTQ
Electricity generation
Line-by-line
Enel Green
0.01%
100.00%
Guatemala SA
from renewable
resources
Power Guatemala
SA
Riverview LP
Alberta
Canada
-
CAD
Renewable energy
Line-by-line
Enel Alberta
99,00%
100,00%
Enel Green
99.99%
Power SpA
Wind Inc.
Enel Green
1,00%
Power Canada
Inc.
Rock Creek Hydro
Delaware
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
LLC
from renewable
resources
Power North
America Inc.
Rock Creek Wind
Delaware
USA
-
USD
Renewable energy
Line-by-line
Enel Green
100.00%
100.00%
Holdings I LLC
Power North
America Inc.
Rock Creek Wind
-
USA
-
USD
Electricity generation
Line-by-line
EGPNA Preferred
100.00%
100.00%
Holdings LLC
from renewable
resources
Holdings II LLC
Rock Creek Wind
Clayton
USA
-
USD
Holding company
Line-by-line
Rock Creek
30.00%
100.00%
Project LLC
(California)
Wind Holdings
I LLC
Rock Creek
70.00%
Wind Holdings
LLC
Rocky Caney
Holdings LLC
Oklahoma City
USA
(Oklahoma)
Rocky Caney Wind
New York
USA
LLC
(New York)
-
-
USD
Renewable energy
Equity
Enel Kansas LLC 100.00%
20.00%
USD
Electricity generation
Equity
Enel Kansas LLC 100.00%
20.00%
from renewable
resources
466
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Rocky Ridge Wind
Oklahoma City
USA
-
USD
Electricity generation
Equity
Rocky Caney
100.00%
20.00%
Project LLC
(Oklahoma)
from renewable
resources
Wind LLC
RusEnergoSbyt LLC Moscow
Russia
2,760,000.00
RUB
Electricity trading
Equity
Enel Investment
49.50%
49.50%
Holding BV
RusEnergoSbyt
Krasnoyarskiy
Russia
4,600,000.00
RUB
Electricity sales
Equity
RusEnergoSbyt
50.00%
24.75%
Siberia LLC
Kray
LLC
RusEnergoSbyt
Yaroslavl
Russia
100,000.00
RUB
Electricity sales
Equity
RusEnergoSbyt
50.00%
24.75%
Yaroslavl
LLC
Ruthton Ridge LLC
Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
(Minnesota)
from renewable
resources
Wind LLC
Sacme SA
Buenos Aires
Argentina
12,000.00
ARS
Monitoring of electricity
Equity
Empresa
50.00%
18.68%
system
Distribuidora Sur
SA - Edesur
Salmon Falls Hydro
Delaware
USA
-
USD
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
LLC
from renewable
resources
Power North
America Inc.
Salto de San Rafael
Seville
Spain
461,410.00
EUR
Hydroelectric plants
Equity
Enel Green
50.00%
35.05%
SL
Power España SL
San Juan Mesa Wind
Wilmington
USA
-
USD
Electricity generation
Line-by-line
Padoma Wind
100.00%
100.00%
Project II LLC
(Delaware)
from renewable
resources
Power LLC
Sanatorium-
Nevinnomyssk Russia
10,571,300.00
RUB
Energy services
Line-by-line
Enel Russia
99.99%
56.43%
Preventorium Energetik
LLC
PJSC
OGK-5 Finance
0.01%
LLC
Santo Rostro
Seville
Spain
207,000.00
EUR
Cogeneration of
-
Enel Green
45.00%
31.55%
Cogeneración SA
electricity and heat
Power España SL
Se Hazelton A LLC
Los Angeles
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
(California)
from renewable
resources
Hydro Holdings
LLC
Se Predaj Sro
Bratislava
Slovakia
4,505,000.00
EUR
Electricity supply
Equity
Slovenské
100.00%
33.00%
elektrárne AS
SE Služby
Kalná nad
Slovakia
200,000.00
EUR
Services
Equity
Slovenské
100.00%
33.00%
inžinierskych stavieb
Hronom
s.r.o.
