New CEO, Francesco Starace, is taking the Italian firm in a new direction, investing in solar and wind to become the first ‘truly green energy giant’

Just a year ago the Italian energy giant Enel was in a bitter court battle with Greenpeace, which accused the utility’s coal plant pollution of killing people. Today, the two groups are firm friends and Greenpeace says Enel is on track to be the “first truly green energy giant”.

What changed was the observation by new Enel CEO, Francesco Starace, that the tide was flowing in only one direction for utilities – towards low-carbon energy – thanks to fast-dropping renewable energy costs, smarter and more-efficient grids and increasing government action on climate change.

“There is a huge tide flowing and you can decide in which direction you want to swim,” he told the Guardian in an interview. “The tide is not in our control - it is the evolution of technology. I think it is crazy if there is someone thinking that he can actually influence this.”

Enel, the biggest utility in the world by customer numbers, has taken the plunge and pledged never to build another coal plant and to be carbon neutral by 2050.

A few other major utilities, such as E.ON and Vattenfall are taking a few strokes in the same direction, but Starace thinks a flood of companies making similar waves is imminent. “You will have big surprises,” he says. “In the next 12 months you will see most of the companies more or less go the same way.”

It is clear that the prevailing wind is blowing towards renewable energy and smart grids, Starace says. “I don’t think you will see someone stand up and say this is totally wrong, because it is quite obvious. I don’t think we were geniuses. We knew this was right and I think everyone knows it, more or less.”

Coal currently generates 29% of the electricity Enel supplies to 61m homes and businesses in 40 countries. But Starace says: “These plants are basically technologically obsolete and there is very little you can do about it.”

He says the coal-fired power station opened in Chile this year will be Enel’s last: “Why would you put €1bn into something that takes 10 years to be built and by the time you finish, you find out there is no point in having it anymore. It is too slow to be fitting this world anymore.”

“Nuclear is the same story, but even worse: a longer time cycle,” Starace says. “Today’s nuclear technology – though not nuclear technology in general – is a dead end. The proof of it is that fact that these huge new plants are typically nightmares of engineering and construction.”

He says the reactors planned by French company EDF for the UK are the “best in class” of current technology but are the same dead end: “I admire that they have the guts to carry on but these plants are over-engineered and incredibly complex and very, very difficult to complete.”

Gas plants – about half as polluting as coal and faster to build – may make sense to build up to about 2025, Starace says, but not beyond. He is deeply sceptical about the cost of carbon capture and storage technology – trapping CO2 emissions and burying them – that some argue could make fossil fuel plants clean: “We don’t think it works. Technically, for sure it can work, but the economics simply don’t work.”

Facebook Twitter Pinterest A meeting between Greenpeace director, Kumi Naidoo, and Enel CEO, Francesco Starace, March 2015. Photograph: Greenpeace

Instead of fossil fuel projects, half of Enel’s £18bn growth investment over the next five years is going into solar and wind energy, which currently provide 7% of its electricity. A third of the investment will be spent on grid infrastructure, with the rest used to complete existing conventional plants, including hydro schemes.

Starace’s new-found friend, Giuseppe Onufrio, executive director of Greenpeace Italy, says: “Enel’s shift is a welcome move. They’re reshaping their business model in the right direction. With onshore wind now the cheapest energy source in countries like Germany and the UK, it’s becoming increasingly obvious that flexible and smart clean technologies make both environmental and business sense. By completing a full transition to clean energy Enel could become the first truly green energy giant.”

Europe’s utilities are all looking for new business models, having lost at least €500bn (£365) in value with the existing one. Competing with Enel to find the winning formula will be German giant E.on. It is splitting off its old coal, gas and nuclear plants into a separate company in order to focus on renewables and grids, though Starace disagrees with that strategy: “I don’t think it makes sense, scale is important in our business.”

Facebook Twitter Pinterest Enel SpA’s combined cycle thermodynamic solar power plant in Priolo Gargallo, Italy. Photograph: Alessandra Benedetti/Bloomberg/Getty Images

Another major European utility, Vattenfall, is selling its large German coal mines and power plants, again to focus on renewables. Greenpeace is looking to make friends with them too, suggesting they will raise the money to buy – then close – the coal assets.

And the former boss of another big German utility RWE npower, Volker Beckers, said last year that the fossil-fuel powered energy system had “reached its natural end”: he now chairs a renewable energy fund and a smart grid company and is a trustee of Forum for the Future, the sustainability advisory outfit founded by environmentalist Jonathon Porritt.

Even in the US, where Enel operate, but which Starace says is “behind the curve” on the shift to low-carbon energy, utilities are embracing limits on carbon emissions, not fighting them like coal companies and at least 16 states. Economics are dictating the move towards a low-carbon energy system, say utility bosses like Dominion chief executive, Tom Farrell. “Everybody is moving in this direction anyway,” he told the Wall Street Journal recently.

In a few weeks, the world’s nations will meet in Paris at a crunch UN climate change summit, aiming to agree a deal to halt global warming. The most important outcome for Starace is making clear that the low-carbon economy is an inevitability. “What industry needs is a direction clearly indicated by an agreement by the big countries,” he says. “Once the direction is set, that’s it and we are OK.”

The transition to clean energy “can happen much faster and in a less complex way with some good regulatory frameworks”, Starace says. “Or it can take a long time and waste a lot of money the other way around.”