Enel S.p.A. Annual Report 2020

Plain-text annual report

OPEN POWER FOR A BRIGHTER FUTURE. WE EMPOWER SUSTAINABLE PROGRESS. INTEGRATED ANNUAL REPORT 2020 OPEN POWER FOR A BRIGHTER FUTURE. R E T H G R B I INTEGRATED ANNUAL REPORT 2020 ENEL IS OPEN POWER VI SI ON Open Power to tackle some of the world’s biggest challenges. POS ITI ON ING Open Power PUR PO SE MI SSI ON > Open access to electricity for more people. > Open the world of energy to new technology. > Open up to new uses of energy. > Open up to new ways of managing energy for people. > Open up to new partnerships. 2 OF PRI NCI PLES CO NDU CT Open power for a brighter future. We empower sustainable progress. > Make decisions in daily activities and take responsibility for them. > Share information, being willing to collaborate and open to the contribution of others. > Follow through with commitments, pursuing activities with determination and passion. > Change priorities rapidly if the situation evolves. > Get results by aiming for excellence. > Adopt and promote safe behavior and move pro-actively to improve conditions for health, safety and well-being. > Work for the integration of all, recognizing and leveraging individual diversity (culture, gender, age, disabilities, personality etc.). > Work focusing on satisfying customers and/or co-workers, acting effectively and rapidly. > Propose new solution and do not give up when faced with obstacles or failure. > Recognize merit in co-workers and give feedback that can improve their contribution. VA LU ES > Trust > Proactivity > Responsibility > Innovation Integrated Annual Report 2020Michele Crisostomo Chairman of the Board of Directors Francesco Starace Chief Executive Officer and General Manager Letter to shareholders and other stakeholders Dear shareholders and stakeholders, Our sustainable and fully integrated business model has allowed us to maximize END USERS shared value with all our stakeholders, even during a year characterized by the global recession triggered by the COVID-19 pandemic, confirming our leading role in the energy transition. We are the largest private renewable energy operator in the world, with 49 GW of managed capacity, and the largest private electricity distribution company globally, with 74 million end users connected to the world’s most advanced digi- talized grids. We manage the largest customer base in the world among private companies, with approximately 70 million customers. 74 million MANAGED RENEWABLES CAPACITY 49 GW Our strategy of basing all our business on digital platforms, together with industrial leadership, allows us to optimally seize opportunities arising from the energy transition now under way around the globe. Our solid financial and sustainability performance in recent years has enhanced investor confidence in us. This is demon- strated by the 17% increase in the Enel stock price during the year, outperforming both the sector index (EURO STOXX Uti- lities: +10%) and the general Italian index (FTSE-MIB: -5%). Enel’s leadership in sustainability is also confirmed worldwide by the Group’s presence in a number of important sustainability ratings, indices and rankings, including the AAA rating from MSCI and confirmation of our presence in the MSCI ESG Leaders Indexes, the Dow Jones World and Europe sustainability indices, the CDP Climate “A” List, the Vigeo Eiris rating in which the Group is ranked first in all sectors and the Euronext Vigeo Eiris 120 index, the ESG rating of Refinitiv and the FTSE4Good index, being the sector leader in both cases. Enel is also present in the three main indices that monitor corporate gender diversity performance: Bloomberg Gender Equality Index, Refinitiv Top 100 Diversity and Inclusion Index, and Equileap Gender Equality Top 100 ranking. In 2020 we confirmed ourselves as the leading European utility by market capitalization and the second in the world. The macroeconomic environment The global economic environment in 2020 was characterized by an unprecedented recession, caused by the COVID-19 pandemic. The health crisis and the resulting restrictions have had a negative impact on supply and demand, leading to a contraction in world GDP estimated at around 3.7% in 2020. The waves of the pandemic had a strong impact on the euro area, with GDP contracting by about 6.8% during the year, and on the United States, where the contraction in GDP was 3.5%. In response to the recession, the European Central Bank has pursued an expansionary monetary policy, keeping its main interest rates at very low levels through the Pandemic Emergency Purchase Program. For its part, the European Commission is using the Next Generation EU program to channel €750 billion, divided into loans and subsidies, to the Member States. The US government has also adopted major expansionary fiscal policies to support families and firms, and the Fed has im- plemented an unlimited public and private debt purchase program. In Latin America, economic developments were highly influenced by the pandemic and the consequent responses of the indi- vidual countries, which varied considerably and in some cases exacerbated existing structural problems. The Chilean economy was among the most resilient thanks to its considerable openness, with exports driven by the Chinese recovery (GDP -6.1%), while in Brazil economic activity in 2020 was supported by a broad fiscal stimulus program in support of families (GDP -4.4%). During 2020, the oil market was characterized by sharp volatility, with oil prices collapsing during the 1st Quarter due to weak demand, followed by a sharp rise in the 2nd Half of the year thanks to the reopening of the main world economies. The gas market also experienced strong volatility during 2020. During the 1st Half of the year, the benchmarks of all the main European hubs contracted by almost 50% compared with the same period of 2019, while prices in the last quarter returned to the average levels seen in 2019. The price of CO2 displayed excellent resilience. Recent statements by the European Commission about the central role of the ETS in achieving decarbonization and climate neutrality goals have supported the market, leaving prices on a gradually rising path towards long-term equilibrium. Integrated Annual Report 2020Performance Performance achieved in 2020, which was also the fruit of our business model, based on the central role of digitalization and platforms, key tools in dealing with the pandemic emergency, underscored the resilience of the Group from both an operational and financial point of view. Despite the economic crisis, the Group continued its growth path by continuing to generate value. The 2020 financial year closed with ordinary EBITDA of €17.9 billion, in line with last year’s results. Ordinary profit, on which the dividend is calculated, reached €5.2 billion, up 9% compared with the previous year. The dividend for 2020 amounts to about €0.36 per share, up 8% compared with 2019. The FFO/net debt ratio, an indicator of financial strength, reached 25% at the end of the year. Net debt is equal to €45.4 billion, lower than the forecasts previously provided to the market. Main developments As in previous years, Enel reached a new record for renewables generation capacity in 2020, adding 3,106 MW of new re- newables capacity globally, while at the same time increasing our pipeline of future renewables projects, reaching 180 GW worldwide at the end of the year. The consolidated installed renewables capacity reached 45 GW, again exceeding thermal generation capacity, which fell to about 36 GW (-3.3 GW compared with 2019). Furthermore, 2020 was the first year in which consolidated renewable genera- tion also surpassed thermal output, with 105.4 TWh. This is an important step in the Group’s journey towards a cleaner and more sustainable energy mix and an acceleration of the decarbonization process, which was also underscored by the rapid decline in specific CO2 emissions, which reached 214 gCO2eq/kWh, a decrease of 28% compared with 2019. Thanks to our investments in grids and the simultaneous focus on the digitization of systems and processes, we continued to improve the quality of the service offered to our customers, reducing the average per-customer duration of outages by 12% compared with the previous year, registering a global SAIDI of 258.9 minutes. Furthermore, with the Grid Blue Sky project, we are completely overhauling the operating model of the distribution grids. The goal is to create a single global operating platform by 2022, which will enable the efficient integrated management of our grids in all the geographical areas in which we operate, supporting the sustainable development of the asset portfolio in order to maximize value. The benefits associated with the project are manifold. These include increasing the value of our services for customers, the rapid im- plementation of innovative solutions, an increase in the efficiency of our processes and the creation of shared value in the communities in which we operate. During 2020, the development of public and private charging infrastructure for electric vehicles continued and, thanks in part to interoperability agreements, we have exceeded 185,000 charging points worldwide. The Group has also supported the electrification of public transport thanks to the supply of charging stations for electric buses, with Enel X closing 2020 with over 900 electric buses managed globally. We were once again the leader in terms of the number of lighting points operated, at 2.8 million worldwide. We also confirmed our ability to assist industrial customers in using energy more effi- ciently, bringing active demand management capacity to 6.0 GW and total battery capacity installed at those customers or directly connected with distribution and transmission grids to 123 MW. With regard to the digital transformation, the decision to migrate 100% of applications to the cloud has enabled Enel to guarantee the continuity of supply of essential services even during the pandemic. The digitalization of plants and grids has enabled remote operation of our infrastructure, significantly reducing the number of interventions in the field. The comple- te transition to the cloud has also facilitated the adoption of continuous flexible working measures for all employees whose activities can be managed remotely. Between April and December 2020, approximately 53% of personnel worked remotely, supported by the robustness and resilience of the Group’s digital infrastructures and the enhanced IT equipment swiftly made available to those without appropriate devices, enabling a massive transition to working from home. Among extraordinary corporate transactions, in December 2020, the Extraordinary Shareholders’ Meeting of Enel Américas approved the merger of EGP Américas into Enel Américas, as well as the removal of the limits in that company’s articles of association that currently do not permit a single shareholder to own more than 65% of shares with voting rights. In 2020, as part of the restructuring of the joint venture with General Electric, Enel Green Power North America closed the sale of 255 MW of hydroelectric capacity and 27 MW of wind capacity in Canada and 25 MW of hydroelectric capacity in the United States. From a financial point of view, on September 1, 2020, an equity-accounted perpetual hybrid bond of €600 million was is- sued, the first of its kind for an Italian industrial group. At the same time, Enel also launched a voluntary purchase offer for hybrid bonds maturing in 2076 with a nominal value of £250 million. In October, after the issue in 2019 of the world’s first general-purpose bonds linked to the United Nations Sustainable Development Goals (SDGs), Enel successfully launched a £500 million “Sustainability-Linked Bond”, the first of its kind in that currency. The issue is linked to the achievement of a target for the percentage of consolidated installed renewables capacity, in line with the commitment to achieve the United Nations SDGs. Thanks to its success on the market, Enel has obtained savings of about 15 basis points compared with financial instruments with the same characteristics but not linked to the pursuit of the SDGs. Strategy and forecasts for 2021-2023 The energy transition, driven by the fight against climate change and facilitated by decarbonization, the electrification of energy consumption and digitalization, is revolutionizing not only the energy sector but all areas of the economy, in a world in which the role of electricity will be increasingly significant. In this context, it is essential to extend the time horizon of our strategic vision to the medium and long term. Guided by this intuition, in November 2020 the Group presented the new Strategic Plan with a vision that reaches 2030, placing the acce- leration of the energy transition at the center of the strategy, which, in enabling sustainable and profitable growth, offers the concrete prospect of simultaneously generating significant shared value for all stakeholders and a satisfactory return for shareholders. With the new Strategic Plan, the Group has indicated its direction for the next ten years, mobilizing approximately €190 billion between direct and third-party investments, in order to achieve our objectives in a decade that promises to be full of opportunities, to be seized through two complementary business models: the traditional Ownership model, based on direct investments to support long-term sustainable development, in which platforms contribute to business growth and value maximization; and a new Stewardship model, in which the use of platforms enables new services, products and know-how by catalyzing third-party investments. The 2021-2023 Strategic Plan is ideally placed as the first step in a growth path that spans the entire coming decade. The Group’s ambitions are reflected in a marked increase in investments, both direct and indirect, to enable the acceleration of trends in decarbonization and electrification. In the 2021-2023 period, the Group expects to directly invest around €40 billion, of which €38 billion through the Ownership model, mainly in expanding and upgrading grids and developing renewables, and around €2 billion through the Stewardship model, while mobilizing an additional €8 billion in investment by third parties. These investments will allow the Group to increase the renewables capacity it manages from around 49 GW in 2020 to around 68 GW at the end of 2023, with renewables capacity reaching around 70% of the total by the end of 2023. The Group also plans to invest in improving the service quality and resilience of our distribution grids, in new connections and digitalization. The acceleration of investment will grow the Group’s regulatory asset base (RAB) by 14% to about €48 billion in 2023. The remainder of the investments envisaged in the plan will be allocated to the retail businesses and Enel X, to support the electrification of consumption by offering new “beyond commodity” services through platforms, generating an increase in the value of B2C and B2B customers of 30% and 45%, respectively, and supporting the decarbonization of cities. In support of these objectives, by 2023 the Group plans to achieve some 780,000 charging points, 10.6 GW of active demand mana- gement capacity and 5,500 electric buses globally. About 90% of 2021-2023 consolidated investment is in line with the United Nations SDGs and it is estimated that between 80% and 90% of investments will be aligned with the criteria of the European taxonomy, given their substantial contribution to climate change mitigation. This testifies to how sustainable development represents the intrinsic basis of our strategy, helping to direct all our actions towards increasingly sustainable and consequently less risky choices and approaches. The Group’s strategy is aligned with a target of reducing direct CO2 emissions to 82 gCO2eq/kWh by 2030, down 80% com- pared with 2017 in accordance with a scenario that limits global warming to 1.5 °C compared with pre-industrial levels, as certified by the Science Based Targets initiative (SBTi), and achieving carbon neutrality by 2050. As for performance, the Group expects that ordinary EBITDA will reach between €20.7 and 21.3 billion by 2023, with a CAGR of 5%-6% over the results achieved in 2020. At the same time, ordinary profit is expected to reach between €6.5 and 6.7 bil- lion, with a CAGR of between 8% and 9%. The intrinsic sustainability of our business model, combined with a determination to achieve strategic objectives, has enabled Enel to establish a guaranteed fixed dividend per share that will increase over the Plan period to €0.43 per share in 2023. Integrated Annual Report 2020LETTER TO SHAREHOLDERS AND OTHER STAKEHOLDERS 4 BASIS OF PRESENTATION 10 S T N E T N O C S N O I T A R E P O N O T R O P E R ENEL GROUP Highlights GOVERNANCE STRATEGY & RISK MANAGEMENT 18 Enel shareholders 34 Group strategy World Economic Forum (WEF) Value creation and the business model 22 24 Corporate Boards 35 Reference scenario The Enel corporate governance system 36 > Macroeconomic environment Enel organizational model 42 > The energy industry European Union taxonomy 28 Incentive system Enel around the world 30 Values and pillars of corporate ethics 44 45 > Climate change and long-term scenarios > Assessment of the risks and opportunities connected with the Strategic Plan Risk management 50 62 62 64 67 76 77 To facilitate the navigation hypertext links have been included into the document. Go to... Statement of Cash flows Income Statement Statement of Changes in Equity Statement of financial position Statement of Comprehensive Income PERFORMANCE & METRICS OUTLOOK Outlook 216 Definition of performance indicators 108 Performance of the Group 110 Value created and distributed to stakeholders 128 Analysis of the Group’s financial position and financial structure 129 Results by Business Line 136 Enel shares Innovation and digitalization People centricity 173 176 178 Significant events in 2020 189 Regulatory and rate issues 199 I S T N E M E T A T S L A C N A N I F D E T A D I L O S N O C CONSOLIDATED FINANCIAL STATEMENTS Consolidated financial statements Notes to the financial statements Declaration of the Chief Executive Officer and the officer in charge Reports Report of the Board of Statutory Auditors to the Shareholders’ Meeting of Enel SpA Independent auditors’ report Attachments 224 231 397 398 398 414 421 Subsidiaries, associates and other significant equity investments of the Enel Group at December 31, 2020 421 Integrated Annual Report 2020 Basis of Presentation Enel’s approach to corporate reporting The Enel Group has drawn inspiration from the “Core&Mo- re” reporting approach, designing its own corporate repor- ting system at the service of stakeholders in a connected, logical and structured manner and developing its own con- cept for presenting economic, social, environmental and The Integrated Annual Report of the Enel Group, consisting governance information, in accordance with specific regu- of the Report on Operations inspired by integrated thinking lations, recommendations and international best practices. and the consolidated financial statements prepared in ac- This “Core Report” seeks to provide a holistic view of the cordance with the IFRS/IAS international accounting stan- Group, its sustainable and integrated business model and dards, represents the “core” document of the Enel Group’s the related value creation process, including the qualitati- integrated corporate reporting system, based on the tran- ve and quantitative financial and non-financial information sparency, effectiveness and accountability of information. considered most relevant on the basis of a materiality asses- The objective of the Enel’s Integrated Annual Report is to sment that also considers the expectations of stakeholders. describe its strategic thinking, summarized in the equation The “More Reports”, on the other hand, include more de- “sustainability = value”, and to present its results and the me- tailed and additional information, partly in compliance with dium- and long-term outlook for a sustainable and integra- specific regulations, than that provided in the Core Report ted business model that in recent years has fostered the cre- while being cross referenced to the latter. ation of value in the context of the energy transition. 1010 Corporate reporting framework The CORE&MORE approach of the Enel Group REPORT AND FINANCIAL STATEMENTS OF ENEL SPA This is prepared in conformity with Article 9, paragraph 3, of Legislative Decree 38 of February 28, 2005 SUSTAINABILITY REPORT This includes the Consolidated Non-Financial Statement prepared pursuant to Legislative Decree 254/2016 and presents Enel’s sustainable business model for creating value for all stakeholders and contributing to achievement of the 17 Sustainable Development Goals of the United Nations INTEGRATED ANNUAL REPORT REPORT ON REMUNERATION POLICY This describes the Enel remuneration system, as provided for by Article 123-ter of the Consolidated Law on Financial Intermediation REPORT ON CORPORATE GOVERNANCE AND THE OWNERSHIP STRUCTURE This describes the Enel corporate governance system pursuant to Article 123-bis of the Consolidated Law on Financial Intermediation and Article 144-decies of the CONSOB Issuers Regulation 11 |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||Integrated Annual Report 2020The Integrated Annual Report and materiality analysis Group and for the stakeholders (material issues), and to verify the “alignment” or “misalignment” between exter- nal expectations and internal importance. The result of this As an expression of integrated thinking, the Integrated An- analysis is represented in the Group’s priority matrix (or nual Report seeks to represent the capacity of the business materiality matrix), which, in giving a comprehensive view model to create value for stakeholders in the short, medium of all stakeholders, provides complete sustainability disclo- and long term, ensuring the connectivity of the information sure that incorporates the positive and negative impacts it contains. on society, the environment and the economy, and there- The Group maintains ongoing relationships with all sta- fore the Group’s contribution to sustainable development, keholders in order to understand and meet their reporting as illustrated in the Sustainability Report. needs, taking account of the importance of the impact of For the purposes of the Integrated Annual Report, the is- the Group’s business model for all interests involved, with a sues that have a direct impact on the creation of entrepre- view to creating shared value. neurial value were identified, applying a filter to so-called The financial and non-financial information presented wi- primary users, i.e. the “financial community” stakeholders. thin the various documents of the corporate reporting sy- (1) The analysis identified the following three priority issues: stem are selected based on their materiality determined › ecosystems and platforms; on the basis of specific frameworks, methodologies and › sound governance and transparent conduct; assessments. › decarbonization of the energy mix. The following represent the key principles underpinning the preparation of the Report on Operations, with the ba- In addition to the concept of materiality, the qualitative and sis of preparation of the consolidated financial statements quantitative financial and non-financial information repor- being discussed in the section “Form and content of the ted in the Report on Operations have been prepared and financial statements”. presented in such a way as to ensure their completeness, The Report on Operations includes financial and non-fi- accuracy, neutrality and comprehensibility. nancial information selected on the basis of a materiality The information contained in the Report on Operations is analysis performed in accordance with the requirements also consistent with the previous year, unless otherwise in- set out in Practice Statement 2 “Making Materiality Judg- dicated. ments”, issued by the International Accounting Standards Accordingly, the Group applies the same methodologies Board (IASB), with specific consideration of the United from year to year, unless otherwise specified, in complian- Nations Sustainable Development Goals (SDGs) (i.e. Affor- ce with international best practices for integrated reporting dable and Clean Energy (SDG 7); Industry, Innovation and and non-financial reporting. Infrastructure (SDG 9); Sustainable Cities and Communities For the purposes of preparing non-financial information, (SDG 11) and Climate Action (SDG 13)) and on the activities especially quantitative information, the Group mainly ap- implemented to contribute to their achievement in order plies the provisions of the Global Reporting Initiative (GRI) to meet the expectations of the main stakeholders in the Standard, in line with the Sustainability Report, and the Integrated Annual Report. “Aspects” of the GRI supplement dedicated to the Electric The Enel Group also performs the materiality analysis in ac- Utilities sector (“Electric Utilities Sector Disclosures”). Con- cordance with the Sustainability Report. sideration was also given to the indicators proposed in the As part of the analysis, the main stakeholders of the Group white paper “Towards Common Metrics and Consistent are identified and assessed on the basis of their relevance Reporting of Sustainable Value Creation” of the World Eco- to the Group. They may prioritize business and governan- nomic Forum (WEF) and the recommendations of the Task ce issues, social issues and environmental issues. The pri- Force on Climate-related Financial Disclosures (TCFD), the orities thus defined by the stakeholders are then compa- details of which are highlighted in the section below on the red against those of the Group and the business strategy. WEF and in the “Performance & Metrics” chapter of this This joint view of the two perspectives makes it possible document. to identify the issues of greatest importance both for the Taking account of the results of the priority matrix and the (1) Includes financial institutions and their governance bodies, investors, rating agencies and financial analysts. 1212 significant climate impacts on the Group’s value creation between key financial and non-financial information have process, each section (entitled after the four pillars of the been identified and presented in the Report on Operations TCFD: Governance, Strategy & Risks, Performance & Me- for each of the four sections indicated above. trics and Outlook) includes information relating to climate For the purposes of greater and easier access to informa- change as proposed by the TCFD, which published specific tion, the Integrated Annual Report has also been published recommendations in June 2017 and were adopted by the in the “Investors” section of the Enel website (www.enel. Group in its voluntary reporting on the financial impacts of com) in a navigable format with specific hyperlinks. climate risks. The Group also took account of the recommendations is- sued by the IASB in November 2019 “IFRS Standards and Connectivity matrix climate-related disclosures” and November 2020 “Effects In order to represent the connectivity of information, the of climate-related matters on financial statements “, which Enel Group has developed a matrix delineating the relation- emphasize that this risk must be considered in the assu- ships between: mptions of management in the exercise of its judgment in › strategic objectives that also clearly represent Enel’s measuring items in the financial statements. contribution to achieving the United Nations Sustainable Development Goals (SDGs) and in particular to the four In order to ensure the connectivity of information and to key objectives of the Strategic Plan (i.e. SDG 7, SDG 9, communicate the way in which the progress achieved in SDG 11 and SDG 13); sustainability contributes to enhancing current and future › the governance, risks and opportunities, performance financial performance, clear and consistent relationships and outlook for each Business Line. 13 Integrated Annual Report 2020Connectivity matrix Enel business Value creation and business model Global Power Generation & Global Trading GENERATION End-user Markets Enel X CUSTOMERS Global Infrastructure and Networks GRIDS 1414 Governance Strategy SDG Risk & Opportunities DECARBONIZATION The use of capital is targeted at decarbonization through the development of renewable generation assets. > ENEL’S CORPORATE GOVERNANCE SYSTEM > ENEL’S ORGANIZATIONAL MODEL ELECTRIFICATION The development of renewable generation assets and technological and digital evolution will foster the electrification of energy consumption and the development of new services for customers. PLATFORM & DIGITAL Investments in enabling infrastructure for the development of grids and the implementation of platform-based models, expertly exploiting technological and digital evolution. Thermal Generation and Trading Acceleration of investment in renewables, especially in Latin America and North America, supporting industrial growth within the scope of the Group’s decarbonization policy. Strategic > Legislative and regulatory Performance > Revenue from thermal and nuclear Performance & Metrics (KPls) Innovation and digitalization People centricity Enel Green Power Operations > Net electricity generation > Net efficient installed capacity Performance > Revenue > Gross operating profit > Operating profit > Capital expenditure Operations > Net electricity generation > Net efficient installed capacity generation > Revenue > Gross operating profit > Operating profit > Capital expenditure People centricity Operations > Sale of electricity > Sale of natural gas Performance > Revenue > Gross operating profit > Operating profit > Capital expenditure Innovation and digitalization People centricity Operations > Demand response > Lighting points > Storage > Charging points Performance > Revenue > Gross operating profit > Operating profit > Capital expenditure Outlook (Targets) 2021-2030 equivalent. 2021 Reduction of direct CO2 emissions by 80% compared with 2017, saving the extraction of about 200 million barrels of oil 2021-2023 More than €19 billion invested in Global Power Generation, with about €17 billion dedicated to expanding renewable generation capacity, which will rise to 60 GW on a consolidated basis by 2023. The electrification process will enable customers to save about 25% on their energy bills while reducing their emissions. 2021-2023 About €3 billion invested in the Customer business: the customer value of the Business to Consumer segment is expected to increase by about 30%, while that of the Business to Business segment is expected to expand by about 45%, thanks to the elimination of regulated rates, mainly in Italy, and trends in the electrification of energy consumption, which will promote “beyond commodity” services. 2021 An increase in investments in electrification of consumption, especially in Italy, in order to leverage the growth of the customer base, while continuing to implement efficiency gains, supported by the creation of global business platforms. 2021-2030 The process of digitalization and the creation of platforms will make it possible to offer a level of service quality three times greater than current levels, with the System Average Interruption Duration Index falling to about 100 minutes in Innovation and digitalization 2021-2030 Innovation and digitalization 2030. People centricity Operations > Electricity distribution and transmission grids More than €16 billion invested in Infrastructure and > Average frequency of interruptions Networks. The acceleration of investment is expected to increase the Group RAB to €48 billion by 2023. per customer > Average duration of interruptions 2021-2023 2021 An increase in investments to improve the quality and resilience of distribution grids, especially in Italy and Latin America, with even more progress in their digitalization. per customer > Grid losses (% avg) Performance > Revenue > Gross operating profit > Operating profit > Capital expenditure developments > Macroeconomic and geopolitical trends > Climate change > Competitive environment Financial > Interest rates > Commodities > Currency risk > Credit and counterparty > Liquidity Digital Technology > Cyber security > Digitalization, IT effectiveness, Service continuity Operational > Health and safety > Environment > Procurement, logistics & supply chain > People and organization Compliance > Data protection Connectivity matrix Enel business Value creation and business model Global Power Generation & Global Trading GENERATION DECARBONIZATION The use of capital is targeted at decarbonization through the development of renewable generation assets. The development of renewable generation assets and technological and digital evolution will foster the electrification of energy consumption and the development of new services for customers. PLATFORM & DIGITAL Investments in enabling infrastructure for the development of grids and the implementation of platform-based models, expertly exploiting technological and digital evolution. End-user Markets Enel X > ENEL’S CORPORATE GOVERNANCE SYSTEM > ENEL’S ORGANIZATIONAL MODEL ELECTRIFICATION CUSTOMERS Global Infrastructure and Networks GRIDS Governance Strategy SDG Risk & Opportunities Performance & Metrics (KPls) Innovation and digitalization People centricity Enel Green Power Operations > Net electricity generation > Net efficient installed capacity Performance > Revenue > Gross operating profit > Operating profit > Capital expenditure Thermal Generation and Trading Outlook (Targets) 2021-2030 Reduction of direct CO2 emissions by 80% compared with 2017, saving the extraction of about 200 million barrels of oil equivalent. 2021-2023 More than €19 billion invested in Global Power Generation, with about €17 billion dedicated to expanding renewable generation capacity, which will rise to 60 GW on a consolidated basis by 2023. 2021 Acceleration of investment in renewables, especially in Latin America and North America, supporting industrial growth within the scope of the Group’s decarbonization policy. Strategic > Legislative and regulatory developments > Macroeconomic and geopolitical trends > Climate change > Competitive environment Financial > Interest rates > Commodities > Currency risk > Credit and counterparty > Liquidity Digital Technology > Cyber security > Digitalization, IT effectiveness, Service continuity Operational > Health and safety > Environment > Procurement, logistics & supply chain > People and organization Compliance > Data protection Operations > Net electricity generation > Net efficient installed capacity Performance > Revenue from thermal and nuclear generation > Revenue > Gross operating profit > Operating profit > Capital expenditure Innovation and digitalization People centricity Operations > Sale of electricity > Sale of natural gas Performance > Revenue > Gross operating profit > Operating profit > Capital expenditure Innovation and digitalization People centricity Operations > Demand response > Lighting points > Storage > Charging points Performance > Revenue > Gross operating profit > Operating profit > Capital expenditure Innovation and digitalization People centricity Operations > Electricity distribution and transmission grids > Average frequency of interruptions per customer > Average duration of interruptions per customer > Grid losses (% avg) Performance > Revenue > Gross operating profit > Operating profit > Capital expenditure 2021-2030 The electrification process will enable customers to save about 25% on their energy bills while reducing their emissions. 2021-2023 About €3 billion invested in the Customer business: the customer value of the Business to Consumer segment is expected to increase by about 30%, while that of the Business to Business segment is expected to expand by about 45%, thanks to the elimination of regulated rates, mainly in Italy, and trends in the electrification of energy consumption, which will promote “beyond commodity” services. 2021 An increase in investments in electrification of consumption, especially in Italy, in order to leverage the growth of the customer base, while continuing to implement efficiency gains, supported by the creation of global business platforms. 2021-2030 The process of digitalization and the creation of platforms will make it possible to offer a level of service quality three times greater than current levels, with the System Average Interruption Duration Index falling to about 100 minutes in 2030. 2021-2023 More than €16 billion invested in Infrastructure and Networks. The acceleration of investment is expected to increase the Group RAB to €48 billion by 2023. 2021 An increase in investments to improve the quality and resilience of distribution grids, especially in Italy and Latin America, with even more progress in their digitalization. 15 Integrated Annual Report 2020 Value creation and the business model The integrated presentation of how the Group transforms its resources into outcomes and value created for stakehol- ders, prioritizing the pursuit of Sustai- nable Development Goals (SDGs) 7, 9, 11 and 13. WEF metrics and the European taxonomy Clear, transparent and comparable di- sclosure through WEF metrics and the European taxonomy. Enel is increasingly a driver of change in achieving the energy transition. Sustainable development in 5 continents The Enel Group is present in 47 countries with more than 1,000 companies. 1 ENEL GROUP S N O I T A R E P O N O T R O P E R 1616 17 Integrated Annual Report 2020HIGHLIGHTS HIGHLIGHTS 18 134562Enel GroupStrategy & Risk ManagementPerformance& MetricsOutlookConsolidated financial statementsGovernanceHIGHLIGHTSTotal revenue -19.1% €64,985 million €80,327 million in 2019 Profit attributable to owners of the Parent +20.1% €2,610 million €2,174 million in 2019 Capital expenditure on property, plant and equipment and intangible assets +2.5% €10,197 million €9,947 (1) million in 2019 Total employees -2.3% 66,717 no. of employees 68,253 in 2019 GROSS OPERATING PROFIT ORDINARY GROSS OPERATING PROFIT -5.0% +0.2% €16,816 million €17,940 million €17,704 million in 2019 €17,905 million in 2019 ORDINARY PROFIT ATTRIBUTABLE TO OWNERS OF THE PARENT NET FINANCIAL DEBT +9.0% +0.5% €5,197 million €45,415 million €4,767 million in 2019 €45,175 million in 2019 CASH FLOWS FROM OPERATING ACTIVITIES +2.3% €11,508 million €11,251 million in 2019 “HIGH CONSEQUENCE” ACCIDENTS 3 no. 3 in 2019 (1) Does not include €4 million regarding units classified as “held for sale” in 2019. 19 Integrated Annual Report 2020HIGHLIGHTS - BUSINESS LINES Global Power Generation TOTAL NET EFFICIENT INSTALLED CAPACITY -0.4% NET ELECTRICITY GENERATION -9.6% 84.0 GW 84.3 in 2019 207.1 TWh 229.1 in 2019 NET EFFICIENT INSTALLED RENEWABLES CAPACITY NET EFFICIENT INSTALLED RENEWABLES CAPACITY AS % OF TOTAL ADDITIONAL EFFICIENT INSTALLED RENEWABLES CAPACITY +7.2% 53.6 % 50.0 in 2019 -18.7% 2.91(2) GW 3.58 in 2019 +6.9% 45.0 GW(1) 42.1 in 2019 NET RENEWABLE ELECTRICITY GENERATION +6.0% 105.4 TWh 99.4 in 2019 SPECIFIC DIRECT GREENHOUSE GAS EMISSIONS - SCOPE 1 -28.2% 214 gCO2eq/kWh 298 in 2019 Global Infrastructure and Networks END USERS +0.7% 74,303,931 no.(3) 73,811,964 in 2019 ELECTRICITY DISTRIBUTION AND TRANSMISSION GRID ELECTRICITY END USERS WITH ACTIVE TRANSPORTED ON ENEL’S SMART METERS +0.6% 2,231,961 km(3) 2,219,008 in 2019 DISTRIBUTION GRID -4.5% 484.6 TWh(4) 507.7 in 2019 +1.1% 44,292,794 no.(5)(6) 43,821,596 in 2019 End-user Markets ELECTRICITY SOLD RETAIL CUSTOMERS -1.4% BY ENEL -7.4% 298.2 TWh(7) 322.0 in 2019 of which free market +0.7% 69,517,932 23,164,875 no.(8) no.(8) 70,471,612 in 2019 23,013,224 in 2019 Enel X STORAGE +11.8% 123.0 MW 110.0 in 2019 CHARGING POINTS DEMAND RESPONSE +32.3% 105,237(9) no. 79,565 in 2019 -4.1% 6,038 no. 6,297 in 2019 (1) Net efficient installed renewables capacity, including managed capacity, (4) The figure for 2019 reflects a more accurate calculation of quantities amounted to 48.6 GW at December 31, 2020 and 45.8 GW at December 31, 2019. transported. (2) Additional efficient installed renewables capacity including managed capacity was equal to 3.1 GW at December 31, 2020 and 3 GW at December 31, 2019. (3) The figure for 2019 reflects a more accurate calculation of the numbers. (5) To ensure a uniform comparison, the figure for 2019 has been adjusted on the basis of the new calculation method, which excludes digital meters with an active contract that are not managed remotely. (6) Of which 18.2 million second-generation meters in 2020 and 13.1 million in 2019. (7) Volumes include sales to large customers by generation companies in Latin America. The figure for 2019 has consequently been adjusted to ensure The figure for 2019 has consequently been adjusted to ensure comparability. (9) The number of charging points including interoperable points was equal to about 186 thousand at December 31, 2020 and about 82 thousand comparability. (8) Also includes the large customers of generation companies in Latin America. at December 31, 2019. 2020 134562Enel GroupStrategy & Risk ManagementPerformance& MetricsOutlookConsolidated financial statementsGovernance HIGHLIGHTS - BUSINESS LINES Global Power Generation TOTAL NET EFFICIENT INSTALLED CAPACITY -0.4% NET ELECTRICITY GENERATION -9.6% 84.0 GW 84.3 in 2019 207.1 TWh 229.1 in 2019 NET EFFICIENT INSTALLED NET EFFICIENT INSTALLED RENEWABLES CAPACITY AS % OF TOTAL CAPACITY ADDITIONAL EFFICIENT INSTALLED RENEWABLES +7.2% 53.6 % 50.0 in 2019 -18.7% 2.91(2) GW 3.58 in 2019 RENEWABLES CAPACITY +6.9% 45.0 GW(1) 42.1 in 2019 NET RENEWABLE ELECTRICITY GENERATION +6.0% 105.4 TWh 99.4 in 2019 SPECIFIC DIRECT GREENHOUSE GAS EMISSIONS - SCOPE 1 -28.2% 214 gCO2eq/kWh 298 in 2019 Global Infrastructure and Networks END USERS +0.7% 74,303,931 no.(3) 73,811,964 in 2019 ELECTRICITY DISTRIBUTION AND TRANSMISSION GRID ELECTRICITY TRANSPORTED ON ENEL’S DISTRIBUTION GRID END USERS WITH ACTIVE SMART METERS +0.6% 2,231,961 km(3) 2,219,008 in 2019 -4.5% 484.6 TWh(4) 507.7 in 2019 +1.1% 44,292,794 no.(5)(6) 43,821,596 in 2019 End-user Markets ELECTRICITY SOLD BY ENEL -7.4% RETAIL CUSTOMERS -1.4% of which free market +0.7% 298.2 TWh(7) 322.0 in 2019 69,517,932 23,164,875 no.(8) no.(8) 70,471,612 in 2019 23,013,224 in 2019 Enel X STORAGE +11.8% 123.0 MW 110.0 in 2019 CHARGING POINTS DEMAND RESPONSE +32.3% 105,237(9) no. 79,565 in 2019 -4.1% 6,038 no. 6,297 in 2019 (1) Net efficient installed renewables capacity, including managed capacity, (4) The figure for 2019 reflects a more accurate calculation of quantities amounted to 48.6 GW at December 31, 2020 and 45.8 GW at December 31, 2019. transported. (2) Additional efficient installed renewables capacity including managed capacity was equal to 3.1 GW at December 31, 2020 and 3 GW at December 31, 2019. (3) The figure for 2019 reflects a more accurate calculation of the numbers. (5) To ensure a uniform comparison, the figure for 2019 has been adjusted on the basis of the new calculation method, which excludes digital meters with an active contract that are not managed remotely. (6) Of which 18.2 million second-generation meters in 2020 and 13.1 million in 2019. (7) Volumes include sales to large customers by generation companies in Latin America. The figure for 2019 has consequently been adjusted to ensure comparability. (8) Also includes the large customers of generation companies in Latin America. The figure for 2019 has consequently been adjusted to ensure comparability. (9) The number of charging points including interoperable points was equal to about 186 thousand at December 31, 2020 and about 82 thousand at December 31, 2019. 21 Integrated Annual Report 2020 WORLD ECONOMIC FORUM (WEF) Consistent Reporting of Sustainable Value Creation”, with the aim of defining shared common metrics to measure, report and compare levels of sustainability, i.e. the effecti- veness of its actions in pursuing the Sustainable Develop- ment Goals set by the United Nations (SDGs), in the busi- ness model adopted to create value for stakeholders. The metrics are based on existing standards and seek to increase convergence and comparability between the va- The International Business Council (IBC) of the World Eco- rious parameters used today in sustainability reports. nomic Forum has developed a report entitled “Measuring The following table gives the 21 main indicators specified in Stakeholder Capitalism: Towards Common Metrics and the WEF report. Integrated Annual Report 2020 Pillar Theme CORE KPIs KPIs representing the 21 CORE KPIs of the WEF Chapter/Section reporting all KPIs and disclosure on the 21 CORE KPIs of the WEF 2020 PRINCIPLES OF GOVERNANCE Governing purpose Quality of governing body Stakeholder engagement Setting purpose Governance body composition Material issues impacting stakeholders Anti-corruption Ethical behavior Protected ethics advice and reporting mechanisms Risk and opportunity oversight Integrating risk and opportunity into business process Enel is Open Power “Corporate boards” section in “Governance” chapter “Basis of Presentation” chapter “Values and pillars of corporate ethics” section in “Governance” chapter No. of women on Board 4 Employees with training in anti-corruption policies and procedures (%) Confirmed violations for conflict of interest/ corruption (no.) 40.0 2 Reports received for violations of Code of Ethics 151 “Values and pillars of corporate ethics” section in “Governance” chapter - “Risk management” section in “Strategy & Risk Management” chapter PLANET Climate change Greenhouse gas (GHG) emissions Direct greenhouse gas emissions - Scope 1 (million/teq) Indirect greenhouse gas emissions - Scope 2 - Purchase of electricity from the grid (location based) (million/teq) Indirect greenhouse gas emissions - Scope 2 - Purchase of electricity from the grid (market based) (million/teq) Indirect greenhouse gas emissions - Scope 2 - Distribution grid losses (location based) (million/teq) Indirect greenhouse gas emissions - Scope 3 (million/teq) 45.26 1.43 2.28 3.56 47.70 “Fighting climate change and ensuring environmental sustainability” section in “Performance & Metrics” chapter TCFD implementation “Governance”, “Strategy & Risk Management”, “Performance & Metrics” and “Outlook” chapters 2222 134562Enel GroupStrategy & Risk ManagementPerformance& MetricsOutlookConsolidated financial statementsGovernance WEF Pillar PLANET PEOPLE Integrated Annual Report 2020 Theme 21 CORE KPIs KPIs representing the 21 CORE KPIs of the WEF Chapter/Section reporting all KPIs and disclosure on the 21 CORE KPIs of the WEF 2020 Nature loss Land use and ecological sensitivity No. of protected areas 187 “Fighting climate change and ensuring environmental sustainability” section in “Performance & Metrics” chapter Fresh water availability Water consumption and withdrawals in water-stressed areas Water withdrawals (millions of m3) Water withdrawals in water- stressed areas (%) Total water consumption (millions of m3) Water consumption in water-stressed areas (%) Diversity and inclusion Women as proportion of total employees (%) 51.5 22.9 20.4 31.6 21.5 Pay equality Equal Remuration Ratio (%) 83.3 Dignity and equality Wage level CEO Pay Ratio (%) (1) 146 Risk for incidents of child, forced or compulsory labor Assessment of protection of child labor and compliance with ban on forced labor in the supply chain Fatal accidents - Enel (no.) 1 Frequency of fatal accidents - Enel (i.) 0.008 “Fighting climate change and ensuring environmental sustainability” section in “Performance & Metrics” chapter “People centricity” section in “Performance & Metrics” chapter “People centricity” section in “Performance & Metrics” chapter “Values and pillars of corporate ethics section” in “Governance” chapter Health and well-being Health and safety High consequence accidents - Enel (no.) 3 “People centricity” section in “Performance & Metrics” chapter Skills for the future Training provided Absolute number and rate of employment Economic contribution Employment and wealth generation PROSPERITY Financial investment contribution Frequency of high consequence accidents - Enel (i.) Average hours of training per employee (hrs/person) Employee training costs (millions of euro) 0.024 40.9 19 People hired (no.) 3,131 Hiring rate (%) 4.7 Terminations (no.) 3,696 Turnover (%) 6.0 Total investment (millions of euro) 10,197 Purchase of treasury shares and dividends paid 4,755 “People centricity” section in “Performance & Metrics” chapter “People centricity” section in “Performance & Metrics” chapter “Value created and distributed to stakeholders” section in “Performance & Metrics” chapter “Analysis of the Group’s financial position and financial structure” section in “Performance & Metrics” chapter Consolidated financial statements Innovation in better products and services Community and social vitality Total R&D expenses Investment in R&D (millions of euro) 111 “Innovation and digitalization” section in “Performance & Metrics” chapter Total tax paid Total tax paid (millions of euro) (2) 4,245 “Value created and distributed to stakeholders” section in “Performance & Metrics” chapter (1) Ratio of total remuneration of the CEO/General Manager of Enel and the average gross annual remuneration of Enel employees (CEO Pay Ratio equal to 143% in 2019). (2) The amount represents “total taxes borne”, which is costs for taxes borne by the Group. For more information, see the 2020 Sustainability Report and the Consolidated Non-Financial Statement. 23 Integrated Annual Report 2020 VALUE CREATION AND THE BUSINESS MODEL The value chain The integrated presentation of financial and non-financial information makes it possible to effectively communicate the business model and the value creation process both in terms of results and the short- and medium/long-term outlook, constituting an important input for a process of Our resources PROSPERITY €45,415 million Net financial debt €42,357 million Equity €10,197 million Capital expenditure €78,718 million Property, plant and equipment 84.0 GW Net efficient installed capacity 45.0 GW Net efficient installed renewables capacity 2.2 million km Electricity distribution and transmission grid 44.3 million End users with active smart meters 74.3 million End users 69.5 million Retail customers 23.2 million Retail customers, free market 105.2 thousand Charging points €17,668 million Intangible assets €13,264 million Concessions PEOPLE 66,717 Employees 21.5% Women as proportion of total employees 3,825 Women in management positions PLANET 22.9% Water withdrawals in water-stressed areas 2424 Context: Opportunity and Threats Circular Cities | Peer2Peer | Innovate to Zero | Freemium Business Model | Autonomous World | Zero Latency (5G) | Turmoil of Competition Context: Opportunity and Threats Connected Living | Emerging Raw Materials | Environmental and Climate Urgency | Heterogenous Society (Millennials, Gen Y and Z) | COVID-19 Outcome and value created for stakeholders Enel is Open Power PRINCIPLES OF GOVERNANCE PRINCIPLES OF GOVERNANCE > Open access to electricity Trust > Open the world of energy Proactivity for more people. to new technology. > Open up to new uses of energy. Responsibility > > > Innovation > Open up to new ways of managing energy for people. > Open up to new partnerships. PERFORMANCE & METRICS OUTLOOK Industry trends Directly tackled by Enel DECARBONIZATION PLATFORM & DIGITAL ELECTRIFICATION Open Power for a brighter future. We empower sustainable progress. How we do GOVERNANCE What we do Open Power to tackle some of the world’s biggest challenges. STRATEGY & RISK MANAGEMENT Business strategy Direction, Ambition GENERATION GRIDS CUSTOMERS CREATING SUSTAINABLE VALUE IN THE LONG TERM FUTURE OF WORK AND PEOPLE CENTRICITY FUTURE OF WORK AND PEOPLE CENTRICITY Automation and Robotics | Gig Economy | Creativity and Design Thinking | Competition for Talents and STE(A)M | New Ways of Working (Habits and Spaces) | Caring and Inclusion | Transhumanism PROSPERITY €65,081 million Economic value generated directly by the Group €4,245 million Total taxes borne €4,755 million Purchase of treasury shares and dividends paid 484.6 TWh Electricity transported 298.2 TWh Electricity sold €64,985 million Revenue €17,940 million Ordinary EBITDA €5,197 million Group ordinary profit 2.9 GW Additional efficient installed renewables capacity 25.7 thousand Public and private charging points installed in 2020 SAIDI (min.) 258.9 Intellectual property: 837 applications for patents, of which 0.521 Injury frequency rate 40.9 Hours of training (average hours 692 granted PEOPLE per employee) 6.0% Turnover PLANET 214 gCO2eq/kWh Specific direct greenhouse gas emissions - Scope 1 31.6% Water consumption in water-stressed areas 134562Enel GroupStrategy & Risk ManagementPerformance& MetricsOutlookConsolidated financial statementsGovernance informed financial decisions by investors and other sta- how they are transformed into outcomes and value crea- keholders, especially in consideration of the fact that en- ted for stakeholders by the organization and the business vironmental, social and economic aspects are increasingly model of the Group, which is characterized by sound and significant in terms of assessing the ability to create finan- transparent governance and a sustainable strategy that cial value for all categories of stakeholders. prioritizes the pursuit of SDGs 7, 9, 11 and 13, among other The following graphical representation summarizes the va- things. lue chain of the Enel Group with the main inputs used and Context: Opportunity and Threats Circular Cities | Peer2Peer | Innovate to Zero | Freemium Business Model | Autonomous World | Zero Latency (5G) | Turmoil of Competition Context: Opportunity and Threats Connected Living | Emerging Raw Materials | Environmental and Climate Urgency | Heterogenous Society (Millennials, Gen Y and Z) | COVID-19 Outcome and value created for stakeholders Enel is Open Power PRINCIPLES OF GOVERNANCE PRINCIPLES OF GOVERNANCE > Open access to electricity for more people. > Open the world of energy to new technology. Trust > Proactivity > > Open up to new uses of energy. Responsibility > Open up to new ways of managing energy for people. > Open up to new partnerships. > Innovation PERFORMANCE & METRICS OUTLOOK Industry trends Directly tackled by Enel DECARBONIZATION PLATFORM & DIGITAL ELECTRIFICATION FUTURE OF WORK AND PEOPLE CENTRICITY FUTURE OF WORK AND PEOPLE CENTRICITY Automation and Robotics | Gig Economy | Creativity and Design Thinking | Competition for Talents and STE(A)M | New Ways of Working (Habits and Spaces) | Caring and Inclusion | Transhumanism PROSPERITY €65,081 million Economic value generated directly by the Group €4,245 million Total taxes borne €4,755 million Purchase of treasury shares and dividends paid 484.6 TWh Electricity transported 298.2 TWh Electricity sold €64,985 million Revenue €17,940 million Ordinary EBITDA €5,197 million Group ordinary profit 2.9 GW Additional efficient installed renewables capacity 25.7 thousand Public and private charging points installed in 2020 SAIDI (min.) 258.9 Intellectual property: 837 applications for patents, of which 692 granted PEOPLE 0.521 Injury frequency rate 40.9 Hours of training (average hours per employee) 6.0% Turnover PLANET 214 gCO2eq/kWh Specific direct greenhouse gas emissions - Scope 1 31.6% Water consumption in water-stressed areas 25 Our resources PROSPERITY €45,415 million Net financial debt €42,357 million Equity €10,197 million Capital expenditure €78,718 million Property, plant and equipment 84.0 GW Net efficient installed capacity 45.0 GW Net efficient installed renewables capacity 2.2 million km Electricity distribution and transmission grid 44.3 million End users with active smart meters 74.3 million End users 69.5 million Retail customers 23.2 million Retail customers, free market 105.2 thousand Charging points €17,668 million Intangible assets €13,264 million Concessions PEOPLE 66,717 Employees 21.5% Women as proportion of total employees 3,825 Women in management positions PLANET 22.9% Water withdrawals in water-stressed areas Open Power for a brighter future. We empower sustainable progress. How we do GOVERNANCE What we do Open Power to tackle some of the world’s biggest challenges. STRATEGY & RISK MANAGEMENT Business strategy Direction, Ambition GENERATION GRIDS CUSTOMERS CREATING SUSTAINABLE VALUE IN THE LONG TERM Integrated Annual Report 2020 Business model local communication. The mission of each business can be summarized as follows: Enel’s business model has been structured so as to support › Global Power Generation: the Group operates through the commitments made by the Group in the fight against this Business Line to accelerate the energy transition, climate change. In 2019, Enel, responding to the call for continuing to increase investments in new renewable action from the United Nations, signed a commitment to energy capacity, and manages the decarbonization of act to limit the increase in global temperatures to 1.5 °C its generation mix and the countries in which it opera- and be net zero across its entire value chain by 2050. tes, always aiming to ensure the safety and capacity of The business model delineates how the organizational uni- electrical systems. ts of the Company, linked to our three main businesses, › Global Trading: this Business Line manages our integra- must work to reap all the possible benefits from the main ted margin as a single portfolio in which Generation and trends in the sector, possibly accelerating their implemen- Retail operations are always balanced effectively. In addi- tation as well. tion, the line manages all trading operations on interna- The role defined for all the major organizational units is also tional desks. intended to enable them to effectively address all the risks › Global Infrastructure and Networks: in developing and posed by developments in the rapidly changing energy in- operating infrastructure that enables the energy tran- dustry. sition, the Group ensures the reliability in the supply of Working transversally across organizational units, thanks energy and the quality of service to communities throu- to the platform-based digital models implemented to con- gh resilient and flexible networks, leveraging efficiency, nect assets, data and solutions, it will also be possible to technology and digital innovation, and ensuring appro- seize new opportunities to create value through two com- priate returns on investment and cash generation. plementary business models: › End-user Markets: through its sales relationships with end › the Ownership business model, in which platforms are users, the Group interacts locally with millions of families promoters of the business in support of the profitabili- and companies. Thanks to our technology, the platform ty of direct investments in renewables, grids and custo- model enables us to improve customer satisfaction and mers, supporting sustainable long-term growth, in which the customer experience, while at the same time achie- platform-based operating models also play an important ving ever higher levels of efficiency. The business units enabling role; optimize the supply of power to their customer base, › the Stewardship business model, in which the Group of- maximizing the value generated by that resource and fo- CUSTOMERS fers important services, products or know-how through stering long-term relationships with customers. platforms that mobilize investments, including third-par- › Enel X: this Business Line is enabling the energy tran- ty investors, to maximize value creation. More specifically, sition by acting as an accelerator for the electrification this comprises: and decarbonization of customers, helping them to use – operating platforms, which deliver services to third energy more efficiently, driving circularity and leveraging parties using know-how and best practices developed the assets of the Enel Group through the delivery of in- over time; novative “beyond commodity” services. – business platforms, which generate new products and services and thus new business opportunities for a By exploiting the synergies between the different business broad range of customers; areas, implementing actions through the lever of innovation – joint ventures and partnerships, in which joint invest- and deploying Open Power approaches, the Enel Group se- Creativity and Design Thinking | | Caring and Inclusion ment opportunities foster the creation of value thanks eks to develop solutions to reduce environmental impact, to platforms that enable third-party investments. meet the needs of customers and the local communities in which it operates and ensure high safety standards for In this design, each Country organization acts within its ter- employees and suppliers. ritory in a matrix relationship with the broader and more Global Business Lines, managing activities such as relations with local communities, regulation, the retail market and 2626 Context OPPORTUNITY and THREATS Circular Cities | Peer2Peer | Innovate to Zero | Freemium Business Model | Autonomous World | Zero Latency (5G) | Turmoil of Competition | Connected Living | Emerging Raw Materials | Environmental and Climate Urgency | Heterogenous Society (Millenials, Gen Y and Z) | COVID-19 Industry trends Directly tackled by Enel DECARBONIZATION ELECTRIFICATION PLATFORM & DIGITAL Business strategy Direction, Ambition GENERATION GRIDS Future of work and people centricity Automation and Robotics | | Competition for Talents and STE(A)M Gig Economy | | New Ways of Working (Habits and Spaces) Transhumanism | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||134562Enel GroupStrategy & Risk ManagementPerformance& MetricsOutlookConsolidated financial statementsGovernanceContext OPPORTUNITY and THREATS Circular Cities | Peer2Peer | Innovate to Zero | Freemium Business Model | Autonomous World | Zero Latency (5G) | Turmoil of Competition | Connected Living | Emerging Raw Materials | Environmental and Climate Urgency | Heterogenous Society (Millenials, Gen Y and Z) | COVID-19 Industry trends Directly tackled by Enel DECARBONIZATION PLATFORM & DIGITAL ELECTRIFICATION Business strategy Direction, Ambition GENERATION GRIDS CUSTOMERS Future of work and people centricity Automation and Robotics | | Competition for Talents and STE(A)M Gig Economy | | New Ways of Working (Habits and Spaces) Creativity and Design Thinking | | Caring and Inclusion Transhumanism | 27 ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||Integrated Annual Report 2020EUROPEAN UNION TAXONOMY (NFD) must make public the share of their turnover, capital expenditure and ordinary operating expenditure that qua- lify as environmentally sustainable. Based on this approach, Enel has classified all its econo- mic activities in the value chain into the following three categories: Eligible: an economic activity that meets both of the fol- The European Commission has established a specific lowing two conditions: classification system to identify environmentally sustai- › it was explicitly included in the European taxonomy re- nable economic activities, acting as an important enabler gulation because it contributes substantially to climate to support sustainable investment and to implement the change mitigation or adaptation; European Green Deal. › it satisfies the criteria set out in the European taxonomy regulation for the two environmental objectives. By providing appropriate definitions of the economic acti- Ineligible: an economic activity that meets both of the fol- vities that can be considered environmentally sustainable, lowing two conditions: it is intended to create security and transparency for inve- › it was explicitly included in the European taxonomy re- stors, protect private investors from greenwashing, help gulation because it contributes substantially to climate companies plan the transition, mitigate market fragmen- change mitigation or adaptation; tation and, ultimately, bridge the sustainable investment › it does not satisfy the criteria set out in the European ta- gap. xonomy regulation for the two environmental objectives. Not covered: an economic activity that: The European taxonomy established six environmental › was not included in the European taxonomy regulation objectives to identify environmentally sustainable econo- because it does not contribute substantially to climate mic activities: climate change mitigation, climate change change mitigation or adaptation and therefore no spe- adaptation, the sustainable use and protection of water cific technical criteria have been developed. The Euro- and marine resources, the transition to a circular eco- pean Commission believes that this type of activity may nomy, pollution prevention and control and the protection not have a significant impact on climate change mitiga- and restoration of biodiversity and ecosystems. An eco- tion/adaptation or could be integrated into the Europe- nomic activity is defined as environmentally sustainable if: an taxonomy regulation at a later stage. › it makes a substantive contribution to at least one of the The existence of this third category makes it impossible to six environmental objectives; achieve a business model that is fully compliant with the › it does no significant harm (DNSH) to the other five envi- European taxonomy criteria, since currently some activi- ronmental objectives; › it meets minimum safeguards. ties within the electric utilities value chain are not consi- dered to substantially contribute to climate change miti- In July 2018, the European Commission established a Te- gation. chnical Expert Group (TEG) on sustainable finance to de- velop recommendations for technical screening criteria for economic activities that can make a substantial con- tribution to climate change mitigation or adaptation while avoiding significant harm to the four other environmental objectives. Based on the contribution of the TEG and a wide range of stakeholders and institutions, the taxonomy regulation was published in the Official Journal of the European Union on June 22, 2020 and entered into force on July 12, 2020. Starting from January 2022, companies which are subject to the obligation to publish a Non-Financial Declaration 2828 Statement on the compliance of Enel’s business with the European taxonomy Although the European taxonomy regulation establishes an obligation for companies to declare compliance with the taxonomy starting from January 2022, given its importance 134562Enel GroupStrategy & Risk ManagementPerformance& MetricsOutlookConsolidated financial statementsGovernancefor the financial community and policymakers, Enel has de- could lead to a change in eligibility status; cided to highlight this in the 2020 Integrated Annual Report › the Enel X portfolio was analyzed at the Business Line and in the 2020 Sustainability Report, to which reference and product cluster level, as it was not possible to as- should be made for further information. sociate all the financial metrics required by the Europe- The summary of results and results by Business Lines in the an taxonomy with each individual product. However, as a “Performance & Metrics” chapter contain the results of the precaution, only the Business Lines and product clusters statement on compliance with the European taxonomy for that fully meet the criteria were designated as eligible, the activities of the Enel Group in 2020 and 2019. excluding the others (for example “e-home” and “distri- In analyzing these results, it is helpful to consider the fol- buted energy”); lowing elements as they are relevant for the preparation of › the statement was prepared without performing an the statement: exhaustive review of the DNSH criteria, which will be car- › the statement was prepared exclusively following the ried out once the delegated acts are approved in the se- criteria established in the draft version of the delegated cond quarter of 2021. Nonetheless, Enel is confident that act of the European taxonomy concerning the climate it can demonstrate a high level of performance, as over change mitigation goal because at the time of the pre- the years it has implemented complete and comprehen- paration of the 2020 annual reports the final version had sive environmental management systems that go beyond not yet been published. Final publication could introduce legal requirements and are applied throughout the va- important changes that might significantly affect the re- lue chain. Additional information on Enel’s environmental sult presented in this statement; performance is available in the “Environmental Sustaina- › one change that could significantly affect the final result bility” chapter of the 2020 Sustainability Report; concerns the manner in which the retail business seg- › the European Commission has not yet finished drafting ment will finally be represented in the European taxo- the delegated acts for the other four environmental nomy. Enel, together with other utilities, has asked the objectives. The latter could strengthen the compliance European Commission to include this business activity of Enel’s business model with the European taxonomy, because, similarly to electricity distribution, it contributes considering that the current statement only covers the substantially to climate change mitigation as an enabler climate change mitigation objective; of the decarbonization of other industries by promoting › the aggregates being analyzed refer to the “sector” le- the electrification of energy consumption; vel and only include items in respect of third parties. Ac- › Enel performed a detailed mapping of all its hydroelectric cordingly, they do not include inter-sectoral exchange assets on the basis of the “power density” metric requi- between sectors; red in the draft delegated acts. For plants with a power › although not explicitly required, Enel has also performed density lower than 5 W/m2, a further analysis was con- an assessment in terms of the ordinary gross operating ducted to verify that the emissions (calculated over the profit, as it believes that this metric represents the ef- entire life cycle) were below the specific emission limit of 100 gCO2eq/kWh. The findings indicated that 99% of the installed hydroelectric capacity is eligible in accordance fective financial performance of integrated utilities such as Enel. A metric that only considers revenue is strongly influenced by business activities with a high volume of with the European taxonomy criteria for climate change revenue (such as the wholesale market) that do not con- mitigation only, while only 1% – for which it was not pos- tribute proportionately to the growth of the gross opera- sible to conduct a timely assessment due to the lack of ting profit like other business activities. robust data – was ruled out on a conservative basis; › in order to maintain this conservative approach, the busi- The statement also gives a view that excludes “not cove- ness activity relating to the generation of electricity from red” activities to underscore the compliance of the Group geothermal sources was considered almost entirely ineli- for only the economic activities for which the European gible pending certification by an independent third party taxonomy has developed criteria and therefore the most of compliance with the threshold for geothermal plants of 100 gCO2eq/kWh for the entirety of Group’s geother- mal assets; › activities relating to the infrastructure and networks bu- siness in Chile, Colombia, Peru and Argentina were consi- dered ineligible, again adopting a conservative approach. However, during 2021 an in-depth analysis will be perfor- med for the distribution and transmission system, which significant from the point of view of the climate change mi- tigation objectives. 29 Integrated Annual Report 2020ENEL AROUND THE WORLD The Enel Group has a presence in 47 countries on the va- rious continents, with more than 1,000 subsidiaries. The following map shows the distribution of the Enel Group across the globe. PRESENCE PRESENCE 47 countries 47 Countries 3030 more than 1,000 subsidiaries more than 1,000 subsidiaries 134562Enel GroupStrategy & Risk ManagementPerformance& MetricsOutlookConsolidated financial statementsGovernanceIntegrated Annual Report 2020 31 2 GOVERNANCE Corporate governance system focused on achieving sustainable success. Governance model compliant with international best practice. Transparency and integrity its fundamental values. S N O I T A R E P O N O T R O P E R 3232 33 Integrated Annual Report 2020ENEL SHAREHOLDERS Company pursuant to Article 120 of Legislative Decree 58 of February 24, 1998, as well as other available informa- tion, shareholders with an interest of greater than 3% in the Company’s share capital included the Ministry for the Eco- nomy and Finance (with a 23.585% stake), BlackRock Inc. (with a stake of 5.081% held for asset management purpo- ses) and Capital Research and Management Company (with At December 31, 2020, the fully subscribed and paid-up a 5.029% stake held for asset management purposes). share capital of Enel SpA totaled €10,166,679,946, repre- sented by the same number of ordinary shares with a par value of €1.00 each. Share capital is unchanged compa- red with that registered at December 31, 2019. In 2020 the Company purchased a total of 1,720,000 treasury shares to support the 2020 Long-Term Incentive Plan (“LTI Plan”) for Composition of shareholder base the management of Enel and/or its subsidiaries pursuant Since 1999, Enel has been listed on the Mercato Telema- to Article 2359 of the Italian Civil Code. Considering the tico Azionario organized and operated by Borsa Italiana number of treasury shares already owned, Enel SpA holds SpA. Enel’s shareholders include leading international in- a total of 3,269,152 treasury shares, all supporting the 2019 vestment funds, insurance companies, pension funds and and 2020 LTI Plans. ethical funds. Significant shareholders At December 31, 2020, based on the shareholders register and the notices submitted to CONSOB and received by the Composition of shareholders base at December 2020 100% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 23.6% 14.1% MINISTRY FOR THE ECONOMY AND FINANCE RETAIL INVESTORS 62.3% INSTITUTIONAL INVESTORS The number of Environmental, Social and Governance (ESG) ber 31, 2019), while investors who have signed the Prin- investors in Enel has been rising steadily: at December 31, ciples for Responsible Investment represent 47.8% of the 2020, socially responsible investors (SRIs) held around share capital (compared with 43% at December 31, 2019). 14.6% of the share capital (compared with 10.8% at Decem- 3434 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsCORPORATE BOARDS Board of Directors CHAIRMAN Michele Crisostomo DIRECTORS Cesare Calari CHIEF EXECUTIVE OFFICER AND GENERAL MANAGER Francesco Starace SECRETARY Silvia Alessandra Fappani Mariana Mazzucato Costanza Esclapon de Villeneuve Mirella Pellegrini Samuel Leupold Alberto Marchi Anna Chiara Svelto R E D N E G E G A E S I T R E P X E 1 EXECUTIVE DIRECTOR 1 in 2019 8 NON-EXECUTIVE DIRECTORS 8 in 2019 of which 7 independent(1) 7 in 2019 2020 2020 2020 energy industry 3 1 strategic vision 4 accounting, finance and risk management 5 9 1 9 1 legal and corporate governance communication and marketing international experience 3 1 1 1 9 9 1 6 (1) The figures for 2020 and 2019 refer to directors qualifying as independent pursuant to the Corporate Governance Code (2018 edition). Board of Statutory Auditors CHAIRMAN Barbara Tadolini AUDITORS Romina Guglielmetti Claudio Sottoriva ALTERNATE AUDITORS Maurizio De Filippo Francesca Di Donato Piera Vitali Audit Firm KPMG SpA 9 9 35 Composition of shareholders base at December 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 100% 23.6% 14.1% MINISTRY FOR THE ECONOMY AND FINANCE RETAIL INVESTORS 62.3% INSTITUTIONAL INVESTORS 555.6%0%22%78%<3030-50>5044.4%66.7% in 20190% in 20190% in 2019100% in 201933.3% in 20196 in 2019MEN43 in 2019WOMENIntegrated Annual Report 2020 THE ENEL CORPORATE GOVERNANCE SYSTEM pany, and with international best practice. The corporate governance system adopted by Enel and its Group is es- sentially aimed at creating value for the shareholders over the long term, taking into account the social importance of the Group’s business operations and the consequent need, in conducting such operations, to adequately consider all the interests involved. In compliance with Italian legislation governing listed com- panies, the Group’s organization comprises the following bodies: In 2020, the corporate governance system of Enel SpA (“Enel” or the “Company”) was compliant with the principles set forth in the July 2018 edition of the Corporate Gover- nance Code for listed companies, adopted by the Com- SMSHAREHOLDERS' MEETING Audit Firm KPMG SpA BOD BOARD OF DIRECTORS BSA BOARD OF STATUTORY AUDITORS CRC CONTROL AND RISK COMMITTEE NCC NOMINATION AND COMPENSATION COMMITTEE CGSC CORPORATE GOVERNANCE AND SUSTAINABILITY COMMITTEE RPC RELATED PARTIES COMMITTEE 3636 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements It is charged with deciding, among other things, in either ordinary or extraordinary session: › the appointment and removal of the members of the Board of Directors and the Board of Sta- tutory Auditors and their compensation and undertaking any stockholder actions; › the approval of the financial statements and the allocation of profit; SHAREHOLDERS’ MEETING › the purchase and sale of treasury shares; › remuneration policy and its implementation; › share ownership plans; › amendments to the bylaws; › mergers and demergers; › the issue of convertible bonds. BOARD OF DIRECTORS 16 meetings held by the Board in 2020, in 12 of which it addressed issues connected with climate and their impact on strategies and the associated approaches to imple- mentation › It is vested by the bylaws with the broadest powers for the ordinary and extraordinary management of the Company and has the power to carry out all the actions it deems advisable to implement and achieve the corporate purpose. › It is responsible for examining and approving the corporate strategy, including the annual budget and business plan, which incorporate the main objectives and planned actions, including with regard to sustainability,(2) to lead the energy transition and tackle climate change, promoting a sustainable business model that creates long-term value. › It also performs a policy-setting role and provides an assessment of the adequacy of the internal control and risk management system (the ICRMS), determining the nature and level of risk compatible with the strategic objectives of the Company and the Group. The ICRMS consists of the set of rules, procedures and organizational structures designed to enable the identification, measurement, ma- nagement and monitoring of the main business risks to which the Group is exposed. These include the risks that could arise in a medium- to long-term perspective, including the risks associated with climate change and, more generally, the risks that the Group’s activities may engender in the areas of the environment, society, personnel and respect for human rights. › During 2020, it addressed climate-related issues at various meetings, including: (i) an in-depth analy- sis of possible future climate scenarios with a view to defining the Group’s strategy, taking account of the related risks and opportunities; (ii) the management of the impacts of the just transition and decarbonization on workers, providing for upskilling and reskilling programs; (iii) an analysis of inve- stor expectations for climate change, through updates on the related engagement activities; and (iv) the inclusion of the fight against climate change and the reduction of direct and indirect emissions among the parameters taken into consideration in analyzing the positioning of the Group with re- spect to peers. › It also examined issues relating to enhancing diversity, with reference to both disabilities and gender. With regard to disabilities, a Value for Disability plan was developed to promote the empowerment of disabled workers and the inclusion of people with disabilities who live in the communities where the Group operates. › At each meeting, starting from the end of February 2020, it received updates on the impact of the COVID-19 pandemic in the countries in which the Group operates, constantly monitoring the actions taken to prevent or mitigate the effects of the emergency on the workplace and to ensure business continuity, with a focus on specific issues, including: (i) developments in the disease contagion among employees and obtaining a specific insurance policy to cover hospitalizations; (ii) the efficiency of remote work and the digital operation of plants and infrastructures; (iii) the impacts on individual Bu- siness Lines and on the Group’s results; and (iv) solidarity and charity initiatives. (2) Sustainability comprises issues connected with climate change, atmospheric emissions, managing water resources, biodiversity, the circular economy, health and safety, diversity, management and development of employees, relations with communities and customers, the supply chain, ethical conduct and human rights. 37 Integrated Annual Report 2020In compliance with the provisions of the Italian Civil Code, the provision of the applicable CONSOB regulations, has the Board of Directors has delegated part of its manage- appointed the following committees from among its mem- ment duties to the CEO and, in accordance with the re- bers to provide recommendations and advice: commendations of the Corporate Governance Code and CORPORATE GOVERNANCE AND SUSTAINABILITY COMMITTEE 11 meetings held by the Committee in 2020, in 4 of which it addressed issues connected with climate and their impact on strategies and the associated approaches to implementation CONTROL AND RISK COMMITTEE 12 meetings held by the Committee in 2020, in 5 of which it addressed issues connected with climate and their impact on strategies and the associated approaches to implementation › A majority of its members are independent directors and for all of 2020 it was composed of the Chairman of the Board of Directors and two independent directors. › It assists the Board of Directors in assessment and decision-making activities concerning the corporate governance of the Company and the Group and sustainability, including climate change issues and the interaction of the Group with all stakeholders. › With regard to sustainability issues, it examines: – the guidelines of the Sustainability Plan, including the climate objectives set out in the plan and the approach to implementing the sustainability policy; – the general approach of the Sustainability Report, which includes the Non-Financial State- ment, and the structure of its content as well as the comprehensiveness and transparency of the disclosures – including with regard to climate change – provided in that document, issuing a prior opinion to the Board of Directors, which is called upon to approve that do- cument. › It is composed of non-executive directors, the majority of whom (including its Chairman) are independent. For all of 2020 it was made up of four independent directors. › It has the task of supporting the assessments and decisions of the Board of Directors relating to the internal control and risk management system, as well as those relating to the approval of periodic financial reports. In particular, it issues its prior opinion to the Board of Directors, inter alia: (i) on the guidelines of the internal control and risk management system, so that the main risks concerning Enel and its subsidiaries – including the various risks that may be relevant from the perspective of medium- to long-term sustainability – are correctly identified and adequa- tely measured, managed and monitored; (ii) on the degree of compatibility of the risks referred to in point (i) above with company management consistent with the strategic objectives identi- fied; and (iii) on the adequacy of the internal control and risk management system with respect to the characteristics of the Company and the risk profile assumed, as well as the effectiveness of the system itself. › It also examines the content of the Sustainability Report, which includes the Non-Financial Sta- tement relevant for the purposes of the ICRMS and contains corporate disclosures on climate issues, issuing a prior opinion on these aspects to the Board of Directors, which is called upon to approve that document. 3838 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements › It is composed of non-executive directors, the majority of whom (including its Chairman) are independent. For all of 2020 it was made up of four independent directors. › It supports the Board of Directors in evaluations and decisions relating to the size and compo- sition of the Board itself, as well as the remuneration of directors and key management person- nel. In this regard, the remuneration policy for 2020 provides that a significant portion of the short- and long-term variable remuneration of the Chief Executive Officer/General Manager and key management personnel shall be linked to sustainability-related performance objecti- ves. In particular, with regard to the long-term variable component of the remuneration of the Chief Executive Officer/General Manager and key management personnel, in the 2020 Long- Term Incentive Plan, starting from 2020, an additional ESG target was introduced concerning the ratio between consolidated net installed renewables capacity and the total consolidated net installed capacity, in line with the provisions for SDG-linked bond issues by Enel linked to SDG 7 (Affordable and Clean Energy). Furthermore, the Long-Term Incentive Plan retains the reduction of specific carbon dioxide emissions among the performance objectives, in line with the Group’s decarbonization strategy, which provides for the progressive reduction of CO2 emissions in line with the Paris Agreement. As regards the short-term variable component of the remuneration of the Chief Executive Officer/General Manager, the ESG target concerning the further improvement of safety parameters in the workplace was retained in the remunera- tion policy for 2020 and its weight was increased. Furthermore, in light of the state of the CO- VID-19 health emergency, a new performance target was introduced that measures the Group’s ability to remotely manage company activities where possible, guaranteeing service continuity and excellent levels of operational efficiency. › It is composed of independent non-executive directors. For all of 2020 it was made up of four independent directors. › It performs the functions provided for in the relevant CONSOB regulations and in the specific Enel procedure for transactions with related parties, essentially issuing in particular reasoned opinions on the interest of Enel – and any direct or indirect subsidiary that may be involved – in carrying out transactions with related parties, expressing its assessment of the benefits and substantive appropriateness of the associated conditions, subject to receiving timely and com- prehensive information on the transaction. It is charged with overseeing: › compliance with the law and the bylaws, as well as compliance with the principles of sound administration in carrying out corporate activities; › the financial reporting process and the appropriateness of the organizational structure, the internal control system and the administrative-accounting system of the Company; › the statutory audit of the annual accounts and the consolidated accounts, as well as the inde- pendence of the Audit Firm; › the approach adopted in implementing the corporate governance rules envisaged by the Cor- porate Governance Code. NOMINATION AND COMPENSATION COMMITTEE 12 meetings held in 2020 RELATED PARTIES COMMITTEE 4 meetings held in 2020 BOARD OF STATUTORY AUDITORS 27 meetings held in 2020 39 Integrated Annual Report 2020CHAIRMAN OF THE BOARD OF DIRECTORS CHIEF EXECUTIVE OFFICER › 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 the meetings of the Board of Directors, establishes the agenda and presides over its proceedings, ensuring that sufficient information on the issues being addressed in the agenda is provided in a timely manner to all members of the Board of Directors and the Board of Sta- tutory Auditors. › Ascertains that the Board’s resolutions are carried out. › Pursuant to a Board resolution of May 15, 2020, the Chairman has been vested with a number of additional non-executive powers. › In the exercise of the function of stimulating and coordinating the activities of the Board of Directors, the Chairman plays a proactive role in the process of approving and monitoring of corporate and sustainability strategies, which are sharply focused on the decarbonization and electrification of energy consumption. › In addition, during 2020 the Chairman also chaired the Corporate Governance and Sustainabi- lity Committee. › Like the Chairman of the Board of Directors, the CEO 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 15, 2020 with all powers for managing the Company, with the exception of those that are otherwise assigned by law, regulation or the bylaws or that the aforesaid resolution reserves for the Board of Directors. › In the exercise of these powers, the CEO has defined a sustainable business model, delineating a strategy to lead the energy transition towards a low-carbon model. The CEO is also respon- sible for managing the business activities connected with Enel’s efforts in combatting climate change. › The CEO reports to the Board of Directors on the activities performed in the exercise of the powers granted to him, including business activities to maintain Enel’s commitment to address climate change. › The CEO represents Enel in various initiatives that deal with sustainability, holding positions of leadership in international institutions such as the United Nations Global Compact and the Global Investors for Sustainable Development (GISD) Alliance launched by the United Nations in 2019. › The CEO has also been designated as the director responsible for the ICRMS. STATUTORY AUDIT OF THE ACCOUNTS › This is performed by a specialized firm entered in the appropriate register of auditors, which is appointed by the Shareholders’ Meeting on the basis of a reasoned proposal from the Board of Statutory Auditors. › In 2020, the Company organized a comprehensive induction program – also taking account of the significant change in the Board membership following the appointment of the Board of Directors approved by the Shareholders’ Meeting of May 14, 2020 – in order to provide the directors with an understanding of the sectors in which the Group operates, including issues related to sustainability. › At the end of 2020 and during the first two months of 2021, the Board of Directors carried out, with the assistance of a specialized independent advisor, an assessment of the size, composition and functioning of the Board and its committees (the “board review”), in line with the most advan- ced corporate governance practices accepted at the international level and incorporated within the Corporate Governance Code. The board review was also carried out using a “peer review” approach, i.e. evaluating not only the operation of the body as a whole, but also the style and substance of the contribution made by each of its members, and it was extended to include the Board of Statutory GOOD CORPORATE GOVERNANCE PRACTICES 4040 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsAuditors. The board review also specifically sought to verify the directors’ perception of the Board’s involvement with sustainability issues and the integration of sustainability into corporate strategy. › The Board of Directors and the Board of Statutory Auditors have approved, each within their own sphere of competence, specific diversity policies that set out the characteristics considered opti- mal for the members of these bodies, so that each can exercise their duties most effectively, taking decisions that can effectively draw on the contribution of a plurality of qualified points of view, able to examine the issues under discussion from different perspectives. The policy approved by the Bo- ard of Directors establishes that with regard to the types of diversity and the associated objectives: – the optimal composition of Board members should provide for a majority of independent directors; – even when the regulatory provisions on gender balance expire, it is important to continue to ensure that at least one-third of the Board of Directors, both at the time of appointment and during its term of office, shall be made up of directors of the least represented gender; – the international scope of the Group’s activities should be taken into consideration, ensu- ring that at least one-third of directors should have adequate experience in the international arena, which is also considered useful for preventing the standardization of opinions and the emergence of “group thought”; – in order to achieve a balance between the need for continuity and renewal in management, it would be necessary to ensure a balanced combination of people of differing seniority – and age – within the Board of Directors; – non-executive directors should have a management and/or professional and/or academic and/or institutional background such as to create a diverse and complementary set of skills and experience. › In July 2015 the Board of Directors also approved (and subsequently amended in February 2019) a number of recommendations aimed at strengthening the corporate governance of Enel subsidia- ries with shares listed on regulated markets and ensuring the implementation of local best practices in this area by those companies. Among other issues, these recommendations concern the compo- sition of the management body, with regard to which it is also suggested to integrate a diversity of professional and management experience and skills, combined, where possible, with a diversity of gender, age and seniority, without prejudice to the provisions of applicable local legislation. For more detailed information on the corporate governan- blished on the Company’s website (http://www.enel.com, in ce system, please see the Report on Corporate Governan- the “Governance” section). ce and Ownership Structure of Enel, which has been pu- 41 Integrated Annual Report 2020ENEL ORGANIZATIONAL MODEL C ENEL GROUP CHAIRMAN M. Crisostomo CEO ENEL GROUP CEO F. Starace HLD Holding Function ADMINISTRATION, FINANCE AND CONTROL A. De Paoli COMMUNICATIONS R. Deambrogio INNOVATION AND SUSTAINABILITY E. Ciorra GLOBAL PROCUREMENT F. Di Carlo PEOPLE AND ORGANIZATION LEGAL AND CORPORATE AFFAIRS G. Fazio AUDIT S. Fiori GLOBAL DIGITAL SOLUTIONS C. Bozzoli CR Country and Region GBL Global Infrastructure and Networks A. Cammisecra Global Business Line Global Trading Global Power Generation Enel X S. Bernabei F. Venturini ITALY C. Tamburi IBERIA J. Bogas Gálvez EUROPE S. Mori AFRICA, ASIA AND OCEANIA S. Bernabei NORTH AMERICA E. Viale LATIN AMERICA M. Bezzeccheri 4242 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements ADMINISTRATION, FINANCE AND CONTROL PEOPLE AND ORGANIZATION C ENEL GROUP CHAIRMAN M. Crisostomo HLD Holding Function A. De Paoli COMMUNICATIONS R. Deambrogio INNOVATION AND SUSTAINABILITY E. Ciorra GLOBAL PROCUREMENT F. Di Carlo CR Country and Region CEO ENEL GROUP CEO F. Starace LEGAL AND CORPORATE AFFAIRS G. Fazio AUDIT S. Fiori GLOBAL DIGITAL SOLUTIONS C. Bozzoli GBL Global Infrastructure and Networks A. Cammisecra Global Business Line Global Trading Global Power Generation Enel X S. Bernabei F. Venturini ITALY C. Tamburi IBERIA J. Bogas Gálvez EUROPE S. Mori S. Bernabei NORTH AMERICA E. Viale LATIN AMERICA M. Bezzeccheri AFRICA, ASIA AND OCEANIA The Enel Group structure is organized into a matrix that comprises: GLOBAL BUSINESS LINES The Global Business Lines are responsible for managing and developing assets, optimizing their per- formance and the return on capital employed in the various geographical areas in which the Group operates. The Business Lines are also tasked with improving the efficiency of the processes they ma- nage and sharing best practices at the global level. The Group, which also draws on the work of an In- vestment Committee,(3) benefits from a centralized industrial vision of projects in the various Business Lines. Each project is assessed not only on the basis of its financial return but also in relation to the best technologies available at the Group level, which reflect the new strategic line adopted, explicitly integrating the SDGs within our financial strategy and promoting a low-carbon business model. Fur- thermore, each Business Line contributes to guiding Enel’s leadership in the energy transition and in the fight against climate change, managing the associated risks and opportunities in its area of competence. In 2019, Global Power Generation was created with the merger of Enel Green Power and Global Thermal Generation to confirm the Enel Group’s leading role in the energy transition, pursuing an integrated process of decarbonization and the sustainable development of renewables capacity. In addition, the Grid Blue Sky project was launched. Its objective is to innovate and digitalize infra- structures and networks in order to make them an enabling factor for the achievement of the Climate Action objectives, thanks to the progressive transformation of Enel into a platform-based group. REGIONS AND COUNTRIES Countries and Regions are responsible for managing relationships with institutional bodies and re- gulatory authorities, as well as selling electricity and gas, in each of the countries in which the Group is present, while also providing staff and other service support to the Business Lines. They are also charged with promoting decarbonization and guiding the energy transition towards a low-carbon business model within their areas of responsibility. The following functions provide support to Enel’s business operations: GLOBAL SERVICE FUNCTIONS The Global Service Functions are responsible for managing information and communication tech- nology activities and procurement at the Group level. They are also responsible for adopting sustai- nability criteria, including climate change issues, in managing the supply chain and developing digital solutions to support the development of enabling technologies for the energy transition and the fight against climate change. HOLDING COMPANY FUNCTIONS The Holding Company Functions are responsible for managing governance processes at the Group level. The Administration, Finance and Control function is also responsible for consolidating scenario analysis and managing the strategic and financial planning process aimed at promoting the decarbo- nization of the energy mix and the electrification of energy demand, key actions in the fight against climate change. (3) The Group Investment Committee is made up of the heads of Administration, Finance and Control, Innovability, Legal and Corporate Affairs, Global Procure- ment, and the heads of the Regions and the Business Lines. 43 Integrated Annual Report 2020 INCENTIVE SYSTEM • funds from operations/consolidated net financial debt; • managing COVID-19 emergency: implementing re- mote operations; • workplace safety; – for key management personnel, the associated MBOs establish objective annual goals connected with their Enel’s remuneration policy for 2020, which was adopted by business area, differentiated by the functions and re- the Board of Directors acting on a proposal of the Nomina- sponsibilities assigned to them; tion and Compensation Committee and approved by the › a long-term variable component linked to participation in Shareholders’ Meeting of May 14, 2020, was formulated on specific long-term incentive plans (LTI Plans). The adop- the basis of national and international best practice, the tion of long-term incentive plans for the management guidance provided by the favorable vote of the Sharehol- personnel of Enel SpA and/or its subsidiaries pursuant to ders’ Meeting of May 16, 2020 on the remuneration policy Article 2359 of the Civil Code has been approved annual- for 2019 as well as the results of a benchmarking exercise ly by the Shareholders’ Meeting of Enel SpA since 2019. on the remuneration of the Chairman of the Board of Di- Each of the incentive plans approved envisages, subject rectors, the Chief Executive Officer/General Manager and to the achievement of specific performance targets, the the non-executive directors of Enel for the 2017-2019 term grant of ordinary shares of the Company (“Shares”) to the conducted by the independent consultant Willis Towers respective beneficiaries, as discussed in note 49 of the Watson. consolidated financial statements, which readers are in- In line with the recommendations of the Corporate Go- vited to consult for more information on incentive plans vernance Code for listed companies (2018 edition), Enel’s and the share buyback programs in support of those remuneration policy for 2020 is designed to attract, moti- plans. For 2020, this component is linked to participation vate and retain personnel possessing the professional skills in the 2020 LTI Plan. most suitable to successfully managing the Company, in- centivizing achievement of our strategic objectives and en- For more information on the 2020 Remuneration Policy, suring sustainable growth. It is also structured so as to align please see Enel’s Report on Remuneration Policy for 2020 the interests of management with the priority objective of and Compensation Paid in 2019, which is available on the creating sustainable value for shareholders in the medium/ corporate website (www.enel.com). long term and promoting the Enel mission and our corpo- For more information on the LTI Plans, please see the infor- rate values. mation document prepared pursuant to Article 84-bis of The 2020 remuneration policy adopted for the Chief Exe- the CONSOB Regulation issued with Resolution no. 11971 cutive Officer/General Manager and key management per- of May 14, 1999 (the “Issuers Regulation”), which is available sonnel envisages: › a fixed component; to the public in the section of Enel’s website (www.enel. com) dedicated, respectively, to the Shareholders’ Meeting › a short-term variable component (MBO) that will be paid of May 14, 2020 (2020 LTI Plan) and that of May 16, 2019 out on the basis of achievement of specific performance (2019 LTI Plan). objectives. More specifically: – for the Chief Executive Officer/General Manager, the 2020 MBO establishes the following annual objectives: • consolidated ordinary profit; • Group operating expenditure; 4444 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsVALUES AND PILLARS OF CORPORATE ETHICS A robust system of ethics underlies all activities of the Enel Group. This system is embodied in a dynamic set of rules constantly oriented towards incorporating national and international best practices that everyone who works for and with Enel must respect and apply in their daily activi- ties. The system is based on specific compliance programs, including: the Code of Ethics, the Compliance Model under Legislative Decree 231/2001, the Enel Global Compliance Program, the Zero-Tolerance-of-Corruption Plan, the Hu- man Rights Policy and any other national compliance mo- dels adopted by Group companies in accordance with local laws and regulations. Code of Ethics rate conduct on the basis of standards aimed to ensure the maximum transparency and fairness with all stakeholders. The Code of Ethics is valid in Italy and abroad, taking due account of the cultural, social and economic diversity of the various countries in which the Group operates. Enel also requires that all associates and other investees and its main suppliers and partners adopt conduct that is in line with the general principles set out in the Code. Any viola- tions or suspected violations of Enel Compliance Programs can be reported, including in anonymous form, through a single Group-level platform (the “Ethics Point”). In 2020, the Code was updated to reflect the main international measures concerning human rights and align the duties of the units responsible for updating the document with cur- rent organizational arrangements. In particular, the Code expresses our commitments and ethical responsibilities in the conduct of business, regulating and standardizing corporate conduct in accordance with standards based on maximum transparency and fairness towards all stakehol- ders. In February 2021, the Board of Directors approved a further update of the Code of Ethics in order to align its content with the current context, including the current cor- porate mission and the United Nations Sustainable Deve- lopment Goals, the current organizational structure and the system of procedures, as well as national and international best practices in the areas of diversity and privacy. With regard to the Code of Ethics, the following table re- In 2002, Enel adopted a Code of Ethics, which expresses ports the average number of training hours per person, to- the Company’s ethical responsibilities and commitments in tal reports of violations received and violations confirmed. conducting business, governing and standardizing corpo- Average number of hours of training per person Total reported violations of the Code of Ethics received Confirmed violations of the Code of Ethics (1) - of which violations involving conflicts of interest/bribery no. no. no. no. 2020 38.6 151 26 2 2019 42.3 166 38 10 Change (3.7) (15) (12) (8) (1) The analysis of reports received in 2019 was completed in 2020. For that reason, the number of verified violations for 2019 was restated from 36 to 38. The two additional violations are attributable to minor cases of private conflicts of interest in Brazil. Compliance Model (Legislative Decree 231/2001) committed by their directors, managers or employees on behalf of or to the benefit of the company. Enel was the first organization 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”). It has been constantly updated to reflect developments in the appli- Legislative Decree 231 of June 8, 2001 introduced into cable regulatory framework and current organizational ar- Italian law a system of administrative (and de facto crimi- rangements. nal) liability for companies for certain types of offenses 45 Integrated Annual Report 2020Enel Global Compliance Program (EGCP) The Enel Global Compliance Program for the Group’s fo- reign companies was approved by Enel in September 2016. It is a governance mechanism aimed at strengthening the Group’s ethical and professional commitment to preven- ting the commission of crimes abroad that could result in criminal liability for the company and do harm to our re- putation. Identification of the types of crime covered by the Enel Global Compliance Program – which encompas- ses standards of conduct and areas to be monitored for preventive purposes – is based on illicit conduct that is generally considered such in most countries, such as cor- ruption, crimes against the government, false accounting, money laundering, violations of regulations governing sa- fety in the workplace, environmental crimes, etc. Training in anti-corruption policies and procedures Training in anti-corruption policies and procedures by geographical area Italy Iberia Latin America Europe Africa, Asia and Oceania North America Zero-Tolerance- of-Corruption Plan and the anti-bribery management system In compliance with the tenth principle of the Global Compact, according to which “businesses should work against corrup- tion in all its forms, including extortion and bribery”, Enel is committed to combating corruption. For this reason, in 2006 we adopted the “Zero-Tolerance-of-Corruption Plan” (ZTC Plan) confirming the Group’s commitment, as described in both the Code of Ethics and the Model 231, to ensure pro- priety and transparency in conducting company business and operations and to safeguard our image and positioning, the work of our employees, the expectations of shareholders and all of the Group’s stakeholders. Following receipt of the ISO 37001 anti-corruption certification by Enel SpA in 2017, the 37001 certification plan has gradually been extended to the main Italian and international subsidiaries of the Group. 2020 26,660 40.0 2019 19,798 29.0 Change 6,862 11.0 34.7% 37.9% 47.7 20.2 26.8 80.7 28.4 56.7 35.3 33.9 18.1 24.4 6.8 43.5 12.4 -13.7 8.7 56.3 21.6 13.2 35.1% -40.4% 48.1% - - 30.3% no. % % % % % % % Human Rights Policy suppliers and business partners as part of its business rela- tionships. In order to give effect to the United Nations Guiding Principles on Business and Human Rights, in 2013 the Enel SpA Board of Directors approved the Human Rights Policy, which was subsequently approved by all the subsidiaries of the Group. This policy sets out the commitments and responsibilities in respect of human rights on the part of the employees of Enel SpA and its subsidiaries, whether they be directors or employees in any manner of those companies. Similarly, with this formal commitment, Enel explicitly becomes a promoter of the observance of such rights on the part of contractors, Enel conducts specific human rights due diligence for the entire value chain in the various countries in which it opera- tes. The process was developed in accordance with the main international standards such as the United Nations Guiding Principles on Business and Human Rights, the OECD guideli- nes and international best practices. During the due diligence process, opportunities for improvement were identified and incorporated in specific action plans for each country in whi- ch we operate, as well as an improvement plan to be managed centrally in order to harmonize and integrate processes and 4646 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementspolicies developed globally and applied locally. In total, around ne conditions and compliance with regulatory, remuneration, 170 actions have been planned, covering 100% of the opera- contribution, insurance and tax requirements. Suppliers are tions and sites. also expressly asked to undertake to adopt and implement the principles of the Global Compact and to ensure that these With regard to the sustainability of the supply chain, Enel eva- are satisfied in the performance of all their activities, whether luates suppliers’ human rights performance, regardless of the performed by their employees or subcontractors. In addition, level of risk, through a dedicated questionnaire in which the suppliers must undertake to comply with the principles set characteristics of potential suppliers are analyzed with regard out in Enel’s Code of Ethics, or in any case to be inspired by to inclusion and diversity, protection of workers’ privacy, veri- principles equivalent to those adopted by Enel in the mana- fication of their supply chain, forced or child labor, freedom of gement of their business. Finally, it is specified that the provi- association and collective bargaining, and application of fair sions of International Labor Organization conventions or ap- working conditions (including adequate wages and working plicable legislation in the country in which the activities must hours). During 2020, the questionnaire was supplemented be carried out, if more restrictive, shall apply. with additional questions in order to obtain a more accurate The contracts govern working conditions in their entirety and assessment of the potential supplier. Among other things, the clearly state all the terms included in the contracts, detailing Group requires its contractors/providers and subcontractors workers’ rights (working hours, wages, overtime, allowances to respect and protect internationally recognized human ri- and benefits). The terms are translated into the workers’ nati- ghts and comply with ethical and social obligations regarding: ve language and are supported with information contained in the protection of children and women in the labor force, equal documents agreed with employees. Human resource mana- treatment, the prohibition of discrimination, freedom of trade gement systems and procedures ensure that minors are not unions and the right of association and representation, the present in the workforce. Internships and work experience prohibition of forced labor, the protection of health, safety projects are also implemented. and the environment, the safeguarding of health and hygie- 47 Integrated Annual Report 20203 STRATEGY AND RISK MANAGEMENT S N O I T A R E P O N O T R O P E R 4848 Long-term planning The energy transition is revolutionizing not only the energy sector but all econo- mic spheres in a world in which the role of electricity will be increasingly important in the medium and long term. The new 2021-2023 Business Plan Within the broader ambitions for the po- sitioning of the Group by 2030, the 2021- 2023 Business Plan is ideally positioned as the first effective step on a journey that spans the entire decade. Reference scenarios Assessing the impacts of climate chan- ge and the energy transition is crucial for long-term planning. To this end, the Group has created an comprehensive fra- mework and a process that can translate data into useful information to maximize opportunities and mitigate risks. 49 Integrated Annual Report 2020GROUP STRATEGY They prepare dedicated workshops or strategic options to be discussed. This process enables the correct defi- nition of the opportunities associated with each specific topic (including any operational, economic or financial impacts) and the eventual roadmap for implementing the necessary initiatives. These outputs are then discussed The determination of the Group’s strategy is based on mul- by top management in dedicated meetings. These mee- tiple factors, beginning with an evaluation of the external tings include one special event, called Top Team Offsite, environment and its evolution. In particular, the following usually scheduled in June, where the most relevant topics analyses are performed: are discussed by all top management. Following this me- › an analysis of macroeconomic, energy and climate sce- eting, some of the conclusions are incorporated in the narios: assessments and projections at the global and Group’s long-term planning, then become part of the local levels to identify the main macroeconomic, energy storytelling and are presented to the Board of Directors and climate drivers in the short, medium and long term; at the Strategic Summit, usually organized in October in › competitive landscape analysis: a comparison of the order to agree the annual update of the Strategic Plan. economic, financial, industrial, ESG (Environmental, So- This type of framework enables adequate governance of cial & Governance) performance of companies in the the treatment of strategic issues, while at the same time utilities sector and other industries (for example, auto- ensuring swift identification of emerging trends and the motive, technology, oil & gas) in order to monitor, shape necessary cross-business involvement for a complete and support the Group’s competitive advantage and le- analysis of complex and interdependent issues in the adership position; presence of an organizational structure based on the › industrial vision: an overview of the macro-trends in new Country/Business Line/staff matrix; technologies affecting the company’s business, with an › strategic planning process: this process, which is driven assessment of the potential impacts on the Group’s bu- on an ongoing basis by feedback from the strategic dia- siness based on a broad internal and external collabo- logue, transforms the information to be processed into rative effort to identify actions to prevent, adapt to and quantitative models in order to obtain an overview of the manage disruption and changes in our business. industrial, economic and financial evolution of the Group, The analysis of what is happening and what could happen supplemented by possible extraordinary transactions in the external environment underpins the phase of desi- and active portfolio management operations. The eva- gning our strategic options and consequent positioning luation of strategic options over a time horizon extends and planning, which is structured into the following main beyond that used in industrial planning, with (i) the defini- activities: tion and the quantitative and qualitative development of › strategic dialogue: the definition of the Group’s strate- alternative macroeconomic, energy and climate scena- gy is based on a continuous process of active dialogue rios against which overall strategy can be assessed, and throughout the year, through which the issues relevant (ii) analysis based on stress testing for various factors, in- for the evolution and growth of the Group are identi- cluding the evolution of the industrial sector, technology, fied, analyzed, discussed and addressed. This dialogue is competitive structure and policies; part of a strategic design phase, where communication › long-term positioning: the analyses and decisions de- between executives in different businesses makes a va- scribed in the previous points generate information for luable contribution to developing new strategic options, long-term positioning on multiple topics and the asses- with an emphasis on the need for cultural or organiza- sment of ambitions and targets for the Group; tional change and synergies between businesses. This › analysis of ESG factors and assessment of materiality in process, which is coordinated at the Group level, first the field of sustainability: the method Enel uses to per- involves the identification of topics through consensus form ESG and materiality analysis was developed on the among top managers and approval by the CEO. The next basis of the guidelines set out in numerous international phase of the strategic dialogue process involves the standards (for example, the Global Reporting Initiative, structuring of working groups with all the professional UN Global Compact, SDG Compass, etc.), with the aim of expertise necessary for the proper analysis of each topic. identifying and evaluating priorities for stakeholders and 5050 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementscorrelating them with Group strategy (for more informa- value for all stakeholders, benefiting from the opportunities that tion, please see the materiality analysis in the “Basis of are emerging from the energy transition while at the same time Presentation” chapter). limiting the related risks. The strategy of the Enel Group has proven its ability to cre- The Group has therefore again confirmed its strategic direction ate sustainable long-term value, integrating the themes of based on the trends connected with the energy transition. The sustainability and close attention to climate change issues use of capital is in fact focused on decarbonization, through the while simultaneously ensuring a steady increase in profi- development of renewable generation assets, on the enabling tability. infrastructures linked to the development of networks and on The Group is among the leaders guiding the energy transi- the implementation of platform models, exploiting technologi- tion through the decarbonization of electricity generation cal and digital evolution, which will foster the electrification of and the electrification of energy consumption, which re- energy consumption and the development of new services for present opportunities both to increase value creation and customers. All of this is aimed at achieving the SDGs of the Uni- to contribute positively to more rapid achievement of the ted Nations. Our ambition is to accelerate the processes related Sustainable Development Goals set by the United National to decarbonization and electrification to enable achievement of (SDGs) in the 2030 Agenda. the objectives of limiting global warming in line with the Paris Agreement. Strategic Plan The sustainability strategy developed in recent years and the integrated business model have enabled the Group to create Energy transition Decarbonization, electrification, digital and platforms CREATING SUSTAINABLE VALUE IN THE LONG TERM The energy transition, impelled by the fight against climate Precisely because of this transformation, investment in change and characterized by the trends in the decarboni- the energy sector is expected to surge, tripling its annual zation and electrification of consumption, is revolutionizing value in 2020-2040 compared with 2010-2019. not only the energy sector but all economic areas in a world in which the role of electricity will be increasingly significant. 51 GROWTH ACCELERATORSIntegrated Annual Report 2020YEARLY AVERAGE INVESTMENTS ($ trillions) YEARLY AVERAGE INVESTMENTS BY TYPE ($ trillions) INVESTMENTS SHARE 2020-2040 (%) 1.2 0.6 ~0.7 S E L B A W E N E R S K R O W T E N E S U D N E Y C N E I C I F F E >4x 0.3 0.3 >2x >5x ~0.1 45% 24% 25% 2.6 ~3x 0.9 2010-2019 2020-2040 2010-2019 2020-2040 Source: IEA, World Energy Investments 2020 and IEA, World Energy Outlook 2020, Sustainable Develpoment Scenario. In this context, it is essential to extend the strategic vision gly complex systems, which will include a growing number to the medium/long term. Driven by this need, in Novem- of distributed generation assets with a consequently more ber 2020 the Group presented a new Strategic Plan with active role being played by final customers. A platform-ba- a vision that extends to 2030, placing the acceleration of sed and multi-layer digital model (discussed in the “Busi- the energy transition at the center of our strategy, together ness model” section) that connects data and solutions will with sustainable and profitable growth to create significant therefore be essential to successfully complete this tran- shared value for customers, society and the environment, sformation. as well as an attractive return for shareholders over time. In order to respond more effectively to the expected ac- ally positioned to fully benefit from emerging opportunities, celeration of investments, and to contribute to more rapid capturing the value that will become available to accelerate Thanks to this comprehensive approach, the Group is ide- achievement of the main objectives necessary to fight cli- the energy transition. mate change, the Enel Group intends to leverage its pro- gress in digitalization as well as its positioning as (i) the lea- In this way, the Group plans to mobilize investments of €190 ding private operator in the renewables sector worldwide, billion in the period 2021-2030, promoting decarboniza- with 48.6 GW of capacity under management;(1) (ii) the wor- tion, the electrification of consumption and the develop- ld’s leading private grid operator, with over 74 million end ment of platforms to create shared and sustainable value users; and (iii) the private operator with the largest retail cu- for all stakeholders and profitability in the medium and long stomer base worldwide, with around 70 million customers term. The Group expects to directly invest around €160 bil- worldwide. lion, of which over €150 billion through the Ownership busi- ness model and around €10 billion through the Stewardship Thanks to platform-based models, in this decade utilities business model, while mobilizing another €30 billion from will strengthen their leadership role at the top of increasin- third parties. (1) In addition to installed capacity, this includes the capacity of associates or joint ventures (about 3.6 GW). 5252 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statements Integrated Annual Report 2020 53 INVESTMENTS ACTIVATED FOR THE ENERGY TRANSITION (€ bn) ~30 ~160 0 9 1 ~ l a t o T I P H S R E N W O L E D O M I P H S D R A W E T S L E D O M |||||||| | | | | | ||||||| | | | | | | | | | | | | | | | | | | | | | >150 € bn |||||||||| | ||||||||| ~30 ~10(1) ~40 € bn 2021-2030 Enel Third parties (1) Includes equity injections. (2) Includes managed and leased e-buses. Consolidated renewables capacity (GW) 2020 2030 45 ~120 RAB (€ bn) ~42 ~70 % Smart meters 60% ~100% Renewables capacity managed (GW) Electric buses(2) (no.) Demand response (GW) Homes connected (mn) 2020 3.6 912 6 11.1 2030 ~25 >10k ~20 34 This level of investment will support achievement of the model, almost half will be dedicated to Global Power Genera- long-term ambitions that the Enel Group has identified, tion, with a total of around €65 billion allocated to renewable namely: energy, which is expected to enable the Group to add some 75 › becoming a “Renewable Supermajor”, tripling the re- GW of renewables capacity, balanced between solar and wind, newables capacity operated from around 49 GW in 2020 to the current consolidated total of 45 GW, for about 120 GW to around 145 GW in 2030, thanks to the planned invest- of total renewables capacity by 2030 (2.7 times current levels). ments and the joint action of Ownership and Steward- The investments will mainly be focused on the countries in ship models, to reach a global market share of more than which the Group has an integrated presence, but the involve- 4%; ment of a variety of areas will enable natural derisking of the › becoming a world leader in networks for reliability, quali- volatility of renewable resources. To achieve this, the Group will ty of service and efficiency. The investments are intended capitalize on a pipeline of renewable projects (some 206 GW in to make grids more resilient and increase the degree of December 2020), combined with a global platform-based mo- digitalization to enable more effective and efficient ma- del for business development, engineering and construction nagement and transform distributors into real system and operation and maintenance activities. In addition, the operators; Group plans to invest an additional €5 billion in the hybridiza- › becoming the reference energy partner for all custo- tion of renewable sources and storage systems, the potential mer segments (domestic customers, offices, industrial of which is expected to reach around 20 TWh by 2030. Signi- customers, cities, etc.), promoting decarbonization, the ficant opportunities will also come from the green hydrogen electrification of consumption and circularity, enabling segment, in which the Group plans to integrate electrolyzers the creation of benefits in terms of emissions, costs and into renewables plants that produce electricity for direct sale efficiency. Long-term planning Consistent with the above vision, as regards the approximately €150 billion of investments planned in the Ownership business or for dispatching services, while also selling green hydrogen to industrial customers. The Group plans to increase its green hydrogen capacity to over 2 GW in 2030. The increase in renewables capacity and the simultaneous reduction in thermal capacity, which includes the early clo- sure of coal plants by 2027, represent the two main strate- gic levers that the Group intends to use to decarbonize its generation mix. 5454 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statements CAPEX BY GBL >150 € bn | | | ||||||||||||||||||| | | | | ||||||||||||||| | | ||||||||||| | | |||||||| | | | | | | | | | | | | | ||| ||||||||||||||||| |||||||||||||| |||||||||| ||||||| | | | | | | | | | | | | | | | | | | | | | 4 | | 6 | | % | | | | | | ||| | | | || | | || | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021-30 >150 € bn 3 % ||||||||||| 5% ||||||||||||||| |||||||||||||||||||| |||||||||||||||||||||||||| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||| ||||||||||||| |||||||||||||||||| ||||||||||||||||||||||| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % 6 4 | | | | | | | | | | | | | | | | | VALUE CREATION KPIs EBITDA/ Capex (%) 2021-2030 ~11% RAB/End user +35% B2C customer value (€/cl/y) 2x Renewables Networks Retail Conventional generation In 2019, Enel, responding to the call for action from the Uni- the Strategic Plan presented by Enel in November 2020 ted Nations, signed a commitment to act to limit the incre- describes how the massive investments envisaged throu- ase in global temperatures to 1.5 °C and be net zero across its entire value chain by 2050, including both direct (Scope 1) and indirect (Scope 2 and 3) emissions. This objective gh the Ownership business model are consistent with the objective of reducing direct emissions to 82 gCO2eq/kWh, an objective that has been certified by the Science Based requires not only a sharp acceleration in renewables and Targets initiative (SBTi) as in line with the 1.5 °C scenario energy efficiency, but also a complete rethinking of the set out in the Paris Agreement. In particular, investments economic model and investment planning. With regard to in new renewables capacity will enable the achievement of the latter, in particular, future investments will be aimed at certain Key Performance Indicators (KPIs): renewable sour- achieving the objectives that Enel has set itself in terms of ces will account for more than 80% of total capacity and reducing greenhouse gas emissions in order to limit the about 80% of electricity generation in 2030. This will allow increase in global temperatures to 1.5 °C. With particular the share of “emission-free” generation to grow from 65% reference to investment planning for the next 10 years, SCOPE 1(1) (gCO2eq/kWh) 82 -80% 2017 2019 2020 2023 2030 125 N O I T A Z I N O B R A C E D L L U F 2050 SCOPE 3(2) (MtCO2) 25.3 -16% Previous SBTi target 21.2 (1) (2) Includes all direct emissions (GHG Scope 1), of which 99% are attributable to electricity generation only, in line with the 1.5 °C scenario of the Science Based Targets initiative. Includes indirect emissions (GHG Scope 3 – Use of Sold Products) associated with the sale of gas on the retail market by 2030, in line with the 2 °C scenario of the Science Based Targets initiative. 55 414298214148Integrated Annual Report 2020 in 2020 to about 85% in 2030 and, consequently, to cut di- rect emissions from 214 gCO2eq/kWh in 2020 to 82 gCO2eq/ kWh in 2030. Accordingly, Enel is acting on the main lever of direct emis- sions and at the same time rethinking its business model in a broader sense to act on all other dimensions. The goal of achieving total decarbonization by 2050 requi- Investments related to the decarbonization of the gene- res not only a major acceleration in renewables and energy ration mix, together with those related to the digitalization efficiency, but also a complete rethinking of the economic and efficiency of the distribution grid, as well as to the offer model in terms of circularity. It is estimated that about 45% of new services to promote the electrification of consu- of global emissions are currently associated with the ex- mption (such as electric mobility or demand response ser- traction and production of materials, manufacturing, and vices), will all contribute to the fight against climate change disposal. This is an area in which action can be taken to (SDG 13). In fact, Enel expects that approximately 90% of achieve full decarbonization, as well as positively contribu- consolidated investments in 2021-2023 will be aimed at ting to solving a series of further environmental problems achieving the objectives set by SDG 7 (Affordable and Cle- connected with resource consumption and waste genera- an Energy), SDG 9 (Industry, Innovation and Infrastructure) tion. and SDG 11 (Sustainable Cities and Communities), thereby Net-Zero commitment Enel, as a signatory of the “Business Ambition for 1.5 °C” campaign promoted by the United Nations and other institutions, is committed to setting a long-term goal to achieve net-zero emissions across the entire value chain by 2050, including both direct emissions (Scope 1) and indirect emissions (Scope 2 and 3), together with science-based targets in all relevant areas and in line with the criteria and recommendations of the Science Based Targets initiative (SBTi). GHG Target Scope Climate scenario Main drivers and actions to achieve target Short term (2023) 148 gCO2eq/kWh by 2023 100% of Scope 1 GHG emissions (1) 1.5 °C (2) > Gradual phase out of 90% of coal-fired capacity in 2021-2023 period (percentage weight of coal capacity in total consolidated capacity reduced from 10% in 2020 to about 1% in 2023) Medium- Long term (2030) 82 gCO2eq/kWh by 2030 (80% reduction compared with 2017) 100% of Scope 1 GHG emissions (1) 21.2 MtCO2eq (16% reduction compared with 2017) 100% of Scope 3 emissions connected with sale of natural gas on end-user market (Scope 3, “use of products sold”) > Invest €16.8 billion to accelerate the development of renewable energy by installing 15.4 GW of new renewables capacity in 2021-2023 period, reaching 60 GW of consolidated renewables capacity by 2023 > Accelerate the exit from coal to 2027 from 2030 (phasing out of 16 GW of coal capacity over 2017-2027) > Invest €65 billion to accelerate the development of renewable energy by installing 75 GW of renewables capacity in 2021-2030 period, reaching 120 GW of consolidated renewables capacity by 2030 (3 times installed renewables capacity in the 2017 base year) > Promote the switch of customers from gas to electricity (especially residential customers) > Optimization of the gas portfolio of customers (especially industrial customers) 1.5 °C, SBTi certified 2 °C, SBTi certified Long term (2050) ~0 gCO2eq/kWh by 2050 100% of Scope 1 GHG emissions (1) (3) 1.5 °C (2) > Aim for the gradual elimination of thermal capacity and achieve a 100% renewable energy mix (1) Although Enel constantly monitors Scope 2 emissions and is actively committed to reducing them, the Group has not set a specific reduction target, as they represented less than 4% of total Scope 1 and Scope 2 emissions in 2017 (base year of the target certified by SBTi). Therefore they are considered marginal and fall within the exclusion criteria under the SBTi methodology, which sets a margin of 5% on total Scope 1 and Scope 2 emissions. (2) The target could not be officially validated by SBTi because the targets must cover a minimum of 5 years and a maximum of 15 years from the date the target is presented to SBTi for official validation. However, they meet the 1.5 °C path established by the SBTi for the electricity services sector (sectoral decarbonization approach, SDA). In compliance with the Group’s net-zero commitment, which comprises both direct and indirect emissions, targets will be set for Scope 2 and Scope 3 emissions in accordance with the Net-Zero Standard under development by SBTi. (3) 5656 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsall contributing to the fight against climate change (SDG 13 With regard to the Stewardship business model, in 2021- - Climate Action). Furthermore, it is estimated that between 2030 the Group expects to invest approximately €10 billion 80% and 90% of these investments will be aligned with the directly, while at the same time mobilizing some €30 billion criteria of the European taxonomy, given the substantial in third-party investments, for a total of around €40 billion, contribution to climate change mitigation. mainly in renewable energy, fiber optics, electric mobility In particular, it is estimated that about 46% of investments in and flexibility services. 2030 relating to the Ownership business model will be dedi- cated to the Infrastructure and Networks business, with the In particular, in the Customers sector, the two business aim of obtaining improvements in terms of service quality and models will promote customer value in all segments throu- grid resilience, increasing the number of connections and gh combined product offering: increasing the digitalization of the infrastructure. Thanks to these initiatives, the Group expects to expand the number of › in the B2C segment, the Group will promote the electrifi- end users to about 90 million, all equipped with smart meters, cation of the customer base through an integrated offer from the current 74 million, of which 60% are equipped with of power and services offered by Enel X. The volume of smart meters. The Group’s RAB (Regulatory Asset Base) will electricity sold on the free market in Europe is expected reach around €70 billion in 2030, up about 70% from current to increase by 2.5 times compared with 2020, reaching levels (around €42 billion). These results will benefit from our around 100 TWh in 2030 compared with 39 TWh in 2020; unique operational dimensions, a very high level of expertise in › in the B2B segment, the Group intends to be a leading digitalization and the significant value of intellectual property. energy partner for global and local companies on their The extensive use of digital platforms in the management of path towards sustainability and energy efficiency. Tradi- assets and end users should reduce operating expenses per tional products, such as PPAs, will be combined with new user by about 27% in real terms compared with 2020. services, including flexibility services, solutions for electric mobility and the enhancement of circularity. The Group’s The remainder of the investments related to the Owner- gross margin in B2B operations in Europe is expected to ship business model, about 5%, will be dedicated to the reach €1.9 billion in 2030, compared with about €1.1 bil- Customers sector, and it is expected that, in 2030, it will lion in 2020, driven by “beyond commodity” services; produce a net increase in customer value, i.e. the an- › in the B2G segment, the Group will support city govern- nual gross margin per customer. The Group will play an ments in achieving ambitious long-term decarbonization enabling role in the electrification process, accelerating and sustainability objectives, through the electrification the transition of customers towards sustainability and of public transport, supplementing the product range energy efficiency, combining its traditional range of servi- with digital mobility services (such as city analytics), intel- ces with “beyond commodity” services. This business will ligent lighting and other advanced services. By 2030, the benefit from the largest customer base globally, digital Group expects to increase the number of electric buses platforms and a growing integrated portfolio of products to over 10,000 (12 times the number in 2020), while pu- and services. The Group’s strategy will encompass all seg- blic lighting points are expected to exceed 4 million in ments: B2C (business to customer), B2B (business to busi- 2030, up from 2.8 million in 2020 (up 1.5 times). In addi- ness) and B2G (business to government). tion, charging points for electric vehicles are expected CAPEX BY CLUSTER Enel's direct investments ~10 € bn ~30 ~10 ~40 € bn | | | | | | | | | | ||||||||| ||||||| | | 2021-30 ~40 € bn ||||||||| |||||||||| | | | | | | | | | | | | | | Renewables E-transport Fiber Flexibility & Other to increase to over 4 million and demand response solu- tions to grow by more than three times, to around 20 GW compared with about 6 GW in 2020. Across the segments, the progressive digitalization of cu- stomer relationships, supported by the evolution of digital management platforms, should produce a substantial re- duction in costs in real terms. The strategic vision of an action based on sustainability, integrated along the entire value chain, will be rewarded by an increase in the value generated by the Group within the “sustainability = value” strategic paradigm. It is expected that the Group’s ordinary EBITDA will achieve a CAGR of 5%-6%, while ordinary net profit will show a CAGR of 6%- 7% between 2020 and 2030. 57 Integrated Annual Report 2020By promoting decarbonization, electrification and platform migration processes, the Group also plans to create shared and sustainable value for all stakeholders. Examples include: › over €240 billion of gross domestic product in the coun- The new 2021-2023 Business Plan tries in which the Group operates, through local invest- Within the broader ambitions for the positioning of the ments in decarbonization and electrification; Group by 2030, the 2021-2023 Business Plan is ideally pla- › a tripling of service quality levels, with the system avera- ced as the first step in a growth path spanning the enti- ge interruption duration index (SAIDI) falling to about 100 re decade. The effect of the ambitions on the long-term minutes in 2030 from 258.9 minutes in 2020. Strategic Plan will translate into a decisive increase in both direct and indirect investments to enable the acceleration People centricity is one of the pillars of Enel’s sustainability of decarbonization and electrification trends. strategy. In 2021-2023, the Group expects to directly invest around The Enel Group promotes the economic and social growth €40 billion, of which €38 billion through the Ownership of the local communities in which it operates, strengthe- business model, mainly on expanding networks and re- ning its commitment to supporting sustainable deve- newables, and around €2 billion through the Stewardship lopment: 5 million beneficiaries of quality education in model, while mobilizing €8 billion in third-party investment. 2015-2030 (SDG 4); 20 million beneficiaries of clean and These investments will be earmarked for the development accessible energy in 2015-2030 (SDG 7.1); 8 million bene- of renewable energy, fiber optics, electric mobility and ficiaries of decent work and lasting, inclusive and sustai- flexibility systems. nable economic growth in 2015-2030 (SDG 8). This increase in investments of about 36% over the pre- We pay great attention to our people, developing plans vious plan, considering the analyses of the various possible designed to strengthen their roles and skills and provide transition scenarios in the countries in which Enel opera- the tools for managing the energy transition, with clear and tes, will put the Group in an advantageous position to re- precise goals in terms of performance assessment and bu- spond to any acceleration in the energy transition. siness climate. We work to promote upskilling and reskil- ling programs as well as the development of digital skills. The Group also aims to promote diversity and inclusion by having 50% female participation in selection processes by 2023. These effective objectives and actions are also confirmed by the signing in July 2019 of the “just transition” commit- ment promoted by the United Nations. Unwavering attention continues to be devoted to workpla- ce health and safety, to promoting a sustainable supply chain, to forging an increasingly integrated governance structure and to managing environmental impact through the reduction of atmospheric emissions and water consu- mption and the promotion of biodiversity. Finally, technological transformation cannot be divorced from serious concerns about cyber security, where the Group confirms and expands its objectives for dissemina- ting cutting-edge solutions supported by associated verifi- cation measures (ethical hacking, vulnerability assessment and cyber exercising involving plants and other industrial sites), and fostering an effective IT security culture. 5858 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsINVESTMENTS ACTIVATED FOR THE ENERGY TRANSITION (€ bn) ~30 ~160 I P H S R E N W O L E D O M |||||||| | | | | | ||||||| | | | | | | | | | | | | | >38 € bn |||||||||| | | | | | | | | | ||||||||| 8 ~40 8 8 4 ~ l a t o T I P H S D R A W E T S L E D O M 2(1) 10 € bn Consolidated renewables capacity (GW) 2020 2023 45 ~60 RAB (€ bn) ~42 48 % Smart meters 60% 64% Renewables capacity managed (GW) Electric buses(2 ) (k) Homes connected (mn) 2020 2023 3.6 0.9 7.6 5.5 11.1 28.9 2021-2030 2021-2023 Enel Third parties (1) Includes equity injections. (2) Includes managed and leased e-buses. Almost 90% of the €38 billion of investment through the Ownership business model is planned to go to networks and renewables, for a total of €33 billion over the three ye- As a result of the decarbonization strategy that the Group is implementing, the Group’s Scope 1 CO2 emissions (gCO2eq/ kWh) will decrease by more than 30% between 2020 and 2023, ars, with the remainder allocated to retail businesses and accompanying the Group towards achievement of its scien- conventional generation. The €2 billion of investment attri- ce-based decarbonization goal of an 80% reduction in gre- butable to the Stewardship business model are expected enhouse gas emissions by 2030 compared with 2017 levels, as to be directed towards the development of renewable well as the ultimate goal of full decarbonization by 2050. energy, fiber optics, e-mobility and flexibility systems. As noted earlier, over 90% of Enel’s consolidated invest- ments will be consistent with the United Nations Sustai- nable Development Goals (SDGs). Furthermore, in line with Enel’s initial estimates, between 80% and 90% of invest- ments on a consolidated basis will be aligned with the Eu- ropean taxonomy criteria thanks to their substantial contri- bution to climate change mitigation. With regard to the renewable energy business: › as part of the Ownership business model, the Group plans to invest a total of €16.8 billion, of which €15.7 bil- lion for the development of over 15.4 GW of new capa- city, mainly in countries in which we have an integrated presence; › as part of the Stewardship business model, the Group plans to mobilize a total of €3.8 billion, of which €500 million in direct investments and €3.3 billion in third-par- ty investments. This investment will produce 4.1 GW of new capacity. Investments under both business models will enable the Group to develop around 19.5 GW of new renewables ca- pacity over the three years of the Plan. 2020 2023 NET EFFICIENT INSTALLED RENEWABLES CAPACITY (1) NET EFFICIENT INSTALLED RENEWABLES CAPACITY (2) 45 GW 54 % 60 GW 65 % NET EFFICIENT INSTALLED COAL CAPACITY (2) 10.6 % 1 % SPECIFIC DIRECT SCOPE 1 GREENHOUSE GAS EMISSIONS 214 gCO2eq/kWh 148 gCO2eq/kWh (1) Net efficient installed renewables capacity, including managed capacity, was equal to 48.6 GW at December 31, 2020 and 45.8 GW at December 31, 2019. (2) Renewables and coal capacity as a percentage of consolidated capacity assuming coal plant closures authorized by the competent authorities are completed within the timeframe set by the Group. 59 Integrated Annual Report 2020 Global Power Generation’s ordinary EBITDA is expected to In the B2C segment, free market sales volumes in Euro- reach about €7.7 billion in 2023, up 11% from about €7 bil- pe are expected to increase by 55% (from about 39 TWh lion in 2020. This growth will be driven by the renewables in 2020 to around 62 TWh in 2023). In the B2B segment, business, whose ordinary EBITDA is expected to rise to the gross margin is expected to increase from around about €6.5 billion in 2023 (+€1.8 billion compared with €1.1 billion in 2020 to around €1.4 billion in 2023 (+27%), about €4.7 billion in 2020), while ordinary EBITDA from mainly thanks to “beyond commodity” services. Finally, in thermal generation is expected to decline to about €1.2 the B2G segment, the Group plans to continue supporting billion in 2023, down from about €2.2 billion in 2020. the transition of cities towards electric mobility, adding In the Infrastructure and Networks business, the Group contributing, with direct and indirect investments, to put- expects to invest €16.2 billion over the three-year period, ting about 5,500 electric buses into circulation (up about 6 bringing average annual investment to around €5.4 billion. times compared with 2020). Street lighting is expected to Of this, 65% will be dedicated to improving the service expand from 2.8 million points in 2020 to about 3.4 million around 200,000 public charging points in 2021-2023 and quality and grid resilience, about 23% to new connections in 2023 (+21%). and about 12% to digitalization. The acceleration of invest- ments is also expected to expand the Group’s RAB by 14%, At the end of the Plan period, Enel X aims to reach about reaching about €48 billion in 2023 (from about €42 billion 780 thousand public and private charging points - inclu- in 2020). ding interoperable points - available globally, up from about 186 thousand in 2020 (+4 times), approximately 10.6 GW of At the operational level, the number of end users is demand response capacity, up from the 6 GW offered in expected to increase to around 77 million in 2023, of which 2020 (+1.8 times), as well as 527 MW of storage capacity, 64% equipped with smart meters, from around 74 million up from 123 MW in 2020 (+4.3 times). in 2020 (of which 60% equipped with smart meters). Fur- thermore, on the service quality front, the SAIDI and the Ordinary EBITDA associated with the Customers business system average interruption frequency index (SAIFI) are is expected to reach €4.5 billion at the end of 2023, com- expected to decline by 12% and 14%, respectively. There- pared with €3.4 billion in 2020, with a contribution of about fore, the Group’s networks are expected to become more €500 million from B2C, about €400 million from B2B, and efficient, while net operating expenditure per user will drop about €100 million from B2G. Efficiency improvements, to around €34 in 2023, from around €41 in 2020 (a re- driven by an operating platform that unifies and digitali- duction of 17%). zes operations for customers, will contribute about €300 million to ordinary EBITDA in 2023. The ordinary EBITDA of Infrastructure and Networks is expected to reach about €9.5 billion at the end of 2023, an At the Group level, the aggregate effects of the Owner- increase of 23% compared with about €7.7 billion in 2020, ship and Stewardship business models will have a substan- thanks in part to efficiency improvements linked to the im- tial impact on the creation of value, with ordinary EBITDA plementation of operating platforms. expected to reach between €20.7 billion and €21.3 billion in 2023, with a CAGR of 5%-6%. At the same time, ordinary The remainder is associated with the Customers business, profit is expected to rise to between €6.5 billion and 6.7 where the value of B2C customers is expected to increase billion in 2023, with a CAGR of between 8% and 9%. The by approximately 28%, while the value of B2B customers is Group expects to achieve these results thanks to the conti- projected to rise by about 45%, thanks to the expansion of nuous optimization of Enel’s finance operations, notably an the portfolio of free-market customers and developments expansion of sources of sustainable funding, with a conse- in the electrification of energy consumption, which will dri- quent reduction in the cost of borrowing. ve demand for “beyond commodity” services. 6060 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsFINANCIAL TARGETS Ordinary EBITDA (€ billions) Ordinary profit (€ billions) 2020 17.9 5.2 2021 18.7-19.3 5.4-5.6 2022 2023 19.7-20.3 20.7-21.3 5.9-6.1 6.5-6.7 CAGR 2020-2023 +5%/+6% +8%/+9% The Group’s net debt is expected to reach €57-58 billion by maturing issues and raise new funds through sustainable the end of 2023, driven by the acceleration of investments. instruments. In terms of credit metrics: › the FFO/net debt ratio is expected to be at 26% in 2023, The cost of debt of the Group’s sustainability-linked bond compared with 25% in 2020, driven by the improvement issues is on average about 15-20 basis points lower than in cash conversion; conventional bond issues, a level that is expected to reduce › the Group’s net debt/ordinary EBITDA ratio is expected Enel’s borrowing costs. to be 2.7 in 2023; › thanks to the sustainable financing strategy that the Enel has implemented a simple, predictable and attractive Group is implementing, the cost of the Group’s gross dividend policy. Shareholders will receive a fixed dividend debt is expected to reach 3.3% at the end of the Plan per share (DPS) guaranteed over the next three years, with period, compared with 3.7% at the end of 2020. a CAGR of approximately 6%. Currently, sustainable funding sources, including sustai- The soundness of our business model, combined with nability-linked bond issues, green bonds and sustainable confidence in our ability to achieve strategic objectives, loans, represent about one third of the Group’s total gross enables Enel to pay a guaranteed fixed dividend per sha- debt. These sources are expected to increase as a propor- re that will increase over the Plan period, reaching €0.43/ tion of total gross debt to about 50% in 2023 and to over share in 2023. 70% in 2030, as the Group aims to progressively refinance DPS Value creation Dividend per share (€) 2020 0.358 2021 0.38 2022 0.40 2023 0.43 CAGR 2020-2023 ~6% 61 Integrated Annual Report 2020REFERENCE SCENARIO Macroeconomic environment The global COVID-19 pandemic, which first emerged in the 1st Quarter of 2020, and the consequent restrictions imple- mented by governments triggered a recession unpreceden- ted in recent history, producing a contraction in world GDP of around 3.7% on an annual basis in 2020. In this regard, the measures to counter the recession im- plemented in the advanced economies involved a range of support programs for the various productive sectors, the labor market and domestic demand, as well as ultra-expan- sionary monetary and fiscal policy measures. China United States Euro area United Kingdom ECONOMIC MEASURES > Strict restrictive measures at the beginning of the pandemic and strong resilience of the economy, supported mainly by high spending on infrastructure > Expansionary fiscal policies to support families and companies > Cut in main interest rate to 0-0.25% and a program for the purchase of securities by the Federal Reserve > Massive government subsidies and other labor market support measures > Main interest rates at the European Central Bank unchanged, with no adjustment until the target inflation rate of 2% is achieved (the interest rate on main refinancing operations at 0% and the rate on the deposit facility of the ECB a negative 0.5%) > Pandemic Emergency Purchase Program (PEPP) with envelope of €1.85 trillion > €750 billion recovery plan (Next Generation EU), divided between loans (€360 billion) and grants (almost €390 billion) > Subsidies for the labor market, Coronavirus Job Retention Scheme, and ultra-expansionary monetary and fiscal policies In Latin America, one of the most severely affected areas in › in Colombia, despite the severity of the consequences the world, macroeconomic developments were strongly im- of the pandemic (GDP contracted by 7.5%), expectations pacted by the pandemic and the diverse responses of the for 2021 are improving given the recovery of the oil sec- individual governments: tor and the absence of political instability in the medium › in Argentina the pandemic has further exacerbated exi- term; sting structural problems with growth and fiscal stabili- › although Peru was among the hardest hit countries (GDP ty (GDP down 10%), compounded by doubts about the down 12%), its good fiscal and financial position together outcome of ongoing negotiations with the International with rising mineral prices put the country among the Monetary Fund over the restructuring of public debt, area’s favorites to post a strong economic recovery in which are weighing on the recovery; the short term despite the political instability linked to › the Chilean economy has been among the most resilient the elections scheduled for next April, which could wor- in Latin America thanks to its considerable openness, sen the economic outlook. with exports driven by the Chinese recovery. Doubts In general, despite the fact that the prospects for an exit about the prospects for growth persist, however, given from the pandemic in 2021 have improved thanks to pro- the strong political uncertainty in the country; gress in vaccine development and the beginning of vaccine › in Brazil, a broad family support program prevented a distribution, uncertainty linked to the spread of new cases severe recession, but it undermined the economic and and the possible imposition of new restrictions persists, with fiscal soundness of the country, with an estimated deficit its elimination depending significantly on the progress of of over 15% of GDP. For 2021, projections remain positive vaccination on the global scale. given the country’s large foreign currency reserves and its low exposure to foreign debt payments; 6262 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsGDP GROWTH AND INFLATION (1) % Italy Spain Portugal Greece Argentina Romania Russia Brazil Chile Colombia Mexico Peru Canada United States South Africa India GDP Inflation 2020 -9.0 -11.1 -8.3 -9.6 -10.5 -5.3 -3.8 -4.4 -6.1 -7.5 -8.7 -11.3 -5.5 -3.5 -7.3 - 2019 0.3 2.0 2.2 1.6 -2.1 4.2 1.3 1.4 1.0 3.3 - 2.2 1.9 2.2 0.2 - 2020 -0.1 -0.3 - - 42.0 2.6 3.4 3.3 3.0 2.5 3.4 1.8 0.8 1.2 3.3 6.8 2019 0.6 0.7 - - 53.5 3.8 4.5 3.7 2.3 3.5 3.6 2.1 2.0 1.8 4.1 3.7 Change -0.7 -1.0 - - -11.5 -1.2 -1.1 -0.4 0.7 -1.0 -0.2 -0.3 -1.2 -0.6 -0.8 3.1 (1) The GDP and inflation figures are the best estimate available at the publication date and are subject to revision by national statistical institutes in the co- ming months. Source: national statistical institutes and Enel based on data from ISTAT, INE, EUROSTAT, IMF, OECD and Global Insight. 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 sol US dollar/Mexican peso US dollar/Turkish lira US dollar/Indian rupee US dollar/South African rand 2020 1.14 0.89 1.07 107 1.34 1.45 72.29 70.68 5.16 791.61 3,693 3.50 21.48 7.02 74.08 16.46 2019 1.12 0.88 1.11 109 1.33 1.44 62.99 48.17 3.94 702.85 3,280 3.34 19.25 5.68 70.42 14.45 Change 1.79% 1.14% -3.60% -1.83% 0.75% 0.69% 14.76% 46.73% 30.96% 12.63% 12.59% 4.79% 11.58% 23.59% 5.20% 13.91% 63 Integrated Annual Report 2020The IBOR reform of December, Brent and WTI prices reached their highest levels since March, thanks above all to expectations for a The IBOR reform is a fundamental reform of the bench- recovery in demand fueled by the arrival of vaccines and marks used to determine interest rates being conducted the agreement reached in the last OPEC meeting to incre- by the regulatory bodies in the wake of various instances ase production starting from January 2021, containing the of rate manipulation by the banks that contribute data for fall in oil prices to about 33% compared with levels in 2019. their calculation. The reform includes the replacement of certain benchmark indices, including the Euribor and LI- The gas market was also buffeted by strong volatility during BOR, with alternative risk-free benchmark rates. 2020, with the 1st Half of the year characterized by a con- For more details on the reform of the IBORs and the results traction of almost 50% in prices on all the main European of the analyses conducted by the Group, please see note hubs compared with 2019. A combination of record levels 47.1 of the consolidated financial statements. of stocks, resilient supply and mild weather put pressure The energy industry Energy - commodity conditions During 2020, the oil market experienced considerable vo- latility, with prices collapsing in the 1st Quarter, largely due to the impact of the pandemic, before partially reversing the losses in the 2nd Half of the year, thanks to the gra- dual reopening of the world’s major economies and sharp production cuts by the OPEC countries. At the beginning Brent API2 TTF CO2 $/bbl $/ton €/MWh €/ton on prices. The restrictions on mobility imposed to counter the pandemic and the pressure of a market already expe- riencing clear oversupply also caused European gas de- mand to contract by 5%. In the 2nd Half of the year, demand for gas recovered than- ks to low coal and nuclear generation in Europe, reduced flows from Russia, the decline in LNG imports and the reco- very of Asian demand, as well as an increase in demand for gas for heating, which returned prices to a level in line with the averages for 2019, even though they were still well be- low the annual average levels registered in 2017 and 2018. 2020 2019 43 50 9 25 64 61 14 25 Change -32.8% -18.0% -35.7% - 6464 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsThe price of CO2 on the ETS displayed excellent resilience, remaining stable at around €25/ton and rapidly absorbing Recent statements by the European Commission about the central role of the ETS in achieving decarbonization the initial shock experienced in March and May, months in and climate neutrality goals have supported the market, le- which the first wave of COVID-19 cases triggered a tempo- aving prices on a gradually rising path towards long-term rary decline to around €15/20/ton. equilibrium. Electricity and natural gas markets Electricity demand DEVELOPMENTS IN ELECTRICITY DEMAND (1) (2) TWh Italy Spain Romania Russia (3) Argentina Brazil Chile Colombia Peru United States 2020 2019 Change 303 236 59 779 132 587 78 70 49 320 249 62 802 133 594 77 72 53 3,651 3,750 -5.3% -5.2% -4.8% -2.9% -0.8% -1.2% 1.3% -2.8% -7.5% -2.6% (1) Gross of grid losses. (2) The figures are the best estimate available at the publication date and could be revised by TSOs in the coming months. (3) Europe/Urals. Source: Enel based on TSO figures. The past year was particularly bad for electricity consump- 5.2% respectively. Examining developments at the sector le- tion due to the onset of the COVID-19 pandemic in March, vel, in Spain, the decline in energy demand has returned to with Belgium, the United Kingdom, Italy, Spain and France pre-COVID-19 levels in the industrial sector, while demand in the most severely affected countries, experiencing declines services is still down. in demand due to the emergency of 5%-6% compared with In Latin America, electricity demand declined significantly 2019. in Peru (-7.5%), reflecting the prolonged closure of mining Italy and Spain saw electricity demand drop by 5.3% and activities, and in Colombia (-2.8%), mainly attributable to 65 Integrated Annual Report 2020the closure of large and medium-sized firms. The decline in national level, and in Argentina, with falls of about 1.2% and electricity consumption was smaller in Brazil, thanks to more 0.8% respectively. Electricity demand in Chile was more resi- localized restrictive measures that were not extended to the lient, recording an increase, albeit a small one, of 1.3%. Electricity prices ELECTRICITY PRICES Italy Spain Average baseload price 2020 (€/MWh) Change in average baseload price 2020-2019 Average peakload price 2020 (€/MWh) Change in average peakload price 2020-2019 38.9 31.9 -25.6% -32.8% 51.4 43.7 -11.8% -14.5% PRICE DEVELOPMENTS IN THE MAIN MARKETS (1) Eurocents/kWh Final market (residential) (2) Italy Romania Spain Final market (industrial) (3) Italy Romania Spain 2020 2019 Change 0.1382 0.1045 0.1178 0.0609 0.0757 0.0519 0.1430 0.1004 0.1324 0.0785 0.0715 0.0651 -3.4% 4.1% -11.0% -22.4% 5.9% -20.3% (1) The figures are the best estimate available at the publication date and could be revised by TSOs in the coming months. (2) Annual price net of taxes - annual consumption of between 2,500 kWh and 5,000 kWh. (3) Annual price net of taxes - annual consumption of between 70,000 MWh and 150,000 MWh. Source: Eurostat. Natural gas markets NATURAL GAS DEMAND Billions of m3 Italy Spain 2020 70 31 2019 73 34 Change (3) (3) -4.1% -8.8% The COVID-19 crisis and an exceptionally mild winter in the 2020, with most of the decline coming in the 2nd Quarter. northern hemisphere caused global gas demand to suffer The countries most affected included Spain (-8.8%), with its largest year-on-year decline in history (-4% according a decline mainly attributable to the thermal generation to the latest estimates of the IEA). (-20%) and residential (-12%) sectors, France, the United In Europe, gas demand decreased by an average of 5% in Kingdom and finally Germany. 6666 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsNATURAL GAS DEMAND IN ITALY Billions of m3 Distribution grids Industry Thermal generation Other (1) Total 2020 2019 Change 31 13 25 1 70 32 14 26 1 73 (1) (1) (1) - (3) -3.1% -7.1% -3.8% - -4.1% Includes other consumption and losses. (1) Source: Enel based on data from the Ministry for Economic Development and Snam Rete Gas. In Italy, demand contracted by 4.1% compared with 2019, Standard, constituted the main framework for the Group’s with an especially steep decline in thermal generation reporting on climate change issues in 2020. (-3.8%) and industry (-7.1%), and a less marked decrease in the distribution grid segment (-3.1%), thanks to an increase The Enel Group is committed to implementing a business in consumption in the 4th Quarter (+14% year on year), due model that is consistent with the objectives of the Paris to demand for heating. Climate change and long-term scenarios Agreement (COP21) to contain the average increase in glo- bal temperature by 2100 below 2 °C compared with pre-in- dustrial levels and to continue to limit this rise to 1.5 °C. Furthermore, Enel, as a signatory of the “Business Ambition for 1.5 °C” campaign promoted by the United Nations and other institutions, is committed to setting a long-term goal Enel promotes transparency in its climate-change disclo- to achieve net zero emissions along the entire value chain sures and works to demonstrate to its stakeholders that by 2050 and to pursue evidence-based targets in all rele- it is tackling climate change with diligence and determi- vant areas consistent with the criteria and recommenda- nation. Enel has therefore publicly committed itself to tions of the Science Based Targets initiative (SBTi). adopting the recommendations of the Task Force on Cli- mate-related Financial Disclosures (TCFD) of the Financial In 2020, Enel’s decarbonization roadmap was updated to Stability Board, which in June 2017 published specific re- capture the acceleration in the spread of renewables and commendations for the voluntary reporting of the financial the reduction in thermal generation capacity envisaged in impact of climate risks. The Group is also taking on board the new 2021-2023 Strategic Plan and in the 2030 ambi- the “Guidelines on reporting climate-related information” tions presented on the 2020 Capital Markets Day, setting published by the European Commission in June 2019, whi- the following objectives in line with the Paris Agreement. ch, together with the TCFD recommendations and the GRI TIME HORIZON Short term Medium term GREENHOUSE GAS (GHG) REDUCTION TARGET 2023 2030 > Direct emissions of Scope 1 greenhouse gases to 148 gCO2eq/kWh (-32% compared with 2020) > Direct emissions of Scope 1 greenhouse gases to 82 gCO2eq/kWh (-80% compared with 2017, consistent with the 1.5 °C path as certified by the SBTi) > 16% reduction in indirect Scope 3 emissions associate with gas consumption by end users compared with 2017 Long term 2050 > Full decarbonization of energy mix This acceleration in the reduction of greenhouse gas emis- sions is also a response to the appeal of the Intergovern- From scenario to strategic decisions mental Panel on Climate Change (IPCC) as part of its effort to The Group develops short-, medium- and long-term sce- strengthen the global response to the climate change threat. narios for the energy industry and for macroeconomic and Included in the IPCC special report, the appeal warns of the financial conditions in order to support its strategic and in- impacts of global warming of 1.5 °C above pre-industrial levels dustrial planning and the evaluation of investments and ex- and the related global greenhouse gas emission pathways. traordinary corporate transactions. The role of climate chan- ge in these scenarios is increasingly important in terms of: 67 Integrated Annual Report 2020 › acute phenomena (heat waves, flooding, hurricanes, etc.) corporate processes takes account of the guidelines of and their potential impact on industrial assets; the TCFD and enables the assessment of the risks and op- › chronic phenomena related to structural changes in the portunities connected with climate change. For this reason, climate, such as the rising trend in temperatures, rising the Group has established an ongoing dialogue and col- sea levels, etc., which can bring about changes, for exam- laborative relationship with experts in the field of climate ple, in the output of generation plants and in electricity change, such as the International Centre for Theoretical consumption profiles in the residential and commercial Physics (ICTP) in Trieste. In addition, the Group has equip- sectors; ped itself to manage high resolution post-downscaling › transition of the various industrial and business sectors climate scenarios and has activated dedicated projects to towards a green economy characterized by ever lower develop the skills necessary to translate the complexity of emission levels for climate changing gases. climate modeling into useful information for understan- ding its local effects on the business and supporting stra- The issues connected with future trends in climate va- tegic decisions. riables (in terms of acute and chronic phenomena) define The acquisition and processing of the large volume of the so-called “physical scenario”, while the issues associa- data underlying the scenarios, and the identification of the ted with the industrial and economic transition towards solutions to reduce atmospheric concentrations of CO2 are the characteristic elements of the “transition scenario”. methodologies and metrics necessary to interpret com- plex phenomena at very high resolution, require a conti- nuous dialogue with both external and internal sources. To The scenarios are constructed within an overall framework this end, the Group works with a platform approach, de- that ensures consistency between climate projections and ploying tools that guarantee sound and accessible infor- transition assumptions and can be used to evaluate the mation. The process that translates scenario phenomena phenomena identified in the short, medium and long term. into useful information for industrial and strategic deci- The adoption of these scenarios and their integration into sions can be summarized in five steps: S T E P S 5 | | || |||| | ||| 1 ||||||||||| | | | | | | | || |||| | ||| 2 ||||||||||| | | | | | | | || |||| | ||| 3 ||||||||||| | | | | | | | || |||| | ||| 4 ||||||||||| | | | | | | | || |||| | ||| 5 ||||||||||| | | | | | | | | | | 1 | | |||||||||||||| | | | | | | 2 ||||||||||| | | | | | | | | | | | | | | | | | | | | | | | | | | Impact assessment |||||||||||||| 3 |||||||||||||||| | | | | | 4 5 6868 Identification of phenomena relevant to business (e.g. impact on electricity demand, heat waves) Development of link functions between climate/transition scenarios and operatio- nal variables Identification of event trend on the basis of scenario data (e.g. intensity and frequency) Calculate impact (e.g. ∆ margins, losses, capex) Strategic actions: definition and implementation (e.g. capital allocation, resilience plans) |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statements The physical climate scenario Among the climate projections developed by the IPCC on a specific level of emissions connected with the so-called a global scale, the Group has selected three representing “Representative Concentration Pathway” (RCP): SCENARIO AVERAGE TEMPERATURE INCREASE COMPARED WITH PRE-INDUSTRIAL LEVELS (1850-1900) RCP 2.6 RCP 4.5 RCP 8.5 ~ +1.5 °C by 2100 (the IPCC estimates a 78% probability of staying below +2 °C).