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Integrated Annual Repo 2021 MISSION • Open access to electricity for more people. • Open the world of energy to new technology. • Open up to new uses of energy. • Open up to new ways of managing energy for people. • Open up to new panerships. PRINCIPLES OF CONDUCT • Make decisions in daily activities and take responsibility for them. • Share information, being willing to collaborate and open to the contribution of others. • Follow through with commitments, pursuing activities with determination and passion. • Change priorities rapidly if the situation evolves. • Get results by aiming for excellence. • Adopt and promote safe behavior and move pro- actively to improve conditions for health, safety and well-being. • Work for the integration of all, recognizing and leveraging individual diversity (culture, gender, age, disabilities, personality, etc.). • Work focusing on satisfying customers and/or co- workers, acting eectively and rapidly. • Propose new solution and do not give up when faced with obstacles or failure. • Recognize merit in co-workers and give feedback that can improve their contribution. VALUES • Trust • Proactivity • Responsibility • Innovation Francesco Starace Chief Executive Ocer and General Manager Michele Crisostomo Chairman Leer to shareholders and other stakeholders 6 Integrated Annual Repo 2021 Dear shareholders and stakeholders, 2021 was the year in which the Enel Group sharply accelerated its energy-transition strategy towards a decarbonized, customer- centric business model. We are the largest private renewable energy operator in the world, with 53.4 GW of managed capacity, and the largest private-sector electricity distribution company globally, with more than 75 million end users connected to our grids, the world’s most advanced digitalized networks. We also manage the largest customer base in the world among private- sector companies, with more than 69 million customers. Our business model, which is entirely based on digital platforms, enables us to optimally seize the oppounities oered by the energy transition now under way around the globe. The solid economic and nancial peormance of the Enel Group in 2021 made it possible to achieve the objectives we announced to the market, including our targets for EBITDA and ordinary prot. The Group’s leadership in sustainability was once again recognized at the international level by our continuing presence in a number of impoant sustainability ratings, indices and rankings. In addition, Enel was again included in the main indices that monitor corporate gender diversity peormance. In 2021 we were again the leading utility by market capitalization in Europe and the second in the world. The macroeconomic environment The global economy in 2021 experienced a generalized recovery on a global scale, with estimated world GDP growth of about 5.8% on an annual basis, sustained by government fiscal policies and strong monetary stimulus from central banks, as well as by the effective vaccination campaign implemented in many countries starting from the 2nd Quarter of the year. In the United States, GDP expanded by an annual 5.7% in 2021, although the decline in private consumption and industrial production, shortages of raw materials and sharply rising energy prices slowed the economy in the final months of the year. In the euro area, the real economy registered a substantial recovery in 2021, with GDP growing by 5.2% on an annual basis, driven by a strong recovery in the 2nd and 3rd Quarters, although growth slowed in the 4th Quarter due to a rapid increase in energy prices and the introduction of restrictions on economic activity and mobility in response to the spread of the Omicron variant. The pattern was similar in Latin America, where economic developments in 2021 were strongly influenced by the progress of national vaccination campaigns, with an average increase in GDP of almost 10% compared with the previous year in the main countries in which we operate. The broad-based recovery and the reopening of commercial activities at the beginning of 2021 generated large imbalances between supply and demand, creating severe distortions in supply chains and consequently triggering inflationary pressures that subsequently impacted the prices of intermediate and consumer goods. During 2021, the oil market experienced rapid growth in its indices, reecting optimism about the recovery in economic activity, combined with the precautionary measures of OPEC regarding production cuts. Considerable volatility was registered in the European gas market, caused by both supply and demand factors, contributing to a sharp increase in prices in the 4th Quaer of 2021\. CO 2 prices also increased, responding to the strong commitment expressed by the European authorities, who expressed their intention to reduce CO 2 emissions by at least 55% by 2030, causing the price of the commodity to rise above €80/ton at the end of December. The bullish peormance of the commodity markets in 2021 led to a sharp increase in power prices across Europe, which exceeded 220% compared with 2020 in Italy and Spain. Leer to shareholders and other stakeholders 53.4 GW End users 75 million Renewables capacity managed 7 The year 2021 was also characterized by large increases in the prices of the main industrial metals. The resumption of economic activity and the revival of investment have driven demand, while supply has been challenged by availability issues and logistical bottlenecks, generating scarcity on the market with a consequent sharp rise in prices. The world scenario, already characterized by high price volatility, was further shaken in February 2022 by the Russian military intervention in Ukraine. The conflict is dramatic in its impact on the civilian population and its profound (1) 1,120 MW Litoral (Andalusia, Spain), 548 MW La Spezia (Liguria, Italy) and 315 MW units 1 and 2 of Fusina (Veneto, Italy). effect on the world's geopolitical, economic and energy balance, with major repercussions for the energy security of the European Union countries in particular. In this constantly evolving environment, the Group is carefully monitoring international developments, promptly assessing the impacts on its business activities, financial situation and performance in the main euro-area countries in which it operates, with particular regard to the shortage of raw materials from the areas affected by the conflict and the generalized increase in commodity prices. Peormance The Enel Group continued to grow in 2021, hiing all the objectives announced to the nancial community despite the continuing instability associated with the COVID-19 pandemic and the unceainty engendered by the volatility in commodity prices. In paicular, the 2021 nancial year closed with ordinary EBITDA of €19.2 billion, with an increase of 6.7% compared with 2020. Ordinary prot, on which the dividend is calculated, reached €5.6 billion, an increase of 8% compared with the previous year. The dividend for 2021 amounts to €0.38 per share, an increase of 6.1% compared with 2020. In terms of cash generation, FFO in 2021 were about 3% greater than the previous year despite the impact on working capital of the still unstable macroeconomic situation. Net debt is equal to €52.0 billion, lower than the forecasts previously provided to investors. Main developments As in previous years, Enel reached a new record for renewables generation capacity in 2021, adding 5,120 MW of new renewables capacity globally, which includes 220 MW of baery storage for the rst time, while continuing to grow our project pipeline to 370 GW worldwide. Installed renewables capacity reached 53.4 GW, taking an impoant step towards the complete decarbonization of the generation mix and divesting 1,983 MW of installed coal-red capacity. (1) For the second consecutive year, 2021 posted a record for renewables generation, with about 118 TWh of output, equal to 51% of the total Group production. As a result, the Group reduced specic CO 2 emissions to 227 gCO 2eq /kWh, a decrease of 45% compared with 2017, continuing progress along the path towards the SBTi ceied target of 82 gCO 2eq /kWh by 2030. Thanks to investments in grids and the simultaneous eo to digitalize systems and processes, we have reached 75 million customers connected to our grids, 60% of which are equipped with sma meters. At the same time, we have exceeded 1 million prosumers (customers who are both consumers and electricity producers) connected to the Group’s grids. Fuhermore, the volume of electricity distributed over our grids around the world Ordinary net prot €5.6 billion +8% on 2020 8 Integrated Annual Repo 2021 reached 510 TWh in 2021, surpassing the levels recorded in the pre-pandemic period. In order to meet the new demands on the grid and the new role of distribution system operators (DSOs), the Grid Futurability® project was launched in 2021 within the scope of COP26, with which the Global Infrastructure and Networks (GI&N) area has delineated a path to 2030 for the renovation, upgrading, digitalization and expansion of power grids. The year 2021 was also crucial for the progress of the Grid Blue Sky project, which seeks to redesign the operating model from a platform standpoint, making grid operations signicantly more ecient and enabling new services for customers. Fuhermore, 2021 saw the launch of Gridspeise, a company born from the Group’s successful experience in the eld of technological and digital innovation of distribution grids, with the aim of making innovative solutions available to third-pay distribution companies to accelerate the energy transition. The Group conrmed its leadership in managing the largest customer base in the world, with 16 retailers, 69 million commodity customers and 7 million beyond-commodity customers. In order to simplify the customer experience and maximize their satisfaction, in April the Global Customer Operations Service Function was created. It is responsible for managing and optimizing the activation, billing, credit and customer care processes, leveraging the platform operating model. Fuhermore, in order to seize the incredible oppounities oered by the electrication process that will characterize the coming decade, a new global organizational unit named Enel X Global Retail was created with the job of creating a single commercial and marketing strategy directed at end users, integrating the commodity market with the beyond-commodity solutions oered by the Enel X businesses. Our leadership has grown stronger in the business-to- government segment, in active demand management services for our industrial customers and in energy storage solutions in the business-to-business segment. In order to fuher accelerate the electrication of transpo, we have launched the new Enel X Way in order to lend even more energy to the development of electric mobility, a key business for the energy transition. Among extraordinary corporate transactions during the year, the sale of 50% of the share capital of Open Fiber, held by Enel, to Macquarie Infrastructure and Real Assets and CDP Equity (40% and 10% respectively) closed in December 2021. From a nancial point of view, on March 4, 2021, an equity-accounted perpetual hybrid bond was issued in the amount of €2.25 billion. The transaction increased the Group’s hybrid bond pofolio, bringing it to about €5.6 billion, fuher strengthening and optimizing the Group’s nancial structure. Between June and September 2021, Enel issued sustainability-linked bonds denominated in euros and US dollars in the total equivalent amount of about €10.1 billion. These issues are linked to the achievement of Enel’s sustainability target for the reduction of direct greenhouse gas emissions (Scope 1) and are consistent with the Group’s Sustainability-Linked Financing Framework, updated to January 2021. At the same time, Enel repurchased and cancelled outstanding bonds not linked to the pursuit of SDG objectives through two voluntary purchase oers and the exercise of repurchase options for a total amount of about €7.4 billion. The bond issue and repurchase programs made it possible to achieve a ratio between sustainable sources of nancing and the Group’s total gross debt of about 55%, simultaneously reducing the cost of the Group’s debt to its current 3.5%. Fuhermore, on March 5, 2021, Enel obtained a revolving 5-year credit line from a pool of banks in the amount of €10 billion. The credit line is linked to the key peormance indicator (KPI) for direct greenhouse gas emissions. Leer to shareholders and other stakeholders €10.1 billion 55 % Ratio between sustainable sources of nancing and the Group’s total gross debt Sustainability-linked bonds issued between June and September 2021 9 Strategy and forecasts for 2022-2024 Over the past decade we have seen how the development of renewables has been the dominant trend in energy generation thanks to cost reductions, allowing decarbonization to proceed more rapidly. Similarly, we expect the electrication process to characterize the current decade, emerging as a crucial factor for avoiding the grave consequences of a temperature increase above 1.5 °C compared with pre- industrial levels. With electrication, customers will gradually conve their energy consumption to electricity, with gains in terms of cost, eciency, emissions and price stability. With the new Strategic Plan, the Group has conrmed the path towards 2030 already under way, increasing investments envisaged in the previous Business Plan by 6% to around €210 billion in direct and third-pay investments. The Group conrmed the use of two dierent business models (Ownership and Stewardship) to achieve the objectives we have set, which will be deployed depending on geographical area and operating conditions. The strategy and positioning of the Group envisaged for 2030 have made it possible to bring forward the “Net-Zero” commitment for both direct and indirect emissions by 10 years from 2050 to 2040. With regard to the generation of energy and the sale of electricity and natural gas to end users, Enel is commied to achieving zero emissions without resoing to CO 2 capture techniques or nature-based solutions such as reforestation. The Plan underpinning the early achievement of this ambitious goal is based on the implementation of ceain key strategic steps: (i) the plan to abandon coal and gas generation by 2027 and 2040 respectively, replacing the thermal generation pofolio with new renewables capacity and exploiting the hybridization of renewables with storage solutions; (ii) by 2040, 100% of the electricity sold by the Group will be generated from renewables and by the same year the Group will exit the retail gas sales business. In suppo of our long-term targets, in 2022-2024 the Group expects to directly invest around €45 billion, of which €43 billion through the Ownership model, mainly in expanding and upgrading grids and in developing renewables and about €2 billion through the Stewardship model, while mobilizing €8 billion in investment from third paies. About 94% of 2022-2024 consolidated investment is in line with the United Nations Sustainable Development Goals (SDGs) and it is estimated that more than 85% of this investment will be aligned with the criteria of the European taxonomy. The Group expects to increase the renewables capacity it manages to some 77 GW by the end of 2024, with zero-emission output reaching about 77% of the total, with a decrease in specic greenhouse gas emissions of more than 35% in the same period. In distribution grids, the acceleration of investment, thanks in pa to the oppounities created with the National Recovery and Resilience Plans launched by the European Union, will expand the Group’s regulatory asset base (RAB) by 14% to about €49 billion in 2024, making it possible to reach a total of some 81 million customers served, 4 million of which through the Stewardship model. The central role of our customers in the Group’s business model makes the integrated margin a pillar of our Plan. €210 billion Direct and third-pay investments to 2030 10 Integrated Annual Repo 2021 This is the margin from the sale of power generated and purchased, the correct management of which requires the joint optimization of both sales and provisioning. Compared with 2021, we expect the integrated margin to grow 1.6 times by 2024. This will be accompanied by a decrease of about 15% in the total cost of electricity sold compared with 2021. On the peormance front, the Group expects ordinary EBITDA to reach between €21.0 and 21.6 billion by 2024, an increase of about 11% compared with 2021. At the same time, ordinary prot is forecast to rise by about 20% from €5.6 billion in 2021 to between €6.7 and 6.9 billion in 2024. Enel’s dividend policy for the period remains simple, predictable and aractive. Shareholders should receive a xed dividend per share (DPS) that is expected to increase by 13% between 2021 and 2024, reaching €0.43 per share. Leer to shareholders and other stakeholders 11 Contents LETTER TO SHAREHOLDERS AND OTHER STAKEHOLDERS 6 ENEL GROUP 20 Highlights 22 World Economic Forum (WEF) 26 European Union taxonomy 28 Value creation and the business model 31 Enel around the world 36 REPORT ON OPERATIONS GOVERNANCE 38 Enel shareholders 40 Corporate boards 42 The Enel corporate governance system 44 Enel organizational model 51 Incentive system 54 Values and pillars of corporate ethics 55 GROUP STRATEGY & RISK MANAGEMENT 58 Group strategy 60 Reference scenario 74 \- Macroeconomic environment 74 \- The energy industry 76 \- Climate change and long-term scenarios 79 \- Assessment of the risks and oppounities connected with the Strategic Plan 96 Risk management 98 1. 2. 3. BASIS OF PRESENTATION 14 GROUP PERFORMANCE 130 Denition of peormance indicators 132 Peormance of the Group 134 Value generated and distributed for stakeholders 162 Analysis of the Group’s nancial position and structure 163 Peormance by Business Line 170 Enel shares 205 Innovation and digitalization 208 People centricity 212 Signicant events in 2021 223 Regulatory and rate issues 231 OUTLOOK 252 Outlook for operations 254 Other information 256 CONSOLIDATED FINANCIAL STATEMENTS 260 Consolidated nancial statements 262 Notes to the consolidated nancial statements 269 Declaration of the Chief Executive Ocer and the ocer in charge 437 REPORTS 438 Repo of the Board of Statutory Auditors 438 Repo of the Audit Firm 453 ATTACHMENTS 460 Subsidiaries, associates and other signicant equity investments of the Enel Group at December 31, 2021 460 CONSOLIDATED FINANCIAL STATEMENTS Guide to navigating the repo To facilitate navigation, hyperlinks have been integrated into the document 4. 5. 6. Income Statement Statement of Financial Position Statement of Cash Flows Statement of Changes in Equity Statement of Comprehensive Income Return to main menu Go to... Search Print Back/forward 14 Integrated Annual Repo 202114 Basis of Presentation Enel’s approach to corporate repoing The Integrated Annual Repo of the Enel Group, consisting of the Repo on Operations inspired by integrated think- ing and the consolidated nancial statements prepared in accordance with the IFRS/IAS international accounting standards, represents the “core” document of the Enel Group’s integrated corporate repoing system, based on the transparency and accountability of information. The objective of the Enel’s Integrated Annual Repo is to describe its strategic-sustainable thinking and to present its results and the medium- and long-term outlook for a sustainable and integrated business model that in recent years has fostered the creation of value in the context of the energy transition. The Enel Group has drawn inspiration from the “Core&More” repoing approach, designing its own corporate repoing system at the service of all stakeholders in a connected, logical and structured manner and developing its own concept for presenting economic, social, environmental and governance information, in accordance with specif- ic regulations, recommendations and international best practices. This “Core Repo” seeks to provide a holistic view of the Group, its sustainable and integrated business model and the related medium/long-term value creation process, including the qualitative and quantitative nancial and non-nancial information considered most relevant on the basis of a materiality assessment that also considers the expectations of all stakeholders. The “More Repos”, on the other hand, include more de- tailed and additional information, paly in compliance with specic regulations, than that provided in the Core Repo while being cross referenced to the laer. 15Basis of Presentation 15 Integrated Annual Repo 2021 Repo and nancial statements of Enel SpA This is prepared in conformity with Aicle 9, paragraph 3, of Legislative Decree 38 of February 28, 2005 Repo on Remuneration Policy This describes the Enel remuneration system, as provided for by Aicle 123-ter of the Consolidated Law on Financial Intermediation Repo on Corporate Governance and the Ownership Structure This describes the Enel corporate governance system pursuant to Aicle 123-bis of the Consolidated Law on Financial Intermediation and Aicle 144-decies of the CONSOB Issuers Regulation Sustainability Repo This includes the Consolidated Non-Financial Statement pursuant to Legislative Decree 254/2016 and presents Enel’s sustainable business model for creating value for all stakeholders and contributing to achievement of the 17 Sustainable Development Goals of the United Nations Corporate Repoing Framework The Core&More approach of the Enel Group 16 Integrated Annual Repo 202116 The Integrated Annual Repo and materiality analysis As an expression of integrated thinking, the Integrated An- nual Repo seeks to represent the capacity of the busi- ness model to create value for stakeholders in the sho, medium and long term, ensuring the connectivity of the information it contains. The Group maintains ongoing relationships with all stake- holders in order to understand and meet their repoing needs, taking account of the impoance of the impact of the Group’s business model for all interests involved, with a view to creating shared value. The nancial and non-nancial information presented within the various documents of the corporate repoing system are selected based on their materiality determined on the basis of specic frameworks, methodologies and assessments. The following represent the key principles underpinning the preparation of the Repo on Operations, with the ba- sis of preparation of the consolidated nancial statements being discussed in the section “Form and content of the consolidated nancial statements”. The Repo on Operations includes nancial and sustain- ability information selected on the basis of a materiality analysis that takes account of stakeholder information requirements, including Enel’s contribution to achieving the United Nations Sustainable Development Goals (SDGs) included in the Group Strategic Plan (i.e., “Aordable and Clean Energy” (SDG 7), “Industry, Innovation and Infrastruc- ture” (SDG 9), “Sustainable Cities and Communities” (SDG 11) and “Climate Action” (SDG 13)) and on the activities im- plemented to contribute to their achievement in order to meet the expectations of the main stakeholders in the In- tegrated Annual Repo. The Enel Group also peorms a double materiality analysis, details on which are available in the methodological note of the Sustainability Repo. In addition to the concept of materiality, the qualitative and quantitative nancial and sustainability information repoed in the Repo on Operations have been prepared and presented in such a way as to ensure their complete- ness, accuracy, neutrality and comprehensibility. The information contained in the Repo on Operations is also consistent with the previous year. Accordingly, the Group applies the same methodologies from year to year, unless otherwise specied, in compli- ance with international best practices for integrated re- poing and non-nancial repoing. For the purposes of preparing sustainability information, especially quantitative information, the Group mainly ap- plies the provisions of the Global Repoing Initiative (GRI) Standard, in line with the Sustainability Repo, and the “Aspects” of the GRI supplement dedicated to the Elec- tric Utilities sector (“Electric Utilities Sector Disclosures”). Consideration was also given to the indicators proposed in the white paper “Towards Common Metrics and Consist- ent Repoing of Sustainable Value Creation” of the World Economic Forum (WEF), the details of which are highlight- ed in the section below on the WEF and in the “Group Per- formance” chapter of this Repo. 17Basis of Presentation 17 The Repo on Operations in organized into the following sections: The section discusses the Group’s governance bodies, its organizational model and its involvement in sustainability and climate change policies 100% Governance Founded on a macroeconomic vision, the section provides an overview of the Group’s strategies and the main objectives of the Strategic Plan, examining the main risks to which the Group is exposed, including risks associated with climate change and specic mitigation actions. It also underscores the oppounities of the business model within the current energy transition scenario Group Strategy and Risk Management The section discusses signicant developments connected with the outlook for the operations of the Enel Group, providing forward-looking information in line with the Strategic Plan Outlook In accordance with “IFRS 8 - Segment Repoing“, this section focuses on the business segments of the Enel Group and their nancial and non-nancial peormance for the year, oering a holistic view consistent with Enel’s integrated and sustainable business model Group Peormance 1 2 4 3 Taking account of the results of the priority matrix and the signicant climate impacts on the Group’s value cre- ation process, each chapter (entitled after the four pillars of the Task Force on Climate-Related Financial Disclosures \- TCFD: Governance, Group Strategy & Risk Management, Group Peormance and Outlook) includes information re- lating to climate change as proposed by the TCFD, which published specic recommendations in June 2017 that were adopted by the Group in its voluntary repoing on the nancial impacts of climate risks. The Group also took account of the recommendations is- sued by the IASB in November 2019 “IFRS Standards and climate-related disclosures” and November 2020 “Eects of climate-related maers on nancial statements“, which emphasize that this risk must be considered in the as- sumptions of management in the exercise of its judgment in measuring items in the nancial statements. In order to ensure the connectivity of information and to communicate the way in which the progress achieved in sustainability contributes to enhancing current and future nancial peormance, clear and consistent relationships between key nancial and sustainability information have been identied and presented in the Repo on Operations for each of the four chapters indicated above. In addition, Enel’s Integrated Annual Repo has been pub- lished in the “Investors” section of the Enel website (www. enel.com). Connectivity matrix In order to provide an integrated representation of the Group and represent the connectivity of information, since 2020 the Enel Group has prepared a matrix delineating the relationships between: • strategic objectives that also clearly represent Enel’s contribution to achieving the United Nations Sustaina- ble Development Goals (SDGs) and in paicular the four key objectives of the Strategic Plan (i.e., SDG 7, SDG 9, SDG 11 and SDG 13); • the governance, Group strategy and risk management, Group peormance and the outlook for each Business Line. 18 Integrated Annual Repo 202118 Enel business Value creation and business model Governance Group strategy SDGs Risk management Group peormance Outlook ENEL GREEN POWER AND THERMAL GENERATION & GLOBAL ENERGY AND COMMODITY MANAGEMENT GENERATION AND TRADING • Enel shareholders (p. 40) • Corporate boards (p. 42) • The Enel corporate governance system (p. 44) • Enel organizational model (p. 51) • Incentive system (p. 54) • Values and pillars of corporate ethics (p. 55) “THE DECADE OF ELECTRIFICATION“ (p. 61) I. Allocate capital to suppo the supply of decarbonized electricity II. Enable the electrication of customer energy demand III. Leverage the creation of value throughout the value chain IV. Move forward achievement of sustainable Net-Zero objectives to 2040 Strategic (p. 102) • Legislative and regulatory developments • Macroeconomic and geopolitical trends • Risks and strategic oppounities associated with climate change • Competitive environment Financial (p. 121) • Interest rate • Commodity • Currency • Credit and counterpay • Liquidity Digital Technology (p. 124) • Cyber security • Digitalization, IT eectiveness and service continuity Operational (p. 125) • Health and safety • Environment • Procurement, logistics and supply chain • People and organization Compliance (p. 128) • Data protection Value generated and distributed for stakeholders (p. 162) Innovation and digitalization (p. 208) ENEL GREEN POWER (p. 180) Operations • Net electricity generation • Net ecient installed capacity Peormance • Revenue • Ordinary gross operating prot • Ordinary operating prot • Capex THERMAL GENERATION AND TRADING (p. 174) Operations • Net electricity generation • Net ecient installed capacity Peormance • Revenue from thermal and nuclear generation • Revenue • Ordinary gross operating prot • Ordinary operating prot • Capex • Allocate capital to suppo the supply of decarbonized electricity (p. 254) • Enable the electrication of customer energy demand (p. 254) • Leverage the creation of value throughout the value chain (p. 254) • Achieve sustainable Net-Zero objectives in advance (p. 254) 2020-2030 As a result of the above strategic lines of action, the Group’s ordinary EBITDA is expected to increase at a compound annual growth rate of 5-6%, with the ordinary prot of the Group expected to increase at a compound annual rate of 6-7%. 2022-2024 In 2024 the Group’s ordinary EBITDA is forecast to reach €21-21.6 billion, compared with €19.2 billion in 2021. The Group’s ordinary prot is expected to rise to €6.7-6.9 billion in 2024, compared with €5.6 billion in 2021. Enel’s dividend policy for the period remains simple, predictable and aractive. Shareholders should receive a xed dividend per share (“DPS”) that is expected to increase by 13% between 2021 and 2024, reaching €0.43 per share. 2022 • An acceleration of investments in renewable energy, especially in Iberia and Noh America, to suppo industrial growth and as pa of the Group’s decarbonization policies. • An increase in investments in distribution grids, especially in Italy, with the aim of fuher improving service quality and increasing the exibility and resilience of the grid. • An increase in investments dedicated to the electrication of consumption, with the aim of leveraging the growth of the customer base, and to achieving continuous eciency gains, suppoed by the development of global business platforms. • Ordinary EBITDA is forecast at €19-19.6 billion, with ordinary net prot of €5.6-5.8 billion. RETAIL CUSTOMERS Value generated and distributed for stakeholders (p. 162) Innovation and digitalization (p. 208) END-USER MARKETS (p. 194) Operations • Sales of electricity • Sales of natural gas Peormance • Revenue • Ordinary gross operating prot • Ordinary operating prot • Capex ENEL X Value generated and distributed for stakeholders (p. 162) Innovation and digitalization (p. 208) ENEL X (p. 198) Operations • Demand response • Lighting points • Storage • Charging points Peormance • Revenue • Ordinary gross operating prot • Ordinary operating prot • Capex GLOBAL INFRASTRUCTURE AND NETWORKS DISTRIBUTION Value generated and distributed for stakeholders (p. 162) Innovation and digitalization (p. 208) INFRASTRUCTURE AND NETWORKS (p. 188) Operations • Distribution grids and electricity transmission • Average frequency interruptions per customer • Average duration of interruptions per customer • Grid losses Peormance • Revenue • Ordinary gross operating prot • Ordinary operating prot • Capex 19Basis of Presentation 19 Enel business Value creation and business model Governance Group strategy SDGs Risk management Group peormance Outlook ENEL GREEN POWER AND THERMAL GENERATION & GLOBAL ENERGY AND COMMODITY MANAGEMENT GENERATION AND TRADING • Enel shareholders (p. 40) • Corporate boards (p. 42) • The Enel corporate governance system (p. 44) • Enel organizational model (p. 51) • Incentive system (p. 54) • Values and pillars of corporate ethics (p. 55) “THE DECADE OF ELECTRIFICATION“ (p. 61) I. Allocate capital to suppo the supply of decarbonized electricity II. Enable the electrication of customer energy demand III. Leverage the creation of value throughout the value chain IV. Move forward achievement of sustainable Net-Zero objectives to 2040 Strategic (p. 102) • Legislative and regulatory developments • Macroeconomic and geopolitical trends • Risks and strategic oppounities associated with climate change • Competitive environment Financial (p. 121) • Interest rate • Commodity • Currency • Credit and counterpay • Liquidity Digital Technology (p. 124) • Cyber security • Digitalization, IT eectiveness and service continuity Operational (p. 125) • Health and safety • Environment • Procurement, logistics and supply chain • People and organization Compliance (p. 128) • Data protection Value generated and distributed for stakeholders (p. 162) Innovation and digitalization (p. 208) ENEL GREEN POWER (p. 180) Operations • Net electricity generation • Net ecient installed capacity Peormance • Revenue • Ordinary gross operating prot • Ordinary operating prot • Capex THERMAL GENERATION AND TRADING (p. 174) Operations • Net electricity generation • Net ecient installed capacity Peormance • Revenue from thermal and nuclear generation • Revenue • Ordinary gross operating prot • Ordinary operating prot • Capex • Allocate capital to suppo the supply of decarbonized electricity (p. 254) • Enable the electrication of customer energy demand (p. 254) • Leverage the creation of value throughout the value chain (p. 254) • Achieve sustainable Net-Zero objectives in advance (p. 254) 2020-2030 As a result of the above strategic lines of action, the Group’s ordinary EBITDA is expected to increase at a compound annual growth rate of 5-6%, with the ordinary prot of the Group expected to increase at a compound annual rate of 6-7%. 2022-2024 In 2024 the Group’s ordinary EBITDA is forecast to reach €21-21.6 billion, compared with €19.2 billion in 2021. The Group’s ordinary prot is expected to rise to €6.7-6.9 billion in 2024, compared with €5.6 billion in 2021. Enel’s dividend policy for the period remains simple, predictable and aractive. Shareholders should receive a xed dividend per share (“DPS”) that is expected to increase by 13% between 2021 and 2024, reaching €0.43 per share. 2022 • An acceleration of investments in renewable energy, especially in Iberia and Noh America, to suppo industrial growth and as pa of the Group’s decarbonization policies. • An increase in investments in distribution grids, especially in Italy, with the aim of fuher improving service quality and increasing the exibility and resilience of the grid. • An increase in investments dedicated to the electrication of consumption, with the aim of leveraging the growth of the customer base, and to achieving continuous eciency gains, suppoed by the development of global business platforms. • Ordinary EBITDA is forecast at €19-19.6 billion, with ordinary net prot of €5.6-5.8 billion. RETAIL CUSTOMERS Value generated and distributed for stakeholders (p. 162) Innovation and digitalization (p. 208) END-USER MARKETS (p. 194) Operations • Sales of electricity • Sales of natural gas Peormance • Revenue • Ordinary gross operating prot • Ordinary operating prot • Capex ENEL X Value generated and distributed for stakeholders (p. 162) Innovation and digitalization (p. 208) ENEL X (p. 198) Operations • Demand response • Lighting points • Storage • Charging points Peormance • Revenue • Ordinary gross operating prot • Ordinary operating prot • Capex GLOBAL INFRASTRUCTURE AND NETWORKS DISTRIBUTION Value generated and distributed for stakeholders (p. 162) Innovation and digitalization (p. 208) INFRASTRUCTURE AND NETWORKS (p. 188) Operations • Distribution grids and electricity transmission • Average frequency interruptions per customer • Average duration of interruptions per customer • Grid losses Peormance • Revenue • Ordinary gross operating prot • Ordinary operating prot • Capex Value creation and the business model An integrated representation of how the Group transforms its resources into outcomes and value created for stakeholders, prioritizing the pursuit of Sustainable Development Goals (SDGs) 7, 9, 11 and 13. WEF metrics and the European taxonomy Clear, transparent and comparable disclosure through WEF metrics and the European taxonomy. Sustainable development on 5 continents The Enel Group is present in 47 countries with more than 1,000 companies. 1. Enel Group REPORT ON OPERATIONS 20 Integrated Annual Repo 2021 21 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 22 Integrated Annual Repo 202122 Highlights 2323 (1) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. The change in classication had no impact on operating prot. For more details, please see note 7 to these consolidated nancial statements. (2) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more details, please see note 7 to these consolidated nancial statements. (3) Does not include €111 million regarding units classied as “held for sale” in 2021. (4) Injuries whose consequences caused permanent changes in the life of the individual. Revenue Group revenue (1) (2) +33.3% €88,006 million €66,004 million in 2020 GROSS OPERATING PROFIT (2) +3.9% €17,567 million €16,903 million in 2020 ORDINARY GROSS OPERATING PROFIT (2) +6.6% €19,210 million €18,027 million in 2020 Peormance Group prot +22.2% €3,189 million €2,610 million in 2020 GROUP ORDINARY PROFIT +7.6% €5,593 million €5,197 million in 2020 NET FINANCIAL DEBT +14.4% €51,952 million €45,415 million in 2020 Capital expenditure Capital expenditure on propey, plant and equipment and intangible assets (3) +27.5% €12,997 million €10,197 million in 2020 CASH FLOWS FROM OPERATING ACTIVITIES -12.5% €10,069 million €11,508 million in 2020 People Group employees -0.7% 66,279 employees 66,717 in 2020 “LIFE CHANGING“ INCIDENTS AT ENEL (4) 1 employee \- in 2020 Highlights 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 24 Integrated Annual Repo 202124 Business Line Highlights Global Power Generation TOTAL NET EFFICIENT INSTALLED CAPACITY +3.7% 87. 1 GW 84.0 in 2020 NET ELECTRICITY GENERATION +7.5% 222.6 TWh 207.1 in 2020 NET EFFICIENT INSTALLED RENEWABLES CAPACITY +11.3% 50.1 GW 45.0 in 2020 ADDITIONAL EFFICIENT INSTALLED RENEWABLES CAPACITY +78.0% 5.18 GW 2.91 in 2020 NET RENEWABLE ELECTRICITY GENERATION +3.2% 108.8 TWh 105.4 in 2020 NET EFFICIENT INSTALLED RENEWABLES CAPACITY AS % OF TOTAL +7.3% 57.5 % 53.6 in 2020 DIRECT GREENHOUSE GAS EMISSIONS - SCOPE 1 – SPECIFIC (1) (2) +5.1% 227 gCO 2eq /kWh 216 in 2020 (1) The gures for 2020 have been modied following the introduction of a new calculation method deriving from the implementation of the Net-Zero project. (2) Specic emissions are calculated by considering total direct (Scope 1) emissions from total renewable, nuclear and conventional thermal generation includ- ing the contribution of heat. 25Business Line Highlights 25 (3) The gure for 2020 reects a more accurate calculation of the numbers. (4) Of which 23.5 million second-generation sma meters in 2021 and 18.2 million in 2020. Global Infrastructure and Networks END USERS +1.2% 75,178,777 no. 74,303,931 in 2020 ELECTRICITY DISTRIBUTION AND TRANSMISSION GRID +0.1% 2,233,368 km (3) 2,232,023 in 2020 END USERS WITH ACTIVE SMART METERS +1.5% 44,968,974 no. (3) (4) 44,293,483 in 2020 ELECTRICITY TRANSPORTED ON ENEL’S DISTRIBUTION GRID +5.2% 510.3 TWh (3) 485.2 in 2020 Retail ELECTRICITY SOLD BY ENEL +3.8% 309.4 TWh 298.2 in 2020 OF WHICH FREE MARKET +8.3% 24,839,600 no. (3) 22,931,809 in 2020 RETAIL CUSTOMERS -0.3% 69,342,818 no. 69,517,932 in 2020 Enel X STORAGE +205% 375 MW 123 in 2020 DEMAND RESPONSE +27.7% 7,713 MW 6,038 in 2020 CHARGING POINTS +49.6% 157,209 no. (3) 105,079 in 2020 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 26 Integrated Annual Repo 202126 World Economic Forum (WEF) The International Business Council (IBC) of the World Eco- nomic Forum has produced a repo entitled “Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Repoing of Sustainable Value Creation”, with the aim of dening shared common metrics to measure, repo and compare levels of sustainability, i.e., the eec- tiveness of its actions in pursuing the Sustainable De- velopment Goals set by the United Nations (SDGs), in the business model adopted to create value for stakeholders. The metrics are based on existing standards and seek to increase convergence and comparability between the var- ious parameters used today in sustainability repos. The following table gives the 21 main indicators specied in the WEF repo. Integrated Annual Repo 2021 Pillar Theme 21 CORE KPIs KPIs representing the 21 CORE KPIs of the WEF 2021 2020 Change Chapter/Section repoing all KPIs and disclosure on the 21 CORE KPIs of the WEF Principles of Governance Governing purpose Seing purpose Enel is Open Power Quality of governing body Governance body composition No. of women on Board 4 4 - “Corporate boards” section in “Governance” chapter Stakeholder engagement Material issues impacting stakeholder “Basis of Presentation” chapter Ethical behavior Anti-corruption Employees with training in anti-corruption policies and procedures (%) 30.3 40.0 (9.7) “Values and pillars of corporate ethics” section in “Governance” chapter Conrmed violations for conict of interest/corruption (no.) 7 2 5 Protected ethics advice and repoing mechanisms Repos received for violations of Code of Ethics 153 151 2 “Values and pillars of corporate ethics” section in “Governance” chapter Risk and oppounity oversight Integrating risk and oppounity into business process “Risk management” section in “Group Strategy & Risk Management” chapter Planet Climate change Greenhouse gas (GHG) emissions Direct greenhouse gas emissions \- Scope 1 (million/t eq ) 51.6 45.7 5.9 “Fighting climate change and ensuring environmental sustainability” section in “Group Peormance” chapter Indirect greenhouse gas emissions - Scope 2 - Purchase of electricity from the grid (location based) (million/t eq ) 4.3 4.1 0.2 Indirect greenhouse gas emissions - Scope 2 - Purchase of electricity from the grid (market based) (million/t eq ) 7. 1 6.9 0.2 Indirect greenhouse gas emissions - Scope 3 (million/t eq ) 69.1 64.9 4.2 TCFD implementation “Governance”, “Group Strategy & Risk Management”, “Group Peormance” and “Outlook” chapters Nature loss Land use and ecological sensitivity Habitat recovery (hectares) 9,092 4,356 4,736 “Fighting climate change and ensuring environmental sustainability” section in “Group Peormance” chapter Freshwater availability Water consumption and withdrawal in water-stressed areas Water withdrawals (millions of m 3 ) 55.6 51.5 4.1 “Fighting climate change and ensuring environmental sustainability” section in “Group Peormance” chapter Water withdrawals in water- stressed areas (%) 27.4 23.3 4.1 Total water consumption (millions of m 3 ) 26.3 20.4 5.9 Water consumption in water- stressed areas (%) 33.8 31.6 2.2 27World Economic Forum (WEF) 27 Integrated Annual Repo 2021 Pillar Theme 21 CORE KPIs KPIs representing the 21 CORE KPIs of the WEF 2021 2020 Change Chapter/Section repoing all KPIs and disclosure on the 21 CORE KPIs of the WEF People Dignity and equality Diversity and inclusion Women as propoion of total employees (%) 22.5 21.5 1.0 “People centricity” section in “Group Peormance” chapter Pay equality Equal Remuneration Ratio (%) 81.1 83.3 (2.2) “People centricity” section in “Group Peormance” chapter Wage level CEO Pay Ratio (%) (1) 91.0 145.0 (54.0) Risk for incidents of child, forced or compulsory labor Assessment of protection of child labor and compliance with ban on forced labor in the supply chain “Values and pillars of corporate ethics” section in “Governance” chapter Health and well- being Health and safety Fatal accidents - Enel (no.) 3 1 2 “People centricity” section in “Group Peormance” chapter Frequency of fatal accidents - Enel (i.) 0.024 0.008 0.016 Life changing accidents - Enel (no.) 1 \- 1 Frequency of life changing accidents - Enel (i.) 0.008 \- 0.008 Skills for the future Training provided Average hours of training per employee (hrs/person) 44.6 40.9 3.7 “People centricity” section in “Group Peormance” chapter Employee training costs (millions of euro) 23 19 4 Prosperity Employment and wealth generation Absolute number and rate of employment People hired (no.) 5,401 3,131 2,270 “People centricity” section in “Group Peormance” chapter Hiring rate (%) 8.1 4.7 3.4 Terminations (no.) 5,862 3,696 2,166 Turnover (%) 8.8 6.0 2.8 Economic contribution “Value generated and distributed for stakeholders” section in “Group Peormance” chapter Financial investment contribution Total investment (millions of euro) 12,997 10,197 2,800 “Analysis of the Group’s nancial position and structure” section in “Group Peormance” chapter Purchase of treasury shares and dividends and interim dividends paid to holders of hybrid bonds 5,054 4,755 299 Consolidated nancial statements Innovation in beer products and services Total R&D expenses Investment in R&D (millions of euro) 130 111 19 “Innovation and digitalization” section in “Group Peormance” chapter Community and social vitality Total tax paid Total tax paid (millions of euro) (2) 4,127 4,260 (133) “Value generated and distributed for stakeholders” section in “Group Peormance” chapter (1) Ratio between the total remuneration of the CEO/General Manager of Enel and the average gross annual remuneration of Group employees. The gure for 2020 has been adjusted to take account of 2021 exchange rates. (2) The amount represents “total tax borne”, which is costs for taxes borne by the Group. For more information, see the 2021 Sustainability Repo and the Consolidated Non-Financial Statement. The 2020 gure has been calculated more accurately. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 28 Integrated Annual Repo 202128 European Union taxonomy The European taxonomy was adopted by the European Union with Regulation 2020/852, published in the Ocial Journal of the European Union on June 22, 2020 and en- tered into force on July 12, 2020. The European taxonomy establishes six environmental ob- jectives to identify environmentally sustainable economic activities: climate change mitigation; climate change ad- aptation; the sustainable use and protection of water and marine resources; the transition to a circular economy; pollution prevention and control; and the protection and restoration of biodiversity and ecosystems. Accordingly, an economic activity is dened as environmentally sustaina- ble if: • it makes a substantive contribution to at least one of the six environmental objectives; • it does no signicant harm (DNSH) to the other ve en- vironmental objectives; • it meets minimum safeguards. The European taxonomy provides a standardized, sci- ence-based classication system to identify environmen- tally sustainable economic activities and thus acts as an impoant enabler to promote sustainable investment and accelerate the decarbonization of the European economy, while at the same time creating security and transparen- cy for investors and suppoing businesses in planning the Net Zero transition. Although the taxonomy regulation establishes an obliga- tion for undeakings to declare compliance with the tax- onomy from January 2022, Enel has positioned itself as leader and elected to announce implementation in the previous 2020 Sustainability Repo and the Integrated Annual Repo 2020 as well as during the 2020 and 2021 Capital Markets Days. EU taxonomy repoing pursuant to the regulation and the delegated act is provided in full in the 2021 Sustainability Repo \- Non-Financial Statement pursuant to Regulation (EU) 2020/852. The European taxonomy implementation process at Enel Through a process overseen by the CEO and top manage- ment, involving the competent functions at the company and country level as well as all Business Lines, ve steps have been identied to analyze the applicability of the Eu- ropean taxonomy along the entire value chain in all coun- tries in which the Group operates. 1. Identication of eligible economic activities: all the ac- tivities within the Group’s pofolio included in the Cli- mate Delegated Act have been identied. The process only considered the climate change mitigation objec- tive as it is the most material objective in consideration of the Enel Group’s business model and the sector in which we operate. 2. Analysis of substantial contribution: the eligible activi- ties identied in the previous phase were carefully ana- lyzed to verify their compliance with the specic tech- Identication of eligible economic activities 2 31 Analysis of substantial contribution Calculation of nancial metrics 4 5 Verication of minimum social safeguards Assessment of the principle of Do No Signicant Harm (DNSH) to other environmental objectives 29European Union taxonomy 29 nical criteria established to measure their substantial contribution to climate change mitigation. The analysis was conducted following the criteria contained in the Climate Delegated Act, namely: – technology screening for electricity generation. The threshold of 100 gCO 2eq /kWh measured on a life-cy- cle basis was complied with as follows: • coal and liquid fossil fuels: technology non included in the European taxonomy; • gas and nuclear: on February 2, 2022, the European Commission approved in principle a Complementa- ry Delegated Act on climate which includes, under strict conditions, activities related to nuclear energy and gas in the list of economic activities covered by the European taxonomy. At the time of publica- tion of this Repo, the Complementary Delegated Act is going through the approval process with the European Parliament and the Council. In these cir- cumstances, the legislation is not yet nalized and therefore the production of electricity from gas and nuclear activities has been considered as “non-eli- gible”; • wind, solar and energy storage: these activities are exempt from the verication of the carbon intensi- ty threshold due to their substantial contribution to climate change mitigation; • hydroelectric energy: the carbon intensity thresh- old was veried only for those plants whose power density is less than 5 W/m 2 . All plants with power densities greater than 5W/m 2 as well as run-of-the- river plants and pumping facilities are exempt from verication of the threshold; • geothermal: the threshold was veried by carrying out life-cycle emissions assessments ceied by independent third paies; – geographical and system level screening for electric- ity transmission and distribution. For the purposes of classifying activities as eligible, compliance with one of the following technical screening criteria was ver- ied in all eight countries wherein which Enel distrib- utes electricity: • the distribution system operator (DSO) is the Euro- pean interconnected system; • the non-European DSO operates a system in which more than 67% of newly enabled generation capac- ity is below the threshold value of 100 gCO 2eq /kWh measured on a life-cycle basis in the 2016-2020 period; • the average emissions factor of the non-European DSO network is below the threshold value of 100 gCO 2eq /kWh measured on a life-cycle basis in ac- cordance with electricity generation criteria in the 2016-2020 period. Infrastructure constructed in 2021 and dedicated to the creation of a direct connection or expanding an existing direct connection between a substation or network and a power production plant that is more greenhouse gas intensive than 100 gCO 2eq /kWh measured on a life-cycle basis has been identied and excluded from the aligned activities of the DSOs; – product cluster screening for the Enel X Business Line. A complete analysis of the Enel X pofolio was con- ducted, classifying the eligible activities in the sectors identied in the Climate Delegated Act, such as con- struction and real estate, transpo or professional, scientic and technical activities; – provisioning screening for retail electricity activities. The amount of power sold by electricity sales com- panies in Italy and Spain suppoed by Ceicates of Origin was calculated and considered to be aligned with the European taxonomy due to its compliance with the technical screening criteria established in the Climate Delegated Act for electricity generation. 3\. Analysis of compliance with the principle of not caus- ing signicant harm to other objectives (Do No Sig- nicant Harm - DNSH): an analysis of existing environ- mental procedures was peormed to verify compliance with the DNSH quality criteria for each technology (for power generation activities), region (for transmission and distribution activities) and product cluster (for the activities of the Enel X Business Line), adapted to the specic requirements envisaged for each environmen- tal objective. 4\. Due diligence assessment of compliance with min- imum social guarantees: we veried that the due dili- gence process for the Group’s human rights assessments includes the entire Enel Group. 5\. Calculation of nancial metrics: the corresponding - nancial metrics were associated with each economic activity in accordance with the classication peormed in steps 1-4, as described in the “Statement on the alignment of Enel’s business with the European taxono- my” section of the “Group Peormance” chapter. Using this process, Enel has classied all the economic ac- tivities along its value chain in the following three catego- ries: eligible-aligned, eligible-not aligned, non-eligible. Eligible-aligned: this refers to an economic activity that si- multaneously meets the following three conditions: • it is explicitly included in the European taxonomy regu- lation for its substantial contribution to climate change mitigation; • it meets the specic criteria in the European taxonomy regulation for this specic environmental objective; • it meets all DNSH criteria and minimum protection guar- antees. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 30 Integrated Annual Repo 202130 Eligible-not aligned: this refers to an economic activity that: • is explicitly included in the European taxonomy regula- tion for its substantial contribution to climate change mitigation or adaptation; but • it does not meet the specic criteria in the European taxonomy regulation for these specic environmental objectives; or • it does not meet at least one of the DNSH conditions and/or the minimum protection guarantees. Not eligible: this refers to an economic activity that has not been identied by the European taxonomy as a substantial contributor to climate change mitigation and, therefore, no criteria have been developed. The rationale of the Euro- pean Commission is that these activities may: • not have a signicant impact on climate change mitiga- tion or may be integrated into the European taxonomy regulation at a later stage; • have a very signicant impact on climate change miti- gation, so they may not be eligible in any case; • be awaiting a denitive resolution of the European au- thorities regarding their classication (nuclear and gas). Eligibility of Enel activities In 2021, Enel’s eligibility analysis was updated in accord- ance with the process delineated above and the new denition for the three categories described above and pursuant to the nal version of the Climate Delegated Act published in the Ocial Journal of the European Union in December 2021. European taxonomy Aligned Non-aligned Not eligible Mapping in accordance with Climate Delegated Act • Solar and wind • Hydro (99.5%) • Geothermal • RES Storage Distribution in Europe, Brazil, Chile, Peru and Colombia without new connections to generation plant over threshold of 100 gCO 2eq /kWh Sma Lighting, e-Bus, Energy Eciency, Home, Vivi Meglio Unifamiliare, Condominium, Customer Insight, Distributed Energy, e-Mobility, Baery Energy Storage Retail sale of power in Italy and Spain with Ceicates of Origin Hydro (0.5%) • New connections between subscriber or grid and a generation plant with greenhouse gas intensity over threshold of 100 gCO 2eq /kWh • Distribution in Argentina Retail sale of power without Ceicates of Origin Trading Sale of gas to end users Finanical services, hardware and software, insurance and other general services Coal and liquid fossil fuels • Nuclear • Gas Eligible TBD TBD Pending approval of Complementary Delegated Act. To be considered not eligible until approval. 31Value creation and the business model 31 Value creation and the business model The value creation process The integrated presentation of nancial and non-nancial information makes it possible to eectively communicate the business model and the value creation process both in terms of results and the sho\- and medium/long-term outlook. Environmental, social and economic aspects are increasingly signicant in terms of assessing the ability to create value for all categories of stakeholders. The following graphical representation summarizes the value chain of the Enel Group with the main inputs used and how they are transformed into outcomes and value created for stakeholders by the Group’s organization and the business model in the sho term. For more on the me- dium/long-term impacts, please see the Sustainability Re- po. The Group is characterized by sound and transparent governance and a sustainable strategy that prioritizes the pursuit of Sustainable Development Goals (SDGs) 7, 9, 11 and 13. These SDGs are thus the objectives of the Group’s strategic action and are translated into the creation of val- ue for the Group itself and for its stakeholders. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 34 Integrated Annual Repo 202134 Business model Enel’s business model has been structured so as to Group’s strategic objectives, including the commitments made by the Group in the ght against climate change. The business model delineates how the organizational units of the Company, linked to our three main businesses (gen- eration, distribution and sales), must work to reap all the possible benets from the main trends in the sector, possi- bly accelerating their implementation as well. The role dened for all the major organizational units is also intended to enable them to eectively address all the risks posed by developments in the rapidly changing energy in- dustry. In order to fully benet from all the oppounities emerging in the market environment in which it operates, the Group has identied two dierent business models (Ownership and Stewardship) that it can use to achieve the ambitions we have dened. The most appropriate and eective busi- ness model is selected depending on the geographical area and operating environment involved: • the Ownership business model, in which the Group makes direct investments in renewables, grids and cus- tomers. This model is employed in countries where the entire value chain can already be leveraged, from gen- eration to integration with end user. These are dened as “Tier 1” countries, such as Italy, Spain and Romania in Europe and the United States, Brazil, Chile, Colombia and Peru in the Americas. The central role of our customers in the Group’s business model makes the integrated margin a pillar of our Plan. This is the margin from the sale of power generated and purchased, the correct manage- ment of which requires the joint optimization of both sales of power, considering the dierent options availa- ble in the countries in which we operate, and provision- ing, which is linked to our generation rather than to the dierent sourcing options; • the Stewardship business model, in which the Group in- vests capital in existing or new joint ventures or acquires minority stakes, with a view to maximizing the value of the know-how developed in the various businesses in which it operates. This is achieved through the delivery of spe- cic contractual services to paners or the subsequent monetization of these investments on the market. This model focuses mainly, but not exclusively, on “non-Tier 1” countries, where the Group’s presence is not integrated and it seeks to build panerships with third paies to ex- plore new geographical areas or to leverage the Group’s operational experience in alternative environments. In this design, each country organization acts within its ter- ritory in a matrix relationship with the broader and more global Business Lines, managing activities such as relations with local communities, regulation, the retail market and lo- cal communication. The current mission of each business can be summarized as follows: • Enel Green Power and Thermal Generation: the Group operates through this Business Line to accelerate the energy transition, continuing to increase investments in new renewable energy capacity, and manages the decarbonization of its generation mix and the countries in which it operates, always aiming to ensure the safety and capacity of electrical systems. • Global Energy and Commodity Management: this Business Line manages our integrated margin as a single pofolio in which Generation and Retail operations are always balanced eectively. In addition, the Line manages all trading operations on international desks. Trading Generation 3535Value creation and the business model • Global Infrastructure and Networks: in developing and operating infrastructure that enables the energy transition, the Group ensures the reliability in the supply of energy and the quality of service to communities through resilient and exible networks, leveraging eciency, technology and digital innovation, and ensuring appropriate returns on investment and cash generation. • Global Retail: through its sales relationships with end users, the Group interacts locally with millions of families and companies. Thanks to our technology, the platform model enables us to improve customer satisfaction and the customer experience, while at the same time achieving ever higher levels of eciency. The business units optimize the supply of power to their customer base, maximizing the value generated by that resource and fostering long- term relationships with customers. • Enel X: this Business Line is enabling the energy transition by acting as an accelerator for the electrication and decarbonization of customers, helping them to use energy more eciently, driving circularity and leveraging the assets of the Enel Group through the delivery of innova- tive beyond-commodity services. Distribution Customers In 2021, the Enel X Global Retail and Global e-Mobility Busi- ness Lines were formed but will only begin operations from 2022. Enel X Global Retail is involved in managing energy and be- yond-commodity services, as well as expanding the cus- tomer base while maximizing value for customers, innovat- ing and developing the services oered and managing the entire life cycle. Global e-Mobility is responsible for managing the pofo- lio of e-Mobility solutions in both existing and new coun- tries, maximizing value for customers and leveraging Enel X Global Retail for sales activities. It is also involved in inno- vating and developing e-Mobility solutions, managing the entire life cycle. By exploiting the synergies between the dierent busi- ness areas, implementing actions through the lever of innovation and deploying Open Power approaches, the Enel Group seeks to develop solutions to reduce environ- mental impact, meet the needs of customers and the local communities in which it operates and ensure high safety standards for employees and suppliers. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 36 Integrated Annual Repo 202136 Enel around the world The Enel Group has a presence in 47 countries on multiple continents around the world, with more than 1,000 sub- sidiaries. The following map shows the distribution of the Enel Group across the globe. Presence 47 countries more than 1,000 subsidiaries 37Enel around the world 37 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Governance REPORT ON OPERATIONS Corporate governance system focused on achieving sustainable success. Governance model compliant with international best practice. Transparency and integrity its fundamental values. 2\. 38 Integrated Annual Repo 2021 39 2 Governance 1 Enel Group 3 Group Strategy & Risk Management 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 40 Integrated Annual Repo 202140 Enel shareholders At December 31, 2021, the fully subscribed and paid-up share capital of Enel SpA totaled €10,166,679,946, repre- sented by the same number of ordinary shares with a par value of €1.00 each. Share capital is unchanged compared with that registered at December 31, 2020. In 2021 the Company purchased a total of 1,620,000 treasury shares to suppo the 2021 Long-Term Incentive Plan (LTI Plan) for the management of Enel and/or its subsidiaries pursuant to Aicle 2359 of the Italian Civil Code. Considering the number of treasury shares already owned, Enel SpA holds a total of 4,889,152 treasury shares, all suppoing the 2019, 2020 and 2021 LTI Plans. Signicant shareholders At December 31, 2021, based on the shareholders register and the notices submied to CONSOB and received by the Company pursuant to Aicle 120 of Legislative Decree 58 of February 24, 1998, as well as other available informa- tion, shareholders with an interest of greater than 3% in the Company’s share capital included the Ministry for the Economy and Finance (with a 23.585% stake), BlackRock Inc. (with a stake of 5.000% held for asset management purposes) and Capital Research and Management Com- pany (with a 5.000% stake held for asset management pur- poses). Composition of shareholder base Since 1999, Enel has been listed on the Euronext Milan market (formerly the Mercato Telematico Azionario) organ- ized and operated by Borsa Italiana SpA. Enel’s sharehold- ers include leading international investment funds, insur- ance companies, pension funds and ethical funds. 