elektrárne AS
Seguidores Solares
Murcia
Spain
3,010.00
EUR
Electricity generation
Line-by-line
Enel Green
100.00%
70.10%
Planta 2 SL
from renewable
resources
Power España SL
Servicio de Operación
Mexico City
Mexico
3,000.00
MXN
Electricity generation
Line-by-line
Enel Green
0.01%
100.00%
y Mantenimiento para
Energías Renovables S
de RL de Cv
from renewable
resources
Power Guatemala
SA
Energía Nueva
99.99%
Energía Limpia
México S de RL
de Cv
Servizio Elettrico
Rome
Italy
10,000,000.00
EUR
Electricity sales
Line-by-line
Enel SpA
100.00%
100.00%
Nazionale SpA
Shield Energy Storage
Delaware
USA
-
USD
Electricity generation
Line-by-line
EGP Energy
100.00%
100.00%
Project LLC
from renewable
resources
Storage Holdings
LLC
Sierra Energy Storage
Camden
USA
-
USD
Electricity generation
Line-by-line
EGP Energy
51.00%
51.00%
LLC
(Delaware)
from renewable
resources
Storage Holdings
LLC
SIET - Società
Piacenza
Italy
697,820.00
EUR
Analysis, design and
Equity
Enel Innovation
41.55%
41.55%
Informazioni Esperienze
Termoidrauliche SpA
research in thermal
technology
Hubs Srl
Sistema Eléctrico de
Granada
Spain
44,900.00
EUR
Electricity generation
Equity
Enel Green
16.70%
11.71%
Conexión Montes
Orientales SL
Power España SL
467
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Sistema Eléctrico de
Madrid
Spain
175,200.00
EUR
Electricity generation
Equity
Enel Green
28.13%
Conexión Valcaire SL
Power España SL
Consolidation
%
Group %
holding
19.72%
Sistemas Energéticos
La Coruña
Spain
2,007,750.00
EUR
Electricity generation
Line-by-line
Enel Green
96.00%
67.30%
Mañón Ortigueira SA
from renewable
resources
Power España SL
Slate Creek Hydro
Los Angeles
USA
-
USD
Electricity generation
Equity
Slate Creek
95.00%
47.50%
Associates LP
(California)
from renewable
resources
Hydro Company
LLC
Slate Creek Hydro
Wilmington
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
Company LLC
(Delaware)
from renewable
resources
Hydro Holdings
LLC
Slovak Power Holding
Amsterdam
Netherlands
25,010,000.00
EUR
Holding company
Equity
Enel Produzione
50.00%
50.00%
BV
SpA
Slovenské elektrárne
Bratislava
Slovakia
1,269,295,724.66
EUR
Electricity generation
-
Slovak Power
66.00%
33.00%
AS
Slovenské elektrárne
Cˇeská republika s.r.o.
Prague
Czech Republic 3,000.00
CZK
Electricity supply
Equity
Slovenské
100.00%
33.00%
elektrárne AS
Holding BV
Smart P@Per SPA
Potenza
Italy
2,184,000.00
EUR
Services
-
Servizio Elettrico
10.00%
10.00%
Smoky Hill Holdings
Wilmington
USA
II LLC
(Delaware)
Smoky Hills Wind Farm
Topeka
USA
LLC
(Kansas)
-
-
USD
Renewable energy
Line-by-line
Enel Kansas
100.00%
100.00%
LLC
USD
Electricity generation
Line-by-line
Texkan Wind
100.00%
100.00%
Nazionale SpA
from renewable
resources
LLC
Smoky Hills Wind
Topeka
USA
-
USD
Electricity generation
Line-by-line
Nevkan
100.00%
100.00%
Project II LLC
(Kansas)
from renewable
resources
Renewables LLC
Snyder Wind Farm
Dallas
USA
-
USD
Electricity generation
Line-by-line
Texkan Wind
100.00%
100.00%
LLC
(Texas)
from renewable
resources
LLC
Socibe Energia SA
Rio de Janeiro Brazil
19,969,032.25
BRL
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
and sale
Power Brasil
Participações
Ltda
Sociedad Agrícola de
Santiago
Chile
5,738,046,495.00
CLP
Financial investment
Line-by-line
Enel Chile SA
57.50%
34.86%
Cameros Ltda
Sociedad Eólica de
Seville
Spain
4,507,590.78
EUR
Electricity generation
Line-by-line
Enel Green
64.74%
45.38%
Andalucía SA
Power España SL
Sociedad Eólica El
Seville
Spain
1,643,000.00
EUR
Electricity generation
Equity
Enel Green
50.00%
35.05%
Puntal SL
from renewable
resources
Power España SL
Sociedad Eólica Los
Cadiz
Spain
2,404,048.42
EUR
Electricity generation
Line-by-line
Enel Green
60.00%
42.06%
Lances SA
from renewable
resources
Power España SL
Sociedad Portuaria
Bogotá DC
Colombia
5,800,000.00
COP
Port construction and
Line-by-line
Emgesa SA ESP
94.95%
25.08%
Central Cartagena SA
management
Inversora
4.90%
Codensa SAS
Sol Real Istmo SA
Panama
Panama
10,000.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power Panama
SA
Sol Real Uno SA
Panama
Panama
10,000.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power Panama
SA
Soliloquoy Ridge LLC Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
(Minnesota)
from renewable
resources
Wind LLC
Somersworth Hydro
Wilmington
USA
100.00
USD
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
Company Inc.