(1) This scenario is used by the Group to assess physical phenomena and perform analyses that consider an energy transition consistent with ambitious mitigation objectives ~ +2.4 °C by 2100. This scenario has been identified by Enel as the most appropriate representation of the current global climate and political context and consistent with the temperature increase estimates that consider current policies announced globally(2) ~ +4.3 °C by 2100. Compatible with a worst case scenario where no particular measures to combat climate change are implemented IPCC Fifth Assessment Report, Working Group 1, “Long-term Climate Change: Projections, Commitments and Irreversibility”. (1) (2) Climate Action Tracker Thermometer, estimates of global heating at 2100 considering existing “pledges & targets” (December 2020 update). In the RCP 8.5 climate projections, the Mediterranean and The analyses carried out for the physical scenarios consi- Central/South America will experience an impact in ter- dered both chronic and acute phenomena. Some of the- ms of an increase in average temperatures and a decline se phenomena require an additional level of complexity, in precipitation. These effects will probably become more as they depend not only on climate trends but also on the pronounced in the 2nd Half of the century, with the impact specific characteristics of the territory and require further increasing up to 2100. In the RCP 2.6 scenario, the effects modeling to obtain a high resolution representation. For will be similar but less intense, with the trend slowing in the this reason, in addition to the climate scenarios provided 2nd Half of the century, thereby producing a substantial by ICTP, the Group also uses natural hazard maps. differential between the two scenarios by 2100. This tool makes it possible to obtain, with a high spatial re- solution, recurrence intervals for a series of events, such as The climate scenarios are global in nature. Accordingly, in storms, hurricanes and floods. As described in the section order to determine their effects in the areas of relevance “Strategic risks and opportunities connected with climate for the Group, a collaborative initiative has been started with change”, this tool is widely used within the Group, which al- the Earth Sciences department of the International Centre ready uses historical data to optimize insurance strategies. for Theoretical Physics (ICTP) of Trieste. As part of this col- In addition, work is under way to be able to take advantage laboration, the ICTP provides projections for the major cli- of this information developed in accordance with climate mate variables with a grid resolution varying from about 12 scenario projections. km2 to about 100 km2 and a forecast horizon running from 2030 to 2050. The main variables are temperature, rainfall and snowfall and solar radiation. Compared with the analysis Italy Acute phenomena: heat waves were defined in collabo- conducted in 2019, the current study is no longer based on ration with the ICTP and Infrastructure and Networks to the use of a single regional climate model (that developed by obtain the most appropriate description of the climate the ICTP) but rather on the union of three models, selected phenomenon for characterizing this critical event for the as being representative of the ensemble of climate models business. The conditions identified (persistence of high currently available in the literature. This technique is usual- temperatures for at least five consecutive days with no ly used in the scientific community to obtain a more robust precipitation) were sought in the projections to 2030- and bias-free analysis, mediating the different assumptions 2050 provided by the ICTP, finding an increase in both the that could characterize the single model. frequency and geographical distribution of such events in In 2020, future projections were analyzed for Italy, Spain all the scenarios analyzed. In particular, there was a signifi- and Brazil, obtaining – thanks to the use of the set of mo- cant deterioration in the RCP 8.5 scenario, especially in the dels – a more highly defined representation of the physical islands and in the southern regions of the country. scenario. 69 Integrated Annual Report 2020AVERAGE NUMBER OF HIGH TEMPERATURE DAYS IN THE VARIOUS RCP SCENARIOS COMPARED WITH HISTORIC VALUES (1990-2017) RCP 2.6 RCP 4.5 RCP 8.5 Δ days 25 20 15 10 5 0 In such scenarios, the intensity of rainfall and extreme 4.5 scenario, on the other hand, an increase of between snowfall will increase, but their frequency will decline 1.0-1.7 °C is expected with an average value of about 1.3 AVERAGE NUMBER OF EXTREME RISK DAYS: DIFFERENCES BETWEEN RCP SCENARIOS AND HISTORICAL VALUES compared with historical data. °C, while for the RCP 2.6 scenario the interval is 0.9-1.5 RCP 2.6 RCP 4.5 RCP 8.5 Fire risk can also be affected by climate change. The °C with an average value of around1.2 °C. The differen- Group has analyzed it using the Fire Weather Index (FWI), tial between the RCP 2.6 scenario and the RCP 4.5 and which takes account of factors such as relative humidity, 8.5 scenarios will grow significantly in the 2nd Half of the precipitation, wind speed and temperature. Days at ex- century. Chronic temperature changes can be analyzed treme risk(2) were selected in the 2030-2050 period and to obtain information about the potential effects on the compared with those in the 1990-2010 period. In all the cooling and heating demand of local energy systems. The scenarios analyzed, the number of days at extreme risk indicators used to measure the thermal requirement are increases compared with historical levels, with different intensities at the geographical level. In some regions, the RCP 2.6 scenario shows a slightly higher number of extre- me risk days than the other scenarios (RCP 4.5 and RCP 8.5) due to factors such as lower humidity, contributing to the fire risk assessment. Chronic phenomena: the average annual temperature is Heating Degree Days (HDDs), i.e. the sum, for all days of the year with a Taverage ≤ 15 °C, of the differences between the internal temperature (with Tinternal assumed to be 18 °C) and the average temperature, and Cooling Degree Days (CDDs), i.e. the sum, for all days of the year with Taverage ≥ 24 °C, of the differences between the Taverage and the Tin- ternal (assumed to be 21 °C), respectively, for heating and cooling requirements. In 2030-2050, the heating requi- expected to increase over the 2030-2050 period in all rement is expected to decrease by 17% compared with scenarios analyzed. In particular, an average temperature 1990-2017, which is constant in all scenarios, while CDDs increase of around 1.4 °C is expected in 2030-2050 com- are always greater than historical data, with an increasing pared with the pre-industrial period, falling with a range trend going from the RCP 2.6 scenario (+55%) to RPC 8.5 of between 1.1-2.0 °C for the RCP 8.5 scenario. In the RCP (+91%). (2) The value of the FWI considered to identify extreme risk days is based on an analysis of historical data and information provided by the European Forest Fire Information System (EFFIS). 7070 Δ days FWI>45 10 7.5 5 2.5 0 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsΔ days 25 20 15 10 5 0 AVERAGE NUMBER OF HIGH TEMPERATURE DAYS IN THE VARIOUS RCP SCENARIOS COMPARED WITH HISTORIC RCP 8.5 VALUES (1990-2017) RCP 2.6 RCP 4.5 RCP 8.5 -17% -17% -17% 91% RCP 2.6 55% RCP 4.5 73% Cooling Degree Days (CDD) Heating Degree Days (HDD) Note that compared with the analysis performed in 2019, ves are expected to increase appreciably in frequency, the RCP 4.5 scenario was introduced and the ensemble of with their geographical spread expected to expand, espe- several models was used as a database, as described abo- cially in the southern area of the country. Extreme rainfall ve. In addition, to give greater weight to the most popula- will increase in intensity but its frequency will decline. At ted areas, HDDs and CDDs were calculated as an average the same time, extreme snowfalls will largely remain loca- over the country, weighting each geographical node by po- ted in the current geographical areas but their frequency pulation thanks to the use of the Shared Socioeconomic and intensity could decline sharply. As regards fire risk, the Pathways (SSPs) associated with each scenario. number of days at extreme risk is higher in the RCP 8.5 Spain Acute phenomena: over the 2030-2050 period, heat wa- scenario than in the RCP 2.6 scenario, and is always grea- ter than the historical average. AVERAGE NUMBER OF EXTREME RISK DAYS: DIFFERENCES BETWEEN RCP SCENARIOS AND HISTORICAL VALUES RCP 2.6 RCP 4.5 RCP 8.5 Δ days FWI>45 10 7.5 5 2.5 0 Chronic phenomena: the average annual temperature is to be around 1 °C (in an interval of between 0.8 and 1.3 °C). expected to increase over the 2030-2050 period, with in- The differential between the RCP 2.6 scenario and the RCP creases in all RCP scenarios considered. In particular, ave- 4.5 and 8.5 scenarios grows significantly in the 2nd Half of rage temperature is expected to increase by about 1.4 °C the century. In terms of Heating Degree Days (HDDs) and compared with the pre-industrial period (within a range of Cooling Degree Days (CDDs), we expect a reduction of 13% between 1.2 and 1.8 °C) for the RCP 8.5 scenario. In the in HDDs in 2030-2050 compared with 1990-2017 and an RCP 4.5 scenario, the average increase is forecast to be increase of 41% in CDDs in the RCP 2.6 scenario, and chan- about 1.2 °C (in an interval of between 1.0 and 1.5 °C), while ges of -17% and +64% in HDDs and CDDs, respectively, in for the RCP 2.6 scenario the average increase is expected the RCP 8.5 scenario. 71 Integrated Annual Report 2020RCP 2.6 41% RCP 4.5 53% RCP 8.5 -13% -17% 64% Cooling Degree Days (CDD) Heating Degree Days (HDD) Brazil Acute phenomena: the trend in acute phenomena in very large countries such as Brazil can differ significantly in the various areas of the country. Our analyses focus on the areas of interest for the Group. For example, the first stu- dies carried out for the state of São Paulo show an incre- ase in heat waves. In Brazil, climate projections point to a larger average reduction in precipitation in the north, with extreme phenomena to be explored on the local scale. Ac- cording to the initial analyses, the number of days at extre- me fire risk are projected to increase in both the RCP 8.5 scenario and the RCP 2.6 scenario compared with the hi- storical average, with the most critical differences coming in the center-west and north-east areas of the country. As with precipitation, fire risk will also need to be investigated further on the local scale based on the needs of the Group. Note that these conclusions are the result of analyses car- ried out using a single climate model, not an ensemble of multiple models, as was done for Italy and Spain. -15% Chronic phenomena: the average annual temperature in the 2030-2050 period is expected to rise from pre-in- dustrial levels in each scenario. More specifically, average temperature is expected to increase by about 1.6 °C in 2030-2050 compared with 1850-1900 (within a range of between 1.2 and 2.1 °C) for the RCP 8.5 scenario. In the RCP 4.5 scenario, the average increase is forecast to be around 1.3 °C (within an interval of between 1.0 and 1.7 °C), while for the RCP 2.6 scenario the average increase is expected to be about 1.1 °C (within a range of between 0.8 and 1.4 °C). In terms of Heating Degree Days (HDDs) and Cooling Degree Days (CDDs), HDDs decrease by 7% and CDDs in- crease by 13% in 2030-2050 compared with 1990-2017 in the RCP 2.6 scenario, while changes in HDDs and CDDs in the RCP 8.5 scenario come to -27% and +31%, respectively. RCP 2.6 13% RCP 4.5 22% -7% -17% RCP 8.5 31% -27% Cooling Degree Days (CDD) Heating Degree Days (HDD) 7272 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsThe transition scenario The transition scenario refers to the description of how energy production and consumption evolve in the various sectors in an economic, social and regulatory context consistent with different greenhouse gas (GHG) emission trends correlated with RCP climate scenarios. As for the global horizon, the literature contains abun- dant publications produced by institutions, international organizations and private companies. The panorama is varied and presents scenarios, sometimes from the same provider, which cover most of the spectrum delineated by the potential temperature increase linked to the different RCP trajectories: each scenario is associated, more or less strictly, with a specific RCP and consequently with a range of temperature increase. The scenarios can be divided into two macro-catego- ries: those that, in accordance with the Paris Agreement, seek to limit the temperature increase compared with the pre-industrial period to less than 2 °C, and those that de- scribe developments in systems that will lead to higher temperatures. In general, a systematic analysis of the dif- ferent sources found that the response to the most chal- lenging scenarios for climate change mitigation efforts in- volves the strong penetration of decarbonized electricity. Global transition scenarios to 2040-2050 and temperature increase Temperature increase ≤2 °C >2 °C A, B , C, D: provider 1, 2, 3: scenarios from the same provider D2 B3 A2 B1 B2 D1 A1 C1 40 35 30 25 20 % n o i t a c fi i r t c e E l 2019 15 20 30 40 50 Renewable generation % 60 70 80 The available evidence, including the scenarios developed The transition scenarios used by the Group globally are the by the leading global agencies, indicates that the policies result of the benchmark analysis of external scenarios and implemented by governments around the world are cur- currently known policy objectives. For the main countries in rently not sufficient to achieve the Paris objectives.(3) The which it operates, the Group develops consistent transition most likely global climate pathway under existing policies, scenarios using system energy models. Where internal mo- i.e. those declared by individual countries, is a RCP 4.5 sce- dels are not available, risks and opportunities are assessed nario lying between RCP 2.6 and 8.5. Although it is a less through the analysis of scenarios produced by third parties, ambitious path than the RCP 2.6, it is consistent with the as described above. policies approved or announced and which are unlikely to be disregarded. (3) Consider for example “UNEP Emissions Gap Report 2020” and “IEA World Energy Outlook 2020”. 73 Integrated Annual Report 2020 The main assumptions considered in developing the tran- ce) scenario, constructed mainly on the basis of existing or sition scenarios concern: announced policies and specific internal assumptions for the › local policies and regulatory measures to combat clima- evolution of individual variables, and a more ambitious scenario te change, such as measures to reduce carbon dioxide (Brighter Future), consistent with the achievement of the Pa- emissions, increase energy efficiency, decarbonize the ris objectives, which presupposes more stringent targets for electricity sector and reduce oil consumption; reducing carbon dioxide emissions or increasing energy effi- › the global macroeconomic and energy context (for exam- ciency, as well as a possible acceleration in the reduction of ple, gross domestic product, population and commodity the costs of certain technologies. This second case assumes prices), considering international benchmarks including incremental growth in renewable generation and greater de- those produced by the International Energy Agency (IEA), mand for electricity due to the greater electrification of final Bloomberg New Energy Finance (BNEF), the International consumption, mainly driven by more ambitious objectives in Institute for Applied Systems Analysis (IIASA) and others. terms of energy efficiency and decarbonization. As regards the IIASA, for example, we have considered Of course, if the countries with the highest emissions do not the fundamentals of commodity demand and the popu- adopt effective decarbonization policies, remaining on iner- lation underlying the “Shared Socioeconomic Pathways tial or deteriorating paths, any particularly ambitious transition (SSPs)”, which project different scenarios describing trajectories defined at the local level could coexist with climate socioeconomic developments and policies consistent change scenarios that are worse than the Paris scenarios. In with climate scenarios. The information from the SSPs fact, the ambitions of individual countries for mitigation actions is used, together with the internal modeling, to support are not sufficient on their own to determine the long-term long-term forecasts, such as those for commodity pri- trajectories of emissions and the consequent RCP pathways. ces and electricity demand; To develop the transition scenarios for the countries under › the evolution of energy production, conversion and con- analysis, the Group has equipped itself with quantitative tools sumption technologies, both in terms of technical ope- that, given the assumptions regarding the evolution of po- rating parameters and costs. licies, technologies and other contextual variables, produce the corresponding projections for energy demand, electrici- On the basis of the framework described, the transition sce- ty demand, electricity production, penetration of renewables, nario framework with which the Group conducted the impact electric vehicles, etc. In other words, all the relevant variables analyses relating to the risks and opportunities inherent in cli- that characterize a national energy system with respect to the mate change envisages two scenarios: an “inertial” (Referen- Group’s activities. PHYSICAL SCENARIO TRANSITION SCENARIO Temperature Macro Precipitation Commodities Wind Regulatory Irradiation Technological evolution 7474 Energy System Model ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsOnce the medium/long-term transition scenarios have scenario with RCP 8.5, in addition to RCP 4.5. Assuming this been determined, the scenario framework makes it pos- additional increase in temperature, with the same energy sible to conduct analyses of the longer-term chronic phy- transition, leads to an increase of less than 1% in demand sical effects determined locally by the climate pathways in the RCP 8.5 Reference scenario compared with the RCP considered. One example is the analysis of the impact of 4.5 Reference scenario. the change in temperature on electricity demand. For this purpose, the Reference and Brighter Future scenarios for Italy and Spain have been supplemented with the Heating Average impact on electricity demand (2030-2050) comparing RCP 2.6 and RCP 4.5 Degree Days and Cooling Degree Days under RCP 4.5 and RCP 2.6 respectively. It was thus possible to quantify the effect that the change in temperature will have on energy demand (total, not just electricity) for cooling and heating in the residential and commercial sectors. The time horizon of the analysis is 2030-2050, where the current policies of the European Union connected with the carbon neutrality objective, in both the Reference and Brighter Future sce- narios, converge towards decarbonized and electrified energy systems in 2050. The use of integrated energy system models makes it pos- sible to quantify the individual service demand of a country. 3.5% 3% RCP 2.6 BASELINE RCP 4.5 -0.5% Temperature effect Transition effect This level of detail therefore makes it possible to discrimi- While on the one hand the trends in degree days are si- nate the specific effects that a change in temperature can milar, the substantial difference between Italy and Spain have on energy requirements. Considering the entire time concerns the energy system in 2030. For the latter, in fact, horizon analyzed, the greater speed of the Brighter Futu- the Reference scenario is very similar to the Brighter Fu- re scenario in achieving carbon neutrality makes it more ture scenario, in line with the national energy plan, which efficient and electrified than the Reference scenario. This is already very challenging. It follows that the temperature difference in the speed of the transition leads to an avera- effect between RCP 2.6 and 4.5 remains small as with Italy, ge increase of between 3% and 4% in electricity demand in less than 1% and in the same direction, and the transition the Brighter Future scenario compared with the Referen- effect is negligible.(4) ce scenario in the 2030-2050 period. When the effect of temperature is also considered and the differences betwe- While the role of temperature is small for Italy and Spain, en the two scenarios associated with RCP 4.5 and 2.6 are Brazil, another country of particular interest for the Group, analyzed, the average increase in electricity demand is less could experience a more marked increase in demand in re- than 1% in both the Reference and Brighter Future scena- sponse to the increase in temperature, equal to a few per- rios. In the most extreme years, this impact can reach 2%. centage points of total demand. This would be driven by Considering the integrated view, the potential effect of the higher cooling demand expected in the country. Howe- more ambitious transition scenarios has a more significant ver, these estimates are subject to a significant degree of impact on electricity demand than the increase in tempe- uncertainty, given the significant volatility of Brazilian eco- rature resulting from climate change. nomic growth. In order to investigate the effect of temperature on tran- sition scenarios further and at the same time expand the range of assumptions regarding climate change, a sensiti- vity analysis was carried out by associating the Reference (4) Significant electrification of heating in the residential sector in future years could change the sign and order of magnitude of the climate change effect for both Italy and Spain. 75 Integrated Annual Report 2020Assessment of the risks and opportunities connected with the Strategic Plan The process of defining the Group’s strategies is accompa- nied by an accurate analysis of the risks and opportunities connected with those strategies. Identifying those risks and opportunities within the Enel Group’s strategic and industrial planning process is desi- gned to span the horizon of the Plan in an integrated man- ner. Although the strategy underlying the Plan, as described above, envisages a phase of careful analysis and verification of the strategic risk factors and variables, it retains scenario assumptions regarding future events that will not necessa- rily occur, as they depend on variables that cannot be con- trolled by management. Upside and downside developmen- ts may occur as time unfolds. Before being able to approve the Strategic Plan, a quantita- tive analysis of the risks and opportunities associated with the Group’s strategic positioning is presented annually to the Control and Risk Committee appointed by the Board of Directors. In particular, risk factors such as macroecono- mic and energy variables (such as exchange rates, inflation, commodity prices and electricity demand), regulatory deve- lopments, weather and climate events and risks connected with the competition are identified. Based on the nature of the risk and opportunity drivers, the analytical approach that best represents their volatility is selected. In practice, we perform a scenario analysis for all those variables whose market time series provide a robust foundation to estimate levels of correlation and representa- tive volatility for future risk, and a deterministic analysis ba- sed on what-ifs and expert judgments of the possible evolu- tion of the business with respect to the main risk factors for the execution of the Business Plan. The validity of the results is also monitored with ex-post analyses by risk cluster. In 2020, most of the actual upside and downside events fell well within the limits estimated by the risk models of the Strategic Plan presented at the end of 2019, despite the strong downside impact of the COVID-19 emergency. Focusing on the scenario risk analysis for the Strategic Plan, exchange rates, electricity demand and the volatility of ener- gy and commodity prices represent almost all the volatility of the drivers. In particular, in addition to the US dollar the most impacting currencies are the Chilean peso, the Colombian peso and the Brazilian real. Nevertheless, the Group’s very structure ensures that the volatility of the South American currencies has only a negligible impact on profit, as demon- strated in the presentation at the Capital Markets Day. Italy and Spain represent nearly all of the Group’s exposure to the impact of the volatility of energy prices and commodity pri- ce fluctuations on margins. Examining the other risk factors, such as those connected with weather and climate events, we can see that geo- graphical diversification significantly reduces the exposure to the risk associated with renewable resources – a highly positive factor considering the Group’s positioning and the steady expansion of renewable generation. Furthermore, with regard to climate change, the risk associated with “acu- te” events is managed as part of investment for adaptation to climate change and the Group’s insurance strategy. With regard to risk factors estimated deterministically, the monitoring of all possible regulatory issues is crucial for as- sessing any upside or downside impact on the Group. In general, correlations between all the risk factors create diversification effects that substantially mitigate total expo- sures. 7676 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsRISK MANAGEMENT The Group’s governance model is in line with best risk ma- nagement practices and envisages: 1 SEPARATION of roles between management and control and their complementarity and independence (3 lines of defense) 2 RISK CONTROL UNIT overseeing second-level defense and economic-financial impact of risks 3 SYSTEM OF RISK COMMITTEES focused on business or geographical areas, coordinated among themselves, with a Group Risk Committee at the top 4 5 6 SYSTEM OF ORGANIZATIONAL POLICIES AND PROCEDURES setting out processes, tools and responsibilities SPECIFICATION OF EXPLICIT RISK LIMITS, and control processes to ensure compliance A RISK REPORTING SYSTEM that ensures management remains informed and enables corrective and mitigation action In view of the nature of its operations, Enel adopts a six-ca- prehensive representation of risks within the Group, thus tegory classification of the risks to which it is exposed: facilitating the identification of those that impact Group Strategic, Financial, Operational, Governance & Culture, processes and the roles of the organizational units involved Digital Technology, and Compliance. in their management. Risks are defined in a risk catalog that serves as a referen- The most significant categories of risk in relation to the im- ce for all areas of the Group and for all the units involved pacts on the Group are described as follows: in management and monitoring processes. The adoption of a common language facilitates the mapping and com- Financial Operational Strategic Digital Technology Compliance 77 ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||Integrated Annual Report 2020Category Risk Definition Legislative and regulatory developments Macroeconomic and geopolitical trends Strategic Climate change Competitive environment Interest rate Commodity Possible effects from unfavorable legislative/regulatory changes. Potential effects of a deterioration of global economic and geopolitical conditions as a result of economic, financial or political crises. Possible impacts of slow or inadequate responses to environmental and climate change. Potential impacts of a weakening of competitive positioning in markets. Potential impact of adverse fluctuations in interest rates. Impacts due to greater volatility in commodity prices or a lack of demand or availability of raw materials. Financial Currency risk Impact of adverse changes in exchange rates. Credit and counterparty Liquidity IT effectiveness Cyber security Digital Technology Digitalization Effect of a deterioration in creditworthiness, breach of contract or excessively concentrated exposures. Potential impact of short-term financial tensions. Potential impact of ineffective IT systems support for business processes and operational activities. Potential impact of cyber attacks and the theft of sensitive company and customer data. Organizational and operational impact on business processes with potential increase in costs due to inadequate level of digitalization. Service continuity Possible impact of exposure of IT/OT systems to service interruptions and data loss. Health and safety Potential impact on the health and safety of employees and other parties involved as a result a violation of health and safety laws. Environment Operational Significant impact on the quality of the environment and the ecosystems involved as a result of a violation of environmental laws. Procurement, logistics & supply chain Potential effects of ineffective procurement or contract management activities. People and Organization Impact attributable to inadequate organizational structures or lack of internal skills. Compliance Data protection Impact of violations of applicable data protection and privacy laws. 7878 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsThe Group also adopts a Risk Appetite Framework in or- der to enable the implementation – for each risk and with an integrated approach – of the appropriate management and control arrangements, as well as development and updating (metrics and models for measuring risks). To effectively manage these risks, Enel has adopted an in- ternal control and risk management system (the ICRMS), which is periodically updated. It strengthens the Group’s awareness of its risk profile, identifying any opportunities it may offer, and supports management in the decision-ma- king process to create value in a constantly evolving ex- ternal environment. This system is the set of rules, proce- dures, and organizational structures aimed at identifying, measuring, monitoring and managing the main risks appli- cable to the Group. Strategic risks This section provides disclosure on the following strategic risk: Legislative and regulatory developments The Group operates in regulated markets and changes in the operating rules of the various systems, as well as the In this context, the Board of Directors plays a guiding and prescriptions and obligations characterizing them, impact coordinating role for risk management, ensuring, at every the operations and performance of the Parent. level of the Group, the adoption of decisions that are in- Accordingly, Enel closely monitors legislative and regula- formed, structured and consistent with the nature and tory developments, such as: level of risks. To this end, the Board of Directors includes › periodic revisions of regulation in the distribution seg- in its assessments all the risks, including those related to ment; climate change, that may be relevant in any way, compri- › the liberalization of electricity markets, with special at- sing opportunities in the context of business sustainability tention being paid to the acceleration provided for in in the medium/long term, thus ensuring the compatibility Italy and expected developments in South America; of company operations with strategic objectives. › developments in capacity payment mechanisms in the The Board draws on the expertise of the Control and Risk generation segment. Committee, which issues prior opinions on a variety of mat- ters, including the guidelines of the ICRMS. In order to manage the risks associated with these deve- The Group also has specific internal committees composed lopments, Enel has intensified its relationships with local of senior management personnel that are responsible for governance and regulatory bodies, adopting a transparent, governing and overseeing the identification, management, collaborative and proactive approach in addressing and monitoring and control of the main risks, taking due ac- eliminating sources of instability in the legislative and re- count of the specific operations of each Business Line and gulatory framework. their underlying processes in order to assess the potential impacts and opportunities. Finally, the internal committees ensure that the risk governance policy evolves in line with business dynamics and the applicable regulatory context. With regard to the COVID-19 pandemic, the actions taken Macroeconomic and geopolitical trends in recent years by the Group to increase its resilience to The considerable internationalization of the Group – which such a scenario can leverage a sound financial position, has a presence in many regions, including South America, geographical diversification and an integrated business North America, Africa and Russia – requires Enel to con- model capable of mitigating and addressing unforeseen sider economic and geopolitical trends at the global level events and their potential effects with mitigation actions in order to evaluate and appropriately measure systematic and contingency plans. and idiosyncratic risks of a macroeconomic, financial, in- stitutional, social or climatic nature and those specifical- The following discusses the main types of risks and oppor- ly associated with the energy sector whose occurrence tunities facing the Group. could have a significant adverse impact on both revenue flows and the value of corporate assets. Enel has adopted a quantitative country risk assessment model capable of promptly monitoring the riskiness of the countries in which it operates. 79 |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||Integrated Annual Report 2020The country risk model is intended to measure the econo- cing local governments to extend restrictions on mobility mic resilience of each country, defined as the balance of its and services (especially in the entertainment, restaurant position with respect to the rest of the world, the effecti- and tourist industries). veness of internal policies, the vulnerabilities of its banking and corporate system that might portend systemic crises Recent data show that growth prospects for 2021 are more and its attractiveness in terms of economic growth. This optimistic than the previous year, thanks to recent deve- process also includes an assessment of the robustness of lopments in the production and subsequent distribution of the country’s institutions and the political context and an vaccines. These changes have prompted an upward revi- in-depth analysis of social phenomena, measuring the level sion of forecasts, pointing to a significant rebound in the of well-being, inclusion and social progress. To complete growth rates of many countries for 2021. However, there the analysis, a quantification of extreme climate events as a are severe risks associated with potential logistical obsta- cause of stress at the environmental and economic level is cles to the production and distribution of vaccines that also performed and the effectiveness of the energy system could slow the vaccination process and, consequently, de- and its positioning within the energy transition process is laying the emergence of many countries from the econo- measured, as these are all essential factors for evaluating mic and health crisis. In addition, new variants of the virus the sustainability of investments in the medium to long have been identified that have significantly increased the term. number of cases in some countries (for example, the Uni- In order to mitigate this risk, the model supports the ca- ted Kingdom) and generated greater uncertainty about the pital allocation and investment evaluation processes. To efficacy of the new vaccines. further support the investment evaluation process, Enel The governments and central banks of the major coun- has adopted a methodology called “Total Societal Impact” tries (first and foremost, the Federal Reserve, the Europe- that, adopting an integrated approach based on advan- an Central Bank and the Bank of England) have adopted ced economic models, clearly and robustly expresses the ultra-accommodative monetary policies (interest rates on direct, indirect and induced impacts of investment initia- refinancing operations close to zero and large volumes of tives at the national, regional or local levels. By quantifying securities purchases on the market, ensuring the availabi- standard international metrics, Total Societal Impact covers lity of inexpensive liquidity) and fiscal policies (subsidies) to a wide range of economic, social and environmental indi- support the economic recovery and reduce the damage to cators that play a strategic role in correctly assessing the the labor market. These actions have heavily burdened the social and environmental contribution of Enel’s projects. In budgets of governments and other institutions. The ability fact, considering some of the indicators that can be analy- of institutions to continue to implement these expansio- zed, such as the contribution to GDP, the increase in inco- nary policies in support of the economy in 2021 is exposed me of the weakest social groups, the calculation of carbon to substantial risks. dioxide emissions avoided and the recovery of end-of-life materials from a circular economy perspective, it is clear- In July, the European Council reached an agreement on ly now essential to have a broad overview of the situation a recovery plan, the Next Generation EU program, which in order to evaluate a specific project in a specific country envisages €750 billion in funding (around 5.5% of EU27 with a view to creating shared value for all. GDP in 2019), divided between loans (€360 billion) and grants (almost €390 billion) to Member States. The actual In 2020, the world economy was severely impacted by implementation of this plan depends on the national go- the COVID-19 pandemic, which spread rapidly around the vernments, who must present projects eligible to receive world, significantly undermining the outlook for economic funding, and the methods of selecting projects vary at the growth in the short to medium term. The crisis caused wor- country level. In this regard, Enel can turn to Total Societal ld GDP to contract by an estimated 4% on an annual basis Impact, which is an effective tool for exploring the relevant in 2020, which should be followed by a rebound of around aspects that meet the needs of the Green Deal when se- 5% in 2021. lecting investments. The risks threatening the outlook for 2021 are mainly asso- ciated with the continued spread of COVID-19, which could Economic and socio-political risk factors in Latin America, generate a third wave of the disease in many countries, for- one of the areas most severely affected by the pandemic, 8080 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsmust be monitored carefully. In particular, the political un- intense meteorological conditions and the latter to more certainty associated with presidential elections in Peru, the gradual but structural changes in climate conditions. vote in a Chilean referendum at the end of 2020 for the cre- Extreme events expose the Group to the risk of prolonged ation of a new constitution by 2022, the Brazilian elections unavailability of assets and infrastructure, the cost of re- in the medium term and the presidential elections in Co- storing service, customer disruptions and so on. Chronic lombia in 2020 all contribute to fueling downward risks for changes in climate conditions expose the Group to other the economic recovery, as they could push governments risks or opportunities: for example, structural changes in to implement populist (fiscally expansionary) measures temperature could cause changes in electricity demand that may not be welcomed by investors, accelerating ca- and have an impact on output, while alterations in rainfall pital outflows from their respective countries. On the latter or wind conditions could impact the Group’s business by point, Brazil, which implemented a very generous fiscal me- increasing or decreasing potential electricity generation. asures in 2020 (around 8% of GDP) in order to support fa- milies and stimulate domestic demand, now has debt equal to around 90% of GDP and a government deficit of around 14%, which undermine its resilience in the short-medium The energy transition towards a more sustainable model characterized by a gradual reduction of CO2 emissions has risks and opportunities connected both with changes in term. The possibility of a further extension of the family aid the regulatory and legal context and trends in technology program (“Coronavoucher”) in 2021 and delays in the ap- development and competition, electrification and the con- proval of structural reforms could further compromise the sequent market developments. economic stability and competitiveness of the country. Finally, Argentina, which has been in a recession since 2017, by Enel to determine risks and opportunities, the main is concerned about its fiscal instability and the uncertain- transition-related phenomena are beginning to emerge in ties about ongoing debt restructuring negotiations with relation to customer behavior, industrial strategies being the International Monetary Fund. adopted in all economic sectors and regulatory policies. Consistent with the climate and transition scenarios used Climate change The identification and management of risks connected with climate change Climate change and the energy transition will impact Group activities in a variety of ways. By 2030, the transition trends will become visible in re- sponse to the evolution of the context: the Enel Group has decided to guide and facilitate the transition, preparing to seize all the opportunities that may arise. As discussed previously, our strategic choices, which are already stron- gly oriented towards the energy transition, with more than 90% of investments directed at improving a number of the Sustainable Development Goals, enable us to incorporate In order to identify the main types of risk and opportuni- risk mitigation and opportunity maximization “by design”, ty and their impact on the business associated with them adopting a positioning that takes account of the medium in a structured manner consistent with the TCFD, we have and long-term phenomena we have identified. The strate- adopted a framework that explicitly represents the main gic choices are accompanied by the operating best practi- relationships between scenario variables and types of risk ces adopted by the Group. and opportunity, specifying the strategic and operational approaches to managing them, comprising mitigation and adaptation measures. There are two main macro-categories of risks/opportuni- ties: those connected with developments in physical va- riables and those linked to the evolution of the transition scenarios. The framework described has been created with a view to ensuring overall consistency, making it possible to analyze and evaluate the impact of physical and transition phenomena within solid alternative scenarios, constructed using a quantitative and modeling approach combined with ongoing dialogue with both internal stakeholders and external authorities. Physical risks are divided in turn between acute (i.e. extre- me events) and chronic, with the former linked to extremely 81 Integrated Annual Report 2020 FRAMEWORK OF MAIN RISKS AND OPPORTUNITIES Scenario phenomena Time horizon Risk & opportunity category Description Impact Management approach The Group adopts best practices to manage the restoration of service as quickly as possible. We also work to implement investments in resilience. With regard to risk assessment in insurance, the Group has a loss prevention program for property risk that also assesses the main exposures to natural events. Looking forward, the assessments will also include the potential impacts of long-term trends in the most significant climate variables. The Group’s geographical and technological diversification means that the impact of changes (positive and negative) in a single variable is mitigated at the global level. In order to ensure that operations always take account of weather and climate phenomena, the Group adopts a range of practices such as, for example, weather forecasting, real-time monitoring of plants and long-term climate scenarios. The Group is minimizing its exposure to risks through the progressive decarbonization of its generation fleet. The Group’s strategic actions, which are focused on investment in renewables, networks and customers, enable us to mitigate potential threats and exploit the opportunities connected with the energy transition. The Group is also actively contributing to the formation of public policies through its advocacy efforts. These activities are conducted within platforms for dialogue with stakeholders called “Energy Transition Roadmaps” that explore national decarbonization scenarios in the various countries in which Enel operates in environmental, economic and social terms. The Group is maximizing opportunities by adopting a strategy founded on the energy transition and the rapid expansion of renewable generation and the electrification of energy consumption. Acute physical Starting with short term (1-3 years) Extreme events Risk: especially extreme weather/climate events. Extreme events can damage assets and interrupt operations. Chronic physical Starting with long term (2030-2050) Market Risk/opportunity: increase or decrease in electricity demand; increase or decrease in output. Electricity demand is also affected by temperature, whose fluctuation can impact our business. Transition Starting with medium term (2022-2030) Policy & Regulation Risk/opportunity: policies on CO2 prices and emissions, energy transition incentives, greater scope for investment in renewables and resilience regulation. Policies concerning the energy transition and resilience can impact the volume of and returns on investments. Transition Starting with medium term (2022-2030) Market Risk/opportunity: changes in the prices of commodities and energy, evolution of energy mix, changes in retail consumption, changes in competitive environment. Considering two alternative transition scenarios, the Group assesses the impact of trends in the proportion of renewable sources in the energy mix, electrification and the penetration of EVs to estimate their potential impacts. 8282 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statements Transition Starting with medium term (2022-2030) Product & Services Starting with medium term (2022-2030) Technology The Group is maximizing opportunities thanks to its strong positioning in new businesses and “beyond commodity” services. The Group is maximizing opportunities thanks to its strong positioning in global networks. Opportunity: increase in margins and greater scope for investment as a consequence of the transition in terms of greater penetration of new electrical technologies for residential consumption and electric transportation. Trends in the electrification of transportation and residential consumption will potentially have an impact on our business. Considering two alternative transition scenarios, the Group assesses the potential opportunities to scale up current businesses in response to trends in the electrification of transportation. The framework illustrated above also highlights the re- fied, the best practices for the operational management lationships that link the physical and transition scenarios of weather and climate phenomena, and the qualitative with the potential impact on the Group’s business. These and quantitative impact assessments performed to date effects can be assessed from the perspective of three are discussed below. These activities are performed on the time horizons: the short term (1-3 years), in which sensiti- foundation of an ongoing effort during the year to analyze, vity analyses based on the Strategic Plan presented to in- assess and manage the phenomena giving rise to the risks vestors in 2020 can be performed; the medium term (until and opportunities identified. As declared by the TCFD, the 2029), in which it is possible to assess the effects of the process of disclosing information on the risks and oppor- energy transition; and the long term (2030-2050), in which tunities connected with climate change will be gradual and chronic structural changes in the climate should begin to incremental from year to year. emerge. The main sources of risk and opportunity identi- 83 Integrated Annual Report 2020Chronic and acute physical phenomena: repercussions on our business, risks and opportunities Taking the IPCC scenarios as our reference point, deve- Chronic physical changes creating risks and opportunities The climate scenarios developed with the ICTP do not provi- de definitive indications of structural changes before 2030, lopments in the following physical variables and the asso- but changes could begin to emerge between 2030 and 2050. ciated operational and industrial impacts connected with The main impacts of chronic physical changes would be potential risks and opportunities are assessed. reflected in the following variables: VARIABLES IMPACTED BY CHRONIC PHYSICAL CHANGES › Electricity demand: variation in the average temperature level with a potential increase or re- duction in electricity demand. › Thermal generation: variation in the level and average temperatures of the oceans and rivers, with effects on thermal generation. › Hydroelectric generation: variation in the average level of rainfall and snowfall and temperatu- res with a potential increase or reduction in hydro generation. › Solar generation: variation in the average level of solar radiation, temperature and rainfall with a potential increase or reduction in solar generation. › Wind generation: variation in the average wind level with a potential increase or reduction in wind generation. The Group will work to estimate the relationships between As part of the assessment of the effects of long-term cli- changes in physical variables and the change in the poten- mate change, we have identified chronic events relevant to tial output of individual plants in the different categories of each technology and began the analysis of the related im- generation technology. pacts on potential output. EVENT TYPE Estimated Impact Lower Higher Rain/Snow Wind Irradiance Sea level Temperature Thermal Solar Wind Hydro Lines Demand 8484 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsScenario analysis has shown that chronic structural chan- (+/-1% per year), whose variations can potentially impact ges in the trends of physical variables will become signi- the generation and retail businesses. It was stress tested ficant beginning in 2030. However, in order to obtain an for all countries in which the Group operates. The output indicative estimate of the potential impacts, it is possible potential of renewable plants was also stressed (+/-10% to test sensitivity of the Business Plan to the factors poten- over a single year). Variations in this variable can potentially tially influenced by the physical scenario, regardless of any impact the generation business. It was stressed separately direct relationship with climate variables. Of course, such at the individual technology level around the globe. The stress testing has an extremely low probability of occur- data reported show the effect on a single year for a single rence based on historical events and geographical diver- generation technology and include both the volume and sification. The variables examined are electricity demand price effects. Scenario phenomena Risk & opportunity category Time horizon(1) Description of impact GBL affected Scope Quantification - Type of impact Quantification - range <100 €mn 100- 300 €mn >300 €mn Chronic physical Market Short term Chronic physical Market Short term Risk/opportunity: Increase or decrease in electricity demand. Electricity demand is also affected by temperature, whose fluctuations can have an impact on our business. Although structural changes should not emerge in the short/medium- term, in order to assess the sensitivity of Group performance to potential temperature variations, we have performed an analysis of sensitivity to changes of +/- 1% in electricity demand for the Group as a whole. Risk/opportunity: Increase or decrease in renewables generation. Renewables generation is also affected by the availability of resources, whose fluctuations can have an impact on our business. Although structural changes should not emerge in the short/medium- term, in order to assess the sensitivity of Group performance to potential temperature variations, we have performed an analysis of sensitivity to changes of +/- 10% in potential electricity output by technology. Global Power Generation and Global Infrastructure and Networks Group EBITDA/year EBITDA/ year Group Potential hydroelectric output Global Power Generation Group Potential wind output EBITDA/ year Group Potential solar output EBITDA/ year +1% -1% +10% -10% +10% -10% +10% -10% (1) Time horizon : short (2020-2022); medium (up to 2030); long (2030-2050). Upside scenario current policies Downside scenario current policies 85 Integrated Annual Report 2020Acute physical changes creating risks and opportunities With regard to acute physical phenomena (extreme even- currence interval. In other words, a catastrophic event that has, for example, a recurrence interval of 250 years has a probability of occurrence in any given year of 0.4%. ts), the intensity and frequency of extreme physical phe- This information, which is necessary for assessing the le- nomena can cause significant and unexpected physical vel of frequency of the event, is then associated with the damage to assets and generate negative externalities as- geographical distribution of Group assets. sociated with the interruption of service. Within climate change scenarios, the acute physical com- For this purpose, the Group adopts the hazard map tool, ponent plays a leading role in defining the risks to which which associates the estimated frequency associated the Group is exposed, both due to the broad geographical with an extreme event, for the different types of natural diversification of its asset portfolio and the primary impor- disasters, with each geographical point of the global map. tance of renewable resources in electricity generation. This information, organized in geo-referenced databa- Acute physical phenomena, in different cases such as wind ses, can be obtained from global reinsurance companies, storms, floods, heat waves, cold snaps, etc., are characteri- weather consulting firms or academic institutions. zed by considerable intensity and a frequency of occurren- ce that, while not high in the short term, is clearly trending › Vulnerability, which indicates in percentage terms how upwards in medium and long-term climate scenarios. much value would be lost upon the occurrence of a given Therefore, the Group, for the reasons described above, is catastrophic event. In more specific terms, reference can already managing the risk associated with extreme even- be made to the damage to material assets, the impact ts in the short term. At the same time, the methodology is on the continuity of electricity generation and/or distri- also being extended to longer time horizons (up to 2050) bution or the provision of electrical services to end users. in accordance with the climate change scenarios that have been developed (RCP 8.5, 4.5 and 2.6). The Group, especially in the case of damage to its assets, conducts and promotes specific vulnerability analyses Extreme event risk assessment methodology for each technology in its portfolio: solar, wind and hy- In order to quantify the risk deriving from extreme events, the Group uses a consolidated catastrophic risk analysis approach, which is adopted in the insurance sector and in the IPCC reports.(5) Through its insurance business units and the captive insurance company Enel Insurance NV, the Group manages the various phases of assessing the risks connected with natural disasters: from assessment and quantification to the corresponding insurance coverage to minimize impacts. The methodology is applicable to all extreme events that can be analyzed, such as wind storms, heat waves, tropical cyclones, flooding, etc. In all of these types of natural disa- ster, three independent factors can be identified, as briefly described below. › The event probability (hazard), i.e. the theoretical fre- quency of the event over a specific time frame: the re- droelectric generation plants, transmission and distribu- tion grids, primary and secondary substations, etc. The- se analyses are naturally focused on the extreme events that most impact the different types of technologies. This produces a sort of matrix that associates the signifi- cantly impacted type of asset with the individual natural catastrophic events. › Exposure is the set of economic values present in the Group’s portfolio that could be materially impacted in the presence of catastrophic natural events. Again, the dimensions of the analyses are specific for the different production technologies, distribution assets and servi- ces to end users. The three factors described above (hazard, vulnerability and exposure) constitute the fundamental elements of any assessment of the risk associated with extreme events. In (5) L. Wilson, “Industrial Safety and Risk Management”, University of Alberta Press, Alberta 2003. T. Bernold. “Industrial Risk Management”, Elsevier Science Ltd, Amsterdam, 1990. H. Kumamoto and E.J. Henley, “Probabilistic Risk Assessment and Management for Engineers and Scientists”, IEEE Press, 1996. Nasim Uddin, Alfredo H.S. Ang (eds.), “Quantitative risk assessment (QRA) for natural hazards”, ASCE, Germany, 2012. UNISDR, “Global Assessment Report on Disaster Risk Reduction: Revealing Risk, Redefining Development”, UNISDR, Geneva, 2011. IPCC, “Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation - A Special Report of Working Groups I-II of the Intergo- vernmental Panel on Climate Change (IPCC)”, Cambridge University Press, Cambridge, 2012. 8686 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statements this sense, the Group, with respect to climate change sce- The following table summarizes the scheme adopted for narios, differentiates its risk analyses in accordance with the assessment of the impacts deriving from acute physi- the specificities of the various associated time horizons. cal phenomena. Time horizon Hazard Vulnerability Exposure Short term (1-3 years) Hazard maps based on historical data and meteorological models Long term (to 2050 and/or 2100) Hazard maps and specific studies for the different RCP climate scenarios of the IPCC Vulnerability, being linked to the type of extreme event, to the specifics of the type of damage and to the technical requirements of the technology in question, is essentially independent of time horizons Group values in the short term Group values in the long term In the case of the vulnerability of assets within the portfo- in collaboration with the relevant Global Business Lines of lio, therefore, a priority table of the impacts of the main the Group. extreme events on the various technologies was defined EVENT TYPE Estimated Impact Lower Higher Heatwave Floods Heavy snow Hailstorm Windstorm Wildfire Thermal Solar Wind Hydro Lines Demand Risk management from extreme events in the short term preventing losses that could be caused by extreme events. Over the short term (1-3 years) the Group, in addition to The general characteristics of these actions are illustrated risk assessment and quantification, takes actions to redu- below and, naturally, in the case of damage prevention and ce the impacts that the business may suffer following cata- mitigation activities, specific reference will be made to the strophic extreme events. Two main types of action can be Group’s Power Generation and Infrastructure and Networ- distinguished: obtaining effective insurance coverage and ks Global Business Lines. 87 Integrated Annual Report 2020Insurance in the Enel Group The intensification of the effects of climate change me- Each year, the Group develops global insurance programs ans it is essential to adopt adaptive behaviors: each cata- for its businesses in the various countries in which it ope- strophic event represents a lesson learned for Enel, from rates. The two main programs, in terms of coverage and which we draw inspiration to strengthen design techniques volumes, are the following: and preventive measures to ensure the resilience of the as- › the Property Program for material damage to assets and set portfolio. the resulting business interruption. Accordingly, in addi- From this perspective, the method and the information ex- tion to the costs of rebuilding assets (or parts thereof), tracted from the ex post analysis of events play a crucial the financial losses due to the stoppage of electricity ge- role in determining the processes and practices to be de- neration and/or distribution are also covered, within the ployed in mitigating such events in the future. limits and conditions defined in the policies; › the Liability Program, which insures harm caused to third Generation parties, including the impact that extreme events may With regard to generation, over time the Group has imple- have on the Group’s assets and business. mented targeted measures at specific sites and establi- shed ad hoc management activities and processes. Based on effective risk assessment, it is possible to specify Measures implemented for specific sites in recent years appropriate limits and insurance conditions within the po- include: licies, and this also applies in the case of extreme natural › improving cooling water management systems for cer- events linked to climate change. In fact, in the latter case, tain plants in order to counter the problems caused by the impacts on the business can be significant but, as has the decline in water levels on rivers, such as the Po in Italy; happened in the past in various locations around the world, › installing fogging systems to improve the flow of inlet air the Group has demonstrated a high degree of resilience, and offset the reduction in power output caused by the thanks to the ample insurance coverage limits, thanks in increase in ambient temperature in CCGTs; part to the Group’s solid reinsurance capabilities through › installing drainage pumps, raising embankments, perio- the captive company Enel Insurance NV. dic cleaning of canals and interventions to consolidate The presence of this effective insurance coverage does not land adjacent to plants to prevent landslides in order to make the actions that the Group takes in the preventive mitigate flood risks; maintenance of its generation and distribution assets any › periodic site-specific reassessments for hydro plants of less important. In fact, while on the one hand the effects flood scenarios using numerical simulations. The scena- of these activities are immediately reflected in the mitiga- rios developed are managed with mitigation actions and tion of the impacts of extreme events, on the other hand interventions on civil works, dams and water inlets. they are a necessary prerequisite for optimizing and mini- mizing the cost of the Group’s global insurance coverage The Group adopts a series of best practices to manage the programs for its risks, including the risk associated with impact of weather events on power generation, such as: natural catastrophic events. 8888 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsGROUP PRACTICES FOR MANAGING WEATHER EVENTS IN GENERATION OPERATIONS › weather forecasting both to monitor renewable resource availability and detect extreme events, with warning systems to ensure the protection of people and assets; › hydrological simulations, land surveys (including the use of drones), monitoring any vulnerabili- ties through digital GISs (Geographic Information Systems) and satellite measurements; › advanced monitoring of over 100,000 parameters (with over 160 million historical measure- Main policies: ments) for dams and hydroelectric works; No. 1106 Global Power Generation Maintenance No. 1107 Global Power Generation O&M Operation No. 1025 Dams and Hydraulic Infrastructure Safety No. 1020 Global Power Generation Critical Event Management › real-time remote monitoring of generation plants; › safe rooms in areas exposed to tornadoes and hurricanes, such as the wind farms in Oklahoma in the United States; › adoption of specific guidelines for performing hydrological and hydraulic studies from the ear- liest development stages, aimed at assessing the risks inside plants and in the areas outside plants, with application in the design phase of drainage and mitigation systems in compliance with the principle of hydraulic invariance; › verification of potential climate trends for the main project parameters in order to take them into account in the sizing of systems for relevant projects (for example: assessments of the temperature of the coolant source in order to ensure greater flexibility in cooling in new CCGTs); › estimation of extreme wind speeds using updated databases containing the logs and historical trajectories of hurricanes and tropical storms, enabling the selection of the wind turbine tech- nology best suited to the emerging conditions. In addition, in order to ensure rapid response to adverse ving service quality as they are at reducing the risk of events, the Group has adopted specific emergency ma- prolonged and extended interruptions in the event of nagement procedures with protocols for real-time com- rare and high-impact critical events, using a probabilistic munication and management of all activities to restore approach. operations rapidly and standard checklists for damage › Readiness: this includes all measures aimed at increasing assessment and the safe return to service for all plants as the speed with which a potentially critical event can be rapidly as possible. Infrastructure and Networks identified, ensuring coordination with Civil Protection authorities and local institutions and preparing the ne- cessary resources once a grid disruption has occurred. In the Infrastructure and Networks Business Line, the Enel › Response: this represents the phase in which the ope- Group has adopted an approach in recent years called “4R” rational capacity to cope with an emergency upon the to cope with extreme climate events. A specific policy has occurrence of an extreme event is assessed. It is directly been developed (No. 486: 4R Innovative Resilience Strate- related to the ability to mobilize operational resources in gy for Power Distribution Networks) to define the measures the field and the capacity to remotely restore power sup- to be taken both in preparation for an emergency within ply through resilient backup systems. the network and for the prompt restoration of service once › Recovery: this is the last phase, in which the goal is to climate events have caused damage to assets and/or outa- return the network to ordinary operating conditions as ges. The 4R strategy is divided into four phases. soon as possible in cases where an extreme weather › Risk prevention: this includes actions that make it possi- event has caused service interruptions despite the in- ble to reduce the probability of losing network compo- creased resilience measures taken previously. nents because of an event and/or to minimize its effects, Following this approach, the Business Line has prepared i.e. interventions aimed both at increasing the robustness various policies for specific actions to address the various of the infrastructure and maintenance interventions. The aspects and risks associated with climate change. In par- former, in particular, are not directed so much at impro- ticular: 89 Integrated Annual Report 2020Policy No. 1073: Guidelines for Readiness Response and Recovery actions during emergencies Policy No. 387: Guideline for Network Resilience Enhancement Plan This policy covers the last three phases of the 4R approach, indicating guidelines and measures to improve preparation strategies, mitigate the impact of total blackouts and, finally, restore ser- vice to as many customers as possible in the shortest time possible. This policy seeks to identify the most impactful extraordinary climate events on the network, to evaluate the current status of the KPIs of the network and to improve them based on proposed interventions in order to be able to evaluate the order of priority. In this manner, actions are selected that, when implemented, will minimize the impact on the network of particularly critical extreme events in a given area/region. The policy therefore covers the first two phases of the 4R approach, suggesting measures regarding risk prevention and readiness. In Italy, this policy has already been implemented through the Resilience Plan that e-distribuzione has prepared each year since 2017, which represents an addendum to the Development Plan for investments over a 3-year time horizon to reduce the impact of extreme events in certain criti- cal areas, namely heat waves, icing and windstorms (with the associated risk of falling trees). In 2017-2019, some €400 million were invested and a similar amount will be invested in the following three-year period (about €130 million/year), as specified in the addendum to the 2020-2022 Plan, affecting approximately 3 million customers and up to 4,000 km of medium voltage lines. For exam- ple, in the case of icing, a phenomenon linked to the breakage of the conductors of overhead lines in the event of accumulation of wet snow, the risk of such interruptions has been assessed on the basis of the probability of losing segments of the grid and then calculating the relative impact in terms of customers without power and the loss in terms of power not delivered. To address these risks, investments include the targeted replacement of uninsulated lines with insulated conductors, the creation of less vulnerable alternative routes to restore power and the use of remote control systems to isolate the section of the grid affected by the fault as quickly as possible. As in Italy, similar issues are being explored in other countries, both in Europe and South America, in order to prepare an ad-hoc investment planning process to enhance the resilience of networks to extreme events, taking due account of the distinctive characteristics of each territory. Policy No. 439: Measures for Risk Prevention and Preparation in case of wildfires affecting the electrical installations An integrated approach is taken to the emergency management approach applied in the case of forest fires, both where they are caused by the grid itself and where they are of external origin, that could potentially threaten Enel plants. The document provides guidelines to be implemented in the various territories involved to identify areas/plants at risk, define specific prevention measures (e.g. evaluation of specific maintenance plans and any upgrades) and, in the event of a fire, manage the emergency optimally in order to limit its impact and restore service as soon as possible. SUPPORT ACTIONS These include the implementation of systems for weather forecasting, monitoring the status of the network and evaluating the impact of critical climate phenomena on the network, the pre- paration of operational plans and the organization of specific exercises. Particularly important in this regard are advance agreements for the mobilization of extraordinary resources to respond to emergencies, comprising both internal personnel and contractors. Moreover, with a view not only to assessing weather emer- mate their future impact on the network in the medium gencies in the short/medium term, but also in considera- and long term. The following are some examples. tion of the climate change we are witnessing, Infrastructu- re and Networks is collaborating with leading research Heat waves institutes to analyze trends in most critical threats (Table › During 2020, heat waves in the countries in which Infra- 1) to the assets of the power distribution network in the structure and Networks operates were investigated fur- various countries in which the Group operates, and to esti- ther. This critical event is characterized by the persisten- 9090 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsce of high temperatures over a period of several days Similar analyses are already planned in 2021 for the other in correspondence with the absence of precipitation countries in which Enel operates. which, by hindering the dissipation of heat from under- ground cables, causes an anomalous increase in the risk Wildfires of multiple failures on grids, especially in urban areas and › With regard to fire risk, despite the insignificance of in summer tourist locales. These analyses have provided events recorded to date along Enel networks, which did initial results for Italy, given the especially extensive histo- not generate a need for an impact analysis, the Business rical records of such events and the experience gained Line, consistent with Policy no. 439 noted above, is pre- with the measures provided for in the Resilience Plan. paring an in-depth analysis of the scenarios for 2030 In light of the climate scenarios developed to evaluate -2050 concerning the evolution of the phenomenon, trends in heat waves in Italy and the historical correlation with a view to possible improvements in the Policy itself. of the extreme event-costs, taking a particularly criti- cal year as a reference (2017, selected both because of the intensity of heat waves that year and their extension across the entire country), an initial estimate was obtai- Transition phenomena: repercussions on our business, risks and opportunities With regard to the risks and opportunities associated with ned for any costs associated with an increase in heat transition variables, we use the different reference scena- waves in 2030-2050. These estimates of the potential rios in combination with the elements that make up the risk prospective annual extra cost were assessed in the three identification process (e.g. competitive context, long-term RCP scenarios (over the 2030-2050 horizon), finding that vision of the industry, materiality analysis, technological in the RCP 2.6 scenario they do not represent more than evolution, etc.) to identify the drivers of potential risks and 3% of the annual value of the measures envisaged in the opportunities. Priority is given to the most material phe- current 2020-2022 Resilience Plan described above and nomena. The main risks and opportunities identified within do not exceed 5% in the RCP 8.5 scenario. this framework are described below. PRIORITY EXTREME EVENTS INFRASTRUCTURE AND NETWORKS AND MAIN POLICIES/DEEP-DIVES PRIORITY EXTREME EVENTS Wildfires Policy 486 Policy 1073 Policy 439 Heat waves Policy 486 Policy 1073 Policy 387 Policy Icing Wind storms Flooding Policy 486 Policy 1073 Policy 387 Policy 486 Policy 1073 Policy 387 Policy 486 Policy 1073 Policy 387 Italy: Resilience Plan Italy: Resilience Plan Italy: Resilience Plan Deep-dive Studies under way with research institutions 91 Integrated Annual Report 2020Policy & Regulation LIMITS ON EMISSIONS AND CARBON PRICING INCENTIVES FOR THE ENERGY TRANSITION The enactment of laws and regulations that introduce more stringent emission limits by gover- nment action (non-market driven) and market-based mechanisms, such as a carbon tax in non- ETS (Emissions Trading System) sectors or an expansion of the ETS in other sectors. › Opportunities: command & control regulations and market-based mechanisms strengthening CO2 price signals to foster investment in carbon-free technologies. › Risks: lack of a coordinated approach among the various actors and policy-makers involved and limited effectiveness of the policy instruments deployed, with an impact on the speed of the trend towards electrification and decarbonization in the various sectors, compared with a decisive group strategy focused on the energy transition. Development incentives and opportunities with a view to the energy transition, consequently gui- ding the energy system towards the use of low-emission energy resources as the mainstream approach in the energy mixes of countries, greater electrification of energy consumption, energy efficiency, flexibility of the electrical system and upgrading of infrastructure, with a positive im- pact on the return on investment and new business opportunities. › Opportunities: additional volumes and greater margins due to additional investment in the electricity industry, in line with the electrification strategy, decarbonization and the upgrading/ digitalization of enabling infrastructure. › Risks: obstacles to achieving energy transition targets due to regulatory systems that do no effectively support the energy transition (delays in permitting processes, no upgrading of the electricity grid, etc.). To improve standards or introduce ad hoc mechanisms to incentivize investments in resilience in the context of the evolution of climate change. RESILIENCE REGULATION › Opportunities: benefits from investments that reduce service quality and continuity risks for the community. › Risks: in the case of especially severe extreme events with a greater-than-expected impact, there is a risk that recovery could be slower than planned, with an associated reputational risk. Incentives for the energy transition through appropriate policy measures and financial instrumen- ts, which should be capable of supporting an investment framework and a long-term, credible and stable positioning of policy-makers. Introduction of rules and/or public and private financial instruments (e.g. funds, mechanisms, taxonomies, benchmarks) aimed at integrating sustainabili- ty into financial markets and public finance instruments. FINANCIAL MEASURES FOR THE ENERGY TRANSITION › Opportunities: the creation of new markets and sustainable finance products consistent with the investment framework, activating greater public resources for decarbonization and access to financial resources in line with energy transition objectives and the related impact on costs and on finance charges; introduction of subsidized support tools (funds and calls) for the tran- sition. › Risks: actions and instruments are not sufficient to provide incentives consistent with an overall positioning tailored to the energy transition, uncertainty or slowdown in the introduction of new instruments and rules due to the deterioration in the public finances or differences in applica- tion in the geographic areas in which the Group operates. 9292 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsMarket MARKET DYNAMICS Technology PENETRATION OF NEW TECHNOLOGIES Products and Services ELECTRIFICATION OF RESIDENTIAL ENERGY CONSUMPTION ELECTRIC MOBILITY AND ELECTRIFICATION OF INDUSTRIAL ENERGY CONSUMPTION Market dynamics, such as those connected with the variability of commodity prices, the increase in electricity consumption due to the energy transition and the penetration of renewables, have an impact on business drivers, with effects on margins and on production and sales volumes. › Opportunities: positive effects associated with the growth in electricity demand and the greater room for renewables and all sources of flexibility. › Risks: exposure of merchant technologies to market price volatility. Gradual penetration of new technologies such as storage, demand response and green hydro- gen; digital lever to transform operating models and “platform” business models. › Opportunities: investments in developing technology solutions. With the gradual electrification of end uses, the penetration of products with lower costs and a smaller impact in terms of local residential emissions will expand (for example, the use of heat pumps for heating and cooling). › Opportunities: increase in electricity consumption against a background of declining energy consumption thanks to the greater efficiency of electricity. › Risks: additional competition in this market segment. Use of more efficient and effective modes of transportation from the point of view of climate change, with a special focus on the development of electric mobility and charging infrastructure; electrification of industrial energy users. › Opportunities: positive effects of the increase in electricity demand and greater margins connected with the penetration of electric transportation and associated “beyond commodity” service. The Group has already taken strategic actions to mitiga- te potential risks and exploit the opportunities offered by the energy transition. Thanks to our industrial and financial to the price of CO2 (ETS). Examining the main transition va- riables, the price of CO2 appears to be an especially re- liable driver of regulatory measures that could accelerate strategy incorporating ESG factors, an integrated approa- the transition process. ch shaped by sustainability and innovation makes it possi- ble to create long-term shared value. A strategy focused on complete decarbonization and the energy transition makes the Group resilient to the risks as- To assess the impact of possible changes in this driver, the effects of a potential change of +/-10% in the CO2 price for Italy and Spain are determined. This price change would sociated with the introduction of more ambitious policies modify the equilibrium price of both wholesale markets, for emissions reductions and maximizes opportunities for with repercussions on the margins of Global Power Gene- the development of renewable generation, infrastructure ration for both conventional and renewables plants. and enabling technologies. Unlike chronic climate impacts, developments in the tran- To quantify the risks and opportunities engendered by the sition scenario could have impacts in the short and me- energy transition in the long term, the transition scenarios dium/long term (by 2030) as well. described in the section “The transition scenario” have been considered for Italy and Spain. The effects on the As with climate variables, we can test the current Business variables that can most influence the business were then Plan (2021-2023) for its sensitivity to the factors potentially identified. In the Brighter Future scenarios, these include influenced by the transition scenario, with particular regard electricity demand driven by greater electrification of con- 93 Integrated Annual Report 2020sumption and the power generation mix. These considera- These developments will lead to the decentralization of tions offer ideas for determining what the Group’s strategic power withdrawal/injection points, an increase in electricity positioning for resource allocation could be. The dynamics demand and the average power required, and strong varia- of the energy transition could bring growing opportunities bility of energy flows, requiring dynamic and flexible mana- for the Group in the context of greater ambition for de- gement of the network. The Group, therefore, expects that carbonization and energy efficiency. In particular, on the in this scenario incremental investments will be needed to retail electricity market, the progressive electrification of ensure connections and adequate levels of quality and re- final consumption – in particular in transportation and the silience, encouraging the adoption of innovative operating residential segment – will lead to a significant increase in models. These investments must be accompanied by con- electricity consumption to the detriment of other forms of sistent policy and regulatory scenarios to ensure adequate energy. financial returns within the distribution Business Line. With regard to the financial impact of changes in transition scenarios, the Group analyzed the impact of the Brighter Future scenario on 2030 results in terms of EBITDA com- pared with the Reference scenario. Given the ambition defined in the national plan, the two scenarios in Iberia would not see substantial increases in the penetration of renewable energy, and therefore no si- gnificant impacts deriving from changes in electricity pri- ces are expected. Conversely, in Italy the Brighter Future scenario enables a greater penetration of renewable energy, with additive ef- fects on installed capacity, partially offset by a possible re- duction in electricity prices. Similar effects are highly likely in other areas, such as North America. With regard to the electrification of consumption, however, the Brighter Future scenario envisages higher penetration rates of the most efficient electrical technologies. In par- ticular, a substantial increase in electric vehicles and hea- ting/cooling systems based on heat pumps would give rise to a 5% increase in demand compared with the Reference scenario, with positive impacts both on the Retail business and on the “beyond commodity” services offered by Enel X. The greater penetration of heat pumps could at the same time lead to a reduction in gas sales in the Retail segment as a result of gradual switching to electricity. However, it is expected that the overall effect on EBITDA performance would be positive, accompanied by a reduction in Scope 3 CO2 emissions connected with the SBTi targets. As noted above, the Brighter Future scenario will entail a considerable increase in the complexities that will have to be managed by grids in the various geographical areas. In fact, we expect a significant increase in distributed ge- neration and other resources, such as storage systems, the greater penetration of electric mobility with the rela- ted charging infrastructures, as well as the growing rate of electrification of consumption and the appearance of new actors with new modes of consumption. 9494 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsTRANSITION Risk & opportunity category Time horizon(1) Description and impact GBL affected Scope Quantification - Type of impact Quantification - range <100 €mn 100- 300 €mn >300 €mn Risk: Impact on margin due to measures affecting CO2 price. Global Power Generation Italy and Iberia EBITDA/year +10% -10% Policy & Regulation Short/ medium term Global Power Generation Medium term Market Medium term Product & Services Medium term Considering the potential impact of regulatory measures to incentivize energy transition, the Group assesses the exposure to changes of +/- 10% in the price of CO2 using sensitivity analysis. Opportunity: Greater room for investment in new renewables capacity. Risk: Decrease in power prices due to increased penetration of renewables. Considering the two alternative transition scenarios, the Group assessed the impact of an increase in the penetration of renewables on the benchmark power price and on additional capacity at 2030. Opportunity: Increase in margins due to impact of transition on electrification of energy consumption. Risk: Increase in competition and possible decrease in market share. Considering two alternative transition scenarios, the Group assesses the impact of trends in efficiency, the adoption of electric devices and the penetration of EVs to estimate its potential effect on electricity demand, including the effect on gas customers associated with the increase in electrification. Opportunity: Increase in margins and greater scope for investment due to impact of transition in terms of penetration of new technologies and electric transportation. Considering two alternative transition scenarios, the Group has assessed the impact of trends in the electrification of transportation and residential consumption to assess the potential effects. Global Power Generation Italy and Iberia EDITDA 2030 Brighter vs Reference End-user Markets Italy and Iberia EBITDA 2030 Brighter vs Reference Enel X Italy and Iberia EBITDA 2030 Brighter vs Reference (1) Time horizon : short (2020-2022); medium (up to 2030); long (2030-2050). Upside scenario current policies Downside scenario current policies Competitive environment energy vector, competition driven by contiguous sectors is also rising, although this offers utilities the opportunity to The markets and businesses in which the Group operates move into new businesses. are exposed to steadily growing competition and evo- The differentiation on which the Group can count, both ge- lution, from both a technological and regulatory point of ographically and in the various sectors in which it operates, view, with the timing of these developments varying from is an important mitigation factor, but in order to orient stra- country to country. tegic development guidelines more effectively, the evolu- As a result of these processes, Enel is exposed to growing tion of the competitive environment is constantly monito- competitive pressure and, as electricity is this century’s red, both inside and outside the world of utilities. 95 Integrated Annual Report 2020 Financial risks responsibilities for risk management, monitoring and con- trol processes, ensuring compliance with the principle of organizational separation of units responsible for opera- As part of its operations, Enel is exposed to a variety of tions and those in charge of monitoring and managing risk. financial risks that, if not appropriately mitigated, can di- The financial risk governance system also defines a system rectly impact our performance. of operating limits at the Group and individual Region and In line with the Group’s risk catalog, these risks include the Country levels for each risk, which are monitored periodi- following: cally by risk management units. For the Group, the system of limits constitutes a decision-making tool to achieve its objectives. For further information on the management of financial risks, please see note 45 of the consolidated financial sta- tements. The internal control and risk management system provides for the specification of policies that establish the roles and INTEREST RATE The Group is exposed to the risk that changes in the level of interest rates could produce unexpected changes in net financial expense or financial assets and liabilities measured at fair value. The exposure to interest rate risk derives mainly from the variability of the terms of financing, in the case of new debt, and from the variability of the cash flows in respect of interest on floa- ting-rate debt. The interest rate risk management policy seeks to contain financial expense and its volatility by optimizing the Group’s portfolio of financial liabilities and using OTC derivatives. Risk control through specific processes, risk indicators and operating limits enables us to limit possible adverse financial impacts and, at the same time, to optimize the structure of debt with an adequate degree of flexibility. The volatility that characterized the financial markets from the outset of the pandemic has in many cases returned to pre-COVID 19 levels and was offset by risk mitigation actions using derivative financial instruments. Enel operates in energy markets and for this reason is exposed to the risk of incurring losses as a result of an increase in the volatility of commodity prices, such as the prices of fuels and electri- city (price risk), or owing to a lack of demand or commodity shortages (volume risk). If not managed effectively, these risks can have a significant impact on results. To mitigate this exposure, the Group has developed a strategy of stabilizing margins by contracting for supplies of fuel and the delivery of electricity to end users or wholesalers in advance. COMMODITY commodity risk, the specification of a ceiling for maximum acceptable risk and the implemen- Enel has also implemented a formal procedure that provides for the measurement of the residual tation of a hedging strategy using derivatives on regulated markets and over-the-counter (OTC) markets. The commodity risk control process limits the impact of unexpected changes in market prices on margins and, at the same time, ensures an adequate margin of flexibility that makes it possible to seize short-term opportunities. In order to mitigate the risk of interruptions in fuel supplies, the Group has diversified fuel sour- ces, using suppliers from different geographical areas. 9696 |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsIn 2020, the spread of the COVID-19 pandemic triggered a complex global economic crisis, cau- sing significant increases in commodity price volatility. Enel has contained the risk below the limits estimated in 2019 for the current year, thanks to careful and timely mitigation measures, the geographical diversification of our business, the growing impetus given to the energy transition through the decarbonization process and the use of renewable sources for power generation. Finally, the adoption of global and local strategies, such as flexibility in contractual clauses and proxy hedging techniques (in the event that hedging derivatives are not available on the market or are not sufficiently liquid), has made it possible to optimize results even in a highly dynamic market context. In view of their geographical diversification, access to international markets for the issuance of debt instruments and transactions in commodities, Group companies are exposed to the risk that changes in exchange rates between the presentation currency and other currencies could generate unexpected changes in the performance and financial aggregates in their respective financial statements. Given the current structure of Enel, the exposure to currency risk is mainly linked to the US dollar and is attributable to: › cash flows in respect of the purchase or sale of fuel or electricity; › cash flows in respect of investments, dividends from foreign subsidiaries or the purchase or sale of equity investments; › cash flows connected with commercial relationships; › financial assets and liabilities. CURRENCY RISK The Group’s consolidated financial statements are also exposed to the currency risk deriving from the translation into euros of the items relating to investments in companies whose pre- sentation currency is not the euro (translation risk). The currency risk management policy is based on systematically hedging the exposures of the Group companies, with the exception of translation risk. Appropriate operational processes ensure the definition and implementation of appropriate hedging strategies, which typically employ financial derivatives obtained on OTC markets. Risk control through specific processes and indicators enables us to limit possible adverse fi- nancial impacts and, at the same time, to optimize the management of cash flows on the ma- naged portfolios. During the year, currency risk was managed through compliance with the risk management policies, encountering no difficulties in accessing the derivatives market. The volatility that characterized the financial markets during the initial phase of the pandemic has in many cases returned to pre-COVID 19 levels and was offset by risk mitigation actions using derivative financial instruments. The Group’s commercial, commodity and financial transactions expose it to credit risk, i.e. the possibility that a deterioration in the creditworthiness of counterparties or the failure to dischar- ge contractual payment obligations could lead to the interruption of incoming cash flows and an increase in collection costs (settlement risk) as well as lower revenue flows due to the replacement of the original transactions with similar transactions negotiated on unfavorable market conditions (replacement risk). Other risks include the reputational and financial risks associated with signi- ficant exposures to a single counterparty or groups of related customers, or to counterparties operating in the same sector or in the same geographical area. Accordingly, the exposure to credit risk is attributable to the following types of operations: 97 CREDIT AND COUNTERPARTY Integrated Annual Report 2020 › the sale and distribution of electricity and gas in free and regulated markets and the supply of goods and services (trade receivables); › trading activities that involve the physical exchange of assets or transactions in financial instru- ments (the commodity portfolio); › trading in derivatives, bank deposits and, more generally, financial instruments (the financial portfolio). The policy for managing credit risk associated with commercial activities and transactions in commodities provides for a preliminary assessment of the creditworthiness of counterparties and the adoption of mitigation instruments, such as obtaining guarantees. The control process based on specific risk indicators and, where possible, limits ensures that the economic and financial impacts associated with a possible deterioration in credit standing are contained within sustainable levels. At the same time, this approach preserves the necessary flexibility to optimize portfolio management. In addition, the Group undertakes transactions to factor receivables without recourse, which re- sults in the complete derecognition of the corresponding assets involved in the factoring. Finally, with regard to financial and commodity transactions, risk mitigation is pursued through the diversification of the portfolio (giving preference to counterparties with a high credit rating) and the adoption of specific standardized contractual frameworks that contain risk mitigation clauses (e.g. netting arrangements) and possibly the exchange of cash collateral. Despite the deterioration in the collection status of certain customer segments, which was taken into consideration in determining impairment of trade receivables, the Group’s portfolio has so far demonstrated resilience to the global pandemic. This reflects the expansion of digital collection channels and a solid diversification of commercial customers with a low exposure to the impact of COVID-19 (e.g. utilities and distribution companies). Enel’s liquidity risk management policy is designed to maintain sufficient liquidity to meet expected commitments over a given time horizon without resorting to additional sources of financing, also retaining a prudential liquidity reserve, sufficient to meet any unexpected commitments. Further- more, in order to meet its medium and long-term commitments, Enel pursues a borrowing stra- tegy that provides for a diversified structure of funding sources, which it uses to meet its financial needs, and a balanced maturity profile. Liquidity risk is the risk that the Group, while solvent, would not be able to discharge its obliga- tions in a timely manner or would only be able to do so on unfavorable terms or in the presence of constraints on disinvestment from assets with consequent capital losses, owing to situations LIQUIDITY of tension or systemic crises (credit crunches, sovereign debt crises, etc.) or changes in the per- ception of Group riskiness by the market. Among the factors that define the risk perceived by the market, the credit rating assigned to Enel by rating agencies plays a decisive role, since it influences its ability to access sources of financing and the related financial terms of that financing. A deterioration in the credit rating could there- fore restrict access to the capital market and/or increase of the cost of funding, with consequent negative effects on the financial position, financial performance and cash flows of the Group. In 2020, Enel’s risk profile did not change compared with 2019. Accordingly, at the end of the year, Enel’s rating was: (i) “BBB+” with a stable outlook for Standard & Poor’s; (ii) “A-” with a stable outlook for Fitch; and (iii) “Baa2” with a positive outlook for Moody’s. On January 15, 2021, Moody’s increased its Enel rating to Baa1. The upgrade reflected the progress achieved in improving the 9898 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsGroup’s risk profile, the result of constant investment in grids and renewable energy, greater ge- ographical diversification and a focus on centralized financing. Enel’s liquidity risk management policies are designed to maintain a level of liquidity sufficient to meet its obligations over a specified time horizon, without having recourse to additional sources of financing, as well as to maintain a prudential liquidity buffer sufficient to meet unexpected obligations. In addition, in order to ensure that the Group can discharge its medium and long- term commitments, Enel pursues a borrowing strategy that provides for a diversified structure of financing sources to which it can turn and a balanced maturity profile. In order to manage liquidity efficiently, treasury activities have largely been centralized at the hol- ding company level, meeting liquidity requirements primarily by drawing on the cash generated by ordinary operations and managing any cash surpluses appropriately. As regards the impact of COVID-19, despite the effects of the pandemic the liquidity risk indices monitored for the Group remained within the limits established for 2020. 99 Integrated Annual Report 2020Digital Technology risks The risks discussed in this section are as follows: The speed of technological developments that constantly generate new challenges, the ever increasing frequency and intensity of cyber attacks and the attraction of critical infrastructures and strategic indu- strial sectors as targets underscore the potential risk that, in extreme cases, the normal operations of companies could grind to a halt. Cyber attacks have evolved dramatically in recent years: their number has grown exponentially, as has their complexity and impact (theft of company data on customers), making it increasingly difficult to promptly identify the source of threats. In the case of the Enel Group, this exposure reflects the many environments in which it operates (data, industry and people), a circu- mstance that accompanies the intrinsic complexity and interconnection of the resources that over the years have been increasingly integrated into the Group’s daily operating processes. The Group has adopted a holistic governance approach to cyber security that is applied to all the sec- tors of IT (Information Technology), OT (Operational Technology) and IoT (Internet of Things). The fra- mework is based on the commitment of top management, on global strategic management, on the involvement of all business areas as well as on the units involved in the design and management of our systems. It seeks to use cutting edge technologies, to design ad hoc business processes, to strengthen people’s IT awareness and to implement regulatory requirements for IT security. In addition, the Group has developed an IT risk management methodology founded on “risk-based” and “cyber security by design” approaches, thus integrating the analysis of business risks into all strategic decisions. Enel has also created its own Cyber Emergency Readiness Team (CERT) in order to proactively respond to any IT security incidents. Finally, back in 2019, the Group also took out an insurance policy for cyber security risks in order to mitigate IT threats. The Group is carrying out a complete digital transformation of how it manages the entire energy va- lue chain, developing new business models and digitizing its business processes, integrating systems and adopting new technologies. A consequence of this digital transformation is that the Group is increasingly exposed to risks related to the functioning of the IT systems, which are integrated across the Company with impacts on processes and operations, which could expose IT and OT systems to service interruptions or data losses. These risks are managed using a series of internal measures developed by the Global Digital Solu- tions (GDS) unit, which is responsible for guiding the Group’s digital transformation. It has set up an internal control system that introduces control points along the entire IT value chain, enabling us to prevent the emergence of risks engendered by such issues as the creation of services that do not meet business needs, the failure to adopt adequate security measures and service interruptions. The internal control system of the Global Digital Solutions unit oversees both the activities performed in-house and those outsourced to external associates and service providers. Furthermore, Enel is promoting the dissemination of a digital culture and digital skills within the Group in order to succes- sfully guide the digital transformation and minimize the associated risks. CYBER SECURITY DIGITALIZATION, IT EFFECTIVENESS AND SERVICE CONTINUITY 100100 |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsOperational risks The risks discussed in this section are as follows: HEALTH AND SAFETY The main health and safety risks to which Enel personnel and contractors are exposed are asso- ciated with operations at the Group’s sites and assets. The violation of the laws, regulations and procedures governing health and safety, work environments, management of corporate structu- res, assets and processes, which could have an adverse impact on the health of employees, workers or stakeholders, can give rise to the risk of incurring administrative or judicial penalties and related economic, financial and reputational impacts. These risks were identified through an analysis of the main events that have occurred in the last three years. In particular, in terms of probability of occurrence, mechanical incidents (falls, collisions, crushing and cuts) are the most common, while the most severe in terms of potential associated impact are electrical incidents (possibly fatal injuries). In addition, in relation to the presence of the Group in different areas of the world, employees and contractors could be exposed to health risks connected with potential emerging infectious diseases of a pandemic and potentially pandemic nature, which could have an impact on their health and well-being. Enel has adopted a Declaration of Commitment to Health and Safety, signed by the Group’s top management. In implementing the policy, each Group Business Line has its own Occupational Health and Safety Management System compliant with the international standard BS OHSAS 18001, which is based on the identification of hazards, the qualitative and quantitative assessment of risks, the planning and implementation of prevention and protection measures, the verification of the effectiveness of the prevention and protection measures and any corrective actions. This system also consi- ders the rigor employed in the selection and management of contractors and suppliers and the promotion of their involvement in programs for continuous improvement of safety performance. The Enel Group has defined a structured health management system, based on prevention and protection measures, which also plays a role in the development of a corporate culture aimed at promoting the psycho-physical health and organizational well-being of workers, as well as hel- ping to balance personal and professional life. Furthermore, with regard to emergencies relating to health, safety and the environment, a unit has been set up within the HSEQ department of the Parent with liaisons in each Business Line and Country in order to ensure the definition of the global strategy and policies for emergency mana- gement and their adoption in every Group organization. In particular, this organizational structure and the related management processes make it possible to direct, integrate and monitor, both at Group level and in the individual countries in which it operates, all the prevention, protection and intervention actions aimed at protecting the health of employees and contractors, also in relation to exogenous health risk factors that may not be strictly related to work activities. 101 |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||Integrated Annual Report 2020Recent years have seen the continuation of the growth in the sensitivity of the entire community to risks connected with development models that impact the quality of the environment and ecosystems with the exploitation of scarce natural resources (including raw materials and water). In some cases, the synergistic effects between these impacts, such as global warming and the in- creasing exploitation and degradation of water resources, have increased the risk of environmen- tal emergencies in the most sensitive areas of the planet, with the risk of sparking competition among different uses of water resources such as industrial, agricultural and civil uses. In response to these needs, governments have imposed increasingly restrictive environmental re- gulations, placing ever more stringent constraints on the development of new industrial initiatives and, in the most impactful industries, incentivizing or requiring the elimination of technologies no longer considered sustainable. In this context, companies in every sector, and above all industry leaders, are ever more aware that environmental risks are economic risks. As a result, they are called upon to increase their commitment and accountability for developing and adopting innovative and sustainable technical solutions and development models. Enel has made the effective prevention and minimization of environmental impacts and risks a foundational element of each project across its entire life cycle. ENVIRONMENT The adoption of ISO 14001-certified environmental management systems across the entire Group ensures the implementation of structured policies and procedures to identify and manage the environmental risks and opportunities associated with all corporate activities. A structured control plan combined with improvement actions and objectives inspired by the best environ- mental practices, with requirements exceeding those for simple environmental regulatory com- pliance, mitigate the risk of impacts on the environment, reputational damage and litigation. Also contributing are the multitude of actions to achieve the challenging environmental improvement objectives set by Enel, such as those regarding atmospheric emissions, waste production and water consumption, especially in areas with high water stress. The risk of water scarcity is directly mitigated by Enel’s development strategy, which is based on the growth of generation from renewable sources that are essentially not dependent on the availability of water for their operation. Special attention is also devoted to assets in areas with a high level of water stress, in order to develop technological solutions to reduce consumption. On- going collaboration with local river basin management authorities enables us to adopt the most effective shared strategies for the sustainable management of hydroelectric generation assets. Finally, appropriate terrestrial, marine and river monitoring actions are being implemented in ecosystems to verify the effectiveness of the measures adopted to protect, restore and conserve biodiversity. The purchasing processes of Global Procurement and the associated governance documents form a structured system of rules and control points that make it possible to combine the achievement of economic business objectives with full compliance with the fundamental principles set out in the Code of Ethics, the Enel Global Compliance Program, the Zero-Tolerance-of-Corruption Plan and the Human Rights Policy, without renouncing the promotion of initiatives for sustainable economic development. The procedures governing procurement processes are all designed to ensure conduct imbued with the utmost respect for key values such as loyalty, professionalism, collaboration, transparen- cy and traceability of decision-making processes. These principles have been incorporated into the organizational processes and controls that Enel has voluntarily decided to adopt in order to establish relationships of trust with all its stakeholders, as well as define stable and constructive relationships that are not based exclusively on ensuring financial competitiveness but also take account of best practices in essential areas for the Group, PROCUREMENT, LOGISTICS & SUPPLY CHAIN 102102 134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementssuch as the avoidance of child labor, occupational health and safety and environmental responsibility. In this sense, the Global Procurement procedural system guides the daily operations of the va- rious procurement units, which by systematically adopting tender procedures ensure maximum competition and equal access opportunities for all vendors meeting the specified technical, eco- nomic/financial, environmental, safety, human rights, legal and ethical requirements. The supplier qualification system applies to the entire Enel Group and governs compliance with the aforementioned requirements. Enel uses the qualification system – even before the procure- ment process begins – to verify that its potential suppliers are in line with its strategic vision and expectations in all the areas mentioned and that they are inspired by the same values. The global supplier qualification system enables the accurate assessment of companies wishing to participate in procurement procedures and represents a guarantee for Enel, since it gives the Group an updated list of suppliers of proven reliability to draw from and makes it possible, in com- pliance with applicable regulations, to call on suppliers in procurement tenders initiated by Group companies. The qualification procedure is completed by the Supplier Performance Management process, which monitors supplier performance with regard to the appropriateness of their con- duct during the tender, quality, punctuality and sustainability in the execution of the contract. Direct procurement without a competitive tender can only be used in exceptional cases, duly motivated, in compliance with applicable legislation. The effectiveness of supply chain risk management is monitored using a number of performance indicators (including the concentration of contracts with individual suppliers or industrial groups, the supplier’s dependence on Enel, the turnover rate of suppliers, etc.), for which thresholds are specified that guide the definition of the procurement strategy. The actions taken to counter the impact of the COVID-19 emergency have focused in differentiating sup- ply sources to avoid interruptions in the supply chain and the remote performance of activities that would ordinarily require physical interaction between Enel and the supplier (e.g. inspections at the company). The profound transformations of the energy sector, which has experienced sweeping technolo- gical developments, require companies in the industry to recruit people with new experience and professional skills, as well as imposing the need for major cultural and organizational changes. Organizations must move to adopt new, agile and flexible business models. Policies to enhance diversity and to manage and promote talent have become key factors for companies that are managing the transition and have a widespread geographical presence. Enel places the people who work for it at the center of its business model: the management of human capital is a priority for which specific objectives have been established. The main goals include: the development of the digital capabilities and skills made necessary by the Fourth In- dustrial Revolution, as well as the promotion of reskilling and upskilling programs for employees PEOPLE AND ORGANIZATION in order to support the energy transition; the effective involvement of employees in the pursuit of the corporate purpose, which ensures the achievement of better results while offering greater satisfaction to our people; the development of systems for evaluating the working environment and performance; the dissemination of diversity and inclusion policies to all countries in which the Group operates, as well as instilling an inclusive organizational culture based on the principles of non-discrimination and equal opportunity, a key driver in ensuring that everyone can make an effective contribution. In addition, Enel is developing specific initiatives to foster the diffusion of agile working methods in business processes. The Group is committed to enhancing the resi- lience and flexibility of organizational models through simplification and digitalization in order to enable the effectiveness and autonomy of our people within new flexible working schemes, which have already been effectively tested in the response to the COVID-19 pandemic emergency, whi- ch will be a key element of future approaches to work. 103 Integrated Annual Report 2020Compliance The risks discussed in this section are as follows: RISKS CONNECTED WITH THE PROTECTION OF PERSONAL DATA In the era of the digitalization and globalization of markets, Enel’s business strategy has focused on ac- celerating the transformation towards a business model based on a digital platform, using a data-driven and customer-centric approach implemented along the entire value chain. The Company, which is present in more than 40 countries, has the largest customer base in the public services sector (about 70 million customers), and currently employs some 67,000 people. Consequently, the Group’s new business model requires the management of an increasingly large and growing volu- me of personal data in order to achieve the financial and business results envisaged in the 2021-2023 Strategic Plan. This exposes Enel to the risks connected with the protection of personal data (an issue that must also take account of the substantial growth in privacy legislation in most of the countries in which Enel opera- tes). These risks may result in the loss of confidentiality, integrity or availability of the personal information of our customers, employees and others (e.g. suppliers), with the risk of incurring fines determined on the basis of global turnover, the prohibition of the use of certain processes and consequent financial losses and reputational harm. In order to manage and mitigate this risk, Enel has adopted a model for the global governance of perso- nal data that provides for the establishment of positions responsible for privacy issues at all levels (inclu- ding the appointment of Data Protection Officers at the global and country levels) and digital compliance tools to map applications and processes and manage risks with an impact on protecting personal data, in compliance with specific local regulations in this field. 104104 |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||134562Strategy & Risk ManagementPerformance& MetricsOutlookGovernanceEnel GroupConsolidated financial statementsIntegrated Annual Report 2020 105 4 PERFORMANCE & METRICS S N O I T A R E P O N O T R O P E R 106106 Integrated disclosure Financial and non-financial results are reported in integrated form to give an overall view of the Group’s performance. Ordinary net profit in 2020 up 9% on 2019 An improvement in ordinary operating performance including a reduction in de- preciation and amortization for the period and efficient financial management. Capital expenditure exceeds €10 billion 45.4% in Enel Green Power and 38.6% in Infrastructure and Networks. 33% of debt consists of sustainable financing Consistent with its Sustainability-Linked Financing Framework, the Group is in- creasingly active in the development of sustainable finance tools with KPIs linked to the achievement of the Sustainable De- velopment Goals (SDGs). 107 Integrated Annual Report 2020DEFINITION OF PERFORMANCE INDICATORS In order to present the results of the Group and the Parent and analyze their financial structure, Enel has prepared se- parate reclassified schedules that differ from the schedules envisaged under the IFRS-EU adopted by the Group and Enel SpA and presented in the consolidated and separate financial statements, respectively. These reclassified sche- dules contain different performance indicators from those obtained directly from the consolidated and separate fi- nancial statements, which management believes are useful in monitoring the performance of the Group and the Parent and representative of the financial performance of our bu- siness. With regard to those indicators, on December 3, 2015, CONSOB issued Communication no. 92543/2015, which gives force to the Guidelines issued on October 5, 2015, by the European Securities and Markets Authority (ESMA) concerning the presentation of alternative performance measures in regulated information disclosed or prospectu- ses published as from July 3, 2016. These Guidelines, which update the previous CESR Recommendation (CESR/05- 178b), are intended to promote the usefulness and tran- sparency of alternative performance indicators included in regulated information or prospectuses within the scope of application of Directive 2003/71/EC in order to improve their comparability, reliability and comprehensibility. Accordingly, in line with the regulations cited above, the cri- teria used to construct these indicators are the following. Gross operating profit: an operating performance indicator, calculated as “Operating profit” plus “Depreciation, amorti- zation and impairment losses”. Ordinary gross operating profit: defined as “Gross opera- ting profit” from core businesses connected with the new Ownership and Stewardship business models. It does not include costs connected with corporate restructurings and costs directly attributable to the COVID-19 pandemic. Ordinary operating profit: defined as “Operating profit” 108108 from core businesses connected with the new Ownership and Stewardship business models. It is calculated by adjusting “Operating profit” for the ef- fects of transactions not connected with core operations referred to with regard to the gross operating profit and excluding significant impairment losses on assets and/or groups of assets following impairment testing (including reversals or impairment losses) or classification under “As- sets held for sale”. Group ordinary profit: it is defined as “Group profit” gene- rated by Enel’s core business connected with the new Ow- nership and Stewardship business models. It is equal to “Group profit” adjusted primarily for the items discussed under “Ordinary operating profit”, net of any tax effects and non-controlling interests. Low carbon ordinary EBITDA: it is the ordinary gross opera- ting profit of the set of products, services and technologies included in the following Business Lines: Enel Green Power, Infrastructure and Networks, Enel X and End-user Markets (excluding gas). Gross global value added from continuing operations: this is defined as value created for stakeholders and is equal to “Revenue”, including “Net income/(expense) from com- modity management” net of external costs defined as the algebraic sum of “cost of fuels”, “cost of electricity pur- chases”, “costs of materials”, “capitalized costs of internal projects”, “other costs” and “costs for services, rentals and leases”, with the latter net of “costs for fixed water diversion fees” and “costs for public land usage fees”. Net non-current assets: calculated as the difference between “Non-current assets” and “Non-current liabilities” with the exception of: › “Deferred tax assets”; › “Securities” and “Other financial assets” included in “Other non-current financial assets”; › “Long-term borrowings”; › “Employee benefits”; › “Provisions for risks and charges (non-current portion)”; › “Deferred tax liabilities”. Net working capital: calculated as the difference between “Current assets” and “Current liabilities” with the exception of: › “Current portion of long-term loan assets”, “Factoring 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsreceivables”, “Securities”, “Cash collateral” and “Other › net of the “Current portion of long-term loan assets”, financial assets” included in “Other current financial as- “Factoring receivables”, “Cash collateral” and “Other fi- sets”; nancial assets” included in “Other current financial as- › “Cash and cash equivalents”; sets”; › “Short-term borrowings” and the “Current portion of › net of “Securities” and “Other financial assets” included long-term borrowings”; in “Other non-current financial assets”. › “Provisions for risks and charges (current portion)”; More generally, the net financial debt of the Enel Group is › “Other borrowings” included in “Other current liabilities”. calculated in accordance with paragraph 127 of Recom- mendation CESR/05-054b implementing Regulation (EC) Net assets held for sale: calculated as the algebraic sum of no. 809/2004 and in line with the CONSOB instructions of “Assets held for sale” and “Liabilities included in disposal July 28, 2006, net of financial assets and long-term secu- groups held for sale”. rities. Net capital employed: calculated as the sum of “Net non-current assets” and “Net current assets”, “Provisions for risks and charges”, “Deferred tax liabilities” and “Defer- red tax assets”, as well as “Net assets held for sale”. Net financial debt: a financial structure indicator, determi- ned: › by “Long-term borrowings” and “Short-term borrowings and the current portion of long-term borrowings”, taking account of “Short-term financial borrowings” included in “Other current liabilities”; › net of “Cash and cash equivalents”; Main changes in the consolidation scope In the two periods under review, the consolidation scope changed as a result of a number of transactions. For more information, please see note 7 of the consolidated financial statements. 109 Integrated Annual Report 2020PERFORMANCE OF THE GROUP 110110 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements207.1 TWh 53.6 % 2.2 million km NET ELECTRICITY GENERATION NET EFFICIENT INSTALLED RENEWABLES CAPACITY ELECTRICITY DISTRIBUTION AND TRANSMISSION GRID of which 105.4 TWh of renewables for a total of 45.0 GW 44.2 million 69.5 million 105,237 no. END USERS WITH ACTIVE SMART METERS RETAIL CUSTOMERS CHARGING POINTS 60% of end users are digitalized of which 23.1 million on free market +32.3% on 2019 Operations The following presents the operating, environmental and financial performance of the Group. SDG 7 7 7 7 9 9 9 11 11 11 Net electricity generation (TWh) of which: - renewable (TWh) Total net efficient installed capacity (GW) Net efficient installed renewables capacity (GW) (1) Net efficient installed renewables capacity (%) Additional efficient installed renewables capacity (GW) (2) 2020 207.1 105.4 84.0 45.0 53.6% 2.91 2019 229.1 99.4 84.3 42.1 50.0% 3.58 Electricity transported on Enel’s distribution grid (TWh) (3) 484.6 507.7 End users with active smart meters (no.) (4) (5) Electricity distribution and transmission grid (km) (6) End users (no.) (6) Electricity sold by Enel (TWh) (7) Gas sold to end users (billions of m3) (7) Retail customers (no.) (8) - of which free market (8) Demand response capacity (MW) Charging points (no.) (9) Storage (MW) 44,292,794 43,821,596 2,231,961 2,219,008 74,303,931 73,811,964 298.2 9.7 69,517,932 23,164,875 6,038 105,237 123 322.0 10.8 70,471,612 23,013,224 6,297 79,565 110 Change (22.0) 6.0 (0.3) 2.9 7.2% (0.67) (23.1) 471,198 12,953 491,967 (23.8) (1.1) (953,680) 151,651 (259) 25,672 13 (1) Net efficient installed renewables capacity, including managed capacity, amounted to 48.6 GW at December 31, 2020 and 45.8 GW at December 31, 2019. (2) Additional efficient installed renewables capacity including managed capacity was equal to 3.1 GW at December 31, 2020 and 3 GW at December 31, 2019. (3) The figures for 2019 reflect a more accurate measurement of amounts transported. (4) To ensure a uniform comparison, the figure for 2019 has been adjusted on the basis of the new calculation method, which excludes digital meters with an active contract that are not managed remotely. (5) Of which 18.2 million second generation smart meters in 2020 and 13.1 million in 2019. (6) The figures for 2019 reflect more accurate calculation of the numbers. (7) Volumes include sales to large customers by the power generation companies in Latin America. The 2019 figure has been adjusted to ensure comparability; (8) Also includes the large customers of generation companies in Latin America. The figure for 2019 has consequently been adjusted to ensure comparability. (9) The number of charging points including interoperable points was equal to about 186 thousand at December 31, 2020 and about 82 thousand at December 31, 2019. 111 Integrated Annual Report 2020Electricity generation Net electricity generated by Enel in 2020 decreased by 22 TWh (-9.6%) from 2019. This reduction reflects, in parti- cular, a decrease in thermal power generation (-27.5 TWh) due mainly to a reduction in coal-fired generation (-24.4 NET ELECTRICITY GENERATION BY SOURCE (%) ENERGIA ELETTRICA NETTA PRODOTTA PER FONTE (%) TWh), which was partially offset by an increase in renewable output (+6.0 TWh). The increase can be attributed to grea- ter wind output (+4.3 TWh) and solar generation (1.8 TWh), mainly in Spain and North America as a result of new plants coming online. Nuclear generation, totaling 25.8 TWh, decreased by 0.4 TWh compared with 2019. 2020 ENERGIA ELETTRICA NETTA PRODOTTA PER FONTE (%) Geothermal and other 3.0% Geothermal and other 3.0% Wind 15.0% Coal-fired 6.3% Combined-cycle 20.9% Coal-fired 6.3% Combined-cycle 20.9% Solar 2.8% Fuel-oil and turbo-gas 9.4% Total 207.1 TWh Total 207.1 TWh Nuclear 12.5% Total renewable sources 50.9% Wind 15.0% Solar 2.8% Fuel-oil and turbo-gas 9.4% Total traditional sources 49.1% Nuclear 12.5% Total renewable sources 50.9% Total traditional sources 49.1% Geothermal and other 2.7% Coal-fired 16.4% Combined-cycle 19.6% Total 229.1 TWh Geothermal and other 2.7% Wind 11.7% Coal-fired 16.4% Solar 1.7% Combined-cycle 19.6% Fuel-oil and turbo-gas 9.1% Nuclear 11.5% Total 229.1 TWh 2020 Hydroelectric 30.1% Hydroelectric 30.1% 2019 2019 Hydroelectric 27.3% Hydroelectric 27.3% Total renewable sources 43.4% Wind 11.7% Solar 1.7% Fuel-oil and Total traditional sources 56.6% turbo-gas 9.1% Nuclear 11.5% At the end of December 2020, the Group’s total net effi- Total renewable sources 43.4% Total traditional sources 56.6% new renewables capacity, mainly in the form of wind and cient installed capacity totaled 84.0 GW, a decrease of 0.3 solar power in North America (1.4 GW), Brazil (0.9 GW), and GW compared with 2019. The disposal of 3 GW of coal and Spain (0.4 GW). fuel-oil plants in Italy and Spain was only partially offset by POTENZA EFFICIENTE INSTALLATA NETTA PER FONTE (%) 2020 NET EFFICIENT INSTALLED CAPACITY BY SOURCE (%) POTENZA EFFICIENTE INSTALLATA NETTA PER FONTE (%) 2020 Hydroelectric 33.1% Geothermal and other 1.1% Geothermal and other 1.1% Wind 14.8% Hydroelectric 33.1% Total renewable sources 53.6% Wind 14.8% Solar 4.6% Solar 4.6% Total 84.0 GW Combined-cycle 17.9% Total 84.0 GW Coal-fired 10.6% Coal-fired 10.6% Combined-cycle 17.9% Fuel-oil and turbo-gas 13.9% Fuel-oil and Total traditional sources 46.4% turbo-gas 13.9% Nuclear 4.0% Nuclear 4.0% Total renewable sources 53.6% Total traditional sources 46.4% 2019 2019 Hydroelectric 33.0% Geothermal and other 1.0% Geothermal and other 1.0% Wind 12.3% Hydroelectric 33.0% Wind Total renewable sources 50.0% 12.3% Coal-fired 13.8% Coal-fired 13.8% Solar 3.7% Solar 3.7% Total 84.3 GW Combined-cycle 17.8% Total 84.3 GW Fuel-oil and turbo-gas 14.5% Combined-cycle 17.8% Total traditional sources 50.0% Fuel-oil and turbo-gas 14.5% Nuclear 3.9% Nuclear 3.9% Total renewable sources 50.0% Total traditional sources 50.0% 112112 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements Fighting climate change and ensuring environmental sustainability 214 (gCO2eq/kWh) SPECIFIC DIRECT GREENHOUSE GAS EMISSIONS - SCOPE 1 -28.2% on 2019 20.4 millions of m3 63.4% TOTAL WATER CONSUMPTION ZERO-EMISSION GENERATION -64.9% on 2019 (% of total) €15,616 million €9,575 million ORDINARY EBITDA FOR LOW-CARBON PRODUCTS, SERVICES AND TECHNOLOGIES CAPEX FOR LOW-CARBON PRODUCTS, SERVICES AND TECHNOLOGIES Main climate change indicators Direct greenhouse gas emissions - Scope 1 (1) Indirect greenhouse gas emissions - Scope 2 - Purchase of electricity from the grid (location based) Indirect greenhouse gas emissions - Scope 2 - Purchase of electricity from the grid (market based) Indirect greenhouse gas emissions - Scope 2 - Distribution grid losses (location based) Indirect greenhouse gas emissions - Scope 2 - Distribution grid losses (market based) Indirect greenhouse gas emissions - Scope 3 - of which emissions connected with gas sales Specific direct greenhouse gas emissions - Scope 1 Specific emissions of SO2 Specific emissions of NOx Specific emissions of particulates Zero-emission generation Total direct fuel consumption Average efficiency of thermal plants (2) Water withdrawals in water-stressed areas (3) Specific water withdrawals for total generation (4) Reference price of CO2 Ordinary EBITDA for low-carbon products, services and technologies (5) Capex for low-carbon products, services and technologies Ratio of capex for low-carbon products, services and technologies to total (million/teq) (million/teq) (million/teq) (million/teq) (million/teq) (million/teq) (million/teq) (gCO2eq/kWh) (g/kWh) (g/kWh) (g/kWh) (% of total) (Mtoe) (%) (%) (l/kWh) (€) (millions of €) (millions of €) 2020 45.26 1.43 2.28 3.56 5.57 47.70 21.48 214 0.10 0.36 0.01 63.4 23.9 44.2 22.9 0.20 24.72 15,616 9,575 2019 69.98 1.55 2.30 3.82 6.00 56.92 23.92 298 0.59 0.60 0.12 54.9 30.1 42.0 25.4 0.33 24.8 2020-2019 (24.72) -35.3% (0.12) -7.7% (0.02) -0.9% (0.26) -6.8% (0.43) (9.22) (2.44) (84) (0.49) (0.24) (0.11) 8.5 (6.2) 2.2 (2.5) (0.13) (0.1) -7.2% -16.2% -10.2% -28.2% -83.1% -40.0% -91.7% 15.5% -20.6% 5.2% -9.8% -39.4% -0.3% -3.8% 4.9% 16,241 9,131 (625.0) 444.0 (%) 94.0 92.0 2.0 2.2% (1) Specific emissions are calculated considering total emissions from thermal generation as a ratio of total renewable, nuclear and thermal generation (including the contribution of heat). (2) The calculation does not consider Italian O&G plants being decommissioned or of marginal impact. In addition, the figures do not take account of consumption and generation for cogeneration relating to Russian thermal generation plants. Average efficiency is calculated on the basis of the plant fleet and is weighted by generation. (3) The figure for 2019 has been recalculated on the basis of the change in scope of plants in water-stressed areas. (4) Specific withdrawals consist of all water withdrawals from sources on the surface (including recovered rainwater), underground, third-party, the sea and wastewater (supplies from third parties) used for generation processes and for closed-cycle cooling, excluding sea water returned to the sea after the desalination process (brine). (5) The comparative figure for 2019 has been adjusted to take account of the fact that in South America and Mexico the values relating to large customers managed by the generation companies have been reallocated to the End-user Markets Business Line. 113 Integrated Annual Report 2020The Group’s ambition for leadership in the fight against cli- the contribution of the Reftinskaya plant, which was sold in mate change was further strengthened in 2020: the target 2019, and a concomitant decrease in Italy, Spain and Chile for the reduction of direct emissions from generation by 2020, which was set in 2015 at 350 geq/kWh of CO2 with a 25% reduction compared with 2007, had already been owing to the acceleration of the energy transition. In addi- tion, generation by other higher-emission plants also decli- ned in favor of renewable generation. achieved in 2018, two years early. The year 2020 closed The electricity generated by Enel in 2020 from zero-emis- with a reduction of 40% in specific emissions from thermal sion sources amounted to 63.4% of total output, a signifi- generation compared with the base year of 2007. In 2020, direct emissions of CO2 equivalent (Scope 1) amounted to 45.26 million tons equivalent, a decrease of 35.3% on 2019. As noted earlier, the reduction is attributable to a decline in thermal generation attributable essentially to a sharp de- cline in coal-fired generation as a result of the absence of cant increase compared with 2019 (54.9%) due to the in- crease in the contribution of solar and wind power. Due to the contraction in coal generation, SO2 and particu- late emissions fell sharply, with drops of about 83.1% and 91.7% respectively compared with 2019. NOx emissions also decreased by 40% due to the decline in thermal generation. Responsible water resource management Total withdrawals Water withdrawals in water-stressed areas (1) Specific water withdrawals for total generation (2) Total water consumption Water consumption in water-stressed areas (millions of m3) (%) (l/kWh) (millions of m3) (%) 2020 2019 Change 51.5 22.9 0.20 20.4 31.6 77.3 25.4 0.33 58.1 23.7 (25.8) (2.5) (0.13) (37.7) 7.9 -33.4% -9.8% -39.4% -64.9% 33.3% (1) The figure for 2019 has been recalculated on the basis of the change in scope of plants in water-stressed areas. (2) Specific withdrawals consist of all water withdrawals from sources on the surface (including recovered rainwater), underground, third-party, the sea and wastewater (supplies from third parties) used for generation processes and for closed-cycle cooling, excluding sea water returned to the sea after the desa- lination process (brine). Water is an essential part of electricity generation, and Enel ted in these plants in order to minimize consumption and therefore believes that the availability of this resource is a maximize withdrawals from lower quality or more abun- critical part of future energy scenarios. dant sources (waste, industrial or sea water). Enel constantly monitors all generation sites located in About 11% of the Enel Group’s total electricity output uses areas at risk of water scarcity (“water-stressed” areas) in fresh water in water-stressed areas. In 2020 total water wi- order to ensure the most efficient management of the re- thdrawals were 51.5 million cubic meters, 33.4% less than source. in 2019, reflecting a decrease in thermal generation com- Site monitoring is conducted through the following levels pared with the previous year. The specific withdrawals for of analysis: 2020 were about 0.20 l/kWh, 39.4% less than in 2019. › mapping of generation sites in water-stressed are- as identified on the basis of the (baseline) water stress conditions indicated by the World Resources Institute “Aqueduct Water Risk Atlas”; Preserving biodiversity › identification of “critical” generation sites, i.e. those lo- Preserving biodiversity is one of the strategic objectives of cated in water-stressed areas that draw fresh water for Enel’s environmental policy. The Group promotes specific operating needs; projects in the various areas in which it operates in order to › verification of the water management procedures adop- help protect local species, their natural habitats, and the lo- 114114 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementscal ecosystems in general. These projects cover a vast ran- gas bills, so as to give everyone equal access to electricity. ge of areas, including: inventory and monitoring; programs Enel has also established numerous processes to ensure to protect specific species at risk of extinction; methodo- customers receive a high level of service. In Italy, the com- logical research and other studies; repopulation and refo- mercial quality of all our contact channels (customer service restation; the construction of infrastructure supports to calls, Enel Points and stores, utility bills, app, e-mail, social promote the presence and activities of various species (e.g. media, account manager, fax) is ensured through systema- artificial nests along power distribution lines for birds or fish tic monitoring of the sales and management processes. ladders at hydroelectric plants), and ecological restoration The goal is to ensure compliance with applicable laws and and reforestation programs. regulations and respect for the privacy, freedom and digni- In 2020, 187 projects were under way to safeguard species ty of our customers. and natural habitats, with a total of 4,479 hectares involved Enel is also continuing its efforts to expand digitalization, in habitat recovery efforts. Electricity distribution and access, ecosystems and platforms Electricity transported on Enel’s distribution grid totaled 484.6 TWh in 2020, down 23.1 TWh (-4.5%) from 2019, at- tributable essentially to Italy (-14.5 TWh), Brazil (-3.4 TWh) and Spain (-2.0 TWh). The number of Enel end users with active smart meters in- creased by 471,198 in 2020, mainly in Spain (+211,228) and Romania (+288,859). Electricity sold by Enel in 2020 came to 298.2 TWh, decre- asing by 23.8 TWh (-7.4%) compared with the previous year. Quantities decreased in the following regions in particular: Italy (-7.3 TWh), Spain (-8.7 TWh), Latin America (-6.9 TWh) – mainly in Brazil (-2.7 TWh) – and Romania (-0.9 TWh). In addition, gas sold by Enel in 2020 totaled 9.7 billion cubic meters, a decline of 1.1 billion cubic meters compared with the previous year. Enel’s leadership position has been gained thanks to the at- tention we place on the customer in providing quality ser- vices: aspects that concern more than just the provision of electricity and/or natural gas, extending, above all, to intan- gible aspects of our service that relate to the perception and satisfaction of our customers. Through our products for both the residential and business markets, Enel provides dedicated offers with a lower en- vironmental impact and a concentration on the most vul- nerable segments of the population. In fact, all the coun- tries in which the Group operates provide forms of support (often linked to government initiatives) which assist these segments of the population in paying their electricity and electronic invoicing and new services. With Enel X, we of- fer innovative solutions to residential customers (techno- logical solutions for smart homes, home automation, solar and photovoltaic systems, boilers, maintenance services, lighting, etc.), government customers (public lighting, mo- nitoring services for smart cities, security systems, etc.) and large customers (demand response services, consulting and energy efficiency solutions). We also promote electric mobility through the development of public and private charging infrastructures. Enel charging points increased by 25,672 units in 2020 compared with 2019. Private charging points increased by 21,033, mainly in North America and Italy, while public charging points increased by 4,639, primarily in Italy and Spain. 115 Integrated Annual Report 2020Group performance €16,816 million €8,368 million €2,610 million GROSS OPERATING PROFIT €17,704 in 2019 OPERATING PROFIT +21.7% on 2019 GROUP PROFIT +20.1% on 2019 €17,940 million €11,284 million €5,197 million ORDINARY GROSS OPERATING PROFIT ORDINARY OPERATING PROFIT of which 64% eligible under European taxonomy of which 30.7% from Enel Green Power GROUP ORDINARY PROFIT +9.0% on 2019 Millions of euro Revenue Costs Net expense from commodity derivatives Gross operating profit Depreciation, amortization and impairment losses Operating profit Financial income Financial expense Net financial expense Share of profit/(loss) from equity-accounted investments Pre-tax profit Income taxes Profit from continuing operations Profit/(Loss) from discontinued operations Profit for the year (owners of the Parent and non-controlling interests) Profit attributable to owners of the Parent Profit attributable to non-controlling interests 2020 64,985 47,957 (212) 16,816 8,448 8,368 4,607 7,213 2019 80,327 61,890 (733) 17,704 10,826 6,878 3,953 6,397 (2,606) (2,444) (299) 5,463 1,841 3,622 - 3,622 2,610 1,012 (122) 4,312 836 3,476 - 3,476 2,174 1,302 Change (15,342) (13,933) 521 (888) (2,378) 1,490 654 816 (162) (177) 1,151 1,005 146 - 146 436 (290) -19.1% -22.5% 71.1% -5.0% -22.0% 21.7% 16.5% 12.8% -6.6% - 26.7% - 4.2% - 4.2% 20.1% -22.3% 116116 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements Financial impact of COVID-19 In compliance with recent recommendations of ESMA and CONSOB, the Group has initiated internal analyses to as- sess the real and potential impacts of COVID-19 on busi- ness activities, on the financial position and on performan- ce. In light of the macroeconomic scenario discussed earlier, the impact of COVID-19 is most significant for the business segments most closely involved with the market such as End-user Markets and Enel X, taking account of the fact that they have been affected by a significant reduction in demand and a general slowdown in the acquisition of new customers. More specifically, End-user Markets are af- fected by the overcontracting of electricity as demand and the related volumes decline, as well as the slowdown in col- Millions of euro Gross operating profit Operating profit Group profit Ordinary gross operating profit Ordinary operating profit Group ordinary profit lections on accounts receivable, due both to the effects of the crisis and the lockdowns that affected the timeliness of payments and the practices adopted in certain countries that suspended the possibility of cutting off electricity sup- ply to defaulting customers. Enel X, on the other hand, has experienced a general slowdown in the development of its portfolio of new businesses in the first nine months of 2020, much of which it recouped in the 4th Quarter, especially in Italy, in light of the measures adopted by the government to encourage the revival of economic activity. Bearing in mind the current climate of uncertainty and ba- sed on the best information available to date, the estima- ted financial impact of COVID-19 on the gross operating profit, the ordinary gross operating profit, operating profit, ordinary operating profit, Group profit and Group ordinary profit are reported below. Demand COVID-19 costs Impairment of receivables (727) (727) (298) (727) (727) (298) (133) (133) (86) - - - - (290) (154) - (290) (154) Total (860) (1,150) (538) (727) (1,017) (452) The gross operating profit was affected by the COVID-19 pment and donations. These costs do not impact the de- emergency mainly in terms of a decrease of €727 million termination of the ordinary gross operating profit. in demand for electricity, with a decrease in sales volumes At the same time, taking into account the most recent col- and the related margins, mainly in End-user Markets of Italy lection status and the results of the valuation model used and Spain and in Distribution in Latin America. This figure to measure the recoverability of receivables, the Group re- was determined by using benchmark prices to measure the cognized an increase in impairment losses on receivables reduction in quantities distributed and sold, as observed of about €290 million at the marketing companies, in parti- during the peak of the COVID-19 pandemic in the various cular in Italy, Spain and Brazil. countries in which the Group operates. Taking account of tax effects and minority interests, the Another factor impacting the gross operating profit was overall impact of COVID-19 on the Group’s profit at Decem- the direct cost of the health emergency (€133 million) for ber 31, 2020 was a negative €538 million (€452 million on workplace sanitization activities, personal protective equi- Group ordinary profit). 117 Integrated Annual Report 2020Revenue Millions of euro Sale of electricity (1) Transport of electricity (1) Fees from network operators Transfers from institutional market operators Sale of gas Transport of gas Sale of fuels Fees for connection to electricity and gas networks Revenue from construction contracts Sale of commodities under contracts with physical settlement (IFRS 9) (1) Other revenue Total 2020 34,745 10,710 932 1,395 2,718 611 602 759 732 7,737 4,044 64,985 2019 39,584 10,931 866 1,625 3,294 617 914 785 749 16,294 4,668 80,327 Change (4,839) (221) 66 (230) (576) (6) (312) (26) (17) (8,557) (624) (15,342) -12.2% -2.0% 7.6% -14.2% -17.5% -1.0% -34.1% -3.3% -2.3% -52.5% -13.4% -19.1% (1) In the Distribution segment in Colombia, a number of items previously classified under “Sale of electricity” were reclassified to “Transport of electricity” to impro- ve the presentation of the data. In order to ensure the uniformity and comparability of the figures, the amounts for 2019 have also been reclassified in the amount of €461 million. As noted earlier, the reduction in revenue mainly reflects the in Spain and the United States due to new plants coming effects of the COVID-19 pandemic. on line. More specifically, revenue in 2020 decreased significantly due to the following: These factors were partly offset by: › lower electricity sales in Spain (€1,390 million) and Italy › an increase registered by Enel North America in income (€808 million), on both the regulated and the free mar- from tax partnerships (€139 million), other revenue from kets, due mainly to the effects of the COVID-19 pande- indemnities and litigation (€31 million) and the sale of the mic, which led to a decrease in business-to-business vo- Haystack wind project (€45 million); lumes on the free market; › an increase in income recognized by e-distribuzione for › a decrease in the trading of commodities from contracts the reimbursement of system charges and grid fees on with physical settlement due to a reduction in volumes the basis of Resolutions no. 50/2018 and 461/2020 of traded and in prices applied (€8,557 million); the Regulatory Authority for Energy, Networks and the › a reduction in electricity sales in Latin America (€2,248 Environment (ARERA) (€158 million); million) due mainly to the impact of the depreciation of › the negative goodwill recognized on the acquisition of local currencies against the euro and the contraction in Paytipper following the completion of the purchase price volumes and average sales prices; allocation process (€20 million). › a reduction in volumes of gas sales to end users (€510 million) in Spain and Italy, due in part to the negative im- In 2019 revenue included the following other income: pact of COVID-19 on demand; › an increase in revenue in Argentina following the Edesur › a decrease in wheeling volumes in 2020, mainly in agreement with the local authorities resolving reciprocal reflection of the impact of the COVID-19 pandemic, whi- pending disputes arising during the period 2006-2016 ch caused a decline of €221 million in revenue from the (€233 million); transport of electricity; › a gain on the sale of Mercure Srl (€108 million); › a reduction in revenue from renewable power genera- › negative goodwill (€181 million) resulting from the de- tion in Latin America, particularly in Chile and Brazil, due finitive allocation of the purchase price of (i) a number mainly to adverse exchange rate developments, which of companies sold by Enel Green Power North America were only partially offset by increased revenue in Italy due Renewable Energy Partners LLC (€106 million) and (ii) Tra- to the improved performance of hydroelectric plants, and dewind, which transitioned from being an associate to a 118118 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements| | | 37.9% 60.9% 1.2% | | | | | | ||||||||||||||||| | ||||||||||||| ||||||| | | | | || | | | | | | | | | ||||||||||||||| | | | 2 3 . 3 % ||||||||||| | | ||||||| | | | | 1 | | 2 | | | lion); | | | | | . | | | | | | % | | | | | | wholly-owned subsidiary (negative goodwill of €75 mil- | | | | | | | | | | 17.9 | | | | | | | | | | | | | | | | | | | | | | billions of euro | › the gains of €42 million on the disposals of Gratiot and 8 | | | | | Outlaw, two renewable energy projects developed by Tra- | | | | dewind; | | | | | | | | | ||||||||||| ||||||||||||||| ||||||||||||||||||||| | › the contractual indemnity received following the exercise | of the option to withdraw from an electricity supply con- tract by a major industrial customer of Enel Generación | | Chile (€160 million), of which €80 million pertaining to Eligible | | | | | | | | | | % | | | | | | | | | | | ||||||||| 63.9 |||||||||||||| ||||||||||||||||| | S E I T I V I T C A E L B I G I L E L A N O I T I D D A T U P T U O torWerks in 2017 following application of a number of › the €50 million payment under the agreement reached contractual clauses (€98 million); R E S U LT E XC LU D I N G AC T I V I T I E S N OT C OV E R E D BY TA XO N O M Y by e-distribuzione with F2i and 2i Rete Gas for the ear- 16.7% 83.3% ly all-inclusive settlement of the second indemnity con- nected with the sale in 2009 of the interest held in Enel 13.8 billions of euro Rete Gas. Not eligible With regard to revenue, the results of the alignment of this Not covered thermal generation and €80 million to renewable energy; metric with the European taxonomy are reported as previously › the adjustment of the price for the acquisition of eMo- specified in the section “European Union taxonomy”. REVENUE UNDER THE EUROPEAN TAXONOMY | | | ||||||||||||||| | | | ||||||||||| | | ||||||| | | | | | | | | | ||||||||||||||||| | ||||||||||||| ||||||| | | | | || | | | | | | | 3 | 4 | . | | | | | | | | | 65.0 billions of euro | | | | | | | | | | | | | | | | | | | | | | | | 8 | | % | | | | | | | | | | | | | | | | | | | | | | | | 1 3 . 5 ||||||||||| ||||||||||||||| ||||||||||||||||||||| ||||||||| |||||||||||||| % ||||||||||||||||| | | | | | Eligible | | | | | | | | | | | | | | % | | | 7 | | . | 1 5 | | | | | | | | | | | | | | | | S E I T I V I T C A I E L B G I L E L A N O I T I D D A T U P T U O 30.5% 66.6% 2.9% R E S U LT E XC LU D I N G AC T I V I T I E S N OT C OV E R E D BY TA XO N O M Y 72.1% 27.9% 31.4 billions of euro Not eligible Not covered In 2020, 34.8% of revenue was generated by business acti- rently not covered by the European taxonomy regulation, vities that meet climate change mitigation criteria, compa- 72.1% of revenue was eligible. red with 30.2% in 2019. Excluding activities that are cur- | | | | | |||||||||||||||| | ||||||||||||| ||||||| | | | | | | | | | | | | | | | | | | | | | | Costs |||||||||||||| | | 9 . 5 % ||||||||||| | | |||||||| | 10.2 % | | | Millions of euro | | | | | | | | | | | | | | | | | Electricity purchases (1) | | | | | | | | | 10.2 billions of euro | | | | | | | | | | | | | | | | | | | | | | | Consumption of fuel for electricity generation | | | | Fuel for trading and gas for sale to end users (1) | | | | | | | | | | Materials (1) | | | | Personnel expenses | | | | | ||||||||||| ||||||||||||||| ||||||||||||||||||| | Services, leases and rentals Other operating costs (1) Capitalized costs | | | | | | | | | | | | | | | % ||||||||| 0.3 |||||||||||||| |||||||||||||||| 8 | | | | Eligible Total S E I T I V I T C A I E L B G I L E L A N O I T I D D A T U P T U O 56.1% 42.0% 1.9% 2020 2019 Change 16,003 20,682 R E S U LT E XC LU D I N G AC T I V I T I E S N OT C OV E R E D BY TA XO N O M Y 8,322 (5,688) (4,679) 2,634 6,637 88.8% 2,397 4,793 15,676 2,202 9,284 2,366 4,634 16,264 2,693 (2,647) 31 159 (588) (491) 9,2 billions of euro Not eligible (2,385) Not covered (2,355) (30) 47,957 61,890 (13,933) -22.6% -68.3% -28.5% 11.2% 1.3% 3.4% -3.6% -18.2% 1.3% -22.5% (1) The figures for 2019 have been adjusted to take account of the reclassification of contracts to purchase commodities for physical settlement (IFRS 9) under the aggregates: “Electricity, gas and fuel”; “Services and other materials”. | | | | | ||||||||||||||| | | | ||||||||||| | | 16 . 9 % |||||||| | | | | | | | | | | | | | | | | | ||||||||||||||||| | ||||||||||||| ||||||| | | | | | | | | | | | | | | | | | | % | | | | | | | | | | | | | | 9 | . | | 9 | | 3 | | | | | | | | | | | | | | | | | | 37.3% 56.2% 6.5% 119 S E I T I V I T C A I E L B G I L E L A N O I T I D D A T U P T U O | | | | | | | | | | | | | | | | | | | | | 7.5 billions of euro | | | | | | | | | | | | | | | | | 4 | | ||||||||||| | | | | 3 . 2 ||||||||||||||| ||||||||||||||||||||| % | ||||||||| |||||||||||||| ||||||||||||||||| | | | | R E S U LT E XC LU D I N G AC T I V I T I E S N OT C OV E R E D BY TA XO N O M Y 70.2% 29.8% 4.2 billions of euro Eligible Not eligible Not covered Integrated Annual Report 2020 | | | | ||||||||||||||| | | | ||||||||||| | | 2 3 . 3 % ||||||| | | | | | | | | | | | | | ||||||||||||||||| | ||||||||||||| | | | | || ||||||| | | | | | | | | | | | | | | | | | | | | | | | | | | 17.9 billions of euro | | | | | | | | | | | | | | 1 | | 2 | . | | | | | | | | | | | | | | | | | | | | | | 8 | | | % ||||||||||| | | | | ||||||||||||||| ||||||||||||||||||||| | | | | | | | | | | | | | | | | | | | | | | | % | ||||||||| | | | | |||||||||||||| 63.9 ||||||||||||||||| | | | | | | ||||||||||||||| | | | ||||||||||| | | ||||||| | | | | | | | | ||||||||||||||||| | ||||||||||||| | | | | || ||||||| | | | | | | 3 | | | 4 | . | | | | | | | | | | | | | | | | | % | | 7 | . | | 1 | | 5 | | | | | | | | | | | | | | | | | | | | | | | | | 65.0 billions of euro | 1 3 . 5 ||||||||||| | | | | ||||||||||||||| ||||||||||||||||||||| | | 8 | | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||| % |||||||||||||| ||||||||||||||||| | | | | 37.9% 60.9% 1.2% R E S U LT E XC LU D I N G AC T I V I T I E S N OT C OV E R E D BY TA XO N O M Y 83.3% 16.7% 13.8 billions of euro Eligible Not eligible Not covered 30.5% 66.6% 2.9% R E S U LT E XC LU D I N G AC T I V I T I E S N OT C OV E R E D BY TA XO N O M Y 72.1% 27.9% 31.4 billions of euro Eligible Not eligible Not covered S E I T I V I T C A E L B I G I L E L A N O I T I D D A T U P T U O S E I T I V I T C A E L B I G I L E L A N O I T I D D A T U P T U O S E I T I V I T C A E I L B G I L E L A N O I T I D D A T U P T U O 56.1% 42.0% 1.9% R E S U LT E XC LU D I N G AC T I V I T I E S N OT C OV E R E D BY TA XO N O M Y With regard to ordinary operating expenditure, the results 11.2% of the alignment of this metric with the European taxonomy are reported as previously specified in the section “Europe- 88.8% an Union taxonomy”. Not eligible Not covered 9,2 billions of euro | | | | | | |||||||||||||| | | 9 . 5 % ||||||||||| | | |||||||| | 10.2 % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||| | ||||||||||||| ||||||| | | | | | | | | | | | | | | | | | 10.2 billions of euro | | | | | | | | | | | | | | | | | | | | | | | | The decrease in costs is mainly attributable to a reduction | in the provisioning of commodities in relation to reduced | demand as a result of COVID-19. | | For further details on operating costs, see the notes to the | | | | | | | | | | | ||||||||||| ||||||||||||||| ||||||||||||||||||| | | | | | | | | | | | | | | | % ||||||||| 0.3 |||||||||||||| |||||||||||||||| 8 | | | Eligible consolidated financial statements. ORDINARY OPERATING EXPENDITURE UNDER THE EUROPEAN TAXONOMY (ORDINARY OPEX) | | | | | | ||||||||||||||| | | | ||||||||||| | | 16 . 9 % |||||||| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 7.5 billions of euro | | | | | | | | | 4 | | . 2 | | | 3 ||||||||||| ||||||||||||||| ||||||||||||||||||||| % | | | | | ||||||||||||||||| | ||||||||||||| ||||||| | | | | | | | | | | | | | | | | . | | | | | | | | | | | | | | | | | | | | | | ||||||||| |||||||||||||| ||||||||||||||||| | | | | | | | | % | | | 9 | | 9 3 | | | | | | | | | | Eligible S E I T I V I T C A I E L B G I L E L A N O I T I D D A T U P T U O 37.3% 56.2% 6.5% R E S U LT E XC LU D I N G AC T I V I T I E S N OT C OV E R E D BY TA XO N O M Y 70.2% 29.8% 4.2 billions of euro Not eligible Not covered In 2020, 39.9% of ordinary operating expenditure was ge- nerated by business activities that meet climate change mitigation criteria, compared with 39.6% in 2019. Excluding Net expense from commodity derivatives activities that are currently not covered by the European Net expense from commodity derivatives in 2020 connected taxonomy regulation, 70.2% of ordinary operating expen- with trading activities that do not involve physical delivery of diture was eligible. the underlying products decreased by €521 million compa- red with the previous year, due mainly to fluctuations in mar- ket prices. 120120 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements Gross operating profit The table below presents gross operating profit by Busi- ness Line: Millions of euro Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other, eliminations and adjustments Total 2019 (1) Change 2020 1,700 4,647 7,433 3,121 152 (47) (190) 1,364 4,588 8,278 3,334 158 126 (144) 16,816 17,704 336 59 (845) (213) (6) (173) (46) (888) 24.6% 1.3% -10.2% -6.4% -3.8% - -31.9% -5.0% (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in South America and Mexico amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. Generally speaking, the reduction in the gross operating city demand, particularly on the free markets in Italy and profit reflects the effects of COVID-19 and unfavorable Spain, above all in the business-to-business segments. exchange rate developments, especially in Latin America, These negative effects were partially offset by lower costs and is mainly attributable to: for commodity provisioning and the effect of the indem- › Infrastructure and Networks in the amount of €845 mil- nity received by Edesur in 2019 (€24 million); lion, reflecting: › Enel X (-€6 million), where improvements in operations – the lower volumes distributed particularly in Latin Ame- were, despite the effects of the pandemic, more than rica, essentially in Brazil, Chile and Peru, because of the offset by the effect of the recognition in 2019 of an in- impact the COVID-19 health emergency has had on demnity in the amount of €98 million in application of demand. This decline was compounded by adverse contractual clauses related to the sale of eMotorWerks; exchange rate developments in 2020 (€402 million), › Services (-€173 million) due, above all, to non-recurring particularly in Brazil; costs associated with the COVID-19 health emergency – the recognition of provisions for early-retirement in- (€46 million) and costs related to early-retirement incen- centives in Spain following the changes introduced in tives and restructuring plans for the energy transition. the agreement on the voluntary suspension or resolu- tion of employment contracts (€315 million); These decreases were partially offset by increases achie- – the lower quantities transported, together with appli- ved by the generation Business Lines. cation of the new rates in Spain, which went into effect More specifically: for 2020-2025; › in Thermal Generation and Trading, the positive effects – the positive effects recognized in 2019 as a result of came from: the Edesur settlement agreement (€209 million) and – the change in the benefit for the electricity discount the indemnity for the sale of Enel Rete Gas (€50 mil- net of the provision for early-retirement incentives in lion), as described above. Spain (€165 million); These factors were only partially offset by: – the reduction in provisioning costs and the improve- – the modification of the electricity discount benefit in ments in operating efficiency in Italy and Spain. Spain (€269 million) following the signing of the 5th These positive effects were partially offset by: Endesa Collective Bargaining Agreement, which led to – increased charges (€204 million) related to the Group’s the partial reversal of the provision; restructuring plans as part of the energy transition, – an increase of €158 million in income in Italy resulting particularly related to coal-fired plants in Spain; from application of ARERA Resolutions nos. 50/2018 – the reduction in the gross operating profit in Russia due and 461/2020 for the reimbursement of system char- to the sale of the Reftinskaya plant in October 2019; ges and network fees; – the €79 million increase in tax expense in Spain due › End-user Markets (-€213 million) as a result of the negati- to the temporary suspension, solely for 2019, of the ve impact of the COVID-19 health emergency on electri- electricity generation tax and the tax on fuels for nu- 121 Integrated Annual Report 2020clear and conventional thermal generation (Royal De- new wind farms, which generated an increase in inco- cree Law 15/2018), as well as to the introduction of a me from tax partnerships (€137 million), in addition to new “eco-tax” in Catalonia in July 2020; increased income from indemnities and disputes (€31 – the recognition, in the 1st Quarter of 2019, of the inco- million) and the gain on the disposal of the Haystack me related to the indemnity of €80 million in Chile and wind farm (€45 million); the sale of Mercure Srl in Italy (€94 million, equal to the – the improved profit in Europe due, above all, to new capital gain noted above net of the related charges to wind farms in Greece entering service. reclaim the industrial site); – the unfavorable exchange rate developments in Latin These positive effects were partially offset by the effect America in the amount of €82 million; of the recognition in 2019 of income from the indemnity › in Enel Green Power due to: for early withdrawal from an electricity supply contract in – the improvement in the gross operating profit in Italy Chile (€80 million), lower profits in Brazil due to the sale (€71 million), mainly attributable to the improved per- of a number of wind farms in 2019, as well as unfavo- formance of hydroelectric plants; rable exchange rate developments, and the recognition, – the increase in the profit in Iberia (€76 million) due to in 2019, of negative goodwill (€181 million) following the the increased quantities produced and sold following, purchase by Enel North America (formerly Enel Green in part, an expansion of wind capacity; Power North America - EGPNA) of a number of compa- – the increased profit in the United States and Canada nies sold by Enel Green Power North America Renewable (€35 million) resulting from the entry into service of Energy Partners LLC (EGPNA REP) and Tradewind Energy. Ordinary gross operating profit Millions of euro 2020 Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other, eliminations and adjustments Total Gross operating profit/(loss) 1,700 4,647 7,433 3,121 152 (47) (190) 16,816 Write-downs of inventories and other charges in respect of coal- fired plants Restructuring plans for the decarbonization and digitalization process 218 - - - 299 50 231 65 Other impairment losses COVID-19 costs - 13 14 10 - 50 - 11 - 7 - 2 Ordinary gross operating profit 2,230 4,721 7,714 3,197 161 - 95 - 46 94 - 218 12 759 - 1 14 133 (177) 17,940 122122 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsMillions of euro 2019 Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other, eliminations and adjustments Total Gross operating profit (1) 1,364 4,588 8,278 3,334 158 126 (144) 17,704 Indemnity resulting from the sale of the equity interest in Enel Rete Gas Adjustment to the price to purchase a number of Greek companies Write-down of fuel and replacement- parts inventories at a number of coal plants in Italy and Spain Impairment loss on the Reftinskaya coal plant Sale of the equity interest in Mercure Srl - - 308 7 (94) - 30 - - - (50) - - - - - - - - - - - - - - - - - - - - - - - - (50) 30 308 7 (94) Ordinary gross operating profit (1) 1,585 4,618 8,228 3,334 158 126 (144) 17,905 (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in South America and Mexico amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. With regard to the ordinary gross operating profit (EBITDA), pean taxonomy are reported as previously specified in the the results of the alignment of this metric with the Euro- section “European Union taxonomy”. ORDINARY GROSS OPERATING PROFIT (ORDINARY EBITDA) UNDER THE EUROPEAN TAXONOMY | | | | ||||||||||||||| | | | 2 3 . 