41Enel shareholders 41 Composition of shareholder base at December 2021 With regard to Environmental, Social and Governance (ESG) investors in Enel, at December 31, 2021, socially re- sponsible investors (SRIs) held around 14.6% of the share capital (in line with December 31, 2020), while investors who have signed the Principles for Responsible Investment represent 46.6% of the share capital (compared with 47.8% at December 31, 2020). Institutional investors 100% 59.4% Ministry for the Economy and Finance 23.6% Retail investors 17.0% 2 Governance 1 Enel Group 3 Group Strategy & Risk Management 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 42 Integrated Annual Repo 202142 Corporate boards Board of Directors CHAIRMAN Michele Crisostomo CHIEF EXECUTIVE OFFICER AND GENERAL MANAGER Francesco Starace SECRETARY Silvia Alessandra Fappani Audit Firm KPMG SpA Board of Statutory Auditors CHAIRMAN Barbara Tadolini AUDITORS Romina Guglielmei Claudio Sooriva ALTERNATE AUDITORS Maurizio De Filippo Francesca Di Donato Piera Vitali DIRECTORS Cesare Calari Costanza Esclapon de Villeneuve Samuel Leupold Albeo Marchi Mariana Mazzucato Mirella Pellegrini Anna Chiara Svelto 43Corporate boards 43 5 in 2020 5 Men 4 in 2020 4 Women Composition of the Board of Directors 1 in 2020 1 executive director 8 in 2020 8 non-executive directors of which 8 independent (1) 7 in 2020 55.6% 44.4% 55.6% in 2020 44.4% in 2020 0% 11% 89 % 2021 <30 30-50 >50 AGE (1) The gures for 2020 refer to directors qualifying as independent pursuant to the Corporate Governance Code for Italian listed companies (2018 edition). The gures for 2021 refer to directors qualifying as independent pursuant to the Italian Corporate Governance Code (2020 edition). GENDER Energy industry 1 9 3 Legal and corporate governance 1 9 3 Strategic vision 1 9 4 Communication and marketing 1 9 1 Accounting, nance and risk management 1 9 5 International experience 1 9 6 EXPERTISE 2 Governance 1 Enel Group 3 Group Strategy & Risk Management 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 44 Integrated Annual Repo 202144 The Enel corporate governance system (2) Available from the website of Borsa Italiana (at hps://www.borsaitaliana.it/comitato-corporate-governance/codice/2020.pdf). The corporate governance system of Enel SpA is compli- ant with the principles set foh in the January 2020 edi- tion of the Italian Corporate Governance Code, (2) adopted by the Company, and with international best practice. The corporate governance system adopted by Enel and its Group is essentially aimed at achieving sustainable suc- cess, as it is aimed at creating value for the shareholders over the long term, taking into account the environmental and social impoance of the Group’s business operations and the consequent need, in conducting such operations, to adequately consider all the interests involved. In compliance with Italian legislation governing listed com- panies, the Group’s organization comprises the following bodies: Shareholders’ Meeting Board of Directors Board of Statutory Auditors Corporate Governance and Sustainability Commiee Nomination and Compensation Commiee Control and Risk Commiee Related Paies Commiee Audit Firm KPMG SpA 45The Enel corporate governance system 45 It is charged with deciding, among other things, in either ordinary or extraordinary session: • the appointment and removal of the members of the Board of Directors and the Board of Stat- utory Auditors and their compensation and undeaking any stockholder actions; • the approval of the nancial statements and the allocation of prot; • the purchase and sale of treasury shares; • remuneration policy and its implementation; • share ownership plans; • amendments to the bylaws; • mergers and demergers; • the issue of conveible bonds. • It is vested by the bylaws with the broadest powers for the ordinary and extraordinary manage- ment of the Company and has the power to carry out all the actions it deems advisable to imple- ment and achieve the corporate purpose. • It plays a central role in corporate governance, hold powers for strategic and organizational guid- ance and control of the Company and the Group, whose sustainable success it pursues. In this context, it examines and approves corporate strategy, including the annual budget and Business Plan (which incorporate the main objectives and planned actions, including with regard to sustain- ability, (3) to lead the energy transition and tackle climate change), taking account of the analysis of key issues for the generation of long-term value and therefore promoting a sustainable business model. • It peorms a policy-seing role and provides an assessment of the adequacy of the internal con- trol and risk management system (the ICRMS). More specically, it determines the nature and level of risk compatible with the strategic objectives of the Company and the Group, incorporat- ing in its assessments all factors that could be relevant to achieving the sustainable success of the Company. The ICRMS consists of the set of rules, procedures and organizational structures designed to enable the identication, measurement, management and monitoring of the main business risks to which the Group is exposed. These include the risks associated with climate change and, more generally, the risks that the Group’s activities may engender in the areas of the environment, society, personnel and respect for human rights. • It determines the remuneration policy for directors, statutory auditors and key management per- sonnel with a view to pursuing the Company’s sustainable success, taking due account of the need to have, retain and motivate people with the skills and expeise required by the positions they hold, submiing this policy for approval by the Shareholders’ Meeting. • Activities peormed in 2021 included addressing climate-related issues on the occasion of: (i) the examination and approval of the Business Plan of the Company and the Group; (ii) the updating of the Code of Ethics and the Human Rights Policy; (iii) the determination of Enel’s remuneration policy for 2021; (iv) the examination of the 2020 Sustainability Repo, which incorporates the Con- solidated Non-Financial Statement pursuant to Legislative Decree 254/2016 for the same year. In addition, it discussed climate-related issues as pa of the analysis of proposed legislation and in its engagement with investors. • With regard to enhancing gender diversity, it agreed on the introduction of a new peormance objective in the 2021 Long-Term Incentive Plan, represented by the percentage of women in man- agement succession plans at the end of 2023. • Finally, the Board of Directors receives regular updates on the impact of the COVID-19 pandemic and safety-related issues in the countries in which the Group operates, as well as information on developments in and the substance of the various forms of investor engagement. (3) Sustainability comprises issues connected with climate change, atmospheric emissions, managing water resources, biodiversity, the circular economy, health and safety, diversity, management and development of employees, relations with communities and customers, the supply chain, ethical conduct and human rights. Board of Directors 16 meetings held by the Board in 2021, in 8 of which it addressed issues connected with climate and their impact on strategies and the associated approaches to implementation Shareholders’ Meeting 2 Governance 1 Enel Group 3 Group Strategy & Risk Management 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 46 Integrated Annual Repo 202146 In compliance with the provisions of the Italian Civil Code, the Board of Directors has delegated pa of its manage- ment duties to the Chief Executive Ocer and, in accord- ance with the recommendations of the Corporate Gov- ernance Code and the provisions of the applicable CON- SOB regulations, has appointed the following commiees from among its members to provide recommendations and advice. • A majority of its members are independent directors and in 2021 it was composed of the Chairman of the Board of Directors and two other directors, all of whom met independence requirements. • It assists the Board of Directors in assessment and decision-making activities concerning the corporate governance of the Company and the Group and sustainability, including climate change issues and the interaction of the Group with all stakeholders. • With regard to sustainability issues, it examines: – the guidelines of the Sustainability Plan, including the climate objectives set out in the Plan, and the materiality matrix, which species the priority themes for stakeholders in the light of the Group’s business strategies; – the approach to implementing the sustainability policy; – the general approach and the structure of the content of the Non-Financial Statement and the Sustainability Repo – which may be presented in a single document – and the com- prehensiveness and transparency of the disclosures they provide, including with regard to climate change, and their consistency with the principles envisaged in the repoing standard adopted, issuing a prior opinion to the Board of Directors, which is called upon to approve those documents. • Activities peormed in 2021 included addressing climate-related issues on the occasion of the examination of: (i) the 2020 Sustainability Repo, which incorporates the Consolidated Non-Fi- nancial Statement pursuant to Legislative Decree 254/2016 for the same year; (ii) the materiality analysis and the guidelines of the 2022-2024 Sustainability Plan; (iii) the proposed update of the Human Rights Policy; (iv) updates on the main sustainability activities peormed by the Enel Group in 2021, on the state of implementation of the 2021-2023 Sustainability Plan and on the inclusion of Enel in the main sustainability indices. • It is composed of non-executive directors, the majority of whom (including its Chairman) are independent. In 2021 it was made up of four independent directors. • It has the task of suppoing the assessments and decisions of the Board of Directors relating to the internal control and risk management system (the ICRMS), as well as those relating to the approval of periodic nancial and non-nancial repos. In paicular, it issues its prior opinion to the Board of Directors, inter alia: (i) on the guidelines of the ICRMS, so that the main risks concerning Enel and its subsidiaries – including the various risks that may be relevant from the perspective of sustainable success – are correctly identied and adequately meas- ured, managed and monitored; (ii) on the degree of compatibility of the risks referred to in point (i) above with company operations consistent with the strategic objectives identied; and (iii) on the adequacy of the ICRMS with respect to the characteristics of the Company and the risk prole assumed, as well as the eectiveness of the system itself. • It evaluates whether periodic nancial and non-nancial repoing correctly represents the business model, the strategies of the Company and the Group it heads and the impact of company activities and the peormance achieved, coordinating with the Corporate Govern- ance and Sustainability Commiee with regard to periodic non-nancial repoing. • It examines the issues relevant to the ICRMS addressed in the Non-Financial Statement and the Sustainability Repo, which may be presented in a single document and contains corpo- rate disclosures on climate issues, issuing a prior opinion on these aspects to the Board of Directors, which is called upon to approve these documents. • Activities peormed in 2021 included addressing climate-related issues on the occasion of the examination of: (i) issues concerning the ICRMS dealt with in the 2020 Sustainability Re- Corporate Governance and Sustainability Commiee 5 meetings held by the Commiee in 2021, in 4 of which it addressed issues connected with climate and their impact on strategies and the associated approaches to implementation Control and Risk Commiee 17 meetings held by the Commiee in 2021, in 5 of which it addressed issues connected with climate and their impact on strategies and the associated approaches to implementation 47The Enel corporate governance system 47 po, which incorporates the Consolidated Non-Financial Statement pursuant to Legislative Decree 254/2016 for the same year; (ii) the analysis of the risks associated with macroeco- nomic and environmental developments and climate risks; (iii) the proposed update of the Human Rights Policy; and (iv) the analysis of the compatibility of the main risks associated with the strategic objectives of the Business Plan. • It is composed of non-executive directors, the majority of whom (including its Chairman) are independent. In 2021 it was made up of four independent directors. • It suppos the Board of Directors in, inter alia, evaluations and decisions relating to the size and optimal composition of the Board and its commiees, as well as the remuneration of directors and key management personnel. In this regard, the remuneration policy for 2021 provides that a signicant poion of the sho\- and long-term variable remuneration of the Chief Executive Ocer/General Manager and key management personnel shall be linked to sustainability-related peormance objectives. In paicular, with regard to the long-term vari- able component of the remuneration of the Chief Executive Ocer/General Manager and key management personnel, in the 2021 Long-Term Incentive Plan, an additional ESG target was introduced, represented by the percentage of women in management succession plans at the end of 2023\. With specic regard to the ght against climate change, the Plan retains the objective for the ratio between consolidated net installed renewables capacity and the total consolidated net installed capacity, albeit with a slightly smaller weighting compared with the 2020 Long-Term Incentive Plan as a result of the addition of the objective indicated above. Fuhermore, the 2021 Long-Term Incentive Plan also retains the reduction of specic green- house gas emissions among the peormance objectives, in line with the Group’s decarbon- ization strategy, which provides for the progressive reduction of such emissions in line with the Paris Agreement. As regards the sho-term variable component of the remuneration of the Chief Executive Ocer/General Manager, the ESG target concerning the fuher improve- ment of safety parameters in the workplace was retained in the remuneration policy for 2021. Fuhermore, in light of the central role played by distribution grids in the pursuit of decar- bonization and the electrication of energy consumption by the Group, a new peormance target was introduced that measures the average annual duration of service interruptions for low-voltage customers (System Average Interruption Duration Index - SAIDI). • It is composed of independent non-executive directors. In 2021 it was made up of four inde- pendent directors. • It peorms the functions provided for in the relevant CONSOB regulations and in the specic Enel procedure for transactions with related paies, essentially issuing in paicular reasoned opinions on the interest of Enel – and any direct or indirect subsidiary that may be involved – in carrying out transactions with related paies, expressing its assessment of the benets and substantive appropriateness of the associated conditions, subject to receiving timely and comprehensive information on the transaction. Nomination and Compensation Commiee 12 meetings held in 2021 Related Paies Commiee 7 meetings held in 2021 2 Governance 1 Enel Group 3 Group Strategy & Risk Management 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 48 Integrated Annual Repo 202148 It is charged with overseeing: • compliance with the law and the bylaws, as well as compliance with the principles of sound administration in carrying out corporate activities; • the nancial repoing process and the appropriateness of the organizational structure, the internal control system and the administrative-accounting system of the Company; • the statutory audit of the annual accounts and the consolidated accounts, as well as the in- dependence of the Audit Firm; • the approach adopted in implementing the corporate governance rules envisaged by the Corporate Governance Code. • The Chairman is vested by the bylaws with the powers to represent the Company and to sign on its behalf. • The Chairman presides over Shareholders’ Meetings. • The Chairman convenes the meetings of the Board of Directors, establishes the agenda and presides over its proceedings. • The Chairman acts as a liaison between the executive directors and the non-executive di- rectors and, with the suppo of the Secretary of the Board of Directors, is responsible for the eective operation of the Board. More specically, the Chairman, with the suppo of the Board Secretary, is responsible, among other things, for ensuring: – that information provided before Board meetings and supplementary information provid- ed during meetings enable the directors to act in an informed manner in the peormance of their duties; and – that the activity of the Board commiees is coordinated with that of the Board of Directors. • The Chairman ensures that the Board of Directors is informed in a timely manner on develop- ments in and the substance of engagement activities with all shareholders. • The Chairman asceains that the Board’s resolutions are carried out. • Pursuant to a Board resolution of May 15, 2020, the Chairman has been vested with a number of additional non-executive powers. • In the exercise of the function of stimulating and coordinating the activities of the Board of Directors, the Chairman plays a proactive role in the process of approving and monitoring of corporate and sustainability strategies, which are sharply focused on the decarbonization and electrication of energy consumption. • In addition, during 2021 the Chairman also chaired the Corporate Governance and Sustaina- bility Commiee. • Like the Chairman of the Board of Directors, the CEO is vested by the bylaws with the powers to represent the Company and to sign on its behalf, and in addition is vested by a Board reso- lution of May 15, 2020 with all powers for managing the Company, with the exception of those that are otherwise assigned by law, regulation or the bylaws or that the aforesaid resolution reserves for the Board of Directors (making the Chief Executive Ocer the ocer with prima- ry responsibility for managing the Company). • In the exercise of these powers, the CEO has dened a sustainable business model, deline- ating a strategy to lead the energy transition towards a low-carbon model. The CEO is also responsible for managing the business activities connected with Enel’s eos in combaing climate change. • The CEO repos to the Board of Directors on the activities peormed in the exercise of the powers granted to him, including business activities to maintain Enel’s commitment to ad- dress climate change. • The CEO represents Enel in various initiatives that deal with sustainability, holding positions of leadership in international institutions such as Sustainable Energy for All (SEforALL) of the United Nations and the Global Investors for Sustainable Development (GISD) Alliance launched by the United Nations in 2019. Chief Executive Ocer Chairman of the Board of Directors Board of Statutory Auditors 28 meetings held in 2021 49The Enel corporate governance system 49 • As the ocer with primary responsibility for managing the Company, the CEO has primary authority for engaging with institutional investors, providing them with any appropriate clar- ication concerning maers that fall within the scope of the CEO's management powers, in line with the policy for engaging with institutional investors and with Enel’s shareholders and bondholders as a whole. • The CEO has also been designated as the director responsible for establishing and maintain- ing the ICRMS. • The statutory audit is peormed by a specialized rm entered in the appropriate register of auditors, which is appointed by the Shareholders’ Meeting on the basis of a reasoned propos- al from the Board of Statutory Auditors. • Following up on the comprehensive induction program organized in 2020 in order to provide the directors with an understanding of the sectors in which the Group operates (including issues related to sustainability), in 2021 this program continued with specic examination of corporate governance and climate change issues. • At the end of 2021 and during the rst two months of 2022, the Board of Directors carried out, with the assistance of a specialized independent advisor, an assessment of the size, composition and functioning of the Board and its commiees (the “board review”), in line with the most advanced corporate governance practices accepted at the international level and incorporated within the Corporate Governance Code. The board review was also carried out using a “peer review” approach, i.e., evaluating not only the operation of the body as a whole, but also the style and substance of the contribution made by each of its members, and it was extended to include the Board of Statutory Auditors. The board review also specically sought to verify the directors’ perception of: (i) training activities peormed in 2021 within the induction program concerning climate change issues; and (ii) the Board’s involvement with sustainability issues and the integration of sustainability into corporate strategy. The ndings of the board review are repoed in Enel’s Repo on Corporate Governance and Ownership Structure. • The Board of Directors and the Board of Statutory Auditors have approved, each within their own sphere of competence, specic diversity policies that set out the characteristics con- sidered optimal for the members of these bodies, so that each can exercise their duties most eectively, taking decisions that can eectively draw on the contribution of a plurality of qual- ied points of view, able to examine the issues under discussion from dierent perspectives. The policy approved by the Board of Directors establishes that with regard to the types of diversity and the associated objectives: – the optimal composition of Board members should provide for a majority of independent directors; – even when the regulatory provisions on gender balance expire, it is impoant to continue to ensure that at least one-third of the Board of Directors, both at the time of appointment and during its term of oce, shall be made up of directors of the least represented gender; – the international scope of the Group’s activities should be taken into consideration, ensur- ing that at least one-third of directors should have adequate experience in the internation- al arena, which is also considered useful for preventing the standardization of opinions and the emergence of “group thought”; – in order to achieve a balance between the need for continuity and renewal in management, it would be necessary to ensure a balanced combination of people of diering seniority – and age – within the Board of Directors; – non-executive directors should have a management and/or professional and/or academic and/or institutional background such as to create a diverse and complementary set of skills and experience; Good corporate governance practices Statutory audit of the accounts 2 Governance 1 Enel Group 3 Group Strategy & Risk Management 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 50 Integrated Annual Repo 202150 – in view of the dierences in their roles, the Chairman and the CEO should have the ap- propriate skills (specically indicated in the policy) for the eective peormance of their respective duties. • In July 2015 the Board of Directors also approved (and subsequently amended in February 2019) a number of recommendations aimed at strengthening the corporate governance of Enel subsidiaries with shares listed on regulated markets and at the same time ensuring the implementation of local best practices in this area by those companies. Among other issues, these recommendations concern the composition of the management body, with regard to which it is also suggested to integrate a diversity of professional and management experience and skills, combined, where possible, with a diversity of gender, age and seniority, without prejudice to the provisions of applicable local legislation. • In order to regulate the procedures for the Company’s engagement with institutional in- vestors and with its shareholders and bondholders as a whole, in March 2021 the Board of Directors adopted, acting on a proposal from the Chairman formulated in agreement with the Chief Executive Ocer, a specic policy in this area (the “Engagement Policy”). It largely incorporates the practices already followed by Enel to ensure that this dialogue is based on principles of fairness and transparency and takes place in compliance with EU and nation- al regulations concerning market abuse, as well as in line with international best practices. In drawing up the Engagement Policy, which was consistently applied during 2021, the best practices adopted in this eld by institutional investors and reected in “stewardship” codes were taken into account. For more detailed information on the corporate govern- ance system, please see the Repo on Corporate Gov- ernance and Ownership Structure of Enel, which has been published on the Company’s website (hp://www.enel.com, in the “Governance” section). 51Enel organizational model 51 Enel organizational model Global lnfrastructure and Networks Global Energy and Commodity Management Enel Green Power and Thermal Generation Enel X Global Retail Global e-Mobility A. Cammisecra C. Machei S. Bernabei F. Venturini E. Ripa ITA LY N. Lanzea IBERIA J. Bogas Galvez EUROPE S. Mori AFRICA, ASIA AND OCEANIA S. Bernabei NORTH AMERICA E. Viale LATIN AMERICA M. Bezzeccheri ADMINISTRATION, FINANCE AND CONTROL A. De Paoli COMMUNICATIONS R. Deambrogio INNOVABILITY E. Ciorra Enel Group Chairman M. Crisostomo Enel Group CEO F. Starace Holding Function PEOPLE AND ORGANIZATION G. Straa LEGAL AND CORPORATE AFFAIRS G. Fazio AUDIT S. Fiori GLOBAL PROCUREMENT F. Di Carlo GLOBAL CUSTOMER OPERATIONS N. Melchioi GLOBAL DIGITAL SOLUTIONS C. Bozzoli Global Business Line Country and Region 2 Governance 1 Enel Group 3 Group Strategy & Risk Management 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 52 Integrated Annual Repo 202152 The Enel Group structure is organized into a matrix that comprises: The Global Business Lines are responsible for managing and developing assets, optimizing their peormance and the return on capital employed in the various geographical areas in which the Group operates. In addition, in compliance with safety, protection and environmen- tal policies and regulations, they are tasked with maximizing the eciency of the processes they manage and applying best international practices, sharing responsibility for EBITDA, cash ows and revenue with the countries. The Group, which also draws on the work of an Investment Commiee, (4) benets from a cen- tralized industrial vision of projects in the various Business Lines. Each project is assessed not only on the basis of its nancial return but also in relation to the best technologies available at the Group level, which reect the new strategic line adopted, explicitly integrating the SDGs within our nancial strategy and promoting a low-carbon business model. Fuhermore, each Business Line contributes to guiding Enel’s leadership in the energy transition and in the ght against climate change, managing the associated risks and oppounities in its area of compe- tence. In 2021 the Global Power Generation Business Line, created from the merger of Enel Green Power and Global Thermal Generation, was renamed Enel Green Power and Thermal Genera- tion. This Business Line is responsible for the integrated management of the growth of renew- ables generation capacity, the decarbonization process and managing storage assets, thus conrming the Enel Group’s leadership role in the energy transition. In 2021, the Enel X Global Retail Business Line was formed. It is specically involved in manag- ing energy and beyond-commodity services, as well as expanding the customer base while maximizing value for customers. Fuhermore, it has the task of innovating and developing the services oered, managing the entire life cycle from conception to technological develop- ment, testing, marketing, sales, operations and after-sales activities. The Global e-Mobility Business Line was also established in 2021. It is responsible for manag- ing the pofolio of e-Mobility solutions in both existing and new countries, maximizing value for customers, also leveraging Enel X Global Retail for sales activities. It is also involved in inno- vating and developing e-Mobility solutions, managing the entire life cycle, from conception to technological development, testing and marketing in step with the rest of the retail product line. In addition, the Grid Blue Sky project is being implemented. Its objective is to innovate and digitalize infrastructures and networks in order to make them an enabling factor for the achievement of the “Climate Action” objectives, thanks to the progressive transformation of Enel into a platform-based Group. Regions and countries are responsible for managing relationships with institutional bodies and regulatory authorities, as well as selling electricity and gas, in each of the countries in which the Group is present, while also providing sta and other service suppo to the Business Lines. They are also charged with promoting decarbonization and guiding the energy transi- tion towards a low-carbon business model within their areas of responsibility. (4) The Group Investment Commiee is made up of the heads of Administration, Finance and Control, Innovability, Legal and Corporate Aairs, Global Procure- ment, and the heads of the Regions and the Business Lines. Global Business Lines Regions and countries 53Enel organizational model 53 The following functions provide suppo to Enel’s business operations: The Global Service Functions are responsible for managing information and communication tech- nology activities and procurement at the Group level. During the 1st Half of 2021, a new Service Function called Global Customer Operations was intro- duced. Its activities are focused on managing customer activation, invoicing, credit management, customer assistance and the related suppo processes at the Group level. It is also responsible for: • dening and implementing the strategy of global actions regarding customers, increasing customer satisfaction and value and at the same time optimizing service costs and related cash ows; • managing customer operational processes, maximizing operational excellence and customer focus and exploiting technology; • developing and innovating operating models and solutions for managing the customer’s life cycle, maximizing adaptability to internal and external change through market leadership that innovates on the basis of specic data analyses. The Global Service Functions are also focused on the responsible adoption of measures that al- low the achievement of sustainable development objectives, in paicular in managing the supply chain and developing digital solutions to suppo the development of enabling technologies for the energy transition and the ght against climate change. The Holding Company Functions are responsible for managing governance processes at the Group level. The Administration, Finance and Control Function is also responsible for consol- idating scenario analysis and managing the strategic and nancial planning process aimed at promoting the decarbonization of the energy mix and the electrication of energy demand, key actions in the ght against climate change. Global Service Functions Holding Company Functions 2 Governance 1 Enel Group 3 Group Strategy & Risk Management 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 54 Integrated Annual Repo 202154 Incentive system Enel’s remuneration policy for 2021, which was adopted by the Board of Directors acting on a proposal of the Nomina- tion and Compensation Commiee and approved by the Shareholders’ Meeting of May 20, 2021, was formulated on the basis of: (i) the recommendations of the Italian Corpo- rate Governance Code published on January 31, 2020; (ii) national and international best practice; (iii) the guidance provided by the favorable vote of the Shareholders’ Meet- ing of May 14, 2020 on the remuneration policy for 2020; (iv) the results of the engagement activity on corporate gov- ernance issues pursued by the Company between January and March 2021 with the leading proxy advisors and Enel’s institutional investors; and (v) the ndings of the benchmark analysis of the remuneration of the Chairman of the Board of Directors, the Chief Executive Ocer/General Manager and the non-executive directors of Enel for 2020, which was peormed by the independent consultant Mercer. This policy is intended to: (i) foster Enel’s sustainable suc- cess, which takes the form of creating long-term value for the benet of shareholders, taking due consideration of the interests of other key stakeholders, so as to incentivize the achievement of strategic objectives; (ii) aract, retain and motivate personnel with the professional skills and experi- ence required by the sensitive managerial duties entrusted to them, taking into account the remuneration and working conditions of the employees of the Company and the Enel Group; and (iii) promote the corporate mission and values. The 2021 remuneration policy adopted for the Chief Exec- utive Ocer/General Manager and key management per- sonnel envisages: • a xed component; • a sho-term variable component (MBO) that will be paid out on the basis of achievement of specic peor- mance objectives. Namely: – for the CEO/General Manager, annual objectives have been set for the following components: • consolidated net ordinary prot; • Group opex; • funds from operations/consolidated net nancial debt; • System Average Interruption Duration Index (SAIDI); • workplace safety; – for key management personnel, objective annual goals connected with their business area have been set in their MBO mechanism, dierentiated by the functions and responsibilities assigned to them; • a long-term variable component linked to paicipation in specic long-term incentive plans. In paicular, for 2021 this component is linked to paicipation in the 2021 Long-Term Incentive Plan for the management of Enel SpA and/or its subsidiaries pursuant to Aicle 2359 of the Italian Civil Code (2021 LTI Plan), which establishes three-year peormance targets for the following: – Enel’s average TSR (Total Shareholder Return) com- pared with the average TSR for the EURO STOXX Util- ities - EMU index for the 2021-2023 period; – ROACE (Return on Average Capital Employed), cu- mulative for 2021-2023; – consolidated net installed renewables capacity/con- solidated net installed total capacity at the end of 2023; – grams of Scope 1 GHG emissions per equivalent kWh generated by the Group in 2023; – percentage of women in management succession plans at the end of 2023. The 2021 LTI Plan establishes that any bonus accrued is represented by an equity component, which can be sup- plemented – depending on the level of achievement of the various targets – by a cash component. More specical- ly, the Plan envisages that 100% of the basic bonus of the Chief Executive Ocer/General Manager (compared with a maximum of 280% of the basic bonus) and 50% of the ba- sic bonus of key management personnel (compared with a maximum of 180% of the basic bonus) will be paid in Enel shares previously acquired by the Company. In addition, the disbursement of a signicant poion of long-term variable remuneration (70% of the total) is deferred to the second year following the three-year peormance period covered by the 2021 LTI Plan. For more information on the remuneration policy for 2021, please see Enel’s “Repo on the remuneration policy for 2021 and compensation paid in 2020”, which is available on the Company’s website (www.enel.com). 55Values and pillars of corporate ethics 55 Values and pillars of corporate ethics A robust system of ethics underlies all activities of the Enel Group. This system is embodied in a dynamic set of rules constantly oriented towards incorporating national and in- ternational best practices that everyone who works for and with Enel must respect and apply in their daily activities. The system is based on specic compliance programs, including: the Code of Ethics, the Compliance Model un- der Legislative Decree 231/2001, the Enel Global Compli- ance Program, the Zero-Tolerance-of-Corruption Plan, the Human Rights Policy, and any other national compliance models adopted by Group companies in accordance with local laws and regulations. Code of Ethics In 2002, Enel adopted a Code of Ethics, which expresses the Company’s ethical responsibilities and commitments in conducting business, governing and standardizing cor- porate conduct on the basis of standards aimed to ensure the maximum transparency and fairness with all stakehold- ers. The Code of Ethics is valid in Italy and abroad, taking due account of the cultural, social and economic diversity of the various countries in which the Group operates. Enel also requires that all associates and other investees and its main suppliers and paners adopt conduct that is in line with the general principles set out in the Code. Any violations or suspected violations of Enel Compliance Programs can be repoed, including in anonymous form, through a single Group-level platform (the “Ethics Point”). In February 2021, the Board of Directors approved a fuher update of the Code of Ethics in order to align its content with the current context, including the current corporate mission and the United Nations Sustainable Development Goals, the current organizational structure and the system of procedures, as well as national and international best practices in the areas of diversity and privacy. With regard to the Code of Ethics, the following table re- pos the average number of training hours per person, to- tal repos of violations received and violations conrmed. 2021 2020 Change Total repoed violations of the Code of Ethics received no. 153 151 2 1.3% Conrmed violations of the Code of Ethics no. 41 26 15 57.7 % \- of which violations involving conicts of interest/bribery no. 7 2 5 - Compliance Model under Legislative Decree 231/2001 Legislative Decree 231 of June 8, 2001 introduced into Italian law a system of administrative (and de facto crim- inal) liability for companies for ceain types of oenses commied by their directors, managers or employees on behalf of or to the benet of the company. Enel was the rst organization in Italy to adopt, back in 2002, this so of compliance model that met the requirements of Legis- lative Decree 231/2001 (also known as “Model 231”). It has been constantly updated to reect developments in the applicable regulatory framework and current organiza- tional arrangements. 2 Governance 1 Enel Group 3 Group Strategy & Risk Management 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 56 Integrated Annual Repo 202156 Enel Global Compliance Program (EGCP) The Enel Global Compliance Program for the Group’s for- eign companies was approved by Enel in September 2016\. It is a governance mechanism aimed at strengthening the Group’s ethical and professional commitment to prevent- ing the commission of crimes abroad that could result in criminal liability for the company and do harm to our rep- utation. Identication of the types of crime covered by the Enel Global Compliance Program – which encompasses standards of conduct and areas to be monitored for pre- ventive purposes – is based on illicit conduct that is gener- ally considered such in most countries, such as corruption, crimes against the government, false accounting, money laundering, violations of regulations governing safety in the workplace, environmental crimes, etc. Zero-Tolerance-of-Corruption Plan and the anti-bribery management system In compliance with the tenth principle of the Global Com- pact, according to which “businesses should work against corruption in all its forms, including extoion and bribery”, Enel is commied to combating corruption. For this rea- son, in 2006 we adopted the “Zero-Tolerance-of-Corrup- tion Plan” (ZTC Plan), conrming the Group’s commitment, as described in both the Code of Ethics and the Model 231, to ensure propriety and transparency in conducting com- pany business and operations and to safeguard our image and positioning, the work of our employees, the expecta- tions of shareholders and all of the Group’s stakeholders. Following receipt of the ISO 37001 anti-corruption cei- cation by Enel SpA in 2017, the 37001 ceication plan has gradually been extended to the main Italian and interna- tional subsidiaries of the Group. 2021 2020 Change Training in anti-corruption policies and procedures no. 20,074 26,660 (6,586) -24.7% % 30.3 40.0 (9.7) -24.3% Training in anti-corruption policies and procedures by geographical area Italy % 34.5 47.7 (13.2) -27.7% Iberia % 37.4 20.2 17. 2 85.1% Latin America % 17.8 26.8 (9.0) -33.6% Europe % 21.0 80.7 (59.7) -74.0% Africa, Asia and Oceania % 27.7 28.4 (0.7) -2.5% Noh and Central America % 75.9 56.7 19.2 33.9% Human Rights Policy The Company adopted a human rights policy in 2013, which was subsequently approved by all the subsidiaries of the Group. In implementing the “Guiding Principles on Business and Human Rights” set out by the United Nations, it denes the principles that all associates of Enel SpA and its subsidiaries undeake to respect on the basis of their relevance in the context of their activities and business re- lationships in each country in which they operate, taking due consideration of local cultural, social and economic diversity and requiring that all its stakeholders adopt a line of conduct that complies with these principles. Stakeholders are all those who have a direct or indirect in- terest in the activities of the Enel Group, such as custom- ers, employees of any type or level, suppliers, contractors, paners, other companies and trade associations, the nancial community, civil society, local communities and indigenous and tribal peoples, national and international institutions, the media, as well as the organizations and in- stitutions that represent them. In consideration of the evolution of external conditions and operational, organizational and management devel- opments at Enel, including compliance with the Code of Ethics updated at the beginning of the year, a review of the Human Rights Policy was begun in 2021. The update, similar to the 2013 version, involved a process of consultation with stakeholders relevant to the Compa- 57Values and pillars of corporate ethics 57 ny (internal, other companies, suppliers, human rights ex- pes, think tanks, NGOs) conducted in accordance with the criteria contained in the ‘‘UN Global Compact Guide for Business: How to Develop a Human Rights Policy’’. The new code, which was approved by the Board of Direc- tors of Enel SpA on November 4, 2021, identies twelve principles (compared with the previous eight), again divid- ed into two macro-themes: work practices and community relations. The Human Rights Policy is a commitment to: • proactively consider the needs and priorities of people and society in general because this makes it possible to innovate processes and products, a key factor in an increasingly competitive, inclusive and sustainable business model, including through the adoption of the principles of circularity, the protection of natural capital and biodiversity; • promote the engagement of our main external and in- ternal stakeholders in order to enhance their awareness and develop a constructive dialogue that can provide a valuable contribution to the design of solutions to miti- gate climate change. In addition to the commitment to the contribution to achieving the United Nations Sustainable Development Goals, the updates include: (i) a reminder of how envi- ronmental degradation and climate change are intercon- nected with human rights, in that the implementation of measures to mitigate the eects of human activities on the environment cannot take place without taking ac- count of their social impact; (ii) the strengthening of the principles of “respect for diversity and non-discrimination” and “health and safety” in the pa relating to psycholog- ical and physical well-being and work-life integration; (iii) an increase in the granularity of our commitment in our relations with communities, with paicular regard to local communities, indigenous and tribal populations, privacy and communication. Enel has undeaken to monitor application of the Human Rights Policy (i) by employing a specic due diligence pro- cess in the various countries in which we operate; (ii) by promoting conduct consistent with a just and inclusive transition; and (iii) by enhancing communication with re- gard to the action plans developed to prevent and remedy situations in which critical issues could arise. More specically, the due diligence process for the man- agement system, which is structured into three-year cy- cles and has been developed in accordance with the main international standards such as the United Nations Guid- ing Principles on Business and Human Rights, the OECD guidelines and international best practices, enables us to identify oppounities for improvement and develop specic action plans for each country in which we have a presence, accompanied by a plan for improvement at the central level in order to harmonize and integrate processes and policies dened at the global level and applied at the local level. All of these improvement plans are also inte- grated into the Sustainability Plan. In the 2020-2022 cycle, some 170 actions have been iden- tied, covering 100% of operations and sites. As more specically regards the sustainability of the sup- ply chain, human rights peormance is evaluated for all potential suppliers through a dedicated questionnaire in which the characteristics of potential suppliers are ana- lyzed with regard to inclusion and diversity, protection of workers’ privacy, verication of their supply chain, forced or child labor, freedom of association and collective bar- gaining, and application of fair working conditions (includ- ing adequate wages and working hours). As enshrined in the Human Rights Policy, in addition to guaranteeing the necessary quality standards, supplier peormance must go hand in hand with the commitment to adopt best prac- tices in terms of human rights and working conditions (including appropriate working hours, no forced or child labor, respect for personal dignity, non-discrimination and inclusion of diversity, freedom of association and collec- tive bargaining), workplace health and safety, environmen- tal responsibility and respect for privacy by design and by default. Fuhermore, general contractual terms and conditions expressly provide for suppliers to undeake to adopt and implement, among other things, the principles contained in the Human Rights Policy and in the Group’s Code of Ethics and to comply with International Labor Or- ganization conventions or legislation in force in the coun- try in which activities are to be peormed, if more restric- tive, and in accordance with the principles of the Global Compact that Enel has adopted, ensuring that such prin- ciples are met in the peormance of all activities both by a supplier’s employees and its subcontractors. 2 Governance 1 Enel Group 3 Group Strategy & Risk Management 4 Group Peormance 5 Outlook 6 Consolidated nancial statements REPORT ON OPERATIONS Long-term planning This decade will be the decade of electrication: a key step, along with the development of renewables, in accelerating decarbonization and achieving our ambitious climate goals. The new 2022-2024 Business Plan Within the broader ambitions for the positioning of the Group by 2030, the 2022-2024 Business Plan is ideally positioned as the sta of a journey of growth that spans the entire decade. Reference scenarios Assessing the impacts of climate change and the energy transition is crucial for long-term planning. To this end, the Group has created a comprehensive framework and a process that can translate data into useful information to maximize oppounities and mitigate risks. 3. Group Strategy & Risk Management 58 Integrated Annual Repo 2021 59 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 60 Integrated Annual Repo 202160 Group strategy Determination of the Group’s long-term strategy is based on an assessment of options that will enable the sustain- able generation of value for all stakeholders. Fundamental to this is the assessment of the external environment and its evolution. To determine the frame- work in which we operate, we conduct in-depth scenario planning in order to be prepared to seize oppounities and manage future risks and unceainties in the most robust manner possible. This analysis of what could hap- pen in the external landscape, together with the Group’s purpose and our Open Power mission, is key to dening the Group’s positioning within that landscape. We then dene our long-term ambitions and design the strategic options that characterize our long-term planning. In recent years, the increasing complexity of the rapidly changing context in which we operate has made it so that the process of dening the Group’s strategies has also evolved in order to capture as much of this dynamism as possible, so as to make it an enabling factor in the de- nition of goals. Today, this process is organized into the following main activities: • strategic dialogue: a continuous process of active dialogue throughout the year and across all Group functions, through which the strategic topics for the evolution and growth of the Group are identied, ana- lyzed, discussed and addressed. This dialogue is pa of a strategic design phase, where communication between executives makes a valuable contribution to developing new strategic options, with an emphasis on the need for cultural or organizational change and synergies between businesses. This process, which is coordinated at the Group level, rst involves the iden- tication of topics through consensus among senior management and approval by the CEO. The next phase of the strategic dialogue process involves the struc- turing of agile working groups with all the profession- al expeise necessary for the proper analysis of each topic, aimed at the preparation of dedicated work- shops or strategic options to be discussed. The process is centrally governed and includes mile- stones and deadlines that are dened based, in pa, on the relative priority of the decisions to be made. In 2021, the working groups created for the various topics were organized around strategic priorities (e.g., Electrica- tion, Value for the entire System, Decarbonization, Plat- forms and the Digital Transition, etc.). This process ena- bles us to properly dene oppounities related to each strategic topic (including any nancial or operational impacts) and a roadmap for the implementation of any actions to be taken. The outputs are then discussed by top management in dedicated meetings. These meet- ings include one special event, the Top Team Osite meeting, at which all senior management discusses the priority topics. The most signicant conclusions are then included in the Group’s long-term planning. This is then followed by the Strategic Summit, usually organ- ized in October in order to discuss the annual update of the Strategic Plan with the Board of Directors. This framework enables governance of the treatment of strategic issues, while at the same time ensuring swift identication of emerging trends and the necessary cross-business involvement for a complete analysis of complex and interdependent issues in the presence of an organizational structure based on the country/Busi- ness Line/Service Functions matrix; Discover new topics 1 2 Go in-depth of hot topics and raise ags KEEP ROLLING AND DON’T MISS OUT Strategic dialogue 3 Discuss options and crossroads 4 Evaluate being on-track with long-term plan and vision 2021 61Group strategy 61 • strategic planning: this process, which is driven on an ongoing basis by feedback from the strategic dia- logue, transforms the information to be processed into quantitative models in order to establish an overview of the industrial, economic and nancial evolution of the Group, supplemented by possible active pofolio management. The evaluation of strategic options over a time horizon extends beyond that used in industrial planning, with (i) the denition and the quantitative and qualitative development of alternative macroeconom- ic, energy and climate scenarios against which overall strategy can be assessed; and (ii) analysis based on stress testing for various factors, including the evolu- tion of the industrial sector, technology, competitive structure and policies; • long-term positioning: the analyses and decisions de- scribed in the previous points generate information for long-term positioning on multiple topics and the as- sessment of ambitions and targets for the Group; • analysis of ESG factors and assessment of materiality in the eld of sustainability: the method Enel uses to peorm ESG and materiality analysis was developed on the basis of the guidelines set out in numerous in- ternational standards (for example, the Global Repo- ing Initiative - GRI, UN Global Compact, SDG Compass, etc.), with the aim of identifying and evaluating priori- ties for stakeholders and integrating them into Group strategy. The strategy of the Enel Group has proven its ability to create sustainable long-term value, fully integrating the themes of sustainability and close aention to climate change issues while simultaneously ensuring increased protability. The Group is among the leaders guiding the energy tran- sition through the decarbonization of electricity genera- tion and other activities and the electrication of energy consumption, which represent oppounities both to in- crease value creation for all and to contribute positively to more rapid achievement of the Sustainable Develop- ment Goals set by the United National (SDGs) in the 2030 Agenda. Strategic Plan The decade of electrication - The quest for net zero is under way throughout the world, and decarbonization and the electrication of the global economy are cru- cial to avoiding the grave consequences of an increase in temperatures of 1.5 °C above pre-industrial levels. The most recent scenarios all indicate that we will need to ac- celerate the electrication of energy consumption and decarbonize electricity generation in order to achieve our ambitious climate goals. Our customers will play an active role and be the primary beneciaries of this process. Over the last 10 years, renewable energy has become the dominant trend in power generation thanks to declining costs, thereby enabling decarbonization to move at a more rapid pace. It has been a decade of radical change in the power generation mix, and this is destined to con- tinue accelerating. The coming decade will be crucial in achieving the goals set by the 2015 Paris Agreement. At the same time, it will also be a period characterized by in- creasing eos in electrication, whereby customers will gradually conve their energy consumption to the elec- trical grid, which will improve spending levels, eciency, emissions, and price stability. In order to respond more eectively to the expected ac- celeration in investment and contribute to more rapidly achieving the primary goals that are needed to combat climate change, the Enel Group intends to leverage the progress we have made in digitalization, as well as our position as: • the world’s leading private-sector player in renewable energy, with a total global capacity of about 53.4 GW; • the world’s primary private-sector network operator, with more than 75 million network customers; • the private-sector player with the world’s largest base of retail customers, with more than 69 million retail customers worldwide. Our business model - In order to take full advantage of all the oppounities emerging in the marketplace in which we operate, the Group has established the Ownership and Stewardship business models. The most appropriate and eective business model is selected based on the geographical area and context of operations: • the Ownership business model, by which the Group in- vests directly in renewable energy, grids and custom- ers. This model is used when operating in countries in which we can leverage the entire value chain, from power generation to integration with the end user. Ac- cordingly, we refer to these countries as “Tier 1”, and they include Italy, Spain and Romania in Europe, and the United States, Brazil, Chile, Colombia and Peru in the Americas; • the Stewardship business model, by which the Group invests in new joint ventures (JVs), existing JVs or ac- quires minority interests in order to maximize the val- ue of the know-how we have developed in the various businesses in which we have a presence. This is done 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 62 Integrated Annual Repo 202162 by activating specic contract services with paners or by the subsequent development of assets. This model focuses primarily, although not exclusively, on the “non-Tier 1” countries where the Group does not have an integrated presence and where we seek to build panerships with others in order to explore new geographical areas or to contribute the Group’s oper- ating experience in alternative contexts. Strategic action - Within this landscape, the Group has set the following strategy guidelines: I. Allocating capital to suppo the provision of decar- bonized electricity The Group expects to mobilize €210 billion between 2021 and 2030\. Of this total, the Group expects to invest di- rectly some €170 billion (up 6% from the previous Plan) by way of the Ownership and Stewardship business mod- els, with an additional €40 billion being catalyzed through third paies under the Stewardship model. We expect this allocation of capital to accelerate achieve- ment of the Group’s electrication and decarbonization goals. By 2030, the Enel Group expects to manage a total renew- ables capacity of about 154 GW, triple our 2020 pofo- lio, as well as to grow our grid customer base by 12 million and promote the electrication of energy consumption, while increasing the volume of electricity sold by nearly 30% and focusing, at the same time, on the development of beyond-commodity services, such as strengthening the electric-vehicle charging grid or for behind-the-me- ter storage and electric buses, in collaboration with other paners. Total investments (1) (€bn) Capex by Business Line and customers’ needs 2021-2030 Old Plan 190 210 150 10 160 10 2021-2030 New Plan Stewardship Third paies Ownership (1) 2021-2030 Old Plan included Enel X consolidated capex in stewardship. 2021-2030 170 €bn 10% 43% 3% Aordable and clean energy 44% Reliable and safe delivery High tech and high quality service +6% 63Group strategy 63 2020 2030 2020 2030 2020 2030 RES capacity (GW) Grid customers (mln) Electricity sold (2) (TWh) Ownership 45 129 (1) 74 81 ~430 ~550 +84 GW +7 mln +28% Storage (MW) Stewardship ~4 25 0 5 6 >600 +21 GW +5 mln Electric buses (k) 0.4 >20 Total ~49 154 74 86 +105 GW +12 mln (1) It includes RES capacity and BESS. (2) Power free + regulated + wholesales + PPAs. II. Enabling the electrication of energy demand among customers The Group’s strategic action will seek to increase value for customers in the business-to-consumer (B2C), busi- ness-to-business (B2B), and business-to-government (B2G) segments by increasing the level of electrication of these customers while improving the services provided. In the “Tier 1“ countries, we expect this targeted strate- gy, paired with investment in our asset base, to increase the Group’s integrated margin by 2.6 times between 2021 and 2030 with the suppo of a unied platform that is able to manage the world’s largest customer base of any pri- vate-sector player. The Group will be taking advantage of our integrated posi- tioning in the “Tier 1“ countries, where we forecast: • an 80% increase in revenue compared with 2021; • a 40% decrease in the total cost of energy sold to cus- tomers from all sources as compared with 2021. (1) Vs. 2020, based on Enel’s pofolio of clients in Italy and Spain. (2) Based on “Tier 1“ countries; free market. 2030 ~40% Reduction of household energy spending (1) >85% Sales covered by RES production (2) (%) ~80% GHG emissions household reduction (1) 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 64 Integrated Annual Repo 202164 The increase in the volume of electricity sold and the growth in beyond-commodity services will be accompa- nied by a generalized reduction in costs. More specical- ly, we expect total production costs to decrease by about 50% as a result of greater use of our own output in elec- tricity sales and an increase in the share of renewable en- ergy in the Group’s generation mix, which is expected to increase from around 60% in 2021 to more than 85% by 2030 in the “Tier 1“ countries. We also estimate that value created for customers by the Group could lead to a reduction of up to 40% in their to- tal energy costs, together with a decrease of up to 80% in their carbon footprint by 2030. III. Focusing on the creation of value throughout the value chain To reinforce our strategy of focusing on the customer by making use of platforms, the Group has created the Global Customer Operations Business Line, which is responsible for dening commercial strategies and guiding the alloca- tion of capital towards customer needs by leveraging elec- trication and continuing to improve service quality. This renewed focus of the Group will accompany the bal- ancing and streamlining of our pofolio by way of: (i) a focus on “Tier 1“ countries; (ii) resources made available by selling o assets that no longer serve Group strategies; and (iii) ex- traordinary operations aimed at improving positioning, ac- quiring skills or generating synergies. Launch of matrix organization 2014 Migration to cloud 2016 2019 2017 2020 2021 Set up of Customer Operations platform GRID BLUE SKY TIER 1 COUNTRIES Enel Green Power Global Infrastructure and Networks Global Energy and Commodity Management Enel X Global Retail 65Group strategy 65 IV. Moving sustainable Net Zero goals up to 2040 The Group’s strategy and positioning planned for 2030 enable us to arm our intention to move up achievement of Paris Agreement’s Net Zero commitment by 10 years, from 2050 to 2040, for both direct and indirect emissions. Enel is commied to achieving zero emissions, without the use of any carbon-removal technologies or nature-based solutions, related to power generation and the sale of electricity and natural gas to end users. The plan by which the Group expects to reach this ambi- tious goal ahead of our original schedule is based on the implementation of ceain key strategic steps: (i) the ex- pectation to accelerate the decarbonization of genera- tion, progressively replacing our thermal pofolio with new renewables capacity while also taking advantage of the hybridization of renewables with storage solutions; (ii) by 2040, the electricity sold by the Group will be 100% renew- able and we will exit the retail sale of natural gas. Investment plan The Group’s investment plan is fully aligned with its goal of achieving net zero by 2040 (in line with the Paris Agree- ment’s goal of limiting global warming to 1.5 °C). Conse- quently, investments in carbon-intensive assets or prod- ucts will gradually decline to zero by 2040. In line with this vision, over the next decade the Group ex- pects to directly invest some €160 billion under the Own- ership business model, mainly in “Tier 1“ countries. More specically: • nearly half (€70 billion approximately) will be dedicat- ed to our Renewables business, where we expect an increase of about 84 GW in capacity compared with 2020, 9 GW of which in storage, to bring our consoli- dated renewable energy installed capacity to 129 GW by 2030\. We expect this outcome to be achieved by developing a growing pipeline, equal to about 370 GW and more than doubling since last year, along with three global platforms for the activities of Business Develop- ment, Engineering and Construction, and Operations and Maintenance; • an additional investment of about €70 billion is planned for the Infrastructure and Networks business, up €10 billion from the previous plan and concentrated in Eu- rope, with the goal of strengthening the Group’s posi- tion as a global player in terms of size, quality, ecien- cy, and resilience. We forecast that this investment will produce a regulatory asset base (RAB) of €65 billion by 2030, along with the full digitalization of our entire net- work customer base with sma meters. Development Development of new RES capacity to have a 100%-sustainable eet Exit from coal and exit from gas Enel capex plan fully aligned with 2040 Net-Zero targets Exit from gas and 100% sales from RES (1) Including 3.3 GW of managed renewable capacity. RES capacity on total (1) 2021 59% ~80% ~100% 2030 2040 Gas sold (bsmc) 2021 9.9 ~6 0 2030 2040 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 66 Integrated Annual Repo 202166 of Group activities in this space will benet from imple- mentation of Grid Blue Sky, a digital platform to manage the grid assets within the framework of a unied, global model that places the customer at the hea of the value chain. Within the scope of the Stewardship business model, the Group plans to invest about €10 billion, while also catalyz- ing €40 billion in additional investment by third paies. Net Zero by 2040 In 2019, Enel, responding to the call for action from the United Nations, signed a commitment to act to limit the increase in global temperatures to 1.5 °C and be net zero across its entire value chain by 2050, including both direct (Scope 1) and indirect (Scopes 2 and 3) emissions. In 2021, Enel announced that we have moved up our Net Zero target to 2040. This commitment calls for: (i) the 100% reduction of direct emissions (Scope 1) and of in- direct emissions related to gas sales (Scope 3 Gas); (ii) a reduction of at least 90% in all other indirect emissions (Scopes 2 and 3). This objective requires not only a sharp acceleration in renewables and energy eciency, but also a complete rethinking of the economic model and invest- ment planning. Over the next 10 years, the Strategic Plan presented by Enel in November 2021 describes how the massive investments envisaged through the Ownership business model are consistent with the objective of reduc- ing direct emissions (Scope 1) to 82 gCO 2eq /kWh by 2030, an objective that has been ceied by the Science Based Targets initiative (SBTi) as in line with the 1.5 °C scenario set out in the Paris Agreement. In paicular, investments in new renewables capacity will enable the achievement of ceain key peormance indicators (KPIs): renewable sources will account for more than 80% of total capacity and about 80% of electricity generation in 2030. This will allow the share of “emission-free” generation to grow from 65% in 2020 to over 85% in 2030 and, consequently, to cut direct emissions from 211 gCO 2eq /kWh in 2020 to 82 gCO 2eq /kWh in 2030\. The goal of achieving total decarbonization by 2040 re- quires a complete rethinking of the economic model in terms of circularity. Accordingly, Enel is acting on the main lever of direct emis- sions and at the same time rethinking its business model in a broader sense to act on all other dimensions. The Group has increased both awareness of and transpar- ency around all categories of indirect emissions. Despite the fact that repoing on indirect emissions is voluntary, Enel has prepared a more in-depth repo of emissions from fuel extraction and transpo, grid losses, self-con- sumption, and supplier relations. Capex deployed in “Tier 1“ countries (€bn) Other countries “Tier 1“ countries 44% 2021-2030 160 €bn 3% 9% Capex 2021-2030 160 €bn 98% 44% 67Group strategy 67 GHG target Scope Climate scenario Main drivers and actions to achieve target Sho term (2024) 140 gCO 2eq /kWh by 2024 100% of Scope 1 GHG emissions (1) 1.5 °C (2) • Gradual phase out of coal-red capacity in the 2022-2024 period (percentage of coal capacity out of total consolidated capacity reduced from 7% in 2021 to about 4% in 2024) • Invest €17.3 billion to accelerate the development of renewable energy by installing 17 GW of new renewables capacity in the 2022-2024 period, reaching 67 GW of consolidated renewables capacity by 2024 21.3 million tCO 2eq by 2024 100% of Scope 3 emissions connected with the sale of natural gas on end-user market 1.5 °C (2) • Promote the switch of customers from gas to electricity (especially residential customers) • Optimize the gas pofolio of customers (especially industrial customers) ≤130 gCO 2eq /kWh by 2024 100% of of Scope 1 and Scope 3 emissions connected with the sale of electricity on end-user market 1.5 °C (2) • Increase the percentage of renewable energy sold to customers, while increasing Group’s renewables production Medium term (2030) 82 gCO 2eq /kWh by 2030 (80% reduction compared with 2017) 100% of Scope 1 GHG emissions (1) 1.5 °C, SBTi ceied • Exit from coal-red generation (phasing out 16 GW of coal capacity) • Invest €65 billion to accelerate the development of renewable energy by installing 75 GW of renewables capacity in the 2021- 2030 period, reaching 120 GW of consolidated renewables capacity by 2030 (3 times installed renewables capacity in the 2017 base year) 11.4 million tCO 2eq by 2030 (55% reduction compared with 2017) 100% of Scope 3 emissions connected with the sale of natural gas on end-user market 1.5 °C (3) • Update to previous target, equal to a 46% reduction compared with the previous 2030 target • Promote the switch of customers from gas to electricity (especially residential customers) • Optimization of the gas pofolio of customers (especially industrial customers) ≤73 gCO 2eq /kWh by 2030 (80% reduction compared with 2017) 100% of Scope 1 and Scope 3 emissions connected with the sale of electricity on end-user market 1.5 °C (3) • Increase the percentage of renewable energy sold to customers, while increasing Group’s renewables production As a signatory of the “Business Ambition for 1.5 °C” campaign promoted by the United Nations and other institutions, Enel is commied to seing a long-term goal to achieve net-zero emissions across the entire value chain by 2040 (up from the previous target of 2050), including both direct emissions (Scope 1) and indirect emissions (Scopes 2 and 3), together with science- based targets in all relevant areas and in line with the criteria and recommendations of the Science Based Targets initiative (SBTi). Net-Zero commitment 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 68 Integrated Annual Repo 202168 GHG target Scope Climate scenario Main drivers and actions to achieve target Long term (2040) (4) ~0 gCO 2eq /kWh by 2040 100% of Scope 1 GHG emissions (1) 1.5 °C (3) • Gradual phase out of thermal capacity and achieve a 100% renewable energy mix • No use of carbon-removal technologies ~0 million tCO 2eq by 2040 100% of Scope 3 emissions connected with the sale of natural gas on end-user market 1.5 °C (3) • Exit from the sale of gas to end users by promoting the electrication of energy consumption • No use of carbon-removal technologies ~0 gCO 2eq /kWh by 2040 100% of Scope 1 and Scope 3 emissions connected with the sale of electricity on end-user market 1.5 °C (3) • Aim to achieve sale of 100% renewable energy to end users by 2040 • No use of carbon-removal technologies Net-zero emissions by 2040 All remaining emissions (Scopes 1, 2 and 3) 1.5 °C (3) • Potential use of carbon-removal technologies (1) Although Enel constantly monitors Scope 2 emissions and is actively commied to reducing them, the Group has not set a specic reduction target, as they represented less than 4% of total Scope 1 and Scope 2 emissions in 2017 (base year of the target ceied by SBTi). Therefore, they are considered marginal and fall within the exclusion criteria under the SBTi methodology, which sets a margin of 5% on total Scope 1 and Scope 2 emissions. (2) The target could not be ocially validated by SBTi because the targets must cover a minimum of 5 years and a maximum of 15 years from the date the target is presented to SBTi for ocial validation. However, they meet the 1.5 °C path established by the SBTi for the electricity services sector (sectoral decarbon- ization approach, SDA). (3) We expect to request SBTi ceication of the target in June 2022 and, in any event, based on a schedule agreed upon with SBTi. (4) In compliance with the Group’s Net-Zero commitment, which comprises both direct and indirect emissions, targets also will be set for additional compo- nents of Scope 2 and Scope 3 emissions in accordance with the Net-Zero Standard that SBTi published in October 2021. 