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 / Autumn 2008 / Issue 52(originally published by Booz & Company)


Fulvio Conti: The Thought Leader Interview

Acting Like an Asset

S+B: How does that fit with the other transition that Enel has been making  in recent years — from a regu­­lated monopoly to a shareholder­-oriented company, and then to a community-oriented company?
CONTI: This is an integral part of our corporate strategy. You have to think globally and act locally. That’s easy to say, but difficult to execute. Promoting investments in the en­ergy sector means being able to educate your own local community to accept a new plant — a facility that uses fossil fuel, that is regarded as invading the community, and that may be perceived as a massive stock of iron and concrete.

In the past, our industry’s new developments were like those in China today, where there is one new power plant being opened every week. The energy industry could deploy its investments as it needed or as society demanded. The terri­tory, whether closer to raw materials or closer to the final consumer, was made available for this.

In most of Europe and North America, this is no longer the case. Only limited space is available for energy facilities. And those sites that would otherwise be most attractive — because they are close to raw materials or located near a port, making them better for transportation and logistics, or because they are near an industrial district — are not acceptable as locations for en­ergy plants to the local community.

Therefore, we need to engage the local community. Without being patronizing, we need to make a case to the population that we can do something that would favorably impact their economy and society.

In the past, we used to think that an energy facility investment would automatically be seen as an asset by local community leaders. But the feedback often says, “Not in my region. I want the service, but not the investment.” And how do we propose reconciling this contradiction? By demonstrating that such an investment would not destroy the fundamental value of the community. And the only way to do that is to open our books, so to speak, to the wider community.

We can no longer take the stance of a wealthy investor willing to share a portion of the profits from our economies of scale. Instead, we have to reverse the angle. We have to ask people: “What would be your ideal path, as consumers? What would it mean to be wise in energy? What would be your recommendation for promoting the local economy? And what would be the value, to you, of having this power source in place?”

S+B: How is this different from the kind of traditional community engagement that a power company would conduct?
CONTI: We now recognize that successful projects are fully accepted by the local population. This doesn’t mean just a few people. It’s the entire community, including the local authorities, opinion makers, and all local stakeholders. If we don’t bring them on board at the beginning, we have no chance of making that investment fruitful.

We have had bad experiences in the past, particularly in countries with a high density of population or a NIMBY [not in my backyard] culture. I heard another acronym the other day: DADA. It stands for “de­sign, approve, develop, and abandon.” And that’s the dynamic for too many energy projects. That was more or less what happened in the Brindisi case, which Fernando and his ­coauthors described in Megacommunities. We invested, with British Gas, in a terminal for re­gasifying liquid natural gas, to be located in an economically de­pressed area in southern Italy. We assumed that there would be popular support. The project would bring cleaner energy, short-term and long-term employment, and greater diversity of supply. We met all the legal requirements. But the community reaction was too great for us to continue. We sold our interest in the project to British Gas and abandoned it.

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