(Delaware)
from renewable
resources
Power North
America Inc.
468
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Sona Enerjì Üretìm
Istanbul
Turkey
50,000.00
TRY
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Anonìm S¸ ìrketì
from renewable
resources
Power Turkey
Enerjì Yatirimlari
Anonìm S¸ ìrketì
Sotavento Galicia SA
Santiago de
Spain
601,000.00
EUR
Electricity generation
Equity
Enel Green
36.00%
25.24%
Compostela
from renewable
resources
Power España SL
Southwest
Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
Transmission LLC
(Minnesota)
from renewable
resources
Wind LLC
Spartan Hills LLC
Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
(Minnesota)
from renewable
resources
Wind LLC
Stillman Valley Solar
Delaware
USA
LLC
Stillwater Woods Hill
Delaware
USA
Holdings LLC
-
-
USD
Renewable energy
Line-by-line
Enel Kansas LLC 100.00%
100.00%
USD
Renewable energy
Line-by-line
Enel Kansas LLC 100.00%
100.00%
Stipa Nayaá SA de Cv Mexico City
Mexico
1,811,016,348.00
MXN
Electricity generation
Line-by-line
Enel Green
55.21%
95.37%
from renewable
resources
Power México S
de RL de Cv
Enel Green
40.16%
Power
Partecipazioni
Speciali Srl
Sublunary Trading (RF)
Johannesburg South Africa
10,000.00
ZAR
Electricity generation
Line-by-line
Enel Green
57.00%
57.00%
(Pty) Ltd
from renewable
resources
Power Solar
Energy Srl
Suministradora
Cadiz
Spain
12,020,240.00
EUR
Electricity distribution
Equity
Endesa Red SA 33.50%
23.48%
Eléctrica de Cádiz SA
and sale
Suministro de Luz y
Torroella de
Spain
2,800,000.00
EUR
Electricity distribution
Line-by-line
Hidroeléctrica de
60.00%
42.06%
Fuerza SL
Montgri (Girona)
Catalunya SL
Summit Energy
Wilmington
USA
2,050,000.00
USD
Electricity generation
Line-by-line
Enel Green
75.00%
75.00%
Storage Inc.
(Delaware)
from renewable
resources
Power North
America Inc.