69Group strategy 69 The Enel Group’s strategy with regard to the IEA NZE scenario (5) It is estimated that about 45% of emissions at the Planet level are currently associated with the extraction and production of materials, manufacturing and disposal. The Net Zero Emissions (NZE) scenario of the International Energy Agency (IEA) sets out one of the possible paths to achieving global net-zero emissions by 2050. It is the most ambitious of the scenarios dened by the IEA and was de- veloped with the goal of reducing emissions by the energy system in line with the goal of containing the average in- crease in global temperatures to within +1.5 °C. Compared with the IEA’s other scenarios, there is a gap to be closed in emission reductions by way of a sharp acceleration in terms of policies and in terms of the rate of electrication and the development of renewables capacity. Like all IEA scenarios, this scenario, too, is based on currently known industrial processes and consumption models and on ex- isting technologies and does not include any disruptive technologies that could emerge in the coming years. The IEA NZE scenario is paicularly useful to help busi- nesses assess the sustainability of their strategies in re- lation to a scenario of net-zero emissions by 2050. The roadmap to net-zero emissions set out in this scenario provides helpful, global and regional signposts in terms of the evolution and penetration of technologies deemed necessary to reach this goal. Nonetheless, local details are not always available in order to test more granular business assumptions and hypotheses. As for Enel’s strategy, the main points of note are as fol- lows: • exit from gas-red generation by 2040, with a roadmap that does not call for any carbon-removal technologies or solutions, which are not compatible with the Group’s strategic or technological positioning. Therefore, this is a target of zero, not “net” zero, direct emissions charac- terized by power generation that is entirely renewable; • forecasts of end-use electrication that, in accordance with the IEA NZE roadmap, call for milestones that would leave room for additional business oppounities due, in paicular, to the segments of transpoation (e.g., 60% of global car sales must be electric vehicles, no new combustion-engine cars by 2035, etc.) and heating and air conditioning. The Sustainability Plan People centricity is one of the pillars of Enel’s sustainability strategy. The Group is commied to providing the best conditions and oppounities for the people who work for us, with the goal of facing the challenges of the energy transition in line with the United Nations’ just-transition commitment signed in 2019. Upskilling, reskilling and specic training in digital skills are being paired with action plans for employ- ee development and valuing diversity aimed at creating an inclusive workplace by way of detailed objectives, including in terms of listening to employees and evaluating their per- formance. Within this context, the Group has raised tar- gets, compared with the previous year, related to the per- centages of female senior managers and middle managers to 26.8% and 33.4%, respectively, by 2024. At the same time, one of the pillars of our sustainability strategy centers on the impoance of the relationship with the local communities in which the Group operates, with the commitment, for the period 2015-2030, to reach: 5 million beneciaries of a quality education (SDG 4); 20 mil- lion beneciaries of clean, accessible energy (SDG 7); and 8 million beneciaries of decent work and lasting, inclusive and sustainable economic growth (SDG 8). To suppo the Group’s sustainability strategy, a focus on health and safety throughout the value chain continues to be of central impoance, made possible by way of con- stant, increasing monitoring. The Group is commied to promoting issues of sustainability and quality in supplier relations throughout the supply chain. Also crucial is envi- ronmental management aimed at reducing emissions, the consumption of water and other natural resources, and the preservation of biodiversity, and a strong governance structure continues to be a cornerstone of Group strategy. Finally, the energy transition must include enabling factors such as digitalization and cyber security, by way of which the Group is commied to promoting the most advanced solutions and actions to verify them (e.g., ethical hacking, vulnerability assessments, and cyber exercises involving industrial plant and facilities). The adoption of a fully sustainable business model re- quires us to completely rethink the concept of circulari- ty. The circular economy is fundamental for two reasons in paicular: on the one hand, it is an indispensable lever in achieving the goals of decarbonization throughout the value chain, (5) as well as making a positive contribution to resolving a series of other critical environmental issues in terms of the use of soil, water consumption, the creation of waste, etc.; on the other, the large-scale adoption of technologies such as photovoltaic power, baeries, and electrical mobility requires, right from the sta, a circular 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 70 Integrated Annual Repo 202170 approach to raw materials – and critical raw materials es- pecially – throughout the value chain. For years now, based on this awareness, Enel has included the circular economy among our strategic drivers by way of: • increasing engagement with suppliers in order to meas- ure the circularity of all that we purchase (e.g., the EPD project, which covers the Group’s strategic categories and accounts for about 55% of all products purchased globally), the implementation of a system of tracking the raw materials procured, and co-innovation with suppliers with an emphasis on solutions to close loops together by way of specic projects; • focusing on new models for the use of assets, extend- ing the useful lives of the assets in use, and increasing focus by way of remanufacturing and recycling projects for assets that have reached the end of their useful lives; • in terms of customers, both increasing the circularity of the solutions oered by Enel X for end users and sup- poing customers in terms of metering and improving circularity by way of repoing and consulting services. A transition of this so requires a change both in technolo- gy and business models, methods of interaction within the value chain and the functioning of the economic model writ large. To this end, Enel is collaborating with business- es, organizations and stakeholders in all countries in which we have a presence. All of this will also require a profound transformation in skills and professionalism, for which we are placing a great deal of emphasis on training and on new approaches to collaboration between the various ar- eas of the Group. We have also seen growing interest in this issue in recent years from the nancial services industry, and Enel has, for some time now, been supplementing our eos with a view to nancing in order to ensure that new initiatives are designed from the sta to be nancially competitive (and so scalable) and to contribute to the protability and derisking of Group peormance overall. The 2022-2024 Business Plan Within the broader ambitions for the positioning of the Group by 2030, the 2022-2024 Business Plan is ideally placed as the staing point for a growth path spanning the entire decade. Over the next three years, the Group will be operating within the framework of the objectives set for 2030\. More specically, the mid- and long-term strategies are fully in line with the following strategic actions. I. Allocating capital to suppo the delivery of decarbon- ized electricity The Group plans to directly invest a total of around €45 bil- lion over the period 2022-2024, an increase of 12% above the previous Plan, while also mobilizing an additional €8 billion from third paies within the scope of the Steward- ship business model. For the period 2022-2024, the Group plans to invest some €43 billion within the Ownership business model, align- ing 94% with the United Nations Sustainable Develop- ment Goals (SDGs). Specically, these funds will be aimed at achieving the targets of SDG 7 (“Aordable and Clean Energy”), SDG 9 (“Industry, Innovation and Infrastructure”), and SDG 11 (“Sustainable Cities and Communities”), there- by helping to combat climate change (SDG 13 - “Climate Action”). The alignment of the investments envisaged in the Group’s Strategic Plan with decarbonization and greenhouse gas reduction objectives is dened on the basis of a specic methodology in which investments in renewables and retail power by their very nature fall under SDG 7, investments in the distribution grid fall under SDG 9 and investments in Enel X concern SDG 11. The 94% mentioned above there- fore excludes investments in conventional generation and retail gas. Fuhermore, it is estimated that between 80% and 90% of planned investments will be aligned with the criteria of the European taxonomy, given the substantial contribution to climate change mitigation. 71Group strategy 71 Over the same period, the Group also plans to invest some €2 billion (of which 27% in renewables, 17% in the distribution grid and the remaining 56% to enable customer electrica- tion) within the scope of the Stewardship business model by way of capital contributions and acquisitions of minority in- terests, while also mobilizing an additional €8 billion in invest- ment by third paies. Investment in conventional generation will decline progressively over the period covered by the Plan. Of the Group’s total investment planned under the Owner- ship and Stewardship models for 2022-2024: • about €19 billion is expected to go to Renewables, par- ticularly in countries in which the Group benets from business integrated with the end user. The Group’s total renewables capacity is expected to increase to 77 GW, up from an estimated 53 GW installed at the end of 2021. As a result, it is estimated that zero-emission production will reach 77% by 2024 and that, over the same period, carbon emissions per kWh will decline by more than 35% com- pared with 2021, moving the Group closer to achieving our net-zero goals on schedule; • about €18 billion is expected to go to the Infrastructure and Networks business, up 12% from the previous Plan, as a result of increased investment in Europe, which is expected to take advantage of oppounities created by the national plans under the EU’s Recovery and Resilience Facility. With these investments, the goal of which is to fuher increase grid quality and resilience, it is estimated that the Group’s RAB will reach €49 billion, an increase of nearly 14% over 2021. Total investments (1) (€bn) Enel’s capex (€bn) 2021-2023 Old Plan ~48 ~52 38 ~2 42.6 ~2 2022-2024 New Plan Stewardship Third paies Ownership (1) 2021-2023 Old Plan included Enel X consolidated capex in stewardship. (2) Referred only to capex under the ownership model. +11% 2021-2023 Old Plan 40 44.6 38 2 42.6 1.9 2022-2024 New Plan ~94% SDG aligned (2) >85% EU taxonomy aligned (2) Capex deployed in “Tier 1“ countries Other countries “Tier 1“ countries 43% 2022-2024 42.6 €bn 5% 8% Gross capex 2022-2024 42.6 €bn 98% 44% 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 72 Integrated Annual Repo 202172 II. Enabling the electrication of energy demand among customers With the Group’s new customer-centric model, the inte- grated margin is expected to grow 1.6 times by 2024 as compared with 2021. Over the next three years, revenue from customers are expected to increase by 26%, while electricity sales are expected to rise by 25%. This will be accompanied by about a 15% decrease in the total cost of energy sold compared with 2021, thanks, in pa, to a reduction of about 23% in average production costs. III. Focusing on the creation of value throughout the value chain Active management of assets will complete the process of streamlining the Enel Group and providing the resources to be used to take advantage of additional oppounities for growth. These actions are expected to generate a €300 mil- lion increase in prots once fully operational. (6) Including conventional generation activities. At the Group level, ordinary EBITDA is expected to grow by 11%, from €19.2 billion in 2021 to between €21.0-21.6 bil- lion by 2024. The following factors are expected to contribute to this growth in the Group’s ordinary EBITDA: • growth in Renewables will be the main driver for the pe- riod, with an expected contribution of about €2.0 billion out of a total contribution of the power generation busi- ness of €2.9 billion. The evolution of the generation po- folio is expected to translate into a 45% increase in the EBITDA of Enel Green Power (6) over the period of the Plan, from the €6.0 billion of 2021 to €8.7 billion by 2024; • EBITDA for the Customers business is expected grow by about 40% over the period of the Plan to reach €4.9 bil- lion by 2024, up from the €3.4 billion of 2021. This growth will be driven by Group actions to implement an integrat- ed strategy in terms of commercial strategy and genera- tion capacity, as well as by the contribution of electricity volumes on the free market and by incremental needs for additional services; • EBITDA for the Infrastructure and Networks business is expected to increase by 16% to €8.7 billion by 2024, up from the €7.7 billion of 2021. The primary factors in this growth are the increase in RAB, driven by increased capi- tal expenditure, programs to increase eciency, increas- es in ination-indexed rates, paicularly in Latin America, and increased volumes in energy distribution. Cumulated EBITDA by GBL EBITDA evolution over 2021-2024 (€bn) EBITDA 2021 (1.8) (1.8)-(1.2) 2.9 1.3 1.2 22% 36%42% 2022-2024 60-62 €bn +11% 19.2 Open Fiber EBITDA 2024 CustomersGeneration 21-21.6 Networks Active pofolio management & other 5.4 €bn Business growth Integrated margin in “Tier 1“ countries (€bn) 2021 ~6 2024 2030 1.6x ~2.6x 73Group strategy 73 Ordinary prot is expected to increase by about 20%, from €5.6 billion in 2021 to between €6.7-6.9 billion by 2024, as a result of the operating trends described above and the ongoing optimization of the Group’s nancial management. This optimization will be achieved primarily by way of increas- es in sustainable sources of nancing, which are expected to account for about 65% of total gross debt by 2024, decreas- ing the cost of gross debt to an estimated 2.9% by 2024, down from 3.5% in 2021. We expect the use of debt to remain stable at a ratio of net debt to EBITDA for the Group of 2.9 times over the period of the Plan, with net debt for the Group expected to be €61-62 billion by 2024, up from €52 billion in 2021. Enel’s dividend policy for the period will remain simple, pre- dictable and aractive. Shareholders are expected to receive a xed dividend per share (DPS) that will grow by 13% from 2021 to 2024 to reach €0.43/share. We estimate that the ex- pected growth in prots, added to the underlying dividend yield, will translate into a total yield of around 13%. 2021 2022 2023 2024 Total return Earnings growth Ordinary EBITDA (€bn) 19.2 19-19.6 20-20.6 21-21.6 Net ordinary income (€bn) 5.6 5.6-5.8 6.1-6.3 6.7-6.9 Value creation Fixed DPS (€/sh) 0.38 0.40 0.43 0.43 Implied dividend yield (1) 5.4% 5.7% 6.1% 6.1% (1) Enel Share Price: 7 €/sh. Earnings CAGR Average dividend yield >13% 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 74 Integrated Annual Repo 202174 Reference scenario Macroeconomic environment The world economic environment in 2021 was character- ized by a broad-based economic recovery, with world GDP growth of about 5.8% on an annual basis in 2021, following a sharp drop of about 3.5% the previous year. This recovery was made possible – especially in more developed countries – with signicant scal suppo from governments and rapid and eective vaccination, which prevented the introduction of signicant restrictions on economic activity and mobility, especially in the 2nd Half of the year. However, the dierenc- es in the pace of vaccination between developed and devel- oping countries was also substantially reected in the GDP growth rates, engendering clear disparities in the recovery of the dierent economies. The generalized reopening of countries at the beginning of 2021 in concomitance with the initial roll out of vaccines generated sharp imbalances between supply and demand on a global scale, creating large distoions in supply chains and, consequently, pushing up the prices of raw materials. These inationary pressures also spilled over into the prices of intermediate and consumer goods, creating a surge in in- ation spiral that, accompanied by severe bolenecks due to logistical hurdles, is expected to continue in 2022. In the advanced countries, the 2nd Half of the year was marked by an unexpected economic slowdown, reecting interrelated factors such as an upturn in COVID-19 cases driven by the spread of new variants on a global scale and bolenecks associated with logistical challenges. With re- surgent demand buoyed by the reopening of economies, limits on production accompanied by the already rising pric- es of commodities have generated severe inationary pres- sures, boosting ination to record levels. US GDP grew by 5.7% on an annual basis in 2021, but in the 2nd Half expanded more slowly than expected at the begin- ning of the year due to general slowdowns in private con- sumption and industrial production in connection with the various waves of COVID-19, the reduction of the government suppo for private individuals that marked the rst months of the pandemic, shoages of raw materials and sharply higher energy prices. For 2022, projections conrm a slow- down in the economy as the suppo provided by excess private saving, which helped fuel the recovery in early 2021, will dissipate. Another factor will be the shift in the monetary policy stance to a less accommodative posture with the Fed- eral Reserve’s announcement that it would begin tapering its purchases of securities and could increase its main ocial rates as early as this year. Fuhermore, signicant risks linked to the pandemic, ination pressures at least until the end of the year, and political unceainty connected with the mid- term elections in November 2022 persist. In the euro area, the real economy posted a strong recovery in both the 2nd and 3rd Quaers of 2021, with annual GDP growing by 5.2%. However, the economic recovery slowed in the 4th Quaer due to steep increases in energy prices and the resurgence of COVID-19 with the Omicron variant, which prompted many countries to reintroduce business closures and restrictions on mobility. The price increases in the energy sector represent a crucial risk factor, especially for industrial production, which is more sensitive than pri- vate consumption, and therefore for the outlook for growth in 2022. However, inationary pressures associated with the high prices of electricity and natural gas will have heteroge- neous impacts within the euro area, and investment will re- ceive signicant suppo from the Next Generation EU recov- ery plan. Finally, the monetary policy stance of the European Central Bank will remain accommodative in 2022, although it has been announced that the massive pandemic emergency purchase program (PEPP) will be gradually tapered, but not before March. In Latin America, the progress of national vaccination cam- paigns led to a steep drop in COVID-19 cases in the 2nd Half of 2021. The associated reopening of national economies coincided with a global increase in food and energy prices, weak local currencies and periods of severe drought in sev- eral large areas of the continent. These factors produced a general increase in the price level, with ination well above the targets of many local central banks. The Argentine econ- omy has shown signs of recovery, with GDP growing by 9.8% on an annual basis in 2021. Structural problems per- sist, mainly concerning ination and the public nances, but negotiations with the International Monetary Fund continue on a debt restructuring to avoid default in 2022. In Brazil, most sectors of the economy recovered to pre-pandemic levels, with GDP growth estimated at an annual 4.7% in 2021. High levels of ination prompted a restrictive monetary pol- icy stance, which, combined with the limited contribution of reopening to growth as a result of the vaccination process, is moving the country towards a 2022 of stagation. Fuher downside risks are represented by political unceainty, with the previous President Lula favored for the upcoming elec- tions. In 2021, the Chilean economy was driven by an upturn in private consumption and investment, which produced GDP growth of 12% on annual basis. Current risks are mainly represented by the unceainties associated with the choic- es that the newly elected leftist candidate Gabriel Boric will 75Reference scenario 75 make. With ination above the national target and a growing current account decit, he could pursue excessively radical programs, with consequences for Chilean assets, including the local currency, which had adverse repercussions at the beginning of 2022. In Colombia, currency and inationary pressures led to a generalized increase in prices, with an- nual ination standing at 3.5% in 2021. For 2022, downside risks are represented by a slowdown in oil prices and global demand despite the estimated annual GDP growth of 9.6% in 2021. In Peru, the reopening of the economy and an ac- commodative monetary policy stance fueled annual GDP growth of 12.9% in 2021. For 2022, the risks of low or moder- ate growth are mainly aributable to the removal of current scal and monetary stimuli and considerable political uncer- tainty, with President Castillo surviving an impeachment at- tempt just four months after taking oce. . GDP growth and ination (1) % GDP Ination 2021 2020 2021 2020 Change Italy 6.5 -9.0 2.0 -0.1 2.1 Spain 5.0 -10.8 3.0 -0.3 3.3 Pougal 4.9 -8.4 - - - Greece 8.8 -8.8 - - - Argentina 9.8 -9.9 48.1 42.0 6.1 Romania 6.3 -3.7 4.1 2.6 1.5 Russia 4.4 -3.0 6.7 3.4 3.3 Brazil 4.7 -4.2 8.3 3.3 5.0 Chile 12.0 -6.0 4.5 3.0 1.5 Colombia 9.6 -6.8 3.5 2.5 1.0 Mexico 5.2 -8.4 5.7 3.4 2.3 Peru 12.9 -11.0 4.0 1.8 2.2 Canada 4.7 -5.2 3.4 0.8 2.6 United States 5.7 -3.4 4.7 1.2 3.5 South Africa 4.7 -6.4 4.5 3.3 1.2 India - - 5.1 6.8 -1.7 (1) The GDP and ination gures are the best estimate available at the publication date and are subject to revision by national statistical institutes in the coming months. Source: national statistical institutes and Enel based on data from ISTAT, INE, EUROSTAT, IMF, OECD and Global Insight. Exchange rates 2021 2020 Change Euro/US dollar 1.18 1.14 3.39% Euro/British pound 0.86 0.89 -3.49% Euro/Swiss franc 1.08 1.07 0.93% US dollar/Japanese yen 110 107 2.80% US dollar/Canadian dollar 1.25 1.34 -7.20% US dollar/Australian dollar 1.33 1.45 -9.02% US dollar/Russian ruble 73.71 72.29 1.93% US dollar/Argentine peso 95.16 70.68 25.73% US dollar/Brazilian real 5.40 5.16 4.44% US dollar/Chilean peso 760.72 791.61 -4.06% US dollar/Colombian peso 3,747.97 3,692.87 1.47% US dollar/Peruvian sol 3.88 3.50 9.79% US dollar/Mexican peso 20.29 21.48 -5.86% US dollar/Turkish lira 8.90 7.0 2 21.12% US dollar/Indian rupee 73.93 74.08 -0.20% US dollar/South African rand 14.79 16.46 -11.29% 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 76 Integrated Annual Repo 202176 The energy industry Energy - Commodity conditions in 2021 During 2021, the oil market experienced sharp growth in its indices, reecting the optimism for the recovery of eco- nomic activity, combined with the precautionary measures of OPEC+ regarding production cuts, which produced ten- sions in price indices in the 2nd and 3rd Quaers. After peaking in October, with the spread of new COVID-19 var- iants, prices began to ease, falling below $75/barrel in De- cember. In 2021, the European gas market experienced considerable volatility, caused by both supply and demand factors. In the 1st Half of the year, lower than average temperatures and a heating season that lasted until May led to a progressive depletion of gas inventories in Europe, with a consequent increase in demand during the summer months. On the supply side, however, LNG expos from the United States have been aracted to the Asian market, fuher ex- acerbating the commodity’s scarcity. The rise in gas prices, combined with strong Chinese de- mand, in turn led to an increase in coal prices, which peaked at $231 per metric ton in October, before falling below $150 per metric ton in November following the reopening of a number of mines in China, which eased supply-side strains. 2021 2020 Change Brent $/barrel 71 43 65.1% API2 $/ton 120 50 140.0% TTF €/MWh 46 9 411.1% CO 2 €/ton 53 25 112.0% Copper $/ton 9,310 6,177 50.7% Aluminum $/ton 2,472 1,704 45.1% Nickel $/ton 18,461 13,787 33.9% The prices of CO 2 in the ETS are also increasing, following the strong commitment expressed by the European au- thorities, culminating in the approval in July of the “Fit for 55” package, an expression of the desire to reduce CO 2 emissions by at least 55% by 2030\. Expectations of rising prices, combined with strains in the gas market and the in- crease in speculative positions in this market, produced an increase in the price of the commodity, which at the end of December stood above €80/ton. Similarly to developments in energy commodities, 2021 was a very volatile year, characterized by sharp increases in the prices of the main industrial metals as well. The re- sumption of post-COVID-19 economic activities and the launch of investment and recovery plans focused on the energy transition around the world have driven the de- mand for metals up sharply. At the same time, metal supply, which is intrinsically inelas- tic and aected by availability problems and logistical and transpo bolenecks, has not managed to keep pace with the growth in demand, generating scarcity on the market with a consequently large increase in prices. For copper and aluminum, after the highs reached during the year (over $10,000/ton in May for copper and around $3,000/ton in October for aluminum), prices appear to have stabilized during the last quaer, albeit at a high level, with less strained market fundamentals looking forward. Similarly, after the peaks recorded in the 3rd Quaer of 2021, demand for steel has declined, reecting both the slowdown in the Chinese economy and the environmental and energy limitations that have slowed down production at foundries in the Far East. All these factors paved the way for a substantial stabilization of prices in the nal months of the year. Finally, as regards metals used in baeries, in paicular nick- el, lithium and cobalt, prices rose steadily throughout the year, driven by strained market fundamentals, in paicular demand from the electric vehicle and general energy sec- tors, which has not shown any signs of slowing down. Please see the section “Fighting climate change and ensur- ing environmental sustainability” for an analysis of the circular management of commodities linked to the energy transition. 77Reference scenario 77 Electricity and natural gas markets Electricity demand Developments in electricity demand (1) TWh 2021 2020 Change Italy 319.3 302.8 5.4% Spain (2) 256.4 250.1 2.5% Romania 62.2 59.3 4.9% Russia (3) 820.1 778.6 5.3% Argentina 138.7 131.7 5.3% Brazil 609.0 586.6 3.8% Chile 81.5 7 7.7 4.9% Colombia 74. 1 70.4 5.3% (1) Gross of grid losses. (2) National data. (3) Europe/Urals. Source: Enel based on TSO gures. The gures are the best estimate available at the publication date and could be revised by TSOs in the coming months. The year 2021 was characterized by a broad recovery in electricity consumption, which returned to pre-pandemic levels in most of the countries in which we operate. In Italy, electricity demand grew by 5.4%, thanks to the gradual reopening of various sectors of the economy. Spain also recovered, registering a rise of 2.5% compared with 2020, although demand remains below pre-pandemic levels (-2.9% compared with 2019). This dierence is due to the slower recovery to normal economic activity, which dampened demand in the services sector, combined with summer temperatures that were below the seasonal av- erage. The high prices of electricity recorded in Europe in the 4th Quaer neveheless had an impact on industrial con- sumption, and demand destruction is also expected in the 1st Quaer of 2022 given the current tensions in the Eu- ropean markets. Consumption also increased in Russia and Romania, by 5.3% and 4.9% respectively. Similar developments were recorded in Latin America, where electricity demand grew by an average of 4.8%. Growth was paicularly rapid in Argentina (+5.3%), Colom- bia (+5.3%) and Chile (+4.9%); in the laer country, demand had also grown in 2020, albeit only very slightly (+0.8%). Electricity prices Electricity prices Average baseload price 2021 (€/MWh) Change in average baseload price 2021-2020 Average peakload price 2021 (€/MWh) Change in average peakload price 2021-2020 Italy 125.0 86.1 139.8 95.2 Spain 111.5 77.5 120.8 84.8 Electricity prices in Italy and Spain rose sharply compared with 2020, reecting the rise in prices on commodity markets in 2021. More specically, the sharp increase in the price of gas, together with a decline in output from renewable sourc- es and maintenance at a number of nuclear power plants in Europe, caused power prices in Italy and Spain to in- crease by more than 220% compared with 2020, reaching record highs in the 4th Quaer of 2021. The strains on electricity prices recorded at the end of 2021 are expect- 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 78 Integrated Annual Repo 202178 ed to continue in 2022. The following table provides an overview of prices in end-user markets by main consumption segment. Price developments in the main markets Eurocents/kWh 2021 2020 Change End-user market (residential) (1) Italy 0.1432 0.1357 5.5% Romania 0.1115 0.1043 6.9% Spain 0.1358 0.1219 11.4% End-user market (industrial) (2) Italy 0.0939 0.0867 8.3% Romania 0.0824 0.0869 -5.2% Spain 0.0931 0.0834 11.6% (1) Annual price net of taxes - annual consumption of between 2,500 kWh and 5,000 kWh. (2) Annual price net of taxes - annual consumption of between 70,000 MWh and 150,000 MWh. Source: Eurostat. Natural gas markets Natural gas demand Billions of m 3 2021 2020 Change Italy 75.0 70.0 5.0 7. 1% Spain 32.5 31.0 1.5 4.8% The resumption of activity in various sectors of the econ- omy, combined with a paicularly long and severe winter in the Nohern hemisphere, drove global demand for gas in 2021. In Italy and Spain, demand grew by 7.1% and 4.8% respec- tively. Natural gas demand in Italy Billions of m 3 2021 2020 Change Distribution grids 33.4 31.0 2.4 7.7 % Industry 14.0 13.0 1.0 7.7 % Thermal generation 25.9 25.0 0.9 3.6% Other (1) 1.7 1.0 0.7 70.0% Total 75.0 70.0 5.0 7. 1% (1) Includes other consumption and losses. Source: Enel based on data from the Ministry for Economic Development and Snam Rete Gas. In Italy, demand increased by 7.1% compared with 2020, with a paicularly strong rise in the distribution grid (+7.7%) and industrial (+7.7%) sectors, aributable to the greater demand for gas for heating and industrial production. The recovery in thermal generation (+3.6%) was less marked, but still signicant. 79Reference scenario 79 Climate change and long-term scenarios Enel promotes transparency in its climate-change disclo- sures and works to demonstrate to its stakeholders that it is tackling climate change with diligence and determi- nation. Enel has publicly commied to adopting the rec- ommendations of the Task Force on Climate-Related Fi- nancial Disclosures (TCFD) of the Financial Stability Board and to following all published updates. The Group is also taking on board the “Guidelines on repoing climate-re- lated information” published by the European Commission in June 2019, which, together with the TCFD recommenda- tions and the GRI standard, constituted the main frame- work for the Group’s repoing on climate change issues in 2021\. Enel has been involved in a working group to develop specic recommendations to suppo the implementation of the TCFD guidelines concerning scenario analysis. The TCFD Advisory Council worked on the scenarios in 2020 and, since then, Enel has been involved in various initia- tives of scenario analysis, sharing our experience in order to suppo the increasingly widespread and transparent implementation of this practice among a growing number of organizations. Scenario analysis Analysis of the evolving external conditions is a funda- mental component of Enel’s strategy. In today’s complex world and faced with unceainty about the future, den- ing a solid and resilient strategy is crucial to the creation of value for all stakeholders. Therefore, Enel’s strategic planning process begins with an analysis of the evolving external landscape, with a paicular emphasis on climate change and the energy transition. To this end, the Group adopts a structured approach to scenario analysis in or- der to maximize oppounities and mitigate risks. Scenario-based planning involves dening “alternative futures” based on a number of key unceainty variables, such as achieving the goals of the Paris Agreement or the development of technology. Compared with forecasting, scenario analysis provides greater exibility and enables us to prepare for handling risks and seizing oppouni- ties. Forecasting, on the other hand, seeks to understand the future based on past trends, so it cannot anticipate changes, risks or signicant unceainties. At Enel, scenario analysis is used in planning, the alloca- tion of capital, strategic positioning, and the assessment of risks and of strategy resilience. The preparation of sce- narios helps companies to make strategic decisions un- der complex, unceain conditions by exploring plausible alternative futures, designing various paths forward with dierent timing and options for mitigation, and conduct- ing risk-based analyses in order to challenge our strate- gic thinking. In 2021, the scenario framework was dened by way of a specic workstream to suppo the decision-making process (“strategic dialogue”). The topic was analyzed in dedicated workshops with senior management that fo- cused on identifying the primary trends, disruptions, fu- ture unceainties and potential scenario narratives. Within the scope of dening Enel’s long-term scenarios, the mid- and long-term trends identied were then ana- lyzed in depth, and the results of this analysis were sum- marized in an Industry View document for internal use. Designed to suppo the decision-making process, this document provides an overview of the structural forces, macro-trends, potential disruptions, and technologies that have an impact on the development of the industry and the economy and describes the potential impact on the Company’s business. As a result, it provides a framework for the denition of actions aimed at guiding, preventing, and adapting to changes in our various businesses, as well as at seizing related oppounities and developing a great- er awareness of the risks involved. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 80 Integrated Annual Repo 202180 Benchmarking and analyses were also conducted on the external energy-transition scenarios, which, together with an analysis of relevant repos on trends in the economy, in commodities, and in climate, have fed the internal model in order to dene the assumptions for the long-term sce- narios. 3 narratives to capture the evolution of trends and unceainty. They are the foundation of our long-term planning and the assessment of risks and oppounities in alternative scenarios. They are a staing point for ”what-if” analysis. 10 key factors that delineate the long-term outlook for our industry. They may be aected by greater or lesser unceainty but their common feature is high expected impact. Technologies 10 areas Ideas for the future 5 suggestions for fuher analysis 3 macro-level structural factors Structural forces Scenario narratives Emerging trends and disruption People Planet Prosperity Analysis of external scenarios and benchmarking Collection and analysis of key available scenarios, comparing their main features. Analysis of trends and unceainties Analysis of key trends and distruptions that drive the scenarios, creating a “library” of trends that fuel our strategic dialogue and scenario planning. Macroeconomic, nancial and climate analysis and forecasting Processing data for use in scenario planning based on internal models and analysis of peormance data and indicators from key repos. Internal Enel scenarios Full vision of macroeconomic, nancial, energy and climate variants. 81Reference scenario 81 Within this framework, each scenario narrative has been prepared so as to ensure consistency between the ener- gy-transition scenarios and the climate scenarios, based on which the acute and chronic physical phenomena are analyzed. This benchmarking of external scenarios is a key staing point in order to build robust internal scenarios. There are many global energy-transition scenarios published by var- ious providers and designed for a wide range of purposes, from government planning to the suppo of enterprise decision-making processes. Benchmarking entails analyz- ing the scenarios produced by the external organizations in order to compare results in terms of the energy mixes, trends in emissions, and technology decisions and to iden- tify the main drivers of the energy transition for each. Global energy scenarios are typically grouped by family based on the degree of climate ambition, as follows: • Business-as-usual/Stated-policies scenarios: these provide a fairly conservative benchmark for the future and represent how the energy system would evolve in the absence of additional climate and energy policies. These scenarios do not manage to achieve the goals of the Paris Agreement. • Paris-Aligned scenarios: these include a goal of limiting the increase in average global temperatures ”well below 2 °C” above pre-industrial levels. In order to achieve this goal, this family of scenarios consider new, more ambi- tious policies for the electrication of end uses and for the development of renewables. • Paris-Ambitious scenarios: global energy scenarios that take a path towards net-zero greenhouse gas emissions by 2050, in line with the most ambitious of the Paris Agreement goals, i.e., to stabilize the average increase in global temperatures within 1.5 °C. All scenarios in this family are in agreement that the primary drivers of the energy transition to net zero by 2050 are the electri- cation of end uses and increasing the generation of renewable energy over the medium and long term. How they dier is in the additional solutions needed over the long term to close the gap towards the goal of net-ze- ro emissions, in that they assign dierent relevance to the contributions of the various technologies and to the changes in consumer behavior. Scenarios considered: Source: IEA (2021) Net-Zero by 2050; BNEF (2021), New Energy Outlook; IRENA (2021); 1.5 Scenario. 2010 0 5 10 15 20 25 30 35 2020 2030 2040 2050 Consensus: High Low Range Consensus 25-27% ≥50% of sales 10-12 TW Range Consensus ~50% ~100% sales EV 25-46 TW Hydrogen demand 500-1,000 MtH 2 Behavioral changes and circularity None - High impact CCS/CCUS, DAC 0-7 GtCO 2 /year Nuclear 0.4-7 TW GtCO 2 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 82 Integrated Annual Repo 202182 In general, a systematic analysis of the various scenarios found that the response to the most challenging scenari- os for climate change mitigation eos involves a greater penetration of electrication and renewable energy. One climate scenario, multiple energy-transition scenarios An energy-transition scenario represents how the contri- bution of the various energy sources might evolve within a specic economic, social, regulatory and policy context and based on the technology options available. Social and macroeconomic assumptions determine the service de- mand, while the regulatory, policy and cost restrictions dene the optimal mix of technologies needed to meet that demand. Each scenario is associated with a trend in greenhouse gas emissions. A given long-term result in terms of temperature increase may be associated with various trends in greenhouse gas emissions and, therefore, to more than one transition sce- nario. Each energy scenario is associated, more or less strictly, to a specic climate trajectory dened by the Inter- governmental Panel on Climate Change (IPCC) and, conse- quently, to a range of temperature increases estimated to PES Energreen 20 15 20 25 30 35 40 45 50 30 40 50 60 70 80 90 100 Renewable generation (%) Electrication rate (%) ≤2 °C >2 °C NZ@2050/~1.5 °C Temperature increase To 2050 | Graphic source: internal processing based on IEA (2021), World Energy Outlook 2021 | BNEF (2021), New Energy Outlook | IRENA (2020), Global Renew- ables Outlook | IRENA (2021), World Energy Transition Outlook. Red Enerbase Enerblue STEPS SDS NZE 1.5C Green Base 2019 level 83Reference scenario 83 a ceain degree of likelihood over a given period of time. (7) In turn, various increases in global temperatures by 2100 (and, therefore, various future scenarios of global warming) also change the trends in the other climate variables (e.g., rainfall, wind, etc.), causing changes in the intensity and frequency of the physical manifestations (e.g., heat waves, extreme rainfall, etc.). It should be underscored that these changes aect the entire globe, but the physical manifes- tations vary at the regional and local level. (7) For example, the scenario SSP1-1.9 (which includes the assumptions of the scenario SSP1 and the RCP 1.9 climate forecasts), which predicts an immediate decline in climate-altering emissions to reach net-zero emissions by around 2050, followed by net negative emissions, leads to an estimated average in- crease in global temperatures of 1.4 °C by 2081-2100, with a “very likely” (i.e., with a probability of 90 to 100%) range of average temperature increase of 1.0 to 1.8 °C. The SSP1-2.6 scenario considers a slower reduction in emissions, reaching net-zero emissions in the second half of the century, and is associated with a best-estimate average increase in global temperatures of 1.8 °C by 2018-2100, with a very likely range of 1.3 °C - 2.4 °C. (8) Paris Agreement, published in the Ocial Journal of the European Union. hps://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:22016A1019(01)&from=EN. That said, a global energy scenario is said to be Par- is Aligned when the overall result, in terms of trends in greenhouse gas emissions, may be associated with an av- erage increase in global temperatures that is in line with the Paris Agreement objective of “holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and pursuing eos to limit the tem- perature increase to 1.5 °C”. (8) Enel’s long-term scenarios The issues associated with the industrial and economic transition towards solutions to reduce atmospheric con- centrations of CO 2 are the characteristic elements of the “energy-transition scenario”, while the issues connected with future trends in climate variables (in terms of acute and chronic manifestations) dene the “physical scenario”. The scenarios are constructed within an overall framework that ensures consistency between transition assumptions and climate projections. Granularity & extended geographical coverage Forward-looking metrics & KPIs Automation and advanced analytical techniques Integration of interdependencies Open databases available to stakeholders Macro-Finance More than 150 countries monitored for analysis of country risk and macroeconomic- nancial scenarios Monitoring of market expectations and sensitivity analysis of new social and technology paradigms General equilibrium models and machine- learning techniques to manage big data Incorporation of social- environmental eects in analysis to quantify eects of actions taken (e.g., TSI) Periodic updating on interactive platforms with optimization for graphical analysis Energy Broad coverage of market and geographical indicators and staing-point focus areas Monitoring of trends in electricity demand and price volatility. With analysis of regulatory and transition impacts Econometric models and neural networks to produce forecasts Impact analysis with exogenous variables (macroeconomic and climate) Development of integrated database updated automatically Climate Climate scenario data available with worldwide high- resolution coverage Standard and/or ad hoc metrics to assess developments in future scenarios Analytics and machine learning to manage georeferenced big data in downloadable cloud environments Integration of exposure data (e.g., demographic density, asset location/ value) Platforms for sharing, visualizing and downloading results Integrated System Models Main countries of interest for Enel. Developed to manage integrated business models Development of scenarios by economic sector to identify trends in electrication and eciency Use of system models to optimize the use of technologies to minimize emissions and costs Integrated management of both energy supply and demand Technology database for each service: types of electric vehicles, heat pumps, etc. The acquisition and processing of the large volume of data and information needed to dene the scenarios, and the identication of the methodologies and metrics necessary to interpret phenomena that are complex and – in the case of climate scenarios – at very high resolution, require a con- tinuous dialogue with both external and internal sources. In order to evaluate the eects of physical and transitional phenomena on the energy system, for example, the Group makes use of models that, for each country analyzed, de- scribe the energy system in terms of specic technological, socio-economic, policy and regulatory aspects. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 84 Integrated Annual Repo 202184 The adoption of these scenarios and their integration into corporate processes take account of the guidelines of the TCFD and enable the assessment of the risks and oppou- nities connected with climate change. (9) As regards the IIASA, for example, we have considered the fundamentals of commodity demand and the population underlying the Shared Socioeconomic Pathways (SSPs), which project dierent scenarios describing socioeconomic developments and policies consistent with climate scenarios. The information from the SSPs is used, together with the internal modeling, to suppo long-term forecasts, such as those for commodity prices and electricity demand. The process that translates scenario phenomena into use- ful information for industrial and strategic decisions can be summarized in ve steps: Enel’s energy-transition scenarios A transition scenario describes how energy generation and consumption evolve in the various sectors in a specic eco- nomic, social, policy and regulatory context, and this corre- sponds to a trend in greenhouse gas (GHG) emission. The main assumptions considered in developing the ener- gy-transition scenarios concern: • the local policies and regulatory measures to combat climate change, such as measures to reduce carbon dioxide emissions and the consumption of fossil fuels, to increase energy eciency, and to decarbonize the electricity sector; • the global macroeconomic and energy context (for ex- ample, gross domestic product, population and com- modity prices), considering international benchmarks including those produced by the International Energy Agency (IEA), Bloomberg New Energy Finance (BNEF), the International Institute for Applied Systems Analysis (IIASA) (9) and others; • the evolution of energy production, conversion and consumption technologies, in terms of both technical operating parameters and costs. In 2021, Enel revised the framework of medium- and long- term energy-transition scenarios and dened three alterna- tive scenario narratives. • Paris scenario - Calls for achieving the objectives of the Paris Agreement, so it is a level of climate ambition that is signicantly higher than business as usual. The greater ambition is suppoed by greater electrication of energy consumption and a growing development of renewables. • Slow Transition scenario - Characterized by a slower en- ergy transition that does not achieve the objectives of the Paris Agreement. This scenario involves a slower increase in renewables and in the electrication process than that of the Paris scenario, paicularly over the sho term (i.e., delays in implementation of the energy transition). • Best Place scenario - Designed to test assumptions that improve upon the Paris scenario. Here, too, the objec- tives of the Paris Agreement are achieved, but the sce- nario considers a wider range of technology options, such as a greater penetration of green hydrogen (i.e., produced using renewable energy) used more widely in hard-to-abate sectors, thereby facilitating the decar- bonization process towards net-zero emissions. At Enel, we have selected the Paris scenario, which calls for achieving the Paris Agreement objectives, as the bench- 1 2 3 4 5 F I V E S T E P S Impact assessment 1 2 4 5 3 Identication of trends and factors relevant to the business (e.g., electrication of consumption, heat waves, etc.) Development of link functions connecting climate/transition scenarios and operating variables Calculation of impacts on business (e.g., change in peormance, losses, capex) Strategic actions: denition and implementation (e.g., capital allocation, resilience plans) Identication of risks and oppounities 85Reference scenario 85 mark for long-term planning, unlike last year when the benchmark was the Stated-policies scenario. We did this on the belief that the world’s governments, businesses, organizations, and people will work together eectively to mitigate greenhouse gas emissions. The increased com- mitment to net-zero emissions in 2021 among nations that currently account for 88% of global emissions (10) and the success of COP26 suppo the decision to select a sce- nario that achieves the Paris objectives as Enel’s long-term benchmark. As for the possibility of assuming achievement of the more challenging Paris Agreement objective, i.e., to stabilize average global temperatures to within +1.5 °C, as a benchmark for long-term planning, there remain evident unceainties that a number of countries could remain on business-as-usual trajectories, thereby slowing the decar- bonization process towards net-zero emissions by 2050. Given this external environment, the Enel Group imple- ments a business model that is in line with the highest am- bition of the Paris Agreement and so is consistent with an increase in average global temperatures of 1.5 °C by 2100. (10) At December 28, 2021. Enel has set a long-term objective of reaching zero direct emissions (Scope 1) with fully renewable power generation and zero emissions connected with the retail sale of ener- gy (Scope 3). The assumptions for trends in commodities prices feeding the Paris scenario are consistent with the external scenari- os that achieve the objectives of the Paris Agreement. More specically, we assume sustained growth in the price of CO 2 through 2030, caused by a gradual reduction in the supply of permits as demand increases, as well as stabilization in the price of coal due to declining demand. As for gas, we expect pricing pressures to lessen in the coming years as we see a realignment between global supply and demand. Finally, we are forecasting a gradual stabilization in oil prices, with demand expected to peak by around 2030. In the following tables, the values for “Enel scenario” repre- sent the assumptions in the Group’s baseline scenario used for various applications, including planning activities and determining impairment. (1) Sources: IEA, Sustainable Development Scenario and Net-Zero Scenario; BNEF; IHS green case scenario; Enerdata green scenario. N.B. The scenarios used as benchmarks have been published at various points throughout the year and may not be up to date with the latest market trends. (2) Actuals. Average benchmark (1) Max benchmark Min benchmark Enel scenario 2030 2030 43.2 50.3 ~68 ~72 ~62 ~67 ~70 ~73 ~45 ~65 2020 (2) 2020 (2) Brent ($/barrel) API2 ($/t) 9.3 ~21 ~20 ~42 ~13 2030 24.7 ~95 ~87 ~127 ~53 2020 (2) 20302020 (2) CO 2 EU - ETS (€/t) TTF (€/MWh) 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 86 Integrated Annual Repo 202186 The two alternative scenarios, i.e., Slow Transition and Best Place, are used for strategic stress testing, risk assess- ment, and the identication of business oppounities. Analysis of the main components of the transition scenarios The Group analyzes energy-transition scenarios and de- nes assumptions regarding trends in policy, technology, commodities, and other macroeconomic variables. Enel’s benchmark scenario, the Paris scenario, is based on a decarbonization ambition that is in line with the ob- jectives of the Paris Agreement, suppoed by a growing electrication of energy consumption and the develop- ment of renewable capacity. Denition of the Paris scenario at the local level has been set up based on two dierent approaches that vary based on the availability of models fundamental to simulating the long-term equilibrium of the entire energy system. More specically, in the primary countries in which we have a presence and for which these models are avail- able (i.e., Italy, Spain and Brazil at present), we have tak- en a boom-up approach, imposing an explicit limit on the trend in CO 2 emissions for the country. The values of the scenario variables of relevance to the activities of the Group (including electricity demand, electrication rates, renewable and distributed-generation capacity, the number of electric vehicles, and the production of green hydrogen) have been calculated by the model over a time horizon to 2050, in line with the limit on emissions and with a view to minimizing costs for the system. For the rest of the world, we have taken a top-down approach, such that the variables of interest have been calculated by way of analyses of consensus in relation to external scenarios aligned with the objectives of the Paris Agree- ment as provided by international accredited bodies. These two dierent approaches have also been used to dene the alternative Slow Transition and Best Place sce- narios at the local level. Under the Paris scenario, European countries show a downward trend in emissions consistent with the Euro- pean “Fit for 55” package thanks to a greater electrica- tion of energy consumption suppoed by an increasing contribution of renewables in the energy mix. More spe- cically, the Paris scenario for Italy, which is more ambi- tious than the national plan currently in place, calls for an increase in electrication to 28% by 2030 (vs. 22% in 2021) and a level of renewable energy generation that can meet 70% of electricity demand (vs. about 55% under the Italian national plan at the same date). Romania, too, sees an in- crease in the electrication of energy consumption and in the role of renewables in pursuing a more aggressive re- duction in emissions compared with the current national plan. For Spain, the ambition level dened under the na- tional plan is in line with achievement of the Paris Agree- ment objectives. As such, the Paris scenario calls for an electrication rate of 29% by 2030 and development of renewables capacity that would bring the percentage of electricity demand met by renewable energy to over 80%. For Brazil, the Paris scenario has been dened based on the assumption of reaching the target of net-zero emis- sions by 2050. For the remaining countries of interest to the Group, the Paris scenario and the alternative scenar- ios have been dened based on a consensus analysis of the external scenarios available. The Slow Transition scenario shows a lower ambition in combating climate change, which translates into a slow- er development of renewables and slower growth in electrication at all levels. This scenario has been con- structed based on the assumption that countries will re- main essentially tied to the current national plans, where these plans do not feature a climate ambition in line with achieving the Paris Agreement objectives, or that the am- bition, if high, is not suppoed by adequate implement- ing policies. This laer case, for example, applies to Spain, which, under the Slow Transition scenario, fails to meet the ambition of the national plan due to delays in imple- menting policies that would enable a greater penetration of renewables and of other electricity technologies. The Best Place scenario assumes a faster reduction in the cost of technologies to produce green hydrogen. This, then, translates into greater penetration of green hydro- gen in the hard-to-abate sectors, at the expense of blue and gray hydrogen (i.e., gas-fueled hydrogen production with or without, respectively, the use of CCS technolo- gies), resulting in an increase in electricity demand and in the installation of renewables capacity in the countries analyzed as compared with the Paris scenario. With the help of fundamental system models, we have also been able to estimate the impact of energy ecien- cy measures on both energy consumption and trends in electricity demand. We have also quantied the benet of electrication of the average household’s energy con- sumption and transpoation in terms of lower energy bills and lower emissions. This analysis was done in relation to an average Enel customer, which showed a higher degree of electrication than the national average for the coun- try in question as a result of Enel’s electrication strategy. Finally, we have analyzed the impact of each scenario in terms of the reduction in overall consumption of fossil fu- els and energy dependency. 87Reference scenario 87 Within the scope of dening the scenario, we also devel- oped a specic analysis of electric mobility in Latin Amer- ica in order to determine the primary drivers of electri- cation in end-user consumption. A number of countries are working to promote electric mobility in the region: Chile and Colombia, for example, have set specic tar- gets for electric mobility and their governments are im- plementing clear policies to promote growth in this mar- ket. Most of the scenarios expect private-sector electric mobility to take o in the region between 2025 and 2030, when costs will become more competitive. The physical climate scenario Under the scenarios, the role of climate change is always the most impoant and generates eects both in terms of transitioning the economy towards net-zero emissions and in terms of physical impacts, which may be: • acute phenomena (heat waves, ooding, hurricanes, etc.) and their potential impact on industrial assets; • chronic phenomena related to structural changes in the climate, such as the rising trend in temperatures, rising sea levels, etc. which can bring about constant changes, for example, in the output of generation plants and in electricity consumption proles in the residential and commercial sectors. The Group has selected three of the global climate path- ways developed by the Intergovernmental Panel on Climate Change (IPCC), which are in line with those of the IPCC’s sixth assessment repo (AR6). These scenarios are asso- ciated with emission paerns linked to a level of the Rep- resentative Concentration Pathway, each of which is con- nected to one of the ve scenarios dened by the scientif- ic community as Shared Socioeconomic Pathways (SSPs). The SSP scenarios include general assumptions concern- ing population, urbanization, etc. The three physical sce- narios analyzed by the Group are as follows: • SSP1-RCP 2.6: compatible with a range of global warm- ing below 2 °C from pre-industrial levels (1850-1900) by 2100 (the IPCC forecasts an average of about +1.8 °C from 1850-1900 with a 44% likelihood of staying below 1.5 °C and 78% of staying below +2 °C (11) ); in the analyses that consider both physical and transition variables, the Group associates the SSP1-RCP 2.6 scenario with the Paris and Best Place scenarios. • SSP2-RCP 4.5: compatible with an intermediate sce- nario that calls for an average temperature increase of about 2.7 °C by 2100 from pre-industrial levels. The RCP 4.5 scenario is the one that is most representative (11) IPCC Fifth Assessment Repo, Working Group 1, “Long-term Climate Change: Projections, Commitments and Irreversibility”. (12) Climate Action Tracker Thermometer, estimates of global heating at 2100 considering existing policies and action, and 2030 targets only (November 2021 update). of the world’s current climate and political landscape and correlated transition assumptions. This scenar- io forecasts global warming in line with the estimates of temperature increases that consider current policy around the world; (12) in the analyses that consider both physical and transition variables, the Group associates the SSP2-RCP 4.5 scenario with the Slow Transition scenario. • SSP5-RCP 8.5: compatible with a scenario where no paicular measures to combat climate change are im- plemented. This scenario forecasts an increase in global temperatures of about +4.4 °C from pre-industrial levels by 2100 (denitely above 3 °C and with a 62% likelihood of being above 4 °C according to IPCC estimates). The Group considers the RCP 8.5 scenario to a worst- case climate scenario used to assess the eects of phys- ical phenomena in a context of paicularly signicant cli- mate change, but it is currently deemed not to be very likely. The RCP 2.6 scenario is used both to assess phys- ical phenomena and peorm analyses that consider an energy transition consistent with most ambitious mitiga- tion objectives. The analyses carried out for the physical scenarios con- sidered both chronic and acute phenomena. For the de- scription of specic, complex events, the Group consid- ers data and analyses of public bodies, universities, and private-sector entities. The climate scenarios are global and must be analyzed at the local level in order to determine their impact in the areas of relevance to the Group. Among active paner- ships, collaboration is under way with the Eah Sciences Depament of the International Centre for Theoretical Physics (ICTP) in Trieste. As pa of this collaboration, the ICTP provides projections for the major climate variables with a grid resolution of varying from about 12 km to 100 km and a forecast horizon running from 2020 to 2050. The main variables are temperature, rain and snowfall, and solar radiation. Compared with past analyses, current studies are based on the use of multiple regional climate models: the one of the ICTP along with ve other simu- lations, which have been selected as being representa- tive of the set of climate models currently available in the literature. The output of this set is representative of the average of the various climate models. This technique is usually used in the scientic community to obtain a more robust and bias-free analysis, mediating the dierent as- sumptions that could characterize the single model. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 88 Integrated Annual Repo 202188 In this phase of the study, future projections have been analyzed for Italy, Spain and all countries of interest to the Group in South America, obtaining – thanks to the use of the set of models – a more highly dened representa- tion of the physical scenario. In the same way, the Group is also analyzing data related to climate projections for Noh America. The ICTP is also providing science suppo to interpret all other climate data we gather. We are using climate sce- narios for the countries of interest to the Group to allow for a homogeneous assessment of climate risk. Some of these phenomena entail high levels of complex- ity, as they depend not only on climate trends but also on the specic characteristics of the territory and re- quire fuher modeling to obtain a high-resolution rep- resentation. For this reason, in addition to the climate scenarios provided by ICTP, the Group also uses natural hazard maps. This tool makes it possible to obtain, with a high spatial resolution, recurrence intervals for a series of events, such as storms, hurricanes and oods. As de- scribed in the section “Risks and strategic oppounities associated with climate change”, these maps are widely used within the Group, which already uses historical data to optimize insurance strategies. In addition, work is un- der way to be able to take advantage of this information developed in accordance with climate scenario projec- tions. Finally, the Group has acquired the tools and capabilities needed to autonomously gather and analyze the raw out- put published by the scientic community, so as to have a global, high-level view of the long-term trends in the climate variables of interest to us. These sources include the output from the climate and regional models CMIP6 (13) and CORDEX (14) . CMIP6 is the sixth assessment of the Coupled Model Intercomparison Project (CMIP), which is a project of the World Climate Research Programme (WCRP) and of the Working Group of Coupled Modelling (WGCM), which provides raw climate data from global cli- mate models. These are used to assess standard global measurements at a resolution of about 100x100 km. The Coordinated Regional Climate Downscaling Experiment (CORDEX) also falls within the scope of the WCRP and generates regional climate forecasts at a higher resolu- tion. (13) hps://www.wcrp-climate.org/wgcm-cmip/wgcm-cmip6. (14) hps://cordex.org/. Physical scenario analysis - Integration of climate scenarios within the Open Country Risk model In addition to using high-resolution data to analyze the impact of physical phenomena, the Group has also de- signed a higher-level analysis framework that enables us to obtain a country-level assessment of trends in cer- tain global climate hazards in a manner that is consist- ent across all regions. More specically, we have adopted a modular approach that will enable us to progressively upgrade our analyses by including new physical phenom- ena and rening both the data and our methodologies. At present, four climate phenomena are included: two related to extreme temperatures; one related to intense rainfall; and one related to drought. The phenomena are assigned a numerical index based on the global distribu- tion to a resolution of about 100x100 km and are sum- marized in a composite index. This has enabled us to in- clude a dimension related to climate change in the Open Country Risk model. This enables the tool to include both the aspects considered by the Country Risk models and those aspects related to the physical risks considered in the model as a cause of environmental and economic stress in a given country. The Open Country Risk model is described in greater detail in the section “Macroeconom- ic and geopolitical trends”. Physical scenario analysis - Italy Acute phenomena: for Italy, we rst analyzed the phe- nomenon of acute rainfall to study the change in daily rainfall above the ninety-fth percentile, calculated as average millimeters per year for the periods of analysis. As shown in the left-hand gure below, comparing 2030- 2050 with the historical period 1990-2020, under the RCP 2.6 scenario, intense rainfall is forecast to increase, above all, in the noheast and signicantly along the Tyrrhenian coastline. It is interesting to note that, under the RCP 2.6 scenario, this general increase in extreme rainfall is ac- companied by a slight decrease in the annual total of daily rainfall excluding the acute phenomena (see right-hand gure). Under the other scenarios (RCP 4.5 and 8.5), too, we see the same dichotomy between intense and aver- age rainfall. 89Reference scenario 89 Acute rainfall and average rainfall (i.e., total rainfall net of acute rainfall): dierence between RCP 2.6 (2030-2050) and historical values (2000-2020) As seen in previous analyses published by the Group, heat waves and re risk will change signicantly, both in- creasing under the various climate scenarios considered. Fire risk is described by the Fire Weather Index (FWI), an indicator widely used internationally that takes account of temperature, humidity, rainfall, and wind in order to calculate an estimate of re risk. Figures provided by the ICTP may be used to describe the trend in re risk in or- der to suppo the business in properly managing this risk. Studies that examine the changes in the 2030-2050 forecasts compared with 1990-2010 show that, under all scenarios, there is an increase in the number of high-risk days (index > 45) in summer. This change mainly impacts the islands and southern Italy, where the increase in high- risk days goes from about +6 to +8 days compared with historical values. Chronic phenomena: chronic temperature changes can be analyzed to obtain information about the potential ef- fects on the cooling and heating demand of local energy systems. As was done in 2020, to measure the thermal requirement are Heating Degree Days (HDDs), i.e., the sum, for all days of the year with a T average ≤ 15 °C, of the dierences between the internal temperature (with T internal assumed to be 18 °C) and the average temperature, and Cooling Degree Days (CDDs), i.e., the sum, for all days of the year with T average ≥ 24 °C, of the dierences between the T average and the T internal (assumed to be 21 °C), respec- tively, for heating and cooling requirements. The analysis for Italy has been rened both by increasing the number of models considered, from 3 to 6, and by increasing data resolution, from about 50x50 km to 12x12 km. The coun- try averages have been calculated as an average over the country, weighting each geographical node by population thanks to the use of the Shared Socioeconomic Pathways (SSPs) associated with each RCP scenario. In 2030-2050, the heating requirement is expected to decrease from 7% to 15% compared with 2000-2020 under the various sce- narios, while CDDs are always greater than historical data, with an increasing trend going from the RCP 2.6 scenario (~+50%) to RPC 8.5 (~+100%). SSP1-RCP 2.6 SSP2-RCP 4.5 SSP5-RCP 8.5 Cooling Degree Days (CDD) Heating Degree Days (HDD) -7% 49% -11% 74% -15% 100% With regard to rainfall, changes in the areas of interest for the Group’s hydroelectric power generation have been analyzed. A preliminary analysis points to no signicant change, with a generalized slightly downward trend in southern Italy and a slight increase in the noh under the RCP 2.6 and RCP 4.5 scenarios. Acute rainfall - RCP 2.6 Average rainfall - RCP 2.6 ∆% (-6) • (-3) (-3) • 0 0 • 3 ∆% (-8) • (-5) (-5) • 0 0 • 5 5 • 10 10 • 15 15 • 20 CDD and HDD Italy: dierential between RCP (2030-2050) and historical values (2000-2020) 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 90 Integrated Annual Repo 202190 Physical scenario analysis - Spain Acute phenomena: as regards re risk, the number of days at extreme risk (i.e., Fire Weather Index > 45) is higher in the RCP 8.5 scenario than in the RCP 2.6 scenario, and is al- ways greater than the historical average. The south-central region of Spain is expected to see the greatest increase in average number of days of high re risk per year in sum- mer under all future scenarios. Increase in average number of days of high re risk per year in summer under the various RCP scenarios compared with historical values (2000-2020) As seen in previous analyses published by the Group, heat waves are expected to be more widespread geographi- cally and more frequent in 2030-2050, paicularly in the southern regions of the country. Extreme rainfall will change in frequency throughout most of Spain. A preliminary analysis that looked at days of average annual rainfall in millimeters above the nine- ty-fth percentile pointed to a reduction in ceain areas of southern Spain even under the RCP 2.6 scenario. Chronic phenomena: the analysis of heating and cooling needs has been rened and updated in the same man- ner as for Italy. For the period 2030-2050, compared with 1990-2020, we estimate a reduction in Heating Degree Days (HDDs) under all scenarios within a range of -8% un- der RCP 2.6 to -17% under RCP 8.5\. The data also conrms the increase (+35%) in Cooling Degree Days (CDDs) under the RCP 2.6 scenario and increases of 58% and 81%, re- spectively, under the RCP 4.5 and RCP 8.5 scenarios. SSP1-RCP 2.6 SSP2-RCP 4.5 SSP5-RCP 8.5 Cooling Degree Days (CDD) Heating Degree Days (HDD) -8% 35% -12% 58% -17% 81% RCP 2.6 RCP 4.5 RCP 8.5 0 • 2(-1) • 0 2 • 4 4 • 6 6 • 8 8 • 10 10 • 12 12 • 14 RCP 2.6 RCP 4.5 RCP 8.5 0 • 2(-1) • 0 2 • 4 4 • 6 6 • 8 8 • 10 10 • 12 12 • 14 ∆ days FWI > 45 CDD and HDD Spain: dierential between RCP (2030-2050) and historical values (2000-2020) 91Reference scenario 91 With regard to rainfall, changes in the areas of interest for the Group’s hydroelectric power generation have been analyzed. According to a preliminary analysis, the gures do not change signicantly when comparing 2030-2050 to 1990-2009, pointing to a generalized slight downward trend in southern Spain under all scenarios. Physical scenario analysis - Latin America Acute phenomena: for very large countries such as Brazil, the trend in acute phenomena can dier signicantly in the various areas of the country. To have a holistic view of the entire continent and identify the areas of greatest interest for our studies, we have analyzed a number of acute phe- nomena using standard indicators. The analyses have been based on data from a set of 6 climate models at a spatial resolution of 25x25 km. In order to study the phenomenon of extreme tempera- tures, we have used the Warm Spell Duration Index (WSDI), which considers heat waves of at least 6 consecutive days with an average daily high above the ninetieth percentile. Comparing 2030-2050 with 1990-2020, the gures point to a signicant increase in heat waves even under the RCP 2.6 scenario, paicularly in ceain areas of Brazil, in Co- lombia, in Peru, and in nohern Chile. This increase in ex- treme temperatures is expected to be even more accentu- ated under the other scenarios, paicularly RCP 8.5. Warm Spell Duration Index (heat stress): dierence between RCP (2030-2050) and historical values (2000-2020) With regard to extreme rainfall, we have considered daily rainfall above the ninety-fth percentile, as was done for Italy and Spain. Future changes in this phenomenon vary to a greater degree. Under the RCP 2.6 scenario, ceain areas, such as nohern Brazil and nohern Argentina, are expected to see declines, whereas other areas, such as western Colombia and ceain areas of Brazil and Peru, are expected to see increases in extreme rainfall. Chronic phenomena: for the major countries in which we have a presence, we studied the potential changes in heating and cooling needs related to chronic temperature changes. Here, too, we calculated the changes in Heat- ing Degree Days (HDDs) and Cooling Degree Days (CDDs) for 2030-2050 compared with 1990-2020 based on data from 6 models at a resolution of 25x25 km. The country averages have been calculated as an average over the country, weighting each geographical node by population using the Shared Socioeconomic Pathways (SSPs) associ- ated with each RCP scenario. In each country studied, the CDDs increase progressively across all scenarios: under the RCP 2.6 scenario, they increase by 42% in Chile, but by only 14% and 19% in the other countries considered. Under the RCP 4.5 scenario, the increases become 108% in Chile and just over 25% for Argentina, Brazil and Peru, seling at 20% for Colombia. The increase in CDDs compared with the historical values is even more signicant under the RCP 8.5 scenario. As for HDDs, the RCP 2.6 scenario forecasts considerable reductions in Colombia (-51%), Brazil (-21%), and Peru (-15%). This trend is even greater under the RCP 4.5 scenario: ~-61% in Colombia; ~-28% in Brazil; and ~-20% in Peru. ∆ days 0 • 10 10 • 20 20 • 30 30 • 40 40 • 50 50 • 60 60 • 100 RCP 2.6 RCP 4.5 RCP 8.5 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 92 Integrated Annual Repo 202192 CDDs and HDDs in the countries of interest to the Group: dierence between RCP 2.6 and historical values (2000-2020) (15) European Commission - Fit for 55: hps://www.consilium.europa.eu/en/policies/green-deal/eu-plan-for-a-green-transition/. With regard to rainfall, changes in the areas of interest for the Group’s hydroelectric power generation have been analyzed. Initial analyses, which compare 2030-2050 fore- casts under the three scenarios with the historical period 1990-2009, show a prevalent downward trend in chronic rainfall. The most signicant average reductions are ex- pected to be seen in Chile and Colombia, at just under 10%. A closer look at the averages for Chile shows that, in the areas considered, the expected rainfall for 2030-2050 is in line with the rainfall experienced over the last decade (2010-2019). These gures show how, in these areas, we are already seeing climate change compared with the his- torical period used as a benchmark. Overall eect of the transition and physical scenarios on electricity demand Italy and Spain The use of integrated energy system models makes it possible to quantify the individual service demand of a country. This level of detail therefore makes it possible to discriminate the specic eects that a change in temper- ature can have on energy requirements. For this purpose, the Paris, Slow Transition, and Best Place transition sce- narios described above have been expanded to include the eect that temperature increases, measured in terms of Heating Degree Days (HDDs) and Cooling Degree Days (CDDs) as discussed above, have on (total, not just electric- ity) energy demand for residential and commercial heat- ing and cooling. By dening a strategic base scenario in line with achieving the Paris objectives and with Europe’s commitment to reduce greenhouse gas emissions, (15) we were able to associate HDDs and CDDs consistent with the RCP 2.6 scenario with the Paris and Best Place scenarios, while those that are consistent with the RCP 4.5 scenario are associated with the Slow Transition scenario. For fur- ther stress testing, this laer scenario was also associated with the RCP 8.5 scenario. Given current policy and the Eu- ropean Union’s keen focus on achieving carbon neutrali- ty by 2050, all three scenarios (i.e., Paris, Slow Transition, and Best Place) for Italy and Spain converge on this result. However, the Slow Transition scenario, as specied above, is associated with a dierent, higher RCP because it cor- responds to a slower downward trend in greenhouse gas emissions. As concerns the eect of the transition con- Cooling Degree Days (CDD) - RCP 2.6 Heating Degree Days (HDD) - RCP 2.6 ∆% 10 • 15 15 • 20 20 • 25 25 • 30 30 • 35 35 • 40 40 • 45 ∆% (-60) • (-50) (-50) • (-40) (-40) • (-30) (-30) • (-20) (-20) • (-10) (-10) • (-0) 93Reference scenario 93 sidered on its own, the greater speed in achieving carbon neutrality under the Paris scenario makes it, on average, a more electried scenario than the Slow Transition, which points to lower average gures for electricity demand of 2031-2050 of about 2% for Italy and 1.5% for Spain. In turn, as mentioned, the crucial role that green hydrogen will play under the Best Place scenario is expected to lead to elec- tricity demand far above the Paris scenario, of 19% for Italy and 15% for Spain. Similarly to the previous year, the speed of the energy transition has had a much greater impact on electricity demand than the increase in temperature as a result of climate change. Decarbonization policies, together with technological innovation, social responsibility, and con- sequent changes in consumer behavior, will play an active role in trends in electricity demand and in the energy mix generally. However, analysis makes it clear that an increase in temperature as a result of climate change will lead to an increase in electricity demand, even if limited within a range of one percentage point for both Italy and Spain. Considering the integrated view, the potential eect of more ambitious transition scenarios has a more signicant impact on electricity demand than the increase in temper- ature resulting from climate change. Although the trends in degree days (both HDDs and CDDs) are similar, the percentage dierences in electricity de- mand in Spain for the three scenarios are lower than in Ita- ly. The essential dierence concerns the energy system by 2030, for which Spain’s existing national energy plan is al- ready very ambitious and in line with RCP 2.6, meaning that the Slow Transition scenario is closer to the Paris scenario. Therefore, we expect less volatility in energy system trends and in electricity demand over the 2031-2050 period. Italy - Average impact on electricity demand (2031-2050) of the three transition scenarios paired with RCP 2.6 and 4.5 Paris RCP 2.6 to Slow Transition RCP 4.5 Paris RCP 2.6 to Best Place RCP 2.6 Baseline RCP 2.6 Paris Baseline RCP 2.6 Paris -1.3% 19% Temperature eect Temperature eect Transition eect Transition eect Baseline RCP 4.5 Slow Transition Baseline RCP 2.6 Best Place -2.1% 19% 0.8% Italy 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 94 Integrated Annual Repo 202194 Spain - Average impact on electricity demand (2031-2050) of the three transition scenarios paired with RCP 2.6 and 4.5 Paris RCP 2.6 to Slow Transition RCP 4.5 Paris RCP 2.6 to Best Place RCP 2.6 In order to investigate the eect of temperature on tran- sition scenarios fuher and at the same time expand the range of assumptions regarding climate change, a sensitivi- ty analysis was carried out by associating the Slow Transition scenario with RCP 8.5, in addition to RCP 4.5\. An assumption of a fuher temperature increase, without changing the en- ergy transition, results in a more limited change in demand equal to -0.8% for Italy and -0.6% for Spain. Eect of temperature and transition on electricity demand, average over specied period of temperature and transition contributions for dierent combinations of transition scenarios and climate pathways Paris to Slow Transition RCP 4.5 Paris to Slow Transition RCP 8.5 Paris to Best Place Transition eect Temperature eect from RCP 2.6 to RCP 4.5 Total impact Transition eect Temperature eect from RCP 2.6 to RCP 8.5 Total impact Transition eect Temperature eect from RCP 2.6 to RCP 2.6 Total impact Italy 2022-2030 2031-2050 -1.3% -2.1% 0.0% 0.8% -1.3% -1.3% -1.3% -2.1% 0% 1.3% -1.3% -0.8% 2.7% 19.0% 0.0% 0.0% 2.7% 19.0% Spain 2022-2030 2031-2050 -0.9% -1.6% 0.0% 0.5% -0.9% -1.1% -0.9% -1.6% 0.0% 0.9% -0.9% -0.6% 3.1% 15.2% 0.0% 0.0% 3.1% 15.2% Baseline RCP 2.6 Paris Baseline RCP 2.6 Paris -1.1% 15% Temperature eect Temperature eect Transition eect Transition eect Baseline RCP 4.5 Slow Transition Baseline RCP 2.6 Best Place -1.6% 15% 0.5% Spain 95Reference scenario 95 As a nal consideration, however, note that, in the future, greater than forecast electrication of residential heating could change both the sign and the size of the tempera- ture eect in both countries. It is therefore necessary to monitor developments over time in the share of electri- cation of heating during the annual review. Eect of the variation in temperatures on electricity demand in the main Latin American countries in which the Group operates In Latin American countries, the impact of temperature trends, quantied through the Heating Degree Days (HDDs) and Cooling Degree Days (CDDs) metrics, was estimated using econometric forecasting models based on historical elasticity. The analysis shows that Brazil could experience a signi- cant increase in demand due to the increase in tempera- ture, with an estimated increase of between 0.8% and 1.5% in prospective demand (calculated as the average of the demand forecasts in the 2030-2050 period). The driving factor would be the greater demand for cooling expect- ed in the country. This change is also conrmed using a system modeling approach. However, these forecasts are subject to a signicant degree of unceainty given the vol- atility of Brazilian economic growth. Argentina could also experience an increase in demand linked to an increase in temperature, estimated at between 0.3% and 0.6% of prospective demand. Similarly to Brazil, this forecast depends largely on the impact of macroeco- nomic developments in this country on electricity demand. The same considerations can also be extended to the oth- er countries in which the Group is present. In paicular, in the rest of South America, where we again observe the positive elasticity of electricity demand to temperatures, the expected rise in temperature would still have less im- pact than economic growth. In fact, in Chile and Colombia, historical evidence still shows a strong coupling between the growth of electricity demand and GDP growth, with demand from the industrial sector accounting for around 50% of electricity consumption. Fuhermore, the variabil- ity of the macroeconomic context could have repercus- sions on the electrication of the residential and service sectors, which represent the most immediate drivers of the increase in electricity demand in the event of an in- crease in temperatures. The following table summarizes the main temperature eects in the South American countries, with ranges ob- tained by applying a 95% condence interval to our base- line case. Upper bound Country Temperature eect (annual average) from RCP 2.6 to RCP 4.5 from RCP 2.6 to RCP 8.5 TWh % TWh % Argentina 0.68 0.3 1.37 0.6 Brazil 7.9 2 0.8 15.83 1.5 Chile 0.05 0.0 0.10 0.1 Colombia 0.08 0.1 0.17 0.1 Lower bound Country Temperature eect (annual average) from RCP 2.6 to RCP 4.5 from RCP 2.6 to RCP 8.5 TWh % TWh % Argentina 0.57 0.3 1.15 0.5 Brazil 2.48 0 4.96 0 Chile 0.01 0.0 0.01 0.0 Colombia 0.02 0.0 0.05 0.0 Eect of the variation in temperature on electricity demand in the main Latin American countries in which the Group operates (average 2030-2050). 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 96 Integrated Annual Repo 202196 Assessment of the risks and oppounities connected with the Strategic Plan The process of dening the Group’s strategies is accom- panied by a careful analysis of the risks and oppounities connected with those strategies. Identifying those risks and oppounities within the Enel Group’s strategic and industrial planning process is de- signed to span the horizon of the Plan in an integrated manner. Although the strategy underlying the Plan, as described above, envisages a phase of careful analysis and verica- tion of the strategic risk factors and variables, it retains scenario assumptions regarding future events that will not necessarily occur, as they depend on variables that can- not be controlled by management. Upside and downside developments may occur as time unfolds. Before being able to approve the Strategic Plan, a quan- titative analysis of the risks and oppounities associated with the Group’s strategic positioning is presented an- nually to the Control and Risk Commiee appointed by the Board of Directors. In paicular, risk factors such as macroeconomic and energy variables (such as exchange rates, ination, commodity prices and electricity demand), regulatory developments, weather and climate events and risks connected with the competition are identied. Based on the nature of the risk and oppounity drivers, the analytical approach that best represents their volatil- ity is selected. In practice, we peorm scenario analysis for all those variables whose market time series provide a robust foundation to estimate levels of correlation and representative volatility for future risk, and a deterministic analysis based on what-ifs of the possible evolution of the business with respect to the main risk factors for the exe- cution of the Business Plan. The validity of the results is also monitored with ex-post analyses by risk cluster. In 2021, most of the actual upside and downside events fell well within the limits estimated by the risk models of the Strategic Plan presented at the end of 2020. Focusing on the scenario risk analysis for the Strategic Plan, exchange rates, electricity demand and the volatility of energy and commodity prices represent almost all the volatility of the drivers. In paicular, in addition to the US dollar the most impacting currencies are the Chilean peso, the Colombian peso and the Brazilian real. Neveheless, the Group’s very structure ensures that the volatility of the South American currencies has only a negligible im- pact on prots. Italy and Spain represent nearly all of the Group’s exposure to the impact of the volatility of energy prices and commodity price uctuations on margins. Examining the other risk factors, such as those connect- ed with weather and climate events, we can see that ge- ographical diversication signicantly reduces the expo- sure to the risk associated with renewable resources – a highly positive factor considering the Group’s positioning and the steady expansion of renewable generation. Fur- thermore, with regard to climate change, the risk associ- ated with “acute” events is managed as pa of investment for adaptation to climate change and the Group’s insur- ance strategy. With regard to risk factors estimated deterministically, the monitoring of all possible regulatory issues is crucial for assessing any upside or downside impact on the Group. In general, correlations between all the risk factors create diversication eects that substantially mitigate total ex- posures. 97Reference scenario 97 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 98 Integrated Annual Repo 202198 Risk management The Group adopts a risk governance model suppoed by principles (risk governance pillars) and by a homogeneous taxonomy of risks for the Group (risk catalog). The governance of the Group’s risks is based on a struc- tured and formalized set of elements that are periodical- ly dened and updated in line with the evolution of the Group, with the international risk management standard ISO 31000 and with the best risk management practices. Pillars of risk governance The risk governance pillars provide for: Risk catalog In view of the nature of its operations, Enel adopts a six-cat- egory classication of the risks to which it is exposed: Stra- tegic, Financial, Digital Technology, Operational, Compli- ance, Governance and Culture. 1 Group Risk Commiee established at the highest level and headed by the CEO of the Enel Group. 4 Three lines of defense Clear and dened assignment of roles and responsibilities in accordance with the principle of three lines of defense (1 = Management, 2 = Control, 3 = Internal Audit). 2 Local risk commiees established for the main Business Lines and geographical segments (countries and regions), led by the head of the appropriate organization (head of Business Line/country/ region) coordinating with the Group Risk Commiee. 5 System of risk procedures and policies to develop processes for the measurement, management, monitoring and control of signicant risks. 3 Risk Appetite Framework expressly formalized in the Group risk catalog. 6 Repoing system for ongoing and structured repoing to decision- makers on risk exposures and metrics, delivered at the level of the Group, Business Line and signicant geographical area. Strategic Financial Governance and Culture Operational Digital Technology Compliance RISKS 99Risk management 99 Risks are dened in a risk catalog that serves as a reference for all areas of the Group and for all the units involved in management and monitoring processes. The adoption of a common language facilitates the mapping and comprehen- sive representation of risks within the Group, thus facilitating the identication of those that impact Group processes and the roles of the organizational units involved in their man- agement. The six most signicant categories of risk in relation to the impacts on the Group are described as follows: Category Risk Denition Strategic Climate change Risk associated with delayed or inadequate strategic and operational initiatives for climate change adaptation and mitigation. Competitive environment Risk associated with evolving market trends that may aect the Group’s competitive positioning in the markets, growth and protability. Innovation Risk associated with inadequate technology scouting, erroneous or incomplete analysis of the unceainty, complexity or feasibility of innovative projects. Legislative and regulatory developments Risk associated with adverse developments in the legislative or regulatory environment that are not promptly identied, assessed or managed. Macroeconomic and geopolitical trends Risk associated with a deterioration in global economic and geopolitical conditions associated with economic, nancial, political, social or macroeconomic crises. Strategic planning and capital allocation Risk associated with scenarios that do not capture emerging trends, compromising the implementation of timely mitigation actions. Governance and Culture Corporate culture and ethics Risk associated with the inadequate integration of the Group’s principles of ethics, diversity and equal oppounities in corporate processes and activities. Corporate governance Risk associated with ineective corporate governance rules and/or a lack of integrity and transparency in decision-making processes. Reputation Risk of adversely impacting the public image of the Group and prejudicing the relationship of trust with shareholders. Stakeholders Risk of ineective engagement with the main stakeholders in Enel’s strategic positioning in terms of sustainability and nancial objectives, with potential adverse eects on its reputation and competitiveness. Digital Technology IT eectiveness Risk associated with ineective IT system suppo for business processes and operational activities. Cyber security Risk arising from cyber-aacks and theft of sensitive company and customer data aributable to a lack of security in networks, operating systems and databases. Digitalization Risk of ineective business processes and incurring higher operating costs associated with the lack of digitalization in the workow, systems integration and adoption of new technologies. Service continuity Risk associated with exposure of IT/OT systems to service interruptions and data loss. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 100 Integrated Annual Repo 2021100 Category Risk Denition Financial Appropriate capital structure and access to nancing Risk that the Group’s debt/equity ratio or the mix of long- and sho- term debt may not suppo nancial exibility, enable easy access to funding sources or achieve borrowing cost targets. Interest rate Risk associated with adverse uctuations in interest rates that aect nancial expense or the fair value measurement of sensitive nancial assets and liabilities. Commodity Risk associated with adverse trends in commodity markets, price volatility or lack of demand for commodities and natural resources. Currency Risk associated with adverse changes in exchange rates aecting costs and revenue denominated in foreign currencies, the fair value measurement of sensitive nancial assets and liabilities and the consolidation of subsidiaries with dierent currencies of account. Credit and counterpay Risk associated with non-compliance with contractual payment and delivery obligations, deterioration of credit wohiness, signicant exposures to a single counterpay or counterpaies operating in the same sector or geographical area. Liquidity Potential impact associated with the inability to promptly meet sho-term nancial commitments except on unfavorable nancial terms or the inability to liquidate assets on the nancial markets in the presence of restrictions on the divestment of assets. Operational Asset protection Risk associated with ineective safeguards for the Group’s physical assets (theft, embezzlement, mismanagement) and nancial assets (insurance, legal safeguards). Business interruption Risk associated with the paial or total interruption of operations resulting from technical failures, malfunctions, human errors, sabotage, unavailability of raw materials or adverse weather events. Customer needs and satisfaction Risk associated with the failure to fully satisfy customer expectations and needs in terms of quality, accessibility, sustainability and innovation. Environment Risk of signicant impacts on the quality of the environment and on the ecosystems involved following a violation of environmental regulations. Health and safety Risk of potential impacts on the health and safety of employees and other paies following a violation of health and safety regulations. Intellectual propey Risk associated with the infringement or fraudulent use of the Group’s intellectual propey rights. People and organization Risk of impacts on organizational arrangements or internal sta skills associated with ineective recruitment, training and incentive processes. Process eciency Risk associated with inadequate management and monitoring of processes and operational activities. Procurement, logistics and supply chain Risk of potential eects associated with inadequate procurement or contract management activities. Service quality management Risk associated with the inability of third-pay suppliers of internal services to meet the agreed service standards. 101Risk management 101 Category Risk Denition Compliance Accounting compliance Risk of potential impacts associated with violation of international and national accounting laws and regulations as a result of the incorrect application and/or interpretation of the international accounting standards adopted by the Group. Antitrust and consumer rights compliance Risk associated with the violation of antitrust laws and regulations concerning consumer rights. Corruption Risk of adverse impacts associated with willful misconduct or corruption by persons within or outside the Group in order to obtain an unfair or illegal advantage. Personal data protection Risk associated with the violation of applicable data protection and privacy legislation. External disclosure Risk associated with the dissemination of repos, accounting documents, communications or other notices containing incorrect, inaccurate or incomplete information. Compliance with nancial regulations Risk associated with the violation of international or national nancial laws and regulations. Compliance with tax regulations Risk associated with the violation of international or national tax laws and regulations. Compliance with other laws and regulations Risk associated with non-compliance with other international, national or local laws and regulations not previously described (e.g., those governing electricity markets, distribution, generation, tenders, authorizations, stock exchanges and golden powers, etc.). Internal control and risk management system To eectively manage these risks, Enel has adopted an in- ternal control and risk management system (the ICRMS), which is periodically updated. It strengthens the Group’s awareness of its risk prole, identifying any oppounities it may oer. This system is the set of rules, procedures, and organiza- tional structures developed to identify, measure, monitor and manage the main risks to which the Group is exposed. The internal control and risk management system makes it possible to comprehensively dene – for each risk and with an integrated approach – the risk strategy, appropri- ate management and control arrangements, the develop- ment and updating of metrics, risk measurement models and risk limits. With regard to the COVID-19 pandemic, the actions taken in recent years by the Group to increase its resilience to such a development can leverage our sound nancial posi- tion, geographical diversication and integrated business model to mitigate and address unforeseen events and their potential eects with mitigation actions and contin- gency plans. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 102 Integrated Annual Repo 2021102 Strategic risks This section provides disclosure on the following strategic risks: Legislative and regulatory developments The Group operates in regulated markets and changes in the operating rules of the various systems, as well as the prescriptions and obligations characterizing them, impact the operations and peormance of the Parent. Accordingly, Enel closely monitors legislative and regulato- ry developments, such as: • periodic revisions of regulation in the distribution segment; • the liberalization of electricity markets, with special at- tention being paid to the acceleration provided for in Italy and expected developments in South America; • developments in capacity payment mechanisms in the generation segment. In order to manage the risks associated with these develop- ments, Enel has intensied its relationships with local govern- ance and regulatory bodies, adopting a transparent, collabo- rative and proactive approach in addressing and eliminating sources of instability in the legislative and regulatory frame- work. Macroeconomic and geopolitical trends The considerable internationalization of the Group – which has a presence in many regions, including South America, Noh America, Africa and Russia – requires Enel to consid- er country risk, i.e., the risks of a macroeconomic, nancial, institutional, social or climatic nature and those specical- ly associated with the energy sector whose occurrence could have a signicant adverse impact on both revenue ows and the value of corporate assets. Enel has adopted a quantitative Open Country Risk assessment model capa- ble of specically monitoring the riskiness of the countries in which it operates. Open Country Risk is a quantitative model that extends the more conventional denition of country risk used in the existing literature by providing a more com- plete analysis of the risks involved, incorporating economic, nancial, political, climate and energy factors. • Legislative and regulatory developments • Macroeconomic and geopolitical trends • Risks and strategic oppounities associated with climate change • Competitive environment Social factors Energy factors Economic factors Institutional & political factors 103Risk management 103 The Open Country Risk model seeks to go beyond the more conventional denition of country risk, which focus- es on the ability of a government to repay the debt it has issued, to oer a broader view of the risk factors that can impact a country. The model is divided into four risk com- ponents: economic; institutional and political; social; and energy factors. More specically, the Open Country Risk model has the ambition to measure the economic resilience of individual countries, dened as the balance of their position with re- spect to the rest of the world, the eectiveness of internal policies, the vulnerabilities of their banking and corporate system that might poend systemic crises and their at- tractiveness in terms of economic growth, and nally a quantication of extreme climate events as a cause of stress at the environmental and economic level (econom- ic factors). This is accompanied by an assessment of the robustness of the country’s institutions and the political context (institutional and political factors), an in-depth analysis of social phenomena, measuring the level of well-being, inclusion and social progress (social factors), and the eectiveness of the energy system and its po- sitioning within the energy-transition process, as these are all essential factors for evaluating the sustainability of investments in the medium to long term (energy factors). Specically, the introduction of extreme climate events within the Open Country Risk model makes it possible to develop a uniform assessment on the evolution of ceain climate hazards at the country level on a global scale. More information on climate scenarios and the framework used within the Open Country Risk model is discussed in the section “Risks and strategic oppounities associated with climate change”. Finally, with regard to the analysis of the energy-transition process, the Open Country Risk model also includes risk and oppounity analyses designed for forecasting pur- poses, quantifying the actions and the paths taken by the individual countries. For example, the model incorporates various factors reecting the weight of renewable sources in energy generation, the electrication process and the environmental sustainability of the national energy sys- tem, which together are crucial characteristics for evalu- ating the country’s potential growth and aractiveness in the medium to long term. In order to mitigate this risk, the model suppos the cap- ital allocation and investment evaluation processes. To fuher suppo the investment evaluation process, Enel has adopted a methodology called “Total Societal Impact” that, adopting an integrated approach based on advanced economic models, clearly and robustly expresses the di- rect, indirect and induced impacts of investment initia- tives at the national, regional or local levels. By quantifying standard international metrics, Total Societal Impact cov- ers a wide range of economic, social and environmental indicators that play a strategic role in correctly assessing the social and environmental contribution of Enel’s pro- jects. In fact, considering some of the indicators that can be analyzed, such as the contribution to GDP, the increase in income of the weakest social groups, the calculation of carbon dioxide emissions avoided and the recovery of end-of-life materials from a circular economy perspec- tive, it is clearly now essential to have a broad overview of the situation in order to evaluate a specic project in a given country with a view to creating shared value for all. The year 2021 was the second year in a row in which the world had to face the COVID-19 health crisis. However, the economies of many mature and developing coun- tries experienced a signicant recovery last year after the sharp decline in 2020, with estimated global GDP growth of around 5.8% year-on-year in 2021. This progress was mainly achieved thanks to high vaccination rates (although there remain considerable disparities in vaccination cov- erage between high and low-income countries) and to the expansionary scal and monetary policies adopted by governments and central banks. Recent data show that the growth outlook for 2022 is less optimistic, with the pace of expansion set to slow compared with the previous year, with global annual GDP growth projected to be around 4%. This would be aribut- able to possible factors such as a resurgence of COVID-19 cases triggered by the spread of new variants around the world, continuing inationary pressures with rising food and energy prices, which could cause ination expecta- tions to de-anchor from the targets pursued by central banks, and new supply interruptions. Finally, a range of economic and socio-political risk fac- tors needs to be carefully monitored in Latin America as well. For example, a worsening of the pandemic caused by the spread of new variants could place a greater strain on healthcare systems in the countries of the area. Central banks in the area have been among the most reactive in raising interest rates in response to high levels of ination, and could also continue to adopt such restrictive strat- egies in 2022, representing a downside risk to the eco- nomic recovery. Finally, other risks are connected with the high levels of public debt accumulated by governments in these two years of the pandemic, and with political uncer- tainty associated with elections in Brazil and Colombia or the potentially overly radical political agenda that might be pursued by the new President of Chile, Gabriel Boric. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 104 Integrated Annual Repo 2021104 Risks and strategic oppounities associated with climate change The identication and management of risks connected with climate change and actions to seize oppounities Climate change and the energy transition will impact Group activities in a variety of ways. In order to identify the main types of risk and oppouni- ty and their impact on the business associated with them in a structured manner consistent with the Task Force on Climate-Related Financial Disclosures (TCFD), we have adopted a framework that explicitly represents the main relationships between scenario variables and types of risk and oppounity, specifying the strategic and operational approaches to managing them, comprising mitigation and adaptation measures. There are two main macro-categories of risks/oppouni- ties: those connected with developments in physical varia- bles and those linked to the evolution of the transition sce- narios. The framework described has been created with a view to ensuring overall consistency, making it possible to analyze and evaluate the impact of physical and transition phenomena within solid alternative scenarios, construct- ed using a quantitative and modeling approach combined with ongoing dialogue with both internal stakeholders and external authorities. Physical risks are divided in turn between acute (i.e., ex- treme events) and chronic, with the former linked to ex- tremely intense meteorological conditions and the laer to more gradual but structural changes in climate conditions. Extreme events expose the Group to the risk of prolonged unavailability of assets and infrastructure, the cost of re- storing service, customer disruptions and so on. Chronic changes in climate conditions expose the Group to other risks or oppounities: for example, structural changes in temperature could cause changes in electricity demand and have an impact on output, while alterations in rainfall or wind conditions could impact the Group’s business by increasing or decreasing potential electricity generation. The energy transition towards a more sustainable model characterized by a gradual reduction of CO 2 emissions has risks and oppounities connected both with changes in the regulatory and legal context and trends in technology development and competition, electrication and the con- sequent market developments. Consistent with the climate and transition scenarios used by Enel to determine risks and oppounities, the main transition-related phenomena are beginning to emerge in relation to customer behavior, industrial strategies being adopted in all economic sectors and regulatory policies. By 2030, the transition trends will become visible in response to the evolution of the context: the Enel Group has decided to guide and facilitate the transition, preparing to seize all the oppounities that may arise. As discussed previously, our strategic choices, which are already strongly oriented towards the energy transition, with more than 90% of in- vestments directed at improving a number of the Sustain- able Development Goals, enable us to incorporate risk mit- igation and oppounity maximization “by design”, adopt- ing a positioning that takes account of the medium- and long-term phenomena we have identied. The strategic choices are accompanied by the operating best practices adopted by the Group. 105Risk management 105 Framework of main risks and oppounities Scenario phenomena Time horizon Risk & oppounity category Description Impact Management approach Acute physical Staing with sho term (1-3 years) Extreme events Risk: especially extreme weather/climate events. Extreme events can damage assets and interrupt operations. The Group adopts best practices to manage the restoration of service as quickly as possible. We also work to implement investments in resilience (e.g., the Italian case). With regard to risk assessment in insurance, the Group has a loss prevention program for propey risk that also assesses the main exposures to natural events, suppoed by preventive maintenance activities and internal risk management policies. Looking forward, the assessments will also include the potential impacts of long-term trends in the most signicant climate variables. Chronic physical Staing with long term (2030-2050) Market Risk/oppounity: increase or decrease in electricity demand; increase or decrease in output. Electricity demand is also aected by temperature, whose uctuation can impact our business. Renewables generation can also be impacted by structural changes in resource availability. The Group's geographical and technological diversication means that the impact of changes (positive and negative) in a single variable is mitigated at the global level. In order to ensure that operations always take account of weather and climate phenomena, the Group adopts a range of practices such as, for example, weather forecasting, real-time monitoring of plants and long- term climate scenarios to identify any chronic changes in renewable source availability. Transition Staing with sho term (1-3 years) Policy & Regulation Risk/oppounity: policies on CO 2 prices and emissions, energy transition incentives, greater scope for investment in renewables and resilience. Policies concerning the energy transition and resilience can impact the volume of and returns on investments. The Group is minimizing its exposure to risks through the progressive decarbonization of its generation eet. The Group's strategic actions, which are focused on investment in renewables, grids and customers, enable us to mitigate potential threats and exploit the oppounities connected with the energy transition. The Group is also actively contributing to the formation of public policies through its advocacy eos. These activities are conducted within platforms for dialogue with stakeholders called "Energy Transition Roadmaps" that explore national decarbonization scenarios in the various countries in which Enel operates in environmental, economic and social terms. Transition Staing with medium term (2025-2029) Market Risk/oppounity: changes in the prices of commodities and energy, evolution of energy mix, changes in retail consumption, changes in competitive environment. Considering two alternative transition scenarios, the Group assesses the impact of rising trends in the propoion of renewable sources in the energy mix and the electrication of nal energy consumption. The Group is maximizing oppounities by adopting a strategy founded on the energy transition, the electrication of energy consumption and rapid growth in renewables output. Transition Staing with medium term (2025-2029) Product & Services Oppounity: increase in margins and greater scope for investment as a consequence of the transition in terms of greater penetration of electrical transpo and new technologies for the electrication and energy eciency of nal consumption. Considering two alternative transition scenarios, the Group assesses the impact of dierent trends in the electrication of energy consumption. The Group is maximizing oppounities thanks to its strong positioning in new businesses and "beyond commodity" services. Staing with medium term (2025-2029) Technology With the current trend in the penetration of electrication eciency technologies, the Group considers two alternative transition scenarios to assess oppounities to scale up current businesses. The Group is maximizing oppounities thanks to its strong positioning in global networks. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 106 Integrated Annual Repo 2021106 The framework illustrated above also highlights the rela- tionships that link the physical and transition scenarios with the potential impact on the Group’s business. These eects can be assessed from the perspective of three time horizons: the sho term (1-3 years), in which sensitivity analyses based on the Strategic Plan presented to investors in 2021 can be peormed; the medium term (until 2029), in which it is possible to assess the eects of the energy transition; and the long term (2030-2050), in which chronic structural changes in the climate should be- gin to emerge. In order to facilitate the correct identication and man- agement of the risks and oppounities associated with climate change, a Group policy was published in 2021 that describes the common guidelines for assessing these risks and oppounities. The “Climate change risks and oppor- tunities” policy denes a shared approach for integrating issues relating to climate change and the energy transition into the Group’s processes and activities, thus informing industrial and strategic choices to improve business resil- ience and long-term sustainable value creation, in line with the adaptation and mitigation strategy. The main steps considered in the policy are described below. • Prioritization of phenomena and scenario analysis. These activities include the identication of physical and tran- sition phenomena relevant to the Group and the con- sequent preparation of the scenarios to be considered, which are developed through the analysis and process- ing of data from internal and external sources. For the phenomena so identied, functions can be developed to connect the scenarios (for example, data on changes in renewable sources) to the operation of the business (for example, changes in expected potential output). • Evaluation of impacts. This includes all the analyses and activities needed to quantify the eects at an operation- al, economic and nancial level, consistent with the pro- cesses in which they are integrated (for example, design of new buildings, evaluation of operational peormance, etc.). • Operational and strategic actions. The information ob- tained from the previous activities is integrated into pro- cesses, informing the decisions of the Group and the business activities. Some examples of activities and pro- cesses that benet from this are capital allocation, such as in the evaluation of investments in existing assets or new projects, the development of resilience plans, risk management and nancing activities, engineering and business development. The main sources of risk and oppounity identied, the best practices for the operational management of weather and climate phenomena, and the qualitative and quantita- tive impact assessments peormed to date are discussed below. The above activities are peormed on the founda- tion of an ongoing eo during the year to analyze, assess and manage the information produced. As declared by the TCFD, the process of disclosing information on the risks and oppounities connected with climate change will be gradu- al and incremental from year to year. Enel’s resilience to the energy transition and climate change The impacts of climate change, technological evolution, the evolution of policies and changes in macroeconom- ic fundamentals make it ever more impoant to develop resilient business strategies, i.e., strategies capable of withstanding external shocks, and therefore of absorbing the causes of potential crises and thriving even when ex- ternal conditions change, whether slowly or rapidly. Jointly considering the factors associated with energy-transition scenarios and the various climate change scenarios is therefore a prerequisite for long-term planning. The set of transition and climatic scenarios plays a role in guiding strategic and industrial decisions, taking ac- count, for example, of the future eects of temperature on electricity demand, the investments necessary to sup- po the process of ever greater electrication and de- carbonization, the evolution of the market environment and of consumer habits. Given that Enel’s Strategic Plan concentrates more than 94% of investment on combat- ting climate change through the progressive expansion of generation from renewable sources and the development of infrastructure and services to guide energy systems and customers towards progressive electrication, while at the same time signicant reducing the use of fossil fuels, the Group’s investments and activities delineate, by design, a long-term growth path that is in line with an energy transi- tion consistent with the Paris Agreement. The application of long-term climate scenarios enables the construction of adaptation plans for the Group’s asset and business pofolio. Climate scenarios are developed staing with the identication of the most relevant phys- ical phenomena for each business (such as heat waves, extreme rainfall, re risk, etc.), to produce analyses that provide both high-level indicators (such as comparable country risk indices) and high-resolution data, which make it possible to study physical hazards at the single-site lev- el. The approach applies to both the existing pofolio and new investments. Asset vulnerability assessment makes it possible to identify priority actions to increase resilience. 