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Key Findings

The Endesa investment is likely to end up stranded if the EU, as expected, proceeds with commitments related to the 2015 Paris Agreement on climate change. 

Under a regulation introduced in 1997 at a time of rapidly rising demand, the Spanish government prevents the mothballing of idle generation. The regulation, now used by a government seeking to block coal power plant closures, is redundant in an electricity system with substantial over-capacity. 

Enel Group has made clear that it plans to close two other, even more polluting Endesa coal power plants, Teruel and Compostilla, that traditionally burned subsidised Spanish coal.

Executive Summary

Two of Europe’s biggest utilities, Enel and Engie, are on track to becoming modern, progressive energy companies with their focus on decentralised, digital technologies that save money, cut emissions and serve customers.

However, Enel’s Spanish unit, Endesa, still has one foot in the past, as it argues for the benefit of keeping older fossil fuel generation online for another 15 years.

Enel and Engie are large, diversified, multinational utilities with progressive plans to boost renewable generation, customer service and reliability through digitalisation and, ultimately, to exit coal generation. In its present strategic programme, Engie has said a driving theme will be “low carbon power generation.” Enel’s CEO said last year that “renewables will become the backbone of generation of modern utilities going forward.” Both utilities have significantly out-performed indices of European utility stocks year to date, likely due at least in part to these progressive policies.

But both utilities remain trapped to some extent by their coal generation legacy.

Enel’s 70 percent-owned Spanish subsidiary, Endesa, is planning to invest €400 million into environmental upgrades at three older, more polluting coal-fired power plants, to bring them into compliance with new European Union air emissions standards. This strategy is inconsistent with Enel Group’s over-arching vision of shutting down coal. The three power plants are called Litoral, AS Pontes and Alcudia. 

Meanwhile, Engie recently started up two brand new coal-fired power plants (Rotterdam and Wilhelmshaven in the Netherlands and Germany) that have weighed on the company’s financial performance. Engie also sold, instead of closed, its Polaniec coal-fired plant in Poland in 2016. That plant, at the time its dirtiest generating facility, is still operating under a new owner, which could have a negative reputational impact for the French firm going forward.

Tighter EU air pollution limits that take effect in 2021 present Enel, in particular, with a strategic choice: hang onto the past or move forward aggressively with its coal phaseout plans, using funds saved from coal-related environmental upgrades to pay for renewables growth and other strategic objectives such as grid digitalisation.

Please view full report PDF for references and sources.

Press release: IEEFA Report: Endesa’s Plan to Upgrade Aging Spanish Coal Plants Puts €400 Million in Shareholder Wealth at Risk

Gerard Wynn

Former IEEFA Energy Finance Consultant Gerard Wynn is a U.K.-based 10-year veteran of energy and economics reporting at the Thomson Reuters News Agency and has authored numerous papers on energy issues ranging from solar power in Great Britain to coal-burning in China and India. He blogs at

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Paolo Coghe

Paolo Coghe is president of Acousmatics.

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