3 % ||||||||||| | | ||||||| | | | | | | | | | | | 1 | | 2 | | | | | | | | | | | | | | | | | . | | | | | | | | 8 | | | % 17.9 billions of euro | | | | | | | | | | | | | | ||||||||||| ||||||||||||||| ||||||||||||||||||||| | | | | | | | ||||||||||||||||| | ||||||||||||| ||||||| | | | | || | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | | | | | | | | | | | | | ||||||||| 63.9 |||||||||||||| ||||||||||||||||| | | | | Eligible S E I T I V I T C A I E L B G I L E L A N O I T I D D A T U P T U O 37.9% 60.9% 1.2% R E S U LT E XC LU D I N G AC T I V I T I E S N OT C OV E R E D BY TA XO N O M Y 83.3% 16.7% 13.8 billions of euro Not eligible Not covered In 2020, 63.9% of the ordinary gross operating profit was activities that are currently not covered by the European generated by business activities that meet climate change taxonomy regulation, 83.3% of the ordinary gross operating mitigation criteria, compared with 64.4% in 2019. Excluding profit was eligible. | | | | | | | | | | | | | | 3 | | | | | 8 | | | | | | | | || % | | | | | | | | | | | | | | | | | 4 | . | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | billions of euro | | | | | | | | | | | | | | | | | | | % | | | 7 | | . | 1 5 65.0 1 3 . 5 ||||||||||| ||||||||||||||| ||||||||| |||||||||||||| % ||||||||||||||||| ||||||||||||||| | | | ||||||||||| | | ||||||| | | | | | | ||||||||||||||||| | ||||||||||||| ||||||| 30.5% 66.6% 2.9% R E S U LT E XC LU D I N G AC T I V I T I E S N OT C OV E R E D BY TA XO N O M Y 123 27.9% S E I T I V I T C A I E L B G I L E L A N O I T I D D A T U P T U O S E I T I V I T C A E L B I G I L E L A N O I T I D D A T U P T U O S E I T I V I T C A E L B I G I L E L A N O I T I D D A T U P T U O | | | | | | | | | | | | ||||||||||||||||||||| | | | | | | 72.1% Eligible Not eligible Not covered 31.4 billions of euro 56.1% 42.0% 1.9% | | | | | | |||||||||||||| | | ||||||||||| | | 9 . 5 % |||||||| | 10.2 % | | | | | | | | | | | | | |||||||||||||||| | ||||||||||||| | | | | | | | ||||||| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10.2 billions of euro | | | | | | | | | | | | | | | | | | | | | | | | | % | | | | 0.3 | ||||||||| |||||||||||||| |||||||||||||||| 8 | | | | | | | | | | | | ||||||||||| | | | | ||||||||||||||| ||||||||||||||||||| | | | ||||||||||||||| | | | ||||||||||| | | | | | | | | ||||||||||||||||| | ||||||||||||| | | | | | ||||||| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||| | 16 . 9 % | | | | | | | | | | 7.5 billions of euro | | | | | | | | | | | | | | | | | 4 | | ||||||||||| | | | | 3 . 2 ||||||||||||||| ||||||||||||||||||||| % | ||||||||| |||||||||||||| ||||||||||||||||| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % | | | 9 | . | | 9 | | 3 | | | | | | | | R E S U LT E XC LU D I N G AC T I V I T I E S N OT C OV E R E D BY TA XO N O M Y 88.8% 11.2% 9,2 billions of euro Eligible Not eligible Not covered 37.3% 56.2% 6.5% R E S U LT E XC LU D I N G AC T I V I T I E S N OT C OV E R E D BY TA XO N O M Y 70.2% 29.8% 4.2 billions of euro Eligible Not eligible Not covered Integrated Annual Report 2020 Operating profit Millions of euro Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other, eliminations and adjustments Total 2020 15 2,734 4,262 1,817 (16) (226) (218) 8,368 2019 (1) (3,525) 3,260 5,277 2,210 (98) (75) (171) 6,878 Change 3,540 (526) (1,015) (393) 82 (151) (47) 1,490 - -16.1% -19.2% -17.8% -83.7% - -27.5% 21.7% (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in South America and Mexico amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. Operating profit for 2020 increased by €1,490 million ta- nization of generation processes (€737 million); king account of a decrease of €2,378 million in deprecia- › the impairment losses on coal-fired plants in Italy in the tion, amortization and impairment losses. In addition to the amount of €135 million, including Unit 2 of the Brindisi factors discussed with regard to the gross operating profit, power plant; this increase was due mainly to the decrease of €407 mil- › the impairment losses on the Mexico, Argentina and Au- lion in depreciation and amortization and the impairment stralia CGUs in the total amount of €750 million; losses recognized in 2019 for a number of coal plants in › other impairment losses of €159 million, the most signi- Italy, Spain, Chile and Russia for a total of €4,010 million. ficant of which regarded the solar panel manufacturing More specifically: plants of Enel Green Power Italia (€65 million) and the › in Chile, an impairment loss of €356 million was recogni- Snyder plant in the United States (€47 million); zed for two plants following an agreement with the Chile- › an increase of €141 million in impairment losses on recei- an government on their early decommissioning; vables, mainly due to the deterioration in the collection › in Russia, as a result of an agreement for the sale of the status of receivables in the wake of the COVID-10 emer- Reftinskaya coal plant, its carrying amount was adjusted gency. to take account of the sale price (€127 million); › in Spain, the worsening of the marketplace in relation to the trend in commodities prices and to the functioning of the CO2 emissions market in the 3rd Quarter of 2019 compromised the competitiveness of the coal plants in the country. In Italy, in addition to a deterioration in mar- ket conditions, the implementation of the new system for remunerating generation capacity availability (the capa- city market) narrowed the future scope for using plan- ts with higher levels of CO2 emissions, providing for the exclusion of coal-fired plants from the electricity market. For these reasons, the carrying amount of a number of coal-fired plants in Italy and Spain, including dismantling charges, was impaired by a total of €3,527 million. These effects were partially offset by: › the impairment loss recognized in 2020 on the Bocamina II coal plant in Chile, given the decision by the Enel Group to close the plant early in order to accelerate achieve- ment of the Group’s strategic objective for the decarbo- 124124 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsOrdinary operating profit Millions of euro 2020 Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other, eliminations and adjustments Total Operating profit/(loss) 15 2,734 4,262 1,817 (16) (226) (218) 8,368 Write-down of inventories and other charges in respect of coal- fired plants Restructuring plans for the decarbonization and digitalization process Impairment losses on the Mexico, Australia and Argentina CGUs Other impairment losses COVID-19 costs 1,123 - 299 50 - 6 13 534 132 10 - 231 216 - 50 - 65 - 13 11 - 7 - - 2 Ordinary operating profit/(loss) 1,456 3,460 4,759 1,906 (7) - 95 - - 46 (85) - 1,123 12 759 - - 1 750 151 133 (205) 11,284 Millions of euro 2019 Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other, eliminations and adjustments Operating profit/(loss) (1) (3,525) 3,260 5,277 2,210 (98) (75) (171) Indemnity resulting from the sale of the equity interest in Enel Rete Gas Sale of the equity interest in Mercure Srl Write-downs of fuel and spare-parts inventories at a number of coal plants in Italy and Spain Impairment losses on a number of coal-fired plants in Italy Impairment losses on a number of coal-fired plants in Spain Impairment losses on a number of gas-fired plants in Italy Impairment losses on a number of coal-fired plants in Chile Value adjustment of the Reftinskaya coal-fired plant Impairment losses on a number of renewable energy projects in Italy and North America Value adjustment of the Funac receivable for Enel Distribuição Goiás Impairment losses on a number of intangible assets of Enel X North America Impairment losses on a number of Enel Italia assets Price adjustment for purchase of a number of Greek companies - (94) 308 1,936 1,591 (265) 356 134 - - - - - - - - - - - - - 70 - - - 30 (50) - - - - - - - - 96 - - - - - - - - - - - - - - - - - - - - - - - - - - 77 - - Ordinary operating profit/(loss) (1) 441 3,360 5,323 2,210 (21) - - - - - - - - - - - 29 - (46) Total 6,878 (50) (94) 308 1,936 1,591 (265) 356 134 70 96 77 29 30 - - - - - - - - - - - - - (171) 11,096 (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in South America and Mexico amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. 125 Integrated Annual Report 2020Group profit › the reversal of deferred tax liabilities by EGPNA as an an- cillary effect of the acquisition of a number of companies Group profit in 2020 came to €2,610 million, compared from EGPNA REP. with €2,174 million the previous year. The increase was attributable to the increase in operating These effects were partially offset by: profit commented earlier, partially offset by impairment los- › a reduction in net financial expense connected with inte- ses of the equity interest in Slovenské elektrárne and the rest rates primarily on bonds, mainly due to renegotiation associated receivable due from EP Slovakia BV for the sale at more advantageous interest rates; of the investment, as well as an increase in the tax liability. › a decrease in the impact of non-controlling interests The tax liability increased in 2020 as a result both of the compared with 2019. tax treatment of the above impairment losses and the fol- lowing tax transactions recognized in 2019: Group ordinary profit in 2020 came to €5,197 million › the reversal of deferred taxes by Enel Distribuição São (€4,767 million in 2019), increasing by €430 million compa- Paulo following the merger with Enel Brasil Investimentos red with 2019. The following table provides a reconciliation Sudeste SA (Enel Sudeste) in the amount of €494 million; of Group profit with Group ordinary profit, indicating the › the “revalúo” of a number of generation companies in non-recurring items and their respective impact on perfor- Argentina; mance, net of the associated tax effects and non-control- › the application of the participation exemption mechani- ling interests. sm to the gain on the sale of Mercure Srl; Millions of euro Group profit Impairment losses on certain assets connected with the disposal of Slovenské elektrárne Impairment losses on/write-downs of a number of plants, inventories and other charges in respect of coal-fired plants Impairment losses on the Mexico, Australia and Argentina CGUs Restructuring plans for the decarbonization and digitalization process COVID-19 costs Impairment losses on a number of assets of Enel Italia and Enel Green Power Impairment losses on assets related to a number of wind and hydroelectric projects in North America Other minor impairment losses Impairment losses on the Reftinskaya coal-fired plant Impairment losses on a number of intangible assets of Enel X North America Price adjustment for purchase of a number of Greek companies Indemnity from the sale of e-distribuzione’s equity interest in Enel Rete Gas Sale of the equity interest in Mercure Srl Group ordinary profit (1) (1) Taking account of taxes and non-controlling interests. 2020 2,610 833 598 537 422 86 65 35 11 - - - - - 5,197 2019 2,174 38 2,415 - - - 50 31 38 60 77 30 (49) (97) 4,767 126126 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsIntegrated Annual Report 2020 127 VALUE CREATED AND DISTRIBUTED TO STAKEHOLDERS Millions of euro Economic value generated directly Economic value distributed directly Operating expenses Personnel expenses and benefits Payments to providers of capital Payments to government (2) 2020 65,081 41,702 3,956 7,082 4,245 56,985 8,096 2019 (1) 80,437 56,284 3,748 6,566 4,762 71,360 9,077 Economic value retained (1) The figures for 2019 have been reclassified to improve presentation. (2) The amount represents “total taxes borne”, which is costs for taxes borne by the Group. For more information, see the 2020 Sustainability Report and the Con- solidated Non-Financial Statement. The economic value generated and distributed directly by electricity, which led to a decline in sales volumes and costs Enel provides a helpful indication of how the Group has for materials and services. created wealth for the stakeholders. The retained economic value declined primarily as a result The reduction in the economic value generated directly and of the increase in personnel expenses connected with the in operating expenses reflects the impact of the COVID-19 energy transition and the effects of COVID-19. emergency, mainly in terms of a reduction in demand for 128128 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements ANALYSIS OF THE GROUP’S FINANCIAL POSITION AND FINANCIAL STRUCTURE €87,772 million €45,415 million NET CAPITAL EMPLOYED NET FINANCIAL DEBT €92,113 million at December 31, 2019 +0.5% on December 31, 2019 33% SUSTAINABLE FINANCING as proportion of gross debt of €59,037 million €10,197 million TOTAL CAPITAL EXPENDITURE of which 80% eligible under European taxonomy Analysis of the Group’s financial position Millions of euro Net non-current assets: - property, plant and equipment and intangible assets - goodwill - equity-accounted investments - other net non-current assets/(liabilities) Total net non-current assets Net working capital: - trade receivables - inventories - net receivables due from institutional market operators - other net current assets/(liabilities) - trade payables Total net working capital Gross capital employed Provisions: - employee benefits - provisions for risks and charges and net deferred taxes Total provisions Net assets held for sale Net capital employed Total equity Net financial debt at Dec. 31, 2020 at Dec. 31, 2019 Change 96,489 13,779 861 (6,807) 99,010 14,241 1,682 (5,022) 104,322 109,911 12,046 2,401 (2,755) (6,977) (12,859) (8,144) 96,178 (2,964) (6,050) (9,014) 608 87,772 42,357 45,415 13,083 2,531 (3,775) (7,282) (12,960) (8,403) 101,508 (3,771) (5,722) (9,493) 98 92,113 46,938 45,175 (2,521) (462) (821) (1,785) (5,589) (1,037) (130) 1,020 305 101 259 (5,330) 807 (328) 479 510 (4,341) (4,581) 240 -2.5% -3.2% -48.8% -35.5% -5.1% -7.9% -5.1% 27.0% 4.2% 0.8% 3.1% -5.3% 21.4% -5.7% 5.0% - -4.7% -9.8% 0.5% 129 Integrated Annual Report 2020Property, plant, equipment, and intangible assets decre- of the impairment loss on the equity investment held in Slo- ased as a result of adverse exchange rate developments vak Power Holding (-€385 million) in relation to the change (€5,873 million), mainly in Latin America, and depreciation, in the formula to calculate the sale price called for by con- amortization and impairment losses for the year (€6,906 tract under certain conditions, net of results for the year. million), These factors were partially offset by capital expen- diture during the period (€9,548 million) and changes in the Net assets held for sale refer mainly to a number of projects consolidation scope (€106 million), related mainly to the ac- in South Africa for which there is a binding offer for their quisition by Enel X of a controlling interest in Paytipper and future sale, as well as assets held in Bulgaria, which were the acquisition of a number of companies in the renewable sold in January 2021, and the equity-accounted investment energy segment in Spain and Italy. These effects were com- in OpEn Fiber. pounded by the value adjustment of assets in Argentina due to hyperinflation. Net capital employed came to €87,772 million at December Goodwill decreased following the impairment loss recogni- 31, 2020 and was funded by equity attributable to owners zed in Argentina in the amount of €253 million and unfavo- of the Parent and non-controlling interests in the amount rable exchange rate developments, particularly in Brazil, in of €42,357 million and net financial debt of €45,415 million. the amount of €178 million. The debt-to-equity ratio at December 31, 2020, was 1.07 (compared with 0.96 at December 31, 2019). Equity-accounted investments decreased mainly as a result 130130 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsAnalysis of the Group’s financial structure Net financial debt The following schedule shows the composition of and changes in net financial debt. Millions of euro Long-term debt: - bank borrowings - bonds - other borrowings Long-term debt Long-term financial assets and securities Net long-term debt Short-term debt Bank borrowings: - current portion of long-term bank borrowings - other short-term bank borrowings Short-term bank borrowings Bonds (current portion) Other borrowings (current portion) Commercial paper Cash collateral on derivatives and other financing Other short-term financial borrowings (1) Other short-term debt Long-term loan assets (short-term portion) Loan assets - cash collateral Other short-term financial assets Cash and cash equivalents with banks and short-term securities Cash and cash equivalents and short-term financial assets Net short-term debt NET FINANCIAL DEBT Net financial debt of “Assets held for sale” at Dec. 31, 2020 at Dec. 31, 2019 Change 8,663 38,357 2,499 49,519 (2,745) 46,774 1,369 711 2,080 1,412 387 4,854 370 415 7,438 (1,428) (3,223) (253) (5,973) (10,877) (1,359) 45,415 646 8,407 43,294 2,473 54,174 (3,185) 50,989 1,121 579 1,700 1,906 382 2,284 750 351 5,673 (1,585) (2,153) (369) (9,080) (13,187) (5,814) 45,175 - 256 (4,937) 26 (4,655) 440 (4,215) 248 132 380 (494) 5 2,570 (380) 64 1,765 157 (1,070) 116 3,107 2,310 4,455 240 646 3.0% -11.4% 1.1% -8.6% 13.8% -8.3% 22.1% 22.8% 22.4% -25.9% 1.3% - -50.7% 18.2% 31.1% 9.9% -49.7% 31.4% 34.2% 17.5% -76.6% 0.5% - (1) Includes current financial borrowings included under “Other current financial liabilities”. Net financial debt, in the amount of €45,415 million at Cash flows from operating activities (€11,508 million), the December 31, 2020, increased by €240 million over De- issue of perpetual hybrid bonds (€592 million, net of tran- cember 31, 2019. The decline in gross financial debt was saction costs), the conversion of hybrid bonds into perpe- more than offset by the decline in cash and financial as- tual hybrid bonds (€1,794 million, net of transaction costs) sets. More specifically, this was due mainly to the following and the impact of favorable exchange rate developments factors: (i) investment needs for the year (€10,197 million), on debt denominated in foreign currencies partially offset including contract assets; (ii) the payment of dividends to- cash needs related to the factors listed above. taling €4,742 million; and (iii) extraordinary transactions in non-controlling interests to acquire additional stakes in Gross financial debt as at December 31, 2020, came to Enel Américas and Enel Chile (€1,065 million). €59,037 million, down €2,510 million from the previous year. 131 Integrated Annual Report 2020GROSS FINANCIAL DEBT Millions of euro Gross financial debt of which: - sustainable financing at Dec. 31, 2020 at Dec. 31, 2019 Gross long- term debt Gross short- term debt Gross debt Gross long- term debt Gross short- term debt Gross debt 52,687 6,350 59,037 57,583 3,964 61,547 15,748 3,901 19,649 13,758 - 13,758 Sustainable financing/Total gross debt (%) 33% 22% More specifically, gross long-term financial debt (including Gross short-term financial debt increased by €2,386 mil- the current portion) amounted to €52,687 million, of which lion compared with December 31, 2019, to €6,350 million €15,748 million in sustainable financing, and breaks down and mainly includes commercial paper in the amount of as follows: €4,854 million, of which €3,901 million linked to sustainabi- › bonds in the amount of €39,769 million, of which €7,710 lity goals issued by Enel Finance International and Endesa. million related to sustainable bonds, a decrease of €5,431 million compared with December 31, 2019. The new bond Cash and cash equivalents and short-term financial assets issues, including a bond of £500 million (equivalent to amounted to €13,622 million, a decrease of €2,750 million €557 million) linked to sustainability objectives issued by compared with the end of 2019, due mainly to the decrea- Enel Finance International in October 2020, were easily se in cash and cash equivalents with banks and short-term offset by redemptions, positive exchange rate develop- securities totaling €3,107 million. ments and the accounting effects of the consent solici- tation directed at the holders of three non-convertible subordinated hybrid bonds denominated in euros in or- der to align their features with those of new issues, for a total amount of €1,797 million. More specifically, the main change to those instruments regarded their maturity, which was transformed from fixed to perpetual, which means that they will be redeemed only in the event of liquidation. As a result, those bonds are no longer reco- gnized as debt instruments but as equity instruments; › bank borrowings in the amount of €10,032 million, of whi- ch €8,038 million related to sustainable financing. These borrowings increased by €504 million compared with the previous year due mainly to the use of new financing, only partially offset by exchange gains and repayments during the year. New bank borrowings include: – €1,000 million in respect of the use of a floating-rate loan granted to Enel SpA linked to sustainability goals; – €300 million in respect of a floating-rate loans granted to Endesa linked to sustainability goals; – $340 million (equivalent to €277 million) in respect of the use of a floating-rate loan granted to Enel Finance America linked to sustainability goals; – €250 million in respect of the use of a floating-rate loan granted to e-distribuzione by the European In- vestment Bank linked to sustainability goals; › other borrowings in the amount of €2,886 million, essen- tially unchanged from the previous year. 132132 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsCash flows Millions of euro Cash and cash equivalents at the beginning of the year (1) Cash flows from operating activities Cash flows used in investing activities Cash flows from/(used in) financing activities Effect of exchange differences on cash and cash equivalents Cash and cash equivalents at the end of the year (2) 2020 9,080 11,508 (10,117) (3,972) (497) 6,002 2019 6,714 11,251 (9,115) 306 (76) 9,080 Change 2,366 257 (1,002) (4,278) (421) (3,078) (1) Of which, cash and cash equivalents in the amount of €9,029 million at January 1, 2020 (€6,630 million at January 1, 2019), short-term securities in the amount of €51 million at January 1, 2020 (€63 million at January 1, 2019), and cash and cash equivalents pertaining to assets held for sale in the amount of €21 million at January 1, 2019. (2) Of which, cash and cash equivalents in the amount of €5,906 million at December 31, 2020 (€9,029 million at December 31, 2019), short-term securities in the amount of €67 million at December 31, 2020 (€51 million at December 31, 2019), and cash and cash equivalents pertaining to assets held for sale in the amount of €29 million at December 31, 2020. Cash flows from operating activities for 2020 were a po- aggregate referred mainly to the sale of 100% of three solar sitive €11,508 million, up €257 million on the previous year plants in Brazil; the sale of the business unit comprising the due mainly to a decrease in financial expense paid, lower Mercure biomass plant; and the disposal by EGPNA (now taxes paid and a decrease in the use of provisions for risks Enel North America) of 30% of its stake in the EGPNA REP and charges, which offset the change in the gross opera- joint venture, which held a number of wind energy project ting profit and the increase in cash requirements con- development companies. nected with the change in net working capital. Cash flows used in other investing activities in 2020 amoun- Cash flows used in investing activities for 2020 amounted ted to €41 million, essentially regarding the capital contri- to €10,117 million, while they amounted to €9,115 million in bution to the joint venture OpEn Fiber, partially offset by 2019. minor divestments, mainly in Italy, Iberia and Latin America. Investments in property, plant and equipment, intangible assets, investment property and contract assets totaled Cash flows used in financing activities amounted to €3,972 €10,197 million, an increase compared with the previous million, compared with cash flows from financing activities year. For more details, please see the following section. of €306 million in 2019. Cash flows for 2020 essentially Investments in entities (or business units) less cash and reflected: cash equivalents acquired amounted to €33 million and › the payment of dividends in the amount of €4,742 million; mainly included the acquisition of 100% of Parque Eólico › transactions in non-controlling interests in the amount Tico SLU, Tico Solar 1 SLU and Tico Solar 2 SLU by Enel Gre- of €1,067 million, mainly related to increasing the sta- en Power España and the acquisition of 100% of Sugge- kes held in Enel Américas and Enel Chile (€1,065 million) stion Power Unipessoal Lda by Endesa Generación Portu- through a number of share swaps entered into with a le- gal. In 2019, this aggregate mainly included the acquisition, ading financial institution; by EGPNA (now Enel North America), of 100% of seven re- › an increase as the net effect of repayments and new bor- newable energy plants from EGPNA REP, a 50/50 joint ven- rowing and other changes in financial debt in the amount ture between EGPNA and General Electric Capital’s Energy of €1,262 million; Financial Services. › the generation of liquidity in the amount of €588 million Disposals of entities and business units, net of cash and with the issue of a non-convertible subordinated perpe- cash equivalents sold, generated cash flows of €154 mil- tual hybrid bond, net of transaction costs associated with lion and mainly regarded the sale by Enel North America of the issue and the transaction costs connected with the a number of companies that owned hydroelectric plants conversion of a number of bonds into perpetual hybrid and were measured using the equity method; the sale by bonds. Endesa of 80% of its stake in Endesa Soluciones; the sale of a number of storage facilities in North America; and the In 2020, cash flows from operating activities in the amount collection of a receivable related to the sale last year of the of €11,508 million were sufficient to meet only a part of the Reftinskaya coal-fired plant in Russia (net of the payment funding needs for investment activities in the amount of of a residual VAT liability related to the sale). In 2019, this €10,117 million and financing activities in the amount of 133 Integrated Annual Report 2020€3,972 million. The difference was reflected in a decrease in adverse developments in the exchange rates of the various cash and cash equivalents, which amounted to €6,002 mil- local currencies with respect to the euro in the amount of lion at December 31, 2020, compared with €9,080 million €497 million. at the end of 2019. This change also reflects the impact of Capital expenditure Millions of euro Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other, eliminations and adjustments Total 2020 694 4,629 3,937 460 303 103 71 2019 851 4,293 (1) 3,905 449 270 134 45 10,197 9,947 Change (157) 336 32 11 33 (31) 26 250 -18.4% 7.8% 0.8% 2.4% 12.2% -23.1% 57.8% 2.5% (1) The figure does not include €4 million regarding units classified as “held for sale”. Capital expenditure increased by €250 million on the pre- relation to the e-Bus project in Colombia and in Italy due vious year. In line with the Paris Agreement on the reduction of CO2 emissions, and guided by our energy efficiency and energy to increased investment in public lighting and the develop- ment of the e-Home and Vivi Meglio businesses. These ef- fects were partially offset by decreased capital expenditure transition objectives, the Enel Group has invested primarily on storage distributed energy and demand response in the in renewable energy. More specifically, the increase mainly United States and on the e-Home business in Spain, due involved Chile (€447 million), the United States (€447 mil- mainly to a change in business model and to a slowing of lion), South Africa (€143 million), Russia (€74 million), India capital expenditure in response to COVID-19. (€47 million), Italy (€43 million) and Brazil (€20 million, net of Investment in thermal generation plants and trading de- the significant adverse impact of exchange rate develop- creased, especially in Iberia (€57 million) and Latin America ments in the amount of €241 million). These increases were (€73 million). only partially offset by a decrease in investment in Iberia (€305 million), Mexico (€334 million), Canada (€84 million), With regard to capital expenditure, the results of the align- Greece (€98 million), and Australia (€25 million). ment of this metric with the European taxonomy are repor- In order to enhance grid resilience in response to increasin- ted as previously specified in the section “European Union gly volatile weather events, investment in electricity distri- taxonomy”. bution also increased. Investment in distribution increased in Italy (€213 million) for quality and remote control projects and in Romania (€13 million) for efforts related to service quality and new connections. These increases were primarily offset by re- ductions in capital expenditure in South America (€179 mil- lion, especially in Argentina, Colombia and Brazil, with the latter primarily reflecting adverse exchange rate develop- ments) and in Spain. Capital expenditure on electronic me- ters decreased due to a slowdown in the mass replacement effort as a result of the pandemic. Capital expenditure by Enel X increased in Latin America in 134134 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements37.9% 60.9% 1.2% R E S U LT E XC LU D I N G AC T I V I T I E S N OT C OV E R E D BY TA XO N O M Y 83.3% 16.7% 13.8 billions of euro Eligible Not eligible Not covered | | | | ||||||||||||||| | | | ||||||||||| | | 2 3 . 3 % ||||||| | | | | | | | | | | | | | ||||||||||||||||| | ||||||||||||| | | | | || ||||||| | | | | | | | | | | | | | | | | | | | | | | | | | | 17.9 billions of euro | | | | | | | | | | | | | | 1 | | 2 | . | | | | | | | | | | | | | | | | | | | | | | 8 | | | % ||||||||||| | | | | ||||||||||||||| ||||||||||||||||||||| | | | | | | | | | | | | | | | | | | | | | | | % | ||||||||| | | | | |||||||||||||| 63.9 ||||||||||||||||| | | | | | | ||||||||||||||| | | | ||||||||||| | | ||||||| | | | | | | | | ||||||||||||||||| | ||||||||||||| | | | | || ||||||| | | | | | | 3 | | | 4 | . | 65.0 | | | | | | | | | | | | | | | | | | 8 | | % | | | | | | | S E I T I V I T C A E L B I G I L E L A N O I T I D D A T U P T U O S E I T I V I T C A E L B I G I L E L A N O I T I D D A T U P T U O 30.5% 66.6% 2.9% R E S U LT E XC LU D I N G AC T I V I T I E S N OT C OV E R E D BY TA XO N O M Y 72.1% 27.9% 31.4 billions of euro Not eligible Not covered S E I T I V I T C A I E L B G I L E L A N O I T I D D A T U P T U O 56.1% 42.0% 1.9% R E S U LT E XC LU D I N G AC T I V I T I E S N OT C OV E R E D BY TA XO N O M Y 88.8% 11.2% 9,2 billions of euro Not eligible Not covered % ||||||||| 0.3 |||||||||||||| |||||||||||||||| 8 |||||||||||||| | | 9 . 5 % ||||||||||| | | |||||||| | 10.2 % 1 3 . 5 ||||||||||| ||||||||||||||| ||||||||||||||||||||| | | | | |||||||||||||||| | ||||||||||||| ||||||| ||||||||||| ||||||||||||||| ||||||||||||||||||| ||||||||| |||||||||||||| % ||||||||||||||||| | | | | | | | | | | | | | | | | % | | 7 | . | | | 1 5 | | | | | | | | | | | | | | | | 10.2 | | | | | | | | | | | | | | | | | billions of euro billions of euro | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Eligible Eligible | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ELIGIBLE CAPITAL EXPENDITURE UNDER THE EUROPEAN TAXONOMY (CAPEX) In 2020, 80.3% of capital expenditure was generated by bu- are currently not covered by the European taxonomy regu- siness activities that meet climate change mitigation crite- lation, 88.8% of capital expenditure was eligible. ria, compared with 76.8% in 2019. Excluding activities that 37.3% 56.2% 6.5% S E I T I V I T C A I E L B G I L E | | | | | | ||||||||||||||| | | | ||||||||||| | | 16 . 9 % |||||||| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 7.5 billions of euro | | | | | | | | | 4 | | . 2 | | | 3 ||||||||||| ||||||||||||||| ||||||||||||||||||||| % | | | | | ||||||||||||||||| | ||||||||||||| ||||||| | | | | | | | | | | | | | | | | . | | | | | | | | | | | | | | | | | | | | | | ||||||||| |||||||||||||| ||||||||||||||||| | | | | | | | | % | | | 9 | | 9 3 | | | | | | | | | | Eligible L A N O I T I D D A T U P T U O R E S U LT E XC LU D I N G AC T I V I T I E S N OT C OV E R E D BY TA XO N O M Y 70.2% 29.8% 4.2 billions of euro Not eligible Not covered 135 Integrated Annual Report 2020 RESULTS BY BUSINESS LINE The following chart outlines these organizational arrangemen- ts. The organizational model, which continues to be based on ma- trix of divisions, provides for the integration of the various com- panies in the Enel Green Power Business Line into the various divisions by geographical segment, including the functional as- The representation of performance by Business Line presented signment of large hydro operations, which formally remain at- here is based on the approach used by management in moni- tributed to the thermal generation companies, and a definition toring Group performance for the two years under review, ta- of the geographical segments (Italy, Iberia, Europe, Latin Ame- king account of the operational model adopted by the Group rica, North America, Africa, Asia and Oceania, Central/Holding). as described above. In addition, the business structure is arranged as follows: Ther- With regard to disclosures for operating segments, as mana- mal Generation and Trading, Enel Green Power, Infrastructure gement reports on performance by business area, the Group and Networks, End-user Markets, Enel X, Services and Holding/ has therefore adopted the following reporting sectors: Other. › primary segment: Business Line; In order to improve the presentation of the performance of the › secondary segment: geographical segment. various Business Lines, as from March 31, 2020 the data per- The Business Line is therefore the main discriminant in the taining to large customers managed by the generation com- analyses performed and decisions taken by the management panies in South America and Mexico have been reallocated to of the Enel Group, and is fully consistent with the internal re- the End-user Markets Business Line. Consequently, in order to porting prepared for these purposes since the results are me- ensure full comparability of the figures for the two years under asured and evaluated first and foremost for each Business Line review, the comparative figures for 2019 have been adjusted and only thereafter are they broken down by country. appropriately. Holding Global Business Lines Local Business Thermal Generation Trading Enel Green Power Infrastructure and Networks Enel X End-user Markets Services Regions and Countries Italy Iberia Europe Africa, Asia and Oceania North America Latin America 136136 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsResults by Business Line for 2020 and 2019 RESULTS FOR 2020 (1) Millions of euro Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other, eliminations and adjustments Total Revenue from third parties 19,350 7,409 17,824 17,647 970 1,803 (18) 64,985 Revenue from transactions with other segments 1,454 283 1,518 11,861 151 67 (15,334) - Total revenue 20,804 7,692 19,342 29,508 1,121 1,870 (15,352) 64,985 Net income/(expense) from commodity derivatives (534) 68 - 264 Gross operating profit/(loss) 1,700 4,647 7,433 3,121 Depreciation, amortization and impairment losses Operating profit/(loss) Capital expenditure 1,685 15 694 1,913 2,734 4,629 3,171 4,262 3,937 1,304 1,817 460 - 152 168 (16) 303 (6) (47) 179 (226) 103 (4) (212) (190) 16,816 28 8,448 (218) 8,368 71 10,197 (1) Segment revenue includes both revenue from third parties and revenue from transactions with other segments. An analogous approach was taken for other income and costs for the year. RESULTS FOR 2019 (1) (2) Millions of euro Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other, eliminations and adjustments Total Revenue from third parties 30,480 7,344 20,092 19,537 967 1,901 6 80,327 Revenue from transactions with other segments Total revenue Net income/(expense) from commodity derivatives 1,532 32,012 373 7,717 1,697 13,062 163 80 (16,907) - 21,789 32,599 1,130 1,981 (16,901) 80,327 (676) 14 - (71) Gross operating profit 1,364 4,588 8,278 3,334 Depreciation, amortization and impairment losses Operating profit/(loss) Capital expenditure 4,889 1,328 (3,525) 3,260 851 4,293 (3) 3,001 5,277 3,905 1,124 2,210 449 - 158 256 (98) 270 - 126 201 (75) 134 - (733) (144) 17,704 27 10,826 (171) 6,878 45 9,947 (1) Segment revenue includes both revenue from third parties and revenue from transactions with other segments. An analogous approach was taken for other income and costs for the year. (2) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in South America and Mexico the data for large customers managed by the generation companies have been reallocated to the End-user Market Business Line. (3) Does not include €4 million regarding units classified as “held for sale”. In addition to the above, the Group also monitors perfor- goal of providing a view of performance not only by Busi- mance by Region/Country. In the table below, gross opera- ness Line but also by Region/Country. ting profit is shown for the two years under review with the 137 Integrated Annual Report 2020GROSS OPERATING PROFIT (1) Millions of euro Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other Total 2020 2019 Change 2020 2019 Change 2020 2019 Change 2020 2019 Change 2020 2019 Change 2020 2019 Change 2020 2019 Change 2020 2019 Change Italy 221 (14) 235 1,311 1,240 71 3,824 3,906 (82) 2,362 2,314 48 68 169 (101) 7,824 7,628 196 Iberia 1,039 590 449 434 358 76 1,890 2,025 (135) 467 715 (248) (94) 66 (160) 3,775 3,792 (17) Latin America 309 609 (300) 1,979 2,202 (223) 1,579 2,259 (680) 201 292 (91) (88) (123) 4,063 5,303 (1,240) Argentina Brazil Chile Colombia 85 66 35 9 165 (80) 28 51 (23) 46 270 (224) (7) 3 102 (36) 271 335 (64) 871 1,144 (273) 107 154 198 (163) 825 888 (63) 156 222 (66) 8 1 573 620 (47) 353 399 (46) Peru 114 136 (22) 136 Panama Other countries - - - - - - 101 45 157 112 39 Europe 118 209 (91) 161 112 Romania (1) (2) 1 Russia Other countries North America United States and Canada Mexico Africa, Asia and Oceania South Africa India Other countries 119 209 (90) - 17 18 (1) - - - - 2 (16) (16) - - - - - (2) 33 34 (1) - - - - 78 (7) 90 75 (1) 38 767 737 693 658 74 53 53 6 (6) 79 62 58 8 (4) Other (4) (14) 10 (58) (123) (21) 153 224 (71) (11) 6 49 3 (6) 52 30 35 (5) (9) (5) (2) (2) 65 - - - - 135 107 135 107 - - - - - - - - - - - - - - - - - - - - 28 28 - - - - - - - - - 5 (19) 24 (10) (47) (16) (12) (6) - - 67 67 - - 11 - 11 - - - - - 25 54 22 - - 82 82 - - 9 - 9 - - - - - 41 66 28 - - 15 15 - - (2) - (2) - - - - - Total 1,700 1,364 336 4,647 4,588 59 7,433 8,278 (845) 3,121 3,334 (213) 152 158 (47) 126 (173) (190) (144) (46) 16,816 17,704 (888) (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in South America and Mexico amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. 138138 (11) (65) (72) 991 1,303 (312) - - - - - - - - - - - - - - - - - - - (2) (2) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 151 488 (337) 1,298 1,685 (387) 1,030 1,131 (101) 447 545 (98) 509 448 307 206 101 206 (94) 112 39 36 77 61 58 8 (5) (11) 6 61 54 (21) (26) 5 (6) (3) (2) (1) 101 45 112 90 82 55 55 6 (6) (4) (19) - - - - 4 4 - - - - - - - (1) (49) - (1) - - 5 5 - - - - - - - - - 35 (3) 30 (1) (1) (3) (3) 7 - 1 - - - - - - - - - (90) (90) (3) (3) (2) (2) 778 799 696 722 38 39 83 3 2 15 41 22 - - 9 9 - - - 2 2 - - (10) (10) 13 38 64 - (1) 26 38 1 - - - 6 (2) (4) 80 80 (1) - - - (1) 25 1 19 3 3 3 21 - - 9 3 2 4 - 3 2 - 1 27 (6) (9) (36) 66 9 57 (188) (144) (44) (188) (327) 139 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsMillions of euro and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other Total Thermal Generation 2020 2019 Change 2020 2019 Change 2020 2019 Change 2020 2019 Change 2020 2019 Change 2020 2019 Change 2020 2019 Change 2020 2019 Change Italy 221 (14) 235 1,311 1,240 71 3,824 3,906 (82) 2,362 2,314 48 Iberia 1,039 590 449 434 358 76 1,890 2,025 (135) 467 715 (248) Latin America 309 609 (300) 1,979 2,202 (223) 1,579 2,259 (680) 201 292 (91) Argentina 165 (80) 28 51 (23) 46 270 (224) (7) 3 102 (36) 271 335 (64) 871 1,144 (273) 107 154 198 (163) 825 888 (63) 156 222 (66) 573 620 (47) 353 399 (46) Peru 114 136 (22) 136 (21) 153 224 (71) Brazil Chile Colombia Panama Other countries Russia Other countries North America United States and Canada Mexico Africa, Asia and Oceania South Africa India Other countries 85 66 35 9 - - - 17 18 (1) - - - - Europe 118 209 (91) 161 112 135 107 Romania (1) (2) 135 107 119 209 (90) 8 - - - - - - - 2 (16) (16) 1 - - 1 - - - - (2) 33 34 (1) 157 112 39 75 (1) 38 79 62 58 8 (4) 101 45 78 (7) 90 74 53 53 6 (6) 767 737 693 658 - - - - - - - - - - - - - - - - - - - - - - 28 28 - - - - - - - - - - - (11) 6 49 3 (6) 52 30 35 (5) (9) (5) (2) (2) 65 (10) (47) (16) (12) (6) 67 67 11 - 11 - - - - - - - - - 25 54 22 - - 82 82 - - 9 - 9 - - - - - 41 66 28 15 15 (2) (2) - - - - - - - - - - 38 39 83 3 2 15 41 22 - - 9 9 - - (10) (10) - 2 2 - - 13 38 64 - (1) 26 38 1 - - - 6 (2) (4) 80 80 - (1) - - (1) Other (4) (14) 10 (58) (123) 5 (19) 24 Total 1,700 1,364 336 4,647 4,588 59 7,433 8,278 (845) 3,121 3,334 (213) (9) (36) 152 158 25 1 19 3 3 3 21 - - 9 3 2 4 (90) (90) - 3 2 - 1 27 (6) 68 169 (101) (94) 66 (160) (88) (123) (4) (19) (1) (49) (11) (65) (72) - - - - - - - - - - - - - - (2) (2) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (2) (2) - - - - - 7,824 7,628 196 3,775 3,792 (17) 4,063 5,303 (1,240) 151 488 (337) 1,298 1,685 (387) 991 1,303 (312) 1,030 1,131 (101) 447 545 (98) 101 45 112 39 509 448 (11) 6 61 307 206 101 206 (94) 112 90 36 778 799 696 722 82 55 55 6 (6) 77 61 58 8 (5) 54 (21) (26) 5 (6) (3) (2) (1) 35 (3) 30 7 - 1 - - (1) (1) - - (3) (3) - - - - - - - - - 4 4 - - (3) (3) - - - - - - (1) - - 5 5 - - - - - - - - - 66 9 57 (188) (144) (44) (188) (327) 139 (47) 126 (173) (190) (144) (46) 16,816 17,704 (888) 139 Integrated Annual Report 2020RESULTS IN ACCORDANCE WITH THE EUROPEAN TAXONOMY BY BUSINESS LINE The results of the alignment of the metrics for revenue expenditure and ordinary operating expenditure with the from third parties, ordinary gross operating profit, capital European taxonomy are reported, broken down by Business VALUE CHAIN Eligible activities (substantive contribution to climate change mitigation) Generation Enel Green Power Thermal Generation and Trading Grids Infrastructure and Networks Customers End-user Markets Revenue from third parties(1) Ordinary gross operating profit (ordinary EBITDA) Capital expenditure (CAPEX)(2) Ordinary operating expenditure (ordinary OPEX) 2020 2019 2020 2019 2020 2019 2020 2019 € millions % € millions % € millions % € millions % € millions % € millions % € millions % € millions % 7,409 11.4% 7,344 9.1% 4,721 26.3% 4,618 25.8% 6,914 10.6% 6,921 495 - 0.8% - 423 - 8.6% 0.5% - 4,346 24.2% 4,296 24.0% 375 - 2.1% - 322 - 1.8% - 19,350 29.8% 30,480 38.0% 2,230 12.4% 1,585 8.8% 8.6% 1,192 15.9% 1,561 18.3% 5,545 13,802 17,824 15,103 2,720 3 - 3 - 8.5% 7,591 9.5% 21.3% 22,886 28.5% - 1,194 1,036 - 6.7% 5.7% 2 1,150 433 - 6.4% 2.4% 27.4% 20,092 25.0% 7,714 43.0% 8,228 46.0% 23.2% 16,618 20.7% 6,989 39.0% 7,132 39.9% 4.2% 3,474 4.3% 1 - - - 726 (1) 4.0% 1,096 - - 6.1% - 17,647 27.2% 19,537 24.3% 3,197 17.8% 3,334 18.6% 460 4.5% 449 4.5% 897 11.9% 1,009 11.9% - - - - - - - - - - - - - - - - 17,647 27.2% 19,537 24.3% 3,197 17.8% 3,334 18.6% 4,629 4,591 38 - 694 1 493 200 3,937 3,435 502 - - - - - - 460 303 158 145 174 174 10,197 8,185 1,033 979 - - - - - - - - 45.4% 45.0% 0.4% 6.8% 4.9% 1.9% 38.6% 33.7% 4.9% 4.5% 3.0% 1.6% 1.4% 1.7% 1.7% 100% 80.3% 10.2% 9.5% 4,293 4,247 46 - 851 - 663 188 3,905 3,269 636 - - - - - - 449 270 133 137 179 179 9,947 7,649 1,345 953 43.2% 42.7% 0.5% - - - - - - - - 6.7% 1.9% 39.2% 32.8% 6.4% 4.5% 2.7% 1.3% 1.4% 1.8% 1.8% 100% 76.8% 13.6% 9.6% - - 1 - - - - - 1,227 1,119 108 783 409 2,065 1,683 381 897 296 195 101 1,844 1,844 7,521 2,997 1,272 3,252 - - - - - - - - 16.3% 14.9% 1.4% 10.4% 5.5% 27.5% 22.4% 5.1% 11.9% 3.9% 2.6% 1.3% 24.5% 24.5% 100% 39.9% 16.9% 43.2% - - - - - - - - - - 1 - - - - - 1,277 15.0% 1,177 100 13.8% 1.2% 1,150 411 2,388 1,989 398 13.5% 4.8% 28.1% 23.4% 4.7% 1,009 347 203 11.9% 4.1% 2.4% 144 1.7% 1,924 22.6% 1,924 8,506 3,369 1,648 3,489 22.6% 100% 39.6% 19.4% 41.0% - - 1,785 64,985 22,678 TOTAL - - - - - - - - - - 2.7% 1,907 2.4% (83) -0.4% (18) 100% 80,327 100% 17,940 100% 17,905 - - -0.1% 100% 34.8% 24,255 30.2% 11,469 63.9% 11,524 64.4% Enel X 970 658 - 312 1.5% 1.0% - 0.5% 967 713 - 254 Other Services and other 1,785 2.7% 1,907 161 134 - 27 0.9% 0.7% - 0.2% 158 94 - 64 0.9% 0.5% - 0.4% (83) -0.4% (18) -0.1% 1.2% 0.9% - 0.3% 2.4% - - 8,760 13.5% 11,488 33,547 51.7% 44,584 14.3% 55.5% 2,295 4,176 12.8% 23.3% 2,568 3,813 14.3% 21.3% (1) Revenue from third parties is “segment” revenue from non-Group counterparties only. It therefore does not include transactions between the various segments. (2) The figure for 2019 capital expenditure does not include €4 million regarding units classified as “held for sale”. 140140 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsLine, as previously specified in the section “European Union re and ordinary operating expenditure into the European taxonomy”. taxonomy categories as a percentage of the total for each The table reports the breakdown of revenue from third of those aggregates. parties, ordinary gross operating profit, capital expenditu- VALUE CHAIN Eligible activities (substantive contribution to climate change mitigation) Generation Enel Green Power 7,409 11.4% 7,344 9.1% 4,721 26.3% 4,618 25.8% 6,914 10.6% 6,921 4,346 24.2% 4,296 24.0% 0.8% 375 2.1% 1.8% 8.6% 0.5% 423 - Thermal Generation and Trading 19,350 29.8% 30,480 38.0% 2,230 12.4% 1,585 8.8% 8.5% 7,591 9.5% 21.3% 22,886 28.5% 1,194 1,036 6.7% 5.7% 6.4% 2.4% Grids Infrastructure and Networks 27.4% 20,092 25.0% 7,714 43.0% 8,228 46.0% 23.2% 16,618 20.7% 6,989 39.0% 7,132 39.9% 4.2% 3,474 4.3% 4.0% 1,096 6.1% Customers End-user Markets 17,647 27.2% 19,537 24.3% 3,197 17.8% 3,334 18.6% - - - - - - - - 1.2% 0.9% 0.3% 2.4% 3 - - - - - - 322 - 2 1,150 433 - - - - - 158 94 - 64 - - - - - - - - 0.9% 0.7% 0.2% - - - - - - 726 (1) 161 134 - 27 - - - - - - - - 17,647 27.2% 19,537 24.3% 3,197 17.8% 3,334 18.6% Enel X 970 658 1.5% 1.0% 967 713 312 0.5% 254 Other Services and other 1,785 2.7% 1,907 (83) -0.4% (18) -0.1% TOTAL 100% 80,327 100% 17,940 100% 17,905 2.7% 1,907 2.4% (83) -0.4% (18) 34.8% 24,255 30.2% 11,469 63.9% 11,524 64.4% 8,760 13.5% 11,488 33,547 51.7% 44,584 14.3% 55.5% 2,295 4,176 12.8% 23.3% 2,568 3,813 495 - 3 5,545 13,802 17,824 15,103 2,720 1 - - - - - 1,785 64,985 22,678 - - - - - - - - 0.9% 0.5% 0.4% -0.1% 100% 14.3% 21.3% Revenue from third parties(1) Ordinary gross operating profit (ordinary EBITDA) Capital expenditure (CAPEX)(2) Ordinary operating expenditure (ordinary OPEX) 2020 2019 2020 2019 2020 2019 2020 2019 € millions % € millions % € millions % € millions % € millions % € millions % € millions % € millions 4,629 4,591 38 - 694 1 493 200 3,937 3,435 502 - 460 - - 460 303 158 - 145 174 - - 174 10,197 8,185 1,033 979 45.4% 45.0% 0.4% - 6.8% - 4.9% 1.9% 38.6% 33.7% 4.9% - 4.5% - - 4.5% 3.0% 1.6% - 1.4% 1.7% - - 1.7% 100% 80.3% 10.2% 9.5% 4,293 4,247 46 - 851 - 663 188 3,905 3,269 636 - 449 - - 449 270 133 - 137 179 - - 179 9,947 7,649 1,345 953 43.2% 42.7% 0.5% - 1,227 1,119 108 - 16.3% 14.9% 1.4% - 1,277 1,177 100 - % 15.0% 13.8% 1.2% - 8.6% 1,192 15.9% 1,561 18.3% - 6.7% 1.9% 39.2% 32.8% 6.4% - 4.5% - - 4.5% 2.7% 1.3% - 1.4% 1.8% - - 1.8% 100% 76.8% 13.6% 9.6% - 783 409 2,065 1,683 381 1 897 - - 897 296 195 - 101 - 10.4% 5.5% 27.5% 22.4% 5.1% - 11.9% - - - 1,150 411 2,388 1,989 398 1 - 13.5% 4.8% 28.1% 23.4% 4.7% - 1,009 11.9% - - - - 11.9% 1,009 11.9% 3.9% 2.6% - 1.3% 347 203 - 144 4.1% 2.4% - 1.7% 1,844 24.5% 1,924 22.6% - - 1,844 7,521 2,997 1,272 3,252 - - 24.5% 100% 39.9% 16.9% 43.2% - - 1,924 8,506 3,369 1,648 3,489 - - 22.6% 100% 39.6% 19.4% 41.0% eligible not eligible not covered 141 Integrated Annual Report 2020THERMAL GENERATION AND TRADING 142142 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements 39.0 GW 101.7 TWh NET EFFICIENT INSTALLED CAPACITY -23.9% from coal plants compared with 2019 NET ELECTRICITY GENERATION -65.0% from coal plants compared with 2019 2.5% €1,700 million “COAL” REVENUE as proportion of total Group revenue GROSS OPERATING PROFIT €1,636 million in 2019 Operations NET ELECTRICITY GENERATION Millions of kWh Coal plants Fuel-oil and turbo-gas plants Combined-cycle plants Nuclear plants Total net generation - of which Italy - of which Iberia - of which Latin America - of which Europe 2020 13,155 19,401 43,353 25,839 2019 37,592 20,887 44,980 26,279 Change (24,437) (1,486) (1,627) (440) 101,748 129,738 (27,990) 19,044 42,853 21,764 18,087 22,604 51,312 23,388 32,434 (3,560) (8,459) (1,624) (14,347) -65.0% -7.1% -3.6% -1.7% -21.6% -15.7% -16.5% -6.9% -44.2% The decrease in net electricity generation is essentially at other high-emission plants generally decreased while attributable to a sharp reduction in coal-fired generation renewable generation increased. More specifically, gene- (24,437 kWh), mainly in Russia (13,333 million kWh) fol- ration at fuel-oil and turbo-gas plants decreased by 1,486 lowing the sale on October 1, 2019 of the Reftinskaya GRES million kWh, while combined-cycle plants saw a reduction coal-fired plant, as well as in Iberia (6,210 million kWh), Italy of 1,627 million kWh. (3,672 million kWh), and Chile (1,280 million kWh) in respon- se to the acceleration of the energy transition. Generation 143 Integrated Annual Report 2020NET EFFICIENT INSTALLED CAPACITY MW Coal plants Fuel-oil and turbo-gas plants Combined-cycle plants Nuclear plants Total - of which Italy - of which Iberia - of which Latin America - of which Europe 2020 8,903 11,711 15,009 3,328 38,951 12,414 13,871 7,406 5,260 2019 11,695 12,211 14,991 3,318 42,215 13,480 15,957 7,523 5,255 Change (2,792) (500) 18 10 (3,264) (1,066) (2,086) (117) 5 -23.9% -4.1% 0.1% 0.3% -7.7% -7.9% -13.1% -1.6% 0.1% Compared with 2019, the 3,264 MW decrease in net effi- sioning of 3,023 MW in coal, fuel-oil and turbo-gas plants cient installed capacity was primarily due to the decommis- in Spain and Italy. Performance (1) Millions of euro Revenue Gross operating profit Ordinary gross operating profit Operating profit/(loss) Capital expenditure 2020 20,804 1,700 2,230 15 694 2019 32,012 1,364 1,585 (3,525) 851 Change (11,208) 336 645 3,540 (157) -35.0% 24.6% 40.7% - -18.4% (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in South America and Mexico amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. With regard to revenue, in response to strategic decisions bating climate change, coal-related revenue experienced a inspired by a sustainable business model under which we progressive, generalized decline as shown in the following pursue the goals, inter alia, of decarbonization and com- table: REVENUE FROM THERMAL AND NUCLEAR GENERATION Millions of euro Revenue (1) Revenue from thermal generation - of which: coal generation Revenue from nuclear generation Revenue from thermal generation as a percentage of total revenue - of which: revenue from coal generation as a percentage of total revenue Revenue from nuclear generation as a percentage of total revenue Change -27.1% -42.0% 4.9% 2020 7,512 1,639 1,360 11.6% 2.5% 2.1% 2019 10,300 2,827 1,296 12.8% 3.5% 1.6% (1) Revenue from third parties is “segment” revenue from non-Group counterparties and transactions between the various segments. 144144 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThe following tables show a breakdown of performance by Region/Country in 2020. REVENUE (1) Millions of euro Italy Iberia Latin America - of which Argentina - of which Brazil - of which Chile - of which Colombia - of which Peru North America Europe - of which Romania - of which Russia - of which other countries Other Eliminations and adjustments Total 2020 14,029 5,129 1,304 148 182 627 183 164 12 539 - 539 - 130 2019 23,688 6,261 1,875 323 283 813 102 354 29 956 42 911 3 54 (339) 20,804 (851) 32,012 Change (9,659) (1,132) (571) (175) (101) (186) 81 (190) (17) (417) (42) (372) (3) 76 512 (11,208) -40.8% -18.1% -30.5% -54.2% -35.7% -22.9% 79.4% -53.7% -58.6% -43.6% - -40.8% - - 60.2% -35.0% (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in South America and Mexico amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. GROSS OPERATING PROFIT (1) Millions of euro Italy Iberia Latin America - of which Argentina - of which Brazil - of which Chile - of which Colombia - of which Peru North America Europe - of which Romania - of which Russia - of which other countries Other Total 2020 221 1,039 309 85 66 35 9 114 17 118 (1) 119 - (4) 2019 Change (14) 590 609 165 102 198 8 136 (16) 209 (2) 209 2 (14) 235 449 (300) (80) (36) (163) 1 (22) 33 (91) 1 (90) (2) 10 336 - 76.1% -49.3% -48.5% -35.3% -82.3% 12.5% -16.2% - -43.5% -50.0% -43.1% - -71.4% 24.6% 1,700 1,364 (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in South America and Mexico amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. The increase in gross operating profit in 2020 is mainly due which mainly reflects the reduction in thermal gene- to: ration and the consequent decline in other provisio- › an increase of €449 million in Iberia, essentially attribu- ning costs, including electricity (€135 million), as well table to the following factors: as improvements in operating efficiency, partly offset – a decrease of €1,093 million in fuel consumption costs, by a decrease in revenue from the sale of electricity 145 Integrated Annual Report 2020and gas as result of a decline in volumes handled and – a decrease of €163 million in gross operating profit in prices charged; Chile, mainly attributable to the effect of the recogni- – a reduction in personnel expenses due to the modifica- tion in 2019 of an indemnity of €80 million from a large tion of the electricity discount benefit, net of the provi- industrial customer for having exercised the early with- sion for early retirement incentive plans (€165 million); drawal option and to a reduction in revenue from the – the decrease in costs associated with services in sale of electricity and gas, which mainly reflected ad- reflection of the lockdown imposed in response to the verse exchange rate developments, partially offset by COVID-19 health emergency. These effects were partially offset by: lower costs related to decarbonization, which involved the early closure of Unit I at the Bocamina coal plant; – increased provisions (€204 million) related to the – a reduction of €80 million in gross operating profit in Group’s restructuring plans as part of the energy tran- Argentina due, above all, to adverse exchange rate de- sition, particularly related to coal plants in Spain; velopments and to the lower quantities of electricity – a deterioration in net income from derivative contracts sold; for the management of commodity risk in the amount – a decrease of €36 million in gross operating profit in of €124 million; Brazil due mainly both to lower volumes sold at decli- › an increase of €235 million in gross operating profit in ning average prices and to the weakening of the Brazi- Italy due essentially to: lian real against the euro; – a reduction in provisioning costs of thermal plants › a decrease of €91 million in gross operating profit in Eu- being decommissioned and improvements in opera- rope, mainly in Russia, and due essentially to the sale of ting efficiency, the effects of which were partially offset the Reftinskaya GRES coal-fired plant. by reduced revenue from the sale of electricity due to both lower volumes and lower prices applied; The ordinary gross operating profit of €2,230 million – an improvement in the net profit from derivative con- (€1,585 million in 2019) was affected by €299 million of co- tracts for the management of commodity risk in the sts relating to restructuring plans connected with the ener- amount of €255 million; gy transition, €218 million in write-downs of the inventories – a write-down of €186 million of fuel and spare-parts and spare parts of a number of plants and €13 million of inventories; costs incurred following the COVID-19 pandemic for the – charges connected with restructuring plans for the sanitization of workplaces, personal protective equipment energy transition in the amount of €71 million; and donations. › a reduction of €300 million in gross operating profit in Latin America due mainly to: 146146 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsOPERATING PROFIT (1) Millions of euro Italy Iberia Latin America - of which Argentina - of which Brazil - of which Chile - of which Colombia - of which Peru North America Europe - of which Romania - of which Russia - of which other countries Other Eliminations and adjustments Total 2020 (40) 559 (589) 32 56 (749) (7) 79 14 76 (2) 83 (5) (5) - 15 2019 (1,908) (1,650) 35 100 89 (246) (9) 101 (17) 30 (1) 31 - (15) - Change 1,868 2,209 (624) (68) (33) (503) 2 (22) 31 46 (1) 52 (5) 10 - (3,525) 3,540 -97.9% - - -68.0% -37.1% - -22.2% -21.8% - - - - - -66.7% - - (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in South America and Mexico amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. In addition to the factors described above in relation to the in 2020 as compared with the previous year, when impair- gross operating profit, the increase in operating profit is ment losses were recognized on coal plants. More specifi- connected with the decrease in depreciation, amortization cally, depreciation and amortization came to €364 million, and impairment losses (totaling €3,204 million) recognized while impairment losses totaled €2,840 million. CAPITAL EXPENDITURE Millions of euro Italy Iberia Latin America North America Europe Other Total 2020 2019 Change 180 331 120 7 56 - 694 189 388 193 - 79 2 851 (9) (57) (73) 7 (23) (2) (157) -4.8% -14.7% -37.8% - -29.1% - -18.4% The decrease of €157 million in capital expenditure invol- ge in scheduling and a redefinition of activities concerning ved all geographical segments, with the exception of Nor- gas and coal plants in Spain, the rest of Europe and Latin th America, and mainly reflects the sale in Russia of the America, and cost-optimization efforts. Reftinskaya GRES plant in the 4th Quarter of 2019, a chan- 147 Integrated Annual Report 2020ENEL GREEN POWER 148148 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements45.0 GW 105.4 TWh NET EFFICIENT INSTALLED CAPACITY 53.6% of total Group capacity NET ELECTRICITY GENERATION +45.0% from solar plants compared with 2019 €4,647 million €4,629 million GROSS OPERATING PROFIT €4,588 million in 2019 CAPITAL EXPENDITURE +7.8% on 2019 Operations NET ELECTRICITY GENERATION Millions of kWh Hydroelectric Geothermal Wind Solar Other sources Total net generation - of which Italy - of which Iberia - of which Latin America - of which Europe - of which North America - of which Africa, Asia and Oceania 2020 62,437 6,167 30,992 5,763 1 105,360 23,451 13,415 47,400 2,374 17,182 1,538 2019 62,580 6,149 26,668 3,974 21 99,392 24,309 10,090 48,448 2,005 12,969 1,571 Change (143) 18 4,324 1,789 (20) 5,968 (858) 3,325 (1,048) 369 4,213 (33) -0.2% 0.3% 16.2% 45.0% -95.2% 6.0% -3.5% 33.0% -2.2% 18.4% 32.5% -2.1% Net electricity generation in 2020 increased from 2019 The increase in solar generation is mainly attributable to the due to increases in wind and solar generation, partially of- United States (+850 million kWh) with the significant con- fset by a decrease in hydro and biomass generation. The tribution of the new Roadrunner plant; Iberia (+397 million most significant changes in wind power were seen in the kWh), thanks, above all, to the new plants that went onli- United States (+2,116 million kWh) due mainly to the start of ne in late 2019 in Estremadura; and Mexico (+397 million operations at the High Lonesome (I and II) and Whitney Hill kWh), mainly due to the start of operations at the Magda- plants; in Iberia (+1,108 million kWh); in Mexico (+503 million lena plant. kWh), due, above all, to the start of operations at the Dolo- Hydroelectric output fell slightly due to declining genera- res Wind plant; in Canada (+374 million kWh) due mainly to tion in Chile in particular (-866 million kWh) and Colombia the start of operations at the Riverview plant; and in Greece (-1,305 million kWh), partly offset by an increase in output in (+346 million kWh) due mainly to the start-up of the new Iberia (+1,821 million kWh). Kafireas wind farms. 149 Integrated Annual Report 2020NET EFFICIENT INSTALLED CAPACITY MW Hydroelectric Geothermal Wind Solar Other sources Total net efficient generation capacity - of which Italy - of which Iberia - of which Latin America - of which Europe - of which North America - of which Africa, Asia and Oceania 2020 27,820 882 12,412 3,897 5 45,016 13,986 7,781 14,554 1,141 6,643 911 2019 27,830 878 10,327 3,094 5 42,134 13,972 7,391 13,676 1,037 5,282 776 Change (10) 4 2,085 803 - 2,882 14 390 878 104 1,361 135 - 0.5% 20.2% 26.0% - 6.8% 0.1% 5.3% 6.4% 10.0% 25.8% 17.4% Net efficient installed capacity increased in 2020 compared que Amistad III SA de Cv wind farms; with 2019, and mainly in: › Brazil in relation to the São Gonçalo photovoltaic plants › the United States as a result of construction of the Roa- and the Lagoa dos Ventos I wind farm; drunner Ph II, Ph III and Ph IV solar plants, expansion of the › Spain for the Aragona wind farms and the Andalusia, Ca- Cimarron Bend wind farm, and the start of operations at stilla - La Mancha, Estremadura and Balearic Islands pho- the White Cloud and High Lonesome plants; tovoltaic plants. › Mexico in relation to the Dolores Wind SA de Cv and Par- Performance (1) Millions of euro Revenue Gross operating profit Ordinary gross operating profit Operating profit Capital expenditure 2020 7,692 4,647 4,721 2,734 4,629 2019 7,717 4,588 4,618 3,260 4,293 (2) Change (25) 59 103 (526) 336 -0.3% 1.3% 2.2% -16.1% 7.8% (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in Latin America amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. (2) The figure does not include €4 million regarding units classified as “held for sale”. 150150 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThe following tables show a breakdown of performance by Region/Country in 2020. REVENUE (1) Millions of euro Italy Iberia Latin America - of which Argentina - of which Brazil - of which Chile - of which Colombia - of which Peru - of which Panama - of which other countries North America - of which United States and Canada - of which Mexico Europe - of which Romania - of which Greece - of which Bulgaria - of which other countries Africa, Asia and Oceania Other Eliminations and adjustments Total 2020 2,154 771 3,234 39 837 1,209 814 132 136 67 1,156 1,018 138 323 198 114 9 2 99 226 (271) 7,692 2019 1,918 653 3,677 64 694 1,479 1,007 196 169 68 1,115 956 159 271 175 86 8 2 107 105 (129) 7,717 Change 236 118 (443) (25) 143 (270) (193) (64) (33) (1) 41 62 (21) 52 23 28 1 - (8) 121 (142) (25) 12.3% 18.1% -12.0% -39.1% 20.6% -18.3% -19.2% -32.7% -19.5% -1.5% 3.7% 6.5% -13.2% 19.2% 13.1% 32.6% 12.5% - -7.5% - - -0.3% (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in Latin America amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. 151 Integrated Annual Report 2020GROSS OPERATING PROFIT (1) Millions of euro Italy Iberia Latin America - of which Argentina - of which Brazil - of which Chile - of which Colombia - of which Peru - of which Panama - of which other countries North America - of which United States and Canada - of which Mexico Europe - of which Romania - of which Russia - of which Greece - of which Bulgaria - of which other countries Africa, Asia and Oceania Other Total 2020 1,311 434 1,979 28 271 825 573 136 101 45 767 693 74 161 78 (7) 85 7 (2) 53 2019 1,240 358 2,202 51 335 888 620 157 112 39 737 658 79 112 75 (1) 35 6 (3) 62 (58) 4,647 (123) 4,588 Change 71 76 (223) (23) (64) (63) (47) (21) (11) 6 30 35 (5) 49 3 (6) 50 1 1 (9) 65 59 5.7% 21.2% -10.1% -45.1% -19.1% -7.1% -7.6% -13.4% -9.8% 15.4% 4.1% 5.3% -6.3% 43.8% 4.0% - - 16.7% 33.3% -14.5% 52.8% 1.3% (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in Latin America amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. The gross operating profit increased by €59 million from – increased tax-partnership income (€137 million) reco- 2019, essentially reflecting: gnized in 2020 following the start of operations at new › an increase in gross operating profit in Italy, due above all Enel North America plants, in particular Cimarron Bend, to improved performance of hydroelectric plants; White Cloud, Roadrunner, and Aurora Wind; › an increase in gross operating profit in Spain, due above – an increase in income from indemnities and disputes all to increased quantities generated and sold as a result (€31 million); of an increase in capacity following the start of opera- – an increase in income attributable to the sale of the tions at a number of wind and solar plants, as well as to Haystack wind project by Tradewind (€45 million); increased quantities generated by hydroelectric plants, › an increase in gross operating profit in Europe, and in the effect of which was partially offset by a reduction in Greece in particular, following the start of operations for prices; the Kafireas wind farms in the first part of 2020; › an improved gross operating profit in North America, › a decrease in gross operating profit in Latin America, due mainly in the United States and Canada, where the reco- mainly to: gnition of negative goodwill in the amount of €181 million – a decrease in gross operating profit in Chile due mainly and gains on the sale of projects in the amount of €42 to the recognition by Enel Generación Chile in 2019 of million in 2019 were more than offset by the following ef- penalty revenue in the amount of €80 million as a result fects: of the early withdrawal by a large-scale industrial cu- – increased gross operating profit related to new plants stomer from a long-term electricity supply agreement, entering service; as well as adverse exchange rate developments; 152152 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements – a deterioration of gross operating profit in Brazil, mainly million (€4,618 million in 2019), reflecting €50 million in co- as a result of the lower quantities sold, the significant sts relating to restructuring plans connected with the ener- weakening of the Brazilian real against the euro and the gy transition in Italy, Spain and Latin America, €10 million in effect of the sale of a number of wind plants in 2019; costs incurred as a result of the COVID-19 pandemic for – a reduction of gross operating profit in Colombia, workplace sanitization activities, personal protective equi- mainly due to adverse exchange rate developments pment and donations, €10 million in write-downs of the and to a decline in quantities generated and sold as a materials inventories of Enel Green Power Italia and €4 mil- result, above all, of limited water availability and lower lion for the supply of solar panels by Enel Green Power Italia electricity demand. related to a contractual clause connected with the sale of The ordinary gross operating profit amounted to €4,721 EF Solare Italia to F2i in 2019. OPERATING PROFIT (1) Millions of euro Italy Iberia Latin America - of which Argentina - of which Brazil - of which Chile - of which Colombia - of which Peru - of which Panama - of which other countries North America - of which United States and Canada - of which Mexico Europe - of which Romania - of which Russia - of which Greece - of which Bulgaria - of which other countries Africa, Asia and Oceania Other Eliminations and adjustments Total 2020 935 235 1,544 (15) 207 660 521 99 83 (11) (28) 394 (422) 129 109 (13) 46 4 (17) (11) (70) - 2,734 2019 909 183 1,793 38 249 718 560 118 96 14 418 367 51 58 49 - 10 3 (4) 24 (125) - 3,260 Change 26 52 (249) (53) (42) (58) (39) (19) (13) (25) (446) 27 (473) 71 60 (13) 36 1 (13) (35) 55 - 2.9% 28.4% -13.9% - -16.9% -8.1% -7.0% -16.1% -13.5% - - 7.4% - - - - - 33.3% - - -44.0% - (526) -16.1% (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in Latin America amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. Operating profit for 2020, including depreciation, amor- gentina (for a total of €534 million) and to the impairment tization and impairment losses in the amount of €1,913 losses on the assets of a solar panel production line of Enel million (€1,328 million in 2019), decreased by €526 million Green Power Italia (€65 million) and the CIS Nola plant (€15 compared with 2019, due mainly to the recognition of im- million). pairment losses on the CGUs of Mexico, Australia and Ar- 153 Integrated Annual Report 2020CAPITAL EXPENDITURE Millions of euro Italy Iberia Latin America North America Europe Africa, Asia and Oceania Other Total 2020 283 460 1,514 1,773 157 414 28 2019 240 765 1,055 (1) 1,744 189 274 26 4,629 4,293 Change 43 (305) 459 29 (32) 140 2 336 17.9% -39.9% 43.5% 1.7% -16.9% 51.1% 7.7% 7.8% (1) The figure does not include €4 million regarding units classified as “held for sale”. Capital expenditure increased by €336 million in 2020 the United States at wind farms (€306 million) and pho- compared with the same figure for the previous year. More tovoltaic plants (€90 million), partially offset by reduced specifically, the change is attributable to: capital expenditure at wind farms (€235 million) and pho- › an increase of €459 million in capital expenditure in La- tovoltaic plants (€100 million) in Mexico and at wind farms tin America attributable mainly to photovoltaic plants in Canada (€84 million), reflecting the construction of nu- (€403 million), geothermal plants (€12 million) and wind merous plants in 2019; farms (€130 million), partially offset by a decrease in ca- › a decrease of €305 million in capital expenditure in Iberia, pital expenditure on hydroelectric plants (€71 million). The mainly related to wind farms (€387 million), given that con- increase in capital expenditure was concentrated in Chile struction for most of the projects was completed in 2019. and Brazil; This was partially offset by increased capital expenditure › an increase of €140 million in capital expenditure in Afri- for photovoltaic and hydroelectric plants; ca, Asia and Oceania related mainly to wind farms (€189 › a decrease of €32 million in capital expenditure in Europe, million) concentrated in South Africa and India, which was particularly in Greece (€98 million), as projects developed partially offset by decreased capital expenditure for photo- in 2019 became operational. This effect was partially offset voltaic plants (€49 million), mainly in Australia and Zambia; by increased capital expenditure for wind farms in Russia › an increase of €29 million in capital expenditure in North in the amount of €74 million. America related mainly to increased capital expenditure in 154154 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsIntegrated Annual Report 2020 155 INFRASTRUCTURE AND NETWORKS 156156 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements484.6 TWh €7,433 million €3,937 million ELECTRICITY TRANSPORTED ON ENEL’S DISTRIBUTION GRID GROSS OPERATING PROFIT 507.7 TWh in 2019 €8,278 million in 2019 CAPITAL EXPENDITURE 38.6% of total Group capex Operations ELECTRICITY DISTRIBUTION AND TRANSMISSION GRID Millions of kWh Electricity transported on Enel’s distribution grid (1) - of which Italy - of which Iberia - of which Latin America - of which Europe 2020 484,605 213,615 124,658 130,958 15,374 2019 507,738 228,143 126,608 137,296 15,691 End users with active smart meters (no.) (2) (3) 44,292,794 43,821,596 Change (23,133) (14,528) (1,950) (6,338) (317) 471,198 -4.6% -6.4% -1.5% -4.6% -2.0% 1.1% (1) The figure for 2019 reflects a more accurate measurement of amounts transported. (2) To ensure a uniform comparison, the figure for 2019 has been adjusted on the basis of the new calculation method, which excludes digital meters with an active contract that are not managed remotely. (3) Of which 18.2 million second generation smart meters in 2020 and 13.1 million in 2019. In 2020, electricity transported on the grid decline (-4.6%), city distributed to high-voltage customers (-3.0 TWh) due generally to the COVID-19 health emergency. The im- and to other resellers (-0.2 TWh); pact on the various geographical segments is described › in Latin America (-4.6%), the change in volumes transpor- below: ted was seen mainly in Brazil; › in Italy (-6.4%), the reduction in demand for electrici- › in Europe (-2%), energy distribution declined in Romania ty distribution concerned low-voltage customers for in the business segment; non-domestic uses (-5.7 TWh) as well as medium-voltage › in Iberia (-1.5%), the decrease was essentially connected customers (-5.6 TWh). Demand also declined for electri- with the decline in demand. AVERAGE FREQUENCY OF INTERRUPTIONS PER CUSTOMER 2020 2019 Change SAIFI (average no.) Italy Iberia Argentina Brazil Chile Colombia Peru Romania 1.7 1.4 4.5 5.4 1.5 5.6 2.6 3.4 1.9 1.4 6.0 5.8 1.6 6.8 2.8 4.1 (0.2) - (1.5) (0.4) (0.1) (1.2) (0.2) (0.7) -10.5% - -25.0% -6.9% -6.3% -17.6% -7.1% -17.1% 157 Integrated Annual Report 2020AVERAGE DURATION OF INTERRUPTIONS PER CUSTOMER SAIDI (average min.) Italy Iberia Argentina Brazil Chile Colombia Peru Romania 2020 2019 Change 42.0 74.5 839.0 678.8 171.2 466.6 419.4 134.5 48.5 75.8 1,214.1 728.8 184.1 666.6 418.9 169.6 (6.5) (1.3) (375.1) (50.0) (12.9) (200.0) 0.5 (35.1) -13.4% -1.7% -30.9% -6.9% -7.0% -30.0% 0.1% -20.7% As shown in the tables above, service quality has improved tina remains high, due in particular to faults in high-voltage in all geographical segments, although the SAIDI in Argen- transmission systems not operated by the Group. Grid losses (average %) Italy Iberia Argentina Brazil Chile Colombia Peru Romania 2020 2019 Change 4.9 7.1 18.9 13.4 5.2 7.6 8.8 9.2 4.7 7.5 15.5 12.8 5.0 7.7 8.2 9.7 0.2 (0.4) 3.4 0.6 0.2 (0.1) 0.6 (0.5) 4.3% -5.3% 21.9% 4.7% 4.0% -1.3% 7.3% -5.2% The variations in grid losses are stable in all geographical economic crisis in the wake of the COVID-19 pandemic has segments except in Argentina, where the worsening of the produced an increase in fraud. Performance Millions of euro Revenue Gross operating profit Ordinary gross operating profit Operating profit Capital expenditure 158158 2020 19,342 7,433 7,714 4,262 3,937 2019 21,789 8,278 8,228 5,277 3,905 Change (2,447) (845) (514) (1,015) 32 -11.2% -10.2% -6.2% -19.2% 0.8% 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThe following tables show a breakdown of performance by Region/Country in 2020. REVENUE Millions of euro Italy Iberia Latin America - of which Argentina - of which Brazil - of which Chile - of which Colombia - of which Peru Europe Other Eliminations and adjustments Total GROSS OPERATING PROFIT Millions of euro Italy Iberia Latin America - of which Argentina - of which Brazil - of which Chile - of which Colombia - of which Peru Europe Other Total 2020 7,488 2,617 8,821 647 5,649 1,229 601 695 396 393 (373) 19,342 2020 3,824 1,890 1,579 46 871 156 353 153 135 5 2019 7,647 2,724 11,033 1,166 6,946 1,467 641 813 386 60 (61) Change (159) (107) (2,212) (519) (1,297) (238) (40) (118) 10 333 (312) -2.1% -3.9% -20.0% -44.5% -18.7% -16.2% -6.2% -14.5% 2.6% - - 21,789 (2,447) -11.2% 2019 3,906 2,025 2,259 270 1,144 222 399 224 107 (19) Change (82) (135) (680) (224) (273) (66) (46) (71) 28 24 -2.1% -6.7% -30.1% -83.0% -23.9% -29.7% -11.5% -31.7% 26.2% - 7,433 8,278 (845) -10.2% The gross operating profit decreased: scount benefit (€269 million) following the signing of the › in Latin America, and particularly in Brazil, due to the 5th Endesa Collective Bargaining Agreement, which led lower volumes transported as a result of COVID-19 and to the partial reversal of the provision; the unfavorable exchange rate developments, as well as › in Italy, due mainly to reduced margins recognized as a in Argentina due to the effect of the recognition in 2019 result of a decrease in volumes transported as a result of the Edesur settlement with the Argentine government, of COVID-19 and to the indemnity received in 2019 in which resolved reciprocal pending disputes arising from relation to the sale of Enel Rete Gas (€50 million). The- 2006 to 2016 (€209 million); se effects were partially offset by an increase in gains › in Iberia, following the reduction in energy revenue due for e-distribuzione as a result of the reimbursement of both to a reduction in quantities sold and to the appli- system charges and network fees based on Resolutions cation of new remuneration parameters that went into nos. 50/2018 and 461/2020 of the Regulatory Authority effect for the 2020-2025 regulatory period, and to the for Energy, Networks and the Environment (ARERA) (€158 recognition of provisions related to early retirement in- million). centive plans following the amendments made to the agreement on the voluntary suspension or resolution of The ordinary gross operating profit amounted to €7,714 employment contracts (€315 million). These effects were million (€8,228 million in 2019) and reflected: only partially offset by the change in the electricity di- › costs incurred mainly in Italy and Brazil as a result of the 159 Integrated Annual Report 2020COVID-19 pandemic for workplace sanitization activities, › provisions for charges related to restructuring plans con- personal protective equipment and donations (€50 mil- nected with the energy transition in Colombia and Peru lion); (€7 million). › costs related to digitalization in Spain (€224 million); OPERATING PROFIT Millions of euro Italy Iberia Latin America - of which Argentina - of which Brazil - of which Chile - of which Colombia - of which Peru Europe Other Total 2020 2,370 1,140 696 (186) 433 108 253 88 52 4 2019 2,647 1,288 1,349 240 487 173 292 157 13 (20) Change (277) (148) (653) (426) (54) (65) (39) (69) 39 24 -10.5% -11.5% -48.4% - -11.1% -37.6% -13.4% -43.9% - - 4,262 5,277 (1,015) -19.2% In addition to the changes in gross operating profit for the on receivables in Italy due, in part, to the effects of CO- year discussed earlier, the decrease in operating profit in VID-19 (€124 million) and the impairment losses on goodwill 2020, including depreciation, amortization and impairment related to the Argentina CGU (€216 million), which was par- losses in the amount of €3,171 million (€3,001 million in tially offset by exchange rate developments in Brazil. 2019), was mainly due to an increase in impairment losses CAPITAL EXPENDITURE Millions of euro Italy Iberia Latin America Europe Other Total 2020 1,966 631 1,156 182 2 3,937 2019 1,753 647 1,335 169 1 3,905 Change 213 (16) (179) 13 1 32 12.2% -2.5% -13.4% 7.7% - 0.8% Capital expenditure increased by €32 million compared ginning in February 2019; with the previous year. The rise was mainly attributable to › in Iberia by a reduction in capital expenditure for sub- Italy, as a result of quality and remote control investments, stations, transformers and the replacement of metering and to Romania (€13 million) for activities connected with equipment, and for software applications, partially offset service quality and new connections. This increase was partially offset: by an increase in capital expenditure on the distribution network. › in Latin America, and particularly in Brazil, by a reduction Capital expenditure on digital meters declined due to the in capital expenditure as a result of unfavorable exchange slowdown in the mass replacement of meters as a result of rate developments and the freeze on rates imposed be- the pandemic. 160160 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsIntegrated Annual Report 2020 161161 Integrated Annual Report 2020END-USER MARKETS 162162 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements298.2 TWh €3,121 million 69.5 million ELECTRICITY SALES 322.0 TWh in 2019 GROSS OPERATING PROFIT RETAIL CUSTOMERS €3,334 million in 2019 of which 23.2 million on free market Operations ELECTRICITY SALES Millions of kWh Free market Regulated market Total (1) - of which Italy - of which Iberia - of which Latin America (1) - of which Europe 2020 2019 Change 160,202 137,984 298,186 90,205 80,772 118,388 8,821 172,699 149,324 322,023 97,539 89,441 125,308 9,735 (12,497) (11,340) (23,837) (7,334) (8,669) (6,920) (914) -7.2% -7.6% -7.4% -7.5% -9.7% -5.5% -9.4% (1) Volumes include sales to large customers by generation companies in Latin America. The figure for 2019 has consequently been adjusted to ensure comparability. In 2020, quantities sold decreased due mainly to a reduction gency. The reductions in Italy and Spain were greater on the in consumption tied to declining demand for electricity in free market for business-to-business (B2B) customers. nearly all countries as a result of the COVID-19 health emer- NATURAL GAS SALES Millions of m3 Business to consumer Business to business Total (1) - of which Italy - of which Iberia - of which Latin America (1) - of which Europe (2) 2020 3,640 6,076 9,716 4,429 5,022 155 110 2019 3,732 7,067 10,799 4,736 5,750 171 142 Change (92) (991) (1,083) (307) (728) (16) (32) -2.5% -14.0% -10.0% -6.5% -12.7% -9.4% -22.5% (1) Volumes include sales to large customers by generation companies in Latin America. The figure for 2019 has consequently been adjusted to ensure comparability. (2) The figures for 2019 reflect a more accurate measurement of volumes sold. The decrease in quantities of gas sold in 2020 compared Total retail customers of the Group number 69,517,932, of with the previous year is mainly attributable to reduced which 23,164,875 on the free market, while at December consumption levels in Italy and Spain due mainly to the CO- 31, 2019 they numbered 70,471,612, of which 23,013,224 VID-19 pandemic. on the free market. 163 Integrated Annual Report 2020Performance (1) Millions of euro Revenue Gross operating profit Ordinary gross operating profit Operating profit Capital expenditure 2020 29,508 3,121 3,197 1,817 460 2019 32,599 3,334 3,334 2,210 449 Change (3,091) (213) (137) (393) 11 -9.5% -6.4% -4.1% -17.8% 2.4% (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in South America and Mexico amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. The following tables show a breakdown of performance by Region/Country in 2020. REVENUE (1) Millions of euro Italy Iberia Latin America - of which Argentina - of which Brazil - of which Chile - of which Colombia - of which Peru North America Europe Eliminations and adjustments Total 2020 14,869 11,987 1,492 - 299 271 705 217 10 1,150 - 29,508 2019 16,042 13,867 1,559 30 404 293 777 55 - 1,131 - Change (1,173) (1,880) (67) (30) (105) (22) (72) 162 10 19 - 32,599 (3,091) -7.3% -13.6% -4.3% - -26.0% -7.5% -9.3% - - 1.7% - -9.5% (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in South America and Mexico amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. GROSS OPERATING PROFIT (1) Millions of euro Italy Iberia Latin America - of which Argentina - of which Brazil - of which Chile - of which Colombia - of which Peru North America Europe Total 2020 2,362 467 201 (7) 107 25 54 22 9 82 2019 2,314 715 292 3 154 41 66 28 (2) 15 Change 48 (248) (91) (10) (47) (16) (12) (6) 11 67 2.1% -34.7% -31.2% - -30.5% -39.0% -18.2% -21.4% - - 3,121 3,334 (213) -6.4% (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in South America and Mexico amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. 164164 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThe decrease in the gross operating profit for 2020 is essen- the free market (due mainly to a reduction in the ener- tially attributable to: gy profit margin as a result, essentially, of reduced sales › a decrease of €248 million in gross operating profit in in response to the COVID-19 pandemic) was offset by an Iberia, which mainly reflects a decrease in quantities sold increase of €75 million in gross operating profit on the and reduced profit margins caused by efforts to respond regulated market due to decreasing operating costs as a to the continuing negative impact of COVID-19 on volu- result, primarily, of the release of provisions for litigation mes and demand. These effects were partially offset by following favorable rulings and an increase in income re- lower provisioning costs. The decrease in the margin also sulting from the reimbursement of fraud-related matters. reflects an increase in provisions for the voluntary termi- These effects were partially offset by lower volumes sold nation incentives program (€63 million); as a result of the COVID-19 pandemic and a reduction in › a decrease in gross operating profit in Latin America, due customers. mainly to the weakening of local currencies against the euro, particularly in Brazil, and to the effect of the indem- The ordinary gross operating profit came to €3,197 million nity received by Edesur in 2019 (€24 million); (€3,334 million in 2019). The extraordinary items concern › an increase of €67 million in gross operating profit in Ro- non-recurring costs due to COVID-19 for workplace sanitiza- mania, due to the combined effect of increased revenue tion activities, personal protective equipment and donations as a result of higher average prices and lower provisio- (€11 million), as well as charges related to direct and indirect ning costs; activities related to digitalization and the acceleration of the › an increase of €48 million in gross operating profit in energy transition (€65 million). Italy, where the €27 million decrease in the margin on OPERATING PROFIT (1) Millions of euro Italy Iberia Latin America - of which Argentina - of which Brazil - of which Chile - of which Colombia - of which Peru North America Europe Eliminations and adjustments Total 2020 1,538 241 (22) (44) (39) 11 39 11 9 51 - 2019 1,609 491 126 (35) 49 30 59 23 (2) (14) - Change (71) (250) (148) (9) (88) (19) (20) (12) 11 65 - -4.4% -50.9% - -25.7% - -63.3% -33.9% -52.2% - - - 1,817 2,210 (393) -17.8% (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in South America and Mexico amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. Operating profit includes depreciation, amortization and and impairment losses is mainly attributable to impairment impairment losses in the amount of €1,304 million (€1,124 losses of trade receivables in Italy due to the deterioration in million in 2019). The increase in depreciation, amortization the collection status of customers as a result of COVID-19. CAPITAL EXPENDITURE Millions of euro Italy Iberia Latin America Europe Total 2020 310 139 - 11 460 2019 324 110 - 15 449 Change (14) 29 - (4) 11 -4.3% 26.4% - -26.7% 2.4% The increase in capital expenditure is mainly attributable to the acquisition of new customers. These effects were par- Spain in relation to the capitalization of costs concerning tially offset by lower contract costs in Italy. 165 Integrated Annual Report 2020ENEL X 166166 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements105,237 2,794 thousands of units 6.0 GW CHARGING POINTS (1) 79,565 in 2019 LIGHTING POINTS 2,424 in 2019 €152 million DEMAND RESPONSE CAPACITY 6.3 GW in 2019 +12.2% GROSS OPERATING PROFIT €158 million in 2019 CAPITAL EXPENDITURE compared with 2019, for a total of €303 million (1) The number of charging points including interoperable points was equal to about 186 thousand at December 31, 2020 and about 82 thousand at December 31, 2019. Operations Demand response capacity (MW) Lighting points (thousands of units) Storage (MW) (1) Charging points (no.) (2) 2020 6,038 2,794 123 2019 6,297 2,424 110 Change (259) 370 13 105,237 79,565 25,672 -4.1% 15.3% 11.8% 32.3% Includes storage-on-plant. (1) (2) The number of charging points including interoperable points was equal to about 186 thousand at December 31, 2020 and about 82 thousand at December 31, 2019. In 2020, the Group further expanded the vehicle-charging mainly in North America and Italy, while public charging infrastructure. Private charging points increased by 21,033, points increased by 4,639, primarily in Italy and Spain. Performance Millions of euro Revenue Gross operating profit Ordinary gross operating profit Operating loss Capital expenditure 2020 1,121 152 161 (16) 303 2019 1,130 158 158 (98) 270 Change (9) (6) 3 82 33 -0.8% -3.8% 1.9% 83.7% 12.2% 167 Integrated Annual Report 2020The following tables show a breakdown of performance by Region/Country in 2020. REVENUE Millions of euro Italy Iberia Latin America - of which Argentina - of which Brazil - of which Chile - of which Colombia - of which Peru North America Europe Africa, Asia and Oceania Other Eliminations and adjustments Total GROSS OPERATING PROFIT Millions of euro Italy Iberia Latin America - of which Argentina - of which Brazil - of which Chile - of which Colombia - of which Peru North America Europe Africa, Asia and Oceania Other Total 2020 324 244 218 7 20 68 75 48 192 53 55 156 (121) 1,121 2019 282 261 186 4 17 81 77 7 328 35 52 66 (80) 1,130 Change 42 (17) 32 3 3 (13) (2) 41 (136) 18 3 90 (41) (9) 2020 2019 Change 38 39 83 3 2 15 41 22 (10) 9 2 (9) 152 13 38 64 - (1) 26 38 1 80 - (1) (36) 158 25 1 19 3 3 (11) 3 21 (90) 9 3 27 (6) 14.9% -6.5% 17.2% 75.0% 17.6% -16.0% -2.6% - -41.5% 51.4% 5.8% - -51.3% -0.8% - 2.6% 29.7% - - -42.3% 7.9% - - - - 75.0% -3.8% The gross operating profit decreased mainly as a result of › in Italy, thanks to the positive performance of e-Home the recognition in 2019 of an indemnity in the amount of and Vivi Meglio products for energy and seismic upgra- €98 million in North America in application of contractual ding; clauses related to the sale of eMotorWerks. This decrease › in Other, where negative goodwill of €20 million was re- was partially offset by an improvement in operating perfor- cognized for Paytipper following completion of the pur- mance in other countries, in particular: chase price allocation process. 168168 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThe ordinary gross operating profit came to €161 million emergency and to other charges, in the amount of €7 mil- (€158 million in 2019). The difference of €9 million compared lion, connected with direct and indirect activities related to with the gross operating profit is due to €2 million in non-re- digitalization and the acceleration of the energy transition. curring costs incurred in response to the COVID-19 health OPERATING PROFIT Millions of euro Italy Iberia Latin America - of which Argentina - of which Brazil - of which Chile - of which Colombia - of which Peru North America Europe Africa, Asia and Oceania Other Total 2020 (12) (7) 71 3 (2) 14 40 16 (52) 3 (1) (18) (16) 2019 (45) (13) 58 - (4) 24 37 1 (50) (3) (5) (40) (98) Change 33 6 13 3 2 (10) 3 15 (2) 6 4 22 82 73.3% 46.2% 22.4% - 50.0% -41.7% 8.1% - -4.0% - 80.0% 55.0% 83.7% Despite the decrease in gross operating profit, operating in depreciation, amortization and impairment losses tota- loss for 2020 improved essentially as a result of a decrease ling €88 million, primarily in North America. CAPITAL EXPENDITURE Millions of euro Italy Iberia Latin America North America Europe Africa, Asia and Oceania Other Total 2020 2019 Change 70 50 67 36 5 3 72 303 52 64 40 61 4 1 48 270 18 (14) 27 (25) 1 2 24 33 34.6% -21.9% 67.5% -41.0% 25.0% - 50.0% 12.2% Capital expenditure increased primarily in Latin America by decreased capital expenditure on storage distributed in relation to the e-Bus project in Colombia; in Italy due energy and demand response in the United States and on to increased investment on public lighting and to develop the e-Home business in Spain due mainly to a change in the e-Home and Vivi Meglio businesses; and for Enel X Srl business model and to a slowing of capital expenditure in due to increased investment in ICT and the capitalization response to COVID-19. of personnel expenses. These effects were partially offset 169 Integrated Annual Report 2020SERVICES AND OTHER 170170 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsPerformance Millions of euro Revenue Gross operating loss Ordinary gross operating loss Operating loss Capital expenditure The table below shows the financial performance by Re- gion/Country in 2020. REVENUE Millions of euro Italy Iberia Latin America Europe Other Eliminations and adjustments Total GROSS OPERATING LOSS Millions of euro Italy Iberia Latin America North America Europe Other Total 2020 2,139 (237) (83) (444) 174 2020 749 480 13 24 1,103 (230) 2,139 2020 68 (94) (88) (3) 4 (124) (237) 2019 2,229 (18) (18) (246) 179 2019 1,359 597 27 28 291 (73) 2,229 2019 169 66 (123) - 5 (135) (18) Change Change Change (90) (219) (65) (198) (5) (610) (117) (14) (4) 812 (157) (90) (101) (160) 35 (3) (1) 11 (219) -4.0% - - -80.5% -2.8% -44.9% -19.6% -51.9% -14.3% - - -4.0% -59.8% - 28.5% - -20.0% 8.1% - The increase in the gross operating loss in 2020 is mainly of the 5th Endesa Collective Bargaining Agreement; attributable to: › Italy, in the amount of €101 million, as a result of a re- › Spain, in the amount of €160 million, mainly related to a duction in revenue from services and from customer decline in revenue from services provided to other com- contracts for other Group companies, only partially off- panies of the Group; increased costs following the allo- set by a reduction in service costs and personnel expen- cation of provisions for the termination incentives pro- ses. These factors are mainly attributable to the spin-off gram as a result of changes introduced in the agreement of the Global Procurement and Global Digital Solutions on the voluntary suspension or resolution of employment business units, which are now included in the aggregate contracts; and restructuring costs related to the direct “Other”, the gross operating loss for which decreased by and indirect activities connected with the Group’s digita- €11 million. lization and energy-transition plans. These effects were Also of note is the negative impact on margins of costs in- partially offset by decreased costs related to the release curred for the COVID-19 pandemic (€47 million), mainly in of the electricity discount provision following the signing Italy and Spain. 171 Integrated Annual Report 2020The ordinary gross operating loss was €154 million smal- donations, as well as charges related to direct and indirect ler than the gross operating loss as a result of the non-re- activities connected with digitalization and the accelera- curring costs associated with COVID-19 for workplace tion of the energy transition (€107 million). sanitization activities, personal protective equipment and OPERATING LOSS Millions of euro Italy Iberia Latin America North America Europe Other Total 2020 (1) (140) (90) (6) 3 (210) (444) 2019 17 19 (122) - 3 (163) (246) Change (18) (159) 32 (6) - (47) (198) - - 26.2% - - -28.8% -80.5% The operating loss for 2020 is essentially in line with the €21 million decrease in depreciation, amortization and im- increase in the gross operating loss, taking account of the pairment losses. CAPITAL EXPENDITURE Millions of euro Italy Iberia Latin America Europe Other Total 2020 2019 Change 33 27 3 - 111 174 78 46 9 1 45 179 (45) (19) (6) (1) 66 (5) -57.7% -41.3% -66.7% - - -2.8% Overall capital expenditure was broadly in line with that in ment and Global Digital Solutions business units, which are 2019. The decrease in capital expenditure in Italy in 2020 now included under “Other”. is mainly attributable to the spin-off of the Global Procure- 172172 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsENEL SHARES Enel and the financial markets Gross operating profit per share (euro) Operating profit per share (euro) Group profit per share (euro) Group ordinary profit per share (euro) Dividend per share (euro) (1) Group 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) (3) 2020 1.65 0.82 0.26 0.51 0.358 2.79 8.57 5.23 8.17 83,110 10,167 2019 1.74 0.68 0.21 0.47 0.328 2.99 7.21 5.08 6.89 70,047 10,167 (1) Dividend approved by the Board of Directors on March 18, 2021 and proposed to the Shareholders’ Meeting of May 20, 2021 at single call. The amount includes the interim dividend of €0.175 per share approved by the Board of Directors on November 5, 2020 and paid from January 20, 2021. (2) Calculated on average share price in December. (3) The number of shares includes 3,269,152 treasury shares in 2020 and 1,549,152 treasury shares in 2019. Current (1) at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2018 Rating Standard & Poor’s Outlook Moody’s Fitch Medium/long-term Short-term Outlook Medium/long-term Short-term Outlook Medium/long-term Short-term (1) Figures updated to January 29, 2021. STABLE BBB+ A-2 STABLE Baa1 - STABLE A- F2 STABLE BBB+ A-2 POSITIVE Baa2 - STABLE A- F2 STABLE BBB+ A-2 POSITIVE Baa2 - STABLE A- F2 STABLE BBB+ A-2 STABLE Baa2 - STABLE BBB+ F2 The global economic context in 2020 was strongly im- market and domestic demand. pacted by the COVID-19 pandemic and the consequent In particular, the United States experienced a contraction restrictions on mobility, production and services. All of this of 3.5% in GDP and an increase in the unemployment rate caused a worldwide recession of unprecedented severity of over 8 percentage points, reaching the record levels re- in recent history, leading to an estimated 4% contraction in gistered during the 2008-2009 financial crisis. In response world GDP on an annual basis in 2020. to this recession, the government adopted major expansio- The specter of the crisis prompted the world’s govern- nary fiscal policies to support families and businesses. ments to adopt accommodative fiscal and monetary mea- In the euro area, the pandemic caused an estimated fall in sures to support the various productive sectors, the labor GDP of 6.8% and inflation stood at 0.3% on an annual basis 173 Integrated Annual Report 2020in 2020, leaving many countries experiencing deflation. The re distributed in 2019. labor market, however, proved more resilient thanks to sub- In relation to ordinary profit for 2020, on January 20, 2021 sidies from many governments. an interim dividend of €0.175 was paid, while the balance Both the Fed and the ECB intend to keep their main interest of the dividend is scheduled for payment on July 21, 2021. rates low until inflation stabilizes at around 2%. Furthermo- re, in July the European Council reached an agreement on The outlook for investors is changing rapidly: the changes the Next Generation EU, a recovery plan that includes €750 taking place and the challenges the world presents us to- billion in funding. day are also impacting the way we invest. Companies are As for Latin America, the pandemic crisis and the various no longer seen as closed systems, but rather as open sy- responses of individual governments have created a rather stems that generate wealth through interaction with the diverse macroeconomic picture. environment and the communities in which they operate, The world economic outlook for 2021 is more optimistic, and towards which they are accountable. albeit still burdened by the COVID-19 pandemic. Growth In this context, Enel’s pursuit of a strategy that, through projections will depend significantly on the development of decarbonization and seizing the opportunities offered by new vaccines and the speed of vaccination campaigns in electrification, seeks to create value for customers, society different countries. and the environment has been understood and appreciated by institutional investors, whose stake in Enel at December The crisis has also impacted the financial markets. The main 31, 2020 reached an all-time high of 62.3% (compared with European equity indices closed 2020 with losses. The Italian 60.3% at December 31, 2019), while the share of individual FTSE-MIB index slipped 5.4%, the Spanish Ibex35 index de- investors has fallen to a record low of 14.1% (compared with clined 15.5%, and the French CAC40 index was down 7.1%. 16.1% at December 31, 2019). The interest of the Ministry By contrast the German DAX30 rose 3.5%. for the Economy and Finance was unchanged at 23.6%. The number of Environmental, Social and Governance (ESG) The euro-area Utilities sector (EURO STOXX Utilities) closed investors continued to rise steadily: at December 31, 2020, the year with an increase of 9.8%. socially responsible investors (SRIs) held about 14.6% of Finally, as regards the Enel stock, 2020 ended with a price investors who have signed the Principles for Responsible of €8.276 per share, an increase of 17.0% compared with Investment represent 47.8% of share capital (43% at De- share capital (against 10.8% at December 31, 2019), while the previous year, outperforming both the European and cember 31, 2019). Italian sector indices. At the end of 2020 Enel had a weight of 14.9% in the FT- For further information we invite you to visit the Investor SE-MIB and 21.7% in the EURO STOXX Utilities. Relations section of our corporate website (http://www.enel. On January 22, 2020 Enel paid an interim dividend of €0.16 app, which contains financial data, presentations, real-time per share from 2019 profits and on July 22, 2020 it paid updates of the share price, information on the composition the balance of the dividend for that year in the amount of of corporate bodies and the rules of Shareholders’ Meetin- €0.168. Total dividends distributed in 2020 amounted to gs, as well as periodic updates on corporate governance €0.328 per share, about 17% higher than the €0.28 per sha- issues. com/investors) and download the “Enel Investor Relations” 174174 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsDevelopments in ESG investors 134 132 150 10.3 10.5 7.7 8.0 8.6 5.9 160 11.3 8.6 244 19.1 14.6 169 182 13.7 14.1 10.5 10.8 2014 2015 2016 2017 2018 2019 2020 Investors (no.) Float (%) Share capital (%) We have also created contact centers for private investors (whi- at azionisti.retail@enel.com) and for institutional investors (pho- ch can be reached by phone at +39-0683054000 or by e-mail ne: +39-0683051; e-mail: investor.relations@enel.com). Performance of Enel share price and the EURO STOXX Utilities and FTSE-MIB indices from January 1, 2020 to January 31, 2021 130 120 110 100 90 80 70 60 50 01/01 01/02 01/03 01/04 01/05 01/06 01/07 01/08 01/09 01/10 01/11 01/12 01/01 2020 Enel EURO STOXX Utilities FTSE-MIB Source: Bloomberg. 2021 175 Integrated Annual Report 2020Pisa, Milan, Silicon Valley, Boston, Rio de Janeiro, Madrid, Moscow, Santiago de Chile and Tel Aviv), they manage rela- tionships with all the players involved in innovation activities and are the main source of scouting for innovative startups and SMEs. The Labs (among which those in Milan, Pisa, Ca- tania, São Paulo, Haifa and Be’er Sheva are the most repre- sentative) allow startups to develop and test their solutions together with the Business Lines. During 2020, thanks to the Group’s positioning in innova- tive ecosystems and the consolidation of the Hub and Lab network, more than 40 bootcamps were organized in dif- ferent technological areas and startup scouting activities expanded to two new areas (Canada and Australia). A new FinSec Lab was opened in Be’er Sheva (Israel), thanks to Enel X and Mastercard, and is aimed at the development of early stage startups in the FinTech and cyber security fields. All this has enabled Enel to meet more than 2,600 startups and to launch more than 70 new collaborative relationships despite the pandemic. Every increasing importance is begin taken on by activities to promote and develop the culture of innovation and en- trepreneurship within the Company, working through the Innovation Academies and the Innovation Ambassadors project. Furthermore, in 2020 the activities of the innovation com- munities continued, involving different areas and skills wi- thin the Company. Energy storage, blockchain, drones, aug- mented and virtual reality, additive manufacturing, artificial intelligence, wearables, robotics and green hydrogen are the areas and technologies addressed within these com- munities. In one example, in recent years Enel has intensi- fied the use of drones in the monitoring and maintenance of its assets, inspecting solar fields, wind farms, dams and hydroelectric reservoirs, closed components in traditional plants and distribution lines with the aim of increasing the efficiency of operational and maintenance processes and above all reduce workers’ exposure to risks. Furthermore, storage systems, in addition to guaranteeing ongoing sup- port for current business activities, pave the way to new frontiers of sustainable business. As of 2020, €111 million (including personnel expenses) have been invested in innovation (R&D spending). INNOVATION AND DIGITALIZATION For Enel, innovation and digitalization are key pillars of its strategy to grow in a rapidly changing context while ensu- ring high safety standards, business continuity and opera- tional efficiency, and thus enabling new uses of energy and new ways of managing it, making it accessible to an ever larger number of people. In particular, data management plays a fundamental role in supporting the decision-making process with the develop- ment and application of advanced analytics and in crea- ting new synergies. Enel’s digital transformation is based on pillars (assets, customers, people), enablers (platforms, cloud, cyber security) and approaches to connect pillars and enablers (agile, data-driven). Robotics, artificial intelli- gence, cyber security, big data and the cloud are some of the main areas in which Enel is investing, thus confirming digitalization as one of the key dimensions of the 2021- 2023 Strategic Plan to support business development. The digital strategy is moving towards maximizing margins and reducing operating costs, to facilitate the energy transition. Enel also operates through an Open Innovability® mo- del, a consensus-based ecosystem that makes it possible to connect all areas of the Company with startups, indu- strial partners, small and medium-sized enterprises, rese- arch centers and universities through a variety of system, such as crowdsourcing platforms and the Innovation Hub network. The Company has numerous innovation partner- ship agreements that, in addition to Enel’s traditional lines of business in the renewables and conventional generation sectors, have promoted the development of new solutions for e-mobility, microgrids, energy efficiency and the indu- strial Internet of Things (IoT). Enel’s innovation strategy leverages the online crowdsour- cing platform (openinnovability.com) and a global network of 10 Innovation Hubs (of which 3 are also Labs) and 22 Labs (of which 3 are dedicated to startups), which consolidates the new model of collaboration with startups and SMEs. The latter offer innovative solutions and new business mo- dels, and Enel makes its skills, testing facilities and a global network of partners available to support their development and possible scale-up. The Hubs are located in the most important innovation ecosystems for the Group (Catania, 176176 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsIntellectual property In 2020, Enel renewed and strengthened its commitment to enable users to carry out supervisory, audit and perfor- the enhancement and development of its intellectual assets mance analysis activities; as a source of competitive advantage for the Group. › investments in networks for the management of smart The value for the Group is not only expressed through the meters, remote grid control and communication softwa- growing investment in innovation activities but also in the re; inestimable wealth of knowledge and skills that its people ac- › investments at Enel X in demand response systems; quire as a result of the opportunity to be able to work daily in › investments in power generation for predictive mainte- a cutting-edge digital working environment. nance systems; This drive creates a clear cross-fertilization effect among the › additional customizations of Group ERP (Enterprise Re- Group’s personnel, which translates into an ability to generate source Planning). ideas within a model of diffuse innovation, open and attentive to sustainability, and which can be summed up in the formula The patent activity of the Group is also proving to be prolific, of Open Innovability®. involving as many as 837 applications for patents in 137 tech- The models developed internally for strategic activities, such nological families. Of these, 692 have been granted and 145 as those relating to trading in energy commodities and we- are pending. ather variables, or of a technical nature, such as predictive The increase in the size of the entire portfolio of intellectual maintenance at generation plants or customer-care platfor- property rights held by the Enel Group corresponds to ms, are an expression of this impulse towards innovation. growing internal efforts to strengthen the information infra- It is precisely in this perspective that Enel’s intellectual pro- structure necessary for the immediate identification of the perty is directed at the service of the Group’s leadership in innovation generated, its evaluation and protection, as well achieving the strategic objectives of decarbonization, electri- as the ongoing monitoring of the portfolio’s evolution, with fication and the creation of platforms. a view to ensuring continuous and close alignment between This innovative impulse is also reflected in the Group’s invest- technological and commercial trajectories and correspon- ment in intangible assets, which show a significant increase, in ding forms of safeguarding the competitive advantage pro- line with the strategic direction delineated above. vided by intellectual property rights. In this regard, the increase in investment in intangible assets The Group also intends to continue to support and encoura- is particularly evident, with special regard to IT and digital ap- ge the development of its innovation model through specific plications, whether legally protected or not. The investments projects for internal dissemination by the Intellectual Proper- focused on all the Group’s Global Business Lines and mainly ty unit and through the creation of specific tools to identify, concerned internally developed software (i.e. internal custo- ascertain, protect and preserve on an iterative basis all in- mization of software purchased externally). Among these, we formation of value generated in Enel in accordance with the highlight: Open Innovability® model. › the technological infrastructure of Paytipper, consisting of an application bus into which peripheral interfaces de- veloped to meet different operational needs are integra- ted, with the goal of handling millions of financial tran- sactions per day. Other monitoring and control modules Integrated Annual Report 2020 177 PEOPLE CENTRICITY 66,717. The contraction in the Group workforce reflects the impact of the balance between new hires and terminations during the period (-565) and the change in the consolida- tion scope (a total of -971), which included the disposal of the Reftinskaya GRES plant in Russia, the disposal of hydro plants in the United States and the acquisition of Viva Labs. People management and development at Enel In the tables below, the number and variation in employees by gender, age group, job classification and geographical area are analyzed. An analysis by Business Line is also provided for the number of employees only. The Enel Group workforce at December 31, 2020 numbered YEAR-END WORKFORCE Employees by gender: - of which men - of which women Employees by age group: - <30 - 30-50 - >50 Employees by level: - senior manager - middle manager - office staff - blue collar Employees by geographical area Italy Iberia Latin America Europe North America Africa, Asia and Oceania 178178 no. no. % no. % no. no. % no. % no. % no. % % % % no. no. % no. % no. % no. % no. % no. % 2020 66,717 52,346 78.5 14,371 21.5 66,717 7,289 10.9 36,355 54.5 23,073 34.6 66,717 2.1 17.4 53.8 26.7 66,717 29,800 44.7 9,781 14.7 19,838 29.7 4,966 7.4 1,639 2.5 693 1.0 2019 68,253 53,933 79.0 14,320 21.0 68,253 7,899 11.6 37,121 54.4 23,233 34.0 68,253 2.0 16.6 53.1 28.3 68,253 29,767 43.6 10,123 14.8 20,240 29.7 5,907 8.7 1,639 2.4 577 0.8 Change (1,536) (1,587) -0.5 51 0.5 (1,536) (610) -0.7 (766) 0.1 (160) 0.6 (1,536) 0.1 0.8 0.7 -1.6 (1,536) 33 1.1 (342) -0.1 (402) - (941) -1.3 - 0.1 116 0.2 -2.3% -2.9% -0.6% 0.4% 2.4% -2.3% -7.7% -6.0% -2.1% 0.2% -0.7% 1.8% -2.3% 5.0% 4.8% 1.3% -5.7% -2.3% 0.1% 2.5% -3.4% -0.7% -2.0% - -15.9% -14.9% - 4.2% 20.1% 25.0% 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsWORKFORCE BY BUSINESS LINE No. Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other Total CHANGE IN WORKFORCE Balance at December 31, 2019 Hirings Terminations Change in consolidation scope Balance at December 31, 2020 BREAKDOWN OF CHANGES IN WORKFORCE Hiring rate New hires by gender: - of which men - of which women New hires by age group: - <30 - 30-50 - >50 New hires by geographical area Italy Iberia Latin America Europe North America Africa, Asia and Oceania at Dec. 31, 2020 at Dec. 31, 2019 8,142 8,298 34,332 6,324 2,989 5,731 901 66,717 2019 5.5 3,726 2,702 72.5 1,024 27.5 3,726 1,865 50.1 1,698 45.5 163 4.4 3,726 1,042 28.0 430 11.5 1,098 29.4 528 14.2 435 11.7 193 5.2 9,432 7,957 34,822 6,336 2,808 6,013 885 68,253 68,253 3,131 (3,696) (971) 66,717 -14.5% -16.0% -18.5% -2.9% -9.4% 7.6% -16.0% -26.9% -13.2% 0.1% 19.3% -58.3% -50.0% -16.0% 0.2% 18.9% -40.2% -28.7% -9.7% 7.8% -47.0% -37.3% -16.8% -0.9% 2.1% 21.2% 179 Change -0.8 (595) (499) -2.1 (96) 2.1 (595) (502) -6.6 2 8.8 (95) -2.2 (595) 2 5.3 (173) -3.3 (107) 2.3 (248) -5.3 (73) -0.1 4 1.1 % no. no. % no. % no. no. % no. % no. % no. no. % no. % no. % no. % no. % no. % 2020 4.7 3,131 2,203 70.4 928 29.6 3,131 1,363 43.5 1,700 54.3 68 2.2 3,131 1,044 33.3 257 8.2 991 31.7 280 8.9 362 11.6 197 6.3 Integrated Annual Report 2020Turnover rate Terminations by gender: - of which men - of which women Terminations by age group: - <30 - 30-50 - >50 Terminations by geographical area Italy Iberia Latin America Europe North America Africa, Asia and Oceania % no. no. % no. % no. no. % no. % no. % no. no. % no. % no. % no. % no. % no. % 6.0 3,696 3,001 81.2 695 18.8 3,696 547 14.8 1,273 34.4 1,876 50.8 3,696 1,011 27.3 599 16.2 1,393 37.7 299 8.1 313 8.5 81 2.2 7.1 4,820 3,766 78.1 1,054 21.9 4,820 626 13.0 1,867 38.7 2,327 48.3 4,820 1,607 33.3 254 5.3 2,103 43.6 369 7.7 392 8.1 95 2.0 (1.1) (1,124) (765) 3.1 (359) -3.1 (1,124) (79) 1.8 (594) -4.3 (451) 2.5 (1,124) (596) -6.0 345 10.9 (710) -5.9 (70) 0.4 (79) 0.4 (14) 0.2 -15.5% -23.3% -20.3% 4.0% -34.1% -14.2% -23.3% -12.6% 13.8% -31.8% -11.1% -19.4% 5.2% -23.3% -37.1% -18.0% - - -33.8% -13.5% -19.0% 5.2% -20.2% 4.9% -14.7% 10.0% Training and development better time management by supporting the well-being of people and their families. In response to the COVID-19 emergency, Enel promptly in- Growing automation and technological evolution open up tervened with appropriate measures to ensure the safety new scenarios for the Group and its people and are dri- of personnel and at the same time activating flexible wor- ving the need for new technical and professional expertise king approaches for over 37,000 people in the countries in and the simultaneous waning of other skills. In this context, which the Group is present. This global-scale response was the targeted reskilling and upskilling programs have the- made possible by the flexible working experience gained refore been strengthened, the former to learn skills and in Italy since as early as 2016 and then gradually extended expertise that enable people to fill new positions and ro- throughout the Group and by the technological transfor- les, while the latter involve the development of training and mation launched in 2014, which led to the integration of empowerment courses that enable employees to improve digitalization into corporate strategy, making Enel the first their performance in their job, increasing the skills available utility company to fully operate in the cloud. to them in their current position. In particular, Enel signed The adoption of flexible working has also meant giving pe- an agreement with the trade unions in December 2020 for ople the tools they need to work from home, ensuring the the implementation of an upskilling and reskilling training circulation of information and the effective organization plan in Italy, which includes over 40 training courses and of activities. Initiatives were also launched to support the the involvement of more than 20,000 people. The planned transition to the new digital reality, promote a work culture initiatives range from digital transformation for operational based on autonomy, delegation and trust, and encourage and commercial personnel, to job shadowing projects as 180180 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsan innovative learning method, passing through reskilling development of new languages, also promoting the forma- activities involving technical-professional and cultural skills. tion of internal trainers (“train the trainer”). In 2020, more External skilling initiatives were also undertaken, from the than 2.7 million hours of training were provided, a slight in- perspective of stewardship – responsible management of crease compared with the previous year despite the fact relations with Enel’s external stakeholders – which provide that almost all training was delivered remotely due to the for the accompaniment and growth of people outside the COVID-19 pandemic. This was made possible by the up- Company (institutions, external entities, suppliers) for the grading of digital tools and the E-Ducation platform, which acquisition of new skills. These include initiatives aimed at ensured broad access to content and expanded the culture female students in the last two years of high school in order of digitalization for learning. The training courses covered to promote a culture of STEM studies. issues related to conduct, technical issues, safety, new skills and digital culture. Enel promotes training activities for its people as a key ele- ment in ensuring their constant development. We have de- Total Group training costs in 2020 amounted to more than €18 million(1). veloped career paths to foster the evolution of our talent, the valorization of passions and personal aptitude and the AVERAGE TRAINING HOURS PER EMPLOYEE Average number of training hours Average number of training hours by level: - senior manager - middle manager - office staff - blue collar Average number of training hours by gender: - men - women hrs/ person hrs/ person hrs/ person hrs/ person hrs/ person hrs/ person hrs/ person 2020 2019 Change 40.9 38.8 2.1 5.4% 31.9 41.4 35.7 51.4 40.4 42.7 58.4 44.9 29.6 49.6 39.7 35.0 (26.5) -45.4% (3.5) -7.8% 6.1 1.8 0.7 7.7 20.6% 3.6% 1.8% 22.0% In a rapidly changing work environment, accelerated by the pandemic crisis, the Group has set itself the ambitious goal of promoting digital sustainability in the coming years Listening and improvement of organizational well-being through a series of training initiatives that illustrate all those In light of the digitalization of relations as a result of the technologies that enable our people to work and coexist COVID-19 pandemic, the Listening Channel has undergo- sustainably with the surrounding environment. ne a review. Accordingly, in 2020 a project was launched With regard to personal development activities, the quan- to make direct involvement approaches more constant and titative and qualitative Performance Assessment process dynamic, for the definition of action plans aimed at impro- in 2020 involved the various levels of Group personnel in a ving organizational well-being. The Open Listening survey fluid process. More specifically, 100% of eligible employees was also launched. This interview is intended to help build were involved in the 2019 Performance Evaluation Campai- our future, with 70% of personnel responding. People were gn, which was completed in July 2020. A review of the pro- asked to imagine the future of work in the “new normal” cess has been planned for the upcoming 2020 Campaign era: from ways of working remotely to workspaces, new te- – to be conducted between the 2020 and 2021 calendar chnologies, psychological and physical well-being and new years – that will enhance the specific features of individuals models for the leadership of the future. Of total respon- and leverage people’s talents and inclinations. dents, 93.5% declared a high level of involvement (People Engagement rate). In the course of 2021, global and spe- (1) The cost calculation takes account of the specific training account in the New Primo system. This includes all external training costs and is currently the only form of certified information on training costs available. 181 Integrated Annual Report 2020cific action plans will be prepared for the various targets through a global reporting process that measures the per- populations identified. Diversity and inclusion formance of a comprehensive set of KPIs on all dimensions for internal and external purposes. In particular, with regard to gender, Enel has set itself two public objectives: to en- sure equal representation of the two genders in the initial stages of the selection processes (50% by 2021) and to in- Enel’s commitment to promoting diversity and inclusion is a crease the number of female managers and middle mana- process that started in 2013 with the adoption of our policy gers. In 2020, women represented 44% of people involved on human rights, followed in 2015 by our global diversity in the selection process, an increase on previous years (42% and inclusion policy, published in conjunction with Enel’s in 2019), while the number of female managers and middle adoption of the Women’s Empowerment Principles (WEP) managers increased by 6%. promoted by the UN Global Compact and UN Women and The steady increase in female managers in recent years in line with the United Nations Sustainable Development has been accompanied by a simultaneous increase in the Goals. In 2019, the global workplace harassment policy was Equal Remuneration Ratio(2) (ERR), which in 2020 was equal published. It sets out the principle of respect for integrity to 83.3%, a slight improvement on the 83.2% registered and dignity of the individual in the workplace and addresses in 2019 (equal to 82.4% on a unchanged euro exchange the issue of sexual harassment and harassment connected rate basis). These results are evidence of the management with discrimination, the principles of which are delineated actions taken to valorize the presence of women in top in the Statement against Harassment in the Workplace. positions, the effects of which will be fully appreciable in Enel’s approach is based on the fundamental principles, the medium/long term, taking due account of generational enunciated in the diversity and inclusion policy, of non-di- dynamics. scrimination, equal opportunities and human dignity in all The following table demonstrates Enel’s commitment to its forms, inclusion and promoting work-life balance. The diversity and inclusion, showing the proportion of disabled application of this policy has enabled the development of personnel or personnel belonging to protected categories, global and local projects that focus on diversity in terms the number of women in management positions and the of gender, disability, age, nationality and disseminating the ratio for basic salary and average remuneration between culture of inclusion at all levels of the organization. women and men. The progress of D&I policies is monitored periodically (2) ERR (Equal Remuneration Ratio) = fixed + variable remuneration of female managers/fixed + variable remuneration of male managers. 182182 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsDIVERSITY AND INCLUSION Disabled personnel or personnel belonging the protected categories Women in management positions (1) Ratio of base salary to remuneration Ratio base salary women/men: - senior manager - middle manager - office staff - blue collar Ratio base remuneration women/men: - senior manager - middle manager - office staff - blue collar 2020 2019 Change 3.3 3.3 - - 3,825 3,602 223 6.2% 108.1 86.7 96.5 90.2 77.0 108.3 83.3 95.7 90.3 77.8 107.4 86.7 96.0 90.0 68.6 107.6 83.2 95.2 90.0 70.1 0.7 - 0.5 0.2 8.4 0.7 0.1 0.5 0.3 7.7 0.7% - 0.5% 0.2% 12.2% 0.7% 0.1% 0.5% 0.3% 11.0% % no. % % % % % % % % % % (1) The number of women in management positions was calculated considering the number of women managers and middle managers in line with the new KPI “Increase the number of women managers and middle managers” of the 2020-2022 Sustainability Plan. Consequently, the corresponding value for the previous period was restated. Workplace health and safety our contractors, operational improvements and safety with equipment, tools and processes. Safety is closely integrated into tender processes, and we closely monitor our contractors’ performance both upstre- am with our qualification system and ongoing as the con- Enel considers employee health, safety and general well- tracts progress through numerous control processes and being to be its most valuable asset, one to be preserved tools such as the Supplier Performance Management (SPM) both at work and at home. We are therefore committed to system. During 2020, we further improved and integrated developing and promoting a strong culture of safety that the HSE Terms into all contracts. These are binding con- ensures a healthy work environment and protection for all ditions that companies must agree to when contracts are those working with and for the Group. Safeguarding our awarded. The document, unique for the Group, defines the own health and safety and that of the people with whom requirements regarding health, safety and significant envi- we interact is the responsibility of everyone who works for ronmental aspects that the contractor must comply with Enel. For this reason, as provided for in the Group “Stop and enforce with their subcontractors during the execution Work Policy”, everyone is required to promptly report and of works. In addition, during the year considerable impulse halt any situation of risk or unsafe behavior. The constant was given to the “Safety Supplier Assessment”, specific au- commitment of us all, the integration of safety both in cor- dits on safety issues to be undertaken at the suppliers’ pre- porate processes and training, the reporting and detailed mises and their worksites. The audits are performed during analysis of all information, near misses, safety warnings, the qualification phase for each new supplier in cases whe- non-compliance, controls, rigor in the selection and mana- re critical issues have emerged (severe or fatal injuries) or gement of contractors, the sharing of experience and best where the supplier has received a low SPM rating. In 2020, practices throughout the Group as well as benchmarking despite the COVID emergency, a total of 1,185 contractor against the leading international players are all cornersto- assessments were performed. nes of Enel’s culture of safety. These values are part of the SHE project, launched in 2018 and further strengthened The following table reports the main workplace safety in- in 2020.The project involves the Group’s people and sup- dicators. pliers with initiatives regarding safety, health and the en- vironment. It is aimed at fostering continuous growth with 183 Integrated Annual Report 2020Enel Contractors Total injuries Enel Contractors Injury frequency rate (1) Enel Contractors Fatal injuries Enel Contractors Fatal injury frequency rate Enel Contractors “High consequence” injuries (2) Enel Contractors “High consequence” injury frequency rate Enel Contractors millions of hours millions of hours millions of hours no. no. no. i i i no. no. no. i i i no. no. no. i i i 2020 2019 Change 403.239 398.553 4.69 1.2% 125.264 129.069 (3.805) -2.9% 277.975 269.484 210 75 135 0.521 0.599 0.486 9 1 8 0.022 0.008 0.029 23 3 20 0.057 0.024 0.072 292 116 176 0.733 0.899 0.653 7 1 6 0.018 0.008 0.022 19 3 16 0.048 0.023 0.059 8.491 (82.00) (41) (41) (0.212) (0.300) (0.167) 2.00 - 2 0.004 - 0.007 4.00 - 4 0.009 0.001 0.013 3.2% -28.1% -35.3% -23.3% -28.9% -33.4% -25.6% 28.6% - 33.3% 22.2% - 31.8% 21.1% - 25.0% 18.8% 4.3% 22.0% (1) This index is calculated as the ratio between the number of injuries (all injury events including those with three or fewer missed days of work) and hours wor- ked/1,000,000. (2) Sum of: - - - injuries that at December 31, 2020 involved more than six months of absence from work; injuries that at December 31, 2020 were still under investigation and are considered serious (initial prognosis > 30 days); injuries classified as “life changing accidents” (LCA), regardless of the number of missed days of work connected with them. In 2020, the injury frequency rate for Enel employees declined The Enel Group has established a structured health mana- to 0.599 injuries for every million hours worked (-33.4 compa- gement system, based on prevention measures to develop red with 2019), confirming the effectiveness of the safety stra- a corporate culture that promotes psycho-physical health, tegy and policies implemented in the Group. In 2020, 1 fatal organizational well-being and a balance between personal accident occurred in Brazil involving Enel Group employees, and professional life. With this in mind, the Group conducts and 8 fatal accidents involving contractors (5 in Brazil and one global and local awareness campaigns to promote healthy each in Italy, Spain and Colombia). The causes of these nine lifestyles, sponsors screening programs aimed at preven- fatal accidents were mainly associated with electrical inciden- ting the onset of diseases and guarantees the provision of ts. Also in 2020, 3 “high consequence” accidents occurred in- medical services. More specifically, we have a policy for the volving employees of the Enel Group, while 20 such accidents prevention of local diseases and provide support in the event involved contractors. They were mainly of a mechanical nature. of diseases or accidents abroad. A smartphone application is Training and awareness-raising activities concerning issues rela- also available with travel information and guidelines on vac- ting to the protection of health and safety are a key element of cinations, while a new global insurance policy has been taken the Group’s safety culture. A number of communication campai- out for all employees traveling abroad. The Enel Group has a gns were carried out during the year in areas of specific impor- systematic and ongoing process for identifying and asses- tance for the Company. At the same time, some 903,802 hours sing work-related stress risks, in accordance with the “Stress of training on safety issues were provided to Enel personnel. at Work Prevention and Well-being at Work Promotion” po- 184184 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements licy, for the prevention, identification and management of stress in work situations, also providing recommendations aimed at promoting a culture of organizational well-being. The Group also constantly monitors epidemiological and health developments in order to implement preventive and protecti- ve measures for the health of employees and those who work with the Group, both locally and globally. Since the outset of the COVID-19 emergency in February 2020, Enel has taken steps to protect the health of all workers and ensure the continuity of electricity supply to the communities in which it operates. A global task force has been created, as well as local task forces in each country where Enel is present, to monitor the progress of the pandemic with dedicated indicators and immediately take all necessary prevention measures. Given the persistence of the COVID-19 emergency and its spread on a global scale, at the end of 2020 a HSE Emergency Management unit was set up within the Parent’s HSEQ department, with a focus on heal- th, safety and environmental emergencies, with the objective of integrating the HSE emergency management process into the company organization and ensuring the integration and conti- nuous alignment of strategy and the management of emergen- cy events at the Business Line and Country level. Since the beginning of the pandemic, new operating models have been activated to minimize the risk of contagion and spe- cific prevention protocols have been implemented, dynamically adapting the activity plan and the measures defined in respon- se to developments in the pandemic at a global level. All per- sonnel whose jobs could be done remotely have been working using flexible working arrangements since the beginning of the emergency. For operational units (about 13,000 employees), who necessarily work in the field, stringent measures to con- tain the spread of the disease were applied through the division of teams into smaller nuclei (elementary cells) and the adoption of temporal and/or physical segregation measures. Stress te- sts were conducted for critical infrastructures with the aim of verifying their operation in various possible contagion scena- rios. Information and training initiatives were launched for em- ployees on the prevention measures to be adopted. Enel also invited its suppliers on a global scale to take all actions deemed appropriate to ensure the protection of the health of their wor- kers and the limitation of the spread of the disease. Influenza vaccination programs were implemented as a preventive health measure in all the main countries in which Enel operates. Responsible relations with communities Last year was marked by the health emergency, which had sweeping socio-economic consequences at a global level. The economic effects of the crisis have also increased vulne- rability and inequality in the communities in which the Group operates, but thanks to our strong and extensive roots in those communities we have been able to identify measures to provi- de immediate support to address health and socio-economic emergencies. From Europe to Latin America, Asia, Africa and Australia, the Enel Group implemented about 450 sustainabili- ty projects as an immediate response in two main areas: › containment of the health emergency with aid initiatives for hospitals and people working on the front line; › support for the economic revitalization of communities, through programs to support food security, development of micro-entrepreneurship, services for vulnerable custo- mers and professional and educational distance training. Our knowledge of specific local circumstances and con- stant listening to the needs of stakeholders have also made it possible to develop concrete responses to the new context delineated by restrictions such as social distancing and tra- vel bans and the multiplicity of economic, social and cultural realities in which Enel operates and of which it is an integral part in the operation of our assets. Specific initiatives have focused on local socio-economic development plans, with targeted solutions to stimulate economic recovery through the development of local markets, specific services dedica- ted to vulnerable customers and actions aimed at combating energy poverty and ensuring social inclusion for the weakest categories of the population by leveraging access to new te- chnologies and circular economy approaches. The continuous attention to social and environmental factors, combined with the objective of contributing to the economic and social progress of the communities, makes it possible to cre- ate long-term value for the Company and for the communities in which it operates, promoting a new balanced development mo- del that leaves no one behind. This model has been incorporated along the entire value chain: analyzing the needs of communities right from the development phases of new activities; taking ac- count of social and environmental factors in the establishment of sustainable worksites; managing assets and plants to make them sustainable development platforms to the benefit of the territories in which they are located. Another development was the extension of this approach to the design, development and supply of energy services and products, helping to build increa- singly sustainable communities. In 2020, Enel developed over 2,100 projects with 8 million 185 Integrated Annual Report 2020beneficiaries,(3) concretely contributing to the development ation in its various forms (safety, savings, timeliness, quality, and social and economic growth of local communities. The earnings, revenue, flexibility) as a result of ever-greater inte- projects to ensure access to affordable, reliable, sustainable raction and integration with the outside world and the diffe- and modern energy (SDG 7) have involved 9.8 million people rent parts of the company organization. In 2020, we signed to date,(4) those to foster the economic and social develop- agreements with a total of more than 24,000 vendors. ment of communities (SDG 8) have reached 3 million bene- Vendor management involves three essential stages, whi- ficiaries,(5) while initiatives to promote quality education (SDG ch integrate social, environmental and governance issues: 4) have benefited 2.3 million people.(6) the qualification system, the definition of general terms A fundamental lever in implementing these projects is the and conditions of contract, and the Supplier Performance use of about 1,000 partnerships with social enterprises, Management (SPM) system in the evaluation process. Enel’s non-profit organizations, startups and institutions opera- global vendor qualification system (with about 12,000 acti- ting both locally and internationally that promote the deve- ve qualifications as at December 31, 2020) enables us to lopment of the territory through innovative and tailor-made accurately assess businesses that intend to participate in interventions. The search for social innovation ideas and solu- tender processes through the analysis of compliance with tions through the Open Innovability® ecosystem is constant, technical, financial, legal, environmental, health and safety, based on openness and sharing through various tools such human and ethical rights and integrity requirements, repre- as, for example, crowdsourcing platforms (openinnovability. senting a guarantee for the Company. As regards the ten- com) and the Innovation Hub network. dering and bargaining process, Enel continued to introdu- ce aspects related to sustainability in tendering processes, The progress in terms of the Group’s contribution to achieving with the introduction of a specific “K for sustainability” fac- the United Nations Sustainable Development Goals (SDGs) has tor, which takes account of environmental and social fac- also enabled Enel to revise its 2030 goals, doubling the number tors and supplier safety. Furthermore, specific contractual of people it intends to benefit through projects to ensure qua- clauses regarding sustainability are envisaged in all con- lity education (SDG 4: target of 5 million beneficiaries by 2030) tracts for works, services and supplies, including respect and access to energy (SDG 7: target of 20 million beneficiaries for and protection of human rights and compliance with by 2030). The commitment to initiatives to promote long-la- ethical and social obligations. The SPM system is designed sting, inclusive and sustainable economic growth has also been to monitor vendor services in terms of the quality, timeli- confirmed (SDG 8: target of 8 million beneficiaries by 2030). ness and sustainability of contract execution. Furthermore, we continued working on those activities that enable the ever-greater integration of environmental, social and governance issues in the supply chain strategy, creating shared value with vendors. These include meetings and in- formation initiatives with contractors on sustainability issues, with specific regard to safeguarding health and safety. Sustainable supply chain In addition to meeting certain quality standards, the services of our vendors must also go hand in hand with the adop- tion of best practices in terms of human rights and working conditions, health and safety and environmental and ethical responsibility. Our procurement procedures are designed to guarantee service quality in full respect of the principles of economy, effectiveness, timeliness, fairness and transparen- cy. The procurement process plays a central role in value cre- (3) Beneficiaries are the people for which a project is implemented. Enel only considers direct beneficiaries in the current year. The number of beneficiaries includes the activities and projects carried out in all the areas in which the Group operates (for companies within the scope of the Non-Financial Statement, the number of beneficiaries does not include companies accounted for using the equity method, Group foundations and non-profit organizations and companies operating within the Build, Sell and Operate mechanism). (4) Cumulative 2015-2020 figures for total number of SDG 7 beneficiaries to date. (5) Cumulative 2015-2020 figures for total number of SDG 8 beneficiaries to date. (6) Cumulative 2015-2020 figures for total number of SDG 4 beneficiaries to date. 186186 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThe circular economy rials throughout the life cycle: from production to installation, to decommissioning of generation assets. A concrete example of the Group’s circular approach is the For Enel, the circular economy represents a strategic dri- “Circular Smart Meter” project, which represents a virtuous ver and a fundamental choice for achieving competitiveness example of the application of the principles of the circular objectives, both in economic terms and in terms of risk re- economy in Global Infrastructure and Networks. As the plan duction, and, at the same time, creating a fully sustainable bu- to replace 32 million first generation meters in Italy moves siness model to respond to the great global environmental and forward, Enel has decided to transform their disposal into an social challenges. opportunity, using the material from the discontinued meters The Group’s vision is based on five pillars, which act through to build the new “Circular Open Meter”. To develop the device, three main levers: design, methods of use and the closure of a process for selecting and regenerating the polycarbonate cycles. from the discontinued meters was also developed, which in For the result to be effectively transformative, the circular ap- the future could also be extended to the other Country seg- proach must inevitably embrace the entire value chain. For this ments of the Group, where technically possible. In June 2020 reason, it has been implemented in all the Group’s activities, the NMi Certification Body (Nederlands Meetinstituut) for the acting both through the Business Lines, as regards techno- MID (Measuring Instruments Directive) approved the use of re- logies and business models, and through the Countries, as generated plastic for the Open Meter, and the manufacture of regards cross-sectoral synergies, collaborations and ecosy- the initial lot of 30,000 Circular Open Meters began. Produced stems. To this end, the main areas of activity address the fol- with 100% regenerated plastic, the new meters minimize the lowing aspects. › Suppliers: the Circular Procurement strategy with sup- pliers has been operational since 2018 to measure the circularity of what we purchase, reward the most virtuous environmental impact for the benefit of customers, the terri- tory and the environment. More specifically, the new process is estimated to have reduced CO2 emissions by 210 tons for the first lot compared with the traditional process, using a life and co-innovate to rethink assets and products together. cycle assessment method. Furthermore, thanks to the rein- › Assets: the Global Power Generation and Global Infra- tegration of the waste material from the old devices (mainly structure and Networks Business Lines are both re- plastic) into the production process of the new Circular Open viewing the value chain of the main projects they have Meters, waste has also been reduced by an estimated 31.5 undertaken recently, such as smart meters, photovoltaics tons. In percentage terms, 48% by weight of the new meters and wind power, from a circular point of view and leve- consists of regenerated materials, ensuring the virtuous ma- raging their operational assets. Global Trading, bearing nagement of their end of life, for which the recyclability and in mind the specificities of the various assets involved, reuse of materials (metals in addition to plastic) is estimated is supporting this transition by extending its skills to the at about 79% by weight. areas of new materials and secondary raw materials. › Customers: Enel X is marketing itself as an accelerator of the circularity of its customers, both by continuously measuring and improving its products and services and by providing measurement and consulting services to cu- stomers to increase their circularity. Since the initial stages of adopting a circular approach, Enel has placed a strong focus on measuring the environmental and economic benefits of circularity, with the awareness that a model that exceeds and, ideally, eliminates the consump- tion of non-renewable resources must be measurable in or- der to be not only sustainable but also economically compe- titive. As part of the 2020 Capital Markets Day, for example, a new circularity indicator was introduced for generation as- sets, supplementing existing indicators on direct emissions. This additional indicator photographs the evolution over the years of the consumption of materials per MWh generated on a whole life basis, measuring the consumption of mate- 187 Integrated Annual Report 2020Product as service A business model in which the customer purchases a service for the company retains ownership of the product, maximizing usage and useful life. E S U R A L U C R I C Sharing platforms Systems for joint management by multiple users of products, goods or skills. Extending useful life Approach to the design and operation of an asset or product intended to extend its useful life, such as modular design, facilitated repair or predictive maintenance. Circular inputs Model of production and use based in renewable inputs or inputs from previous life cycles (reuse and recycling). L A R D E U C S I G N R I C E X T ENDING U SEFUL LIFE | | | | | | | | ||||||||||||| ||||||||||| R A S L T U U C P R N I C I | | | | | | | | | | | | | | | A P S R S O E D R V U C T I C E | | | | | | | | | | | | | | | | | | | | | N E C W Y C L |||||||||||||||| LIFE ES | | ||||||||||||| R IN G O R MS A H S P L F T A V A L U E R E C O V Y R E New life cycles All solutions designed to preserve the value of an asset at the end of its life cycle thanks to reuse, regeneration, upcycling or recycling, in synergy with other pillars. 188188 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||| SIGNIFICANT EVENTS IN 2020 Brindisi plant - Ash dispute volving a number of officers of Enel Produzione SpA, as well as certain third parties who are today owners of the land With regard to the criminal investigation initiated by the adjacent to the plant – formerly Enel’s – on which ash was Public Prosecutor’s Office of the Court of Lecce in 2017 found. concerning the use of fly ash in the cement industry, the The alleged offenses are as follows: failure to restore the Brindisi power plant was involved in a criminal investigation site (Article 452-terdecies of the Italian Criminal Code) for that resulted in the issue of a preventive seizure order that a number of areas affected by the spillage of ash produ- allowed operation of the plant subject to certain techni- ced up to the 1980s by the Pietrafitta power plant and ash cal requirements. The order also provided for the seizure from other company plants, and other areas where conta- of Enel Produzione assets and receivables in an amount of mination with polychlorinated biphenyls (“PCBs”) was found about €523 million. On August 1, 2018, the Lecce Public associated with decommissioned mining equipment; envi- Prosecutor lifted its seizure of the Brindisi plant, with the ronmental pollution (Article 452-bis of the Criminal Code) consequent termination of the judicial custody/administra- connected with the PCB contamination, with respect to tion of the facility and the restitution of the other seized as- which Enel Produzione SpA was also charged with admi- sets to Enel Produzione, on the basis of the report prepared nistrative liability pursuant to Legislative Decree 231/2001. by the experts appointed by the investigating magistrate at In the summer of 2019, Enel Produzione SpA filed a petition the Court of Lecce, which fully confirmed the appropriate- for dismissal, which was accepted by the prosecutor for the ness of the operation of the plant. crime of environmental pollution, with consequent dismis- However, the preliminary investigation is continuing both sal of the charge pursuant to Legislative Decree 231/2001. against the accused individuals and the company pursuant A number of environmental associations filed an objection to Legislative Decree 231/2001. to the dismissal, and on February 21, 2020 a hearing was On January 9, 2020, the original notices of the preliminary held before the investigating magistrate, which ended with hearing set for January 29, 2020 were received. Due to a dismissal of the charges (May 28, 2020), which, in brief, ac- number of irregularities in the notices, the hearing was ini- cepted all of Enel’s defenses and confirmed the dismissal tially postponed until April 8, 2020. However, owing to the of any other possible charges – even if not brought by the measures imposed to counter the COVID-19 pandemic, the Prosecutor’s Office – relating to the possible health effects hearing was again postponed until June 10, 2020 and then caused by the presence of the ash. again until November 20, 2020, as a result of the impossibi- Accordingly, the criminal proceedings are continuing with lity of conducting the argument phase with the necessary sole regard to the crime of failure to restore the site, with guarantees provided for in health and safety guidelines. This respect to which in December 2019 the Enel Produzio- hearing was also not held due to the persistence of the he- ne SpA employees presented an application for a stay of alth emergency. In any event, the Region of Puglia and the proceedings with probation, consisting in the implemen- City of Brindisi filed to join the proceeding as civil plaintiffs, tation of a program agreed with the Prosecutor’s Office the admissibility of which was discussed at the hearing of for proportionate and fair restoration with respect to the March 4, 2021. Following the discussion, the court did not complaints filed against the defendants. The probation he- issue a ruling and adjourned the hearing to April 21, 2021. aring was held on October 29, 2020, when the investigating Criminal proceedings connected with Pietrafitta plant With regard to the Pietrafitta thermal generation plant, the Perugia Public Prosecutor had started an investigation in- magistrate of the Court of Perugia granted the request for probation. The hearing was then postponed to February 18, 2021, when the program proposed by Enel Produzione was approved, setting a deadline of nine months for its execu- tion. 189 Integrated Annual Report 2020Connection to the grid of São Gonçalo, the largest photovoltaic plant in South America agreement for the acquisition of Celg-D by Enel Brasil SA. On April 26, 2019, Law 20468 was promulgated. With the law, the state of Goiás fully revoked the tax relief referred to above. On May 5, 2019, Celg-D filed an ordinary petition On January 13, 2020 Enel Green Power Brasil Participações and a request for a precautionary suspension against the Ltda (EGPB) started operations to connect the 475 MW state of Goiás to contest this law. On September 16, 2019, section of São Gonçalo photovoltaic plant, located in São the Court of the state of Goiás denied the petition for pre- Gonçalo do Gurguéia, in Brazil’s northeastern state of Piauí, cautionary relief, citing the absence of any danger in delay, to the grid. The construction of the 475 MW section of the a requirement for the granting of precautionary relief. On solar plant involved an investment of around R$1.4 billion, September 26, 2019, Celg-D filed an appeal (agravo de in- equivalent to approximately $390 million. Once fully up and strumento) before the Court of the state of Goiás against running, the 475 MW section of the plant will be able to ge- the decision denying the precautionary suspension, clai- nerate over 1,200 GWh per year while avoiding the emission of over 600,000 metric tons of CO2 into the atmosphere. ming that the repeal of the tax credit law is unconstitutional to the extent that these credits were established in accor- Funac and the ICMS tax relief dance with applicable law and constitute acquired rights. As part of the same appeal proceeding, the state of Goiás initiated an action to challenge the admissibility of the Celg-D petition, which was granted on a preliminary basis With Law 20416 of February 5, 2019, the state of Goiás and subsequently challenged by Celg-D. On September 7, shortened from January 27, 2015 to April 24, 2012 the pe- 2020, the state of Goiás submitted its reply to the precau- riod of operation of the Funac fund (established with Law tionary petition filed with the appeal. 17555 of January 20, 2012) and the tax benefit system (crea- Moreover, the Brazilian association of electricity distribu- ted with Law 19473 of November 3, 2016) that allowed Celg tion companies (ABRADEE) had filed an action for a ruling Distribuição SA to offset payment obligations in respect on constitutionality with the Constitutional Court of Brazil of the ICMS - Imposto sobre Circulação de Mercadorias (Supremo Tribunal Federal) with regard to Laws 20416 and e Serviços (tax on the circulation of goods and services). 20468. This was denied on June 3, 2020 with an individual On February 25, 2019, Celg-D appealed the provisions of Decision by the judge-rapporteur for lack of formal requi- Law 20416 before the Court of the state of Goiás, filing a rements. On June 24, 2020, the ABRADEE filed an appeal writ of mandamus and an accompanying petition for a pre- (agravo regimental) against that decision. On September cautionary suspension, which was denied on a preliminary 21, 2020, the Supreme Court of Brazil, without going into basis on February 26, 2019. Celg-D appealed this ruling the merits of the case, rejected ABRADEE’s appeal for for- and the Court of the state of Goiás allowed the appeal on mal reasons and the proceeding was concluded. On Octo- June 11, 2019. On October 1, 2019, the Court of the state ber 15, 2020, ABRADEE filed an appeal against this decision. of Goiás issued an order revoking the precautionary me- asure previously granted in favor of Celg-D and, accordin- gly, the effects of the law were restored as from that date. Celg-D filed an appeal against this decision, claiming that Hydroelectric concessions the right to guarantee tax credits has both a legal and con- Italian regulations governing large-scale hydroelectric con- tractual basis and that, therefore, the actions that the state cessions were recently modified by the “Simplifications De- of Goiás has taken in order to fully suspend the application cree” (Decree Law 135 of 2018 ratified with Law 12 of Fe- of these laws are patently unfounded. On October 2, 2019, bruary 11, 2019), which introduced a series of innovations the appeal filed by Celg-D was denied. On November 21, regarding the granting of such concessions upon their 2019, Celg-D challenged this decision before the Superior expiry, or in the event of forfeiture or renunciation, and the Tribunal de Justiça (STJ). On February 27, 2020, the Tribunal valorization of the assets and works connected to them to de Justiça (TJ) declared inadmissible the appeal by Celg-D, be transferred to the new concession holder. This legisla- which on May 5, 2020 appealed this decision before the STJ. tion also introduced a number of changes in the matter These proceedings are under way. It is important to note of concession fees as well as an obligation to provide free that the coverage of the Funac fund is provided for in the power to public bodies (220 kWh of power for each kW of 190190 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsaverage nominal capacity of the facilities covered by the concession). In implementation of this national law and under specific Enel reaches 65% stake in Enel Américas enabling authority, various regions (Lombardy, Piedmont, On April 3, 2020, Enel announced its intention to increase Emilia-Romagna, Friuli-Venezia Giulia and the Province of its shareholding in its Chilean listed subsidiary Enel Améric- Trento) enacted regional laws. as SA by up to an additional 2.7% in order to reach the maxi- In the view of the Company, both the national law and the mum shareholding currently permitted under the bylaws of regional implementing legislation violate Community princi- Enel Américas, equal to 65%. To this end, Enel entered into ples and constitutional principles such as property rights, the two new share swap agreements (the “share swap tran- principle of legal certainty, the principle of proportionality and sactions”) with a financial institution. On May 28, 2020, fol- legitimate expectations and the freedom of enterprise. lowing the settlement of two share swap transactions en- In particular, the rules do not expressly provide for the tran- tered into in June 2019 with a financial institution, the stake sfer of the business unit from the outgoing to the suc- held by Enel SpA in Enel Américas amounted to 62.3%. cessor concession holder, and also establish inadequate Subsequently, on August 18, 2020, Enel SpA increased its criteria for the valorization of the works to be transferred, holding in Enel Américas to 65% of that company’s sha- which threatens to create what is essentially a mechanism re capital, following the settlement of the two share swap for expropriation, in violation of constitutional principles. transactions entered into in April 2020. The provision for the payment of the new fee and the obli- The above transactions are in line with the announced goal gation to supply free electricity for the existing holders of of the Enel Group to increase its shareholding in the Group current concessions entails the introduction in the con- companies operating in South America, thus reducing the cession relationships of an unexpected and unreasonable presence of non-controlling shareholdings. element of significant financial imbalance, in clear violation of the principle of reasonableness and proportionality of the fee that constitutional case law has established must be respected in the event that changes worsening the po- sition of a party are introduced in the context of long-term Early closure of Unit 2 of the Brindisi plant is authorized relationships. On May 28, 2020, Italy’s Ministry for Economic Development The government challenged a number of the regional im- gave Enel the green light for the early closure of Unit 2 of the plementing laws before the Constitutional Court, claiming Federico II thermal power plant in Brindisi as from January the violation of various constitutional principles. 