107Risk management 107 Chronic and acute physical phenomena: repercussions on our business, risks and oppounities Taking the scenarios developed by the Intergovernmental Panel on Climate Change (IPCC) as our reference point, de- velopments in the following physical variables and the as- sociated operational and industrial impacts connected with potential risks and oppounities are assessed. Chronic physical changes creating risks and oppounities The climate scenarios developed with the Internation- al Centre for Theoretical Physics (ICTP) in Trieste do not provide denitive indications of structural changes before 2030, but changes could begin to emerge between 2030 and 2050. The main impacts of chronic physical changes would be reected in the following variables: Variables impacted by chronic physical changes • Electricity demand: variation in the average temperature level with a potential increase or reduction in electricity demand. • Thermal generation: variation in the level and average temperatures of the oceans and rivers, with eects on thermal generation. • Hydroelectric generation: variation in the average level of rainfall and snowfall and tempera- tures with a potential increase or reduction in hydro generation. • Solar generation: variation in the average level of solar radiation, temperature and rainfall with a potential increase or reduction in solar generation. • Wind generation: variation in the average wind level with a potential increase or reduction in wind generation. Vulnerability assessment Analysis of vulnerabilities to quantify risk at the asset level (existing and new investment) Prioritization Specication of adaptation priorities at the local level and main adaptation risks and actions at the country level Adaptation plans Development of long-term adaptation plans to increase resilience Scenario integration High level (e.g., Open Country Risk, evolution of energy system) Site specic (e.g., high resolution climate data) 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 108 Integrated Annual Repo 2021108 The Group will work to estimate the relationships be- tween changes in physical variables and the change in the potential output of individual plants in the dierent categories of generation technology. As pa of the assessment of the eects of long-term cli- mate change, we have identied chronic events relevant to each technology and began the analysis of the related impacts on potential output. Rain/ snow Wind Sunshine Sea level Air temperature River/sea temperature Thermal Solar Wind Hydro Storage Geothermal Infrastructure and Networks Under assessment Enel X Scenario analysis has shown that chronic structur- al changes in the recent trends of physical variables will become signicant beginning in 2030. However, in order to obtain an indicative estimate of the potential impacts, and include the possible early emergence of chronic ef- fects, it is possible to test sensitivity of the Business Plan to the factors potentially inuenced by the physical sce- nario, regardless of any direct relationship with climate variables. Of course, such stress testing has an extremely low probability of occurrence based on historical events and geographical diversication. The variables examined are electricity demand (+/-1% per year), whose variations can potentially impact the generation and retail business- es. It was stress tested for all countries in which the Group operates. The output potential of renewable plants was also stressed (+/-10% over a single year). Variations in this variable can potentially impact the generation business. It was stressed separately at the individual technology level around the globe. The data repoed show the eect on a single year for a single generation technology and include both the volume and price eects. Priority High Low Not material Event 109Risk management 109 Scenario phenomena Risk & oppounity category Description Time horizon Impact GBL aected Scope Quantication \- Type of impact Upside/ Downside Quantication - range < €100 mn €100- 300 mn > €300 mn Chronic physical Market Risk/ oppounity: increased or decreased power demand. Sho Electricity demand is also inuenced by temperature, the uctuations of which can have an impact on the business. Although structural changes should not occur in the sho-medium term, to assess the sensitivity of the Group's peormance to potential temperature changes, sensitivity analyses are conducted with respect to changes in electricity demand of +/- 1% of the Group total. Enel Green Power and Thermal Generation and Infrastructure and Networks Group EBITDA/year +1% -1% Chronic physical Market Risk/ oppounity: increased or decreased renewables output Sho Renewables output is also inuenced by the availability of resources whose uctuations can have an impact on the business. Although structural changes should not occur in the sho-medium term, to assess the sensitivity of the Group's peormance to potential temperature changes, sensitivity analyses are conducted with respect to changes in potential output of +/- 10% per year by individual technology. Enel Green Power and Thermal Generation Group Potential Hydro Output EBITDA/year +10% -10% Group Potential Wind Output EBITDA/year +10% -10% Group Potential Solar Output EBITDA/year +10% -10% Time horizon Sho (within 3 years) Medium (until 2030) Long (2030-2050) Upside scenario current policies Downside scenario current policies 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 110 Integrated Annual Repo 2021110 Preliminary analysis of the impact of chronic climate changes on renewable generation Preliminary analyses were conducted to translate chronic climate changes into impacts on potential output for the main RES technologies operated by the Group: wind, solar and hydroelectric. For each technology, two pilot sites were selected, based on the geographical position and the availability of histor- ical data on the site, for which a link function was calculat- ed, staing from the observed data, which makes it possi- ble to translate trends in climatic variables into production information. This function was then applied to the data for climate projections to estimate the dierence in output expected in 2030-2050 compared with historical gures. The results of these initial analyses at the pilot sites are repoed below. Pilot sites Input parameters Results Climate variables used to calculate link function: wind speed, air density Time step: monthly Time horizon: 2030-2050 vs. historical Site 1: output in line with historical trend in RCP 2.6 scenario and down slightly in RCP 4.5 and RCP 8.5 scenarios Site 2: output stable in RCP 2.6 and RCP 4.5 scenarios and up slightly in RCP 8.5 scenario Climate variables used to calculate link function: global horizontal irradiance (GHI), temperature Time step: daily Time horizon: 2030-2050 vs. historical No material changes for the business at either of the plants examined Climate variables used to calculate link function: preciptation, temperature Time step: monthly Time horizon: 2030-2050 vs. historical For both areas, average output is unchanged in RCP 2.6 scenario but declines slightly in RCP 8.5 scenario Slight increase or slight decrease means a change that does not exceed +/- 5%. Acute physical changes creating risks and oppounities With regard to acute physical phenomena (extreme events), the intensity and frequency of extreme physical phenomena can cause signicant and unexpected phys- ical damage to assets and generate negative externalities associated with the interruption of service. Within climate change scenarios, the acute physical com- ponent plays a leading role in dening the risks to which the Group is exposed, due both to the broad geographical diversication of its asset pofolio and the primary impor- tance of renewable resources in electricity generation. Acute physical phenomena, in dierent cases such as wind storms, oods, heat waves, cold snaps, etc., are character- ized by considerable intensity and a frequency of occur- rence that, while not high in the sho term, is clearly trend- ing upwards in medium- and long-term climate scenarios. Therefore, the Group, for the reasons described above, is already managing the risk associated with extreme events in the sho term. At the same time, the methodology is also being extended to longer time horizons (up to 2050) in accordance with the climate change scenarios that have been developed (RCP 8.5, 4.5 and 2.6). Acute event risk assessment methodology In order to quantify the risk deriving from extreme events, the Group uses a consolidated catastrophic risk analysis Site 1 Site 2 Site 1 Site 2 Watershed 1 Watershed 2 111Risk management 111 approach, which is adopted in the insurance sector and in the IPCC repos. (16) Through its insurance business units and the captive insurance company Enel Insurance NV, the Group manages the various phases of assessing the risks connected with natural disasters: from assessment and quantication to the corresponding insurance coverage to minimize impacts. The methodology is applicable to all extreme events that can be analyzed, such as wind storms, heat waves, tropi- cal cyclones, ooding, etc. In all of these types of natural disaster, three independent factors can be identied, as briey described below. • The event probability (hazard), i.e., the theoretical fre- quency of the event over a specic time frame: the re- currence interval. In other words, a catastrophic event that has, for example, a recurrence interval of 250 years has a probability of occurrence in any given year of 0.4%. This information, which is necessary for assessing the level of frequency of the event, is then associated with the geographical distribution of Group assets. For this purpose, the Group adopts the hazard map tool, which associates the estimated frequency associ- ated with an extreme event, for the dierent types of natural disasters, with each geographical point of the global map. This information, organized in geo-refer- enced databases, can be obtained from global reinsur- ance companies, weather consulting rms or academic institutions. • Vulnerability, which indicates in percentage terms how much value would be lost upon the occurrence of a giv- (16) L. Wilson, “Industrial Safety and Risk Management”, University of Albea Press, Albea 2003. T. Bernold, “Industrial Risk Management”, Elsevier Science Ltd, Amsterdam, 1990. H. Kumamoto and E.J. Henley, “Probabilistic Risk Assessment and Management for Engineers and Scientists”, IEEE Press, 1996. Nasim Uddin, Alfredo H.S. Ang (eds.), “Quantitative risk assessment (QRA) for natural hazards”, ASCE, Germany, 2012. UNISDR, “Global Assessment Repo on Disaster Risk Reduction: Revealing Risk, Redening Development”, UNISDR, Geneva, 2011. IPCC, “Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation - A Special Repo of Working Groups I-II of the Inter- gover nmental Panel on Climate Change (IPCC)”, Cambridge University Press, Cambridge, 2012. en catastrophic event. In more specic terms, reference can be made to the damage to material assets, the im- pact on the continuity of electricity generation and/or distribution or the provision of electrical services to end users. The Group, especially in the case of damage to its as- sets, conducts and promotes specic vulnerability anal- yses for each technology in its pofolio: solar, wind and hydroelectric generation plants, transmission and dis- tribution grids, primary and secondary substations, etc. These analyses are naturally focused on the extreme events that most impact the dierent types of technol- ogies. This produces a so of matrix that associates the signicantly impacted type of asset with the individual natural catastrophic events. • Exposure is the set of economic values present in the Group’s pofolio that could be materially impacted in the presence of catastrophic natural events. Again, the dimensions of the analyses are specic for the dierent production technologies, distribution assets and ser- vices to end users. The three factors described above (hazard, vulnerability and exposure) constitute the fundamental elements of any assessment of the risk associated with extreme events. In this sense, the Group, with respect to climate change sce- narios, dierentiates its risk analyses in accordance with the specicities of the various associated time horizons. The following table summarizes the scheme adopted for the assessment of the impacts deriving from acute phys- ical phenomena. Time horizon Hazard Vulnerability Exposure Sho term (1-3 years) Hazard maps based on historical data and meteorological models Vulnerability, being linked to the type of extreme event, to the specics of the type of damage and to the technical requirements of the technology in question, is essentially independent of time horizons Group values in the sho term Long term (to 2050 and/or 2100) Hazard maps and specic studies for the dierent RCP climate scenarios of the IPCC Group values in the long term 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 112 Integrated Annual Repo 2021112 In the case of the vulnerability of assets within the pofolio, therefore, a priority table of the impacts of the main extreme events on the various technologies was dened in collabo- ration with the relevant Global Business Lines of the Group: Heat waves Flooding/ heavy rain Heavy snow/ icing Hail Windstorms Wildres Lightning Thermal Under assessment Solar Under assessment Wind Under assessment Hydro Storage Under assessment Geothermal Under assessment Infrastructure and Networks Enel X Under assessment “Heavy/wet snow” includes icing, which is relevant for Infrastructure and Networks. Managing the risk of extreme events in the sho term Over the sho term (1-3 years) the Group, in addition to risk assessment and quantication, takes actions to re- duce the impacts that the business may suer following catastrophic extreme events. Two main types of action can be distinguished: obtaining eective insurance coverage and climate adaptation activities, preventing losses that could be caused by extreme events. The general characteristics of these actions are illustrated below and, naturally, in the case of adaptation activities for damage prevention and mitigation, specic reference will be made to the Group’s Generation and Infrastructure and Networks Global Business Lines. Impact of acute physical events on the Group The Enel Group has a well-diversied pofolio in terms of its generation technologies, geographical distribution and asset scale and, consequently, the pofolio’s exposure to natural risks is also diversied. The Group implements vari- ous risk mitigation measures, which, as described below, in- clude both insurance coverage and other management and operational arrangements to fuher lower the Company’s risk prole. The empirical evidence indicates negligible repercussions from these risks, as shown by the data for the last ve years. Considering the most signicant events, dened as events with a gross impact of more than €10 million, the cumulative gross impact amounts to about €270 million, which repre- sents less than 0.14% of the value of the Group’s insured assets as at 2022 (about €202 billion), most of which was recovered through insurance reimbursements. Priority High Low Not material Event 113Risk management 113 Insurance in the Enel Group Each year, the Group develops global insurance programs for its businesses in the various countries in which it op- erates. The two main programs, in terms of coverage and volumes, are the following: • the Propey Program for material damage to assets and the resulting business interruption. Accordingly, in addition to the costs of rebuilding assets (or pas thereof), the nancial losses due to the stoppage of electricity generation and/or distribution are also cov- ered, within the limits and conditions dened in the policies; • the Liability Program, which insures against loss- es caused to third paies, including the impact that extreme events may have on the Group’s assets and business. Based on eective risk assessment, it is possible to spec- ify appropriate limits and insurance conditions within the policies, and this also applies in the case of extreme nat- ural events linked to climate change. In fact, in the laer case, the impacts on the business can be signicant but, as has happened in the past in various locations around the world, the Group has demonstrated a high degree of resilience, thanks to the ample insurance coverage limits, thanks in pa to the Group’s solid reinsurance capabilities through the captive company Enel Insurance NV. The presence of this eective insurance coverage does not make the actions that the Group takes in the preven- tive maintenance of its generation and distribution assets any less impoant. In fact, while on the one hand the ef- fects of these activities are immediately reected in the mitigation of the impacts of extreme events, on the other hand they are a necessary prerequisite for optimizing risk nancing and minimizing the cost of the Group’s glob- al insurance coverage programs, including the risk as- sociated with catastrophic natural events. This adaptive strategy takes the form of management strategies and actions that go beyond insurance alone and change with the surrounding conditions. For example, the Group has managed to sterilize much of the strong upward trend in premiums on the insurance markets through changes to its risk retention policies for assets, as well as through internal risk transfer policies that reward the Business Lines that are most viuous in terms of risk mitigation. From this perspective, the method and the information extracted from the ex-post analysis of events play a cru- cial role in determining the processes and practices to be deployed in mitigating such events in the future. Climate change adaptation in the Enel Group The Group implements adaptation solutions for weath- er and climate events in order to eectively manage the chronic and acute phenomena aecting each activity and Business Line. The adaptation solutions can involve both sho-term and long-term actions, such as planning investments in re- sponse to climate phenomena. Adaptation activities also include the implementation of procedures, policies and best practices. For new investments, it is also possible to take advance action in the design and construction phase to reduce the impact of climate risks by design (for example, through risk and vulnerability assessment in the design phase) and to take account of any chronic eects (e.g., the inclusion of climate scenarios in long-term renewable resource estimates). Once the relevant weather and climate phenomena have been identied, the activities implemented to maximize adaptability can be classied as follows: • adverse event prevention and management: proce- dures for advanced preparation for extreme events (for example, acquiring sho-term forecast weather data and training) and procedures for restoring nor- mal operations as quickly as possible (for example, the denition of operational and organizational proce- dures to be activated in response to critical events); • enhancing asset resilience: measures to increase the resilience of assets, such as the quantitative assess- ment of potential acute and chronic risks to beer de- ne requirements in the design phase and actions to be implemented for existing assets. The following table provides a high-level summary of the type of actions that Enel implements to eectively man- age adverse events and to increase resilience to weather phenomena and their evolution due to climate change. In the following sections, ceain activities are described in greater detail. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 114 Integrated Annual Repo 2021114 Business Line A. Adverse event prevention and management B. Enhancing asset resilience Enel Green Power and Thermal Generation Existing assets 1\. Critical incident and event management 2\. Site-specic emergency management plans and procedures 3\. Specic tools for forecasting imminent extreme events Existing assets 1\. Guidelines for hydraulic risk assessment and design 2\. Lessons-learned feedback from O&M to E&C and BD New construction In addition to actions for existing assets: 1\. Climate change risk assessments (CCRA) included in environmental impact documentation (pilot) Global Infrastructure and Networks Existing assets 1\. Strategies and guidelines for risk prevention, readiness, response and recovery actions for the distribution grid 2\. Global Infrastructure and Networks guidelines for emergency and critical event management 3\. Risk prevention and preparation measures for res involving electrical installations (lines, transformers, etc.) Existing assets and new construction 1\. Guidelines for developing grid resilience enhancement plans (e.g., the “Network Resilience Enhancement Plan” of e-distribuzione) Enel X Existing assets 1\. Enel X critical event management 2\. e-Mobility: guidelines for asset maintenance and monitoring (repair or replacement of charging infrastructure) Existing assets 1\. e-Mobility: the continuous improvement program Adaptation measures - Generation With regard to generation, over time the Group has im- plemented targeted measures at specic sites and estab- lished ad hoc management activities and processes. Measures implemented for specic sites in recent years include: • improving cooling water management systems for cer- tain plants in order to counter the problems caused by the decline in water levels on rivers, such as the Po in Italy; • installing fogging systems to improve the ow of inlet air and oset the reduction in power output caused by the increase in ambient temperature in CCGTs; • installing drainage pumps, raising embankments, peri- odic cleaning of canals and interventions to consolidate land adjacent to plants to prevent landslides in order to mitigate ood risks; • periodic site-specic reassessments for hydro plants of ood scenarios using numerical simulations. The sce- narios developed are managed with mitigation actions and interventions for civil works, dams and water inlets. The Group adopts a series of best practices to manage the impact of weather events on power generation, such as: Group practices for managing weather events in generation operations Main areas: Maintenance O&M Operation • weather forecasting both to monitor renewable resource availability and detect extreme events, with warning systems to ensure the protection of people and assets; • hydrological simulations, land surveys (including with the use of drones), monitoring any vul- nerabilities through digital GISs (Geographic Information Systems) and satellite measurements; • advanced monitoring of over 100,000 parameters (with over 160 million historical measure- ments) for dams and hydroelectric works; • real-time remote monitoring of generation plants; • safe rooms in plants in areas exposed to tornadoes and hurricanes, such as the wind farms in Oklahoma in the United States; • adoption of specic guidelines for peorming hydrological and hydraulic studies from the ear- liest development stages, aimed at assessing the risks inside plants and in the areas outside plants, with application in the design phase of drainage and mitigation systems in compliance with the principle of hydraulic invariance; • verication of potential climate trends for the main project parameters in order to take them into account in the sizing of systems for relevant projects (for example, assessments of the temperature of the coolant source in order to ensure greater exibility in cooling in new CCGTs) 115Risk management 115 and civil engineering works (for example, rainfall assessments for designs of drainage systems at solar plants); • estimation of extreme wind speeds using updated databases containing the logs and historical trajectories of hurricanes and tropical storms, enabling the selection of the wind turbine tech- nology best suited to the emerging conditions. Guidelines for Readiness Response and Recovery actions during emergencies Guideline for Network Resilience Enhancement Plan Dams and Hydraulic Infrastructure Safety Critical Event Management In addition, in order to ensure rapid response to adverse events, the Group has adopted specic emergency man- agement procedures with protocols for real-time commu- nication and management of all activities to restore oper- ations rapidly and standard checklists for damage assess- ment and the safe return to service for all plants as rapidly as possible. One solution to minimize the impacts of cli- mate phenomena is represented by the lessons-learned feedback process, which is implemented by the technical functions. It is governed by the existing operating model and inuences future projects. Adaptation measures - Infrastructure and Networks In the Infrastructure and Networks Business Line, the Enel Group has adopted an approach in recent years called “4R” to cope with extreme climate events. A specic policy (which seeks to implement an innovative strategy to ensure the resilience of the distribution grid) has been developed to dene the measures to be taken both in preparation for an emergency within the network and for the prompt res- toration of service once climate events have caused dam- age to assets and/or outages. The 4R strategy is divided into four phases. • Risk prevention: this includes actions that make it pos- sible to reduce the probability of losing network com- ponents because of an event and/or to minimize its eects, i.e., interventions aimed both at increasing the robustness of the infrastructure and maintenance in- terventions. • Readiness: this includes all measures aimed at increas- ing the speed with which a potentially critical event can be identied, ensuring coordination with Civil Protection authorities and local institutions and preparing the nec- essary resources once a grid disruption has occurred. • Response: this represents the phase in which the oper- ational capacity to cope with an emergency upon the occurrence of an extreme event is assessed. It is directly related to the ability to mobilize operational resources in the eld and the capacity to remotely restore power supply through resilient backup systems. • Recovery: this is the last phase, in which the goal is to return the network to ordinary operating conditions as soon as possible in cases where an extreme weather event has caused service interruptions despite the in- creased resilience measures taken previously. Following this approach, the Business Line has prepared various policies for specic actions to address the various aspects and risks associated with climate change. In par- ticular: This policy covers the last three phases of the 4R approach, indicating guidelines and measures to improve preparation strategies, mitigate the impact of total blackouts and, nally, restore ser- vice to as many customers as possible in the shoest time possible. This policy seeks to identify the most impactful extraordinary climate events on the network, to evaluate the specic KPIs of the network and to improve them based on proposed interven- tions in order to be able to evaluate the order of priority. In this manner, actions are selected that, when implemented, will minimize the impact on the network of paicularly critical extreme events in a given area/region. The policy therefore covers the rst two phases of the 4R ap- proach, suggesting measures regarding risk prevention and readiness. In Italy, this policy has been translated into the Resilience Plan that e-distribuzione has prepared each year since 2017, which represents an addendum to the Development Plan for investments over a 3-year time horizon to reduce the impact of extreme events in ceain critical areas, name- ly heat waves, icing and windstorms (with the associated risk of falling trees). In 2017-2020, some €520 million were invested and about €345 million will be invested in the following three-year period, as specied in the addendum to the 2021-2023 Plan. To address these risks, investments 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 116 Integrated Annual Repo 2021116 include the targeted replacement of uninsulated lines with insulated conductors, the under- grounding of cables in some cases or solutions involving routes to restore power that are not vulnerable to the above phenomena. As in Italy, similar issues are being explored in other countries, both in Europe and South America, in order to prepare an ad hoc investment planning process to enhance the resilience of networks to extreme events, taking due account of the distinctive characteristics of each territory. This policy is dedicated to addressing the risk of wildres, outlining an integrated approach to emergency management measures applied in the case of forest res, whether they are of ex- ternal origin or, in a small minority of cases, are caused by the grid itself and could potentially threaten Enel plant. The document provides guidelines to be implemented in the various territo- ries involved to identify areas/plant at risk, dene specic prevention measures (e.g., evaluation of specic maintenance plans and any upgrades) and, in the event of a re, manage the emergency optimally in order to limit its impact and restore service as soon as possible. These include the implementation of systems for weather forecasting, monitoring the status of the network and evaluating the impact of critical climate phenomena on the network, the preparation of operational plans and the organization of specic exercises. Paicularly impoant in this regard are advance agreements for the mobilization of extraordinary resources to respond to emergencies, comprising both internal personnel and contractors. For example, in Italy a trial has begun of sensors on above-ground lines in areas that are highly exposed to snow and wind (Project Newman). Measures for Risk Prevention and Preparation in case of wildres aecting the electrical installations Suppo actions Moreover, with a view not only to assessing weather emer- gencies in the sho/medium term, but also in considera- tion of the climate change we are witnessing, Infrastruc- ture and Networks is mapping key phenomena at the glob- al level as pa of an analysis of the specic climate risks in countries in which it operates, seeking to associate a risk level with each phenomenon and prioritize the most ex- posed areas. Infrastructure and Networks is collaborating with leading research institutes to analyze trends in the most critical threats in the various countries in which the Group oper- ates, and to estimate their future impact on the network in the medium and long term. The following are some examples. Heavy rainfall/wind storms • In 2021, the selection of external paners was initiated for an investigation of scenarios concerning the evolution of intense rainfall events in various countries. For example, with regard to explosive cyclogenesis in Spain, a prelimi- nary survey of the events with the greatest impact on the grid was conducted, following the policy concerning the enhancement of grid resilience, which will form the basis for subsequent detailed analyses staing from 2022. Heat waves • In 2021, heat waves in the other countries in which Infra- structure and Networks operates were investigated fur- ther after having produced initial results for Italy in 2020. This critical event is characterized by the persistence of high temperatures over a period of several days in corre- spondence with the absence of precipitation which, by hindering the dissipation of heat from underground ca- bles, causes an anomalous increase in the risk of multiple failures on grids, especially in urban areas and in summer tourist locales. • In Spain, despite the increase in the frequency and inten- sity of heat waves, especially where the presence of un- derground cables is relatively low, no signicant historical correlation between heat waves and failures has been found in the analyses conducted to date. • Finally, staing from 2022, similar analytical work will be peormed in other geographical areas. Wildres • With regard to re risk, despite the insignicance of events recorded to date, the Business Line, consistent with the policy noted above, is preparing an in-depth analysis of the scenarios through 2050 concerning the evolution of the phenomenon, with a view to possible im- provements in the policy itself. So far, each country has conducted a study to identify the areas at greatest risk of forest res. Today, this study also makes use of GIS (Ge- ographic Information System) mapping for more precise 117Risk management 117 identication of grids in dierent environments (protect- ed natural areas, forests, habitats). This makes it possible to adopt even more eective construction or mainte- nance design measures with a view to preventing re risk. Inclusion of climate change eects in the assessment of new projects Many activities connected with the evaluation and imple- mentation of new projects can benet from general and site-specic climate analyses, which the Group is begin- ning to integrate with those already considered in the eval- uation of new projects. For example: • preliminary studies: in this phase, climate data can serve as a preliminary screening tool, with the analysis of spe- cic climate phenomena, such as those discussed previ- ously in the analysis of physical scenarios, and synthetic indicators such as the Climate Risk Index, integrated into the Open Country Risk model. These data provide a pre- liminary measure of the most relevant phenomena in an area among those identied as being relevant for each technology; • estimation of expected output: the climate scenarios will be progressively integrated to enable the evaluation of how climate change will modify the availability of renew- able sources at the specic site. In the in-depth devel- opment of the preliminary analyses on potential output, the approach applied for now to selected pilot sites is described and then scaled up over the entire generation pofolio; • environmental impact analysis: the Group has begun to integrate a Climate Change Risk Assessment into project documentation. This contains a representation of the main physical phenomena and their expected change in the area; • resilient design: as noted, the development of resilient assets by design is a key climate change adaptation activity. The Group is working to progressively consider analyses based on climate data, such as the increase in the frequency and intensity of acute events. The laer will integrate existing analyses based on historical data already in use, in order to increase the resilience of future assets, including all necessary adaptation actions over the useful life of a project. Transition phenomena: repercussions on our business, risks and oppounities With regard to the risks and oppounities associated with transition variables, we use the dierent reference scenar- ios in combination with the elements that make up the risk identication process (e.g., competitive context, long-term vision of the industry, materiality analysis, technological evolution, etc.) to identify the drivers of potential risks and oppounities. Priority is given to the most material phe- nomena. The main risks and oppounities identied within this framework are described below. Policy & Regulation Limits on emissions and carbon pricing Incentives for the energy transition The enactment of laws and regulations that introduce more stringent emission limits by govern- ment action (non-market driven) and market-based mechanisms. • Oppounities: command & control regulations and market-based mechanisms strengthening CO 2 price signals to foster investment in carbon-free technologies. • Risks: lack of a coordinated approach among the various actors and policy-makers involved and limited eectiveness of the policy instruments deployed, with an impact on the speed of the trend towards electrication and decarbonization in the various sectors, compared with a decisive Group strategy focused on the energy transition. Development incentives and oppounities with a view to the energy transition, consequently guiding the energy system towards the use of low-emission energy resources as the mainstream approach in the energy mixes of countries, greater electrication of energy consumption, energy eciency, exibility of the electrical system and upgrading of infrastructure, with a positive im- pact on the return on investment and new business oppounities. • Oppounities: additional volumes and greater margins due to additional investment in the elec- tricity industry, in line with the electrication strategy, decarbonization and the upgrading/dig- italization of enabling infrastructure. • Risks: obstacles to achieving energy-transition targets due to regulatory systems that do no eectively suppo the energy transition (delays in permiing processes, no upgrading of the electricity grid, etc.). 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 118 Integrated Annual Repo 2021118 To improve standards or introduce ad hoc mechanisms to incentivize investments in resilience in the context of the evolution of climate change. • Oppounities: benets from investments that reduce service quality and continuity risks for the community. • Risks: in the case of especially severe extreme events with a greater-than-expected impact, there is a risk that recovery could be slower than planned, with an associated reputational risk. Incentives for the energy transition through appropriate policy measures and nancial instru- ments, which should be capable of suppoing an investment framework and a long-term, credible and stable positioning of policy-makers. Introduction of rules and/or public and private nancial instruments (e.g., funds, mechanisms, taxonomies, benchmarks) aimed at integrating sustainability into nancial markets and public nance instruments. • Oppounities: the creation of new markets and sustainable nance products consistent with the investment framework, activating greater public resources for decarbonization and access to - nancial resources in line with energy-transition objectives and the related impact on costs and on nance charges; introduction of subsidized suppo tools (funds and calls) for the transition. • Risks: actions and instruments are not sucient to provide incentives consistent with an overall positioning tailored to the energy transition, unceainty or slowdown in the introduction of new instruments and rules due to the deterioration in the public nances or dierences in applica- tion in the geographical areas in which the Group operates. Market dynamics, such as those connected with the variability of commodity prices, the increase in electricity consumption due to the energy transition and the penetration of renewables and distributed generation, have an impact on business drivers, with eects on margins and on pro- duction and sales volumes. • Oppounities: positive eects associated with the growth in electricity demand and the greater room for renewables and all sources of exibility. • Risks: exposure of merchant technologies to market price volatility. Gradual penetration of new technologies such as electric vehicles, storage, demand response and green hydrogen; digital lever to transform operating models and “platform” business models. • Oppounities: investments in developing technology solutions, as well as the positive eects of the increase in electricity demand and the greater space for renewables deriving from the production of green hydrogen. • Risks: slowdowns and interruptions in the supply chain for raw materials, including metals for baeries (such as lithium, nickel and cobalt) and semiconductors, could lead to delays in pro- curement and/or increase costs, potentially slowing the penetration of renewables, storage and electric vehicles. With the gradual electrication of end uses, the penetration of products with lower costs and a smaller impact in terms of local residential and industrial emissions will expand (for example, the use of heat pumps). • Oppounities: increase in electricity consumption against a background of declining energy consumption thanks to the greater eciency of electricity. • Risks: additional competition in this market segment. Resilience regulation Financial measures for the energy transition Market Market dynamics Technology Penetration of new technologies suppoing the transition Products & Services Electrication of residential energy consumption and industrial processes 119Risk management 119 Use of more ecient and eective modes of transpoation from the point of view of climate change, with a special focus on the development of electric mobility and charging infrastructure; electrication of industrial energy users. • Oppounities: positive eects of the increase in electricity demand and greater margins connected with the penetration of electric transpoation and associated beyond-commodity services. • Risks: additional competition in this market segment. Electric mobility The Group has already taken strategic actions to miti- gate potential risks and exploit the oppounities oered by the energy transition. Thanks to our industrial and - nancial strategy incorporating ESG factors, an integrated approach shaped by sustainability and innovation makes it possible to create long-term shared value. A strategy focused on complete decarbonization and the energy transition makes the Group resilient to the risks as- sociated with the introduction of more ambitious policies for emissions reductions and maximizes oppounities for the development of renewable generation, infrastructure and enabling technologies. Unlike chronic climate impacts, developments in the tran- sition scenario could have impacts in the sho and medi- um/long term (by 2030) as well. As with climate variables, we can test the current Business Plan (2022-2024) for its sensitivity to the factors potentially inuenced by the transition scenario, with paicular regard to the price of CO 2 (ETS). Examining the main transition vari- ables, the price of CO 2 appears to be a reliable driver of reg- ulatory measures that could accelerate the transition pro- cess. To assess the impact of possible changes in this driver, the eects of a potential change of +/-10% in the CO 2 price for Italy and Spain are determined. This price change would modify the equilibrium price of both wholesale markets, with repercussions on the margins of Global Power Genera- tion for both conventional and renewables plants. To quantify the risks and oppounities engendered by the energy transition in the long term, the transition scenarios described in the section “Enel’s energy-transition scenar- ios” have been considered. The eects of the Slow Tran- sition and Best Place scenarios on the variables that can most impact the business were then identied, in paicu- lar electricity demand inuenced by developments in the electrication of consumption – and hence the penetra- tion of electrical technologies – and the power generation mix. These considerations oer ideas for determining what the Group’s strategic positioning for resource allocation could be. Enel’s benchmark scenario – the Paris scenario – envis- ages a greater ambition for decarbonization and energy eciency, suppoed by increasing the electrication of - nal energy consumption and the development of renewa- bles capacity. The dynamics of the energy transition could bring greater oppounities for the Group. In paicular, on the retail electricity market, the progressive electrication of nal consumption – in paicular in transpoation and the residential segment – will lead to a signicant increase in electricity consumption to the detriment of other more polluting forms of energy. Likewise, the gradual increase in renewables share of the energy mix should lead to a reduc- tion in the wholesale price of electricity in the medium to long term. This impact is limited, however, considering an unchanged market design based on system marginal pric- es in the medium term. Any alternative market structures could induce dierent eects. With regard to the nancial impact of changes in transition scenarios, the Group analyzed the impact of the Slow Tran- sition and Best Place scenarios on 2030 results in terms of EBITDA compared with the benchmark Paris scenario. With regard to the electrication of consumption, how- ever, the Slow Transition scenario envisages lower pene- tration rates for the most ecient electrical technologies, in paicular electric vehicles and heat pumps, produc- ing a decrease in electricity demand compared with the Paris scenario, which would have a limited impact on the commodity and beyond-commodity retail business. At the same time, the decline in electricity demand would leave less room for growth in renewables, with an impact on the generation business. The Best Place scenario assumes a more rapid reduction in the costs of green hydrogen production technologies. This translates into greater penetration for this energy source, displacing blue and gray hydrogen, with a conse- quent additive eect on national electricity demand and the installation of renewables capacity compared with the Paris scenario. All of the scenarios, but especially the Paris and Best Place scenarios, will entail a considerable increase in the com- plexities that will have to be managed by grids in the var- ious geographical areas. In fact, we expect a signicant increase in distributed generation and other resources, such as storage systems, the greater penetration of elec- tric mobility with the related charging infrastructures, as well as the growing rate of electrication of consumption 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 120 Integrated Annual Repo 2021120 and the appearance of new actors with new modes of consumption. These developments will lead to the decentralization of power withdrawal/injection points, an increase in electric- ity demand and the average power required, and strong variability of energy ows, requiring dynamic and exible management of the network. The Group, therefore, ex- pects that in this scenario incremental investments will be needed to ensure connections and adequate levels of quality and resilience, encouraging the adoption of inno- vative operating models. These investments must be ac- companied by consistent policy and regulatory scenarios to ensure adequate nancial returns within the Infrastruc- ture and Networks Business Line. Risk & oppounity category Time horizon Scope of analysis GBL aected Geographic scope Description of impact Quantication - Type of impact Quantication - range < €100 mn €100- 300 mn > €300 mn Policy & Regulation Sho/ Medium For any given Paris scenario, the Group has assessed the impact on peormance of actions to modify the price of CO 2 . Enel Green Power and Thermal Generation Italy and Iberia Considering the potential impact of regulatory measures to incentivize energy transition, the Group assesses the exposure to changes of +/- 10% in the price of CO 2 using sensitivity analysis. EBITDA/year 10% - Upside vs. Paris -10% - Downside vs. Paris Market Medium Considering two alternative transition scenarios, the Group assessed the impact of an increase in the penetration of renewables on the benchmark power price and on additional capacity at 2030. Enel Green Power and Thermal Generation Global Greater room for investment in new renewables capacity associated with a decrease in power prices due to increased penetration of renewables. EDITDA 2030 Best Place vs. Paris Less room for investment in new renewables capacity associated with an increase in power prices due to decreased penetration of renewables. EDITDA 2030 Slow Transition vs. Paris Market/ Products & Services Medium Considering two alternative transition scenarios, the Group assessed the impact of trends in eciency, the adoption of electric devices and the penetration of EVs to estimate the potential eect on commodity consumption, including the impact on gas customers due to the increase in electrication and on the demand for beyond-commodity services. Customer Global Increase in margins due to impact of transition in terms of the electrication of energy consumption, mainly linked to forecast increases in green hydrogen. EDITDA 2030 Best Place vs. Paris Decrease in margins due to impact of transition in terms of slower electrication of energy consumption, mainly in residential and transpo sectors, and reduced penetration of new technologies. EDITDA 2030 Slow Transition vs. Paris Note: the estimated transition impacts take account of current coverage levels. Upside Downside Time horizon Sho (within 3 years) Medium (until 2030) Long (2030-2050) 121Risk management 121 Competitive environment The markets and businesses in which the Group operates are exposed to steadily growing competition and evolution, from both a technological and regulatory point of view, with the timing of these developments varying from country to country. As a result of these processes, Enel is exposed to growing competitive pressure and, as electricity is this century’s en- ergy vector, competition driven by contiguous sectors is also rising, although this oers utilities the oppounity to move into new businesses. The dierentiation on which the Group can count, both ge- ographically and in the various sectors in which it operates, is an impoant mitigation factor, but in order to orient stra- tegic development guidelines more eectively, the evolution of the competitive environment is constantly monitored, both inside and outside the world of utilities. Financial risks As pa of its operations, Enel is exposed to a variety of nancial risks that, if not appropriately mitigated, can di- rectly impact our peormance. In line with the Group’s risk catalog, these risks include the following: The internal control and risk management system (the ICRMS) provides for the specication of policies that establish the roles and responsibilities for risk management, monitoring and control processes, ensuring compliance with the princi- ple of organizational separation of units responsible for oper- ations and those in charge of monitoring and managing risk. The nancial risk governance system also denes a system of operating limits at the Group and individual region and coun- try levels for each risk, which are monitored periodically by risk management units. For the Group, the system of limits constitutes a decision-making tool to achieve its objectives. For fuher information on the management of nancial risks, please see note 47 to the consolidated nancial statements. • Interest rate • Commodity • Currency • Credit and counterpay • Liquidity The Group is exposed to the risk that changes in the level of interest rates could produce unex- pected changes in net nancial expense or nancial assets and liabilities measured at fair value. The exposure to interest rate risk derives mainly from the variability of the terms of nancing, in the case of new debt, and from the variability of the cash ows in respect of interest on oat- ing-rate debt. The interest rate risk management policy seeks to contain nancial expense and its volatility by optimizing the Group’s pofolio of nancial liabilities and using OTC derivatives. Risk control through specic processes, risk indicators and operating limits enables us to limit possible adverse nancial impacts and, at the same time, to optimize the structure of debt with an adequate degree of exibility. The volatility that characterized the nancial markets from the outset of the pandemic has in many cases returned to pre-COVID 19 levels and was oset by risk mitigation actions using derivative nancial instruments. Enel operates in energy markets and for this reason is exposed to the risk of incurring losses as a result of an increase in the volatility of the prices of energy commodities, such as power, gas and fuel, and other commodities, such as minerals and metals (price risk), or owing to a lack of demand or energy commodity shoages (volume risk). If not managed eectively, these risks can have a signicant impact on results. To mitigate this Interest rate Commodity 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 122 Integrated Annual Repo 2021122 exposure, the Group has developed a strategy of stabilizing margins by contracting for supplies of fuel and materials and the delivery of electricity to end users or wholesalers in advance. Enel has also implemented a formal procedure that provides for the measurement of the resid- ual commodity risk, the specication of a ceiling for maximum acceptable risk and the imple- mentation of a hedging strategy using derivatives on regulated markets and over-the-counter (OTC) markets. The commodity risk control process limits the impact of unexpected changes in market prices on margins and, at the same time, ensures an adequate margin of exibility that makes it possible to seize sho-term oppounities. Beginning in 2021, monitoring of the risk was extended to the main raw materials to which the Group is exposed. In order to mitigate the risk of interruptions in the supply of fuel and raw materials, the Group has diversied fuel sources, using suppliers from dierent geographical areas. In 2021, the spread of the COVID-19 pandemic triggered a complex global economic crisis, causing signicant increases in the volatility of prices of energy commodities and other raw materials. Enel has contained the risk below the limits estimated in 2020 for 2021, thanks to careful and timely mitigation measures, the geographical diversication of our business, the growing impetus given to the energy transition through the decarbonization process and the use of renewable sources for power generation. Finally, the adoption of global and local strat- egies, such as exibility in contractual clauses and proxy hedging techniques (in the event that hedging derivatives are not available on the market or are not suciently liquid), has made it possible to optimize results even in a highly dynamic market context. In view of their geographical diversication, access to international markets for the issuance of debt instruments and transactions in commodities, Group companies are exposed to the risk that changes in exchange rates between the presentation currency and other currencies could generate unexpected changes in the peormance and nancial aggregates in their respective nancial statements. Given the current structure of Enel, the exposure to currency risk is mainly linked to the US dol- lar and is aributable to: • cash ows in respect of the purchase or sale of fuel or electricity; • cash ows in respect of investments, dividends from foreign subsidiaries or the purchase or sale of equity investments; • cash ows connected with commercial relationships; • nancial assets and liabilities. The possible impacts of currency risk are reected in: • costs and revenue denominated in foreign currencies with respect to the time at which pric- ing conditions were dened or the investment decision was made (economic risk); • revaluations or adjustments to fair value of nancial assets and liabilities sensitive to exchange rates (transaction risk); • the consolidation of subsidiaries with dierent currencies of account (translation risk). The currency risk management policy is based on systematically hedging the exposures of the Group companies, with the exception of translation risk. Appropriate operational processes ensure the denition and implementation of appropriate hedging strategies, which typically employ nancial derivatives obtained on OTC markets. Risk control through specic processes and indicators enables us to limit possible adverse - nancial impacts and, at the same time, to optimize the management of cash ows on the man- aged pofolios. During the year, currency risk was managed through compliance with the risk management policies, encountering no diculties in accessing the derivatives market. The volatility that characterized the nancial markets during the initial phase of the pandemic Currency 123Risk management 123 has in many cases returned to pre-COVID 19 levels and was oset by risk mitigation actions us- ing derivative nancial instruments. The Group’s commercial, commodity and nancial transactions expose it to credit risk, i.e., the possibility that a deterioration in the creditwohiness of counterpaies or the failure to dis- charge contractual payment obligations could lead to the interruption of incoming cash ows and an increase in collection costs (selement risk) as well as lower revenue ows due to the replacement of the original transactions with similar transactions negotiated on unfavorable market conditions (replacement risk). Other risks include the reputational and nancial risks as- sociated with signicant exposures to a single counterpay or groups of related customers, or to counterpaies operating in the same sector or in the same geographical area. The exposure to credit risk is aributable to the following types of operations: • the sale and distribution of electricity and gas in free and regulated markets and the supply of goods and services (trade receivables); • trading activities that involve the physical exchange of assets or transactions in nancial in- struments (the commodity pofolio); • trading in derivatives, bank deposits and, more generally, nancial instruments (the nancial pofolio). The policy for managing credit risk associated with commercial activities and transactions in commodities provides for a preliminary assessment of the creditwohiness of counterpaies and the adoption of mitigation instruments, such as obtaining guarantees. The control process based on specic risk indicators and, where possible, limits ensures that the economic and nancial impacts associated with a possible deterioration in credit standing are contained within sustainable levels. At the same time, this approach preserves the neces- sary exibility to optimize pofolio management. In addition, the Group undeakes transactions to factor receivables without recourse, which results in the complete derecognition of the corresponding assets involved in the factoring. Finally, with regard to nancial and commodity transactions, risk mitigation is pursued through the diversication of the pofolio (giving preference to counterpaies with a high credit rating) and the adoption of specic standardized contractual frameworks that contain risk mitigation clauses (e.g. neing arrangements) and possibly the exchange of cash collateral. Despite the deterioration in the collection status of ceain customer segments, which was tak- en into consideration in determining impairment of trade receivables, the Group’s pofolio has so far demonstrated resilience to the global pandemic. This reects the expansion of digital collection channels and a solid diversication of commercial customers with a low exposure to the impact of COVID-19 (e.g., utilities and distribution companies). Enel’s liquidity risk management policy is designed to maintain sucient liquidity to meet expected commitments over a given time horizon without resoing to additional sources of nancing, also retaining a prudential liquidity reserve, sucient to meet any unexpected com- mitments. Fuhermore, in order to meet its medium- and long-term commitments, Enel pur- sues a borrowing strategy that provides for a diversied structure of funding sources, which it uses to meet its nancial needs, and a balanced maturity prole. Liquidity risk is the risk that the Group, while solvent, would not be able to discharge its obliga- tions in a timely manner or would only be able to do so on unfavorable terms or in the presence of constraints on disinvestment from assets with consequent capital losses, owing to situa- tions of tension or systemic crises (credit crunches, sovereign debt crises, etc.) or changes in the perception of Group riskiness by the market. Credit and counterpay Liquidity 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 124 Integrated Annual Repo 2021124 Among the factors that dene the risk perceived by the market, the credit rating assigned to Enel by rating agencies plays a decisive role, since it inuences its ability to access sources of nancing and the related nancial terms of that nancing. A deterioration in the credit rating could therefore restrict access to the capital market and/or increase the cost of funding, with consequent negative eects on the nancial position, nancial peormance and cash ows of the Group. In 2021, Enel’s risk prole only changed compared with 2020 for Moody’s, whose rating went from “Baa2” with a positive outlook to “Baa1” with a stable outlook. Enel’s rating remained “BBB+” with a stable outlook for Standard & Poor’s and “A-” with a stable outlook for Fitch. In order to manage liquidity eciently, treasury activities have largely been centralized at the Parent level, meeting liquidity requirements primarily by drawing on the cash generated by or- dinary operations and managing any cash surpluses appropriately. As regards the impact of COVID-19, despite the eects of the pandemic the liquidity risk indi- ces monitored for the Group remained within the limits established for 2021. Digital Technology risks The risks discussed in this section are as follows: • Cyber security • Digitalization, IT eectiveness and service continuity The speed of technological developments that constantly generate new challenges, the ever-in- creasing frequency and intensity of cyber-aacks and the araction of critical infrastructures and strategic industrial sectors as targets underscore the potential risk that, in extreme cases, the normal operations of companies could grind to a halt. Cyber-aacks have evolved dramat- ically in recent years: their number has grown exponentially, as has their complexity and impact (theft of company data on customers), making it increasingly dicult to promptly identify the source of threats. In the case of the Enel Group, this exposure reects the many environments in which it operates (data, industry and people), a circumstance that accompanies the intrinsic complexity and interconnection of the resources that over the years have been increasingly inte- grated into the Group’s daily operating processes. The Group has adopted a holistic governance approach to cyber security that is applied to all the sectors of IT (Information Technology), OT (Operational Technology) and IoT (Internet of Things). The framework is based on the commitment of top management, on global strategic manage- ment, on the involvement of all business areas as well as of the units involved in the design and implementation of our systems. It seeks to use cuing edge technologies, to design ad hoc busi- ness processes, to strengthen people’s IT awareness and to implement regulatory requirements for IT security. In addition, the Group has developed an IT risk management methodology founded on “risk- based” and “cyber security by design” approaches, thus integrating the analysis of business risks into all strategic decisions. Enel has also created its own Cyber Emergency Readiness Team (CERT) in order to proactively respond to any IT security incidents. Finally, back in 2019, the Group also took out an insurance policy for cyber security risks in order to mitigate those risks with other tools in addition to technical countermeasures. Cyber security 125Risk management 125 The Group is carrying out a complete digital transformation of how it manages the entire en- ergy value chain, developing new business models and digitizing its business processes, inte- grating systems and adopting new technologies. A consequence of this digital transformation is that the Group is increasingly exposed to risks related to the functioning of the IT systems, which are integrated across the Company with impacts on processes and operations, which could expose IT and OT systems to service interruptions or data losses. These risks are managed using a series of internal measures developed by the Global Digital Solutions (GDS) unit, which is responsible for guiding the Group’s digital transformation. It has set up an internal control system that introduces control points along the entire IT value chain, enabling us to prevent the emergence of risks engendered by such issues as the creation of services that do not meet business needs, the failure to adopt adequate security measures and service interruptions. The internal control system of the Global Digital Solutions unit over- sees both the activities peormed in-house and those outsourced to external associates and service providers. Fuhermore, Enel is promoting the dissemination of a digital culture and digital skills within the Group in order to successfully guide the digital transformation and mini- mize the associated risks. Digitalization, IT eectiveness and service continuity Operational risks The risks discussed in this section are as follows: Health and safety The main health and safety risks to which Enel personnel and contractors are exposed are associated with opera- tions at the Group’s sites and assets. The violation of the laws, regulations and procedures governing health and safety, work environments, management of corporate structures, assets and processes, which could have an adverse impact on the health of employees, workers or stakeholders, can give rise to the risk of incurring admin- istrative or judicial penalties and related economic, nan- cial and reputational impacts. These risks were identied through an analysis of the main events that have occurred in the last three years. In paicular, in terms of probabil- ity of occurrence, mechanical incidents (falls, collisions, crushing and cuts) are the most common, while the most severe in terms of potential associated impact are electri- cal incidents (possibly fatal injuries). In addition, in relation to the presence of the Group in dierent areas of the world, employees and contractors could be exposed to health risks connected with poten- tial emerging infectious diseases of a pandemic and po- tentially pandemic nature, which could have an impact on their health and well-being. Enel has adopted a Declaration of Commitment to Health and Safety, signed by the Group’s top management. In implementing the policy, each Group Business Line has its own Occupational Health and Safety Management Sys- tem compliant with the international standard BS OHSAS 18001, which is based on the identication of hazards, the qualitative and quantitative assessment of risks, the plan- ning and implementation of prevention and protection measures, the verication of the eectiveness of the pre- vention and protection measures and any corrective ac- tions. This system also considers the rigor employed in the selection and management of contractors and suppliers and the promotion of their involvement in programs for continuous improvement of safety peormance. The Enel Group has dened a structured health manage- ment system, based on prevention and protection meas- ures, which also plays a role in the development of a cor- porate culture aimed at promoting the psycho-physical • Health and safety • Environment • Procurement, logistics and supply chain • People and organization 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 126 Integrated Annual Repo 2021126 health and organizational well-being of workers, as well as helping to balance personal and professional life. Fuhermore, with regard to emergencies in relation to risks connected with the ongoing pandemic, a unit has been set up within the Personnel and Organization depament of the Parent with liaisons in each Business Line and country in order to ensure the denition of the global strategy and policies for emergency management and their adoption in every Group organization. In paicular, this organizational structure and the related management processes make it possible to direct, integrate and monitor, both at Group level and in the individual countries in which it operates, all the prevention, protection and intervention actions aimed at protecting the health of employees and contractors, also in relation to exogenous health risk factors that may not be strictly related to work activities. Additional information on risk management is provided in the “Workplace health and safety” section. Environment Recent years have seen the continuation of the growth in the sensitivity of the entire community to risks con- nected with development models that impact the quality of the environment and ecosystems with the exploitation of scarce natural resources (including raw materials and water). In some cases, the synergistic eects between these impacts, such as global warming and the increasing ex- ploitation and degradation of water resources, have in- creased the risk of environmental emergencies in the most sensitive areas of the planet, with the risk of spark- ing competition among dierent uses of water resources such as industrial, agricultural and civil uses. In response to these needs, authorities have imposed in- creasingly restrictive environmental regulations, placing ever more stringent constraints on the development of new industrial initiatives and, in the most impactful indus- tries, incentivizing or requiring the elimination of tech- nologies no longer considered sustainable. Specically, the European Commission has launched a work plan to dene challenging targets for environmen- tal recovery, both in terms of air quality and the recovery of rivers and contaminated land, and for the reduction of biodiversity loss. In this context, companies in every sector, and above all industry leaders, are ever more aware that environmental risks are economic risks. As a result, they are called upon to increase their commitment and accountability for de- veloping and adopting innovative and sustainable techni- cal solutions and development models. Enel has made the eective prevention and minimization of environmental impacts and risks a foundational ele- ment of each project across its entire life cycle. The adoption of ISO 14001-ceied environmental man- agement systems across the entire Group ensures the implementation of structured policies and procedures to identify and manage the environmental risks and oppor- tunities associated with all corporate activities. A struc- tured control plan combined with improvement actions and objectives inspired by the best environmental prac- tices, with requirements exceeding those for simple en- vironmental regulatory compliance, mitigate the risk of impacts on the environment, reputational damage and litigation. Also contributing are the multitude of actions to achieve the challenging environmental improvement objectives set by Enel, such as those regarding atmos- pheric emissions, waste production and water consump- tion, especially in areas with high water stress. The risk of water scarcity is directly mitigated by Enel’s development strategy, which is based on the growth of generation from renewable sources that are essentially not dependent on the availability of water for their oper- ation. Special aention is also devoted to assets in areas with a high level of water stress, in order to develop tech- nological solutions to reduce consumption. Ongoing col- laboration with local river basin management authorities enables us to adopt the most eective shared strategies for the sustainable management of hydroelectric gener- ation assets. Finally, with regard to protecting biodiversity, an analysis of the impacts/dependencies of the business on natural resources was conducted and priority areas for action were dened along the entire value chain. On the basis of this analysis, appropriate terrestrial, marine and river monitoring actions are being implemented in ecosystems to verify the eectiveness of the measures adopted to protect, restore and conserve biodiversity. 127Risk management 127 Procurement, logistics and supply chain The purchasing processes of Global Procurement and the associated governance documents form a structured system of rules and control points that make it possible to combine the achievement of economic business objectives with full compliance with the fundamental principles set out in the Code of Ethics, the Enel Global Compliance Program, the Zero-Tolerance-of-Corruption Plan and the Human Rights Policy, without renouncing the promotion of initiatives for sustainable economic development. These principles have been incorporated into the organiza- tional processes and controls that Enel has voluntarily decid- ed to adopt in order to establish relationships of trust with all its stakeholders, as well as dene stable and constructive relationships that are not based exclusively on ensuring - nancial competitiveness but also take account of best prac- tices in essential areas for the Group, such as the avoidance of child labor, occupational health and safety and environ- mental responsibility. Thanks to the greater interaction and integration with the outside world and with the dierent pas of the corporate organization, the procurement process has assumed an increasingly central role in the creation of value. Global Procurement contributes to a resilient and sustainable supply chain, thinking from a circular economy perspective and fostering innovation, sharing the Group’s values and ob- jectives with suppliers who thereby become enablers of the achievement of Enel’s targets. More specically, bonus factors have been introduced in ten- ders in order to engender viuous behavior on the pa of our suppliers. For example, the environmental impact of any customer is strongly inuenced by the impact of its upstream supply chain, and that is why Global Procurement pushes its suppliers to objectively measure their carbon footprint and improve their peormance. From the point of view of the procurement process, the various procurement units almost systematically adopt the tender mechanism, thus ensuring maximum competition and equal access oppounities for all operators who are in possession of the technical, economic/nancial and envi- ronmental requirements, security, human, legal and ethical rights. Procurement with direct assignment and without a competitive procedure can only take place in exceptional cases, duly motivated, in compliance with current legislation on the maer. Fuhermore, the single global supplier qualication system for the entire Enel Group, even before the procurement pro- cess begins, veries that potential suppliers who intend to paicipate in procurement procedures are aligned with the Company’s strategic vision and expectations in all the areas and requirements cited earlier and that they have adopted the same values. With regard to the risk governance system, Global Procure- ment is focused on the application of metrics that indicate the level of risk before and after the mitigation action, in or- der to implement precautionary measures to reduce uncer- tainty to a tolerable level or mitigate any impacts in all busi- ness, technological and geographical areas. The eectiveness of supply chain risk management is mon- itored through specic indicators – including the probability of insolvency, the concentration of contracts with individual suppliers or industrial groups, the supplier’s dependence on Enel, a peormance indicator for the correctness of conduct during the tender, quality, punctuality and sustainability in the execution of the contract, country risk, etc. – for which thresholds have been specied to guide the denition of the procurement, negotiation and tender award strategy, ena- bling informed choices of risk and potential benet (savings). The actions taken to counter the impact of the COVID-19 emergency have focused in dierentiating supply sources to avoid interruptions in the supply chain and the remote per- formance of activities that would ordinarily require physical interaction between Enel and the supplier (e.g., inspections at the company). People and organization Enel has set itself the goal of leading the transition to a more sustainable system, an essential step for the future of the planet, by accelerating the decarbonization of our energy mix through an expansion of renewables and the ever-increasing electrication of energy consumption. Enel could be exposed to the risk of incurring judicial or administrative penalties, economic or nancial losses and reputational harm following a paial or total interruption of commercial operations and the supply of the electric- ity services to customers as a result of technical failures, malfunctioning assets and plant, human error, sabotage, unavailability of raw materials or adverse weather events or infectious diseases of epidemic or pandemic potential that could limit the normal operation of the Group’s activities or its supply chain. The profound transformations of the energy sector have increased the impoance of recruiting people with new experience and professional skills, as well as imposing the need for major cultural and organizational changes in or- der to achieve Group objectives. Organizations must move to adopt new, agile and exible business models. Policies to 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 128 Integrated Annual Repo 2021128 enhance diversity and to manage and promote talent have become key factors for companies that are managing the transition and have a widespread geographical presence. Enel places the people who work for it at the center of its business model. The management of human capital is a priority for which specic objectives have been estab- lished. These include: the development of the digital ca- pabilities and skills, as well as the promotion of reskilling and upskilling programs for employees in order to sup- po the energy transition and external skilling to foster the development of a reference ecosystem; the eective engagement of employees in the pursuit of the corporate purpose, which ensures the achievement of beer results while oering greater satisfaction to our people; the de- velopment of systems for evaluating the working environ- ment and peormance; the dissemination of diversity and inclusion policies to all countries in which the Group oper- ates, as well as instilling an inclusive organizational culture based on the principles of non-discrimination and equal oppounity, key drivers for aracting and retaining talent. The Group is involved in enhancing the resilience and ex- ibility of organizational models through the simplication and digitalization of processes in order to enable the ef- fectiveness and autonomy of our people within new exi- ble working schemes, which have already been eectively tested in the response to the COVID-19 pandemic emer- gency, which will be a key element of future approaches to work. Compliance risks The risks discussed in this section are as follows. Risks connected with the protection of personal data In the era of the digitalization and globalization of mar- kets, Enel’s business strategy has focused on accelerating the transformation towards a business model based on a digital platform, using a data-driven and customer-centric approach along the entire value chain. The Group, which is present in more than 40 countries, has the largest customer base in the public services sector (more than 69 million customers), and currently employs more than 66,000 people. Consequently, the Group’s new business model requires the management of an increas- ingly large and growing volume of personal data in order to achieve the nancial and business results envisaged in the 2021-2023 Strategic Plan. This exposes Enel to the risks connected with the protec- tion of personal data (an issue that must also take account of the substantial growth in privacy legislation in most of the countries in which Enel operates). These risks may re- sult in the loss of condentiality, integrity or availability of the personal information of our customers, employees and others (e.g., suppliers), with the risk of incurring nes de- termined on the basis of global turnover, the prohibition of the use of ceain processes and consequent nancial losses and reputational harm. In order to manage and mitigate this risk, Enel has adopted a model for the global governance of personal data, with the appointment of personnel responsible for privacy is- sues at all levels (including the appointment of Data Pro- tection Ocers at the global and country levels) and the adoption of digital compliance tools to map applications and processes and manage risks with an impact on pro- tecting personal data, in compliance with specic local regulations in this eld. • Personal data protection 129Risk management 129 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements REPORT ON OPERATIONS Group Peormance 4. Integrated disclosure Financial and non-nancial results are repoed in integrated form to give an overall view of the Group's peormance. Group ordinary prot in 2021 up 7.6% on 2020 An improvement in ordinary operating peormance and a decrease in non-controlling interests following Group reorganization in Latin America. Capital expenditure reaches €13 billion to accelerate the energy transition 43.6% in Enel Green Power and 40.7% in Infrastructure and Networks. 