Sun River LLC
Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
(Minnesota)
Sundance East Wind
Wilmington
USA
Project LLC
Sundance
(Delaware)
Wilmington
USA
Interconnect LLC
(Delaware)
Sundance Wind
Wilmington
USA
Project LLC
(Delaware)
Sweetwater
Concord
USA
Hydroelectric LLC
(New
Hampshire)
-
-
-
-
from renewable
resources
Wind LLC
USD
Renewable energy
Line-by-line
Sundance Wind
100.00%
100.00%
Project LLC
USD
Renewable energy
Line-by-line
Land Run Wind
50.00%
100.00%
Project LLC
Sundance East
50.00%
Wind Project LLC
USD
Renewable energy
Line-by-line
Enel Kansas LLC 100.00%
100.00%
USD
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
Taranto Solar Srl
Rome
Italy
100,000.00
EUR
Electricity generation
-
Enel F2i Solare
100.00%
50.00%
from renewable
resources
Italia SpA
Tecnatom SA
Madrid
Spain
4,025,700.00
EUR
Electricity generation
Equity
Endesa
45.00%
31.55%
and services
Generación SA
Tecnoguat SA
Guatemala City Guatemala
30,948,000.00
GTQ
Electricity generation
Line-by-line
Enel Green
75.00%
75.00%
from renewable
resources
Power SpA
Tejo Energia Produção
Paço de Arcos
Portugal
5,025,000.00
EUR
Electricity generation,
Equity
Endesa
43.75%
30.67%
e Distribuição de
(Oeiras)
Energia Eléctrica SA
transmission and
distribution
Generación SA
469
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Tenedora de Energía
Mexico City
Mexico
1,359,424,561.00
MXN
Renewable energy
Line-by-line
Enel Green
99.00%
100.00%
Renovable Sol y Viento
SAPI de Cv
Power SpA
Energía y
1.00%
Servicios South
America SpA
Teploprogress OJSC
Sredneuralsk
Russia
128,000,000.00
RUB
Electricity sales
Line-by-line
Enel Russia
60.00%
33.86%
Termoeléctrica José
Buenos Aires
Argentina
500,000.00
ARS
Plant construction and
Equity
de San Martín SA
operation
PJSC
Central
Costanera SA
5.33%
8.80%
Central Dock
1.42%
Sud SA
Enel Generación
18.85%
El Chocón SA
Termoeléctrica
Buenos Aires
Argentina
500,000.00
ARS
Plant construction and
Equity
Central
5.33%
8.80%
Manuel Belgrano SA
operation
Costanera SA
Central Dock
1.42%
Sud SA
Enel Generación
18.85%
El Chocón SA
Termotec Energía AIE
Valencia
Spain
481,000.00
EUR
Cogeneration of
-
Enel Green
45.00%
31.55%
(in liquidation)
electricity and heat
Power España SL
Texkan Wind LLC
Wilmington
USA
-
USD
Electricity generation
Line-by-line
Enel Texkan Inc. 100.00%
100.00%
(Delaware)
from renewable
resources
Thunder Ranch Wind
Delaware
USA
-
USD
Renewable energy
Line-by-line
Enel Green
100.00%
100.00%
Holdings I LLC
Thunder Ranch Wind
Delaware
USA
Holdings LLC
Thunder Ranch Wind
Delaware
USA
-
-
Project LLC
Power North
America Inc.
USD
Renewable energy
Line-by-line
Enel Kansas LLC 100.00%
100.00%
USD
Electricity generation
Line-by-line
Thunder Ranch
30.00%
100.00%
from renewable
resources
Wind Holdings
I LLC
Thunder Ranch
70.00%
Wind Holdings
LLC
Tko Power LLC
Los Angeles
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
(California)
from renewable
resources
Hydro Holdings
LLC
Tobivox (RF) (Pty) Ltd Houghton
South Africa
10,000,000.00
ZAR
Electricity generation
Line-by-line
Enel Green
60.00%
60.00%
from renewable
resources
Power RSA (Pty)
Ltd
Toledo Pv AEIE
Madrid
Spain
26,887.96
EUR
Photovoltaic plants
Equity
Enel Green
33.33%
23.36%
Power España SL
Tradewind Energy
Wilmington
USA
200,000.00
USD
Electricity generation
Equity
Enel Kansas LLC 19.90%
19.90%
Inc.
(Delaware)
from renewable
resources
Transmisora
Guatemala City Guatemala
233,561,800.00
GTQ
Electricity generation
Line-by-line
Enel Green
0.00%
100.00%
de Energía Renovable
SA
from renewable
resources
Power Guatemala
SA
Transmisora Eléctrica
Santiago
Chile
440,644,600.00
CLP
Electricity transmission
Equity
Gas Atacama
50.00%
18.50%
de Quillota Ltda
and distribution
Chile SA
Transportadora de
Buenos Aires
Argentina
100,000.00
ARS
Electricity generation,
Line-by-line
Enel Argentina
0.00%
51.61%
Enel Green
100.00%
Power SpA
Energía SA - TESA
470
transmission and
distribution
SA
Enel CIEN SA
100.00%
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
Consolidation
Transportes y
Distribuciones
Eléctricas SA
Olot
(Girona)
Triton Energy Inc.
Delaware
Triton Power
Company
New York
(New York)
Spain
72,120.00
EUR
Electricity transmission Line-by-line
Endesa
Distribución
Eléctrica SL
USA
USA
5,000.00
-
USD
USD
Renewable energy
Line-by-line
EnerNOC Inc.
