Turn toward decarbonisation by pursuing SBTi (Science Based Target Initiative) goals, through: the development of power generation with renewable sources, the gradual exit from the most emissive businesses, and the innovation of the district heating network with the intensification of Waste To Energy (WTE) processes.Double down on waste management and integrated water system business (organic investiments, M&A, Innovation)
Strategic guidelines, risks, and mitigation actions
Strategic guidelines, risks, and mitigation actions
A resilient, flexible, and sustainable plan to manage, between now and the next eight years, the risks implicit in the various trends.
70%
Regulated & Semi-regulated
30%
Mandatory
80%
Sustainable
20%
External funds
Main implications on the new Plan
Main implications on the new Plan
The three strategic pillars in addition to translating the ambition of the Iren Group are also the most relevant implications of the new Business Plan.
- Derisking Decarbonisation
- Derisking for positioning in regulated or semi-regulated businesses
Maximising the level of cross-selling between businesses through: expanding the range of services and prioritising investments in areas of presence (i.e. renewable energy production, electric recharge), addressing the needs of the target territory; focus on inorganic and coordinated growth between businesses (lead by waste management and integrated water system).
Diversified and resilient business model
Maximising service quality (effective and perceived quality) and customer experience for each business area through new digital solutions and new processes (i.e. call center insourcing).
Service quality and customer loyalty as resilience factors
Exposure of business areas to trends
Exposure of business areas to trends
Consistent with identified industry trends, strategic and cross-cutting guidelines are provided. Networks and Waste Management are actually the segments most favourably impacted by the expected trends. The exposures of the main business lines to industry macro-trends are presented below.
After browsing the table you can learn more about the risks implicit in the trends and the mitigation actions proposed by the 2021-2030 Business Plan for each Business Unit.
Networks
Waste management
Energy
Market
Smart Solutions
Corporate
Electricity
Gas
Integrated Water System
Cross themes
-
Main strategic risks implicit in trends
- Business and reputational risks in the event of disservices or service interruptions
- Reputational and business risks linked to the technological and digital inadequacy of networks
Derisking Target @2030
96%
Smart Meter 2G users
+80%
Regulatory Asset Base (RAB) growth % vs 2022
Main mitigation actions
- Network resilience interventions aimed at ensuring the improvement of performance, commercial security and technical quality and the quality of assets
- Upgrade to networks of the future through the acceleration of investments to support the electrification of consumption (distributed generation, electric vehicles) and digitalisation (2G smart meters, remote control)
- Interventions for network resilience through the National Recovery and Resilience Plan (PNRR)
-40%
System Average Interruption Frequency Index (SAIFI) % vs 2022
100%
Smart meter 2G digitalisation
-
Strategic risks implicit in trends
- Stranded assets to reduce consumption faced with the drive towards electrification
- Industrial technical risk due to transition to new technologies for the energy transition (e.g. hydrogenation of networks)
- ESG risk for potential risks on network security (i.e. network losses) due to the acquisition of minimum territorial areas (ATEMs)
- Business risk for loss of tenders (e.g. incumbent and new ATEMs)
Derisking Target @2030
100%
smart meter digitalisation
Main mitigation actions
- Interventions for the hydrogenation of networks to safeguard the value of assets and achieve strategic decarbonization targets
- Maintaining the current network in reference territories and during the energy transition/digitalisation
- Disposal of minority interests to financial partners
- Development in strategic areas through tenders
+66%
Regulatory Asset Base (RAB) growth vs 2022
-
Main strategic risks implicit in trends
- Environmental risks associated with water abstraction
- ESG and business risks related to security in terms of network losses
- Regulatory and ESG risks associated with inorganic development in the Italian south (Mezzogiorno) from the backwardness of the Integrated Water Service (e.g. network losses, infrastructure ageing) and the different tariff scheme
Derisking target @2030
20%
Water losses
261
Water withdrawals from the environment (liters/inhabitant/day)
+110%
Regulatory Asset Base (RAB) growth % vs 2022
Main mitigation actions
- Maintenance and adaptation interventions for the reduction of environmental risks related to water abstraction (e.g. dam maintenance) to improve operational efficiency and the quality of service
- Interventions aimed at network upgrading (i.e. leakage reduction, improvement of purified water quality, increase of drinking water rate)
- Inorganic growth with consolidations and tenders also in the Mezzogiorno
3.970
Treatment capacity (K equivalent inhabitants)
90%
District subdivision of aqueduct networks
-
Main strategic risks implicit in trends
- Impact of climate change and hydrogeological disruption on assets
- High competition in tenders
Main mitigation actions
- Network resilience interventions; maintenance activities; structural interventions; 24-hour emergency response; redundant networks
- Creation of task force for tender preparation, development of innovative technical/economic solutions; preparation of broad development pipeline
Collection
Plants
Cross Themes
-
Main strategic risks implicit in trends
- Legal and corporate risk arising from M&A transactions
- Risk of not reaching collection targets such as number of inhabitants served, million tonnes of waste collected, % of sorted waste collection
- Regulatory and compliance risk related to the non achievement of targets for electrification of the fleet
Derisking Target @2030
+79%
net waste streams vs 2022
+6
sorted waste collection % historical territories vs 2022
Main mitigation actions
- Contribution to the achievement of growth targets of collection by interventions for filling of existing plants
- Reduction of industrial technical risk thanks to interventions on the renewal of the collection fleet (e.g. E-mobility IAM, SEI Toscana, etc.)
