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Starace: the pandemic and the energy transition

The energy sector after the Coronavirus: Starace’s interview in Affari&Finanza
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Despite the global economic slowdown and the drop in energy demand, the pandemic is not going to stop the energy transition process towards renewables and the green economy. Enel’s CEO and General Manager Francesco Starace confirmed this in an interview for Affari&Finanza on 29 June. “I believe that the price factor is less and less important when it comes to the future of electricity. The road to the transformation of this sector is not through raw materials, but through technology: it will take a few more years, but its ability to improve and reduce costs is unrelated to fuel prices”.

The pandemic outbreak has therefore accelerated a process that was already underway: according to Francesco Starace, the question is whether this is enough to save the planet. “It is not, because Europe alone cannot be enough”, said Enel’s CEO. However, “the European Commission is taking the right steps, because the Green Deal now has the support of the Just Transition Fund, which provides resources to put a stop to resistance against the energy transition, on top of those for digitisation, which are just as crucial”. And the world itself seems to be moving in this direction: renewables have surpassed coal in the United States’ energy consumption for the first time in 134 years, and “China has launched one of the most intense decarbonisation plans for cities, followed by India”.

A key role in accelerating the transition will be played by battery technology: “From now on, batteries will be a continuous source of innovation, discoveries and new opportunities, and will be closely connected to increasingly digitised networks and electrical systems”. As explained by Enel’s CEO, Italy has the largest digitised network in Europe “and when the replacement of electricity meters with second-generation models is completed – resulting in better use of meters – the whole system will make a quantum leap which we cannot even imagine now”.

We are doing our utmost to ensure a fair energy transition, managing our important industrial heritage and looking to the future

Francesco Starace, Enel CEO

In this context, as underlined by Francesco Starace, a crucial point is to proceed step by step and give technologies time to evolve, because “you cannot do it all at once and well at the same time”. Many aspects will be clearer only “when there will be tens of millions of electric cars and when bus and truck fleets will change in such a way that they will no longer use methane gas, which still emits particulate matter”. At that point, we will be able to understand, for example, “which energy sources can be combined with electricity, or if hydrogen can replace kerosene or diesel”. However, this does not mean going back to the past: hydrogen “is not a source of energy, but a way to store it”, Enel’s CEO pointed out, adding that “there are other options too”. In order to be competitive and play its part in the transition, hydrogen “has to get rid of its heavy carbon footprint, as the current production from gas and coal has emissions equal to those of Great Britain and Indonesia combined”. It is “obviously fine” to produce hydrogen via electrolysis from renewable sources, instead, “but it is necessary to reduce costs by six or seven times over the next five to ten years”.

Finally, Francesco Starace analysed the possible effects of the pandemic on geopolitical balances, also in relation to the drop in gas prices: “I believe that these dynamics are also somehow not related to prices, as green technologies evolve and spread. Gas consumption in Italy is falling year after year and the growth of renewables can only confirm this trend. I now consider it a marginal issue. Of course, we will continue to buy gas from someone for some time, but we will need it less and less”. So, as a national system, do we need new infrastructures? “We have fewer regasification plants than Spain or France do. But, considering the lack of gas demand and the evolution of the sector, are new investments necessary? Another key question is: are we sure that renewables will cover 100% of the energy demand?”, Enel CEO concluded, pointing out that “perhaps there would be room for another regasification plant, so that in case of need we would be independent from the slavery of pipeline transport and, given the geopolitical instability that surrounds us, we would never have supply problems”.

 

Enel editorial staff