100.00%
100.00%
Electricity generation
Line-by-line
Enel Green
2.00%
100.00%
from renewable
resources
Power North
America Inc.
%
holding
73.33%
Group %
holding
51.41%
Highfalls Hydro
98.00%
Company Inc.
Tsar Nicholas LLC
Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
(Minnesota)
from renewable
resources
Wind LLC
Twin Falls Hydro
Seattle
USA
-
USD
Electricity generation
Equity
Twin Falls Hydro
99.51%
49.76%
Associates
(Washington)
from renewable
resources
Company LLC
Twin Falls Hydro
Wilmington
USA
-
USD
Electricity generation
Equity
EGPNA REP
100.00%
50.00%
Company LLC
(Delaware)
from renewable
resources
Hydro Holdings
LLC
Twin Lake Hills LLC Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
(Minnesota)
from renewable
resources
Wind LLC
Twin Saranac
Holdings LLC
Wilmington
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
(Delaware)
from renewable
resources
Power North
America Inc.
Tynemouth Energy
London
United
Kingdom
2.00
GBP
Services
Line-by-line
Enel SpA
100.00%
100.00%
Aranjuez
Spain
304,150.00
EUR
Electricity generation
-
Enel Green
40.00%
28.04%
from renewable
resources
Power España SL
Storage Limited
Ufefys SL
(in liquidation)
Ukuqala Solar
Johannesburg South Africa
1,000.00
ZAR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
(Pty) Ltd
from renewable
resources
Power RSA (Pty)
Ltd
Unión Eléctrica de
Las Palmas de
Spain
190,171,520.00
EUR
Electricity generation
Line-by-line
Endesa
100.00%
70.10%
Canarias Generación
Gran Canaria
SAU
Generación SA
Upington Solar
Johannesburg South Africa
1,000.00
ZAR
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
(Pty) Ltd
from renewable
resources
Power RSA (Pty)
Ltd
Ustav Jaderného
Rez
Czech Republic 524,139,000.00
CZK
Research and
Equity
Slovenské
27.77%
9.17%
Výzkumu Rez AS
development
elektrárne AS
Vektör Enerjì Üretìm
Istanbul
Turkey
3,500,000.00
TRY
Plant construction and
Line-by-line
Enel Green
100.00%
100.00%
Anonìm S¸ ìrketì
electricity generation
Power SpA
from renewable
resources
Vientos del Altiplano
Mexico City
Mexico
751,623,040.00
MXN
Electricity generation
Held for sale
Enel Green
99.99%
100.00%
S de RL de Cv
from renewable
resources
Power México S
de RL de Cv
Hidroelectricidad
0.01%
del Pacífico S de
RL de Cv
Villanueva Solar SA
Mexico City
Mexico
100.00
MXN
Electricity generation
Held for sale
Enel Green
1.00%
100.00%
de Cv
from renewable
resources
Power Guatemala
SA
Viruleiros SL
Santiago de
Spain
160,000.00
EUR
Electricity generation
Equity
Enel Green
67.00%
46.97%
Compostela
from renewable
resources
Power España SL
Enel Green
99.00%
Power México S
de RL de Cv
471
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Walden Hydro LLC
Delaware
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
from renewable
resources
Power North
America Inc.
Waseca Solar LLC
Delaware
USA
-
USD
Electricity generation
Line-by-line
Aurora
100.00%
51.00%
from renewable
resources
Distributed Solar
LLC
Weber Energy Storage
Delaware
USA
-
USD
Electricity generation
Line-by-line
EGP Energy
100.00%
100.00%
Project LLC
from renewable
resources
Storage Holdings
LLC
West Faribault Solar
Delaware
USA
-
USD
Electricity generation
Line-by-line
Aurora
100.00%
51.00%
LLC
from renewable
resources
Distributed Solar
LLC
West Hopkinton
Delaware
USA
-
USD
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
Hydro LLC
from renewable
resources
Power North
America Inc.
West Waconia Solar
Delaware
USA
-
USD
Electricity generation
Line-by-line
Aurora
100.00%
51.00%
LLC
from renewable
resources
Distributed Solar
LLC
Western New York
Albany
USA
300.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Wind Corporation
(New York)
from renewable
resources
Power North
America Inc.