- Spatial development to protect flows (M&A, consolidations, tenders)
- Drive for sorted waste collection with extension of the point-based pricing model
- Drive for automation and digitalisation to increase efficiency
+45%
residents served vs 2022
+14
sorted waste collection % other territories vs 2022
-
Main strategic risks implicit in trends
- Risk of inefficiency and business slowdown related to landfill saturation e plants
- Risk of technical obsolescence of existing plants
- Regulatory complexity of the sector and authorisation processes for disposal and material recovery plants
- Plant design delays and over costs (e.g. CO2 capture plants) due to potential inefficiencies in the supply chain
- Risk implementation for plants with innovative technologies
- Risk of non-achievement of ESG targets
Derisking Target @2030
+89%
treatment capacity vs 2022
+44%
recovery of energy vs 2022
+680%
biomethane produced (Mm3) vs 2022
Main mitigation actions
- Contribution to the achievement of recycling and recovery targets through the development of new plants (WTE, plastic recycling plants, OFMSW, wood, paper, etc.), also through partnerships
- Positioning on emerging supply chains (textiles, batteries, etc.)
- Reduction of technical and industrial risk with maintenance on existing plants (e.g. plastic recycling plants)
- Interventions on circular material treatment plants (sludge, plastic, wood, paper) with a positive reputational and environmental impact
- Continuous planning and monitoring, with a dedicated cross-business task force for project authorisation and dialogue with entities
+188%
recovery of material vs 2022
71%
recovery of treated waste
-
Strategic risks implicit in trends
- Change in prices of recycled materials
- Impact competitive dynamics on optimising sources and uses in the plastics supply chain
Mitigation actions
- Differentiation of flows and plant implementation plans on the different supply chains
- Renegotiation of contracts with Municipalities
- Increased collection base and treatment capacity
Renewables
Thermoelectric And Cogeneration
Cross themes
-
Main strategic risks implicit in trends
- Reputational and business risk due to the misalignment of the emission mix with the path of decarbonization and market standards
- Regulatory and business risk due to authorisation processes and potential delays in greenfield development of renewable plants, hydroelectric concessions
- Risk of technical obsolescence of hydroelectric plants
- Fiscal and financial risk due to volatile energy scenarios and incentive variability
- Failure to renew hydroelectric concessions
Derisking Target @2030
3.600
RES capacity MW VS 760 @2022
Main mitigation actions
- RES development for decarbonising technology mix: photovoltaics, onshore/offshore wind, Energy Communities based on the “producer” model
- Reducing the risk of technical obsolescence with maintenance and renewal measures in the hydroelectric field
- Renewal of hydroelectric concessions
- Drive towards energy communities
- Offshore wind development
- Storage: development consistent with RES growth scenario
100%
“Green” customer consumption coverage (retail and SMB) % VS 78% @2022 vs 78% 2022
-
Main strategic risks implicit in trends
- Technical-industrial and business risk due to the potential lack of flexibility and operational adequacy of plants
- Reputational and business risk due to the misalignment of the emission mix with the path of decarbonization and market standards
- Strategic and business risk due to potential contraction of district heating demand
Derisking Target @2030
+19%
district heating volumes vs 2022
-48%
carbon intensity (gCO2/KWh) vs 2022
Main mitigation actions
- Reduction of the risk of technical obsolescence with maintenance and renewal interventions in the thermoelectric and cogeneration fields (e.g. initiatives in aerothermal energy and flexibilisation)
- District heating network development through adoption of innovation (e.g. smart grids) and levers for decarbonization (e.g. thermal waste etc.)