1, 2021, following the Company’s request presented in Ja- The Company participated in the aforementioned proce- nuary 2020. This is the first of the plant’s four coal-fired ge- edings before the Constitutional Court (in July 2020 in the neration units set to be closed definitively. In line with Enel’s proceeding involving the regional law of Lombardy and in strategy to decarbonize its electricity generation mix and February 2021 in the proceeding involving the provincial law with the objectives of Italy’s Integrated National Energy and of Trento and the regional law of Piedmont) and also chal- Climate Plan, in recent months the Company has started lenged the first implementing acts issued under the indivi- the permitting process for the conversion of the site into dual regional laws before the competent judicial authorities a high efficiency gas-fired plant. This process is necessary (Regional Administrative Court and Regional Water Resour- to ensure the complete closure of the Brindisi coal plant by ces Court) asking that they be declared void and raising the 2025, while also guaranteeing the security of the national question of constitutional illegitimacy of both the national electricity grid. In addition, Enel is developing projects for law and the regional laws. the installation of photovoltaic capacity within the site, as The trade associations (Utilitalia and Elettricità Futura) also part of the broader development initiative for the installa- presented briefs in the context of the proceedings brou- tion of new renewables capacity throughout Italy. ght before the Constitutional Court by the government. The early closure of Unit 2 of the Federico II plant in Brin- In addition, other sector operators have proposed legal disi is part of Enel’s commitment to the energy transition actions against the implementing measures issued under towards an increasingly sustainable model. the individual regional laws, requesting that they be de- clared void. 191 Integrated Annual Report 2020The Enel Group accelerates the closure of its last coal plant in Chile methods and any listing on regulated markets or multila- teral trading facilities, taking account of developments in market conditions. In line with its decarbonization strategy, the Enel Group clo- sed Unit I of the Bocamina plant in January 2021 and expects to close Unit II of the same plant by May 31, 2022, simulta- neously planning the completion of 2 GW of renewables ca- pacity in the country through Enel Green Power Chile. More Enel included in MSCI ESG Leaders Indexes for the first time specifically, on May 28, 2020 Enel SpA announced that its On June 17, 2020, Enel was included for the first time in the Chilean subsidiaries Enel Chile SA and Enel Generación Chi- MSCI ESG Leaders Indexes following the annual review carried le SA had informed the market of the decision of their re- out by the leading Environmental, Social and Governance (ESG) spective Boards of Directors to expedite the closure of the research and index provider MSCI of its sustainability indices. Bocamina coal-fired plant located in Coronel. Specifically, This capitalization-weighted index series provides exposure to Enel Generación Chile asked the Chilean National Energy companies with high ESG performance relative to their sector Commission (CNE) to authorize the termination of opera- peers. In addition, Enel has been confirmed in the prestigious tions at Units I (128 MW) and II (350 MW) of the plant by the FTSE4Good Index series and Euronext Vigeo Eiris 120 Indices. scheduled dates. The closure, which is subject to that autho- The indices, designed for institutional investors willing to rization, has been accelerated compared with the original integrate ESG factors into investment decision processes, plans of Enel Generación Chile in the national decarboniza- uses a best-in-class approach by only selecting companies tion plan signed with the Ministry of Energy of Chile on June with the highest MSCI ESG ratings, which measure a com- 4, 2019, a plan that provided for the closure of Bocamina I by pany’s resilience to long-term, financially-relevant ESG ri- the end of 2023 and of Bocamina II by 2040. The Enel Group sks. In 2019 Enel received for the first time the highest MSCI will ensure the re-employment of the workers at Bocamina ESG rating (“AAA”), paving the way for the Company’s inclu- within the Group, and at the same time will evaluate the pos- sion this year in the MSCI ESG Leaders Indexes, the most sible conversion of the plant’s structures. prestigious among MSCI’s index series measuring compa- Enel Board authorizes the issue of hybrid bonds in the maximum amount of €1.5 billion On June 10, 2020, the Board of Directors of Enel SpA, me- eting under the chairmanship of Michele Crisostomo, au- thorized the issue by Enel, by December 31, 2021, of one or more hybrid non-convertible subordinated bonds in the maximum amount of €1.5 billion, to be placed exclusively nies’ sustainability performance. In addition, the inclusion is attributable to Enel’s continued investments in renewables and to its ambitious carbon emissions reduction target ali- gned with the Paris Agreement, under which the Company commits to a 70% reduction in its direct greenhouse gas emissions per kWh by 2030 with respect to 2017 levels. Enel reaches 64.9% of the share capital of Enel Chile with EU and non-EU institutional investors, including throu- On July 7, 2020, Enel SpA announced that it had increased gh private placements. The new issues are intended to refi- its stake in its Chilean subsidiary Enel Chile SA to 64.9% of nance outstanding hybrid bonds for which early repayment the company’s share capital, settling two share swap tran- options may be exercised as from this year, thus allowing sactions entered into in December 2019 with a financial in- the Enel Group to maintain a financial structure that is con- stitution to acquire up to 3% of the share capital of Enel sistent with the assessment criteria of rating agencies and Chile, as announced to the financial markets at the time. to actively manage maturities and the cost of debt. The Board of Directors has also delegated the Chief Execu- tive Officer with the task of deciding the issue of the new bonds and their respective characteristics, and therefore to establish, for each issue, times, amount, currency, interest Enel accelerates energy transition towards decarbonization rate and further terms and conditions, as well as placement Enel, in its role as a leader of the energy transition, has pla- 192192 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsced decarbonization and growth of renewables around the world at the center of its strategy. The 2020-2022 Strate- gic Plan provides for a significant increase in installed re- newables capacity, from the current 46 GW to 60 GW at the end of 2022, and the progressive reduction of coal-fired capacity and generation. More specifically, it is expected that such capacity will decrease by more than 40% in 2022 compared with 2019. In order to manage renewable and thermal generation assets around the world in an integra- ted manner and guide and accelerate its transformation, Enel created a new Business Line in 2019. In this context, on July 2, 2020 Enel began restructuring the activities associated with the energy transition pro- cess, which will involve thermal generation plants in all the geographical areas in which the Group operates. The consequent revision of processes and operating models will require changes in the roles and skills of employees, which the Group intends to implement with highly sustai- nable plans based on redeployment programs, with major upskilling and reskilling plans and voluntary individual early retirement agreements that will involve around 1,300 peo- ple worldwide. The restructuring plan will be implemented with proce- dures and timing that will differ in the various countries in which we are present, initiating the appropriate dialogue with local communities and the competent institutions and social partners. Enel launches sustainability-linked share buyback program supporting its 2020 Long-Term Incentive Plan On July 29, 2020, the Board of Directors of Enel, implemen- ting the authorization granted by the shareholders at their meeting held on May 14, 2020 and in compliance with the terms disclosed to the market, approved the launch of a share buyback program involving 1.72 million shares (the “Program”), equal to about 0.017% of Enel’s share capital. The purpose of the Program, which ran from September 3 to December 7, 2020, was to support the 2020 Long-Term Incentive Plan for the management of Enel and/or its sub- sidiaries pursuant to Article 2359 of the Italian Civil Code (2020 LTI Plan), which was also approved by the sharehol- ders at their meeting held on May 14, 2020. The Program involved the purchase of a total of 1,720,000 Enel shares (equal to 0.016918% of share capital), at a volu- me-weighted average price of €7.4366 per share for a total of €12,790,870.154. Considering the treasury shares already held in its portfolio, on October 28, 2020, Enel holds a total of 3,269,152 trea- sury shares, equal to 0.032156% of share capital. Enel issues perpetual hybrid bonds On September 1, 2020, Enel successfully launched a eu- ro-denominated, non-convertible bond for institutional investors on the European market in the form of a subor- dinated perpetual hybrid bond, with an aggregate principal amount of €600 million. The transaction was oversubscri- bed by more than six times, with total orders of more than €3.7 billion. At the same time, Enel launched of a non-binding voluntary offer to repurchase, and subsequently cancel, its £500 mil- lion hybrid notes due in 2076 with the goal of repurchasing a total of £200 million. As a result of the transaction, hybrid bonds with a total nominal value of £250 million were re- purchased in cash. Enel Board of Directors votes to sell 40%-50% of OpEn Fiber to Macquarie On September 17, 2020, the Board of Directors of Enel SpA received notice of a binding offer submitted by Macquarie Infrastructure & Real Assets (MIRA) for the acquisition of the 50% stake held by Enel in OpEn Fiber SpA. The offer provides for a price of about €2,650 million, net of debt, for the purchase of the investment, with adjustment and earn out mechanisms. Enel’s Board of Directors acknowledged that it received the notice and is awaiting updates on the details that may emerge following an examination with MIRA of the details of the offer. On December 17, 2020, the Board of Directors of Enel SpA, meeting under the chairmanship of Michele Crisostomo, resolved to initiate the procedures for the sale of a stake of between 40% and 50% of the share capital of OpEn Fiber SpA to MIRA, giving the CEO specific authority to pursue the transaction. Based on MIRA’s final offer, the price for the sale of 50% of OpEn Fiber is equal to €2,650 million and includes the tran- sfer to MIRA of 100% of Enel’s portion of the shareholder loan granted to OpEn Fiber, including accrued interest, amoun- ting to an estimated €270 million at June 30, 2021, the date by which the transaction is expected to close. Should 40% of OpEn Fiber be sold, as MIRA’s final offer envisages a propor- tional reduction of the above values, the price would amount to €2,120 million, Enel’s portion of the shareholder loan gran- ted to OpEn Fiber being transferred to MIRA would be equal to 80%, with an estimated value at June 30, 2021 of around €220 million. The above price does not include the poten- tial effects of the earn-out mechanisms described below, as they cannot currently be quantified. 193 Integrated Annual Report 2020The final offer received from MIRA envisages that, should the transaction close after June 30, 2021, the above price will be increased at a rate of 9% per year calculated from July 1, 2021 and up to the closing itself. The offer also pro- Enel Group begins reorganization of renewables business in Central and South America vides for the payment of two different earn-outs in favor of On September 22, 2020, Enel SpA announced that the Bo- Enel related to future and uncertain events. One earn-out is ard of Directors of its Chilean listed subsidiary Enel Améric- linked to the positive conclusion, with a final judgment, of as SA had resolved to commence the process to approve the dispute initiated by OpEn Fiber against TIM SpA for an- a merger as part of a corporate reorganization of the Enel ticompetitive conduct by the latter. Specifically, this earn- Group’s shareholdings, with the intention of integrating the out will pay Enel 75% of any net damages that OpEn Fiber non-conventional renewable energy businesses of the Enel should subsequently collect and is expected to be paid to Group in Central and South America (except Chile) into Enel Enel based on the dividends distributed by OpEn Fiber to Américas. The transaction, consistent with Enel’s strate- its shareholders for any reason. The earn-out will be calcu- gic objectives, will further simplify the Group’s corporate lated in proportion to the actual stake sold by Enel to MIRA. structure and align the structure of Enel Américas’ busi- The other earn-out is related to the creation of value de- ness with the rest of the Group. riving from the possible implementation of the so-called The corporate reorganization provides for the integration “single broadband network” between OpEn Fiber and TIM. into Enel Américas of the current non-conventional re- It is based on investor returns and envisages that, should newable assets of the Enel Group in Argentina, Brazil, Co- MIRA’s stake in OpEn Fiber be transferred, resulting in a lombia, Costa Rica, Guatemala, Panama and Peru, through return on investment (IRR) greater than 12.5%, Enel will be a series of transactions culminating in a merger of those paid 20% of the amount achieved by MIRA exceeding the assets into Enel Américas. The merger, which will increase above threshold, up to a maximum of €500 million should Enel’s stake in Enel Américas, will also involve the amend- 50% of OpEn Fiber be sold and €400 million should 40% of ment of the latter’s bylaws by its Shareholders’ Meeting to the company be sold. remove the existing limitation whereby a single shareholder The signing of the purchase agreement between the par- may not hold more than 65% of the voting rights. That Sha- ties is subject to certain conditions, including: reholders’ Meeting was also asked to approve the merger › OpEn Fiber issuing an authorization to MIRA to share the as a transaction with related parties in compliance with ap- information acquired during the due diligence process plicable Chilean law. with a small number of potential co-investors in order to Enel has given Enel Américas a favorable preliminary opi- syndicate the price; nion on the reorganization provided that it: › the non-exercise of the right of pre-emption that the › is carried out on market terms and conditions; OpEn Fiber bylaws give CDP Equity SpA (CDPE, which is in › ensures that Enel Américas has a financial position that turn 50% shareholder of OpEn Fiber); supports the future development of the renewables bu- › in the event of the sale of 50% of OpEn Fiber, the agre- siness and the growth prospects of the company. ement between MIRA and CDPE of the modification of The favorable preliminary opinion is subject to an asses- certain aspects that currently regulate the governance of sment by Enel of the final terms and conditions to be sub- OpEn Fiber. mitted for approval of the shareholders of Enel Américas. The closing of the transaction is in turn subject to a series On December 18, 2020, Enel SpA announced that the Ex- of conditions, including: traordinary Shareholders’ Meeting of the listed Chilean › OpEn Fiber’s lending banks obtaining the waivers requi- subsidiary Enel Américas had adopted resolutions on that red for the transfer of Enel’s stake in OpEn Fiber to MIRA; date concerning the implementation of the corporate re- › obtaining various administrative authorizations needed organization intended to integrate the non-conventional for the transfer of Enel’s stake in OpEn Fiber to MIRA, renewable business of the Enel Group in Central and South specifically relating to the golden power procedure with America (excluding Chile) into Enel Américas. the Presidency of Italy’s Council of Ministers and the au- On December 17, 2020, Enel announced that as part of thorization to be issued by the EU Antitrust Authority. the corporate reorganization intended to integrate the non-conventional renewable energy business of the Enel Group in Central and South America (excluding Chile) into 194194 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsthe listed Chilean subsidiary Enel Américas SA, it would lau- Socially Responsible Investors (SRI), allowing the Enel Group nch a voluntary partial public tender offer for the acquisi- to continue to diversify its investor base. tion of the shares and American Depositary Shares (ADSs) of Enel Américas representing up to a maximum of 10% of its current share capital (the Offer), at a price of 140 Chilean pesos per share (or its equivalent in US dollars at the time of settlement in the case of ADSs). The Offer was launched Enel signs contract for a €1 billion “Sustainability-Linked Loan” in March 2021 (for more details, please see note 55 to the On October 16, 2020, Enel SpA signed a €1 billion “Sustai- consolidated financial statements). The Offer is also subject nability-Linked Loan” facility agreement with a 6-year term. to Chilean, US and any other applicable regulations. Structured as a club deal maturing on October 15, 2026, As announced on November 13, 2020, the Extraordinary the loan is intended to meet the Group’s ordinary financing Shareholders’ Meeting of Enel Américas was called for needs and follows the adoption by Enel of a “Sustainabili- December 18, 2020 to resolve on (i) the merger of EGP ty-Linked Financing Framework” (the Framework), aligned Américas SpA into Enel Américas with a consequent in- with the International Capital Market Association’s (ICMA) crease in the share capital of Enel Américas in support of “Sustainability-Linked Bond Principles” and Loan Market the merger, and (ii) the amendment of the bylaws of Enel Association’s (LMA) “Sustainability-Linked Loan Principles”. Américas in order to remove the limits that currently do not The loan is linked to the key performance indicator (KPI) of allow a single shareholder to own more than 65% of shares Installed Renewables Capacity Percentage (i.e., consolidated with voting rights. The Offer is an opportunity for non-con- installed renewables capacity as a percentage of total con- trolling shareholders who wish to reduce their ownership solidated installed capacity) and to the related achievement interest in Enel Américas after the merger is completed. In of a Sustainability Performance Target (SPT) equal to or grea- this respect, the Offer provides shareholders an opportu- ter than 60% by December 31, 2022 (as of June 30, 2020, the nity to sell shares for more than the price of 109.8 Chilean figure was equal to 51.9%). Based on the achievement of the pesos per share that Enel Américas will offer in accordance SPT by the target date, the credit line provides for a step-up/ with Chilean law to dissenting shareholders who intend to step-down mechanism that will impact the interest spread exercise their withdrawal rights. The Offer will not be laun- applied to drawings on the line, thus reflecting the value of ched if the merger of EGP Américas SpA into Enel Améric- sustainability. The loan reflects the commitment of Enel, le- as and the amendment of the bylaws of Enel Américas do ading private electricity company in the world by installed not take effect by December 31, 2021. The total price to be renewables capacity, to contribute to the achievement of paid under the Offer, which is expected to amount to up to SDG 7.2, i.e. to “Increase substantially the share of renewable €1.2 billion (calculated at the exchange rate prevailing on energy in the global energy mix by 2030”. December 16, 2020 of 895 Chilean pesos per euro), will be funded through internally generated cash flow and existing borrowing capacity. Enel successfully launches a £500 million “Sustainability-Linked Bond”, the first sterling-denominated bond of its kind Enel launches a consent solicitation for holders of certain hybrid bonds On October 23, 2020, Enel announced that it had launched a consent solicitation addressed to the holders of a num- ber of subordinated non-convertible hybrid bonds issued by the Company in order to align the terms and conditions of the bonds with those of the perpetual subordinated, On October 13, 2020, Enel Finance International NV pla- non-convertible hybrid bond launched by Enel on Septem- ced the sterling market’s first “Sustainability-Linked Bond”, ber 1, 2020. To this end, the Company called the Meetings which is linked to the achievement of Enel’s sustainable of the noteholders of the following bonds, with a total out- objective for consolidated installed renewables capacity as standing amount of about €1,797 million (the “Bonds”), at a percentage of total consolidated installed capacity, in line first and single call on November 26, 2020. On the same with the commitment to achieving the United Nations Su- date, the Noteholders’ Meetings approved the proposed stainable Development Goals. changes to the terms and conditions of the Bonds, aimed The issue of £500 million (about €550 million), which is gua- at aligning the latter with the terms and conditions of the ranteed by Enel, was targeted at institutional investors and perpetual subordinated non-convertible hybrid bond laun- was oversubscribed by almost six times, with total orders of ched by Enel on September 1, 2020. More specifically, the approximately £3 billion and the significant participation of approved changes establish, inter alia, that: 195 Integrated Annual Report 2020 › the Bonds, originally issued with a specified long-term Chile Index for the fourth straight year, while Enel’s Chilean maturity date, will become due and payable and hence subsidiary Enel Chile has been confirmed in the three indi- have to be repaid by the Company only in the event of ces for the third time. winding up or liquidation of the Company; › the events of default, previously envisaged in the terms and conditions and additional documentation that regu- late the Bonds, would be eliminated. Historic milestone for Enel taking top spot in 2020 Dow Jones Sustainability World Index Enel recognized as world sustainability leader among all industries in the 2020 edition of Vigeo Eiris Universe On December 2, 2020, Enel’s global sustainability leader- ship was acknowledged by a number one ranking in this year’s Vigeo Eiris (V.E) assessment edition for its first time ever among nearly 5,000 companies that have been asses- On November 14, 2020, Enel’s global sustainability leader- sed. The unprecedented score achieved in the sustainabi- ship was acknowledged by a number one ranking in this lity performance assessment, which doubles the average year’s Dow Jones Sustainability World Index (DJSI World), an score, led to Enel being confirmed in the 2nd Half 2020 re- unprecedented milestone in the Company’s seventeen year view of the Euronext Vigeo Eiris World 120 index. Powered presence in the index. During the DJSI World selection pro- by V.E’s data, twice a year, the Euronext Vigeo Eiris World cess, Enel stood out in most of the 27 criteria assessed by 120 index lists the 120 most sustainable companies out of SAM (the S&P Global Division in charge of ESG – environ- the 1,500 largest companies in terms of free-float market mental, social and governance – related research acquired capitalization in North America, Asia-Pacific and Europe. in 2020 from RobecoSAM, an affiliate of asset management Enel has also maintained its position in the regional Euro- firm Robeco). next Vigeo Eiris Europe 120 and Eurozone 120 indices, whi- Specifically, the Company achieved a score higher than ch respectively list the 120 most sustainable companies out 90/100 in more than 70% of the criteria, among which of the 500 largest free-float companies in Europe and the some of the most significant ones are climate strategy and euro area. Endesa, Enel’s Spanish subsidiary, has also been market opportunities, both criteria aimed at assessing the included in the latter three indices. performance of electric utilities on leading the transition In particular, V.E recognized Enel’s outstanding performance towards a low-carbon energy model. Enel also ranks first in the development of its environmental strategy, including in DJSI Europe for the “Electric Utilities” sector and second the specific environmental targets set out to limit greenhou- globally in the overall family of Dow Jones Sustainability In- se gas emissions and improving air quality, by accelerating dices for the same sector. the decarbonization of its energy mix and boosting re- Enel also excelled in other criteria focused on assessing newables. Enel also excelled in different criteria related to the responsible business management practices including risk management of its human capital, including the promotion and crisis management, environmental policy and mana- of labor relations, non-discrimination and diversity. Further- gement, operational eco-efficiency, water-related issues, more, different governance related practices also outstood, human rights, human capital development as well as tran- among which the role of the Board of Directors in the oversi- sparency on social and environmental performance. ght of the Company’s sustainability performance. The Group’s Spanish subsidiary Endesa has also been inclu- ded in this year’s DJSI World, marking the company’s twen- tieth straight year in the index. Enel and Endesa are two of the eight companies admitted to the index at the global level in the electric utility sector. In addition, the Group’s South American subsidiary, Enel Américas, has been con- firmed in the Dow Jones Sustainability Emerging Markets Enel Green Power and Maire Tecnimont Group’s NextChem sign MoU for a green hydrogen production plant in the United States Index and Dow Jones Sustainability MILA (Mercado Inte- On December 9, 2020, Enel Green Power, acting throu- grado Latinoamericano) Pacific Alliance Index for the third gh its North American renewables subsidiary Enel Green consecutive year, as well as in the Dow Jones Sustainability Power North America Inc. (EGPNA), and Maire Tecnimont 196196 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsSpA, acting through NextChem, its subsidiary dedicated to needs and timing envisaged for the completion of the con- the deployment of technologies for the energy transition, struction of units 3 and 4 of the Mochovce nuclear power signed a memorandum of understanding to support the plant (the “Project”). The disbursement of the first loan, production of green hydrogen via electrolysis in the United amounting to €270 million, is subject to certain conditions, States. The project, which is expected to be operational in in particular the amendment of certain loan agreemen- 2023, will convert renewable energy from one of EGPNA’s ts between Slovenské elektrárne and its lender banks, in solar plants in the United States into green hydrogen to be order to take account of the progress of the Project, and supplied to a bio-refinery. other conditions customary for these kinds of transactions. Enel Green Power is developing projects in the green hy- The disbursement of this first loan is a condition for the ef- drogen segment in Italy, Spain, Chile and the United States. fectiveness of the additional amendments to the Contract As green hydrogen is a new business application, the Enel agreed between the parties and illustrated below. The loans Group is monitoring the relevant market developments to of up to €570 million come in addition to the loan of €700 identify the most efficient way to achieve its plans to grow million (jointly referred to as the “Loans”) already made by its green hydrogen capacity to over 2 GW by 2030. the Enel Group in line with the agreements amending the Enel updates agreement with EPH for sale of stake in Slovenské elektrárne Contract signed by the parties in 2018, whose maturity will also be extended to 2032. The new agreement between the parties also envisages that EPH will grant an additional loan of €200 million to fund the Project. With regard to the amendments related to the mechani- On December 22, 2020, Enel Produzione SpA (Enel Produ- sms governing the exercise of the put or call options, new zione), EP Slovakia BV and Energetický a průmyslový hol- rules have been introduced governing the so-called “trig- ding AS (jointly EPH) had signed a general term agreement ger events” under which Enel Produzione and EPH can that modifies some of the terms and conditions of the con- exercise their respective options. Specifically, the so-called tract (the Contract) signed on December 18, 2015 (as alre- “Long Stop Date” has been eliminated (the date after whi- ady amended during 2018) between Enel Produzione and ch Enel Produzione and EPH were entitled to exercise their EPH concerning the sale of the stake held by Enel Produzio- respective put and call options, even without completion ne in Slovenské elektrárne AS (Slovenské elektrárne or SE). of units 3 and 4 of the Mochovce nuclear power plant) and As announced on December 18, 2015 and on July 28, 2016, therefore the put or call options can be exercised after the the Contract had provided for the contribution to the newly latest of the following events: established Slovak Power Holding BV (HoldCo) of the enti- › six months from the date of completion of the trial run re stake held by Enel Produzione in Slovenské elektrárne, of Mochovce’s unit 4 (i.e., the moment in which that plant equal to 66% of the latter’s capital, and governed the sub- will be able to send power to the grid and sell the gene- sequent sale of 100% of HoldCo in two stages to EP Slo- rated electricity); vakia BV for a total of €750 million, subject to adjustment › the date of completion of the first outage of Mochovce’s based on certain criteria (the first phase of the transaction unit 4 (i.e., the mandatory annual technical shutdown was completed on July 28, 2016 with the sale to EP Slova- of the plant to ensure adequate safety levels), which is kia of 50% of the share capital that Enel Produzione held in expected to occur within a maximum of 12 months from HoldCo). the trial run; and Under the new general term agreement, which is subject to › the Loans fall due, set for 2032. a number of conditions, Enel Produzione and EPH agreed The new agreement also gives EPH an early call option that a number of amendments to the Contract, which regard can be exercised in the period between six months after the financial support provided to Slovenské elektrárne for the signing of the updated text of the Contract and the first the completion of units 3 and 4 of the Mochovce nucle- of the following dates: ar power plant as well as the mechanisms governing the › four years from the completion of the trial run of unit 4 of exercise of the put or call options concerning the transfer the Mochovce plant; and of the residual stake in HoldCo. More specifically, with re- › December 2028. gard to the financial support, the amendments provide that The total price of €750 million is subject to an adjustment Enel Produzione will grant, directly or through other com- mechanism, which will be calculated by independent exper- panies of the Enel Group, loans to the HoldCo – which will ts in accordance with a formula defined in the Contract, for in turn make them available to Slovenské elektrárne – in which the new agreement envisages a number of amend- the maximum amount of €570 million falling due in 2032. ments relating to the exclusion of part of the investments These loans will be made available in accordance with the planned for the completion of Mochovce’s unit 4 and set- 197 Integrated Annual Report 2020ting the percentage of the unit 4’s enterprise value to be as well as the dissemination of new mores of conduct and considered depending on when the option is exercised. the systematic and rigorous adoption of personal protecti- Furthermore, in the event of the exercise of the so-called ve equipment. “early call option” from EPH, a floor and cap have been in- The countries most severely affected were initially China, troduced for the price – which will vary depending on when Italy and Spain, gradually followed by the United Kingdom, the option is exercised and the effective application of the the other Central European countries, the United States price determination formula – ranging from a minimum of and the countries of South America (in particular Brazil and €25 million and a maximum of €750 million. Chile). Finally, the new agreement envisages that when the options Governments adopted numerous containment measures, are exercised, EPH will take over the Loans. In the event of essentially intended to restrict the free movement of peo- the exercise of the early call option, EPH is expected to take ple, such as selective lockdowns or the early closure of pu- over the Loans according to a plan starting from 2026, with blic places to limit crowds. Numerous regulatory measures the last tranche expected in 2032 at the latest. concerning essential services and public utilities have been The above agreement led to a write-down of the carrying implemented, which subsequent sections on the regula- amount of the investment and the financial receivable from tory frameworks adopted in the various countries for the EPH in the total amount of €833 million. different Business Lines address in more detail. COVID-19 Already during the 1st Quarter, the Group had issued gui- delines aimed at ensuring compliance with the measures introduced at the local level and taken numerous steps to adopt the most suitable procedures to prevent and/or miti- The year 2020 was substantially characterized by the spre- gate the effects of contagion in the workplace. ad of the COVID-19 pandemic, with periods of greater For further information, please see the sections on CO- spread and mortality accompanied by the imposition of VID-19 included in the “Performance of the Group” in this drastic social isolation measures (lockdowns) and total or Report on Operations and note 5 of the consolidated finan- partial closure of all economic, social and sports activities, cial statements. 198198 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsREGULATORY AND RATE ISSUES The European regulatory framework Recovery Plan To contribute to the revitalization of the European eco- nomy following the pandemic, the European Commission, the European Parliament and European leaders agreed a Recovery Plan to help the European Union emerge from the crisis and build a greener, more digital and more resi- lient post-COVID-19 Europe. The Plan has a total value of more than €1,824 billion and provides for reinforcing the multiannual financial framework for 2021-2027 by €1,074 billion to rapidly direct investment where it is most needed (strengthening the Single Market, driving the green and di- gital transition and intensifying cooperation in areas such as health and crisis management) and establishes a new instrument – Next Generation EU – worth a total of €750 billion, to temporarily (2021-2024) increase the resources available in the EU budget and support an immediate re- sponse to the crisis by kick-starting the European economy through sustainable and resilient growth. With particular regard to Next Generation EU, the most si- gnificant resources are focused on the Recovery and Resi- lience Facility, which provides for the allocation of €672.5 billion (€312.5 billion in the form of grants and €360 billion in loans) to support investments and essential reforms for a lasting recovery (with a focus on investments connected with the green and digital transitions). In this context, the Member States are called upon to pre- pare National Recovery and Resilience Plans (NRRPs), whi- ch must pursue the general objective of economic/social cohesion and resilience, mitigate the impact of the crisis and support the green and digital transition, in line with the seven flagship areas(7) indicated in the guidelines pu- blished by the European Commission in September 2020. The NRRPs should be submitted by April 30, 2021 but many Member States have already initiated discussions with the Commission over draft plans (this was possible from Octo- ber 15, 2020). The European Green Deal Following the European Green Deal communication presen- ted at the end of 2019, in the 1st Half of 2020 the European Commission published a series of legislative and non-legi- slative initiatives aimed at implementing the principles set out in the communication, which we discuss below. European Climate Law The proposal for a European Regulation, presented by the Commission on March 4, 2020 and currently under discus- sion in the Trilogue between the Commission, the European Parliament and the Council, would make the objective set in the European Green Deal to make the European economy and society climate neutral by 2050 legally binding. This means achieving net-zero greenhouse gas emissions (ba- lance between emissions and absorption) for EU countries as a whole, mainly by cutting emissions, investing in green technologies and protecting the natural environment. Once approved, this would incorporate the objective of climate neutrality for 2050 in Union legislation for the first time. The European Commission proposal also includes the goal of reducing greenhouse gas emissions by 50-55% by 2030, supported by the Commission’s Communication (and Impact Assessment) of September 2020, a target that was also ap- proved by the European Council in December 2020. A more ambitious reduction target of 60% is currently being propo- sed in the European Parliament. To pursue this objective, the proposal for an EU Regulation also provides that all European policies should be revised to ensure they contribute to achieving climate neutrality and the more ambitious intermediate target in 2030, so that all sectors of the European economy do their part. By 2021, the European Commission will propose a review of all policy instruments necessary to achieve the additional reductions planned for 2030. Industrial Strategy The new Industrial Strategy was presented on 10 March 2020. It is intended to maintain the global competitiveness of European industry, make Europe climate neutral by 2050 and shape Europe’s digital future. The strategy proposes a series of initiatives (legislative and non-legislative) to sup- port all the players in European industry, from large to small businesses, research centers and start-ups. Actions include comprehensive measures to modernize and decarbonize energy-intensive industries, to support sustainable and in- telligent mobility industries, to promote energy efficiency and to ensure a sufficient and secure supply of low-carbon energy at competitive prices. The Industrial Strategy also (7) (i) Power Up; (ii) Renovate; (iii) Recharge and Refuel; (iv) Connect; (v) Modernize; (vi) Scale-up; (vii) Reskill and Upskill. 199 Integrated Annual Report 2020envisages the launch of a series of new alliances, such as apply to protect consumers, to address unfair commercial the European Clean Hydrogen Alliance, to accelerate the practices and to protect personal data and privacy. decarbonization of industry and maintain industrial lea- dership, followed by an alliance for low-carbon industries, one for industrial clouds and platforms and one for raw Sustainable and Smart Mobility Strategy On December 9, 2020, the Sustainable and Smart Mobili- materials. In addition to a complete series of actions, both ty Strategy was presented by the European Commission horizontal and in favor of specific technologies, the Com- together with an action plan comprising 82 initiatives. The mission will systematically analyze the risks and needs of strategy lays the foundation for how the EU transport sy- the various industrial ecosystems. In performing this analy- stem will need to achieve its green and digital transforma- sis, the Commission will work in close collaboration with an tion and become more resilient to future crises. As indica- open and inclusive industrial forum, which will be set up by ted in the European Green Deal, the goal is to achieve a September 2020. Communication on “Shaping Europe’s digital future” On February 19, 2020, the Commission presented strate- 90% reduction in emissions by 2050, thanks to an intelli- gent, competitive, safe, accessible and affordable transport system. All modes of transport will need to become more sustainable, with green alternatives widely available, which is why the strategy sets specific milestones. gies for data and artificial intelligence (AI). This communi- By 2030, at least 30 million zero-emission cars will be on cation introduces a series of legislative and non-legislative European roads, 100 European cities will be climate-neu- initiatives, with the aim of developing technology at the tral and zero-emission marine vessels will be market-ready. service of citizens and creating a fair and competitive di- By 2035, zero-emission large aircraft will be market-ready. gital economy. The areas involved in these initiatives are Finally, by 2050, nearly all cars, vans, buses and new hea- manifold: creation of digital skills, regulation of competition vy-duty vehicles will be zero-emission, rail freight traffic and platforms (through a proposal for a Digital Services Act) will double and the multimodal trans-European Transport and climate neutrality by 2050. Network will be fully operational for sustainable and smart In more detail, the aim of the data strategy is to ensure that transport with high-speed connectivity. the EU takes on the role of model and guide for compa- nies made more autonomous thanks to data. The strategy essentially aims to create a true European data space and Hydrogen Strategy The EU Hydrogen Strategy was presented on July 8, 2020. a single market for data, in order to unlock so far unused The strategy seeks to foster an integrated energy system in data to enable their free movement within the European which hydrogen plays a role in the decarbonization of indu- Union in all sectors, thus benefiting businesses, researchers stry, transport, construction and power generation across and governments. The Commission proposes to establish a Europe. The priority of the strategy, through investments, regulatory framework for data governance, access to data the creation of a suitable regulatory framework, the cre- and reuse of data between businesses, between busines- ation of a market and measures to support research and ses and government and within government. The Commis- innovation, is to develop renewable hydrogen, produced sion intends to support the development of technological using mainly wind and solar energy. In the short term, the systems and the next generation of infrastructure, which strategy also includes the use of other low-carbon forms will allow the EU and all operators to take advantage of the of hydrogen to rapidly reduce emissions and support the opportunities offered by the data economy. creation of a market. The strategy aims to support the in- In the White Paper on Artificial Intelligence, the Commission stallation of at least 6 GW of renewable hydrogen electroly- called for a reliable framework based on excellence and zers in the European Union and the production of up to 1 trust. In a partnership between the public and private sec- million metric tons of renewable hydrogen between 2020 tors, the goal is to mobilize resources along the entire va- and 2024, 40 GW of renewable hydrogen electrolyzers and lue chain and create the right incentives to accelerate the the production of up to 10 million metric tons of renewable adoption of solutions based on AI. The document calls for hydrogen between 2025 and 2030 and the large-scale de- clear rules to govern high-risk AI systems without imposing ployment of hydrogen-based solutions in all hard-to-de- excessive burdens on less risky ones. The White Paper also carbonize sectors from 2030. underscores the fact that strict EU rules must continue to 200200 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsEU strategy on energy system integration In conjunction with the Hydrogen Strategy, the EU strategy acts, initially scheduled for the end of 2020, was postponed to the early months of 2021. As regards the Green Bonds, for energy system integration was also presented on July 8, after the issue of the guidelines, a public consultation was 2020. The aim of the strategy is to transform today’s energy held in June-October to support the Commission in asses- system, in which each sector (transport, industry, gas, con- sing certain key aspects relating to the Green Bond Standard. struction) constitutes a separate silo, by creating new inter- In the conclusions of the European Council meeting on De- sectoral connections, exploiting technological advances in cember 10 and 11, the leaders of the Member States called order to achieve climate neutrality by 2050 in the most cost on the EU to promote the development of common global effective way. The strategy lists 38 actions to achieve this rules for green finance. In this context, the Council invited more integrated energy system and is based on three pil- the Commission to present the legislative proposal on the EU lars: a more circular energy system, centered on energy ef- Green Bond Standard by June 2021 at the latest. ficiency, accelerating direct electrification of end-user sec- tors and the promotion of clean fuels, including renewable hydrogen, biofuels and sustainable biogas in sectors that are difficult to electrify. Just Transition Fund The Just Transition Fund (JTF) is a funding instrument inclu- State aid decisions On March 19, 2020 and as subsequently amended on April 3, May 8 and June 29, 2020, the European Commission adopted a temporary framework for addressing the im- ded within the Just Transition Mechanism (JTM), aimed at pact of the COVID-19 pandemic in order to support Mem- supporting Member States in reducing the economic and ber States with regard to the use of State aid to provide social impacts of the transition to a climate-neutral eco- the necessary liquidity to the economic system, including nomy. The total resources (2021-2027) at the Community SMEs, to facilitate its application to all sectors and types of level allocated to the JTF amount to €17.5 billion, of which business affected by the crisis (with the exception of the fi- €7.5 billion from the EU’s multiannual financial framework nancial sector and for companies already in difficulty at the for 2021-2027 and €10 billion from Next Generation EU. end of 2019) and to help stabilize the European economy The resources are allocated between the Member States while preserving the single market. by the Commission, and Italy would be eligible for about On May 28, 2020, the European Commission approved a €900 million, with just under €800 million going to Spain support scheme for the generation of electricity in the Ca- and Greece and about €2 billion to Romania (at 2018 pri- nary Islands, Balearic Islands, Ceuta and Melilla within the ces). The JTF will support workers, businesses and regional State aid framework for the provision of services of general authorities in the green transition and will finance a large economic interest (SGEI). number of initiatives, including the remediation and decon- The Commission approved the scheme until the end of tamination of brownfield sites, investments in renewables 2029 for the Canary Islands, Ceuta and Melilla and 2025 and energy efficiency, upskilling and reskilling, and sustai- for the Balearic Islands. In order to ensure the long-term nable mobility. The Member States are called upon to pre- security of supply, Spain has undertaken to build a second sent national transition plans that cover one or more terri- subsea connection between the mainland and Majorca by tories within the country that are most strongly impacted 2025. The mechanism will compensate electricity genera- by the transition to a green economy. Sustainable Finance In March 2020, the Taxonomy Expert Group presented its final taxonomy report and a guide on recommendations for a Eu- ropean Green Bond standard. With regard to the taxonomy, in June the European Parliament approved the EU taxonomy regulation. The European Parliament’s approval followed the adoption of the text by the Council on June 10, 2020. The Commission must now adopt delegated acts on the Euro- pean taxonomy that establish the technical screening cri- teria for determining whether a specific economic activity substantially contributes to achievement of one or more of the EU’s environmental goals. The adoption of the delegated tors fulfilling a public service obligation for the additional cost of providing these services and ensure the establish- ment of competitive procedures for the development of new generation plants and/or decarbonized solutions. On September 22, the Vice President of the European Commission and Commissioner for Competition Margaret Vestager announced a “Call for Contributions” on the role of competition policy in supporting the objectives of the European Green Deal. The document, which was sent to the European Commission on November 20, 2020, concerns the control of the State aid, antitrust and merger regula- tions and the possible introduction of a “Green Bonus” for measures supporting decarbonization. On November 12, 2020, the European Commission publi- shed the Impact Assessment on the revision of the guide- 201 Integrated Annual Report 2020lines on State aid for environmental protection and energy (Energy and Environmental State aid guidelines - EEAG). On November 23, the Commission published a further ro- admap for the revision of the Communication on Important Projects of Common European Interest (IPCEI) in order to develop the hydrogen industrial chain and the European gigafactory. Regulatory framework by Business Line Thermal Generation and Trading On December 21, the European Commission published 11 Italy templates relating to the rules governing State aid for the seven flagship areas of the Recovery and Resilience Facility. 202202 Generation and wholesale market For 2021, the Brindisi Sud, Sulcis, Portoferraio and Assemini plants were declared eligible for the cost reimbursement scheme. These plants had already been declared eligible for reimbursement for 2020 as well. The Porto Empedocle plant is eligible for long-term cost reimbursement until 2025, while plants located on the smaller islands are automatically eligible for cost reimbur- sement for all years in which they are declared essential, including 2020 and 2021. Admission to the cost reimbur- sement scheme guarantees coverage of the operating co- sts of the plants, including a portion of return on invested capital. For 2020 and 2021, the remainder of essential capacity was contracted under alternative contracts which provide for the obligation, on the Ancillary Services Market (ASM), to offer to go up/down to prices no higher/lower than the values identified using methods established by the Regu- latory Authority for Energy, Networks and the Environment (ARERA) for a fixed premium. On June 28, 2019, the Minister for Economic Development issued a decree approving the definitive rules governing the capacity remuneration mechanism (the capacity mar- ket). On November 6 and November 28, 2019 two auctions were held with delivery in 2022 and 2023 respectively: Enel was awarded capacity for both years. A number of opera- tors and a sectoral trade association contested the decree and the results of the two auctions before the Milan Regio- nal Administrative Court. Two operators also challenged the European Commission decision approving the Italian me- chanism before the EU Court. Both proceedings are under way. ARERA has confirmed the transitional capacity payment mechanism for 2020 and 2021 in order to ensure continuity with the new capacity market, which will produce a financial impact starting from 2022. 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsIn 2020, ARERA, acting on a proposal from Terna, appro- technical and financial parameters of the remuneration of ved a pilot project for the forward procurement of a new generation units in the electrical systems of the non-pe- ultra-fast frequency regulation service (the “Fast Reserve”). ninsular territories (NPT) for the second regulatory period Contracts for delivery in 2023-2027 were awarded through (2020-2025). With regard to fuel prices, the Order establi- a tender. Enel was awarded contracts to supply this service. shed that within three months the prices of energy pro- ducts and logistics would be reviewed by the ministerial In February 2020, Law 8/2020 (ratifying Decree Law order, with effect from January 1, 2020. On August 7, 2020, 162/2019, the “Milleproroghe” omnibus extension act) Decree TED/776/2020 of 4 August was published in Spain’s was published. It contains provisions to activate the im- Official Journal, revising these prices. plementation of experimental configurations of collective self-consumption from renewable sources or renewable Law 5 of April 29, 2020 of the Autonomous Community energy communities, pending the transposition of Directi- of Catalonia ve (EU) 2018/2001. On June 2, 2020, Law 5 of April 29, 2020 of the Autonomous Following this measure, in August 2020 ARERA issued Re- Community of Catalonia concerning fiscal, financial and solution no. 318/2020/R/eel, containing the provisions on administrative measures in the public sector and the intro- the regulation of economic items relating to electricity duction of a tax on generation plants with impacts on the subject to collective self-consumption or sharing in the environment was published in Spain’s Official Journal. Among scope of renewable energy community. other aspects, this law includes the creation and regulation The Ministry for Economic Development, by means of the Mi- of a tax on structures affecting the environment within the nisterial Decree of September 16, 2020, has therefore iden- Autonomous Community of Catalonia. In particular, this new tified the incentive rate for the remuneration of renewable tax is levied on the production, storage, transformation and source plants included in these experimental configurations. transport of electricity. Electricity generation is taxed at a ge- Iberia Spain neral rate of €5/MWh, and a dedicated rate of €1/MWh for combined-cycle plants, while excluding hydroelectric plants and generation from renewable sources, as well as from bio- mass, biogas, high-efficiency cogeneration or sewage. With regard to the transport of electricity, a quota is established Remuneration parameters for generation from renewable based on the voltage level, while transport structures with a sources, cogeneration and waste voltage of less than 30 kV and transport infrastructures for The measure TED/171/2020 of February 24, 2020 updated renewable power evacuation are exempted. the remuneration parameters applicable to standard plants and to certain plants for the generation of electricity from Europe renewable sources, cogeneration and waste for the second regulatory period, with effect for both from January 1, 2020. Romania European Commission Decision C (2020) 3401 Electricity generation on electricity production in Spanish non-peninsular Following the entry into force of Regulation no. 943/2019/EU territories (NPT) and the expected transposition of Directive 2019/944/EU, the On May 28, 2020, the European Commission approved the prohibition on long-term bilateral negotiated contracts (PPAs) regulatory scheme established with Royal Decree 738/2015 under Romanian law since 2012 was weakened following the of July 31, 2015 regulating the production of electricity in adoption of Government Emergency Ordinance 74/2020, whi- the non-peninsular territories (NPT), concluding that it me- ch allows new power generation facilities to sign long-term ets the criteria for services of general economic interest PPAs (more than one year) in order to secure financing for and is compatible with the internal market. The regime is construction. initially applicable until December 31, 2025 in the case of the Balearic Islands and until December 31, 2029 in the Electricity management case of the Canary Islands, Ceuta and Melilla with the pos- During 2020, following Balancing Market reforms, the price sibility of requesting an extension. caps that link the closing market price of the Balancing Market to the closing prices on the Day-Ahead Market were elimina- Order to revise fuel prices in non-peninsular territories ted. Furthermore, the dual pricing system will be replaced by a (NPT) single price, and the period relevant for settlement purposes Order TEC/1260/2019 of December 26, 2019 revised the will be changed from hourly to an interval of 15 minutes. 203 Integrated Annual Report 2020Russia Enel Green Power Electricity and capacity markets In January 2020, the Federal Antimonopoly Service establi- Italy The Ministerial Decree of July 4, 2019 provided for compe- shed the rates for capacity and electricity provided under titive procedures based on Dutch auctions and registers, regulated contracts. For Enel Russia, the rate for the Nevin- depending on the installed capacity and by technology nomysskaya GRES plant is lower than that envisaged in the groups, including photovoltaic systems. In particular, up to 2020 budget. September 2021, seven procedures will be held with: › Dutch auctions for plants with a capacity of more than In March 2020, Enel Russia signed compromise agree- 1 MW; ments with the North Caucasus guarantee suppliers to re- › registers for plants with a capacity of less than 1 MW. schedule the time limits for fulfillment of the electricity and Unlike previous decrees, the Ministerial Decree of July 4, capacity payment obligations under the wholesale market 2019 provides for a new method for supporting renewable contracts accumulated before January 1, 2020, subject to sources through two-way contracts for differences under the payment of interest at the reference interest rate set by which the successful tenderer returns any positive diffe- the central bank. Latin America Chile rences between the zonal price and the auction price. At October 31, 2020 the indicative annual cumulative cost was around €5.3 billion, compared with a ceiling of €5.8 bil- lion for termination of the incentive mechanism. Iberia Rate revision - Introduction of a transitional electricity price stabilization mechanism On November 2, 2019, Law 21.185 of the Ministry of Energy Spain Royal Decree Law 23/2020 provided an important impetus to was published. It introduced a transitional electricity price accelerate the development of renewable energy in Spain. It stabilization mechanism for customers on the regulated established the legal basis for auctioning power generated market. Consequently, the prices to be charged to regula- from renewable sources based on the long-term price of ted customers in the 2nd Half of 2019 were set at the level electricity. It also regulated various aspects to improve ma- of those applied in the 1st Half of 2019 (Decree 20T/2018) nagement and reduce speculation in managing the access and were defined as “Stabilized Prices for Regulated Cu- and connection of renewable energy projects to grids. In par- stomers” (PEC). ticular, it established that at sites where coal or thermonucle- Between January 1, 2021 and the termination of this mecha- ar power plants have been closed, account can be taken of nism, the prices charged will be those set every six months environmental and social criteria, as well as technical criteria, on the basis of Article 158 of the Electricity Act and cannot in allocating grid access capacity. Finally, the royal decree exceed the PEC adjusted for consumer price inflation. proposes various improvements for faster administrative Any differences between the amount billed in application processing of renewable energy projects. of the stabilization mechanism and the theoretical bill de- termined on the basis of considering the price that would In 2020, the Spanish government worked to define a road- have been applied under the terms of contracts with the map for hydrogen and a storage strategy. various electricity distribution companies will be recogni- In the closing months of the year, various regulations gover- zed by generators as receivables for invoices to be issued, ning auctions were also approved, including a royal decree up to a maximum of $1,350 million until 2023. These diffe- for renewable energy auctions (Royal Decree 960/2020) rences will be recognized in US dollars and will not accrue and a ministerial decree governing auction procedures and interest until the end of 2025. Any imbalances in favor of establishing an indicative calendar (Ministerial Decree TED the generation companies will have to be recovered no la- 1161/2020), while, finally, a 3,000 MW auction was announ- ter than December 31, 2027. ced for January 2021. During the year, proposals were submitted for regulations governing grid access and connection for the generation of 204204 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementselectricity from renewable sources. In December, a new royal The guide was published to take account of construction decree concerning access and connection was published and supply chain delays caused by the COVID-19 emergency. (Royal Decree 1183/2020). This regulation will be completed Eligible wind projects that began construction in 2016 can in January 2021 with the approval of a circular by the National now be put into service until 2021, receiving 100% of the PTC Commission on Markets and Competition. The entire access (for example, $25/MW, adjusted annually for inflation) for the and connection regulatory package will be completed in the first 10 years of operation. Projects that started construction 1st Quarter of 2021 with the approval of the Detailed Speci- in 2017 can now be put into service until 2022, receiving 80% fications of technical criteria. It will grant greater access ca- of the PTC (for example, $20/MW, adjusted annually for infla- pacity to grids for renewable generation and establish rules tion) for the first 10 years of operation. improving management of the system. Europe Greece Following approval by the European Commission, the Mini- In December 2020, the US Congress approved and President Trump signed a two-year extension of the Investment Tax Credit (ITC) for investments in Section 48 solar systems and a one-year extension of Section 45 of the PTC for investments in wind farms. ster of Energy extended the remuneration regime for inter- Eligible solar projects can now receive an Investment Tax ruptibility services until September 30, 2021. Interruptibility Credit of 26% of the project capital costs if they start con- is a demand response service willing industrial consumers struction before January 1, 2023 and enter service before interrupt their consumption when required, in exchange for January 1, 2026. Eligible projects that begin construction be- a fee fixed by auction. The scheme is financed by all gene- fore January 1, 2024 and enter service before January 1, 2026 rators operating on the mainland, including EGPH, through can receive an ITC of 22% of the capital costs of the project. the transfer of a percentage of their revenue. The percen- Eligible wind projects can now receive 60% (i.e. $15/MWh) of tage applied differs depending on the generation techno- the PTC (adjusted annually for inflation) for the first 10 years logy used: wind = 1.8% (previously 2%), small hydro = 0.8% of operation if construction begins before January 1, 2022. (previously 1%), PV = 3.6% (no change). Wind farms have no statutory deadline for entering service Law 4759/2020 published in December 2020 introduced but, as discussed above, US Treasury Department guidelines measures to reduce the deficit of the renewable energy re- generally dictate that projects must start operation within muneration fund, which finances incentives for producers. four years of starting construction. A project that started These measures include a retroactive contribution of 6% of construction in 2020 is therefore expected to enter servi- the 2020 annual turnover of renewable energy generators, ce before January 1, 2025, and a project that begins con- which will only apply to renewables plants that entered ser- struction in 2021 is expected to enter service before January vice 2015. Electricity sellers are required to pay a levy of €2/ 1, 2026. MWh for power purchased in 2021. The decision of the Regulatory Authority for Energy (RAE) Africa, Asia and Oceania no. 1538/2020 published in December 2020 set the UOCC contribution for 2021 at €0.325/MWh, slightly lower than the previous year (in 2020 it was €0.326/MWh). This rate South Africa In August 2020, the Risk Mitigation Independent Power applies to monthly revenue from the electricity generation Producer Procurement Program (RMIPPPP) was launched, of all renewable and cogeneration units in operation and an auction for the development of 2,000 MW of capacity, serves to cover the operating and investment costs of DA- which should enter service by June 2022. In the event of an PEEP, the Greek operator responsible for the management award to Enel Green Power, the payments for the electricity of incentives for renewable generation and the issue of generated, for capacity and for ancillary services will have a guarantees of origin. North America positive impact on Enel Green Power’s results. A further procurement auction for 11,813 MW (of which 6,800 from renewable sources) under the long-term ener- United States In May 2020, the United States Treasury Department amen- gy development plan (Integrated Resource Plan - IRP 2019) was approved by the regulator NERSA in September 2020 ded the administrative guidelines for section 45 of the and is expected to take place in 2021. Production Tax Credit (PTC) for investments in wind plants, granting eligible projects two more years to enter service From October 2020, municipalities (which together with and maintain eligibility under the “continuity requirement”. Eskom are South Africa’s electricity distributors) have been 205 Integrated Annual Report 2020able to purchase power directly from renewable energy producers and no longer only from Eskom. This change in the rules improves Enel Green Power’s earnings outlook. India The government took a number measures in 2020 to pro- tect the renewable energy sector from the adverse effects of COVID-19. The pandemic was declared a cause of force majeure, which allowed operators to suspend their obliga- tions without incurring penalties. To safeguard renewable generation projects, a 5-month extension of the deadline for entering service was granted, which is also applicable to EGP India’s 285 MW Coral project. In addition, the government issued strict instructions to protect private generators from any arbitrary curtailment decisions by discoms at a time of very weak electricity de- mand, as well as to ensure timely payment of power pur- chases by discoms. In 2019, the Ministry of Energy had ordered discoms to is- sue letters of credit to private generators under the terms of their respective power purchase agreements (PPAs). The Gurajat State Distribution Company was forced to open and maintain a letter of credit in March 2020. This reduced the risk faced by Enel Green Power projects. Infrastructure and Networks Italy The rate for the fifth regulatory period (2016-2023) is go- verned by ARERA Resolution no. 654/2015/R/eel. This pe- riod lasts eight years and is divided into two sub-periods of four years each (NPR1 for 2016-2019 and NPR2 for 2020- 2023). With regard to the NPR2 period, ARERA published Resolu- tion no. 568/2019/R/eel, with which it updated rates for di- stribution and metering services in force in the 2020-2023 period, publishing the new integrated texts (TIT 2020-2023 and TIME 2020-2023). With Resolution no. 639/2018/R/com, ARERA set the value of the WACC for distribution and metering activities, valid for the 2019-2021 period, at 5.9%. As for distribution and metering rates, ARERA approved both the definitive reference rates for 2019, calculated by taking into account the actual balance sheet data for 2018 (Resolution no. 144/2020/R/eel), and the provisional refe- rence rates for 2020 on the basis of the preliminary balan- ce sheet data for 2019 (Resolution no. 162/2020/R/eel). The definitive reference rates for 2020 are expected to be pu- blished in the early months of 2021. Australia In September 2020, the regulator AER agreed a change With Resolution no. 449/2020/R/eel, ARERA adjusted the grid loss regulations for the 2019-2021 period, revising the conventional percentage loss factors to be applied to in approach by the AEMO system operator with regard to low-voltage withdrawals and making a number of chan- new connections, moving from the parallel evaluation of ges to the methods for calculating the annual equalization new connections to a sequential approach (where gene- amount. rators are placed in a progressive queue). Each connection request is evaluated on the basis of the impact it has indi- As regards service quality, ARERA, with Resolution no. vidually on the grid. AEMO will be able to begin the evalua- 646/2015/R/eel as amended, established output-based tion of an application only if the previous application has regulation for electricity distribution and metering services, received a no-impact assessment on grid security (or – if including the principles for regulation for 2016-2023 (TIQE not – if actions have been taken to remove the impact). This 2016-2023). With Resolution no. 566/2019/R/eel, ARERA change added significant delays in the connection of Enel completed the update of the TIQE for the 2020-2023 se- Green Power plants in Cohuna and Girgarre (whose con- mi-period, proposing tools to bridge gaps in quality of ser- nection was expected in 2020), with a significant impact on vice still existing between the various areas of the country, Enel Green Power’s financial performance. taking account of the time needed to implement interven- tions on the grid as well as the effects of climate change. With Resolution no. 534/2019/R/eel, ARERA published the list of interventions in the 2019-2021 Resilience Plan of e-distribuzione eligible for the bonus-penalty mecha- nism envisaged under the provisions of Resolution no. 668/2019/R/eel, which introduced an incentive mechani- 206206 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementssm for investments to increase the resilience of distribution grids in terms of resistance to loads deriving from extreme saged under Law 15/2012, the proceeds of auctions of CO2 emission allowances and, in the maximum amount of 10% weather events. of the annual value of the Fund, the general State budget Finally, in 2020 ARERA adopted three measures (Resolu- or EU funds. The preliminary bill envisages a mechanism to tions no. 431/2020/R/eel, no. 432/2020/R/com and no. redistribute the cost associated with achieving renewables 213/2020/R/eel) containing extraordinary measures for the objectives at the national level among all energy sectors sterilization of effects of the COVID-19 emergency with re- and provides for a gradual introduction of five years. gard to service quality, resilience and the installation plan for e-distribuzione’s 2nd generation meters. Europe Energy efficiency - White certificates With Resolution no. 270/2020/R/efr, ARERA updated the Romania The regulated rate of return (RAB) was reviewed by the rules for defining the rate subsidy to be paid to distributors energy regulator ANRE. After an order that set the value at under the energy efficiency certificate mechanism, in com- 5.66% in 2019, it was set at 6.39% in 2020, with a 1% bonus pliance with Lombardy Regional Administrative Court ruling for new investments. no. 2538/2019 published on November 28, 2019. The provi- With Law 155/2020, Parliament introduced an obligation sions included confirmation of the cap on the rate subsidy for distribution system operators (DSOs) to finance the set at €250/certificate and the introduction of an additional connection to the network of new non-residential custo- unit fee directly related to any shortage of available certi- mers located less than 2,500 meters from the electricity ficates. e-distribuzione challenged this resolution (with an distribution grid. appeal to the President of the Republic), contesting the fai- With Law 290/2020, the Parliament introduced an obliga- lure to extend the additional contribution to 2018 and the tion for DSOs to finance all new connections of new resi- failure to provide mechanisms for reimbursing costs for the dential customers. purchase of virtual white certificates. Iberia Spain Latin America Chile Law 21.194 Method for calculating costs of electricity and gas plants On December 21, 2019, the Ministry of Energy published Law On July 7, 2020, the Ministry for the Ecological Transition 21.194 which lowered the remuneration of distribution compa- and the Demographic Challenge launched consultations nies and enhanced the process for setting electricity distribu- for two draft decrees concerning the methods for cal- tion rates. The law changes the discount rate for the calculation culating the costs of electricity and gas plants, which will of annual investment costs, which went from 10% to a rate that supplement the methods for calculating the access rates. must be between 6% and 8% post tax. The post-tax remune- These decrees must be approved by the National Commis- ration rate for electricity distribution companies must not be sion for Markets and Competition. At the end of 2020 only more than two points above or three points below the remune- the decree relating to the gas system had been approved, ration rate set by the CNE (National Energy Commission). Finally, while the decree for the electricity system is still awaiting from January 2021 the distribution companies will have to ope- approval. rate exclusively in the distribution field. Bill establishing a National Fund for the Sustainability of CNE Resolution no. 176/2020 - Exclusive activity the Electricity System On June 9, 2020, CNE Resolution no. 176 was published, On December 16, 2020, the Ministry for the Ecological specifying the substance of the obligation of exclusive Transition and the Demographic Challenge has launched a activity and separate accounting in the provision of public public consultation for a bill to create a National Fund for electricity distribution services in accordance with the pro- the Sustainability of the Electricity System, which would fi- visions of Law 21.194. nance, in whole or in part, the costs connected with specific Under the provisions of the resolution, companies holding remuneration scheme for generation from renewables, co- concessions for the public electricity distribution servi- generation and waste, currently included in electricity grid ce operating in the Chilean national electricity system will access rates. The Fund will be financed with contributions have to set up as companies exclusively engaged in distri- from operators in the different energy sectors, taxes envi- bution activities and will only be able to exercise economic 207 Integrated Annual Report 2020activities involved in the provision of the public distribution shed the preliminary technical bases for the calculation of service, in compliance with applicable legislation. The ru- the components of the aggregate distribution value for the les established in the resolution shall apply from January 1, 2020-2024 period and the study of the service costs asso- 2021. Where a company is unable to comply by that date ciated with the supply of electricity, initiating the process for legitimate reasons, subject to notifying the CNE the ap- of determining distribution rates. plication of the resolution may be postponed, but in any Following the stages of the process established under ap- case not later than January 1, 2022. plicable legislation, the companies submitted their com- ments and, on June 11, 2020, the CNE published the defini- Law 21.249 - Exceptional measures supporting end users tive technical bases with Resolution no. 195. of health, electricity and gas services On July 17, 2020, with CNE Resolution no. 256 of the CNE, On August 8, Law 21.249 was approved, introducing excep- the Study Committee of the cost established in Article 183- tional measures supporting the most vulnerable customers, bis of the General Electricity Services Act was established. measures that, in large part, Enel Distribuzione Chile was INECON was selected to conduct the study, with the final already implementing voluntarily. The measures include a report to be delivered by April 2021. moratorium on the interruption of supply due to arrears and make it possible to pay electricity bill arrears in instal- Determination of the 2020-2023 transmission rates lments for electricity for customers defined as vulnerable. As part of the process of determining 2020-2023 transmis- These measures were extended and strengthened with sion rates, the following processes are being developed: Law 21.301. Average bare price › qualification of transmission plants and systems; › determination of the useful life of transmission plants; › definition of the technical and administrative basis for On October 5, 2019, the Ministry of Energy published De- the determination of transmission rates. cree 7T/2019 in the official journal, setting the “bare price” In this context, on June 5, 2018, the CNE approved a de- for the supply of electricity and set adjustments and loads finitive technical document determining the useful life of for the application of the Residential Rate Equity Mechani- transmission systems (Resolution no. 412). sm, with retroactive effect from July 1, 2019. On November Taking account of the studies determining the value of the 2, 2019 the Ministry of Energy published Law 21.185, which installations, the Definitive Report on the National Transmis- introduced a transitory mechanism for stabilizing the price sion System was issued in October 2020 and the related of electricity for customers subject to regulated rates. public hearing was held on November 13, 2020. In Novem- On November 2, 2020, the Ministry of Energy published ber 2020 the Definitive Report on the Zonal Transmission the average bare price to be applied starting from January System was issued and the related public hearing was held 1, 2020. Considering the price stabilization mechanism on December 2, 2020. established with Law 21.185, the publication of this decree had no effect on end-user rates. Argentina Short-term bare price COVID-19 pandemic response measures On October 23, 2019, the Ministry of Energy published As part of its response to the COVID-19 pandemic, the Ar- Decree 9T/2019, setting the bare price for the supply of gentine government introduced the following measures: electricity with effect from October 1, 2019. › the issue on March 17, 2020 of Decree DNU 287/2020 - On April 7, 2020, the Ministry of Energy published Decree Declaration of a state of health emergency from 12 March 2T/2020, which sets the bare price for the supply of electri- 2020 for a duration of 1 year; city, valid from April 1, 2020. › the issue on March 20, 2020 of Decree DNU 297/2020 On December 3, 2020 the Ministry of Energy published De- - Mandatory preventive social isolation and subsequent cree 12T/2020, which sets the bare price for the supply of extensions; electricity, valid from October 1, 2020. › the issue on March 20, 2020 of Decree DNU 298/2020 - Determination of 2020-2024 distribution rates proceedings during the lockdown; With Resolution no. 24 of 21 January 2020, the CNE publi- › the issue on March 25, 2020 of Decree DNU 311/2020 Suspension of administrative deadlines for government 208208 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements- Limitations on the suspension of basic services, inclu- payment of CDE (Energy Development Account) allowances ding users for whom the service interruption procedu- for May, June and July 2020. These payments were made re had been initiated. However, this benefit is applicable in five equal installments starting from August 2020. Any only to users with reduced or subsidized rates. differences caused by the delayed application of the rate revision will be recouped in the subsequent rate revision. COVID-19 payment moratorium On May 15, 2020, in response to the difficulties generated Special rate revision for Enel Distribuição São Paulo by the COVID-19 pandemic for economic, financial and (2020) industrial activities, the regulatory authority ENRE issued On June 30, 2020, ANEEL approved the rate revision for Enel Resolution no. 35 allowing all users who have suffered a Distribuição São Paulo, with an average increase of 4.23%. reduction of 50% or more in their electricity usage requi- The rate review took account of the advances received rement to suspend payments or make partial payments on by Enel Distribuição São Paulo on account for COVID-19, account for contracted power supply until their demand thus reducing the impact of this increase on end users. In returns to 70%. The obligation to pay additional charges the absence of these advances, the average rate increase and taxes is unaffected. would have been 12.22%. The measure also defines the defaulting users who will be able to benefit from a repayment plan that provides ANEEL Resolution no. 878/2020 for payment of 30 consecutive installments of the same ANEEL took measures valid for 90 days from March 24, amount. These repayment plans must be notified to ENRE 2020, to ensure the distribution of electricity during the and Cammesa by Edesur in order to benefit in turn from a COVID-19 emergency, including: banning the interruption similar treatment for purchases of that power. of service to residential customers in urban and rural are- Postponement of rate revision as; granting permission for the suspension of delivery of invoices issued to consumers, replacing them with the is- On June 19, 2020, Emergency Decree 543 was published in sue of electronic invoices or barcodes; and giving priority the Official Journal. It established a 180-day extension from to emergency and essential services in order to facilitate the expiry date of the extraordinary rate revision establi- social distancing measures and ensure the continuous and shed with Article 5 of Law 27541 (the Solidarity and Eco- reliable supply of electricity. nomic Reactivation Act). The new deadline for performing the rate review was set as December 17, 2020. Secondly, Provisional measure no. 950/2020 of the Federal the measure extends the benefits established under DNU government 311/2020 (limitations on suspensions of electricity supply) The provisional measure no. 950/2020 introduced by the in the event of late payment or non-payment by customers Federal government granted a full discount for needy cu- of up to a maximum of six consecutive or alternate invoices stomers billed up to 220 kWh/month, allocating part of the falling due after March 1, 2020. CDE’s resources to fund the measure and allowing the CDE to draw financial resources to address the impact of the Additional postponement of rate revision COVID-19 pandemic on the electricity sector. On December 17, 2020, the Argentine government issued Decree DNU 1020/2020 extending the rate freeze for Reduction of ancillary charges and taxes for electricity another 90 days. It also initiated the full rate renegotiation transmission process, which should be completed with the definition of In order to provide liquidity to the electricity industry in a definitive renegotiation agreement in less than two years. response to COVID-19, on April 20, 2020 ANEEL approved It also authorizes regulatory bodies to set transitional rates measures to facilitate the payment of transmission rates by and allows the segmentation of rates by user category. distributors and end users. Brazil The main measure involved moving forward the financial effects of the adjustment scheme for April, May and June 2020. The immediate effect was R$144 million in discounts Rate revision for Enel Distribuição Ceará on the rates charged for the use of the transmission system On April 14, 2020, the regulatory authority ANEEL approved by of distributors (90%) and end users (10%), with similar di- the rate revision for Enel Distribuiçao Ceará, freezing rates scounts in May and June. to take account of the impact of COVID-19 on the economy. Note also that the decrease in revenue due to the non-ap- plication of the rate revision will be offset by the delayed 209 Integrated Annual Report 2020Decree 10.350/2020 of quality indicators and established the retroactive appli- On May 18, 2020, the government issued a decree regu- cation of incentives for service quality. lating the COVID-19 account, an industry rescue loan to distribution companies in response to the COVID-19 pan- demic. Peru In Peru, the process for determining distribution rates ta- The COVID-19 account consists of a loan obtained from kes place every four years and is referred to as the “Setting a group of public and private banks, with the intention of the Aggregate Distribution Value” (“VAD”). Exceptionally, preserving the liquidity of companies in the sector and, at the last rate cycle set a duration of five years, considering the same time, alleviating the impact of the crisis on con- that an extra year was necessary to implement the reform sumers. approved in 2015 with Peruvian Legislative Decree 1221. Therefore, in 2018 the process of determining the VAD was Provisional measure no. 988/2020 of the Federal completed for the years 2018-2022. At the end of this rate government process, in general, the rates set for the previous regulatory On September 1, 2020 the Federal government issued period (years 2013-2017) were unchanged. a provisional measure with special provisions designed to reduce rates in the period of the pandemic and in the With Decreto Supremo 044-2020-PCM, published on Mar- medium and long term. The measure is valid for 120 days. ch 15, 2020, a state of national emergency was declared It is expected that a law with the same provisions will be for 15 days. This period has since been repeatedly exten- enacted at that time. ded and is now in place until at least March 31, 2021 due to the COVID-19 pandemic. During this period, some social ANEEL Directives nos. 2177/2020, 2353/2020 and distancing measures were taken to prevent the spread of 2640/2020 COVID-19. In particular, Decreto Supremo 044-2020-PCM These directive establish the value of the COVID-19 ac- establishes that the government shall guarantee access to count resources transferred to the distribution concession public services and essential goods and services with no holders in July, August and September. restrictions. Colombia The Energy and Gas Regulation Commission (CREG) de- Vice-ministerial Resolution no. 001-2020-MINEM/VME, pu- blished on March 19, 2020, established that electricity ge- termines the remuneration methodology for the distribu- neration, transmission and distribution companies shall: tion network. Distribution rates are set every five years and › activate safety protocols to safeguard staff, contractors updated monthly based on the producer price index. and third parties; In response to the national and global impact of the CO- electricity service; VID-19 pandemic, in March 2020 the Colombian govern- › send their emergency plans to OSINERGMIN and Ministry › take all necessary actions to ensure the continuity of ment declared a state of economic, social and ecological of Energy and Mining. emergency for the entire country and ordered mandatory preventive isolation for all inhabitants. These measures led Emergency Decree 029-2020, published on March 20, to the issue of a range of transitional rules and regulations 2020, introduced a 30-day suspension on the calculation by Colombian authorities that govern public services, in- of time limits for the activation of administrative procedu- cluding electricity supply, in order to ensure the continuity res and proceedings of any kind, including those regulated of the delivery of public domestic services and to mitigate by laws and special provisions, that are subject to deadlines. financial and social effects in the electricity and natural gas sector. The measures were extended until May 31, 2021. Emergency Decree 035-2020, published on April 3, 2020, On June 24, 2020, the Commission issued CREG Resolution mers with invoices issued in March 2020 or that include 122, which approved the distribution rates of Enel Codensa. amounts consumed during the national emergency by Briefly, CREG, in its final approval, corrected the Asset Base “vulnerable” users (those with a consumption of up to 100 and incorporated some additional events in the calculation kWh/month) to pay in instalments over as many as 24 mon- established that distribution companies can allow custo- 210210 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsths. The government will pay compensatory interest on the installments, which will be paid to electricity companies using the Fondo de Inclusión Social Energético. The mea- sure also establishes that electricity companies will not be liable for compensation or penalties for failure to comply with the technical quality standards for electricity service. Various commercial measures have also been introduced, such as the suspension of the obligation to read meters, of the delivery of paper invoices (digital delivery has been introduced), and of the obligation to physically assist cu- stomers at customer care centers, while customers may be billed using their average consumption over the last six months until an actual meter reading is possible. Emergency Decree 062-2020, published on May 28, 2020, expanded the category of customers who can pay their electricity bills in instalments to include those consuming up to 300 kWh/month. In this case, the measure establi- shes that invoices for May or that include amounts con- sumed during the national emergency are eligible for the instalment plan. The compensatory interest to be paid to electricity companies will be partly borne by the gover- nment and partly by customers. Finally, the measure also establishes that electricity companies will not be liable for compensation or penalties for violation of technical quality standards for up to 60 calendar days after the emergency period. Emergency Decree 074-2020, published on June 27, 2020, as part of the measures issued under the state of national emergency, introduced the “Bono Electricidad”, a subsidy that covers unpaid consumption in the period from Mar- ch to December 2020 with consumption up to 125 kWh/ month (subject to conditions). This subsidy will cover debts up to 160 Peruvian soles, and the resources will be directly transferred to the distribution companies. The resolution of the OSINERMGIN Board of Directors no. 080-2020-OS/ CD, published on July 9, 2020, approved the procedure for applying the “Bono Electricidad”. Emergency Decree 105-2020, published on September 10, 2020, amended Emergency Decree 074-2020, expanding the beneficiaries of the “Bono Electricidad” to include cu- stomers with prepaid supply and those associated in col- lective supply arrangements. The resolution of the OSINERGMIN Board of Directors no. 218-2020-OS/CD, published on December 24, 2020, ap- proved the “Manual of the Basic Cost of activities appli- cable to electricity distribution companies”. End-user Markets Italy Decree Law 162 of December 30, 2019 (the “Milleproroghe” omnibus extension act), ratified with Law 8 of February 28, 2020, amended the Competition Act (Law 124/2017), pro- viding for the staggered postponement of the removal of price protection in the electricity sector, respectively to Ja- nuary 1, 2021 for small businesses and January 1, 2022 for domestic customers and micro-enterprises. The termina- tion of the gas protection regime for domestic users was also scheduled for January 1, 2022. With regard to the deadline of January 1, 2021, the imple- menting decree of the Ministry for Economic Development is expected to be published in the Gazzetta Ufficiale shortly. The Ministry delegates ARERA to define the measures go- verning the transition to the free market, based on certain criteria and guidelines. With Resolution no. 491/2020/R/ eel, ARERA established a last resort service (“gradual pro- tections service”) for small businesses without a supplier as of January 1, 2021. Electricity With Resolution no. 576/2019/R/eel, ARERA updated for 2020 the rate component covering the marketing costs of the operators of the enhanced protection service (RCV) and the levels of the PCV fee, which represents the referen- ce price for sellers on the free market. With Resolution no. 604/2020/R/eel, the levels of the RCV and PCV components for the 2021 were updated. The Milan Regional Administrative Court, with ruling no. 565 of 27 March 2020, partially voided Resolution no. 119/2019/R/eel, with which ARERA had introduced chan- ges to the compensation mechanism for the amounts not collected by operators of the enhanced protection service in respect of fraudulent withdrawals of power. In particu- lar, the Regional Administrative Court voided the part of the resolution in which it provided for a reduction in the amounts subject to reimbursement for amounts invoiced in the period prior to its entry into force (April 2, 2019). With Resolution no. 240/2020/R/eel, ARERA amended the rules in compliance with the provisions of the Regional Admini- strative Court. Gas With Resolution no. 32/2019/R/gas ARERA established the rules for settling financial items between sellers and end users for the 2010-2012 period with regard to gas for the safeguard service, in compliance with Council of State ru- ling no. 4825/2016. With ruling no. 38 of January 7, 2020, the Milan Regional Administrative Court voided the part of 211 Integrated Annual Report 2020Resolution no. 32/2019/R/gas in which it excludes custo- Royal Decree 1106/2020 of 15 December, which regulates mers with an annual consumption equal to or above a cer- the charter of energy-intensive users, governing the sta- tain threshold from socialization of losses. With Resolutions tus and obligations of such users and the compensation no. 247/2020/R/gas and no. 603/2020/R/gas, ARERA com- mechanisms they could benefit from, was published in the plied with this ruling, recalculating, starting from January 1, Official Journal on December 17, 2020. 2021, the amounts to be applied to all end users connected the distribution network. Europe Resolutions no. 577/2019/R/gas and no. 603/2020/R/gas updated the QVD component for 2020 and 2021, respecti- vely, covering the costs of marketing natural gas sales ser- Romania Following the issue of government emergency order no. vices to customers who use the protection service. 114/2019, the energy regulator ANRE reintroduced regula- ted bilateral contracts on the wholesale market and set re- tail prices for the regulated supply of the universal service at levels that would guarantee the recovery of most of the losses registered by last-resort suppliers (universal service providers) in recent years. Iberia Spain Energy efficiency Law 18/2014 of October 15 containing urgent measures for growth, competition and efficiency created a National Energy Efficiency Fund to help achieve energy efficiency objectives. The TED/28/2020 measure of March 23 establi- shed that Endesa would be required to make a contribution for 2020 of €27 million to the National Energy Efficiency Fund. In December 2020, the Ministry for the Ecological Transi- tion and the Demographic Challenge began development of a proposal for an Order that fixes the contribution to the National Energy Efficiency Fund for 2021, bringing the amount proposed for Endesa to €26.6 million. Social Rate On August 13, 2020, the Order TED/788/2020 of July 24 was published in Spain’s Official Journal, which establishes the distribution of the financing obligation for the 2020 So- cial Rate, with the percentage proposed for Endesa being set at 35.57%. Energy-intensive power users Royal Decree Law 24/2020 of June 26 concerning social measures to revive employment and protect self-employ- ment and the competitiveness of the industrial sector was published in the Official Journal on June 27, 2020. The legislation created the Spanish reserve fund for the gua- rantees of energy-intensive entities (FERGEI) to covering the risks deriving from medium and long-term electricity purchase and sale transactions. The fund has a budget of €200 million per year, for a total investment of €600 million over three years. 212212 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsIntegrated Annual Report 2020 213 Enel is a “super major” in the renewable energy field Investing in Enel means investing in the fight against climate change. Enel is a global leader in power grids Grids will play a key role in the energy transition. Electrification of energy consumption This will enable Enel to create value for itself and its stakeholders. Dividend policy Enel has adopted a simple, predictable and attractive dividend policy, producing a guaranteed fixed and increasing dividend until 2023. 5 OUTLOOK S N O I T A R E P O N O T R O P E R 214214 215 Integrated Annual Report 2020OUTLOOK In 2021-2023, the Group expects to invest around €40 billion directly, of which €38 billion through the Owner- ship business model and around €2 billion through the Stewardship business model, while mobilizing €8 billion in investment from third parties. The COVID-19 pandemic has profoundly impacted not With regard to the investments planned within the fra- only economic activity around the world, but also the way mework of the Ownership business model: people lived and worked during 2020. › more than half will be dedicated to Global Power Gene- In this context, the geographical diversification of the ration, with approximately €17 billion allocated to incre- Group, its integrated business model along the entire va- asing renewable generation capacity, which will rise to lue chain, a sound financial structure and a high level of 60 GW on a consolidated basis in 2023; digitalization have enabled Enel to display considerable › about 43% will be dedicated to Infrastructure and resilience, which is reflected in our financial position and Networks. The acceleration of investments is expected performance for the year. to lead to an increase in the Group’s RAB, which will rea- In November 2020, the Group presented the Strategic ch €48 billion in 2023; Plan, providing a vision of the evolution of the business › the remainder will be dedicated to the Customers busi- over the next ten years. ness: the customer value of the business-to-consumer In particular, the new Strategic Plan describes the adop- segment is expected to increase by about 30%, compa- tion of two business models: a traditional “Ownership” red with an increase of some 45% in the business-to-bu- model, in which digital platforms are promoters of the siness segment, thanks to the elimination of regulated business to support the profitability of investments, and rates, mainly in Italy, and the trend of electrification of a “Stewardship” model, which catalyzes investments by energy consumption, which will promote “beyond com- third parties in collaboration with Enel or in the context of modity” services. business-generating platforms. Investments under the Stewardship business model will Through these two business models, in 2021-2030 Enel will mainly be dedicated to renewable energy, as well as to fi- invest over €150 billion through the Ownership business ber optics, e-transport and flexibility services. model and an additional €10 billion through the Steward- Over 90% of Enel’s investments on a consolidated basis ship business model, while at the same time mobilizing will be in line with the United Nations Sustainable Develop- some €30 billion in additional third-party investment. ment Goals (SDGs). Furthermore, according to Enel’s ini- With these investments, it is expected that between 2020 tial calculations, between 80% and 90% of its investments and 2030 the Group’s ordinary EBITDA will grow at a CAGR of on a consolidated basis will be aligned with the European 5%-6%, with an ordinary profit growing at a CAGR of 6%-7%. taxonomy criteria thanks to its substantial contribution to By promoting decarbonization, electrification and pla- climate change mitigation. tform migration processes, the Group also plans to cre- Furthermore, over the period covered by the Plan, Enel will ate shared and sustainable value for all stakeholders, for implement a simple, predictable and attractive dividend example: › pursuing an 80% reduction in direct CO2 emissions com- pared with 2017 in a strategy that will reduce extraction policy: shareholders will receive a fixed, guaranteed and increasing dividend per share (DPS) over the next three years, with the aim of reaching €0.43 per share by 2023. by about 200 million barrels of oil equivalent; In 2021, the following are expected: › saving consumers about 25% on their total energy bills › an acceleration of investments in renewable energy, while simultaneously reducing their emissions; especially in Latin America and North America, to sup- › investing in digitalization and the creation of platforms port industrial growth and as part of the decarboniza- to offer a level of service three times higher than the tion policies followed by the Group; current level, with a system average duration interrup- › an increase in investments to improve the quality and tion index (SAIDI) falling to about 100 minutes in 2030; resilience of distribution networks, especially in Italy and › generating over €240 billion of gross domestic product Latin America, as well as their further digitalization; in the countries in which the Group operates, through › an increase in investments dedicated to the electrifica- local investments in generation and electrification. tion of energy consumption, especially in Italy, with the 216216 134562Enel GroupStrategy & Risk ManagementPerformance& MetricsOutlookConsolidated financial statementsGovernanceaim of enhancing the growth of the customer base and Based on the foregoing, the financial targets on which the achieving continuous efficiency gains, supported by the Group’s 2021-2023 Plan is based are reported below. creation of global business platforms. FINANCIAL TARGETS Ordinary EBITDA (€ billions) Ordinary profit (€ billions) 2020 (1) 2021 2022 2023 CAGR 2020-2023 17.9 5.2 18.7-19.3 19.7-20.3 20.7-21.3 +5%/+6% 5.4-5.6 5.9-6.1 6.5-6.7 +8%/+9% Dividend per share (€) 0.358 0.38 0.40 0.43 ~6% (1) The dividend policy for 2020 provides for the payment of a dividend equal to the higher of €0.358 per share and 70% of the Group’s ordinary net income. 217 Integrated Annual Report 2020OTHER INFORMATION Non-EU subsidiaries Enel Chile SA (a Chilean company directly controlled by Enel SpA); 14) Enel Distribución Chile SA (a Chilean com- pany belonging to Enel Chile); 15) Enel Distribución Perú SAA (a Peruvian company belonging to Enel Américas); 16) Enel Finance America LLC (a United States company belonging to Enel North America); 17) Enel Fortuna SA (a Panamanian company belonging to EGP Américas); 18) Enel Generación Chile SA (a Chilean company belonging to Enel Chile); 19) Enel Generación Costanera SA (an Ar- gentine company belonging to Enel Américas); 20) Enel Generación El Chocón SA (an Argentine company belon- At the date of approval by the Board of Directors of the fi- ging to Enel Américas); 21) Enel Generación Perú SAA (a nancial statements of Enel SpA for 2020 – March 18, 2021 Peruvian company belonging to Enel Américas); 22) Enel – the Enel Group meets the “conditions for the listing of Green Power Brasil Participações Ltda (a Brazilian com- shares of companies with control over companies establi- pany belonging to EGP Américas); 23) Enel Green Power shed and regulated under the law of non-EU countries” Chile SA (a company merged on March 4, 2020 into Enel (hereinafter “non-EU subsidiaries”) established by CONSOB Green Power del Sur SpA, renamed Enel Green Power with Article 15 of the Markets Regulation (approved with Chile SA); 24) Enel Green Power Chile SA (formerly Enel Resolution no. 20249 of December 28, 2017). Green Power del Sur SpA, a Chilean company belonging Specifically, we report that: to Enel Chile); 25) Enel Green Power Diamond Vista Wind › in application of the materiality criteria for the purposes Project LLC (a United States company belonging to Enel of consolidation referred to in Article 15, paragraph 2, of North America); 26) Enel Green Power México S de RL de the CONSOB Markets Regulation, 40 non-EU subsidia- Cv (a Mexican company belonging to Enel Green Power); ries of the Enel Group have been identified to which the 27) Enel Green Power Perú SAC (a Peruvian company be- rules in question apply on the basis of the consolidated longing to EGP Américas); 28) Enel Green Power Rattle- accounts of the Enel Group at December 31, 2019; snake Creek Wind Project LLC (a United States company › they are: 1) Ampla Energia e Serviços SA (a Brazilian belonging to Enel North America); 29) Enel Green Power company belonging to Enel Américas); 2) Celg Distri- RSA (Pty) Ltd (a South African company belonging to Enel buição SA - Celg D (a Brazilian company belonging to Green Power); 30) Enel Green Power RSA 2 (RF) (Pty) Ltd (a Enel Américas); 3) Cimarron Bend Wind Holdings I LLC South African company belonging to Enel Green Power); (a United States company belonging to Enel North Ame- 31) Enel Kansas LLC (a United States company belonging rica); 4) Codensa SA ESP (a Colombian company be- to Enel North America); 32) Enel North America Inc. (a Uni- longing to Enel Américas); 5) Companhia Energética do ted States company directly controlled by Enel SpA); 33) Ceará - Coelce (a Brazilian company belonging to Enel Enel Perú SAC (a Peruvian company belonging to Enel Américas); 6) EGPNA Preferred Wind Holdings LLC (a Uni- Américas); 34) Enel Russia PJSC (a Russian company di- ted States company belonging to Enel North America); rectly controlled by Enel SpA); 35) Enel X North America 7) Eletropaulo Metropolitana Eletricidade de São Paulo Inc. (a United States company belonging to Enel North SA (a Brazilian company belonging to Enel Américas); America); 36) Geotérmica del Norte SA (a Chilean com- 8) Emgesa SA ESP (a Colombian company belonging to pany belonging to Enel Chile); 37) High Lonesome Wind Enel Américas); 9) Empresa Distribuidora Sur SA - Ede- Power LLC (a United States company belonging to Enel sur (an Argentine company belonging to Enel Américas); North America); 38) Red Dirt Wind Project LLC (a United 10) Empresa Eléctrica Panguipulli SA (a company merged States company belonging to Enel North America); 39) on July 1, 2020 into Parque Eólico Taltal SpA, which on Rock Creek Wind Project LLC (a United States company August 1, 2020 was in turn merged into Almeyda So- belonging to Enel North America); 40) Thunder Ranch lar SpA, which on January 1, 2021 was merged into Enel Wind Project LLC (a United States company belonging to Green Power Chile SA); 11) Enel Américas SA (a Chilean Enel North America); company directly controlled by Enel SpA); 12) Enel Brasil › the balance sheet and income statement of the above SA (a Brazilian company belonging to Enel Américas); 13) companies included in the reporting package used for 218218 134562Enel GroupStrategy & Risk ManagementPerformance& MetricsOutlookConsolidated financial statementsGovernancethe purpose of preparing the 2020 consolidated financial for calculating the transfer price or timing could give rise statements of the Enel Group will be made available to to doubts concerning the propriety and/or completeness the public by Enel SpA (pursuant to Article 15, paragraph of disclosure, conflicts of interest, preservation of company 1a) of the Markets Regulation) at least 15 days prior to the assets or protection of non-controlling shareholders. day scheduled for the Ordinary Shareholders’ Meeting called to approve the 2020 financial statements of Enel SpA together with the summary statements showing the essential data of the latest annual financial statements of subsidiaries and associated companies (pursuant to the applicable provisions of Article 77, paragraph 2-bis, of the CONSOB Issuers Regulation approved with Resolu- tion no. 11971 of May 14, 1999); › the articles of association and composition and powers of the control bodies from all the above subsidiaries have been obtained by Enel SpA and are available in updated form to CONSOB where the latter should request such information for supervisory purposes (pursuant to Article 15, paragraph 1b) of the Markets Regulation); › Enel SpA has verified that the above subsidiaries: – provide the auditor of the Parent, Enel SpA, with infor- mation necessary to perform annual and interim audits of Enel SpA (pursuant to Article 15, paragraph 1 (letter c-i) of the Markets Regulation); – use an administrative and accounting system appro- priate for regular reporting to the management and auditor of the Parent, Enel SpA, of income statement, balance sheet and financial data necessary for prepa- ration of the consolidated financial statements (pur- suant to Article 15, paragraph 1 (letter c-ii) of the Mar- kets Regulation). Disclosures on financial instruments The disclosures on financial instruments required by Article 2428, paragraph 2, no. 6-bis of the Civil Code are reported in the following notes to the consolidated financial state- ments: 44 “Financial instruments by category”, 45 “Risk management”, 47 “Derivatives and hedge accounting” and 48 “Assets and liabilities measured at fair value”. Atypical or unusual operations Pursuant to the CONSOB Notice of July 28, 2006, the Group did not carry out any atypical or unusual operations in 2020. Such operations include transactions whose significance, size, nature of the counterparties, subject matter, method Subsequent events Significant events following the close of the year are di- scussed in note 55 to the consolidated financial state- ments. Transactions with related parties For more information on transactions with related parties, please see note 50 to the consolidated financial state- ments. Research and development costs Please see the “Innovation and digitalization” section of the “Performance & Metrics” chapter. 219 Integrated Annual Report 2020Reconciliation of equity and profit of Enel SpA and the corresponding consolidated figures Pursuant to CONSOB Notice no. DEM/6064293 of July 28, 2006, the following table provides a reconciliation of Group profit for the year and equity with the corresponding figu- res for the Parent. Millions of euro Income statement Equity Income statement Equity at Dec. 31, 2020 at Dec. 31, 2019 Separate financial statements - Enel SpA Carrying amount of and impairment losses on consolidated equity investments Equity and profit (calculated using the same 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 ATTRIBUTABLE TO OWNERS OF THE PARENT NON-CONTROLLING INTERESTS CONSOLIDATED FINANCIAL STATEMENTS 2,326 687 4,091 - (274) (4,146) (74) 2,610 1,012 3,622 30,743 (85,641) 78,099 (7,046) 13,779 - (1,609) 28,325 14,032 42,357 4,792 211 4,428 - (27) (7,160) (70) 2,174 1,302 3,476 29,586 (82,098) 75,304 (3,802) 14,241 - (2,854) 30,377 16,561 46,938 220220 134562Enel GroupStrategy & Risk ManagementPerformance& MetricsOutlookConsolidated financial statementsGovernanceIntegrated Annual Report 2020 221 6 CONSOLIDATED FINANCIAL STATEMENTS I S T N E M E T A T S L A C N A N I F D E T A D I L O S N O C 222222 Net profit attributable to shareholders of the Parent at €2,610 million, +20% on 2019 The growth reflects improved financial management and a decrease in impair- ment losses. Energy transition The Group continued the energy tran- sition process by recognizing additional impairment losses on its coal-fired plants and provisions for restructuring plans in- volving decarbonization and digitalization. Impact of climate change In its valuation processes, the Group has taken account of the long-term impacts of climate change. Impact of the COVID-19 pandemic The notes to the consolidated financial statements discuss the impacts of the COVID-19 pandemic. 223 Integrated Annual Report 2020CONSOLIDATED FINANCIAL STATEMENTS Income Statement Millions of euro Notes 9.a 9.b [Subtotal] 10.a 10.b 10.c 10.d 10.e 10.f 10.g [Subtotal] 11 12 13 12 13 14 15 Revenue Revenue from sales and services Other income Costs Electricity, gas and fuel (1) Services and other materials (1) Personnel expenses Net impairment losses on trade receivables and other financial assets Depreciation, amortization and other impairment losses Other operating costs (1) Capitalized costs Net expense from commodity derivatives Operating profit Financial income from derivatives Other financial income Financial expense from derivatives Other financial expense Net income from hyperinflation Share of profit/(loss) of equity-accounted investments Pre-tax profit Income taxes Profit from continuing operations Profit/(Loss) from discontinued operations Profit for the year (owners of the Parent) Attributable to owners of the Parent Attributable to non-controlling interests Basic earnings/(loss) per share attributable to owners of the Parent (euro) Diluted earnings/(loss) per share attributable to owners of the Parent (euro) Basic earnings/(loss) per share from continuing operations attributable to owners of the Parent (euro) Diluted earnings/(loss) per share from continuing operations attributable to owners of the Parent (euro) 2020 2019 of which with related parties of which with related parties 4,804 16 7,189 2,617 235 11 88 46 62,623 2,362 64,985 25,049 18,298 4,793 1,285 7,163 2,202 (2,385) 56,405 (212) 8,368 1,315 2,763 2,256 4,485 57 (299) 5,463 1,841 3,622 - 3,622 2,610 1,012 0.26 0.26 0.26 0.26 4,038 10 5,385 2,958 202 1 62 71 77,366 2,961 80,327 38,082 18,836 4,634 1,144 9,682 2,693 (2,355) 72,716 (733) 6,878 1,484 1,637 1,142 4,518 95 (122) 4,312 836 3,476 - 3,476 2,174 1,302 0.21 0.21 0.21 0.21 (1) The 2019 figures have been adjusted to take account of the reclassification of the result of the measurement of contracts for the purchase of commodities with physical settlement (IFRS 9) from “Other operating costs” to “Electricity, gas and fuel” and “Services and other materials”. 224224 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsNotes Statement of Comprehensive Income Millions of euro Profit for the year Other comprehensive income/(expense) that may be subsequently reclassified to profit or loss (net of taxes) Effective portion of change in the fair value of cash flow hedges Change in fair value of hedging costs Share of the other comprehensive expense of equity-accounted investments Change in the fair value of financial assets at FVOCI Change in translation reserve Other comprehensive income/(expense) that may not be subsequently reclassified to profit or loss (net of taxes) Remeasurement of assets for employee benefits Change in fair value of equity investments in other companies Total other comprehensive expense for the year 35 Comprehensive income/(expense) for the year Attributable to: - owners of the Parent - non-controlling interests 2020 3,622 (268) (99) (9) (1) (4,510) (353) (21) (5,261) (1,639) (1,028) (611) 2019 3,476 39 120 (57) 5 (481) (502) - (876) 2,600 1,745 855 225 Integrated Annual Report 2020at Dec. 31, 2020 at Dec. 31, 2019 of which with related parties of which with related parties Notes 17 20 21 22 23 24 25 26 27 29 78,718 103 17,668 13,779 8,578 861 1,236 304 5,159 2,494 79,809 112 19,089 14,241 9,112 1,682 1,383 487 6,006 2,701 21 1,144 [Total] 128,900 134,622 31 32 26 25 28 30 33 [Total] 34 2,401 12,046 176 446 3,471 5,113 3,578 5,906 33,137 1,416 163,453 863 190 164 2,531 13,083 166 409 4,065 4,305 3,115 9,029 36,703 101 171,426 15 896 8 27 183 Statement of financial position Millions of euro ASSETS Non-current assets Property, plant and equipment Investment property Intangible assets Goodwill Deferred tax assets Equity-accounted investments Non-current financial derivative assets Non-current contract assets Other non-current financial assets Other non-current assets Current assets Inventories Trade receivables Current contract assets Tax assets Current financial derivative assets Other current financial assets Other current assets Cash and cash equivalents Assets classified as held for sale TOTAL ASSETS 226226 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements Millions of euro LIABILITIES AND EQUITY Equity attributable to owners of the Parent Share capital Treasury share reserve Other reserves Retained earnings Non-controlling interests Total equity Non-current liabilities Long-term borrowings Employee benefits Provisions for risks and charges (non-current portion) Deferred tax liabilities Non-current financial derivative liabilities Non-current contract liabilities Other non-current liabilities Current liabilities Short-term borrowings Current portion of long-term borrowings Provisions for risks and charges (current portion) Trade payables Income tax liabilities Current financial derivative liabilities Current contract liabilities Other current financial liabilities Other current liabilities Liabilities included in disposal groups classified as held for sale Total liabilities TOTAL LIABILITIES AND EQUITY Notes [Total] 35 36 37 38 23 25 26 39 10,167 (3) (39) 18,200 28,325 14,032 42,357 49,519 2,964 5,774 7,797 3,606 6,191 3,458 [Total] 79,309 36 36 38 41 25 26 42 40 [Total] 34 6,345 3,168 1,057 12,859 471 3,531 1,275 622 11,651 40,979 808 121,096 163,453 at Dec. 31, 2020 at Dec. 31, 2019 of which with related parties of which with related parties 10,167 (1) 1,130 19,081 30,377 16,561 46,938 984 54,174 715 3,771 5,324 8,314 2,407 6,301 3,706 83,997 3,917 3,409 1,196 161 108 151 89 2,205 12,960 2,291 16 37 209 3,554 1,328 754 13,161 40,488 3 124,488 171,426 8 39 30 227 Integrated Annual Report 2020 Statement of Changes in Equity (note 35) Share capital and reserves attributable to owners of the Parent Millions of euro Share premium reserve Treasury share reserve Share capital Reserve for equity instruments - perpetual hybrid bonds Legal reserve Other reserves Translation reserve Hedging reserve Hedging costs reserve Reserve from measurement Reserve from of financial instruments equity- accounted at FVOCI investments Reserve from Reserve from disposal of acquisitions equity interests of non- Equity attributable Non- Actuarial without loss of controlling Retained to owners controlling control interests earnings of the Parent interests 2,034 2,262 (3,317) (1,745) (258) 16 (63) (2,381) (1,623) - - - - - - 111 111 - (147) - - - - - - - - At December 31, 2018 10,167 7,489 Distribution of dividends Purchase of treasury shares Reclassifications Monetary restatement (IAS 29) Transactions in non- controlling interests Change in the consolidation scope Comprehensive income for the year of which: - other comprehensive expense - profit/(loss) for the year - - - - - - - - - - (9) 7 - - - - - - At December 31, 2019 10,167 7,487 Distribution of dividends Purchase of treasury shares Equity instruments - hybrid perpetual bonds Reserve for share-based payments (LTI bonus) Reclassification for curtailment of defined benefit plans (IAS 19) following signing of 5th Endesa Collective Bargaining Agreement Reclassifications Monetary restatement (IAS 29) Transactions in non- controlling interests Comprehensive expense for the year of which: - other comprehensive expense - profit for the year - - - - - - - - - - - - (11) - - - - - - - - - - - (1) - - - - - - - (1) - (2) - - - - - - - - - - - - - - - - - - - - - - 2,386 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (220) (265) (265) - - - - - - 41 94 94 - 2,034 2,262 (3,802) (1,610) - - - - - - - - - - - - - - (257) (13) - - - - - - - - - - - - - - 6 - - - - - - - At December 31, 2020 10,167 7,476 (3) 2,386 2,034 2,268 (7,046) (1,917) 228228 21 (119) (1,043) (2,381) (1,572) reserve (714) - - - - - - - - - - - - (11) (318) (318) 106 (28) (231) (231) - (56) (56) - - - - - - - - - - - - - - - (9) (9) - - - - - - - 5 5 - - - - - - - - - (22) (22) - (1) 2,174 1,745 855 2,600 19,853 (3,050) 31,720 16,132 (3,050) (1,190) 104 - - - - - - - - 2,174 19,081 (3,487) (10) - 104 61 (193) (429) 2,174 30,377 (3,487) (13) 2,386 6 (106) (1) 105 - (1) 105 (447) 1,302 16,561 (1,356) - - 1 170 593 - - - - - 147 Total equity 47,852 (4,240) (10) - 274 654 (192) (876) 3,476 46,938 (4,843) (13) 2,386 6 - (1) 252 280 (2) (20) (709) (729) - - - (7) 61 (3) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (2,987) (294) (95) 2,610 (1,028) (611) (1,639) (2,987) - (294) - (95) - (242) (128) (1,196) (2,381) (1,292) - (3,638) (1,623) 2,610 18,200 2,610 1,012 28,325 14,032 (5,261) 3,622 42,357 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsAt December 31, 2019 10,167 7,487 2,034 2,262 (3,802) (1,610) (147) Distribution of dividends Purchase of treasury shares (11) Distribution of dividends Purchase of treasury shares Reclassifications Monetary restatement (IAS 29) Transactions in non- controlling interests Change in the consolidation Comprehensive income for scope the year of which: expense - other comprehensive - profit/(loss) for the year Equity instruments - hybrid perpetual bonds Reserve for share-based payments (LTI bonus) Reclassification for curtailment of defined benefit plans (IAS 19) following signing of 5th Endesa Collective Bargaining Agreement Reclassifications Monetary restatement (IAS 29) Transactions in non- controlling interests Comprehensive expense for the year of which: expense - other comprehensive - profit for the year - - - - - - - - - - - - - - - - - - - - - (9) 7 - - - - - - - - - - - - - - - - (1) (1) (2) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2,386 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 6 (220) (265) (265) - - - - - - - - - - - - - 41 94 94 - - - - - - - - - - - - - 111 111 - - - - - - - - - - - - - - - (257) (13) (2,987) (294) (95) (2,987) - (294) - (95) - (242) At December 31, 2020 10,167 7,476 (3) 2,386 2,034 2,268 (7,046) (1,917) Share capital and reserves attributable to owners of the Parent Reserve for equity instruments Millions of euro At December 31, 2018 10,167 7,489 Share Treasury - perpetual Share premium share capital reserve reserve hybrid bonds Legal Other Translation Hedging Hedging reserve reserves 2,034 2,262 reserve (3,317) reserve costs reserve (1,745) (258) Reserve from measurement of financial instruments at FVOCI Reserve from equity- accounted investments Reserve from disposal of equity interests without loss of control Reserve from acquisitions of non- controlling interests Actuarial reserve 16 (63) (714) (2,381) (1,623) - - - - - - 5 5 - 21 - - - - - - - - (22) (22) - (1) - - - - - - (56) (56) - (119) - - - - - - - - (9) (9) - - - - - - (11) (318) (318) - - - - - - - - - - - - (7) - 61 (3) - - - (1,043) (2,381) (1,572) - - - - 106 - - (28) (231) (231) - - - - - - - - - - - - - - - - - - - - - - (128) (1,196) (2,381) (1,292) Equity attributable to owners of the Parent Non- controlling interests 31,720 16,132 (3,050) (1,190) Retained earnings 19,853 (3,050) (10) - 104 61 - - 170 593 - - 104 - - Total equity 47,852 (4,240) (10) - 274 654 (193) 1 (192) 2,174 1,745 855 2,600 - 2,174 19,081 (3,487) - - - (429) 2,174 30,377 (3,487) (13) 2,386 6 (106) (1) 105 - (1) 105 (447) 1,302 16,561 (1,356) - - - - - 147 (876) 3,476 46,938 (4,843) (13) 2,386 6 - (1) 252 2,610 (1,028) (611) (1,639) - (3,638) (1,623) 2,610 18,200 2,610 1,012 28,325 14,032 (5,261) 3,622 42,357 229 280 (2) (20) (709) (729) Integrated Annual Report 2020Statement of Cash Flows Millions of euro Notes 10.d 10.e 12-13 14 31 32 41 26 26 12-13 12-13 15 17-20 21 7 7 44.3 44.3 Pre-tax profit Adjustments for: Net impairment losses on trade receivables and other financial assets Depreciation, amortization and other impairment losses Net financial expense Net gains from equity-accounted investments Changes in net working capital: - inventories - trade receivables - trade payables - other contract assets - other contract liabilities - other assets/liabilities Accruals to provisions Utilization of provisions Interest income and other financial income collected Interest expense and other financial expense paid Net (income)/expense from measurement of commodities Income taxes paid Net capital gains Cash flows from operating activities (A) Investments in property, plant and equipment Investments in intangible assets Investments in non-current contract 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 used in investing activities (B) New long-term borrowings Repayments of borrowings Other changes in net financial debt Payments for acquisition of equity investments without change of control and other transactions in non-controlling interests Issues/(Redemptions) of hybrid bonds Purchase of treasury shares Dividends and interim dividends paid Cash flows from/(used in) 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 the beginning of the year (1) Cash and cash equivalents at the end of the year (2) 2020 2019 of which with related parties of which with related parties 5,463 1,285 7,163 2,606 299 (1,567) (8) (1,350) 698 (15) (142) (750) 834 (1,202) 1,705 (3,690) 188 (1,575) (1) 11,508 (8,330) (1,218) (649) (33) 154 (41) (10,117) 3,924 (1,950) (712) (1,067) 588 (13) (4,742) (3,972) (497) (3,078) 9,080 6,002 33 (86) 34 62 (71) (104) (176) 4,312 1,144 9,682 2,443 123 (273) 318 (877) (51) (31) 154 214 515 (1,838) 1,582 (4,235) (86) (1,850) (268) 11,251 (8,236) (1,023) (692) (320) 688 468 (9,115) 8,899 (5,511) 355 530 - (10) (3,957) 306 (76) 2,366 6,714 9,080 189 (633) 18 88 (46) (89) (1) Of which cash and cash equivalents equal to €9,029 million at January 1, 2020 (€6,630 million at January 1, 2019), short-term securities equal to €51 million at January 1, 2020 (€63 million at January 1, 2019) and cash and cash equivalents pertaining to “Assets held for sale” in the amount of €21 million at January 1, 2019. (2) Of which cash and cash equivalents equal to €5,906 million at December 31, 2020 (9,029 million at December 31, 2019), short-term securities equal to €67 million at December 31, 2020 (€51 million at December 31, 2019) and cash and cash equivalents pertaining to “Assets held for sale” in the amount of €29 million at December 31, 2020. 230230 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Basis of presentation 1. Form and content of the consolidated financial statements pared in conformity with measures issued in implementa- tion of Article 9, paragraph 3, of Legislative Decree 38 of February 28, 2005. The consolidated financial statements consist of the in- come statement, the statement of comprehensive inco- me, the statement of financial position, the statement of changes in equity and the statement of cash flows and the related notes. The assets and liabilities recognized in the statement of financial position are classified on a “current/non-current basis”, with separate reporting of assets held for sale and liabilities included in disposal groups held for sale. Current assets, which include cash and cash equivalents, are assets that are intended to be realized, sold or consumed during the normal operating cycle of the Group; current liabilities are liabilities that are expected to be settled during the nor- mal operating cycle of the Group. The income statement classifies costs on the basis of Enel SpA has its registered office in Viale Regina Margherita their nature, with separate reporting of profit/(loss) from 137, Rome, Italy, and since 1999 has been listed on the Milan continuing operations and profit/(loss) from discontinued stock exchange. operations attributable to owners of the Parent and to There were no changes in the company name in 2020. non-controlling interests. Enel is an energy multinational and is one of the world’s le- The consolidated cash flow statement is prepared using ading integrated operators in the electricity and gas indu- the indirect method, with separate reporting of any cash stries, with a special focus on Europe and Latin America. flows by operating, investing and financing activities asso- The consolidated financial statements as at and for the year ciated with discontinued operations. ended December 31, 2020 comprise the financial statemen- In particular, although the Group does not diverge from the ts of Enel SpA, its subsidiaries and Group holdings in asso- provisions of IAS 7 in the classification of items: ciates and joint ventures, as well as the Group’s share of the › cash flows from operating activities report cash flows from assets, liabilities, costs and revenue of joint operations (“the core operations, interest on loans granted and obtained Group”). and dividends received from associates or joint ventures; A list of the subsidiaries, associates, joint operations and joint › investing activities comprise investments in property, plant ventures included in the consolidation scope is attached. and equipment and intangible assets and disposals of such These consolidated financial statements were approved assets and contract assets related to service concession and authorized for publication by the Board of Directors on arrangements. They include, also, the effects of business March 18, 2021. combinations in which the Group acquires or loses control These consolidated financial statements have been audited of companies, as well as other minor investments; by KPMG SpA. › cash flows from financing activities include cash flows generated by liability management transactions and le- Basis of presentation The consolidated financial statements as at and for the year ases, dividends and interim dividends paid to owners of the Parent and non-controlling interests and the effects ended December 31, 2020 have been prepared in accor- of transactions in non-controlling interests that do not dance with international accounting standards (Internatio- change the status of control of the companies involved; nal Accounting Standards - IAS and International Financial › a separate item is used to report the impact of exchange Reporting Standards - IFRS) issued by the International Ac- rates on cash and cash equivalents and their impact on counting Standards Board (IASB), the interpretations of the profit or loss is eliminated in full in order to neutralize the IFRS Interpretations Committee (IFRSIC) and the Standing effect on cash flows from operating activities. Interpretations Committee (SIC), recognized in the Europe- For more information on cash flows as reported in the sta- an Union pursuant to Regulation (EC) no. 1606/2002 and in tement of cash flows, please see the note on “Cash flows” effect as of the close of the year. All of these standards and in the Report on Operations. interpretations are hereinafter referred to as the “IFRS-EU”. The consolidated financial statements have been prepared The consolidated financial statements have also been pre- on a going concern basis using the cost method, with the 231 Integrated Annual Report 2020exception of items measured at fair value in accordance judgments could have a substantial impact on future results. with IFRS, as explained in the measurement bases applied In addition, as regards the impact of the COVID-19 pan- to each individual item, and of non-current assets and di- demic, the forecasts for future developments in the ma- sposal groups classified as held for sale, which are measu- croeconomic, financial and business environment in which red at the lower of their carrying amount and fair value less the Group operates are characterized by a high degree of costs to sell. uncertainty, which is reflected in the assessments and the The consolidated financial statements are presented in estimates produced by management regarding the car- euro, the functional currency of the Parent Enel SpA. All fi- rying amounts of the assets and liabilities affected by gre- gures are shown in millions of euro unless stated otherwise. ater volatility. In this regard, the following sections provide The consolidated income statement, the statement of finan- specific information on the estimates and judgments used cial position and the consolidated statement of cash flows in the areas of the financial statements most affected by report transactions with related parties, the definition of whi- the COVID-19 pandemic, drawing on the information avai- ch is given in note 2.2 “Significant accounting policies”. lable at December 31, 2020 and considering the constantly The consolidated financial statements provide comparative evolving scenario. Please see note 9.a “Revenue from sales information in respect of the previous year. and services”, note 17 “Property, plant and equipment”, note 22 “Goodwill”, note 37 “Employee benefits” and note 44 “Fi- nancial instruments by category” for the main impacts of 2. Accounting policies the COVID-19 pandemic. 2.1 Use of estimates and management judgment Preparing the consolidated financial statements under With regard to the effects of climate change issues, the Group believes that climate change represents an impli- cit element in the application of the methodologies and models used to perform estimates in the valuation and/ IFRS-EU requires management to take decisions and make or measurement of certain accounting items. Furthermo- estimates and assumptions that may impact the carrying re, the Group has taken account of the impact of climate amount of revenue, costs, assets and liabilities and the re- change in the significant judgments made by management. lated disclosures concerning the items involved as well as In this regard, the main items included in the consolidated contingent assets and liabilities at the reporting date. The financial statements at December 31, 2020 affected by ma- estimates and management’s judgments are based on pre- nagement’s use of estimates and judgments refer to the vious experience and other factors considered reasonable impairment of non-financial assets and obligations con- in the circumstances. They are formulated when the car- nected with generation plants, including those for decom- rying amount of assets and liabilities is not easily determi- missioning and site restoration. For further details on these ned from other sources. The actual results may therefore items, see note 17 “Property, plant and equipment”, note 22 differ from these estimates. The estimates and assump- “Goodwill” and note 38 “Provisions for risks and charges”. tions are periodically revised and the effects of any chan- ges are reflected through profit or loss if they only involve Use of estimates that period. If the revision involves both the current and future periods, the change is recognized in the period in Revenue from contracts with customers which the revision is made and in the related future periods. Revenue from supply of electricity and gas to end users is In order to enhance understanding of the consolidated recognized at the time the electricity or gas is delivered financial statements, the following sections examine the and includes, in addition to amounts invoiced on the basis main items affected by the use of estimates and the cases of periodic (and pertaining to the year) meter readings or that reflect management judgments to a significant de- on the volumes notified by distributors and transporters, gree, underscoring the main assumptions used by mana- an estimate of the electricity and gas delivered during the gement in measuring these items in compliance with the period but not yet invoiced that is equal to the difference IFRS-EU. The critical element of such valuations is the use between the amount of electricity and gas delivered to the of assumptions and professional judgments concerning is- distribution network and that invoiced in the period, ta- sues that are by their very nature uncertain. king account of any network losses. Revenue between the Changes in the conditions underlying the assumptions and date of the last meter reading and the year-end is based 232232 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementson estimates of the daily consumption of individual custo- non-financial assets as at December 31, 2020. For this re- mers, primarily determined on their historical information, ason, the Group has carefully considered the effects of the adjusted to reflect the climate factors or other matters that COVID-19 pandemic in determining the existence of im- may affect the estimated consumption. pairment indicators for non-financial assets. For more details on such revenue, see note 9.a “Revenue Furthermore, in line with its business model and in the con- from sales and services”. text of the acceleration of the decarbonization of the ge- neration mix and driving the energy transition process, the Impairment of non-financial assets Group has also carefully assessed whether climate change When the carrying amount of property, plant and equip- issues have affected the reasonable and supportable assu- ment, investment property, intangible assets, right-of-use mption used to estimate expected cash flows. In this re- assets, goodwill and investments in associates/joint ven- gard, where necessary, the Group has also taken account tures exceeds its recoverable amount, which is the higher of the long-term impact of climate change, in particular by of the fair value less costs to sell and the value in use, the considering in the estimation of the terminal value a long- assets are impaired. term growth rate in line with the change in electricity de- Such impairments are carried out in accordance with the mand in 2030-2050 based on the specific characteristics provisions of IAS 36, as described in greater detail in note of the businesses involved. 22 “Goodwill”. Information on the main assumptions used to estimate In order to determine the recoverable amount, the Group the recoverable amount of assets with reference to the generally adopts the value in use criterion. Value in use is impacts relating to the COVID-19 pandemic and climate based on the estimated future cash flows generated by change, as well as information on changes in these assu- the asset, discounted to their present value using a pre-tax mptions, is provided in note 22 “Goodwill”. discount rate that reflects the current market assessment of the time value of money and of the specific risks of the Expected credit losses on financial assets asset. At the end of each reporting period, the Group recogni- Future cash flows used to determine value in use are based zes a loss allowance for expected credit losses on trade on the most recent business plan, approved by the mana- receivables and other financial assets measured at amorti- gement, containing forecasts for volumes, revenue, ope- zed cost, debt instruments measured at fair value through rating costs and investments. These projections cover the other comprehensive income, contract assets and all other next three years. For subsequent years, account is taken of: assets in scope. › assumptions concerning the long-term evolution of Loss allowances for financial assets are based on assu- the main variables considered in the calculation of cash mptions about risk of default and on the measurement flows, as well as the average residual useful life of the of expected credit losses. Management uses judgment in assets or the duration of the concessions, based on the making these assumptions and selecting the inputs for the specific characteristics of the businesses; impairment calculation, based on the Group’s past expe- › a long-term growth rate equal to the long-term growth rience, current market conditions as well as forward-lo- of electricity demand and/or inflation (depending on the oking estimates at the end of each reporting period. country and business) that does not in any case exceed The expected credit loss (i.e. ECL) – determined conside- the average long-term growth rate of the market invol- ring probability of default (PD), loss given default (LGD), and ved. exposure at default (EAD) – is the difference between all The recoverable amount is sensitive to the estimates and contractual cash flows that are due in accordance with the assumptions used in the calculation of cash flows and the contract and all cash flows that are expected to be received discount rates applied. Nevertheless, possible changes in (including all shortfalls) discounted at the original effective the underlying assumptions on which the calculation of interest rate (EIR). such amounts is based could generate different recove- In particular, for trade receivables, contract assets and le- rable amounts. The analysis of each group of non-financial ase receivables, including those with a significant financial assets is unique and requires management to use estima- component, the Group applies the simplified approach, tes and assumptions considered prudent and reasonable determining expected credit losses over a period corre- in the specific circumstances. sponding to the residual life of the asset, generally equal In the current scenario, the analysis of impairment indica- to 12 months. tors has become even more important as an attempt was Based on the specific reference market and the regulatory also made to assess whether the impact of the COVID-19 context of the sector, as well as expectations of recovery pandemic could reduce the carrying amount of certain after 90 days, for such assets, the Group mainly applies 233 Integrated Annual Report 2020a default definition of 180 days past due to determine adjustments were made to the results of the impairment expected credit losses, as this is considered an effective model adopted by the Group based on IFRS 9 (so-called indication of a significant increase in credit risk. Accordin- “post-model adjustments”), determined mainly on the ba- gly, financial assets that are more than 90 days past due are sis of an expert credit judgment based on the deterioration generally not considered to be in default, except for some in the collection status of certain customer segments. specific regulated markets. For additional details on the key assumptions and inputs used For trade receivables and contract assets the Group mainly please refer to note 44 “Financial instruments by category”. applies a collective approach based on grouping trade re- ceivables/contract assets into specific clusters, taking into Depreciable amount of certain elements of Italian account the specific regulatory and business context. Only hydroelectric plants subsequent to enactment if the trade receivables are deemed to be individually si- of Law 134/2012 gnificant by management and there is specific information Law 134 of August 7, 2012 containing “urgent measures for about any significant increase in credit risk, does the Group growth” (published in the Gazzetta Ufficiale of August 11, apply an analytical approach. 2012), introduced a sweeping overhaul of the rules gover- In case of individual assessment, PD is mainly obtained ning hydroelectric concessions. Among its various provi- from an external provider. sions, the law establishes that five years before the expiration Conversely, for collective assessment, trade receivables are of a major hydroelectric water diversion concession and in grouped based on shared credit risk characteristics and cases of lapse, relinquishment or revocation, where there is past due information, considering a specific definition of no prevailing public interest for a different use of the water, default. incompatible with its use for hydroelectric generation, the competent public entity shall organize a public call for ten- Based on each business and local regulatory framework as ders for the award for consideration of the concession for a well as differences in customer portfolios also in terms of period ranging from 20 to a maximum of 30 years. risk, default rates and recovery expectations, specific clu- In order to ensure operational continuity, the law also go- sters are defined. verns the methods of transferring ownership of the busi- The contract assets are considered to have substantially ness unit necessary to operate the concession, including the same risk characteristics as the trade receivables for all legal relationships relating to the concession, from the the same types of contracts. outgoing concession holder to the new concession holder, in exchange for payment of a price to be determined in ne- In order to measure the ECL for trade receivables on a gotiations between the departing concession holder and collective basis, as well as for contract assets, the Group the grantor agency, taking due account of the following considers the following assumptions related to ECL para- elements: meters: › for intake and governing works, penstocks and outflow › PD, assumed as to be the average default rate, is calcula- channels, which under the consolidated law governing ted on a cluster basis and taking into consideration mini- waters and electrical plants are to be relinquished free of mum 24 month historical data; charge (Article 25 of Royal Decree 1775 of December 11, › LGD is function of the default bucket’s recovery rates, di- 1933), the revalued cost less government capital gran- scounted at the EIR; and ts, also revalued, received by the concession holder for › EAD is estimated as the carrying exposure at the repor- the construction of such works, depreciated for ordinary ting date net of cash deposits, including invoices issued wear and tear; but not expired and invoices to be issued. › for other property, plant and equipment, the market va- Based on specific management evaluations, the forward-lo- lue, meaning replacement value, reduced by estimated oking adjustment can be applied considering qualitative depreciation for ordinary wear and tear. and quantitative information in order to reflect possible While acknowledging that the new regulations introduce future events and macroeconomic scenarios, which may important changes as to the transfer of ownership of the affect the risk of the portfolio or the financial instrument. business unit with regard to the operation of the hydroe- In order to take account of the effects of the COVID-19 lectric concession, the practical application of these prin- pandemic on the impairment of trade receivables, specific ciples faces difficulties, given the uncertainties that do not 234234 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementspermit the formulation of a reliable estimate of the value Pensions and other post-employment benefits that can be recovered at the end of existing concessions Some of the Group’s employees participate in pension (residual value). plans offering benefits based on their wage history and ye- Accordingly, management has decided it could not produ- ars of service. Certain employees are also eligible for other ce a reasonable and reliable estimate of residual value. post-employment benefit schemes. The fact that the legislation requires the new concession hol- The expenses and liabilities of such plans are calculated on der to make a payment to the departing concession holder the basis of estimates carried out by consulting actuaries, prompted management to review the depreciation schedu- who use a combination of statistical and actuarial elements les for assets classified as to be relinquished free of charge in their calculations, including statistical data on past ye- prior to Law 134/2012 (until the year ended on December ars and forecasts of future costs. Other components of 31, 2011, given that the assets were to be relinquished free the estimation that are considered include mortality and of charge, the depreciation period was equal to the closest retirement rates as well as assumptions concerning future date between the term of the concession and the end of the developments in discount rates, the rate of wage increases, useful life of the individual asset), calculating depreciation no the inflation rate and trends in healthcare cost. longer over the term of the concession but, if longer, over These estimates can differ significantly from actual deve- the useful life of the individual assets. If additional informa- lopments owing to changes in economic and market con- tion becomes available to enable the calculation of residual ditions, increases or decreases in retirement rates and the value, the carrying amounts of the assets involved will be lifespan of participants, as well as changes in the effective adjusted prospectively. cost of healthcare. Such differences can have a substantial impact on the Determining the fair value of financial instruments quantification of pension costs and other related expenses. The fair value of financial instruments is determined on the With regard to the COVID-19 pandemic, the Group has ca- basis of prices directly observable in the market, where refully analyzed the possible impacts of the economic crisis available, or, for unlisted financial instruments, using spe- generated by the emergency on the actuarial assumptions cific valuation techniques (mainly based on present value) used in the measurement of the actuarial liabilities and as- that maximize the use of observable market inputs. In rare sets serving the plans. circumstances where this is not possible, the inputs are For more details on the main actuarial assumptions adop- estimated by management taking due account of the cha- ted, please see note 37. racteristics of the instruments being measured. For more information on financial instruments measured at Provisions for risks and charges fair value, please see note 48 “Assets and liabilities measu- For more details on provisions for risks and charges, please red at fair value”. see note 38 “Provisions for risks and charges”. In accordance with IFRS 13, the Group includes a mea- Note 53 “Contingent assets and liabilities” also provides in- surement of credit risk, both of the counterparty (Credit formation regarding the most significant contingent liabili- Valuation Adjustment or CVA) and its own (Debit Valua- ties for the Group. tion Adjustment or DVA), in order to adjust the fair value of financial instruments for the corresponding amount of Litigation counterparty risk, using the method discussed in note 48. The Group is involved in various civil, administrative and tax Changes in the assumptions made in estimating the input disputes connected with the normal pursuit of its activities data could have an impact on the fair value recognized for that could give rise to significant liabilities. It is not always those instruments, especially in current conditions where objectively possible to predict the outcome of these dispu- markets are volatile and the economic outlook is highly un- tes. The assessment of the risks associated with this litiga- certain and subject to rapid change. tion is based on complex factors whose very nature requi- Development expenditure res recourse to management judgments, even when taking account of the contribution of external advisors assisting In order to determine the recoverability of development the Group, about whether to classify them as contingent expenditure, the recoverable amount is estimated making liabilities or liabilities. assumptions regarding any further cash outflow that is Provisions have been recognized to cover all significant expected to be incurred before the asset is ready for use liabilities for cases in which legal counsel feels an adverse or sale, the discount rates to be applied and the expected outcome is likely and a reasonable estimate of the amount period of benefits. of the expense can be made. 235 Integrated Annual Report 2020Obligations associated with generation plants, including asset of a similar value to the right of use asset in a simi- decommissioning and site restoration lar economic environment. When no observable inputs are Generation activities may entail obligations for the ope- available, the Group estimates the IBR making assumptions rator with regard to future interventions that will have to to reflect the terms and conditions of the lease and certain be performed following the end of the operating life of the lessee-specific estimates. plant. One of the most significant judgments for the Group in Such interventions may involve the decommissioning of adopting IFRS 16 is determining this IBR necessary to cal- plants and site restoration, or other obligations linked to culate the present value of the lease payments required to the type of generation technology involved. The nature of be paid to the lessor. The Group approach to determine an such obligations may also have a major impact on the ac- IBR is based on the assessment of the following three key counting treatment used for them. components: In the case of nuclear power plants, where the costs re- › the risk free rate, that consider the currency flows of the gard both decommissioning and the storage of waste fuel lease payments, the economic environment where the and other radioactive materials, the estimation of the fu- lease contract has been negotiated and also the lease ture cost is a critical process, given that the costs will be term; incurred over a very long span of time, estimated at up to › the credit spread adjustment, in order to calculate an IBR 100 years. that is specific for the lessee considering any underlying The obligation, based on financial and engineering assu- Parent or other guarantee; mptions, is calculated by discounting the expected future › the lease related adjustments, in order to reflect into the cash flows that the Group considers it will have to pay to IBR calculation the fact that the discount rate is direct- meet the obligations it has assumed. ly linked to the type of the underlying asset, rather than The discount rate used to determine the present value of being a general incremental borrowing rate. In particular, the liability is the pre-tax risk-free rate and is based on the the risk of default is mitigated for the lessors as they have economic parameters of the country in which the plant is the right to reclaim the underlying asset itself. located. For more information on lease liabilities, please see note 44 That liability is quantified by management on the basis of “Financial instruments by category”. the technology existing at the measurement date and is re- viewed each year, taking account of developments in sto- Income tax rage, decommissioning and site restoration technology, as well as the ongoing evolution of the legislative framework Recovery of deferred tax assets governing health and environmental protection. At December 31, 2020, the consolidated financial state- Subsequently, the value of the obligation is adjusted to ments report deferred tax assets in respect of tax losses or reflect the passage of time and any changes in estimates. tax credits usable in subsequent years and income compo- Onerous contracts nents whose deductibility is deferred in an amount whose future recovery is considered by management to be highly In order to identify an onerous contract, the Group esti- probable. mates the non-discretionary costs necessary to fulfil the The recoverability of such assets is subject to the achieve- obligations assumed (including any penalties) under the ment of future profits sufficient to absorb such tax losses contract and the economic benefits that are presumed to and to use the benefits of the other deferred tax assets. be obtained from the contract. Leases Significant management judgment is required to assess the probability of recovering deferred tax assets, conside- ring all negative and positive evidence, and to determine When the interest rate implicit in the lease cannot be readily the amount that can be recognized, based upon the likely determined, the Group uses the incremental borrowing rate timing and the level of future taxable profits together with (IBR) at the lease commencement date to calculate the pre- future tax planning strategies and the tax rates applicable sent value of the lease payments. This is the interest rate that at the date of reversal. However, where the Group should the lessee would have to pay to borrow over a similar term, become aware that it is unable to recover all or part of re- and with a similar security, the funds necessary to obtain an cognized tax assets in future years, the consequent adjust- 236236 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsment would be taken to the profit or loss in the year in which those returns through its power over the investee. Power is this circumstance arises. defined as the current ability to direct the relevant activities The recoverability of deferred tax assets is reviewed at the of the investee based on existing substantive rights. end of each period. Deferred tax assets not recognized are The existence of control does not depend solely on owner- reassessed at each reporting date in order to verify the con- ship of a majority investment, but rather it arises from sub- ditions for their recognition. stantive rights that each investor holds over the investee. Where required, the Group monitored the recovery times of Consequently, management must use its judgment in asses- deferred tax assets as well as those relating to the reversal sing whether specific situations determine substantive rights of deductible temporary differences, if any, as a result of the that give the Group the power to direct the relevant activities greater uncertainty caused by the COVID-19 pandemic. of the investee in order to affect its returns. For more detail in deferred tax assets recognized or not re- For the purpose of assessing control, management analyzes cognized, please see note 23. all facts and circumstances including any agreements with Management judgment other investors, rights arising from other contractual arran- gements and potential voting rights (call options, warrants, put options granted to non-controlling shareholders, etc.). Identification of cash generating units (CGUs) These other facts and circumstances could be especially si- For impairment testing, if the recoverable amount cannot be gnificant in such assessment when the Group holds less than determined for an individual asset, the Group identifies the a majority of voting rights, or similar rights, in the investee. smallest group of assets that generate largely independent Following such analysis of the existence of control, in appli- cash inflows. The smallest group of assets that generates cation of IFRS 10 the Group consolidated certain companies cash inflows that are largely independent of the cash inflows (Emgesa and Codensa) on a line-by-line basis even though it from other assets or group of assets is a CGU. did not hold more than half of the voting rights, determining Identifying such CGUs involves management judgments re- that the requirements for de facto control existed. garding the specific nature of the assets and the business Furthermore, even if it holds more than half of the voting rights involved (geographical segment, business segment, regula- in another entity, the Group considers all the relevant facts and tory framework, etc.) and the evidence that the cash inflows circumstances in assessing whether it controls the investee. of the group of assets are closely interdependent and lar- The Group reassesses whether or not it controls an investee gely independent of those associated with other assets (or if facts and circumstances indicate that there are changes groups of assets). to one or more of the elements considered in verifying the The assets of each CGU are also identified on the basis of the existence of control. manner in which management manages and monitors those assets within the business model adopted. Determination of the existence of joint control and of the The number and scope of the CGUs are updated systema- type of joint arrangement tically to reflect the impact of new business combinations Under the provisions of IFRS 11, a joint arrangement is an and reorganizations carried out by the Group, and to take agreement where two or more parties have joint control. Joint account of external factors that could influence the ability of control exists only when the decisions over the relevant acti- assets to generate independent cash inflows. vities require the unanimous consent of all the parties that In particular, if certain specific identified assets owned by share joint control. the Group are impacted by adverse economic or operating A joint arrangement can be configured as a joint venture or conditions that undermine their capacity to contribute to the a joint operation. Joint ventures are joint arrangements whe- generation of cash flows, they can be isolated from the rest reby the parties that have joint control have rights to the net of the assets of the CGU, undergo separate analysis of their assets of the arrangement. Conversely, joint operations are recoverability and be impaired where necessary. joint arrangements whereby the parties that have joint con- The CGUs identified by management to which the goodwill trol have rights to the assets and obligations for the liabilities recognized in these consolidated financial statements has relating to the arrangement. been allocated and the criteria used to identify the CGUs are In order to determine the existence of the joint control and indicated in note 22 “Goodwill”. the type of joint arrangement, management must apply ju- Determination of the existence of control arrangement. For this purpose, the management considers Under the provisions of IFRS 10, control is achieved when the the structure and legal form of the arrangement, the terms Group is exposed, or has rights, to variable returns from its agreed by the parties in the contractual arrangement and, involvement with the investee and has the ability to affect when relevant, other facts and circumstances. dgment and assess its rights and obligations arising from the 237 Integrated Annual Report 2020Following that analysis, the Group has considered its inte- in the infrastructure at the end of the term of the arran- rest in Asociación Nuclear Ascó-Vandellós II as a joint ope- gement. ration. In assessing the applicability of these requirements for the The Group re-assesses whether or not it has joint control Group, as operator, management carefully analyzed exi- if facts and circumstances indicate that changes have oc- sting concessions. curred in one or more of the elements considered in veri- On the basis of that analysis, the provisions of IFRIC 12 are fying the existence of joint control and the type of the joint applicable to some of the infrastructure of a number of arrangement. companies that operate in Brazil. For more information on the Group’s investments in joint ven- Further details about the infrastructure used in the service tures, please see note 24 “Equity-accounted investments”. concession arrangements in the scope of IFRIC 12 are pro- Determination of the existence of significant influence vided in note 18. over an associate Revenue from contracts with customers Associates are those in which the Group exercises signifi- In the process of applying IFRS 15, the Group has made the cant influence, i.e. the power to participate in the financial following judgments (further details about the most signifi- and operating policy decisions of the investee but not exer- cant effect on the Group’s revenue are provided in note 9.a cise control or joint control over those policies. In general, “Revenue from sales and services”). it is presumed that the Group has a significant influence Furthermore, during the year, the Group carefully monito- when it has an ownership interest of 20% or more. red the effects of the uncertainties linked to the COVID-19 In order to determine the existence of significant influence, pandemic on the recognition of its revenue, in particular as management must apply judgment and consider all facts regards the main areas affected by significant judgments. and circumstances. The Group re-assesses whether or not it has significant in- Identification of the contract fluence if facts and circumstances indicate that there are The Group carefully analyzes the contractual terms and changes to one or more of the elements considered in ve- conditions on a jurisdictional level in order to determine rifying the existence of significant influence. when a contract exists and the terms of that contract’s en- For more information on the Group’s equity investments in forceability so as to apply IFRS 15 only to such contracts. associates, please see note 24 “Equity-accounted invest- ments”. Identification and satisfaction of performance obligations When a contract includes multiple promised goods or servi- Application of “IFRIC 12 - Service concession ces, in order to assess if they should be accounted for sepa- arrangements” to concessions rately or as a group, the Group considers both the individual IFRIC 12 applies to “public-to-private” service concession characteristics of goods/services and the nature of the pro- arrangements, which can be defined as contracts under mise within the context of the contract, also evaluating all which the operator is obligated to provide public services, the facts and circumstances relating to the specific contract i.e. give access to major economic and social services for under the relevant legal and regulatory framework. a certain period of time, on behalf of a public entity (the To evaluate when a performance obligation is satisfied, the grantor). In these contracts, the grantor conveys to an ope- Group evaluates when the control of the goods or services rator the right to manage the infrastructure used to provi- is transferred to the customer, assessed primarily from the de services. perspective of the customer. More specifically, IFRIC 12 gives guidance on the accoun- ting by operators for “public-to-private” service conces- Determination of the transaction price sion arrangements in the event that: The Group considers all relevant facts and circumstances › the grantor controls or regulates what services the ope- in determining whether a contract includes variable con- rator must provide with the infrastructure, to whom it sideration (i.e., consideration that may vary or depends must provide them, and at what price; and upon the occurrence or non-occurrence of a future event). › the grantor controls – through ownership, beneficial en- In estimating variable consideration, the Group uses the titlement or otherwise – any significant residual interest method that better predicts the consideration to which 238238 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsit will be entitled, applying it consistently throughout the Classification and measurement of financial assets contract and for similar contracts, also considering all avai- At initial recognition, in order to classify financial assets lable information, and updating such estimates until the as financial assets at amortized cost, at fair value through uncertainly is resolved. The Group includes the estimated other comprehensive income and at fair value through pro- variable consideration in the transaction price only to the fit or loss, management assesses both the contractual ca- extent that it is highly probable that a significant reversal in sh-flow characteristics of the instrument and the business the cumulative revenue recognized will not occur when the model for managing financial assets in order to generate uncertainty is resolved. cash flows. For the purpose of evaluating the contractual cash-flow Principal versus agent assessment characteristics of the instrument, management performs The Group considers that it is an agent in some contracts in the SPPI test at an instrument level, in order to determine if which it is not primarily responsible for fulfilling the contract it gives rise to cash flows that are solely payments of princi- and therefore it does not control goods or services before pal and interest (SPPI) on the principal amount outstanding, they are being transferred to customers. For example, the performing specific assessment on the contractual clauses Group acts as an agent in some contracts for electricity/ of the financial instruments, as well as quantitative analysis, gas network connection services and other related activi- if required. ties depending on local legal and regulatory framework. The business model determines whether cash flows will Allocation of transaction price nancial assets, or both. For contracts that have more than one performance obli- For more details, please see note 44 “Financial instruments result from collecting contractual cash flows, selling the fi- gation (e.g., “bundled” sale contracts), the Group generally by category”. allocates the transaction price to each performance obli- gation in proportion to its stand-alone selling price. The Hedge accounting Group determines stand-alone selling prices considering Hedge accounting is applied to derivatives in order to all information and using observable prices when they reflect into the financial statements the effect of risk ma- are available in the market or, if not, using an estimation nagement strategies. method that maximizes the use of observable inputs and Accordingly, at the inception of the transaction the Group applying it consistently to similar arrangements. documents the hedge relationship between hedging in- If the Group evaluates that a contract includes an option struments and hedged items, as well as its risk manage- for additional goods or services (e.g., customer loyalty pro- ment objectives and strategy. The Group also assesses, grams or renewal options) that represents a material right, both at hedge inception and on an ongoing basis, whether it allocates the transaction price to this option since the hedging instruments are highly effective in offsetting chan- option gives rise to an additional performance obligation. ges in the fair values or cash flows of hedged items. Contract costs On the basis of management’s judgment, the effectiveness assessment based on the existence of an economic rela- The Group assesses recoverability of the incremental costs tionship between the hedging instruments and the hedged of obtaining a contract either on a contract-by-contract items, the dominance of credit risk in the changes in fair basis, or for a group of contracts if those costs are asso- value and the hedge ratio, as well as the measurement of ciated with the group of contracts. the ineffectiveness, is evaluated through a qualitative as- The Group supports the recoverability of such costs on the sessment or a quantitative computation, depending on the basis of its experience with other similar transactions and specific facts and circumstances and on the characteristi- evaluating various factors, including potential renewals, cs of the hedged items and the hedging instruments. amendments and follow-on contracts with the same cu- For cash flow hedges of forecast transactions designated stomer. as hedged items, management assesses and documents The Group amortizes such costs over the average customer that they are highly probable and present an exposure to term. In order to determine this expected period of benefit changes in cash flows that affect profit or loss. from the contract, the Group considers its past experien- Furthermore, during the year, the Group carefully monito- ce (e.g., “churn rate”), the predictive evidence from similar red the possible effects of the uncertainties linked to the contracts and available information about the market. COVID-19 pandemic on its hedging relationships. For additional details on the key assumptions about effecti- veness assessment and ineffectiveness measurement, ple- ase refer to note 47.1 “Derivatives and hedge accounting”. 