White Current
Vermont
USA
-
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Corporation
from renewable
resources
Power North
America Inc.
Willimantic Power
Hartford
USA
1,000.00
USD
Electricity generation
Line-by-line
Enel Green
100.00%
100.00%
Corporation
(Connecticut)
from renewable
resources
Power North
America Inc.
Wind Parks Anatolis -
Maroussi
Greece
1,168,188.00
EUR
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
Prinias SA
from renewable
resources
Power Hellas
Wind Parks of
South Evia SA
Wind Parks of Bolibas
Maroussi
Greece
551,500.00
EUR
Electricity generation
Equity
Enel Green
30.00%
30.00%
SA
from renewable
resources
Power Hellas SA
Wind Parks of
Maroussi
Greece
556,500.00
EUR
Electricity generation
Equity
Enel Green
30.00%
30.00%
Distomos SA
from renewable
resources
Power Hellas SA
Wind Parks of Folia
Maroussi
Greece
424,000.00
EUR
Electricity generation
Equity
Enel Green
30.00%
30.00%
SA
from renewable
resources
Power Hellas SA
Wind Parks of Gagari
Maroussi
Greece
389,000.00
EUR
Electricity generation
Equity
Enel Green
30.00%
30.00%
SA
from renewable
resources
Power Hellas SA
Wind Parks of Goraki
Maroussi
Greece
551,500.00
EUR
Electricity generation
Equity
Enel Green
30.00%
30.00%
SA
Wind Parks
of Gourles SA
Wind Parks
of Kafoutsi SA
Wind Parks
of Katharas SA
Wind Parks
of Kerasias SA
from renewable
resources
Power Hellas SA
Maroussi
Greece
555,000.00
EUR
Electricity generation
Equity
Enel Green
30.00%
30.00%
from renewable
resources
Power Hellas SA
Maroussi
Greece
551,500.00
EUR
Electricity generation
Equity
Enel Green
30.00%
30.00%
from renewable
resources
Power Hellas SA
Maroussi
Greece
728,648.00
EUR
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
from renewable
resources
Power Hellas
Wind Parks of
South Evia SA
Maroussi
Greece
895,990.00
EUR
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
from renewable
resources
Power Hellas
Wind Parks of
South Evia SA
Wind Parks of Milias
Maroussi
Greece
994,774.00
EUR
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
SA
472
from renewable
resources
Power Hellas
Wind Parks of
South Evia SA
Annual Report 2017 Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
Wind Parks of Mitikas
Maroussi
Greece
732,639.00
EUR
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
SA
Wind Parks of
Paliopirgos SA
Maroussi
Greece
200,000.00
EUR
Electricity generation
Line-by-line
Enel Green
80.00%
80.00%
from renewable
resources
Power Hellas SA
from renewable
resources
Power Hellas
Wind Parks of
South Evia SA
Wind Parks of Petalo
Maroussi
Greece
575,000.00
EUR
Electricity generation
Equity
Enel Green
30.00%
30.00%
SA
Wind Parks
of Platanos SA
Maroussi
Greece
585,467.00
EUR
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
from renewable
resources
Power Hellas SA
from renewable
resources
Power Hellas
Wind Parks of
South Evia SA
Wind Parks of Skoubi
Maroussi
Greece
472,000.00
EUR
Electricity generation
Equity
Enel Green
30.00%
30.00%
SA
from renewable
resources
Power Hellas SA
Wind Parks of Spilias
Maroussi
Greece
807,490.00
EUR
Electricity generation
Held for sale
Enel Green
100.00%
100.00%
SA
Wind Parks of
Strouboulas SA
Maroussi
Greece
576,500.00
EUR
Electricity generation
Equity
Enel Green
30.00%
30.00%
from renewable
resources
Power Hellas SA
from renewable
resources
Power Hellas
Wind Parks of
South Evia SA
Wind Parks of Vitalio
Maroussi
Greece
361,000.00
EUR
Electricity generation
Equity
Enel Green
30.00%
30.00%
SA
from renewable
resources
Power Hellas SA
Wind Parks of Vourlas
Maroussi
Greece
554,000.00
EUR
Electricity generation
Equity
Enel Green
30.00%
30.00%
SA
from renewable
resources
Power Hellas SA
Windlife Kola Vetro
Murmansk
