Enel SLBs: Q3 results off-track for 2023 target

Enel, an Italian utility, has $10.8bn of Sustainability-Linked Bonds (SLBs) with a potential coupon step-up linked to the emissions intensity of its 2023 power generation.

Enel’s H1 reporting indicated that the 2023 target of 148 gCO2e/kWh would be challenging to meet. Enel has recently released its Q3 figures, which includes its power generation mix, from which we have estimated emissions intensity figures. We provide the generation figures, and our estimated intensity for Q3 of 161 gCO2/kWh.3.

We note that coal as a percentage of conventional generation has reduced and driven a lower emissions intensity. However, the reduction is limited due to a largely unchanged proportion of renewables. Based on this data, we estimate that a Q4 intensity of 90 gCO2e/kWh is needed to achieve the 2023 target, which seems highly unlikely given the recent data.

On 22 Nov, Enel gave an update on its strategy, specifically reducing its investment in renewables. We have so far been focused on the 2023 emissions intensity target, but there are other Enel SLBs referencing further reductions in the same KPI by 2024 and 2025, which may also now be at risk.