239 Integrated Annual Report 2020Leases 2.2 Significant accounting policies The complexity of the assessment of the lease contracts, and also their long-term expiring date, requires conside- rable professional judgments for application of IFRS 16. In particular, this regards: Related parties Related parties are mainly parties that have the same pa- rent entity as Enel SpA, companies that directly or indirectly › the application of the definition of a lease to the cases through one or more intermediaries control, are controlled typical of the sectors in which the Group operates; or are subject to the joint control of Enel SpA and in which › the identification of the non-lease component into the the latter has a holding that enables it to exercise significant lease arrangements; influence. Related parties also include entities that operate › the evaluation of any renewable and termination options post-employment benefit plans for employees of Enel SpA included in the lease in order to determine the term of or its associates (specifically, the FOPEN and FONDENEL leases, also considering the probability of their exercise pension funds), as well as the members of the boards of and any significant leasehold improvements on the un- statutory auditors, and their immediate family, and the key derlying asset, taking due consideration of recent inter- management personnel, and their immediate family, of Enel pretations issued by the IFRS Interpretations Committee; SpA and its subsidiaries. Key management personnel com- › the identification of any variable lease payments that prises management personnel who have the power and di- depend on an index or a rate to determine whether the rect or indirect responsibility for the planning, management changes of the latter impact the future lease payments and control of the activities of the Company. They include and also the amount of the right-of-use asset; directors. › the estimate of the discount rate to calculate the present value of the lease payments; further details on assump- tions about this rate are provided in the paragraph “Use Subsidiaries Subsidiaries are all entities over which the Group has con- of estimates”. trol. The Group controls an entity, regardless of the nature For more information on leases, please see note 19 “Leases”. of the formal relationship between them, when it is expo- Uncertainty over income tax treatments sed, or has rights, to variable returns deriving from its in- volvement and has the ability, through the exercise of its The Group determines whether to consider each uncertain power over the investee, to affect its returns. income tax treatment separately or together with one or The figures of the subsidiaries are consolidated on a full more other uncertain tax treatments as well as whether line-by-line basis as from the date control is acquired until to reflect the effect of uncertainty by using the most likely such control ceases. amount or the expected value method, based on which ap- proach better predicts the resolution of the uncertainty for each uncertain tax treatments, taking account of local tax Consolidation procedures The financial statements of subsidiaries used to prepare regulations. the consolidated financial statements were prepared at The Group makes significant use of professional judgment December 31, 2020 in accordance with the accounting in identifying uncertainties about income tax treatments and policies adopted by the Group. reviews the judgments and estimates made in the event of If a subsidiary uses different accounting policies from tho- a change in facts and circumstances that could change its se adopted in preparing the consolidated financial state- assessment of the acceptability of a specific tax treatment ments for similar transactions and facts in similar circu- or the estimate of the effects of uncertainty, or both. mstances, appropriate adjustments are made to ensure For more information on income taxes, please see note 15 conformity with Group accounting policies. “Income taxes”. 240240 Assets, liabilities, revenue and expenses of a subsidiary acquired or disposed of during the year are included in or excluded from the consolidated financial statements, respectively, from the date the Group gains control or until the date the Group ceases to control the subsidiary. Profit or loss for the year and the other comprehensi- ve income are attributed to the owners of the Parent and 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsnon-controlling interests, even if this results in a loss for of these changes is recognized in the Group’s other com- non-controlling interests. prehensive income. All intercompany assets and liabilities, equity item, revenue, Distributions received from joint venture and associates re- expenses and cash flows relating to transactions between duce the carrying amount of the investments. entities of the Group are eliminated in full. Gains and losses resulting from transactions between the Changes in ownership interest in subsidiaries that do not Group and the associates or joint ventures are eliminated result in loss of control are accounted for as equity tran- to the extent of the interest in the associate or joint venture. sactions, with the carrying amounts of the controlling and The financial statements of the associates or joint ventures non-controlling interests adjusted to reflect changes in are prepared for the same reporting period as the Group. their interests in the subsidiary. Any difference between When necessary, adjustments are made to bring the ac- the amount to which non-controlling interests are adjusted counting policies in line with those of the Group. and the fair value of the consideration paid or received is After application of the equity method, the Group deter- recognized in consolidated equity. mines whether it is necessary to recognize an impairment When the Group ceases to have control over a subsidiary, loss on its investment in an associate or joint venture. If any interest retained in the entity is remeasured to its fair there is objective evidence of a loss of value, the assets value, recognized through profit or loss, at the date when undergo impairment testing pursuant to IAS 36. For more control is lost, recognizing any gain or loss from the loss information on impairment, please see the section “Impair- of control through profit or loss. In addition, any amoun- ment of non-financial assets” in note 2.1 “Use of estimates ts previously recognized in other comprehensive income and management judgment”. in respect of the former subsidiary are accounted for as If the investment ceases to be an associate or a joint ven- if the Group had directly disposed of the related assets or ture, the Group recognizes any retained investment at its liabilities. Investments in associates and joint ventures An associate is an entity over which the Group has signifi- 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 cant influence. Significant influence is the power to parti- liabilities. cipate in decisions concerning the financial and operating If the ownership interest in an associate or a joint venture is policies of the investee without having control or joint con- reduced, but the Group continues to exercise a significant trol over the investee. influence or joint control, the Group continues to apply the A joint venture is a joint arrangement over which the Group equity method and the share of the gain or loss that had exercises joint control and has rights to the net assets of previously been recognized in other comprehensive in- the arrangement. Joint control is the sharing of control come relating to that reduction is accounted for as if the of an arrangement, whereby decisions about the relevant Group had directly disposed of the related assets or liabi- activities require unanimous consent of the parties sharing lities. control. When a portion of an investment in an associate or joint venture meets the criteria to be classified as held for sale, The Group’s investments in associates and joint ventures any retained portion of an investment in the associate or are accounted for using the equity method. joint venture that has not been classified as held for sale is Under the equity method, these investments are initially accounted for using the equity method until disposal of the recognized at cost and any goodwill arising from the diffe- portion classified as held for sale takes place. rence between the cost of the investment and the Group’s Joint operations are joint arrangements whereby the Group, share of the net fair value of the investee’s identifiable as- which holds joint control, has rights to the assets and obli- sets and liabilities at the acquisition date is included in the gations for the liabilities relating to the arrangement. For carrying amount of the investment. Goodwill is not indivi- each joint operation, the Group recognized assets, liabili- dually tested for impairment. ties, costs and revenue on the basis of the provisions of the After the acquisition date, their carrying amount is adju- arrangement rather than the interest held. sted to recognize changes in the Group’s share of profit Where there is an increase in the interest in a joint arrange- or loss of the associate or joint venture in Group profit or ment that meets the definition of a business: loss. Adjustments to the carrying amount may also be ne- › if the Group acquires control, and had rights over the as- cessary following changes in the Group’s share in the as- sets and obligations for the liabilities of the joint arrange- sociate or joint venture as a result of changes in the other ment immediately before the acquisition date, then the comprehensive income of the investee. The Group’s share transaction represents a business combination achieved 241 Integrated Annual Report 2020in stages. Consequently, the Group applies the require- the financial statements of consolidated companies with ments for a business combination achieved in stages, functional currencies other than the presentation currency including the remeasurement of the interest it held pre- used in the consolidated financial statements are transla- viously in the joint operation at its fair value at the acqui- ted into euros by applying the closing exchange rate to the sition date; assets and liabilities, including goodwill and consolidation › if the Group obtains joint control (i.e., it already had an adjustments, and the average exchange rate for the period interest in a joint operation without holding joint control), to the income statement items on the condition it approxi- the interest previously held in the joint operation shall not mates the exchange rates prevailing at the date of the re- be remeasured. spective transactions. For more information on the Group’s investments in asso- Any resulting exchange gains or losses are recognized as a ciates and joint ventures, please see note 24 “Equity-ac- separate component of equity in a special reserve. The gains counted investments”. and losses are recognized proportionately in the income sta- tement on the disposal (partial or total) of the subsidiary. Translation of foreign currency items Transactions in currencies other than the functional cur- When the functional currency of a consolidated company is the currency of a hyperinflationary economy, the Group re- rency are initially recognized at the spot exchange rate pre- states the financial statements in accordance with IAS 29 be- vailing on the date of the transaction. fore applying the specific conversion method set out below. Monetary assets and liabilities denominated in a foreign In order to consider the impact of hyperinflation on the lo- currency other than the functional currency are subse- cal currency exchange rate, the financial position and per- quently translated using the closing exchange rate (i.e. the formance (i.e. assets, liabilities, equity items, revenue and spot exchange rate prevailing at the reporting date). expenses) of a company whose functional currency is the Non-monetary assets and liabilities denominated in foreign currency of a hyperinflationary economy are translated currency that are recognized at historical cost are transla- into the Group’s presentation currency (the euro) using ted using the exchange rate at the date of the transaction. the exchange rate prevailing at the reporting date, except Non-monetary assets and liabilities in foreign currency me- for comparative amounts presented in the previous year’s asured at fair value are translated using the exchange rate financial statements which are not adjusted for subse- at the date the fair value was determined. quent changes in the price level or subsequent changes in Any exchange differences are recognized through profit or exchange rates. loss. In determining the spot exchange rate to use on initial re- cognition of the related asset, expense or income (or part Business combinations Business combinations initiated before January 1, 2010 and of it) on the derecognition of a non-monetary asset or completed within that financial year are recognized on the non-monetary liability relating to advance consideration basis of IFRS 3 (2004). in foreign currency paid or received, the date of the tran- Such business combinations were recognized using the saction is the date on which the Group initially recognizes purchase method, where the purchase cost is equal to the the non-monetary asset or non-monetary liability associa- fair value at the date of the exchange of the assets acquired ted with the advance consideration. and the liabilities incurred or assumed, plus costs directly If there are multiple advance payments or receipts, the attributable to the acquisition. This cost was allocated by Group determines the transaction date for each payment recognizing the assets, liabilities and identifiable contin- or receipt of advance consideration. gent liabilities of the acquired company at their fair values. Translation of financial statements denominated in a foreign currency For the purposes of the consolidated financial statemen- Any positive difference between the cost of the acquisition and the fair value of the net assets acquired attributable to the owners of the Parent was recognized as goodwill. If the difference is negative, it is recognized through profit ts, all revenue, expenses, assets and liabilities are stated in or loss. euro, which is the presentation currency of the Parent, Enel The carrying amount of non-controlling interests was de- SpA. termined in proportion to the interest held by non-control- In order to prepare the consolidated financial statements, ling shareholders in the net assets. In the case of business 242242 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementscombinations achieved in stages, at the date of acquisition deration is not within the scope of IFRS 9, it is measured any adjustment to the fair value of the net assets acquired in accordance with the appropriate IFRS-EU. Contingent previously was recognized in equity; the amount of goo- consideration that is classified as equity is not re-measu- dwill was determined for each transaction separately based red, and its subsequent settlement is accounted for within on the fair values of the acquiree’s net assets at the date of equity. each exchange transaction. If the fair values of the assets, liabilities and contingent lia- bilities can only be calculated on a provisional basis, the bu- Business combinations carried out as from January 1, 2010 siness combination is recognized using such provisional va- are recognized on the basis of IFRS 3 (2008), which is refer- lues. Any adjustments resulting from the completion of the red to as IFRS 3 (Revised) hereafter. measurement process are recognized within 12 months of More specifically, business combinations are recognized the date of acquisition, restating comparative figures. 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 Fair value measurement For all fair value measurements and disclosures of fair va- incurred or assumed, as well as any equity instruments is- lue, that are either required or permitted by IFRS, the Group sued by the purchaser. The consideration transferred in- applies IFRS 13. cludes the fair value of any asset or liability resulting from a Fair value is defined as the price that would be received to contingent consideration arrangement. sell an asset or paid to transfer a liability, in an orderly tran- Costs directly attributable to the acquisition are recogni- saction, between market participants, at the measurement zed through profit or loss. date (i.e. an exit price). The consideration transferred is allocated by recognizing The fair value measurement assumes that the transaction the assets, liabilities and identifiable contingent liabilities of to sell an asset or transfer a liability takes place in the prin- the acquired company at their fair values as at the acquisi- cipal market, i.e. the market with the greatest volume and tion date. The excess of the consideration transferred, me- level of activity for the asset or liability. In the absence of a asured at fair value as at the acquisition date, the amount principal market, it is assumed that the transaction takes of any non-controlling interest in the acquiree plus the fair place in the most advantageous market to which the Group value of any equity interest in the acquiree previously held has access, i.e. the market that maximizes the amount that by the Group (in a business combination achieved in sta- would be received to sell the asset or minimizes the amount ges) over the net amount of the identifiable assets acqui- that would be paid to transfer the liability. red and the liabilities incurred or assumed measured at fair The fair value of an asset or a liability is measured using the value is recognized as goodwill. If the difference is negati- assumptions that market participants would use when pri- ve, the Group verifies whether it has correctly identified all cing the asset or liability, assuming that market participants the assets acquired and liabilities assumed and reviews the act in their economic best interest. Market participants are procedures used to determine the amounts to recognize independent, knowledgeable sellers and buyers who are at the acquisition date. If after this assessment the fair va- able to enter into a transaction for the asset or the liability lue of the net assets acquired still exceeds the total consi- and who are motivated but not forced or otherwise com- deration transferred, this excess represents the profit on a pelled to do so. bargain purchase and is recognized through profit or loss. When measuring fair value, the Group takes into account The carrying amount of non-controlling interests is deter- the characteristics of the asset or liability, in particular: mined either in proportion to the interest held by non-con- › for a non-financial asset, a fair value measurement ta- trolling shareholders in the net identifiable assets of the kes into account a market participant’s ability to generate acquiree or at their fair value as at the acquisition date. economic benefits by using the asset in its highest and In the case of business combinations achieved in stages, at best use or by selling it to another market participant that the date of acquisition of control the previously held equi- would use the asset in its highest and best use; ty interest in the acquiree is remeasured to fair value and › for liabilities and own equity instruments, the fair value any positive or negative difference is recognized in profit reflects the effect of non-performance risk, i.e. the risk or loss. that an entity will not fulfill an obligation, including among Any contingent consideration is recognized at fair value at others the credit risk of the Group itself; the acquisition date. Subsequent changes to the fair value › in the case of groups of financial assets and financial liabi- of the contingent consideration classified as an asset or a lities with offsetting positions in market risk or credit risk, liability, or as a financial instrument within the scope of IFRS managed on the basis of an entity’s net exposure to such 9, are recognized in profit or loss. If the contingent consi- risks, it is permitted to measure fair value on a net basis. 243 Integrated Annual Report 2020In measuring the fair value of assets and liabilities, the ful life, which is reviewed annually. Any changes in depre- Group uses valuation techniques that are appropriate in ciation criteria shall be applied prospectively. Depreciation the circumstances and for which sufficient data are avai- begins when the asset is available for use. lable, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. The estimated useful life of the main items of property, Property, plant and equipment Property, plant and equipment is stated at cost, net of Civil buildings 10-70 years accumulated depreciation and accumulated impairment Buildings and civil works incorporated in plants 10-100 years plant and equipment is as follows: losses, if any. Such cost includes expenses directly attribu- table to bringing the asset to the location and condition necessary for its intended use. The cost is also increased by the present value of the esti- mate of the costs of decommissioning and restoring the site on which the asset is located where there is a legal or constructive obligation to do so. The corresponding liability is recognized under provisions for risks and charges. The accounting treatment of changes in the estimate of these costs, the passage of time and the discount rate is discus- sed under “Provisions for risks and charges”. Hydroelectric power plants: - penstock - mechanical and electrical machinery - other fixed hydraulic works Thermal power plants: - boilers and auxiliary components - gas turbine components - mechanical and electrical machinery - other fixed hydraulic works Nuclear power plants Geothermal power plants: - cooling towers Property, plant and equipment transferred from customers to - turbines and generators connect them to the electricity distribution network and/or to provide them with other related services is initially recognized - turbine parts in contact with fluid - mechanical and electrical machinery at its fair value at the date on which control is obtained. Borrowing costs that are directly attributable to the acquisi- tion, construction or production of a qualifying asset, i.e. an asset that takes a substantial period of time to get ready for its intended use or sale, are capitalized as part of the cost of the assets themselves. Borrowing costs associated with the purchase/construction of assets that do not meet such requi- rement are expensed in the period in which they are incurred. Wind power plants: - towers - turbines and generators - mechanical and electrical machinery Solar power plants: Public and artistic lighting: - public lighting installations - artistic lighting installations Certain assets that were revalued at the IFRS-EU transition date Transport lines or in previous periods are recognized at their fair value, which Transformer stations - mechanical and electrical machinery 20-30 years is considered to be their deemed cost at the revaluation date. Where individual items of major components of property, plant and equipment have different useful lives, the com- ponents are recognized and depreciated separately. Subsequent costs are recognized as an increase in the car- rying amount of the asset when it is probable that future economic benefits associated with the cost incurred to re- place a part of the asset will flow to the Group and the cost of the item can be measured reliably. All other costs are recognized in profit or loss as incurred. The cost of replacing part or all of an asset is recognized as an increase in the carrying amount of the asset and is depreciated over its useful life; the carrying amount of the replaced unit is derecognized through profit or loss. Property, plant and equipment, net of its residual value, is depreciated on a straight-line basis over its estimated use- 244244 Distribution plants: - high-voltage lines - primary transformer stations - low and medium-voltage lines Meters: - electromechanical meters - electricity balance measurement equipment - electronic meters The useful life of leasehold improvements is determined on the basis of the term of the lease or, if shorter, on the duration of the benefits produced by the improvements themselves. Land is not depreciated as it has an indefinite useful life. Assets recognized under property, plant and equipment are derecognized either upon their disposal (i.e., at the date 7-85 years 5-60 years 5-100 years 3-59 years 3-59 years 3-59 years 3-62 years 50 years 20-25 years 25-30 years 10-25 years 20-40 years 20-30 years 20-30 years 15-30 years 10-20 years 20 years 12-50 years 20-55 years 10-60 years 5-55 years 5-50 years 3-34 years 3-30 years 6-35 years 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsthe recipient obtains control) or when no future economic required to pay an indemnity. The amount of the indemnity benefit is expected from their use or disposal. Any gain or will be determined by agreement of the parties using ap- loss, recognized through profit or loss, is calculated as the propriate valuation methods, based on both the carrying difference between the net disposal proceeds, determined amount of the assets themselves and their profitability. in accordance with the transaction price requirements of In determining the indemnity, such profitability will be re- IFRS 15, and the carrying amount of the derecognized as- presented by the present value of future cash flows. The in- sets. frastructure serving the concession is owned and available to the concession holder. It is recognized under “Property, Assets to be relinquished free of charge plant and equipment” and is depreciated over the useful The Group’s plants include assets to be relinquished free lives of the assets. of charge at the end of the concessions. These mainly Enel also operates under administrative concessions for regard major water diversion works and the public lands the distribution of electricity in other countries (including used for the operation of the thermal power plants. Spain and Romania). These concessions give the right to Within the Italian regulatory framework in force until 2011, build and operate distribution networks for an indefinite if the concessions are not renewed, at those dates all inta- period of time. 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. Ac- cordingly, depreciation on assets to be relinquished was Infrastructure within the scope of “IFRIC 12 - Service concession arrangements” Under a “public-to-private” service concession arrange- calculated over the shorter of the term of the concession ment within the scope of “IFRIC 12 - Service concession and the remaining useful life of the assets. arrangements” the operator acts as a service provider In the wake of the legislative changes introduced with Law and, in accordance with the terms specified in the con- 134 of August 7, 2012, the assets previously classified as tract, it constructs/upgrades infrastructure used to pro- assets “to be relinquished free of charge” connected with vide a public service and/or operates and maintains that the hydroelectric water diversion concessions are now infrastructure for the years of the concession. considered in the same manner as other categories of The Group, as operator, does not account for the infra- “property, plant and equipment” and are therefore depre- structure within the scope of IFRIC 12 as property, plant ciated over the useful life of the asset (where this exceeds and equipment and it recognizes and measures revenue the term of the concession), as discussed in the section in accordance with IFRS 15 for the services it performs. In above on the “Depreciable amount of certain elements of particular, when the Group provides construction or up- Italian hydroelectric plants subsequent to enactment of grade services, depending on the characteristics of the Law 134/2012”, which you are invited to consult for more service concession arrangement, it recognizes: details. › a financial asset, if the Group has an unconditional con- tractual right to receive cash or another financial asset In accordance with Spanish laws 29/1985 and 46/1999, from the grantor (or from a third party at the direction hydroelectric power stations in Spanish territory operate of the grantor), that is the grantor has little discretion under administrative concessions at the end of which the to avoid payment. In this case, the grantor contractually plants will be returned to the government in good opera- guarantees to pay to the operator specified or determi- ting condition. The terms of the concessions extend up nable amounts or the shortfall between the amounts re- to 2067. ceived from the users of the public service and specified A number of generation companies that operate in Argen- or determinable amounts (defined by the contract), and tina, Brazil and Mexico hold administrative concessions such payments are not dependent on the usage of the with similar conditions to those applied under the Spanish infrastructure; and/or concession system. These concessions will expire in 2088. › an intangible asset, if the Group receives the right (a li- cense) to charge users of the public service provided. In Infrastructure serving a concession not within the scope such a case, the operator does not have an unconditional of “IFRIC 12 - Service concession arrangements” right to receive cash because the amounts are contin- As regards the distribution of electricity, the Group is a gent on the extent that the public uses the service. concession holder in Italy for this service. The concession, If the Group (as operator) has a contractual right to receive granted by the Ministry for Economic Development, was is- an intangible asset (a right to charge users of public servi- sued free of charge and terminates on December 31, 2030. ce), borrowing costs are capitalized using the criteria spe- If the concession is not renewed upon expiry, the grantor is cified in the paragraph “Property, plant and equipment”. 245 Integrated Annual Report 2020However, for construction/upgrade services, both types If the lease transfers ownership of the underlying asset to of consideration are generally classified as a contract as- the Group at the end of the lease term or if the cost of the set during the construction/upgrade period. right-of-use asset reflects the fact that the Group will exer- For more details about such consideration, please see cise a purchase option, depreciation is calculated using the note 9.a “Revenue from sales and services”. estimated useful life of the underlying asset. Leases The Group holds property, plant and equipment for its In addition, the right-of-use assets are subject to impair- ment and adjusted for any remeasurement of lease liabi- lities. various activities under lease contracts. At inception of a The lease liability is initially measured at the present value contract, the Group assesses whether a contract is, or con- of lease payments to be made over the lease term. In calcu- tains, a lease. lating the present value of lease payments, the Group uses For contracts entered into or changed on or after January 1, the lessee’s incremental borrowing rate at the lease com- 2019, the Group has applied the definition of a lease under mencement date when the interest rate implicit in the lease IFRS 16, that is met if the contract conveys the right to control is not readily determinable. the use of an identified asset for a period of time in exchange Variable lease payments that do not depend on an index for consideration. or a rate are recognized as expenses in the period in which Conversely, for contracts entered into before January 1, the event or condition that triggers the payment occurs. 2019, the Group determined whether the arrangement was After the commencement date, the lease liability is measu- or contained a lease under IFRIC 4. red at amortized cost using the effective interest method Group as a lessee and is remeasured upon the occurrence of certain events. The Group applies the short-term lease recognition At commencement or on modification of a contract that exemption to its lease contracts that have a lease term of contains a lease component and one or more additional 12 months or less from the commencement date. It also lease or non-lease components, the Group allocates the applies the low-value assets recognition exemption to lea- consideration in the contract to each lease component on se contracts for which the underlying asset is of low-value the basis of its relative stand-alone price. whose amount is estimated not material. For example, the The Group recognizes a right-of-use asset and a lease lia- Group has leases of certain office equipment (i.e., personal bility at the commencement date of the lease (i.e., the date computers, printing and photocopying machines) that are the underlying asset is available for use). considered of low-value. Lease payments on short-term The right-of-use asset represents a lessee’s right to use an leases and leases of low-value assets are recognized as underlying asset for the lease term; it is initially measured expense on a straight-line basis over the lease term. at cost, which includes the initial amount of lease liability The Group presents right-of-use assets that do not meet adjusted for any lease payments made at or before the the definition of investment property in “Property, plant and commencement date less any lease incentives received, equipment” and lease liabilities in “Borrowings”. plus any initial direct costs incurred and an estimate of co- Consistent with the requirement of the standard, the Group sts to dismantle and remove the underlying asset and to re- presents separately the interest expense on lease liabilities store the underlying asset or the site on which it is located. under “Other financial expense” and the depreciation char- Right-of-use assets are subsequently depreciated on a ge on the right-of-use assets under “Depreciation, amorti- straight-line basis over the shorter of the lease term and zation and impairment losses”. the estimated useful lives of the right-of-use assets, as fol- lows: Buildings Ground rights of renewable energy plants Vehicles and other means of transport 246246 Average residual life (years) 7 30 5 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsGroup as a lessor asset only when Group can demonstrate the technical fe- When the Group acts as a lessor, it determines at the lease asibility of completing the asset, its intention and ability to inception date whether each lease is a finance lease or an complete development and to use or sell the asset and the operating lease. availability of resources to complete the asset. Leases in which the Group essentially transfers all the risks Research costs are recognized as expenses. and rewards associated with ownership of the underlying Intangible assets with a finite useful life are recognized net of asset are classified as finance leases; otherwise, they are accumulated amortization and any impairment losses. classified as operating leases. To make this assessment, Amortization is calculated on a straight-line basis over the the Group considers the indicators provided by IFRS 16. If item’s estimated useful life, which is reassessed at least an- a contract contains lease and non-lease components, the nually; any changes in amortization policies are reflected on Group allocates the consideration in the contract applying a prospective basis. Amortization commences when the as- IFRS 15. set is ready for use. Consequently, intangible assets not yet The Group accounts for rental income arising from opera- available for use are not amortized, but are tested for impair- ting leases on a straight-line basis over the lease terms and ment at least annually. it recognizes it as other revenue. The Group’s intangible assets have a finite useful life, with the Investment property Investment property consists of the Group’s real estate held exception of a number of concessions and goodwill. Intangible assets with indefinite useful lives are not amorti- zed, but are tested for impairment annually. to earn rentals and/or for capital appreciation rather than The assessment of indefinite useful life is reviewed annually for use in the production or supply of goods and services. to determine whether the indefinite useful life continues to Investment property is measured at acquisition cost less be supportable. If not, the change in useful life from indefinite any accumulated depreciation and any accumulated im- to finite is accounted for as a change in accounting estimate. pairment losses. Intangible assets are derecognized either at the time of their Investment property, excluding land, is depreciated on a disposal (at the date when the recipient obtains control) or straight-line basis over the useful lives of the related assets. when no future economic benefit is expected from their use Impairment losses are determined on the basis of the crite- or disposal. Any gain or loss, recognized through profit or ria following described. loss, is calculated as the difference between the net consi- The breakdown of the fair value of investment property is deration received in the disposal, determined in accordance detailed in note 48 “Assets and liabilities measured at fair with the provisions of IFRS 15 concerning the transaction value”. price, and the carrying amount of the derecognized assets. Investment property is derecognized either when it has The estimated useful life of the main intangible assets, di- been transferred (i.e., at the date the recipient obtains con- stinguishing between internally generated and acquired as- trol) or when it is permanently withdrawn from use and no sets, is as follows: future economic benefit is expected from its disposal. Any gain or loss, recognized through profit or loss, is calcula- ted as the difference between the net disposal proceeds, determined in accordance with the transaction price re- quirements of IFRS 15, and the carrying amount of the de- recognized assets. Transfers are made to (or from) investment property only when there is a change in use. Intangible assets Intangible assets are identifiable assets without physical substance controlled by the Group and capable of genera- ting future economic benefits. They are measured at pur- chase or internal development cost when it is probable that the use of such assets will generate future economic bene- fits and the related cost can be reliably determined. The cost includes any directly attributable expenses neces- sary to make the assets ready for their intended use. Development expenditure is recognized as an intangible Development expenditure: - internally generated - acquired Industrial patents and intellectual property rights: - internally generated - acquired Concessions, licenses, trademarks and similar rights: - internally generated - acquired Intangible assets from service concession arrangements: - internally generated - acquired Other: - internally generated - acquired 2-26 years 3-26 years 3-10 years 2-50 years 20 years 1-40 years - 5 years 2-28 years 1-28 years 247 Integrated Annual Report 2020The Group also presents costs to obtain a contract with a CGUs to which goodwill, intangible assets with an indefini- customer capitalized in accordance with IFRS 15 as intan- te useful life and intangible assets not yet available for use gible assets. are allocated are tested for recoverability annually or more The Group recognized such costs as an asset only if: frequently if there is evidence suggesting that the assets › the costs are incremental, that is they are directly attribu- can be impaired. table to an identified contract and the Group would not If such evidence exists, the recoverable amount of any in- have incurred them if the contract had not been obtai- volved asset is estimated on the basis of the use of the as- ned; set and its future disposal, in accordance with the Group’s › the Group expects to recover them, through reimburse- most recent Business Plan. For the estimate of the recove- ments (direct recoverability) or the margin (indirect reco- rable amount, please see note 2.1 “Use of estimates and verability). management judgment”. In particular, the Group generally capitalizes trade fees and The recoverable amount is determined for an individual as- commissions paid to agents for such contracts if the capi- set, unless the asset do not generate cash inflows that are talization criteria are met. largely independent of those from other assets or groups Capitalized customer contract costs are amortized on a sy- of assets and therefore it is determined for the CGU to whi- stematic basis, consistent with the pattern of the transfer ch the asset belongs. of the goods or services to which they relate, and undergo If the carrying amount of an asset or of a CGU to which it is impairment testing to identify any impairment losses to the allocated is greater than its recoverable amount, an impair- extent that the carrying amount of the asset recognized ment loss is recognized in profit or loss and presented under exceeds the recoverable amount. “Depreciation, amortization and other impairment losses”. The Group amortizes the capitalized customer contract Impairment losses of CGUs are firstly charged against the costs on a straight-line basis over the expected period of carrying amount of any goodwill attributed to it and then benefit from the contract (i.e., the average term of the cu- against the other assets, in proportion to their carrying stomer relationship); any changes in amortization policies amount. are reflected on a prospective basis. If the reasons for a previously recognized impairment loss Goodwill Goodwill represents the future economic benefits arising no longer apply, the carrying amount of the asset is restored through profit or loss, under “Depreciation, amortization and other impairment losses”, in an amount that shall not exceed from other assets acquired in a business combination that the carrying amount that the asset would have had if the im- are not individually identified and separately recognized. pairment loss had not been recognized. The original amount For further details, please see the section of the accounting of goodwill is not restored even if in subsequent years the policies “Business combinations”. reasons for the impairment no longer apply. Goodwill arising on the acquisition of subsidiaries is reco- If certain specific identified assets owned by the Group are gnized separately. After initial recognition, goodwill is not impacted by adverse economic or operating conditions amortized, but is tested for impairment at least annually as that undermine their capacity to contribute to the gene- part of the CGU to which it pertains. ration of cash flows, they can be isolated from the rest of For the purpose of impairment testing, goodwill is alloca- the assets of the CGU, undergo separate analysis of their ted, from the acquisition date, to each CGU that is expected recoverability and be impaired where necessary. to benefit from the synergies of the combination. Goodwill relating to equity investments in associates and joint venture is included in their carrying amount. Inventories Inventories are measured at the lower of cost and net re- alizable value except for inventories involved in trading Impairment of non-financial assets At each reporting date, property, plant and equipment, in- activities, which are measured at fair value with recogni- tion through profit or loss. Cost is determined on the basis vestment property, intangible assets, right-of-use assets, of average weighted cost, which includes related ancillary goodwill and equity investments in associates/joint ventu- charges. Net estimated realizable value is the estimated res are reviewed to determine whether there is evidence of normal selling price net of estimated costs to sell or, where impairment. 248248 applicable, replacement cost. 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsFor the portion of inventories held to discharge sales that refers to how it manages its financial assets in order to ge- have already been made, the net realizable value is deter- nerate cash flows. The business model determines whether mined on the basis of the amount established in the con- cash flows will result from collecting contractual cash flows, tract of sale. selling the financial assets, or both. Inventories include environmental certificates (for example, For purposes of subsequent measurement, financial assets green certificates, energy efficiency certificates and Euro- pean CO2 emissions allowances) that were not utilized for compliance in the reporting period. As regards CO2 emis- sions allowances, inventories are allocated between the are classified in four categories: › financial assets measured at amortized cost (debt instru- ments); › financial assets at fair value through OCI with reclassifi- trading portfolio and the compliance portfolio, i.e. those cation of cumulative gains and losses (debt instruments); used for compliance with greenhouse gas emissions re- quirements. Within the latter, CO2 emissions allowances are allocated to sub-portfolios on the basis of the compliance › financial assets designated at fair value through OCI with no reclassification of cumulative gains and losses upon derecognition (equity instruments); and year to which they have been assigned. › financial assets at fair value through profit or loss. Inventories also include nuclear fuel stocks, use of which is determined on the basis of the electricity generated. Financial assets measured at amortized cost Materials and other consumables (including energy com- This category mainly includes trade receivables, other fi- modities) held for use in production are not written down nancial assets and loan assets. if it is expected that the final product in which they will be Financial assets at amortized cost are held within a busi- incorporated will be sold at a price sufficient to enable re- ness model whose objective is to hold financial assets in covery of the cost incurred. Financial instruments Financial instruments are any contract that gives rise to a order to collect contractual cash flows and whose con- tractual terms give rise, on specified dates, to cash flows that are solely payments of principal and interest on the principal amount outstanding. financial asset of one entity and a financial liability or equity Such assets are initially recognized at fair value, adjusted instrument of another entity; they are recognized and me- for any transaction costs, and subsequently measured at asured in accordance with IAS 32 and IFRS 9. amortized cost using the effective interest method and are A financial asset or liability is recognized in the consolida- subject to impairment. ted financial statements when, and only when, the Group Gains and losses are recognized in profit or loss when the becomes party to the contractual provision of the instru- asset is derecognized, modified or impaired. ment (i.e. the trade date). Trade receivables arising from contracts with customers, in Financial assets at fair value through other comprehensi- the scope of IFRS 15, are initially measured at their tran- ve income (FVOCI) - Debt instruments saction price (as defined in IFRS 15) if such receivables do This category mainly includes listed debt securities held by not contain a significant financing component or when the the Group reinsurance company and not classified as held Group applies the practical expedient allowed by IFRS 15. for trading. Conversely, the Group initially measures financial assets Financial assets at fair value through other comprehensi- other than the above-mentioned receivables at their fair ve income are assets held within a business model whose value plus, in the case of a financial asset not measured at objective is achieved by both collecting contractual cash fair value through profit or loss, transaction costs. flows and selling financial assets and whose contractual Financial assets are classified, at initial recognition, as fi- cash flows give rise, on specified dates, to cash flows that nancial assets at amortized cost, at fair value through other are solely payments of principal and interest on the princi- comprehensive income and at fair value through profit or pal amount outstanding. loss, on the basis of both the Group’s business model and Changes in fair value for these financial assets are recognized the contractual cash-flow characteristics of the instru- in other comprehensive income as well as loss allowances that ment. do not reduce the carrying amount of the financial assets. For this purpose, the assessment to determine whether the When a financial asset is derecognized (e.g. at the time of instrument gives rise to cash flows that are solely payments sale), the cumulative gains and losses previously recogni- of principal and interest (SPPI) on the principal amount out- zed in equity (except impairment and foreign exchange standing is referred to as the SPPI test and is performed at gains and losses to be recognized in profit or loss) are re- an instrument level. versed to profit or loss. The Group’s business model for managing financial assets 249 Integrated Annual Report 2020Financial assets at fair value through other comprehensi- debt instruments measured at fair value through other ve income (FVOCI) - Equity instruments comprehensive income, contract assets and all other as- This category includes mainly equity investments in unli- sets in scope. sted entities irrevocably designated as such upon initial In compliance with IFRS 9, as from January 1, 2018, the recognition. Group adopted a new impairment model based on the Gains and losses on these financial assets are never reclas- determination of expected credit losses (ECL) using a sified to profit or loss. The Group may transfer the cumula- forward-looking approach. In essence, the model provides tive gain or loss within equity. for: Equity instruments designated at fair value through OCI are › the application of a single framework for all financial assets; not subject to impairment testing. › the recognition of expected credit losses on an ongoing Dividends on such investments are recognized in profit or basis and the updating of the amount of such losses at loss unless they clearly represents a recovery of a part of the end of each reporting period, reflecting changes in the cost of the investment. the credit risk of the financial instrument; › the measurement of expected losses on the basis of Financial assets at fair value through profit or loss reasonable information, obtainable without undue cost, This category mainly includes: securities, equity investmen- about past events, current conditions and forecasts of ts in other companies, financial investments in fund held future conditions. for trading and financial assets designated as at fair value For trade receivables, contract assets and lease receivables, through profit or loss at initial recognition. including those with a significant financial component, Financial assets at fair value through profit or loss are: the Group adopts the simplified approach, determining › financial assets with cash flows that are not solely pay- expected credit losses over a period corresponding to the ments of principal and interest, irrespective of the busi- entire life of the receivable, generally equal to 12 months. ness model; For all financial assets other than trade receivables, con- › financial assets held for trading because acquired or in- tract assets and lease receivables, the Group applies the curred principally for the purpose of selling or repurcha- general approach under IFRS 9, based on the assessment sing in short term; of a significant increase in credit risk since initial recogni- › debt instruments designated upon initial recognition, tion. Under such approach, a loss allowance on financial under the option allowed by IFRS 9 (fair value option), if assets is recognized at an amount equal to the lifetime doing so eliminates, or significantly reduces, an accoun- expected credit losses, if the credit risk on those financial ting mismatch; assets has increased significantly, since initial recognition, › derivatives, including separated embedded derivatives, considering all reasonable and supportable information, in- held for trading or not designated as effective hedging cluding also forward-looking inputs. instruments. If at the reporting date the credit risk on financial assets Such financial assets are initially recognized at fair value has not increased significantly since initial recognition, the with subsequent gains and losses from changes in their fair Group measures the loss allowance for those financial assets value recognized through profit or loss. at an amount equal to 12-month expected credit losses. This category also includes listed equity investments which For financial assets on which a loss allowance equal to li- the Group had not irrevocably elected to classify at fair va- fetime expected credit losses has been recognized in the lue through OCI. Dividends on listed equity investments are previous reporting period, the Group measures the loss al- also recognized as other income in the income statement lowance at an amount equal to 12-month expected credit when the right of payment has been established. losses when the condition regarding a significant increase Financial assets that qualify as contingent consideration in credit risk is no longer met. are also measured at fair value through profit or loss. The Group recognizes in profit or loss, as an impairment Impairment of financial assets gain or loss, the amount of expected credit losses (or re- versal) that is required to adjust the loss allowance at the At each reporting date, the Group recognizes a loss al- reporting date to the amount that is required to be reco- lowance for expected credit losses on trade receivables gnized in accordance with IFRS 9. and other financial assets measured at amortized cost, The Group applies the low credit risk exemption, avoiding 250250 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsthe recognition of loss allowances at an amount equal to value through profit or loss, upon initial recognition. lifetime expected credit losses due to a significant increase Financial liabilities that qualify as contingent consideration in credit risk of debt securities at fair value through OCI, are also measured at fair value through profit or loss. whose counterparty has a strong financial capacity to meet its contractual cash-flow obligations (e.g. investment gra- Derecognition of financial assets and liabilities de). Financial assets are derecognized whenever one of the fol- For more information on the impairment of financial assets, lowing conditions is met: please see note 44 “Financial instruments by category”. › the contractual right to receive the cash flows associated with the asset expires; Cash and cash equivalents › the Group has transferred substantially all the risks and This category includes deposits that are available on de- rewards associated with the asset, transferring its rights mand or at very short term, as well as highly liquid short- to receive the cash flows of the asset or assuming a con- term financial investments that are readily convertible into tractual obligation to pay such cash flows to one or more a known amount of cash and which are subject to insignifi- beneficiaries under a contract that meets the require- cant risk of changes in value. ments provided by IFRS 9 (the “pass through test”); In addition, for the purpose of the consolidated statement › the Group has not transferred or retained substantially all of cash flows, cash and cash equivalents do not include the risks and rewards associated with the asset but has bank overdrafts at period-end. transferred control over the asset. Financial liabilities are derecognized when they are extin- Financial liabilities at amortized cost guished, i.e. when the contractual obligation has been di- This category mainly includes borrowings, trade payables, scharged, cancelled or expired. lease liabilities and debt instruments. When an existing financial liability is replaced by another Financial liabilities, other than derivatives, are recognized from the same lender on substantially different terms, or when the Group becomes a party to the contractual clau- the terms of an existing liability are substantially modified, ses of the instrument and are initially measured at fair value such an exchange or modification is treated as the dereco- adjusted for directly attributable transaction costs. Finan- gnition of the original liability and the recognition of a new cial liabilities are subsequently measured at amortized cost liability. The difference in the respective carrying amounts using the effective interest rate method. is recognized in profit or loss. Financial liabilities at fair value through profit or loss Derivative financial instruments Financial liabilities at fair value through profit or loss inclu- A derivative is a financial instrument or another contract: de financial liabilities held for trading and financial liabilities › whose value changes in response to the changes in an designated upon initial recognition as at fair value through underlying variable such as an interest rate, commodity profit or loss. or security price, foreign exchange rate, a price or rate Financial liabilities are classified as held for trading if they index, a credit rating or other variable; are incurred for the purpose of repurchasing in the near › that requires no initial net investment, or one that is term. This category also includes derivative financial instru- smaller than would be required for a contract with similar ments entered into by the Group that are not designated as response to changes in market factors; hedging instruments in hedge relationships as defined by › that is settled at a future date. IFRS 9. Separated embedded derivatives are also classified Derivative instruments are classified as financial assets or liabi- as at fair value through profit or loss unless they are desi- lities depending on the positive or negative fair value and they gnated as effective hedging instruments. are classified as “held for trading” within “Other business mo- Gains or losses on liabilities at fair value through profit or dels” and measured at fair value through profit or loss, except loss are recognized through profit or loss. for those designated as effective hedging instruments. Financial liabilities designated upon initial recognition at For more details about hedge accounting, please refer to fair value through profit or loss are designated at the initial the note 47 “Derivatives and hedge accounting”. date of recognition, only if the criteria in IFRS 9 are sati- All derivatives held for trading are classified as current as- sfied. sets or liabilities. In this case, the portion of the change in fair value attribu- Derivatives not held for trading purposes, but measured at table to own credit risk is recognized in other comprehen- fair value through profit or loss since they do not qualify for sive income. hedge accounting, and derivatives designated as effective The Group has not designated any financial liability as at fair hedging instruments are classified as current or not cur- 251 Integrated Annual Report 2020rent on the basis of their maturity date and the Group in- “normal purchase or sale” if it is entered into: tention to hold the financial instrument till maturity or not. › for the purpose of the physical settlement; › in accordance with the entity’s expected purchase, sale Embedded derivatives or usage requirements. An embedded derivative is a derivative included in a “com- Moreover, contracts to buy or sell non-financial items with bined” contract (the so-called “hybrid instrument”) that physical settlement (for example, fixed-price forward con- contains another non-derivative contract (the so-called tracts on energy commodities) do not qualify for the own host contract) and gives rise to some or all of the combined use exemption and are recognized as derivatives measured contract’s cash flows. at fair value through profit or loss only if: The main Group contracts that may contain embedded › they can be settled net in cash; and derivatives are contracts to buy or sell non-financial items › they are not entered into in accordance with the Group’s with clauses or options that affect the contract price, volu- expected purchase, sale or usage requirements. me or maturity. Consequently, starting from the trade date, these contracts A derivative embedded in a hybrid contract containing a are recognized at FVTPL or as “Other revenue” in the case of financial asset host is not accounted for separately. The fi- contracts for the sale of non-financial items (see the note “Re- nancial asset host together with the embedded derivative venue”) or as “Electricity, gas and fuel” or “Services and other is required to be classified in its entirety as a financial asset materials” in the case of contracts for the purchase of non-fi- at fair value through profit or loss. nancial items (please see, respectively, note 10.a “Electricity, Contracts that do not represent financial instruments to gas and fuel” and note 10.b “Services and other materials”). be measured at fair value are analyzed in order to identify any embedded derivatives, which are to be separated and The Group analyzes all contracts to buy or sell non-finan- measured at fair value. This analysis is performed when the cial assets on an ongoing basis, with a specific focus on Group becomes party to the contract or when the contract forward purchases and sales of electricity and energy com- is renegotiated in a manner that significantly changes the modities, in order to determine if they shall be classified original associated cash flows. and treated in accordance with IFRS 9 or if they have been Embedded derivatives are separated from the host con- entered into for “own use”. tract and accounted for as derivatives when: › the host contract is not a financial instrument measured Offsetting financial assets and liabilities at fair value through profit or loss; The Group offsets financial assets and liabilities when: › the economic risks and characteristics of the embed- › there is a legally enforceable right to set off the recogni- ded derivative are not closely related to those of the host zed amounts; and contract; › there is the intention of settling on a net basis or realizing › a separate contract with the same terms as the embed- the asset and settling the liability simultaneously. ded derivative would meet the definition of a derivative. Embedded derivatives that are separated from the host contract are recognized in the consolidated financial sta- Hyperinflation In a hyperinflationary economy, the Group adjusts non-mo- tements at fair value with changes recognized in profit or netary items, equity and items deriving from index-linked loss (except when the embedded derivative is part of a de- contracts up to the limit of recoverable amount, using a pri- signated hedging relationship). ce index that reflects changes in general purchasing power. The effects of initial application are recognized in equity Contracts to buy or sell non-financial items net of tax effects. Conversely, during the hyperinflatio- In general, contracts to buy or sell non-financial items that nary period (until it ceases), the gain or loss resulting from are entered into and continue to be held for receipt or deli- adjustments is recognized in profit or loss and disclosed very in accordance with the Group’s normal expected pur- separately in financial income and expense. chase, sale or usage requirements are out of the scope of Starting from 2018, this standard applies to the Group’s IFRS 9 and then recognized as executory contracts, accor- transactions in Argentina, whose economy has been decla- ding to the “own use exemption”. red hyperinflationary from July 1, 2018. A contract to buy or sell non-financial items is classified as 252252 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsNon-current assets (or disposal groups) classified as held for sale and discontinued operations Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered prin- cipally through a sale transaction, rather than through con- tinuing use. This classification criterion is applicable only when non-cur- rent assets (or disposal groups) are available in their present condition for immediate sale and the sale is highly probable. If the Group is committed to a sale plan involving loss of control of a subsidiary and the requirements provided for under IFRS 5 are met, all the assets and liabilities of that subsidiary are classified as held for sale when the classi- fication criteria are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after the sale. The Group applies these classification criteria as envisaged in IFRS 5 to an investment, or a portion of an investment, in an associate or a joint venture. Any retained portion of an investment in an associate or a joint venture that has not been classified as held for sale is accounted for using the equity method until disposal of the portion that is classified as held for sale takes place. Non-current assets (or disposal groups) and liabilities of disposal groups classified as held for sale are presented separately from other assets and liabilities in the statement of financial position. The amounts presented for non-current assets or for the assets and liabilities of disposal groups classified as held for sale are not reclassified or re-presented for prior pe- riods presented. Immediately before the initial classification of non-current assets (or disposal groups) as held for sale, the carrying amounts of such assets (or disposal groups) are measured in accordance with the accounting standard applicable to those assets or liabilities. Non-current assets (or disposal groups) classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses for any initial or subsequent write-down of the assets (or disposal groups) to fair value less costs to sell and gains for their reversals are recognized in profit or loss from continuing operations. Non-current assets are not depreciated (or amortized) whi- le they are classified as held for sale or while they are part of a disposal group classified as held for sale. If the classification criteria are no longer met, the Group ceases to classify the non-current assets (or disposal group) as held for sale. In this 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 depre- ciation, amortization or reversals of impairment losses that would have been recognized if the asset (or disposal group) had not been classified as held for sale; and › the recoverable amount, which is equal to the greater of its fair value net of costs to sell and its value in use, as calculated at the date of the subsequent decision not to sell. Any adjustment to the carrying amount of a non-current asset that ceases to be classified as held for sale is included in profit or loss from continuing operations. A discontinued operation is a component of the Group that either has been disposed of, or is classified as held for sale, and: › represents a separate major business line or geographi- cal segment; › is part of a single coordinated plan to dispose of a se- parate major business line or geographical segment; or › is a subsidiary acquired exclusively with a view to resale. The Group presents, in a separate line item of the income statement, a single amount comprising the total of: › the post-tax profit or loss of discontinued operations; and › the post-tax gain or loss recognized on the measure- ment at fair value less costs to sell or on the disposal of the assets or disposal groups constituting the disconti- nued operation. The corresponding amount is restated in the income sta- tement 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 pe- riod. If the Group ceases to classify a component as held for sale, the results of the component previously presented in discontinued operations are reclassified and included in profit or loss from continuing operations for all periods presented. Environmental certificates Some Group companies are affected by national regula- tions governing green certificates and energy efficiency certificates (so-called white certificates), as well as the Eu- ropean “Emissions Trading System”. Green certificates accrued in proportion to electricity ge- nerated by renewable energy plants and energy efficiency certificates accrued in proportion to energy savings achie- ved that have been certified by the competent authority are treated as non-monetary government operating gran- ts and are recognized at fair value, under other operating profit, with recognition of an asset under other non-finan- cial 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 253 Integrated Annual Report 2020account, they are reclassified from other assets to inven- long-term benefits, the related actuarial gains and losses tories. are recognized through profit or loss. Revenue from the sale of such certificates is recognized In the event of a change being made to an existing defined under revenue from contracts with customers, with a cor- benefit plan or the introduction of a new plan, any past ser- responding decrease in inventories. vice cost is recognized immediately in profit or loss. For the purposes of accounting for charges arising from In addition, the Group is involved in defined contribution regulatory requirements concerning green certificates, energy efficiency certificates and CO2 emissions allowan- ces, the Group uses the “net liability approach”. plans under which it pays fixed contributions to a separate entity (a fund) and has no legal or constructive obligation to pay further contributions if the fund does not hold suf- Under this accounting policy, environmental certificates ficient assets to pay all employee benefits relating to em- received free of charge and those self-produced as a re- ployee service in the current and prior periods. Such plans sult of Group’s operations that will be used for compliance are usually aimed to supplement pension benefits due to purposes are recognized at nominal value (nil). In addition, employees post-employment. The related costs are reco- charges incurred for obtaining (in the market or in some gnized through profit or loss on the basis of the amount of other transaction for consideration) any missing certifica- contributions paid in the period. tes to fulfil compliance requirements for the reporting pe- riod are recognized through profit or loss on an accruals basis under other operating costs, as they represent “sy- Termination benefits Liabilities for benefits due to employees for the early ter- stem charges” consequent to compliance with a regulatory mination of employee service arise out of the Group’s de- requirement. cision to terminate an employee’s employment before the normal retirement date or an employee’s decision to ac- Employee benefits Liabilities related to employee benefits paid upon or after cept an offer of benefits in exchange for the termination of employment. The event that gives rise to an obligation is ceasing employment in connection with defined benefit the termination of employment rather than employee ser- plans or other long-term benefits accrued during the em- vice. Termination benefits are recognized at the earlier of ployment period are determined separately for each plan, the following dates: using actuarial assumptions to estimate the amount of the › when the entity can no longer withdraw its offer of be- future benefits that employees have accrued at the repor- nefits; and ting date (using the projected unit credit method). More › when the entity recognizes a cost for a restructuring that specifically, the present value of the defined benefit obli- is within the scope of IAS 37 and involves the payment of gation is calculated by using a discount rate determined termination benefits. on the basis of market yields at the end of the reporting The liabilities are measured on the basis of the nature of period on high-quality corporate bonds. If there is no deep the employee benefits. More specifically, when the bene- market for high-quality corporate bonds in the currency in fits represent an enhancement of other post-employment which the bond is denominated, the corresponding yield of benefits, the associated liability is measured in accordance government securities is used. with the rules governing that type of benefits. Otherwise, The liability, net of any plan assets, is recognized on an ac- if the termination benefits due to employees are expected cruals basis over the vesting period of the related rights. to be settled wholly before 12 months after the end of the These appraisals are performed by independent actuaries. reporting period, the entity measures the liability in accor- If the plan assets exceed the present value of the related dance with the requirements for short-term employee be- defined benefit obligation, the surplus (up to the limit of any nefits; if they are not expected to be settled wholly before cap) is recognized as an asset. 12 months after the end of the reporting period, the entity As regards the liabilities/(assets) of defined benefit plans, measures the liability in accordance with the requirements the cumulative actuarial gains and losses from the actuarial for other long-term employee benefits. measurement of the liabilities, the return on the plan assets (net of the associated interest income) and the effect of the Share-based payments asset ceiling (net of the associated interest) are recognized The Group undertakes share-based payment transactions in other comprehensive income when they occur. For other settled with equity instruments as part of the remuneration 254254 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementspolicy adopted for the Chief Executive Officer and General If the provision is discounted, the periodic adjustment of Manager and for key management personnel. the present value for the time factor is recognized as a fi- The most recent long-term incentive plans provide for the nancial expense. grant to recipients of an incentive represented by an equity When the Group expects some or all charges to be reim- component and a monetary component. bursed, the reimbursement is recognized as a separate In order to settle the equity component through the bonus asset, but only when the reimbursement is virtually certain. award of Enel shares, a program for the purchase of trea- Where the liability relates to decommissioning and/or site sury shares to support these plans was approved. For more restoration in respect of property, plant and equipment, the details on share-based incentive plans, please see note 49 initial recognition of the provision is made against the re- “Share-based payments”. lated asset and the expense is then recognized in profit or The Group recognizes the services rendered by employees loss through the depreciation of the asset involved. as personnel expenses and indirectly estimates their value, Where the liability regards the treatment and storage of and the corresponding increase in equity, on the basis of nuclear waste and other radioactive materials, the provi- the fair value of the equity instruments (i.e., Enel shares) at sion is recognized against the related operating costs. the grant date. A liability for restructuring refers to a program planned This fair value is based on the observable market price of and controlled by management that materially changes Enel shares (on the Milan stock exchange), taking account the scope of a business undertaken by the Group or the of the terms and conditions under which the shares were manner in which the business is conducted. Such a liabili- granted (with the exception of vesting conditions excluded ty is recognized when a constructive obligation is establi- from the measurement of fair value). shed, i.e. when the Group has approved a detailed formal The cost of these share-based payment transactions is re- restructuring plan and has started to implement the plan cognized through profit or loss, with a corresponding entry or has announced its main features to those affected by it. in a specific equity item, over the period in which the ser- Provisions do not include liabilities in respect of uncertain vice and return performance conditions are met (vesting income tax treatments that are recognized as tax liabilities. period). The Group could provide a warranty in connection with the The overall expense recognized is adjusted at each repor- sale of a product (whether a good or service) from contracts ting date until the vesting date to reflect the best estimate with customers in the scope of IFRS 15, in accordance with available to the Group of the number of equity instrumen- the contract, the law or its customary business practices. In ts for which the service and performance conditions other this case, the Group assesses whether the warranty provi- than market conditions will be satisfied, so that the amount des the customer with assurance that the related product recognized at the end is based on the effective number of will function as the parties intended because it complies equity instruments that satisfy the service and performan- with agreed-upon specifications or whether the warranty ce conditions other than market conditions at the vesting provides the customer with a service in addition to the as- date. surance that the product complies with agreed-upon spe- No expense is recognized for awards which ultimately do cifications. not vest because the performance conditions other than After the assessment, if the Group establishes that an market conditions and/or the service conditions have not assurance warranty is provided, it recognizes a separate been satisfied. Conversely, the transactions are conside- warranty liability and corresponding expense when tran- red to have vested irrespective of whether the market or sferring the product to the customer, as additional costs of non-vesting conditions are satisfied, provided that all the providing goods or services, without attributing any of the other performance and/or service conditions are satisfied. transaction price (and therefore revenue) to the warranty. The liability is measured and presented as a provision. Provisions for risks and charges Provisions are recognized where there is a legal or con- Otherwise, if the Group determines that a service warran- ty is provided, it accounts for the promised warranty as a structive obligation as a result of a past event at the end of performance obligation in accordance with IFRS 15, reco- the reporting period, the settlement of which is expected gnizing the contract liability as revenue over the period the to result in an outflow of resources whose amount can be warranty service is provided and the costs associated as reliably estimated. Where the impact is significant, the ac- they are incurred. cruals are determined by discounting expected future cash Finally, if the warranty includes both an assurance element flows using a pre-tax discount rate that reflects the current and a service element and the Group cannot reasonably market assessment of the time value of money and, if ap- account for them separately, then it accounts for both of plicable, the risks specific to the liability. the warranties together as a single performance obligation. 255 Integrated Annual Report 2020In the case of contracts in which the unavoidable costs of account for separately if they are both: capable of being di- meeting the obligations under the contract exceed the stinct and distinct charges within the context of the contract. economic benefits expected to be received under it (one- As an exception, the Group accounts for as a single per- rous contracts), the Group recognizes a provision as the formance obligation a series of distinct goods or ser- lower of the excess of unavoidable costs of meeting the vices that are substantially the same and that have the obligations under the contract over the economic benefits same pattern of transfer to the customer over time. expected to be received under it and any compensation or In assessing the existence and the nature of the perfor- penalty arising from failure to fulfil it. mance obligations, the Group considers all of the con- Changes in estimates of accruals to the provisions addres- tract’s features as mentioned in step 1. sed here are recognized through profit or loss in the period For each distinct good or service identified, the Group de- in which the changes occur, with the exception of those in termines whether it acts as a principal or agent, respecti- the costs of decommissioning, dismantling and/or restora- vely if it controls or not the specified good or service that tion resulting from changes in the timetable and costs ne- is promised to the customer before its control is transfer- cessary to extinguish the obligation or from a change in the red to the customer. When the Group acts as agent, it re- discount rate. These changes increase or decrease the car- cognizes revenue on a net basis, corresponding to any fee rying amount of the related assets and are taken to profit or commission to which it expects to be entitled; or loss through depreciation. Where they increase the car- › determine the transaction price (step 3). rying amount of the assets, it is also determined whether The transaction price represents the amount of consi- the new carrying amount of the assets is fully recoverable. deration to which the Group expects to be entitled in If this is not the case, a loss equal to the unrecoverable exchange for transferring goods or services to a custo- amount is recognized through profit or loss. mer, excluding amounts collected on behalf of third par- Decreases in estimates are recognized up to the carrying ties (e.g., some sale taxes and value-added taxes). amount of the assets. Any excess is recognized immedia- The Group determines the transaction price at inception tely in profit or loss. of the contract and updates it each reporting period for For more information on the estimation criteria adopted in any changes in circumstances. determining provisions for dismantling and/or restoration When the Group determines the transaction price, it of property, plant and equipment, especially those associa- considers whether the transaction price includes va- ted with decommissioning nuclear power plants and stora- riable consideration, non-cash consideration received ge of waste fuel and other radioactive materials, please see from a customer, consideration payable to a customer note 2.1 “Use of estimates and management judgment”. and a significant financing component; › allocate the transaction price (step 4). Revenue from contracts with customers The Group recognizes revenue from contracts with custo- The Group allocates the transaction price at contract inception to each separate performance obligation to mers in order to represent the transfer of promised goods depict the amount of consideration to which the Group or services to the customers at an amount that reflects the expects to be entitled in exchange for transferring the consideration at which the Group expects to be entitled in promised goods or services. exchange for those goods or services. When the contract includes a customer option to acqui- The Group applies this core principle using a five-step re additional goods or services that represents a material model: right, the Group allocates the transaction price to this › identify the contract with the customer (step 1). performance obligation (i.e. the option) and defers the The Group applies IFRS 15 to contracts with customers in relative revenue until those future goods or services are the scope of the standard when the contract is legally en- transferred or the option expires. forceable and all the criteria envisaged for step 1 are met. The Group generally allocates the transaction price on If the criteria are not met, any consideration received the basis of the relative stand-alone selling price of each from the customer is generally recognized as an advance; distinct good or service promised in the contract (that › identify the performance obligations in the contract (step 2). is, the price at which the Group would sell that good or The Group identifies all goods or services promised in the service separately to the customer); contract, separating them into performance obligations to › recognize revenue (step 5). 256256 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThe Group recognizes revenue when (or as) each perfor- to the right to consideration in exchange for goods or ser- mance obligation is satisfied by transferring the promi- vices transferred to the customer. sed good or service to the customer, which is when the If a customer pays consideration before the Group tran- customer obtains control of the good or service. sfers goods or services to the customer, the Group reco- To this end, the Group first determines if one of the gnizes a contract liability when the payment is made (or the over-time criteria is met. payment is due) that is recognized as revenue when the For each performance obligation satisfied over time, the Group performs under the contract. Group recognizes revenue over time by measuring pro- gress toward the complete satisfaction of that performan- ce obligation using an output method or an input method Other revenue The Group recognizes revenue other than that deriving and applies a single method of measuring progress from from contracts with customers mainly referring to: contract inception until full satisfaction and to similar per- › revenue from the sale of energy commodities based on formance obligations and in similar circumstances. contracts with physical settlement, which do not qualify When the Group cannot reasonably measure the pro- for the own use exemption and therefore is recognized gress, it recognizes revenue only to the extent of the co- at FVTPL in accordance with IFRS 9; sts incurred that are considered recoverable. › changes in the fair value of contracts to sell energy com- If the performance obligation is not satisfied over time, modities with physical settlement, which do not qualify the Group determines the point in time at which the for the own use exemption and therefore are recognized customer obtains the control, considering whether the at FVTPL in accordance with IFRS 9; indicators of the transfer of control collectively indicate › operating lease revenue accounted for on an accrual that the customer has obtained control. basis in accordance with the substance of the relevant Depending on the type of transaction, the broad criteria lease agreement. used under IFRS 15 are summarized below: – revenue from the sale of goods is recognized at the point in time at which the customer obtains the control Other operating profit Other operating profit primarily includes gains on dispo- of goods if the Group considers that the sale of goods sal of assets that are not an output of the Group’s ordinary is satisfied at a point in time; activities and government grants. – revenue from providing services is recognized on the Government grants, including non-monetary grants at fair basis of the progress towards complete satisfaction value, are recognized where there is reasonable assurance of the performance obligation measured with an ap- that they will be received and that the Group will comply propriate method that better depicts this progress if with all conditions attaching to them as set by the gover- the Group considers that the performance obligation nment, government agencies and similar bodies whether is satisfied over time. The cost incurred method (cost- local, national or international. to-cost method) is considered appropriate for measu- When loans are provided by governments at a below-mar- ring progress, except when specific contract analyses ket rate of interest, the benefit is regarded as a government suggest the use of an alternative method, which better grant. The loan is initially recognized and measured at fair depicts the Group’s performance obligation fulfilled at value and the government grant is measured as the diffe- the reporting date. rence between the initial carrying amount of the loan and The Group does not disclose the information about the the funds received. The loan is subsequently measured in remaining performance obligations in existing contracts if accordance with the requirements for financial liabilities. the performance obligation is part of a contract that has Government grants are recognized in profit or loss on a sy- an original expected duration of one year or less and if the stematic basis over the periods in which the Group reco- Group recognizes revenue in the amount to which it has a gnizes as expenses the costs that the grants are intended right to invoice the customer. to compensate. Where the Group receives government grants in the form More information on the application of this revenue reco- of a transfer of a non-monetary asset for the use of the gnition model is provided in note 2.1 “Use of estimates and Group, it accounts for both the grant and the asset at the management judgment” and in note 9.a “Revenue from sa- fair value of the non-monetary asset received at the date les and services”. of the transfer. If the Group performs by transferring goods or services to Capital grants, including non-monetary grants at fair value, a customer before the customer pays consideration or be- i.e. those received to purchase, build or otherwise acquire fore payment is due, it recognizes a contract asset relating non-current assets (for example, an item of property, plant 257 Integrated Annual Report 2020and equipment or an intangible asset), are deducted from the tax rates and tax laws that are enacted or substantively the carrying amount of the asset and are recognized in enacted by the end of the reporting period in the countries profit or loss over the depreciable/amortizable life of the where taxable income has been generated. asset as a reduction in the depreciation/amortization char- Current income taxes are recognized in profit or loss with ge. the exception of current income taxes related to items re- cognized outside profit or loss that are recognized in equity. Financial income and expense from derivatives Financial income and expense from derivatives includes: Deferred tax › income and expense from derivatives measured at fair va- Deferred tax liabilities and assets are calculated on the lue through profit or loss on interest rate and currency risk; temporary differences between the carrying amounts of › income and expense from fair value hedge derivatives on liabilities and assets in the financial statements and their interest rate risk; corresponding amounts recognized for tax purposes on › income and expense from cash flow hedge derivatives the basis of tax rates in effect on the date the temporary on interest rate and currency risks. difference will reverse, which is determined on the basis of tax rates that are enacted or substantively enacted as at Other financial income and expense For all financial assets and liabilities measured at amortized the end of the reporting period. Deferred tax liabilities are recognized for all taxable tem- cost and interest-bearing financial assets classified as at porary differences, except when such liability arises from fair value through other comprehensive income, interest the initial recognition of goodwill or in respect of taxable income and expense is recognized using the effective inte- temporary differences associated with investments in sub- rest rate method. The effective interest rate is the rate that sidiaries, associates and joint ventures, when the Group exactly discounts the estimated future cash payments or can control the timing of the reversal of the temporary dif- receipts over the expected life of the financial instrument ferences and it is probable that the temporary differences or a shorter period, where appropriate, to the carrying will not reverse in the foreseeable future. amount of the financial asset or liability. Deferred tax assets are recognized for all deductible tem- Interest income is recognized to the extent that it is pro- porary differences, the carry forward of tax losses and any bable that the economic benefits will flow to the Group and unused tax credits. For more information concerning the the amount can be reliably measured. recoverability of such assets, please see the appropriate Other financial income and expense include also changes in section of the discussion of estimates. the fair value of financial instruments other than derivatives. Deferred taxes and liabilities are recognized in profit or loss, Dividends Dividends are recognized when the unconditional right to receive payment is established. with the exception of those in respect of items recognized outside profit or loss that are recognized in equity. Deferred tax assets and deferred tax liabilities are offset only if there is a legally enforceable right to offset current Dividends and interim dividends payable to the Parent’s tax assets with current tax liabilities and when they relate shareholders are recognized as changes in equity in the to income taxes levied by the same taxation authority on period in which they are approved by the Shareholders’ either the same taxable entity or different taxable entities Meeting and the Board of Directors, respectively. which intend either to settle current tax liabilities and as- Income taxes sets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which si- gnificant amounts of deferred tax liabilities or assets are Current income taxes expected to be settled or recovered. Current income year for the period, which are recognized under “income tax liabilities” net of payments on account, Uncertainty over income tax treatments or under “tax assets” where there is a credit balance, are In defining ‘uncertainty’, it shall be considered whether a determined using an estimate of taxable income and in particular tax treatment will be accepted by the relevant ta- conformity with the applicable regulations. xation authority. If it is deemed probable that the tax treat- In particular, such liabilities and assets are determined using ment will be accepted (where the term ‘probable’ is defined 258258 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsas ‘more likely than not’), then the Group recognizes and “material” between the accounting standards and the measures its current/deferred tax asset or liabilities ap- Conceptual Framework for Financial Reporting and cla- plying the requirements in IAS 12. rify a number of aspects. The definition of material is as Conversely, when the Group feels that it is not likely that the follows: “information is material if omitting, misstating or taxation authority will accept the tax treatment for inco- obscuring it could reasonably be expected to influence me tax purposes, the Group reflects the uncertainty in the decisions that the primary users of general purpose fi- manner that best predicts the resolution of the uncertain nancial statements make on the basis of those financial tax treatment. The Group determines whether to consider statements, which provide financial information about a each uncertain tax treatment separately or together with specific reporting entity.” More specifically, the amend- one or more other uncertain tax treatments based on whi- ments clarify that: ch approach provides better predictions of the resolution – “obscuring information“ regards situations for which of the uncertainty. In assessing whether and how the un- the effect for users of financial statements is similar certainty affects the tax treatment, the Group assumes that to the omission or misstatement of information whose a taxation authority will accept or not an uncertain tax tre- materiality is assessed in the context of the financial atment supposing that the taxation authority will examine statements taken as a whole; amounts it has a right to examine and have full knowledge – “primary users of financial statements“, to whom ge- of all related information when making those examinations. neral purpose financial statements are directed, are The Group reflects the effect of uncertainty in accounting “existing and potential investors, lenders and other for current and deferred tax using the expected value or creditors” who must rely on general purpose financial the most likely amount, whichever method better predicts statements for much of the financial information they the resolution of the uncertainty. need; and – “materiality” depends on the nature or magnitude of Since uncertain income tax positions meet the definition of information, or both. An entity assesses whether infor- income taxes, the Group presents uncertain tax liabilities/ mation, either individually or in combination with other assets as current tax liabilities/assets or deferred tax liabi- information, is material in the context of its financial lities/assets. 3. New and amended standards and interpretations statements taken as a whole. A misstatement of infor- mation is material if it could reasonably be expected to influence decisions of made by the primary users of the financial statements. › “Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest Rate Benchmark Reform”, issued in September 2019. The Group has applied the following standards, interpre- The amendments: (i) provide for temporary exceptions tations and amendments that took effect as from January that enable hedging relationships to continue during 1, 2020. the period of uncertainty until alterative risk-free rates are established with the interbank offered rates (IBORs) › “Amendments to IFRS 3 - Definition of a Business”, is- reform; and (ii) require additional disclosures on hedging sued in October 2018, is intended to assist companies in relationships directly affected by the uncertainty. In this determining whether an integrated set of activities and regard, note that the reform will impact fair value mea- assets is a business. More specifically, the amendments surement, the effects of hedge accounting and net fi- clarify that a business, considered as an integrated set of nancial income and expense when the alternative rates activities and assets, must include, at a minimum, an in- are defined. put and a substantive process that together significantly › “Amendments to References to the Conceptual Fra- contribute to the ability to create outputs. Accordingly, mework in IFRS Standards”, issued in March 2018. The the amendments clarify that a business cannot exist wi- document sets out the amendments to affected stan- thout including the inputs and substantive processes ne- dards in order to update references to the revised Con- cessary to produce outputs. The definition of “output”, as ceptual Framework. These amendments accompany the modified by these amendments, focuses on the goods latest version of the Revised Conceptual Framework for and services delivered to customers, on investment inco- Financial Reporting, issued in March 2018 and in effect as me and other revenue and excludes returns in the form from January 1, 2020, which includes some new concep- of lower costs or other economic benefits. ts, provides updated definitions and recognition criteria › “Amendments to IAS 1 and IAS 8 - Definition of Mate- and clarifies some important concepts. The main amend- rial”, issued in October 2018, to align the definition of ments include: 259 Integrated Annual Report 2020 – an increase in the importance of management’s ment of the non-monetary financial statement figures was stewardship of economic resources for financial re- conducted by applying the inflation indices starting from porting purposes; that date. In addition to being already reflected in the ope- – the restoration of prudence as an element supporting ning statement of financial position, the accounting effects neutrality; of that remeasurement also include changes during the – the definition of reporting entity, which may be a legal period. More specifically, the effect of the remeasurement entity or a portion of that entity; of non-monetary items, the equity items and the income – the revision of the definitions of assets and liabilities; statement items recognized in 2020 was recognized in a – elimination of the probability threshold in recognition specific line of the income statement under financial inco- and the addition of guidelines for derecognition; me and expense. The associated tax effect was recognized – the addition of guidelines on various measurement ba- in taxes for the year. ses; and – the affirmation that profit or loss is the primary indica- In order to also take account of the impact of hyperinfla- tor of performance and that, in principle, income and tion on the exchange rate of the local currency, the income expense included in other comprehensive income shall statement balances expressed in the hyperinflationary cur- be reclassified to profit or loss when doing so results in rency have been translated into the Group’s presentation the income statement providing more relevant infor- currency (euro) applying, in accordance with IAS 21, the mation or a more faithful representation. closing exchange rate rather than the average rate for the year in order to adjust these amounts to present values. The application of these amendments did not have a mate- rial impact on these consolidated financial statements. The cumulative changes in the general price indices at De- 4. Argentina - Hyperinflationary economy: impact of the application of IAS 29 As from July 1, 2018, the Argentine economy has been con- sidered hyperinflationary based on the criteria established by “IAS 29 - Financial reporting in hyperinflationary econo- mies”. This designation is determined following an asses- sment of a series of qualitative and quantitative circum- cember 31, 2018, December 31, 2019 and December 31, 2020 are shown in the following table. Periods From July 1, 2009 to December 31, 2018 From January 1, 2019 to December 31, 2019 From January 1, 2020 to December 31, 2020 Cumulative change in general consumer price index 346.30% 54.46% 35.41% stances, including the presence of a cumulative inflation In 2020, the application of IAS 29 generated net financial rate of more than 100% over the previous three years. income (gross of tax) of €57 million. For the purposes of preparing the consolidated financial statements at December 31, 2020 and in accordance with The following tables report the effects of IAS 29 on the ba- IAS 29, certain items of the statements of financial position lance at December 31, 2020 and the impact of hyperinfla- of the investees in Argentina have been remeasured by ap- tion on the main income statement items for 2020, diffe- plying the general consumer price index to historical data rentiating between that concerning the revaluation on the in order to reflect changes in the purchasing power of the basis of the general consumer price index and that due to Argentine peso at the reporting date for those companies. the application of the closing exchange rate rather than the Bearing in mind that the Enel Group acquired control of the average exchange rate for the period, in accordance with Argentine companies on June 25, 2009, the remeasure- the provisions of IAS 21 for hyperinflationary economies. 260260 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsMillions of euro Total assets Total liabilities Equity Cumulative hyperinflation effect at Dec. 31, 2019 Hyperinflation effect for the period Exchange differences Cumulative hyperinflation effect at Dec. 31, 2020 857 164 693 313 86 227 (1) (208) (58) (150) 962 192 770 (1) The figure includes profit for 2020, equal to €25 million. Millions of euro Revenue Costs Operating profit Net financial expense Net income/(expense) from hyperinflation Pre-tax profit/(loss) Income taxes Loss for the year (owners of the Parent and non-controlling interests) Attributable to owners of the Parent Attributable to non-controlling interests IAS 29 effect IAS 21 effect Total effect 119 169 (1) (50) (4) 57 3 28 (25) - (25) (199) (177) (2) (22) (4) - (26) (3) (23) (10) (13) (80) (8) (72) (8) 57 (23) 25 (48) (10) (38) (1) (2) Includes impact on depreciation, amortization and impairment losses of €49 million. Includes impact on depreciation, amortization and impairment losses of €(18) million. 5. Disclosures on non-financial issues Disclosures concerning the COVID-19 pandemic In view of the complexity of the current situation, the Group financial statements at December 31, 2020 offer additio- nal specific information regarding the COVID-19 pande- mic, based on specific company circumstances and on the availability of reliable information, in order to highlight its impact on the financial position and performance of the has carefully monitored the evolution of the COVID-19 pan- Group at that date. demic with regard to the main areas and countries in which In this regard, additional information on the financial impli- we operate, in line with the recommendations of ESMA in cations of the COVID-19 pandemic is available in note 2.1 the public statements(1) published in March, May, July and “Use of estimates and management judgment” and in the October 2020, and of CONSOB in its warning notices nos. notes to specific items. 6/2020 of April 9, 2020, 8/2020 of July 16, 2020 and 1/2021 of February 16, 2021. The Group has analyzed the impacts of COVID-19 on bu- Disclosures on climate change The Group is moving forward in its commitment to lead siness operations, the financial position and performance, the energy transition, in line with the objectives of the Paris which are also reflected in the assumptions underlying the Agreement (COP21) and the Sustainable Development Go- Group’s Business Plan, also identifying the main risks and als set by the United Nations. uncertainties to which it is exposed, as reported in the “Risk In particular, the Group is fully committed to the develop- management” section of the Report on Operations. For ment of a long-term sustainable business model, consi- more on the effects generated by the COVID-19 pandemic at December 31, 2020, please see the specific section “Fi- nancial impact of COVID-19” in the Report on Operations. stent with the objectives of the Paris Agreement to achieve a reduction in CO2 emissions and to limit the average in- crease in global temperature to below 2 °C compared with Consistent with the disclosures provided in the earlier pre-industrial levels. Since 2019, the Group has officially sections of the Report on Operations, the consolidated reaffirmed this commitment, responding to the United Na- (1) ESMA 71-99-1290 of March 11, 2020; ESMA 32-63-951 of March 25, 2020; ESMA 31-67-742 of March 27, 2020; ESMA 32-63-972 of May 20, 2020; ESMA 32-61-417 of July 21, 2020 and ESMA 32-63-1041 of October 28, 2020. 261 Integrated Annual Report 2020tions call for action and is the only Italian company to have qualify for the own use exemption and are therefore me- signed the commitment to limit the increase in global tem- asured at fair value through profit or loss (within the scope peratures to 1.5 °C and to achieve zero emissions by 2050. of IFRS 9), the Group slightly modified the recognition of These objectives form the basis for the 2021-2030 Strate- those items in 2020 with a simple reclassification of costs gic Plan presented in November 2020. It is founded on the between two lines of the income statement, thus enabling Group’s leadership in the energy transition process throu- a closer correlation between costs and revenue together gh the decarbonization of its generation mix, the electrifi- with more relevant information. This reclassification had no cation of energy consumption and the creation of digital impact on either profit for the year or equity. platforms for the development of new business and ope- More specifically, in 2019 the previous accounting treat- rational models. ment of these transactions in non-financial items provided The Group has considered the risks related to climate for recognition in: change and the objectives of the Paris Agreement in the › “Other revenue” of changes in the fair value of sales con- preparation of the consolidated financial statements at De- tracts as well as, at the settlement date, the related re- cember 31, 2020, which appropriately reflect the effect of venue together with the effects in profit or loss of the achieving net zero emissions by 2050 on assets, liabilities, derecognition of derivative assets or liabilities; profits and losses, incorporating the material and foresee- › “Other operating costs” of changes in the fair value of able impacts as required under the Framework of the IFRS. purchase contracts as well as, at the settlement date, of Furthermore, in compliance with the document published the related costs together with the effects, in profit or by the IFRS Foundation on November 20, 2020(2), the Group loss, of the derecognition of derivative assets or liabili- provides explicit information in the notes to these consoli- ties in “Electricity, gas and fuel” or “Services and other dated financial statements regarding how the implications materials”. of climate change are reflected in the financial statements. The current accounting treatment of these transactions in For further details on the financial implications of issues non-financial items (see the section “Contracts to buy or related to climate change, please see note 2.1 “Use of esti- sell non-financial items” in note 2.2 “Significant accounting mates and management judgment” and in the notes to policies”) instead provides for recognition in: specific items. › “Other revenue” of changes in the fair value of sales con- The accounting assumptions used for the preparation of tracts as well as, at the settlement date, the related re- the 2020 consolidated financial statements are consistent venue together with the effects in profit or loss of the with the information on the risks deriving from climate derecognition of derivative assets or liabilities; change reported in the “Risk management” section of the › “Electricity, gas and fuel” of the changes in the fair value Report on Operations, which readers are invited to consult of purchase contracts; for further information. 6. Restatement of comparative disclosures › “Electricity, gas and fuel” or “Services and other mate- rials” of the related costs at the settlement date together with the effects in profit or loss of the derecognition of derivative assets or liabilities. Consequently, the only difference between the two years under comparison concerned the reclassification of the The data presented in the comments and in the tables of 2019 amounts for changes in the fair value of contracts to the notes to these consolidated financial statements are buy non-financial items from “Other operating costs” to uniform and comparable. In this regard, note that with re- “Electricity, gas and fuel” and “Services and other mate- gard to contracts entered into for the purchase or sale of rials”. non-financial items with physical settlement that do not (2) “Effects of climate-related matters on financial statements”, which expands on an article on the issue written by Nick Anderson, a member of the Internatio- nal Accounting Standards Board in November 2019. 262262 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements[Subtotal] [Subtotal] IMPACT ON THE INCOME STATEMENT Millions of euro Revenue Revenue from sales and services Other income Costs Electricity, gas and fuel Services and other materials Personnel expenses Net impairment losses on trade receivables and other financial assets Depreciation, amortization and other impairment losses Other operating costs Capitalized costs Net expense from commodity derivatives Operating profit Financial income from derivatives Other financial income Financial expense from derivatives Other financial expense Net income from hyperinflation Share of profit/(loss) of equity-accounted investments Pre-tax profit Income taxes Profit from continuing operations Profit from discontinued operations Profit for the year (owners of the Parent and non-controlling interests) Attributable to owners of the Parent Attributable to non-controlling interests Basic earnings/(loss) per share attributable to owners of the Parent (euro) Diluted earnings/(loss) per share attributable to owners of the Parent (euro) Basic earnings/(loss) per share from continuing operations attributable to owners of the Parent (euro) Diluted earnings/(loss) per share from continuing operations attributable to owners of the Parent (euro) 2019 Reclassifications 2019 restated 77,366 2,961 80,327 33,755 18,580 4,634 1,144 9,682 7,276 (2,355) 72,716 (733) 6,878 1,484 1,637 1,142 4,518 95 (122) 4,312 836 3,476 - 3,476 2,174 1,302 0.21 0.21 0.21 0.21 4,327 256 (4,583) 77,366 2,961 80,327 38,082 18,836 4,634 1,144 9,682 2,693 (2,355) 72,716 (733) 6,878 1,484 1,637 1,142 4,518 95 (122) 4,312 836 3,476 - 3,476 2,174 1,302 0.21 0.21 0.21 0.21 In addition, during the year, a number of adjustments were This change affected the segment reporting but did not made to the income statement figures for 2019 to take produce any change in the overall figures for the Group, account of the fact that with effect from March 31, 2020 although reclassifications have been made within the va- in Latin America the amounts attributable to large custo- rious Business Lines. mers managed by the power generation companies were reallocated to the End-user Markets Business Line. 263 Integrated Annual Report 2020Changes in the consolidation scope 7. Main acquisitions and disposals during the year 2020 › In January 2020, the Wild Plains project company, 100% owned by Tradewind, was sold. The sale did not have an impact on profit or loss; › on May 11, 2020 Endesa Energía sold 80% of Endesa Soluciones for €21 million. The interest, which had pre- viously been consolidated on a line-by-line basis, is now In the two periods under review, the consolidation scope accounted for using the equity method; changed as a result of a number of transactions. › on July 7, 2020, Enel Green Power España acquired 100% 2019 › The disposal, on March 1, 2019, of 100% of Mercure Srl, of Parque Eólico Tico SLU, Tico Solar 1 SLU and Tico Solar 2 SLU for a total of €40 million; › on September 14, Endesa Generación Portugal acquired a company to which the business unit consisting of the 100% of Suggestion Power (Unipessoal) Lda for a total of Mercure biomass plant and the related legal relationships €6 million; had been previously transferred. The price for the tran- › on September 17, 2020, Enel X International acquired saction was €168 million; 60% of Viva Labs AS for a total of €3 million; › the acquisition, on March 14, 2019, by Enel Green Power › Enel Green Power Panama acquired 100% of Jaguito Solar SpA, acting through its US renewables subsidiary Enel and Progreso Solar in 2020 for a total of €2 million. Green Power North America (EGPNA, now renamed Enel North America), of 100% of 13 companies that own ope- rating renewable generation plants from Enel Green Other changes In addition to the above changes in the consolidation sco- Power North America Renewable Energy Partners (EGPNA pe, the following transactions, which although they do not REP), a joint venture 50% owned by EGPNA and 50% by represent transactions involving the acquisition or loss of General Electric Capital’s Energy Financial Services; control, gave rise to a change in the interest held by the › the acquisition, on March 27, 2019, by Enel Green Power Group in the investees: SpA (EGP), acting through its US renewables subsidiary › the disposal, in 2020, of a number of 50% owned joint EGPNA (now ENA), of Tradewind Energy, a renewable ventures in Enel North America’s hydroelectric portfolio. energy project development company based in Lenexa, In December 2019, the entire portfolio had been classi- Kansas. EGP has incorporated the entire Tradewind de- fied as held for sale in accordance with IFRS 5. The gain velopment platform, which includes 13 GW of wind, solar recognized in profit or loss was €2 million; and storage projects located in the United States. The › in 2020, Enel SpA increased its interest in Enel Améric- agreement also provided for the sale, which took place in as by 5.03% under the provisions of share swaps entered June, of Savion, a wholly owned subsidiary of Tradewind; into with a financial institution. The Group’s total stake is › on April 30, 2019, Enel X Italia acquired 100% di YouSave therefore now 65%; SpA, an Italian company operating in the energy services › Enel SpA increased its interest in Enel Chile by 2.89% un- sector, providing assistance to large electricity consu- der the provisions of two share swaps entered into with mers; a financial institution. The Group’s total stake is therefore › on May 31, 2019, the finalization, acting through the now 64.93%. renewables subsidiary Enel Green Power Brasil Partici- pações Ltda, of the disposal of 100% of three renewables plants in Brazil. The total price of the transaction was Minor acquisitions The Group will determine, for the other minor acquisitions, about R$2.7 billion, the equivalent of about €603 million; the fair value of the assets acquired and the liabilities assu- › the acquisition, on November 14, 2019, by Enel X Srl of med within 12 months of the acquisition date. 55% di Paytipper, an authorized payment institution that offers its customers financial services to facilitate their daily lives. The contract is accompanied by a put option for the remaining 45%. 264264 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsDETERMINATION OF GOODWILL Millions of euro Net assets acquired Cost of the acquisition (of which paid in cash) Goodwill/(Negative goodwill) Parque Eólico Tico SLU, Tico Solar 1 SLU and Tico Solar 2 SLU Suggestion Power (Unipessoal) Lda Viva Labs AS Jaguito Solar, Progreso Solar 40 40 14 - 6 6 3 - - 3 2 3 - 2 2 2 Acquisition of Paytipper During 2020, the company Paytipper, acquired by Enel X the assets acquired and the liabilities assumed. The main adjustments with respect to the carrying amount are attri- Srl on December 23, 2019, completed the allocation of the butable to the recognition of the intangible asset relating acquisition price, definitively determining the fair value of to the technological platform and the related tax effects. Millions of euro Net assets acquired Cost of the acquisition Goodwill/(Negative goodwill) Carrying amount prior to December 23, 2019 Adjustments from purchase price allocation Post-adjustment carrying amount at December 23, 2019 4 22 18 39 1 - 43 23 (20) Following the final allocation of the purchase price, negati- of a put option. The value of the put option was estimated ve goodwill was recognized in profit or loss in 2020. on the basis of the mechanism included in the sharehol- The acquisition price, totaling €24.5 million, includes con- ders’ agreement and using the prospective EBITDA indica- tingent consideration of €18.3 million linked to the exercise ted in the business plan approved by the Board of Directors. Operating segments 8. Segment reporting The representation of financial position and performance by business segment presented here is based on the ap- proach used by management in monitoring Group perfor- mance for the two years being compared. As already discussed in note 6 to the consolidated financial statements, segment reporting has been reformulated be- cause in March 2020 a number of large generation custo- mers were reallocated to the End-user Market segment in South America and Mexico. In order to ensure full comparability of the figures com- mented here in the light of the new breakdown of the pri- mary and secondary reporting segments for IFRS 8 disclo- sure purposes, the comparative figures for 2019 have been restated appropriately. For more information on performance and financial deve- lopments during the year, please see the dedicated section in the Report on Operations. 265 Integrated Annual Report 2020Segment reporting for 2020 and 2019 RESULTS FOR 2020 (1) Millions of euro Revenue and other income from third parties Revenue and other income from transactions with other segments Total revenue Total costs Net income/ (expense) from commodity derivatives Depreciation and amortization Impairment losses Impairment gains Operating profit/ (loss) Capital expenditure Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other, eliminations and adjustments Total 19,350 7,409 17,824 17,647 970 1,803 (18) 64,985 1,454 20,804 18,570 283 7,692 3,113 1,518 19,342 11,909 11,861 29,508 26,651 151 1,121 969 67 1,870 1,911 (15,334) - (15,352) 64,985 (15,166) 47,957 (534) 68 - 264 778 950 (43) 15 694 1,252 728 (67) 2,734 4,629 2,597 621 (47) 4,262 3,937 366 1,079 (141) 1,817 460 - 150 18 - (16) 303 (6) 172 11 (4) (226) 103 (4) 28 1 (1) (212) 5,343 3,408 (303) (218) 71 8,368 10,197 (1) Segment revenue includes both revenue from third parties and revenue from transactions with other segments. An analogous approach was taken for other income and costs for the year. RESULTS FOR 2019 (1) (2) Millions of euro Revenue and other income from third parties Revenue and other income from transactions with other segments Total revenue Total costs Net income/(expense) from commodity derivatives Depreciation and amortization Impairment losses Impairment gains Operating profit/(loss) Capital expenditure Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other, eliminations and adjustments Total 30,480 7,344 20,092 19,537 967 1,901 6 80,327 1,532 32,012 29,972 (676) 1,142 4,031 (284) (3,525) 851 373 7,717 3,143 14 1,241 99 (12) 3,260 4,293 (3) 1,697 21,789 13,511 13,062 163 32,599 1,130 29,194 972 80 1,981 1,855 (16,907) (16,901) (16,757) - 80,327 61,890 - (71) - 2,692 371 (62) 5,277 3,905 333 930 (139) 2,210 449 145 111 - (98) 270 - 171 33 (3) (75) 134 - 26 1 - (171) 45 (733) 5,750 5,576 (500) 6,878 9,947 (1) Segment revenue includes both revenue from third parties and revenue from transactions with other segments. An analogous approach was taken for other income and costs for the year. (2) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in South America and Mexico amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. (3) Does not include €4 million regarding units classified as “held for sale”. 266266 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other, eliminations and adjustments Financial position by segment AT DECEMBER 31, 2020 Millions of euro Property, plant and equipment Intangible assets Non-current and current contract assets Trade receivables Other 10,747 184 4 2,670 1,433 30,655 4,883 1 2,053 1,095 Operating assets 15,038 (1) 38,687 (2) Trade payables Non-current and current contract liabilities Sundry provisions Other Operating liabilities 2,816 2,751 147 3,528 1,133 7,624 152 947 1,434 5,284 (4) (1) Of which €3 million regarding units classified as “held for sale”. (2) Of which €855 million regarding units classified as “held for sale”. (3) Of which €11 million regarding units classified as “held for sale”. (4) Of which €35 million regarding units classified as “held for sale”. AT DECEMBER 31, 2019 (1) 36,718 21,490 340 6,493 2,674 67,715 5,405 7,172 3,794 7,856 24,227 Millions of euro Property, plant and equipment Intangible assets Non-current and current contract assets Trade receivables Other 11,863 134 30,351 4,697 36,333 23,782 - 3,181 1,426 - 1,711 1,421 482 7,703 1,654 Operating assets 16,604 (2) 38,180 (3) 69,954 (4) Trade payables Non-current and current contract liabilities Sundry provisions Other Operating liabilities 3,375 2,192 5,417 199 3,410 1,074 8,058 167 903 1,843 5,105 7,271 4,412 8,867 25,967 (5) Total 79,499 31,505 480 12,052 6,212 154 3,775 - 4,034 756 516 676 42 358 297 699 418 14 755 769 10 79 79 (4,311) (812) 8,719 1,889 (3) 2,655 (4,955) 129,748 4,678 426 868 (4,061) 12,883 42 400 2,245 7,365 5 46 179 8 603 1,101 (60) 479 284 7,466 9,797 14,232 656 2,580 (3,358) 44,378 Other, eliminations and adjustments 11 29 43 (4,633) (1,350) Total 79,823 33,337 653 13,083 6,075 (5,900) 132,971 (4,417) 12,960 (104) 459 (503) 7,629 10,290 15,789 (4,565) 46,668 160 3,624 - 3,838 543 8,165 5,030 75 494 2,642 8,241 442 605 53 607 1,098 2,805 414 5 34 415 868 663 466 75 676 1,283 3,163 949 16 578 1,451 2,994 Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services (1) The comparative figures for 2019 have been adjusted to take account of the fact that as from 2020 in South America and Mexico amounts attributable to large customers managed by the power generation companies were reallocated to the End-user Markets Business Line. (2) Of which €4 million regarding units classified as “held for sale”. (3) Of which €7 million regarding units classified as “held for sale”. (4) Of which €10 million regarding units classified as “held for sale”. (5) Of which €3 million regarding units classified as “held for sale”. 267 Integrated Annual Report 2020The following table reconciles segment assets and liabili- ties and the consolidated figures. Millions of euro Total assets Equity-accounted investments Non-current financial derivative assets Other non-current financial assets Non-current tax assets included in “Other non-current assets” Other current financial assets Current financial derivative assets Cash and cash equivalents Deferred tax assets Tax assets Financial and tax assets of “Assets held for sale” Segment assets Total liabilities Long-term borrowings Non-current financial derivative liabilities Short-term borrowings Current portion of long-term borrowings Other current financial liabilities Current financial derivative liabilities Deferred tax liabilities Income tax liabilities Other tax liabilities Financial and tax liabilities of “Liabilities included in disposal groups held for sale” Segment liabilities at Dec. 31, 2020 at Dec. 31, 2019 163,453 171,426 861 1,236 5,159 1,539 5,113 3,471 5,906 8,578 1,294 548 129,748 121,096 49,519 3,606 6,345 3,168 622 3,531 7,797 471 886 773 44,378 1,682 1,383 6,006 1,587 4,305 4,065 9,029 9,112 1,206 80 132,971 124,488 54,174 2,407 3,917 3,409 754 3,554 8,314 209 1,082 - 46,668 268268 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsInformation on the income statement Revenue 9.a Revenue from sales and services - €62,623 million Millions of euro Sale of electricity (1) Transport of electricity (1) Fees from network operators Transfers from institutional market operators Sale of gas Transport of gas Sale of fuel Fees for connection to electricity and gas networks Construction contracts Sale of environmental certificates Sale of value-added services Other sales and services Total IFRS 15 revenue Sale of energy commodities under contracts with physical settlement (IFRS 9) Fair value gain/(loss) on derivatives on sale of commodities with physical settlement (IFRS 9) Other revenue Total revenue from sales and services 2020 34,745 10,710 932 1,395 2,718 611 602 759 732 35 862 764 2019 39,584 10,931 866 1,625 3,294 617 914 785 749 36 918 720 54,865 61,039 7,513 224 21 62,623 10,775 5,519 33 77,366 Change (4,839) (221) 66 (230) (576) (6) (312) (26) (17) (1) (56) 44 (6,174) (3,262) (5,295) (12) (14,743) -12.2% -2.0% 7.6% -14.2% -17.5% -1.0% -34.1% -3.3% -2.3% -2.8% -6.1% 6.1% -10.1% -30.3% -95.9% -36.4% -19.1% (1) In the Distribution segment in Colombia, a number of items previously classified under “Sale of electricity” were reclassified to “Transport of electricity” to improve the presentation of the data. In order to ensure the uniformity and comparability of the figures, the amounts for 2019 have also been reclassified in the total amount of €461 million. Revenue from the “sale of electricity” amounted to Revenue from “transport of electricity” amounted to €34,745 million, a decrease of €4,839 million compared €10,710 million in 2020, a decrease of €221 million that with the previous year (-12.2%). The reduction is mainly due was mainly attributable to the reduction in electricity tran- to: sported on the grid due to the effects of the COVID-19 › a decrease in revenue from the sale of electricity to end pandemic. users on both the regulated and the free markets in Spain (€1,390 million) and Italy (€808 million), reflecting “Transfers from institutional market operators” decre- in particular the effects of the COVID-19 pandemic, whi- ased by €230 million compared with the previous year, ch on the free market caused a decline in sales volumes reflecting the entry into force of the new 2020-2025 re- involved in business-to-business transactions; muneration parameters for extra-peninsular generation in › a significant reduction in revenue in Latin America Spain following a decrease in demand and an increase in (€2,248 million), due in particular to the depreciation of commodity prices. local currencies against the euro and the contraction in volumes and the average prices applied to sales; Revenue from the “sale of gas” in 2020 amounted to › a reduction in revenue registered by Enel Global Trading €2,718 million (€3,294 million in 2019), a decrease of €576 (€82 million) as a result of lower sales on the spot market million compared with the previous year. This reduction, in Italy, mainly due to the fall in electricity prices; concentrated mainly in Spain and Italy, also reflected the › a decline in revenue in Russia (€362 million) following the decline in quantities sold connected with the COVID-19 sale of the Reftinskaya coal plant in October 2019. health emergency. 269 Integrated Annual Report 2020 Revenue from the “sale of fuel” fell by €312 million due to the fair value measurement of those contracts decreased a reduction in volumes handled by Enel Global Trading, by a total of €8,557 million, reflecting the contraction in reflecting in part the energy transition initiated by the volumes traded and a decline in spot prices. Group and the consequent decline in conventional gene- ration. The following table shows the net charges in respect of contracts for the purchase and sale of commodities with Revenue from the sale of energy commodities under con- physical settlement measured at fair value through profit tracts with physical settlement (IFRS 9) and the gain from or loss within the scope of IFRS 9. Millions of euro Contracts for sale of energy commodities with physical settlement (within the scope of IFRS 9) Electricity Sale of electricity Fair value gain on contracts for sale of electricity Total electricity Gas Sale of gas Fair value gain on contracts for sale of gas Total gas Environmental certificates Sale of environmental certificates Fair value gain/(loss) on contracts for sale of environmental certificates Total environmental certificates TOTAL REVENUE Contracts for purchase of energy commodities with physical settlement (within the scope of IFRS 9) Electricity Purchase of electricity Fair value gain/(loss) on contracts for purchase of electricity Total electricity Gas Purchase of gas Fair value gain/(loss) on contracts for purchase of gas Total gas Environmental certificates Purchase of environmental certificates Fair value gain on contracts for purchase of environmental certificates Total environmental certificates TOTAL CHARGES NET CHARGES 270270 2020 2019 Change 2,478 156 2,634 4,723 123 4,846 312 (55) 257 7,737 4,011 (155) 3,856 4,664 (185) 4,479 301 71 372 8,707 (970) 4,278 988 5,266 6,235 4,296 10,531 262 235 497 16,294 7,064 233 7,297 6,575 4,094 10,669 1,060 256 1,316 19,282 (2,988) (1,800) (832) (2,632) (1,512) (4,173) (5,685) 50 (290) (240) (8,557) (3,053) (388) (3,441) (1,911) (4,279) (6,190) (759) (185) (944) (10,575) 2,018 -72.6% - - -32.0% - - 16.0% - -93.4% - -76.1% - -89.2% -41.0% - - - - - - - 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsRevenue from contracts with customers (IFRS 15) for 2020 time” and “over time” revenue as indicated in the following amounted to €54,865 million, and break down into “point in table. Millions of euro 2020 Iberia Latin America Europe North America Africa, Asia and Oceania Other, eliminations and adjustments Point in time Over time Point in time Point in time Point in time Over time Over time Over time Point in time Over time Over time Point in time Over time Total Point in time Italy Point in time Over time 21,107 441 16,355 460 13,433 200 1,418 580 586 51 67 79 16 72 52,982 1,883 2019 Iberia Latin America Europe North America Africa, Asia and Oceania Other, eliminations and adjustments Point in time Over time Point in time Point in time Point in time Over time Over time Over time Point in time Over time Over time Point in time Over time Total Point in time Italy Point in time Over time 22,635 522 17,860 785 15,573 503 1,383 934 646 27 76 81 7 7 58,180 2,859 Total IFRS 15 revenue Millions of euro Total IFRS 15 revenue The table below gives a breakdown of revenue from sales and services by geographical segment. Millions of euro Italy Europe Iberia France Switzerland Germany Austria Slovenia Romania Greece Bulgaria Belgium Czech Republic Hungary Russia Netherlands United Kingdom Other European countries Americas United States Canada Mexico Brazil Chile Peru Colombia Argentina Panama Other Africa Asia Total 2020 23,968 16,173 503 99 1,860 66 2 1,322 110 9 18 33 165 533 2,743 399 78 502 25 218 6,666 2,811 1,118 2,022 816 136 79 149 62,623 2019 26,420 18,265 1,259 217 3,746 173 40 1,311 73 8 26 152 418 897 6,553 726 (22) 501 18 233 7,752 3,263 1,261 2,243 1,323 169 92 249 77,366 271 Integrated Annual Report 2020Performance obligations related revenue recognition policies. The following table provides information about the Group’s performance obligations arising from contracts with cu- stomers with reference to the main revenue streams only, with a summary of the specific judgments made and the For information on the use of estimates with revenue from contracts with customers, please see note 2.1 “Use of esti- mates and management judgment”. Type of product/ service Nature and timing of satisfaction of performance obligation Accounting policies Revenue from the sale and transport of electricity/gas to end users is recognized when these commodities are delivered to the customer and is based on the quantities provided during the period, even if these have not yet been invoiced. It is determined using estimates as well as periodic meter readings. Where applicable, this revenue is based on the rates and related restrictions established by law or by the Regulatory Authority for Energy, Networks and the Environment (ARERA) and analogous foreign authorities during the applicable period. Sale/transport of electricity/gas to end users An electricity/gas supply agreement signed with an end user includes a single performance obligation (sale and transport of the commodity) because the Group has determined that the contract does not provide distinct goods/services and the promise is satisfied by transferring control over the commodity to the customer when it is delivered at the point of delivery. In order to determine the nature of the promise included in such contracts, the Group carefully analyzes the facts and circumstances applicable to each contract and commodity. However, the Group considers that the performance obligation provided for in a repetitive service contract, such as a supply or transport contract for the provision of electricity/gas to end users, is typically satisfied over time (because the customer simultaneously receives and consumes the benefits of the commodity as it is delivered) as part of a series of distinct goods/services (i.e., each unit of commodity) that are substantially the same and have the same pattern of transfer to the customer. In these cases, the Group applies an output method to recognize revenue in the amount to which it has a right to invoice the customer if that amount corresponds directly with the value to the customer of the performance completed to date. 272272 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsType of product/ service Nature and timing of satisfaction of performance obligation Accounting policies The network connection fees received from customers for connecting them to the electricity/ gas distribution networks require a specific Group assessment to take into consideration all terms and conditions of the connection arrangements. This assessment is intended to determine whether the contract includes other distinct goods or services, such as for example the right to obtain ongoing access to the infrastructure in order to receive the commodity or, when the connection fee is a “non-refundable up-front fee” paid at or near contract inception, a material right that gives rise to a performance obligation. In particular, in some countries in which the Group operates, it has determined that the nature of the consideration received represents a “non-refundable up-front fee” whose payment provides a material right to the customer. In order to determine if the period over which this material right should be recognized extends beyond the initial contractual period, the Group takes into consideration the applicable local legal and regulatory framework applicable to the contract and affecting the parties. In such cases, if there is an implied assignment of the material right and an obligation from the initial customer to the new customer, the Group recognizes the connection fee over a period beyond the relationship with the initial customer, considering the concession terms as the period during which the initial customer and any future customer can benefit from the ongoing access without paying an additional connection fee. As a consequence, the fee is recognized over the period for which the payment creates an obligation for the Group to make the lower prices available to future customers (i.e., the period during which the customer is expected to benefit from the ongoing access service without having to pay an “up-front fee” upon renewal). The construction contracts typically include a performance obligation satisfied over time. For these contracts, the Group generally considers it appropriate to use an input method for measuring progress, except when a specific contract analysis suggests the use of an alternative method that better depicts the Group’s performance obligation fulfilled at the reporting date. Network connection services Construction contracts Revenue from monetary and in-kind fees for connection to the electricity and gas distribution network is recognized on the basis of the satisfaction of the performance obligations included in the contract. The identification of distinct goods or services requires a careful analysis of the terms and conditions of the connection arrangements, which could vary from country to country based on the local context, regulations and law. In order to finalize this assessment, the Group considers not only the characteristics of the goods/services themselves (i.e., the good or service is capable of being distinct) but also the implied promises for which the customer has a valid expectation as it views those promises as part of the negotiated exchange, that is goods/services that the customer expects to receive and has paid for (i.e., the promise to transfer the good or service to the customer is separately identifiable from other promises in the contract). Furthermore, the Group acts as an agent in some contracts for electricity/gas network connection services and other related activities, depending on local legal and regulatory framework. In such cases, it recognizes revenue on a net basis, corresponding to any fee or commission to which it expects to be entitled. For construction contracts that include a performance obligation satisfied over time, the Group recognizes revenue over time by measuring progress toward the complete satisfaction of that performance obligation. The cost-to-cost method is generally considered the best method to depict the Group’s performance obligation fulfilled at the reporting date. The amount due from customers under a construction contract is presented as a contract asset; the amount due to customers under a construction contract is presented as a contract liability. 273 Integrated Annual Report 20209.b Other income - €2,362 million Millions of euro Operating grants Grants for environmental certificates Capital grants (electricity and gas business) Sundry reimbursements Gains on the disposal of subsidiaries, associates, joint ventures, joint operations and non-current assets held for sale Gains on the disposal of property, plant and equipment, and intangible assets Service continuity bonuses Other income Total 2020 12 342 24 371 15 58 40 1,500 2,362 2019 19 475 25 521 325 79 32 1,485 2,961 Change (7) (133) (1) (150) (310) (21) 8 15 (599) -36.8% -28.0% -4.0% -28.8% -95.4% -26.6% 25.0% 1.0% -20.2% “Grants for environmental certificates” amounted to €342 “Other income” increased by €15 million, mainly due to the million, a decrease of €133 million compared with the recognition in 2020 of: previous year, mainly registered by e-distribuzione due to › an increase in income recognized by e-distribuzione for a decrease in grants received from the Energy and Envi- the reimbursement of system charges and grid fees on ronmental Services Fund for energy efficiency certificates the basis of Resolutions no. 50/2018 and 461/2020 of (EECs), mainly reflecting the decrease in quantities handled. the Regulatory Authority for Energy, Networks and the Environment (ARERA) (€158 million); “Sundry reimbursements” mainly declined due to the effect › an increase registered by Enel North America in income of the recognition in 2019 of the contractually envisaged from tax partnerships (€139 million), other revenue from reimbursement due following the exercise by a large indu- indemnities and litigation (€31 million) and the sale of the strial customer of an option to withdraw from a contract Haystack wind project (€45 million); for the supply of electricity from Enel Generación Chile › income for the eco-bonus subsidy relating to energy and (€160 million, of which €80 million relating to the Thermal seismic upgrading posted by Enel X Italia (€20 million); Generation and Trading Business Line and €80 million rela- › the negative goodwill recognized on the acquisition of ting to the Enel Green Power Business Line). Paytipper following the completion of the purchase price allocation process (€20 million). Gains on the disposal of subsidiaries, associates, joint ven- In 2019, this item mainly included income for: tures, joint operations and non-current assets held for sale › the early all-inclusive settlement of the second indemnity came to €15 million in 2020, a decrease of €310 million, of €50 million connected with the disposal in 2009 of the which mainly reflected: interest held by e-distribuzione in Enel Rete Gas; › the gain on the sale of Mercure Srl, a special-purpose › Edesur’s settlement agreement (€233 million) with the vehicle to which Enel Produzione had previously transfer- Argentine government to resolve reciprocal disputes ori- red the Valle del Mercure biomass plant (€108 million); ginating in the period from 2006 to 2016; › the negative goodwill (of €181 million) resulting from the › the price adjustment in the acquisition of eMotorWerks definitive allocation of the purchase price of (i) a num- in 2017 following the application of contractual clauses ber of companies sold by Enel Green Power North Ame- (€98 million). rica Renewable Energy Partners LLC (€106 million) and (ii) Tradewind, which transitioned from being an associate The following table shows a breakdown of total revenue by to a wholly-owned subsidiary (negative goodwill of €75 business segment based on the approach used by mana- million); gement to monitor the Group’s performance during the › the gains of €42 million on the disposals of Gratiot and Out- two years being compared. law, two renewable energy projects developed by Tradewind. 274274 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements77,366 2,961 80,327 -22.9% -25.7% - -6.4% -53.1% -34.2% Millions of euro 2020 Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services 20,242 562 20,804 31,705 307 32,012 7,150 542 7,692 7,157 560 7,717 18,381 961 19,342 20,599 1,190 21,789 29,151 357 29,508 2019 32,098 501 32,599 1,026 95 1,121 1,011 119 1,130 Revenue from sales and services Other income Total revenue Revenue from sales and services Other income Total revenue Costs Other, eliminations and adjustments (15,168) (184) Total 62,623 2,362 (15,352) 64,985 1,841 29 1,870 1,946 35 (17,150) 249 1,981 (16,901) 10.a Electricity, gas and fuel – €25,049 million Millions of euro Electricity (1) Gas (1) Fair value gain/(loss) on contracts for purchase of electricity and gas (IFRS 9) Nuclear fuel Other fuels Total 2020 16,158 7,952 (340) 117 1,162 25,049 2019 20,449 10,706 4,327 125 2,475 38,082 Change (4,679) (2,754) (4,667) (8) (1,313) (13,033) (1) The 2019 figures have been adjusted to take account of the reclassification of the fair value gain/(loss) on contracts for the purchase of commodities with physical settlement (IFRS 9) from “Other operating costs”. Costs for the purchase of “electricity” mainly decreased Purchases from contracts with physical settlement (IFRS 9) due to a decline in volumes purchased in an environment and the gain/(loss) from the fair value measurement of such of decreasing average prices, mainly attributable to the ef- contracts showed a decrease of €4,667 million compared with fects of the COVID-19 pandemic. the previous year, mainly attributable to gas (€4,279 million). The decrease in costs for the purchase of “gas” reflects the The reduction in “other fuels” is mainly attributable to the decline in quantities handled, mainly due to a reduction in decline in the volume of thermal generation. and includes generation, as well as the fall in the cost of gas. In particular, the write-down of fuel inventories connected with coal-fi- the latter factor also reflected the financial benefit of the red plants in Italy and Spain as a result of the energy tran- finalization of the agreement with NLNG on the price review sition process. applied to Nigerian supplies. 275 Integrated Annual Report 2020 10.b Services and other materials - €18,298 million Millions of euro Wheeling Maintenance and repairs Telephone and postal costs Communication services IT services Leases and rentals Other services Purchase of environmental certificates Fair value gain on contracts for purchase of environmental certificates (IFRS 9) (1) Other materials Total 2020 9,619 1,127 172 116 823 396 3,648 673 71 1,653 18,298 2019 9,879 1,145 181 142 806 382 3,935 481 256 1,629 18,836 Change (260) (18) (9) (26) 17 14 (287) 192 (185) 24 (538) -2.6% -1.6% -5.0% -18.3% 2.1% 3.7% -7.3% 39.9% -72.3% 1.5% -2.9% (1) The 2019 figures have been adjusted to take account of the reclassification of the fair value gain on contracts for the purchase of commodities with physi- cal settlement (IFRS 9) from “Other operating costs”. Costs for services and other materials, equal to €18,298 essentially due to the decrease in costs for services con- million in 2020, decreased by €538 million compared with nected with the electricity and gas business (€93 million), 2019, mainly due to: the value-added services business (€40 million) and tra- › a decline in wheeling costs, mainly in Spain, Chile and vel expenses (€85 million). Brazil, connected with the contraction in volumes tran- All of the effects mentioned above were substantially af- sported; fected by the measures introduced to counter the CO- › a reduction in costs for “other services” of €287 million, VID-19 pandemic. 10.c Personnel expenses - €4,793 million Millions of euro Wages and salaries Social security contributions Italian post-employment benefits Post-employment and other long-term benefits Early retirement incentives Early retirement incentives connected with restructuring agreements Other costs Total 2020 3,133 824 103 (485) 152 882 184 4,793 2019 3,240 875 103 108 101 - 207 4,634 Change (107) (51) - (593) 51 882 (23) 159 -3.3% -5.8% - - 50.5% - -11.1% 3.4% Personnel expenses amounted to €4,793 million in 2020, an › the sale of the Reftinskaya GRES plant in Russia; increase of €159 million. › the disposal of hydro plants in the United States; The Group’s workforce decreased by 1,536 employees, › the acquisition of Viva Labs. mainly reflecting the negative balance between new hires and terminations (565 employees) due to early-retirement The decrease in “wages and salaries” substantially reflects incentive policies and changes in the consolidation scope the lower average and total number of employees in 2020. (-971 employees), essentially attributable to: The €593 million decrease in “post-employment and other 276276 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementslong-term benefits” is mainly attributable to the modifi- agreement concerning the suspension of employment re- cation in Spain of the electricity discount benefit for em- lationships for certain individual contracts as a result of the ployees following the renewal of the 5th Endesa Collective signing of the new collective bargaining agreement men- Bargaining Agreement, which led to the release of the as- tioned above, and in Italy, in reflection of terminations of sociated provision in the amount of €515 million. employment in application of the provisions of Article 4 of Expenses for “early retirement incentives” in 2020 amoun- Law 92/2012 (the “Fornero Act”) applied mainly in 2018. ted to €152 million, up €51 million, with most of the increase coming in Spain, due to the accrual to the provision for the The table below shows the average number of employe- Plan de Salida in the amount of €783 million prompted by es by category, along with a comparison with the previous elimination of the extinguishment option of the individual year, and the headcount as of December 31, 2020. No. Senior managers Middle managers Office staff Blue collar Total Average (1) Headcount (1) Change at Dec. 31, 2020 2020 1,397 11,258 36,027 18,396 67,078 2019 1,375 11,016 35,066 20,846 68,303 22 242 961 (2,450) (1,225) (1) For companies consolidated on a proportionate basis, the headcount corresponds to Enel’s percentage share of the total. 10.d Net impairment losses on trade receivables and other financial assets - €1,285 million Millions of euro Impairment losses on trade receivables Impairment losses on other financial assets Total impairment losses on trade receivables and other financial assets Impairment gains on trade receivables Impairment gains on other financial assets Total impairment gains on trade receivables and other financial assets NET IMPAIRMENT LOSSES ON TRADE RECEIVABLES AND OTHER FINANCIAL ASSETS 2020 1,505 46 1,551 (194) (72) (266) 1,285 2019 1,239 116 1,355 (202) (9) (211) 1,144 Change 266 (70) 196 8 (63) (55) 141 1,397 11,592 35,883 17,845 66,717 21.5% -60.3% 14.5% - - - 12.3% The item, equal to €1,285 million, includes impairment increased by a total of €141 million compared with 2019, losses and gains on trade receivables and other financial primarily in Italy, mainly in reflection of the effects of the assets. The net impairment losses on trade receivables COVID-19 pandemic. 277 Integrated Annual Report 202010.e Depreciation, amortization and other impairment losses - €7,163 million Millions of euro Property, plant and equipment Investment property Intangible assets Other impairment losses Other reversals of impairment losses Total 2020 4,118 2 1,223 1,857 (37) 7,163 2019 4,481 3 1,266 4,221 (289) 9,682 Change (363) (1) (43) (2,364) 252 (2,519) -8.1% -33.3% -3.4% -56.0% -87.2% -26.0% The decrease in “depreciation, amortization and other im- › the impairment losses on of the Mexico, Argentina and pairment losses” in 2020 was essentially attributable to the Australia CGUs in the total amount of €750 million; effect of the impairment losses recognized in 2019 on cer- › other impairment losses of €159 million, the most signi- tain coal-fired plants in Italy, Spain, Chile and Russia totaling ficant of which regarded the solar panel manufacturing €4,010 million and the consequent decrease in deprecia- plants of Enel Green Power in Italy (65 million) and the tion recognized in 2020. Snyder plant in the United States (€47 million). These effects were partially offset by: Note that the impairment losses recognized in respect of › the impairment loss recognized in 2020 on the Chilean coal plants in 2020 and 2019 are linked to the achievement coal plant of Bocamina II (€737 million); of the Group’s strategic objective for the decarbonization › the impairment losses on a number of coal plants in Italy of generation and that the impacts of climate change were in the amount of €135 million, including Unit 2 of the taken into account in carrying out the impairment tests. Brindisi power plant; 10.f Other operating costs - €2,202 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 (1) 2020 90 277 61 65 1,130 579 2,202 2019 430 416 62 76 1,035 674 2,693 Change (340) (139) (1) (11) 95 (95) (491) -79.1% -33.4% -1.6% -14.5% 9.2% -14.1% -18.2% (1) The 2019 figures have been adjusted to take account of the fair value gain on contracts for the purchase of commodities with physical settlement (IFRS 9) from “Other operating costs” to “Electricity, gas and fuel” and “Services and other materials”. Other operating costs decreased by €491 million com- These factors were partly offset by higher taxes and duties pared with the previous year, mainly due to a reduction in in Spain, mainly reflecting the effect of the temporary su- environmental compliance charges in Italy and the effect spension for 2019 of the tax on the generation of electri- of the recognition in 2019 of capital losses by Enel North city and on fuels used in conventional thermal and nuclear America, mainly reflecting the sale of a number of com- generation (Royal Decree Law 15/2018) as well as the intro- panies owning wind farms that were measured using the duction from July 2020 of a new “eco-tax” in Catalonia. equity method. 278278 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements10.g Capitalized costs - €(2,385) million Millions of euro Personnel Materials Other Total 2020 (836) (846) (703) 2019 (899) (980) (476) (2,385) (2,355) Change 63 134 (227) (30) -7.0% -13.7% -47.7% -1.3% Capitalized costs increased by €30 million, mainly for the the Enel Green Power Business Line and new commercial in-house development and construction of new plants by initiatives undertaken in the Enel X Business Line. 11. Net expense from commodity derivatives – €(212) million Millions of euro Income: - income from derivatives designated as hedging derivatives - income from derivatives at fair value through profit or loss Total income Expense: - expense from derivatives designated as hedging derivatives - expense from derivatives at fair value through profit or loss Total expense NET EXPENSE FROM COMMODITY DERIVATIVES 2020 2019 Change 76 4,904 4,980 (132) (5,060) (5,192) (212) 200 1,311 1,511 (23) (2,221) (2,244) (733) (124) 3,593 3,469 (109) (2,839) (2,948) 521 -62.0% - - - - - -71.1% Net expense from commodity derivatives amounted to › net expense from derivatives at fair value through profit €212 million for 2020 (compared with net expense of €733 or loss in the amount of €156 million (compared with net million in 2019), which can be broken down as follows: expense of €910 million in 2019). › net expense from cash flow hedge derivatives in the For more information on derivatives, see note 47 “Derivati- amount of €56 million (compared with net income of ves and hedge accounting”. €177 million in 2019); 279 Integrated Annual Report 202012. Net financial income/(expense) from derivatives - €(941) million Millions of euro Income: - income from derivatives designated as hedging derivatives - income from derivatives at fair value through profit or loss Total income Expense: - expense from derivatives designated as hedging derivatives - expense from derivatives at fair value through profit or loss Total expense NET FINANCIAL INCOME/(EXPENSE) FROM DERIVATIVES 2020 2019 Change 639 676 1,315 (1,945) (311) (2,256) (941) 1,120 364 1,484 (538) (604) (1,142) 342 (481) 312 (169) (1,407) 293 (1,114) (1,283) -42.9% 85.7% -11.4% - -48.5% 97.5% - Net expense from derivatives on interest and exchange ra- › net income from derivatives at fair value through profit tes amounted to €941 million for 2020 (compared with net or loss in the amount of €365 million (compared with net income of €342 million in 2019), which can be broken down expense of €240 million in 2019). as follows: The net balances recognized in 2020 on both hedging and › net expense from derivatives designated as hedging de- trading derivatives mainly refer to the hedging of currency rivatives in the amount of €1,306 million (compared with risk. For more information on derivatives, see note 47 “De- net income of €582 million in 2019), mainly in respect of rivatives and hedge accounting”. cash flow hedges; 13. Net other financial income/(expense) - €(1,665) 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 financial assets - interest income at effective rate on current 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 Income from hyperinflation Other income TOTAL OTHER FINANCIAL INCOME 280280 2020 2019 Change 110 69 179 - 2,182 23 529 379 3,292 126 162 288 - 915 4 832 430 2,469 (16) (93) (109) - 1,267 19 (303) (51) 823 -12.7% -57.4% -37.8% - - - -36.4% -11.9% 33.3% 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsOther financial income, equal to €3,292 million, increased by of IAS 29 related to accounting for hyperinflationary econo- €823 million compared with the previous year, due mainly to mies (-€303 million). See note 4 of the consolidated financial an increase in exchange gains, partly offset by the reduction statements at December 31, 2020 for more information. in income from the application to the Argentine companies 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 Adjustment to post-employment and other employee benefits Adjustment to other provisions Expense from equity investments Expense from hyperinflation Other expenses 2020 2019 Change 291 1,887 149 2,327 1,245 109 150 1 472 653 386 2,030 183 2,599 1,229 135 186 2 737 367 (95) (143) (34) (272) 16 (26) (36) (1) (265) 196 (298) -24.6% -7.0% -18.6% -10.5% 1.3% -19.3% -19.4% -50.0% -36.0% 53.4% -5.7% TOTAL OTHER FINANCIAL EXPENSE 4,957 5,255 Other financial expense, equal to €4,957 million, showed cation of IAS 29 in Argentina (-€265 million). These effects an overall decrease of €298 million compared with 2019. were partially offset by the impairment loss on the financial The change is reflected in particular by a decrease in inte- asset in respect of the sale of the investment in Slovenské rest expense in the amount of €272 million, especially on elektrárne (€401 million). bonds, and a decrease in charges deriving from the appli- 14. Share of profit/(loss) of equity-accounted investments - €(299) million Millions of euro Share of profit of associates Share of loss of associates Total 2020 131 (430) (299) 2019 120 (242) (122) Change 11 (188) (177) 9.2% -77.7% - Net losses of equity-accounted investments increased by › the profit posted by OpEn Fiber, which increased by €60 €177 million compared with the previous year. The change million compared with 2019, mainly due to the tax benefit was essentially due to the impairment loss on the invest- registered by the company for the revaluation of assets ment in Slovak Power Holding (€433 million) following the under the provisions of Decree Law 104/2020; signing of the general term agreement on December 22, › €25 million in profit recognized in Spain in September 2020 between Enel Produzione and EPH, which modified a 2020 in respect of Nuclenor following the successful number of terms and conditions of the agreement signed settlement of a dispute; on December 18, 2015 (as already amended in 2018) con- › the recognition in 2019 of the effects of reacquiring 13 cerning the sale of the investment held by Enel Produzione companies from EGPNA REP, which resulted in the reco- in Slovenské elektrárne. This negative effect was partly offset by: gnition of a capital loss (€88 million) by EGPNA REP. 281 Integrated Annual Report 202015. Income taxes - €1,841 million Millions of euro Current taxes Adjustments for income taxes relating to prior years Total current taxes Deferred tax expense Deferred tax income TOTAL 2020 1,898 (168) 1,730 180 (69) 1,841 2019 2,137 (132) 2,005 (567) (602) 836 Change (239) (36) (275) 747 533 1,005 -11.2% -27.3% -13.7% - -88.5% - The increase in taxes in 2020 compared with the previous gnized in Argentina by the generation companies Enel year is essentially attributable to the deferred tax assets Generación Costanera and Central Dock Sud as a result associated with the effect of the impairment losses con- of exercising the “revalúo impositivo” option for tax in- nected with the decarbonization process recognized in centives. In return for payment of a tax in lieu, this me- 2019, while the impairment losses on certain assets of Slo- chanism allows the remeasurement of certain assets for venské elektrárne and the impairment losses on the Enel tax purposes, resulting in the recognition of deferred tax Produzione’s financial assets from EP Slovakia BV for the assets and the greater deductibility of future deprecia- sale of that holding essentially did not give rise to deferred tion; tax assets. › the reversal of deferred tax liabilities by EGPNA as an an- In addition, the tax burden increased in reflection of the fol- cillary effect of the acquisition of a number of companies lowing factors from the previous year: from EGPNA REP; › the release of €494 million in deferred taxes by Enel Di- › the deductibility of goodwill resulting from the merger of stribuição São Paulo following the merger with Enel Brasil GasAtacama into Enel Generación Chile. Investimentos Sudeste SA (Enel Sudeste); › the agreement with the tax authorities concerning the For more information on changes in deferred tax assets “patent box” option, which provides for preferential ta- and liabilities, see note 23. xation of earnings resulting from the use of intellectual The following table provides a reconciliation of the theore- property (€53 million); tical tax rate and the effective tax rate. › a decrease in taxes (in the amount of €35 million) reco- Millions of euro Pre-tax profit Theoretical taxes Change in tax effect on impairment losses, capital gains and negative goodwill Reversal of deferred taxes in Brazil Net effect on deferred taxation recognized with timing mismatch Impact on deferred taxation of changes in tax rates Patent box mechanism in Italy Remeasurement for tax purposes of certain assets in Argentina IRAP Other differences, effect of different tax rates abroad compared with the theoretical rate in Italy, and other minor items Total 282282 24.0% 2020 5,463 1,311 202 - 16 - - - 249 63 1,841 24.0% 2019 4,312 1,035 93 (494) - (33) (53) (35) 235 88 836 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements16. Basic and diluted earnings per share Both of these indicators are calculated on the basis of the (348,092 at December 31, 2019). The exact number of the treasury shares at December 31, 2020 and December 31, average number of ordinary shares for the year, equal to 2019 was equal to 3,269,152 and 1,549,152, respectively, 10,166,679,946, adjusted by the average number of trea- with a par value of €1. For further information on treasury sury shares acquired to support the Long-Term Incentive shares, please see note 49 “Share-based payments”. Plan (“LTI Plan”), equal to 2,067,594, with a par value of €1 Profit from continuing operations attributable to owners of the Parent Profit from discontinued operations attributable to owners of the Parent (millions of euro) Profit attributable to owners of the Parent (millions of euro) 2020 2,610 - 2,610 2019 2,174 - 2,174 Number of ordinary shares 10,166,679,946 10,166,679,946 Change 436 - 436 - Average number of ordinary shares, excluding treasury shares 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) 10,164,612,352 10,166,331,854 (1,719,502) 0.26 0.26 - 0.21 0.21 - 0.05 0.05 - 20.1% - 20.1% - - 23.8% 23.8% - 283 Integrated Annual Report 2020Information on the statement of financial position 17. Property, plant and equipment - €78,718 million The breakdown of and changes in property, plant and equip- ment for 2020 is shown below. Millions of euro Land Buildings Plant and machinery Industrial and commercial equipment Other assets Leased assets Leasehold improvements Assets under construction and advances Total 663 10,265 160,068 527 1,471 2,614 - 5,469 96,604 366 1,149 613 663 4,796 63,464 161 322 2,001 2 8 277 188 2,780 2,711 (26) (287) (2,475) - (1) - (8) - (1) - (26) - (3) (9) (81) (174) (3,515) (65) - 75 - 11 (1,091) 31 15 (226) (1,860) 23 1 (1) - (1) (26) - - (14) - (18) 81 57 4 19 (23) (90) (15) (15) (92) - - 17 - 10 (1) (40) (280) (10) - 572 - 174 637 10,263 159,411 523 1,487 2,994 - 5,456 97,807 380 1,155 819 637 4,807 61,604 143 332 2,175 427 291 136 7 13 (1) - - (31) - - - - (12) 443 319 124 8,266 184,301 - 104,492 8,266 79,809 5,155 8,329 (2,997) - (907) (3,810) 15 (8) - (10) (149) (4,118) (369) (1,543) - 261 31 925 (520) 630 (746) (1,091) 8,896 184,654 - 105,936 8,896 78,718 Cost net of accumulated impairment losses Accumulated depreciation Balance at Dec. 31, 2019 Capital expenditure Assets entering service Exchange differences Change in the consolidation scope Disposals Depreciation Impairment losses Impairment gains Other changes Reclassifications from/to assets held for sale Total changes Cost net of accumulated impairment losses Accumulated depreciation Balance at Dec. 31, 2020 284284 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsPlant and machinery includes assets to be relinquished For more information on leased assets, see note 19 below. free of charge with a carrying amount of €8,083 million (€8,976 million at December 31, 2019), largely regarding The types of capital expenditure made during 2020 are power plants in Iberia and Latin America amounting to summarized below, including that on intangible assets and €3,808 million (€4,267 million at December 31, 2019), and investment property. These expenditures, totaling €9,548 the electricity distribution network in Latin America tota- million, increased by €289 million from 2019, with the in- ling €3,626 million (€3,911 million at December 31, 2019). crease being particularly concentrated in solar power plants. Millions of euro Power plants: - thermal - hydroelectric - geothermal - nuclear - alternative energy sources Total power plants Electricity distribution networks (1) Enel X (e-mobility, e-city, e-industries, e-home) Retail customers Other TOTAL (2) 2020 452 332 145 137 4,007 5,073 3,288 303 460 424 9,548 2019 602 382 145 130 3,695 4,954 3,213 270 449 373 9,259 (1) The figure for 2020 does not include €649 million in respect of infrastructure investments within the scope of IFRIC 12 (€692 million in 2019). (2) The figure for 2019 includes €4 million regarding units classified as “held for sale”. The Enel Group, in line with the Paris agreements on CO2 emis- sions reductions and guided by energy efficiency and energy The exchange loss of €3,810 million primarily reflects the ge- neral depreciation of South American currencies against the transition objectives, has invested above all in generation plan- euro. ts that exploit alternative energy sources. Capital expenditure The “change in the consolidation scope” in 2020 mainly refers on generation plants mainly regard solar plants in Chile and to the sale of a stake held in the Spanish company Endesa So- wind farms in the United States, Russia, South Africa, India and luciones SLU, in which the interest is now 14%, as well as the Italy. acquisition of control by Enel Green Power Italia of a number In order to respond to ever more variable climate developmen- of renewable energy companies. ts and, therefore, enhance the resilience of grids, the Group continued to invest in the Distribution Business Line (€3,288 “Impairment losses” amounted to €1,543 million and are million). The €75 million increase is mainly attributable to hi- mainly attributable to the decarbonization process initiated gher investments in Italy and Romania for maintenance activi- by the Group, which in 2020 led to the impairment loss of the ties on grids and an increase in connection requests, partially Bocamina II plant and certain assets of a number of Italian offset by the contraction in investments in development and thermal generation plants, as well as Unit 2 of the Brindisi Sud service quality, especially in South America. Expenditure on power plant. In addition, the Group took account of climate digital meters decline as a result of the slowdown in the mass change impacts in performing the impairment tests. replacement of meters due to the COVID-19 emergency. In the transition towards the sustainability of urban centers, Following impairment testing, this item was also affected by Enel X, convinced of the key role of electric mobility, has in- the impairment loss of assets in Australia as a result of the de- vested above all in the e-city business, particularly in Colom- terioration of market conditions and in Mexico due to: bia, with the E-Bus project. In Italy, following the introduction › the increase in regulatory charges as a result of recently of measures to revive the economy and to encourage energy approved laws (“Porteo”); upgrading and seismic resilience, Enel X has undertaken gre- › a decrease in generation due to regulatory and plant ater investments in the development of the e-Home business constraints, with particular regard to the Dolores facility; associated with the Vivi Meglio initiative. › the deconsolidation of the hydroelectric plant. 