84.6% of total capital expenditure in businesses aligned with the European taxonomy 55% of debt consists of sustainable nancing Consistent with its Sustainability-Linked Financing Framework, the Group is increasingly active in the development of sustainable nance tools with KPIs linked to the achievement of the Sustainable Development Goals (SDGs). 130 Integrated Annual Repo 2021 131 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 132 Integrated Annual Repo 2021132 Denition of peormance indicators In order to present the results of the Group and the Par- ent and analyze their nancial structure, Enel has pre- pared separate reclassied schedules that dier from the schedules envisaged under the IFRS-EU adopted by the Group and by Enel SpA and contained in the consolidat- ed nancial statements and separate nancial statements, respectively. These reclassied schedules contain dierent peormance indicators from those obtained directly from the consolidated nancial statements and separate nan- cial statements, which management believes are useful in monitoring the peormance of the Group and the Parent and representative of the nancial peormance and posi- tion of our business. With regard to those indicators, on April 29, 2021, CON- SOB issued warning notice no. 5/21, which gives force to the Guidelines issued on March 4, 2021 by the European Securities and Markets Authority (ESMA) on disclosure re- quirements under Regulation (EU) 2017/1129 (the Prospec- tus Regulation), which took eect on May 5, 2021. The Guidelines update the previous CESR Recommenda- tions (ESMA/2013/319, in the revised version of March 20, 2013) with the exception of those concerning the special issuers referred to in Annex no. 29 of Delegated Regulation (EU) 2019/980, which were not conveed into Guidelines and remain applicable. Accordingly, as from May 5, 2021, the references to the above CESR Recommendations contained in previous CONSOB communications shall be considered to have been replaced by references to the ESMA Guidelines cit- ed above, including the references in Communication no. DEM/6064293 of July 28, 2006 regarding the net nancial position. The Guidelines are intended to promote the usefulness and transparency of alternative peormance indicators included in regulated information or prospectuses within the scope of application of Directive 2003/71/EC in order to improve their comparability, reliability and comprehen- sibility. In line with the regulations cited above, the criteria used to construct these indicators are the following. Gross operating prot: an operating peormance indica- tor, calculated as “Operating prot“ plus “Depreciation, amoization and impairment losses“. Ordinary gross operating prot: dened as “Gross operat- ing prot“ from core businesses connected with the Own- ership and Stewardship business models. It does not in- clude costs connected with corporate restructurings and costs directly aributable to the COVID-19 pandemic. Ordinary operating prot: dened as “Operating prot“ from core businesses connected with the Ownership and Stewardship business models. It is calculated by adjusting “Operating prot“ for the ef- fects of transactions not connected with core operations referred to with regard to gross operating prot and ex- cluding signicant impairment losses on assets and/or groups of assets following impairment testing (including reversals of impairment losses) or classication under “As- sets held for sale“. Group ordinary prot: it is dened as “Group prot“ gener- ated by Enel’s core business connected with the Owner- ship and Stewardship business models. It is equal to “Group prot“ adjusted primarily for the items discussed under “Ordinary operating prot“, net of any tax eects and non-controlling interests. Low carbon ordinary EBITDA: it is the ordinary gross oper- ating prot of the set of products, services and technolo- gies included in the following Business Lines: Enel Green Power, Infrastructure and Networks, Enel X and End-user Markets (excluding gas). Net non-current assets: calculated as the dierence be- tween “Non-current assets“ and “Non-current liabilities“ with the exception of: • “Deferred tax assets“; • “Securities“ and “Other nancial assets“ included in “Other non-current nancial assets“; • “Long-term borrowings“; • “Employee benets“; • “Provisions for risks and charges (non-current poion)“; • “Deferred tax liabilities“. Net working capital: calculated as the dierence between “Current assets“ and “Current liabilities“ with the exception of: • “Current poion of long-term loan assets“, “Factoring re- ceivables“, “Securities“, “Cash collateral“ and “Other nan- cial assets“ included in “Other current nancial assets“; 133Denition of peormance indicators 133 • “Cash and cash equivalents“; • “Sho-term borrowings“ and the “Current poion of long-term borrowings“; • “Provisions for risks and charges (current poion)“; • “Other nancial liabilities“ included in debt. Net assets held for sale: calculated as the algebraic sum of “Assets held for sale“ and “Liabilities included in disposal groups held for sale“. Net capital employed: calculated as the sum of “Net non-current assets“ and “Net current assets“, “Provisions for risks and charges“, “Deferred tax liabilities“ and “De- ferred tax assets“, as well as “Net assets held for sale“. Net nancial debt: a nancial structure indicator, deter- mined by: • “Long-term borrowings“, “Sho-term borrowings“ and “Current poion of long-term borrowings“, taking ac- count of “Long- and sho-term nancial borrowings“ included respectively in “Other non-current nancial liabilities“ and “Other current nancial liabilities“; • net of “Cash and cash equivalents“; • net of the “Current poion of long-term loan assets“, “Current securities“ and “Other nancial assets“ includ- ed in “Other current nancial assets“; • net of “Non-current securities“ and “Non-current nan- cial assets“ included in “Other non-current nancial as- sets“. Main changes in the consolidation scope In the two periods under review, the consolidation scope changed as a result of a number of transactions. For more information, please see note 8 to the consolidated nan- cial statements. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 134 Integrated Annual Repo 2021134 Peormance of the Group 135Peormance of the Group 135 The following presents the operating and nancial peor- mance of the Group. Operations SDG 2021 2020 Change Net electricity generation (TWh) 222.6 207. 1 15.5 of which: 7 \- renewable (TWh) 108.8 105.4 3.4 Total net ecient installed capacity (GW) 87. 1 84.0 3.1 7 Net ecient installed renewables capacity (GW) 50.1 45.0 5.1 7 Net ecient installed renewables capacity (%) 57.5 % 53.6% 3.9 7 Additional ecient installed renewables capacity (GW) 5.18 2.91 2.27 9 Electricity transpoed on Enel’s distribution grid (TWh) (1) 510.3 485.2 25.1 9 End users with active sma meters (no.) (1) (2) 44,968,974 44,293,483 675,491 9 Electricity distribution and transmission grid (km) (1) 2,233,368 2,232,023 1,345 End users (no.) 75,178,777 74,303,931 874,846 Electricity sold by Enel (TWh) 309.4 298.2 11.2 Gas sold to end users (billions of m 3 ) 9.9 9.7 0.2 Retail customers (no.) 69,342,818 69,517,932 (175,114) \- of which free market (1) 24,839,600 22,931,809 1,907,791 11 Demand response capacity (MW) 7,7 13 6,038 1,675 11 Charging points (no.) (1) 157,209 105,079 52,130 11 Storage (MW) 375 123 252 (1) The gures for 2020 reect a more accurate calculation of the numbers. (2) Of which 23.5 million second generation sma meters in 2021 and 18.2 million in 2020. Peormance of the Group 222.6 TWh NET ELECTRICITY GENERATION of which 108.8 TWh of renewable generation 57.5% NET EFFICIENT INSTALLED RENEWABLES CAPACITY for a total of 50.1 GW 2.2 million km ELECTRICITY DISTRIBUTION AND TRANSMISSION GRID 45 million END USERS WITH ACTIVE SMART METERS (1) 60% of end users are digitalized 69.3 million RETAIL CUSTOMERS of which 24.8 million on the free market 157,209 no. CHARGING POINTS +49.6% on 2020 (1) Of which 23.5 million second-generation sma meters in 2021 and 18.2 million in 2020. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 136 Integrated Annual Repo 2021136 Net electricity generated by Enel in 2021 increased by 15.5 TWh (7.5%) from 2020. This rise mainly reects an increase in wind generation (+6.8 TWh), mainly in Brazil and Noh America, and a larger contribution from combined-cycle plants (+8.4 TWh), above all in Italy, Spain and Chile. Net electricity generation by source (2021) 25.6% Hydroelectric 30.1% in 2020 17.0% Wind 15.0% in 2020 3.5% Solar 2.8% in 2020 2.8% Geothermal and other 3.0% in 2020 23.2% Combined-cycle 20.9% in 2020 11.5% Nuclear 12.5% in 2020 10.2% Fuel oil and turbo-gas 9.4% in 2020 6.2% Coal-red 6.3% in 2020 2021 2021 Total 222.6 TWh Total renewable sources 48.9% Total traditional sources 51.1% 50.9% in 2020 49.1% in 2020 207.1 TWh in 2020 32.0% Hydroelectric 33.1% in 2020 17.1% Wind 14.8% in 2020 7.3% Solar 4.6% in 2020 1.1% Geothermal and other 1.1% in 2020 17.3% Combined-cycle 17.9% in 2020 13.5% Fuel oil and turbo-gas 13.9% in 2020 7.9% Coal-red 10.6% in 2020 3.8% Nuclear 4.0% in 2020 2021 Total 87.1 GW Total renewable sources 57.5% Total traditional sources 42.5% 53.6% in 2020 46.4% in 2020 84.0 GW in 2020 At the end of December 2021, the Group’s net ecient in- stalled capacity totaled 87.1 GW, an increase of 3.1 GW on 2020. During 2021, 2.6 GW of new wind capacity and 2.2 GW of new solar capacity were installed, while a number of com- panies in Australia were fully consolidated (0.3 GW of solar capacity) after having been equity accounted until December 31, 2020. At the same time, a number of coal-red plants in Italy and Spain were decommissioned (2.0 GW). Net ecient installed capacity by source (2021) 25.6% Hydroelectric 30.1% in 2020 17.0% Wind 15.0% in 2020 3.5% Solar 2.8% in 2020 2.8% Geothermal and other 3.0% in 2020 23.2% Combined-cycle 20.9% in 2020 11.5% Nuclear 12.5% in 2020 10.2% Fuel oil and turbo-gas 9.4% in 2020 6.2% Coal-red 6.3% in 2020 2021 2021 Total 222.6 TWh Total renewable sources 48.9% Total traditional sources 51.1% 50.9% in 2020 49.1% in 2020 207.1 TWh in 2020 32.0% Hydroelectric 33.1% in 2020 17.1% Wind 14.8% in 2020 7.3% Solar 4.6% in 2020 1.1% Geothermal and other 1.1% in 2020 17.3% Combined-cycle 17.9% in 2020 13.5% Fuel oil and turbo-gas 13.9% in 2020 7.9% Coal-red 10.6% in 2020 3.8% Nuclear 4.0% in 2020 2021 Total 87.1 GW Total renewable sources 57.5% Total traditional sources 42.5% 53.6% in 2020 46.4% in 2020 84.0 GW in 2020 137Peormance of the Group 137 At the end of December 2021, the Group’s net ecient in- stalled renewables capacity reached 50.1 GW, an increase of 5.1 GW compared with 2020, and represents 57.5% of total net ecient installed capacity. Fighting climate change and ensuring environmental sustainability Main climate change indicators 2021 2020 Change Direct greenhouse gas emissions - Scope 1 (1) (million/t eq ) 51.6 45.7 5.9 12.9% Indirect greenhouse gas emissions - Scope 2 - location based (1) (million/t eq ) 4.3 4.1 0.2 4.9% Indirect greenhouse gas emissions - Scope 2 - market based (1) (million/t eq ) 7.1 6.9 0.2 2.9% Indirect greenhouse gas emissions - Scope 3 (1) (million/t eq ) 69.1 64.9 4.2 6.5% \- of which emissions connected with gas sales (1) (million/t eq ) 22.3 21.9 0.4 1.8% Specic direct greenhouse gas emissions - Scope 1 (1) (2) (gCO 2eq /kWh) 227 216 11 5.1% Specic emissions of SO 2 (g/kWh) 0.07 0.10 (0.03) -30.0% Specic emissions of NO x (g/kWh) 0.35 0.36 (0.01) -2.8% Specic emissions of paiculates (g/kWh) 0.005 0.01 (0.005) -50.0% Zero-emission generation (% of total) 60.3 63.4 (3.1) -4.9% Total direct fuel consumption (Mtoe) 26.3 23.9 2.4 10.0% Average eciency of thermal plants (3) (%) 44.4 44.2 0.2 0.5% Water withdrawals in water-stressed areas (4) (%) 27.4 23.3 4.1 17.6% Specic water requirement for total generation (l/kWh) 0.2 0.2 \- - Reference price of CO 2 (€) 53.24 24.72 28.52 - Ordinary EBITDA for low-carbon products, services and technologies (5) (millions of €) 17,335 15,703 1,632 10.4% Capex for low-carbon products, services and technologies (millions of €) 12,302 9,575 2,727 28.5% Ratio of capex for low-carbon products, services and technologies to total (%) 94.0 94.0 \- - (1) The gures for 2020 have been modied following the introduction of a new calculation method deriving from the implementation of the Net-Zero project. (2) Specic emissions are calculated considering total direct emissions (Scope 1) as a ratio of total renewable, nuclear and thermal generation (including the con- tribution of heat). (3) The calculation does not consider Italian O&G plants being decommissioned or of marginal impact. In addition, the gures do not take account of consumption and generation for cogeneration relating to Russian thermal generation plants. Average eciency is calculated on the basis of the plant eet and is weighted by generation. (4) Value for 2020 recalculated following extension of the category of plants in water-stressed areas. (5) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more information, please see note 7 to the consolidated nancial statements. 227 gCO 2eq /kWh DIRECT GREENHOUSE GAS EMISSIONS - SCOPE 1 - SPECIFIC +5.1% on 2020 €17,335 million ORDINARY EBITDA FROM LOW-CARBON PRODUCTS, SERVICES AND TECHNOLOGIES €12,302 million CAPEX ON LOW-CARBON PRODUCTS, SERVICES AND TECHNOLOGIES 26.3 million m 3 TOTAL WATER CONSUMPTION +28.9% on 2020 60.3% ZERO-EMISSIONS GENERATION (% of total) 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 138 Integrated Annual Repo 2021138 The Group’s ambition for leadership in the ght against cli- mate change was fuher strengthened in 2021: the target of an 80% reduction by 2030 in Scope 1 emissions com- pared with 2017 was conrmed, in line with the scenario for containing temperature increases to 1.5 °C compared with pre-industrial levels, as ceied by the Science Based Tar- gets initiative (SBTi), and achieving the Net-Zero target by 2040. The year 2021 closed with a 6% decrease in carbon intensity compared with the base year. Direct emissions of CO 2 equivalent (Scope 1) amounted to 51.6 million metric tons, an increase of 12.9% compared with 2020. The increase was aributable to the growing de- (17) The water requirement consists of all water withdrawals from suace sources (including rainwater), underground sources, third-paies, the sea and waste- water sources (relating to supplies from third paies) used for process needs and closed-cycle cooling, except for the amount of sea water returned to the sea after desalination (brine). The laer item (brine), on the other hand, contributes to withdrawals. mand for electricity compared with the previous year, with a rise in thermal generation, which oset the decline in hydro- electric generation for the year. Electricity generated by Enel from zero-emission sources in 2021 amounted to 60.3% of total output, a slight decrease compared with 2020 as a result of the increase in fossil fuel generation, but still signicantly higher than in 2019 (when it was equal to 54.9%) due to the increase in solar and wind generation. Specic emissions of SO 2 and paiculates declined com- pared with 2020 by 30% and over 50%, respectively. Specic NO x emissions also recorded a slight decrease (-2.8% com- pared with 2020). Responsible water resource management 2021 2020 Change Total withdrawals (millions of m 3 ) 55.6 51.5 4.1 8.0% Water withdrawals in water-stressed areas (1) (%) 27.4 23.3 4.1 17.6% Specic water requirement for total generation (l/kWh eq ) 0.2 0.2 - - Total water consumption (m 3 ) (millions of m 3 ) 26.3 20.4 5.9 28.9% Water consumption in water-stressed areas (%) (1) (%) 33.8 31.6 2.2 7. 0% (1) Value for 2020 recalculated following extension of the category of plants in water-stressed areas. Water is an essential pa of electricity generation, al- though the gradual shift to renewables, notably solar and wind, is reducing the specic water requirement. Enel constantly monitors all generation sites located in ar- eas at risk of water scarcity (water-stressed areas) in order to ensure the most ecient management of the resource. Site monitoring is conducted through the following levels of analysis: • mapping of generation sites in water-stressed areas identied on the basis of the (baseline) water stress conditions indicated by the World Resources Institute “Aqueduct Water Risk Atlas“; • identication of “critical“ generation sites, i.e., those lo- cated in water-stressed areas that draw fresh water for operating needs; • verication of the water management procedures adopted in these plants in order to minimize consump- tion and maximize withdrawals from lower quality or more abundant sources (waste, industrial or sea water). About 14% of the Enel Group’s total electricity output uses fresh water in water-stressed areas. In 2021 total water re- quirements (17) were 46.5 million cubic meters, an increase of 8% on 2020 owing to the rise in thermal generation. The specic water requirement for 2021 was 0.2 l/kWh eq . Preserving biodiversity Preserving biodiversity is one of the strategic objectives of Enel’s environmental policy. The Group promotes spe- cic projects in the various areas in which it operates in order to help protect local species, their natural habitats, and the local ecosystems in general. These projects cover a vast range of areas, including: inventory and monitoring; programs to protect specic species at risk of extinction; methodological research and other studies; repopulation and reforestation; the construction of infrastructure sup- pos to promote the presence and activities of various species (e.g., aicial nests along power distribution lines for birds or sh ladders at hydroelectric plants), and eco- logical restoration and reforestation programs. In 2021, 183 projects were under way to safeguard spe- 139Peormance of the Group 139 cies and natural habitats, with a total total of 9,092 hec- tares involved in habitat recovery eos. The area involved in restoration projects in 2021 increased compared with the previous year (4,356 hectares in 2020), reecting both the sta of new restoration projects and an increase in the areas involved in restoration as pa of existing projects. Electricity distribution and access, ecosystems and platforms Electricity transpoed on Enel’s distribution grid totaled 510.3 TWh in 2021, up 25.1 TWh (+5.2%) from 2020, arib- utable essentially to Italy (+12.3 TWh), Spain (+6.6 TWh) and Brazil (+2.5 TWh). The number of Enel end users with active sma meters in- creased by 675,491 in 2021, mainly in Italy (+332,311) and Romania (+205,006). Electricity sold by Enel in 2021 came to 309.4 TWh, in- creasing by 11.2 TWh (+3.8%) compared with the previous year. Quantities increased mainly in Italy (+2.6 TWh) and Latin America (+9.5 TWh) – mainly in Brazil (+4.1 TWh) and Chile (+3.7 TWh). In addition, gas sold by Enel in 2021 to- taled 9.9 billion cubic meters, an increase of 0.2 billion cu- bic meters compared with the previous year. Enel’s leadership position has been gained thanks to the aention we place on the customer in providing quality services: aspects that concern more than just the provi- sion of electricity and/or natural gas, extending, above all, to intangible aspects of our service that relate to the per- ception and satisfaction of our customers. Through our products for both the residential and business markets, Enel provides dedicated oers with a lower envi- ronmental impact and a concentration on the most vul- nerable segments of the population. In fact, all the coun- tries in which the Group operates provide forms of suppo (often linked to government initiatives) which assist these segments of the population in paying their electricity and gas bills, so as to give everyone equal access to electricity. Enel has also established numerous processes to ensure customers receive a high level of service. In Italy, the com- mercial quality of all our contact channels (customer ser- vice calls, Enel Points and stores, utility bills, app, e-mail, social media, account manager, fax) is ensured through systematic monitoring of the sales and management pro- cesses. The goal is to ensure compliance with applicable laws and regulations and respect for the privacy, freedom and dig- nity of our customers. In order to ensure the quality, accessibility and reliability of its service, Enel is commied to ensuring an ecient and digitalized electricity grid, which enables a more sustain- able lifestyle through the use of electricity for all our cus- tomers. As a DSO (distribution system operator), Enel has embraced the challenges of the energy transition to de- velop the grid of the future: sma, modern and digital. To suppo this ambitious transformation, Grid Futurability® has been launched, a new long-term strategy to design the grid that Enel intends to create by 2030, both from an industrial point of view and in integration with stakehold- ers, with the aim of preparing it to suppo a decarbonized and electried world. The grid also represents a “mine of materials“ that, when suitably regenerated, can be used as inputs in the produc- tion of new assets or new products in other production chains. Using an approach called “grid mining“, the entire value chain of assets is being analyzed in order to recover valuable materials/devices from obsolete grid infrastruc- tures, with the aim of minimizing the environmental impact and the consumption of resources by maximizing the pos- itive social aspects, with a view to creating long-term value. Enel is also continuing its eos to expand digitalization, electronic invoicing and new services. With Enel X, we oer innovative solutions to residential customers (technological solutions for sma homes, home automation, solar and pho- tovoltaic systems, boilers, maintenance services, lighting, etc.), government customers (public lighting, monitoring services for sma cities, security systems, etc.) and large customers (demand response services, consulting and energy ecien- cy solutions). We also promote electric mobility through the development of public and private charging infrastructures. Enel charging points increased by 52,130 units in 2021 compared with 2020. Private charging points increased by 48,430, mainly in Noh America and Italy, while public charging points increased by 3,700, primarily in Italy and Spain. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 140 Integrated Annual Repo 2021140 Group peormance Millions of euro Ordinary income statement (1) Income statement 2021 2020 Change 2021 2020 Change Revenue (2) (3) 88,006 66,004 22,002 33.3% 88,006 66,004 22,002 33.3% Costs (2) 71,318 47, 87 8 23,440 49.0% 72,961 49,002 23,959 48.9% Net results from commodity contracts (2) 2,522 (99) 2,621 - 2,522 (99) 2,621 - Gross operating prot/(loss) (3) 19,210 18,027 1,183 6.6% 17,567 16,903 664 3.9% Depreciation, amoization and impairment losses 6,975 6,656 319 4.8% 9,887 8,448 1,439 17. 0 % Operating prot/(loss) (3) 12,235 11,371 864 7.6% 7,680 8,455 (775) -9.2% Financial income (3) 5,420 4,520 900 19.9% 5,424 4,520 904 20.0% Financial expense 8,247 6,804 1,443 21.2% 8,175 7, 2 13 962 13.3% Net nancial expense (3) (2,827) (2,284) (543) -23.8% (2,751) (2,693) (58) -2.2% Share of prot/(loss) of equity-accounted investments 102 134 (32) -23.9% 571 (299) 870 - Pre-tax prot/(loss) 9,510 9,221 289 3.1% 5,500 5,463 37 0.7% Income taxes 2,831 2,541 290 11.4% 1,643 1,841 (198) -10.8% Prot/(Loss) from continuing operations 6,679 6,680 (1) - 3,857 3,622 235 6.5% Prot/(Loss) from discontinued operations - - - - - - - - Prot for the year (owners of the Parent and non- controlling interests) 6,679 6,680 (1) - 3,857 3,622 235 6.5% Aributable to owners of the Parent 5,593 5,197 396 7.6 % 3,189 2,610 579 22.2% Aributable to non-controlling interests 1,086 1,483 (397) -26.8% 668 1,012 (344) -34.0% (1) The ordinary income statement does not include non-recurring items. The summary of results presents a reconciliation of repoed gures with ordinary gures for the following aggregates: gross operating prot, operating prot, and prot for the year (aributable to owners of the Parent). (2) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects of the dierent classication resulting from the fair value measurement of outstanding contracts at the end of the period for purchase and sale of commodities with physical selement. This change in classication had no impact on operating prot. For more information, please see note 7 to the consolidated nancial statements. (3) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more informa- tion, please see note 7 to the consolidated nancial statements. €17,567 million GROSS OPERATING PROFIT €16,903 million in 2020 €7,680 million OPERATING PROFIT -9.2% on 2020 €3,189 million GROUP PROFIT +22.2% on 2020 €19,210 million ORDINARY GROSS OPERATING PROFIT of which 68.7% eligible and aligned with European taxonomy €12,235 million ORDINARY OPERATING PROFIT of which 28.4% from Enel Green Power €5,593 million GROUP ORDINARY PROFIT +7.6% on 2020 141Peormance of the Group 141 Revenue Millions of euro 2021 2020 Change Sale of electricity 46,963 34,745 12,218 35.2% Transpo of electricity 10,732 10,710 22 0.2% Fees from network operators 800 932 (132) -14.2% Transfers from institutional market operators 833 1,395 (562) -40.3% Sale of gas 4,823 2,718 2,105 7 7.4 % Transpo of gas 599 611 (12) -2.0% Sale of fuels 1,791 602 1,189 - Fees for connection to electricity and gas networks 787 759 28 3.7% Revenue from construction contracts (1) 1,268 819 449 54.8% Sale of commodities with physical selement and fair value gain/(loss) on contracts seled in the period (2) 13,421 8,669 4,752 54.8% Other income 5,989 4,044 1,945 48.1% Total (1) (2) 88,006 66,004 22,002 33.3% (1) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more informa- tion, please see note 7 to the consolidated nancial statements. (2) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. The change in classication had no impact on operating prot. For more details, please see note 7 to the consolidated nancial statements. In 2021, revenue increased by €22,002 million due to an increase in the sale of electricity in an environment of ris- ing average prices, paicularly in End-user Markets and in renewables generation, paicularly in Brazil and Italy. These eects were amplied by the increase in sales in 2021 at- tributable to commodity sales contracts with physical set- tlement, to thermal generation as a result of greater quan- tities generated at rising prices, paicularly in Italy, Spain and Latin America, and to the increase in revenue recog- nized by the distribution companies in Brazil. Also of note was the gain – recognized in “other income“ – realized on the sale of Open Fiber for a total of €1,763 million. Finally, with regard to revenue, we repo the results of the alignment of this indicator with the European taxonomy by reason of their substantial contribution to climate change mitigation, in compliance with the principle of not doing harm to other environmental objectives (DNSH) and the minimum social safeguards, as discussed in the sections “European Union taxonomy“ and “Statement on the align- ment of Enel’s business with the European taxonomy“. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 142 Integrated Annual Repo 2021142 Turnover (revenue) under the European taxonomy 32.6% 31.0% 36.4% 39.9% (1) 31.0% 29.1% Turnover 2021 €88.0 billion €88.0 billion Considering all retail electricity sales as “non-eligible” (1) Excluding the capital gain on the sale of Open Fiber from turnover, eligible-aligned turnover is equal to 40.8% of total. Eligible-aligned Eligible-not aligned Non-eligible In 2021, 39.9% of turnover (revenue) was generated by business activities aligned with the EU taxonomy, com- pared with 46.2% in 2020. Considering all retail electricity sales as “non-eligible“, 32.6% of revenue was aligned. Although revenue from taxonomy eligible-aligned activ- ities increased in 2021 compared with 2020 (by €4,654 million), thanks in paicular to greater energy generation from renewable sources and an increase in revenue from the transmission, distribution and sale of electricity with Ceicates of Origin, the increase in revenue from not eli- gible activities, essentially due to greater trading activities, thermal generation and sales of gas in the retail market, caused the percentage weight of revenue from taxonomy eligible-aligned activities to decrease in 2021. Costs Millions of euro 2021 2020 Change Electricity purchases (1) 28,359 16,111 12,248 76.0% Consumption of fuel for electricity generation 4,486 2,634 1,852 70.3% Fuel for trading and gas for sale to end users (1) 16,414 7,506 8,908 - Materials (1) 3,530 2,465 1,065 43.2% Personnel expenses 5,281 4,793 488 10.2% Services, leases and rentals 15,913 15,676 237 1.5% Other operating expenses 2,095 2,202 (107) -4.9% Capitalized costs (3,117) (2,385) (732) -30.7% Total (1) 72,961 49,002 23,959 48.9% (1) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. The change in classication had no impact on operating prot. For more details, please see note 7 to the consolidated nancial statements. Costs increased primarily as a result of increased provisioning of commodities, paicularly in relation to an increase in the average price of fuels generally (and gas in paicular) and of electricity. For fuher details on operating costs, see the notes to the consolidated nancial statements. In addition, with regard to ordinary operating expenses, we re- po the results of the alignment of this indicator with the Eu- ropean taxonomy by reason of their substantial contribution to climate change mitigation, in compliance with the principle of not doing harm to other environmental objectives (DNSH) and the minimum social safeguards, as discussed in the sec- tions “European Union taxonomy“ and “Statement on the alignment of Enel’s business with the European taxonomy“. 143Peormance of the Group 143 Ordinary operating expenses (opex) under the European taxonomy Opex (ordinary) 2021 31.1% 31.1% 4.3% 4.7% 64.6% 64.2% €1.4 billion (1) €1.4 billion (1) Considering all retail electricity sales as “non-eligible” (1) Only expenses required by the taxonomy. Eligible-aligned Eligible-not aligned Non-eligible In 2021, 64.6% of ordinary operating expenses (opex) were generated by business activities aligned with the EU tax- onomy, compared with 65.6% in 2020\. Considering all re- tail electricity sales as “non-eligible“, 64.2% of operating expenses were aligned. The percentage of ordinary operating expenses of taxono- my eligible-aligned activities decreased in 2021 compared with the previous year, mainly reecting a slight decrease in transmission and distribution costs (taxonomy eligi- ble-aligned) and an increase in thermal generation costs. Net results from commodity contracts Net results from commodity contracts in 2021 improved by €2,621 million compared with the previous year, due mainly to uctuations in market prices. Ordinary gross operating prot The table below presents gross operating prot/(loss) by Business Line. Millions of euro 2021 2020 Change Thermal Generation and Trading 1,702 2,230 (528) -23.7% Enel Green Power 4,815 4,721 94 2.0% Infrastructure and Networks (1) 7,663 7,801 (138) -1.8% End-user Markets 3,086 3,197 (111) -3.5% Enel X 298 161 137 85.1% Services 79 94 (15) -16.0% Holding and other 1,567 (177) 1 ,744 - Total 19,210 18,027 1,183 6.6% (1) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more informa- tion, please see note 7 to the consolidated nancial statements. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 144 Integrated Annual Repo 2021144 The increase in ordinary gross operating prot is mainly aributable to the development of new commercial ini- tiatives by Enel X, paicularly in Italy, and the sta-up of new renewable energy plants, especially in Brazil, as well as the gain on the sale of Open Fiber within the scope of the Stewardship business model. These eects were only paially oset by a decrease in margins, primarily in Italy, on trading and on End-user Mar- kets for the release of a provision (in the amount of €75 million) in 2020 related to a dispute with a trader, as well as the recognition of a ne of €27 million assessed by Italy’s Privacy Authority in 2021. Gross operating prot reects the unfavorable trend in exchange rates, paicularly in Lat- in America, in the amount of €314 million. Finally, the following additional eects that essentially o- set each other should also be noted: • the release in Spain, in 2020, of the electricity discount provision net of allocations for early-retirement incen- tives for a total of €377 million; • greater provisions in 2020 for early-retirement incen- tives in Italy in application of Aicle 4 of the Fornero Law in the amount of €126 million; • the reversal in 2021 of provisions following the closure of a dispute concerning hydroelectric fees in Spain in the amount of €300 million; • gains recognized in 2021 resulting from the reimburse- ment related to the CO 2 allowances granted free of charge in Spain in the amount of €186 million; • a decrease in other income connected with the electri- cal business (€288 million), mainly related to the reim- bursement of system charges and network fees (Res- olutions nos. 50/2018 and 461/2020 of the Regulatory Authority for Energy, Networks and the Environment - ARERA) within the scope of distribution operations in Italy. In addition, with regard to ordinary gross operating prot (ordinary EBITDA), we repo the results of the alignment of this indicator with the European taxonomy by reason of their substantial contribution to climate change mitiga- tion, in compliance with the principle of not doing harm to other environmental objectives (DNSH) and the minimum social safeguards, as discussed in the sections “Europe- an Union taxonomy“ and “Statement on the alignment of Enel’s business with the European taxonomy“. Ordinary gross operating prot (ordinary EBITDA) under the European taxonomy (1) Excluding the capital gain on the sale of Open Fiber from ordinary EBITDA, eligible-aligned ordinary EBITDA is equal to 75.6% of total. Eligible-aligned Eligible-not aligned Non-eligible In 2021, 68.7% of ordinary gross operating prot was gen- erated by business activities aligned with the EU taxonomy, compared with 73.4% in 2020. Considering all retail electricity sales as “non-eligible“, 65.8% of ordinary gross operating prot was aligned in 2021. The percentage of the ordinary gross operating prot of taxonomy eligible-aligned activities decreased in 2021 com- pared with 2020, mainly reecting the changes discussed in “Turnover (revenue) under the European taxonomy“. 65.7 % 20.8% 13.5% 68.7% (1) 10.5% 20.8% €19.2 billion €19.2 billion EBITDA (ordinary) 2021 Considering all retail electricity sales as “non-eligible” 145Peormance of the Group 145 Gross operating prot Millions of euro 2021 Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Holding and other Total Ordinary gross operating prot/(loss) 1,702 4,815 7,6 63 3,086 298 79 1,567 19,210 Energy-transition and digitalization costs (795) (47) (423) (94) (15) (160) (56) (1,590) COVID-19 costs (8) (7) (30) (2) - (5) (1) (53) Gross operating prot/(loss) 899 4,761 7, 210 2,990 283 (86) 1,510 17,5 67 Millions of euro 2020 Thermal Generation and Trading Enel Green Power Infrastructure and Networks (1) End-user Markets Enel X Services Holding and other Total (1) Ordinary gross operating prot/(loss) 2,230 4,721 7, 8 0 1 3,197 161 94 (177) 18,027 Energy-transition and digitalization costs (517) (64) (231) (65) (7) (95) (12) (991) COVID-19 costs (13) (10) (50) (11) (2) (46) (1) (133) Gross operating prot/(loss) 1,700 4,647 7,52 0 3,121 152 (47) (190) 16,903 (1) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more informa- tion, please see note 7 to the consolidated nancial statements. The Group has continued the energy-transition and digi- talization process with additional provisions for personnel expenses, costs for the restructuring and conversion of ceain plants in Italy, and write-downs of fuel and replace- ment-pa inventories associated with the coal plants, which are not included in ordinary gross operating prot. Ordinary operating prot Millions of euro 2021 2020 Change Thermal Generation and Trading 729 1,456 (727) -49.9% Enel Green Power 3,480 3,460 20 0.6% Infrastructure and Networks (1) 4,813 4,846 (33) -0.7% End-user Markets 1,753 1,906 (153) -8.0% Enel X 44 (7) 51 - Services (113) (85) (28) -32.9% Holdings and other 1,529 (205) 1,734 - Total (1) 12,235 11,371 864 7.6 % (1) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more informa- tion, please see note 7 to the consolidated nancial statements. Ordinary operating prot for 2021 increased by €864 mil- lion as a result of the factors described above for ordinary gross operating prot and, above all, the increase in de- preciation and amoization recognized in 2021 within the scope of distribution in Italy and Spain due to the technical obsolescence of a number of digital meters, which result- ed in a reduction in their useful life, as well as to new plants that have begun operating in the last two years. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 146 Integrated Annual Repo 2021146 Operating prot Millions of euro 2021 Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Holding and other Total Ordinary operating prot/(loss) 729 3,480 4,813 1,753 44 (113) 1,529 12,235 Energy-transition and digitalization costs and impairment losses (1,819) (47) (423) (94) (15) (160) (56) (2,614) Write-downs of generation plants in Spain \- Non-Peninsular Territories, Mexico, and Australia (1,488) (185) - - - - - (1,673) Other impairment losses - (159) (12) - 1 (45) - (215) COVID-19 costs (8) (7) (30) (2) - (5) (1) (53) Operating prot/(loss) (2,586) 3,082 4,348 1,657 30 (323) 1,472 7,680 Millions of euro 2020 Thermal Generation and Trading Enel Green Power Infrastructure and Networks (1) End-user Markets Enel X Services Holding and other Total (1) Ordinary operating prot/(loss) 1,456 3,460 4,846 1,906 (7) (85) (205) 11,371 Energy-transition and digitalization costs and impairment losses (1,422) (50) (231) (65) (7) (95) (12) (1,882) Write-down of the Mexico, Australia and Argentina CGUs - (534) (216) - - - - (750) Other impairment losses (6) (132) - (13) - - - (151) COVID-19 costs (13) (10) (50) (11) (2) (46) (1) (133) Operating prot/(loss) 15 2,734 4,349 1,817 (16) (226) (218) 8,455 (1) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more informa- tion, please see note 7 to the consolidated nancial statements. In addition to the factors described above in relation to gross operating prot, the most signicant non-recurring items include the write-down of coal-red plants, paicu- larly in Italy, within the scope of the broader energy tran- sition, which is a strategic pillar for the Group, and the im- pairment losses recognized on the assets related to the CGUs of Spain (Non-Peninsular Territories) (€1,488 million), Mexico (€155 million), and Australia (€30 million). Other impairment losses mainly involve the assets asso- ciated with the PH Chucas plant in Costa Rica to reect the deterioration of future earnings at this plant and the impairment loss of €45 million for the head oce following the paial demolition of the propey to be restructured. 147Peormance of the Group 147 Group ordinary prot Group ordinary prot in 2021 came to €5,593 million, as compared with the €5,197 million for the same period of the previous year. This increase is due to the factors described above in re- lation to ordinary operating prot, paially oset by an in- crease in taxes. The eective tax rate increased in 2021 as a result of: • tax reforms in Argentina and Colombia; • a tax inspection at Enel Iberia and related adjustment to the tax credit; • the tax benet recognized in Italy in 2020 in relation to the patent box mechanism. These eects were paially oset by application of the paicipation exemption (PEX) on the gain realized on the sale of the investment in Open Fiber. Group prot Group prot in 2021 came to €3,189 million (€2,610 million in 2020), an increase of €579 million compared with 2020\. The table below provides a reconciliation of Group prot with Group ordinary prot, indicating the non-recurring items and their respective impact on peormance, net of the associated tax eects and non-controlling interests. Millions of euro 2021 2020 Group ordinary prot 5,593 5,197 Energy-transition and digitalization costs and impairment losses (1,839) (1,020) Write-downs of generation plant assets (1,027) (637) Other impairment losses (42) (11) COVID-19 costs (36) (86) Write-down of ceain assets related to the sale of the investment in Slovenské elektrárne 540 (833) Group prot 3,189 2,610 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 148 Integrated Annual Repo 2021148 Statement on the alignment of Enel’s business with the European taxonomy Financial metrics calculation process As described in the section “European Union taxono- my“, Enel peormed a specic implementation process to classify all its economic activities along its value chain in accordance with the following three categories: eligi- ble-aligned, eligible-not aligned and not eligible. The calculation of the nancial metrics associated with each economic activity was peormed using a specic process during which the following criteria were imple- mented and the following considerations were made: • the three nancial metrics required under the Europe- an taxonomy regulation – turnover (revenue), capital expenditure (capex) and operating expenditure (opex or ordinary operating expenses) – were calculated in accordance with the eligibility analysis described in the section “European Union taxonomy“; • although not expressly requested, Enel also peormed an assessment for ordinary gross operating prot, be- lieving that this metric best represents the actual nan- cial peormance of integrated utilities such as Enel; • the nancial information was collected from the ac- counting system used by the Enel Group or from the management systems used by the corporate Business Lines. However, some exceptions were also made to provide a more detailed representation of the gures or to exclude ceain specic activities from the over- all eligibility-alignment calculation (such as non-aligned hydroelectric generation or infrastructure considered eligible-not aligned among eligible-aligned distribution systems). For example, the following proxies were used: – hydroelectric: eligible-not aligned hydroelectric plants were excluded considering their output mul- tiplied by average unit revenue for 2020 and 2021. This approach was also extended to capital expendi- ture, ordinary operating expenses and ordinary gross operating prot; – distribution: new connections between a substation or network and a generation plant whose green- house gas intensity exceeds the threshold of 100 gCO 2eq /kWh have been excluded considering their power (in MW) multiplied by average revenue (thou- sands of euro/MW) for 2020 and 2021. This approach was only applied to revenue and capital expenditure; • the aggregate nancial data in the repoing refer to “segment“ values and include items concerning third paies and inter-segment transactions; • revenue from electricity sales was calculated consider- ing the quantity of retail power sales by Group compa- nies in Italy and Spain accompanied by Ceicates of Origin (based on data from national authorities) and ap- plying the average unit revenue. This revenue is consid- ered eligible-aligned since it regards electricity gener- ated using technologies that comply with the technical screening criteria of the European taxonomy. This ap- proach was also implemented for capital expenditure, ordinary operating expenses and ordinary gross oper- ating prot. To prevent double counting, eligible reve- nue by sector is included net of inter-segment transac- tions (Enel Green Power, Distribution and Retail); • the 2020 data were recalculated on the basis of the new eligibility analysis peormed in 2021 after the publica- tion of the 2020 Sustainability Repo and the publica- tion of the Climate Delegated Act in the Ocial Journal of the European Union. The main dierences in each business segment are as follows: – electricity generation: 100% of geothermal installed capacity is now considered eligible-aligned com- pared with 10% in the previous analysis, while an additional 0.5% of hydroelectric installed capacity is now considered eligible (rising from 99% to 99.5%); – electricity transmission and distribution: DSOs in Chile, Colombia and Peru are now considered eligible and new infrastructure installed in 2020 to connect power plants with a carbon intensity threshold above 100 gCO2 eq /kWh have been excluded from the - nancial data of all eligible-aligned DSOs; – Enel X: e-Home and distributed generation solutions are now considered eligible-aligned (they were pre- viously considered not eligible); – sales: the retail sale of electricity in Italy and Spain accompanied by Ceicates of Origin is now con- sidered eligible-aligned (it was previously considered not eligible); • total revenue, capital expenditure and ordinary gross operating prot of each specic activity correspond to Group totals, while the total ordinary operating expens- es of each specic activity correspond only to the total ordinary costs considered in the types of operating ex- penses envisaged under the European taxonomy; • the share of the KPIs relating to each individual eco- nomic activity is calculated on the basis of the total rev- enue, capital expenditure and ordinary gross operating prot of the Group and the total ordinary costs consid- ered in the types of operating expenses envisaged by the European taxonomy. The share of revenue, capital expenditure, ordinary operating expenses and ordinary gross operating prot of each individual economic ac- 149Peormance of the Group 149 tivity contributes to the climate change mitigation goal. This is the only European taxonomy objective repoed in the table, as the alignment analysis was peormed only for this objective as it is more relevant than the cli- mate change adaptation objective and the criteria for the other environmental objectives are not yet available. The 2021-2023 Strategic Plan presented on the occasion of the 2020 Capital Markets Day held in November 2020 declared that between 80% and 90% of capital expenditure was aligned with the European taxonomy for the three- year period, reecting the regulatory unceainty prevailing when it was announced (the Climate Delegated Act had not yet been approved). However, 85.6% of the capital expendi- ture established for 2021 in the 2021-2023 Strategic Plan is now considered to be aligned with the European taxonomy according to the updated analysis conducted in 2021. The same main changes are considered for the restated 2020 data. In addition, the new 2022-2024 Strategic Plan pre- sented on the occasion of the 2021 Capital Markets Day states that over 85% of capital expenditure will be allocated to aligned activities in the 2022-2024 period. Statement on the alignment of Enel’s business with the European taxonomy In 2021, the level of alignment of the Group’s economic activities with the European taxonomy due to their sub- stantial contribution to the climate change mitigation objective, in compliance with the principle of not doing harm to other environmental objectives (DNSH) and the minimum social safeguards is indicated in the following tables and in the sections “Revenue“, “Costs“, “Ordinary gross operating prot/(loss)“ and “Capital expenditure“. Finally, EU taxonomy repoing pursuant to the European taxonomy regulation and the delegated act is provided in full in the 2021 Sustainability Repo – Non-Financial Statement pursuant to Regulation (EU) 2020/852. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 150 Integrated Annual Repo 2021150 Turnover (revenue) under the European taxonomy DNSH Criteria (“Do No Significant Harm“) (4) Category (6) Economic activities Taxo- nomy Code Absolute Turnover “revenue“ (1) 2021 Propoion of Turnover “revenue“ (2) 2021 Absolute Turnover “revenue“ (1) Propoion of Turnover “revenue“ (2) 2020 Substantial contribution to climate change mitigation (3) Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards (5) Enabling activity Transitional activity millions of euro % millions of euro % % Y/N Y/N Y/N Y/N Y/N Y/ N Y/N E T A.1 Environmentally sustainable activities (taxonomy-aligned) Electricity generation from wind power 4.3 2,392 2.7 2,195 3.3 100.0 Y Y Y Y Electricity generation using solar photovoltaic technology 4.1 761 0.9 477 0.7 100.0 Y Y Y Y Electricity generation from hydropower 4.5 5,976 6.8 4,543 6.9 100.0 Y Y Y Y Electricity generation from geothermal energy 4.6 380 0.4 484 0.8 100.0 Y Y Y Y Y Storage of electricity 4.10 - - - - 100.0 Y Y Y Y Y Enel Green Power and Retail Intercompany (795) (0.9) (760) (1.2) Y Y Y Y Transmission and distribution of electricity 4.9 19,907 22.6 18,761 28.4 100.0 Y E e-distribuzione and Retail Intercompany (770) (0.9) (786) (1.2) Y Y Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment (Enel X - Sma Lighting) 7.3 (d) 239 0.3 243 0.4 100.0 Y Y Y Urban and suburban transpo, road passenger transpo (Enel X - e-Bus) 6.3 (a) 62 0.1 5 - 100.0 Y Y Y Y Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment (Enel X - Energy Eciency) 7.3 (a-e) 9 - 1 - 100.0 Y Y Y 7.3 Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment 7.5 Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy peormance of buildings 7.6 Installation, maintenance and repair of renewable energy technologies (Enel X - Home/Vivi Meglio Unifamiliare) 7.3 (a-e) 7.5 (a) 7.6 (a) 334 0.4 223 0.4 100.0 Y Y Y A1. TAXONOMY ELIGIBLE-ALIGNED ACTIVITIES 151Peormance of the Group 151 DNSH Criteria (“Do No Significant Harm“) (4) Category (6) Economic activities Taxo- nomy Code Absolute Turnover “revenue“ (1) 2021 Propoion of Turnover “revenue“ (2) 2021 Absolute Turnover “revenue“ (1) Propoion of Turnover “revenue“ (2) 2020 Substantial contribution to climate change mitigation (3) Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards (5) Enabling activity Transitional activity millions of euro % millions of euro % % Y/N Y/N Y/N Y/N Y/N Y/ N Y/N E T Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment (Enel X - Condominium) 7.3 (a-e) 9 - 1 - 100.0 Y Y Y Professional services related to energy peormance of buildings (Enel X - Customer Insight) 9.3 88 0.1 98 0.1 100.0 Y Y 7.3 Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment 7.6 Installation, maintenance and repair of renewable energy technologies (Enel X - Distributed Energy) 7.3 (d,e) 7.6 (a) 55 - 44 0.1 100.0 Y Y Y Installation, maintenance and repair of renewable energy technologies (Enel X - Baery Energy Storage) 7.6 (f) 24 - 16 - 100.0 Y Y 6.13 Infrastructure for personal mobility, cycle logistics 7.4 Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces aached to buildings) (Enel X - Mobility) 6.13 7.4 63 0.1 32 - 100.0 Y Y Y Y Y Y Market (power sales to end customer with Ceicates of Origin) 6,416 7.3 4,919 7.5 Turnover of environmentally sustainable activities (taxonomy-aligned) (A.1) 35,150 39.9 30,496 46.2 100.0 A1. TAXONOMY ELIGIBLE-ALIGNED ACTIVITIES 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 152 Integrated Annual Repo 2021152 DNSH Criteria (“Do No Significant Harm“) (4) Category (6) Economic activities Taxo- nomy Code Absolute Turnover “revenue“ (1) 2021 Propoion of Turnover “revenue“ (2) 2021 Absolute Turnover “revenue“ (1) Propoion of Turnover “revenue“ (2) 2020 Substantial contribution to climate change mitigation (3) Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards (5) Enabling activity Transitional activity millions of euro % millions of euro % % Y/N Y/N Y/N Y/N Y/N Y/ N Y/N E T A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities) Electricity generation from hydropower 4.5 28 - 18 - Transmission and distribution of electricity (Argentina and new connections between a substation and power plant >100 gCO 2eq /kWh) 4.9 689 0.8 648 1.0 Market (power sales to end customer without Ceicates of Origin) 24,890 28.3 19,916 30.2 Turnover of taxonomy- eligible but not evironmentally sustainable activities (not taxonomy- aligned activities) (A.2) 25,607 29.1 20,582 31.2 Total (A.1 + A.2) 60,757 69.0 51,078 7 7.4 B. Taxonomy-not-eligible activities Electricity generation from coal and liquid fossil fuels 1,904 2.2 1,639 2.5 Electricity generation from gas 8,064 9.1 4,783 7. 2 Electricity generation from nuclear energy 1,388 1.6 1,342 2.0 Enel X (only activities not eligible) 798 0.9 585 0.9 Trading activities (energy sales - wholesale) 21,799 24.8 13,973 21.2 Market (gas sales to end customer) 6,276 7. 1 3,821 5.8 Services, Holding and Other 3,930 4.5 2,025 3.1 Elisions and adjustments (16,910) (19.2) (13,242) (20.1) Turnover of taxonomy- non-eligible activities (B) 27, 249 31.0 14,926 22.6 Total (A + B) 88,006 100.0 66,004 100.0 (1) Absolute Turnover “revenue“: revenues from each single activity. If an activity is present in both A.1 and A.2 or B, the gure refers to the propoion of the activity that corresponds to A.1, A.2 or B. (2) Propoion of Turnover “revenue“: percentage impact of revenues from each individual business activity on the Group’s total revenues. (3) Substantial contribution to climate change mitigation: refers to the share of the revenues of each individual economic activity (indicated in the column Turnover “revenue“) that contributes to climate change mitigation. This is the only objective of the EU taxonomy regulation alignment analysis shown in the table, as it is considered more relevant compared to the climate change adaptation objective, while the criteria for the other environmental objectives are not yet available. (4) DNSH: environmental objectives meeting the DNSH criteria are specied for each activity. (5) Minimum safeguards: indicates whether the minimum safeguards are respected for each individual activity. (6) Category: species whether the activity makes a direct contribution to climate mitigation or is an enabling or transitional activity. A2. TAXONOMY ELIGIBLE-NOT ALIGNED ACTIVITIES B. TAXONOMY NOT ELIGIBLE ACTIVITIES 153Peormance of the Group 153 Capital expenditure (capex) under the European taxonomy DNSH Criteria (“Do No Significant Harm“) (4) Category (6) Economic activities Taxo- nomy Code Absolute capex “capital expendi- ture“ (1) 2021 Propoion of capex “capital expenditure“ (2) 2021 Absolute capex “capital expendi- ture“ (1) 2020 Propoion of capex “capital expenditure“ (2) 2020 Substantial contribution to climate change mitigation (3) Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards (5) Enabling activity Transitional activity millions of euro % millions of euro % % Y/N Y/N Y/N Y/N Y/N Y/ N Y/N E T A.1 Environmentally sustainable activities (taxonomy-aligned) Electricity generation from wind power 4.3 2,971 22.6 2,601 25.5 100.0 Y Y Y Y Electricity generation using solar photovoltaic technology 4.1 1,991 15.2 1,430 14.0 100.0 Y Y Y Y Electricity generation from hydropower 4.5 416 3.2 333 3.3 100.0 Y Y Y Y Electricity generation from geothermal energy 4.6 122 0.9 146 1.4 100.0 Y Y Y Y Y Storage of electricity 4.10 153 1.2 23 0.2 100.0 Y Y Y Y Y Transmission and distribution of electricity 4.9 5,109 39.0 3,836 37.6 100.0 Y Y Y Y Y E Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment (Enel X - Sma Lighting) 7.3 (d) 53 0.4 47 0.5 100.0 Y Y Y Urban and suburban transpo, road passenger transpo (Enel X - e-Bus) 6.3 (a) (1) - 32 0.3 100.0 Y Y Y Y Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment (Enel X - Energy Eciency) 7.3 (a-e) 2 - 1 - 100.0 Y Y Y 7.3 Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment 7.5 Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy peormance of buildings 7.6 Installation, maintenance and repair of renewable energy technologies (Enel X - Home/Vivi Meglio Unifamiliare) 7.3 (a-e) 7.5 (a) 7.6 (a) 54 0.4 35 0.4 100.0 Y Y Y A1. TAXONOMY ELIGIBLE-ALIGNED ACTIVITIES 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 154 Integrated Annual Repo 2021154 DNSH Criteria (“Do No Significant Harm“) (4) Category (6) Economic activities Taxo- nomy Code Absolute capex “capital expendi- ture“ (1) 2021 Propoion of capex “capital expenditure“ (2) 2021 Absolute capex “capital expendi- ture“ (1) 2020 Propoion of capex “capital expenditure“ (2) 2020 Substantial contribution to climate change mitigation (3) Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards (5) Enabling activity Transitional activity millions of euro % millions of euro % % Y/N Y/N Y/N Y/N Y/N Y/ N Y/N E T Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment (Enel X - Condominium) 7.3 (a-e) 3 - \- - 100.0 Y Y Y Professional services related to energy peormance of buildings (Enel X - Customer Insight) 9.3 3 - 1 - 100.0 Y Y 7.3 Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment 7.6 Installation, maintenance and repair of renewable energy technologies (Enel X - Distributed Energy) 7.3 (d,e) 7.6 (a) 8 0.1 7 0.1 100.0 Y Y Y Installation, maintenance and repair of renewable energy technologies (Enel X - Baery Energy Storage) 7.6 (f) 34 0.3 10 0.1 100.0 Y Y 6.13 Infrastructure for personal mobility, cycle logistics 7.4 Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces aached to buildings) (Enel X - Mobility) 6.13 7.4 51 0.4 45 0.4 100.0 Y Y Y Y Y Y Market (power sales to end customer with Ceicates of Origin) 121 0.9 88 0.9 Capex of environmentally sustainable activities (taxonomy-aligned) (A.1) 11,090 84.6 8,635 84.7 100.0 A1. TAXONOMY ELIGIBLE-ALIGNED ACTIVITIES 155Peormance of the Group 155 DNSH Criteria (“Do No Significant Harm“) (4) Category (6) Economic activities Taxo- nomy Code Absolute capex “capital expendi- ture“ (1) 2021 Propoion of capex “capital expenditure“ (2) 2021 Absolute capex “capital expendi- ture“ (1) 2020 Propoion of capex “capital expenditure“ (2) 2020 Substantial contribution to climate change mitigation (3) Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards (5) Enabling activity Transitional activity millions of euro % millions of euro % % Y/N Y/N Y/N Y/N Y/N Y/ N Y/N E T A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities) Electricity generation from hydropower 4.5 2 - 2 - Transmission and distribution of electricity (Argentina and new connections between a substation and power plant >100 gCO 2eq /kWh) 4.9 174 1.3 100 1.0 Market (power sales to end customer without Ceicates of Origin) 425 3.3 305 3.0 Capex of taxonomy- eligible but not evironmentally sustainable activities (not taxonomy-aligned activities) (A.2) 601 4.6 407 4.0 Total (A.1 + A.2) 11,691 89.2 9,042 88.7 B. Taxonomy-non-eligible activities Electricity generation from coal and liquid fossil fuels 49 0.4 67 0.7 Electricity generation from gas 499 3.8 383 3.8 Electricity generation from nuclear energy 165 1.3 146 1.4 Enel X (only activities not eligible) 160 1.2 125 1.2 Trading activities (energy sales - wholesale) 65 0.5 54 0.5 Market (gas sales to end customer) 97 0.7 67 0.6 Services, Holding and Other 207 1.6 174 1.7 Adjustments 175 1.3 139 1.4 Capex of taxonomy- non-eligible activities (B) 1,417 10.8 1,155 11.3 Total (A + B) 13,108 100.0 10,197 100.0 (1) Absolute capex “capital expenditure“: investments for each individual activity. If an activity is present in both A.1 and A.2 or B, the gure refers to the pro- poion of the activity that corresponds to A.1, A.2 or B. (2) Propoion of capex “capital expenditure“: percentage impact of investments of each individual business activity on the Group’s total investments. (3) Substantial contribution to climate change mitigation: refers to the share of capex “capital expenditure“ of each individual economic activity (indicated in the column capex “capital expenditure“) that contributes to climate change mitigation. This is the only objective of the EU taxonomy regulation alignment analysis shown in the table, as it is considered more relevant compared to the climate change adaptation objective, while the criteria for the other environ- mental objectives are not yet available. (4) DNSH: environmental objectives meeting the DNSH criteria are specied for each activity. (5) Minimum safeguards: indicates whether the minimum safeguards are respected for each individual activity. (6) Category: species whether the activity makes a direct contribution to climate mitigation or is an enabling or transitional activity. B. TAXONOMY NOT ELIGIBLE ACTIVITIES A2. TAXONOMY ELIGIBLE-NOT ALIGNED ACTIVITIES 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 156 Integrated Annual Repo 2021156 Operating expenses (opex) under the European taxonomy DNSH Criteria (“Do No Significant Harm“) (4) Category (6) Economic activities Taxo- nomy Code Absolute opex (1) 2021 Propoion of opex (2) 2021 Absolute opex (1) 2020 Propoion of opex (2) 2020 Substantial contribution to climate change mitigation (3) Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards (5) Enabling activity Transitional activity millions of euro % millions of euro % % Y/N Y/N Y/ N Y/N Y/N Y/ N Y/N E T A.1 Environmentally sustainable activities (taxonomy-aligned) Electricity generation from wind power 4.3 101 7.3 86 5.9 100.0 Y Y Y Y Electricity generation using solar photovoltaic technology 4.1 44 3.2 27 1.9 100.0 Y Y Y Y Electricity generation from hydropower 4.5 188 13.5 191 13.1 100.0 Y Y Y Y Electricity generation from geothermal energy 4.6 6 0.4 6 0.4 100.0 Y Y Y Y Y Storage of electricity 4.10 - - \- - 100.0 Y Y Y Y Y Transmission and distribution of electricity 4.9 546 39.3 636 43.5 E Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment (Enel X - Sma Lighting) 7.3 (d) 2 0.1 2 0.1 100.0 Y Y Y Y Y Urban and suburban transpo, road passenger transpo (Enel X - e-Bus) 6.3 (a) - - \- \- Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment (Enel X - Energy Eciency) 7.3 (a-e) - - \- \- 100.0 Y Y Y 7.3 Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment 7.5 Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy peormance of buildings 7.6 Installation, maintenance and repair of renewable energy technologies (Enel X - Home/Vivi Meglio Unifamiliare) 7.3 (a-e) 7.5 (a) 7.6 (a) 2 0.1 1 0.1 100.0 Y Y Y Y A1. TAXONOMY ELIGIBLE-ALIGNED ACTIVITIES 157Peormance of the Group 157 DNSH Criteria (“Do No Significant Harm“) (4) Category (6) Economic activities Taxo- nomy Code Absolute opex (1) 2021 Propoion of opex (2) 2021 Absolute opex (1) 2020 Propoion of opex (2) 2020 Substantial contribution to climate change mitigation (3) Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards (5) Enabling activity Transitional activity millions of euro % millions of euro % % Y/N Y/N Y/ N Y/N Y/N Y/ N Y/N E T Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment (Enel X - Condominium) 7.3 (a-e) - - \- \- 100.0 Y Y Y Professional services related to energy peormance of buildings (Enel X - Customer Insight) 9.3 1 0.1 1 0.1 100.0 Y Y Y 7.3 Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment 7.6 Installation, maintenance and repair of renewable energy technologies (Enel X - Distributed Energy) 7.3 (d,e) 7.6 (a) - - \- \- 100.0 Y Y Y Installation, maintenance and repair of renewable energy technologies (Enel X - Baery Energy Storage) 7.6 (f) 1 0.1 1 0.1 100.0 Y Y 6.13 Infrastructure for personal mobility, cycle logistics 7.4 Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces aached to buildings) (Enel X - Mobility) 6.13 7.4 1 0.1 2 0.1 100.0 Y Y Y Market (power sales to end customer with Ceicates of Origin) 6 0.4 5 0.3 100.0 Y Y Opex of environmentally sustainable activities (taxonomy-aligned) (A.1) 898 64.6 958 65.6 100.0 A1. TAXONOMY ELIGIBLE-ALIGNED ACTIVITIES 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 158 Integrated Annual Repo 2021158 DNSH Criteria (“Do No Significant Harm“) (4) Category (6) Economic activities Taxo- nomy Code Absolute opex (1) 2021 Propoion of opex (2) 2021 Absolute opex (1) 2020 Propoion of opex (2) 2020 Substantial contribution to climate change mitigation (3) Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards (5) Enabling activity Transitional activity millions of euro % millions of euro % % Y/N Y/N Y/ N Y/N Y/N Y/ N Y/N E T A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities) Electricity generation from hydropower 4.5 1 0.1 1 \- Transmission and distribution of electricity (Argentina and new connections between a substation and power plant >100 gCO 2eq /kWh) 4.9 25 1.8 19 1.3 Market (power sales to end customer without Ceicates of Origin) 34 2.4 29 2.0 Opex of taxonomy- eligible but not environmentally sustainable activities (not taxonomy-aligned activities) (A.2) 60 4.3 49 3.3 Total (A.1 + A.2) 958 68.9 1,007 68.9 B. Taxonomy-non-eligible activities Electricity generation from coal and liquid fossil fuels 59 4.2 78 5.3 Electricity generation from gas 228 16.4 233 15.9 Electricity generation from nuclear energy 97 7.0 95 6.5 Enel X (only activities not eligible) 18 1.3 13 0.9 Trading activities (energy sales - wholesale) 8 0.6 9 0.7 Market (gas sales to end customer) 8 0.6 5 0.3 Services, Holding and Other 99 7. 