Russia
10,000.00
RUB
-
Line-by-line
Enel Rus Wind
100.00%
56.43%
LL1 Limited Liability
Company
Generation LLC
Winter’s Spawn LLC Minneapolis
USA
-
USD
Electricity generation
Line-by-line
Chi Minnesota
51.00%
51.00%
(Minnesota)
from renewable
resources
Wind LLC
Woods Hill Solar LLC Wilmington
USA
-
USD
Renewable energy
Line-by-line
Stillwater Woods
100.00%
100.00%
(Delaware)
Hill Holdings LLC
WP Bulgaria 1 EOOD Sofia
Bulgaria
5,000.00
BGN
Plant construction,
Line-by-line
Enel Green
100.00%
100.00%
operation and
maintenance
Power Bulgaria
EAD
WP Bulgaria 10 EOOD Sofia
Bulgaria
5,000.00
BGN
Plant construction,
Line-by-line
Enel Green
100.00%
100.00%
operation and
maintenance
Power Bulgaria
EAD
WP Bulgaria 11 EOOD Sofia
Bulgaria
5,000.00
BGN
Plant construction,
Line-by-line
Enel Green
100.00%
100.00%
operation and
maintenance
Power Bulgaria
EAD
WP Bulgaria 12 EOOD Sofia
Bulgaria
5,000.00
BGN
Plant construction,
Line-by-line
Enel Green
100.00%
100.00%
operation and
maintenance
Power Bulgaria
EAD
WP Bulgaria 13 EOOD Sofia
Bulgaria
5,000.00
BGN
Plant construction,
Line-by-line
Enel Green
100.00%
100.00%
operation and
maintenance
Power Bulgaria
EAD
WP Bulgaria 14 EOOD Sofia
Bulgaria
5,000.00
BGN
Plant construction,
Line-by-line
Enel Green
100.00%
100.00%
operation and
maintenance
Power Bulgaria
EAD
WP Bulgaria 15 EOOD Sofia
Bulgaria
5,000.00
BGN
Plant construction,
Line-by-line
Enel Green
100.00%
100.00%
operation and
maintenance
Power Bulgaria
EAD
WP Bulgaria 19 EOOD Sofia
Bulgaria
5,000.00
BGN
Plant construction,
Line-by-line
Enel Green
100.00%
100.00%
operation and
maintenance
Power Bulgaria
EAD
473
Attachments Company name
Headquarters Country
Share capital
Currency Activity
method
Held by
holding
Consolidation
%
Group %
holding
WP Bulgaria 21 EOOD Sofia
Bulgaria
5,000.00
BGN
Plant construction,
Line-by-line
Enel Green
100.00%
100.00%
operation and
maintenance
Power Bulgaria
EAD
WP Bulgaria 26 EOOD Sofia
Bulgaria
5,000.00
BGN
Plant construction,
Line-by-line
Enel Green
100.00%
100.00%
operation and
maintenance
Power Bulgaria
EAD
WP Bulgaria 3 EOOD Sofia
Bulgaria
5,000.00
BGN
Plant construction,
Line-by-line
Enel Green
100.00%
100.00%
operation and
maintenance
Power Bulgaria
EAD
WP Bulgaria 6 EOOD Sofia
Bulgaria
5,000.00
BGN
Plant construction,
Line-by-line
Enel Green
100.00%
100.00%
operation and
maintenance
Power Bulgaria
EAD
WP Bulgaria 8 EOOD Sofia
Bulgaria
5,000.00
BGN
Plant construction,
Line-by-line
Enel Green
100.00%
100.00%
operation and
maintenance
Power Bulgaria
EAD
WP Bulgaria 9 EOOD Sofia
Bulgaria
5,000.00
BGN
Plant construction,
Line-by-line
Enel Green
100.00%
100.00%
operation and
maintenance
Power Bulgaria
EAD
Yacylec SA
Buenos Aires
Argentina
20,000,000.00
ARS
Electricity transmission Equity
Enel Américas
22.22%
11.51%
SA
Yedesa-Cogeneración
Almería
Spain
234,394.72
EUR
Cogeneration of
-
Enel Green
40.00%
28.04%
SA
electricity and heat
Power España SL
474
Annual Report 2017 475
Attachments 07Corporate governance
476
Annual Report 2017 477
Corporate governance Report on corporate governance
and ownership structure
The corporate governance structure of Enel SpA complies with
Group is essentially aimed at creating value for the sharehold-
the principles set forth in the edition of the Corporate Govern-
ers over the medium-long term, taking into account the social
ance Code for listed companies most recently amended in July
importance of the Group’s business operations and the con-
2015(1),which has been adopted by the Company. Furthermore,
sequent need, in conducting such operations, to adequately
the aforementioned corporate governance structure is inspired
consider all the interests involved.