285 Integrated Annual Report 2020“Reclassifications from/to assets held for sale” refer mainly to and site restoration costs in the amount of €142 million, new the plants of the South African companies involved in Round leases of €569 million and the effect of capitalizing interest on 4, Enel Green Power Bulgaria as well as the storage plant ow- loans specifically dedicated to capital expenditure on proper- ned by Tynemouth Energy Storage. ty, plant and equipment of €154 million (€150 million in 2019), “Other changes” include the provision for plant dismantling broken down as follows. Millions of euro Enel Green Power Enel Green Power Brazil Enel Green Power North America Enel Green Power México Enel Green Power South Africa Enel Américas Group Enel Chile Group Endesa Group (1) EGP Spain Group Enel Russia Group EGP India Group EGP Australia Group EGP Colombia Enel Produzione Nuove Energie Enel Green Power Italia Enel Green Power Chile Enel Finance International Total (2) 2020 Rate % 2019 Rate % Change - 12 10 23 47 7 21 3 - 10 1 1 2 4 1 1 4 15 162 - 2.4% 0.2% 4.1% 6.3% 5.8% 7.2% 1.7% - 7.2% 7.5% 3.4% 1.3% 4.3% 0.5% 3.3% 4.6% 1.8% 4 16 16 36 17 14 12 3 3 5 3 - - 9 - - - 21 159 1.2% 5.8% 0.2% 7.0% 6.4% 8.3% 8.0% 1.8% 1.8% 9.13% 7.5% 4.8% 1.6% (4) (4) (6) (13) 30 (7) 9 - (3) 5 (2) 1 2 (5) 1 1 4 (6) 3 - -25.0% -37.5% -36.1% - -50.0% 75.0% - - - -66.7% - - -55.6% - - - -28.6% 1.9% (1) The 2020 amount for the EGP Spain Group is included in that for the Endesa Group. (2) The total for 2020 also includes €7 million in capitalized financial expense in respect of intangible assets (€1 million in 2019) and €1 million in other non-cur- rent assets (€8 million in 2019). At December 31, 2020, contractual commitments to pur- chase property, plant and equipment amounted to €6,409 million. 286286 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements18. Infrastructure within the scope of “IFRIC 12 - Service concession arrangements” Service concession arrangements, which are recognized serving concessions for electricity distribution in Brazil and Costa Rica. The following table summarizes the salient details of those in accordance with IFRIC 12, regard certain infrastructure concessions. Millions of euro Grantor Activity Country Concession period Concession period remaining Renewal option Enel Distribuição Rio de Janeiro Enel Distribuição Ceará Enel Green Power Mourão Brazilian government Brazilian government Brazilian government Enel Green Power Paranapanema Brazilian government Enel Distribuição Goiás Brazilian government Enel Green Power Volta Grande Enel Distribuição São Paulo PH Chucas Total Brazilian government Brazilian government Costa Rican Electricity Institute Electricity distribution Electricity distribution Electricity generation Electricity generation Electricity distribution Electricity generation Electricity distribution Hydroelectric Brazil 1997-2026 6 years Yes Brazil 1998-2028 8 years Yes Brazil 2016-2046 26 years Brazil 2016-2046 26 years Brazil 2015-2045 25 years Brazil 2017-2047 27 years Brazil 1998-2028 8 years No No No No No plant Costa Rica 2002-2022 11 years No Amount recognized among contract assets at Dec. 31, 2020 Amount recognized among financial assets at Dec. 31, 2020 Amount recognized among intangible assets at Dec. 31, 2020 52 40 - - 165 - 40 - 297 678 475 5 21 35 226 823 442 412 - - 461 - 621 46 2,309 172 2,108 The assets at the end of the concessions classified under information, see note 48 “Assets and liabilities measured financial assets have been measured at fair value. For more at fair value”. 287 Integrated Annual Report 2020Total 2,001 560 (90) (280) (16) 2,175 1,964 441 (208) (129) 2,068 1,821 247 2020 280 66 42 1 17 406 19. Leases The table below shows the changes in right-of-use assets in 2020. Millions of euro Leased land Leased buildings Leased plant Other leased assets Total at December 31, 2019 Increases Exchange differences Depreciation Other changes Total at December 31, 2020 545 241 (40) (30) (9) 707 601 109 (16) (119) (24) 551 488 16 (21) (33) 29 479 367 194 (13) (98) (12) 438 Lease liabilities and changes during the year are shown in the table below. Millions of euro Total at December 31, 2019 Increases Payments Other changes Total at December 31, 2020 of which medium to long term of which short term Note that in 2020, despite the effects of the pandemic, no changes or renegotiations were made to leases. Millions of euro Depreciation of right-of-use assets Interest expense on lease liabilities Expense relating to short-term leases (included in cost for services and other materials) Expense relating to leases of low-value assets (included in cost for services and other materials) Variable lease payments (included in cost for services and other materials) Total 288288 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements20. Investment property - €103 million Investment property at December 31, 2020 came to €103 million, a decrease of €9 million year on year. Millions of euro Cost net of accumulated impairment losses Accumulated depreciation Balance at Dec. 31, 2019 Investments Exchange differences Depreciation Impairment losses Other changes Total changes Cost net of accumulated impairment losses Accumulated depreciation Balance at Dec. 31, 2020 157 45 112 1 (3) (2) (7) 2 (9) 159 56 103 The Group’s investment property consists of properties in ses recognized on a number of assets of Endesa and the Italy, Spain, Brazil and Chile, which are free of restrictions depreciation of the Brazilian real. on the sale of the investment property or the remittance of income and proceeds of disposal. In addition, the Group For more information on the valuation of investment pro- has no contractual obligations to purchase, construct or perty, see notes 48 “Assets and liabilities measured at fair develop investment property or for repairs, maintenance or value”, and 48.2 “Assets not measured at fair value in the enhancements. statement of financial position”. The change for the year was mainly due to impairment los- 289 Integrated Annual Report 202021. Intangible assets - €17,668 million A breakdown of and changes in intangible assets for 2020 are shown below. Industrial patents & intellectual property rights Concessions, licenses, trademarks and similar rights Development expenditure Service concession arrangements Other Leasehold improvements Assets under development and advances Contract costs Total 46 23 23 4 4 (2) (2) - (2) - - (4) - (2) 44 23 21 2,767 15,083 6,987 3,747 10 1,060 1,275 30,975 2,185 1,837 4,370 2,802 582 75 176 (18) - - (257) - - 9 - 13,246 2,617 29 10 - - 945 71 311 (1,193) (768) (26) - (5) (168) - 2 (499) - (15) 59 - (300) (307) - - 574 (27) - 469 (2) - - (15) (1,826) (509) 550 2,985 12,988 5,452 4,821 2,418 1,568 3,344 3,326 567 11,420 2,108 1,495 3 7 - - - - - (1) - - - - (1) 10 4 6 - 666 11,886 1,060 609 19,089 731 308 1,218 (501) - - (52) (1) (2,060) 59 (7) - (6) - 106 (53) 277 - - 116 (27) (202) (1,237) - - - - (33) 2 655 (55) 105 (1,421) 1,337 1,581 29,218 - 867 11,550 1,337 714 17,668 Millions of euro Cost net of accumulated impairment losses Accumulated amortization Balance at Dec. 31, 2019 Capital expenditure Assets entering service Exchange differences Change in the consolidation scope Disposals Amortization Impairment losses Impairment gains Other changes Reclassifications from/to assets held for sale Total changes Cost net of accumulated impairment losses Accumulated amortization Balance at Dec. 31, 2020 In 2020, the Enel Group renewed and strengthened its of an application bus into which peripheral interfaces de- commitment to the enhancement and development of its veloped to meet different operational needs are integra- intellectual assets as a source of competitive advantage for ted, with the goal of handling managing millions of finan- the Group, which is increasingly directed at achieving its cial transactions per day. Other monitoring and control strategic objectives for decarbonization, electrification and modules enable users to carry out supervisory, audit and the creation of platforms. performance analysis activities; In this regard, the increase in investment in intangible as- › investments in networks for the management of smart sets is particularly evident, with special regard to IT and meters, remote grid control and communication software; digital applications, whether legally protected or not. The › investments at Enel X in demand response systems; investments focused on all the Group’s Global Business › investments in power generation for predictive mainte- Lines and mainly concerned internally developed software nance systems; (i.e. internal customization of software purchased exter- › additional customizations of Group ERP (Enterprise Re- nally). Among these, we highlight: source Planning). › the technological infrastructure of Paytipper, consisting The patent activity of the Group is also proving to be pro- 290290 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementslific, involving as many as 837 applications for patents in accordance with the Open Innovability® model. For more 137 technological families. Of these, 692 have been gran- information, please see the “Innovation and digitalization” ted and 145 are pending. section of the “Performance & Metrics” chapter of the Re- The Group also intends to continue to support and en- port on Operations. courage the development of its innovation model through specific projects for internal dissemination by the Intel- The following table reports service concession arrange- lectual Property unit and through the creation of speci- ments that do not fall within the scope of IFRIC 12 and had fic tools to identify, ascertain, protect and preserve on an a balance as at December 31, 2020. iterative basis all information of value generated in Enel in Millions of euro Endesa Distribución Eléctrica Codensa Enel Distribución Chile (formerly Chilectra) Enel Distribución Perú (formerly Empresa de Distribución Eléctrica de Lima Norte) E-Distribuţie Muntenia Grantor Activity Country Concession period Concession period remaining Renewal option at Dec. 31, 2020 Initial fair value Electricity distribution - Republic of Colombia Electricity distribution Republic of Chile Electricity distribution Spain Indefinite Indefinite Colombia Indefinite Indefinite Chile Indefinite Indefinite Republic of Peru Electricity distribution Romanian Ministry for the Economy Electricity distribution Peru Indefinite Indefinite - - - - 5,678 5,673 1,291 1,839 1,388 1,667 535 548 Romania 2005-2054 33 years Yes 125 191 291 Integrated Annual Report 2020The item includes assets with an indefinite useful life in the The change in the consolidation scope for 2020 mainly amount of €8,892 million (€9,218 million at December 31, reflects the acquisition of a number of companies in Spain 2019), essentially accounted for by concessions for distri- and the PPA of Paytipper SpA and to a number of re- bution activities in Spain (€5,678 million), Colombia (€1,291 newables companies in Italy. million), Chile (€1,388 million), and Peru (€535 million), for which there is no statutory or currently predictable expi- Impairment losses amounted to €33 million in 2020. For ration date. On the basis of the forecasts developed, cash more information, see note 10.e. flows for each CGU, with which the various concessions are associated, are sufficient to recover the carrying amount. “Other changes” report the design costs connected with The change during the year is essentially attributable to the acquisition of a number of Brazilian vehicle companies. changes in exchange rates. For more information on servi- ce concession arrangements, see note 18. 22. Goodwill - €13,779 million Change in consol. scope Exchange differences Impairment losses Offsetting cost with accum. impairment losses Other changes at Dec. 31, 2020 - (4) - - - (138) - (1) - (28) - - - - - (7) (178) - - (253) - - - - (18) - - - (3) - - - - (274) Cumulative impairment Net carrying amount (2,392) 8,785 - 1,205 (253) - - - - (18) - - - (3) - - - (13) 22 564 530 1,273 25 - 70 184 84 43 - 580 20 394 Cost 11,177 1,205 275 564 530 1,273 25 18 70 - - (1) - - - - - - (123) 184 84 39 - 1 - - 84 46 - 580 20 407 - 16,458 (2,679) 13,779 - - - - - - - - - - - - - - - - - Millions of euro Iberia Chile Argentina Peru Colombia Brazil Central America Mexico Enel Green Power North America Enel X North America Enel X Asia Pacific Enel X Rest of Europe (1) Enel X Italy Cost 11,177 1,209 276 561 530 1,411 23 19 70 335 - 3 19 Market Italy (2) 579 Enel Green Power Italy Romania 20 414 at Dec. 31, 2019 Cumulative impairment Net carrying amount (2,392) 8,785 - - - - - - - - - - - - - - (13) 1,209 276 561 530 1,411 23 19 70 335 - 3 19 579 20 401 - - - 3 - - 2 - - - - 4 (19) - - - Total 16,646 (2,405) 14,241 (10) (1) (2) Includes Tynemouth and Viva Labs. Includes Enel Energia. 292292 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsGOODWILL MATRIX AT DECEMBER 31, 2020 Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other Total Millions of euro Enel Green Power SpA Italy Market Italy (1) Iberia Argentina Brazil Chile Colombia Peru Central America Romania Enel Green Power North America Enel X North America Enel X Asia Pacific Enel X Rest of Europe (2) - - - - - - - 43 - - - - - - 20 - - - 1,190 5,788 - 580 1,807 3 397 992 307 201 25 - 70 - - - 19 876 213 223 320 - 336 - - - - - - - - - - 58 - - - - - - - - - - - - - - - 184 84 43 311 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 20 580 8,785 22 1,273 1,205 530 564 25 394 70 184 84 43 13,779 Total 43 3,205 7,775 2,445 (1) (2) Includes Enel Energia. Includes Viva Labs. GOODWILL MATRIX AT DECEMBER 31, 2019 Millions of euro Enel Green Power SpA Italy Market Italy (1) Enel X Italia Iberia Argentina Brazil Chile Colombia Peru Central America Romania Enel Green Power North America Mexico Enel X North America Enel X Rest of Europe (2) Total (1) (2) Includes Enel Energia. Includes Tynemout. Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other Total - - - - - - - - 43 - - - - - 3 46 20 - - 1,190 40 397 996 307 198 23 - 70 19 - - - - - 5,788 236 1,014 213 223 320 - 342 - - - - - 579 - 1,807 - - - - - - 59 - - - - 3,260 8,136 2,445 - - 19 - - - - - - - - - - 335 - 354 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 20 579 19 8,785 276 1,411 1,209 530 561 23 401 70 19 335 3 14,241 293 Integrated Annual Report 2020The decrease of €462 million in goodwill is mainly attri- as risk-free rates, betas and market-risk premiums. butable to impairment losses of €274 million, mainly in Cash flows were determined on the basis of the best in- Argentina (€253 million) and Mexico (€18 million) following formation available at the time of the estimate, taking ac- impairment testing, as well as €3 million on the goodwill count of the specific risks of each CGU, and drawn: recorded in respect of Tynemouth. › for the explicit period, from the Business Plan approved by the Board of Directors of the Parent on November 23, The decrease attributable to the change in the consoli- 2020, containing forecasts for volumes, revenue, opera- dation scope is exclusively due to the finalization of the ting costs, capital expenditure, industrial and commer- allocation of the purchase price of Paytipper, partly offset cial organization and developments in the main macro- by the €4 million recorded for Viva Labs in respect of a economic variables (inflation, nominal interest rates and consolidation difference pending allocation through the exchange rates) and commodity prices. The explicit pe- PPA process and by the goodwill recognized with the ac- riod of cash flows considered in impairment testing was quisition of new companies (Los Pinos, Enel Solar). three years; › for subsequent years, from assumptions concerning “Exchange differences” are mainly due to adverse exchan- long-term developments in the main variables that de- ge rate developments in Brazil, the United States, Roma- termine cash flows, the average residual useful life of as- nia, Chile and Mexico. sets or the duration of the concessions. “Other changes” are attributable to the reallocation of the More specifically, the terminal value is calculated based on goodwill associated with a number of CGUs in order to the specific characteristics of the businesses related to reflect the effects of the corporate reorganizations con- the various CGUs subject to impairment testing: cluded by the Group in 2020, with particular reference to: › perpetuity, for the businesses of large-hydro (LH) power › the separation of the Mexican renewables business from generation and of distribution, in which the licenses and the Central America segment, which was merged as public concessions are of a long-term nature and are part of the Astrid operation following the organizational easily renewable; as well as for the Enel X businesses, as changes implemented in 2020; they feature the development of specific know-how that › the definition of the Enel X Rest of Europe and Enel X Asia is sustainable over the long term; Pacific CGUs to complete the process of reorganizing › annuity, for CGUs that are predominantly characterized the assets (essentially related to intellectual property) of by retail business, for which the residual life is, therefo- Enel X North America. re, essentially correlated with the average duration of the customer relationships; as well as for businesses of The criteria used to identify the cash generating units conventional thermal power generation (G&T). An annu- (CGUs) for impairment testing purposes were essentially ity was also used for the renewable energy (Enel Green based – in line with management’s strategic and opera- Power) businesses to take account of: (i) the value resul- tional vision – on the specific characteristics of their busi- ting from the remaining useful lives of the plants; and (ii) ness, on the operational rules and regulations of the mar- the residual value, in the event of plant decommissioning, kets in which Enel operates, on the corporate organization, associated with licensing rights, the competitiveness of and on the level of reporting monitored by management. the production facilities (in terms of natural resources), and network interconnectivity. The reallocation of goodwill among the new CGUs men- tioned above was carried out specifically or on the basis The nominal growth rate (g-rate) is equal to the long-term of the “relative value” of each CGU in accordance with the rate of growth in electricity and/or inflation (depending on applicable accounting standard. the country and business involved) and in any case no hi- The recoverable amount of the goodwill recognized was gher than the average long-term growth rate of the refe- estimated by calculating the value in use of the CGUs using rence market. discounted cash flow models, which involve estimating The Group has also taken account of the long-term im- expected future cash flows and applying an appropriate pact of climate change, in particular by considering in the discount rate, selected on the basis of market inputs such estimation of the terminal value a long-term growth rate 294294 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsin line with the change in electricity demand in 2030-2050 tion of platform models, making the most of technological based on the specific characteristics of the businesses in- and digital evolution, which will foster the electrification of volved. energy consumption, as well as the development of new services for end users. The Group therefore confirmed its strategic direction ba- In 2020, Enel’s decarbonization roadmap was updated to sed on the trends associated with the energy transition. capture the acceleration in the spread of renewables and The use of capital has been focused on decarbonization the reduction in thermal generation capacity envisaged in through the development of generation assets that use the new 2021-2023 Strategic Plan and in the 2030 ambi- renewable sources, on the enabling infrastructures linked tions presented on the 2020 Capital Markets Day, setting to the development of networks and on the implementa- the following objectives in line with the Paris Agreement: TIME HORIZON Short term Medium term Long term GREENHOUSE GAS (GHG) REDUCTION TARGET 2023 2030 › Direct emissions of Scope 1 greenhouse gases to 148 gCO2eq/kWh (-32% compared with 2020) › Direct emissions of Scope 1 greenhouse gases to 82 gCO2eq/kWh (-80% compared with 2017, consistent with the 1.5 °C path as certified by the SBTi) › 16% reduction in indirect Scope 3 emissions associate with gas consumption by end users compared with 2017 2050 › Full decarbonization of energy mix In addition, the scenarios used to determine cash flows drivers of the amounts, in particular WACC, the long-term took account of the impact of COVID-19. growth rate and margins, the outcomes of which fully sup- The value in use calculated as described above was found to be greater than the amount recognized on the state- The table below reports the composition of the main go- ment of financial position. odwill amounts by CGU, along with the discount rates ap- In order to verify the robustness of the value in use of the plied and the time horizon over which the expected cash CGUs, sensitivity analyses were conducted for the main flows have been discounted. ported that amount. 295 Integrated Annual Report 2020Millions of euro Amount of goodwill Growth rate (1) Pre-tax WACC discount rate (2) Explicit period of cash flows Terminal value (3) Amount of goodwill Growth rate (1) Pre-tax WACC discount rate (2) Explicit period of cash flows Terminal value (3) Iberia Chile Argentina Peru Colombia Brazil Central America Mexico Enel Green Power North America Enel X North America Enel X Asia Pacific Enel X Rest of Europe Market Italy Enel Green Power Italy Romania CGUs with no recognized goodwill but that underwent impairment testing given the presence of the indicators provided for in IAS 36 (4) Australia 8,785 1,205 275 564 530 1,273 25 18 70 184 84 39 580 20 394 at Dec. 31, 2020 1.65% 1.97% 4.06% 6.95% 11.79% 41.61% 2.30% 3.04% 3.25% 1.97% 1.43% 1.97% 1.97% 2.02% 2.02% 1.30% 1.38% 2.35% 6.73% 8.54% 9.35% 8.15% 8.83% 5.49% 8.25% 9.07% 8.70% 9.98% 5.44% 7.98% 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years Perpetuity/24 years EGP/11 years G&T Perpetuity/25 years EGP/7 years G&T Perpetuity/1 year G&T/5 years LH Perpetuity/24 years EGP/10 years G&T Perpetuity/28 years EGP/17 years G&T Perpetuity/26 years EGP/8 years G&T 22 years 25 years 25 years Perpetuity Perpetuity Perpetuity 15 years 3 years Perpetuity/24 years 3 years Perpetuity/26 years 8,785 1,209 276 561 530 1,411 42 n.a. 70 335 n.a. n.a. 579 20 401 at Dec. 31, 2019 4.59% 7.41% 21.84% 7.46% 9.01% 10.64% 9.68% n.a. 6.58% 10.89% n.a. n.a. 10.23% 6.15% 7.27% 1.80% 2.07% 6.36% 2.39% 2.97% 3.61% 2.01% n.a. 2.01% 2.01% n.a. n.a. 0.48% 1.03% 2.00% 5 years 5 years 5 years 5 years 5 years 5 years 5 years n.a. 5 years 5 years n.a. n.a. 5 years 5 years 5 years Perpetuity/26 years EGP/9 years G&T Perpetuity/25 years EGP/9 years G&T Perpetuity/1 year G&T/4 years LH Perpetuity/23 years EGP/9 years G&T Perpetuity/27 years EGP/16 years G&T Perpetuity/26 years EGP/7 years G&T 22 years n.a. 25 years Perpetuity n.a. n.a. 15 years Perpetuity/25 years Perpetuity/18 years - 1.35% 4.42% 3 years 26 years n.a. n.a. n.a. n.a. n.a. (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 (G&T = Generation & Trading, EGP = Enel Green Power, LH = Large Hydro). (4) With regard to Australia it became necessary to perform the test following the deterioration in local market conditions. 296296 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsIberia Chile Argentina Peru Colombia Brazil Mexico America Central America Enel Green Power North Enel X North America Enel X Asia Pacific Enel X Rest of Europe Market Italy Enel Green Power Italy Romania CGUs with no recognized goodwill but that underwent impairment testing given the presence of the indicators provided for in IAS 36 (4) Australia Millions of euro Amount of goodwill Growth rate (1) Pre-tax WACC discount rate (2) Explicit period of cash flows Terminal value (3) Amount of goodwill Growth rate (1) Pre-tax WACC discount rate (2) Explicit period of cash flows Terminal value (3) at Dec. 31, 2020 at Dec. 31, 2019 11.79% 41.61% 3 years 8,785 1,205 275 564 530 1,273 25 18 70 184 84 39 580 20 394 1.65% 1.97% 2.30% 3.04% 3.25% 1.97% 1.43% 1.97% 1.97% 2.02% 2.02% 1.30% 1.38% 2.35% 4.06% 6.95% 6.73% 8.54% 9.35% 8.15% 8.83% 5.49% 8.25% 9.07% 8.70% 9.98% 5.44% 7.98% Perpetuity/24 years 3 years EGP/11 years G&T Perpetuity/25 years 3 years EGP/7 years G&T Perpetuity/1 year G&T/5 years LH Perpetuity/24 years 3 years EGP/10 years G&T Perpetuity/28 years 3 years EGP/17 years G&T Perpetuity/26 years EGP/8 years G&T 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 22 years 25 years 25 years Perpetuity Perpetuity Perpetuity 15 years 3 years Perpetuity/24 years 3 years Perpetuity/26 years 8,785 1,209 276 561 530 1,411 42 n.a. 70 335 n.a. n.a. 579 20 401 1.80% 2.07% 6.36% 2.39% 2.97% 3.61% 2.01% n.a. 2.01% 2.01% n.a. n.a. 0.48% 1.03% 2.00% 4.59% 7.41% 21.84% 7.46% 9.01% 10.64% 9.68% n.a. 6.58% 10.89% n.a. n.a. 10.23% 6.15% 7.27% 5 years 5 years 5 years 5 years 5 years 5 years 5 years n.a. 5 years 5 years n.a. n.a. 5 years 5 years 5 years Perpetuity/26 years EGP/9 years G&T Perpetuity/25 years EGP/9 years G&T Perpetuity/1 year G&T/4 years LH Perpetuity/23 years EGP/9 years G&T Perpetuity/27 years EGP/16 years G&T Perpetuity/26 years EGP/7 years G&T 22 years n.a. 25 years Perpetuity n.a. n.a. 15 years Perpetuity/25 years Perpetuity/18 years - 1.35% 4.42% 3 years 26 years n.a. n.a. n.a. n.a. n.a. (1) Perpetual growth rate for cash flows after the explicit forecast period. calculated with post-tax cash flows discounted with the post-tax WACC. (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 (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 (G&T = Generation & Trading, EGP = Enel Green Power, LH = Large Hydro). (4) With regard to Australia it became necessary to perform the test following the deterioration in local market conditions. 297 Integrated Annual Report 2020At December 31, 2020 the impairment tests performed on and liabilities by type of timing difference and calculated the CGUs to which goodwill was allocated revealed an im- based on the tax rates established by applicable regula- pairment loss of €253 million on the Argentina CGU and tions, as well as the amount of deferred tax assets offset- €308 million on the EGP Mexico CGU. With reference to the table, where permitted, with deferred tax liabilities. CGUs with no goodwill recognized, an impairment loss of €23 million was found for the Australia CGU. 23. Deferred tax assets and liabilities - €8,578 million and €7,797 million The following table details changes in deferred tax assets Increase/ (Decrease) taken to profit or loss Increase/ (Decrease) taken to equity Change in the consolidation scope Exchange differences Other changes Reclassifications of assets held for sale at Dec. 31, 2020 - - - (17) - - (17) 2,123 1,725 508 561 898 2,763 8,578 15 (34) 29 (162) (113) (5) (145) (88) (547) (41) 49 8 5 (79) (29) - - - - - 15 24 - - 24 (459) (19) (16) 5,442 (18) (149) (626) 52 (9) 24 - - (16) 470 1,885 7,797 4,637 3,078 778 Millions of euro Deferred tax assets: - differences in the carrying amount 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 at Dec. 31, 2019 2,372 (259) 1,702 502 786 1,086 2,664 9,112 226 70 (22) (211) 265 69 - - - (189) 163 1 (25) 6,093 (181) - 481 1,740 8,314 55 306 180 (100) (3) (103) Non-offsettable deferred tax assets Non-offsettable deferred tax liabilities Excess net deferred tax liabilities after any offsetting 298298 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsDeferred tax assets recognized at December 31, 2020, as prior tax losses in the amount of €769 million because, on the generation of sufficient future taxable income to reco- the basis of current estimates of future taxable income, it is very such assets is considered highly likely, totaled €8,578 not highly likely that such assets will be recovered. million (€9,112 million at December 31, 2019). Deferred tax assets during the year decreased by €534 mil- Deferred tax liabilities amounted to €7,797 million at De- lion, essentially due to unfavorable exchange rate develop- cember 31, 2020 (€8,314 million at December 31, 2019). ments in Latin America, reversals of deferred tax assets on They essentially include the determination of the tax effects differences in the carrying amount of non-current assets, of the adjustments to assets acquired as part of the final al- mainly in Italy and Spain, a decrease in deferred tax assets location of the cost of acquisitions made in the various ye- linked to developments in the fair value of cash flow hedge ars and the deferred taxation in respect of the differences derivatives and the recognition of the tax effects relating between depreciation charged for tax purposes, including to the reversal of the electricity discount provision in Spain. accelerated depreciation, and depreciation based on the These effects were partially offset by the deferred tax as- estimated useful lives of assets. sets recognized on the increase in provisions for early reti- Deferred tax liabilities decreased by a total of €517 million rement incentives in Italy and Spain. due, in particular, to adverse exchange rate developments in Latin America and reversals associated with write-downs It should also be noted that deferred tax assets (in the of a number of coal-fired plants in Italy, Spain and Chile. amount of €205 million) were not recorded in relation to 299 Integrated Annual Report 202024. Equity-accounted investments - €861 million Investments in joint ventures and associated companies accounted for using the equity method are as follows. Impact on profit or loss % held Change in consolidation scope Dividends Reclassifications from/to assets held for sale Other changes Millions of euro Joint ventures at Dec. 31, 2019 Slovak Power Holding 504 50.0% (385) EGPNA Renewable Energy Partners OpEn Fiber Zacapa Topco Sàrl Project Kino companies Tejo Energia Produção e Distribuição de Energia Eléctrica Rocky Caney Holding Drift Sand Wind Project Front Maritím del Besòs Enel Green Power Bungala Rusenergosbyt Energie Electrique de Tahaddart Transmisora Eléctrica de Quillota PowerCrop Nuclenor Associates CESI Tecnatom Suministradora Eléctrica de Cádiz Compañía Eólica Tierras Altas Cogenio Srl Other Total 137 384 130 20.0% 50.0% 20.6% 8 2 (1) 60 20.0% (17) 43.8% 20.0% 50.0% 61.4% 50.0% 49.5% 32.0% 50.0% 50.0% 50.0% 42.7% 45.0% 33.5% 37.5% 20.0% 58 46 36 37 - 40 26 7 - - 61 30 11 9 11 95 1,682 (3) 5 3 (4) (3) 45 1 1 - 25 (4) (2) 5 - 1 24 (299) - (9) - - - - - - - - - - - - - - - - - - 4 (5) - - - - - (9) - - - - (43) (2) - - - - - (3) (1) (1) (14) (73) - - (489) - - - - - - - - - - - - - - - - - - (489) (15) (21) 103 (14) (3) - (6) (4) - 34 4 (3) 1 2 (25) 3 - (1) - 1 (11) 45 % held at Dec. 31, 2020 104 50.0% 115 - 115 20.0% 50.0% 20.6% 40 20.0% 43.8% 20.0% 50.0% 61.4% 51.0% 49.5% 32.0% 50.0% 50.0% 50.0% 42.7% 45.0% 33.5% 37.5% 20.0% 46 45 35 33 31 46 22 9 2 - 60 28 12 8 12 98 861 300300 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThe impact on profit or loss includes the profit or loss re- for the income recognized in September 2020 following cognized by the companies in proportion to the share held the successful resolution of a dispute. in these companies by the Enel Group and mainly concerns the impairment loss of the Slovak Power Holding invest- The decrease associated with changes in the consolidation ment, which takes account of the general term agree- scope mainly refer to the sale of a number North American ment signed on December 22, 2020 between Enel Produ- companies, offset in part by the increase recorded in Spain zione and EPH modifying certain terms and conditions of due to the reduction in the stake held by Endesa Energía the contract signed on December 18, 2015 (as previously SA in Endesa Soluciones SLU, which had previously been amended in 2018) concerning the sale of Enel Produzio- consolidated on a line-by-line basis. ne’s interest in Slovenské elektrárne. This adjustment, cal- culated on the basis of the price formula, takes account of Reclassification to assets held for sale refers exclusively to the different scenarios that could occur depending on the the investment in OpEn Fiber following receipt of a binding different opportunities of the parties by virtue of the provi- acquisition offer and the occurrence of additional condi- sions of the general term agreement. The value associated tions in accordance with the provisions of IFRS 5. with each of the different scenarios was weighted on the basis of the probability of occurrence assigned to each. “Other changes” mainly include the pro-rated changes in Based on these assessments, at December 31, 2020 the the OCI reserves or other changes recognized directly in consideration is estimated at €208 million. Accordingly, a equity. In particular, the €103 million in respect of OpEn write-down of 433 million on the residual investment was Fiber comprise €113 million for capital increases, partially recognized and the financial receivable resulting from the offset by fair value gains/(losses) on cash flow hedge deri- sale of the first stake, equal to €354 million, was dereco- vatives. The Australian Bungala companies also reflect the gnized, with the simultaneous recognition of a provision for fair value gain (€32 million) on the PPA contracts signed risks and charges of €47 million. with customers following the decline in the prices on the Companies making the largest positive contribution inclu- de Rusenergosbyt (€45 million) under the contract for the The following tables provide a summary of financial infor- supply of electricity to a leading railway transport company mation for each joint venture and associate of the Group in Russia and Nuclenor (€25 million), a Spanish company, not classified as held for sale in accordance with IFRS 5. Australian forward market. 301 Integrated Annual Report 2020Millions of euro Non-current assets Current assets Total assets Non-current liabilities Current liabilities Total liabilities Equity at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 Joint ventures Slovak Power Holding (1) Zacapa Topco Sàrl Rusenergosbyt Tejo Energia Produção e Distribuição de Energia Eléctrica Energie Electrique de Tahaddart Associates CESI Tecnatom Suministradora Eléctrica de Cádiz Compañía Eólica Tierras Altas 10,813 1,253 2 10,206 1,376 3 82 62 202 60 67 21 146 77 198 62 19 4 676 117 120 128 18 25 58 32 3 700 99 144 132 20 13 64 66 23 11,489 1,370 122 10,906 1,475 147 6,922 729 - 6,461 753 - 210 80 227 118 99 24 278 97 211 126 85 27 802 90 106 33 6 - 33 45 2 754 73 131 85 8 - 24 20 2 7,724 819 106 54 11 17 56 63 4 7,215 826 131 110 14 21 59 53 4 3,765 551 16 156 69 210 62 36 20 3,691 649 16 168 83 190 67 32 23 21 5 17 23 18 2 25 6 21 35 33 2 (1) The figures at December 31, 2019 for Slovak Power Holding have been updated from those published in the 2019 Annual Report to align them with the financial statements approved on May 29, 2020. Millions of euro Total revenue Pre-tax profit/(loss) Profit/(Loss) from continuing operations 2020 2019 2020 2019 2020 2019 Joint ventures Slovak Power Holding (1) Zacapa Topco Sàrl Rusenergosbyt Tejo Energia Produção e Distribuição de Energia Eléctrica Energie Electrique de Tahaddart Associates CESI Tecnatom Suministradora Eléctrica de Cádiz Compañía Eólica Tierras Altas 2,954 221 2,198 114 33 122 78 25 8 2,601 208 2,548 145 37 111 104 18 12 163 7 112 17 5 (14) (5) 21 - 125 (22) 111 21 9 9 2 11 2 120 (3) 90 8 3 (16) (5) 14 - 96 (32) 89 14 6 6 2 11 1 (1) The figures at December 31, 2019 for Slovak Power Holding have been updated from those published in the 2019 Annual Report to align them with the financial statements approved on May 29, 2020. 302302 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsMillions of euro Non-current assets Current assets Total assets Non-current liabilities Current liabilities Total liabilities Equity at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 802 90 106 33 6 - 33 45 2 754 73 131 85 8 - 24 20 2 7,724 819 106 54 11 17 56 63 4 7,215 826 131 110 14 21 59 53 4 3,765 551 16 156 69 210 62 36 20 3,691 649 16 168 83 190 67 32 23 10,813 1,253 2 10,206 1,376 3 11,489 1,370 122 10,906 1,475 147 6,922 729 - 6,461 753 - 21 5 17 23 18 2 25 6 21 35 33 2 Joint ventures Slovak Power Holding (1) Zacapa Topco Sàrl Rusenergosbyt Tejo Energia Produção e Distribuição de Energia Eléctrica Energie Electrique de Tahaddart Associates CESI Tecnatom Suministradora Eléctrica de Cádiz Compañía Eólica Tierras Altas Joint ventures Slovak Power Holding (1) Zacapa Topco Sàrl Rusenergosbyt Tejo Energia Produção e Distribuição de Energia Eléctrica Energie Electrique de Tahaddart Associates CESI Tecnatom Suministradora Eléctrica de Cádiz Compañía Eólica Tierras Altas (1) The figures at December 31, 2019 for Slovak Power Holding have been updated from those published in the 2019 Annual Report to align them with the financial statements approved on May 29, 2020. Millions of euro Total revenue Pre-tax profit/(loss) Profit/(Loss) from continuing operations 2020 2019 2020 2019 2020 2019 676 117 120 128 18 25 58 32 3 163 7 112 17 5 (14) (5) 21 - 700 99 144 132 20 13 64 66 23 125 (22) 111 21 9 9 2 11 2 210 80 227 118 99 24 120 (3) 90 8 3 (16) (5) 14 - 278 97 211 126 85 27 96 (32) 89 14 6 6 2 11 1 82 62 202 60 67 21 2,954 221 2,198 114 33 122 78 25 8 146 77 198 62 19 4 2,601 208 2,548 145 37 111 104 18 12 (1) The figures at December 31, 2019 for Slovak Power Holding have been updated from those published in the 2019 Annual Report to align them with the financial statements approved on May 29, 2020. 303 Integrated Annual Report 2020In addition, the financial disclosure requirements of IFRS 12 for subsidiaries with significant non-controlling interests are reported below. Millions of euro Non-current assets Current assets Total assets Non-current liabilities Current liabilities Total liabilities Equity owners of the Parent Non-controlling interests at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, at Dec. 31, at Dec. 31, at Dec. 31, at Dec. 31, at Dec. 31, at Dec. 31, at Dec. 31, at Dec. 31, at Dec. 31, 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Equity attributable to Subsidiaries Enel Américas Group Enel Chile Group Endesa Group 21,337 9,295 41,819 26,278 9,711 41,722 4,582 170 1,386 5,570 367 1,087 25,919 9,465 43,205 31,848 10,078 42,809 8,827 3,027 12,869 11,230 3,332 12,440 5,495 1,066 7,101 5,668 1,049 6,943 14,322 4,093 19,970 16,898 4,381 19,383 11,597 5,372 23,235 14,950 5,697 23,426 6,643 3,326 17,366 8,231 3,363 17,466 4,954 2,046 5,869 6,719 2,334 5,960 Millions of euro Total revenue Pre-tax profit Profit from continuing operations Subsidiaries Enel Américas Group Enel Chile Group Endesa Group 2020 10,350 2,775 17,065 2019 12,601 3,482 18,468 2020 1,187 (133) 1,965 2019 1,974 469 114 Profit attributable to owners of the Parent Profit attributable to non-controlling interests 2020 738 (40) 1,551 2019 1,844 394 93 2020 274 (25) 1,082 2019 2020 784 230 57 464 (15) 469 2019 1,060 164 36 304304 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements Millions of euro Non-current assets Current assets Total assets Non-current liabilities Current liabilities Total liabilities Equity Equity attributable to owners of the Parent Non-controlling interests at Dec. 31, at Dec. 31, at Dec. 31, at Dec. 31, at Dec. 31, at Dec. 31, at Dec. 31, at Dec. 31, 2020 2019 2020 2019 2020 2019 2020 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 21,337 9,295 41,819 26,278 9,711 41,722 4,582 170 1,386 5,570 367 1,087 25,919 9,465 43,205 31,848 10,078 42,809 8,827 3,027 12,869 11,230 3,332 12,440 5,495 1,066 7,101 5,668 1,049 6,943 14,322 4,093 19,970 16,898 4,381 19,383 11,597 5,372 23,235 14,950 5,697 23,426 6,643 3,326 17,366 8,231 3,363 17,466 4,954 2,046 5,869 6,719 2,334 5,960 Millions of euro Total revenue Pre-tax profit Profit from continuing operations Profit attributable to owners of the Parent Profit attributable to non-controlling interests 2020 10,350 2,775 17,065 2019 12,601 3,482 18,468 2020 1,187 (133) 1,965 2019 1,974 469 114 2020 738 (40) 1,551 2019 1,844 394 93 2020 274 (25) 1,082 2019 2020 784 230 57 464 (15) 469 2019 1,060 164 36 Subsidiaries Enel Américas Group Enel Chile Group Endesa Group Subsidiaries Enel Américas Group Enel Chile Group Endesa Group 305 Integrated Annual Report 2020 25. Derivatives Millions of euro Non-current Current Derivative financial assets Derivative financial liabilities at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 1,236 3,606 1,383 2,407 3,471 3,531 4,065 3,554 For more information on derivatives classified as non-cur- rent financial assets and liabilities, please see note 47 for hedging derivatives and trading derivatives. 26. Current/Non-current contract assets/(liabilities) Millions of euro Contract assets Contract liabilities Non-current Current at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 304 6,191 487 6,301 176 1,275 166 1,328 Non-current assets deriving from contracts with custo- on which are subject to the fulfillment of a performance mers (contract assets) refer mainly to assets under deve- obligation. lopment resulting from public-to-private service conces- The figure at December 31, 2020 for non-current contract sion arrangements recognized in accordance with IFRIC 12 liabilities is mainly attributable to distribution in Italy (€3,359 and which have an expiration of beyond 12 months (€297 million), Spain (€2,400 million) and Romania (€425 million) million). These cases arise when the concession holder has as a result of the accounting treatment of revenue from not yet obtained full right to recognize the asset from the connections of new customers with invoicing in advance of grantor at the hypothetical conclusion of the concession the completion of the performance obligation. arrangement in that there remains a contractual obligation to ensure that the asset becomes operational. At Decem- Current contract liabilities include the contractual liabilities ber 31, 2020, the figure includes investments for the year in related to revenue from connections to the electricity grid the amount of €649 million. expiring within 12 months in the amount of €859 million, mainly recognized in Italy and Spain, as well as liabilities for Current contract assets mainly concern construction con- construction contracts in progress (€387 million). tracts in progress (€154 million) to be invoiced, payments 27. Other non-current financial assets - €5,159 million Millions of euro Equity investments in other companies measured at fair value Financial assets and securities included in net financial debt (see note 27.1) Service concession arrangements Non-current financial prepayments Total 306306 at Dec. 31, 2020 at Dec. 31, 2019 Change 70 2,745 2,300 44 5,159 72 3,185 2,702 47 6,006 (2) (440) (402) (3) (847) -2.8% -13.8% -14.9% -6.4% -14.1% 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThe reduction in “other non-current financial assets” pri- concession arrangements (in application of IFRIC 12) in marily reflects: Brazil. › a decrease in financial assets included in net financial debt, as detailed in note 27.1; The following is a breakdown of equity investments in other › adverse exchange rate developments, mainly for service companies measured at fair value. Millions of euro Galsi Empresa Proprietaria de la Red SA European Energy Exchange Athonet Srl Korea Line Corporation Hubject GmbH Termoeléctrica José de San Martín SA Termoeléctrica Manuel Belgrano SA Other Total at Dec. 31, 2020 - 5 13 7 1 10 10 11 13 70 % held 17.6% 11.1% 2.4% 16.0% 0.3% 12.5% 3.3% 3.7% at Dec. 31, 2019 14 17 8 7 2 10 - - 14 72 % held 17.6% 11.1% 2.2% 16.0% 0.3% 12.5% - - Change (14) (12) 5 - (1) - 10 11 (1) (2) The change in “equity investments in other companies me- held by Enel SpA in Empresa Propietaria de la Red. These asured at fair value” reflects the full impairment loss reco- effects were offset above all by the new carrying amount gnized by Enel Produzione on the investment held in Galsi recognized for Termoeléctrica José de San Martín SA and and by the impairment loss of €12 million on the investment Termoeléctrica Manuel Belgrano SA. 27.1 Other non-current financial assets included in net financial debt - €2,745 million Millions of euro Securities at FVOCI Other financial assets Total at Dec. 31, 2020 at Dec. 31, 2019 Change 408 2,337 2,745 416 2,769 3,185 (8) (432) (440) -1.9% -15.6% -13.8% Securities measured at FVOCI represent financial instru- › €93 million in respect of the reclassification, from of ments in which the Dutch insurance companies invest a medium- and long-term financial assets to short-term portion of their liquidity. financial assets and securities, of the current portion of the amount due to e-distribuzione from the Energy The reduction in “other financial assets” is mainly attribu- and Environmental Services Fund (€56 million) and the table to: amount due to the same company related to reimburse- › €354 million in respect of the impairment loss on the re- ment of the extraordinary costs incurred by distributors ceivable due to Enel Produzione from EP Slovakia BV re- for the early replacement of electromechanical meters lating to the sale of 50% of its investment in Slovak Power with electronic devices (€37 million). Holding BV; 307 Integrated Annual Report 202028. Other current financial assets - €5,113 million Millions of euro Current financial assets included in net financial debt (see note 28.1) Other Total at Dec. 31, 2020 at Dec. 31, 2019 Change 4,971 142 5,113 4,158 147 4,305 813 (5) 808 19.6% -3.4% 18.8% 28.1 Other current financial assets included in net financial debt - €4,971 million Millions of euro Current portion of long-term financial assets Securities at FVOCI Financial assets and cash collateral Other Total at Dec. 31, 2020 at Dec. 31, 2019 Change 1,428 67 3,223 253 4,971 1,585 61 2,153 359 4,158 (157) 6 1,070 (106) 813 -9.9% 9.8% 49.7% -29.5% 19.6% The change in the item is mainly attributable to: ruling of the judicial authorities in favor of the concession › €1,070 million in respect of an increase in cash collateral holders of the public electricity distribution service (€95 paid to counterparties for derivatives transactions; million); › €157 million in respect of the reduction in the current portion – an increase in financial assets for security deposits of long-term financial assets, which essentially reflects: (€46 million); – the decrease in financial assets relating to the deficit of › €106 million in respect of a decrease in the residual item the Spanish electricity system (€71 million); “other”, mainly reflecting the reduction in a number of fi- – the offsetting in 2020 of financial assets relating to the Bra- nancial assets in South Africa and Italy and the deprecia- zilian rate deficit with a number of liabilities for regulatory tion of currencies in Latin America. items following the settlement of a court dispute and the 29. Other non-current assets - €2,494 million Millions of euro Amounts due from institutional market operators Other assets Total at Dec. 31, 2020 at Dec. 31, 2019 Change 186 2,308 2,494 232 2,469 2,701 (46) (161) (207) -19.8% -6.5% -7.7% Amounts due from institutional market operators decrea- to be received in respect of green certificates amounting to sed by €46 million on the previous year, mainly in Spain as a €73 million (€37 million at December 31, 2019). result of the remuneration of distribution operations. The change for the year mainly reflects the tax assets re- cognized by Enel Distribuição São Paulo and Enel Distribu- At December 31, 2020 other assets mainly include tax assets ição Ceará related to the PIS/COFINS dispute in Brazil in the in the amount of €1,539 million (€1,587 million at December amount of €211 million, which was more than offset by the 31, 2019), security deposits in the amount of €330 million depreciation of the Brazilian real. (€418 million at the end of 2019) and non-monetary grants 308308 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements30. Other current assets - €3,578 million Millions of euro Amounts due from institutional market operators Advances to suppliers Amounts due from employees Amounts due from others Sundry tax assets Accrued operating income and prepayments Total at Dec. 31, 2020 at Dec. 31, 2019 Change 1,265 309 30 956 848 170 3,578 732 314 28 1,084 797 160 3,115 533 (5) 2 (128) 51 10 463 72.8% -1.6% 7.1% -11.8% 6.4% 6.3% 14.9% Amounts due from institutional market operators include The increase of €51 million in sundry tax assets is mainly amounts due in respect of the Italian system in the amount attributable to an increase in credits for indirect taxes and of €890 million (€450 million at December 31, 2019) and duties. the Spanish system in the amount of €337 million (€254 Amounts due from others decreased mainly due to a de- million at December 31, 2019). The increase is essentially cline in advances paid to third parties, a reduction in recei- attributable to the increase in amounts due in Italy in re- vables in respect of pension and insurance institutions and spect of the Energy and Environmental Services Fund, a decrease in other sundry amounts. mainly held by e-distribuzione (€207 million) and Servizio Elettrico Nazionale (€249 million), primarily connected with equalization mechanisms. 31. Inventories - €2,401 million Millions of euro Raw and ancillary materials, and consumables: - fuels - materials, equipment and other inventories Total Environmental certificates: - CO2 emissions allowances - green certificates - white certificates Total Buildings held for sale Payments on account TOTAL at Dec. 31, 2020 at Dec. 31, 2019 Change 595 1,542 2,137 159 5 7 171 52 41 857 1,493 2,350 96 12 1 109 54 18 (262) 49 (213) 63 (7) 6 62 (2) 23 2,401 2,531 (130) -30.6% 3.3% -9.1% 65.6% -58.3% - 56.9% -3.7% - -5.1% Raw and ancillary materials, and consumables consist of le, as a result of the energy transition process begun by the materials and equipment used to operate, maintain, and Group. Other factors include the reduction in inventories in construct power plants and distribution networks, as well Russia following the disposal of the Reftinskaya GRES plant as fuel inventories to cover the Group’s requirements for generation and trading activities. The change in the year is mainly attributable to the wri- in the final Quarter of 2019. These developments were par- tially offset by an increase in CO2 emissions allowances in Spain as a result of a decrease in the compliance obligation te-down of inventories of fuel and materials associated as a result of the reduction in high-emissions generation. with plants subject to impairment, primarily in Italy and Chi- 309 Integrated Annual Report 202032. Trade receivables - €12,046 million Millions of euro Customers: - electricity sales and transport - distribution and sale of gas - other assets Total trade receivables due from customers Trade receivables due from associates and joint ventures TOTAL at Dec. 31, 2020 at Dec. 31, 2019 Change 7,986 900 2,945 11,831 215 12,046 8,532 1,284 3,014 12,830 253 13,083 (546) (384) (69) (999) (38) (1,037) -6.4% -29.9% -2.3% -7.8% -15.0% -7.9% Trade receivables due from customers are recognized net of For more information on trade receivables, see note 44 “Fi- loss allowances, which totaled €3,287 million at the end of nancial instruments”. the year, compared with a balance of €2,980 million at the end of the previous year. Specifically, the reduction for the year, totaling €1,037 million, mainly recognized in Italy (€819 million) and Latin America (€176 million), was attributable to 33. Cash and cash equivalents - €5,906 million Cash and cash equivalents, detailed in the following table, the decline in receivables for the sale and transport of electri- decreased especially for the Parent, due to cash outflows city and gas, the deterioration in the collection status of linked to the acquisition of additional equity interests in certain receivables and an increase in write-downs, all con- subsidiaries in Latin America and to the depreciation of lo- nected with the effects of the COVID-19 pandemic, as well as cal currencies. the depreciation of the Latin American currencies. Millions of euro Bank and postal deposits Cash and cash equivalents on hand Other investments of liquidity Total at Dec. 31, 2020 at Dec. 31, 2019 Change 5,699 42 165 5,906 7,910 87 1,032 9,029 (2,211) (45) (867) (3,123) -28.0% -51.7% -84.0% -34.6% 310310 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements34. Assets and liabilities included in disposal groups classified as held for sale - €1,416 mil- lion and €808 million Changes in assets held for sale during 2020 can be broken down as follows. Millions of euro Property, plant and equipment Intangible assets Deferred tax assets Equity-accounted investments Non-current financial assets Cash and cash equivalents Inventories, trade receivables, and other current assets Total at Dec. 31, 2019 Reclassification from/ to current and non- current assets Disposals and changes in the consolidation scope Other changes at Dec. 31, 2020 14 7 - 80 - - - 101 747 56 17 489 11 28 29 1,377 (10) (7) - (79) - - - (96) 30 2 1 (1) - 1 1 34 781 58 18 489 11 29 30 1,416 Changes in liabilities included in disposal groups held for sale in 2020 were as follows. Millions of euro Long-term borrowings Provisions for risks and charges, non-current portion Deferred tax liabilities Non-current financial liabilities Other non-current liabilities Other current financial liabilities Trade payables and other current liabilities Total Reclassification from/to current and non-current liabilities at Dec. 31, 2019 Other changes at Dec. 31, 2020 - - - - 3 - - 3 660 2 16 54 - 11 33 776 27 - 1 3 (3) 1 - 29 687 2 17 57 - 12 33 808 Assets and liabilities included in disposal groups held for Majorana” site at Termini Imerese in the amount of €4 mil- sale at December 31, 2020 amounted to €1,416 million and lion, as well as the plant with a carrying amount of €2 mil- €808 million respectively and mainly comprise a number lion held by the Panamanian company Llano Sanchez Solar of renewables companies held for sale in South Africa and Power One SA. Bulgaria, which, following decisions by management, meet the requirements of IFRS 5 for classification within this ag- During 2020 a number of hydro companies held by Enel gregate. North America, which had previously been classified as At December 31, 2020, the equity-accounted investment available for sale, were sold, producing a capital gain of in OpEn Fiber, with a carrying amount of €489 million, was about €2 million, as was the Rionegro plant in Colombia, reclassified as held for sale. which was also classified in that item. The aggregate also includes the plant held for sale making Finally, net debt relating to assets and liabilities held for sale up the Enel Produzione business unit formed of the “Ettore amounted to €646 million. 311 Integrated Annual Report 202035. Equity - €42,357 million 35.1 Equity attributable to owners of the Parent - €28,325 million petual hybrid bond in an amount, net of transaction costs, of €592 million and with the conversion of bonds already in issue and converted into perpetual hybrid bonds in the amount, net of transaction costs, of €1,794 million. Share capital - €10,167 million Legal reserve - €2,034 million At December 31, 2020, the fully subscribed and paid-up The legal reserve is formed of the part of profits that, pur- share capital of Enel SpA totaled €10,166,679,946, repre- suant to Article 2430 of the Italian Civil Code, cannot be sented by the same number of ordinary shares with a par distributed as dividends. value of €1.00 each. The share capital is unchanged compared with the amount Other reserves - €2,268 million reported at December 31, 2019. These include €2,215 million related to the remaining por- At December 31, 2020, based on the shareholders regi- tion of the adjustments carried out when Enel was transfor- ster and the notices submitted to CONSOB and received med from a public entity to a joint-stock company. by the Parent pursuant to Article 120 of Legislative Decree Pursuant to Article 47 of the Consolidated Income Tax Code 58 of February 24, 1998, as well as other available infor- (Testo Unico Imposte sul Reddito, or “TUIR”), this amount mation, shareholders with interests of greater than 3% in does not constitute taxable income when distributed. the Parent’s share capital were the Ministry for the Eco- nomy and Finance (with a 23.585% stake), BlackRock Inc. Translation reserve - €(7,046) million (with a 5.081% stake held for asset management purposes) The decrease for the year, of €3,244 million, was mainly and Capital Research and Management Company (with a due to the net appreciation of the euro against the foreign 5.029% stake held for asset management purposes). currencies used by subsidiaries and the change in the con- solidation scope connected with the purchase of 5.03% of Treasury share reserve - €(3) million Enel Américas and 2.89% of Enel Chile. As at December 31, 2020, treasury shares are represented by 3,269,152 ordinary shares of Enel SpA with a par value of Hedging reserve - €(1,917) million €1.00 each (1,549,152 at December 31, 2019), purchased This includes the net expense recognized in equity from through a qualified intermediary for a total amount of €23 the measurement of cash flow hedge derivatives. The cu- million. The difference between the amount paid and the mulative tax effect is equal to €305 million. par value is recognized as a reduction in equity in the share premium reserve. Other reserves - €(39) million Share premium reserve - €7,476 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. The change of €11 million for the year reflects the purchase of treasury shares suppor- ting the 2020 LTI Plan. Reserve for equity instruments - perpetual hybrid bonds – €2,386 million This reserve was established with the subscription of a per- 312312 Hedging costs reserve - €(242) million In application of IFRS 9, these reserves include the fair va- lue gains and losses on currency basis points and forward points. The cumulative tax effect is equal to €5 million. Reserve from measurement of financial instruments at FVOCI - €(1) million This includes net unrealized fair value losses on financial assets. The cumulative tax effect is equal to a negative €2 million. Reserve from equity-accounted investments - €(128) million The reserve reports the share of comprehensive income to be recognized directly in equity of equity-accounted inve- stees. The cumulative tax effect is equal to €26 million. 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsActuarial reserve - €(1,196) million › the effects of the merger into Enel Américas of Endesa This reserve includes all actuarial gains and losses, net of Américas and Chilectra Américas; tax effects. The change is mainly attributable to the decrea- › the disposal to third parties of a non-controlling interest se in net actuarial losses recognized during the year, mainly without loss of control in Enel Green Power North Ameri- reflecting changes in the discount rate, and to the reclas- ca Renewable Energy Partners and a number of compa- sification following the curtailment of a number of defined nies in South Africa. benefit plans following the signing of the 5th Endesa Col- The reserve did not change in 2020. lective Bargaining Agreement. The cumulative tax effect is equal to €329 million. Reserve from acquisitions of non-controlling interests - €(1,292) million Reserve from disposal of equity interests without loss of This reserve mainly includes the surplus of acquisition pri- control - €(2,381) million This item mainly reports: ces with respect to the carrying amount of the equity ac- quired following the acquisition from third parties of further › the gain posted on the public offering of Enel Green interests in companies already controlled in Latin America Power shares, net of expenses associated with the di- and in Italy (Enel Green Power SpA). sposal and the related taxation; The change for the year mainly reflects the effects of the › the sale of non-controlling interests recognized as a re- increase of 5.03% in the interest held in Enel Américas and sult of the Enersis (now Enel Américas and Enel Chile) ca- of 2.89% in that held in Enel Chile, bringing the overall sta- pital increase; kes to 65% and 64.93%, respectively. › the capital loss, net of expenses associated with the di- sposal and the related taxation, from the public offering Retained earnings - €18,200 million of 21.92% of Endesa; This reserve reports earnings from previous years that have › the income from the disposal of the non-controlling not been distributed or allocated to other reserves. interest in Enel Green Power North America Renewable Energy Partners; 313 Integrated Annual Report 2020The table below shows the changes in gains and losses ding non-controlling interests, with specific reporting of recognized directly in other comprehensive income, inclu- the related tax effects. at Dec. 31, 2019 Change Of which owners of the Parent Of which non-controlling interests Gains/(Losses) recognized in equity during the year Released to profit or loss (3,471) (1,627) (147) 2 (168) (11) (1,045) (3,719) (341) 2 (1) 2 - (430) (4,510) (2,121) (91) 1 (10) (21) (516) - 2,003 (6) (3) - - - Total (7,190) (1,968) (145) 1 (166) (11) (1,475) (10,954) (6,467) (4,487) (7,268) 1,994 (5,261) (3,638) (1,623) (16,215) (10,105) (6,110) Of which owners Of which non-controlling interests (1,523) of the Parent (2,987) (294) (95) 26 (4) - - - (122) (1) (9) (21) (231) Total (4,510) (268) (99) (1) (9) (21) (353) at Dec. 31, 2020 Of which Of which non- owners of the Parent (6,458) (1,921) (242) 1 (177) (32) (1,276) controlling interests (5,242) (315) (2) (1) 2 - (552) Total (11,700) (2,236) (244) - (175) (32) (1,828) Taxes - (150) (2) 1 1 - 163 13 Millions of euro Translation reserve Hedging reserve Hedging costs reserve Reserve from measurement of financial instruments at FVOCI Share of OCI of equity- accounted associates Reserve from measurement of equity investments in other companies Actuarial reserve Total gains/(losses) recognized in equity 314314 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsMillions of euro Translation reserve Hedging reserve Hedging costs reserve Reserve from measurement of financial instruments at FVOCI Share of OCI of equity- accounted associates Reserve from measurement of equity investments in other companies Actuarial reserve Total gains/(losses) recognized in equity at Dec. 31, 2019 Of which owners of the Parent Of which Gains/(Losses) non-controlling recognized in equity Released interests during the year to profit or loss Change Total (7,190) (1,968) (145) 1 (166) (11) (1,475) (3,471) (1,627) (147) 2 (168) (11) (1,045) (3,719) (341) 2 (1) 2 - (430) (4,510) (2,121) (91) 1 (10) (21) (516) 2,003 - (6) (3) - - - (10,954) (6,467) (4,487) (7,268) 1,994 Of which owners of the Parent Of which non-controlling interests (2,987) (294) (95) (1) (9) (21) (231) (1,523) 26 (4) - - - (122) Total (4,510) (268) (99) (1) (9) (21) (353) at Dec. 31, 2020 Of which owners of the Parent Of which non- controlling interests (6,458) (1,921) (242) 1 (177) (32) (1,276) (5,242) (315) (2) (1) 2 - (552) Total (11,700) (2,236) (244) - (175) (32) (1,828) (5,261) (3,638) (1,623) (16,215) (10,105) (6,110) Taxes - (150) (2) 1 1 - 163 13 315 Integrated Annual Report 202035.2 Dividends Dividends paid in 2019 Dividends for 2018 Interim dividends for 2019 (1) Special dividends Total dividend paid in 2019 Dividends paid in 2020 Dividends for 2019 Interim dividends for 2020 (2) Special dividends Total dividend paid in 2020 Amount distributed (millions of euro) Dividend per share (euro) 2,847 - - 2,847 3,334 - - 3,334 0.28 - - 0.28 0.33 - - 0.33 (1) Approved by the Board of Directors on November 12, 2019, and paid as from January 22, 2020 (interim dividend of €0.16 per share for a total of €1,627 million). (2) Approved by the Board of Directors on November 5, 2020, and paid as from January 20, 2021 (interim dividend of €0.175 per share for a total of €1,779 million). The dividend for 2020 is equal to €0.358 per share, for a to- Capital management tal amount of €3,640 million (of which €0.175 per share, for The Group’s objectives for managing capital comprise sa- a total of €1,779 million, already paid as an interim dividend feguarding the business as a going concern, creating value as from January 20, 2021) approved by the Board of Direc- for stakeholders and supporting the development of the tors on March 18, 2020 and proposed to the Shareholders’ Group. In particular, the Group seeks to maintain an ade- Meeting of May 20, 2021 at single call. These consolidated quate capitalization that enables it to achieve a satisfactory financial statements do not take account of the effects of return for shareholders and ensure access to external sour- the distribution to shareholders of the dividend for 2020, ces of financing, in part by maintaining an adequate rating. except for the liability in respect of shareholders for the in- In this context, the Group manages its capital structure terim dividend for 2020 dividend, which was approved by and adjusts that structure when changes in economic con- the Board of Directors on November 5, 2020 for a potential ditions so require. There were no substantive changes in maximum of €1,779 million, and paid as from January 20, objectives, policies or processes in 2020. 2021 net of the portion pertaining to the 3,269,152 million To this end, the Group constantly monitors developments in the treasury shares held as at the record date of January 19, level of its debt in relation to equity. The situation at December 2021. Millions of euro Non-current financial debt Net current financial position Non-current financial assets and long-term securities Net financial debt Equity attributable to owners of the Parent Non-controlling interests Equity Debt/equity ratio 316316 31, 2020 and 2019, is summarized in the following table. at Dec. 31, 2020 at Dec. 31, 2019 49,519 (1,359) (2,745) 45,415 28,325 14,032 42,357 1.07 54,174 (5,814) (3,185) 45,175 30,377 16,561 46,938 0.96 Change (4,655) 4,455 440 240 (2,052) (2,529) (4,581) - 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThe percentage increase in the debt ratio is attributable to the additional interests in Enel Américas and Enel Chile. decrease in equity, essentially reflecting adverse exchange rate See note 43 for a breakdown of the individual items in the table. developments, and the increase in net financial debt, mainly reflecting the funding requirements of investments in the year, the payment of dividends and extraordinary transactions 35.3 Non-controlling interests - €14,032 million The following table presents the composition of non-con- in non-controlling interests connected with the acquisition of trolling interests by geographic area. Millions of euro Non-controlling interests Profit for the year attributable to non-controlling interests at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 Italy Iberia Latin America Europe North America Africa, Asia and Oceania Total 2 5,869 7,206 638 160 157 14,032 1 5,961 9,277 903 222 197 - 468 477 55 6 6 (2) 36 1,256 6 (1) 7 16,561 1,012 1,302 The decrease in the portion attributable to non-controlling and the increase in the percentage holding in Enel Améric- interests mainly reflects exchange rate effects, dividends as and Enel Chile. 36. Borrowings Millions of euro Non-current Current Long-term borrowings Short-term borrowings Total at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 49,519 - 49,519 54,174 - 54,174 3,168 6,345 9,513 3,409 3,917 7,326 For more information on the nature of borrowings, see note by appropriate insurance policies. In addition, the group 44 “Financial instruments by category”. has two other limited-enrollment plans (i) for current and retired Endesa employees covered by the electricity indu- 37. Employee benefits - €2,964 million The Group provides its employees with a variety of benefits, stry collective bargaining agreement prior to the changes introduced with the framework agreement noted earlier including deferred compensation benefits, additional mon- and (ii) for employees of the Catalan companies merged ths’ pay for having reached age limits or eligibility for old-age in the past (Fecsa/Enher/HidroEmpordà). Both are defi- pension, loyalty bonuses for achievement of seniority milesto- ned benefit plans and benefits are fully ensured, with the nes, supplemental retirement and healthcare plans, residen- exception of the former plan for benefits in the event of tial electricity discounts and similar benefits. More specifically: the death of a retired employee. Finally, the Brazilian com- › for Italy, the item “pension benefits” regards estimated ac- panies have also established defined benefit plans; cruals made to cover benefits due under the supplemental › the item “electricity discount” comprises benefits regar- retirement schemes of retired executives and the benefits ding electricity supply associated with foreign companies. due to personnel under law or contract at the time the em- For Italy, that benefit, which was granted until the end of ployment relationship is terminated. For the foreign com- 2015 to retired employees only, was unilaterally cancelled; panies, the item refers to post-employment benefits, of › the item “health insurance” refers to benefits for current which the most material regard the pension benefit sche- or retired employees covering medical expenses; mes of Endesa in Spain, which break down into three types › “other benefits” mainly regard the loyalty bonus, which is that differ on the basis of employee seniority and company. adopted in various countries and for Italy is represented In general, under the framework agreement of October 25, by the estimated liability for the benefit entitling em- 2000, employees participate in a specific defined contribu- ployees covered by the electricity workers national col- tion pension plan and, in cases of disability or death of em- lective bargaining agreement to a bonus for achievement ployees in service, a defined benefit plan which is covered of seniority milestones (25th and 35th year of service). 317 Integrated Annual Report 2020It also includes other incentive plans, which provide for obligation for post-employment and other long-term em- the award to certain Company managers of a monetary ployee benefits at December 31, 2020, and December 31, bonus subject to specified conditions. 2019, respectively, as well as a reconciliation of that obliga- The following table reports changes in the defined benefit tion with the actuarial liability. Millions of euro 2020 Electricity 2019 Pension benefits 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 5,691 18 249 45 105 466 (24) (584) (1,206) - 1 (358) 5 - 4,408 3,374 160 85 (782) 342 1 (358) (523) - 2,299 45 3 (24) (11) - 13 904 3 5 12 19 (21) (504) - (1) - - (16) 2 - 403 - - - - 16 - (16) - - - - - - - - - 263 4 7 6 (2) (7) (13) - (30) - - (11) - - 217 - - - - 11 - (11) - - - - - - - - - 242 38 4 1 2 (8) (1) - (7) - - (48) (1) - 222 - - - - 21 - (21) - - - - - - - - - 7,100 63 265 64 124 430 (542) (584) (1,244) - 1 (433) 6 - 5,250 3,374 160 85 (782) 390 1 (406) (523) - 2,299 45 3 (24) (11) - 13 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 included in disposal groups 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 Changes in the consolidation scope 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 Changes in the consolidation scope Asset ceiling at year-end Net liability in statement of financial position (A-B+C) 318318 5,072 20 335 (16) 701 94 (8) (84) - - 2 6 - (431) 5,691 3,160 235 272 (50) 186 (431) 2 - - 3,374 24 2 20 (1) - 45 767 4 15 91 55 (31) 904 31 (31) - - - - - - 3 - - - - - - - - - - - - - - - 253 4 10 1 15 (4) (2) (14) 263 14 (14) - - - - - - - - - - - - - - - - - - - - 231 32 8 13 5 - 2 - 1 - - (45) (5) 242 16 (16) - - - - - - - - - - - - - - - Total 6,323 60 365 (15) 815 158 (6) (85) - - 2 4 - (521) 7,100 3,160 235 272 (50) 247 (492) 2 - - 3,374 24 2 20 (1) - 45 2,122 403 217 222 2,964 2,362 904 263 242 3,771 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsMillions of euro 2020 Electricity CHANGES IN ACTUARIAL OBLIGATION Actuarial obligation at the start of the year 5,691 Current service cost Interest expense Actuarial (gains)/losses arising from changes in demographic assumptions Actuarial (gains)/losses arising from changes (Gains)/losses arising from settlements in financial assumptions Experience adjustments Past service cost Exchange differences Employer contributions Employee contributions Benefits paid Other changes Liabilities included in disposal groups 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 Changes in the consolidation scope 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 Changes in the consolidation scope Asset ceiling at year-end Net liability in statement of financial position 18 249 45 105 466 (24) (584) (1,206) (358) - 1 5 - 4,408 3,374 160 85 (782) 342 (358) (523) 1 - 2,299 45 3 (24) (11) - 13 217 222 5,250 904 3 5 12 19 (21) (504) (1) - - - 2 - (16) 403 16 (16) - - - - - - - - - - - - - - 263 4 7 6 (2) (7) (13) (30) (11) 11 (11) - - - - - - - - - - - - - - - - - - - 242 38 4 1 2 (8) (1) (7) - - - (48) (1) 21 (21) - - - - - - - - - - - - - - - (1,244) 7,100 63 265 64 124 430 (542) (584) (433) - 1 6 - 3,374 160 85 (782) 390 (406) (523) 1 - 2,299 45 3 (24) (11) - 13 Pension benefits discount Health insurance Other benefits Total Pension benefits Electricity discount Health insurance Other benefits 2019 5,072 20 335 (16) 701 94 (8) - (84) - 2 (431) 6 - 5,691 3,160 235 272 (50) 186 2 (431) - - 3,374 24 2 20 (1) - 45 767 4 15 - 91 55 - - - - - (31) 3 - 904 - - - - 31 - (31) - - - - - - - - - 253 4 10 1 15 (4) - - (2) - - (14) - - 263 - - - - 14 - (14) - - - - - - - - - 231 32 5 - 8 13 2 - 1 - - (45) (5) - 242 - - - - 16 - (16) - - - - - - - - - Total 6,323 60 365 (15) 815 158 (6) - (85) - 2 (521) 4 - 7,100 3,160 235 272 (50) 247 2 (492) - - 3,374 24 2 20 (1) - 45 (A-B+C) 2,122 403 217 222 2,964 2,362 904 263 242 3,771 319 Integrated Annual Report 2020The decrease in the actuarial liability compared with 2019, Note also that the obligations in respect of Enel Group per- equal to €807 million, is mainly attributable to the transfer sonnel have not been appreciably affected by the effects of by Enel Distribuição São Paulo in Brazil of part of its em- the COVID-19 emergency, which are considered temporary ployee defined benefit plans to external companies. These and short-term. plans thereby became defined contribution plans, which are not subject to actuarial measurement. Millions of euro (Gains)/Losses taken 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 Expected 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 2020 (509) 108 (61) 31 (9) (440) 2020 (85) 626 (24) (1) 516 2019 32 129 - 25 - 186 2019 (272) 958 20 (4) 702 The decrease in the cost recognized in profit or loss was The liability recognized in the statement of financial posi- equal to €626 million. The impact on the income state- tion at the end of the year is reported net of the fair value ment is, therefore, smaller than in 2019, due mainly to the of plan assets, amounting to €2,299 million at December signing in 2020 of the 5th Endesa Collective Bargaining 31, 2020. Those assets, which are entirely in Spain and Agreement, which modified the electricity discount bene- Brazil, break down as follows. fit for current and former employees, with the consequent reversal of the associated provision. Investments quoted in active markets Equity instruments Fixed-income securities Investment property Other Unquoted investments Assets held by insurance undertakings Other Total 320320 at Dec. 31, 2020 at Dec. 31, 2019 7% 63% 2% - - 28% 100% 8% 68% 3% - - 21% 100% 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThe 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 2020 0.00% -0.50% 0.50% 0.50% -2.50% 0.00% -0.61% 1.00% 1.00% 1.50% 3.20% - 0.57% Latin America Other countries 2.55% -7.95% 3.00% -4.85% 3.80% -5.04% 7.12% -8.00% 6.08% -7.33% 0.75% -6.30% 0.75% -3.83% 2.25% -3.83% - - Italy Iberia 2019 0.00% -0.70% 0.70% 0.70% -1.70% 0.00% -1.14% 2.00% 2.00% 1.70% 3.20% - 1.09% Latin America Other countries 3.40% -7.59% 3.00% -8.00% 3.80% -8.00% 7.12% -8.00% 6.44% -7.38% 1.20% -6.45% 1.00% -3.94% 2.50% -3.94% - - Discount rate Inflation rate Rate of wage increases Rate of increase in healthcare costs Expected rate of return on plan assets 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 Pension benefits Electricity discount Health insurance Other benefits Pension benefits Electricity discount Health insurance Other benefits at Dec. 31, 2020 at Dec. 31, 2019 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% healthcare costs Increase of 1 year in life expectancy of active and retired employees 239 (190) (1) 33 14 15 - 27 30 (30) (5) 2 (2) (2) - (11) 11 (15) (3) 7 (3) (3) (2) 2 (1) (11) (7) (4) (3) (6) - 321 (285) (2) 31 19 9 - (34) 179 78 (73) (74) 79 2 (2) - 36 15 (19) (5) 10 (2) (3) 12 19 5 (7) (3) 1 5 (1) - (1) The sensitivity analysis used an approach that extrapolates the plans in the subsequent year amount to €80 million. effect on the defined benefit obligation of reasonable changes in an individual actuarial assumption, leaving the other assu- The following table reports expected benefit payments in the mptions unchanged. coming years for defined benefit plans. The contributions expected to be paid into defined benefit Millions of euro Within 1 year In 1-2 years In 2-5 years More than 5 years at Dec. 31, 2020 at Dec. 31, 2019 366 337 971 1,534 461 447 1,288 2,040 321 Integrated Annual Report 2020- 102 132 33 24 504 795 401 - 1,196 at Dec. 31, 2020 38. Provisions for risks and charges - €6,831 million Millions of euro Provision for litigation, risks and other charges: - nuclear decommissioning - site retirement, removal and restoration - litigation - environmental certificates - taxes and duties - other Total Provision for early retirement incentives and other restructuring plans Provision for restructuring programs connected with energy transition TOTAL at Dec. 31, 2020 at Dec. 31, 2019 Non-current Current Non-current Current 596 2,017 734 - 288 757 4,392 623 759 5,774 - 99 86 42 43 343 613 444 - 1,057 640 1,840 938 - 312 762 4,492 832 - 5,324 Provisions for site retirement and restoration Change in the conso- lidation scope Exchan- ge differen- ces Other changes Reclassifi- cations of liabilities included in disposal groups held for sale Millions of euro Accrual Reversal Utiliza- tion Discoun- ting at Dec. 31, 2019 Provision for litigation, risks and other charges: - nuclear decommissioning 640 1 - - 1 (46) 1,942 1,070 33 336 1,266 5,287 99 187 41 46 331 705 (50) (44) (160) (136) (8) (18) (24) (17) (147) (178) (383) (399) 17 37 - 34 10 99 187 - - - - 141 1,233 223 (39) (443) 59 - - site retirement, removal and restoration - litigation - environmental certificates - taxes and duties - other Total Provision for early retirement incentives and other restructuring plans Provision for restructuring programs connected with energy transition - 759 - - - 158 - 141 TOTAL 6,520 1,687 (422) (842) 322322 - - - - - - - - - - - - - 596 (36) (198) - (46) (51) (331) 2 21 - (4) (131) (112) (1) (1) - - - 2,116 820 42 331 1,100 (2) 5,005 (2) 36 - 1,067 - (333) - (76) - (2) 759 6,831 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsNuclear decommissioning provision At December 31, 2020, the provision reflected solely the costs need for compliance with national or supranational en- vironmental protection requirements and mainly regards that will be incurred at the time of decommissioning of nucle- Enel Energia, Endesa Energía and Unelco. ar plants by ENRESA, a Spanish public entity responsible for such activities in accordance with Royal Decree 1349/2003 and Law 24/2005. Quantification of the costs is based on Provision for taxes and duties The provision for taxes and duties covers the estimated the standard contract between ENRESA and the electricity liability deriving from tax disputes concerning direct and companies approved by the Ministry for the Economy in Sep- indirect taxes. The balance of the provision also includes tember 2001, which regulates the retirement and closing of the provision for current and potential disputes concer- nuclear power plants. The time horizon envisaged, three ye- ning local property tax (whether the Imposta Comunale ars, corresponds to the period from the termination of power sugli Immobili (“ICI”) or the new Imposta Municipale Unica generation to the transfer of plant management to ENRESA (“IMU”)) in Italy. The Group has taken due account of the (so-called post-operational costs) and takes account, among criteria introduced with circular no. 6/2012 of the Public the various assumptions used to estimate the amount, of the Land Agency (which resolved interpretive issues concer- quantity of unused nuclear fuel expected at the date of clo- ning the valuation methods for movable assets consi- sure of each of the Spanish nuclear plants on the basis of the dered relevant for property registry purposes, including provisions of the concession agreement. Site retirement, removal and restoration provision This provision represents the present value of the estima- certain assets typical to generation plants, such as turbi- nes) in estimating the liability for such taxes, both for the purposes of quantifying the probable risk associated with pending litigation and generating a reasonable valuation ted cost for the retirement and removal of non-nuclear of probable future charges on positions that have not yet plants where there is a legal or constructive obligation to been assessed by Land Agency offices and municipalities. do so. The provision mainly regards the Endesa Group, The provision was virtually unchanged on December 31, 2019. Enel Produzione and the companies in Latin America. The change in the provisions during 2020 is mainly linked to the redetermination of the future retirement costs of certain Other provisions Other provisions cover various risks and charges, mainly in plants in Iberia and an increase in provisions for retirement connection with regulatory disputes and disputes with lo- costs resulting from the Group’s decision to promote the cal authorities regarding various duties and fees or other termination of generation from coal-fired power plants in charges. Iberia, Italy and Chile in order to achieve the Group’s stra- The decrease of €166 million in other provisions is mainly tegic objective of decarbonizing generation in order to attributable to Enel Energia and the adverse exchange rate mitigate the impacts of climate change. effects in Latin America. Litigation provision The litigation provision covers contingent liabilities in re- spect of pending litigation and other disputes. It includes an estimate of the potential liability relating to disputes that arose during the year, as well as revised estimates of the potential costs associated with disputes initiated in Note also the recognition of a provision for risks (equal to €47 million) as a result of the write-down of the sale of 50% of the investment in Slovak Power Holding. Provision for early retirement incentives and other restructuring plans The provision for early retirement incentives and other prior years. The balance for litigation mainly regards the restructuring plans includes the estimated charges rela- companies in Spain (€178 million), Italy (€107 million) and ted to binding agreements for the voluntary termination Latin America (€522 million). of employment contracts in response to organizational The decrease compared with the previous year, equal to needs. The reduction of €166 million for the year mainly €250 million, mainly reflects the change in the provision in reflects uses of provisions for incentives established in Latin America and North America, attributable in particular Spain and Italy in previous years. to adverse exchange rate developments in Brazil and Ar- In Italy, the latter is largely associated with the union-com- gentina, as well as the resolution of a number of disputes pany agreements signed in September 2013 and Decem- in the United States. ber 2015, implementing, for a number of companies in Italy, the mechanism provided for under Article 4, para- Provision for environmental certificates The provision for environmental certificates covers costs graphs 1-7 ter, of Law 92/2012 (the Fornero Act). The latter agreement envisaged the voluntary termination, in Italy, of in respect of shortfalls in the environmental certificates about 6,100 employees in 2016-2020. 323 Integrated Annual Report 2020In Spain, the provisions regard the Acuerdo de Salida Vo- reskilling plans and voluntary individual early retirement luntaria. Provision for restructuring programs connected with the energy transition Enel, in its role as a leader of the energy transition, has agreements that will involve around 1,300 people worldwi- de. The energy transition is also based on the progressive and expansive development of digital tools, as digitization is essential to responding to multiple external forces and making informed and well-considered decisions at every placed decarbonization and growth of renewables around level within the Group. the world at the center of its strategy. A provision was therefore established for restructuring In this context, Enel has begun restructuring the activities programs, which at December 31, 2020 amounted to associated with the energy transition process, which in- €759 million, which is mainly attributable to Spain and Italy, volves thermal generation plants in all the geographical and represents the estimated costs that the Group has areas in which the Group operates. The consequent revi- provisioned to accelerate the energy transition process, sion of processes and operating models will require chan- for all direct and indirect activities related to the review of ges in the roles and skills of employees, which the Group processes and operating models and the roles and skills intends to implement with highly sustainable plans based of employees. on redeployment programs, with major upskilling and 39. Other non-current liabilities - €3,458 million Millions of euro Accrued operating expenses and deferred income Other items Total at Dec. 31, 2020 at Dec. 31, 2019 Change 500 2,958 3,458 552 3,154 3,706 (52) (196) (248) -9.4% -6.2% -6.7% The decrease of €52 million in “accrued operating expen- to “accrued operating expenses and deferred income”, the ses and deferred income” is essentially attributable to the change in “other items” reflected an increase in liabilities €59 million reclassification carried out by Enel Finance In- for tax partnerships beyond 12 months in the United Sta- ternational for presentation purposes for deferred income tes and an increase in liabilities relating to the outcome of related to the negotiation of derivative contracts, now re- the PIS/COFINS dispute in Brazil (already discussed under ported in “other items” of the same table. “other non-current assets”) in the amount of €330 million. These changes were more than offset by adverse exchange In addition to the reclassification mentioned with regard rate developments, mainly in Latin America. 324324 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements40. Other current liabilities - €11,651 million Millions of euro Amounts due to customers Amounts due to institutional market operators Amounts due to employees Other tax liabilities Amounts due to social security institutions Contingent consideration Put options granted to non-controlling shareholders Current accrued expenses and deferred income Dividends Other Total at Dec. 31, 2020 at Dec. 31, 2019 Change 1,481 4,012 438 886 207 53 1 346 2,135 2,092 11,651 1,670 4,507 496 1,082 212 116 3 372 2,143 2,560 13,161 (189) (495) (58) (196) (5) (63) (2) (26) (8) (468) (1,510) -11.3% -11.0% -11.7% -18.1% -2.4% -54.3% -66.7% -7.0% -0.4% -18.3% -11.5% Amounts due to customers include €822 million (€880 mil- tnerships (€87 million) posted by renewables companies in lion at December 31, 2019) in security deposits related to North America in the amount of €181 million as a result of amounts received from customers in Italy as part of electri- the entry of new plants into service. city and gas supply contracts. Following the finalization of the contract, deposits for electricity sales, the use of which is not restricted in any way, are classified as current liabili- 41. Trade payables - €12,859 million The item amounted to €12,859 million (€12,960 million in ties given that the Parent does not have an unconditional 2019) and includes payables in respect of electricity sup- right to defer repayment beyond 12 months. plies, fuel, materials, equipment associated with tenders, Amounts due to institutional market operators include and other services. liabilities arising from the application of equalization me- chanisms to electricity purchases on the Italian market More specifically, trade payables falling due in less than 12 amounting to €2,444 million (€3,064 million at December months amounted to €12,282 million (€12,322 million at 31, 2019), on the Spanish market amounting to €1,538 mil- December 31, 2019), while those with falling due in more lion (€1,267 million at December 31, 2019) and on the Latin than 12 months amounted to €577 million (€638 million at American market amounting to €30 million (€176 million at December 31, 2019). December 31, 2019). Contingent consideration mainly regards a number of equity investments held by the Group in North America, the fair value of which was determined on the basis of the con- tractual conditions in the agreements between the parties. Other mainly regards the liabilities of some Brazilian com- panies to the national electricity agency ANEEL (Regulatory Resolution no. 885/2020 of June 23) in respect of loans granted to distribution companies in order to provide liqui- dity to them and minimize the effects of the pandemic. The decline in other is mainly attributable to the effect of the recognition in 2019 of the debt of €358 million asso- ciated with the purchase through financial intermediaries (with share swaps) of additional shares in Enel Américas and Enel Chile, compounded by the impact of the reduction in 2020 of liabilities for expired commodity derivatives, whi- ch were registered mainly in Italy and Spain. These effects were partially offset by an increase in liabilities for tax par- 325 Integrated Annual Report 202042. Other current financial liabilities - €622 million Millions of euro Accrued financial expense and deferred financial income Other items Total at Dec. 31, 2020 at Dec. 31, 2019 Change 535 87 622 607 147 754 (72) (60) (132) -11.9% -40.8% -17.5% The decrease in other current financial liabilities is at- tributable to a €73 million decrease in accrued financial expense, connected primarily with the decline in interest on bonds, a €41 million decrease in the liability in respect 43. Net financial position and long-term financial assets and securities - €45,415 million The following table shows the net financial position and of the deficit of the Spanish electrical system and a €20 long-term financial assets and securities on the basis of million decrease in the liability in respect of bondholders the items on the consolidated statement of financial po- for accrued interest to be settled. sition. Millions of euro Long-term borrowings Short-term borrowings Other current financial borrowings (1) Current portion of long-term borrowings Other non-current financial assets included in net financial debt Other current financial assets included in net financial debt Cash and cash equivalents Total Notes at Dec. 31, 2020 at Dec. 31, 2019 Change 36 36 36 27.1 28 33 49,519 6,345 5 3,168 (2,745) (4,971) (5,906) 45,415 54,174 3,917 47 3,409 (3,185) (4,158) (9,029) 45,175 (4,655) 2,428 (42) (241) 440 (813) 3,123 240 -8.6% 62.0% -89.4% -7.1% 13.8% -19.6% 34.6% 0.5% (1) “Other current financial borrowings” is included under “Other current financial liabilities”. Pursuant to CONSOB instructions of July 28, 2006, the fol- debt as provided for in the presentation methods of the lowing table reports the net financial debt at December 31, Enel Group. 2020 and December 31, 2019, reconciled with net financial 326326 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsMillions of euro Cash and cash equivalents on hand Bank and post office deposits Other investments of liquidity Securities Liquidity Short-term loan assets Current portion of long-term loan assets Current loan assets Short-term bank borrowings Commercial paper Current portion of long-term bank borrowings Bonds issued (current portion) Other borrowings (current portion) Other short-term borrowings (1) Total current financial debt Net current financial position Bank borrowings Bonds Other borrowings Non-current financial debt NET FINANCIAL DEBT as per CONSOB Communication Non-current financial assets and securities NET FINANCIAL DEBT at Dec. 31, 2020 at Dec. 31, 2019 Change 42 5,699 165 67 5,973 3,476 1,428 4,904 (711) (4,854) (1,369) (1,412) (387) (785) (9,518) 1,359 (8,663) (38,357) (2,499) (49,519) 87 7,910 1,032 51 9,080 2,522 1,585 4,107 (579) (2,284) (1,121) (1,906) (382) (1,101) (7,373) 5,814 (8,407) (43,294) (2,473) (54,174) (48,160) (48,360) 2,745 (45,415) 3,185 (45,175) (45) (2,211) (867) 16 (3,107) 954 (157) 797 (132) (2,570) (248) 494 (5) 316 (2,145) (4,455) (256) 4,937 (26) 4,655 200 (440) (240) (1) Includes current borrowings included under other current financial liabilities. -51.7% -28.0% -84.0% 31.4% -34.2% 37.8% -9.9% 19.4% -22.8% - -22.1% 25.9% -1.3% 28.7% -29.1% -76.6% -3.0% 11.4% -1.1% 8.6% 0.4% -13.8% -0.5% 327 Integrated Annual Report 2020Financial instruments 44. Financial instruments by category This note provides disclosures necessary for users to 44.1 Financial assets by category The following table reports the carrying amount for each category of financial asset provided for under IFRS 9, broken down into current and non-current financial as- assess the significance of financial instruments for the sets, showing hedging derivatives and derivatives me- Group’s financial position and performance. asured at fair value through profit or loss separately. Millions of euro Financial assets at amortized cost Financial assets at FVOCI Financial assets at fair value through profit or loss Derivative financial assets at FVTPL Other financial assets at FVTPL Financial assets designated upon initial recognition (fair value option) 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 Notes 44.1.1 44.1.2 44.1.3 44.1.3 44.1.3 44.1.4 44.1.4 Non-current Current at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 3,966 448 52 2,087 - 2,139 50 1,134 1,184 7,737 4,258 480 29 2,370 - 2,399 32 1,322 1,354 8,491 22,967 26,326 67 61 2,765 301 - 3,066 28 678 706 26,806 3,086 51 - 3,137 - 979 979 30,503 For more information on fair value measurement, see note 44.1.1 Financial assets measured at amortized cost 48 “Assets and liabilities measured at fair value”. The following table reports financial assets measured at amortized cost by nature, broken down into current and non-current financial assets. Millions of euro Non-current Current Cash and cash equivalents Trade receivables Current portion of long-term loan assets Cash collateral Other financial assets Financial assets from service concession arrangements at amortized cost Other financial assets at amortized cost Total Notes at Dec. 31, 2020 at Dec. 31, 2019 Notes at Dec. 31, 2020 at Dec. 31, 2019 32 27.1 27 - 1,200 - - - 917 - - 2,337 2,769 243 186 3,966 340 232 4,258 33 32 28.1 28.1 28.1 28 5,702 10,846 1,331 3,223 253 9 1,603 22,967 9,029 12,166 1,534 2,153 370 13 1,061 26,326 Impairment of financial assets at amortized cost measured at amortized cost subject to impairment testing: Financial assets measured at amortized cost at December › cash and cash equivalents; 31, 2020 amounted to €3,624 million (€3,370 million at De- › trade receivables and contract assets; cember 31, 2019) and are recognized net of allowances for › loan assets; expected credit losses. › other financial assets. The Group mainly has the following types of financial assets While cash and cash equivalents are also subject to the im- 328328 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements pairment requirements of IFRS 9, the identified impairment For more information on assets deriving from contracts loss was immaterial. with customers, please see note 26 “Current/Non-current contract assets/(liabilities). The expected credit loss (ECL), determined using proba- A forward-looking adjustment can be applied considering bility of default (PD), loss given default (LGD) and exposure qualitative and quantitative information in order to reflect at default (EAD), is the difference between all contractual future events and macroeconomic developments that cash flows that are due in accordance with the contract could impact the risk associated with the portfolio or finan- and all cash flows that are expected to be received (i.e., cial instrument. all shortfalls) discounted at the original effective interest Depending on the nature of the financial assets and the rate (EIR). credit risk information available, the assessment of the in- For calculating ECL, the Group applies two different appro- crease in credit risk can be performed on: aches: › an individual basis, if the receivables are individually si- › the general approach, for financial assets other than gnificant and for all receivables which have been indivi- trade receivables, contract assets and lease receivables. dually identified for impairment based on reasonable and This approach, based on an assessment of any signifi- supportable information; cant increase in credit risk since initial recognition, is per- › a collective basis, if no reasonable and supportable infor- formed comparing the PD at origination with PD at the mation is available without undue cost or effort to mea- reporting date, at each reporting date. sure expected credit losses on an individual instrument Then, based on the results of the assessment, a loss al- basis. lowance is recognized based on 12-month ECL or lifeti- When there is no reasonable expectation of recovering a me ECL (i.e. staging): financial asset in its entirety or a portion thereof, the gross – 12-month ECL, for financial assets for which there has carrying amount of the financial asset shall be reduced. not been a significant increase in credit risk since initial A write-off represents a derecognition event (e.g. the right recognition; to cash flows is legally or contractually extinguished, tran- – lifetime ECL, for financial assets for which there has been sferred or expired). a significant increase in credit risk or which are credit impaired (i.e. defaulted based on past due information); The following table reports expected credit losses on finan- › the simplified approach, for trade receivables, contract cial assets measured at amortized cost on the basis of the assets and lease receivables with or without a significant general simplified approach. financing component, based on lifetime ECL without tracking changes in credit risk. Millions of euro Cash and cash equivalents Trade receivables Loan assets Other financial assets at amortized cost Total at Dec. 31, 2020 Allowance for expected credit losses - 3,287 208 129 3,624 Gross amount 5,702 15,333 7,352 2,170 30,557 at Dec. 31, 2019 Allowance for expected credit losses - 2,980 231 159 Total 9,029 13,083 6,826 1,646 3,370 30,584 Total Gross amount 5,702 12,046 7,144 2,041 26,933 9,029 16,063 7,057 1,805 33,954 To measure expected losses, the Group assesses trade re- ceivables are grouped on the basis of their shared credit ceivables and contract assets with the simplified approach, risk characteristics and information on past due positions, both on an individual basis (e.g. government entities, au- considering a specific definition of default. thorities, financial counterparties, wholesale sellers, traders Based on each business and local regulatory framework, as and large companies, etc.) and a collective basis (e.g. retail well as differences between customer portfolios, including customers). their default and recovery rates (comprising expectations In the case of individual assessments, PD is generally obtai- › the Group mainly defines a defaulted position as one that ned from external providers. is 180 days past due. Accordingly, beyond this time limit, Otherwise, in the case of collective assessments, trade re- trade receivables are presumed to be credit impaired); and for recovery beyond 90 days): 329 Integrated Annual Report 2020 › specific clusters are defined on the basis of specific mar- › LGD is a function of the recovery rates for each cluster, kets, business and risk characteristics. discounted using the effective interest rate; and Contract assets substantially have the same risk characte- › EAD is estimated as equal to the carrying amount at the ristics as trade receivables for the same types of contracts. reporting date net of cash deposits, including invoices is- In order to measure the ECL for trade receivables on a col- sued but not past due and invoices to be issued. lective basis, as well as for contract assets, the Group uses the following assumptions regarding the ECL parameters: The following table reports changes in the allowance for › PD, assumed equal to the average default rate, is calcu- expected credit losses on loan assets in accordance with lated by cluster and considering historical data from at the general simplified approach. ECL 12-month allowance ECL lifetime allowance 87 - - (1) (8) 78 78 354 - (4) (363) 65 142 26 - (3) (12) 153 153 8 - (4) (14) 143 2,828 1,239 (834) (202) (51) 2,980 2,980 1,505 (819) (194) (185) 3,287 least 24 months; Millions of euro Opening balance at Jan. 1, 2019 Accruals Uses Reversals to profit or loss Other changes Closing balance at Dec. 31, 2019 Opening balance at Jan. 1, 2020 Accruals Uses Reversals to profit or loss Other changes Closing balance at Dec. 31, 2020 The following table reports changes in the allowance for expected credit losses on trade receivables. Millions of euro Opening balance at Jan. 1, 2019 Accruals Uses Reversals to profit or loss Other changes Closing balance at Dec. 31, 2019 Opening balance at Jan. 1, 2020 Accruals Uses Reversals to profit or loss Other changes Closing balance at Dec. 31, 2020 330330 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThe following table reports changes in the allowance for expected credit losses on other financial assets at amorti- zed cost. Millions of euro Opening balance at Jan. 1, 2019 Accruals Uses Reversals to profit or loss Other changes Closing balance at Dec. 31, 2019 Opening balance at Jan. 1, 2020 Accruals Uses Reversals to profit or loss Other changes Closing balance at Dec. 31, 2020 ECL lifetime allowance 64 105 - (7) (3) 159 159 22 - (23) (29) 129 Note 45 “Risk management” provides additional informa- 44.1.2 Financial assets at fair value through tion on the exposure to credit risk and expected losses. other comprehensive income The following table shows financial assets at fair value throu- gh other comprehensive income by nature, broken down into current and non-current financial assets. Notes 27 27.1 Non-current at Dec. 31, 2020 at Dec. 31, 2019 40 408 448 64 416 480 Notes 28.1 Current at Dec. 31, 2020 at Dec. 31, 2019 - 67 67 - 61 61 Millions of euro Equity investments in other companies at FVOCI Securities Total Changes in financial assets at FVOCI EQUITY INVESTMENTS IN OTHER COMPANIES Millions of euro Opening balance at Jan. 1, 2020 Purchases Sales Changes in fair value through OCI Other changes Closing balance at Dec. 31, 2020 SECURITIES AT FVOCI Millions of euro Opening balance at Jan. 1, 2020 Purchases Sales Changes in fair value through OCI Reclassifications Other changes Closing balance at Dec. 31, 2020 Non-current Current 64 6 - (21) (9) 40 - - - - - - Non-current Current 416 124 (54) (3) (75) - 408 61 - - - 75 (69) 67 331 Integrated Annual Report 202044.1.3 Financial assets at fair value through profit or loss through profit or loss by nature, broken down into current The following table shows financial assets at fair value and non-current financial assets. Millions of euro Derivatives at FVTPL Investments in liquid assets Financial assets at FVTPL Equity investments in other companies at FVTPL Financial assets from service concession arrangements at FVTPL Total Notes 47 27 27 Non-current at Dec. 31, 2020 at Dec. 31, 2019 52 - - 30 29 - - 8 2,057 2,139 2,362 2,399 Notes 47 32 28, 28.1 Current at Dec. 31, 2020 2,765 204 97 - - at Dec. 31, 2019 3,086 - 51 - - 3,066 3,137 44.1.4 Derivative financial assets designated as hedging instruments 44.2 Financial liabilities by category The following table shows the carrying amount for each For more information on derivative financial assets, please category of financial liability provided for under IFRS 9, see note 47 “Derivatives and hedge accounting”. broken down into current and non-current financial liabili- Millions of euro 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 ties, showing hedging derivatives and derivatives measured at fair value through profit or loss separately. Notes 44.2.1 44.4 44.4 44.4 Non-current Current at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 50,254 54,931 29,598 28,261 29 29 - 20 20 1 3,577 2,386 3,577 53,860 2,387 57,338 2,887 2,887 - 644 644 33,129 2,981 2,981 - 573 573 31,815 For more information on fair value measurement, please 44.2.1 Financial liabilities measured at amortized cost see note 48 “Liabilities measured at fair value”. The following table shows financial liabilities at amortized cost by nature, broken down into current and non-current financial liabilities. Millions of euro Long-term borrowings Short-term borrowings Trade payables Other financial liabilities Total 332332 Notes 44.3 41 Non-current at Dec. 31, 2020 at Dec. 31, 2019 49,519 54,174 - 577 158 - 638 119 50,254 54,931 Notes 44.3 44.3 41 Current at Dec. 31, 2020 at Dec. 31, 2019 3,168 6,345 12,282 7,803 29,598 3,409 3,917 12,322 8,613 28,261 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements 44.3 Borrowings The following table reports the carrying amount and fair va- lue for each category of long-term debt and interest rate, 44.3.1 Long-term borrowings (including the portion including the portion falling due within 12 months. falling due within 12 months) - €52,687 million 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 Changes in carrying amount at Dec. 31, 2020 at Dec. 31, 2019 Bonds: - listed, fixed rate 23,629 23,052 1,041 22,011 27,470 27,312 26,593 1,621 24,972 31,073 (3,541) - listed, floating rate - unlisted, fixed rate - unlisted, floating rate 2,817 2,800 260 2,540 2,937 3,515 3,488 258 3,230 3,655 (688) 13,262 13,184 - 13,184 15,753 14,458 14,359 - 14,359 15,794 (1,175) 733 733 111 622 828 760 760 27 733 753 (27) Total bonds 40,441 39,769 1,412 38,357 46,988 46,045 45,200 1,906 43,294 51,275 (5,431) Bank borrowings: - fixed rate 790 782 254 - floating rate 9,278 9,250 1,115 528 8,135 833 896 893 9,259 8,610 8,565 279 842 614 7,723 947 8,642 (111) 685 - - - - - 70 70 - 70 70 (70) 10,068 10,032 1,369 8,663 10,092 9,576 9,528 1,121 8,407 9,659 504 1,979 1,979 - floating rate 89 89 Total leases 2,068 2,068 225 22 247 74 66 1,754 1,979 1,856 1,856 67 89 108 108 1,821 2,068 1,964 1,964 565 113 630 160 792 86 822 69 257 18 275 92 15 1,599 1,856 90 108 1,689 1,964 730 54 811 75 123 (19) 104 (183) 110 607 191 639 179 798 818 140 678 790 878 891 107 784 886 (73) 40,267 39,636 1,594 38,042 46,665 45,314 44,523 2,249 42,274 50,481 (4,887) 13,108 13,051 1,574 11,477 13,273 13,149 13,060 1,160 11,900 13,303 (9) TOTAL 53,375 52,687 3,168 49,519 59,938 58,463 57,583 3,409 54,174 63,784 (4,896) 333 - use of revolving credit lines Total bank borrowings Leases: - fixed rate Other non-bank borrowings: - fixed rate - floating rate Total other non- bank borrowings Total fixed-rate borrowings Total floating-rate borrowings Integrated Annual Report 2020 The table below reports long-term financial debt by curren- cy and interest rate. LONG-TERM FINANCIAL DEBT BY CURRENCY AND INTEREST RATE Millions of euro Euro US dollar Pound sterling Colombian peso Brazilian real Swiss franc Chilean peso/UF Peruvian sol Russian ruble Other currencies Carrying amount Nominal value Carrying amount Nominal value Current average nominal interest rate Current effective interest rate at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 25,581 18,500 3,955 1,283 1,832 328 368 388 281 171 26,089 18,589 3,998 1,283 1,864 329 374 388 286 175 27,272 20,103 4,354 1,381 2,412 419 414 426 225 577 30,311 57,583 27,915 20,239 4,394 1,381 2,458 419 421 426 227 583 30,548 58,463 2.2% 4.5% 5.1% 6.8% 5.3% 1.8% 4.9% 5.8% 7.1% 2.6% 4.7% 5.3% 6.8% 5.3% 1.8% 5.0% 5.8% 7.1% Total non-euro currencies TOTAL 27,106 52,687 27,286 53,375 Long-term financial debt denominated in currencies other butable to the positive effect of the exchange rates of the than the euro decreased by €3,205 million, largely attri- main currencies. CHANGE IN THE NOMINAL VALUE OF LONG-TERM DEBT Millions of euro Nominal value Repayments Change in the consolidation scope New issues Other changes Exchange differences Bonds Borrowings - of which leases Total financial debt at Dec. 31, 2019 46,045 12,418 1,964 58,463 (2,109) (1,638) (208) (3,747) - (389) - (389) 668 3,256 441 3,924 (1,797) (48) - (2,366) (665) (129) (1,845) (3,031) Nominal value at Dec. 31, 2020 40,441 12,934 2,068 53,375 The nominal value of long-term debt amounted to €53,375 instruments regarded their maturity, which was transfor- million at December 31, 2020, a decrease of €5,088 million med from fixed to perpetual, which means that they will be compared with December 31, 2019. The increase in debt redeemed only in the event of liquidation. As a result, those deriving from new issues of €3,924 million was easily offset bonds are no longer recognized as debt instruments but as by reductions associated with repayments in the amount equity instruments. of €3,747 million, exchange gains of €3,031 million, the deconsolidation of the debt of a number of South African Repayments in 2020 concerned bonds in the amount of companies in the amount of €389 million (that amount is €2,109 million and borrowings totaling €1,638 million. net of new issues in 2020 by the deconsolidated compa- nies) and other changes in debt totaling €1,845 million. More specifically, the main bonds maturing in 2020 inclu- This value includes €1,797 million reflecting the accounting ded: effects of the consent solicitation directed at the holders › €410 million in respect of a fixed-rate hybrid bond issued of three non-convertible subordinated hybrid bonds deno- by Enel SpA, maturing in January 2020; minated in euros in order to align their features with those › €100 million in respect of a fixed-rate bond issued by of new issues. More specifically, the main change to those Enel Finance International, maturing in January 2020; 334334 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements › €482 million in respect of a fixed-rate bond issued by › €150 million in respect of a floating-rate loan of Enel SpA; Enel Finance International, maturing in March 2020; › €182 million in respect of loan repayments by Endesa; › the equivalent of €93 million in respect of a fixed-rate › €285 million in respect of loans linked to the achievement bond in Swiss francs issued by Enel Finance International, of sustainability goals of the Group’s Italian companies; maturing in June 2020; › the equivalent of €585 million associated with Latin › the equivalent of €438 million in respect of a fixed-rate American companies. bond in pounds sterling issued by Enel SpA, maturing in September 2020; New borrowing carried out in 2020 involved bonds in the › the equivalent of €274 million in respect of a fixed-rate amount of €668 million and borrowings of €3,256 million hybrid bond in pounds sterling repurchased early by Enel (both translated at the exchange rates prevailing at the is- SpA in September 2020; sue date). › the equivalent of €286 million in respect of bonds issued by the Latin American companies. The table below shows the main characteristics of the most significant financial transactions involving bond issues and The main repayments of borrowings in the year included bank borrowings carried out in 2020 and translated into eu- the following: ros at the exchange rate prevailing at December 31, 2020. Issuer/Borrower Issue/Grant date Amount in millions of euro Currency Interest rate Interest rate type Maturity Bonds Total bonds Bank borrowings Total bank borrowings Enel Finance International 20.10.2020 Codensa 25.08.2020 Codensa 25.08.2020 Enel SpA 26.10.2020 Enel SpA 27.11.2020 Enel Finance America 21.01.2020 Endesa 20.04.2020 e-distribuzione 30.03.2020 Dolores Wind SA de Cv Enel Distribuição São Paulo 09.03.2020 17.04.2020 Enel Rus Wind Kola 27.03.2020 Endesa 01.09.2020 Parque Amistad IV SA de Cv EGP Magdalena Solar SA de Cv Enel Distribuição Ceará Enel Distribuição Goiás Enel Distribuição Rio de Janeiro 09.03.2020 09.03.2020 07.01.2020 06.03.2020 23.12.2020 557 60 60 677 500 500 277 300 250 57 71 39 35 33 33 30 27 32 2,184 GBP COP COP EUR EUR USD EUR EUR USD USD 1.00% Fixed rate 20.10.2027 CPI + 2.5% Floating rate 25.08.2027 4.700% Fixed rate 25.08.2024 Euribor 6M + 1% Euribor 6M + 1% LIBOR 6M + 1.3% Euribor 3M + 0.7% Euribor 6M + 0.42% LIBOR 6 M + 1.4% Floating rate 15.10.2026 Floating rate 15.10.2026 Floating rate 20.11.2026 Floating rate 19.04.2022 Floating rate 30.03.2035 Floating rate 15.01.2027 2.96% Fixed rate 19.04.2021 RUB OFZ 3Y+ 1.55% Floating rate 26.02.2034 EUR USD USD USD USD USD Euribor 6M + 0.51% LIBOR 6 M + 1.4% LIBOR 6 M + 1.4% Floating rate 03.09.2035 Floating rate 15.01.2027 Floating rate 15.01.2027 2.1% Fixed rate 07.01.2021 1.8% Fixed rate 08.03.2021 1.4% Fixed rate 23.12.2022 335 Integrated Annual Report 2020The Group’s main long-term financial liabilities are gover- be repaid in the event of the dissolution or liquidation of ned by covenants that are commonly adopted in interna- the Company, can be summarized as follows: tional business practice. These liabilities primarily regard › subordination clauses, under which each hybrid bond is the bond issues carried out within the framework of the subordinate to all other bonds issued by the company Global/Euro Medium-Term Notes program, issues of su- and has the same seniority with all other hybrid financial bordinated unconvertible hybrid bonds (so-called “hybrid instruments issued, being senior only to equity instru- bonds”) and loans granted by banks and other financial ments; institutions (including the European Investment Bank and › prohibition on mergers with other companies, the sale or Cassa Depositi e Prestiti SpA). leasing of all or a substantial part of the company’s as- sets to another company, unless the latter succeeds in all The main covenants regarding bond issues carried out within obligations of the issuer. the framework of the Global/Euro Medium-Term Notes pro- gram of (i) Enel and Enel Finance International NV (including The main covenants envisaged in the loan contracts of Enel the green bonds of Enel Finance International NV guaranteed and Enel Finance International NV and the other Group by Enel SpA, which are used to finance the Group’s so-called companies, including the sustainability-linked loan facili- eligible green projects) and those regarding bonds issued by ty agreements obtained by Enel in 2019 and 2020, can be Enel Finance International NV on the US market guaranteed summarized as follows: by Enel SpA can be summarized as follows: › negative pledge clauses, under which the borrower and, › negative pledge clauses under which the issuer and the in some cases, the guarantor are subject to limitations on guarantor may not establish or maintain mortgages, liens the establishment of mortgages, liens or other encum- or other encumbrances on all or part of its assets or reve- brances on all or part of their respective assets, with the nue to secure certain financial liabilities, unless the same exception of expressly permitted encumbrances; encumbrances are extended equally or pro rata to the › disposals clauses, under which the borrower and, in bonds in question; some cases, the guarantor may not dispose of their as- › pari passu clauses, under which the bonds and the as- sets or operations, with the exception of expressly per- sociated security constitute a direct, unconditional and mitted disposals; unsecured obligation of the issuer and the guarantor and › pari passu clauses, under which the payment undertakin- are issued without preferential rights among them and gs of the borrower have the same seniority as its other have at least the same seniority as other present and fu- unsecured and unsubordinated payment obligations; ture unsubordinated and unsecured bonds of the issuer › change of control clauses, under which the borrower and the guarantor; and, in some cases, the guarantor could be required to › cross-default clauses, under which the occurrence of a renegotiate the terms and conditions of the financing or default event in respect of a specified financial liability make compulsory early repayment of the loans granted; (above a threshold level) of the issuer, the guarantor or, in › rating clauses, which provide for the borrower or the some cases, “significant” subsidiaries, constitutes a de- guarantor to maintain their rating above a certain spe- fault in respect of the liabilities in question, which beco- cified level; me immediately repayable. › cross-default clauses, under which the occurrence of a Since 2019, Enel Finance International NV has issued a default event in respect of a specified financial liability number of “sustainable” bonds on the European market (as (above a threshold level) of the issuer or, in some cases, part of the Euro Medium Term Notes - EMTN bond issue the guarantor constitutes a default in respect of the liabi- program) and on the American market, both guaranteed lities in question, which become immediately repayable. by Enel SpA, linked to the achievement of a number of the In some cases the covenants are also binding for the signi- Sustainable Development Goals (SDGs) of the United Na- ficant companies or subsidiaries of the obligated parties. All tions that contain the same covenants as other bonds of the borrowings considered specify “events of default” typi- the same type. cal of international business practice, such as, for example, insolvency, bankruptcy proceedings or the entity ceases The main covenants covering Enel’s hybrid bonds, including trading. the perpetual hybrid bond issues in September, which will In addition, the guarantees issued by Enel in the interest 336336 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsof e-distribuzione SpA for certain loans to e-distribuzione (notably Enel Generación Chile SA) contain covenants and SpA from Cassa Depositi e Prestiti SpA require that at the events of default typical of international business practice, end of each six-month measurement period that Enel’s net which had all been complied with as at December 31, 2020. consolidated financial debt shall not exceed 4.5 times an- nual consolidated EBITDA. The following table reports the impact on gross long-term Finally, the debt of Endesa SA, Enel Américas SA, Enel Chile debt of hedges to mitigate currency risk. SA and the other Spanish and Latin American subsidiaries LONG-TERM FINANCIAL DEBT BY CURRENCY AFTER HEDGING Millions of euro at Dec. 31, 2020 at Dec. 31, 2019 Initial debt structure Impact of hedge Debt structure after hedging Initial debt structure Impact of hedge Debt structure after hedging Carrying amount Nominal value % Carrying amount Nominal value % Euro US dollar 25,581 26,089 48.9% 18,423 44,512 83.4% 27,272 27,915 47.8% 20,218 48,133 82.3% 18,500 18,589 34.8% (14,955) 3,634 6.8% 20,103 20,239 34.6% (16,445) 3,794 6.5% Pound sterling 3,955 3,998 7.5% (3,998) - - 4,354 4,394 7.5% (4,394) - - Colombian peso Brazilian real Swiss franc Chilean peso/ UF Peruvian sol Russian ruble Other currencies Total non-euro currencies 1,283 1,832 328 368 388 281 1,283 1,864 329 374 388 286 2.4% 3.5% 0.6% 0.7% 0.7% 0.5% - 1,283 794 2,658 (329) - - - - 374 388 286 2.4% 5.0% - 0.7% 0.7% 0.5% 1,381 2,412 419 414 426 225 1,381 2,458 419 421 426 227 2.4% 4.2% 0.7% 0.7% 0.7% 0.4% - 1,381 968 3,426 (419) - - - - 421 426 227 2.4% 5.9% - 0.7% 0.7% 0.4% 171 175 0.4% 65 240 0.5% 577 583 1.0% 72 655 1.1% 27,106 27,286 51.1% (18,423) 8,863 16.6% 30,311 30,548 52.2% (20,218) 10,330 17.7% TOTAL 52,687 53,375 100.0% - 53,375 100.0% 57,583 58,463 100.0% - 58,463 100.0% The amount of floating-rate debt that is not hedged the income statement (raising borrowing costs) in the event against interest rate risk is a risk factor that could impact of an increase in market interest rates. Millions of euro 2020 2019 Pre-hedge % Post-hedge % Pre-hedge % Post-hedge Floating rate Fixed rate Total 19,458 40,267 59,725 32.6% 67.4% 13,672 46,053 59,725 22.9% 77.1% 17,113 45,314 62,427 27.4% 72.6% 12,208 50,219 62,427 % 19.6% 80.4% At December 31, 2020, 32.6% of financial debt was floa- accounting, the percentage of net financial debt hedged ting rate (27.4% at December 31, 2019). Taking account of at December 31, 2020 was unchanged compared with the hedges of interest rates considered effective pursuant to previous year. the IFRS-EU, 22.9% of net financial debt at December 31, 2020 (19.6% at December 31, 2019) was exposed to inte- These results are in line with the limits established in the rest rate risk. Including interest rate derivatives treated as risk management policy. hedges for management purposes but ineligible for hedge 337 Integrated Annual Report 202044.3.2 Short-term borrowings - €6,345 million €6,345 million, an increase of €2,428 million on December At December 31, 2020 short-term borrowings amounted to 31, 2019. They break down as follows. Millions of euro Short-term bank borrowings Commercial paper Cash collateral and other financing on derivatives Other short-term borrowings (1) Short-term borrowings at Dec. 31, 2020 at Dec. 31, 2019 Change 711 4,854 370 410 6,345 579 2,284 750 304 3,917 132 2,570 (380) 106 2,428 (1) Does not include current financial borrowings included in other current financial liabilities. Commercial paper amounted to €4,854 million, issued by als and at December 31, 2020 these issues totaled €3,901 Enel Finance International, Enel Finance America and En- million. desa. The main commercial paper programs include: › €6,000 million of Enel Finance International; 44.4 Derivative financial liabilities For more information on derivative financial liabilities, plea- › €4,000 million of Endesa; se see note 47 “Derivatives and hedge accounting”. › $3,000 million (equivalent to €2,445 million at December 31, 2020) of Enel Finance America. During 2020 Enel Finance International and Endesa structu- 44.5 Net gains and losses The following table shows net gains and losses by category of red commercial paper programs linked to sustainability go- financial instruments, excluding derivatives. Millions of euro 2020 2019 Financial assets at amortized cost (1,326) (1,334) (525) (1,137) Net gain/(loss) Of which impairment loss/gain Net gain/(loss) Of which impairment loss/gain - - - (346) - (346) - - - - 1 5 6 177 - 177 (3,514) - - - - - - (23) - (23) - - - - Financial assets at FVOCI Equity investments at FVOCI Other financial assets at FVOCI Total financial assets at FVOCI Financial assets at FVTPL Financial assets at FVTPL 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 1 6 7 (125) - (125) (1,385) - - - For more details on net gains and losses on derivatives, please see note 12 “Net financial income/(expense) from derivatives”. 338338 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements45. Risk management Financial risk management governance and objectives As part of its operations, the Enel Group is exposed to a va- riety of financial risks, notably interest rate risk, commodity risk, currency risk, credit and counterparty risk and liquidity risk. As noted in the section “Risk management” in the Report on Operations, the Group’s governance arrangements for financial risks include internal committees and the establi- shment 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 re- sults. The Group’s policies for managing financial risks provide for the mitigation of the effects on performance of chan- ges in interest rates and exchange rates with the exclusion of translation risk (connected with consolidation of the ac- counts). This objective is achieved at the source of the risk, through the diversification of both the nature of the finan- cial instruments and the sources of revenue, and by modi- fying the risk profile of specific exposures with derivatives entered into on over-the-counter markets or with specific commercial agreements. As part of its governance of financial risks, Enel regularly monitors the size of the OTC derivatives portfolio in rela- tion to the threshold values set by regulators for the acti- vation of clearing obligations (EMIR - European Market Infrastructure Regulation no. 648/2012 of the European Parliament and of the Council). During 2020, no overshoot of those threshold values was detected. There were no changes in the sources of exposure to such risks compared with the previous year. Finally, the impact of COVID-19 on risk management is- sues was limited and in any case not such as to directly and materially influence the valuation of derivative instruments and the outcome of the assessment of the effectiveness of hedges of exchange rates, interest rates and commodities. The financial underlyings were not affected by the adverse impact of COVID-19 either, and no changes were recorded in the exposures. Interest rate risk Interest rate risk derives primarily from the use of financial instruments and manifests itself as unexpected changes in charges on financial liabilities, if indexed to floating 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 instruments measured at fair value (such as fixed-rate debt). The main financial liabilities held by the Group include bonds, bank borrowings, borrowings from other lenders, commercial paper, derivatives, cash deposits received to secure commercial or derivative contracts (guarantees, cash collateral). 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 diversification of the por- tfolio of financial liabilities by contract type, maturity and interest rate, and modifying the risk profile of specific exposures using OTC derivatives, mainly interest rate swaps and interest rate options. The term of such derivatives does not exceed the maturity of the underlying financial liability, so that any change in the fair value and/or expected cash flows of such contracts is offset by a corresponding change in the fair value and/or cash flows of the hedged position. Proxy hedging techniques can be used in a number of re- sidual circumstances, when the hedging instruments for the risk factors are not available on the market or are not sufficiently liquid. For the purpose of EMIR compliance, in order to test the actual effectiveness of the hedging techniques adopted, the Group subjects its hedge portfolios to periodic stati- stical assessment. Using interest rate swaps, the Enel Group agrees with the counterparty to periodically exchange floating-rate interest flows with fixed-rate flows, both calculated on the same notional principal amount. Floating-to-fixed interest rate swaps transform floating-ra- te financial liabilities into fixed rate liabilities, thereby neu- tralizing the exposure of cash flows to changes in interest rates. Fixed-to-floating interest rate swaps transform fixed rate financial liabilities into floating-rate liabilities, thereby neu- tralizing the exposure of their fair value to changes in inte- rest rates. Floating-to-floating interest rate swaps transform the in- dexing criteria for floating-rate financial liabilities. Some structured borrowings have multi-stage cash flows hedged by interest rate swaps that at the reporting date, and for a limited time, provide for the exchange of fixed-ra- te interest flows. Interest rate options involve the exchange of interest diffe- rences calculated on a notional principal amount once cer- tain thresholds (strike prices) are reached. These thresholds specify the effective maximum rate (cap) or the minimum rate (floor) to which the synthetic financial instrument will be indexed as a result of the hedge. Certain hedging stra- tegies provide for the use of combinations of options (col- lars) that establish the minimum and maximum rates at the 339 Integrated Annual Report 2020same time. In this case, the strike prices are normally set so of greater uncertainty about future interest rate develop- that no premium is paid on the contract (zero cost collars). ments because they make it possible to benefit from any Such contracts are normally used when the fixed interest decrease in interest rates. rate that can be obtained in an interest rate swap is con- The following table reports the notional amount of interest sidered too high with respect to market expectations for rate derivatives at December 31, 2020 and December 31, future interest rate developments. In addition, interest rate 2019 broken down by type of contract. options are also considered most appropriate in periods 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 2020 7,323 173 - 276 50 7,822 2019 7,932 152 - 327 50 8,461 For more details on interest rate derivatives, please see the financial expense associated with unhedged gross debt. note 47 “Derivatives and hedge accounting”. These market scenarios are obtained by simulating parallel increases and decreases in the yield curve as at the repor- Interest rate risk sensitivity analysis ting date. Enel analyzes the sensitivity of its exposure by estimating There were no changes introduced in the methods and as- the effects of a change in interest rates on the portfolio of sumptions used in the sensitivity analysis compared with financial instruments. the previous year. More specifically, sensitivity analysis measures the potential With all other variables held constant, the Group’s pre-tax impact on profit or loss and on equity of market scenarios profit would be affected by a change in the level of interest that would cause a change in the fair value of derivatives or in rates as follows. Millions of euro 2020 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 18 6 - - (18) (6) - - - - 112 - - - (112) - 340340 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsAt December 31, 2020, 24.6% (22.5% at December 31, 2019) ments include cross currency interest rate swaps, currency of gross long-term financial debt was floating rate. Taking forwards and currency swaps. The term of such contracts account of effective cash flow hedges of interest rate risk does not exceed the maturity of the underlying instrument, (in accordance with the provisions of the IFRS-EU), 86.3% so that any change in the fair value and/or expected cash of gross long-term financial debt was hedged at December flows of such instruments offsets the corresponding chan- 31, 2020 (85.9% at December 31, 2019). ge in the fair value and/or cash flows of the hedged posi- tion. Currency risk Cross currency interest rate swaps are used to transform a Currency risk mainly manifests itself as unexpected chan- long-term financial liability denominated in currency other ges in the financial statement items associated with tran- than the presentation currency into an equivalent liability in sactions denominated in a currency other than the pre- the presentation currency. sentation currency. The Group’s consolidated financial Currency forwards are contracts in which the counter- statements are also exposed to translation risk as a result parties agree to exchange principal amounts denomina- of the conversion of the financial statements of foreign ted in different currencies at a specified future date and subsidiaries, which are denominated in local currencies, exchange rate (the strike). Such contracts may call for the into euros as the Group’s presentation currency. actual exchange of the two principal amounts (deliverable The Group’s exposure to currency risk is connected with forwards) or payment of the difference generated by diffe- the purchase or sale of fuels and power, investments (cash rences between the strike exchange rate and the prevai- flows for capitalized costs), dividends and the purchase or ling exchange rate at maturity (non-deliverable forwards). sale of equity investments, commercial transactions and fi- In the latter case, the strike rate and/or the spot rate can nancial assets and liabilities. be determined as averages of the rates observed in a given The Group policies for managing currency risk provide for period. the mitigation of the effects on profit or loss of changes in Currency swaps are contracts in which the counterparties the level of exchange rates, with the exception of the tran- enter into two transactions of the opposite sign at different slation effects connected with consolidation. future dates (normally one spot, the other forward) that In order to minimize the exposure to currency risk, Enel im- provide for the exchange of principal denominated in dif- plements diversified revenue and cost sources geographi- ferent currencies. cally, and uses indexing mechanisms in commercial con- tracts. Enel also uses various types of derivative, typically The following table reports the notional amount of tran- on the OTC market. sactions outstanding at December 31, 2020 and December The derivatives in the Group’s portfolio of financial instru- 31, 2019, broken down by type of hedged item. Millions of euro Notional amount Cross currency interest rate swaps (CCIRSs) hedging debt denominated in currencies other than the euro Currency forwards hedging currency risk on commodities Currency forwards/swaps hedging future cash flows in currencies other than the euro Other currency forwards Total 2020 20,636 5,469 3,971 990 31,066 2019 22,756 4,291 4,760 1,488 33,295 More specifically, these include: › other currency forwards include OTC derivatives tran- › CCIRSs with a notional amount of €20,636 million to he- sactions carried out to mitigate currency risk on expected dge the currency risk on debt denominated in curren- cash flows in currencies other than the presentation cur- cies other than the euro (€22,756 million at December rency connected with the purchase of investment goods 31, 2019); in the renewables and infrastructure and networks sec- › currency forwards with a total notional amount of €9,440 tors (new generation digital meters), on operating costs million used to hedge the currency risk associated with for the supply of cloud services and on revenue from the purchases of natural gas and fuel and expected cash sale of renewable energy. flows in currencies other than the euro (€9,051 million at December 31, 2019); At December 31, 2020, 51% (52% at December 31, 2019) 341 Integrated Annual Report 2020of Group long-term debt was denominated in currencies would cause a change in the fair value of derivatives or in other than the euro. the financial expense associated with unhedged gross me- Taking account of hedges of currency risk, the percentage dium/long-term debt. of debt not hedged against that risk amounted to 17% at These scenarios are obtained by simulating the apprecia- December 31, 2020 (18% at December 31, 2019). tion/depreciation of the euro against all of the currencies compared with the value observed as at the reporting date. Currency risk sensitivity analysis There were no changes in the methods or assumptions The Group analyses the sensitivity of its exposure by esti- used in the sensitivity analysis compared with the previous mating the effects of a change in exchange rates on the year. portfolio of financial instruments. With all other variables held constant, the pre-tax profit More specifically, sensitivity analysis measures the potential would be affected by changes in exchange rates as follows. impact on profit or loss and equity of market scenarios that Millions of euro Change in fair value of derivatives classified as non- hedging instruments Change in fair value of derivatives designated as hedging instruments 2020 Pre-tax impact on profit or loss Pre-tax impact on equity Exchange rate Increase Decrease Increase Decrease 10% 605 (739) - - Cash flow hedges Fair value hedges 10% 10% - (53) - 65 (2,968) - 3,626 - Commodity price risk the strike price and to Enel in the opposite case. The resi- The risk of fluctuations in the price of energy commodities such as electricity, gas, oil, CO2, etc. is generated by the vo- latility of prices and structural correlations between them, dual exposure in respect of the sale of energy on the spot market not hedged with such contracts is aggregated by uniform risk factors that can be managed with hedging which create uncertainty in the margin on purchases and transactions on the market. Proxy hedging techniques can sales of electricity and fuels at variable prices (e.g. indexed be used for the industrial portfolios when the hedging in- bilateral contracts, transactions on the spot market, etc.). struments for the specific risk factors generating the expo- The exposures on indexed contracts are quantified by bre- sure are not available on the market or are not sufficiently aking down the contracts that generate exposure into the liquid. In addition, Enel uses portfolio hedging techniques underlying risk factors. to assess opportunities for netting intercompany exposu- To contain the effects of fluctuations and stabilize margins, res. in accordance with the policies and operating limits deter- The Group mainly uses plain vanilla derivatives for hedging mined by the Group’s governance and leaving an appro- (more specifically, forwards, swaps, options on commodi- priate margin of flexibility to seize any short-term opportu- ties, futures, contracts for differences). nities that may present themselves, Enel develops and plans strategies that impact the various phases of the industrial process linked to the production and sale of electricity and Some of these products can be indexed to a variety of un- derlyings (coal, gas, oil, CO2, different geographical areas, etc.) and the approaches can be assessed and adapted to gas (such as forward procurement and long-term commer- specific needs. cial agreements), as well as risk mitigation plans and tech- Enel also engages in proprietary trading in order to main- niques using derivative contracts (hedging). tain a presence in the Group’s reference energy commodity As regards electricity sold by the Group, Enel mainly uses fixed-price contracts in the form of bilateral physical con- tracts (PPAs) and financial contracts (e.g. contracts for dif- markets. These operations consist in taking on exposures in energy commodities (oil products, gas, coal, CO2 certi- ficates and electricity) using financial derivatives and phy- ferences, VPP contracts, etc.) in which differences are paid sical contracts traded on regulated and over-the-counter to the counterparty if the market electricity price exceeds markets, optimizing profits through transactions carried 342342 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsout on the basis of expected market developments. ding transactions at December 31, 2020 and December 31, The following table reports the notional amount of outstan- 2019, broken down by type of instrument. Millions of euro Notional amount Forward and futures contracts Swaps Options Embedded Total 2020 48,064 1,862 576 7 50,509 2019 35,824 5,706 654 68 42,252 For more details, please see note 47 “Derivatives and hedge the price curve for the main commodities that make up accounting”. Sensitivity analysis of commodity risk The following table presents the results of the analysis of sensitivity to a reasonably possible change in the com- modity prices underlying the valuation model used in the scenario at the same date, with all other variables held con- the fuel scenario and the basket of formulas used in the contracts is mainly attributable to the change in the price of electricity, gas and petroleum products and, to a lesser extent, of CO2. The impact on equity of the same shifts in the price curve is primarily due to changes in the price of electricity, petroleum products and, to a lesser extent, CO2. The Group’s exposure to changes in the prices of other stant. commodities is not material. The impact on pre-tax profit of shifts of +15% and -15% in Millions of euro 2020 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 15% 15% (43) - 43 - - 25 - (25) Credit and counterparty risk consolidated exposure is carried out by Enel SpA. The Group’s commercial, commodity and financial tran- In addition, at the Group level the policy provides for the sactions expose it to credit and counterparty risk, i.e. the use of uniform criteria – in all the main Regions/Countries/ possibility that a deterioration in the creditworthiness of a Global Business Lines and at the consolidated level – in me- counterparty that has an adverse impact on the expected asuring commercial credit exposures in order to promptly value of the creditor position or, for trade payables only, in- identify any deterioration in the quality of outstanding re- crease average collection times. ceivables and any mitigation actions to be taken. Accordingly, the exposure to credit risk is attributable to The policy for managing credit risk associated with com- the following types of transactions: mercial activities provides for a preliminary assessment of › the sale and distribution of electricity and gas in free and the creditworthiness of counterparties and the adoption of regulated markets and the supply of goods and services mitigation instruments, such as obtaining collateral or un- (trade receivables); secured guarantees. › trading activities that involve the physical exchange of In addition, the Group undertakes transactions to factor re- assets or transactions in financial instruments (the com- ceivables without recourse, which results in the complete modity portfolio); derecognition of the corresponding assets involved in the › trading in derivatives, bank deposits and, more generally, factoring, as the risks and rewards associated with them financial instruments (the financial portfolio). have been transferred. In order to minimize credit risk, credit exposures are ma- Finally, with regard to financial and commodity transactions, naged at the Region/Country/Global Business Line level by risk mitigation is pursued with a uniform system for asses- different units, thereby ensuring the necessary segregation sing counterparties at the Group level, including implemen- of risk management and control activities. Monitoring the tation at the level of Regions/Countries/Global Business Li- 343 Integrated Annual Report 2020nes, as well as with the adoption of specific standardized assessment of the impairment of trade receivables, to date contractual frameworks that contain risk mitigation clau- the Group portfolio has displayed resilience to the global ses (e.g. netting arrangements) and possibly the exchange pandemic. This reflects the strengthening of digital col- of cash collateral. lection channels and a sound diversification of commercial Despite the deterioration in the collection status of some customers with a low exposure to the impacts of COVID customer segments, which was taken into account in the (e.g. utilities and distribution companies). LOAN ASSETS Millions of euro Staging Performing Underperforming Non-performing Total Basis for recognition of expected credit loss allowance 12 m ECL Lifetime ECL Lifetime ECL at Dec. 31, 2020 Avg loss rate (PD*LGD) Gross carrying amount Expected credit loss allowance 0.9% 25.0% 68.8% 7,088 88 176 7,352 65 22 121 208 CONTRACT ASSETS, TRADE RECEIVABLES AND OTHER FINANCIAL ASSETS: INDIVIDUAL MEASUREMENT Millions of euro at Dec. 31, 2020 Avg loss rate (PD*LGD) Gross carrying amount Expected credit loss allowance Contract assets Trade receivables Trade receivables not past due Trade receivables past due: - 1-30 days - 31-60 days - 61-90 days - 91-120 days - 121-150 days - 151-180 days - more than 180 days (credit impaired) Total trade receivables Other financial assets Other financial assets not past due Other financial assets past due: - 1-30 days - 31-60 days - 61-90 days - 91-120 days - 121-150 days - 151-180 days - more than 180 days (credit impaired) Total other financial assets TOTAL 344344 4.3% 1.3% 1.5% 2.8% 12.8% 28.0% 12.9% 100.0% 83.8% 3.1% 15.6% - - - - 40.0% 6.3% 23 4,953 453 106 39 25 31 53 1,692 7,352 1,243 499 11 - - - 5 79 1,837 9,212 1 66 7 3 5 7 4 53 1,418 1,563 38 78 - - - - 2 5 123 1,687 Carrying amount 7,023 66 55 7,144 Carrying amount 22 4,887 446 103 34 18 27 - 274 5,789 1,205 421 11 - - - 3 74 1,714 7,525 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsCONTRACT ASSETS, TRADE RECEIVABLES AND OTHER FINANCIAL ASSETS COLLECTIVE MEASUREMENT Millions of euro at Dec. 31, 2020 Avg loss rate (PD*LGD) Gross carrying amount Expected credit loss allowance Contract assets Trade receivables Trade receivables not past due Trade receivables past due: - 1-30 days - 31-60 days - 61-90 days - 91-120 days - 121-150 days - 151-180 days - more than 180 days (credit impaired) Total trade receivables Other financial assets Other financial assets not past due Other financial assets past due: - 1-30 days - 31-60 days - 61-90 days - 91-120 days - 121-150 days - 151-180 days - more than 180 days (credit impaired) Total other financial assets TOTAL Liquidity risk 1.2% 0.6% 7.2% 16.2% 26.4% 36.6% 43.1% 100.0% 100.0% 2.2% - - - - - - - 163 5,487 554 154 110 71 58 79 1,468 7,981 274 3 1 - - - - 55 333 8,477 2 32 40 25 29 26 25 79 1,468 1,724 6 - - - - - - - 6 1,732 Carrying amount 161 5,455 514 129 81 45 33 - - 6,257 268 3 1 - - - - 55 327 6,745 sources of funding on different markets, in different cur- Liquidity risk manifests itself as uncertainty about the rencies and with diverse counterparties. Group’s ability to discharge its obligations associated with The mitigation of liquidity risk enables the Group to main- financial liabilities that are settled by delivering cash or tain a credit rating that ensures access to the capital mar- another financial asset. ket and limits the cost of funds, with a positive impact on Enel manages liquidity risk by implementing measures to its financial position and performance. ensure an appropriate level of liquid financial resources, minimizing the associated opportunity cost and maintai- In order to respond to any exceptional circumstances that ning a balanced debt structure in terms of its maturity pro- might arise in the context of the COVID-19 emergency, in file and funding sources. 2020 the Group decided to further increase its already lar- In the short term, liquidity risk is mitigated by maintaining ge and robust level of liquid financial resources available by an appropriate level of unconditionally available resources, expanding its committed credit lines and commercial pa- including liquidity on hand and short-term deposits, avai- per programs. lable committed credit lines and a portfolio of highly liquid assets. The Group holds the following undrawn lines of credit and In the long term, liquidity risk is mitigated by maintaining a commercial paper programs. balanced maturity profile for our debt, access to a range of 345 Integrated Annual Report 2020Millions of euro at Dec. 31, 2020 at Dec. 31, 2019 Committed credit lines Uncommitted credit lines Commercial paper Total Maturity analysis Expiring within one year Expiring beyond one year Expiring within one year Expiring beyond one year 4,028 802 7,591 12,421 14,531 - - 14,531 215 927 9,627 10,769 15,461 - - 15,461 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 2022 2023 2024 2025 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 Leases: - fixed rate - floating rate Total leases Other non-bank borrowings: - fixed rate - floating rate Total other non-bank borrowings TOTAL 175 - - - 175 69 181 - 250 62 5 67 21 44 65 557 866 260 - 111 1,237 185 934 - 1,119 163 17 180 53 22 75 2,256 437 1,677 97 4,467 233 944 - 1,177 194 15 209 63 24 87 2,611 5,940 2,085 580 2,032 97 4,794 63 713 - 776 159 13 172 90 17 4,595 397 1,217 97 6,306 32 722 - 754 121 13 134 130 14 107 5,849 144 7,338 3,408 308 1,213 97 5,026 32 683 - 715 115 13 128 24 19 43 9,667 818 7,045 234 17,764 168 5,073 - 5,241 1,165 13 1,178 258 39 297 5,912 24,480 Commitments to purchase commodities own use exemption provided for under IFRS 9. 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, 2020. Millions of euro Commitments to purchase commodities: - electricity - fuels Total 346346 at Dec. 31, 2020 67,400 41,855 109,255 2021-2024 2025-2029 2030-2034 Beyond 19,058 21,207 40,265 15,730 12,855 28,585 13,273 5,832 19,105 19,339 1,961 21,300 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements46. Offsetting financial assets and financial liabilities At December 31, 2020, the Group did not hold offset po- tionship and the hedged risk, broken down into current and non-current instruments. sitions in assets and liabilities, as it is not the Enel Group’s The notional amount of a derivative contract is the amount policy to settle financial assets and liabilities on a net basis. on the basis of which cash flows are exchanged. This amount can be expressed as a value or a quantity (for 47. Derivatives and hedge accounting The following tables show the notional amount and the fair example tons, converted into euros by multiplying the no- tional amount by the agreed price). Amounts denominated value of derivative financial assets and derivative finan- in currencies other than the euro are translated at the offi- cial liabilities eligible for hedge accounting or measured a cial closing exchange rates provided by the World Markets FVTPL, classified on the basis of the type of hedge rela- Refinitiv (WMR) Company. Millions of euro Non-current Current Notional Fair value Notional Fair value at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 DERIVATIVE ASSETS Fair value hedge derivatives: - on interest rates - on exchange 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 ASSETS 138 639 777 161 5,061 2,541 7,763 50 71 379 500 12 166 178 335 11,705 1,628 22 28 50 21 685 428 13,668 1,134 50 - 322 372 2 4 46 52 7 25 32 26 1,081 215 1,322 2 - 27 29 - 79 79 - 698 2,165 2,863 - 3,430 21,424 - - - 133 2,717 3,081 5,931 - 3,399 17,203 24,854 20,602 - 28 28 - 51 627 678 - 79 2,686 2,765 - - - - 132 847 979 - 34 3,052 3,086 9,040 14,218 1,236 1,383 27,796 26,533 3,471 4,065 347 Integrated Annual Report 2020Millions of euro Non-current Current Notional Fair value Notional Fair value at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 DERIVATIVE LIABILITIES Fair value hedge derivatives: - on exchange rates Total Cash flow hedge derivatives: - on interest rates - on exchange rates - on commodities - - 5 5 7,201 16,310 1,535 7,704 11,049 601 Total 25,046 19,354 Trading derivatives: - on interest rates - on exchange rates - on commodities Total TOTAL DERIVATIVE LIABILITIES 50 28 89 167 62 2 154 218 - - 938 2,491 148 3,577 4 3 22 29 1 1 779 1,560 47 2,386 6 - 14 20 - - - - 122 3,766 1,466 5,354 100 984 20,910 21,994 65 2,573 1,613 4,251 100 1,679 17,650 19,429 - - 2 263 379 644 88 41 2,758 2,887 - - 1 115 457 573 79 38 2,864 2,981 25,213 19,577 3,606 2,407 27,348 23,680 3,531 3,554 47.1 Derivatives designated as hedging instruments Derivatives are initially recognized at fair value, on the tra- arising from financial instruments to which the Group is exposed, please see note 45 “Risk management”. de date of the contract and are subsequently re-measured To be effective a hedging relationship shall meet all of the at their fair value. The method of recognizing the resulting following criteria: gain or loss depends on whether the derivative is designa- › existence of an economic relationship between hedging ted as a hedging instrument, and if so, the nature of the instrument and hedged item; item being hedged. › the effect of credit risk does not dominate the value Hedge accounting is applied to derivatives entered into in changes resulting from the economic relationship; order to reduce risks such as interest rate risk, currency › the hedge ratio defined at initial designation shall be risk, commodity price risk and net investments in foreign equal to the one used for risk management purposes (i.e. operations when all the criteria provided by IFRS 9 are met. same quantity of the hedged item that the entity actually At the inception of the transaction, the Group documents hedges and the quantity of the hedging instrument that the relationship between hedging instruments and hedged the entity actually uses to hedge the quantity of the he- items, as well as its risk management objectives and strate- dged item). gy. The Group also documents its assessment, both at hed- Based on the IFRS 9 requirements, the existence of an ge inception and on an ongoing basis, of whether hedging economic relationship is evaluated by the Group through a instruments are highly effective in offsetting changes in fair qualitative assessment or a quantitative computation, de- values or cash flows of hedged items. pending on the following circumstances: For cash flow hedges of forecast transactions designated › if the underlying risk of the hedging instrument and the as hedged items, the Group assesses and documents that hedged item is the same, the existence of an economic they are highly probable and present an exposure to chan- relationship will be provided through a qualitative analysis; ges in cash flows that affect profit or loss. › on the other hand, if the underling risk of the hedging Depending on the nature of the risk exposure, the Group instrument and the hedged item is not the same, the exi- designates derivatives as either: › fair value hedges; › cash flow hedges. stence of the economic relationship will be demonstra- ted through a quantitative method in addition to a quali- tative analysis of the nature of the economic relationship For more details about the nature and the extent of risks (i.e. linear regression). 348348 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsIn order to demonstrate that the behavior of the hedging Fair value hedges instrument is in line with those of the hedged item, diffe- Fair value hedges are used to protect the Group against rent scenarios will be analyzed. exposures to changes in the fair value of assets, liabilities or For hedging of commodity price risk, the existence of an firm commitment attributable to a particular risk that could economic relationship is deduced from a ranking matrix affect profit or loss. that defines, for each possible risk component a set of all Changes in fair value of derivatives that qualify and are standard derivatives available in the market whose ranking is designated as hedging instruments are recognized in the based on their effectiveness in hedging the considered risk. income statement, together with changes in the fair value In order to evaluate the credit risk effects, the Group con- of the hedged item that are attributable to the hedged risk. siders the existence of risk mitigating measures (collateral, If the hedge no longer meets the criteria for hedge accoun- mutual break-up clauses, netting agreements, etc.). ting, the adjustment to the carrying amount of a hedged item for which the effective interest rate method is used is The Group has established a hedge ratio of 1:1 for all the amortized to profit or loss over the period to maturity. hedging relationships (including commodity price risk he- dging) as the underlying risk of the hedging derivative is Cash flow hedges identical to the hedged risk, in order to minimize hedging Cash flow hedges are applied in order to hedge the Group ineffectiveness. exposure to changes in future cash flows that are attribu- The hedge ineffectiveness will be evaluated through a qua- table to a particular risk associated with a recognized asset litative assessment or a quantitative computation, depen- or liability or a highly probable transaction that could affect ding on the following circumstances: profit or loss. › if the critical terms of the hedged item and hedging in- The effective portion of changes in the fair value of deriva- strument match and there are no other sources of inef- tives that are designated and qualify as cash flow hedges fectiveness included the credit risk adjustment on the is recognized in other comprehensive income. The gain or hedging derivative, the hedge relationship will be consi- loss relating to the ineffective portion is recognized imme- dered fully effective on the basis of a qualitative asses- diately in the income statement. sment; Amounts accumulated in equity are reclassified to profit › if the critical terms of the hedged item and hedging in- or loss in the periods when the hedged item affects profit strument do not match or there is at least one source of or loss (for example, when the hedged forecast sale takes ineffectiveness, the hedge ineffectiveness will be quan- place). tified applying the dollar offset cumulative method with If the hedged item results in the recognition of a non-fi- hypothetical derivative. This method compares changes nancial asset (i.e. property, plant and equipment or inven- in fair value of the hedging instrument and the hypothe- tories, etc.) or a non-financial liability, or a hedged forecast tical derivative between the reporting date and the in- transaction for a non-financial asset or a non-financial ception date. liability becomes a firm commitment for which fair value hedge accounting is applied, the amount accumulated in The main causes of hedge ineffectiveness can be the fol- equity (i.e. hedging reserve) shall be removed and included lowing: in the initial amount (cost or other carrying amount) of the › basis differences (i.e. the fair value or cash flows of the asset or the liability hedged (i.e. “basis adjustment”). hedged item depend on a variable that is different from When a hedging instrument expires or is sold, or when a the variable that causes the fair value or cash flows of the hedge no longer meets the criteria for hedge accounting, hedging instrument to change); any cumulative gain or loss existing in equity at that time › timing differences (i.e. the hedged item and hedging in- remains in equity and is recognized when the forecast strument occur or are settled at different dates); transaction is ultimately recognized in the income state- › quantity or notional amount differences (i.e. the hed- ment. When a forecast transaction is no longer expected ged item and hedging instrument are based on different to occur, the cumulative gain or loss that was reported in quantities or notional amounts); equity is immediately transferred to the income statement. › other risks (i.e. changes in the fair value or cash flows of For hedging relationships using forwards as a hedging in- a derivative hedging instrument or hedged item relate strument, where only the change in the value of the spot to risks other than the specific risk being hedged); element is designated as the hedging instrument, accoun- › credit risk (i.e. the counterparty credit risk differently im- ting for the forward element (profit or loss vs OCI) is defi- pact the changes in the fair value of the hedging instru- ned case by case. This approach is actually applied by the ments and hedged items). Group for hedging of currency risk on renewables assets. 