- Drive towards decarbonization/circularity of the system
- Energy optimisation in the district heating network operation
- Adoption of pilot innovative technologies
- Completion of plant flexibilisation including air cooling
- Decommissioning of thermoelectric merchant generation (post 2026)
-51%
Thermoelectric capacity (MWh) vs 2022
+46%
Thermal storage capacity (kmc)
-
Strategic risks implicit in trends
- Delays in permitting new facilities or modifications to existing facilities
- High competition on concessions for hydroelectric plants
Mitigation actions
- Planning, monitoring and dialogue with authorising agencies with dedicated cross-business task force for project authorisation
- Monitoring expiring concessions, proactive dialogue with entities and achievement of set targets, and preparing extensive development pipeline
- Delays in permitting new facilities or modifications to existing facilities
Commodity
Value added services
-
Main strategic risks implicit in trends
- Strategic and business risk of margin reduction and increased churn rate due to competitive pressure and quality standards/customer engagement
- Strategic and business risk of customer base reduction due to aggressive actions by competitors, extraordinary repricing and overshooting of higher protection
- Risk of non-return of Capex Call To Action on customers with high churn rate
- Risk of lack of effectiveness of commercial campaigns
- Energy commodity price risk and critical supply disruption (gas)
Derisking Target @2030
+18%
customer base #M vs 2022
550
retail gas unit consumption mc/customer vs 650 @2022
Main mitigation actions
- Investment in electricity and gas sales campaigns for the maintenance and growth of the customer base with strong mitigating impact on the strategic and business risk side
- Recurring investments in commercial campaigns to mitigate baby churn rate
- Focus on raising service quality and personalisation; anti-churn policies and loyalty programs, selection of low churn sales channels (web, counter)
- Acceleration path rebalancing acquisition channel mix in favour of web self, stores
- Medium to long-term Power Purchase Agreement (PPA) development with end customers (both B2B and B2C)
- Energy supply chain risk management (hedging etc.)
3
Unit consumption retail electrical energy MWh/ POD vs 2,5 @2022
-
Main strategic risks implicit in trends
- Reputational and business risk due to misalignment of consumption electrification efforts with the market trend
- Business risk due to pressure on margins and churn rates due to competing “any-to-any” ecosystems (service platforms with integrated customer experience)
- High competition on new products and developments (Iren Plus, Iren Go etc.)
Derisking Target @2030
60k
wallbox vs 0,3 @2022
14
Linee E-Bus elettrificate vs 0 @2022
Main mitigation actions
- Development of charging infrastructure for local public transport leveraging public funds with a strong contribution to ESG targets
- Numerous investments aimed at mitigation of risks related to the achievement of targets and strategic objectives of the plan
- Investments enabling the cross-selling of IrenPlus services with strong mitigating contribution to strategic and business risk
- Installation of semi-public charging points (private land open to the public), with priority on territories where Iren manages the electricity grid (enabling network synergies)
4k
Semi-public charging points vs 0,1 @2022
Energy efficiency
Cross themes
-
Main strategic risks implicit in trends
- Fiscal and financial risk due to the circulating absorption capacity for ISS work
- Changes in the legal/regulatory framework with negative effects on business (e.g. reduction of incentives)
Derisking Target @2030
400
Energy communities (MW)
120
Government Redevelopment Projects vs 15 @2022
Main mitigation actions
- Monitoring regulatory developments regarding incentives for energy efficiency interventions and business reorientation
- Development of energy communities based on the “producer” or “seller” model
- Development of integrated services portfolio complementary to energy communities for long-term value generation
- Development of service portfolio for value generation in local areas and municipalities of reference
- Developing districts starting with the upgrading of key services (e.g. schools, hospitals, public buildings)
- Integrated management of complex redevelopment projects of relevance to the territories by leveraging the Public Private Partnerships (PPP) instrument (e.g. specific local public transport services)
- “Smart” services (security, ZTL access, parking, etc.)
400
B2B efficiency projects vs 13 @2022
-
Strategic risks implicit in trends
- High competition on electrical and thermal plant concessions
Mitigation actions
- Monitoring expiring concessions, proactive dialogue with entities and achievement of set targets; preparing extensive development pipeline
People
IT
-
Strategic risks implicit in trends
- Loss of key skills with repercussions on achievement of objectives
- Difficulty in finding specialised professional profiles in line with evolving business needs and/or traditional profiles
- Difficulties in implementing non-inclusive policies/conduct
- Difficulties in implementing new leadership models in view of the changing environment with possible repercussions on the execution of strategic guidelines
Mitigation actions
- Critical skills mapping, retention and corporate welfare initiatives, compensation & benefits policies, back-up figures
- "Multi-channel" personnel selection (e.g. "IrenFutura," Linkedin, specialised sites, social pages); change management/training programs
- Diversity management initiatives and programs
- Leadership Project
-
Strategic risks implicit in trends
- Growing complexity of the transformation process, affecting project implementation
- Lack of resilience of IT/ OT systems due to causes attributable to vendors, cyber attacks, natural events, ...
Mitigation actions
- PMO skills acquisition and training
- Training/procedures; access control, backup and restore
- Business Continuity Management model implementation