by CONSOB’s recommendations on this matter and, more gen-
In compliance with the provisions of Italian law governing com-
erally, international best practice.
panies with listed shares, the Company’s organization is char-
The corporate governance system adopted by Enel and the
acterized by:
S
For more detailed information
on the corporate governance system,
please see the Report on Corporate
Governance and Ownership Structure
of Enel, which has been published
on the Company’s website
(www.enel.com, in the “Governance”
section).
u
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a ir m a
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Romina Guglielmetti
Auditor
Roberto Mazzei
Auditor
Alfredo Antoniozzi
Director, independent
Alberto Bianchi
Director, independent
a
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Cesare C
Director, inde
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Board of Auditors
Board
of Directors
Shareholders’ Meeting
Independent auditors
Nomination
and Compensation
Committee
Corporate
Governance and
Sustainability
Committee
Control and
Risk Committee
Related Parties
Committee
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Anna Chiara Svelto
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(1) The current edition of the Code is available on the website of Borsa Italiana
(http://www.borsaitaliana.it/borsaitaliana/regolamenti/corporategovernance/code2015.en.pdf).
Drawn from
the majority slate
Drawn from
the minority slate
C
Chairman
478
Annual Report 2017
> a Board of Directors charged with managing the Company;
sions concerning, among other issues – in ordinary or ex-
> a Board of Auditors charged with monitoring: (i) compli-
traordinary session: (i) the appointment and termination of
ance with the law and the bylaws, and with the principles
members of the Board of Directors and the Board of Au-
of sound administration in the performance of company
ditors and their compensation and responsibilities; (ii) the
business; (ii) the financial reporting process, as well as the
approval of the financial statements and allocation of net
adequacy of the organizational structure, the internal con-
income; (iii) the purchase and sale of treasury shares; (iv)
trol system and the administrative-accounting system of the
stock-based compensation plans; (v) amendments of the
Company; (iii) the statutory auditing of the annual accounts
bylaws; and (vi) the issue of convertible bonds.
and the consolidated accounts, as well as the independence
The statutory auditing of the accounts is performed by a spe-
of the statutory audit firm; and (iv) the manner in which the
cialized firm entered in the appropriate official register. It was
corporate governance rules set out in the Corporate Govern-
engaged by the Shareholders’ Meeting on the basis of a rea-
ance Code are actually implemented;
> a Shareholders’ Meeting, which is competent to take deci-
soned proposal of the Board of Auditors.
Romina Guglielmetti
Roberto Mazzei
Auditor
Auditor
Alfredo Antoniozzi
Director, independent
Alberto Bianchi
Director, independent
C
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Shareholders’ Meeting
Independent auditors
Nomination
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Corporate
Governance and
Sustainability
Committee
Control and
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Related Parties
Committee
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Director, in
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Director, independent
Anna Chiara Svelto
Director, independent
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Drawn from
the majority slate
Drawn from
the minority slate
C
Chairman
479
Corporate governance
Concept design and realization
HDRÀ Group
Copy editing
postScriptum di Paola Urbani
Printing
Varigrafica Alto Lazio
Print run: 25 copies
Published in June 2018
INSIDE PAGES
Paper
Fedrigoni X-PER P.W.
Weight
120 g/m2
Number of pages
480
COVER
Paper
Fedrigoni X-PER P.W.
Weight
320 g/m2
This publication is printed on FSC® certified 100% paper
Publication not for sale
By
Communications Italy
Enel Società per azioni
Registered Office 00198 Rome - Italy
Viale Regina Margherita, 137
Stock Capital Euro 10,166,679,946 fully paid-in
Companies Register of Rome and Tax I.D. 00811720580
R.E.A. of Rome 756032 VAT Code 00934061003
© Enel SpA
00198 Rome, Viale Regina Margherita, 137
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enel.com