349 Integrated Annual Report 2020Conversely, hedging relationships using cross currency in- the Group is finalizing an assessment of the impact of the terest rate swaps as hedging instruments, the Group sepa- reform on contracts after having delineated their global rates foreign currency basis spread, in designating the he- scope in terms of their number and nominal value throu- dging derivative, and present them in other comprehensive gh a census based on data collection from Countries and income (OCI) as hedging costs. Business Lines. In addition, contractual amendments are With specific regard to cash flow hedges of commodi- beginning to be implemented gradually in a process that ty risk, in order to improve their consistency with the risk will continue in 2021, although this may vary depending on management strategy, the Enel Group applies a dynamic developments in the reform of benchmarks for determi- hedge accounting approach based on specific liquidity re- ning interest rates and alternative risk-free reference rates quirements (the so-called liquidity-based approach). associated with market liquidity. This approach requires the designation of hedges through the use of the most liquid derivatives available on the mar- Derivatives ket and replacing them with others that are more effective For risk management purposes, the Group holds interest in covering the risk in question. rate swaps and cross currency interest rate swaps that are Consistent with the risk management strategy, the liquidi- mostly designated as cash flow hedging relationships, with ty-based approach allows the roll-over of a derivative by only a minority portion designated as fair value hedges. replacing it with a new derivative, not only in the event of Interest rate swaps and cross currency interest rate swaps expiry but also during the hedging relationship, if and only are essentially indexed to either Euribor or LIBOR in dollars if the new derivative meets both of the following require- or pounds. The Group’s derivative instruments are mana- ments: ged through contracts that are mainly based on framework › it represents a best proxy of the old derivative in terms agreements defined by the International Swaps and Deriva- of ranking; tives Association (ISDA). › it meets specific liquidity requirements. The ISDA has revised its standardized contracts in light of Satisfaction of these requirements is verified quarterly. the benchmark reform and plans to amend the 2006 ISDA At the roll-over date, the hedging relationship is not di- definitions relating to floating rates to include replacement scontinued. Accordingly, starting from that date, changes clauses (fallbacks) that would apply upon the permanent di- in the effective fair value of the new derivative will be re- scontinuation of certain key IBORs. The ISDA has published cognized in equity (the hedging reserve), while changes in a supplement to amend the ISDA 2006 definitions (the ISDA the fair value of the old derivative are recognized through Fallback Supplement) and a protocol to facilitate multila- profit or loss. teral amendments to include the amended floating-rate options in derivative transactions entered into prior to the Reform of benchmarks for the determination of interest entry into force of the supplement (ISDA Fallback Proto- rates and the associated risk Overview col). The Group is evaluating whether or not to adopt to this protocol, monitoring whether other counterparties are doing so. In the event of a change in the plan or if certain Interbank Offered Rates (“IBORs”) are benchmark rates at counterparties do not adopt the protocol, the Group would which banks can borrow funds on the interbank market on negotiate bilaterally with them about the inclusion of new an unsecured basis for a given period ranging from overni- fallback clauses. ght to 12 months, in a specific currency. In recent years there have been a number of cases of ma- Hedging relationships nipulation of these rates by the banks contributing to their The Group has assessed the impact of uncertainty engen- calculation. For this reason, regulators around the world dered by the IBOR reform on hedging relationships at De- have begun a sweeping reform of the benchmarks for the cember 31, 2020 with reference to both hedging instru- determination of interest rates that includes the replace- ments and hedged items. Both the hedged items and the ment of some benchmark indices with alternative risk-free Group’s hedging instruments will change their paramete- reference rates (the IBOR reform). rization from interbank market-based benchmarks (IBORs) In a context of significant uncertainty regarding the ti- to alternative risk-free rates (RFRs) as a result of the con- ming and transition procedures in the various countries, tractual amendments that will take effect in 2021. More 350350 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsspecifically, for hedging instruments indexed to Euribor, The hedging relationships affected by the IBOR reform the replacement rate will be based on the Euro STR (Euro could become ineffective owing to the expectations of Short-Term Rate), while those indexed to LIBOR in dollars market players regarding the moment in which the tran- and pounds will be indexed to SOFR (Secured Overnight sition from the benchmarks for determining interest rates Financing Rate) and SONIA (Sterling Overnight Index Ave- based on interbank markets to alternative rates will take rage), respectively. place. This transition could occur at different times for he- The most significant exposure of the Group is to Euribor, dged items and hedging instruments and lead to ineffecti- together with significant exposures to LIBOR in pounds veness. In any case, the Group will work to implement the and dollars as well. However, it is certainly on the euro side replacements at the same time. that the uncertainty surrounding the replacement process is greatest. The exposure of the Enel Group to hedging relationships However, even if the Group expects the benchmark rates impacted by the IBOR reform, for which the exceptions based on interbank markets to be discontinued after the provided for in the amendments to IFRS 9 issued in Sep- end of 2021, there is uncertainty about the timing and pro- tember 2019 were applied, amounts to €9,434 million in cedures for replacing these indices for both hedged items terms of the notional amount of the hedging instruments and hedging instruments. The Group is therefore applying at December 31, 2020. The following table provides a brea- the amendments to IFRS 9 issued in September 2019 to kdown of the notional amounts of the hedging instruments hedging relationships directly impacted by the IBOR re- by IBOR rate. form. Millions of euro Hedging instruments GBP LIBOR USD LIBOR Euribor Total Notional amount at Dec. 31, 2020 1,225 1,595 6,614 9,434 351 Integrated Annual Report 202047.1.1 Hedge relationships by type of risk hedged rage interest rate of instruments hedging the interest rate Interest rate risk The following table shows the notional amount and the ave- risk on transactions outstanding at December 31, 2020 and December 31, 2019, broken down by maturity. Millions of euro At Dec. 31, 2020 Interest rate swaps Total notional amount Notional amount related to IRS in euro Average IRS rate in euro Notional amount related to IRS in US dollars Average IRS rate in US dollars At Dec. 31, 2019 Interest rate swaps Total notional amount Notional amount related to IRS in euro Average IRS rate in euro Notional amount related to IRS in US dollars Average IRS rate in US dollars 2021 2022 2023 2024 2025 Beyond Maturity 122 - 461 135 178 178 155 155 591 591 5.0139 4.1593 4.4380 1.9058 122 2.0350 326 3.5227 - - - 6,115 5,295 1.8321 639 2.4648 2020 2021 2022 2023 2024 Beyond 199 47 3.1825 134 1.5740 140 - 499 143 187 187 170 170 4.9699 4.0516 4.1629 134 2.0350 356 3.5227 - - 7,054 6,042 1.8298 665 2.9665 The following table shows the notional amount and the fair of transactions outstanding as at December 31, 2020 and value of the hedging instruments on the interest rate risk December 31, 2019, broken down by type of hedged item. Millions of euro Fair value Assets Liabilities Notional amount Hedging instrument Hedged item at Dec. 31, 2020 Fair value Assets Liabilities at Dec. 31, 2019 Notional amount Fair value hedges Interest rate swaps Interest rate swaps Cash flow hedges Interest rate swaps Interest rate swaps Interest rate swaps Total Floating-rate non-bank borrowings Fixed-rate bank borrowings Floating-rate bonds Floating-rate loan assets Floating-rate non-bank borrowings 352352 15 7 - 21 - 43 - - 126 12 (232) 1,190 - 161 (708) (940) 6,133 7,622 - 7 11 15 - 33 - - - 12 (499) 3,953 - 140 (281) (780) 4,144 8,249 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThe following table shows the notional amount and the fair cember 31, 2020 and December 31, 2019, 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 Derivatives Fair value hedges Interest rate swaps Interest rate options Total Cash flow hedges Interest rate swaps Interest rate options Total TOTAL INTEREST RATE DERIVATIVES at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 138 - 138 161 - 161 12 - 12 468 - 468 299 480 22 - 22 21 - 21 43 7 - 7 26 - 26 33 - - - - - - - - - - - - 7,323 7,769 (940) (780) - 7,323 - 7,769 - (940) - (780) 7,323 7,769 (940) (780) The notional amount of derivatives classified as hedging › new interest rate swaps amounting to €40 million. The instruments at December 31, 2020, came to €7,622 million, amount also reflects the reduction of €360 million in the with a corresponding negative fair value of €897 million. notional amount of amortizing interest rate swaps. The deterioration in the fair value of €150 million mainly Compared with December 31, 2019, the notional amount reflects developments in the yield curve. decreased by €627 million, mainly reflecting: › the expiry of interest rate swaps amounting to €180 mil- Fair value hedge derivatives lion; The following table reports net gains and losses recognized › a reduction of €127 million in interest rate swaps due through profit or loss deriving from changes in the fair va- to a change in the consolidation method used for avai- lue of fair value hedge derivatives and the changes in the lable-for-sale entities in the Africa, Asia and Oceania fair value of the hedged item that are attributable to inte- area; Millions of euro Interest rate hedging instruments Hedged item Ineffective portion rest rate risk both in 2020 and the previous year. 2020 Net gain/(loss) 2019 Net gain/(loss) 15 (14) 1 - - - The following table shows the impact of fair value hedges of interest rate risk in the statement of financial position at December 31, 2020 and December 31, 2019. Millions of euro 2020 2019 Interest rate swaps Notional amount 138 Carrying amount 22 Fair value used to measure ineffectiveness in the year 22 Notional amount 12 Carrying amount 7 Fair value used to measure ineffectiveness in the year 7 353 Integrated Annual Report 2020The following table shows the impact of the hedged item of fair value hedges in the statement of financial position at December 31, 2020 and December 31, 2019. Millions of euro 2020 2019 Fixed-rate borrowings Floating-rate borrowings Total Cumulative adjustment of fair value of hedged item Fair value used to measure ineffectiveness in the year 7 15 22 (7) (15) (22) Carrying amount 20 146 166 Cumulative adjustment of fair value of hedged item Fair value used to measure ineffectiveness in the year 7 - 7 (7) - (7) Carrying amount 20 - 20 Cash flow hedge derivatives The following table shows the cash flows expected in co- ming years from cash flow hedge derivatives on interest rate risk. Millions of euro Cash flow hedge derivatives on interest rates Positive fair value Negative fair value Fair value at Dec. 31, 2020 Distribution of expected cash flows 2021 2022 2023 2024 2025 Beyond 21 (940) 4 (149) 4 (141) 4 (141) 3 (125) 2 (104) 5 (306) The following table shows the impact of cash flow hedges of interest rate risk in the statement of financial position at December 31, 2020 and December 31, 2019. Millions of euro 2020 2019 Interest rate swaps Total Fair value used to measure ineffectiveness in the year (919) (919) Carrying amount (919) (919) Notional amount 7,484 7,484 Fair value used to measure ineffectiveness in the year (754) (754) Carrying amount (754) (754) Notional amount 8,237 8,237 354354 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThe following table shows the impact of the hedged item of cash flow hedges in the statement of financial position at December 31, 2020 and December 31, 2019. Millions of euro Floating-rate bonds Floating-rate loan assets Floating-rate non-bank borrowings Total 2020 2019 Fair value at the designation date of CFH derivatives through profit or loss Fair value used to measure ineffectiveness in the year Ineffective portion of carrying amount of CFH derivatives Fair value used to measure ineffectiveness in the year Hedging reserve Hedging costs reserve Fair value at the designation date of CFH derivatives through profit or loss Ineffective portion of carrying amount of CFH derivatives Hedging reserve Hedging costs reserve 232 (21) 653 864 - - (232) 21 (44) (44) (653) (864) - - - - - - (11) (11) 486 (15) 275 746 - - (486) 15 (49) (49) (226) (697) - - - - (2) - (6) (8) Finally, note that for cash flow hedge derivatives on in- Currency risk terest rates, the amount reclassified in 2020 from other The following table reports the maturity profile of the notio- comprehensive income to profit or loss generated financial nal amount and associated average contractual exchange expense of €82 million gross of tax effects, while the pre- rate for the instruments hedging currency risk on tran- vious year the financial expense recognized amounted to sactions outstanding at December 31, 2020 and December €1,315 million. 31, 2019. 355 Integrated Annual Report 2020Millions of euro Maturity 2021 2022 2023 2024 2025 Beyond Total At Dec. 31, 2020 Cross currency interest rate swaps (CCIRS) Total notional amount of CCIRS 859 1,702 3,120 3,088 1,336 10,882 20,987 185 1.1348 1,630 1.1213 2,038 1.2493 1,223 1.1039 1,223 1.1593 6,928 1.2397 Total notional amount of forwards 3.684 1.871 Notional amount for CCIRS EUR- USD Average exchange rate EUR/USD Notional amount for CCIRS EUR- GBP Average exchange rate EUR/GBP Notional amount for CCIRS EUR- CHF Average exchange rate EUR/CHF Notional amount for CCIRS USD- BRL Average exchange rate USD/BRL Currency forwards Notional amount - currency forward EUR/USD Average currency forward rate - EUR/USD Notional amount - currency forward USD/BRL Average currency forward rate - USD/BRL Notional amount - currency forward USD/COP Average currency forward rate - USD/COP Notional amount - currency forward USD/CLP Average currency forward rate - USD/CLP 716.8847 Notional amount - currency forward EUR/RUB Average currency forward rate - EUR/RUB 100 91.8464 356356 278 0.8248 - - - - - 946 0.8765 208 1.0642 395 4.3935 71 64 4.1779 5.1967 2.671 1.786 1.1473 1.1535 1.1976 379 37 5.2226 5.4405 187 3.782 121 - - - 12 12 - - - - - - - - - - - 13,227 4,667 328 774 5,567 4,469 416 187 121 100 - - - - - - - - - 3.443 0.7876 120 0.9040 244 3.4489 - - - - - - 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsMillions of euro At Dec. 31, 2019 Cross currency interest rate swaps (CCIRS) 2020 2021 2022 2023 2024 Beyond Total Maturity Total notional amount of CCIRS 831 1.115 1.781 3.339 3.146 12.511 22.723 Notional amount for CCIRS EUR- USD Average exchange rate EUR/USD - 202 1.1348 1.781 1.1213 3.339 1.2184 1.336 1.1039 8.904 1.2067 15.562 - - - 18 18 Notional amount for CCIRS EUR- GBP Average exchange rate EUR/GBP 470 0.8466 587 0.8245 Notional amount for CCIRS EUR- CHF Average exchange rate EUR/CHF 92 1.2169 - Notional amount for CCIRS USD- BRL Average exchange rate USD/BRL 269 3.9273 326 3.4742 Currency forwards Total notional amount of forwards 4.459 1.015 Notional amount - currency forward EUR/USD Average currency forward rate - EUR/USD Notional amount - currency forward USD/CLP Average currency forward rate - USD/CLP Notional amount - currency forward USD/BRL Average currency forward rate - USD/BRL Notional amount - currency forward EUR/ZAR Average currency forward rate - EUR/ZAR Notional amount - currency forward EUR/RUB Average currency forward rate - EUR/RUB 2.899 958 1.1774 1.1803 1.1609 527 678.0443 44 680 313 14 4.1274 4.1330 221 17.7856 181 74.1277 - - - - - - - - - - - - - - - 999 0.8765 3.041 0.8062 5.097 207 1.0642 120 1.21 - - - - - - - 288 3.5655 - - - - - - 419 883 5.492 3.875 571 327 221 181 357 Integrated Annual Report 2020The following table shows the notional amount and the fair transactions outstanding as at December 31, 2020 and value of the hedging instruments on the currency risk of December 31, 2019, broken down by type of hedged item. Millions of euro Fair value Notional amount Fair value Notional amount Hedging instrument Hedged item Assets Liabilities Assets Liabilities at Dec. 31, 2020 at Dec. 31, 2019 Fair value hedges Cross currency interest rate swaps (CCIRS) Cross currency interest rate swaps (CCIRS) Cash flow hedges Cross currency interest rate swaps (CCIRS) Cross currency interest rate swaps (CCIRS) Fixed-rate borrowings/bonds in foreign currencies Floating-rate borrowings in foreign currencies Floating-rate borrowings in foreign currencies Fixed-rate borrowings in foreign currencies Cross currency interest rate swaps (CCIRS) Floating-rate bonds in foreign currencies Cross currency interest rate swaps (CCIRS) Fixed-rate bonds in foreign currencies Cross currency interest rate swaps (CCIRS) Currency forwards Currency forwards Currency forwards Total Future cash flows denominated in foreign currencies Future cash flows denominated in foreign currencies Future commodity purchases denominated in foreign currencies Purchases of investment goods and other in foreign currency 28 28 67 50 12 - - 639 79 25 - (15) 579 55 - - 484 356 - 6 (1) - (5) (4) (1) 171 - 999 72 302 588 (2,374) 18,499 1,022 (1,535) 20,877 7 3 5 (4) (12) 351 574 - 3 (17) 302 (63) 811 (309) 4,167 124 (7) 3,462 4 792 (40) (2,754) 825 26,553 3 1,238 (43) (1,676) 1,219 28,215 Cash flow hedges and fair value hedges include: › currency forwards with a notional amount of €825 million › CCIRSs with a notional amount of €19,622 million used to and a negative fair value of €36 million in respect of OTC hedge the currency risk on fixed-rate debt denominated transactions to mitigate the currency risk on expected in currencies other than the euro, with a negative fair va- cash flows in currencies other than the presentation cur- lue of €1,708 million; rency connected with the purchase of investment goods › CCIRSs with a notional amount of €1,365 million used to in the renewables and infrastructure and networks sec- hedge the currency risk on floating-rate debt denomina- tors (new generation digital meters), on operating costs ted in currencies other than the euro, with a positive fair for the supply of cloud services and on revenue from the value of €95 million; sale of renewable energy. › currency forwards with a notional amount of €4,741 mil- lion used to hedge the currency risk associated with pur- The following table reports the notional amount and fair va- chases of natural gas, purchases of fuel and expected lue of foreign exchange derivatives at December 31, 2020 cash flows in currencies other than the euro, with a ne- and December 31, 2019, broken down by type of hedge. gative fair value of €313 million; 358358 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsMillions of euro Notional amount Fair value assets Notional amount Fair value liabilities Derivatives Fair value hedges CCIRS Total Cash flow hedges Currency forwards CCIRS Total TOTAL EXCHANGE RATE DERIVATIVES at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 718 718 476 5,582 6,058 166 166 3,253 11,169 14,422 56 56 12 724 736 25 25 130 1,083 1,213 - - 5,090 14,687 19,777 5 5 2,238 11,384 13,622 - - (361) (2,393) (2,754) (1) (1) (113) (1,562) (1,675) 6,776 14,588 792 1,238 19,777 13,627 (2,754) (1,676) The notional amount of CCIRSs at December 31, 2020 cember 31, 2019), an increase of €75 million. The exposure amounted to €20,987 million (€22,724 million at December to currency risk, especially that associated with the US dol- 31, 2019), a decrease of €1,737 million. Cross currency inte- lar, is mainly due to purchases of natural gas, purchases of rest rate swaps with a total amount of €831 million expired, fuel and cash flows in respect of investments. Changes in while new derivatives amounted to €1,108 million, of whi- the notional amount are connected with normal develop- ch €557 million in respect of bond issues denominated in ments in operations. pounds sterling in October 2020. In addition, cross curren- cy interest rate swaps of €294 million were terminated ear- Fair value hedge derivatives ly. The amount also reflects developments in the exchange The following table reports net gains and losses recognized rate of the euro against the main other currencies and the through profit or loss, reflecting changes in the fair value effect of amortization, which caused their notional amount of fair value hedge derivatives and the changes in the fair to decrease by €1,720 million. value of the hedged item that are attributable to currency The notional amount of currency forwards at December risk for 2020 and the previous year. 31, 2020 amounted to €5,566 million (€5,491 million at De- Millions of euro Interest rate hedging instruments Hedged item Ineffective portion The following table shows the impact of fair value hedges of currency risk in the statement of financial position at De- cember 31, 2020 and December 31, 2019. 2020 2019 Net gain/(loss) Net gain/(loss) 44 (51) (7) 1 (4) (3) Millions of euro at Dec. 31, 2020 at Dec. 31, 2019 Notional amount Carrying amount Fair value used to measure ineffectiveness in the year Notional amount Carrying amount Fair value used to measure ineffectiveness in the year Cross currency interest rate swaps (CCIRS) 718 56 56 171 24 24 359 Integrated Annual Report 2020The following table shows the impact of the hedged item of fair value hedges in the statement of financial position at December 31, 2020 and December 31, 2019. Millions of euro at Dec. 31, 2020 at Dec. 31, 2019 Fixed-rate borrowings in foreign currency Floating-rate borrowings in foreign currency Total Cumulative adjustment of fair value of hedged item Fair value used to measure ineffectiveness in the year Carrying amount Cumulative adjustment of fair value of hedged item Fair value used to measure ineffectiveness in the year Carrying amount 637 79 716 34 28 62 (34) (28) (62) 81 90 171 11 15 26 (11) (15) (26) Cash flow hedge derivatives The following table shows the cash flows expected in co- ming years from cash flow hedge derivatives on currency risk. Millions of euro Cash flow hedge derivatives on exchange rates Positive fair value Negative fair value Fair value at Dec. 31, 2020 Distribution of expected cash flows 2021 2022 2023 2024 2025 Beyond 736 (2,754) 140 (139) 105 (180) 178 (18) 87 (96) 13 27 53 (98) The following table shows the impact of cash flow hedges of currency risk in the statement of financial position at De- cember 31, 2020 and December 31, 2019. Millions of euro at Dec. 31, 2020 at Dec. 31, 2019 Cross currency interest rate swaps (CCIRS) Currency forwards Total Notional amount Carrying amount Fair value used to measure ineffectiveness in the year Notional amount Carrying amount Fair value used to measure ineffectiveness in the year 20,269 5,566 25,835 (1,669) (349) (2,018) (1,463) (342) (1,805) 22,552 5,491 28,043 (479) 17 (462) (345) 52 (293) 360360 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThe following table shows the impact of the hedged item of cash flow hedges in the statement of financial position at December 31, 2020 and December 31, 2019. Millions of euro at Dec. 31, 2020 at Dec. 31, 2019 Fair value used to measure ineffectiveness in the year Hedging reserve Hedging costs reserve Ineffective portion of carrying amount of CFH derivatives Fair value used to measure ineffectiveness in the year Ineffective portion of carrying amount of CFH derivatives Hedging reserve Hedging costs reserve Floating-rate borrowings in foreign currencies Fixed-rate borrowings in foreign currencies Floating-rate bonds in foreign currencies Fixed-rate bonds in foreign currencies Future cash flows denominated in foreign currencies Future cash flows denominated in foreign currencies Future commodity purchases denominated in foreign currencies Purchases of investment goods and other in foreign currency Total (52) (50) (12) 52 50 12 - - - 1,580 (1,580) (205) (3) 7 3 (7) 305 (305) - (3) - - - - - - - 1 (49) 3 (5) 49 (3) 5 1 (1) - 378 (378) (135) 17 59 (17) (59) - (1) (119) 119 - 30 1,805 (30) (1,805) (5) (213) (1) - 9 293 (9) (293) (32) (168) - - - - - - (2) 1 (1) Finally, note that for cash flow hedge derivatives on exchan- expense of €1,483 million gross of tax effects, while the ge rates, the amount reclassified in 2020 from other com- previous year the financial expense recognized amounted prehensive income to profit or loss generated financial to €770 million. 361 Integrated Annual Report 20202021 2022 2023 2024 2025 Beyond Total Maturity 78 65 64 65 53 37.7 37.7 37.6 1,065 244 246 40.3 32 37.9 2 51.2 57.9 - - - - 43.2 1,521 14.3 317 24.2 744 25.0 973 14.9 134 26.6 413 45.0 44.3 8 - - - - - - 19.1 17 15.2 37 27.9 - - 9 - - - - 197 17.9 20 4.9 - - - - 9 - - - - 191 17.4 20 4.9 - - - - 9 29.7 26.4 26.4 26.4 31.7 606 34 - 281 37.7 - - - - 741 2,684 2,659 488 1,157 15.2 108 2.5 - - - - 45 80 Commodity price risk Millions of euro At Dec. 31, 2020 Commodity swaps Notional value on power Average commodity swap price on power (€/MWh) Notional value on coal/ shipping Average commodity swap price on coal/ shipping ($/ton) Notional value on gas Average commodity swap price on gas (€/ MWh) Commodity forwards/ futures Notional value on power Average commodity forward/future price on power (€/MWh) Notional value on gas Average commodity forward/future price on gas (€/MWh) Notional value on CO2 Average commodity forward/future price on CO2 (€/ton) Notional value on oil Average commodity forward/future price on oil ($/bbl) Commodity options Notional value on power Average commodity option price on power (€/MWh) 362362 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements2020 2021 2022 2023 2024 Beyond Total Maturity 123 121 135 128 712 1.922 20.5 20.2 20.2 20.2 20.7 Millions of euro At Dec. 31, 2019 Commodity swaps Notional value on power Average commodity swap price on power (€/MWh) Notional value on coal/ shipping Average commodity swap price on coal/ shipping ($/ton) Notional value on gas Average commodity swap price on gas (€/ MWh) Commodity forwards/ futures Notional value on power Average commodity forward/future price on power (€/MWh) Notional value on gas Average commodity forward/future price on gas (€/MWh) Notional value on CO2 Average commodity forward/future price on CO2 (€/ton) Notional value on oil Average commodity forward/future price on oil ($/bbl) Commodity options Notional value on power Average commodity option price on power (€/MWh) 703 47.7 253 62.4 13 - - 13 - - 13 - - 13 3.0 3.0 3.0 3.0 726 2 50.5 1,869 15.9 217 18.0 988 50.4 662 19.1 9 25.0 115 64.8 59.7 - - - - - - 1 17.2 - - - - - - - - - - - - - - - - - - 41 7.0 - - - - - - - - - - - - 66 7.9 - - - - - - - - - - 253 159 728 2,532 226 1,103 - 363 Integrated Annual Report 2020The following table reports the notional amount and fair va- sactions outstanding at December 31, 2020 and December lue of instruments hedging commodity price risk on tran- 31, 2019, broken down by type of commodity. Millions of euro Notional amount Fair value assets Notional amount Fair value liabilities at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 Derivatives Cash flow hedges Derivatives on power: - swaps - forwards/futures - options Total derivatives on power Derivatives on coal/shipping: - swaps - forwards/futures - options Total derivatives on coal/shipping 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 TOTAL COMMODITY DERIVATIVES 369 2,066 70 1,301 280 - 2,505 1,581 34 - - 34 - 1,674 11 - - - - 79 2,823 - 1,685 2,902 - 482 - 482 - 226 - 226 70 361 - 431 11 - - 11 - 456 18 474 - 139 - 139 234 34 - 268 7 - - 7 9 694 - 703 - 84 - 84 236 571 - 807 - - - - - 2,189 - 2,189 - 5 - 5 621 448 - 1,069 253 - - 253 80 812 - 892 - - - - (56) (16) - (72) - - - - - (455) - (107) (44) - (151) (54) - - (54) (1) (298) - (455) (299) - - - - - - - - 4,706 4,709 1,055 1,062 3,001 2,214 (527) (504) The table reports the notional amount and fair value of derivatives hedging commodity price risk on at December The CO2 category mainly includes hedging transactions undertaken for Enel Group compliance purposes. 31, 2020 and at December 31, 2019, broken down by type The power category mainly includes medium/long-term of hedge. hedging transactions, especially in North America. The positive fair value of cash flow hedge derivatives on Cash flow hedge derivatives on commodities included in commodities regards derivatives on gas and oil commo- dities in the amount of €474 million, derivatives on CO2 (€139 million), derivatives on power (€431 million) and, to a liabilities regard derivatives on gas and oil commodities in the amount of €455 million (mainly for derivatives hedging sales) and derivatives on power in the amount of €72 million. lesser extent, hedges of coal purchases requested by the The Group’s main hedge accounting transactions have not generation companies in the amount of €11 million. currently been affected by any particular adverse negative The first category primarily regards hedges of fluctuations effects (e.g. discontinuation, ineffectiveness) associated in the price of natural gas, for both purchases and sales, with the COVID-19 emergency either globally or at the lo- carried out for oil commodities and gas products. cal economy level. 364364 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsCash flow hedge derivatives The following table shows the cash flows expected in co- ming years from cash flow hedge derivatives on commo- dity price risk. Millions of euro Cash flow hedge derivatives on commodities Positive fair value Negative fair value Fair value at Dec. 31, 2020 Distribution of expected cash flows 2021 2022 2023 2024 2025 Beyond 1,055 (527) 626 (392) 131 (99) 34 (23) 18 (6) 19 (6) 227 (1) The following table shows the impact of cash flow hedges of commodity price risk in the statement of financial posi- tion at December 31, 2020 and December 31, 2019. Millions of euro at Dec. 31, 2020 at Dec. 31, 2019 Power swaps Coal/shipping swaps Gas and oil swaps Power forwards/futures Coal/shipping forwards/futures Gas and oil forwards/futures CO2 forwards/futures Power options Total Notional amount Carrying amount Fair value used to measure ineffectiveness in the year Notional amount Carrying amount Fair value used to measure ineffectiveness in the year 605 34 - 2,717 - 3,794 487 70 7,707 23 11 - 375 - (20) 139 - 528 23 11 - 356 - (20) 139 - 509 1,922 253 159 728 - 3,635 226 127 (47) 8 (10) - 396 84 127 (47) 8 (10) - 396 84 6,923 558 558 The following table shows the impact of the hedged item of cash flow hedges in the statement of financial position at December 31, 2020 and December 31, 2019. Millions of euro at Dec. 31, 2020 at Dec. 31, 2019 Fair value used to measure ineffectiveness in the year Hedging reserve Hedging costs reserve Ineffective portion of carrying amount of CFH derivatives Fair value used to measure ineffectiveness in the year Ineffective portion of carrying amount of CFH derivatives Hedging reserve Hedging costs reserve Future transactions in power Future transactions in coal/shipping Future transactions in gas and oil Future transactions in CO2 Total (316) 374 (11) 11 20 (20) (139) (446) 139 504 - - - - - 24 (110) 110 - - - 24 47 (47) (404) 404 (84) (551) 84 551 - - - - - 7 - - - 7 365 Integrated Annual Report 2020Finally, note that for cash flow hedge derivatives on com- modity prices, the amount reclassified in 2020 from other 47.2 Derivatives at fair value through profit or loss The following table shows the notional amount and the fair comprehensive income to profit or loss generated finan- value of derivatives at FVTPL as at December 31, 2020 and cial expense of €293 million gross of tax effects, while the December 31, 2019. previous year the financial income recognized amounted to €20 million. Millions of euro Notional amount Fair value assets Notional amount Fair value liabilities at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 at Dec. 31, 2020 at Dec. 31, 2019 Derivatives at FVTPL: - derivatives on interest rates: - interest rate swaps - interest rate options - derivatives on exchange rates: 50 - 50 - - currency forwards 3,501 3,399 - - 144 5,493 137 - - 282 5,353 3 2 - 83 - - 14 75 24 2 - 34 - - 25 403 2 100 50 112 50 (88) (4) (80) (5) 1,012 1,648 (44) (38) - - 109 5,626 9 33 - 281 4,329 27 - - (18) (428) (12) - - (28) (155) (14) 5,774 5,638 113 430 5,744 4,637 (458) (197) 47 200 247 635 13,993 185 311 - 311 1,259 9,782 315 4 40 44 81 2,108 165 69 - 69 168 2,126 247 16 144 160 259 14,121 170 367 - 367 (1) (27) (28) (80) - (80) 852 11,047 309 (34) (1,999) (173) (97) (2,190) (273) 14,813 11,356 2,354 2,541 14,550 12,208 (2,206) (2,560) - 770 - 770 - 195 195 4 - 185 - 185 4 6 10 25 - 209 - 209 - 9 9 3 - 31 - 31 2 3 5 3 - 290 5 295 13 234 247 3 - 524 - 524 16 9 25 43 - (72) (5) (77) (7) (1) (8) (3) - (32) - (32) (1) (4) (5) (4) TOTAL 25,354 20,974 2,817 3,115 22,161 19,647 (2,916) (3,001) 366366 - CCIRS - derivatives on commodities Derivatives on power: - swaps - forwards/futures - options Total derivatives on power Derivatives on coal: - swaps - forwards/futures 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 Total derivatives on other Embedded derivatives 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsAt December 31, 2020 the notional amount of trading deri- depending on the inputs and valuation techniques used in vatives on interest rates came to €200 million. The net ne- determining their fair value: gative fair value of €90 million increased by €7 million on › Level 1, where the fair value is determined on basis of the previous year, mainly due to developments in the yield quoted prices (unadjusted) in active markets for identical curve. assets or liabilities that the entity can access at the me- At December 31, 2020, the notional amount of derivatives asurement date; on exchange rates was €4,513 million. The overall decrease › Level 2, where the fair value is determined on basis of in their notional value and the increase in the associated inputs other than quoted prices included within Level 1 net positive fair value of €43 million mainly reflected normal that are observable for the asset or liability, either directly operations and developments in exchange rates. (such as prices) or indirectly (derived from prices); At December 31, 2020, the notional amount of derivatives › Level 3, where the fair value is determined on the basis of on commodities came to €42,802 million. The fair value unobservable inputs. of trading derivatives on commodities classified as assets This note also provides detailed disclosures concerning mainly reflects the market valuation of hedges of gas and the valuation techniques and inputs used to perform these oil amounting to €2,354 million and derivatives on power measurements. amounting to €113 million. To that end: The fair value of trading derivatives on commodities clas- › recurring fair value measurements of assets or liabilities sified as liabilities mainly regards hedges of gas and oil are those required or permitted by the IFRS in the sta- amounting to €2,206 million and derivatives on power tement of financial position at the close of each period; amounting to €458 million. › non-recurring fair value measurements are those requi- The “other” category includes hedges using weather deri- red or permitted by the IFRS in the statement of financial vatives. In addition to commodity risk, the Group compa- position in particular circumstances. nies are also exposed to changes in volumes associated For general information or specific disclosures on the ac- with weather conditions (for example, temperature impacts counting treatment of these circumstances, please see the consumption of gas and power). note 2 “Accounting policies”. Embedded derivatives, which are held by Enel Green Power North America, mainly regard supplementary financial clau- ses in more complex tax equity partnership agreements, which are used to finance investment in new renewables 48.1 Assets measured at fair value in the statement of financial position The following table shows, for each class of assets measu- capacity. red at fair value on a recurring or non-recurring basis in the statement of financial position, the fair value measurement Derivatives at fair value through profit or loss include tran- at the end of the reporting period and the level in the fair sactions managed within the trading portfolios and tran- value hierarchy into which the fair value measurements of sactions that, although established for hedging purposes, those assets are classified. did not meet the requirements for hedge accounting. Measurement at fair value 48. Assets and liabilities measured at fair value The Group determines fair value in accordance with IFRS 13 whenever such measurement is required by the IFRS as a recognition or measurement criterion. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability, in an orderly tran- saction, between market participants, at the measurement date (i.e. an exit price). The best proxy of fair value is market price, i.e. the current publically available price actually used on a liquid and active market. The fair value of assets and liabilities is classified in ac- cordance with the three-level hierarchy described below, 367 Integrated Annual Report 2020Millions of euro Non-current assets Current assets Notes Fair value Level 1 Level 2 Level 3 Fair value Level 1 Level 2 Level 3 Equity investments in other companies at FVOCI 27 Securities at FVOCI 27.1, 28.1 40 408 4 408 27 30 21 27 2,057 Equity investments in other companies at FVTPL Financial assets from service concession arrangements at FVTPL Loan assets and other financial assets measured at fair value Fair value hedge derivatives: - on interest rates - on exchange rates Cash flow hedge derivatives: - on interest rates - on exchange rates - on commodities Trading derivatives: - on interest rates - on exchange rates - on commodities Inventories measured at fair value 13 - - 2,057 - 22 28 21 685 282 2 4 40 - 8 23 - 9 - - - - - - 44 - - 2 - 13 - 67 - - - 67 - - 301 226 - 28 - 51 627 - 79 - - - - 279 - - - - - - 75 - 28 - 51 333 - 79 2,686 1,637 1,049 55 23 41 - 2 11 - - - - - - - - - 15 - - - 12 12 - - - - - - 102 - - 5 - - 27 47 47 47 47 47 47 47 47 47 - 22 28 21 685 428 2 4 46 - 21 Contingent consideration 29, 30 The fair value of “equity investments in other companies the official prices for instruments traded on regulated mar- at FVOCI” is determined for listed companies on the basis kets. The fair value of instruments not listed on a regulated of the quoted price at the close of the year, while that for market is determined using valuation methods appropriate unlisted companies is based on a reliable valuation of the for each type of financial instrument and market data as relevant assets and liabilities. of the end of the reporting period (such as interest rates, exchange rates, volatility), discounting expected future “Financial assets from service concession arrangements at cash flows on the basis of the market yield curve and tran- FVTPL” concern electricity distribution operations in Brazil, slating amounts in currencies other than the euro using mainly by Enel Distribuição Rio de Janeiro, Enel Distribuição exchange rates provided by the World Markets Refinitiv Ceará and Enel Distribuição Goiás, as well as the generation (WMR) Company. plant of PH Chucas in Costa Rica, and are accounted for Derivatives on interest rates and exchange rates are all me- in accordance with IFRIC 12. Fair value was estimated as asured using Level 2 inputs. the net replacement cost based on the most recent rate The fair value of derivatives on commodities is almost information available and on the general price index for the always measured using Level 1 or Level 2 inputs, as the de- Brazilian market. termination is based on market inputs as these contracts are entered into with exchange counterparties, leading “Loan assets and other financial assets measured at fair sector operators or financial institutions. value” essentially regard investments of liquidity. Their fair Marginal exceptions for both cash flow hedges and trading value is determined using Level 1 or Level 2 market inputs. transactions include certain derivatives relating to weather The fair value of derivative contracts is determined using derivatives, which are measured on the basis of certified hi- 368368 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsstorical data for the underlying variables as well as certain the position and subsequently allocating the adjustment to long-term financial contracts (virtual power purchase agre- the individual financial instruments that make up the overall ements, or VPPAs), for which internal measurement models portfolio. All of the inputs used in this technique are obser- were also used in part in order to measure these instru- vable on the market. ments over longer time horizons, given the illiquidity of the underlying variables. In accordance with the IFRS, the Group assess credit risk, both of the counterparty (Credit Valuation Adjustment or 48.2 Assets not measured at fair value in the statement of financial position For each class of assets not measured at fair value on a CVA) and its own (Debit Valuation Adjustment or DVA), in recurring basis but whose fair value must be reported, the order to adjust the fair value of financial instruments for following table reports the fair value at the end of the year the corresponding amount of counterparty risk. More spe- and the level in the fair value hierarchy into which the fair cifically, the Group measures CVA/DVA using a Potential Fu- value measurements of those assets are classified. ture Exposure valuation technique for the net exposure of 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 Investment property Inventories 20 31 148 - - - - - 148 - - 52 - - - - - 52 The table reports the fair value of investment property and inventories of real estate not used in the business in the amount of €148 million and €52 million respectively. The 48.3 Liabilities measured at fair value in the statement of financial position The following table reports for each class of liabilities measu- amounts were calculated with the assistance of appraisals red at fair value on a recurring or non-recurring basis in the conducted by independent experts, who used different statement of financial position the fair value measurement at methods depending on the specific assets involved. the end of the reporting period and the level in the fair value hierarchy into which the fair value measurements are classified. 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 Trading derivatives: - on interest rates - on exchange rates - on commodities 47 47 47 47 47 47 Contingent consideration 39, 40 938 2,491 148 4 3 22 41 - - 29 - - 3 - 938 2,491 76 4 3,0 19 - - - 43 - - - 41 2 263 379 88 41 2,758 53 - - 75 - - 1,629 - 2 263 302 88 41 1,122 51 - - 2 - - 7 2 Contingent consideration mainly regards a number of equity investments held by the Group in North America and Greece, whose fair value was determined on the basis of the contractual terms and conditions. 369 Integrated Annual Report 202048.4 Liabilities not measured at fair value in the statement of financial position For each class of liabilities not measured at fair value in the be reported, the following table reports the fair value at the end of the period and the level in the fair value hierarchy into which the fair value measurements of those liabilities statement of financial position but whose fair value must are classified. Millions of euro Bonds: - fixed rate - floating rate Bank borrowings: - fixed rate - floating rate Non-bank borrowings: - fixed rate - floating rate Total Notes Fair value Level 1 Level 2 Level 3 44.3.1 44.3.1 44.3.1 44.3.1 44.3.1 44.3.1 43,223 3,765 39,722 147 833 9,259 2,609 249 - - - - 3,501 3,618 833 9,259 2,609 249 59,938 39,869 20,069 - - - - - - - For listed debt instruments, the fair value is given by official of financial instrument and market data at the close of the prices. For unlisted instruments the fair value is determined year, including the credit spreads of Enel. using appropriate valuation techniques for each category 370370 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsOther information 49. Share-based payments Long-term incentive plans, described below, are part of the Remuneration Policy adopted by the Group and described in the section “Incentive system” in the Report on Opera- tions. Plan beneficiaries are the Chief Executive Officer/General Manager of Enel and Group managers in the positions most directly responsible for company performance or conside- red to be of strategic interest. The plans provide for the award to the beneficiaries of a non-transferrable incenti- ve consisting of an equity component (share-based pay- ment transaction) and a monetary component (classified as another long-term employee benefit). For more details on the accounting treatment of these plans, please see note 2.2 “Significant accounting policies”. The following information describes the main characteri- stics of the share-based incentive plans adopted by Enel outstanding during 2020: 2019 LTI Plan 2020 LTI Plan Date of approval Grant date Performance period Verification of achievement of targets 16.05.2019 (3) 12.11.2019 (4) 2019-2021 14.05.2020 (6) 17.09.2020 (7) 2020-2022 2021 (5) 2022 (8) Payout 2022-2023 2023-2024 The vesting of the incentive envisaged under these plans the degree of achievement of each of the three-year per- is subject to the condition that the beneficiaries remain formance targets by the plans, ranging from zero up to a employed with the Group during the vesting period (i.e. the maximum of 280% or 180% of the base value in the case, service condition), with a small number of exceptions spe- respectively, of the Chief Executive Officer/General Mana- cifically governed by the Rules, and that they achieve spe- ger or the other beneficiaries. cific performance conditions connected with the following three-year performance variables: The plans establish that any bonus vested shall be repre- › Enel’s average TSR (Total Shareholder Return)(9) compa- sented by an equity component, which can be supplemen- red with the average TSR for the EURO STOXX Utilities ted – depending on the level of achievement of the various - EMU for the three-year reference period (with a weight targets – by a cash component. More specifically, the plans of 50%); envisage that 100% of the base value for the Chief Executi- › cumulative consolidated ROACE (Return on Average ve Officer and General Manager and 50% of the base value Capital Employed) over the three-year reference period for key management personnel will be paid in Enel shares (with a weight of 25% in the 2020 LTI Plan and 40% in the previously acquired by the Company for the amount of the 2019 LTI Plan); › emissions of CO2 in grams per kWh equivalent produced by the Group in the last year of the three-year reference award that has effectively vested. This equity component represents a share-based payment transaction settled with equity instruments. period(10) (with a weight of 10%); If the targets have been achieved, the disbursement of a si- › consolidated net installed renewables capacity as a per- gnificant portion of the equity and cash components of the centage of total consolidated net installed capacity at vested incentive (70% of the total) is deferred to the second the end of the last year of the three-year reference pe- year following the three-year performance period covered riod (only in the 2020 LTI Plan; with a weight of 15%). by the plans, without prejudice to the beneficiaries’ right to This incentive – determined, at the time of the award, as request deferred payment of the entire incentive. a base value calculated in relation to the fixed remunera- tion of the individual beneficiary – may vary depending on (3) The date of the Enel Shareholders’ Meeting that approved the 2019 LTI Plan pursuant to Article 2359 of the Civil Code, granting the Board of Directors all powers necessary to implement the Plan. (4) The date on which the Board of Directors approved the procedures and timing for granting the 2019 LTI Plan to the beneficiaries (taking account of the pro- posal issued by the Nomination and Compensation Committee at its meeting of November 11, 2019). (5) On the occasion of the approval of the financial statements of Enel SpA at December 31, 2021, the Company will verify the level of achievement of the per- formance targets of the 2019 LTI Plan. (6) The date of the Enel Shareholders’ Meeting that approved the 2020 LTI Plan pursuant to Article 2359 of the Civil Code, granting the Board of Directors all powers necessary to implement the Plan. (7) The date on which the Board of Directors approved the procedures and timing for granting the 2020 LTI Plan to the beneficiaries (taking account of the pro- posal issued by the Nomination and Compensation Committee at its meeting of September 16, 2020). (8) On the occasion of the approval of the financial statements of Enel SpA at December 31, 2022, the Company will verify the level of achievement of the per- formance targets of the 2020 LTI Plan. (9) Average Total Shareholder Return (TSR) of Enel and the EURO STOXX Utilities – EMU index is calculated for the three months preceding the start and end of the performance period in order to neutalize any market volatility. (10) Emissions from generation by Group plants. 371 Integrated Annual Report 2020LTI PLANS (Long-Term Incentive Plans) Vesting period Payout of 30%(1) Payout of 70%(1) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 3-year performance period Verify achievement Deferred payment (1) Nel caso di raggiungimento degli obiettivi di performance. (1) If performance targets are achieved. In implementation of the authorization granted by the Sha- the launch of a share buyback programs to support the LTI reholders’ Meeting and in compliance with the relevant Plans. terms and conditions, the Board of Directors approved Purchases authorized Actual purchases Number of shares Total (euro) Number of shares Weighted average price (euros per share) 2019 LTI Plan (11) 2020 LTI Plan (13) 2,500,000 1,720,000 10,500,000 1,549,152 (12) 1,720,000 (14) 6.7779 7.4366 Total (euro) 10,499,999 12,790,870 As a result of the purchases made to support the LTI Plans, The following information concerns the equity instruments at December 31, 2020 Enel holds a total of. 3,269,152 tre- granted in 2019 and 2020. asury shares, equal to approximately 0.032% of the share capital. 2020 2019 Number of shares granted Fair value per share Number of shares potentially available for award Number of shares granted Fair value per share Number of shares potentially available for award 2019 LTI Plan 2020 LTI Plan - - 1,529,182 1,538,547 6.983 1,538,547 1,635,307 7.380 1,635,307 - - The fair value of those equity instruments is measured on loss amounted to €5 million in 2020 (€0.3 million in 2019). the basis of the market price of Enel shares at the grant There have been no terminations or amendments involving date(15). either of the plans. The total costs recognized by the Group through profit or (11) On September 19, 2019 the Board of Directors approved the launch of a share buyback program to support the 2019 LTI Plan. (12) Number of shares purchased in the period between September 23 and December 2, 2019 equivalent to approximately 0.015% of Enel’s share capital. (13) On July 29, 2020 the Board of Directors approved the launch of a share buyback program to support the 2020 LTI Plan. (14) Number of shares purchased in the period between September 3 and October 28, 2020 equivalent to approximately 0.017% of Enel’s share capital. (15) For the 2019 LTI Plan, the grant date is November 12, 2019, i.e. the date of the meeting of the Board of Directors that approved the procedures and timing of the grant under the 2019 LTI Plan to the beneficiaries. For the 2020 LTI Plan, the grant date is September 17, 2020, i.e. the date of the meeting of the Board of Directors that approved the procedures and timing of the grant under the 2020 LTI Plan to the beneficiaries. 372372 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements 50. Related parties As an operator in the field of generation, distribution, tran- Group’s controlling shareholder. sport and sale of electricity and the sale of natural gas, The table below summarizes the main types of transactions Enel carries out transactions with a number of companies carried out with such counterparties. directly or indirectly controlled by the Italian State, the Related party Single Buyer Relationship Nature of main transactions 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 ESO - Energy Services Operator Fully controlled (directly) by the Ministry for the Economy and Finance EMO - 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 (EMO) Purchase of electricity on the Power Exchange for pumping and plant planning (EMO) 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 Energy, which it holds non-controlling interests. Networks and the Environment. Finally, Enel also maintains relationships with the pension funds FOPEN and FONDENEL, as well as Fondazione Enel The following tables summarize transactions with related and Enel Cuore, an Enel non-profit company devoted to parties, associated companies and joint ventures outstan- providing social and healthcare assistance. ding at December 31, 2020 and December 31, 2019 and All transactions with related parties were carried out on carried out during the period. 373 Integrated Annual Report 2020 Single Buyer EMO - - - 808 - - 2,038 2,059 - 6 - - 38 183 - - ESO 295 - - - 3 - - - Cassa Depositi e Prestiti Group Other personnel Total 2020 ventures Overall total 2020 % of total Key management Associates and joint Total in financial statements 2,542 - - 1,122 2,728 9 1 13 187 1 - - 44 1 - - Single Buyer EMO ESO Cassa Depositi e Prestiti Group Other personnel Total at Dec. 31, 2020 ventures 2020 statements % of total Key management Associates and joint Overall total at Dec. 31, Total in financial - - - - - - - - - 554 - - - - - - - 35 - 9 - - - - 83 - - 250 - - - - 15 - 84 - - - - 746 - - - - - - - 569 - 63 625 4 - 89 748 - 15 13 157 102 - - 29 1 2 - 6 - - 5 1 13 83 36 2 - - - - - - - - - - - - - - - - - - - - - - - 3,832 1 - 5,219 2,813 199 1 13 - - 1 648 158 625 10 - 89 1 28 346 193 104 2,136 1,144 1,144 206 9 62 166 145 3 - 58 21 215 189 6 359 151 21 19 69 15 9 - - - 4,038 10 62 5,385 2,958 202 1 71 21 863 190 164 984 161 21 108 2,205 16 37 346 193 104 62,623 2,362 2,763 25,049 18,298 2,202 (212) 4,485 5,159 1,236 12,046 5,113 3,578 49,519 6,191 6,345 3,168 12,859 1,275 11,651 6.4% 0.4% 2.2% 21.5% 16.2% 9.2% -0.5% 1.6% 22.2% 1.7% 7.2% 3.7% 4.6% 2.0% 2.6% 0.3% 3.4% 17.1% 1.3% 0.3% Millions of euro Income statement Revenue from sales and services Other income Financial income Electricity, gas and fuel purchases Costs for services and other materials Other operating costs Net income/(expense) from commodity derivatives Financial expense Millions of euro Statement of financial position Other non-current financial assets Non-current financial derivative assets Trade receivables Other current financial assets Other current assets Long-term borrowings Non-current contract liabilities Short-term borrowings Current portion of long- term borrowings Trade payables Current contract liabilities Other current liabilities Other information Guarantees issued Guarantees received Commitments 374374 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsMillions of euro Income statement Revenue from sales and services Other income Financial income Electricity, gas and fuel purchases Costs for services and other materials Other operating costs Net income/(expense) from commodity derivatives Financial expense Millions of euro Statement of financial position assets Other non-current financial Non-current financial derivative assets Trade receivables Other current financial assets Other current assets Long-term borrowings Non-current contract liabilities Short-term borrowings Current portion of long- term borrowings Trade payables Current contract liabilities Other current liabilities Other information Guarantees issued Guarantees received Commitments 2,038 2,059 - - - - 6 - - - - - - - - - - - - - - - - 808 38 183 - - - - - - - 9 - - - - - - - - 35 250 554 83 746 ESO 295 - - - 3 - - - - - - - - - - - - - - - 15 84 2,542 - - 1,122 2,728 9 1 13 - - 569 - 63 625 4 - 89 748 - 15 13 157 102 187 1 - - 1 - - 44 29 - - 1 2 - 6 - - 5 1 13 83 36 2 Single Buyer EMO Cassa Depositi e Prestiti Group Other Key management personnel Total 2020 Associates and joint ventures Overall total 2020 Total in financial statements % of total - - - - - - - - 3,832 1 - 5,219 2,813 199 1 13 206 9 62 166 145 3 - 58 4,038 10 62 5,385 2,958 202 1 71 62,623 2,362 2,763 25,049 18,298 2,202 (212) 4,485 6.4% 0.4% 2.2% 21.5% 16.2% 9.2% -0.5% 1.6% Single Buyer EMO ESO Other Cassa Depositi e Prestiti Group Key management personnel Total at Dec. 31, 2020 Associates and joint ventures Overall total at Dec. 31, 2020 Total in financial statements % of total - - - - - - - - - - - - - - - - - 648 1 158 625 10 - 89 2,136 1 28 346 193 104 1,144 1,144 21 215 189 6 359 151 21 19 69 15 9 - - - 21 863 190 164 984 161 21 108 2,205 16 37 346 193 104 5,159 1,236 12,046 5,113 3,578 49,519 6,191 6,345 3,168 12,859 1,275 11,651 22.2% 1.7% 7.2% 3.7% 4.6% 2.0% 2.6% 0.3% 3.4% 17.1% 1.3% 0.3% 375 Integrated Annual Report 2020Single Buyer EMO - - - 2,661 - 3 - - 1,320 - - 3,009 54 182 - - ESO 255 5 - 4 4 1 - 1 Cassa Depositi e Prestiti Group Other personnel Total 2019 ventures Overall total 2019 % of total Key management Associates and joint Total in financial statements 2,733 1 1 1,372 2,338 4 11 14 183 - - - 70 - - - Single Buyer EMO ESO Cassa Depositi e Prestiti Group Other personnel Total at Dec. 31, 2019 ventures 31, 2019 statements % of total Key management Associates and joint Overall total at Dec. Total in financial - - - - - - - - 601 - - - - - - - 45 - - 23 - - - 92 - - - 250 - - - 15 - - 89 - - - 793 - - - - - - - 573 - - 69 715 2 89 726 - - 16 354 125 9 - 13 - - 1 - 6 - 18 - 1 9 164 35 4 - - - - - - - - - - - - - - - - - - - - - - - 4,491 6 1 7,046 2,466 190 11 15 646 - - - 182 715 8 89 - 1 25 768 160 13 2,230 313 10 87 143 151 45 - 31 15 250 143 8 27 1 - - 61 38 8 5 - - - 4,804 16 88 7,189 2,617 235 11 46 15 896 8 27 183 715 151 8 39 30 768 160 13 89 2,291 77,366 2,961 1,637 38,082 18,836 2,693 (733) 4,518 1,383 13,083 4,065 4,305 3,115 54,174 6,301 3,409 12,960 3,554 1,328 13,161 6.2% 0.5% 5.4% 18.9% 13.9% 8.7% -1.5% 1.0% 1.1% 6.8% 0.2% 0.6% 5.9% 1.3% 2.4% 2.6% 17.7% 0.2% 2.9% 0.2% Millions of euro Income statement Revenue from sales and services Other income Other financial income Electricity, gas and fuel purchases Costs for services and other materials Other operating costs Net income/(expense) from commodity derivatives Financial expense Millions of euro Statement of financial position Non-current financial derivative assets Trade receivables Current financial derivative assets Other current financial assets Other current assets Long-term borrowings Non-current contract liabilities Current portion of long- term borrowings Trade payables Current financial derivative liabilities Current contract liabilities Other current liabilities Other information Guarantees issued Guarantees received Commitments 376376 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsMillions of euro Income statement Revenue from sales and services Other income Other financial income Electricity, gas and fuel purchases Costs for services and other materials Other operating costs Net income/(expense) from commodity derivatives Financial expense Millions of euro Statement of financial position Non-current financial derivative assets Trade receivables Current financial derivative assets assets Other current financial Other current assets Long-term borrowings Non-current contract liabilities Current portion of long- term borrowings Trade payables Current financial derivative liabilities Current contract liabilities Other current liabilities Other information Guarantees issued Guarantees received Commitments 2,661 3,009 - - - - 3 - - - - - - - - - - - - - - - - 1,320 54 182 - - - - - - - - - - - - - - - 45 23 250 601 92 793 ESO 255 5 - 4 4 1 - 1 - 15 89 - - - - - - - - - - - 2,733 1 1 1,372 2,338 4 11 14 573 - - - 2 69 715 89 726 - - 16 354 125 9 183 - - - - - - 70 - 13 - - 1 - 6 - 18 - 1 9 164 35 4 Single Buyer EMO Cassa Depositi e Prestiti Group Other Key management personnel Total 2019 Associates and joint ventures Overall total 2019 Total in financial statements % of total - - - - - - - - 4,491 6 1 7,046 2,466 190 11 15 313 10 87 143 151 45 - 31 4,804 16 88 7,189 2,617 235 11 46 77,366 2,961 1,637 38,082 18,836 2,693 (733) 4,518 6.2% 0.5% 5.4% 18.9% 13.9% 8.7% -1.5% 1.0% Single Buyer EMO ESO Other Cassa Depositi e Prestiti Group Key management personnel Total at Dec. 31, 2019 Associates and joint ventures Overall total at Dec. 31, 2019 Total in financial statements % of total - - - - - - - - - - - - - - - - 646 - - 182 715 8 89 2,230 - 1 25 768 160 13 1,383 13,083 4,065 4,305 3,115 54,174 6,301 3,409 12,960 3,554 1,328 13,161 15 250 8 27 1 - 143 - 61 8 38 5 - - - 15 896 8 27 183 715 151 89 2,291 8 39 30 768 160 13 1.1% 6.8% 0.2% 0.6% 5.9% 1.3% 2.4% 2.6% 17.7% 0.2% 2.9% 0.2% 377 Integrated Annual Report 2020With regard to disclosures on the remuneration of key ma- nagement personnel, provided for under IAS 24, please see Section I “Remuneration Policy for the Members of the Bo- ard of Directors, the General Manager, the Executives with 51. Government grants - Disclosure pursuant to Article 1, paragraphs 125-129, of Law 124/2017 Pursuant to Article 1, paragraphs 125-129, of Law 124/2017 Strategic Responsibilities and the Members of the Board as amended, the following provides information on gran- of Statutory Auditors. Procedures for the Adoption and ts received from Italian public agencies and bodies, as well Implementation of the Policy” of the Remuneration Report as donations by Enel SpA and the fully consolidated sub- published on the Enel website at https://www.enel.com/in- sidiaries to companies, individuals and public and private vestors/governance/remuneration. entities. The disclosure comprises: (i) grants received from Italian public entities/State entities; and (ii) donations made In November 2010, the Board of Directors of Enel SpA ap- by Enel SpA and Group subsidiaries to public or private par- proved (and subsequently updated) a procedure governing ties resident or established in Italy. the approval and execution of transactions with related par- The following disclosure includes payments in excess of ties carried out by Enel SpA directly or through subsidiaries. €10,000 made by the same grantor/donor during 2020, The procedure (available at https://www.enel.com/investors/ even if made through multiple financial transactions. They bylaws-rules-and-policies/transactions-with-related-par- are recognized on a cash basis. ties/) sets out rules designed to ensure the transparency and Pursuant to the provisions of Article 3-quater of Decree procedural and substantive propriety of transactions with Law 135 of December 14, 2018, ratified with Law 12 of Fe- related parties. It was adopted in implementation of the pro- bruary 11, 2019, for grants received, please refer to the in- visions of Article 2391-bis of the Italian Civil Code and the im- formation contained in the National Register of State Aid plementing regulations issued by CONSOB. In 2020, no tran- referred to in Article 52 of Law 234 of December 24, 2012. sactions were carried out for which it was necessary to make the disclosures required in the rules on transactions with re- lated parties adopted with CONSOB Resolution no. 17221 of March 12, 2010, as amended. Grants received in millions of euro Financial institution/ Grantor Min. Education, Universities & Research (MIUR) Donations made in millions of euro Beneficiary Amount Notes Enel X Srl Instalment of grant received for WinSic4AP project, funded under the ECSEL-2016-1-RIA call 0.03 0.03 Total Beneficiary Amount Notes Elettrici senza frontiere Onlus 0.04 Donation for development energy Enel Cuore Onlus 1 2020 grant European University Institute Fondazione Accademia Nazionale “Santa Cecilia” Fondazione Centro Studi Enel 0.11 Donation to support research 0.65 2020 donation for cultural projects 0.05 2020 donation Fondazione MAXXI 0.6 2020 donation for cultural projects Fondazione Teatro del Maggio Musicale OECD International Energy Agency (IEA) Responsible Business Alliance Foundation 0.4 2020 donation for cultural projects 0.15 2019 and 2020 donation 0.05 2020 donation Donor Enel SpA Enel SpA Enel SpA Enel SpA Enel SpA Enel SpA Enel SpA Enel SpA Enel SpA 378378 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsEnel SpA Enel SpA Enel X Srl Stichting Global Reporting Initiative Università Commerciale Luigi Bocconi 0.04 2020 donation 0.13 Donation to support study grants Enel Cuore Onlus 1 Donation under Article 66 of Decree 18 of March 17, 2020 Enel Produzione SpA Municipality of Gualdo Cattaneo 0.02 Coronavirus emergency - Civil Protection Enel Produzione SpA Municipality of Porto Tolle 0.03 Donation for purchase of school equipment Enel Produzione SpA Amatrice Alpinist Club 0.03 Donation to Amatrice Alpinist Club for three small brick huts Enel Produzione SpA Municipality of Brindisi Donation for July 1 - August 31 period of 130 meals per day for persons experiencing financial difficulty resident in the city 0.08 Enel Produzione SpA Enel Produzione SpA Autorità di Sistema Portuale del Mare Adriatico Meridionale - Porto di Brindisi (Faro Porto) Municipality of Civitavecchia Donation for installation and connection of a RACON in the outer port of Brindisi 0.08 0.07 Donation of an artistic lighting installation Enel Produzione SpA Enel Foundation Onlus 0.16 Donation - 50% of balance of 2019 grant Enel Foundation Enel Produzione SpA Enel Italia SpA Enel Italia SpA Enel Italia SpA Enel Italia SpA Enel Italia SpA Enel Cuore Onlus Enel Cuore Onlus Fondazione Centro Studi Enel 1 Article 66 of Decree 18 of March 17, 2020 COVID-19 1 Enel Cuore Onlus grant - COVID-19 emergency 0.05 2020 donation Legambiente Onlus 0.03 3° Sal Legambiente - Alleva La Speranza Progetto Itaca Roma 0.01 Donation UPSKILLING 4 AN H project Progetto Itaca Roma 0.01 Donation UPSKILLING 4 AN H project Enel Italia SpA Ashoka Italy Onlus Enel Italia SpA Municipality of Matera Enel Italia SpA Municipality of Civitavecchia Grant for creation of ecosystems for territorial transformation and development (“Puglia fa sistema”) 0.13 Donation of an artistic lighting installation within the Palombaro Lungo cistern 0.06 0.05 Donation of an artistic lighting installation Enel Italia SpA Municipality of Piegaro (PG) 0.04 Enel Italy contributed design and construction of a 32 kW photovoltaic plant on the roof of the “Luigi Boldrini” Museum of Paleontology Enel Italia SpA Municipality of Tolfa (RM) Enel Italia SpA Enel Italia SpA Enel Italia SpA Enel Italia SpA Moige - Movimento italiano genitori Onlus ASES - Agricoltori, Sostenibilità E Sviluppo (Associazione non profit) Fondazione Teatro alla Scala Società Cooperativa Sociale Camelot Onlus (Progetto WE) e-distribuzione SpA Enel Cuore Onlus e-distribuzione SpA e-distribuzione SpA e-distribuzione SpA Fondazione Centro Studi Enel Fondazione Centro Studi Enel Comando dei Vigili del Fuoco di Belluno e-distribuzione SpA Azienda Sanitaria Locale BT e-distribuzione SpA Municipality of Crema Grant for upgrade of gym facilties for use as emergency shelter under provisions of town civil protection plan 0.01 Enel collaborated with Moige to counter cyber risks, bullying and cyber bullying in all its forms. Part of pursuit Sustainable Development Goals 4 (Quality Education) and 10 (Reduced Inequalities) 0.06 0.02 Donation for #lanaturanonsiferma project 0.6 Donation for 2020-2023 Donation for the implementation of a social innovation project with the aim of contributing to increasing the capacity for cooperation between citizens and public-private entities in a specific territory, for the implementation of projects capable of creating long-term value 0.03 Donation to support initiatives to counter COVID-19 emergency - pursuant to Cure Italy Decree of March 16, 2020 9 1.66 1.4 0.05 0.02 0.03 50% balance of 2019 donation 50% of 2020 donation Donatino of 66 generators to Belluno Fire Department Donation for power grid connection of healthcare facilities involved in fighting COVID-19 pandemic Donation for power grid connection of healthcare facilities involved in fighting COVID-19 pandemic 379 Integrated Annual Report 2020e-distribuzione SpA e-distribuzione SpA e-distribuzione SpA e-distribuzione SpA Enel Energia SpA Enel Energia SpA Enel Energia SpA Enel Energia SpA Enel Energia SpA Enel Energia SpA Enel Energia SpA Enel Energia SpA Enel Energia SpA Enel Global Trading SpA Enel Global Trading SpA Soggetto Attuatore Emergenza COVID-19 Calabria Azienda Ospedaliera Regionale San Carlo Azienda Ospedaliera di Perugia A.S.M. Azienda Sanitaria Locale Di Matera Donation for power grid connection of healthcare facilities involved in fighting COVID-19 pandemic Donation for power grid connection of healthcare facilities involved in fighting COVID-19 pandemic Donation for power grid connection of healthcare facilities involved in fighting COVID-19 pandemic Donation for power grid connection of healthcare facilities involved in fighting COVID-19 pandemic 0.04 0.05 0.05 0.09 Enel Cuore Onlus 8 Article 66 of Decree 18 of March 17, 2020 COVID-19 Protezione Civile Regione Sicilia Federazione Nazionale Ordine Professioni Infermieristiche Fondazione Centro Studi Enel Enel Cuore Onlus Enel Cuore Onlus Enel Cuore Onlus Enel Cuore Onlus Regione Sicilia - Dipartimento Protezione Civile Enel Cuore Onlus Enel Cuore Onlus 0.07 Donation to Civil Protection of Sicily COVID-19 emergency - donation for the purchase of personal protective equipment and material for sanitization to protect nurses. 0.13 0.86 Balance of 2019 donation 0.32 20% payment on account of 2019 grant 1.28 80% balance of 2018 grant 0.13 Donation enelpremia 3.0 2016/2017/2018 editions 0.04 2019 assocation dues COVID-19 emergency - donation for the purchase of personal protective equipment and material for sanitization, especially for healthcare personnel, and for the purchase of machinery and equipment for new intensive/semi-intensive care beds 0.06 0.04 2020 grant to support and develop organization’s projects 1 COVID-19 emergency donation 32.11 Total 52. 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: - sureties and other guarantees granted to third parties Commitments to suppliers for: - electricity purchases - fuel purchases - various supplies - tenders - other Total TOTAL at Dec. 31, 2020 at Dec. 31, 2019 Change 11,451 67,400 41,855 1,511 3,604 4,383 118,718 130,169 11,078 97,472 48,016 1,034 3,522 3,391 153,435 164,513 373 (30,072) (6,161) 477 82 957 (34,717) (34,344) Compared with December 31, 2019, the decrease of The decrease of €6,161 million in commitments for “fuel €30,072 million in commitments for “electricity purcha- purchases” mainly regards to gas supplies, especially in ses” million is essentially attributable to companies in Latin Spain and Italy, and was affected by the decline in demand America Region, in particular in Brazil, and mainly reflects for natural gas and gas prices, as well as exchange rate ef- exchange rate effects, as well as differences in the state of fects. progress of outstanding contracts. 380380 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsFor more details on the expiry of commitments and gua- With a subsequent ruling, the Court of Appeal of Lec- rantees, please see the section “Commitments to purchase ce granted the appeal lodged by the Province of Brindisi commodities” in note 45. against the ruling, acknowledging that a material error had been made and therefore recognizing the generic entitle- 53. Contingent assets and liabilities The following reports the main contingent assets and lia- ment of the Province to damages. The defendants filed an appeal against ruling with the Court of Cassation on June bilities at December 31, 2020, which are not recognized in 22, 2019. The hearing initially scheduled for April 24, 2020 the consolidated financial statements as they do not meet was postponed until October 1, 2020 owing to the CO- the requirements provided for in IAS 37. VID-19 health emergency. On that date, the Court of Cas- Brindisi Sud thermal generation plant - Criminal proceedings against Enel employees A criminal proceeding was held before the Court of Brindisi sation voided the ruling of the Court of Appeal of Lecce, with referral to another section of the same court for a new proceeding. Criminal proceedings are also under way before the Cour- concerning the Brindisi Sud thermal plant in which a num- ts of Reggio Calabria and Vibo Valentia against a number ber of employees of Enel Produzione – cited as a liable par- of employees of Enel Produzione for the offense of illegal ty in civil litigation – have been accused of causing criminal waste disposal in connection with alleged violations con- damage and dumping hazardous substances with regard cerning the disposal of waste from the Brindisi plant. Enel to the alleged contamination of land adjacent to the plant Produzione has not been cited as a liable party for civil da- with coal dust as a result of actions between 1999 and mages. 2011. At the end of 2013, the accusations were extended The criminal proceedings before the Court of Reggio Ca- to cover 2012 and 2013. As part of the proceeding, inju- labria ended with the hearing of June 23, 2016. The court red parties, including the Province and City of Brindisi, have acquitted nearly all of the Enel defendants of the main submitted claims for total damages of about €1.4 billion. charges because no crime was committed. Just one case In its decision of October 26, 2016, the Court of Brindisi: was dismissed under the statute of limitations. Similarly, all (i) acquitted nine of the thirteen defendants (all employees of the remaining charges involving minor offenses were di- of Enel Produzione) for not having committed the offense; smissed under the statute of limitations. The proceedings (ii) ruled that it did not have to proceed as the offense was before the Court of Vibo Valentia are still pending and are time-barred for two of the defendants; and (iii) convicted currently in the testimony phase, as the court ruled that the remaining two defendants, sentencing them with all the offenses could not be dismissed under the statute of the allowances provided for by law to nine months’ impri- limitations. At a hearing on February 24, 2020, the Prose- sonment. With regard to payment of damages, the Court’s cution’s expert witness testified. Following the postpone- ruling also: (i) denied all claims of public parties and asso- ment of hearings in all criminal and civil proceedings as part ciations acting in the criminal proceeding to recover dama- of the measures to counter COVID-19, the hearings in this ges; and (ii) granted most of the claims filed by the private case resumed on September 7, 2020, when a number of parties acting to recover damages, referring the latter to the the witnesses of the co-defendants testified. On October civil courts for quantification without granting a provisional 22, 2020, an additional hearing was held to hear witness award. The convicted defendants and the civil defendant, testimony. Arguments were initially scheduled to continue Enel Produzione, as well as by one of the two employees on November 19, 2020. However, due to the persistence of for whom the expiry of the period of limitations had been the health emergency, the hearing was then postponed to declared, appealed the conviction. In a ruling issued on Fe- January 14, 2021, the date on which the legal counsel of bruary 8, 2019, the Lecce Court of Appeal: (i) confirmed the the defendants were heard. The arguments of the public trial court ruling regarding the criminal convictions of two prosecutor and the civil parties were heard on February 4, Enel Produzione executives; (ii) denied the claims for da- 2021, while the discussion of the defense being scheduled mages of some private appellants; (iii) granted some claims for March 18 and 25, 2021. for damages, which had been denied in the trial court, re- ferring the parties, like the others – whose claims had been granted by the trial court – to the civil courts for quantifi- cation, without granting a provisional award; (iv) confirmed Enel Energia and Servizio Elettrico Nazionale anti- trust proceeding On May 11, 2017, the Competition Authority announced for the rest the ruling of the Court of Brindisi except for the beginning proceedings for alleged abuse of a domi- extending litigation costs to the Province of Brindisi, which nant position against Enel SpA (Enel), Enel Energia SpA (EE) had not been awarded damages at either the trial court or and Servizio Elettrico Nazionale SpA (SEN), with the con- on appeal. comitant performance of inspections. The proceeding was 381 Integrated Annual Report 2020initiated on the basis of complaints filed by the Italian As- 27, 2019, the Competition Authority set the recalculated sociation of Energy Wholesalers and Traders (AIGET) and penalty at €27,529,786.46. the company Green Network SpA (GN), as well as a number The rulings of the Regional Administrative Court were chal- of complaints from individual consumers. According to the lenged on appeal before the Council of State by the three charges filed by the Competition Authority, the Enel Group, Enel Group companies and a precautionary request was as an integrated participant in the distribution and sale of presented to the Council of State asking for the suspen- power on the regulated market and at a crucial phase of sion of the measure for recalculating the penalty levied by the liberalization of retail markets for residential and non- the Competition Authority. At the pre-trial hearing, held on residential low-voltage customers, engaged in an exclusio- February 20, 2020, this petition was not discussed in consi- nary strategy, using a series of non-replicable commercial deration of the supervening action of the Council of State stratagems capable of hindering its non-integrated com- to set a date for the hearing of the arguments in the dispu- petitors to the benefit of the Group company operating on te for May 21, 2020. the free market (EE). With an order of July 20, 2020, the Council of State (ac- On December 20, 2018 the Competition Authority issued cepting a subordinate petition from the counsel defending its final ruling, subsequently notified to the parties on Ja- the three companies), after the joinder of the three judg- nuary 8, 2019, with which it levied a fine on Enel SpA, SEN ments, suspended the ruling and ordered that the issue be and EE of €93,084,790.50, for abuse of a dominant position submitted for a preliminary ruling before the Court of Ju- in violation of Article 102 of the Treaty on the Functioning of stice of the European Union (CJEU) pursuant to Article 267 the European Union (TFEU). of the TFEU, formulating a number of questions aimed at The disputed conduct consisted in the adoption of a stra- clarifying the interpretation of the concept of “abuse of a tegy to exclude competitors from the free market for retail dominant position” to be applied to the present case. On power supply on the part of the Group’s operating compa- September 11 and 18, 2020, the CJEU notified EE and SEN nies, in particular EE, who used the privacy consent given by and Enel, respectively, of the initiation of a proceeding pur- consumers to channel their offers within the Group in order suant to Article 267 of the TFEU. The companies then filed to contact SEN customers who were still being served on briefs and are now waiting for the proceeding to continue. the regulated market. Pending the opening of the proceedings before the CJEU, With regard to other allegations made with the measure Enel, EE and SEN filed an additional precautionary petition to initiate the proceeding, concerning the organization and to the Council of State asking for the suspension of the en- performance of sales activities at physical locations (Enel forceability of the contested ruling of the Regional Admi- Points and Enel Point Partner Shops) and winback policies nistrative Court and the measure recalculating the penalty. reported by GN, the Competition Authority reached the Following the precautionary hearing on November 11, 2020, conclusion that the preliminary findings did not provide with three separate orders with identical content – publi- sufficient evidence of any abusive conduct on the part of shed on November 16 – the Council of State granted the Enel Group companies. request for suspension filed by the Enel companies and, as The companies involved filed an appeal to void the ruling a guarantee of payment of the penalty in the event of an before the Lazio Regional Administrative Court. The deci- unfavorable final ruling for Enel, required the issue of a first sion of that court, filed on October 17, 2019, partially upheld demand surety in favor of the Competition Authority in an the appeals filed by SEN and EE, declaring that the abusive amount equal to that of the penalty suspended with the conduct had been engaged in for a period of 1 year and precautionary orders. 9 months, rather than the original period of 5 years and Subsequently, with a separate ruling, the Council of State 5 months referred to in the penalty ruling of the Compe- also set the date of the final trial session of the appeal for tition Authority and requiring that authority to recalculate November 11, 2021, believing that the suspended procee- the penalty in accordance with the criteria specified in the ding could be resumed by that date. The Company is the- ruling. At the same time, the Regional Administrative Court refore still awaiting the final decision. denied Enel’s appeal concerning solely the reasons for the alleged joint and several liability of the Parent with SEN and EE, therefore without an autonomous financial impact on BEG litigation Following an arbitration proceeding initiated by BEG SpA in the recalculation of the penalty. With a measure November Italy, Enelpower SpA obtained a ruling in its favor in 2002, 382382 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementswhich was upheld by the Court of Cassation in 2010, which Following the beginning of the case before the TGI, again entirely rejected the claim for damages with regard to alle- at the initiative of ABA, between 2012 and 2013 Enel Fran- ged breach by Enelpower of an agreement concerning the ce was served with two “Saise Conservatoire de Créances” construction of a hydroelectric power station in Albania. (orders for the precautionary attachment of receivables) to Subsequently, BEG, acting through its subsidiary Albania conserve any receivables of Enel in respect of Enel France. BEG Ambient Shpk (ABA), an Albanian company, filed suit On January 29, 2018, the TGI issued a ruling in favor of Enel against Enelpower and Enel SpA concerning the matter, and Enelpower, denying ABA the recognition and enforce- obtaining a ruling from the District Court of Tirana, upheld ment of the Tirana court’s ruling in France for lack of the by the Albanian Court of Cassation, ordering Enelpower requirements under French law for the purposes of gran- and Enel to pay tortious damages of about €25 million for ting exequatur. Among other issues, the TGI ruled that: (i) 2004 as well as an unspecified amount of tortious damages the Albanian ruling conflicted with an existing decision, in for subsequent years. Following the ruling, ABA demanded this case the arbitration ruling of 2002 and that (ii) the fact payment of more than €430 million from Enel. that BEG sought to obtain in Albania what it was not able With a ruling of June 16, 2015, the first level of adjudication to obtain in the Italian arbitration proceeding, resubmitting was completed in the additional suit lodged by Enelpower the same claim through ABA, represented fraud. ABA ap- and Enel with the Court of Rome asking the Court to ascer- pealed the ruling. The hearing before the Paris Court of Ap- tain the liability of BEG for having evaded compliance with peal was held on February 2, 2021 and a ruling is pending. the arbitration ruling issued in Italy in favor of Enelpower through the legal action taken by ABA. With this action, The Netherlands Enelpower and Enel asked the Court to find BEG liable and At the end of July 2014, ABA filed suit with the Court of order it to pay damages in the amount that they could be Amsterdam to render the ruling of the Albanian court en- required to pay to ABA in the event of the enforcement of forceable in the Netherlands. On June 29, 2016, the court the ruling issued by the Albanian courts. With the ruling, the filed its judgment, which: (i) ruled that the Albanian ruling Court of Rome found that BEG did not have standing to be meet the requirements for recognition and enforcement sued, or alternatively, that the request was not admissible in the Netherlands; (ii) ordered Enel and Enelpower to pay for lack of an interest for Enel and Enelpower to sue, as the €433,091,870.00 to ABA, in addition to costs and ancillary Albanian ruling had not yet been declared enforceable in charges of €60,673.78; and (iii) denied ABA’s request to de- any court. The Court ordered the setting off of court costs. clare the ruling provisionally enforceable. Enel and Enelpower appealed the ruling before the Rome On June 29, 2016, Enel and Enelpower filed appeals against Court of Appeal, asking that it be overturned in full. The he- the first-level ruling of the Court of Amsterdam issued on aring scheduled for February 18, 2021 was postponed until the same date. On September 27, 2016, ABA also appealed November 11, 2021. the court’s ruling of June 29, 2016, to request the reversal On November 5, 2016, Enel and Enelpower filed a petition of its partial loss on the merits. On April 11, 2017, the Am- with the Albanian Court of Cassation, asking for the ruling sterdam Court of Appeal granted the request of Enel and issued by the District Court of Tirana on March 24, 2009 to Enelpower to join to two pending appeals. be voided. The proceeding is still pending. In a ruling of July 17, 2018, the Amsterdam Court of Appeal upheld the appeal advanced by Enel and Enelpower, ruling Proceedings undertaken by Albania BEG Ambient Shpk that the Albanian judgment cannot be recognized and en- (ABA) to obtain enforcement of the ruling of the District forced in the Netherlands. The Court of Appeal found that Court of Tirana of March 24, 2009 the Albanian decision was arbitrary and manifestly unrea- ABA had initiated two proceedings requesting recognition sonable and therefore contrary to Dutch public order. For and enforcement of the Albanian ruling before the courts these reasons, the court did not consider it necessary to of the State of New York and Ireland, which both ruled in analyze the additional arguments of Enel and Enelpower. favor of Enel and Enelpower, respectively, on February 23 The proceeding before the Court of Appeal continued with and February 26, 2018. Accordingly, there are no lawsuits regard to the subordinate question raised by ABA in the ap- pending in Ireland or New York State. peal proceedings, with which it is asking the court to rule France on the merits of the dispute in Albania and in particular the alleged non-contractual liability of Enel and Enelpower in In February 2012, ABA filed suit against Enel and Enelpower the failure to build the plant in Albania. On December 3, with the Tribunal de Grande Instance in Paris (TGI) in order 2019, the Amsterdam Court of Appeal issued a ruling in to render the ruling of the Albanian court enforceable in which it quashed the trial court judgment of June 29, 2016, France. Enel SpA and Enelpower SpA challenged the suit. rejecting any claim made by ABA. The Court came to this 383 Integrated Annual Report 2020conclusion after affirming its jurisdiction over ABA’s subor- 30, 2018, it was learned that Gas Natural had appealed the dinate claim and re-analyzing the merits of the case under decision of the Commission. Albanian law. Enel and Enelpower are therefore not liable to pay any amount to ABA, which was in fact ordered by the Court of Appeal to reimburse the appellant companies for Bono Social - Spain With the rulings of October 24 and 25, 2016 and November the losses incurred in illegitimate conservative seizures, to 2, 2016, the Spanish Supreme Court declared Article 45.4 be quantified as part of a specific procedure, and the costs of the Electricity Industry Law no. 24 of December 26, 2013 of the trial and appeal proceedings. On March 3, 2020, ABA void for incompatibility with Directive 2009/72/EC of the filed an appeal with the Supreme Court of the Netherlands European Parliament and of the Council of July 13, 2009, against the ruling of the Court of Appeal. On April 3, 2020, granting the appeals filed by Endesa against the obligation Enel and Enelpower appeared before the Supreme Court. to finance the “Bono Social” (Social Bonus) mechanism. Following the exchange of briefs between the parties, on The Supreme Court recognized Endesa’s right to receive all July 17, 2020 the Supreme Court ordered the Advocate Ge- amounts that had been paid to users, in addition to legal in- neral to issue an opinion on the case. On February 5, 2021, terest (equal to about €214 million), under the “Bono Social” the Advocate General issued an opinion favorable to Enel system, provided for in the law declared void by the Supre- and Enelpower, calling for the denial the appeal filed by me Court. The government challenged these rulings of the ABA. On February 19, 2021, ABA submitted a response to Supreme Court, requesting that they be overturned, but the opinion of the Advocate General. The issuance of the the related appeals were denied. Subsequently, the gover- decision is pending. Luxembourg nment initiated two proceedings before the Constitutional Court requesting the reopening of the Supreme Court pro- ceedings so that the latter may ask for a preliminary ruling In Luxembourg, again at the initiative of ABA, J.P. Morgan from the European Court of Justice (CJEU). The Constitutio- Bank Luxembourg SA was also served with an order for the nal Court granted the appeals and a preliminary ruling on precautionary attachment of any receivables of Enel SpA. the petition before the CJEU is pending. The government In parallel ABA filed a claim to obtain enforcement of the has not requested the repayment of any sum so far. ruling of the Court of Tirana in that country. The proceeding The CJEU had initially set the date for oral arguments of is still under way and briefs are being exchanged between the preliminary question as October 8, 2020. Following the the parties. No ruling has been issued. adoption of COVID-19 containment measures, the CJEU Environmental incentives - Spain Following the Decision of the European Commission of No- canceled this hearing, replacing it with the submission of written arguments. All parties, including Endesa, presented their respective written arguments by the deadline of No- vember 27, 2017 on the issue of environmental incentives vember 13, 2020. for thermal power plants, the European Commission’s Di- rectorate-General for Competition opened an investiga- tion pursuant to Article 108, paragraph 2, of the Treaty on “Endesa I” industrial relations dispute - Spain After a series of meetings of the Comisión Negociadora of the Functioning of the European Union (TFEU) in order to the 5th Endesa Collective Bargaining Agreement (Comisión assess whether the environmental incentive for coal power Negociadora) which began in October 2017 and continued plants provided for in Order ITC/3860/2007 represents throughout 2018, in view of the impossibility of reaching State aid compatible with the internal market. According an agreement between the social partners, Endesa notified to a literal interpretation of that Decision, the Commis- the workers and their union representatives that, with effect sion reached the preliminary conclusion that the incentive from January 1, 2019, the 4th Collective Bargaining Agree- in question would constitute State aid pursuant to Article ment must be considered terminated under the terms of 107, paragraph 1, of the TFEU, expressing doubts about the the “framework guarantee contract” and the “agreement compatibility of the incentive with the internal market while on the voluntary suspension or resolution of employment recognizing that the incentives are in line with the Europe- contracts in the period 2013-2018”, applying from that date an Union’s environmental policy. On April 13, 2018, Endesa the provisions of general labor law, as well as the applicable Generación SA, acting as an interested third party, submit- legal criteria established in the matter. ted comments contesting this interpretation, while on July Despite the resumption of negotiations within the Comi- 384384 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementssión Negociadora in February 2019, the interpretative dif- ferences between Endesa and the trade union represen- “Endesa II” industrial relations dispute - Spain On December 30, 2020, the Audiencia Nacional notified tatives regarding the effects of the resolution of the 4th Endesa a petition for a “collective dispute” initiated by Collective Bargaining Agreement with regard, in particular, three trade unions with minority representation filed on to the social benefits granted to retired personnel, led to December 16, 2020 concerning the cancellation of some the initiation of a suit by the unions having representation “derogatory provisions” of the 5th Endesa Collective Bar- in the company. On March 13, 2019 a hearing was held be- gaining Agreement. The plaintiffs claim that the contested fore the court of first instance, which on March 26, 2019, “derogatory provisions” would imply the illegitimate abo- issued a ruling in favor of Endesa, upholding the company’s lition of social benefits and economic rights of workers. position concerning the legitimacy of abolishing certain Endesa considers these provisions to be fully legitimate, in social benefits for retired personnel as a consequence of line with the arguments made during proceeding concer- the termination of the 4th Endesa Collective Bargaining ning the reduction of social benefits for retired personnel Agreement. The unions appealed this decision before the (ruling of the court of first instance of March 26, 2019, now Supreme Court, while the initial ruling remains provisio- under appeal before the Supreme Court). The conciliation nally enforceable. On June 19, 2019, Endesa submitted its hearing is scheduled for June 23, 2021. defense. In order to submit the dispute to arbitration, in December 2019, Endesa’s largest union agreed to waive its appeal before the Supreme Court against the ruling of the Furnas-Tractebel litigation - Brazil In 1998 the Brazilian company CIEN (now Enel CIEN) signed court of first instance of March 26, 2019. The other trade an agreement with Tractebel for the delivery of electrici- unions involved refused to join the arbitration proceeding, ty from Argentina through its Argentina-Brazil intercon- electing to go ahead with the proceedings before the Su- nection line. As a result of Argentine regulatory changes preme Court. introduced as a consequence of the economic crisis in On January 21, 2020, the arbitration award was issued, with 2002, CIEN was unable to make the electricity available to the amendment of the corresponding parts of the 5th En- Tractebel. desa Collective Bargaining Agreement, which was subse- In October 2009, Tractebel sued CIEN, which submitted quently signed by the social partners. It entered force on its defense. CIEN cited force majeure as a result of the Ar- January 23, 2020. On the same date, Endesa also signed gentine crisis as the main argument in its defense. Out of two further collective bargaining agreements (a “fra- court, the Tractebel has indicated that it plans to acquire mework guarantee contract” and an “agreement on volun- 30% of the interconnection line involved in the dispute. On tary measures to suspend or terminate employment con- February 14, 2019, CIEN received notice of an order begin- tracts”) with all the unions present in the company. On June ning expert witness operation, which is still pending. The 17, 2020, 5th Endesa Collective Bargaining Agreement was amount involved in the dispute is estimated at about R$118 published in the Spanish Official Journal (Boletín Oficial del million (about €28 million), plus unspecified damages. Estado), taking full effect. For analogous reasons, in May 2010 Furnas had also filed In view of the foregoing, the proceedings before the Su- suit against CIEN for failure to deliver electricity, requesting preme Court continue at the request of the three minority payment of about R$520 million (about €124 million), in unions that had initially initiated the action together with addition to unspecified damages, seeking to acquire ow- the most representative union. nership (in this case 70%) of the interconnection line. The In parallel, numerous individual actions have been filed by proceeding was decided in CIEN’s favor with a ruling of the retired staff and former employees who had agreed to Tribunal de Justiça with a definitive ruling of October 18, participate in termination incentive agreements in order 2019, which denied all of the claims of Furnas. to obtain judicial confirmation that the termination of the 4th Endesa Collective Bargaining Agreement did not affect them. Currently, the majority of these proceedings have Cibran litigation - Brazil Companhia Brasileira de Antibióticos (Cibran) has filed six been suspended or are being suspended, pending the de- suits against the Enel Group company Ampla Energia e finition of the collective action pending before the Supre- Serviços SA (Ampla)(16) to obtain damages for alleged losses me Court, on whose outcome these proceedings depend. incurred as a result of the interruption of electricity servi- ce by the Brazilian distribution company between 1987 and (16) The trading name of Ampla is Enel Distribuição Rio de Janeiro. 385 Integrated Annual Report 20202002, in addition to non-pecuniary damages. The Court do not specifically identify the grids governed by the agre- ordered a unified technical appraisal for those cases, the ements, which has prompted a number of the cooperatives findings of which were partly unfavorable to Ampla. The lat- to sue Coelce asking for, among other things, a revision of ter challenged the findings, asking for a new study, which the fees agreed in the contracts. led to the denial of part of Cibran’s petitions. Cibran subse- These actions include the suit filed by Cooperativa de Ele- quently appealed the decision and the ruling was in favor trificação Rural do Vale do Acarau Ltda (Coperva) with a va- of Ampla. lue of about R$310 million (about €53 million). Coelce was The first suit, filed in 1999 and regarding the years from granted rulings in its favor from the trial court and the court 1995 to 1999, was adjudicated in September 2014 when of appeal, but Coperva filed a further appeal (Embargo de the court of first instance issued a ruling against Ampla, le- Declaração) based on procedural issues, which was also vying a fine of about R$200,000 (about €46,000) as well as denied by the appeal court in a ruling of January 11, 2016. other damages to be quantified at a later stage. Ampla ap- On February 3, 2016, Coperva lodged an extraordinary ap- pealed the ruling and the appeal was upheld by the Tribunal peal before the Superior Tribunal de Justiça (the court of de Justiça. In response, on December 16, 2016, Cibran filed third instance) against the appeal court ruling on the me- an appeal (recurso especial) before the Superior Tribunal rits, which was granted on November 5, 2018 for the ruling de Justiça, which was denied on June 19, 2020. The ruling issued in the previous appeal (Embargo de Declaração). On became definitive on August 24, 2020. December 3, 2018, Enel filed an appeal (Agravo Interno) With regard to the second case, filed in 2006 and regarding against this ruling of the Superior Tribunal de Justiça. The the years from 1987 to 1994, on June 1, 2015, the courts proceedings are currently pending. issued a ruling ordering Ampla to pay R$80,000 Brazi- lian (about €19,000) in non-pecuniary damages as well as R$96,465,103 (about €23 million) in pecuniary damages, AGM litigation - Brazil In 1993, Celg-D,(17) the Association of Municipalities of plus interest. On July 8, 2015 Ampla appealed the decision Goiás (AGM), the State of Goiás and the Banca di Goiás re- with the Tribunal de Justiça of Rio de Janeiro, which on No- ached an agreement (convenio) for the payment of muni- vember 6, 2019 issued a ruling granting Ampla’s petition cipal debts to Celg-D through the transfer of the portion and denying all of Cibran’s claims. On November 25, 2019, of ICMS - Imposto sobre Circulação de Mercadorias e Ser- Cibran filed an appeal against the ruling of the Tribunal de viços (VAT) that the State would have transferred to those Justiça of Rio de Janeiro, which was preliminarily denied on governments. In 2001 the parties to the agreement were September 10, 2020. On January 29, 2021 Cibran appea- sued by the individual municipal governments to obtain led the decisions before the Superior Tribunal de Justiça. a ruling that the agreement was invalid, a position then Decisions at first instance are still pending with regard to upheld by the Supreme Federal Court on the grounds of the remaining four suits for the years 2001 and 2002. The the non-participation of the local governments themselves value of all the disputes is estimated at about R$605 million in the agreement process. In September 2004, Celg-D re- (about €103 million). ached a settlement with 23 municipalities. Between 2007 and 2008, Celg-D was again sued on numerous occasions Coperva litigation - Brazil As part of the project to expand the grid in rural areas of (there are currently 90 pending suits) seeking the restitu- tion of amounts paid under the agreement. Despite the ru- Brazil, in 1982 Companhia Energética do Ceará SA (Coelce), ling that the agreement was void, Celg-D argues that the then owned by the Brazilian government and now an Enel payment of the debts on the part of the local governments Group company, had entered into contracts for the use of is legitimate, as electricity was supplied in accordance with the grids of a number of cooperatives established specifi- the supply contracts and, accordingly, the claims for resti- cally to pursue the expansion project. The contracts provi- tution of amounts paid should be denied. ded for the payment of a monthly fee by Coelce, which was The proceedings pending before the Goiás State Court also required to maintain the networks. include: (i) a suit filed by the Municipio de Aparecida de Those contracts, between cooperatives established in spe- Goiânia, which is pending at the preliminary stage at first cial circumstances and the then public-sector company, instance, for an amount of approximately R$624 million (17) The trading name of Celg-D is Enel Distribuição Goiás. 386386 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statements(approximately €106 million); (ii) a suit filed by the Munici- cense. ANLA has submitted a request for clarification of the pio de Quirinópolis, also pending at the preliminary stage ruling. Another acción popular was brought by a number of of the proceeding at first instance for an amount of about fish farming companies over the alleged impact that filling R$334 million (about €57 million); and (iii) a suit filed by the the Quimbo basin would have on fishing in the Betania ba- Municipio de Anápolis, submitted to the court of first in- sin downstream from Quimbo. After a number of precau- stance after a failed attempt at conciliation between the tionary rulings, on February 22, 2016, the Huila court issued parties, for an amount of approximately R$320 million a ruling allowing generation to continue for six months. The (about €54 million). court ordered Emgesa to prepare a technical design that The total value of the suits is equal to about R$3.5 billion would ensure compliance with oxygen level requirements (about €599 million). It is important to emphasize that the and to provide collateral of about 20,000,000,000 Colom- contingent liability deriving from this dispute is covered by bian pesos (about €5.5 million). the “Funac” provision established during the privatization The Huila court subsequently extended the six-month time of Celg-D. limit, and therefore, in the absence of contrary court rulings the Quimbo plant is continuing to generate electricity as ANEEL litigation - Brazil In 2014, Eletropaulo(18) initiated an action before the federal the oxygenation system installed by Emgesa has so far de- monstrated that it can maintain the oxygen levels required courts seeking to void the administrative measure of ANE- by the court. EL (the National Electricity Agency), which in 2012 retro- On March 22, 2018, ANLA and CAM jointly presented the actively introduced a negative coefficient to be applied in final report on the monitoring of water quality downstre- determining rates for the following regulatory period (2011- am of the dam of the El Quimbo hydroelectric plant. Both 2015). With this provision, the Authority ordered the resti- authorities confirmed the compliance of Emgesa with the tution of the value of some components of the network oxygen level requirements. On June 15, 2018, Emgesa filed previously included in rates because they were considered its final pleadings. On January 12, 2021, it was learned that non-existent and denied Eletropaulo’s request to include the ruling of first instance of the Court of Huila had been additional components in rates. On September 9, 2014, the issued (it was subsequently notified to the company on Fe- administrative measure of ANEEL was suspended on a pre- bruary 1, 2021). The ruling, while acknowledging that the cautionary basis. The first-instance proceeding is in its pre- oxygenation system implemented by Emgesa has mitiga- liminary stages and the value of the suit is R$1,093 million ted the risks associated with the protection of fauna in the (about €186 million). Bethany basin, imposed a series of obligations on the envi- ronmental authorities involved, as well as on Emgesa itself. El Quimbo - Colombia A number of legal actions (“acciones de grupo” and “ac- In particular, the latter is required to implement a deconta- mination project to ensure that the water in the basin does ciones populares”) brought by residents and fishermen in not generate risks for the flora and fauna of the river, which the affected area are pending with regard to the El Quim- will be subject to verification by ANLA, and to make perma- bo project for the construction of a 400 MW hydroelectric nent the operation of the oxygenation system, adapting it plant in the region of Huila (Colombia). More specifically, the to comply with the parameters established by ANLA. Em- first collective action, currently in the preliminary stage, was gesa will take all necessary actions to safeguard its rights. 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 was Nivel de Tensión Uno proceedings - Colombia This dispute involves an “acción de grupo” brought by Cen- brought, between August 2011 and December 2012, by re- tro Médico de la Sabana hospital and other parties against sidents and businesses/associations of five municipalities Codensa seeking restitution of allegedly excess rates. The of Huila claiming damages related to the closing of a brid- action is based upon the alleged failure of Codensa to ap- ge (Paso El Colegio). With regard to acciones populares, or ply a subsidized rate that they claim the users should have class action lawsuits, in 2008 a suit was filed by a number paid as Tensión Uno category users (voltage of less than 1 of residents of the area demanding, among other things, kV) and owners of infrastructure, as established in Resolu- that the environmental permit be suspended. As part of tion no. 82/2002, as amended by Resolution no. 97/2008. this action, on September 11, 2020, the Huila Court issued The suit is at a preliminary stage. The estimated value of the an unfavorable ruling against Emgesa, sentencing it to fulfill proceeding is about 337 billion Colombian pesos (about the obligations already provided for in the environmental li- €96 million). (18) The trading name of Eletropaulo is Enel Distribuição São Paulo. 387 Integrated Annual Report 2020Arbitration proceedings in Colombia On October 8, 2018 the Grupo Energía de Bogotá (GEB) pon the PPO immediately appealed the decision. In parallel with the PPO action, VV also filed a number of (which holds about 51.5% of Emgesa and Codensa) an- suits, asking in particular for the voidance of the VEG Ope- nounced that it had started arbitration proceedings befo- rating Agreement. re the Centro de Arbitraje y Conciliación de la Cámara de On December 12, 2014, VV withdrew unilaterally from the Comercio de Bogotá against Enel Américas SA for an alle- VEG Operating Agreement, notifying its termination on ged breach of contract in relation to the non-distribution March 9, 2015, for breach of contract. On March 9, 2015, of dividends in the 2016, 2017 and 2018 financial years for the decision of the appeals court overturned the ruling of the companies Emgesa and Codensa and for the failure to the trial court and voided the contract as part of the action comply with certain provisions of the shareholders’ agree- pursued by the PPO. SE lodged an extraordinary appeal ment. The GEB is claiming damages of about €514 million against that decision before the Supreme Court. At a hea- plus interest. The preliminary phase has been completed ring of June 29, 2016, the Supreme Court denied the appe- and the procedure is currently suspended. al. SE then appealed the ruling to the Constitutional Court, In parallel, GEB also initiated, respectively, 17 arbitration which denied the appeal on January 18, 2017. proceedings against Codensa and 20 against Emgesa, for In addition, SE lodged a request for arbitration with the a total of 37 pending disputes (now joined into two sepa- Vienna International Arbitral Centre (VIAC) under the VEG rate proceedings for each company), in an attempt to void Indemnity Agreement. Under that accord, which had been the decisions of the Junta Directiva and shareholders’ me- signed as part of the privatization between the National etings of the defendant companies for alleged violation Property Fund (now MH Manazment) of the Slovak Republic of mandatory rules, defect of absolute nullity for illegality and SE, the latter is entitled to an indemnity in the event of motive and subject matter and alleged violation of sha- of the early termination of the VEG Operating Agreement reholders’ agreements. On February 24, 2020, GEB filed a for reasons not attributable to SE. The arbitration court revision of the arbitration petition filed against Emgesa, in- rejected the objection that it did not have jurisdiction and cluding, among other things, claims concerning the failure the arbitration proceeding continued to examine the me- to pursue the corporate purpose and abuse of the exercise rits of the case, with a ruling on the amount involved being of voting rights by Enel Américas and its directors. Emgesa deferred to any subsequent proceeding. Following the he- filed a defense brief challenging GEB’s new claims. Both of aring held on February 2, 2017, the arbitration court issued the two suits launched against Emgesa and Codensa are its ruling denying the request of SE on June 30, 2017. currently suspended due to negotiations by agreement of In parallel with the arbitration proceeding launched by SE, the parties. The value of the disputes is undetermined and both VV and MH Manazment filed two suits in the Slovakian the proceedings are both in the preliminary phase. courts to void the VEG Indemnity Agreement owing to the Gabčíkovo dispute - Slovakia Slovenské elektrárne (SE) is involved in a number of ca- alleged connection of the latter with the VEG Operating Agreement. These proceedings were joindered and, on September 27, 2017, a hearing was held before the Court ses before the national courts concerning the 720 MW of Bratislava in which the judge denied the request of the Gabčíkovo hydroelectric plant, which is administered by plaintiffs for procedural reasons. Both VV and MH Manaz- Vodohospodárska Výsatavba Štátny Podnik (VV) and whose ment appealed that decision. The appeal filed by MH Ma- operation and maintenance, as part of the privatization of nazment was denied by the Bratislava Court of Appeal on SE in 2006, had been entrusted to SE for a period of 30 June 8, 2019, upholding the decision of the court of first years under an operating agreement (the VEG Operating instance in favor of SE. Similarly, the appeal filed by VV was Agreement). denied, upholding the trial court decision in favor of SE. VV Immediately after the closing of the privatization, the Pu- filed a further appeal (dovolanie) against that decision on blic Procurement Office (PPO) filed suit with the Court of March 9, 2020, to which SE replied with a brief submitted Bratislava seeking to void the VEG Operating Agreement on June 8, 2020. At the local level, SE was sued by VV for on the basis of alleged violations of the regulations gover- alleged unjustified enrichment (estimated at about €360 ning public tenders, qualifying the contract as a service million plus interest) for the period from 2006 to 2015. SE contract and as such governed by those regulations. In filed counter-claims for all of the proceedings under way November 2011 the trial court ruled in favor of SE, whereu- and, in particular: (i) for 2006, 2007 and 2008, at the he- 388388 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsaring of June 26, 2019, the Court of Bratislava denied the On May 27, 2015, under the provisions of the BOT con- claims of both parties for procedural reasons. The ruling tract, Chucas initiated an arbitration proceeding before in first instance was appealed by both VV and SE and the the Cámara Costarricense-Norteamericana de Comercio appeals for the years 2006-2008 are pending. As for the (AMCHAM CICA) seeking reimbursement of the additional appeal proceedings relating to 2007, in November 2019, SE costs incurred to build the plant and as a result of the de- had raised a preliminary question which was rejected by the lays in completing the project as well as voidance of the Court of Appeal on January 15, 2020. On August 18, 2020, fine levied by ICE for alleged delays in finalizing the wor- SE filed an appeal with the Constitutional Court; (ii) for the ks. In a decision issued in December 2017, the arbitration proceedings relating to 2009, the Court of Bratislava had board ruled in Chucas’ favor, granting recognition of the initially scheduled the first hearing for October 13, 2020, additional costs in the amount of about $113 million (about which was then postponed to November 24, 2020 and €91 million) and legal costs and ruling that the fines should again postponed to March 23, 2021; (iii) for the proceeding not be paid. ICE appealed the arbitration ruling before the relating to 2011, the Court set the first hearing for Novem- Supreme Court and on September 5, 2019 Chucas was no- ber 19, 2020, again postponed to a date to be decided due tified of the ruling upholding the ICE’s appeal to void the to the COVID-19 situation; (iv) with regard to the procee- arbitration ruling for a number of formal procedural rea- ding involving 2012, at the hearing of April 24, 2019, the sons. On September 11, 2019, Chucas filed a “recurso de Court denied the petition of VV, which filed an appeal on aclaración y adición” with the same court and it was partial- June 21, 2019 and the appeal is under way; (v) for the proce- ly upheld on June 8, 2020. The Court’s decision expanded edings relating to the years 2010 and 2013, the exchange of on the ruling of September 5, 2019 with information con- final pleadings between the parties was concluded and the cerning the admission of evidence deposited by Chucas hearing at first instance, initially set for May 12, 2020, was without, however, modifying the decision concerning the postponed to October 6, 2020. On this date, VV has asked voidance of the arbitration award. On July 15, 2020, Chu- for the hearing to be postponed to November 6, 2020, and cas filed a request for arbitration with the AMCHAM CICA subsequently to February 23, 2021. The hearing was subse- for an estimated amount of about $240 million. On August quently postponed to a date to be determined as a result of 14, 2020, ICE filed a response to Chucas’s arbitration pe- the epidemiological emergency; (vi) for the proceeding re- tition, requesting the dismissal of the proceeding for lack lating to 2014, the hearing at first instance initially schedu- of jurisdiction on the part of the arbitration tribunal. The led for October 6, 2020 was first postponed to November request was denied by AMCHAM CICA. In parallel, ICE filed 6, 2020, and then to February 23, 2021. The hearing was precautionary appeals to the Tribunal Contencioso Admini- subsequently postponed to a date to be determined due strativo against Chucas and the AMCHAM CICA in order to to the health emergency. suspend the arbitration proceedings. These appeals were Finally, in another proceeding before the Court of Bratisla- preliminarily upheld and subsequently revoked. Arbitration va, VV asked for SE to return the fee for the transfer from is therefore in the initial stages. SE to VV of the technology assets of the Gabčíkovo plant as part of the privatization, with a value of about €43 million plus interest. The parties exchanged briefs. At the hearing GasAtacama Chile - Chile On August 4, 2016, the Superintendencia de Electricidad on November 19, 2019, the court issued a preliminary de- y Combustibles (SEC) fined GasAtacama Chile $8.3 million cision on the case in which it noted the lack of standing of (about 5.8 billion Chilean pesos) for information provided by VV. At the hearing of October 1, 2020, the parties filed their the latter to the CDEC-SING (Centro de Despacho Económ- final briefs and on December 18, 2020, the court issued a ico de Carga) between January 1, 2011 and October 29, decision in favor of SE, rejecting VV’s claims. On January 7, 2015, relating to the Minimum Technical and Minimum 2021, VV filed an appeal against the decision, and the pro- Operating Time variables at the Atacama plant. ceeding is pending. Precautionary administrative proceeding and Chucas arbitration PH Chucas SA (Chucas) is a special purpose entity establi- GasAtacama Chile appealed this measure with the SEC, which denied the appeal on November 2, 2016. GasAtaca- ma Chile appealed this decision before the Santiago Court of Appeal, which on April 9, 2019, issued a ruling reducing the fine to $432,000 (about 290 million Chilean pesos). shed by Enel Green Power Costa Rica SA after it won a tender Both GasAtacama Chile and the SEC have appealed this organized in 2007 by the Instituto Costarricense de Electrici- decision before the Supreme Court of Chile. On June 28, dad (ICE) for the construction of a 50 MW hydroelectric plant 2019, a hearing was held for both parties to submit argu- and the sale of the power generated by the plant to ICE un- ments and on January 15, 2020 the Supreme Court upheld der a build, operate and transfer contract (BOT). the ruling of the Santiago Court of Appeal, leaving unchan- 389 Integrated Annual Report 2020ged the reduction in the fine established by that court. The raise funds abroad. Under the special rules then in force, adjusted fine was paid on March 12, 2020. subject to maintaining the bond until 2008, the interest In parallel, GasAtacama Chile also filed an appeal before the paid by Ampla to its subsidiary was not subject to withhol- Constitutional Court, claiming that the legal provisions un- ding tax in Brazil. der which the SEC imposed the fine had been repealed at However, the financial crisis of 1998 forced the Panamanian the time the penalty was issued. On July 17, 2018, the Con- company to refinance itself with its Brazilian parent, which stitutional Court rejected GasAtacama Chile’s appeal. for that purpose obtained loans from local banks. The tax In relation to this issue, some operators of the Sistema In- authorities considered this financing to be the equivalent of terconectado del Norte Grande (SING), including Aes Gener the early extinguishment of the bond, with the consequent SA, Eléctrica Angamos SA and Engie Energía Chile SA, have loss of entitlement to the exemption from withholding tax. initiated actions in order to obtain damages in an amount In December 2005, Ampla carried out a spin-off that in- of about €58 million (the former) and about €141 million volved the transfer of the residual FRN debt and the as- (the latter two). The disputes were joindered in part in a sin- sociated rights and obligations to Ampla Investimentos e gle proceeding and the preliminary phase is currently su- Serviços SA. spended under the state of national emergency declared On November 6, 2012, the Câmara Superior de Recursos in response to the COVID-19 pandemic. Fiscais (the highest level of administrative courts) issued a ruling against Ampla, for which the company prompt- Kino arbitration - Mexico On September 16, 2020, Kino Contractor SA de Cv, Kino ly asked that body for clarifications. On October 15, 2013, Ampla was notified of the denial of the request for clarifica- Facilities Manager SA de Cv and Enel SpA were notified of a tion (Embargo de Declaração), thereby upholding the pre- request for arbitration filed by Parque Solar Don José SA de vious adverse decision. The company provided security for Cv, Villanueva Solar SA de Cv and Parque Solar Villanueva the debt and on June 27, 2014 continued litigation before Tres SA de Cv (together, “Project Companies”) in which the the ordinary courts (Tribunal de Justiça). Project Companies alleged the violation (i) by Kino Contrac- In December 2017, the court appointed an expert to exami- tor of certain provisions of the EPC Contract and (ii) by Kino ne the issue in greater detail in support of the future ruling. Facilities of certain provisions of the Asset Management In September 2018, the expert submitted a report, reque- Agreement, both contracts concerning solar projects ow- sting additional documentation. ned by the three companies filing for arbitration. In December 2018, the company provided the additional Enel SpA – which is the guarantor of the obligations of Kino documentation and is awaiting the court’s assessment of Contractor and Kino Facilities deriving from the above con- the arguments and documents presented. tracts – has also been called into the arbitration procee- The amount involved in the dispute at December 31, 2020 ding, but without specific claims being filed against it. was about €206 million. The Project Companies, in which Enel Green Power SpA is a non-controlling shareholder, are controlled by Caisse de PIS - Eletropaulo Dépôt et Placement du Québec and CKD Infraestructura In July 2000, Eletropaulo filed suit seeking a tax credit for México SA de Cv. The proceeding is in the preliminary pha- PIS (Programa Integração Social) paid in application of re- se and the formation of the arbitration panel is in progress. gulations (Decree Laws 2.445/1988 and 2.449/1988) that The claim is provisionally quantified at about $140 million, were subsequently declared unconstitutional by the Supre- while the Project Companies provisionally quantified their mo Tribunal Federal (STF). In May 2012, the Superior Tribunal claim at about $15.4 million. de Justiça (STJ) issued a final ruling in favor of the company Tax litigation in Brazil Withholding tax - Ampla that recognized the right to the credit. In 2002, before the issue of that favorable final ruling, the company had offset its credit against other federal taxes. This behavior was contested by the federal tax authorities In 1998, Ampla Energia e Serviços SA (Ampla) financed the but the company, claiming it had acted correctly, challen- acquisition of Coelce with the issue of bonds in the amount ged in court the assessments issued by the federal tax au- of $350 million (“Fixed Rate Notes” - FRN) subscribed by thorities. Following defeat at the initial level of adjudication, its Panamanian subsidiary, which had been established to the company appealed. 390390 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsThe amount involved in the dispute at December 31, 2020 from 0.50% to 0.65% with the issue of a provisional measu- was about €103 million. re (Executive Provisional Order). Subsequently, the provisional measure was re-issued five ICMS - Ampla, Coelce and Eletropaulo times before its definitive ratification into law in 1998. Un- The States of Rio de Janeiro, Ceará and São Paulo issued a der Brazilian legislation, an increase in the tax rate (or the number of tax assessments against Ampla Energia e Ser- establishment of a new tax) can only be ordered by law and viços SA (for the years 1996-1999 and 2007-2017), Com- take effect 90 days after its publication. panhia Energética do Ceará(19) (2003, 2004, 2006-2012 and Eletropaulo therefore filed suit arguing that an increase in 2015) and Eletropaulo (2008-2019), challenging the de- the tax rate would only have been effective 90 days after duction of ICMS (Imposto sobre Circulação de Mercadorias the last Provisional Order, claiming that the effects of the e Serviços) in relation to the purchase of certain non-cur- first four provisional measures should be considered void rent assets. The companies challenged the assessments, (since they were never ratified into law). This dispute ended arguing that they correctly deducted the tax and asserting in April 2008 with recognition of the validity of the increase that the assets, the purchase of which generated the ICMS, in the PIS rate starting from the first provisional measure. are intended for use in their electricity distribution activi- In May 2008, the Brazilian tax authorities filed a suit against ties. Eletropaulo to request payment of taxes corresponding The companies are continuing to defend their actions at to the rate increase from March 1996 to December 1998. the various levels of adjudication. Eletropaulo has fought the request at the various levels of The amount involved in the disputes totaled approximately adjudication, arguing that the time limit for the issue of €75 million at December 31, 2020. the notice of assessment had lapsed. In particular, since Withholding tax - Endesa Brasil more than five years have passed since the taxable event (December 1995, the date of the first provisional measure) On November 4, 2014, the Brazilian tax authorities issued without issuing any formal instrument, the right of the tax an assessment against Endesa Brasil SA (now Enel Brasil SA) authorities to request the payment of additional taxes and alleging the failure to apply withholding tax to payments of the authority to undertake legal action to obtain payment allegedly higher dividends to non-resident recipients. have been challenged. More specifically, in 2009, Endesa Brasil, as a result of the In 2017, following the unfavorable decisions issued in pre- first-time application of the IFRS, had derecognized goo- vious rulings, Eletropaulo filed an appeal in defense of its dwill, recognizing the effects in equity, on the basis of the rights and its actions with the Superior Tribunal de Justiça correct application of the accounting standards it had (STJ) and the Supremo Tribunal Federal (STF). The procee- adopted. The Brazilian tax authorities, however, asserted – dings are still pending while the amounts subject to dispute during an audit – that the accounting treatment was incor- have been covered by a bank guarantee. rect and that the effects of the derecognition should have With regard to the request of the Office of the Attorney Ge- been recognized through profit or loss. As a result, the cor- neral of the Brazilian National Treasury Department to re- responding amount (about €202 million) was reclassified place the bank guarantee with a deposit in court, the court as a payment of income to non-residents and, therefore, of second instance granted the petition. The company subject to withholding tax of 15%. therefore replaced the bank guarantee with a cash deposit It should be noted that the accounting treatment adopted and filed a clarification motion against the related decision, by the company was agreed with the external auditor and which is currently awaiting a decision. also confirmed by a specific legal opinion issued by a local The overall amount involved in the dispute at December 31, firm. 2020 was about €38 million. Following unfavorable rulings from the administrative cour- ts, the company is continuing to defend its actions in court ICMS - Coelce and the appropriateness of the accounting treatment. The State of Ceará has filed various tax assessments against The overall amount involved in the dispute at December 31, Companhia Energética do Ceará SA over the years (for tax 2020 was about €56 million. PIS - Eletropaulo periods from 2005 to 2014), contesting the determination of the deductible portion of the ICMS (Imposto sobre Cir- culação de Mercadorias e Serviços) and in particular the In December 1995, the Brazilian government increased method of calculation of the pro-rata deduction with re- the rate of the federal PIS (Programa Integração Social) tax ference to the revenue deriving from the application of a (19) The trading name of Coelce is Enel Distribuição Ceará. 391 Integrated Annual Report 2020special rate envisaged by the Brazilian government for the propriateness of the criteria adopted for the deductibility sale of electricity to low-income households (Baixa Renda). of certain financial expense (about €24 million) and costs The company has appealed the individual assessments, ar- for decommissioning nuclear power plants (about €6 mil- guing that the tax deduction was calculated correctly. The lion). company is defending its actions in the various levels of ju- risdiction. Income taxes - Enel Green Power España SL The overall amount involved in the dispute at December 31, On June 7, 2017, the Spanish tax authorities issued a no- 2020 was about €39 million. FINSOCIAL - Eletropaulo tice of assessment to Enel Green Power España SL, con- testing the treatment of the merger of Enel Unión Fenosa Renovables SA (“EUFER”) into Enel Green Power España SL Following a final ruling issued by the Federal Regional Court in 2011 as a tax neutral transaction, asserting that the tran- on September 11, 2011, Eletropaulo was recognized the ri- saction had no valid economic reason. ght to compensation for certain FINSOCIAL credits (social On July 6, 2017, the company appealed the assessment at contributions) relating to sums paid from September 1989 the first administrative level (Tribunal Económico-Adminis- to March 1992. trativo Central - TEAC), defending the appropriateness of Despite the expiration of the relative statute of limitations, the tax treatment applied to the merger. The company has the Federal Tax Authority contested the determination of provided the supporting documentation demonstrating some credits and rejected the corresponding offsetting, is- the synergies achieved as a result of the merger in order suing tax assessments that the company promptly challen- to prove the existence of a valid economic reason for the ged in the administrative courts, defending the legitimacy transaction. On December 10, 2019, the TEAC denied the of its calculations and actions. appeal and the company is continuing to defend its actions After an unfavorable ruling at first instance, the company in court (Audiencia Nacional). filed an appeal before the administrative court of second The overall amount involved in the dispute at December 31, instance. 2020 was about €95 million. The overall amount involved in the dispute at December 31, 2020 was about €36 million. Tax litigation in Italy Tax litigation in Spain Withholding tax - Enel Servizio Elettrico Nazionale As a result of a tax audit initiated in March 2018 and fol- Income tax - Enel Iberia, Endesa and subsidiaries lowing a subsequent investigation conducted with que- In 2018, the Spanish tax authorities completed a general stionnaires submitted to the banks involved as assignees audit involving the companies of the Group participating in certain transfers of receivables from Servizio Elettrico in the Spanish tax consolidation mechanism. This audit, Nazionale SpA (SEN) in respect of mass market customers which began in 2016, involved corporate income tax, value under a framework agreement, on December 19, 2018, the added tax and withholding taxes (mainly for the years 2012 Revenue Agency Regional Directorate of Lazio Large Ta- to 2014). xpayers Office, notified the company of an assessment in With reference to the main claims, the companies involved respect of the alleged violation of withholding tax obliga- have challenged the related assessments at the first admi- tions relating to the amounts paid to the banks as part of nistrative level (Tribunal Económico-Administrativo Central the aforementioned transfers in 2013. - TEAC), defending the correctness of their actions. In particular, the dispute arises from an assessment by the With regard to the disputes concerning corporate income Office that: (i) reclassified, for tax purposes only, the assign- tax, the issues for which an unfavorable outcome is consi- ment of receivables as a financing transaction; (ii) asserted dered possible amounted to about €151 million at Decem- an alleged withholding obligation for the company com- ber 31, 2020: (i) Enel Iberia is defending the appropriateness mensurate with the cost of the transaction (as the differen- of the criterion adopted for determining the deductibility ce between the nominal value of the assigned receivables of capital losses deriving from stock sales (around €103 and the transfer price), reconstructing the subsequent million) and certain financial expense (around €18 million); transactions involving the assigned receivables (further sa- (ii) Endesa and its subsidiaries are mainly defending the ap- les and/or securitizations with non-residents carried out by 392392 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsthe banks), in which the company had no role. these amendments indefinitely, but if the amendments In the first stages of the proceeding, which arose following are applied early, they must be applied prospectively. SEN’s appeal of the assessment, the company’s objections › “Amendments to IAS 1 - Classification of Liabilities as concerning the illegitimacy of the Office’s reclassification Current or Non-current”, issued in January 2020. The of the transaction for tax purposes and, consequently, of amendments regard the provisions of IAS 1 concerning the payment flows were not upheld, despite significant the presentation of liabilities. More specifically, the chan- procedural violations in the assessment activity. ges clarify: Believing that it has valid legal grounds to continue the di- – the criteria to adopt in classifying a liability as current spute, the company filed an appeal with the Court of Cassa- or non-current, specifying the meaning of right of an tion, asserting the illegitimacy of the tax claim for violation entity to defer settlement and that that right must exist and false application of the rules that, in the view of the trial at the end of the reporting period; court, permit the classification of the income generated by – the classification is unaffected by the intentions or the assignment of receivables as “property income”, which, expectations of management about when the entity consequently, would require SEN to apply withholding tax. will exercise its right to defer settlement of a liability; The overall amount involved in the dispute at December 31, – that the right to defer exists if and only if the entity sa- 2020 is about €81 million. 54. Future accounting standards The following provides a list of accounting standards, tisfies the terms of the loan at the end of the reporting period, even if the creditor does not verify compliance until later; and – that settlement regards the transfer to the counterpar- amendments and interpretations that will take effect for ty of cash, equity instruments, other assets or services. the Group after December 31, 2020. The amendments will take effect, subject to endorse- › “IFRS 17 - Insurance contracts”, issued in May 2017. The ment, for annual periods beginning on or after January 1, standard will take effect, subject to endorsement, for an- 2023, with earlier application permitted. nual periods beginning on or after January 1, 2021, with › “Amendments to IFRS 3 - Reference to the Conceptual earlier application permitted. Framework” issued in May 2020. The amendments are › “Amendment to IFRS 16: COVID 19-related rent conces- intended to replace a reference to the definitions of as- sions”, issued on May 28, 2020 in order to permit lesse- sets and liabilities provided by the Revised Conceptual es to not account for rent concessions (rent payment Framework for Financial Reporting issued in March 2018 holidays, deferral of lease payments, reductions in rent (Conceptual Framework) without significantly changing for a period of time, possibly followed by rent increa- its provisions. ses in future periods) as lease modifications if they are The amendments also add to IFRS 3 a requirement that, a direct consequence of the COVID-19 pandemic and for transactions and other events within the scope of meet certain conditions. According to IFRS 16, a lease “IAS 37 - Provisions, contingent liabilities and contingent modification is a change in the scope of a lease, or the assets” or “IFRIC 21 - Levies”, an acquirer applies IAS 37 or consideration for a lease, that was not part of the origi- IFRIC 21 (instead of the Conceptual Framework) to identi- nal terms and conditions of the lease. Accordingly, rent fy the liabilities it has assumed in a business combination. concessions would represent lease modifications unless Finally, the amendments clarify the existing guidelines in they were provided for in the original lease agreement. IFRS 3 for contingent assets acquired in a business com- The amendment applies only to lessees, while lessors are bination, specifying that, if it is not sure that an asset exi- required to apply the current provisions of IFRS 16. The sts at the acquisition date, the contingent asset shall not amendment, which applies retrospectively for annual re- be recognized. porting periods beginning on or after June 1, 2020, was The amendments will take effect, subject to endorse- not applied early by the Group. ment, for annual periods beginning on or after January › “Amendments to IFRS 10 and IAS 28 - Sale or Contribution 1, 2022. of Assets between an Investor and its Associate or Joint › “Amendments to IAS 16 - Property, Plant and Equipment: Venture”, issued in September 2014. The amendments Proceeds before Intended Use”, issued in May 2020. The clarify the accounting treatment for sales or contribution amendments prohibit a company from deducting from of assets between an investor and its associates or joint the cost of property, plant and equipment amounts re- ventures. They confirm that the accounting treatment ceived from selling items produced while the company is depends on whether the assets sold or contributed to an preparing the asset for its intended use. Instead, a com- associate or joint venture constitute a ‘business’ (as defi- pany will recognize such sales proceeds and related cost ned in IFRS 3). The IASB has deferred the effective date of in profit or loss. The amendments will take effect, subject 393 Integrated Annual Report 2020to endorsement, for annual periods beginning on or after relating to leasehold improvements from the example; January 1, 2022. Early application is permitted. – “IAS 41 - Agriculture”; the amendment removes the › “Amendments to IAS 37 - Onerous Contracts - Costs requirement for entities to exclude cash flows for ta- of Fulfilling a Contract”, issued in May 2020. The amend- xation when measuring fair value. Accordingly, entities ments specify which costs an entity includes in determi- shall use pre-tax cash flows and a pre-tax rate to di- ning the cost of fulfilling a contract for the purpose of scount those cash flows. assessing whether the contract is onerous. To this end, The amendments shall be applied prospectively, subject the cost of fulfilling a contract comprises the costs that to endorsement, for annual periods beginning on or after relate directly to the contract. These consist of the incre- January 1, 2022. Early application is permitted. mental costs of fulfilling that contract or an allocation of › “Amendments to IFRS 9, IAS 39, IFRS 7, and IFRS 16 - In- other costs that relate directly to fulfilling contracts. The terest Rate Benchmark Reform - Phase 2”, issued in Au- amendments will take effect, subject to endorsement, gust 2020. The amendments supplement those issued for annual periods beginning on or after January 1, 2022. in 2019 (Interest Rate Benchmark Reform - Phase 1) and Early application is permitted. address issues that could affect financial reporting after › “Annual improvements to IFRS Standards 2018-2020”, a benchmark has been reformed or replaced with an al- issued in May 2020. The document mainly comprises ternative benchmark rate. The objectives of the Phase 2 amendments to the following standards: amendments are to assist companies: (i) in applying the – “IFRS 1 - First-Time Adoption of International Finan- IFRSs when changes occur in contractual cash flows or cial Reporting Standards”; the amendment simplifies hedging relationships due to the reform of the bench- the application of IFRS 1 by an investee (subsidiary, marks for determining interest rates; and (ii) in providing associate or joint venture) that becomes a first-time information to users of financial statements. adopter of IFRS Standards after its parent has already In addition, when the Phase 1 exemptions cease to apply, adopted them. More specifically, if the investee adop- companies are required to amend the documentation of ts the IFRSs after its parent and applies IFRS 1.D16 (a), hedging relationship to reflect the changes required un- then the investee can elect to measure the cumulative der the IBOR reform by the end of the year in which the translation differences for all foreign operations at the changes are made (such changes do not constitute the amounts that would be included in the parent’s conso- discontinuation of the hedging relationship). When the de- lidated financial statements, based on parent’s date of scription of a hedged element in the documentation of the transition to the IFRSs; hedging relationship is changed, the amounts accumula- – “IFRS 9 - Financial Instruments”; with regard to fees inclu- ted in the hedging reserve shall be considered to be based ded in the ‘10 per cent’ test for derecognition of financial on the alternative benchmark rate on the basis of which liabilities, the amendment clarifies the fees that an entity the future hedged cash flows will be determined. includes when assessing whether the terms of a new or The amendments will require providing additional disclo- modified financial liability are substantially different from sures about the entity’s exposure to the risks arising from the terms of the original financial liability. In particular, the interest rate benchmark reform and related risk ma- these include only fees paid or received between the nagement activities. borrower and the lender, including fees paid or received The amendments will take effect for annual periods be- by either the borrower or lender on the other’s behalf; ginning on or after January 1, 2021. Early application is – “IFRS 16 - Leases”; the International Accounting Stan- permitted. dards Board amended Illustrative Example 13 accom- › “Amendments to IAS 1 and IFRS Practice Statement 2 - Di- panying “IFRS 16 - Leases”. Specifically, the amendment sclosure of Accounting Policies”, issued in February 2021. eliminates the potential for confusion in the application The amendments are intended to support entities in deci- of IFRS 16 created by the way in which Illustrative Exam- ding which accounting policies to disclose in the financial ple 13 had illustrated the requirements for lease incenti- statements. The amendments to IAS 1 require companies ves. The example had included a reimbursement relating to disclose their material accounting policy information ra- to leasehold improvements without explaining whether ther than their significant accounting policies. A guide on the reimbursement qualified as a lease incentive. The how to apply the concept of materiality to disclosures on amendment removes the illustration of a reimbursement accounting policies is provided in the amendments to IFRS 394394 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsPractice Statement 2. The amendments will take effect, ding perpetual bonds, for up to a maximum of €3 billion. subject to endorsement, for annual periods beginning on The bonds are to be placed exclusively with European and or after January 1, 2023. Early application is permitted. non-European institutional investors, including through › “Amendments to IAS 8 - Definition of Accounting Esti- private placements. mates”, issued in February 2021. The amendments clarify how companies should distinguish changes in accoun- ting policies from changes in accounting estimates. The definition of changes in accounting estimates has Enel issues new hybrid bonds for an aggregate prin- cipal amount of €2.25 billion In execution of the February 25, 2021 resolution, on March been replaced with a definition of accounting estimates 4, 2021 Enel announced the issue of a new perpetual hybrid as “monetary amounts in financial statements that are bond of €2.25 billion. The new issue strengthens and optimi- subject to measurement uncertainty”. The amendments zes the Group’s capital structure with an incremental hybrid will take effect, subject to endorsement, for annual pe- bond component, thus contributing to support the Group’s riods beginning on or after January 1, 2023. Early appli- growth set out in the 2021-2023 Strategic Plan, which envisa- cation is permitted. ges direct investments of around €40 billion over the period. The Group is assessing the potential impact of the future application of the new provisions. 55. Events after the reporting period Enel closes Unit I of Bocamina coal-fired plant three years ahead of date set in Chile’s National Decarbonization Plan On January 4, 2021 the Enel Group disconnected and cea- sed operations at Unit I of the Bocamina coal-fired power plant, which is located in the Chilean municipality of Coro- nel. The 128 MW Unit I was disconnected three years before Enel signs the largest ever sustainability-linked revolving credit facility On March 5, 2021, Enel and its Dutch subsidiary Enel Fi- nance International NV (EFI) signed the largest ever sustai- nability-linked revolving credit facility in the amount of €10 billion, with a term of five years. The facility, which will be used to meet the Group’s finan- cial requirements, is linked to a key performance indicator consisting of direct greenhouse gas emissions (i.e., Group Scope 1 CO2 equivalent emissions from the production of electricity and heat), contributing to the achievement of the date set in Chile’s National Decarbonization Plan. With the United Nations Sustainable Development Goal (SDG) 13 this milestone, coupled with the closure of Tarapacá coal “Climate Action” and in line with the Group’s “Sustainabili- plant on December 31, 2019 and the expected closure of ty-Linked Financing Framework”, for which Vigeo Eiris pro- Enel’s last coal facility in the country, Bocamina’s Unit II, by vided a second-party opinion. May 2022, steadily progress is being made towards the de- The facility replaces the previous €10 billion revolving cre- carbonization of Enel’s Chilean generation mix. dit line signed by Enel and EFI in December 2017 and has a lower all-in cost than the earlier facility. Moody’s upgrades Enel’s long-term rating to “Baa1” On January 15, 2021, Moody’s Investors Service (Moody’s) announced that it had upgraded its long-term rating of Voluntary partial public tender offer for the shares and American Depositary Shares of Enel Américas SA As part of the process of corporate reorganization aimed at Enel SpA to “Baa1” from the previous level of “Baa2”. Among integrating the non-conventional renewable energy business the rating drivers prompting the upgrade, Moody’s cited: of the Enel Group in Central and South America (excluding › low earnings volatility driven by large scale and geo- Chile) into the listed Chilean subsidiary Enel Américas SA, on graphical diversification; March 15, 2021, Enel SpA, as previously announced to inve- › stable earnings stemming from regulated networks and stors, launched a voluntary partial public tender offer for Enel contracted generation, which account for 80% of the Américas common stock and American Depositary Shares Group’s EBITDA; (ADSs) up to a maximum overall amount of 7,608,631,104 sha- › solid financial profile, with funds from operations/net res (including the shares represented by ADSs), equal to 10% debt in excess of 20%. Enel’s Board of Directors approves the issue of hy- brid bonds up to a maximum of €3 billion On February 25, 2021, the Board of Directors of Enel SpA of the company’s outstanding share capital at that date. The tender was organized as a voluntary public tender offer in the United States and a voluntary public tender offer in Chile. The Offer period ran from March 15 to April 13, 2021. The Offer was conditional upon the effectiveness of the mer- authorized the issue, by December 31, 2021, of one or ger of EGP Américas SpA into Enel Américas SA, which occur- more non-convertible subordinated hybrid bonds, inclu- red on April 1, 2021. 395 Integrated Annual Report 2020The total maximum outlay of approximately 1,065.2 billion Chilean pesos (equal to about €1.2 billion, calculated at the exchange rate prevailing on March 12, 2021 of 853.44 Chile- an pesos per euro) was funded through internally generated cash flows and existing borrowing capacity. Following the completion of the voluntary partial public ten- der offer and the completion of the merger of EGP Américas, Enel owns about 82.3% of the share capital of Enel Américas currently in circulation. 396396 3452Strategy & Risk ManagementPerformance& MetricsOutlookGovernance16Enel GroupConsolidated financial statementsDeclaration of the Chief Executive Officer and the officer in charge of financial reporting of the Enel Group at December 31, 2020, 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 in charge of financial reporting of Enel SpA, hereby certify, taking account of the provisions of Article 154-bis, para- graphs 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 finan- cial statements of the Enel Group in the period between January 1, 2020 and December 31, 2020. 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, 2020: a. have been prepared in compliance with the International Financial Reporting Standards endorsed by the European Union pursuant to Regulation (EC) no. 1606/2002 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 financial position, financial performance and cash flows of the issuer and the companies included in the consolidation scope. 4. Finally, we certify that the Report on Operations, accompanied by the consolidated financial statements of the Enel Group at December 31, 2020, contains a reliable analysis of operations and performance, as well as the situation of the issuer and the companies included in the consolidation scope, together with a description of the main risks and uncertainties to which they are exposed. Rome, March 18, 2021 Francesco Starace Alberto De Paoli Chief Executive Officer of Enel SpA Officer in charge of financial reporting of Enel SpA 397 Integrated Annual Report 2020REPORTS Report of the Board of Statutory Auditors to the Shareholders’ Meeting of Enel SpA 398 REPORT OF THE BOARD OF STATUTORY AUDITORS TO THE SHAREHOLDERS’ MEETING OF ENEL SpA CALLED TO APPROVE THE FINANCIAL STATEMENTS FOR 2020 (pursuant to Article 153 of Legislative Decree 58/1998 ) Shareholders, during the year ended December 31, 2020 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 2018 edition of the Corporate Governance Code for Listed Companies (hereinafter, the “Corporate Governance Code”), which the Company had adopted until March 2021;(1) 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 (i) Communication no. DEM/1025564 of April 6, 2001, as amended, and (ii) in warning notice no. 1/2021 of February 16, 2021, we report the following: (1) In March 2021, the Board of Directors completed the adoption of measures to ensure that Enel had implemented the amendments to the Italian Corporate Governance Code published in January 2020. 399 Integrated Annual Report 2020 • 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 participation 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 resolutions 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 2020 (in the section “Significant events in 2020”); • 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 financial statements for 2020 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 transactions were carried out in compliance with the approval and execution processes set out in the related procedure – adopted 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 2020. All transactions with related parties reported in the notes to the separate financial statements for 2020 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 separate financial statements for 2020 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 (EC) no. 1606/2002 and in force at the close of 2020, 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 Company’s 2 400 separate financial statements for 2020 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 financial statements. The notes to the separate financial statements give detailed information on the accounting standards and measurement criteria adopted, accompanied by an indication of the standards applied for the first time in 2020, which as indicated in the notes did not have a significant impact in the year under review, and standards that will apply in the future. The separate financial statements for 2020 of the Company underwent the statutory audit by the audit firm, KPMG 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 of the Company with the financial statements, as well as compliance with the provisions of law, pursuant to Article 14 of Legislative Decree 39/2010 and Article 10 of Regulation (EU) no. 537/2014. The report of KPMG SpA also includes: - a discussion of key aspects of the audit report on the separate financial statements; and - the declaration provided pursuant to Article 14, paragraph 2(e) of Legislative 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 2020 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 (EC) no. 1606/2002 and in force at the close of 2020, 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 2020 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 discussion 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, accompanied by an indication of standards applied for the first time in 2020, which did not have a significant impact in the year under review. The consolidated financial statements for 2020 of the Enel Group underwent statutory audit by the audit firm KPMG SpA, which issued an unqualified opinion, including with regard to the consistency of the consistency of the Report on Operations and certain information in the Report on 3 401 Integrated Annual Report 2020 Corporate Governance and Ownership Structure with the consolidated financial statements, as well as compliance with the provisions of law, pursuant to Article 14 of Decree 39/2010 and Article 10 of Regulation (EU) no. 537/2014. The report of KPMG 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 no. 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 consolidated non-financial statement. Under the terms of its engagement, KPMG SpA also issued unqualified opinions on the financial statements for 2020 of the most significant Italian companies of the Enel Group. Moreover, during periodic meetings with the representatives of the audit firm, KPMG 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 28, 2020, to ensure appropriate transparency concerning the methods used by listed companies in testing goodwill for impairment, in line with the recommendations contained in the joint Bank of Italy-CONSOB-ISVAP document no. 4 of March 3, 2010, and in the light of indications of CONSOB in its Communication no. 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 opinion in this regard from the Control and Risk Committee in February 2021, i.e. prior to the date of approval of the financial statements for 2020; • we examined the Board of Directors’ proposal for the allocation of net profit for 2020 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 Statutory Auditors in March 2021, that as at the date on which the 2020 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 4 402 Resolution no. 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 reciprocal 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 most recently in 2020 and the early months of 2021, 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 Global Business Lines are: Global Power Generation, Global Energy and Commodity Management, Global Infrastructure and Networks and Enel X; (ii) Regions and Countries, which are responsible for managing relationships with local institutional bodies, regulatory authorities, the media and other local stakeholders, 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 and adopting appropriate security, safety and environmental standards. Regions and Countries comprise: Italy, Iberia, Europe, Latin America, North America, and Africa, Asia and Oceania; (iii) Global Service Functions, which are responsible for managing information and communication technology activities (Global Digital Solutions) and procurement at the Group level (Global Procurement); and (iv) Holding Company Functions, which among other things are responsible for managing governance processes at the Group level. They include: Administration, Finance and Control, Human Resources and Organization, Communication, Legal and Corporate Affairs, Audit, and Innovation and Sustainability. The Board of Statutory Auditors feels that the organizational system described above is adequate to support the strategic development of the Company and the Enel Group and is also 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; 5 403 Integrated Annual Report 2020 • we monitored the independence of the audit firms, first EY SpA and then its successor during 2020 KPMG SpA, having received today from KPMG (which succeeded EY SpA beginning with the audit activity performed for Enel’s consolidated half-year report for 2020) specific written confirmation that they met that requirement (pursuant to the provisions of Article 6, paragraph 2(a), of Regulation (EU) no. 537/2014) and paragraph 17 of international standard on auditing (ISA Italia) 260 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 Legislative 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 then KPMG SpA and the entities belonging to their respective networks. The fees due to KPMG SpA and the entities belonging to its network are reported in the notes to the separate financial statements of the Company. Following our examinations, the Board of Statutory Auditors feels that there are no critical issues concerning the independence of EY SpA or its successor during the 2020 KPMG SpA. We held periodic meetings with the representatives of the audit firms, pursuant to Article 150, paragraph 3, of the Consolidated Law on Financial Intermediation, and no material issues emerged that would require mention in this report. With specific regard to the provisions of Article 11 of Regulation (EU) no. 537/2014, KPMG SpA today provided the Board of Statutory Auditors with the “additional report” for 2020 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 that would raise issues requiring mention in the opinion on the separate and consolidated financial statements. The Board of Statutory Auditors will transmit that report to the Board of Directors promptly, accompanied by any comments it may have, in accordance with Article 19, paragraph 1(a), of Legislative Decree 39/2010. As at the date of this report, the audit firm also reported that it did not prepare any management letter for 2020; • 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 performance 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 6 404 the findings of the examinations performed first by EY SpA and then its successor during 2020 KPMG SpA. The Chief Executive Officer and the officer in charge of financial reporting of Enel issued a statement (regarding the Company’s 2020 separate financial statements) 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 (EC) no. 1606/2002; (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 position 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 separate 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 – only for the Information Technology General Controls – the Company’s Audit department) 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 2020 of the Enel Group; • we monitored the adequacy and effectiveness of the internal control system, primarily through constant participation of the head of the Audit department of the Company in the meetings of the Board of Statutory Auditors and holding about half of the meetings jointly with the Control and Risk Committee, as well as through periodic meetings with the body charged with overseeing the operation of and compliance with the organizational and management model adopted by the Company pursuant to Legislative Decree 231/2001. In the light of our examination and in the absence of significant issues, the internal control and risk management system can be considered adequate and effective. In February 2021, the Board of Directors of the Company expressed an analogous assessment of the situation and also noted, in November 2020, that the main risks associated with the strategic targets set out in the 2021-2023 Business Plan were compatible with the management of the Company in a manner consistent with those targets; 7 405 Integrated Annual Report 2020 • in 2020 no petitions were received by the Board of Auditors nor did we receive any complaints concerning circumstances deemed censurable pursuant to Article 2408 of the Italian Civil Code; • we monitored the effective implementation of the Corporate Governance Code, which the Company has adopted, verifying 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 2020. In February and June 2020, the Board of Statutory 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 transparent procedure, the details of which are discussed in the Report on Corporate Governance and Ownership Structure for 2020. With regard to the so-called “self-assessment” of the independence of its members, the Board of Statutory Auditors – in February 2020 – ascertained that all standing statutory auditors met the relevant requirements set out in the Consolidated Law on Financial Intermediation and in the Corporate Governance Code. In the final part of 2020 and during the first two months of 2021, the Board of Statutory Auditors, with the support of an independent advisory firm, conducted a board review assessing the size, composition and functioning of the Board of Statutory Auditors, as was done for 2018 and 2019, similar to the review conducted for the Board of Directors since 2004. This is a best practice that the Board of Statutory Auditors intended to adopt even in the absence of a specific recommendation of the Corporate Governance Code, a “peer-to-peer review” approach, i.e. the assessment not only of the functioning of the body as a whole, but also of the style and content of the contribution provided by each of the auditors. The findings of the board review for 2020 reveal the unanimous agreement of the members of the Board of Statutory Auditors concerning the complete adequacy of its size, membership and functioning. Compared with the previous year, it was confirmed that the oversight body has adopted effective and efficient operating methods that comply with the reference regulatory framework. Note that during the assessment phase that preceded the adoption by the Board of Directors of Enel of the measures intended to ensure the implementation of the changes contained in the Italian Corporate Governance Code published in January 2020, the Board of Statutory Auditors, in December 2020, invited the Board of Directors to take account of a number of recommendations intended to ensure the optimal functioning of the Board committees. In particular, the Board of 8 406 Statutory Auditors recommended that the task of assisting the Board of Directors in implementing the board review should be entrusted to a single Board committee and that the organizational rules of the Committees should limit the number of responsibilities to be exercised jointly to the greatest possible extent.(2) The Board of Directors, when adopting the measures intended to ensure the implementation by Enel of the changes to the Italian Corporate Governance Code published in January 2020, took account of the guidance offered by the Board of Statutory Auditors; • during 2020, the Board of Statutory Auditors also participated in an induction program, structured into 17 meetings, organized by the Company to provide an adequate understanding of the business sectors in which the Enel Group operates, as well as the company dynamics and their evolution, market trends and the applicable regulatory framework. For an analysis of the issues addressed at the various induction sessions, please see the Report on Corporate Governance and Ownership Structure for 2020; • we monitored the application of the provisions of Legislative Decree 254 of December 30, 2016 (hereinafter “Decree 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 2020 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. As at the date of this report, the audit firm, KPMG SpA, had not yet issued, pursuant to Article 3, paragraph 10, of Decree 254 and Article 5 of CONSOB Regulation no. 20267 of January 18, 2018, its certification of the conformity of the information provided in the consolidated non-financial statement with the requirements of applicable law. In any event, during meetings with KPMG SpA, the audit firm did not raise any issues in this regard of such significance that they would require mention in this report; • since the listing of its shares, the Company has adopted specific rules (most recently amended in September 2018) 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 (2) This is because the assignment of assessment duties jointly to multiple Board committees, the sum of whose members represents more than half of the members of the Board of Directors, may in the opinion of the Board of Statutory Auditors – taking account of the fact that its power is not merely consultative but advisory – have an adverse impact on the evaluative independence of the Board of Directors and, therefore, impede the correct functioning of the collegial method. 9 407 Integrated Annual Report 2020 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, most recently in February 2021) 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 difference 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 Governance and Ownership Structure for 2020. The structure that monitors the operation and compliance with the program and is responsible for updating it is a collegial body. In July 2020, the Board of Directors again appointed the members of that body, which is still composed of three external members who jointly have specific professional expertise on corporate organization matters and corporate criminal law. The Board of Statutory Auditors received adequate information on the main activities carried out in 2020 by that structure, including in meetings with its members. Our examination of those activities found no facts or situations that would require mention in this report; • in 2020, the Board of Statutory Auditors issued a the following opinions: - a favorable opinion (at the meeting of January 28, 2020) on the 2020 Audit Plan, in accordance with the provisions of Article 7.C.1, letter c) of the Corporate Governance Code; - a favorable opinion (at the meeting of July 2, 2020) pursuant to Article 2389, paragraph 3, of the Italian Civil Code, regarding the amount of remuneration to be paid to the members of the various committees established within the Board of Directors, following the appointment of the latter body by the Shareholders’ Meeting on May 14, 2020, taking account of the provisions of 10 408 Enel’s remuneration policy for 2020 approved with a binding vote by the Shareholders’ Meeting; - a favorable opinion (at the same meeting of July 2, 2020) on the attendance fee to be paid to the Magistrate of the Court of Auditors delegated to monitor the financial management of Enel for participation in the meetings of the corporate bodies; - a favorable opinion (at the meeting of October 7, 2020) pursuant to Article 2389, paragraph 3, of the Civil Code, regarding the decisions concerning the remuneration and terms and conditions of employment for top management, taking account of the provisions of Enel’s remuneration policy for 2020 approved with a binding vote by the Shareholders’ Meeting of May 14, 2020; • a report on the fixed and variable compensation accrued by those who served as Chairman of the Board of Directors, the Chief Executive Officer/General Manager and other directors in 2020 for their respective positions and any compensation instruments awarded to them is contained in the second section of the Report on Remuneration Policy for 2021 and Remuneration Paid in 2020 referred to in Article 123-ter of the Consolidated Law on Financial Intermediation (for the sake of brevity, “Remuneration Report” hereinafter), approved by the Board of Directors, acting on a proposal of the Nomination and Compensation Committee on April 15, 2021, which will be published in compliance with the time limits established by law. The design of these remuneration instruments is in line with best practices as it complies with the principle of establishing a link with appropriate 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 benchmark analyses, including at the international level, conducted by an independent consulting firm. In addition, the second section of the Remuneration Report contains, in compliance with the applicable CONSOB regulations, specific disclosures on the remuneration earned in 2020 by the members of the oversight body and by key management personnel (in aggregate form for the latter). The Board of Statutory Auditors also supervised the process of preparing the remuneration policy for 2021 – described in full in the first section of the Remuneration Report – without finding any critical issues. In particular, oversight activity examined the consistency of the various measures envisaged by that policy with (i) the provisions of Directive (EU) no. 2017/828 as transposed into Italian law, with (ii) the recommendations of the Italian Corporate Governance 11 409 Integrated Annual Report 2020 Code published in January 2020, as well as with (iii) the results of the benchmark analysis carried out, including at the international level, by an independent consulting firm that the Nomination and Compensation Committee elected to engage. As indicated in the first section of the Remuneration Report, during the preparation of the remuneration policy for 2021, the Board of Statutory Auditors – taking account of the recommendations in this regard by the Italian Corporate Governance Committee – asked the independent consulting firm to conduct an additional benchmark analysis to ascertain the adequacy of the remuneration paid to the members of the oversight body. This analysis was performed on the basis of the data reported in the documentation published on the occasion of 2020 Shareholders’ Meetings by issuers belonging to a peer group composed – unlike that used for the analogous analysis concerning the Board of Directors – exclusively of Italian companies belonging the FTSE-MIB index(3). The functions that the Italian legal system assigns to the Board of Statutory Auditors differentiate the latter from the bodies with oversight functions provided for in the one-tier and two-tier governance systems commonly adopted in other countries. For the purpose of identifying the peer group, the consultant, in agreement with the Board of Statutory Auditors, agreed to exclude certain industrial companies belonging to the FTSE-MIB index that have concentrated ownership structures, while evaluating some companies in the FTSE-MIB index operating in the financial services industry. The analysis showed that, on the basis of the data as at December 31, 2019, Enel exceeds the peer group in terms of capitalization, is above the ninth decile in terms of revenue and slightly below the ninth decile in terms of number of employees. The same analysis also found that – against Enel’s very high positioning compared with the companies included in the panel in terms of capitalization, revenue and number of employees – the remuneration of the Chairman of the Board of Statutory Auditors and of the other Statutory Auditors is just above the peer group median. The analysis also found that in 2019, on average, the boards of statutory auditors of the companies belonging to the panel were composed of four standing auditors compared with the three standing members of Enel’s Board of Statutory Auditors, and held 26 meetings compared with the 17 meetings held by Enel’s Board of Statutory Auditors. From this last point of view, however, it (3) The peer group consists of the following 19 companies: A2A, Atlantia, Banco BPM, BPER Banca, Eni, Generali, Hera, Leonardo, Mediobanca, Nexi, Pirelli, Poste Italiane, Prysmian, Saipem, Snam, Terna, TIM, Unicredit and Unipol. 