Ep74: Francesco Starace 'Europe's Clean Power Leader'

“Across these 10 years, renewables became the backbone of the generation of the future, everywhere in the world, not only in Italy”


In this episode of Cleaning Up, Michael Liebreich talks to Franceso Starace, CEO of Italian utility Enel and chairman of the Administrative Board of Sustainable Energy for All.

Michael and Francesco begin by discussing how the COVID-19 pandemic affected the grid in countries like Italy and Spain.

They then discuss Italy’s transition to renewable energy and what the roles of hydrogen and nuclear are in the transition.

Finally, Francesco explains his role with Sustainable Energy for All and the work they are doing to promote energy investment in Africa.

This is an abridged transcript of the conversation, edited for clarity. 


ML: You are running one of the largest utility companies in Europe, so you’re probably the best person to answer the following: what happened to energy demand during the pandemic. and what have you learned from it?


FS: I can tell you about the demand in Spain, Italy and many other places. This pattern more or less repeated itself across all these geographies. During the first phase we got this big drop in demand driven by the economy going into lockdown. All sectors: industry, commerce went down with one exception which was the domestic market. That was the first time in history because typically they all go down but this time the domestic market went up because people disappeared and spent a lot of time at home using energy there. The net result was very strange. Overall, demand went down by 20-25%, but the curve of demand became so different from what the algorithms of the DSOs were used to that the necessary balancing services to the network required to keep the lights on were growing like hell. Generation had a compression and thermal generation took the brunt of this but the same thermal generation started making money by balancing the system. The funny thing is the lights stayed on. There were no problems to manage the system, this huge volatility was managed pretty well. Of course, things changed back to normal where we are today. And we're basically back to where we were pre pandemic at this point. But it was an incredible experience. 


ML: Speaking of Italy - it is shifting towards a low carbon future, could you give us a thumbnail of that plan?


FS: The renewable energy voyage started in earnest during the last decade, 2010 to 2020. At the beginning of 2010 it was still a game for kids. Decarbonization was something that didn't really matter that much, it was on the agenda of only a few people. But across these 10 years, renewables became the backbone of the generation of the future, everywhere in the world, not only in Italy. Decarbonization becomes an important issue for combating climate change, but also from our industry, it is a must from an economical standpoint. A thermal generation plant is displaced by a renewable energy generation plant every time. We were one of those that spotted the trend early and we invested heavily in renewable generation. I'm saying that this is the present future of renewable energy as it covers the next 20 years. The investment that we're putting down is about €75 billion between now and 2030. We are trebling the capacity, we have about 54,000 megawatts, we're going to have 145,000 by the end of 2030. 


ML: Many believe hydrogen is going to play a significant part in that low-carbon future. What are your thoughts on that?


FS: I'm in the business of producing electricity so I love blue hydrogen because it’s a huge demand multiplier. Imagine that we have competitive green hydrogen, that we have found a way of producing hydrogen which is at par with the grey hydrogen we're using today. The world consumption of hydrogen is around 70 million tonnes and there are 860 million metric tonnes of CO2 associated with that production. It's like the combined emissions of the UK and Indonesia put together every year. The first thing one should do is to take the green hydrogen and displace the grey hydrogen, get rid of this 860 million tonnes of CO2. Now 70 million tonnes multiplied by 50 kilowatt hour is the demand for 3500 terawatt hours of electricity, which is the yearly consumption of Europe, including the UK. So that's what we're talking about. This is a staggering amount of energy. I love it but it cannot be done simply like that. It's a question of not being afraid of the fact that there is a lot of work in front of us. We need to make sure that we do not waste too much time debating stupid things like heating homes with hydrogen which is a crazy idea.


ML: You mentioned blue hydrogen - is carbon capture and storage (CCS) a viable technology? What about retrofitting CCS to coal plants?


FS: We failed to build plants with CCS embedded in them from the design phase. The fact is that the complications and the cost of CCS made these plants even more vulnerable to renewables. Renewables killed them from the beginning because a coal plant with CCS cannot be cheaper than a coal plant without it and a coal plant without CCS is already undercut by renewables. For the generation of electricity, CCS is gone. Can CCS work on decarbonizing hydrogen? Maybe, provided that you don't stop at 60%, you have to get to 99.9%. Then the CO2 must be safely stored in places that don't leak 1% every year so that in a century all of the CO2 is back in the atmosphere. Green hydrogen is already more competitive because CCS will make blue hydrogen more expensive. It will add the cost component to blue hydrogen, it's not going to become free.


ML: What do you think about nuclear energy in this transition?


FS: I should warn you that I am a nuclear engineer myself. We have 3300MW of nuclear capacity in Spain and we have a plant that we are commissioning in Slovakia. The issue is that this technology has designed itself out of the world. There is no way that present nuclear technology can be a solution. I think those that own nuclear power plants that are online should keep them running, invest in them and prolong their lifetime if it is safe to do that. Not shut them down early, but that only buys us 10-15 years. To build one of these things today is crazy, it's totally uneconomical, and it is not the solution. Fourth generation nuclear power plants are nothing new. When I graduated in 1980 all of these technologies were there already. They didn't work for many different reasons that we could talk about for a long time. I think if there is a chance for small modular reactor reactors to come online it is using thorium instead of ruthenium and plutonium. Thorium is a totally perfect, precise material that has the flaw of not being useful for military applications. That's why we don't have a thorium technology being developed in the world. Thorium could probably be the next generation of small modular reactors fast breeders so that they are intrinsically safe. We will have to wait until the 2040s before we have something close to commercial operations. You have modular reactors today in all of the aircraft carriers and submarines and even russian icebreakers. There's nothing new about that but this is just exactly the same technology we have today on a smaller scale with exactly the same problems: proliferation of waste and stuff like that. Nuclear, frankly speaking, until we have a thorium cycle, is not interesting. It's just the prolongation of a cycle that started with the big crisis in the 70s, when oil shocks started the nuclear generation that we still have today.


ML: I want to finish by talking about Sustainable Energy for All (SSE) because that was where we first met. How are you involved with SSE?


FS: I am the chairman of the board of SSE. I think that SSE is a very powerful organisation that has an incredible mission. Today there are something short of 800 million people that still lack access to electricity whether it's renewable or non-renewable. The idea is: let's give them electricity that is already decarbonized and not just go through the cycle that we all have to go through. The endeavour is colossal because you have more than 50 governments that are active in Africa today each with different endowments from nature, each with different problems to solve. What we're focusing on now is to put to work the big lending capacity that we have been able to secure and to help the governments of these countries to put down policies that will make it easy for private capital to invest in the country. Africa is going to be going urban and going into cities. There's a big chance there because as people move into cities there, you have to act and to give them electricity in the city. Rural Africa is becoming smaller when compared to metropolitan Africa, that's a big thing that people sometimes fail to understand. That's where the major decisions are going to be taken. What happens in the cities of the world happens in the world. And what happens in cities in Africa, is what happens in Africa. It's much more metropolitan driven than people think.