1 101 7.0 Elisions and adjustments (85) (6.1) (80) (5.5) Opex of taxonomy-non- eligible activities (B) 432 31.1 454 31.1 Total (A + B) 1,390 100.0 1,461 100.0 (1) Absolute opex: opex for each individual activity. If an activity is present in both A.1 and A.2 or B, the gure refers to the propoion of the activity that corresponds to A.1, A.2 or B. (2) Propoion of opex: percentage impact of opex of each individual business activity out of the total ordinary operating expenses required by the taxonomy at Group level. (3) Substantial contribution to climate change mitigation: refers to the share of ordinary opex for each individual economic activity (indicated in the column Absolute opex) that contributes to climate change mitigation. This is the only objective of the EU taxonomy regulation alignment analysis shown in the table, as it is considered more relevant compared to the climate change adaptation objective, while the criteria for the other environmental objectives are not yet available. (4) DNSH: environmental objectives meeting the DNSH criteria are specied for each activity. (5) Minimum safeguards: indicates whether the minimum safeguards are respected for each individual activity. (6) Category: species whether the activity makes a direct contribution to climate mitigation or is an enabling or transitional activity. B. TAXONOMY NOT ELIGIBLE ACTIVITIES A2. TAXONOMY ELIGIBLE-NOT ALIGNED ACTIVITIES 159Peormance of the Group 159 Ordinary gross operating prot under the European taxonomy DNSH Criteria (“Do No Significant Harm“) (4) Category (6) Economic activities Taxo- nomy Code Ordinary gross operating prot (EBITDA) (1) 2021 Propoion of ordinary gross operating prot (EBITDA) (2) 2021 Ordinary gross operating prot (EBITDA) (1) 2020 Propoion of ordinary gross operating prot (EBITDA) (2) 2020 Substantial contribution to climate change mitigation (3) Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards (5) Enabling activity Transitional activity millions of euro % millions of euro % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N E T A.1 Environmentally sustainable activities (taxonomy-aligned) Electricity generation from wind power 4.3 1,393 7. 3 1,490 8.3 100.0 Y Y Y Y Electricity generation using solar photovoltaic technology 4.1 384 2.0 340 1.9 100.0 Y Y Y Y Electricity generation from hydropower 4.5 2,771 14.4 2,570 14.2 100.0 Y Y Y Y Electricity generation from geothermal energy 4.6 236 1.2 350 1.9 100.0 Y Y Y Y Y Storage of electricity 4.10 - - \- - 100.0 Y Y Y Y Y Transmission and distribution of electricity 4.9 7,616 39.7 7,748 43.0 100.0 Y Y Y Y Y E Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment (Enel X - Sma Lighting) 7.3 (d) 73 0.4 91 0.5 100.0 Y Y Y Urban and suburban transpo, road passenger transpo (Enel X - e-Bus) 6.3 (a) 14 0.1 2 \- 100.0 Y Y Y Y Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment (Enel X - Energy Eciency) 7.3 (a-e) 2 - \- \- 100.0 Y Y Y 7.3 Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment 7.5 Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy peormance of buildings 7.6 Installation, maintenance and repair of renewable energy technologies (Enel X - Home/Vivi Meglio Unifamiliare) 7.3 (a-e) 7.5 (a) 7.6 (a) 135 0.7 89 0.5 100.0 Y Y Y A1. TAXONOMY ELIGIBLE-ALIGNED ACTIVITIES 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 160 Integrated Annual Repo 2021160 DNSH Criteria (“Do No Significant Harm“) (4) Category (6) Economic activities Taxo- nomy Code Ordinary gross operating prot (EBITDA) (1) 2021 Propoion of ordinary gross operating prot (EBITDA) (2) 2021 Ordinary gross operating prot (EBITDA) (1) 2020 Propoion of ordinary gross operating prot (EBITDA) (2) 2020 Substantial contribution to climate change mitigation (3) Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards (5) Enabling activity Transitional activity millions of euro % millions of euro % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N E T Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment (Enel X - Condominium) 7.3 (a-e) 1 - \- \- 100.0 Y Y Y Professional services related to energy peormance of buildings (Enel X - Customer Insight) 9.3 16 0.1 13 0.1 100.0 Y Y 7.3 Individual renovation measures consisting in installation, maintenance or repair of energy eciency equipment 7.6 Installation, maintenance and repair of renewable energy technologies (Enel X - Distributed Energy) 7.3 (d,e) 7.6 (a) 5 - 3 \- 100.0 Y Y Y Installation, maintenance and repair of renewable energy technologies (Enel X - Baery Energy Storage) 7.6 (f) (3) - 3 \- 100.0 Y Y 6.13 Infrastructure for personal mobility, cycle logistics 7.4 Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces aached to buildings) (Enel X - Mobility) 6.13 7.4 (11) (0.1) (40) (0.2) 100.0 Y Y Y Y Y Y Market (power sales to end customer with Ceicates of Origin) 565 2.9 568 3.2 Ordinary EBITDA of environmentally sustainable activities (taxonomy-aligned) (A.1) 13,197 68.7 13,227 73.4 100.0 A1. TAXONOMY ELIGIBLE-ALIGNED ACTIVITIES 161Peormance of the Group 161 DNSH Criteria (“Do No Significant Harm“) (4) Category (6) Economic activities Taxo- nomy Code Ordinary gross operating prot (EBITDA) (1) 2021 Propoion of ordinary gross operating prot (EBITDA) (2) 2021 Ordinary gross operating prot (EBITDA) (1) 2020 Propoion of ordinary gross operating prot (EBITDA) (2) 2020 Substantial contribution to climate change mitigation (3) Climate change mitigation Climate change adaptation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards (5) Enabling activity Transitional activity millions of euro % millions of euro % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N E T A.2 Taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities) Electricity generation from hydropower 4.5 17 0.1 9 - Transmission and distribution of electricity (Argentina and new connections between a substation and power plant >100 gCO 2eq /kWh) 4.9 4 - 48 0.3 Market (power sales to end customer without Ceicates of Origin) 1,990 10.4 2,065 11.4 Ordinary EBITDA of taxonomy-eligible but not environmentally sustainable activities (not taxonomy-aligned activities) (A.2) 2,011 10.5 2,122 11.7 Total (A.1 + A.2) 15,208 79.2 15,349 85.1 B. Taxonomy-non-eligible activities Electricity generation from coal and liquid fossil fuels 282 1.4 535 3.0 Electricity generation from gas 906 4.7 659 3.7 Electricity generation from nuclear energy 416 2.2 439 2.4 Enel X (only activities not eligible) 68 0.3 1 - Trading activities (energy sales - wholesale) 98 0.5 597 3.3 Market (gas sales to end customer) 422 2.2 447 2.5 Services, Holding and Other 1,645 8.6 (83) (0.5) Adjustments 165 0.9 83 0.5 Ordinary EBITDA of taxonomy-non-eligible activities (B) 4,002 20.8 2,678 14.9 Total (A + B) 19,210 100.0 18,027 100.0 (1) Ordinary gross operating prot (EBITDA): Ordinary gross operating prot on each individual asset. If an activity is present in both A.1 and A.2 or B, the gure refers to the propoion of the activity that corresponds to A.1, A.2 or B. (2) Propoion of ordinary gross operating margin (ordinary EBITDA): percentage impact of EBITDA of each individual business on the Group’s total EBITDA. (3) Substantial contribution to climate change mitigation: refers to the poion of EBITDA of each individual business activity (indicated in the column Ordinary gross operating prot (EBITDA)) that contributes to climate change mitigation. This is the only objective of the EU taxonomy regulation alignment analysis shown in the table, as it is considered more relevant compared to the climate change adaptation objective, while the criteria for the other environmental objectives are not yet available. (4) DNSH: environmental objectives meeting the DNSH criteria are specied for each activity. (5) Minimum safeguards: indicates whether the minimum safeguards are respected for each individual activity. (6) Category: species whether the activity makes a direct contribution to climate mitigation or is an enabling or transitional activity. B. TAXONOMY NOT ELIGIBLE ACTIVITIES A2. TAXONOMY ELIGIBLE-NOT ALIGNED ACTIVITIES 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 162 Integrated Annual Repo 2021162 Value generated and distributed for stakeholders Millions of euro 2021 2020 Economic value generated directly (1) (2) 88,084 66,100 Economic value distributed directly Operating expenses (1) 63,768 42,634 Personnel expenses and benets 4,415 3,956 Payments to providers of capital (shareholders and lenders) 7,4 28 7,082 Payments to government (3) (4) 4,127 4,260 Total economic value distributed (4) 79,738 57, 93 2 Economic value retained (1) (2) (4) 8,346 8,168 (1) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more informa- tion, please see note 7 to the consolidated nancial statements. (2) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. The change in classication had no impact on operating prot. For more details, please see note 7 to the consolidated nancial statements. (3) The amount represents “total tax borne“, which is costs for taxes borne by the Group. For more information, see the 2021 Sustainability Repo and the Consolidated Non-Financial Statement. (4) The gure for 2020 has been calculated more accurately. The economic value generated and distributed direct- ly by Enel, in accordance with the criteria established by GRI 201, provides a good indication of how the Group has created wealth for all stakeholders. The increase in value generated directly and in operating expenses reects the sharp rise in commodity prices, especially gas. Payments to providers of capital increased in reection of costs connected with the early redemption of a number of bond issues. 163Analysis of the Group’s nancial position and structure 163 Analysis of the Group’s nancial position and structure Net capital employed and funding Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Net non-current assets: \- propey, plant and equipment and intangible assets 102,733 96,489 6,244 6.5% \- goodwill 13,821 13,779 42 0.3% \- equity-accounted investments 704 861 (157) -18.2% \- other net non-current assets/(liabilities) (4,496) (6,807) 2,311 34.0% Total net non-current assets 112,762 104,322 8,440 8.1% Net working capital: \- trade receivables 16,076 12,046 4,030 33.5% \- inventories 3,109 2,401 708 29.5% \- net receivables due from institutional market operators (762) (2,755) 1,993 72.3% \- other net current assets/(liabilities) (10,940) (6,977) (3,963) -56.8% \- trade payables (16,959) (12,859) (4,100) -31.9% Total net working capital (9,476) (8,144) (1,332) -16.4% Gross capital employed 103,286 96,178 7, 10 8 7. 4% Provisions: \- employee benets (2,724) (2,964) 240 8.1% \- provisions for risks and charges and net deferred taxes (6,548) (6,050) (498) -8.2% Total provisions (9,272) (9,014) (258) -2.9% Net assets held for sale 280 608 (328) -53.9% Net capital employed 94,294 87,7 7 2 6,522 7.4 % Total equity 42,342 42,357 (15) - Net nancial debt 51,952 45,415 6,537 14.4% Propey, plant and equipment and intangible assets in- creased, essentially reecting capital expenditure during the period (€12,090 million) and changes in the consoli- dation scope (€395 million) related mainly to the acquisi- tion of a controlling interest in Enel Green Power Australia. These factors were paially oset mainly by depreciation, amoization and impairment losses recognized during the year in the amount of €8,695 million. Goodwill increased as a result of adjustments in exchange rates. Other net non-current assets increased in response to the fair value measurement of derivatives and an increase in nancial assets related to service concessions for which IFRIC 12 has been applied. €94,294 million NET CAPITAL EMPLOYED €87,772 million in 2020 €51,952 million NET FINANCIAL DEBT +14.4% on 2020 €13,108 million TOTAL CAPITAL EXPENDITURE of which 84.6% eligible and aligned with European taxonomy 55.0% SUSTAINABLE FINANCING out of €71,969 million in gross borrowing 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 164 Integrated Annual Repo 2021164 Equity-accounted investments decreased due mainly to the write-down of the investment in Slovak Power Holding in response, primarily, to the reduction in the fair value of the cash ow hedge derivatives. Net assets held for sale refer mainly to a number of pro- jects in South Africa for which there is a binding oer for their future sale. The reduction is due to the sale of Open Fiber in 2021 and the sale of Enel Green Power Bulgaria. Net capital employed came to €94,294 million at Decem- ber 31, 2021, and was funded by €42,342 million in equity aributable to owners of the Parent and minority interests and €51,952 million in net nancial debt. With regard to the laer, the debt/equity ratio at December 31, 2021 was 1.23 (compared with 1.07 at December 31, 2020). Net nancial debt The Enel Group’s net nancial debt and changes in the pe- riod are detailed in the table below. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Long-term debt: \- bank borrowings 12,579 8,663 3,916 45.2% \- bonds 39,099 38,357 742 1.9% \- other borrowings (1) 2,942 2,499 443 17.7 % Long-term debt 54,620 49,519 5,101 10.3% Long-term nancial assets and securities (2,692) (2,745) 53 1.9% Net long-term debt 51,928 46,774 5,154 11.0% Sho-term debt Bank borrowings: \- current poion of long-term bank borrowings 989 1,369 (380) -27.8% \- other sho-term bank borrowings 1,329 711 618 86.9% Sho-term bank borrowings 2,318 2,080 238 11.4% Bonds (current poion) 2,700 1,412 1,288 91.2% Other borrowings (current poion) 342 387 (45) -11.6% Commercial paper 10,708 4,854 5,854 - Cash collateral on derivatives and other nancing 918 370 548 - Other sho-term nancial borrowings (2) 363 415 (52) -12.5% Other sho-term debt 15,031 7, 43 8 7,5 93 - Long-term loan assets (sho-term poion) (1,538) (1,428) (110) -7.7 % Loan assets - cash collateral (6,485) (3,223) (3,262) - Other sho-term nancial assets (356) (253) (103) -40.7% Cash and cash equivalents with banks and sho-term securities (8,946) (5,973) (2,973) -49.8% Cash and cash equivalents and sho-term nancial assets (17,325) (10,877) (6,448) -59.3% Net sho-term debt 24 (1,359) 1,383 - NET FINANCIAL DEBT 51,952 45,415 6,537 14.4% Net nancial debt of “Assets held for sale“ 699 646 53 8.2% (1) Includes other non-current nancial borrowings included under “Other non-current nancial liabilities“. (2) Includes current borrowings included under “Other current nancial liabilities“. 165Analysis of the Group’s nancial position and structure 165 Net nancial debt amounted to €51,952 million at De- cember 31, 2021, an increase of €6,537 million from the €45,415 million at December 31, 2020. This was due mainly to: (i) funding needs for investments in the peri- od (€13,108 million, including €111 million reclassied as available for sale), including contract assets; (ii) the payment of dividends totaling €5,041 million, including coupons paid to holders of hybrid bonds in the amount of €71 million; (iii) transactions in non-controlling inter- ests mainly related to the increase in the interest held in Enel Américas following the public tender oer issued on March 15, 2021 (€1,295 million); (iv) adverse exchange rate developments (€1,918 million); (v) an increase in lease lia- bilities (€479 million); (vi) the payments and consolidation of debt connected with business combinations in Aus- tralia, Spain and Italy (a total of €283 million). Cash ows generated by operating activities (€10,069 million), the issue of perpetual hybrid bonds (€2,214 mil- lion net of transaction costs), the conversion of hybrid bonds into perpetual hybrid bonds (€967 million net of transaction costs) and the liquidity generated by the sale of Open Fiber in the amount of €2,423 million paially oset these funding needs. Gross nancial debt at December 31, 2020 came to €71,969 million, up €12,932 million from the previous year. Gross nancial debt Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Gross long-term debt Gross sho-term debt Gross debt Gross long-term debt Gross sho-term debt Gross debt Gross nancial debt 58,651 13,318 71,969 52,687 6,350 59,037 of which: \- sustainable nancing 28,973 10,474 39,447 15,748 3,901 19,649 Sustainable nancing/Total gross debt (%) 55% 33% More specically, gross long-term nancial debt (including the sho-term poion), in the amount of €58,651 million, includes €28,973 million in sustainable nancing and is structured as follows: • bonds in the amount of €41,799 million, of which €18,003 million in sustainable bonds, up €2,030 mil- lion compared with December 31, 2020. The change in bonds is due mainly to the numerous sustainabili- ty-linked issues by Enel Finance International in 2021, which were only paially oset by redemptions of ma- turing bonds, early repurchases of conventional bonds by Enel Finance International, and a consent solicita- tion in the amount of €900 million by Enel SpA on a non-conveible subordinated hybrid bond conveed into perpetual hybrid and, therefore, recognized as an equity instrument and no longer as a debt instrument; • bank borrowings in the amount of €13,568 million, €10,970 million of which related to sustainable nanc- ing. These borrowings increased by €3,536 million com- pared with the previous year due mainly to the use of new nancing and negative currency dierences, which were only paially oset by repayments made during the period. Of note among new bank borrowings: – €1,508 million related to the use of three varia- ble-rate loans tied to sustainable development goals granted to Enel SpA; – €1,400 million related to the use of various loans tied to sustainable development goals granted to Endesa; – €300 million related to the use of two variable-rate loans tied to sustainable development goals granted to e-distribuzione by the European Investment Bank; • other borrowings in the amount of €3,284 million, an increase of €398 million from the previous year. Gross sho-term nancial debt increased by €6,968 mil- lion compared with December 31, 2020, to €13,318 million. It mainly includes commercial paper of €10,708 million, of which €10,343 connected with sustainability goals. Cash and cash equivalents and sho-term nancial assets, in the amount of €20,017 million, increased by €6,395 million compared with the end of 2020 due mainly to the increase in nancial assets for cash collateral in the amount of €3,262 million and in cash and cash equivalents with banks and sho-term securities for a total of €2,973 million. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 166 Integrated Annual Repo 2021166 Sustainable nance: private and public nance to mobilize capital at the service of climate objectives For Enel, “sustainable nance“ means the synergy between private and public nance. In paicular, private nance conveys private capital towards sustainable investments or for the benet of companies whose strategic action is directed at ceain sustainability objectives, reecting the economic and nancial value of sustainability in a lower borrowing costs. Public nance, on the other hand, stim- ulates the creation of sustainable investments through grants and loans at subsidized interest rates. At Enel, sustainable nance plays a crucial role in suppo- ing the Group’s sustainable growth, representing, at the end of 2021, more than half of our gross debt and con- tributing to a progressive reduction in the cost of debt through the recognition of the value of sustainability. It is for this reason that during 2021 Enel extended this sus- tainability-linked approach to all its nancial debt instru- ments, with the publication of the “Sustainability-Linked Financing Framework“, a comprehensive document with which Enel illustrated how sustainability can be integrated into its various types of nancial transaction: credit lines, commercial paper, bond issues, guarantees and deriva- tives on interest rates and exchange rates. Enel was the rst company to structure a framework with these characteristics. The framework establishes a set of KPIs, targets and principles that govern the development of sustainable nance throughout the Group with ambition and transparency, linking our nancial strategy to our sus- tainability objectives. The Group’s nancial instruments and nancial transactions may therefore have an interest rate or other nancial or structural terms linked to the achievement of objectives for the reduction of direct greenhouse gas emissions (SDG 13 “Climate Action“) or growth in installed renewables capacity (SDG 7 “Aordable and Clean Energy“). The Sustainability-Linked Financing Framework was up- dated in January 2022 following the presentation of the new Strategic Plan and in paicular includes bringing for- ward achievement of the ambitious goal of eliminating direct greenhouse gas emissions (Scope 1) from 2050 to 2040. Actual Target 2021 2021 2022 2023 2024 2030 2040 Direct greenhouse gas emissions (Scope 1) - specic 227 gCO 2eq /kWh 148 gCO 2eq /kWh 140 gCO 2eq /kWh 82 gCO 2eq /kWh 0 gCO 2eq /kWh Percentage of installed renewables capacity (1) 57.5 % 55% 60% 65% 66% 80% 100% (1) The calculation of the KPIs does not include 3.9 MW of capacity connected with generation plants acquired by the Group, in accordance with the contrac- tual terms of the individual instruments. Having achieved 57.5% of installed renewables capacity in 2021, Enel has achieved the target set in all the nancial instruments in which the interest rate, or other nancial or structural terms of the transaction, are linked to a per- centage of installed renewables capacity equal to or great- er than 55%. In paicular, this includes the achievement of the targets contained in the rst sustainability-linked bonds issued by Enel Finance International NV (EFI) in 2019 on the US and European markets. Fuhermore, 2021 was an exciting year for the Group and its sustainable nance strategy, with structured transac- tions amounting to the equivalent of more than €30 billion. Staing with the exposures of the various industrial activ- ities, Enel has signed agreements with multiple nancial counterpaies for both derivatives and sustainable guar- antees, both of which are linked to the Group’s ability to achieve its sustainability objectives in subsequent years. Fuhermore, in March 2021, Enel agreed a sustainabil- ity-linked revolving credit facility woh €10 billion, the largest sustainable credit line in the world at the time of signing, linked to SDG 13\. In May 2021, Enel Finance Amer- ica LLC structured a $5 billion commercial paper program, again linked to the same sustainability goal. With regard to bond issues, between June and Septem- ber 2021, sustainability-linked bonds in euros and dollars were issued by EFI in a total amount equivalent to about €10 billion. These issues are linked to the achievement of Enel’s sus- tainability goal for the reduction of direct greenhouse gas emissions (Scope 1), in line with the Group’s Sustainabili- ty-Linked Financing Framework. At the same time, EFI re- purchased conventional bond in circulation, not linked to the pursuit of SDG objectives, in the total amount of some €8 billion, using voluntary purchase oers and the exercise of specic buyback options. This bond repurchase program, together with the new sus- tainability-linked bond issues, made it possible to achieve 167Analysis of the Group’s nancial position and structure 167 a ratio between sustainable funding sources and the Group’s total gross debt of about 55% at the end of 2021, while also enabling a reduction of the cost of the Group’s borrowing and providing an impoant mechanism for pro- tecting against potential increases in interest rates due to the acceleration of the economic recovery or the tighten- ing of monetary policies by central banks in response to the rise in ination. In the area of public nance, the Group suppos the eco- nomic recovery plan and intends to become a strategic paner in the implementation of the Green Deal and the Recovery Plan at both the European and national levels. The goal is to drive a sustainable, rapid and eective recovery through a broad pipeline of shovel-ready projects focused on decarbonization, electricity grids and electrication, aimed at accelerating the green and digital transition of the European economy with a signicant impact in terms of GDP, employment and reduction of CO 2 emissions, in full alignment with the European taxonomy. To this end, the Group has identied potential investments amounting to about €5.4 billion in 2022-2027 that will have a direct impact on the Group and are consistent with the National Recovery Plans in Italy, Spain and Romania. These initiatives focus on green hydrogen, renewables and stor- age, revitalization of the photovoltaic manufacturing in- dustry, sma grids, grid resilience and charging infrastruc- ture for electric mobility. These investments are expected to have a spill-over impact on GDP of around €13.2 billion, creating over 18,000 new jobs. The Group has also developed other projects with an indi- rect impact, aimed at promoting panerships with public and private entities, both with a view to the decarboniza- tion and electrication of energy consumption through the expansion of electric bus eets, the transition to green pos and the promotion of energy eciency in public buildings. Fuhermore, in the context of subsidized loans from inter- national and national nancial institutions, the Group is lead- ing an innovation process aimed at accelerating the mobili- zation of capital to suppo sustainable growth through the use of sustainability-linked nancial instruments. More specically, in 2021, the Group received subsidized loans totaling €1.3 billion that, following the path taken in our private-sector nancing, include sustainability-linked mechanisms connected with SDG 13\. Among the main transactions, special mention goes to a €600 million sus- tainability-linked loan to e-distribuzione, a Group compa- ny, from the European Investment Bank (EIB), the rst sus- tainability-linked loan agreement for the EIB. In the coming years, Enel will continue to make use of sus- tainable nance tools, with the aim of achieving a ratio be- tween sustainable borrowing and the Group’s total debt of about 65% by 2024 and over 70% by 2030. Sustainability-linked nance will therefore continue to rep- resent the peect tool for linking ambitious climate objec- tives with funding sources and addressing the future chal- lenges of the energy transition. Cash ows Millions of euro 2021 2020 Change Cash and cash equivalents at the beginning of the year (1) 6,002 9,080 (3,078) Cash ows from operating activities 10,069 11,508 (1,439) Cash ows from investing activities (10,875) (10,117) (758) Cash ows from/(used in) nancing activities 3,777 (3,972) 7,749 Eect of exchange dierences on cash and cash equivalents 17 (497) 514 Cash and cash equivalents at the end of the year (2) 8,990 6,002 2,988 (1) Of which cash and cash equivalents in the amount of €5,906 million at January 1, 2021 (€9,029 million at January 1, 2020), sho-term securities in the amount of €67 million at January 1, 2021 (€51 million at January 1, 2020), and cash and cash equivalents peaining to assets held for sale in the amount of €29 million at January 1, 2021. (2) Of which, cash and cash equivalents in the amount of €8,858 million at December 31, 2021 (€5,906 million at December 31, 2020), sho-term securities in the amount of €88 million at December 31, 2021 (€67 million at December 31, 2020), and cash and cash equivalents peaining to assets held for sale in the amount of €44 million at December 31, 2021 (€29 million at December 31, 2020). Cash ows from operating activities for 2021 produced a net inow of €10,069 million, down €1,439 million from the previous year, mainly reecting an increase in nancial ex- pense connected with the early extinguishment of a num- ber of loans replaced by new bond issues at more advanta- geous rates and higher taxes paid. Cash ows from investing activities for 2021 absorbed li- quidity in the amount of €10,875 million, compared with a net outow of €10,117 million in 2020. In paicular, investments in propey, plant and equipment, intangible assets, investment propey and contract assets totaled €13,108 million (including €111 million reclassied as 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 168 Integrated Annual Repo 2021168 available for sale), an increase on the previous year, as ana- lyzed in greater in the following section. Investments in entities or business units, net of cash and cash equivalents acquired, totaled €283 million and main- ly concerned the acquisition of renewable energy assets in Spain for €79 million, the line-item consolidation of the net nancial debt of a number of Australian companies that were equity-accounted until December 2020, and the ac- quisition of CityPoste Payment SpA for about €19 million. Disposals of entities or business units, net of cash and cash equivalents sold, amounted to €61 million, and mainly re- garded the sale of wind operations in Bulgaria. The liquidity generated by the decrease in other investing activities in 2021, equal to €2,455 million, mainly concerned the €2,423 million change in cash ows produced by the sale of Open Fiber. Cash ows from nancing activities generated liquidity in the total amount of €3,777 million, compared with a net cash use of €3,972 million in 2020. The cash ow for 2021 essentially concerned: • the payment of dividends in the amount of €4,970 mil- lion, as well as €71 million paid to holders of perpetual hybrid bonds; • the cash requirement associated with transactions in non-controlling interests in the amount of €1,295 million, mainly regarding the increase in the interest held in Enel Américas following the tender oer launched on March 15, 2021; • the net increase of €7,913 million resulting from repay- ments, new nancing and other changes in nancial debt; • the €2,213 million in cash generated on the issue of a non-conveible perpetual subordinated hybrid bond net of transaction costs as well as ancillary costs related to the conversion of a number of bonds into perpetual hy- brid bonds. In 2021, cash ows for investing activities in the amount of €10,875 million absorbed the entirety of cash ows gen- erated on operating activities of €10,069 million. The dif- ference was covered by borrowing, which generated cash ows totaling €3,777 million. The dierence is reected in the increase in cash and cash equivalents, which at De- cember 31, 2021 amounted to €8,990 million, compared with €6,002 million at the end of 2020. This also reect- ed the eects of favorable developments in the exchange rates of the various local currencies against the euro in the amount of €17 million. Capital expenditure Millions of euro 2021 2020 Change Thermal Generation and Trading 822 694 128 18.4% Enel Green Power 5,662 (1) 4,629 1,033 22.3% Infrastructure and Networks 5,296 3,937 1,359 34.5% End-user Markets 643 460 183 39.8% Enel X 367 303 64 21.1% Services 139 103 36 35.0% Holding and other 68 71 (3) -4.2% Total 12,997 10,197 2,800 2 7.5 % (1) The gure does not include €111 million regarding units classied as “held for sale“. Capital expenditure increased by €2,800 million on the previous year. In line with the Paris Agreement on the reduction of CO 2 emissions and guided by energy eciency and ener- gy-transition goals, the Enel Group has invested, above all, in renewable energy. More specically, the increase pri- marily concerned the United States (€579 million), Iberia (€253 million), Colombia (€192 million), Italy (€123 million), India (€122 million), Russia (€68 million), Chile (€66 million), Peru (€26 million), Panama (€25 million), and Brazil (€30 million, net of the signicant unfavorable impact of ex- change rate developments in the amount of €62 million). These increases were only paially oset by decreased capital expenditure in South Africa (€338 million), Mexico (€118 million) and Greece (€23 million). In response to increasingly volatile weather events and to invest in grid resilience, investment in electricity distribu- tion also increased. Capital expenditure for distribution increased in Italy (€588 million), Brazil (€335 million), Iberia (€243 million), for the 169Analysis of the Group’s nancial position and structure 169 Grid Blue Sky project and for quality and remote control, Argentina (€74 million), Chile (€38 million), Peru (€29 mil- lion), Colombia (€31 million) and Romania (€10 million). Capital expenditure increased in the End-user Markets Business Line, paicularly in Italy (€117 million), Iberia (€57 million) and Romania (€9 million), aributable essentially to the digitalization of customer-management processes. Capital expenditure by Enel X increased mainly in Italy, in the amount of €63 million, in the e-Home business with the Vivi Meglio project as a result of the increase in vol- umes and for investments to develop global technology platforms for the digital management of this business, and in Noh America (€10 million) for the development of stor- age projects, as well as in Iberia in the e-Home business in response to the increase in volumes sold compared with 2020. These factors were paly oset by a decrease in capital expenditure in Latin America. The growth of capital expenditure in Thermal Generation and Trading, especially in Italy (€123 million), is aributable to the conversion of a number of plants from coal to gas with lower CO 2 emissions. Finally, with regard to capital expenditure (capex), we re- po the results of the alignment of this indicator with the European taxonomy by reason of its substantial contribu- tion to climate change mitigation, in compliance with the principle of not doing harm to other environmental objec- tives (DNSH) and the minimum social safeguards, as dis- cussed in the sections “European Union taxonomy“ and “Statement on the alignment of Enel’s business with the European taxonomy“. Capital expenditure (capex) under the European taxonomy (1) 10.8% 4.6% 84.6% €13.1 billion 83.7 % 10.8% 5.5% €13.1 billion CAPEX 2021 Considering all retail electricity sales as “non-eligible” (1) Includes €111 million regarding units classied as “held for sale“. Eligible-aligned Eligible-not aligned Non-eligible In 2021, 84.6% of capital expenditure (capex) was gener- ated by business activities aligned with the EU taxonomy, compared with 84.7% in 2020. Considering all retail electricity sales as “non-eligible“, 83.7 % of capital expenditure was aligned. The percentage of the capital expenditure of taxonomy eli- gible-aligned activities in 2021 was in line with the previous year. The percentage of 2021 capital expenditure for eligi- ble-aligned activities was 1.9% lower than the value of cap- ital expenditure planned for 2021 in the 2021-2023 Strate- gic Plan for those activities. In absolute terms, the capital expenditure of taxonomy eligible-aligned activities was greater than planned, primarily aributable to the great- er-than-planned increase in expenditure to expand Group renewables capacity (an excess of €683 million). However, capital expenditure in eligible-not aligned activities and non-eligible activities was also greater (€412 million), no- tably for electricity transmission and distribution, the sale of energy not ceied by guarantees of origin and thermal generation. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 170 Integrated Annual Repo 2021170 Peormance by Business Line The representation of peormance by Business Line pre- sented here is based on the approach used by manage- ment in monitoring Group peormance for the two peri- ods under review, taking account of the operational model adopted as described above. With regard to disclosures for operating segments, as management repos on peormance by Business Line, the Group has therefore adopted the following repoing sectors: • primary segment: Business Line; • secondary segment: geographical area. The Business Line is therefore the main discriminant in the analyses peormed and decisions taken by the manage- ment of the Enel Group, and is fully consistent with the internal repoing prepared for these purposes since the results are measured and evaluated rst and foremost for each Business Line and only thereafter are they broken down by country. The following cha outlines these organizational arrange- ments. HOLDING Regions/ countries Global Business Lines Local businesses Thermal Generation Trading Enel Green Power Infrastructure and Networks Enel X End-user Markets Services Italy Iberia Europe Africa, Asia and Oceania Noh America Latin America The organization continues to be based on matrix of Busi- ness Lines (Thermal Generation and Trading, Enel Green Power, Infrastructure and Networks, End-user Markets, Enel X, Services and Holding/Other) and geographical are- as (Italy, Iberia, Europe, Latin America, Noh America, Afri- ca, Asia and Oceania, Central/Holding). 171Peormance by Business Line 171 Peormance by Business Line in 2021 and 2020 Results for 2021 (1) Millions of euro Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Holding and other Repoing segment total Eliminations and adjustments Total Revenue and other income from third paies 22,883 7, 24 4 17, 164 37, 3 9 6 1,513 20 1,786 88,006 - 88,006 Revenue and other income from transactions with other segments 10,272 2,282 3,492 1,312 28 1,977 148 19,511 (19,511) - Total revenue 33,155 9,526 20,656 38,708 1,541 1,997 1,934 107,517 (19,511) 88,006 Net results from commodity contracts 535 (55) - 2,044 - - (2) 2,522 - 2,522 Gross operating prot/(loss) 899 4,761 7, 2 10 2,990 283 (86) 1,510 17,5 67 - 17,5 67 Depreciation, amoization and impairment losses 3,485 1,679 2,862 1,333 253 237 38 9,887 - 9,887 Operating prot/(loss) (2,586) 3,082 4,348 1,657 30 (323) 1 ,472 7,680 - 7,680 Capital expenditure 822 5,662 (2) 5,296 643 367 139 68 12,997 - 12,997 (1) Segment revenue includes both revenue from third paies and revenue from transactions with other segments. (2) The gure does not include €111 million classied as available for sale. Results for 2020 (1) (2) (3) (4) Millions of euro Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Holding and other Repoing segment total Eliminations and adjustments Total Revenue and other income from third paies 14,332 5,852 15,919 28,793 1,097 2 9 66,004 - 66,004 Revenue and other income from transactions with other segments 7,404 1,840 3,510 715 24 1,868 145 15,506 (15,506) - Total revenue 21,736 7,692 19,429 29,508 1,121 1,870 154 81,510 (15,506) 66,004 Net results from commodity contracts (421) 68 - 264 - (6) (4) (99) - (99) Gross operating prot/(loss) 1,700 4,647 7,520 3,121 152 (47) (190) 16,903 - 16,903 Depreciation, amoization and impairment losses 1,685 1,913 3, 171 1,304 168 179 28 8,448 - 8,448 Operating prot/(loss) 15 2,734 4,349 1,817 (16) (226) (218) 8,455 - 8,455 Capital expenditure 694 4,629 3,937 460 303 103 71 10,197 - 10,197 (1) Segment revenue includes both revenue from third paies and revenue from transactions with other segments. (2) The gures for revenue from third paies and intersegment transactions have been calculated more accurately. (3) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. The change in classication had no impact on operating prot. For more details, please see note 7 to the consolidated nancial statements. (4) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more informa- tion, please see note 7 to the consolidated nancial statements. In addition to the above, the Group also monitors peor- mance by geographical area, classifying results by region/ country. In the table below, ordinary gross operating prot is shown for the two periods under review with the goal of providing a view of peormance not only by Business Line, but also by region/country. It should be noted that ordinary gross operating prot ex- cludes non-recurring items. For a reconciliation with gross operating prot, please see the section “Group Peor- mance“. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 172 Integrated Annual Repo 2021172 Ordinary gross operating margin (1) (2) Millions of euro Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Holding and other Total 2021 2020 Change 2021 2020 Change 2021 2020 Change 2021 2020 Change 2021 2020 Change 2021 2020 Change 2021 2020 Change 2021 2020 Change Italy 464 488 (24) 1,184 1,362 (178) 3,836 3,861 (25) 2,311 2,372 (61) 131 38 93 56 83 (27) - - - 7, 9 8 2 8,204 (222) Iberia 844 1,258 (414) 840 436 404 1,877 2,114 (237) 547 530 17 52 45 7 31 30 1 - - - 4,191 4,413 (222) Latin America 350 340 10 1,809 1,982 (173) 1,810 1,684 126 263 203 60 92 84 8 (77) (86) 9 - - - 4,247 4,207 40 Argentina 97 85 12 24 28 (4) 3 47 (44) 12 (7) 19 5 3 2 (3) (3) - - - - 138 153 (15) Brazil 132 66 66 334 271 63 1,120 964 156 136 107 29 1 2 (1) (18) (19) 1 - - - 1,705 1,391 314 Chile (49) 64 (113) 536 825 (289) 144 157 (13) 44 25 19 19 15 4 (55) (64) 9 - - - 639 1,022 (383) Colombia 58 11 47 601 575 26 385 362 23 49 56 (7) 50 42 8 - - - - - - 1,143 1,046 97 Peru 114 115 (1) 141 136 5 158 154 4 22 22 - 17 22 (5) (1) - (1) - - - 451 449 2 Panama (2) (1) (1) 127 102 25 - - - - - - - - - - - - - - - 125 101 24 Other countries - - - 46 45 1 - - - - - - - - - - - - - - - 46 45 1 Europe 81 118 (37) 177 162 15 96 136 (40) (41) 83 (124) 17 9 8 7 4 3 - - - 337 512 (175) Romania (2) (2) - 82 79 3 96 136 (40) (41) 83 (124) 11 10 1 7 4 3 - - - 153 310 (157) Russia 83 120 (37) 5 (7) 12 - - - - - - - (1) 1 - - - - - - 88 112 (24) Other countries - - - 90 90 - - - - - - - 6 - 6 - - - - - - 96 90 6 Noh America (39) 17 (56) 699 769 (70) - - - 6 9 (3) 22 (9) 31 - (3) 3 (1) (2) 1 687 781 (94) United States and Canada (35) 18 (53) 627 695 (68) - - - - - - 22 (9) 31 - (3) 3 (1) (2) 1 613 699 (86) Mexico (4) (1) (3) 72 74 (2) - - - 6 9 (3) - - - - - - - - - 74 82 (8) Africa, Asia and Oceania - - - 110 54 56 - - - - - - - 2 (2) - - - - - - 110 56 54 South Africa - - - 82 53 29 - - - - - - - 2 (2) - - - - - - 82 55 27 India - - - 3 6 (3) - - - - - - - - - - - - - - - 3 6 (3) Other countries - - - 25 (5) 30 - - - - - - - - - - - - - - - 25 (5) 30 Other 2 9 (7) (4) (44) 40 44 6 38 - - - (16) (8) (8) 62 66 (4) 1,568 (175) 1,743 1,656 (146) 1,802 Total 1,702 2,230 (528) 4,815 4,721 94 7,6 63 7, 8 0 1 (138) 3,086 3,197 (111) 298 161 137 79 94 (15) 1,567 (177) 1 ,744 19,210 18,027 1,183 (1) Ordinary gross operating prot excludes non-recurring items. For a reconciliation with gross operating prot, see the section “Group Peormance“. (2) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more informa- tion, please see note 7 to the consolidated nancial statements. 173Peormance by Business Line 173 Ordinary gross operating margin (1) (2) Millions of euro Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Holding and other Total 2021 2020 Change 2021 2020 Change 2021 2020 Change 2021 2020 Change 2021 2020 Change 2021 2020 Change 2021 2020 Change 2021 2020 Change Italy 464 488 (24) 1,184 1,362 (178) 3,836 3,861 (25) 2,311 2,372 (61) 131 38 93 56 83 (27) - - - 7, 9 8 2 8,204 (222) Iberia 844 1,258 (414) 840 436 404 1,877 2,114 (237) 547 530 17 52 45 7 31 30 1 - - - 4,191 4,413 (222) Latin America 350 340 10 1,809 1,982 (173) 1,810 1,684 126 263 203 60 92 84 8 (77) (86) 9 - - - 4,247 4,207 40 Argentina 97 85 12 24 28 (4) 3 47 (44) 12 (7) 19 5 3 2 (3) (3) - - - - 138 153 (15) Brazil 132 66 66 334 271 63 1,120 964 156 136 107 29 1 2 (1) (18) (19) 1 - - - 1,705 1,391 314 Chile (49) 64 (113) 536 825 (289) 144 157 (13) 44 25 19 19 15 4 (55) (64) 9 - - - 639 1,022 (383) Colombia 58 11 47 601 575 26 385 362 23 49 56 (7) 50 42 8 - - - - - - 1,143 1,046 97 Peru 114 115 (1) 141 136 5 158 154 4 22 22 - 17 22 (5) (1) - (1) - - - 451 449 2 Panama (2) (1) (1) 127 102 25 - - - - - - - - - - - - - - - 125 101 24 Other countries - - - 46 45 1 - - - - - - - - - - - - - - - 46 45 1 Europe 81 118 (37) 177 162 15 96 136 (40) (41) 83 (124) 17 9 8 7 4 3 - - - 337 512 (175) Romania (2) (2) - 82 79 3 96 136 (40) (41) 83 (124) 11 10 1 7 4 3 - - - 153 310 (157) Russia 83 120 (37) 5 (7) 12 - - - - - - - (1) 1 - - - - - - 88 112 (24) Other countries - - - 90 90 - - - - - - - 6 - 6 - - - - - - 96 90 6 Noh America (39) 17 (56) 699 769 (70) - - - 6 9 (3) 22 (9) 31 - (3) 3 (1) (2) 1 687 781 (94) United States and Canada (35) 18 (53) 627 695 (68) - - - - - - 22 (9) 31 - (3) 3 (1) (2) 1 613 699 (86) Mexico (4) (1) (3) 72 74 (2) - - - 6 9 (3) - - - - - - - - - 74 82 (8) Africa, Asia and Oceania - - - 110 54 56 - - - - - - - 2 (2) - - - - - - 110 56 54 South Africa - - - 82 53 29 - - - - - - - 2 (2) - - - - - - 82 55 27 India - - - 3 6 (3) - - - - - - - - - - - - - - - 3 6 (3) Other countries - - - 25 (5) 30 - - - - - - - - - - - - - - - 25 (5) 30 Other 2 9 (7) (4) (44) 40 44 6 38 - - - (16) (8) (8) 62 66 (4) 1,568 (175) 1,743 1,656 (146) 1,802 Total 1,702 2,230 (528) 4,815 4,721 94 7,6 63 7, 8 0 1 (138) 3,086 3,197 (111) 298 161 137 79 94 (15) 1,567 (177) 1 ,744 19,210 18,027 1,183 (1) Ordinary gross operating prot excludes non-recurring items. For a reconciliation with gross operating prot, see the section “Group Peormance“. (2) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more informa- tion, please see note 7 to the consolidated nancial statements. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 174 Integrated Annual Repo 2021174 Thermal Generation and Trading 175175Peormance by Business Line Operations Net electricity generation Millions of kWh 2021 2020 Change Coal-red plants 13,858 13,155 703 5.3% Fuel-oil and turbo-gas plants 22,709 19,401 3,308 17. 1 % Combined-cycle plants 51,718 43,353 8,365 19.3% Nuclear plants 25,504 25,839 (335) -1.3% Total net generation 113,789 101,748 12,041 11.8% \- of which Italy 23,808 19,044 4,764 25.0% \- of which Iberia 44,799 42,853 1,946 4.5% \- of which Latin America 23,934 21 ,764 2 , 170 10.0% \- of which Europe 21,248 18,087 3,161 17. 5 % The increase in thermal generation is essentially aributa- ble to an increase in generation both from combined-cycle plants (8,365 million kWh) and from fuel-oil and turbo-gas plants (3,308 million kWh). The increase for combined-cy- cle plants is aributable mainly to Italy (3,158 million kWh), Iberia (3,078 million kWh), and Latin America (1,905 mil- lion kWh), whereas the increase for fuel-oil and turbo-gas plants was seen mainly in Russia (2,938 million kWh). Net ecient generation capacity MW 2021 2020 Change Coal-red plants 6,910 8,903 (1,993) -22.4% Fuel-oil and turbo-gas plants 11,715 11,711 4 - Combined-cycle plants 15,039 15,009 30 0.2% Nuclear plants 3,328 3,328 - - Total 36,992 38,951 (1,959) -5.0% \- of which Italy 11,569 12,414 (845) -6.8% \- of which Iberia 12,751 13,871 (1,120) -8.1% \- of which Latin America 7,396 7,4 0 6 (10) -0.1% \- of which Europe 5,276 5,260 16 0.3% Compared with 2020, the 1,959 MW decrease in net e- cient generation capacity was primarily due to the decom- missioning of coal-red plants in Spain and Italy. Thermal Generation and Trading 37 GW NET EFFICIENT INSTALLED CAPACITY -22.4% from coal-red plants on 2020 113.8 TWh NET ELECTRICITY GENERATION +5.3% from coal-red plants on 2020 2.2% COAL REVENUE as % of total Group revenue €1,702 million ORDINARY GROSS OPERATING PROFIT €2,230 million in 2020 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 176 Integrated Annual Repo 2021176 Peormance Millions of euro 2021 2020 Change Revenue (1) 33,155 21,736 11,419 52.5% Gross operating prot/(loss) 899 1,700 (801) -47.1% Ordinary gross operating prot/(loss) 1,702 2,230 (528) -23.7% Operating prot/(loss) (2,586) 15 (2,601) - Ordinary operating prot/(loss) 729 1,456 (727) -49.9% Capital expenditure 822 694 128 18.4% (1) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. The change in classication had no impact on operating prot. For more details, please see note 7 to the consolidated nancial statements. With regard to revenue, it should be noted that, in response to strategic decisions inspired by a sustainable business model under which we pursue the goals, inter alia, of com- bating climate change, the percentage of coal-related revenue experienced a progressive, generalized decline as shown in the following table: Revenue from thermal and nuclear generation Millions of euro 2021 2020 Revenue (1) (2) Revenue from thermal generation 13,501 7,517 \- of which coal-red generation 1,904 1,639 Revenue from nuclear generation 1,403 1,360 Revenue from thermal generation as a percentage of total revenue 15.3% 11.4% \- of which: revenue from coal-red generation as a percentage of total revenue 2.2% 2.5% Revenue from nuclear generation as a percentage of total revenue 1.6% 2.1% (1) Segment revenue includes both revenue from third paies and revenue from transactions with other segments. (2) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. The change in classication had no impact on operating prot. For more details, please see note 7 to the consolidated nancial statements. 177Peormance by Business Line 177 The following tables show a breakdown of peormance by region/country in 2021. Revenue (1) Millions of euro 2021 2020 Change Italy (1) 22,816 14,965 7, 8 51 52.5% Iberia (1) 8,344 5,125 3,219 62.8% Latin America 2,390 1,304 1,086 83.3% \- of which Argentina 165 148 17 11.5% \- of which Brazil 957 182 775 - \- of which Chile 899 627 272 43.4% \- of which Colombia 186 183 3 1.6% \- of which Peru 183 164 19 11.6% Noh America 100 12 88 - Europe 554 539 15 2.8% \- of which Romania 4 - 4 - \- of which Russia 550 539 11 2.0% Other 122 130 (8) -6.2% Eliminations and adjustments (1,171) (339) (832) - Total 33,155 21,736 11,419 52.5% (1) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. The change in classication had no impact on operating prot. For more details, please see note 7 to the consolidated nancial statements. Revenue for 2021 amounted to €33,155 million, an in- crease of €11,419 million over 2020. This change is mainly aributable to: • Italy, primarily due to an increase in sales of electricity and gas, reecting the increase in commodity prices, gas in paicular, and an increase in thermal generation; • Spain, reecting an increase in revenue from the sale of electricity, largely connected with an increase in aver- age prices and the recognition of an indemnity associ- ated with CO 2 emission allowances allocated under the “Plan Nacional de Asignación de Derechos de Emisión“ (PNA) in the amount of €186 million. Ordinary gross operating prot/(loss) Millions of euro 2021 2020 Change Italy 464 488 (24) -4.9% Iberia 844 1,258 (414) -32.9% Latin America 350 340 10 2.9% \- of which Argentina 97 85 12 14.1% \- of which Brazil 132 66 66 - \- of which Chile (49) 64 (113) - \- of which Colombia 58 11 47 - \- of which Peru 114 115 (1) -0.9% \- of which Panama (2) (1) (1) - Noh America (39) 17 (56) - Europe 81 118 (37) -31.4% \- of which Romania (2) (2) - - \- of which Russia 83 120 (37) -30.8% Other 2 9 (7) -77.8% Total 1,702 2,230 (528) -23.7% 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 178 Integrated Annual Repo 2021178 The €528 million decrease in ordinary gross operating prot in 2021 is due mainly to: • a reduction of €414 million in Iberia, essentially arib- utable to: – greater costs related to the purchase of energy commodities and greater costs for the derivatives on those commodities, due mainly to uctuations in market prices; – greater personnel expenses due mainly to the re- lease, in 2020, of the provision for the energy dis- count net of allocations for early-retirement incen- tives. These negative factors were only paly oset by the in- crease in revenue from the sale of electricity connect- ed, above all, to the increase in average prices and by the recognition of the indemnity connected with CO 2 emission allowances allocated under the “Plan Nacional de Asignación de Derechos de Emisión“ (PNA) of €186 million; • a €56 million decrease in prot in Noh America due essentially to the weaker net peormance on commod- ity contracts; • a €37 million decrease in prot in Russia mainly arib- utable to the abolition of the capacity payment for the gas-red plants; • a €113 million decrease in Chile due mainly to the rec- ognition of greater costs for commodity purchases, paicularly for gas, as a result of increases in both price and volumes and in relation to the greater quantities generated by combined-cycled plants. This eect was only paially oset by an increase in revenue from the sale of electricity and improved net peormance on commodity contracts. These eects were paially oset by a €66 million im- provement in prot in Brazil related mainly to the increase in sales revenue due to increases in volumes and in aver- age prices. Gross operating prot in the amount of €899 million (€1,700 million in 2020) reects costs of €795 million relat- ed to the direct and indirect activities called for by person- nel conversion plans associated with the energy transition and digitalization, mainly in Italy, and €8 million in costs in- curred as a result of the COVID-19 pandemic for workplace sanitization activities, personal protective equipment and donations. Ordinary operating prot/(loss) Millions of euro 2021 2020 Change Italy 265 386 (121) -31.3% Iberia 271 787 (516) -65.6% Latin America 180 179 1 0.6% \- of which Argentina 27 32 (5) -15.6% \- of which Brazil 120 56 64 - \- of which Chile (91) 17 (108) - \- of which Colombia 41 (6) 47 - \- of which Peru 86 80 6 7.5 % \- of which other countries (3) - (3) - Noh America (39) 14 (53) - Europe 52 82 (30) -36.6% \- of which Romania (2) (2) - - \- of which Russia 54 84 (30) -35.7% Other - 8 (8) - Total 729 1,456 (727) -49.9% 179Peormance by Business Line 179 The decrease in ordinary operating prot is tied both to the factors described above in relation to ordinary gross operating prot and to the increase in depreciation, amor- tization and impairment losses (totaling €199 million) recognized in 2021 as compared with the previous year, largely reecting an increase in costs for retiring thermal generation plants, in paicular coal-red facilities. The operating loss of €2,586 million for 2021 (€15 million in 2020) reects both the factors described in relation to or- dinary operating peormance and the write-down of cer- tain plants in Spain in the amount of €1,488 million, charg- es related to restructuring plans for the energy transition and digitalization, mainly in Italy, in the amount of €1,819 million, and non-recurring costs incurred in response to the COVID-19 pandemic for workplace sanitization activ- ities, personal protective equipment and donations in the amount of €8 million. Capital expenditure Millions of euro 2021 2020 Change Italy 303 180 123 68.3% Iberia 334 331 3 0.9% Latin America 143 120 23 19.2% Noh America 8 7 1 14.3% Europe 34 56 (22) -39.3% Total 822 694 128 18.4% The €128 million increase in capital expenditure is mainly aributable to Italy. Capital expenditure in Italy in 2021 es- sentially concerned the reconversion of a number of plants as pa of energy-transition projects, eos to improve service quality and digitalization projects. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 180 Integrated Annual Repo 2021180 Enel Green Power 181181Peormance by Business Line Operations Net electricity generation Millions of kWh 2021 2020 Change Hydroelectric 57,001 62,437 (5,436) -8.7% Geothermal (1) 6,086 6,128 (42) -0.7% Wind 37,791 30,992 6,799 21.9% Solar 7,899 5,763 2,136 37. 1% Other sources (1) 40 40 - - Total net generation 108,817 105,360 3,457 3.3% \- of which Italy 24, 157 23,451 706 3.0% \- of which Iberia 12,794 13,415 (621) -4.6% \- of which Latin America 46,441 47,40 0 (959) -2.0% \- of which Europe 2,488 2,374 114 4.8% \- of which Noh America 20,356 17, 18 2 3, 174 18.5% \- of which Africa, Asia and Oceania 2,581 1,538 1,043 67.8% (1) The 2020 gures reect a more accurate calculation of electricity generated. Net electricity generation in 2021 increased by 3.3% from 2020 due to increases in wind and solar production, which were paially oset by decreases in hydroelectric and geo- thermal generation. The most signicant changes in wind generation were seen in Brazil (+3,138 million kWh), the United States (+1,916 mil- lion kWh), South Africa (+550 million kWh), Mexico (+497 million kWh), Iberia (+370 million kWh), Russia (+149 million kWh), and Canada (+104 million kWh). The 37.1% increase in solar generation is aributable mainly to Iberia (+569 million kWh), the United States (+580 million kWh), Australia (+477 million kWh), and Brazil (+402 million kWh). Hydroelectric generation decreased overall due to less fa- vorable water conditions in Latin America (-4,597 million kWh) and Iberia (-1,560 million kWh), which was to minimal extent oset by increased generation in Italy (+691 million kWh). Enel Green Power 50.1 GW NET EFFICIENT INSTALLED CAPACITY 57.5% of total Group capacity €4,815 million ORDINARY GROSS OPERATING PROFIT €4,721 million in 2020 €5,662 million (1) CAPITAL EXPENDITURE +22.3% on 2020 108.8 TWh NET ELECTRICITY GENERATION +37.1% from solar plants on 2020 (1) Does not include €111 million regarding units classied as “held for sale“. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 182 Integrated Annual Repo 2021182 Net ecient generation capacity MW 2021 2020 Change Hydroelectric 2 7, 8 47 27,820 27 0.1% Geothermal 915 882 33 3.7% Wind 14,903 12,412 2,491 20.1% Solar 6,395 3,897 2,498 64.1% Other sources 6 5 1 20.0% Total net ecient generation capacity 50,066 45,016 5,050 11.2% \- of which Italy 14,040 13,986 54 0.4% \- of which Iberia 8,390 7,781 609 7.8% \- of which Latin America 16,506 14,554 1,952 13.4% \- of which Europe 1,248 1,141 107 9.4% \- of which Noh America 7,941 6,643 1,298 19.5% \- of which Africa, Asia and Oceania 1,941 911 1,030 - The increase in net ecient capacity is mainly due to the sta of operations of solar plants in the United States, Chile and Brazil and of wind farms in Brazil, the United States, and South Africa, as well as to the eect of the full con- solidation of a number of companies in Australia, which were measured using the equity method until December 31, 2020. 183Peormance by Business Line 183 Peormance Millions of euro 2021 2020 Change Revenue 9,526 7,692 1,834 23.8% Gross operating prot/(loss) 4,761 4,647 114 2.5% Ordinary gross operating prot/(loss) 4,815 4,721 94 2.0% Operating prot/(loss) 3,082 2,734 348 12.7% Ordinary operating prot/(loss) 3,480 3,460 20 0.6% Capital expenditure 5,662 (1) 4,629 1,033 22.3% (1) The gure does not include €111 million regarding units classied as “held for sale“. The following tables show a breakdown of peormance by region/country in 2021. Revenue Millions of euro 2021 2020 Change Italy 2,725 2,154 571 26.5% Iberia 900 771 129 16.7% Latin America 4,235 3,234 1,001 31.0% \- of which Argentina 37 39 (2) -5.1% \- of which Brazil 1,551 837 714 85.3% \- of which Chile 1,375 1,209 166 13.7% \- of which Colombia 884 814 70 8.6% \- of which Peru 141 132 9 6.8% \- of which Panama 153 136 17 12.5% \- of which other countries 94 67 27 40.3% Noh America 1,147 1,156 (9) -0.8% \- of which United States and Canada 971 1,018 (47) -4.6% \- of which Mexico 176 138 38 27.5 % Europe 358 323 35 10.8% \- of which Romania 220 198 22 11.1% \- of which Russia 13 - 13 - \- of which Greece 125 114 11 9.6% \- of which Bulgaria - 9 (9) - \- of which other countries - 2 (2) - Africa, Asia and Oceania 175 99 76 76.8% Other 264 226 38 16.8% Eliminations and adjustments (278) (271) (7) -2.6% Total 9,526 7,69 2 1,834 23.8% The increase in revenue over 2020 is mainly aributable to: • an increase in the sale of electricity in Brazil due to greater impos by Argentina and Uruguay and for the sta-up of new plants; • an increase in revenue in Italy and Spain tied to greater average energy prices; • the line-by-line consolidation of a number of Australian companies that had been measured at equity until De- cember 31, 2020. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 184 Integrated Annual Repo 2021184 Ordinary gross operating prot/(loss) Millions of euro 2021 2020 Change Italy 1,184 1,362 (178) -13.1% Iberia 840 436 404 92.7% Latin America 1,809 1,982 (173) -8.7% \- of which Argentina 24 28 (4) -14.3% \- of which Brazil 334 271 63 23.2% \- of which Chile 536 825 (289) -35.0% \- of which Colombia 601 575 26 4.5% \- of which Peru 141 136 5 3.7% \- of which Panama 127 102 25 24.5% \- of which other countries 46 45 1 2.2% Noh America 699 769 (70) -9.1% \- of which United States and Canada 627 695 (68) -9.8% \- of which Mexico 72 74 (2) -2.7% Europe 177 162 15 9.3% \- of which Romania 82 79 3 3.8% \- of which Russia 5 (7) 12 - \- of which Greece 95 85 10 11.8% \- of which Bulgaria - 7 (7) - \- of which other countries (5) (2) (3) - Africa, Asia and Oceania 110 54 56 - Other (4) (44) 40 90.9% Total 4,815 4,721 94 2.0% The improvement in ordinary gross operating prot is mainly aributable to: • an increase in gross operating prot in Spain due in paicular to the reversal of provisions for hydroelectric fees following the favorable outcome of a dispute, to greater quantities produced and sold by wind and solar plants, and to higher average energy prices; • an increase in prot in Africa, Asia and Oceania due mainly to the line-by-line consolidation of a number of Australian companies that were measured using the equity method at December 31, 2020, as well as an in- crease in generation at new wind farms in South Africa; • a decrease in prot in Italy due mainly to a decrease in volumes on the spot markets, the lower peormance of hydroelectric plants, and an increase in charges for commodity derivatives; • a decrease in prot in Latin America, paicularly as a result of adverse exchange rate developments and decreased prot in Chile due mainly to a decline in hy- droelectric generation as a result of unfavorable water conditions in the country, which led to higher costs for the provisioning of commodities to supply the greater volumes sold under power purchase agreements (PPAs); this impact was paially oset by an increase in prot in Brazil due to the greater quantities of power generated and sold, the sta-up of new plants, and the eect of prices on new PPAs, as well as by a greater energy mar- gin in Colombia as a result of price eects; • a reduction in prot in Noh America, mainly in the Unit- ed States and Canada, due to a worsening of the en- ergy margin and to the recognition in 2020 of greater gains from indemnities and disputes (€31 million) and the sale of the Haystack wind project by Tradewind (€45 million). These eects were paially oset by greater tax panership gains (€42 million) recognized following the sta-up of new plants by Enel Noh America, including Azure Blue Jay, Lily Solar, and Rochaven Ranchland. Gross operating prot amounted to €4,761 million (€4,647 million in 2020), reecting provisions for charges in respect of the energy transition and digitalization (€47 million) and costs incurred in responding to the COVID-19 pandemic for workplace sanitization activities, personal protective equipment and donations (€7 million). 185Peormance by Business Line 185 Ordinary operating prot/(loss) Millions of euro 2021 2020 Change Italy 902 1,072 (170) -15.9% Iberia 609 237 372 - Latin America 1,448 1,605 (157) -9.8% \- of which Argentina 18 22 (4) -18.2% \- of which Brazil 253 208 45 21.6% \- of which Chile 378 660 (282) -42.7% \- of which Colombia 553 523 30 5.7% \- of which Peru 107 99 8 8.1% \- of which Panama 112 83 29 34.9% \- of which other countries 27 10 17 - Noh America 382 487 (105) -21.6% \- of which United States and Canada 334 444 (110) -24.8% \- of which Mexico 48 43 5 11.6% Europe 114 93 21 22.6% \- of which Romania 61 58 3 5.2% \- of which Russia (1) (13) 12 92.3% \- of which Greece 61 47 14 29.8% \- of which Bulgaria - 4 (4) - \- of which other countries (7) (3) (4) - Africa, Asia and Oceania 46 21 25 - Other (21) (55) 34 61.8% Total 3,480 3,460 20 0.6% Ordinary operating prot in 2021 increased by €20 mil- lion over 2020 and included €1,335 million in deprecia- tion, amoization and impairment losses (€1,261 million in 2020). Depreciation in paicular increased, by €59 mil- lion compared with 2020, reecting new capital expendi- ture in recent years. Operating prot for 2021, in the amount of €3,082 mil- lion (€2,734 million in 2020), reects the factors described above in relation to gross operating prot and ordinary op- erating prot, as well as the write-down of ceain plants in Mexico and Australia in the amount of €185 million and other write-downs for a total of €159 million, mainly relat- ed to assets associated with the PH Chucas plant in Costa Rica, which is operated under a concession arrangement. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 186 Integrated Annual Repo 2021186 Capital expenditure Millions of euro 2021 2020 Change Italy 406 283 123 43.5% Iberia 713 460 253 55.0% Latin America 1,864 1,514 350 23.1% Noh America 2,238 1,773 465 26.2% Europe 204 157 47 29.9% Africa, Asia and Oceania 207 414 (207) -50.0% Other 30 28 2 7. 1 % Total 5,662 (1) 4,629 1,033 22.3% (1) The gure does not include €111 million regarding units classied as “held for sale“. Capital expenditure increased by €1,033 million in 2021 compared with the same gure for the previous year. In paicular, the change was aributable to: • an increase of €465 million in Noh America, mainly reecting a rise in capital expenditure on solar plants (€378 million) and wind farms (€78 million) in the United States; • an increase of €350 million in capital expenditure in Latin America aributable mainly to wind farms (€361 million) and hydroelectric plants (€39 million), which was paially oset by a decrease in capital expenditure on photovoltaic (€67 million) and geothermal plants (€19 million). The increase in capital expenditure was mainly concentrated in Colombia, Chile and Brazil; • an increase of €253 million in capital expenditure in Ibe- ria aributable mainly to solar plants (€146 million), wind farms (€98 million), and hydroelectric plants (€8 million); • a €123 million increase in capital expenditure in Ita- ly aributable mainly to wind farms (€93 million), solar plants (€19 million), and hydroelectric plants (€23 mil- lion), which was to a minimal extent oset by a decrease at geothermal plants (€7 million); • a €47 million increase in capital expenditure in Europe, paicularly at wind farms in Russia (€67 million). This ef- fect was paially oset by decreased capital expendi- ture in Greece in the amount of €23 million; • a decrease of €207 million in capital expenditure in Afri- ca, Asia and Oceania related mainly to wind farms (€292 million) concentrated in South Africa (€111 million was reclassied as held for sale), which was paially oset by increased capital expenditure for wind farms in India (€47 million) and for photovoltaic plants (€85 million), mainly in India and Australia. 