12 410 should be noted that in 2020 the Enel Board of Statutory Auditors held 27 meetings, a significant increase compared with the previous year. On the basis of the analysis, it therefore emerged that the competitiveness of the remuneration envisaged for the Chairman and the standing members of Enel’s Board of Statutory Auditors is substantially similar to that envisaged for non- executive directors with regard to the remuneration paid to them in their capacity as directors. However, the consultant noted that there is a weaker correlation compared with non-executive directors between the remuneration paid to the members of the Board of Statutory Auditors and the volume of work requested of them. In this regard, it should borne in mind that the overall remuneration paid to non-executive directors also takes into account their possible participation on the Board committees, while the members of the Board of Statutory Auditors regularly take part in the meetings of these committees as a necessary part of the performance of the oversight tasks assigned to them by law without being remunerated for this activity. Finally, it should be noted that the benchmark analysis found a clear correlation between the competitiveness of the remuneration offered by the peer group companies to their respective boards of statutory auditors and the different work load required of them, as indicated by the number of meetings held in 2019. At the same time, the analysis noted that the amount of remuneration paid to the Chairman and the standing members of Enel’s Board of Statutory Auditors is substantially in line with that currently paid by most of the peer group companies in which the Ministry for the Economy and Finance holds a significant direct and/or indirect investment. The Board of Statutory Auditors’ oversight activity in 2020 was carried out in 27 meetings (12 of which held jointly with the Control and Risk Committee) and with participation in the 16 meetings of the Board of Directors, and, through the chairman or one or more of its members, in the 12 meetings of the Nomination and Compensation Committee, in the 4 meetings of the Related Parties Committee and in the 11 meetings of the Corporate Governance and Sustainability Committee. The delegated magistrate of the State Audit Court participated in the meetings of the Board of Statutory Auditors and those of the Board of Directors. During the course of this activity and on the basis of information obtained from KPMG 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. Finally, the Board of Statutory Auditors notes that, as at the date of this report, the major global health emergency associated with the COVID-19 pandemic has not 13 411 Integrated Annual Report 2020 ended. Italian authorities have introduced significant limitations on freedom of movement within the country to contain the contagion, among other things imposing bans on gatherings. In this context, the Board of Statutory Auditors, in compliance with the above measures to contain the COVID-19 pandemic, held nearly all of its meetings – beginning with the meeting of February 26, 2020 – exclusively with the use of audio/video conference systems by all participants, which nevertheless ensured their identification and the exchange of documentation – in accordance with the provisions of Article 25.4 of the bylaws – and, more generally, the full performance of the oversight body’s functions. The Board of Statutory Auditors also notes that the Company’s Board of Directors has called the ordinary Shareholders’ Meeting for May 20, 2021 in a single call, establishing that – in light of the evolution of the COVID-19 pandemic and taking account of the provisions concerning the holding of company meetings in Article 106, paragraph 4, of Decree Law 18 of March 17, 2020, ratified with amendments by Law 27 of April 24, 2020(4) – it will be conducted in a manner that enables shareholders to participate exclusively through the shareholders’ representative designated by the Company referred to in Article 135-undecies of the Consolidated Law on Financial Intermediation, to whom shareholders may also confer proxies or sub-proxies pursuant to Article 135-novies of the Consolidated Law, also in derogation from the provisions of Article 135-undecies, paragraph 4, of the Consolidated Law. The Board of Statutory Auditors will ensure that the rights of the shareholders can be exercised on the occasion of the aforementioned Shareholders’ Meeting, within the limits permitted by the special procedures envisaged for holding the Meeting. During 2021, the Board of Statutory Auditors will continue to carry out its oversight activity in close coordination with the Board of Directors and the audit firm to evaluate the impact of the COVID-19 pandemic on the performance and financial position of the Company and the Enel Group. Based on the oversight activity performed and the information exchanged with the independent auditors KPMG SpA, we recommend that you approve the Company’s financial statements for the year ended December 31, 2020 in conformity with the proposals of the Board of Directors. Rome, April 16, 2021 The Board of Auditors (4) Whose validity was extended until July 31, 2021 by Article 3, paragraph 6, of Decree Law 183 of December 31, 2020, ratified with amendments by Law 21 of February 26, 2021. 14 412 Il Collegio Sindacale svolgerà nei prossimi mesi la propria attività di vigilanza in stretto coordinamento con il Consiglio di Amministrazione, per verificare gli impatti economici e finanziari per la Società e il Gruppo Enel determinati dall’epidemia da COVID-19. Il Collegio Sindacale svolgerà nei prossimi mesi la propria attività di vigilanza in stretto Il Collegio Sindacale, a seguito dell’attività di vigilanza svolta e in base a quanto emerso coordinamento con il Consiglio di Amministrazione, per verificare gli impatti economici e finanziari per la Società e il Gruppo Enel determinati dall’epidemia da COVID-19. nello scambio di dati e informazioni con la Società di revisione EY S.p.A., Vi propone di approvare il Bilancio della Società al 31 dicembre 2019 in conformità a quanto proposto Il Collegio Sindacale svolgerà nei prossimi mesi la propria attività di vigilanza in stretto Il Collegio Sindacale, a seguito dell’attività di vigilanza svolta e in base a quanto emerso coordinamento con il Consiglio di Amministrazione, per verificare gli impatti economici dal Consiglio di Amministrazione. nello scambio di dati e informazioni con la Società di revisione EY S.p.A., Vi propone di e finanziari per la Società e il Gruppo Enel determinati dall’epidemia da COVID-19. approvare il Bilancio della Società al 31 dicembre 2019 in conformità a quanto proposto Il Collegio Sindacale, a seguito dell’attività di vigilanza svolta e in base a quanto emerso dal Consiglio di Amministrazione. Roma, 8 aprile 2020 nello scambio di dati e informazioni con la Società di revisione EY S.p.A., Vi propone di Il Collegio Sindacale approvare il Bilancio della Società al 31 dicembre 2019 in conformità a quanto proposto dal Consiglio di Amministrazione. Roma, 8 aprile 2020 Il Collegio Sindacale Roma, 8 aprile 2020 Il Collegio Sindacale _____________ Dott.ssa Barbara Tadolini Presidente _____________ ____________________ Dott.ssa Barbara Tadolini Presidente Barbara Tadolini - Chairman _____________ Dott.ssa Barbara Tadolini Presidente ____________________ ____________________ ____________________ Romina Guglielmetti - Auditor Avv. Romina Guglielmetti – Sindaco Avv. Romina Guglielmetti – Sindaco ____________________ Avv. Romina Guglielmetti – Sindaco ____________________ Claudio Sottoriva - Auditor ____________________ ____________________ ____________________ Prof. Claudio Sottoriva – Sindaco Prof. Claudio Sottoriva – Sindaco Prof. Claudio Sottoriva – Sindaco 13 13 13 15 413 Integrated Annual Report 2020 Independent auditors’ report 414 KPMG S.p.A. Revisione e organizzazione contabile Via Curtatone, 3 00185 ROMA RM Telefono +39 06 80961.1 Email it-fmauditaly@kpmg.it PEC kpmgspa@pec.kpmg.it (Translation from the Italian original which remains the definitive version) Independent auditors’ report pursuant to article 14 of Legislative decree no. 39 of 27 January 2010 and article 10 of Regulation (EU) no. 537 of 16 April 2014 To the shareholders of Enel S.p.A. Report on the audit of the consolidated financial statements Opinion We have audited the consolidated financial statements of the Enel Group (the “group”), which comprise the statement of financial position as at 31 December 2020, the income statement and the statements of comprehensive income, changes in equity and cash flows for the year then ended and notes thereto, which include a summary of the significant accounting policies. In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Enel Group as at 31 December 2020 and of its financial performance and cash flows for the year then ended in accordance with the International Financial Reporting Standards endorsed by the European Union and the Italian regulations implementing article 9 of Legislative decree no. 38/05. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our responsibilities under those standards are further described in the “Auditors’ responsibilities for the audit of the consolidated financial statements” section of our report. We are independent of Enel S.p.A. (the “parent”) in accordance with the ethics and independence rules and standards applicable in Italy to audits of financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other matters The group’s 2019 consolidated financial statements were audited by other auditors, who expressed their unqualified opinion thereon on 8 April 2020. KPMG S.p.A. è una società per azioni di diritto italiano e fa parte del network KPMG di entità indipendenti affiliate a KPMG International Limited, società di diritto inglese. Ancona Bari Bergamo Bologna Bolzano Brescia Catania Como Firenze Genova Lecce Milano Napoli Novara Padova Palermo Parma Perugia Pescara Roma Torino Treviso Trieste Varese Verona Società per azioni Capitale sociale Euro 10.415.500,00 i.v. Registro Imprese Milano Monza Brianza Lodi e Codice Fiscale N. 00709600159 R.E.A. Milano N. 512867 Partita IVA 00709600159 VAT number IT00709600159 Sede legale: Via Vittor Pisani, 25 20124 Milano MI ITALIA 415 Integrated Annual Report 2020 Enel Group Independent auditors’ report 31 December 2020 Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the consolidated financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Recognition of revenue from the supply of electricity and gas not yet invoiced Notes to the consolidated financial statements: notes 2.1 “Use of estimates and management judgement – Revenue from contracts with customers”, 2.2 “Significant accounting policies – Revenue from contracts with customers”, 9.a “Revenue from sales and services” and 32 “Trade receivables” Key audit matter Revenue from the supply of electricity and gas to end users is recognised at the time the electricity or gas is delivered and includes, in addition to amounts invoiced on the basis of periodic meter readings or on the volumes notified by distributors and transporters, an estimate of the electricity and gas delivered during the year but not yet invoiced that is calculated also taking account of any network losses. Revenue accrued between the date of the last meter reading and the year-end is based on estimates of the daily consumption of individual customers, primarily determined on their historical information, adjusted to reflect the climate factors or other matters that may affect the estimated consumption. These estimates are very complex given the nature of underlying assumptions. Therefore, we believe that the recognition of revenue from the supply of electricity and gas not yet invoiced is a key audit matter. Audit procedures addressing the key audit matter Our audit procedures included: — understanding the process for the recognition of revenue from the supply of electricity and gas not yet invoiced; — assessing the design, implementation and operating effectiveness of controls, including IT controls, deemed material for the purposes of our audit, including by involving our IT specialists; — performing substantive procedures on the electricity and gas volumes considered in the estimation; — checking the accuracy of the selling prices used in the estimation; — comparing the estimates recognised in the consolidated financial statements with the subsequent actual figures; — assessing the appropriateness of the disclosures provided in the notes about the revenue from the supply of electricity and gas not yet invoiced. Recoverability of non-current assets Notes to the consolidated financial statements: notes 2.1 “Use of estimates and management judgement - Impairment of non-financial assets and Identification of cash-generating units (CGUs)”, 2.2. “Significant accounting policies – Impairment of non-financial assets”, 10.e “Depreciation, amortisation and other impairment losses”, 17 “Property, plant and equipment” and 22 “Goodwill” Key audit matter The consolidated financial statements at 31 December 2020 include property, plant and equipment of €78,718 million, intangible assets of €17,668 million and goodwill of €13,779 million under non-current assets. Audit procedures addressing the key audit matter Our audit procedures included: — understanding the impairment testing procedure approved by the company’s board of directors on 25 February 2021; 416 2 Enel Group Independent auditors’ report 31 December 2020 The directors tested the cash-generating units (CGUs) to which goodwill is allocated or that include other non-current assets for which indicators of impairment had been identified for impairment. The directors have calculated the CGUs’ estimated recoverable amount, based on their value in use, using the discounted cash flow model.The model is very complex and entails the use of estimates which, by their very nature, are uncertain and subjective, about: — the expected cash flows, calculated by taking into account the general economic performance and that of the group’s sector, the actual cash flows for recent years and the projected growth rates; — the financial parameters used to calculate the discount rate. For the above reasons, we believe that the recoverability of non-current assets is a key audit matter. — understanding the process for preparing the business plan approved by the parent’s board of directors on 23 November 2020 (the “business plan”); — analysing the reasonableness of the main assumptions used by the directors to prepare the business plan, including their consistency with the group’s strategies addressing the climate change and the objectives of the Paris Agreement; — analysing the criteria used to identify the CGUs and tracing the amount of the CGUs’ assets and liabilities to the relevant carrying amounts in the consolidated financial statements; — assessing the consistency of the cash flows used for impairment testing with the cash flows forecast in the business plan; — analysing the most significant — discrepancies between the previous year business plans’ figures and actual figures, in order to check the accuracy of the estimation process adopted; involving experts of the KPMG network in the assessment of the reasonableness of the impairment testing and related assumptions, including by means of a comparison with external data and information; — assessing the appropriateness of the disclosures provided in the notes about non-current assets and the related impairment tests. Responsibilities of the parent’s directors and board of statutory auditors (“Collegio Sindacale”) for the consolidated financial statements The directors are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with the International Financial Reporting Standards endorsed by the European Union and the Italian regulations implementing article 9 of Legislative decree no. 38/05 and, within the terms established by the Italian 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. The directors are responsible for assessing the group’s ability to continue as a going concern and for the appropriate use of the going concern basis in the preparation of the consolidated financial statements and for the adequacy of the related disclosures. The use of this basis of accounting is appropriate unless the directors believe that the conditions for liquidating the parent or ceasing operations exist, or have no realistic alternative but to do so. The Collegio Sindacale is responsible for overseeing, within the terms established by the Italian law, the group’s financial reporting process. 3 417 Integrated Annual Report 2020 Enel Group Independent auditors’ report 31 December 2020 Auditors’ responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISA Italia will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISA Italia, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: — identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain 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 the override of internal control; — obtain 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 the effectiveness of the group’s internal control; — evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors; — conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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 auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the group to cease to continue as a going concern; — evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation; — obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities 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 communicate with those charged with governance, identified at the appropriate level required by ISA Italia, regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 418 4 Enel Group Independent auditors’ report 31 December 2020 We also provide those charged with governance with a statement that we have complied with the ethics and independence rules and standards applicable in Italy and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current year and are, therefore, the key audit matters. We describe these matters in our auditors’ report. Other information required by article 10 of Regulation (EU) no. 537/14 On 16 May 2019, the company’s shareholders appointed us to perform the statutory audit of its separate and consolidated financial statements as at and for the years ending from 31 December 2020 to 31 December 2028. We declare that we did not provide the prohibited non-audit services referred to in article 5.1 of Regulation (EU) no. 537/14 and that we remained independent of the parent in conducting the statutory audit. We confirm that the opinion on the consolidated financial statements expressed herein is consistent with the additional report to the Collegio Sindacale, in its capacity as audit committee, prepared in accordance with article 11 of the Regulation mentioned above. Report on other legal and regulatory requirements Opinion pursuant to article 14.2.e) of Legislative decree no. 39/10 and article 123-bis.4 of Legislative decree no. 58/98 The parent’s directors are responsible for the preparation of the group’s reports on operation and on corporate governance and ownership structure at 31 December 2020 and for the consistency of such reports with the related consolidated financial statements and their compliance with the applicable law. We have performed the procedures required by Standard on Auditing (SA Italia) 720B in order to express an opinion on the consistency of the report on operations and the specific information presented in the report on corporate governance and ownership structure indicated by article 123-bis.4 of Legislative decree no. 58/98 with the group’s consolidated financial statements at 31 December 2020 and their compliance with the applicable law and to state whether we have identified material misstatements. In our opinion, the report on operations and the specific information presented in the report on corporate governance and ownership structure referred to above are consistent with the group’s consolidated financial statements at 31 December 2020 and have been prepared in compliance with the applicable law. With reference to the above statement required by article 14.2.e) of Legislative decree no. 39/10, based on our knowledge and understanding of the entity and its environment obtained through our audit, we have nothing to report. 5 419 Integrated Annual Report 2020 Enel Group Independent auditors’ report 31 December 2020 Statement pursuant to article 4 of the Consob regulation implementing Legislative decree no. 254/16 The directors of Enel S.p.A. are responsible for the preparation of a non-financial statement pursuant to Legislative decree no. 254/16. We have checked that the directors had approved such non-financial statement. In accordance with article 3.10 of Legislative decree no. 254/16, we attested the compliance of the non-financial statement separately. Rome, 16 April 2021 KPMG S.p.A. (signed on the original) Renato Naschi Director of Audit 420 6 ATTACHMENTS Subsidiaries, associates and other significant equity investments of the Enel Group at December 31, 2020 In compliance with CONSOB Notice no. DEM/6064293 of The following information is included for each company: July 28, 2006 and Article 126 of CONSOB Resolution no. name, registered office, share capital, currency in which 11971 of May 14, 1999, a list of subsidiaries and associa- share capital is denominated, business segment, method tes of Enel SpA at December 31, 2020, pursuant to Arti- of consolidation, Group companies that have a stake in the cle 2359 of the Italian Civil Code, and of other significant company and their respective ownership share, and the equity investments is provided below. Enel has full title to Group’s ownership share. all investments. Business segment Description of business segments Group holding company Country holding company Enel Green Power Thermal Generation Trading Infrastructure and Networks Enel X End-user Markets Services Finance 421 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Parent Enel SpA Rome IT 10,166,679,946.00 EUR Holding Group % holding 100.00% Subsidiaries 400 Manley Solar LLC Boston US - 4814 Investments LLC Andover US - USD USD Line-by-line Enel X Finance Partner LLC 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% ABC Solar 11 SpA Santiago de Chile ABC Solar 3 SpA Santiago de Chile CL 1,000,000.00 CLP Line-by-line CL 1,000,000.00 CLP Line-by-line Aced Renewables Hidden Valley (RF) (Pty) Ltd Johannesburg ZA 1,000.00 ZAR ACEFAT AIE Barcelona ES 793,340.00 EUR AFS - Adams Solar PV Project Two (RF) (Pty) Ltd Johannesburg ZA 10,000,000.00 ZAR Line-by-line Adria Link Srl Gorizia Aero-Tanna Srl Rome IT IT 300,297.00 EUR Equity 15,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Agassiz Beach LLC Agatos Green Power Trino Srl Minneapolis US - USD Line-by-line Rome IT 10,000.00 EUR Line-by-line Aguilón 20 SA Zaragoza ES 2,682,000.00 EUR Line-by-line Alba Energia Ltda Niterói BR 16,045,169.00 BRL Line-by-line 100.00% Albany Solar LLC Wilmington US - USD Line-by-line Alliance SA Managua NI 6,180,150.00 NIO Equity Ufinet Latam SLU 49.90% 10.28% Almeyda Solar SpA Santiago de Chile CL 61,655,088.43 USD Line-by-line Enel Green Power Chile SA 100.00% 64.93% Udine IT 900,000.00 EUR Line-by-line Enel Produzione SpA 50.00% 50.00% Alpe Adria Energia Srl 422 Enel Green Power Chile SA 100.00% 64.93% Enel Green Power Chile SA 100.00% 64.93% Enel Green Power RSA 2 (RF) (Pty) Ltd 60.00% 60.00% Edistribución Redes Digitales SL (Sociedad Unipersonal) 14.29% 10.02% Enel Green Power RSA (Pty) Ltd 60.00% 60.00% Enel Produzione SpA 50.00% 50.00% Chi Minnesota Wind LLC 51.00% 51.00% Enel Green Power Solar Energy Srl 80.00% 80.00% Enel Green Power España SL 51.00% 35.75% Enel Green Power Brasil Participações Ltda 100.00% Enel Green Power Desenvolvimento Ltda 0.00% Aurora Distributed Solar LLC 100.00% 74.13% Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Alta Farms Wind Project II LLC Andover US 1.00 USD Line-by-line Alvorada Energia SA Niterói BR 22,317,415.92 BRL Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Green Power Brasil Participações Ltda 100.00% 100.00% Niterói BR 2,498,230,386.65 BRL Line-by-line Enel Brasil SA 99.73% 64.83% Ampla Energia e Serviços SA Annandale Solar LLC Apiacás Energia SA Aquilla Wind Project LLC Aragonesa de Actividades Energéticas SA Aranort Desarrollos SL Aravalli Surya (Project 1) Private Limited Asociación Nuclear Ascó- Vandellós II AIE Wilmington US - USD Line-by-line Niterói BR 14,216,846.33 BRL Line-by-line Andover US 1.00 USD Line-by-line Teruel ES 60,100.00 EUR Line-by-line Madrid ES 3,010.00 EUR Line-by-line Gurugram IN 100,000.00 INR Line-by-line Tarragona ES 19,232,400.00 EUR Proportional Aurora Distributed Solar LLC 100.00% 74.13% Enel Green Power Brasil Participações Ltda 100.00% 100.00% Tradewind Energy Inc. 100.00% 100.00% Endesa Red SA (Sociedad Unipersonal) Enel Green Power España SL Enel Green Power India Private Limited (formerly BLP Energy Private Limited) Endesa Generación SA 100.00% 70.11% 100.00% 70.11% 100.00% 100.00% 85.41% 59.88% Athonet Srl 100.00% 16.00% Enel X Srl 16.00% 16.00% Athonet Srl 100.00% 16.00% Athonet Srl 100.00% 16.00% - - - - Line-by-line Aurora Distributed Solar LLC 100.00% 74.13% Line-by-line Aurora Solar Holdings LLC 74.13% 74.13% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% 423 Athonet France SASU Paris FR 50,000.00 EUR Athonet Srl Trieste IT 68,927.57 EUR Athonet UK Ltd Battle, East Sussex GB 1.00 Athonet USA Inc. Wilmington US 1.00 Atwater Solar LLC Aurora Distributed Solar LLC Aurora Land Holdings LLC Aurora Solar Holdings LLC Aurora Wind Holdings LLC Wilmington US - Wilmington US - Wilmington US - Wilmington US - Andover US - GBP USD USD USD USD USD USD Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Aurora Wind Project LLC Andover US 1.00 Autumn Hills LLC Wilmington US - USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Avikiran Energy India Private Limited Avikiran Solar India Private Limited Avikiran Surya India Private Limited Avikiran Vayu India Private Limited Gurugram IN 100,000.00 INR Line-by-line New Delhi IN 100,000.00 INR Line-by-line Gurugram IN 100,000.00 INR Line-by-line Gurugram IN 100,000.00 INR Line-by-line Enel Green Power India Private Limited (formerly BLP Energy Private Limited) Enel Green Power India Private Limited (formerly BLP Energy Private Limited) Enel Green Power India Private Limited (formerly BLP Energy Private Limited) Enel Green Power India Private Limited (formerly BLP Energy Private Limited) 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Azure Sky Solar Project LLC Andover US 1.00 Azure Sky Wind Holdings LLC Andover US - Azure Sky Wind Project LLC Andover US 1.00 Azure Sky Wind Storage LLC Andover US - USD USD USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Baikal Enterprise SL Palma de Mallorca Baleares Energy SL Palma de Mallorca ES 3,006.00 EUR Line-by-line ES 4,509.00 EUR Line-by-line Barnwell County Solar Project LLC Andover US - USD Line-by-line Baylio Solar SLU Seville ES 3,000.00 EUR Line-by-line Enel Green Power España SL 100.00% 70.11% Enel Green Power España SL 100.00% 70.11% Tradewind Energy Inc. 100.00% 100.00% Enel Green Power España SL 100.00% 70.11% Wilmington US - Wilmington US - USD USD Line-by-line Line-by-line Beaver Valley Holdings LLC 67.50% 67.50% Moscow RU 3,010,000.00 RUB Line-by-line Andover US 1.00 USD Line-by-line Enel Green Power North America Inc. Enel Green Power Rus Limited Liability Company Tradewind Energy Inc. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Beaver Falls Water Power Company Beaver Valley Holdings LLC Belomechetskaya WPS Bijou Hills Wind LLC 424 Slovenské elektrárne AS 5.00% 1.65% Enel Green Power España SL 100.00% 70.11% Enel X Colombia SAS 100.00% 31.40% Enel Green Power España SL 40.00% 28.04% Enel Green Power Brasil Participações Ltda 100.00% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power España SL 51.00% 35.75% Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Bioenergy Casei Gerola Srl Rome IT 100,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Bison Meadows Wind Project LLC Andover US - Blue Star Wind Project LLC Andover US 1.00 USD USD Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% BluRe M.A. San José LU 7,092,970.00 EUR - Bogaris PV1 SLU Seville ES 3,000.00 EUR Line-by-line Bogotá ZE SAS Bogotá CO 1,000,000.00 COP Line-by-line Boiro Energía SA Boiro ES 601,010.00 EUR Equity Bondia Energia Ltda Niterói BR 2,950,888.00 BRL Line-by-line 100.00% Andover US - USD Line-by-line Enel Kansas LLC 100.00% 100.00% Bosa del Ebro SL Zaragoza ES 3,010.00 EUR Line-by-line Bottom Grass Solar Project LLC Boujdour Wind Farm Bp Hydro Finance Partnership Casablanca MA 300,000.00 MAD Equity Salt Lake City US - Line-by-line Nareva Enel Green Power Morocco SA 90.00% 45.00% Enel Kansas LLC 75.92% Enel Green Power North America Inc. 24.08% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% USD USD USD USD USD Bravo Dome Wind Project LLC Andover US 1.00 Brazoria County Solar Project LLC Andover US - Brazoria West Solar Project LLC Andover US - Brazos Flat Solar Project LLC Andover US - Broadband Comunicaciones SA Brush County Solar Project LLC Quito EC 436,425.00 USD Equity Andover US - USD Line-by-line Ufinet Ecuador Ufiec SA 100.00% 20.60% Ufinet Latam SLU 0.00% Tradewind Energy Inc. 100.00% 100.00% 425 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Buffalo Dunes Wind Project LLC Topeka US - USD Line-by-line EGPNA Development Holdings LLC 75.00% 75.00% Enel Alberta Wind Inc. 0.10% Buffalo Jump LP Alberta CA 10.00 CAD Line-by-line 100.00% Andover US 1.00 USD Line-by-line Sydney AU 1,000.00 AUD Equity Sydney AU 100.00 AUD Equity Sydney AU 100.00 AUD Equity Sydney AU 1,000.00 AUD Equity Sydney AU - AUD Equity Sydney AU 1,000.00 AUD Equity Sydney AU 100.00 AUD Equity Sydney AU 100.00 AUD Equity Sydney AU - Sydney AU - Sydney AU - Sydney AU - Sydney AU - Sydney AU - Sydney AU - Sydney AU - AUD AUD AUD AUD AUD AUD AUD AUD Equity Equity Equity Equity Equity Equity Equity Equity Enel Green Power Canada Inc. 99.90% Tradewind Energy Inc. 100.00% 100.00% Bungala One Property (Pty) Ltd 100.00% 51.00% Enel Green Power Bungala (Pty) Ltd 50.00% 50.00% Enel Green Power Bungala (Pty) Ltd 51.00% 51.00% Bungala One Operations Holding (Pty) Ltd Bungala One Operations Holding (Pty) Ltd Bungala One Property Holding (Pty) Ltd 100.00% 51.00% 100.00% 51.00% 100.00% 51.00% Enel Green Power Bungala (Pty) Ltd 51.00% 51.00% Enel Green Power Bungala (Pty) Ltd 50.00% 50.00% Bungala One Property Holding (Pty) Ltd Bungala Two Property (Pty) Ltd 100.00% 51.00% 100.00% 51.00% Enel Green Power Bungala (Pty) Ltd 51.00% 51.00% Enel Green Power Bungala (Pty) Ltd 50.00% 50.00% Bungala Two Operations Holding (Pty) Ltd Bungala Two Operations Holding (Pty) Ltd 100.00% 51.00% 100.00% 51.00% Enel Green Power Bungala (Pty) Ltd 51.00% 51.00% Enel Green Power Bungala (Pty) Ltd 50.00% 50.00% Buffalo Spirit Wind Project LLC Bungala One Finco (Pty) Ltd Bungala One Operation Holding Trust Bungala One Operations Holding (Pty) Ltd Bungala One Operations (Pty) Ltd Bungala One Operations Trust Bungala One Property (Pty) Ltd Bungala One Property Holding (Pty) Ltd Bungala One Property Holding Trust Bungala One Property Trust Bungala Two Finco (Pty) Ltd Bungala Two Operations Holding (Pty) Ltd Bungala Two Operations Holding Trust Bungala Two Operations (Pty) Ltd Bungala Two Operations Trust Bungala Two Property Holding (Pty) Ltd Bungala Two Property Holding Trust 426 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Bungala Two Property (Pty) Ltd Sydney AU - Sydney AU 1.00 AUD AUD Equity Equity Johannesburg ZA 100.00 ZAR Line-by-line Bungala Two Property Holding (Pty) Ltd Bungala Two Property Holding (Pty) Ltd 100.00% 51.00% 100.00% 51.00% Enel Green Power RSA (Pty) Ltd 100.00% 100.00% Andover US - USD Line-by-line Enel Kansas LLC 100.00% 100.00% C&C Castelvetere Srl Rome C&C Uno Energy Srl Rome IT IT 100,000.00 EUR Line-by-line 118,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Enel Green Power Italia Srl 100.00% 100.00% Canastota Wind Power LLC Andover US - Caney River Wind Project LLC Overland Park US - USD USD Line-by-line Fenner Wind Holdings LLC 100.00% 100.00% Equity Rocky Caney Wind LLC 100.00% 20.00% Endesa Generación Portugal SA 0.01% Lisbon PT 50,000.00 EUR Equity 35.05% Madrid ES 3,000.00 EUR Line-by-line Endesa Generación SA 49.99% Enel Green Power España SL 100.00% 70.11% Enel Alberta Wind Inc. 0.10% Alberta CA - CAD Line-by-line 100.00% Bungala Two Property Trust Business Venture Investments 1468 (Pty) Ltd Butterfly Meadows Solar Project LLC Carbopego - Abastecimento de Combustíveis SA Castiblanco Solar SL Castle Rock Ridge Limited Partnership Catalana d’Iniciatives SCR SA Ccp.Ro Bucharest SA Enel Green Power Canada Inc. 99.90% Endesa Red SA (Sociedad Unipersonal) 0.94% 0.66% Enel Romania SA 9.52% 9.52% Almeyda Solar SpA 6.00% 3.90% - - - Barcelona ES 30,862,800.00 EUR Bucharest RO 79,800,000.00 RON Cdec - Sic Ltda Santiago de Chile CL 709,783,206.00 CLP Cedar Run Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Celg Distribuição SA - Celg D Goiás BR 5,075,679,362.52 BRL Line-by-line Enel Brasil SA 99.96% 64.97% Central Dock Sud SA Buenos Aires AR 1,231,270,567.54 ARS Line-by-line Enel Argentina SA 0.24% Inversora Dock Sud SA 71.78% 26.81% 427 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Group % holding Held by % holding Enel Green Power Brasil Participações Ltda 100.00% Central Geradora Fotovoltaica Bom Nome Ltda Central Geradora Fotovoltaica São Francisco Ltda Central Geradora Termelétrica Fortaleza SA Central Hidráulica Güejar-Sierra SL Central Térmica de Anllares AIE Salvador BR 4,979,739.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Brasil SA 0.00% 0.00% Niterói BR 74,549,250.00 BRL Line-by-line 65.00% Enel X Brasil SA 100.00% Fortaleza BR 151,935,779.00 BRL Line-by-line Enel Brasil SA 100.00% 65.00% Seville ES 364,213.34 EUR Madrid ES 595,000.00 EUR Equity Equity Enel Green Power España SL 33.30% 23.35% Endesa Generación SA 33.33% 23.37% Central Dock Sud SA 6.40% Central Vuelta de Obligado SA Buenos Aires AR 500,000.00 ARS Equity Enel Generación Costanera SA 1.30% 16.54% Madrid ES - EUR Kalná Nad Hronom SK 6,639.00 EUR Enel Generación El Chocón SA 33.20% Equity Equity Endesa Generación SA Slovenské elektrárne AS 24.18% 16.95% 100.00% 33.00% Milan IT 8,550,000.00 EUR Equity Enel SpA 42.70% 42.70% Wilmington US 1.00 USD Line-by-line Andover US 1.00 Line-by-line Cheyenne Ridge Wind Project LLC Andover US 1.00 Wilmington US - Wilmington US - USD USD USD USD Andover US 100.00 USD Line-by-line Chi Power Inc. Naples US 100.00 USD Line-by-line 428 Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) Tradewind Energy Inc. 100.00% 100.00% 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Enel Green Power North America Inc. 100.00% 100.00% Enel Green Power North America Inc. 100.00% 100.00% Centrales Nucleares Almaraz-Trillo AIE Centrum Pre Vedu A Vyskum SRO CESI - Centro Elettrotecnico Sperimentale Italiano Giacinto Motta SpA Champagne Storage LLC Cherrywood Solar II LLC Chi Black River LLC Chi Minnesota Wind LLC Chi Operations Inc. Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Chi Power Marketing Inc. Wilmington US 100.00 USD Line-by-line Chi West LLC San Francisco US 100.00 USD Line-by-line Chinango SAC San Miguel PE 295,249,298.00 PEN Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Enel Green Power North America Inc. 100.00% 100.00% Enel Generación Perú SAA 80.00% 43.47% Chisago Solar LLC Wilmington US - Chisholm View II Holding LLC Chisholm View Wind Project II LLC Chisholm View Wind Project LLC Wilmington US - Wilmington US - New York US - USD USD USD USD Line-by-line Aurora Distributed Solar LLC 100.00% 74.13% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Chisholm View II Holding LLC 62.79% 62.79% Equity EGPNA REP Wind Holdings LLC 100.00% 20.00% Cimarron Bend Assets LLC Wilmington US - USD Line-by-line Cimarron Bend III HoldCo LLC Andover US 1.00 USD Line-by-line Wilmington US - USD Line-by-line Dover US 100.00 USD Line-by-line Cimarron Bend Wind Project I LLC 49.00% Cimarron Bend Wind Project II LLC 49.00% Cimarron Bend Wind Project III LLC 1.00% Enel Kansas LLC 1.00% 100.00% Enel Green Power Cimarron Bend Wind Holdings III LLC Cimarron Bend Wind Holdings II LLC 100.00% 100.00% 100.00% 100.00% Cimarron Bend Wind Holdings LLC 100.00% 100.00% Andover US - Wilmington US - Wilmington US - Wilmington US - Wilmington US - Andover US 1.00 USD USD USD USD USD USD Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Line-by-line Line-by-line Line-by-line Cimarron Bend Wind Holdings I LLC Cimarron Bend Wind Holdings I LLC Cimarron Bend Wind Holdings III LLC 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% CivDrone Haifa IL 1,093,350.00 ILS - Enel Global Infrastructure and Networks Srl 4.27% 4.27% 429 Cimarron Bend Wind Holdings I LLC Cimarron Bend Wind Holdings II LLC Cimarron Bend Wind Holdings III LLC Cimarron Bend Wind Holdings LLC Cimarron Bend Wind Project I LLC Cimarron Bend Wind Project II LLC Cimarron Bend Wind Project III LLC Cipher Solar Project LLC Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Clear Sky Wind Project LLC Andover US 1.00 Clinton Farms Wind Project LLC Andover US 1.00 Cloudwalker Wind Project LLC Andover US 1.00 USD USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Codensa SA ESP Bogotá CO 13,487,545,000.00 COP Line-by-line Enel Américas SA 48.30% 31.40% Cogein Sannio Srl Cogeneración El Salto SL Rome IT 10,000.00 EUR Line-by-line Zaragoza ES 36,060.73 EUR Equity Enel Green Power Italia Srl 100.00% 100.00% Enel Green Power España SL 20.00% 14.02% Cogenio Srl Rome IT 2,310,000.00 EUR Equity Enel.si Srl 20.00% 20.00% Cohuna Solar Farm (Pty) Ltd Cohuna Solar Farm Trust Comanche Crest Ranch LLC Comercializadora Eléctrica de Cádiz SA Compagnia Porto di Civitavecchia SpA in liquidation Companhia Energética do Ceará - Coelce Compañía de Trasmisión del Mercosur SA - CTM Compañía Energética Veracruz SAC Sydney AU 100.00 AUD Line-by-line Sydney AU 1.00 Andover US 1.00 AUD USD Enel Green Power Cohuna Holdings (Pty) Ltd Enel Green Power Cohuna Trust 100.00% 100.00% 100.00% 100.00% Line-by-line Line-by-line Tradewind Energy Inc. 100.00% 100.00% Cádiz ES 600,000.00 EUR Equity Rome IT 14,730,800.00 EUR Equity Endesa Red SA (Sociedad Unipersonal) 33.50% 23.49% Enel Produzione SpA 25.00% 25.00% Fortaleza BR 892,246,885.77 BRL Line-by-line Enel Brasil SA 74.05% 48.13% Buenos Aires AR 2,025,191,313.00 ARS Line-by-line Enel CIEN SA 25.85% 65.00% Enel Brasil SA 74.15% Enel SpA 0.00% San Miguel PE 2,886,000.00 PEN Line-by-line Enel Perú SAC 100.00% 65.00% Compañía Eólica Tierras Altas SA Soria ES 13,222,000.00 EUR Equity 26.30% Compañía Eólica Tierras Altas SA 5.00% Concert Srl Rome IT 10,000.00 EUR Line-by-line Concho Solar I LLC Andover US 1.00 USD Line-by-line 430 Enel Green Power España SL 35.63% Enel Global Thermal Generation Srl 100.00% 100.00% Tradewind Energy Inc. 100.00% 100.00% Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding CONSEL - Consorzio ELIS per la formazione professionale superiore Consolidated Hydro New Hampshire LLC Consolidated Hydro Southeast LLC Consolidated Pumped Storage Inc. Rome IT 51,000.00 EUR Equity OpEn Fiber SpA 1.00% 0.50% Wilmington US - Wilmington US - USD USD Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Wilmington US 550,000.00 USD Line-by-line Enel Green Power North America Inc. 81.83% 81.83% Consorzio Civita in liquidation Rome Conza Green Energy Srl Rome IT IT 156,000.00 EUR - Enel SpA 33.30% 33.30% 73,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Copper Landing Solar Project LLC Corporación Empresarial de Extremadura SA Corporación Eólica de Zaragoza SL Andover US - USD Line-by-line Enel Kansas LLC 100.00% 100.00% Badajoz ES 44,538,000.00 EUR - Endesa SA 1.01% 0.71% La Puebla de Alfinden ES 271,652.00 EUR Equity Enel Green Power España SL 25.00% 17.53% Cow Creek Wind Project LLC Andover US 1.00 Andover US 1.00 USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Sandton ZA 100.00 ZAR Line-by-line Enel Green Power RSA (Pty) Ltd 100.00% 100.00% Enel Green Power Romania Srl 100.00% De Rock Int’l Srl Bucharest RO 5,629,000.00 RON Line-by-line 100.00% Dehesa de los Guadalupes Solar SLU Dehesa PV Farm 03 SLU Dehesa PV Farm 04 SLU Depuración Destilación Reciclaje SL Seville ES 3,000.00 EUR Line-by-line Madrid ES 3,000.00 EUR Line-by-line Madrid ES 3,000.00 EUR Line-by-line Boiro ES 600,000.00 EUR Equity Enel Green Power SpA 0.00% Enel Green Power España SL 100.00% 70.11% Enel Green Power España SL 100.00% 70.11% Enel Green Power España SL 100.00% 70.11% Enel Green Power España SL 40.00% 28.04% Derivex SA Bogotá CO 715,292,000.00 COP - Emgesa SA ESP 5.00% 1.58% 431 Crockett Solar I LLC Danax Energy (Pty) Ltd Integrated Annual Report 2020Desarrollo de Fuerzas Renovables S de RL de Cv Di.T.N.E. - Distretto Tecnologico Nazionale sull’Energia - Società Consortile a Responsabilità Limitata Diamond Vista Holdings LLC Distribuidora de Energía Eléctrica del Bages SA Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Mexico City MX 33,101,350.00 MXN Line-by-line Group % holding 100.00% Held by % holding Enel Green Power México S de RL de Cv 99.99% Energía Nueva Energía Limpia México S de RL de Cv 0.01% Rome IT 405,850.51 EUR - Enel Produzione SpA 1.89% 1.89% Wilmington US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Endesa Red SA (Sociedad Unipersonal) 55.00% 70.11% Hidroeléctrica de Catalunya SL 45.00% Endesa Red SA (Sociedad Unipersonal) 100.00% 70.11% Barcelona ES 108,240.00 EUR Line-by-line Distribuidora Eléctrica del Puerto de la Cruz SA Santa Cruz de Tenerife ES 12,621,210.00 EUR Line-by-line Distrilec Inversora SA Buenos Aires AR 497,612,021.00 ARS Line-by-line Enel Américas SA 51.50% 33.48% Dmd Holding AS in liquidation Trenčín- Zlatovce SK 199,543,284.87 EUR - Slovenské elektrárne AS 2.94% 0.97% Dodge Center Distributed Solar LLC Dolores Wind SA de Cv Dominica Energía Limpia SA de Cv Wilmington US - USD Line-by-line Mexico City MX 200.00 MXN Line-by-line Mexico City MX 2,070,600,646.00 MXN Equity Aurora Distributed Solar LLC 100.00% 74.13% Enel Rinnovabile SA de Cv 99.00% Hidroelectricidad del Pacífico S de RL de Cv Tenedora de Energía Renovable Sol y Viento SAPI de Cv 100.00% 1.00% 60.80% 20.00% Dorset Ridge Wind Project LLC Andover US 1.00 Dover Solar I LLC Andover US - Dragonfly Fields Solar Project LLC Andover US - Drift Sand Wind Holdings LLC Wilmington US - Drift Sand Wind Project LLC Wilmington US - USD USD USD USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Equity Enel Kansas LLC 50.00% 50.00% Equity Drift Sand Wind Holdings LLC 100.00% 50.00% 432 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Dwarka Vayu 1 Private Limited Gurgaon E.S.CO. Comuni Srl Bergamo IN IT 100,000.00 INR Line-by-line Avikiran Vayu India Private Limited 100.00% 100.00% 1,000,000.00 EUR Line-by-line Yousave SpA 60.00% 60.00% Eastwood Solar LLC Edistribución Redes Digitales SL (Sociedad Unipersonal) E-Distribuţie Banat SA E-Distribuţie Dobrogea SA E-Distribuţie Muntenia SA e-distribuzione SpA Wilmington US - USD Line-by-line Madrid ES 1,204,540,060.00 EUR Line-by-line Aurora Distributed Solar LLC 100.00% 74.13% Endesa Red SA (Sociedad Unipersonal) 100.00% 70.11% Timisoara RO 382,158,580.00 RON Line-by-line Enel SpA 51.00% 51.00% Constanţa RO 280,285,560.00 RON Line-by-line Enel SpA 51.00% 51.00% Bucharest RO 271,635,250.00 RON Line-by-line Enel SpA 78.00% 78.00% Rome IT 2,600,000,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% EF Divesture LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Efficientya Srl Bergamo IT 100,000.00 EUR Equity Yousave SpA 50.00% 50.00% EGP Américas SpA Santiago de Chile CL 12,000.00 USD Line-by-line Enel SpA 100.00% 100.00% EGP Australia (Pty) Ltd EGP Bioenergy Srl EGP fotovoltaica La Loma SAS in liquidation EGP Geronimo Holding Company Inc. EGP HoldCo 1 LLC EGP HoldCo 10 LLC EGP HoldCo 11 LLC EGP HoldCo 12 LLC EGP HoldCo 13 LLC Sydney AU 10,000.00 AUD Line-by-line Rome IT 1,000,000.00 EUR Line-by-line Bogotá CO 8,000,000.00 COP Line-by-line Wilmington US 1,000.00 USD Line-by-line Enel Green Power Australia (Pty) Ltd 100.00% 100.00% Enel Green Power Puglia Srl 100.00% 100.00% Enel Green Power Colombia SAS ESP 100.00% 100.00% Enel Green Power North America Inc. 100.00% 100.00% Andover US - Andover US - Andover US - Andover US - Andover US - USD USD USD USD USD Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% 433 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - USD USD USD USD USD USD USD USD USD USD USD USD USD Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Mexico City MX 691,771,740.00 MXN Line-by-line Enel Rinnovabile SA de Cv 99.00% Hidroelectricidad del Pacífico S de RL de Cv 1.00% 100.00% EGP HoldCo 14 LLC EGP HoldCo 15 LLC EGP HoldCo 16 LLC EGP HoldCo 17 LLC EGP HoldCo 18 LLC EGP HoldCo 2 LLC EGP HoldCo 3 LLC EGP HoldCo 4 LLC EGP HoldCo 5 LLC EGP HoldCo 6 LLC EGP HoldCo 7 LLC EGP HoldCo 8 LLC EGP HoldCo 9 LLC EGP Magdalena Solar SA de Cv EGP Nevada Power LLC EGP Salt Wells Solar LLC Wilmington US - Wilmington US - EGP San Leandro Microgrid I LLC Wilmington US - EGP Solar 1 LLC Andover US - EGP Solar Services LLC Andover US - 434 USD USD USD USD USD Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Line-by-line EGPNA REP Solar Holdings LLC 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding EGP Stillwater Solar LLC EGP Stillwater Solar PV II LLC Wilmington US - Wilmington US 1.00 EGP Timber Hills Project LLC Los Angeles US - EGPNA 2020 HoldCo 1 LLC EGPNA 2020 HoldCo 10 LLC EGPNA 2020 HoldCo 11 LLC EGPNA 2020 HoldCo 12 LLC EGPNA 2020 HoldCo 13 LLC EGPNA 2020 HoldCo 14 LLC EGPNA 2020 HoldCo 15 LLC EGPNA 2020 HoldCo 16 LLC EGPNA 2020 HoldCo 17 LLC EGPNA 2020 HoldCo 18 LLC EGPNA 2020 HoldCo 19 LLC EGPNA 2020 HoldCo 2 LLC EGPNA 2020 HoldCo 20 LLC EGPNA 2020 HoldCo 21 LLC EGPNA 2020 HoldCo 22 LLC EGPNA 2020 HoldCo 23 LLC EGPNA 2020 HoldCo 24 LLC Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD Line-by-line Enel Stillwater LLC 100.00% 100.00% Line-by-line Stillwater Woods Hill Holdings LLC 100.00% 100.00% Line-by-line Padoma Wind Power LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% 435 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Andover US 1.00 Wilmington US - Wilmington US - Wilmington US - Wilmington US - USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Line-by-line Enel Green Power North America Development LLC Enel Green Power North America Inc. 100.00% 100.00% 100.00% 100.00% Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Dover US 100.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Dover US 100.00 USD Line-by-line Dover US 100.00 USD Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Enel Green Power North America Inc. 100.00% 100.00% EGPNA 2020 HoldCo 25 LLC EGPNA 2020 HoldCo 26 LLC EGPNA 2020 HoldCo 27 LLC EGPNA 2020 HoldCo 28 LLC EGPNA 2020 HoldCo 29 LLC EGPNA 2020 HoldCo 3 LLC EGPNA 2020 HoldCo 30 LLC EGPNA 2020 HoldCo 4 LLC EGPNA 2020 HoldCo 5 LLC EGPNA 2020 HoldCo 6 LLC EGPNA 2020 HoldCo 7 LLC EGPNA 2020 HoldCo 8 LLC EGPNA 2020 HoldCo 9 LLC EGPNA Development Holdings LLC EGPNA Hydro Holdings LLC EGPNA Preferred Wind Holdings II LLC EGPNA Preferred Wind Holdings LLC EGPNA Project HoldCo 1 LLC EGPNA Project HoldCo 2 LLC EGPNA Project HoldCo 3 LLC 436 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Dover US 100.00 USD Line-by-line Dover US 100.00 USD Line-by-line Dover US 100.00 USD Line-by-line Dover US 100.00 USD Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Enel Green Power North America Inc. 100.00% 100.00% Enel Green Power North America Inc. 100.00% 100.00% Enel Green Power North America Inc. 100.00% 100.00% Wilmington US - Wilmington US - EGPNA REP Solar Holdings LLC Wilmington US - Equity EGPNA REP Holdings LLC 20.00% 20.00% Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Line-by-line Enel Green Power North America Inc. 100.00% 100.00% USD USD USD USD USD Wilmington US - Wilmington US - Equity Equity Puertollano ES 809,690.40 EUR Equity EGPNA Project HoldCo 4 LLC EGPNA Project HoldCo 5 LLC EGPNA Project HoldCo 6 LLC EGPNA Project HoldCo 7 LLC EGPNA Renewable Energy Partners LLC EGPNA REP Holdings LLC EGPNA REP Wind Holdings LLC EGPNA Wind Holdings 1 LLC Elcogas SA in liquidation Elcomex Solar Energy Srl Bucharest RO 4,590,000.00 RON Line-by-line 100.00% Elecgas SA Pego PT 50,000.00 EUR Equity Electra Capital (RF) (Pty) Ltd Eléctrica de Jafre SA Johannesburg ZA 10,000,000.00 ZAR Line-by-line Barcelona ES 165,876.00 EUR Line-by-line Eléctrica de Lijar SL Cádiz ES 1,081,821.79 EUR Equity Barcelona ES 500,000.00 EUR Line-by-line Cádiz ES 4,960,246.40 EUR Equity Eléctrica del Ebro SA (Sociedad Unipersonal) Electricidad de Puerto Real SA Electrometalúrgica del Ebro SL Barcelona ES 2,906,862.00 EUR - Enel Green Power España SL 0.18% 0.12% 437 EGPNA Renewable Energy Partners LLC EGPNA REP Wind Holdings LLC Endesa Generación SA 100.00% 20.00% 100.00% 20.00% 40.99% 33.06% Enel SpA 4.32% Enel Green Power Romania Srl 100.00% Enel Green Power SpA 0.00% Endesa Generación Portugal SA 50.00% 35.05% Enel Green Power RSA (Pty) Ltd 60.00% 60.00% Endesa Red SA (Sociedad Unipersonal) 52.54% 70.11% Hidroeléctrica de Catalunya SL 47.46% Endesa Red SA (Sociedad Unipersonal) Endesa Red SA (Sociedad Unipersonal) Endesa Red SA (Sociedad Unipersonal) 50.00% 35.05% 100.00% 70.11% 50.00% 35.05% Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Eletropaulo Metropolitana Eletricidade de São Paulo SA Barueri BR 3,079,524,934.33 BRL Line-by-line Enel Brasil SA 100.00% 65.00% Elini Antwerp BE 76,273,810.00 EUR - Slovenské elektrárne AS 4.00% 1.32% Livister Guatemala SA 1.00% 20.60% Livister Latam SLU 99.00% San Salvador SV 2,000.00 USD Equity Wilmington US 100.00 USD Equity Ifx Networks Ltd 100.00% 20.60% Panama City PA 300.00 USD Equity Ifx/eni - Spc Panama Inc. 100.00% 20.60% Emgesa SA ESP Bogotá CO 655,222,312,800.00 COP Line-by-line Enel Américas SA 48.48% 31.51% Emintegral Cycle SLU Madrid ES 3,000.00 EUR Line-by-line Madrid ES 18,030,000.00 EUR Line-by-line Ceuta ES 9,335,000.00 EUR Line-by-line Ceuta ES 16,562,250.00 EUR Line-by-line San Miguel PE 7,928,044.00 PEN Line-by-line 100.00% Energética Monzón SAC 0.00% Enel Green Power Perú SAC 100.00% San Miguel PE 3,368,424.00 PEN Line-by-line 100.00% Emerging Networks El Salvador SA de Cv Emerging Networks Latam Inc. Emerging Networks Panama SA Empresa Carbonífera del Sur SA Empresa de Alumbrado Eléctrico de Ceuta Distribución SA (Sociedad Unipersonal) Empresa de Alumbrado Eléctrico de Ceuta SA Empresa de Generación Eléctrica Los Pinos SA Empresa de Generación Eléctrica Marcona SAC Enel Green Power España SL 100.00% 70.11% Endesa Generación SA 100.00% 70.11% Empresa de Alumbrado Eléctrico de Ceuta SA Endesa Red SA (Sociedad Unipersonal) 100.00% 67.56% 96.37% 67.56% Enel Green Power Perú SAC 100.00% Energética Monzón SAC Enel Colina SA 0.00% 0.10% Enel Distribución Chile SA 99.90% Distrilec Inversora SA 56.36% Enel Argentina SA 43.10% 64.34% 46.88% Enel Generación Chile SA 92.65% 56.27% Enel Green Power Chile SA 51.00% 33.11% Empresa de Transmisión Chena SA Santiago de Chile CL 250,428,941.00 CLP Line-by-line Empresa Distribuidora Sur SA - Edesur Buenos Aires AR 898,585,028.00 ARS Line-by-line CL 175,774,920,733.00 CLP Line-by-line CL 12,647,789,439.24 CLP Line-by-line Empresa Eléctrica Pehuenche SA Empresa Nacional de Geotermia SA in liquidation Santiago de Chile Santiago de Chile 438 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Empresa Propietaria de la Red SA Endesa Capital SA Endesa Comercialização de Energia SA Endesa Energía Renovable SL (Sociedad Unipersonal) Endesa Energía SA Endesa Financiación Filiales SA Endesa Generación II SA Endesa Generación Nuclear SA Endesa Generación Portugal SA Endesa Generación SA Endesa Ingeniería SLU Endesa Medios y Sistemas SL (Sociedad Unipersonal) Endesa Operaciones y Servicios Comerciales SL Endesa Power Trading Ltd Endesa Red SA (Sociedad Unipersonal) Panama City PA 58,500,000.00 USD - Enel SpA 11.11% 11.11% Madrid ES 60,200.00 EUR Line-by-line Endesa SA 100.00% 70.11% Porto PT 250,000.00 EUR Line-by-line Endesa Energía SA 100.00% 70.11% Madrid ES 100,000.00 EUR Line-by-line Endesa Energía SA 100.00% 70.11% Madrid ES 14,445,575.90 EUR Line-by-line Endesa SA 100.00% 70.11% Madrid ES 4,621,003,006.00 EUR Line-by-line Endesa SA 100.00% 70.11% Seville ES 63,107.00 EUR Line-by-line Endesa SA 100.00% 70.11% Seville ES 60,000.00 EUR Line-by-line Lisbon PT 50,000.00 EUR Line-by-line Endesa Generación SA 100.00% 70.11% Endesa Energía SA 0.20% Endesa Generación SA 99.20% 70.11% Enel Green Power España SL 0.60% Seville ES 1,940,379,735.35 EUR Line-by-line Endesa SA 100.00% 70.11% Seville ES 965,305.00 EUR Line-by-line Endesa Red SA (Sociedad Unipersonal) 100.00% 70.11% Madrid ES 89,999,790.00 EUR Line-by-line Endesa SA 100.00% 70.11% Madrid ES 10,138,580.00 EUR Line-by-line Endesa Energía SA 100.00% 70.11% London GB 2.00 GBP Line-by-line Endesa SA 100.00% 70.11% Madrid ES 719,901,723.26 EUR Line-by-line Endesa SA 100.00% 70.11% Endesa SA Madrid ES 1,270,502,540.40 EUR Line-by-line 70.11% Endesa SA 0.01% Madrid ES 2,874,621.80 EUR Equity Enel Iberia Srl 70.10% Endesa X Servicios SLU 20.00% 14.02% Madrid ES 60,000.00 EUR Line-by-line Endesa SA 100.00% 70.11% Endesa Soluciones SL Endesa X Servicios SLU 439 Integrated Annual Report 2020 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Enel Alberta Wind Inc. Alberta CA 16,251,021.00 CAD Line-by-line Enel Green Power Canada Inc. 100.00% 100.00% Enel Américas SA Santiago de Chile CL 9,783,875,314.43 USD Line-by-line Enel SpA 65.00% 65.00% Enel and Shikun & Binui Innovation Infralab Ltd Enel Argentina SA Enel Bella Energy Storage LLC Enel Brasil Central SA Airport City IL 38,000.00 ILS Equity Buenos Aires AR 2,297,711,908.00 ARS Line-by-line Wilmington US - USD Line-by-line Enel Global Infrastructure and Networks Srl 50.00% 50.00% Enel Américas SA 99.92% Enel Generación Chile SA 0.08% 65.00% Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) 100.00% 100.00% Niterói BR 10,000.00 BRL Line-by-line Enel Brasil SA 100.00% 65.00% Enel Brasil SA Niterói BR 18,978,311,482.06 BRL Line-by-line 65.00% Enel Brasil SA 0.75% Enel Américas SA 99.25% Enel Chile SA Santiago de Chile CL 3,882,103,470,184.00 CLP Line-by-line Enel SpA 64.93% 64.93% Enel CIEN SA Niterói BR 285,044,682.00 BRL Line-by-line Enel Brasil SA 100.00% 65.00% Enel Colina SA Santiago de Chile CL 82,222,000.00 CLP Line-by-line Enel Chile SA 0.00% Enel Distribución Chile SA 100.00% 64.34% Enel Cove Fort II LLC Enel Cove Fort LLC Wilmington US - Beaver US - USD USD Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Line-by-line Enel Geothermal LLC 100.00% 100.00% Enel Distribución Chile SA Santiago de Chile CL 230,137,979,938.00 CLP Line-by-line Enel Chile SA 99.09% 64.34% Enel Distribución Perú SAA San Miguel PE 638,563,900.00 PEN Line-by-line Enel Perú SAC 83.15% 54.05% Enel Energia SpA Rome IT 302,039.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% Mexico City MX 25,000,100.00 MXN Line-by-line Enel Green Power México S de RL de Cv 100.00% 100.00% Energía Nueva de Iguu S de RL de Cv 0.00% Bucharest RO 37,004,350.00 RON Line-by-line Enel SpA 78.00% 78.00% Enel Energía SA de Cv Enel Energie Muntenia SA 440 Enel Energy Australia (Pty) Ltd Enel Energy South Africa Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) Enel Finance America LLC Enel Finance International NV Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Enel Energie SA Bucharest RO 140,000,000.00 RON Line-by-line Enel SpA 51.00% 51.00% Sydney AU 100.00 AUD Line-by-line Wilmington ZA 100.00 ZAR Line-by-line Enel Green Power Australia (Pty) Ltd 100.00% 100.00% Enel X International Srl 100.00% 100.00% Andover US 100.00 USD Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Wilmington US 200,000,000.00 USD Line-by-line Amsterdam NL 1,478,810,371.00 EUR Line-by-line Enel North America Inc. 100.00% 100.00% Enel Holding Finance Srl 75.00% 100.00% Enel SpA 25.00% Enel Green Power Panamá Srl 50.06% 50.06% Enel Fortuna SA Panama City PA 100,000,000.00 USD Line-by-line Enel Future Project 2020 #1 LLC Enel Future Project 2020 #10 LLC Enel Future Project 2020 #11 LLC Enel Future Project 2020 #12 LLC Enel Future Project 2020 #13 LLC Enel Future Project 2020 #14 LLC Enel Future Project 2020 #15 LLC Enel Future Project 2020 #16 LLC Enel Future Project 2020 #17 LLC Enel Future Project 2020 #18 LLC Enel Future Project 2020 #19 LLC Enel Future Project 2020 #2 LLC Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - USD USD USD USD USD USD USD USD USD USD USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% 441 Integrated Annual Report 2020 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Enel Future Project 2020 #20 LLC Enel Future Project 2020 #3 LLC Enel Future Project 2020 #4 LLC Enel Future Project 2020 #5 LLC Enel Future Project 2020 #6 LLC Enel Future Project 2020 #7 LLC Enel Future Project 2020 #8 LLC Enel Future Project 2020 #9 LLC Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - Andover US - USD USD USD USD USD USD USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Generación Chile SA Santiago de Chile CL 552,777,320,871.00 CLP Line-by-line Enel Chile SA 93.55% 60.74% Enel Generación Costanera SA Enel Generación El Chocón SA Enel Generación Perú SAA Enel Generación Piura SA Enel Generación SA de Cv Enel Geothermal LLC Buenos Aires AR 701,988,378.00 ARS Line-by-line Enel Argentina SA 75.68% 49.19% Buenos Aires AR 298,584,050.00 ARS Line-by-line 42.72% Hidroinvest SA 59.00% Enel Argentina SA 8.67% San Miguel PE 2,498,101,267.20 PEN Line-by-line Enel Perú SAC 83.60% 54.34% San Miguel PE 73,982,594.00 PEN Line-by-line Enel Perú SAC 96.50% 62.72% Mexico City MX 7,100,100.00 MXN Line-by-line Wilmington US - USD Line-by-line Enel Green Power México S de RL de Cv 100.00% 100.00% Energía Nueva de Iguu S de RL de Cv 0.00% Enel Green Power North America Inc. 100.00% 100.00% Enel Global Infrastructure and Networks Srl Rome Enel Global Services Srl Enel Global Thermal Generation Srl Rome Rome IT IT IT 442 10,100,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% 10,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% 11,000,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Enel Global Trading SpA Enel Green Power Argentina SA Enel Green Power Aroeira 01 SA Enel Green Power Aroeira 02 SA Enel Green Power Aroeira 03 SA Enel Green Power Aroeira 04 SA Enel Green Power Aroeira 05 SA Enel Green Power Aroeira 06 SA Enel Green Power Aroeira 07 SA Rome IT 90,885,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Buenos Aires AR 82,534,295.00 ARS Line-by-line Enel Rinnovabili Srl 99.24% 100.00% Enel Green Power SpA 0.00% Energía y Servicios South America SpA Enel Green Power Brasil Participações Ltda 0.76% 99.90% Niterói BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Niterói BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Niterói BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Niterói BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Niterói BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Niterói BR 1,000.00 BRL Line-by-line 100.00% Niterói BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% 443 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Group % holding Held by % holding Enel Green Power Brasil Participações Ltda 99.90% Enel Green Power Aroeira 08 SA Enel Green Power Aroeira 09 SA (formerly Enel Green Power São Gonçalo Participações SA) Enel Green Power Australia (Pty) Ltd Enel Green Power Australia Trust Enel Green Power Boa Vista 01 Ltda Enel Green Power Boa Vista Eólica SA Enel Green Power Bouldercombe Holding (Pty) Ltd Enel Green Power Brasil Participações Ltda Enel Green Power Brejolândia Solar SA Enel Green Power Bulgaria EAD Enel Green Power Bungala (Pty) Ltd Enel Green Power Bungala Trust Enel Green Power Cabeça de Boi SA Niterói BR 1,000.00 BRL Line-by-line 100.00% Niterói BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Sydney AU 100.00 AUD Line-by-line Sydney AU 100.00 AUD Line-by-line Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power SpA 100.00% 100.00% Enel Green Power SpA 100.00% 100.00% Enel Green Power Brasil Participações Ltda 100.00% Salvador BR 1,946,507.00 BRL Line-by-line 100.00% Niterói BR 104,890,000.00 BRL Line-by-line Sydney AU 100.00 AUD Line-by-line Niterói BR 8,411,724,678.00 BRL Line-by-line Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.00% 100.00% 100.00% Enel Green Power Australia (Pty) Ltd 100.00% 100.00% Enel Rinnovabili Srl 100.00% Energía y Servicios South America SpA Enel Green Power Brasil Participações Ltda 0.00% 99.90% 100.00% Rio de Janeiro BR 1,000.00 BRL Line-by-line 100.00% Sofia BG 35,231,000.00 BGN AFS Sydney AU 100.00 AUD Line-by-line Sydney AU - AUD Line-by-line Niterói BR 270,114,539.00 BRL Line-by-line Enel Green Power Cachoeira Dourada SA Cachoeira Dourada BR 64,339,835.85 BRL Line-by-line 444 Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power SpA 100.00% 100.00% Enel Green Power Australia (Pty) Ltd 100.00% 100.00% Enel Green Power Australia (Pty) Ltd 100.00% 100.00% Enel Green Power Brasil Participações Ltda 100.00% 100.00% Enel Brasil SA 99.61% Enel Green Power Cachoeira Dourada SA 0.15% 64.84% Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Calabria Srl Enel Green Power Canada Inc. Enel Green Power Cerrado Solar SA Rome IT 10,000.00 EUR Line-by-line Montreal CA 85,681,857.00 CAD Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Enel Green Power North America Inc. 100.00% 100.00% Enel Green Power Brasil Participações Ltda 99.90% Rio de Janeiro BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Chile SA 0.10% 72.46% Enel Green Power Chile SA 27.54% 64.93% Enel SpA 0.01% Enel Green Power Chile SA Santiago de Chile CL 1,197,691,313.37 USD Line-by-line Enel Green Power Cimarron Bend Wind Holdings III LLC Enel Green Power Cohuna Holdings (Pty) Ltd Enel Green Power Cohuna Trust Enel Green Power Colombia SAS ESP Enel Green Power Costa Rica SA Enel Green Power Cove Fort Solar LLC Enel Green Power Cremzow GmbH & Co. Kg Enel Green Power Cremzow Verwaltungs GmbH Enel Green Power Cristal Eólica SA Enel Green Power Cumaru 01 SA Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Sydney AU 3,419,700.00 AUD Line-by-line Sydney AU - AUD Line-by-line Enel Green Power Australia (Pty) Ltd 100.00% 100.00% Enel Green Power Australia Trust 100.00% 100.00% Bogotá CO 6,263,213,000.00 COP Line-by-line Enel Rinnovabili Srl 100.00% 100.00% San José CR 27,500,000.00 USD Line-by-line Energía y Servicios South America SpA 100.00% 100.00% Wilmington US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Schenkenberg DE 1,000.00 EUR Line-by-line Schenkenberg DE 25,000.00 EUR Line-by-line Niterói BR 144,784,899.00 BRL Line-by-line Niterói BR 100,001,000.00 BRL Line-by-line Enel Green Power Germany GmbH 90.00% 90.00% Enel Green Power Germany GmbH 90.00% 90.00% Enel Green Power Brasil Participações Ltda 99.17% Enel Green Power Cristal Eólica SA 0.00% 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.83% 100.00% 100.00% Enel Green Power Desenvolvimento Ltda 0.00% 445 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Group % holding Held by % holding Enel Green Power Brasil Participações Ltda 100.00% Niterói BR 100,001,000.00 BRL Line-by-line 100.00% Niterói BR 100,001,000.00 BRL Line-by-line Niterói BR 100,001,000.00 BRL Line-by-line Niterói BR 100,001,000.00 BRL Line-by-line Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.00% 99.90% Niterói BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Niterói BR 1,000.00 BRL Line-by-line 100.00% Niterói BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.16% Niterói BR 83,709,003.00 BRL Line-by-line 100.00% Niterói BR 549,062,483.00 BRL Line-by-line Niterói BR 93,068,000.00 BRL Line-by-line Niterói BR 31,105,000.00 BRL Line-by-line Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Brasil Participações Ltda 0.84% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Enel Green Power Cumaru 02 SA Enel Green Power Cumaru 03 SA Enel Green Power Cumaru 04 SA Enel Green Power Cumaru 05 SA Enel Green Power Cumaru Participações SA Enel Green Power Cumaru Solar 01 SA Enel Green Power Cumaru Solar 02 SA Enel Green Power Damascena Eólica SA Enel Green Power Delfina A Eólica SA Enel Green Power Delfina B Eólica SA Enel Green Power Delfina C Eólica SA 446 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Delfina D Eólica SA Enel Green Power Delfina E Eólica SA Enel Green Power Desenvolvimento Ltda Enel Green Power Development Srl Enel Green Power Diamond Vista Wind Project LLC Enel Green Power Dois Riachos Eólica SA Niterói BR 105,864,000.00 BRL Line-by-line Niterói BR 105,936,000.00 BRL Line-by-line Niterói BR 43,342,090.38 BRL Line-by-line Rome IT 20,000.00 EUR Line-by-line Wilmington US 1.00 USD Line-by-line Niterói BR 130,354,009.00 BRL Line-by-line Enel Green Power Egypt SAE Cairo EG 250,000.00 EGP Line-by-line El Salvador SV 22,860.00 USD Line-by-line Enel Green Power El Salvador SA de Cv Enel Green Power Elkwater Wind Limited Partnership Enel Green Power Elmsthorpe Wind LP Enel Green Power Emiliana Eólica SA Enel Green Power Esperança Eólica SA Alberta CA 1,000.00 CAD Line-by-line 100.00% Enel Green Power Canada Inc. 99.00% Enel Alberta Wind Inc. 0.10% Calgary CA 1,000.00 CAD Line-by-line 100.00% Niterói BR 135,191,530.00 BRL Line-by-line Enel Green Power España SL Seville ES 11,152.74 EUR Line-by-line Niterói BR 129,418,174.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda 0.86% 447 Enel Green Power Brasil Participações Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Brasil Participações Ltda 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Energía y Servicios South America SpA 0.00% Enel Green Power SpA 100.00% 100.00% Diamond Vista Holdings LLC 100.00% 100.00% Enel Green Power Brasil Participações Ltda 100.00% 100.00% Enel Green Power SpA 100.00% 100.00% Enel Green Power SpA 99.96% Energía y Servicios South America SpA Enel Alberta Wind Inc. 0.04% 1.00% 100.00% Enel Green Power Canada Inc. 99.90% Enel Green Power Brasil Participações Ltda 98.81% Enel Green Power Desenvolvimento Ltda 1.19% 100.00% Enel Green Power Emiliana Eólica SA 0.00% Endesa Generación SA 100.00% 70.11% Enel Green Power Brasil Participações Ltda 99.14% Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Group % holding Held by % holding Enel Green Power Brasil Participações Ltda 99.90% Rio de Janeiro BR 1,000.00 BRL Line-by-line 100.00% Niterói BR 264,141,174.00 BRL Line-by-line Niterói BR 121,001,000.00 BRL Line-by-line Niterói BR 121,001,000.00 BRL Line-by-line Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 100.00% 100.00% 100.00% 100.00% 0.00% 100.00% 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.00% 99.90% Niterói BR 1,000.00 BRL Line-by-line 100.00% Rio de Janeiro BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Paris FR 100,000.00 EUR Line-by-line Berlin DE 25,000.00 EUR Line-by-line Sydney AU 100.00 AUD Line-by-line Amsterdam NL 10,000.00 EUR Line-by-line Guatemala City GT 67,208,000.00 GTQ Line-by-line Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power SpA 100.00% 100.00% Enel Green Power SpA 100.00% 100.00% Enel Green Power Australia (Pty) Ltd 100.00% 100.00% Enel Green Power SpA 100.00% 100.00% Enel Rinnovabili Srl 100.00% Energía y Servicios South America SpA Enel Alberta Wind Inc. 0.00% 1.00% 100.00% - CA 1,000.00 CAD Line-by-line 100.00% Maroussi GR 8,180,350.00 EUR Line-by-line Enel Green Power Canada Inc. 99.00% Enel Green Power SpA 100.00% 100.00% Enel Green Power Esperança Solar SA Enel Green Power Fazenda SA Enel Green Power Fontes dos Ventos 2 SA Enel Green Power Fontes dos Ventos 3 SA Enel Green Power Fontes II Participações SA Enel Green Power Fontes Solar SA Enel Green Power France SAS Enel Green Power Germany GmbH Enel Green Power Girgarre Holdings (Pty) Ltd Enel Green Power Global Investment BV Enel Green Power Guatemala SA Enel Green Power Hadros Wind Limited Partnership Enel Green Power Hellas SA 448 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Hellas Supply Single Member SA Enel Green Power Hellas Wind Parks South Evia Single Member SA Enel Green Power Hilltopper Wind LLC (formerly Hilltopper Wind Power LLC) Enel Green Power Horizonte Mp Solar SA Enel Green Power India Private Limited (formerly BLP Energy Private Limited) Enel Green Power Italia Srl Enel Green Power Ituverava Norte Solar SA Enel Green Power Ituverava Solar SA Enel Green Power Ituverava Sul Solar SA Enel Green Power Joana Eólica SA Enel Green Power Kenya Limited Maroussi GR 600,000.00 EUR Line-by-line Enel Green Power Hellas SA 100.00% 100.00% Maroussi GR 106,609,641.00 EUR Line-by-line Enel Green Power Hellas SA 100.00% 100.00% Dover US 1.00 USD Line-by-line Niterói BR 451,566,053.00 BRL Line-by-line New Delhi IN 100,000,000.00 INR Line-by-line Hilltopper Wind Holdings LLC 100.00% 100.00% Alba Energia Ltda 0.01% Enel Green Power Brasil Participações Ltda 99.99% 100.00% Enel Green Power Development Srl 100.00% 100.00% Rome IT 272,000,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% Niterói BR 204,706,645.67 BRL Line-by-line Niterói BR 219,235,933.00 BRL Line-by-line Niterói BR 407,279,143.00 BRL Line-by-line Bondia Energia Ltda 0.09% Enel Green Power Brasil Participações Ltda Bondia Energia Ltda 99.91% 0.00% Enel Green Power Brasil Participações Ltda Bondia Energia Ltda 100.00% 0.00% Enel Green Power Brasil Participações Ltda Enel Green Power Brasil Participações Ltda 100.00% 98.89% 100.00% 100.00% 100.00% Niterói BR 135,459,530.00 BRL Line-by-line 100.00% Nairobi KE 100,000.00 KES Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power RSA (Pty) Ltd 1.11% 1.00% Enel Green Power Korea LLC Seoul KR 1,040,000,000.00 KRW Line-by-line Enel Green Power SpA 99.00% Enel Green Power SpA 100.00% 100.00% 449 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Group % holding Held by % holding Enel Green Power Brasil Participações Ltda 99.90% Teresina BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Teresina BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Teresina BR 1,000.00 BRL Line-by-line 100.00% Teresina BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Teresina BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Teresina BR 1,000,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Teresina BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Teresina BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Teresina BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Lagoa do Sol 01 SA Enel Green Power Lagoa do Sol 02 SA Enel Green Power Lagoa do Sol 03 SA Enel Green Power Lagoa do Sol 04 SA Enel Green Power Lagoa do Sol 05 SA Enel Green Power Lagoa do Sol 06 SA Enel Green Power Lagoa do Sol 07 SA Enel Green Power Lagoa do Sol 08 SA Enel Green Power Lagoa do Sol 09 SA 450 Enel Green Power Lagoa II Participações SA Enel Green Power Lagoa III Participações SA Enel Green Power Lagoa Participações SA (formerly Enel Green Power Projetos 45 SA) Enel Green Power Lily Solar Holdings LLC Enel Green Power Maniçoba Eólica SA Enel Green Power México S de RL de Cv Enel Green Power Modelo I Eólica SA Enel Green Power Modelo II Eólica SA Enel Green Power Morocco SARLAU Enel Green Power Morro do Chapéu I Eólica SA Enel Green Power Morro do Chapéu II Eólica SA Enel Green Power Morro do Chapéu Solar 01 SA (formerly Enel Green Power São Gonçalo III Participações SA) Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Group % holding Held by % holding Enel Green Power Brasil Participações Ltda 99.90% Niterói BR 1,000.00 BRL Line-by-line 100.00% Niterói BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Niterói BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda 0.10% Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Niterói BR 90,722,530.00 BRL Line-by-line 100.00% Enel Green Power Brasil Participações Ltda 99.20% Enel Green Power Metehara Solar Private Limited Company - ET 5,600,000.00 ETB Line-by-line Enel Green Power Desenvolvimento Ltda 0.80% Enel Green Power Solar Metehara SpA 80.00% 80.00% Enel Green Power SpA 100.00% Mexico City MX 662,949,966.00 MXN Line-by-line 100.00% Niterói BR 132,642,000.00 BRL Line-by-line Niterói BR 117,142,000.00 BRL Line-by-line Casablanca MA 340,000,000.00 MAD Line-by-line Niterói BR 248,138,287.11 BRL Line-by-line Niterói BR 206,050,114.05 BRL Line-by-line Niterói BR 1,000.00 BRL Line-by-line Enel Rinnovabile SA de Cv 0.00% Enel Green Power Brasil Participações Ltda Enel Green Power Brasil Participações Ltda 100.00% 100.00% 100.00% 100.00% Enel Green Power SpA 100.00% 100.00% Enel Green Power Brasil Participações Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Brasil Participações Ltda 100.00% 100.00% 100.00% 100.00% 99.90% 100.00% Enel Green Power Desenvolvimento Ltda 0.10% 451 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Niterói BR 25,600,100.00 BRL Line-by-line Windhoek NA 10,000.00 NAD Line-by-line Enel Green Power Brasil Participações Ltda 100.00% 100.00% Enel Green Power SpA 100.00% 100.00% Wilmington US - Andover US - Andover US - USD USD USD Line-by-line Enel North America Inc. 100.00% 100.00% Line-by-line Enel North America Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Panama City PA 3,001.00 USD Line-by-line Niterói BR 123,350,100.00 BRL Line-by-line Rome IT 10,000.00 EUR Line-by-line Niterói BR 127,424,000.00 BRL Line-by-line Enel Rinnovabili Srl 99.97% Energía y Servicios South America SpA 0.03% 100.00% Enel Green Power Brasil Participações Ltda 100.00% 100.00% Enel Green Power SpA 100.00% 100.00% Enel Green Power Brasil Participações Ltda 98.79% Enel Green Power Desenvolvimento Ltda 1.21% 100.00% Enel Green Power Pau Ferro Eólica SA 0.00% Enel Green Power Brasil Participações Ltda 98.90% Niterói BR 189,519,527.57 BRL Line-by-line 100.00% San Miguel PE 973,213,507.00 PEN Line-by-line Enel Green Power Desenvolvimento Ltda 1.10% Enel Rinnovabili Srl 100.00% Energía y Servicios South America SpA Enel Green Power Brasil Participações Ltda 0.00% 99.00% 100.00% Niterói BR 143,674,900.01 BRL Line-by-line 100.00% Rome IT 1,000,000.00 EUR Line-by-line Cairo EG 15,000,000.00 EGP Line-by-line Enel Green Power Desenvolvimento Ltda 1.00% Enel Green Power Italia Srl 100.00% 100.00% Enel Green Power Egypt SAE 100.00% 100.00% Enel Green Power Mourão SA Enel Green Power Namibia (Pty) Ltd Enel Green Power North America Development LLC Enel Green Power North America Inc. Enel Green Power O&M Solar LLC Enel Green Power Panamá Srl Enel Green Power Paranapanema SA Enel Green Power Partecipazioni Speciali Srl Enel Green Power Pau Ferro Eólica SA Enel Green Power Pedra do Gerônimo Eólica SA Enel Green Power Perú SAC Enel Green Power Primavera Eólica SA Enel Green Power Puglia Srl Enel Green Power RA SAE in liquidation 452 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Rattlesnake Creek Wind Project LLC (formerly Rattlesnake Creek Wind Project LLC) Enel Green Power Roadrunner Solar Project Holdings II LLC Enel Green Power Roadrunner Solar Project Holdings LLC Enel Green Power Roadrunner Solar Project II LLC Enel Green Power Romania Srl Enel Green Power RSA (Pty) Ltd Enel Green Power RSA 2 (RF) (Pty) Ltd Enel Green Power Rus Limited Liability Company Enel Green Power SpA Enel Green Power Salto Apiacás SA (formerly Enel Green Power Damascena Eólica SA) Enel Green Power Sannio Enel Green Power São Abraão Eólica SA Enel Green Power São Gonçalo 07 SA (formerly Enel Green Power Projetos 42 SA) Enel Green Power São Gonçalo 08 SA (formerly Enel Green Power Projetos 43 SA) Delaware US 1.00 USD Line-by-line Rattlesnake Creek Holdings LLC 100.00% 100.00% Andover US - USD Line-by-line Enel Kansas LLC 100.00% 100.00% Andover US - USD Line-by-line Enel Kansas LLC 100.00% 100.00% Dover US 100.00 USD Line-by-line Bucharest RO 2,430,631,000.00 RON Line-by-line Johannesburg ZA 1,000.00 ZAR Line-by-line Johannesburg ZA 120.00 ZAR AFS Moscow RU 60,500,000.00 RUB Line-by-line Enel Roadrunner Solar Project Holdings II LLC 100.00% 100.00% Enel Green Power SpA 100.00% 100.00% Enel Green Power Development Srl 100.00% 100.00% Enel Green Power RSA (Pty) Ltd Enel Green Power Partecipazioni Speciali Srl 100.00% 100.00% 1.00% 100.00% Enel Green Power SpA 99.00% Rome IT 272,000,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Niterói BR 274,420,832.00 BRL Line-by-line Rome IT 750,000.00 EUR Line-by-line Niterói BR 91,300,000.00 BRL Line-by-line Teresina BR 121,600,480.00 BRL Line-by-line Teresina BR 113,710,396.00 BRL Line-by-line Enel Green Power Brasil Participações Ltda 100.00% 100.00% Enel Green Power Italia Srl 100.00% 100.00% Enel Green Power Brasil Participações Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 100.00% 100.00% 100.00% 100.00% 0.00% 100.00% 100.00% Enel Green Power Desenvolvimento Ltda 0.00% 453 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Teresina BR 101,671,353.82 BRL Line-by-line Teresina BR 122,883,216.25 BRL Line-by-line Group % holding 100.00% 100.00% Held by % holding Alba Energia Ltda 0.00% Enel Green Power Brasil Participações Ltda 100.00% Alba Energia Ltda 0.00% Enel Green Power Brasil Participações Ltda Enel Green Power Brasil Participações Ltda 100.00% 100.00% Teresina BR 129,375,630.00 BRL Line-by-line 100.00% Teresina BR 100,619,590.00 BRL Line-by-line Teresina BR 110,001,000.00 BRL Line-by-line Teresina BR 110,001,000.00 BRL Line-by-line Teresina BR 110,001,000.00 BRL Line-by-line Teresina BR 110,001,000.00 BRL Line-by-line Teresina BR 110,001,000.00 BRL Line-by-line Teresina BR 129,213,750.53 BRL Line-by-line Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Enel Green Power Desenvolvimento Ltda 0.00% Alba Energia Ltda 0.00% Enel Green Power Brasil Participações Ltda 100.00% 100.00% Enel Green Power São Gonçalo 1 SA (formerly Enel Green Power Projetos 10) Enel Green Power São Gonçalo 10 SA (formerly Enel Green Power Projetos 15) Enel Green Power São Gonçalo 11 SA (formerly Enel Green Power Projetos 44 SA) Enel Green Power São Gonçalo 12 SA (formerly Enel Green Power Projetos 22 SA) Enel Green Power São Gonçalo 14 Enel Green Power São Gonçalo 15 Enel Green Power São Gonçalo 17 SA Enel Green Power São Gonçalo 18 SA (formerly Enel Green Power Ventos de Santa Ângela 13 SA) Enel Green Power São Gonçalo 19 SA Enel Green Power São Gonçalo 2 SA (formerly Enel Green Power Projetos 11) 454 Enel Green Power São Gonçalo 21 SA (formerly Enel Green Power Projetos 16) Enel Green Power São Gonçalo 22 SA (formerly Enel Green Power Projetos 30) Enel Green Power São Gonçalo 3 SA (formerly Enel Green Power Projetos 12) Enel Green Power São Gonçalo 4 SA (formerly Enel Green Power Projetos 13) Enel Green Power São Gonçalo 5 SA (formerly Enel Green Power Projetos 14) Enel Green Power São Gonçalo 6 SA (formerly Enel Green Power Projetos 19 SA) Enel Green Power São Judas Eólica SA Enel Green Power São Micael 01 SA (formerly Enel Green Power São Gonçalo 9 SA) Enel Green Power São Micael 02 SA (formerly Enel Green Power São Gonçalo 13 SA) Enel Green Power São Micael 03 SA (formerly Enel Green Power São Gonçalo 16 SA) Enel Green Power São Micael 04 SA (formerly Enel Green Power São Gonçalo 20 SA) Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Teresina BR 139,939,932.22 BRL Line-by-line Teresina BR 138,733,692.21 BRL Line-by-line Teresina BR 216,299,843.02 BRL Line-by-line Teresina BR 123,720,789.57 BRL Line-by-line Teresina BR 197,176,257.11 BRL Line-by-line Teresina BR 199,271,048.28 BRL Line-by-line Group % holding 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Held by % holding Alba Energia Ltda 0.00% Enel Green Power Brasil Participações Ltda 100.00% Alba Energia Ltda 0.00% Enel Green Power Brasil Participações Ltda 100.00% Alba Energia Ltda 0.00% Enel Green Power Brasil Participações Ltda 100.00% Alba Energia Ltda 0.00% Enel Green Power Brasil Participações Ltda 100.00% Alba Energia Ltda 0.00% Enel Green Power Brasil Participações Ltda 100.00% Alba Energia Ltda 0.00% Enel Green Power Brasil Participações Ltda Enel Green Power Brasil Participações Ltda 100.00% 99.00% Niterói BR 143,674,900.00 BRL Line-by-line 100.00% Teresina BR 1,000.00 BRL Line-by-line Teresina BR 1,000.00 BRL Line-by-line Teresina BR 1,000.00 BRL Line-by-line Enel Green Power Desenvolvimento Ltda 1.00% Alba Energia Ltda 0.10% Enel Green Power Brasil Participações Ltda 99.90% Alba Energia Ltda 0.10% Enel Green Power Brasil Participações Ltda 99.90% Alba Energia Ltda 0.10% Enel Green Power Brasil Participações Ltda Enel Green Power Brasil Participações Ltda 99.90% 99.90% 100.00% 100.00% 100.00% Teresina BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda 0.10% 455 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Teresina BR 1,000.00 BRL Line-by-line 100.00% Group % holding Held by % holding Enel Green Power Brasil Participações Ltda 99.90% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power North America Inc. 100.00% 100.00% Enel Green Power Egypt SAE 100.00% 100.00% Enel Green Power SpA 100.00% 100.00% Enel Green Power Italia Srl 100.00% 100.00% Enel Green Power SpA 100.00% 100.00% Wilmington US 100.00 USD Line-by-line Cairo EG 15,000,000.00 EGP Line-by-line Singapore SG 1,975,000.00 SGD Line-by-line 10,000.00 EUR Line-by-line 50,000.00 EUR Line-by-line Rome Rome Rome IT IT IT 50,000.00 EUR AFS Enel Green Power SpA 100.00% 100.00% Calgary CA 1,000.00 CAD Line-by-line 100.00% Enel Alberta Wind Inc. 0.10% Niterói BR 86,034,360.00 BRL Line-by-line 100.00% Enel Green Power Canada Inc. 99.90% Enel Green Power Brasil Participações Ltda 98.76% Cairo EG 15,000,000.00 EGP Line-by-line Istanbul TR 65,654,658.00 TRY Line-by-line Teresina BR 132,001,000.00 BRL Line-by-line Teresina BR 171,001,000.00 BRL Line-by-line Enel Green Power Desenvolvimento Ltda 1.24% Enel Green Power Egypt SAE 100.00% 100.00% Enel Green Power SpA 100.00% 100.00% Enel Green Power Brasil Participações Ltda 100.00% Enel Green Power Ventos de Santa Ângela Energias Renováveis SA Enel Green Power Brasil Participações Ltda 0.00% 100.00% Enel Green Power Ventos de Santa Ângela Energias Renováveis SA 0.00% 100.00% 100.00% Enel Green Power São Micael 05 SA Enel Green Power Services LLC Enel Green Power Shu SAE in liquidation Enel Green Power Singapore Pte Ltd Enel Green Power Solar Energy Srl Enel Green Power Solar Metehara SpA Enel Green Power Solar Ngonye SpA (formerly Enel Green Power Africa Srl) Enel Green Power Swift Wind LP Enel Green Power Tacaicó Eólica SA Enel Green Power Tefnut SAE in liquidation Enel Green Power Turkey Enerjí Yatirimlari Anoním Şírketí Enel Green Power Ventos de Santa Ângela 1 SA Enel Green Power Ventos de Santa Ângela 10 SA (formerly Enel Green Power Projetos 21) 456 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Enel Green Power Ventos de Santa Ângela 11 SA (formerly Enel Green Power Projetos 23) Enel Green Power Ventos de Santa Ângela 14 SA (formerly Enel Green Power Projetos 24) Enel Green Power Ventos de Santa Ângela 15 SA (formerly Enel Green Power Projetos 25) Enel Green Power Ventos de Santa Ângela 17 SA (formerly Enel Green Power Projetos 26) Enel Green Power Ventos de Santa Ângela 19 SA (formerly Enel Green Power Projetos 27) Enel Green Power Ventos de Santa Ângela 2 SA Enel Green Power Ventos de Santa Ângela 20 SA (formerly Enel Green Power Projetos 28) Enel Green Power Ventos de Santa Ângela 21 SA (formerly Enel Green Power Projetos 29) Teresina BR 185,001,000.00 BRL Line-by-line Teresina BR 231,402,551.00 BRL Line-by-line Teresina BR 182,001,000.00 BRL Line-by-line Teresina BR 198,001,000.00 BRL Line-by-line Teresina BR 126,001,000.00 BRL Line-by-line Teresina BR 249,650,000.00 BRL Line-by-line Teresina BR 126,001,000.00 BRL Line-by-line Teresina BR 113,001,000.00 BRL Line-by-line Held by % holding Enel Green Power Brasil Participações Ltda 100.00% Enel Green Power Ventos de Santa Ângela Energias Renováveis SA Enel Green Power Brasil Participações Ltda Enel Green Power Ventos de Santa Ângela Energias Renováveis SA Enel Green Power Brasil Participações Ltda Enel Green Power Ventos de Santa Ângela Energias Renováveis SA Enel Green Power Brasil Participações Ltda Enel Green Power Ventos de Santa Ângela Energias Renováveis SA Enel Green Power Brasil Participações Ltda Enel Green Power Ventos de Santa Ângela Energias Renováveis SA Enel Green Power Brasil Participações Ltda Enel Green Power Ventos de Santa Ângela Energias Renováveis SA Enel Green Power Brasil Participações Ltda Enel Green Power Ventos de Santa Ângela Energias Renováveis SA Enel Green Power Brasil Participações Ltda 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% Enel Green Power Ventos de Santa Ângela Energias Renováveis SA 0.00% Group % holding 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 457 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Teresina BR 132,001,000.00 BRL Line-by-line Teresina BR 132,001,000.00 BRL Line-by-line Teresina BR 132,001,000.00 BRL Line-by-line Teresina BR 132,001,000.00 BRL Line-by-line Teresina BR 106,001,000.00 BRL Line-by-line Held by % holding Enel Green Power Brasil Participações Ltda 100.00% Enel Green Power Ventos de Santa Ângela Energias Renováveis SA Enel Green Power Brasil Participações Ltda Enel Green Power Ventos de Santa Ângela Energias Renováveis SA Enel Green Power Brasil Participações Ltda Enel Green Power Ventos de Santa Ângela Energias Renováveis SA Enel Green Power Brasil Participações Ltda Enel Green Power Ventos de Santa Ângela Energias Renováveis SA Enel Green Power Brasil Participações Ltda Enel Green Power Ventos de Santa Esperança Energias Renováveis SA 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% 100.00% 0.00% Enel Green Power Brasil Participações Ltda 100.00% Group % holding 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Teresina BR 132,001,000.00 BRL Line-by-line Teresina BR 185,001,000.00 BRL Line-by-line Teresina BR 105,001,000.00 BRL Line-by-line Enel Green Power Ventos de Santa Ângela Energias Renováveis SA Enel Green Power Brasil Participações Ltda Enel Green Power Ventos de Santa Ângela Energias Renováveis SA Enel Green Power Brasil Participações Ltda 0.00% 100.00% 0.00% 100.00% 100.00% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de Santa Ângela 3 SA (formerly Enel Green Power Projetos 4) Enel Green Power Ventos de Santa Ângela 4 SA (formerly Enel Green Power Projetos 6) Enel Green Power Ventos de Santa Ângela 5 SA (formerly Enel Green Power Projetos 7) Enel Green Power Ventos de Santa Ângela 6 SA (formerly Enel Green Power Projetos 8) Enel Green Power Ventos de Santa Ângela 7 SA (formerly Enel Green Power Projetos 9) Enel Green Power Ventos de Santa Ângela 8 SA (formerly Enel Green Power Projetos 18) Enel Green Power Ventos de Santa Ângela 9 SA (formerly Enel Green Power Projetos 20) Enel Green Power Ventos de Santa Ângela ACL 12 (formerly Enel Green Power Projetos 36 SA) 458 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Group % holding Held by % holding Enel Green Power Brasil Participações Ltda 100.00% Enel Green Power Ventos de Santa Ângela ACL 13 SA (formerly Enel Green Power Projetos 17 SA) Enel Green Power Ventos de Santa Ângela ACL 16 SA (formerly Enel Green Power Projetos 38 SA) Enel Green Power Ventos de Santa Ângela ACL 18 SA (formerly Enel Green Power Projetos 47 SA) Enel Green Power Ventos de Santa Ângela Energias Renováveis SA Enel Green Power Ventos de Santa Esperança 08 SA (formerly Enel Green Power Projetos 34 SA) Enel Green Power Ventos de Santa Esperança 1 SA (formerly Enel Green Power Fonte dos Ventos 1 SA) Enel Green Power Ventos de Santa Esperança 13 (formerly Enel Green Power Projetos 33 SA) Enel Green Power Ventos de Santa Esperança 15 SA Enel Green Power Ventos de Santa Esperança 16 SA (formerly Enel Green Power Projetos 35 SA) Teresina BR 105,001,000.00 BRL Line-by-line 100.00% Teresina BR 105,001,000.00 BRL Line-by-line Teresina BR 105,001,000.00 BRL Line-by-line Niterói BR 7,315,000.00 BRL Line-by-line Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Brasil Participações Ltda 100.00% 100.00% Enel Green Power Brasil Participações Ltda 100.00% Niterói BR 110,200,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.00% 99.90% Niterói BR 1,000.00 BRL Line-by-line 100.00% Niterói BR 147,000,000.00 BRL Line-by-line Niterói BR 202,100,000.00 BRL Line-by-line Niterói BR 183,700,000.00 BRL Line-by-line Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 100.00% 100.00% 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Enel Green Power Desenvolvimento Ltda 0.00% 459 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Group % holding Held by % holding Enel Green Power Brasil Participações Ltda 100.00% Niterói BR 183,700,000.00 BRL Line-by-line 100.00% Niterói BR 202,100,000.00 BRL Line-by-line Niterói BR 202,100,000.00 BRL Line-by-line Salvador BR 110,200,000.00 BRL Line-by-line Niterói BR 202,100,000.00 BRL Line-by-line Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.00% 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Ventos de Santa Esperança 26 SA (formerly Enel Green Power Projetos 41 SA) 0.00% 100.00% 0.00% Enel Green Power Brasil Participações Ltda 99.90% Niterói BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Niterói BR 1,000.00 BRL Line-by-line 100.00% Niterói BR 4,727,414.00 BRL Line-by-line Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Brasil Participações Ltda 100.00% 100.00% Enel Green Power Ventos de Santa Esperança 17 SA (formerly Enel Green Power Projetos 31 SA) Enel Green Power Ventos de Santa Esperança 21 SA (formerly Enel Green Power Projetos 37 SA) Enel Green Power Ventos de Santa Esperança 22 SA (formerly Enel Green Power Projetos 39 SA) Enel Green Power Ventos de Santa Esperança 25 SA (formerly Enel Green Power Projetos 40 SA) Enel Green Power Ventos de Santa Esperança 26 SA (formerly Enel Green Power Projetos 41 SA) Enel Green Power Ventos de Santa Esperança 3 SA Enel Green Power Ventos de Santa Esperança 7 SA (formerly Enel Green Power Lagedo Alto SA) Enel Green Power Ventos de Santa Esperança Energias Renováveis SA 460 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Group % holding Held by % holding Enel Green Power Brasil Participações Ltda 99.90% Enel Green Power Ventos de Santa Esperança Participações SA (formerly Enel Green Power Cumaru 06 SA) Enel Green Power Ventos de Santo Orestes 1 SA Enel Green Power Ventos de Santo Orestes 2 SA Enel Green Power Ventos de São Roque 01 SA Enel Green Power Ventos de São Roque 02 SA Enel Green Power Ventos de São Roque 03 SA Enel Green Power Ventos de São Roque 04 SA Enel Green Power Ventos de São Roque 05 SA Enel Green Power Ventos de São Roque 06 SA Niterói BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Niterói BR 1,000.00 BRL Line-by-line 100.00% Niterói BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Teresina BR 138,001,000.00 BRL Line-by-line Teresina BR 138,001,000.00 BRL Line-by-line Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 100.00% 100.00% 0.00% 100.00% 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.00% 99.90% Teresina BR 1,000.00 BRL Line-by-line 100.00% Teresina BR 138,001,000.00 BRL Line-by-line Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 100.00% 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.00% 99.90% Teresina BR 1,000.00 BRL Line-by-line 100.00% Teresina BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Enel Green Power Desenvolvimento Ltda 0.10% 461 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Group % holding Held by % holding Enel Green Power Brasil Participações Ltda 99.90% Teresina BR 1,000.00 BRL Line-by-line 100.00% Teresina BR 138,001,000.00 BRL Line-by-line Teresina BR 138,001,000.00 BRL Line-by-line Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 100.00% 100.00% 0.00% 100.00% 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.00% 99.90% Teresina BR 1,000.00 BRL Line-by-line 100.00% Teresina BR 138,001,000.00 BRL Line-by-line Teresina BR 138,001,000.00 BRL Line-by-line Teresina BR 138,001,000.00 BRL Line-by-line Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 100.00% 100.00% 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.00% 99.90% Teresina BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Teresina BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Ventos de São Roque 07 SA Enel Green Power Ventos de São Roque 08 SA Enel Green Power Ventos de São Roque 11 SA Enel Green Power Ventos de São Roque 13 SA Enel Green Power Ventos de São Roque 16 SA Enel Green Power Ventos de São Roque 17 SA Enel Green Power Ventos de São Roque 18 SA Enel Green Power Ventos de São Roque 19 SA Enel Green Power Ventos de São Roque 22 SA 462 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Group % holding Held by % holding Enel Green Power Brasil Participações Ltda 99.90% Enel Green Power Ventos de São Roque 26 SA Enel Green Power Ventos de São Roque 29 SA Enel Green Power Villoresi Srl Enel Green Power Volta Grande SA (formerly Enel Green Power Projetos 1 SA) Enel Green Power Zambia Limited Enel Green Power Zeus II - Delfina 8 SA Enel Green Power Zeus Sul 1 Ltda Enel Green Power Zeus Sul 2 SA Enel Holding Finance Srl Teresina BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.10% 99.90% Teresina BR 1,000.00 BRL Line-by-line 100.00% Rome IT 1,200,000.00 EUR Line-by-line Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Italia Srl 51.00% 51.00% Niterói BR 565,756,528.00 BRL Line-by-line Enel Brasil SA 100.00% 65.00% Lusaka ZM 15,000.00 ZMW Line-by-line 100.00% Enel Green Power Development Srl 1.00% Niterói BR 129,639,980.00 BRL Line-by-line Salvador BR 6,986,993.00 BRL Line-by-line Enel Green Power RSA (Pty) Ltd 99.00% Enel Green Power Brasil Participações Ltda Enel Green Power Brasil Participações Ltda 100.00% 100.00% 100.00% 100.00% Enel Green Power Desenvolvimento Ltda Enel Green Power Brasil Participações Ltda 0.00% 99.90% Niterói BR 1,000.00 BRL Line-by-line 100.00% Enel Green Power Desenvolvimento Ltda 0.10% Rome IT 10,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Enel Iberia Srl Madrid ES 336,142,500.00 EUR Line-by-line Enel SpA 100.00% 100.00% Enel Innovation Hubs Srl Enel Insurance NV Enel Investment Holding BV Rome IT 1,100,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Amsterdam NL 60,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Amsterdam NL 1,000,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Enel Italia SpA Rome IT 100,000,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% 463 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Enel Kansas Development Holdings LLC Andover US - Enel Kansas LLC Wilmington US - USD USD Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Enel Logistics Srl Rome IT 1,000,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% Enel Minnesota Holdings LLC Minneapolis US - Enel Nevkan Inc. Wilmington US - Andover US 50.00 Enel North America Inc. Enel Operations Canada Ltd USD USD USD Line-by-line Line-by-line EGP Geronimo Holding Company Inc. Enel Green Power North America Inc. 100.00% 100.00% 100.00% 100.00% Line-by-line Enel SpA 100.00% 100.00% Alberta CA 1,000.00 CAD Line-by-line Enel Green Power Canada Inc. 100.00% 100.00% Enel Perú SAC San Miguel PE 5,361,789,105.00 PEN Line-by-line Enel Américas SA 100.00% 65.00% Enel Produzione SpA Rome IT 1,800,000,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% Enel Rinnovabile SA de Cv Enel Rinnovabili Srl Enel Roadrunner Solar Project Holdings II LLC Enel Roadrunner Solar Project Holdings LLC Mexico City MX 100.00 MXN Line-by-line 100.00% Enel Green Power Global Investment BV 99.00% Hidroelectricidad del Pacífico S de RL de Cv 1.00% Rome IT 10,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Andover US - USD Line-by-line Dover US 100.00 USD Line-by-line Enel Green Power Roadrunner Solar Project Holdings II LLC Enel Green Power Roadrunner Solar Project Holdings LLC 100.00% 100.00% 100.00% 100.00% Enel Romania SA Buftea RO 200,000.00 RON Line-by-line Enel SpA 100.00% 100.00% Enel Rus Wind Azov LLC Enel Rus Wind Kola LLC Moscow RU 200,000,000.00 RUB Line-by-line Enel Russia PJSC 100.00% 56.43% Murmansk City RU 10,000.00 RUB Line-by-line Enel Russia PJSC 100.00% 56.43% Enel Rus Wind Stavropolye LLC Region of Stavropol RU 350,000.00 RUB Line-by-line Enel Russia PJSC 100.00% 56.43% Enel Russia PJSC Yekaterinburg RU 35,371,898,370.00 RUB Line-by-line Enel SpA 56.43% 56.43% 464 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Enel Salt Wells LLC Enel Saudi Arabia Limited Enel Servicii Comune SA Fallon US - USD Line-by-line Al Khobar SA 1,000,000.00 SAR Line-by-line Enel Geothermal LLC 100.00% 100.00% e-distribuzione SpA 60.00% 60.00% E-Distribuţie Banat SA 50.00% Bucharest RO 33,000,000.00 RON Line-by-line 51.00% E-Distribuţie Dobrogea SA 50.00% Enel Green Power Panamá Srl 99.01% Energía y Servicios South America SpA 0.99% 100.00% Enel Solar Srl Panama City PA 10,100.00 USD Line-by-line Enel Sole Srl Rome IT 4,600,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% Enel Soluções Energéticas Ltda Niterói BR 42,863,000.00 BRL Line-by-line Enel Green Power Brasil Participações Ltda 100.00% Enel Green Power Desenvolvimento Ltda 0.00% 100.00% Enel Soluções Energéticas Ltda 0.00% Enel Stillwater LLC Enel Surprise Valley LLC Enel Tecnologia de Redes SA Wilmington US - Wilmington US - USD USD Line-by-line Enel Geothermal LLC 100.00% 100.00% Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Niterói BR 10,000.00 BRL Line-by-line Enel Brasil SA 100.00% 65.00% Enel Texkan Inc. Wilmington US 100.00 USD Line-by-line Chi Power Inc. 100.00% 100.00% Enel Trade Energy Srl Enel Trade Serbia doo Enel Trading Argentina Srl Enel Trading Brasil SA Enel Trading North America LLC Bucharest RO 2,437,050.00 RON Line-by-line Enel Romania SA 100.00% 100.00% Belgrade RS 300,000.00 EUR Line-by-line Enel Global Trading SpA 100.00% 100.00% Enel Américas SA 55.00% Buenos Aires AR 14,011,100.00 ARS Line-by-line 65.00% Enel Argentina SA 45.00% Niterói BR 1,000,000.00 BRL Line-by-line Enel Brasil SA 100.00% 65.00% Wilmington US 10,000,000.00 USD Line-by-line Enel North America Inc. 100.00% 100.00% Enel Uruguay SA Montevideo UY 20,000.00 UYU Line-by-line Enel Brasil SA 100.00% 65.00% 465 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Enel Vayu (Project 2) Private Limited Enel Wind Project (Amberi) Private Limited Gurugram IN 45,000,000.00 INR Line-by-line New Delhi IN 5,000,000.00 INR Line-by-line Enel Green Power India Private Limited (formerly BLP Energy Private Limited) Enel Green Power India Private Limited (formerly BLP Energy Private Limited) 100.00% 100.00% 100.00% 100.00% CL 18,000,000.00 USD Equity Enel X Chile SpA 20.00% 12.99% Enel X AMPCI Ebus Chile SpA Santiago de Chile Enel X AMPCI L1 Holdings SpA Santiago de Chile Enel X AMPCI L1 SpA Santiago de Chile CL 18,000,000.00 USD Equity CL 18,000,000.00 USD Equity Enel X AMPCI Ebus Chile SpA 100.00% 12.99% Enel X AMPCI L1 Holdings SpA 100.00% 12.99% Enel X International Srl 100.00% 100.00% Enel X Finance Partner LLC 100.00% 100.00% Enel X International Srl 100.00% 100.00% Energy Response Holdings (Pty) Ltd Enel X Canada Holding Inc. 100.00% 100.00% 0.01% 100.00% Enel X Canada Ltd 99.99% Enel X Ireland Limited 0.00% EnerNOC UK II Limited Central Geradora Termelétrica Fortaleza SA 100.00% 0.00% 65.00% Enel Brasil SA 100.00% Buenos Aires AR 127,800,000.00 ARS Line-by-line Boston US - USD Line-by-line Melbourne AU 21,224,578.00 AUD Line-by-line Melbourne AU 9,880.00 AUD Line-by-line Oakville CA 10,000.00 CAD Line-by-line Enel X Argentina SAU Enel X Asputeck Ave. Project LLC Enel X Australia Holding (Pty) Ltd Enel X Australia (Pty) Ltd Enel X Battery Storage Limited Partnership Enel X Brasil Gerenciamento de Energia Ltda Sorocaba BR 5,538,403.00 BRL Line-by-line 100.00% Enel X Brasil SA Niterói BR 187,725,892.00 BRL Line-by-line Enel X Canada Holding Inc. Enel X Canada Ltd Oakville CA 1,000.00 CAD Line-by-line Enel X Canada Ltd 100.00% 100.00% Mississauga CA 1,000.00 CAD Line-by-line Enel North America Inc. 100.00% 100.00% Enel X Chile SpA Santiago de Chile CL 3,800,000,000.00 CLP Line-by-line Enel Chile SA 100.00% 64.93% Boston US - USD Line-by-line Enel X MA Holdings LLC 100.00% 100.00% Bogotá CO 5,000,000,000.00 COP Line-by-line Codensa SA ESP 100.00% 31.40% Enel X College Ave. Project LLC Enel X Colombia SAS 466 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Enel X Energy (Shanghai) Co. Ltd Enel X Federal LLC Enel X Finance Partner LLC Enel X Financial Services Srl Enel X France SAS Enel X Hayden Rowe St. Project LLC Shanghai CN 3,500,000.00 USD Line-by-line Boston US 5,000.00 USD Line-by-line Boston US 100.00 USD Line-by-line Enel X International Srl 100.00% 100.00% Enel X North America Inc. Enel X North America Inc. 100.00% 100.00% 100.00% 100.00% Rome IT 1,000,000.00 EUR Line-by-line Enel X Srl 100.00% 100.00% Paris FR 2,901,000.00 EUR Line-by-line Boston US 100.00 USD Line-by-line Enel X International Srl 100.00% 100.00% Enel X MA Holdings LLC 100.00% 100.00% Enel X International Srl Rome Enel X Ireland Limited Dublin Enel X Italia Srl Rome IT IE IT 100,000.00 EUR Line-by-line Enel X Srl 100.00% 100.00% 10,841.00 EUR Line-by-line Enel X International Srl 100.00% 100.00% 200,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% Enel X Japan K.K. Tokyo JP 255,000,000.00 JPY Line-by-line Seoul KR 10,000,000.00 KRW Line-by-line Seoul KR 1,200,000,000.00 KRW Line-by-line Boston US 100.00 USD Line-by-line Boston US - USD Line-by-line Bucharest RO 6,937,800.00 RON Line-by-line Enel X International Srl 100.00% 100.00% Enel X Korea Limited 100.00% 100.00% Enel X International Srl 100.00% 100.00% Enel X Finance Partner LLC Enel X Finance Partner LLC 100.00% 100.00% 100.00% 100.00% Enel X International Srl 99.86% 100.00% Enel X Srl 0.14% Rome IT 100,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% Boston US 100.00 USD Line-by-line Wellington NZ 313,606.00 AUD Line-by-line Boston US 1,000.00 USD Line-by-line Porsgrunn NO 1,000,000.00 NOK Line-by-line Enel X MA Holdings LLC 100.00% 100.00% Energy Response Holdings (Pty) Ltd 100.00% 100.00% Enel North America Inc. 100.00% 100.00% Enel X International Srl 100.00% 100.00% 467 Enel X KOMIPO Limited Enel X Korea Limited Enel X MA Holdings LLC Enel X MA PV Portfolio 1 LLC Enel X Mobility Romania Srl Enel X Mobility Srl Enel X Morrissey Blvd. Project LLC Enel X New Zealand Limited Enel X North America Inc. Enel X Norway AS Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Enel X Perú SAC San Miguel PE 12,005,000.00 PEN Line-by-line Enel Perú SAC 100.00% 65.00% Enel X Polska Sp. Zo.o. Enel X Romania Srl Warsaw PL 10,000,000.00 PLN Line-by-line Bucharest RO 234,450.00 RON Line-by-line Enel X Rus LLC Moscow RU 8,000,000.00 RUB Line-by-line Enel X Ireland Limited 100.00% 100.00% Enel X International Srl 99.00% 100.00% Enel X Srl 1.00% Enel X International Srl 99.00% 99.00% Enel X Srl Rome IT 1,050,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Enel X Services India Private Limited Enel X Singapore Pte Ltd Enel X Sweden AB Enel X Taiwan Co. Ltd Enel X UK Limited Mumbai City IN 45,000.00 INR Line-by-line 100.00% Enel X International Srl 100.00% Singapore SG 1,212,000.00 SGD Line-by-line Stockholm SE 50,000.00 SEK Line-by-line Taipei City TW 65,000,000.00 TWD Line-by-line London GB 32,626.00 GBP Line-by-line Enel X North America Inc. 0.00% Enel X International Srl 100.00% 100.00% Enel X International Srl 100.00% 100.00% Enel X Ireland Limited 100.00% 100.00% Enel X International Srl 100.00% 100.00% Enel.si Srl Rome IT 5,000,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% Enelco SA Maroussi GR 60,108.80 EUR Line-by-line Enel Investment Holding BV 75.00% 75.00% Enelpower Contractor and Development Saudi Arabia Ltd Enelpower do Brasil Ltda Riyadh SA 5,000,000.00 SAR Line-by-line Enelpower SpA 51.00% 51.00% Niterói BR 5,068,000.00 BRL Line-by-line 100.00% Enel Green Power Brasil Participações Ltda 100.00% Energía y Servicios South America SpA 0.00% Enelpower SpA Milan IT 2,000,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% San Miguel PE 6,463,000.00 PEN Line-by-line Ceuta ES 65,000.00 EUR Line-by-line Enel Green Power Perú SAC 100.00% Energía y Servicios South America SpA Empresa de Alumbrado Eléctrico de Ceuta SA 100.00% 0.00% 100.00% 67.56% Energética Monzón SAC Energía Ceuta XXI Comercializadora de Referencia SA 468 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Energía Eólica Alto del Llano SLU Madrid ES 3,300.00 EUR Line-by-line Energia Eolica Srl - EN.EO. Srl Rome IT 4,840,000.00 EUR Line-by-line Energía Global de México (Enermex) SA de Cv Energía Global Operaciones Srl Energía Limpia de Amistad SA de Cv Energía Limpia de Palo Alto SA de Cv Energía Limpia de Puerto Libertad S de RL de Cv Mexico City MX 50,000.00 MXN Line-by-line San José CR 10,000.00 CRC Line-by-line Mexico City MX 33,452,769.00 MXN Equity Mexico City MX 673,583,489.00 MXN Equity Mexico City MX 2,953,980.00 MXN Line-by-line Energía Marina SpA Santiago de Chile Energía Neta Sa Caseta Llucmajor SL (Sociedad Unipersonal) Palma de Mallorca CL 2,404,240,000.00 CLP Equity ES 9,000.00 EUR Line-by-line Mexico City MX 51,879,307.00 MXN Line-by-line Energía Nueva de Iguu S de RL de Cv Energía Nueva Energía Limpia México S de RL de Cv Energía XXI Comercializadora de Referencia SL Energía y Servicios South America SpA Santiago de Chile Energías Alternativas del Sur SL Las Palmas de Gran Canaria Mexico City MX 5,339,650.00 MXN Line-by-line 100.00% Enel Green Power SpA 99.96% Madrid ES 2,000,000.00 EUR Line-by-line Endesa Energía SA 100.00% 70.11% CL 144,290,951.73 USD Line-by-line Enel Rinnovabili Srl 100.00% 100.00% ES 546,919.10 EUR Line-by-line Energías de Aragón I SL Energías de Graus SL Zaragoza ES 3,200,000.00 EUR Line-by-line Barcelona ES 1,298,160.00 EUR Line-by-line Enel Green Power España SL 100.00% 70.11% Enel Green Power Italia Srl 100.00% 100.00% Enel Green Power SpA 99.00% 99.00% Enel Green Power Costa Rica SA Tenedora de Energía Renovable Sol y Viento SAPI de Cv Tenedora de Energía Renovable Sol y Viento SAPI de Cv Enel Green Power México S de RL de Cv 100.00% 100.00% 60.80% 20.00% 60.80% 20.00% 0.01% 100.00% Enel Rinnovabile SA de Cv 99.99% Enel Green Power Chile SA 25.00% 16.23% Enel Green Power España SL 100.00% 70.11% Enel Green Power México S de RL de Cv 99.90% Energía Nueva Energía Limpia México S de RL de Cv Enel Green Power Guatemala SA 0.01% 0.04% 99.91% Enel Green Power España SL 54.95% 38.52% Endesa Red SA (Sociedad Unipersonal) 100.00% 70.11% Enel Green Power España SL 66.67% 46.74% 469 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Energías Especiales de Careón SA Santiago de Compostela ES 270,450.00 EUR Line-by-line Energías Especiales de Peña Armada SA Energías Especiales del Alto Ulla SA Energías Especiales del Bierzo SA Energías Renovables La Mata SA de Cv Energie Electrique de Tahaddart SA Madrid ES 963,300.00 EUR Line-by-line Madrid ES 19,594,860.00 EUR Line-by-line Torre del Bierzo ES 1,635,000.00 EUR Equity Mexico City MX 656,615,400.00 MXN Line-by-line Marrakech MA 637,840,000.00 MAD Equity Energotel AS Bratislava SK 2,191,200.00 EUR Equity Energy Hydro Piave Srl in liquidation Energy Response Holdings (Pty) Ltd Belluno IT 800,000.00 EUR Line-by-line Melbourne AU 630,451.00 AUD Line-by-line Enel Green Power España SL 77.00% 53.98% Enel Green Power España SL 80.00% 56.09% Enel Green Power España SL 100.00% 70.11% Enel Green Power España SL Enel Green Power México S de RL de Cv 50.00% 35.05% 99.00% 100.00% Energía Nueva de Iguu S de RL de Cv 1.00% Endesa Generación SA Slovenské elektrárne AS 32.00% 22.43% 20.00% 6.60% Enel Produzione SpA 51.00% 51.00% Enel X Australia Holding (Pty) Ltd 100.00% 100.00% Enerlive Srl Rome IT 6,520,000.00 EUR Line-by-line Maicor Wind Srl 100.00% 100.00% EnerNOC GmbH Munich DE 25,000.00 EUR Line-by-line EnerNOC Ireland Limited Dublin IE 10,535.00 EUR Line-by-line Enel X North America Inc. Enel X Ireland Limited 100.00% 100.00% 100.00% 100.00% London GB 21,000.00 GBP Line-by-line Enel X UK Limited 100.00% 100.00% EnerNOC UK II Limited Entech (China) Information Technology Co. Ltd Entech Utility Service Bureau Inc. Envatios Promoción I SLU Envatios Promoción II SLU Shenzhen CN 140,000.00 USD Equity Lutherville US 1,500.00 USD Line-by-line Madrid ES 3,000.00 EUR Line-by-line Madrid ES 3,000.00 EUR Line-by-line Envatios Promoción III SLU Madrid ES 3,000.00 EUR Line-by-line Seville ES 3,000.00 EUR Line-by-line Envatios Promoción XX SLU 470 EnerNOC UK II Limited 50.00% 50.00% Enel X North America Inc. 100.00% 100.00% Enel Green Power España SL 100.00% 70.11% Enel Green Power España SL 100.00% 70.11% Enel Green Power España SL 100.00% 70.11% Enel Green Power España SL 100.00% 70.11% Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Eólica del Cierzo SLU Eólica del Principado SAU Eólica Valle del Ebro SA Eólica Zopiloapan SA de Cv Zaragoza ES 225,000.00 EUR Line-by-line Gijón - Asturias ES 60,000.00 EUR Line-by-line Zaragoza ES 3,561,342.50 EUR Line-by-line Mexico City MX 1,877,201.54 MXN Line-by-line ES 240,400.00 EUR Line-by-line ES 216,360.00 EUR Line-by-line Eólicas de Agaete SL Las Palmas de Gran Canaria Eólicas de Fuencaliente SA Las Palmas de Gran Canaria Eólicas de Fuerteventura AIE Puerto del Rosario ES - EUR Eólicas de la Patagonia SA Buenos Aires AR 480,930.00 ARS Eólicas de Lanzarote SL Las Palmas de Gran Canaria ES 1,758,000.00 EUR Eólicas de Tenerife AIE Santa Cruz de Tenerife ES 420,708.40 EUR Equity Equity Equity Equity Eólicas de Tirajana SL Las Palmas de Gran Canaria ES 3,000.00 EUR Line-by-line Epresa Energía SA Cádiz ES 2,500,000.00 EUR Equity European Energy Exchange AG Leipzig DE 40,050,000.00 EUR - Enel Green Power España SL 100.00% 70.11% Enel Green Power España SL 100.00% 70.11% Enel Green Power España SL Enel Green Power México S de RL de Cv Enel Green Power Partecipazioni Speciali Srl Enel Green Power España SL 50.50% 35.40% 56.98% 96.48% 39.50% 80.00% 56.09% Enel Green Power España SL 55.00% 38.56% Enel Green Power España SL 40.00% 28.04% Enel Green Power España SL 50.00% 35.05% Enel Green Power España SL 40.00% 28.04% Enel Green Power España SL 50.00% 35.05% Enel Green Power España SL 60.00% 42.06% Endesa Red SA (Sociedad Unipersonal) 50.00% 35.05% Enel Global Trading SpA 2.38% 2.38% Expedition Solar Project LLC Andover US 1.00 Andover US 1.00 USD USD Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Explorer Wind Project LLC Explotaciones Eólicas de Escucha SA Explotaciones Eólicas El Puerto SA Explotaciones Eólicas Santo Domingo de Luna SA Explotaciones Eólicas Saso Plano SA Zaragoza ES 3,505,000.00 EUR Line-by-line Teruel ES 3,230,000.00 EUR Line-by-line Zaragoza ES 100,000.00 EUR Line-by-line Zaragoza ES 5,488,500.00 EUR Line-by-line Enel Green Power España SL 70.00% 49.07% Enel Green Power España SL 73.60% 51.60% Enel Green Power España SL 51.00% 35.75% Enel Green Power España SL 65.00% 45.57% 471 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Explotaciones Eólicas Sierra Costera SA Explotaciones Eólicas Sierra La Virgen SA Fence Post Solar Project LLC Fenner Wind Holdings LLC Zaragoza ES 8,046,800.00 EUR Line-by-line Zaragoza ES 4,200,000.00 EUR Line-by-line Enel Green Power España SL 90.00% 63.10% Enel Green Power España SL 90.00% 63.10% Andover US - USD Line-by-line Enel Kansas LLC 100.00% 100.00% Dover US 100.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Finsec Lab Ltd Tel Aviv Flagpay Srl Milan IL IT 100.00 ILS Equity Enel X Srl 30.00% 30.00% 10,000.00 EUR Line-by-line Paytipper SpA 100.00% 55.00% Flat Rock Wind Project LLC Flat Top Solar Project LLC Andover US 1.00 Andover US - Flint Rock Solar Project LLC Andover US - Minneapolis US - USD USD USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Florence Hills LLC Fótons de Santo Anchieta Energias Renováveis SA Fotovoltaica Yunclillos SLU Fourmile Wind Project LLC Freedom Energy Storage LLC Front Marítim del Besòs SL Furatena Solar 1 SLU Galaxy Wind Project LLC Garob Wind Farm (RF) (Pty) Ltd Niterói BR 577,000.00 BRL Line-by-line Madrid ES 3,000.00 EUR Line-by-line Andover US 1.00 USD Line-by-line Andover US - USD Line-by-line Barcelona ES 9,000.00 EUR Equity Seville ES 3,000.00 EUR Line-by-line Andover US 1.00 USD Line-by-line Johannesburg ZA 100.00 ZAR AFS Gas y Electricidad Generación SAU Palma de Mallorca ES 213,775,700.00 EUR Line-by-line 472 Enel Green Power Brasil Participações Ltda 100.00% 100.00% Enel Green Power España SL 100.00% 70.11% Tradewind Energy Inc. Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) Endesa Generación SA 100.00% 100.00% 100.00% 100.00% 61.37% 43.02% Enel Green Power España SL 100.00% 70.11% Tradewind Energy Inc. 100.00% 100.00% Enel Green Power RSA 2 (RF) (Pty) Ltd 60.00% 60.00% Endesa Generación SA 100.00% 70.11% Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Gauley Hydro LLC Gauley River Management LLC Wilmington US - Willison US 1.00 USD USD Equity GRPP Holdings LLC 100.00% 50.00% Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Genability Inc. San Francisco US 6,010,074.72 USD Equity Generadora de Occidente Ltda Generadora Eólica Alto Pacora Srl Generadora Montecristo SA Generadora Solar Austral SA Generadora Solar Tolé Srl Guatemala City GT 16,261,697.33 GTQ Line-by-line Panama City PA 10,100.00 USD Line-by-line Guatemala City GT 3,820,000.00 GTQ Line-by-line Chiriquí PA 10,000.00 USD Line-by-line Panama City PA 10,100.00 USD Line-by-line Enel X North America Inc. 50.00% 50.00% Enel Green Power Guatemala SA 1.00% Enel Rinnovabili Srl 99.00% Enel Green Power Panamá Srl 99.01% Energía y Servicios South America SpA Enel Green Power Guatemala SA 0.99% 0.00% Enel Rinnovabili Srl 100.00% 100.00% 100.00% 100.00% Enel Green Power Panamá Srl 100.00% 100.00% Enel Green Power Panamá Srl 99.01% Energía y Servicios South America SpA 0.99% 100.00% Geotérmica del Norte SA Santiago de Chile CL 326,577,419,702.00 CLP Line-by-line Enel Green Power Chile SA 84.59% 54.92% Johannesburg ZA 1,000.00 ZAR Line-by-line Sydney AU - AUD Line-by-line Gibson Bay Wind Farm (RF) (Pty) Ltd Girgarre Solar Farm (Pty) Ltd Global Commodities Holdings Limited London GB 4,042,375.00 GBP Globyte SA San José CR 891,000.00 CRC Enel Green Power RSA (Pty) Ltd Enel Green Power Girgarre Holdings (Pty) Ltd 60.00% 60.00% 100.00% 100.00% Enel Global Trading SpA 4.68% 4.68% Enel Green Power Costa Rica SA 9.09% 9.09% - - Gnl Chile SA Santiago de Chile CL 3,026,160.00 USD Equity Enel Generación Chile SA 33.33% 20.25% Goodwell Wind Project LLC Wilmington US - USD Equity Gorona del Viento El Hierro SA Santa Cruz de Tenerife ES 30,936,736.00 EUR Equity Origin Goodwell Holdings LLC Unión Eléctrica de Canarias Generación SAU 100.00% 20.00% 23.21% 16.27% Grand Prairie Solar Project LLC Andover US - GRPP Holdings LLC Andover US 2.00 USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Equity EGPNA REP Holdings LLC 50.00% 50.00% 473 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Guadarranque Solar 4 SLU Gusty Hill Wind Project LLC GV Energie Rigenerabili ITAL-RO Srl Seville ES 3,006.00 EUR Line-by-line Andover US 1.00 USD Line-by-line Endesa Generación II SA 100.00% 70.11% Tradewind Energy Inc. 100.00% 100.00% Enel Green Power Romania Srl 100.00% Bucharest RO 1,145,400.00 RON Line-by-line 100.00% Hadley Ridge LLC Minneapolis US - Hamilton County Solar Project LLC Andover US 1.00 Hansborough Valley Solar Project LLC Andover US - Harvest Ridge Solar Project LLC Andover US - Harvest Ridge Wind Project LLC Andover US 1.00 Hastings Solar LLC Wilmington US - USD USD USD USD USD USD Enel Green Power SpA 0.00% Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Aurora Distributed Solar LLC 100.00% 74.13% Hatch Data Inc. San Francisco US 10,000.00 USD - Enel X North America Inc. 5.00% 5.00% Wilmington US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Heartland Farms Wind Project LLC Hidroeléctrica de Catalunya SL Barcelona ES 126,210.00 EUR Line-by-line Hidroeléctrica de Ourol SL Lugo ES 1,608,200.00 EUR Equity Hidroelectricidad del Pacífico S de RL de Cv Colima MX 30,890,736.00 MXN Line-by-line Hidroflamicell SL Barcelona ES 78,120.00 EUR Line-by-line Endesa Red SA (Sociedad Unipersonal) Enel Green Power España SL Enel Green Power México S de RL de Cv Hidroeléctrica de Catalunya SL 100.00% 70.11% 30.00% 21.03% 99.99% 99.99% 75.00% 52.58% Enel Américas SA 41.94% Hidroinvest SA Buenos Aires AR 55,312,093.00 ARS Line-by-line 62.85% High Chaparral Solar Project LLC Andover US - Andover US 1.00 USD USD Enel Argentina SA 54.76% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Wilmington US 100.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% High Lonesome Storage LLC High Lonesome Wind Holdings LLC 474 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding High Lonesome Wind Power LLC High Noon Solar Project LLC High Street Corporation (Pty) Ltd Hilltopper Wind Holdings LLC Boston US 100.00 USD Line-by-line High Lonesome Wind Holdings LLC 100.00% 100.00% Andover US - Melbourne AU 2.00 USD AUD Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Energy Response Holdings (Pty) Ltd 100.00% 100.00% Wilmington US 1,000.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Hispano Generación de Energía Solar SL Jerez de los Caballeros ES 3,500.00 EUR Line-by-line Enel Green Power España SL 51.00% 35.75% Hope Creek LLC Crestview US - Hope Ridge Wind Project LLC Andover US 1.00 USD USD Hubject GmbH Berlin DE 65,943.00 EUR Willison US 5,000.00 USD Hydro Energies Corporation Idalia Park Solar Project LLC Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% - AFS Enel X International Srl 12.50% 12.50% Enel Green Power North America Inc. 100.00% 100.00% Andover US - USD Line-by-line Enel Kansas LLC 100.00% 100.00% Idrosicilia SpA Milan IT 22,520,000.00 EUR Equity Enel SpA 1.00% 1.00% i-EM SAT Ltd Didcot, Oxfordshire GB 100.00 GBP Equity i-EM Srl 100.00% 30.00% i-EM Srl Turin IT 28,571.43 EUR Equity Enel Italia SpA 30.00% 30.00% Ifx Networks Argentina Srl Buenos Aires AR 2,260,551.00 ARS Equity Ifx Networks Chile SA Santiago de Chile CL 6,235,913,725.00 CLP Equity Ifx Networks Colombia SAS Bogotá CO 15,734,959,000.00 COP Equity Ifx/eni - Spc V Inc. 99.85% Minority Stock Holding Corp. 0.15% Ifx/eni - Spc IV Inc. 41.20% Servicios de Internet Eni Chile Ltda Ifx Networks Panama SA 58.80% 58.33% Ifx/eni - Spc III Inc. 41.67% 20.60% 20.60% 20.60% Ifx Networks LLC Wilmington US 80,848,653.00 USD Equity Ufinet Latam SLU 100.00% 20.60% Ifx Networks Ltd Tortola VG 50,001.00 USD Equity Ifx Networks LLC 100.00% 20.60% Ifx Networks Panama SA Panama City PA 21,000.00 USD Equity Ifx/eni - Spc Panama Inc. 100.00% 20.60% 475 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Ifx/eni - Spc III Inc. Ifx/eni - Spc IV Inc. Ifx/eni - Spc Panama Inc. Ifx/eni - Spc V Inc. Inertia Solar Project LLC Inertia Wind Project LLC Inkolan Información y Coordinación de obras AIE Tortola VG 100.00 USD Equity Ifx Networks Ltd 100.00% 20.60% Tortola VG 100.00 USD Equity Ifx Networks Ltd 100.00% 20.60% Tortola VG 100.00 USD Equity Ifx Networks Ltd 100.00% 20.60% Tortola VG 100.00 USD Equity Ifx Networks Ltd 100.00% 20.60% Andover US - Andover US - USD USD Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Bilbao ES 84,141.68 EUR Equity Edistribución Redes Digitales SL (Sociedad Unipersonal) 14.29% 10.02% International Multimedia University Srl in bankruptcy - IT 24,000.00 EUR - Enel Italia SpA 13.04% 13.04% Bogotá CO 5,000,000.00 COP Line-by-line Codensa SA ESP 100.00% 31.40% Buenos Aires AR 828,941,660.00 ARS Line-by-line Enel Américas SA 57.14% 37.14% Niterói BR 45,474,475.77 BRL Line-by-line Johannesburg ZA 1,000.00 ZAR Line-by-line Jack River LLC Minneapolis US - USD Line-by-line Jade Energia Ltda Conceição do Jacuípe BR 4,107,097.00 BRL Line-by-line Jaguito Solar 10 MW SA Panama City PA 10,000.00 USD Line-by-line Jessica Mills LLC Minneapolis US - USD Line-by-line JuiceNet GmbH Berlin DE 25,000.00 EUR Line-by-line Enel Green Power Brasil Participações Ltda 100.00% 100.00% Enel Green Power RSA (Pty) Ltd 100.00% 100.00% Chi Minnesota Wind LLC 51.00% 51.00% Enel Green Power Brasil Participações Ltda 100.00% 100.00% Enel Green Power Panamá Srl 100.00% 100.00% Chi Minnesota Wind LLC 51.00% 51.00% Enel X International Srl 100.00% 100.00% JuiceNet Ltd London GB 1.00 Julia Hills LLC Minneapolis US - GBP USD Line-by-line Enel X International Srl 100.00% 100.00% Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% 476 Inversora Codensa SAS Inversora Dock Sud SA Isamu Ikeda Energia SA Italgest Energy (Pty) Ltd Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Juna Renewable Energy Private Limited Gurugram IN 100,000.00 INR Line-by-line Kelley’s Falls LLC Wilmington US - USD AFS Khaba Renewable Energy Private Limited Khidrat Renewable Energy Private Limited Kings River Hydro Company Inc. Kingston Energy Storage LLC Gurugram IN 100,000.00 INR Line-by-line Gurugram IN 100,000.00 INR Line-by-line Wilmington US 100.00 USD Line-by-line Wilmington US - USD Line-by-line Kino Contractor SA de Cv Mexico City MX 100.00 MXN Line-by-line Kino Facilities Manager SA de Cv Kongul Enerjí Sanayí Ve Tícaret Anoním Şírketí Mexico City MX 100.00 MXN Line-by-line Istanbul TR 125,000,000.00 TRY Line-by-line Koporie WPS LLC Region of Leningrad RU 21,000,000.00 RUB Line-by-line Korea Line Corporation Kromschroeder SA Seoul KR 122,132,520,000.00 KRW - Barcelona ES 627,126.00 EUR Equity Enel Green Power India Private Limited (formerly BLP Energy Private Limited) Enel Green Power North America Inc. Enel Green Power India Private Limited (formerly BLP Energy Private Limited) Enel Green Power India Private Limited (formerly BLP Energy Private Limited) Enel Green Power North America Inc. Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) Enel Green Power México S de RL de Cv Hidroelectricidad del Pacífico S de RL de Cv Enel Green Power México S de RL de Cv Hidroelectricidad del Pacífico S de RL de Cv Enel Green Power Turkey Enerjí Yatirimlari Anoním Şírketí Enel Green Power Rus Limited Liability Company 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 99.00% 100.00% 1.00% 99.00% 1.00% 100.00% 100.00% 100.00% 100.00% 100.00% Enel Global Trading SpA 0.25% 0.25% Endesa Medios y Sistemas SL (Sociedad Unipersonal) 29.26% 20.51% La Cabaña SpA Santiago de Chile CL 1,481,845,000.00 CLP Line-by-line Enel Green Power Chile SA 100.00% 64.93% Lake Emily Solar LLC Wilmington US - Lake Pulaski Solar LLC Wilmington US - USD USD Line-by-line Aurora Distributed Solar LLC 100.00% 74.13% Line-by-line Aurora Distributed Solar LLC 100.00% 74.13% 477 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Dover US 100.00 USD Line-by-line Sundance Wind Project LLC 100.00% 100.00% Land Run Wind Project LLC Lava Solar Project LLC Andover US 1.00 Lawrence Creek Solar LLC Minneapolis US - Lemonade Solar Project LLC Andover US - USD USD USD Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Aurora Distributed Solar LLC 100.00% 74.13% Line-by-line Tradewind Energy Inc. Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) 100.00% 100.00% 100.00% 100.00% Andover US - USD Line-by-line Tripoli LY 1,350,000.00 EUR - Enelpower SpA 0.33% 0.33% Andover US 1.00 Lily Solar LLC Andover US - Wilmington US - Wilmington US - Wilmington US - Wilmington US - Andover US - USD USD USD USD USD USD USD Line-by-line Line-by-line Enel Green Power Lily Solar Holdings LLC Enel Kansas Development Holdings LLC 100.00% 100.00% 100.00% 100.00% Line-by-line EGPNA Preferred Wind Holdings LLC 100.00% 100.00% Line-by-line Lindahl Wind Holdings LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Little Elk Wind Holdings LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Boston US 100.00 USD AFS Andover US - USD Line-by-line Guatemala City GT 742,000.00 GTQ Equity Tegucigalpa HN 25,000.00 HNL Equity Enel Green Power North America Inc. Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) 100.00% 100.00% 100.00% 100.00% Ufinet Guatemala SA 0.01% Ufinet Latam SLU 99.99% Livister Guatemala SA 0.40% Livister Latam SLU 99.60% 20.60% 20.60% Madrid ES 3,000.00 EUR Equity Ufinet Latam SLU 100.00% 20.60% Liberty Energy Storage LLC Libyan Italian Joint Company - Azienda Libico- Italiana (A.L.I) Lily Solar Holdings LLC Lindahl Wind Holdings LLC Lindahl Wind Project LLC Little Elk Wind Holdings LLC Little Elk Wind Project LLC Little Salt Solar Project LLC Littleville Power Company Inc. Litus Energy Storage LLC Livister Guatemala SA Livister Honduras SA Livister Latam SLU 478 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Llano Sánchez Solar Power One Srl Panama City PA 10,020.00 USD Line-by-line Held by % holding Enel Green Power Panamá Srl 99.80% Energía y Servicios South America SpA 0.20% Group % holding 100.00% Lone Pine Wind Inc. Alberta CA - Lone Pine Wind Project LP Alberta CA - Lower Valley LLC Wilmington US - Andover US - CAD CAD USD USD - Equity Enel Green Power Canada Inc. 10.00% 10.00% Enel Green Power Canada Inc. 10.00% 10.00% Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Luminary Highlands Solar Project LLC Luz de Angra Energia SA Maicor Wind Srl Rome Bergamo - - Malaspina Energy Scarl in liquidation Maple Canada Solutions Holdings Ltd Maple Energy Solutions LP Marengo Solar LLC Niterói BR 4,062,085.00 BRL Line-by-line Enel X Brasil SA 51.00% 33.15% IT IT 20,850,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% 100,000.00 EUR Line-by-line Yousave SpA 100.00% 100.00% CA - CA - Wilmington US 1.00 CAD CAD USD Equity Enel X Canada Ltd 20.00% 20.00% Equity Enel X Canada Holding Inc. 20.00% 20.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Marte Srl Rome IT 6,100,000.00 EUR Line-by-line Marudhar Wind Energy Private Limited Más Energía S de RL de Cv Mason Mountain Wind Project LLC Matrigenix (Pty) Ltd Gurugram IN 100,000.00 INR Line-by-line Mexico City MX 61,872,926.00 MXN Line-by-line Wilmington US - USD Line-by-line Johannesburg ZA 1,000.00 ZAR Line-by-line Enel Green Power Italia Srl Enel Green Power India Private Limited (formerly BLP Energy Private Limited) Enel Green Power México S de RL de Cv 100.00% 100.00% 100.00% 100.00% 99.99% 100.00% Hidroelectricidad del Pacífico S de RL de Cv 0.01% Padoma Wind Power LLC 100.00% 100.00% Enel Green Power RSA (Pty) Ltd 100.00% 100.00% MC Solar I LLC Andover US - USD Line-by-line Enel Kansas LLC 100.00% 100.00% 479 Integrated Annual Report 2020McBride Wind Project LLC Medidas Ambientales SL Merit Wind Project LLC Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Wilmington US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Burgos ES 60,100.00 EUR Equity Nuclenor SA 50.00% 17.53% Andover US 1.00 Metro Wind LLC Minneapolis US - USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Mexicana de Hidroelectricidad Mexhidro S de RL de Cv Mexico City MX 181,728,901.00 MXN Line-by-line Enel Green Power México S de RL de Cv 99.99% 99.99% Mibgas SA Madrid ES 3,000,000.00 EUR - Endesa SA 1.35% 0.95% Midelt Wind Farm SA Casablanca MA 145,000,000.00 MAD Equity Minicentrales Acequia Cinco Villas AIE Ejea de los Caballeros ES 3,346,993.04 EUR Zaragoza ES 1,202,000.00 EUR - - Zaragoza ES 1,820,000.00 EUR Equity Nareva Enel Green Power Morocco SA 70.00% 35.00% Enel Green Power España SL 5.39% 3.78% Enel Green Power España SL 15.00% 10.52% Enel Green Power España SL 36.50% 25.59% Tortola VG 100.00 USD Equity Ifx Networks Ltd 100.00% 20.60% Johannesburg ZA 100.00 ZAR Line-by-line Enel Green Power RSA (Pty) Ltd 100.00% 100.00% Burgos ES 1,800,000.00 EUR - Nuclenor SA 0.22% 0.08% Minicentrales del Canal de las Bárdenas AIE Minicentrales del Canal Imperial- Gallur SL Minority Stock Holding Corp. Mira Energy (Pty) Ltd Miranda Plataforma Logística SA Montrose Solar LLC Wilmington US - Moonbeam Solar Project LLC Andover US 1.00 Mountrail Wind Project LLC Andover US 1.00 Mucho Viento Wind Project LLC Andover US 1.00 Muskegon County Solar Project LLC Andover US 1.00 Muskegon Green Wind Project LLC Andover US 1.00 Mustang Run Wind Project LLC Andover US 1.00 480 USD USD USD USD USD USD USD Line-by-line Aurora Distributed Solar LLC 100.00% 74.13% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Andover US 1.00 USD Line-by-line Casablanca MA 98,750,000.00 MAD Equity Madrid ES 3,000.00 EUR Line-by-line Barueri BR 29,800,000.00 BRL - Tradewind Energy Inc. 100.00% 100.00% Enel Green Power Morocco SARLAU 50.00% 50.00% Enel Green Power España SL Ufinet Brasil Telecomunicação Ltda 100.00% 70.11% 60.00% 12.36% Wilmington US - Line-by-line Enel Nevkan Inc. 100.00% 100.00% Newbury Hydro Company LLC Andover US - USD USD Lusaka ZM 10.00 ZMW Napolean Wind Project LLC Nareva Enel Green Power Morocco SA Navalvillar Solar SL Netell Telecomunicações SA Nevkan Renewables LLC Ngonye Power Company Limited Nojoli Wind Farm (RF) (Pty) Ltd Johannesburg ZA 10,000,000.00 ZAR Line-by-line AFS AFS Enel Green Power North America Inc. Enel Green Power Solar Ngonye SpA (formerly Enel Green Power Africa Srl) Enel Green Power RSA (Pty) Ltd 100.00% 100.00% 80.00% 80.00% 60.00% 60.00% USD USD USD USD USD USD USD Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Chi West LLC 100.00% 100.00% North Canal Waterworks Boston US - North English Wind Project LLC Andover US 1.00 North Rock Wind LLC Andover US 1.00 Northland Wind Project LLC Andover US 1.00 Andover US - Andover US - Wilmington US - Northstar Wind Project LLC Northumberland Solar Project I LLC Northwest Hydro LLC Notch Butte Hydro Company Inc. Wilmington US 100.00 USD Line-by-line Nuclenor SA Burgos ES 102,000,000.00 EUR Equity Enel Green Power North America Inc. 100.00% 100.00% Endesa Generación SA 50.00% 35.05% Nuove Energie Srl Porto Empedocle IT 5,204,028.73 EUR Line-by-line Enel Global Trading SpA 100.00% 100.00% Nxuba Wind Farm (RF) (Pty) Ltd Johannesburg ZA 1,000.00 ZAR AFS Enel Green Power RSA 2 (RF) (Pty) Ltd 51.00% 51.00% 481 Integrated Annual Report 2020Olivum PV Farm 01 SLU Omip - Operador do Mercado Ibérico (Portugal) Sgps SA Open Range Wind Project LLC Operador del Mercado Ibérico de Energía - Polo Español SA Orchid Acres Solar Project LLC Origin Wind Energy LLC Osage Wind Holdings LLC Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Nyc Storage (353 Chester) Spe LLC Wilmington US 1.00 USD Line-by-line Ochrana A Bezpecnost Se SRO Kalná Nad Hronom SK 33,193.92 EUR Equity Madrid ES 3,000.00 EUR Line-by-line Enel X North America Inc. Slovenské elektrárne AS 100.00% 100.00% 100.00% 33.00% Enel Green Power España SL 100.00% 70.11% Lisbon PT 2,610,000.00 EUR - Endesa SA 5.00% 3.51% OpEn Fiber SpA Milan IT 250,000,000.00 EUR AFS Enel SpA 50.00% 50.00% Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Madrid ES 1,999,998.00 EUR - Endesa SA 5.00% 3.51% Andover US - Origin Goodwell Holdings LLC Wilmington US - Wilmington US - USD USD USD Line-by-line Enel Kansas LLC 100.00% 100.00% Equity Equity EGPNA Wind Holdings 1 LLC 100.00% 20.00% Origin Goodwell Holdings LLC 100.00% 20.00% Wilmington US 100.00 USD Line-by-line Enel Kansas LLC 50.00% 50.00% Osage Wind LLC Wilmington US - USD Line-by-line Ottauquechee Hydro Company Inc. Ovacik Eolíko Enerjí Elektrík Üretím Ve Tícaret Anoním Şírketí Wilmington US 100.00 USD AFS Istanbul TR 11,250,000.00 TRY Line-by-line Oxagesa AIE Alcañiz ES 6,010.00 EUR Equity Johannesburg ZA 1,000.00 ZAR AFS Osage Wind Holdings LLC 100.00% 50.00% Enel Green Power North America Inc. Enel Green Power Turkey Enerjí Yatirimlari Anoním Şírketí Enel Green Power España SL 100.00% 100.00% 100.00% 100.00% 33.33% 23.37% Enel Green Power RSA 2 (RF) (Pty) Ltd 60.00% 60.00% Oyster Bay Wind Farm (RF) (Pty) Ltd Padoma Wind Power LLC Elida US - Palo Alto Farms Wind Project LLC Dallas US - USD USD Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Madrid ES 3,000.00 EUR Line-by-line Andover US 1.00 USD Line-by-line Enel Green Power España SL 100.00% 70.11% Tradewind Energy Inc. 100.00% 100.00% Pampinus PV Farm 01 SLU Paradise Creek Wind Project LLC 482 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Paravento SL Lugo ES 3,006.00 EUR Line-by-line Enel Green Power España SL 90.00% 63.10% Parc Eòlic La Tossa - La Mola d’en Pascual SL Parc Eòlic Los Aligars SL Parco Eolico Monti Sicani Srl Madrid ES 1,183,100.00 EUR Madrid ES 1,313,100.00 EUR Equity Equity Enel Green Power España SL 30.00% 21.03% Enel Green Power España SL 30.00% 21.03% Rome IT 10,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Enel Rinnovabile SA de Cv 99.00% Hidroelectricidad del Pacífico S de RL de Cv Enel Rinnovabile SA de Cv Hidroelectricidad del Pacífico S de RL de Cv Enel Rinnovabile SA de Cv 1.00% 99.00% 1.00% 99.00% Hidroelectricidad del Pacífico S de RL de Cv 1.00% 100.00% 100.00% 100.00% Enel Green Power España SL 100.00% 70.11% Enel Green Power México S de RL de Cv 0.50% 25.50% Enel Rinnovabile SA de Cv 25.00% Enel Green Power España SL 80.00% 56.09% Enel Green Power España SL 75.00% Parque Eólico de Barbanza SA 0.00% Enel Green Power España SL 50.17% 35.17% Enel Green Power España SL 82.00% 57.49% Enel Green Power España SL 65.67% Parque Amistad II SA de Cv Mexico City MX 1,413,533,480.00 MXN Line-by-line Parque Amistad III SA de Cv Mexico City MX 931,692,540.00 MXN Line-by-line Parque Amistad IV SA de Cv Parque Eólico A Capelada SL (Sociedad Unipersonal) Parque Eólico BR-1 SAPI de Cv Mexico City MX 1,489,508,400.00 MXN Line-by-line La Coruña ES 5,857,704.33 EUR Line-by-line Mexico City MX - MXN Line-by-line Parque Eólico Carretera de Arinaga SA Las Palmas de Gran Canaria ES 1,603,000.00 EUR Line-by-line Parque Eólico de Barbanza SA La Coruña ES 3,606,072.60 EUR Line-by-line 52.58% Parque Eólico de Belmonte SA Madrid ES 120,400.00 EUR Line-by-line Parque Eólico de San Andrés SA La Coruña ES 552,920.00 EUR Line-by-line Parque Eólico de Santa Lucía SA Las Palmas de Gran Canaria Parque Eólico Finca de Mogán SA Santa Cruz de Tenerife ES 901,500.00 EUR Line-by-line 46.50% ES 3,810,340.00 EUR Line-by-line Parque Eólico de Santa Lucía SA 1.00% Enel Green Power España SL 90.00% 63.10% 483 Integrated Annual Report 2020Parque Eólico Montes de Las Navas SA Parque Eólico Muniesa SL Parque Eólico Palmas dos Ventos Ltda Parque Eólico Pampa SA Parque Eólico Punta de Teno SA Parque Eólico Sierra del Madero SA Parque Eólico Tico SLU Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Madrid ES 6,540,000.00 EUR Line-by-line Madrid ES 3,006.00 EUR Line-by-line Enel Green Power España SL 75.50% 52.93% Enel Green Power España SL 100.00% 70.11% Enel Green Power Brasil Participações Ltda 100.00% Salvador BR 4,096,626.00 BRL Line-by-line 100.00% Buenos Aires AR 10,637,000.00 ARS Line-by-line Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power SpA 100.00% 100.00% Santa Cruz de Tenerife ES 528,880.00 EUR Line-by-line Enel Green Power España SL 52.00% 36.46% Madrid ES 7,193,970.00 EUR Line-by-line Zaragoza ES 234,900.00 EUR Line-by-line Parque Salitrillos SA de Cv Mexico City MX 100.00 MXN Equity Parque Solar Cauchari IV SA San Salvador de Jujuy AR 500,000.00 ARS Line-by-line Parque Solar Don José SA de Cv Parque Solar Villanueva Tres SA de Cv Mexico City MX 100.00 MXN Equity Mexico City MX 306,024,631.13 MXN Equity Enel Green Power España SL 58.00% 40.66% Enel Green Power España SL Tenedora de Energía Renovable Sol y Viento SAPI de Cv 100.00% 70.11% 60.80% 20.00% Enel Green Power Argentina SA 95.00% Energía y Servicios South America SpA Tenedora de Energía Renovable Sol y Viento SAPI de Cv Tenedora de Energía Renovable Sol y Viento SAPI de Cv 100.00% 5.00% 60.80% 20.00% 60.80% 20.00% Enel Green Power Chile SA 60.91% Parque Talinay Oriente SA Santiago de Chile CL 66,092,165,170.93 CLP Line-by-line 74.12% Enel Green Power SpA 34.56% Pastis - Centro Nazionale per la ricerca e lo sviluppo dei materiali SCPA in liquidation Paynesville Solar LLC Brindisi IT 2,065,000.00 EUR - Enel Italia SpA 1.14% 1.14% Wilmington US - USD Line-by-line Aurora Distributed Solar LLC 100.00% 74.13% 40,000.00 EUR Line-by-line Paytipper SpA 100.00% 55.00% 3,000,000.00 EUR Line-by-line Enel X Srl 55.00% 55.00% Paytipper Network Srl Cascina Paytipper SpA Milan IT IT 484 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding PDP Technologies Ltd Ashkelon IL 1,129,252.00 ILS - Pegop - Energia Eléctrica SA Pego PT 50,000.00 EUR Equity 35.05% PH Chucás SA San José CR 100,000.00 CRC Line-by-line PH Don Pedro SA San José CR 100,001.00 CRC Line-by-line PH Guácimo SA San José CR 50,000.00 CRC Line-by-line PH Río Volcán SA San José CR 100,001.00 CRC Line-by-line Pincher Creek LP Alberta CA - CAD Line-by-line 100.00% Wilmington US - USD Line-by-line Seville ES 1,198,532.32 EUR Line-by-line Enel Green Power Canada Inc. 1.00% Aurora Distributed Solar LLC 100.00% 74.13% Enel Green Power España SL 56.12% 39.34% Andover US - USD Line-by-line Enel Kansas LLC 100.00% 100.00% Pine Island Distributed Solar LLC Planta Eólica Europea SA Point Rider Solar Project LLC Pomerado Energy Storage LLC PowerCrop Macchiareddu Srl Bologna PowerCrop Russi Srl Bologna Bologna PowerCrop SpA (formerly PowerCrop Srl) Prairie Rose Transmission LLC Prairie Rose Wind LLC Primavera Energia SA Wilmington US 1.00 USD Line-by-line IT IT IT 100,000.00 EUR 100,000.00 EUR 4,000,000.00 EUR Minneapolis US - Albany US - USD USD Equity Equity Equity Equity Equity Niterói BR 36,965,444.64 BRL Line-by-line Enel Global Infrastructure and Networks Srl 5.72% 5.72% Endesa Generación Portugal SA 0.02% Endesa Generación SA 49.98% Enel Green Power Costa Rica SA 40.31% Energía y Servicios South America SpA 24.69% 65.00% Enel Green Power Costa Rica SA 33.44% 33.44% Enel Green Power Costa Rica SA 65.00% 65.00% Enel Green Power Costa Rica SA 34.32% 34.32% Enel Alberta Wind Inc. 99.00% Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) PowerCrop SpA (formerly PowerCrop Srl) PowerCrop SpA (formerly PowerCrop Srl) 100.00% 100.00% 100.00% 50.00% 100.00% 50.00% Enel Green Power Italia Srl 50.00% 50.00% Prairie Rose Wind LLC 100.00% 20.00% EGPNA REP Wind Holdings LLC 100.00% 20.00% Enel Green Power Brasil Participações Ltda 100.00% 100.00% 485 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Productora de Energías SA Productora Eléctrica Urgelense SA Progreso Solar 20 MW SA Promociones Energéticas del Bierzo SL Proveedora de Electricidad de Occidente S de RL de Cv Barcelona ES 60,101.22 EUR Equity Enel Green Power España SL 30.00% 21.03% Lérida ES 8,400,000.00 EUR - Endesa SA 8.43% 5.91% Panama City PA 10,000.00 USD Line-by-line Madrid ES 12,020.00 EUR Line-by-line Mexico City MX 89,708,835.00 MXN Line-by-line Enel Green Power Panamá Srl 100.00% 100.00% Enel Green Power España SL 100.00% 70.11% Enel Green Power México S de RL de Cv 99.99% 99.99% Proyecto Almería Mediterráneo SA Madrid ES 601,000.00 EUR Equity Endesa SA 45.00% 31.55% Alicante ES 27,000.00 EUR Equity Enel Green Power España SL 33.33% 23.37% Enel Green Power Partecipazioni Speciali Srl 99.90% San Miguel PE 1,000.00 PEN Line-by-line 100.00% Hyderabad IN 100,000.00 INR Line-by-line Jakarta ID 10,002,250.00 USD Line-by-line Johannesburg ZA 10,000,000.00 ZAR Line-by-line Andover US - USD Line-by-line Quatiara Energia SA Niterói BR 13,766,118.96 BRL Line-by-line Queens Energy Storage LLC Andover US - USD Line-by-line Energía y Servicios South America SpA Enel Green Power India Private Limited (formerly BLP Energy Private Limited) Enel Green Power SpA 0.10% 100.00% 100.00% 90.00% 90.00% Enel Green Power RSA (Pty) Ltd 52.70% 52.70% Tradewind Energy Inc. 100.00% 100.00% Enel Green Power Brasil Participações Ltda Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) 100.00% 100.00% 100.00% 100.00% Proyectos Universitarios de Energías Renovables SL Proyectos y Soluciones Renovables SAC PSG Energy Private Limited PT Enel Green Power Optima Way Ratai Pulida Energy (RF) (Pty) Ltd Pumpkin Vine Wind Project LLC Ranchland Solar Project LLC Andover US 1.00 Ranchland Wind Holdings LLC Andover US - Ranchland Wind Project II LLC Andover US 1.00 USD USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Ranchland Wind Holdings LLC 100.00% 100.00% 486 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Ranchland Wind Project LLC Andover US - Ranchland Wind Storage LLC Rattlesnake Creek Holdings LLC Rausch Creek Wind Project LLC Andover US - Delaware US 1.00 Andover US 1.00 USD USD USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% RC Wind Srl Milan IT 10,000.00 EUR - Reaktortest SRO Trnava SK 66,389.00 EUR Equity Enel Green Power Italia Srl 0.50% 0.50% Slovenské elektrárne AS 49.00% 16.17% Red Centroamericana de Telecomunicaciones SA Red Dirt Wind Holdings I LLC Red Dirt Wind Holdings LLC Red Dirt Wind Project LLC Red Fox Wind Project LLC Redes y Telecomunicaciones S de RL de Cv Reftinskaya GRES LLC Renovables de Guatemala SA Renovables La Pedrera SLU Renovables Mediavilla SLU Panama City PA 2,700,000.00 USD - Enel SpA 11.11% 11.11% Dover US 100.00 USD Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Wilmington US - Dover US 1.00 Wilmington US 1.00 USD USD USD Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Red Dirt Wind Holdings LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% San Pedro Sula HN 82,370,000.00 HNL - Livister Honduras SA 80.00% 16.48% Pgt Reftinskii RU 10,000.00 RUB Line-by-line Enel Russia PJSC 100.00% 56.43% Guatemala City GT 1,924,465,600.00 GTQ Line-by-line Zaragoza ES 3,000.00 EUR Line-by-line Zaragoza ES 3,000.00 EUR Line-by-line Enel Green Power Guatemala SA 0.00% 100.00% Enel Rinnovabili Srl 100.00% Enel Green Power España SL 100.00% 70.11% Enel Green Power España SL 100.00% 70.11% Rihue SpA Santiago de Chile CL 986,821.00 USD Line-by-line Enel Green Power Chile SA 100.00% 64.93% Riverbend Farms Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Alberta Wind Inc. 99.00% Riverview LP Alberta CA - CAD Line-by-line 100.00% Enel Green Power Canada Inc. 1.00% 487 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Roadrunner Solar Project LLC Roadrunner Storage LLC Rochelle Solar LLC Andover US 100.00 USD Line-by-line Enel Roadrunner Solar Project Holdings LLC 100.00% 100.00% Andover US - Coral Springs US 1.00 USD USD Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Rock Creek Wind Holdings I LLC Dover Rock Creek Wind Holdings II LLC Dover US 100.00 USD Line-by-line US 100.00 USD Line-by-line Rock Creek Wind Holdings LLC Wilmington US - Rock Creek Wind Project LLC Clayton US 1.00 Rockhaven Wind Project LLC Andover US 1.00 Rocky Caney Holdings LLC Rocky Caney Wind LLC Oklahoma City US 1.00 Albany US - Rocky Ridge Wind Project LLC Oklahoma City US - USD USD USD USD USD USD Enel Green Power North America Inc. 100.00% 100.00% Rock Creek Wind Holdings LLC EGPNA Preferred Wind Holdings II LLC Rock Creek Wind Holdings LLC 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Line-by-line Line-by-line Line-by-line Tradewind Energy Inc. 100.00% 100.00% Equity Enel Kansas LLC 20.00% 20.00% Equity Enel Kansas LLC 20.00% 20.00% Equity Rocky Caney Wind LLC 100.00% 20.00% Rodnikovskaya WPS Rolling Farms Wind Project LLC Rusenergosbyt LLC Moscow RU 6,010,000.00 RUB Line-by-line Andover US 1.00 USD Line-by-line Enel Green Power Rus Limited Liability Company Tradewind Energy Inc. 100.00% 100.00% 100.00% 100.00% Moscow RU 18,000,000.00 RUB Equity Enel SpA 49.50% 49.50% Rusenergosbyt Siberia LLC Krasnoyarsk City RU 4,600,000.00 RUB Equity Rusenergosbyt LLC 50.00% 24.75% Rustler Wind Project LLC Ruthton Ridge LLC Andover US 1.00 Minneapolis US - USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Saburoy SA Montevideo UY 100,000.00 UYU Equity Ifx Networks LLC 100.00% 20.60% Sacme SA Buenos Aires AR 12,000.00 ARS Equity Saddle House Solar Project LLC Andover US - USD Line-by-line Empresa Distribuidora Sur SA - Edesur Tradewind Energy Inc. 50.00% 23.44% 100.00% 100.00% 488 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Salmon Falls Hydro LLC Wilmington US - Salt Springs Wind Project LLC Andover US - USD USD AFS Enel Green Power North America Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Salto de San Rafael SL Seville ES 462,185.98 EUR Equity Enel Green Power España SL 50.00% 35.05% Samantha Solar SpA Santiago de Chile CL 88,334,025.00 CLP Line-by-line Enel Green Power Chile SA 100.00% 64.93% San Francisco de Borja SA San Juan Mesa Wind Project II LLC Sanosari Energy Private Limited Santo Rostro Cogeneración SA Saugus River Energy Storage LLC Se Služby Inžinierskych Stavieb SRO Seguidores Solares Planta 2 SL (Sociedad Unipersonal) Servicio de Operación y Mantenimiento para Energías Renovables S de RL de Cv Zaragoza ES 60,000.00 EUR Line-by-line Wilmington US - USD Line-by-line Gurugram IN 100,000.00 INR Line-by-line Seville ES 207,340.00 EUR Equity Dover US 100.00 USD Line-by-line Kalná Nad Hronom SK 200,000.00 EUR Equity Madrid ES 3,010.00 EUR Line-by-line Mexico City MX 3,000.00 MXN Line-by-line Enel Green Power España SL 66.67% 46.74% Padoma Wind Power LLC Enel Green Power India Private Limited (formerly BLP Energy Private Limited) Enel Green Power España SL Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) Slovenské elektrárne AS 100.00% 100.00% 100.00% 100.00% 45.00% 31.55% 100.00% 100.00% 100.00% 33.00% Enel Green Power España SL 100.00% 70.11% Enel Green Power Guatemala SA 0.01% Energía Nueva Energía Limpia México S de RL de Cv 99.99% Ifx Networks Ltd 0.10% 100.00% Servicios de Internet Eni Chile Ltda Santiago de Chile Servizio Elettrico Nazionale SpA Rome Setyl Srl Bergamo CL 2,768,688,228.00 CLP Equity 20.60% Ifx/eni - Spc IV Inc. 99.90% IT IT 10,000,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% 100,000.00 EUR Equity Yousave SpA 27.50% 27.50% Seven Cowboy Wind Project LLC Andover US 1.00 Seven Cowboys Solar Project LLC Andover US - Shiawassee Wind Project LLC Wilmington US 1.00 USD USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% 489 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Shield Energy Storage Project LLC Shikhar Surya (One) Private Limited SIET - Società Informazioni Esperienze Termoidrauliche SpA Sistema Eléctrico de Conexión Valcaire SL Sistemas Energéticos Mañón Ortigueira SA Skyview Wind Project LLC Slovak Power Holding BV Slovenské elektrárne - Energetické Služby SRO Slovenské elektrárne AS Wilmington US - USD Line-by-line Gurugram IN 100,000.00 INR Line-by-line Piacenza IT 697,820.00 EUR Equity Madrid ES 175,200.00 EUR Equity La Coruña ES 2,007,750.00 EUR Line-by-line Andover US 1.00 USD Line-by-line Amsterdam NL 25,010,000.00 EUR Equity Bratislava SK 4,505,000.00 EUR Equity Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) Enel Green Power India Private Limited (formerly BLP Energy Private Limited) 100.00% 100.00% 100.00% 100.00% Enel Innovation Hubs Srl 41.55% 41.55% Enel Green Power España SL 28.13% 19.72% Enel Green Power España SL 96.00% 67.30% Tradewind Energy Inc. 100.00% 100.00% Enel Produzione SpA 50.00% 50.00% Slovenské elektrárne AS 100.00% 33.00% Bratislava SK 1,269,295,724.66 EUR Equity Slovak Power Holding BV 66.00% 33.00% Slovenské elektrárne Česká Republika SRO Moravská Ostrava CZ 295,819.00 CZK Equity Slovenské elektrárne AS 100.00% 33.00% Smoky Hill Holdings II LLC Wilmington US - Smoky Hills Wind Farm LLC Topeka US - Smoky Hills Wind Project II LLC Lenexa US - Hermleigh US - Snyder Wind Farm LLC Socibe Energia SA USD USD USD USD Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line EGPNA Project HoldCo 1 LLC 100.00% 100.00% Line-by-line EGPNA Project HoldCo 1 LLC 100.00% 100.00% Line-by-line Texkan Wind LLC 100.00% 100.00% Niterói BR 12,969,032.25 BRL Line-by-line Enel Green Power Brasil Participações Ltda 100.00% 100.00% Sociedad Agrícola de Cameros Ltda Santiago de Chile CL 5,738,046,495.00 CLP Line-by-line Enel Chile SA 57.50% 37.33% Seville ES 4,507,590.78 EUR Line-by-line Seville ES 1,643,000.00 EUR Equity Enel Green Power España SL 64.75% 45.39% Enel Green Power España SL 50.00% 35.05% Sociedad Eólica de Andalucía SA Sociedad Eólica El Puntal SL 490 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Sociedad Eólica Los Lances SA Sociedad para el Desarrollo de Sierra Morena Cordobesa SA Sociedad Portuaria Central Cartagena SA Società di sviluppo, realizzazione e gestione del gasdotto Algeria-Italia via Sardegna SpA in liquidation (Galsi SpA in liquidation) Società Elettrica Trigno Srl Soetwater Wind Farm (RF) (Pty) Ltd Soliloquoy Ridge LLC Somersworth Hydro Company Inc. Sona Enerjí Üretím Anoním Şírketí Sonak Solar Project LLC Seville ES 2,404,048.42 EUR Line-by-line Cordoba ES 86,063.20 EUR - Bogotá CO 89,714,600.00 COP Line-by-line Enel Green Power España SL 60.00% 42.06% Endesa Generación SA 1.82% 1.27% Emgesa SA ESP 94.94% Inversora Codensa SAS 5.05% 31.50% Milan IT 37,419,179.00 EUR - Enel Produzione SpA 17.65% 17.65% Trivento IT 100,000.00 EUR Line-by-line Johannesburg ZA 1,000.00 ZAR AFS Minneapolis US - USD Line-by-line Wilmington US 100.00 USD AFS Istanbul TR 50,000.00 TRY Line-by-line Andover US - USD Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Enel Green Power RSA 2 (RF) (Pty) Ltd 60.00% 60.00% Chi Minnesota Wind LLC 51.00% 51.00% Enel Green Power North America Inc. Enel Green Power Turkey Enerjí Yatirimlari Anoním Şírketí Tradewind Energy Inc. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Sotavento Galicia SA Santiago de Compostela ES 601,000.00 EUR Equity Enel Green Power España SL 36.00% 25.24% South Rock Wind Project LLC Andover US 1.00 Southwest Transmission LLC Cedar Bluff US - Spartan Hills LLC Minneapolis US - Stampede Solar Project LLC Andover US - Stillman Valley Solar LLC Wilmington US - Stillwater Woods Hill Holdings LLC Wilmington US 1.00 USD USD USD USD USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Chi Minnesota Wind LLC 100.00% 100.00% Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% 491 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Group % holding Held by % holding Enel Green Power México S de RL de Cv 55.21% Stipa Nayaá SA de Cv Mexico City MX 1,811,016,348.00 MXN Line-by-line 95.37% Enel Green Power Partecipazioni Speciali Srl 40.16% Stockyard Solar Project LLC Andover US - Strinestown Solar I LLC Andover US - USD USD Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Suave Energía S de RL de Cv Sublunary Trading (RF) (Pty) Suggestion Power (Unipessoal) Lda Suministradora Eléctrica de Cádiz SA Suministro de Luz y Fuerza SL Summit Energy Storage Inc. Mexico City MX 1,000.00 MXN Line-by-line Bryanston ZA 13,750,000.00 ZAR Line-by-line Paço de Arcos PT 50,000.00 EUR Line-by-line Cádiz ES 12,020,240.00 EUR Equity Barcelona ES 2,800,000.00 EUR Line-by-line Wilmington US 1,000.00 USD Line-by-line Sun River LLC Bend US - USD Line-by-line Enel Green Power México S de RL de Cv 0.10% 100.00% Enel Rinnovabile SA de Cv 99.90% Enel Green Power RSA (Pty) Ltd 57.00% 57.00% Endesa Generación Portugal SA 100.00% 70.11% Endesa Red SA (Sociedad Unipersonal) 33.50% 23.49% Hidroeléctrica de Catalunya SL 60.00% 42.06% Enel Green Power North America Inc. 75.00% 75.00% Chi Minnesota Wind LLC 51.00% 51.00% Sundance Wind Project LLC Dover US 100.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Sunflower Prairie Solar Project LLC Andover US - Swather Solar Project LLC Andover US 1.00 Sweet Apple Solar Project LLC Andover US 1.00 USD USD USD Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Tae Technologies Inc. Pauling US 53,207,936.00 USD - Enel Produzione SpA 1.12% 1.12% Tauste Energía Distribuida SL Zaragoza ES 60,508.00 EUR Line-by-line Tecnatom SA Madrid ES 4,025,700.00 EUR Equity Enel Green Power España SL 51.00% 35.75% Endesa Generación SA 45.00% 31.55% Tecnoguat SA Guatemala City GT 30,948,000.00 GTQ Line-by-line Enel Rinnovabili Srl 75.00% 75.00% 492 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Tejo Energia - Produção e Distribuição de Energia Eléctrica SA Tenedora de Energía Renovable Sol y Viento SAPI de Cv Teploprogress JSC Termoeléctrica José de San Martín SA Termoeléctrica Manuel Belgrano SA Termotec Energía AIE in liquidation Testing Stand of Ivanovskaya GRES JSC Lisbon PT 5,025,000.00 EUR Equity Endesa Generación SA 43.75% 30.67% Mexico City MX 2,892,643,576.00 MXN Equity Enel Green Power SpA 32.89% 32.90% Sredneuralsk RU 128,000,000.00 RUB Line-by-line Enel Russia PJSC 60.00% 33.86% Buenos Aires AR 7,078,298.00 ARS Equity Buenos Aires AR 7,078,307.00 ARS Equity Central Dock Sud SA 0.42% Enel Generación Costanera SA 1.68% 3.33% Enel Generación El Chocón SA 5.60% Central Dock Sud SA 0.47% Enel Generación Costanera SA 1.89% 3.72% Enel Generación El Chocón SA 6.23% La Pobla de Vallbona ES 481,000.00 EUR Equity Enel Green Power España SL 45.00% 31.55% Komsomolsk RU 118,213,473.45 RUB - Enel Russia PJSC 1.65% 0.93% Texkan Wind LLC Andover US - USD Line-by-line Enel Texkan Inc. 100.00% 100.00% Thar Surya 1 Private Limited Thunder Ranch Wind Holdings I LLC Thunder Ranch Wind Holdings LLC Gurgaon IN 100,000.00 INR Line-by-line Dover US 100.00 USD Line-by-line Avikiran Surya India Private Limited 100.00% 100.00% Enel Green Power North America Inc. 100.00% 100.00% Wilmington US - Thunder Ranch Wind Project LLC Dover US 1.00 Thunderegg Wind Project LLC Andover US 1.00 USD USD USD Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Thunder Ranch Wind Holdings LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Tico Solar 1 SLU Zaragoza ES 3,000.00 EUR Line-by-line Tico Solar 2 SLU Zaragoza ES 3,000.00 EUR Line-by-line Tobivox (RF) (Pty) Ltd Johannesburg ZA 10,000,000.00 ZAR Line-by-line Enel Green Power España SL 100.00% 70.11% Enel Green Power España SL 100.00% 70.11% Enel Green Power RSA (Pty) Ltd 60.00% 60.00% 493 Integrated Annual Report 2020Torrepalma Energy 1 SLU Tradewind Energy Inc. Transmisora de Energía Renovable SA Transportadora de Energía SA - TESA Transportes y Distribuciones Eléctricas SA in liquidation Trévago Renovables SL Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Toledo PV AIE Madrid ES 26,887.96 EUR Equity Enel Green Power España SL 33.33% 23.37% Enel Green Power España SL 100.00% 70.11% Madrid ES 3,100.00 EUR Line-by-line Wilmington US 1,000.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Guatemala City GT 233,561,800.00 GTQ Line-by-line Enel Rinnovabili Srl 100.00% 100.00% Enel Green Power Guatemala SA 0.00% Transmisora Eléctrica de Quillota Ltda Santiago de Chile CL 4,404,446,151.00 CLP Equity Generadora Montecristo SA 0.00% Enel Generación Chile SA 50.00% 30.37% Enel Argentina SA 0.00% Buenos Aires AR 2,584,473,416.00 ARS Line-by-line Enel Brasil SA 60.15% 65.00% Girona ES 72,121.45 EUR Line-by-line Madrid ES 3,000.00 EUR Equity Tsar Nicholas LLC Minneapolis US - Tula WPS LLC Tula RU - USD RUB Line-by-line Line-by-line Tunga Renewable Energy Private Limited Gurugram IN 100,000.00 INR Line-by-line Enel CIEN SA 39.85% Edistribución Redes Digitales SL (Sociedad Unipersonal) Furatena Solar 1 SLU Seguidores Solares Planta 2 SL (Sociedad Unipersonal) Chi Minnesota Wind LLC Enel Green Power Rus Limited Liability Company Enel Green Power India Private Limited (formerly BLP Energy Private Limited) 73.33% 51.41% 17.73% 17.77% 24.89% 51.00% 51.00% 100.00% 100.00% 100.00% 100.00% TWE Franklin Solar Project LLC Andover US - TWE ROT DA LLC Andover US 1.00 Twin Lake Hills LLC Twin Saranac Holdings LLC Minneapolis US - Wilmington US - USD USD USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Line-by-line Enel Green Power North America Inc. 100.00% 100.00% Tyme Srl Bergamo IT 100,000.00 EUR Equity Yousave SpA 50.00% 50.00% 494 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Tynemouth Energy Storage Limited Ufinet Argentina SA Ufinet Brasil Participações Ltda Ufinet Brasil Telecomunicação Ltda London GB 2.00 GBP AFS Buenos Aires AR 9,745,583.00 ARS Equity Santo André BR 45,784,638.00 BRL Santo André BR 45,784,638.00 BRL - - Enel Global Thermal Generation Srl 100.00% 100.00% Ufinet Latam SLU 99.95% Ufinet Panamá SA 0.05% Ufinet Guatemala SA 0.00% 20.60% 20.60% Ufinet Latam SLU 100.00% Ufinet Brasil Participações Ltda 100.00% 20.60% Ufinet Latam SLU 0.00% Ufinet Chile SpA Santiago de Chile CL 233,750,000.00 CLP Equity Ufinet Latam SLU 100.00% 20.60% Ufinet Colombia SA Bogotá CO 1,180,000,000.00 COP Equity Ufinet Guatemala SA 0.00% Ufinet Honduras SA 0.00% 18.54% Ufinet Latam SLU 90.00% Ufinet Panamá SA 0.00% Ufinet Costa Rica SA Ufinet Ecuador Ufiec SA Ufinet El Salvador SA de Cv Ufinet Guatemala SA Ufinet Honduras SA San José CR 25,000.00 USD Equity Ufinet Latam SLU 100.00% 20.60% Quito EC 1,507,800.00 USD Equity San Salvador SV 10,000.00 USD Equity Guatemala City GT 3,000,000.00 GTQ Equity Tegucigalpa HN 194,520.00 HNL Equity Ufinet Guatemala SA 0.00% Ufinet Latam SLU 100.00% Ufinet Guatemala SA 0.01% Ufinet Latam SLU 99.99% Ufinet Latam SLU 99.99% Ufinet Panamá SA 0.01% Ufinet Latam SLU 99.99% Ufinet Panamá SA 0.01% 20.60% 20.60% 20.60% 20.60% Ufinet Latam SLU Madrid ES 15,906,312.00 EUR Equity Zacapa Sàrl 100.00% 20.60% Ufinet México S de RL de Cv Mexico City MX 7,635,430.00 MXN Equity Ufinet Guatemala SA 1.31% 20.60% Ufinet Latam SLU 98.69% Ufinet Guatemala SA 0.50% Ufinet Nicaragua SA Managua NI 2,800,000.00 NIO Equity Ufinet Latam SLU 99.00% 20.60% Ufinet Panamá SA 0.50% Ufinet Panamá SA Ufinet Paraguay SA Panama City PA 1,275,000.00 USD Equity Ufinet Latam SLU 100.00% 20.60% Asunción PY 79,488,240,000.00 PYG Equity Ufinet Latam SLU 75.00% 15.45% 495 Integrated Annual Report 2020 Valdecaballero Solar SL Vayu (Project 1) Private Limited Vektör Enerjí Üretím Anoním Şírketí Ventos de Santo Orestes Energias Renováveis SA Ventos de São Roque Energias Renováveis SA Vientos del Altiplano S de RL de Cv Villanueva Solar SA de Cv Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Ufinet Perú SAC Lima PE 2,836,474.00 PEN Equity Held by % holding Ufinet Latam SLU 100.00% Ufinet Panamá SA 0.00% Group % holding 20.60% Ufinet Us LLC Wilmington US 1,000.00 USD Equity Ufinet Latam SLU 100.00% 20.60% Ukuqala Solar (Pty) Ltd Johannesburg ZA 1,000.00 ZAR Line-by-line Unión Eléctrica de Canarias Generación SAU Las Palmas de Gran Canaria ES 190,171,520.00 EUR Line-by-line Upington Solar (Pty) Ltd Johannesburg ZA 1,000.00 ZAR Line-by-line Ustav Jaderného Výzkumu Rez AS Řež CZ 524,139,000.00 CZK Equity Madrid ES 3,000.00 EUR Line-by-line Gurugram IN 10,000,000.00 INR Line-by-line Enel Green Power RSA (Pty) Ltd 100.00% 100.00% Endesa Generación SA 100.00% 70.11% Enel Green Power RSA (Pty) Ltd 100.00% 100.00% Slovenské elektrárne AS 27.77% 9.17% Enel Green Power España SL Enel Green Power India Private Limited (formerly BLP Energy Private Limited) 100.00% 70.11% 100.00% 100.00% Istanbul TR 3,500,000.00 TRY AFS Enel SpA 100.00% 100.00% Maracanaú BR 1,754,031.00 BRL Line-by-line Maracanaú BR 9,988,722.00 BRL Line-by-line Mexico City MX 1,455,854,094.00 MXN Equity Mexico City MX 205,316,027.15 MXN Equity Enel Green Power Brasil Participações Ltda Enel Green Power Brasil Participações Ltda Tenedora de Energía Renovable Sol y Viento SAPI de Cv Tenedora de Energía Renovable Sol y Viento SAPI de Cv 100.00% 100.00% 100.00% 100.00% 60.80% 20.00% 60.80% 20.00% Viruleiros SL Santiago de Compostela ES 160,000.00 EUR Line-by-line Enel Green Power España SL 67.00% 46.97% Viva Labs AS Oslo NO 105,534.00 NOK Line-by-line Enel X International Srl 60.00% 60.00% Wapella Bluffs Wind Project LLC Andover US 1.00 Waseca Solar LLC Waseca US - USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Aurora Distributed Solar LLC 100.00% 74.13% Wilmington US - USD Line-by-line Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) 100.00% 100.00% Weber Energy Storage Project LLC 496 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Wespire Inc. Boston US 1,625,000.00 USD Equity Enel X North America Inc. 11.21% 11.21% West Faribault Solar LLC Wilmington US - West Hopkinton Hydro LLC Wilmington US - Wilmington US - USD USD USD Line-by-line Aurora Distributed Solar LLC 100.00% 74.13% AFS Enel Green Power North America Inc. 100.00% 100.00% Line-by-line Aurora Distributed Solar LLC 100.00% 74.13% Albany US 300.00 USD Line-by-line Enel Green Power North America Inc. 100.00% 100.00% West Waconia Solar LLC Western New York Wind Corporation Wharton-El Campo Solar Project LLC White Cloud Wind Holdings LLC Andover US 1.00 Andover US - White Cloud Wind Project LLC Andover US 1.00 White Peaks Wind Project LLC Andover US 1.00 Whitetail Trails Solar Project LLC Andover US - Whitney Hill Wind Power Holdings LLC Andover US 99.00 Whitney Hill Wind Power LLC Andover US - USD USD USD USD USD USD USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line White Cloud Wind Holdings LLC 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Whitney Hill Wind Power Holdings LLC 100.00% 100.00% Enel Alberta Wind Inc. 0.10% Wild Run LP Alberta CA 10.00 CAD Line-by-line 100.00% Wildcat Flats Wind Project LLC Andover US 1.00 Andover US - Andover US 1.00 USD USD USD Wilderness Range Solar Project LLC Wind Belt Transco LLC Wind Parks Anatolis - Prinias Single Member SA Wind Parks Bolibas SA Wind Parks Distomos SA Maroussi GR 1,218,188.00 EUR Line-by-line Maroussi GR 551,500.00 EUR Maroussi GR 556,500.00 EUR Equity Equity Enel Green Power Canada Inc. 99.90% Line-by-line Tradewind Energy Inc. 100.00% 100.00% Line-by-line Enel Kansas LLC 100.00% 100.00% Line-by-line Tradewind Energy Inc. Enel Green Power Hellas Wind Parks South Evia Single Member SA Enel Green Power Hellas SA 100.00% 100.00% 100.00% 100.00% 30.00% 30.00% Enel Green Power Hellas SA 30.00% 30.00% 497 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Wind Parks Folia SA Maroussi GR 424,000.00 EUR Maroussi GR 389,000.00 EUR Maroussi GR 551,500.00 EUR Maroussi GR 555,000.00 EUR Maroussi GR 551,500.00 EUR Equity Equity Equity Equity Equity Maroussi GR 778,648.00 EUR Line-by-line Maroussi GR 945,990.00 EUR Line-by-line Maroussi GR 1,034,774.00 EUR Line-by-line Maroussi GR 772,639.00 EUR Line-by-line Maroussi GR 2,239,800.00 EUR Line-by-line Maroussi GR 575,000.00 EUR Equity Maroussi GR 635,467.00 EUR Line-by-line Maroussi GR 472,000.00 EUR Equity Maroussi GR 857,490.00 EUR Line-by-line Maroussi GR 576,500.00 EUR Maroussi GR 361,000.00 EUR Maroussi GR 554,000.00 EUR Equity Equity Equity Minneapolis US - USD Line-by-line Enel Green Power Hellas SA 30.00% 30.00% Enel Green Power Hellas SA 30.00% 30.00% Enel Green Power Hellas SA 30.00% 30.00% Enel Green Power Hellas SA 30.00% 30.00% Enel Green Power Hellas SA Enel Green Power Hellas Wind Parks South Evia Single Member SA Enel Green Power Hellas Wind Parks South Evia Single Member SA Enel Green Power Hellas Wind Parks South Evia Single Member SA Enel Green Power Hellas Wind Parks South Evia Single Member SA Enel Green Power Hellas SA Enel Green Power Hellas SA Enel Green Power Hellas Wind Parks South Evia Single Member SA Enel Green Power Hellas SA Enel Green Power Hellas Wind Parks South Evia Single Member SA Enel Green Power Hellas SA 30.00% 30.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 30.00% 30.00% 100.00% 100.00% 30.00% 30.00% 100.00% 100.00% 30.00% 30.00% Enel Green Power Hellas SA 30.00% 30.00% Enel Green Power Hellas SA 30.00% 30.00% Chi Minnesota Wind LLC 51.00% 51.00% Wind Parks Gagari SA Wind Parks Goraki SA Wind Parks Gourles SA Wind Parks Kafoutsi SA Wind Parks Katharas Single Member SA Wind Parks Kerasias Single Member SA Wind Parks Milias Single Member SA Wind Parks Mitikas Single Member SA Wind Parks Paliopirgos SA Wind Parks Petalo SA Wind Parks Platanos Single Member SA Wind Parks Skoubi SA Wind Parks Spilias Single Member SA Wind Parks Strouboulas SA Wind Parks Vitalio SA Wind Parks Vourlas SA Winter’s Spawn LLC 498 Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding WKN Basilicata Development PE1 Srl Woods Hill Solar LLC WP Bulgaria 1 EOOD Rome IT 10,000.00 EUR Line-by-line Wilmington US - USD Line-by-line Sofia BG 5,000.00 BGN Line-by-line WP Bulgaria 10 EOOD Sofia WP Bulgaria 11 EOOD Sofia WP Bulgaria 12 EOOD Sofia WP Bulgaria 13 EOOD Sofia WP Bulgaria 14 EOOD Sofia WP Bulgaria 15 EOOD Sofia WP Bulgaria 19 EOOD Sofia WP Bulgaria 21 EOOD Sofia WP Bulgaria 26 EOOD Sofia BG 5,000.00 BGN Line-by-line BG 5,000.00 BGN Line-by-line BG 5,000.00 BGN Line-by-line BG 5,000.00 BGN Line-by-line BG 5,000.00 BGN Line-by-line BG 5,000.00 BGN Line-by-line BG 5,000.00 BGN Line-by-line BG 5,000.00 BGN Line-by-line BG 5,000.00 BGN Line-by-line WP Bulgaria 3 EOOD WP Bulgaria 6 EOOD WP Bulgaria 8 EOOD WP Bulgaria 9 EOOD Sofia BG 5,000.00 BGN Line-by-line Sofia BG 5,000.00 BGN Line-by-line Sofia BG 5,000.00 BGN Line-by-line Sofia BG 5,000.00 BGN Line-by-line Xaloc Solar SLU Valencia ES 3,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Stillwater Woods Hill Holdings LLC 100.00% 100.00% Enel Green Power Bulgaria EAD 100.00% 100.00% Enel Green Power Bulgaria EAD 100.00% 100.00% Enel Green Power Bulgaria EAD 100.00% 100.00% Enel Green Power Bulgaria EAD 100.00% 100.00% Enel Green Power Bulgaria EAD 100.00% 100.00% Enel Green Power Bulgaria EAD 100.00% 100.00% Enel Green Power Bulgaria EAD 100.00% 100.00% Enel Green Power Bulgaria EAD 100.00% 100.00% Enel Green Power Bulgaria EAD 100.00% 100.00% Enel Green Power Bulgaria EAD 100.00% 100.00% Enel Green Power Bulgaria EAD 100.00% 100.00% Enel Green Power Bulgaria EAD 100.00% 100.00% Enel Green Power Bulgaria EAD 100.00% 100.00% Enel Green Power Bulgaria EAD 100.00% 100.00% Enel Green Power España SL 100.00% 70.11% X-bus Italia Srl Milan IT 15,000.00 EUR Equity Enel X Italia Srl 20.00% 20.00% Yacylec SA Buenos Aires AR 20,000,000.00 ARS Equity Enel Américas SA 33.33% 21.67% Yedesa- Cogeneración SA Almería ES 234,394.72 EUR Equity Enel Green Power España SL 40.00% 28.04% 499 Integrated Annual Report 2020Company name Headquarters Country Share/Quota capital Currency Segment Consolidation method Held by % holding Group % holding Yousave SpA Bergamo IT 500,000.00 EUR Line-by-line Enel X Italia Srl 100.00% 100.00% Zacapa HoldCo Sàrl Luxembourg LU 76,180,812.49 EUR Equity Zacapa Topco Sàrl 100.00% 20.60% Zacapa LLC Wilmington US 100.00 USD Equity Zacapa Sàrl 100.00% 20.60% Zacapa Sàrl Luxembourg LU 82,866,475.04 USD Equity Zacapa Topco Sàrl Zoo Solar Project LLC Luxembourg LU 30,000,000.00 EUR Equity Andover US - USD Line-by-line Zacapa HoldCo Sàrl 100.00% 20.60% Enel X International Srl 20.60% 20.60% Tradewind Energy Inc. 100.00% 100.00% 500 501 Integrated Annual Report 2020Concept design and realization HNTO Copy editing postScriptum di Paola Urbani By Enel Communications Disclaimer This Report issued in Italian has been translated into English solely for the convenience of international readers 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 15844561009 © Enel SpA 00198 Rome, Viale Regina Margherita, 137 OPEN POWER FOR A BRIGHTER FUTURE. enel.com

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