187Peormance by Business Line 187 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 188 Integrated Annual Repo 2021188 Infrastructure and Networks 189189Peormance by Business Line Operations Electricity distribution and transmission grids Millions of kWh 2021 2020 Change Electricity transpoed on Enel’s distribution grid (1) 510,257 485,229 25,028 5.2% \- of which Italy 226,715 214,401 12,314 5.7% \- of which Iberia 131,090 124,486 6,604 5.3% \- of which Latin America 136,407 130,968 5,439 4.2% \- of which Europe 16,045 15,374 671 4.4% End users with active sma meters (no.) (1) 44,968,974 44,293,483 675,491 1.5% (1) The gures for 2020 have been calculated more accurately. In 2021, electricity transpoed on the grid increased (by 5.2%) mainly due to developments in: • Italy (+5.7%), with an increase in the demand for electric- ity distributed to low-, medium-, high- and very-high- voltage customers, while electricity distributed to other distributors decreased slightly; • Iberia (+5.3%), where the increase was essentially due to the rise in electricity transpoed by Edistribución Redes Digitales SL, reecting the eect of the lockdown im- posed in 2020 in response to the COVID-19 pandemic; • Latin America (+4.2%), reecting the increase in volumes transpoed, mainly in Peru, Colombia and Argentina; • Europe (+4.4%), with an increase in electricity distributed in Romania, aributable to both business and residential customers. Infrastructure and Networks 510.3 TWh ELECTRICITY TRANSPORTED ON ENEL´S DISTRIBUTION GRID 485.2 TWh in 2020 €5,296 million CAPITAL EXPENDITURE 40.7% of total Group capital expenditure €7,663 million ORDINARY GROSS OPERATING PROFIT €7,801 million in 2020 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 190 Integrated Annual Repo 2021190 Average frequency of interruptions per customer 2021 2020 Change SAIFI (average no.) Italy 1.8 1 .7 0.1 5.9% Iberia 1.4 1.4 - - Argentina (1) 4.9 4.4 0.5 11.4% Brazil 4.8 5.4 (0.6) -11.1% Chile 1.5 1.5 - - Colombia 5.2 5.6 (0.4) -7. 1 % Peru 2.3 2.6 (0.3) -11.5% Romania 2.9 3.4 (0.5) -14.7% (1) The gures for 2020 reect a more accurate calculation of average frequency. Average duration of interruptions per customer 2021 2020 Change SAIDI (average minutes) Italy (1) 42.9 42.1 0.8 1.9% Iberia (1) 70.0 7 7. 5 (7.5) -9.7% Argentina (1) 797. 3 839.4 (42.1) -5.0% Brazil 607.9 678.8 (70.9) -10.4% Chile 152.3 171.2 (18.9) -11.0% Colombia 401.4 466.6 (65.2) -14.0% Peru (1) 413.9 418.6 (4.7) -1.1% Romania 109.7 134.5 (24.8) -18.4% (1) The gures for 2020 reect a more accurate calculation of average duration. As shown in the tables above, service quality has improved in nearly all geographical areas, although the SAIDI in Ar- gentina remains high due, in paicular, to failures in the high-voltage systems not managed by the Group. Grid losses 2021 2020 Change Grid losses (average %) Italy 4.7 4.9 (0.2) -4.1% Iberia (1) 7. 1 7. 3 (0.2) -2.7% Argentina 18.0 18.9 (0.9) -4.8% Brazil 13.1 13.4 (0.3) -2.2% Chile 5.2 5.2 - - Colombia 7.5 7.6 (0.1) -1.3% Peru 8.5 8.8 (0.3) -3.4% Romania 8.7 9.2 (0.5) -5.4% (1) The gures for 2020 reect a more accurate calculation of grid losses. 191Peormance by Business Line 191 Peormance Millions of euro 2021 2020 Change Revenue (1) 20,656 19,429 1,227 6.3% Gross operating prot/(loss) (1) 7, 210 7,52 0 (310) -4.1% Ordinary gross operating prot/(loss) (1) 7,663 7,801 (138) -1.8% Operating prot/(loss) (1) 4,348 4,349 (1) - Ordinary operating prot/(loss) (1) 4,813 4,846 (33) -0.7% Capital expenditure 5,296 3,937 1,359 34.5% (1) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more informa- tion, please see note 7 to the consolidated nancial statements. The following tables show a breakdown of peormance by region/country in 2021. Revenue Millions of euro 2021 2020 Change Italy 7,326 7,488 (162) -2.2% Iberia 2,489 2,617 (128) -4.9% Latin America 10,366 8,908 1,458 16.4% \- of which Argentina 688 647 41 6.3% \- of which Brazil (1) 7, 10 9 5,736 1,373 23.9% \- of which Chile 1,262 1,229 33 2 .7% \- of which Colombia 630 601 29 4.8% \- of which Peru 677 695 (18) -2.6% Europe 414 396 18 4.5% Other 590 393 197 50.1% Eliminations and adjustments (529) (373) (156) -41.8% Total (1) 20,656 19,429 1,227 6.3% (1) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more informa- tion, please see note 7 to the consolidated nancial statements. The increase in revenue is mainly aributable to Brazil, re- ecting an increase in electricity distributed and rate ad- justments. This increase was paially mitigated by lower revenue in: • Italy, due essentially to the recognition in 2020 of the gain related to application of the Regulatory Authority for Energy, Networks and the Environment (ARERA) Res- olutions nos. 50/2018 and 461/2020; • Iberia, due mainly to the lower nancial remuneration rate applied as of January 1, 2020, on power transmis- sion. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 192 Integrated Annual Repo 2021192 Ordinary gross operating prot/(loss) Millions of euro 2021 2020 Change Italy 3,836 3,861 (25) -0.6% Iberia 1,877 2,114 (237) -11.2% Latin America 1,810 1,684 126 7.5 % \- of which Argentina 3 47 (44) -93.6% \- of which Brazil (1) 1,120 964 156 16.2% \- of which Chile 144 157 (13) -8.3% \- of which Colombia 385 362 23 6.4% \- of which Peru 158 154 4 2.6% Europe 96 136 (40) -29.4% Other 44 6 38 - Total (1) 7,663 7, 8 0 1 (138) -1.8% (1) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more informa- tion, please see note 7 to the consolidated nancial statements. Ordinary gross operating prot decreased especially in Spain due to the reversal of the provision related to the energy discount recognized in 2020 (€269 million). This eect was paially oset by an increase in prot in Brazil as a result of an increase in wheeling volumes at rising average prices, reecting rate adjustments for the year. Gross operating prot of €7,210 million (€7,520 million in 2020) reects the factors impacting ordinary gross oper- ating prot and the following non-recurring items: • provisions recognized for costs connected with re- structuring plans for the energy transition and digitali- zation, mainly in Italy and Brazil (€389 million), and costs associated with the removal of ceain meters involved in the replacement campaign (€34 million); • costs incurred for workplace sanitization activities, per- sonal protective equipment and donations in response to the COVID-19 pandemic (€30 million). Ordinary operating prot/(loss) Millions of euro 2021 2020 Change Italy 2,500 2,407 93 3.9% Iberia 1,094 1,364 (270) -19.8% Latin America 1,175 1,018 157 15.4% \- of which Argentina (25) 31 (56) - \- of which Brazil (1) 708 527 181 34.3% \- of which Chile 95 110 (15) -13.6% \- of which Colombia 297 261 36 13.8% \- of which Peru 100 89 11 12.4% Europe 6 54 (48) -88.9% Other 38 3 35 - Total (1) 4,813 4,846 (33) -0.7% (1) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more informa- tion, please see note 7 to the consolidated nancial statements. 193Peormance by Business Line 193 The decrease in ordinary operating prot for 2021, includ- ing depreciation, amoization and impairment losses of €2,850 million (€2,955 million in 2020), is aributable to the factors described above in relation to ordinary gross operating prot. This eect was paially mitigated by an increase in Italy due mainly to a decline in impairment loss- es on trade receivables compared with the previous year (€225 million), paly oset by an increase of €57 million in depreciation as a result of the reduction of the useful life of rst-generation digital meters. Operating prot for 2021, in the amount of €4,348 mil- lion (€4,349 million in 2020), reects the factors described above in relation to ordinary operating prot. Capital expenditure Millions of euro 2021 2020 Change Italy 2,554 1,966 588 29.9% Iberia 874 631 243 38.5% Latin America 1,663 1,156 507 43.9% Europe 192 182 10 5.5% Other 13 2 11 - Total 5,296 3,937 1,359 34.5% Capital expenditure increased year on year by €1,359 million. More specically, this increase is aributable to: • Italy, for an increase in new customer connections and an increase in investment in service quality (e-grid and DSO 4.0 projects). In addition, capital expenditure on the latest generation digital meters also increased by €46 million compared with 2020 following the resumption of the mass-replacement program, which had slowed last year as a result of the COVID-19 emergency; • Spain, for increased capital expenditure on distribution lines and on substations, transformers, and metering equipment; • Latin America, and paicularly Brazil, due to increased spending on distribution lines and substations, mainte- nance, and an increase in new connection. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 194 Integrated Annual Repo 2021194 End-user Markets 195195Peormance by Business Line Operations Electricity sales Millions of kWh 2021 2020 Change Free market 175,958 160,202 15,756 9.8% Regulated market 133,467 137,984 (4,517) -3.3% Total 309,425 298,186 11,239 3.8% \- of which Italy 92,768 90,205 2,563 2.8% \- of which Iberia 79,457 80,772 (1,315) -1.6% \- of which Latin America 127,906 118,388 9,518 8.0% \- of which Europe 9,294 8,821 473 5.4% The increase in the volume of electricity sold in 2021 came primarily on the free market for business-to-business (B2B) customers, mainly in Italy and Latin America. Conversely, the regulated market saw a decrease in volumes in both the busi- ness-to-consumer (B2C) and B2B segments due mainly to a decline in the number of customers compared with 2020. Natural gas sales Millions of m 3 2021 2020 Change -Business to consumer 3,731 3,637 94 2.6% -Business to business 6,142 6,071 71 1.2% Total (1) 9,873 9,708 165 1.7% \- of which Italy 4,353 4,429 (76) -1 .7% \- of which Iberia 5,180 5,022 158 3.1% \- of which Latin America 160 155 5 3.2% \- of which Europe (1) 180 102 78 76.5% (1) The gures for 2020 reect a more accurate calculation of volumes sold. The increase in volumes sold in Spain and Romania in 2021 was paly oset by the reduction in consumption in Italy in the B2B segment. The Group’s retail customers total 69,342,818, of which 24,839,600 in the free market, while at December 31, 2020 they numbered 69,517,932, of which 22,931,809 in the free market. End-user Markets 309.4 TWh ELECTRICITY SOLD 298.2 TWh in 2020 69.3 million RETAIL CUSTOMERS of which 24.8 million on the free market €3,086 million GROSS OPERATING PROFIT €3,197 million in 2020 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 196 Integrated Annual Repo 2021196 Peormance Millions of euro 2021 2020 Change Revenue 38,708 29,508 9,200 31.2% Gross operating prot/(loss) 2,990 3,121 (131) -4.2% Ordinary gross operating prot/(loss) 3,086 3,197 (111) -3.5% Operating prot/(loss) 1,657 1 ,817 (160) -8.8% Ordinary operating prot/(loss) 1,753 1,906 (153) -8.0% Capital expenditure 643 460 183 39.8% The following tables show a breakdown of peormance by region/country in 2021. Revenue Millions of euro 2021 2020 Change Italy 19,818 14,869 4,949 33.3% Iberia 16,177 11,987 4,190 35.0% Latin America 1,393 1,492 (99) -6.6% \- of which Argentina 2 - 2 - \- of which Brazil 349 299 50 16.7% \- of which Chile 93 271 (178) -65.7% \- of which Colombia 760 705 55 7.8% \- of which Peru 189 217 (28) -12.9% Noh America 7 10 (3) -30.0% Europe 1,309 1,150 159 13.8% Other 4 - 4 - Total 38,708 29,508 9,200 31.2% Revenue for 2021 increased by 31.2% over the previous year, due mainly to greater revenue from electricity sales (up €6,637 million) and gas sales (up €2,459 million) as a result of greater volumes and sales prices in Italy and Spain. Ordinary gross operating prot/(loss) Millions of euro 2021 2020 Change Italy 2,311 2,372 (61) -2.6% Iberia 547 530 17 3.2% Latin America 263 203 60 29.6% \- of which Argentina 12 (7) 19 - \- of which Brazil 136 107 29 27. 1 % \- of which Chile 44 25 19 76.0% \- of which Colombia 49 56 (7) -12.5% \- of which Peru 22 22 - - Noh America 6 9 (3) -33.3% Europe (41) 83 (124) - Total 3,086 3,197 (111) -3.5% 197Peormance by Business Line 197 The decrease in ordinary gross operating prot for 2021 is essentially aributable to: • a €124 million decrease in prot in Romania, which mainly reects an increase in costs to purchase energy (€257 million), which was only paially oset by greater sales revenue (€120 million); • a €61 million decrease in prot in Italy, where the €120 million decline in prot on the regulated market due, mainly, to the reduction in revenue from marketing services was paly oset by a €59 million increase in prot on the free market due mainly to an increase in sales volumes thanks in pa to an increased number of customers. The decline in prot also reected low- er operating expenses in 2020 following the reversal of a provision connected with a dispute with a trader and the recognition of a ne of €27 million imposed by the Privacy Authority in 2021. These adverse eects were only paially oset by a €60 million increase in prot in Latin America, paicularly in Brazil due to adjustments to rates and to greater quanti- ties sold. Gross operating prot came to €2,990 million (€3,121 million in 2020). In addition to the factors discussed for ordinary gross operating prot, the gure also reects non-recurring items connected with provisions for charg- es in respect of restructuring plans for the energy tran- sition and digitalization (€94 million) and non-recurring costs incurred in responding to the COVID-19 pandemic for workplace sanitization activities, personal protective equipment and donations (€2 million). Ordinary operating prot/(loss) Millions of euro 2021 2020 Change Italy 1,508 1,548 (40) -2.6% Iberia 345 304 41 13.5% Latin America (41) (6) (35) - \- of which Argentina 4 (44) 48 - \- of which Brazil (113) (26) (87) - \- of which Chile 20 11 9 81.8% \- of which Colombia 31 41 (10) -24.4% \- of which Peru 17 12 5 41.7% Noh America 5 9 (4) -44.4% Europe (64) 51 (115) - Total 1,753 1,906 (153) -8.0% Ordinary operating prot reects the factors noted earlier for ordinary gross operating prot, as well as an increase in depreciation and amoization of €42 million, mainly re- garding amoization of intangibles in Italy and Spain. Operating prot for 2021, in the amount of €1,657 mil- lion (€1,817 million in 2020), reects the factors described above in relation to gross operating prot and the increase in depreciation, amoization and impairment losses in Italy and Spain. Capital expenditure Millions of euro 2021 2020 Change Italy 427 310 117 37.7 % Iberia 196 139 57 41.0% Europe 20 11 9 81.8% Total 643 460 183 39.8% The increase in capital expenditure is mainly aributable to the greater capitalization of costs connected with the acquisition of new contracts with customers. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 198 Integrated Annual Repo 2021198 Enel X 199199Peormance by Business Line Operations 2021 2020 Change Demand response capacity (MW) 7,713 6,038 1,675 27.7% Lighting points (thousands) 2,821 2,794 27 1.0% Storage (MW) 375 123 252 - Charging points (no.) (1) 157,209 105,079 52,130 49.6% (1) The gures for 2020 reect more accurate calculations. Private-sector charging points increased by 48,430, mainly in Noh America and Italy, while public charging points increased by 3,700, primarily in Italy and Spain. Peormance Millions of euro 2021 2020 Change Revenue 1,541 1,121 420 37.5 % Gross operating prot/(loss) 283 152 131 86.2% Ordinary gross operating prot/(loss) 298 161 137 85.1% Operating prot/(loss) 30 (16) 46 - Ordinary operating prot/(loss) 44 (7) 51 - Capital expenditure 367 303 64 21.1% Risultati del Gruppo Enel X 157,209 no. CHARGING POINTS 105,079 in 2020 2,821 thousand LIGHTING POINTS 2,794 in 2020 7.7 GW DEMAND RESPONSE 6.0 GW in 2020 €298 million ORDINARY GROSS OPERATING PROFIT €161 million in 2020 +21.1%. CAPITAL EXPENDITURE compared with 2020 for a total of €367 million 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 200 Integrated Annual Repo 2021200 The following tables show a breakdown of peormance by region/country in 2021. Revenue Millions of euro 2021 2020 Change Italy 536 324 212 65.4% Iberia 271 244 27 11.1% Latin America 275 218 57 26.1% \- of which Argentina 12 7 5 71.4% \- of which Brazil 23 20 3 15.0% \- of which Chile 66 68 (2) -2.9% \- of which Colombia 127 75 52 69.3% \- of which Peru 47 48 (1) -2.1% Noh America 274 192 82 42.7% Europe 88 53 35 66.0% Africa, Asia and Oceania 67 55 12 21.8% Other 164 156 8 5.1% Eliminations and adjustments (134) (121) (13) -10.7% Total 1,541 1,121 420 37.5 % Revenue for 2021 increased by 37.5% year on year, with the greatest gains seen in: • Italy, due to increases in commercial eos in seismic and energy upgrading in the e-Home and Vivi Meglio businesses; • Colombia, for activities related to the e-Bus project; • Noh America, for growth in demand response capacity. Ordinary gross operating prot/(loss) Millions of euro 2021 2020 Change Italy 131 38 93 - Iberia 52 45 7 15.6% Latin America 92 84 8 9.5% \- of which Argentina 5 3 2 66.7% \- of which Brazil 1 2 (1) -50.0% \- of which Chile 19 15 4 26.7% \- of which Colombia 50 42 8 19.0% \- of which Peru 17 22 (5) -22.7% Noh America 22 (9) 31 - Europe 17 9 8 88.9% Africa, Asia and Oceania - 2 (2) - Other (16) (8) (8) - Total 298 161 137 85.1% Ordinary gross operating prot increased mainly in Italy and Noh America, due to increased prot on services as- sociated, respectively, with new commercial initiatives and to demand response activities. Gross operating prot came to €283 million (€152 million in 2020). The dierence of €15 million in 2021 compared with ordinary gross operating prot concerns the provi- sions recognized for restructuring plans for the energy transition and digitalization. 201Peormance by Business Line 201 Ordinary operating prot/(loss) Millions of euro 2021 2020 Change Italy 17 (11) 28 - Iberia 4 (1) 5 - Latin America 72 72 - - \- of which Argentina 5 3 2 66.7% \- of which Brazil 1 (2) 3 - \- of which Chile 17 14 3 21.4% \- of which Colombia 39 41 (2) -4.9% \- of which Peru 10 16 (6) -37. 5 % Noh America (22) (52) 30 57.7% Europe 13 3 10 - Africa, Asia and Oceania (3) (1) (2) - Other (37) (17) (20) - Total 44 (7) 51 - Ordinary operating prot includes depreciation, amoiza- tion and impairment losses in the amount of €254 million (€168 million in 2020). The increase in depreciation, amor- tization and impairment losses is essentially aributable to increased amoization of intangibles recognized by Enel X Italia. Operating prot for 2021, in the amount of €30 million (a loss of €16 million in 2020), reects the factors described above in relation to gross operating prot, the positive val- ue adjustment of the Cremzow storage plant (€1 million) and the increase in amoization recognized by Enel X Italia. Capital expenditure Millions of euro 2021 2020 Change Italy 99 70 29 41.4% Iberia 54 50 4 8.0% Latin America 48 67 (19) -28.4% Noh America 46 36 10 27.8% Europe 4 5 (1) -20.0% Africa, Asia and Oceania 10 3 7 - Other 106 72 34 47. 2 % Total 367 303 64 21.1% Capital expenditure increased mainly in Italy within the Vivi Meglio business due to the increase in volumes handled, in Noh American as a result of an increase in storage ac- tivities, and in Iberia in the e-Home business following an increase in volumes sold compared with 2020. Enel X Srl also posted a signicant increase in capital ex- penditure to develop global technology platforms for digi- tal business management. The reduction in capital expenditure in Latin America is due mainly to the execution, in 2020, of projects related to the e-Bus business in Colombia. This decrease was paial- ly oset by greater capital expenditure for sma lighting projects in Peru and distributed energy projects in Brazil. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 202 Integrated Annual Repo 2021202 Services, Holding and Other 203203Peormance by Business Line Peormance Millions of euro 2021 2020 Change Revenue (1) 3,931 2,024 1,907 94.2% Gross operating prot/(loss) 1,424 (237) 1,661 - Ordinary gross operating prot/(loss) 1,646 (83) 1,729 - Operating prot/(loss) 1,149 (444) 1,593 - Ordinary operating prot/(loss) 1,416 (290) 1,706 - Capital expenditure 207 174 33 19.0% (1) For the sake of clarity, the Holding segment includes internal eliminations that were previously repoed under intersegment eliminations and adjustments in the amount of €115 million in 2020. The tables below show a breakdown of peormance by re- gion/country in 2021. Revenue Millions of euro 2021 2020 Change Italy 760 749 11 1.5% Iberia 465 480 (15) -3.1% Latin America 17 13 4 30.8% Europe 24 24 - - Other (1) 2,895 988 1,907 - Eliminations and adjustments (230) (230) - - Total 3,931 2,024 1,907 94.2% (1) For the sake of clarity, the Holding segment includes internal eliminations that were previously repoed under intersegment eliminations and adjustments in the amount of €115 million in 2020. The increase in 2021 revenue is mainly aributable to the gain related to the sale of Open Fiber as pa of the Stew- ardship business model in the amount of €1,763 million and to the increase in services provided to the other Busi- ness Lines. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 204 Integrated Annual Repo 2021204 Ordinary gross operating prot/(loss) Millions of euro 2021 2020 Change Italy 56 83 (27) -32.5% Iberia 31 30 1 3.3% Latin America (77) (86) 9 10.5% Noh America (1) (5) 4 80.0% Europe 7 4 3 75.0% Other 1,630 (109) 1,739 - Total 1,646 (83) 1,729 - The increase in ordinary gross operating prot for 2021 is mainly aributable to the change in revenue described above, which was paially oset by an increase in service costs, paicularly for information systems, and by greater provisions for disputes in Italy. Gross operating prot came to €1,424 million (€237 million in 2020). Extraordinary items in 2021 were almost entirely represented by provisions for restructuring plans and dig- italization totaling €216 million. Costs incurred in response to the COVID-19 pandemic for workplace sanitization ac- tivities, personal protective equipment and donations in the amount of €6 million decreased by €41 million com- pared with the same period of the previous year. Ordinary operating prot/(loss) Millions of euro 2021 2020 Change Italy (16) 14 (30) - Iberia (20) (16) (4) -25.0% Latin America (79) (88) 9 10.2% Noh America (1) (6) 5 83.3% Europe 5 3 2 66.7% Other 1,527 (197) 1,724 - Total 1,416 (290) 1,706 - Ordinary operating prot for 2021 is essentially in line with the increase in ordinary gross operating prot, taking ac- count of the €23 million increase in depreciation, amoi- zation and impairment losses. Operating prot for 2021, in the amount of €1,149 million (a loss of €444 million in 2020), reects the factors de- scribed above in relation to gross operating prot and or- dinary operating prot and the €45 million impairment loss recognized on the Group’s head oce in Rome following the paial demolition of the propey for renovations. Capital expenditure Millions of euro 2021 2020 Change Italy 53 33 20 60.6% Iberia 32 27 5 18.5% Latin America 4 3 1 33.3% Noh America 1 - 1 - Europe 1 - 1 - Other 116 111 5 4.5% Total 207 174 33 19.0% The increase in capital expenditure in 2021 in Italy is mainly aributable to propey renovation work and software de- velopment. 205Enel shares 205 Enel shares Enel and the nancial markets 2021 2020 Gross operating prot per share (euro) (1) 1.73 1.66 Operating prot per share (euro) (1) 0.76 0.83 Group prot per share (euro) 0.31 0.26 Group ordinary prot per share (euro) 0.55 0.51 Dividend per share (euro) 0.380 0.358 Group equity per share (euro) 2.92 2.79 Share price - 12-month high (euro) 8.95 8.57 Share price - 12-month low (euro) 6.53 5.23 Average share price in December (euro) 6.77 8.17 Market capitalization (millions of euro) (2) 68,804 83,110 No. of shares outstanding at December 31 (millions) (3) 10,167 10,167 (1) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more details, please see note 7 to the consolidated nancial statements. (2) Calculated on average share price in December. (3) The number of shares includes 4,889,152 treasury shares in 2021 and 3,269,152 treasury shares in 2020. Current (1) at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2019 Rating Standard & Poor’s Outlook STABLE STABLE STABLE STABLE Medium/long-term BBB+ BBB+ BBB+ BBB+ Sho-term A-2 A-2 A-2 A-2 Moody’s Outlook STABLE POSITIVE POSITIVE POSITIVE Medium/long-term Baa1 Baa1 Baa2 Baa2 Sho-term - - - - Fitch Outlook STABLE STABLE STABLE STABLE Medium/long-term BBB+ A- A- A- Sho-term F2 F2 F2 F2 (1) Figures updated to January 31, 2022. The world economy in 2021 was characterized by a gener- alized recovery, with estimated world GDP growth of about 5.8% on an annual basis. The rebound was made possible, especially in the more developed countries, by signicant government scal suppo and the rapid and eective roll- out of vaccination campaigns. However, the reopening of economic activity at the begin- ning of 2021 generated sharp imbalances between supply and demand on a global scale, causing severe distoions in supply chains and, consequently, pushing up the prices of raw materials and intermediate and consumer goods, In the 2nd Half of 2021, US GDP, which increased by 5.7% year-on-year in the year as a whole, grew more slowly than anticipated at the beginning of the year. In the euro area, the real economy posted a clear recovery in both the 2nd and 3rd Quaers of 2021, with annual GDP grown by 5.2%. However, the economic recovery slowed in the 4th Quaer due to rapid increases in energy prices and a surge in Omicron-related COVID cases, which prompted many countries to reintroduce business closures and mo- bility restrictions. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 206 Integrated Annual Repo 2021206 In Latin America, the reopening of national economies co- incided with a global increase in food and energy prices against a background of weak local currencies and peri- ods of severe drought in many large relevant areas of the continent. These developments pushed up ination, which in many cases was well above the targets of local central banks. The economic recovery also impacted nancial markets. The main European equity indices closed 2021 with gains. The Italian FTSE- MIB rose 23.0%, the Spanish Ibex35 gained 7.9%, the German DAX30 increased 15.8% and the French CAC40 jumped 28.9%. The euro-area utilities sector (EURO STOXX Utilities) closed the year with an increase of 3.6%. Finally, as regards the Enel stock, 2021 ended with a price of €7.046 per share, a decline of 14.9% on the previous year. On January 20, 2021 Enel paid an interim dividend of €0.175 per share from 2020 prots and on July 21, 2021 it paid the balance of the dividend for that year in the amount of €0.183\. Total dividends distributed in 2021 amounted to €0.358 per share, about 9% higher than the €0.328 per share distributed in 2020. In relation to ordinary prot for 2021, on January 26, 2022 an interim dividend of €0.19 was paid, while the balance of the dividend is scheduled for payment on July 20, 2022. At December 31, 2021, institutional investors had reduced their position in Enel to 59.4% of share capital (compared with 62.3% at December 31, 2020), while the share of indi- vidual investors rose to 17.0% (as against 14.1% at Decem- ber 31, 2020). The interest of the Ministry for the Economy and Finance was unchanged at 23.6%. Socially responsible investors (SRIs) held about 14.6% of share capital (essential- ly unchanged on December 31, 2020) and represent 24.6% of institutional investors (23.4% at December 31, 2020). Investors who have signed the Principles for Responsible Investment represent 46.6% of share capital (47.8% at De- cember 31, 2020). For fuher information we invite you to visit the Investor Relations section of our corporate website (hp://www. enel.com/investors/overview) and download the “Enel In- vestor“ app, which contains both economic and nancial information (annual repos, semi-annual and quaerly repos, presentations to the nancial community, analyst estimates and stock market trading trends involving the shares issued by Enel and its main listed subsidiaries, rat- ings and outlooks assigned by rating agencies) and up-to- date data and documentation of interest to shareholders and bondholders in general (price sensitive press releases, outstanding bonds, bond issue programs, composition of Enel’s corporate bodies, bylaws and regulations of Share- holders’ Meetings, information and documentation relat- ing to Shareholders’ Meetings, procedures and other doc- umentation concerning corporate governance, the Code of Ethics and organizational and management arrange- ments). We have also created contact centers for private investors (which can be reached by phone at +39-0683054000 or by e-mail at azionisti.retail@enel.com) and for institution- al investors (phone: +39-0683051; e-mail: investor.rela- tions@enel.com). 207Enel shares 207 Developments in ESG investors Peormance of Enel share price and the EURO STOXX Utilities and FTSE-MIB indices from January 1, 2021 to January 31, 2022 Investors (no.) Float (%) Share capital (%) 2015 2016 2017 2018 2019 2020 20212014 134 8.6 5.9 132 10.3 7.7 150 10.5 8.0 160 11.3 8.6 169 13.7 10.5 182 14.1 10.8 244 19.1 14.6 14.6 252 19.1 Enel EURO STOXX Utilities FTSE-MIB 130 120 110 100 90 80 70 60 01/01 01/02 01/03 01/04 01/05 01/06 01/07 01/08 01/09 01/10 01/11 01/12 01/01 50 2021 2022 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 208 Integrated Annual Repo 2021208 Innovation and digitalization For Enel, innovation and digitalization are key pillars of its strategy to grow in a rapidly changing context while en- suring high safety standards, business continuity and op- erational eciency, and thus enabling new uses of energy and new ways of managing it, making it accessible to an ever-larger number of people. Enel also operates through an Open Innovability® model, a consensus-based ecosystem that makes it possible to connect all areas of the Company with staups, industri- al paners, small and medium-sized enterprises, research centers and universities through a variety of system, such as crowdsourcing platforms and the Innovation Hub net- work. The Company has numerous innovation panership agreements that, in addition to Enel’s traditional lines of business in the renewables and conventional generation sectors, have promoted the development of new solutions for e-mobility, microgrids, energy eciency and the indus- trial Internet of Things (IoT). Enel’s innovation strategy leverages the online crowd- sourcing platform (openinnovability.com) and a global net- work of 10 Innovation Hubs (of which 3 are also Labs) and 22 Labs (of which 3 are dedicated to staups), which con- solidates the new model of collaboration with staups and SMEs. The laer oer innovative solutions and new busi- ness models, and Enel makes its skills, testing facilities and a global network of paners available to suppo their de- velopment and possible scale-up. The Hubs are located in the most impoant innovation ecosystems for the Group (Catania, Pisa, Milan, Silicon Valley, Boston, Rio de Janeiro, Madrid, Moscow, Santiago de Chile and Tel Aviv), they man- age relationships with all the players involved in innovation activities and are the main source of scouting for innova- tive staups and SMEs. The Labs (among which those in Milan, Pisa, Catania, São Paulo, Tel Aviv and Be’er Sheva are the most representative) allow staups to develop and test their solutions together with the Business Lines. In 2021, thanks to the Group’s stable positioning in innova- tive ecosystems and the extensive use of the Hub and Lab network, more than 90 scouting initiatives were launched (more than half of which in the form of viual bootcamps) in various technological areas. This enabled Enel to meet more than 2,000 staups and to begin more than 100 new collaborative relationships. The community of 500,000 solvers gave Enel a global crowdsourcing presence in 2021 as well, with over 27 in- novation and sustainability challenges launched on open- innovability.com. In 2021, Enel reached a total of over 177 challenges launched since the platform was created, 44,000 users registered on the site (about 400,000 poten- tial solvers from paner platforms) and about €650,000 in monetary prizes paid to the winners. In 2021, the integration of Open Innovation Culture and Agile Transformation was launched at the Group level with the aim of providing the business with comprehensive suppo, from the generation of the idea to the implemen- tation of projects, using Innovation and Agile approaches as a key driver to create competitive advantage and opti- mize costs over time. Ever increasing impoance is being taken on by activities to promote and develop the culture of innovation and en- trepreneurship within the Company, through multiple ini- tiatives such as the training of personnel in courses pro- vided through the Innovation Academy (many of which are run with internal instructors), the project involving In- novation Ambassadors, who are people passionate about innovation and creativity who voluntarily dedicate pa of their working time to suppo activities in solving business challenges with a co-creative and innovative approach, and nally the “Make it Happen!“ entrepreneurship project, a company contest in which employees can propose in- novative business projects or process eciency projects directly to Company top management. During 2021, Enel also continued to implement We4U, the World energy 4 Universities panership program with na- tional and international universities and research centers, with the aim of maintaining a constant and multidisciplinary dialogue focused on the challenges of the energy transition. The activities of the innovation communities also contin- ued, involving dierent areas and skills within the Company. In addition to the existing communities addressing energy storage, blockchain, drones, augmented and viual reality, additive manufacturing, aicial intelligence, wearables, robotics and green hydrogen, four other communities on sensors, materials, computer generative design and data monetization were added in 2021. While for the most cut- ting-edge technologies the role of the communities is ex- ploratory, researching possible use cases and applications, others play a role in sharing and disseminating best prac- tices that can enable technologies to scale and expand their impact on the business: this is the case of drones, with possibilities opened by regulatory developments con- cerning ights beyond the visual line of sight (BVLOS), ro- botic solutions, especially in the eld of legged-robots and autonomous missions, viual and augmented reality and aicial intelligence applications. 209Innovation and digitalization 209 In 2021, €130 million (including personnel expenses) were invested in innovation, research and development. In 2021, cyber security innovation work beneted from the network of Innovation Hubs, as well as from their staup pofolio and the panerships agreed at the Group level. These interconnections have fostered the sharing of best practices and operating approaches, as well as the estab- lishment and expansion of info-sharing channels. In par- ticular, the services provided by more than 20 staups were analyzed and proof-of-concept activities were peormed, some of which are still in progress while others have been internalized, addressing the issues summarized below. The following technological areas were investigated: • cyber protection and detection services in the eld of micro-services, in paicular for containers and server- less instances in the DevSecOps eld; • specic solutions for the protection of industrial sys- tems (OT), which owing to their scope of applicability often have low computational capacity and are linked to legacy systems; • services for identifying vulnerabilities in third-pay as- sets and services used by the organization that can un- dermine the security of the organization itself (external aack suace); • solutions that exploit the greater potential of aicial intelligence and machine learning, helping to enhance capabilities for the detection of cyber threats and the automation of analysis, correlation and response to in- cidents; • solutions to identify the vulnerabilities of assets and de- vices (mobile devices, IoT, web applications, etc) with the use of innovative techniques; • services that enable analysis of the rmware of IoT de- vices within a few hours and the rapid identication of key vulnerabilities, optimizing execution times com- pared with manual processes. Intellectual propey Continuing the work done the previous year, in 2021 Enel redoubled its commitment to leveraging and developing its intellectual propey pofolio to ensure it serves as a source of competitive advantage for the Group. The Open Innovability® ecosystem generates innovation through the creation and sharing of internal and external solutions that give life to ideas that enable the safe and sustainable propagation of the technological solutions through which electrication, platformization and stew- ardship programs are implemented, but which at the same time require appropriate forms of legal protection. This innovative impulse is also reected in the Group’s investment in intangible assets, which show a signicant increase, in line with the strategic direction delineated above, with paicular regard to IT and digital applications. The investments focused on all the Group’s Global Busi- ness Lines and mainly concerned: • in the Global Thermal Generation Global Business Line, the development of innovative technical solutions in so- lar generation that seek, on the one hand, to create an innovative system for the rapid and automatable instal- lation of photovoltaic panels and, on the other hand, to increase the photovoltaic output of plants by increas- ing charge transfer mechanisms at the micro and na- nometric level in correspondence with dierent layers both in single and heterojunction cells and in tandem systems; • in the Global Infrastructure and Networks Global Busi- ness Line, the creation of platforms for the exploitation of network externalities in the service market, as well as for the automation of user management; • in the Enel X Global Business Line, the development of applications in the telemedicine business and platforms in urban livability eld, with paicular regard, respec- tively, to the Sma Axistance eWell App, designed and operated in collaboration with leading specialists at the Policlinico Gemelli Foundation, and to the 15 Minutes City Index platform, developed in collaboration with the University of Florence; • in the new e-Mobility Global Business Line, the deni- tion of forms of protection for its solutions in electric charging, including the community design to protect Juice Media, an innovative product which enables the simultaneous oer of electric charging and multimedia adveising services in a single structure. The Group is also investing resources in the development of innovative solutions for protecting its intellectual prop- ey, mainly in the forms of copyright protection and trade secrets, concerning climate models and advanced quan- titative models for the analysis of energy systems in order to suppo decarbonization and electrication in the main geographical areas in which we operate, using an integrat- ed and future-oriented vision. At December 31, 2021, the Group had applied for 892 for patents in 146 technological families. Of these, 749 have been granted and 143 are pending. The pofolio ensures protection in all the markets in which the Group is present. For a detailed analysis of the most signicant intellectual propey rights of each Global Business Line, please see the section on intellectual propey in the Sustainability Re- po. The increase in the size of the entire pofolio of intel- 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 210 Integrated Annual Repo 2021210 lectual propey rights held by the Enel Group corresponds to growing internal eos to strengthen the information infrastructure necessary for the immediate identication of the innovation generated, its evaluation and protection, as well as the ongoing monitoring of the pofolio’s evolu- tion, with a view to ensuring continuous and close align- ment between technological and commercial trajectories and corresponding forms of safeguarding the competitive advantage provided by intellectual propey rights. The Group also intends to continue to suppo and encourage the development of its innovation model through specic projects for internal dissemination by the Intellectual Prop- ey unit. In this regard, in 2021 a new Intellectual Propey Management procedure was introduced and management repoing tools were developed to enhance the sharing of information on the value generated within Enel through the Open Innovability® model. For more information, please see the section on intellectual propey in the Sus- tainability Repo. The new Intellectual Propey Management procedure The management of the Group’s intellectual propey is governed by the new Intellectual Propey Management procedure. It comprises all stages of the life of intellectu- al propey, from the moment of conception of inventions to that of protecting and maintaining the pofolio and re- lationships with external counterpaies. In paicular, the procedure governs cases in which the intellectual propey generated within Enel is transferred externally in circum- stances such as: (i) collaborative research; (ii) procurement; (iii) relations with staups; (iv) mergers, acquisitions and stewardship operations; and (v) the outright or licensed acquisitions of intangible assets of Enel and third paies. The methods for protecting intangible assets, monitoring their use, and metrics for measuring the Group’s peor- mance in the management of intellectual propey are regulated within this procedure, tracing information of use in the future planning and leveraging assets and mapping risks. The Intellectual Propey Repoing project Staing in 2020, Enel has set itself the challenge – com- monly felt but not denitively absorbed into corporate practices in the various global technology companies – of accurately representing its intellectual assets in its non-nancial repoing. This prompted us to rst under- take a quantitative and qualitative survey of our existing assets, systematizing both legally protected assets (pat- ents, designs, utility models) and trade secrets. In 2021, Enel laid the foundations for the denition of an internal non-nancial repoing process for intellectual propey, based on a proprietary methodology designed to lend continuity from year to year to valuing and leveraging our intangible asset resources, paly with a view to future ex- ternal repoing. The process is applicable to all internal Enel projects that are intended to generate intellectual propey and is based on the necessary and preventive identication of the various components which a project may generate, such as, among other things, documentation, technol- ogy, algorithms, processes, products, layouts, schemes and dashboards. Each identied intangible element is matched with one or more forms of intellectual prop- ey right in order to measure the intensity of the pro- ject’s output in terms of intellectual content. The internal methodology also envisages an exercise to evaluate the intellectual propey generated internally, which, while not intending in any way to replace other valuation methods adopted within the Enel Group for determining fair value based on income methods, makes it possible to assess the intrinsic value of these intangibles on the basis of - nancial factors and providing an indication of the invest- ment that would be necessary to replicate the technolog- ical solution being evaluated. At an experimental level, a number of projects that have contributed to the generation of intellectual proper- ty within the Enel Group were selected from within the Global Business Lines, the Global Service Functions and the sta functions for a more detailed analysis of the problems arising from the application of this qual- itative-quantitative methodology. The methodology was tested and peected with these projects on the basis of empirical experience and taking account of the specic technical and organizational features of the various areas. More specically, the most interesting practical applica- tions of the Intellectual Propey Repoing methodology include Grid Blue Sky, a agship project of the Global In- frastructure and Networks Business Line (mentioned in the 2020 Sustainability Repo), and the intangibles of 211Innovation and digitalization 211 the 3SUN factory, which is involved in the manufacture of bi-facial heterojunction solar panels based on proprietary Enel technology. The Grid Blue Sky project seeks to re-engineer the oper- ating model used for grids with a view to the integrated management of all operations, from design and planning to operation and maintenance, interaction with custom- ers and the suppo of new business models adopted by distributors, all in such a way that the various functions are natively compatible with the various aspects of the operating environment, including the regulatory factors typical of energy markets. Grid Blue Sky is based on an innovative development paradigm, which makes its archi- tecture scalable, sustainable and resilient, being based on the idea that all the activities of an operator take place through access to a single integrated platform on which the data converge. This avoids the need to devel- op redundant veical solutions, because the database is shared and opens up the possibility of developing count- less services or integrating third-pay solutions. The platform includes the following components: • the asset owner, which concerns everything related to the planning and development of the power grid; • the asset operator, which concerns the management of grid operation and maintenance processes; • customer engagement, which handles interaction with customers, who will thus benet from a single platform for interaction and relationship management; and • the system operator, which looks to the future of elec- tricity distribution, examining as yet unregulated per- spectives concerning the use of the exibility oered by grid-connected resources to solve congestion and voltage regulation issues. The examination of the project using the Intellectu- al Propey Repoing methodology made it possible to identify the various intangible components that combine to form the platform and conrmed the considerable in- tellectual propey density of Grid Blue Sky. The search for a correspondence between intangible components and forms of protection – which is pa of the methodology inaugurated by Enel – reveals the presence of a copy- right on all the source code underpinning the platform and on all aspects of conceptual design and the infor- mation ows at the basis of the operating model, as well as copyright over all the original graphic elements (user inteaces and data access dashboards). Fuhermore, in application of the internal procedure governing the pro- tection of trade secrets, all the condential components underlying Enel’s great know-how in managing the grid and which are expressed in technological, organization- al, economic, nancial and marketing aspects have been identied, isolated and codied. Similarly, the exercise of codifying intangible assets and identifying forms of protection was conducted for Enel Green Power’s 3SUN factory, which conceives and de- velops new-generation photovoltaic applications. Enel has long been at the forefront in the design of bi-facial heterojunction solar panels, which increase the eciency of systems thanks to their greater capacity for capturing solar radiation. 3SUN’s know-how in this area does not only involve the panel as such, but also the innovative materials used, the assembly methods, as well as all the industrial knowledge behind the construction and auto- mated management (from an Industry 4.0 perspective) of production lines. The codication of intellectual propey for 3SUN identied all the technological components and related forms of protection, which involve a broad group of patent families for the processes implemented, the materials used and the heterojunction techniques used to manufacture panels, as well as a considerable volume of condential knowledge, adequately identied and pro- tected, necessary to make the panels, and specic pro- duction know-how that directly concerns the realization of all the components of the Gigafactory. The cases of Grid Blue Sky and 3SUN are emblematic of the assiduous work that Enel has been pursuing for some years now to make it increasingly visible to the outside world how intellectual propey is instrumental to the generation and preservation of the Company’s com- petitive advantage, both in cases of direct and internal exploitation of technological solutions (as in the case of 3SUN) or where proprietary oversight is instrumental to sharing knowledge in a context of open innovation and enabling new business models (as in the case of Grid Blue Sky). 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 212 Integrated Annual Repo 2021212 People centricity People management and development at Enel The Enel Group workforce at December 31, 2021 numbered 66,279 (66,717 at December 31, 2020). The contraction of 438 in the Group workforce in 2021 reects the impact of the balance between new hires and terminations during the period (-461) and the change in the consolidation scope (a total of +23), which included the disposal of the Enel Green Power Bulgaria companies and the acquisition of CityPoste Payment SpA in Italy. The following tables analyze the number and variation in employees by gender, age group, job classication and ge- ographical area. An analysis by Business Line is also provid- ed for the number of employees only. Year-end workforce 2021 2020 Change Employees by gender: no. 66,279 66,717 (438) -0.7% \- of which men no. 51,341 52,346 (1,005) -1.9% % 7 7.5 78.5 -1.0 -1.3% \- of which women no. 14,938 14,371 567 3.9% % 22.5 21.5 1.0 4.7% Employees by age group: no. 66,279 66,717 (438) -0.7% \- <30 no. 7,76 1 7,289 472 6.5% % 11.7 10.9 0.8 7.3% \- 30-50 no. 38,024 36,355 1,669 4.6% % 57.4 54.5 2.9 5.3% \- >50 no. 20,494 23,073 (2,579) -11.2% % 30.9 34.6 -3.7 -10.7% Employees by level: no. 66,279 66,717 (438) -0.7% \- senior manager % 2.1 2.1 - - \- middle manager % 18.5 17.4 1.1 6.3% \- oce sta % 53.6 53.8 -0.2 -0.4% \- blue collar % 25.8 26.7 -0.9 -3.4% Employees by geographical area no. 66,279 66,717 (438) -0.7% Italy no. 30,276 29,800 476 1.6% % 45.7 44.7 1.0 2.2% Iberia no. 9,518 9,781 (263) -2.7% % 14.4 14.7 -0.3 -2.0% Latin America no. 18,763 19,838 (1,075) -5.4% % 28.3 29.7 -1.4 -4.7% Europe no. 4,994 4,966 28 0.6% % 7.5 7.4 0.1 1.4% Noh America no. 1,914 1,639 275 16.8% % 2.9 2.5 0.4 16.0% Africa, Asia and Oceania no. 814 693 121 17.5 % % 1.2 1.0 0.2 20.0% 213People centricity 213 Workforce by Business Line No. at Dec. 31, 2021 at Dec. 31, 2020 Percentage of total at Dec. 31, 2021 Percentage of total at Dec. 31, 2020 Thermal Generation and Trading 7,847 8,142 11.8% 12.2% Enel Green Power 8,989 8,298 13.5% 12.4% Infrastructure and Networks 33,263 34,332 50.2% 51.5% End-user Markets 6,148 6,324 9.3% 9.5% Enel X 3,352 2,989 5.1% 4.5% Services 5,734 5,731 8.7% 8.6% Holding and other 946 901 1.4% 1.3% Total 66,279 66,717 100.0% 100.0% Change in workforce Balance at December 31, 2020 66,717 Hirings 5,401 Terminations (5,862) Change in consolidation scope 23 Balance at December 31, 2021 66,279 Breakdown of changes in workforce 2021 2020 Change Hiring rate % 8.1 4.7 3.4 72.3% New hires by gender: no. 5,401 3,131 2,270.0 72.5% \- of which men no. 3,764 2,203 1,561 70.9% % 69.7 70.4 -0.7 -1.0% \- of which women no. 1,637 928 709 76.4% % 30.3 29.6 0.7 2.4% New hires by age group: no. 5,401 3,131 2,270 72.5% \- <30 no. 2,579 1,363 1,216 89.2% % 47.8 43.5 4.3 9.9% \- 30-50 no. 2,653 1,700 953 56.1% % 49.1 54.3 -5.2 -9.6% \- >50 no. 169 68 101 - % 3.1 2.2 0.9 40.9% New hires by geographical area no. 5,401 3,131 2,270 72.5% Italy no. 1,697 1,044 653 62.5% % 31.5 33.3 -1.8 -5.4% Iberia no. 693 257 436 - % 12.8 8.2 4.6 56.1% Latin America no. 1,704 991 713 71.9% % 31.5 31.7 -0.2 -0.6% Europe no. 439 280 159 56.8% % 8.1 8.9 -0.8 -9.0% Noh America no. 636 362 274 75.7% % 11.8 11.6 0.2 1.7% Africa, Asia and Oceania no. 232 197 35 17.8% % 4.3 6.3 -2.0 -31.7% 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 214 Integrated Annual Repo 2021214 2021 2020 Change Turnover rate % 8.8 6.0 2.8 46.7% Terminations by gender: no. 5,862 3,696 2,166 58.6% \- of which men no. 4,779 3,001 1,778 59.2% % 81.5 81.2 0.3 0.4% \- of which women no. 1,083 695 388 55.8% % 18.5 18.8 -0.3 -1.6% Terminations by age group: no. 5,862 3,696 2,166 58.6% \- <30 no. 702 547 155 28.3% % 12.0 14.8 -2.8 -18.9% \- 30-50 no. 2,275 1,273 1,002 78.7% % 38.8 34.4 4.4 12.8% \- >50 no. 2,885 1,876 1,009 53.8% % 49.2 50.8 -1.6 -3.1% Terminations by geographical area no. 5,862 3,696 2,166 58.6% Italy no. 1,249 1,011 238 23.5% % 21.3 27.3 -6.0 -22.0% Iberia no. 956 599 357 59.6% % 16.3 16.2 0.1 0.6% Latin America no. 2,779 1,393 1,386 99.5% % 47.4 37.7 9.7 25.7% Europe no. 406 299 107 35.8% % 6.9 8.1 -1.2 -14.8% Noh America no. 361 313 48 15.3% % 6.2 8.5 -2.3 -27.1% Africa, Asia and Oceania no. 111 81 30 37.0% % 1.9 2.2 -0.3 -13.6% Training and development As the COVID-19 emergency evolved, personnel safety was guaranteed by continuing to adopt the exible working meas- ures implemented in 2020. In 2021, remote working was used by more than 39 thousand employees in the countries in which the Group operates. This capacity for exibility and resilience leverages our consolidated experience with exible working, which began in Italy as early as 2016 and then grad- ually spread throughout the Group, and the technological and digital transformation of corporate strategy that has made Enel the rst public utility completely resident in the cloud. The new approach to work has beneted from the numer- ous tools and suppo services made available to our people, an essential prerequisite for working from home, ensuring the circulation and sharing of information and the eective organization of activities. Training and awareness-raising in- itiatives continue to accompany the adoption of fully digital working methods and the promotion of a work culture based on independence, delegation and trust, and aention to the well-being of our people and their families. In this context, the targeted reskilling and upskilling programs have therefore been strengthened, the former to learn skills and expeise that enable people to ll new positions and roles, while the laer involve the development of training and empowerment courses that enable employees to improve their peormance in their job, increasing the skills available to them in their current position. During 2021, dissemination eos concerning upskilling and reskilling issues were launched with the involvement of all the Group’s countries and Business Lines: these included a global challenge and 36 interviews with senior executives on current and future skills. A working group was also formed to draft guidelines and map projects, adopting a common taxonomy in which upskilling, reskilling and external skilling are consid- ered as an integrated set of initiatives that include training, development and the Enel ecosystem as a whole. European networking on upskilling and reskilling issues was expanded by joining the Upskill4the future initiative of CSR Europe with the People Business Paner R-evolution project of e-distribuzione, targeted at People Business Paners, the rst facilitators of the energy transition in accompanying peo- ple along their professional growth path, who contributed to 215People centricity 215 the drafting of the Joint Statement on the Just Transition, of the European social paners, signed in November. Enel promotes training activities for its people as a key ele- ment in ensuring their constant development. We have de- veloped career paths to foster the evolution of our talent, the valorization of passions and personal aptitude and the de- velopment of new languages, also promoting the formation of internal trainers (“train the trainer“). In 2021, some 3 million (18) The cost calculation takes account of the specic training account in the New Primo system. This includes all external training costs and is currently the only form of ceied information on training costs available. hours of training were provided, an increase compared with the previous year, with 20% provided in person and the re- mainder delivered remotely. This was made possible by the upgrading of digital tools and the E-Ducation platform, which ensured broad access to content and expanded the culture of digitalization for learning. The training courses covered is- sues related to conduct, technical issues, safety, new skills and digital culture. Total Group training costs in 2021 amounted to €23 million. (18) Average training hours per employee 2021 2020 Change Average number of training hours hrs/person 44.6 40.9 3.7 9.0% Average number of training hours by level: \- senior manager hrs/person 29.6 31.9 (2.3) -7. 2% \- middle manager hrs/person 41.9 41.4 0.5 1.2% \- oce sta hrs/person 38.4 35.7 2.7 7.6% \- blue collar hrs/person 60.3 51.4 8.9 17.3% Average number of training hours by gender: \- men hrs/person 46.5 40.4 6.1 15.1% \- women hrs/person 37.7 42.7 (5.0) -11.7% In a rapidly changing work environment, accelerated by the pandemic crisis, the Group has set itself the ambi- tious goal of promoting digital sustainability in the coming years through a series of training initiatives that illustrate all those technologies that enable our people to work and coexist sustainably with the surrounding environment. With regard to people development initiatives, in 2021 a new peormance appraisal model was developed and ex- tended to the entire Group: the Open Feedback Evaluation (OFE). The program, which involves 100% of the Group’s eligible employees, has signicant distinctive features compared with past iterations. More specically, in order to forge a constant dialogue between and with people, the evaluation has been made continuous and omni-com- prehensive, with three moments of communication be- tween managers and personnel during the year. The new OFE model consists of three interdependent dimensions: “Talent“, which consists in highlighting a worker’s individual skills based on the 15 Soft Skills Model linked to the 4 Open Power values of Trust, Responsibility, Innovation and Pro- activity; “Generosity“, understood as an aptitude to enter into relationships with others, dedicating time to recog- nizing the talents of colleagues and in turn geing involved by requesting feedback on one’s own peormance, gen- erating a mechanism for individual and collective growth; and, nally, “Action“, i.e., the ability of employees to achieve professional goals, as assessed by their managers. Listening and improvement of organizational well-being Following earlier initiatives conducted by Enel to ensure we are constantly listening to our people, which over the years have led to the development of specic action plans for individual holding functions, Business Lines and ge- ographical areas, producing answers to the main needs that emerged from the process (meritocracy, personal development, work-life balance, etc.), at the end of 2020 a global “Open Listening - interview to build our future“ program was launched. This global initiative, which saw the active paicipation of 70% of employees, provided impor- tant feedback on the internal climate but also on working conditions, asking our people to imagine the future in the “Next Normal“ era: from remote working methods to spac- es, innovative technologies and the new leadership models of the future. Fuhermore, during 2021 Enel and our people also de- veloped a global well-being model based on eight pillars that impact general satisfaction: psychological, physical, 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 216 Integrated Annual Repo 2021216 social, ethical, economic and cultural well-being, work-life harmony and a feeling of protection. To measure well-be- ing and identify the most impoant initiatives for people, a global well-being survey was conducted. The ndings of the survey will enable the development of a Global Well- ness Program in 2022, with the involvement of an interna- tional, diverse and multicultural team. Finally, 2021 saw another impoant listening moment aimed at identifying, among other things, the aspects of the work environment that our personnel recognize as most valuable and distinctive of the Group: the “Employer Value Proposition Survey“. Thanks to this project, which in- volved employees from around the world, a Net Promoter Score – an indicator measuring the employee satisfaction – was also analyzed, assessing the main aributes associ- ated with the Enel brand in its position as an “employer of choice“. Sustainability, innovation, safety at work and work- life balance are the main aributes that emerged, factors that also match the main preferences declared by people when they choose where they want to work. Diversity in Enel The inclusion of diversity and the valorization of people’s multiple and unique talents are essential factors of Enel’s approach for creating long-term sustainable value for all stakeholders. Enel’s commitment to promoting diversity and inclusion is a process that staed in 2013 with the adoption of our Hu- man Rights Policy, followed in 2015 by our global Diversity and Inclusion Policy, published in conjunction with Enel’s adoption of the Women’s Empowerment Principles (WEP) promoted by the UN Global Compact and UN Women and in line with the United Nations Sustainable Development Goals. In 2019, the Global Workplace Harassment Policy was published. It sets out the principle of respect for the integrity and dignity of the individual in the workplace and addresses the issue of sexual harassment and harassment connected with discrimination in the workplace. In 2020, these principles were delineated in the Statement against Harassment. Finally, with a focus on the inclusion of every- one and with a view to ensuring equal oppounities for access to information and digital systems, a global digital accessibility policy was issued in 2021. Our approach to diversity and inclusion is based on the principles of non-discrimination, equal oppounities, dig- nity and inclusion of every person regardless of dierenc- es, and work-life balance. It is embodied in a comprehen- sive set of actions that promote the care and expression of the uniqueness of each person, an inclusive and prej- udice-free organizational culture, and a coherent mix of skills, qualities and experiences that create value for peo- ple and the business. Among the most impoant initiatives pursued in 2021 are dedicated actions to systematically impact the various as- pects of the gender gap and the inclusion of disability, the specic listening and suppo services made available to people in the context of the pandemic emergency, projects dedicated to people with vulnerabilities, awareness-raising initiatives on LGBTQ+ issues and cultural diversity. In recent years, an intense awareness-raising eo has helped spread and strengthen the culture of inclusion at every level and in every organizational context, using com- munication campaigns and dedicated global and local events. In 2021, two global awareness campaigns on work- place bias and harassment were launched for all employ- ees. The progress of D&I policies is monitored periodically through a global repoing process that measures the per- formance of an extensive set of KPIs on all dimensions for internal and external purposes. In paicular, with regard to gender, Enel has set itself two public objectives: to ensure equal balance of the two genders in the initial stages of the selection processes and to increase the representation of women in senior and middle management. In 2021, women represented 52.1% of people involved in the selection pro- cess, an increase on 2020 (44%), while women accounted for 23.6% of senior managers (21.6% in 2020) and 31.4% of middle managers (30.4% in 2020). With this in mind, a new peormance target in the 2021 Long-Term Incentive Plan has been introduced, with a weight equal to 5% of the total, represented by the “per- centage of women in management succession plans“ at the end of 2023. This represents an objective for all managers of Enel and/ or its subsidiaries, including the General Manager (as well as Chief Executive Ocer) of Enel, who hold top positions and/or positions of strategic interest for the Group. It also underscores the strong commitment of the Enel Group to ensuring equal representation of women in the areas that feed management succession plans and emphasizes the increasing aention being paid to the issue of gender equality. As pa of the Value for Disability project, the actions en- visaged in the associated action plan continued with the issuance of a global policy on digital accessibility and nu- merous awareness-raising initiatives aimed at spreading a new approach to the inclusion of colleagues with disa- bilities and promoting their eective paicipation. In Italy, 217People centricity 217 the roll out of new services for people with chronic disease and the vulnerable also continues. For the purposes of monitoring pay equality, in 2021 a 2% increase in the percentage of female managers (from 21.6% to 23.6%) produced a slight decrease in the Equal Remu- neration Ratio (ERR), which slipped from 83.3% to 81.1%. All the actions taken to valorize the presence of women in the Group continued, whether for those in top positions or otherwise, the eects of which will be fully appreciable in the medium/long term, taking due account of generation- al dynamics. The following table demonstrates Enel’s commitment to diversity and inclusion, showing the propoion of disa- bled personnel, the number of women in senior or middle management positions and the ratio of the average basic remuneration of women to that for men. Diversity and inclusion 2021 2020 Change Disabled personnel or personnel belonging the protected categories % 3.2 3.3 -0.1 -3.0% Women senior and middle managers no. 4,163 3,825 338 8.8% Ratio of base salary to remuneration Ratio of base salary women/men: % 104.8 108.1 -3.3 -3.1% \- senior manager % 84.6 86.7 -2.1 -2.4% \- middle manager % 94.2 96.5 -2.3 -2.4% \- oce sta % 88.4 90.2 -1.8 -2.0% \- blue collar % 111.2 7 7. 0 34.2 44.4% Ratio of base remuneration women/men: % 105.1 108.3 -3.2 -3.0% \- senior manager % 81.1 83.3 -2.2 -2.6% \- middle manager % 93.2 95.7 -2.5 -2.6% \- oce sta % 88.4 90.3 -1.9 -2.1% \- blue collar % 112.0 7 7. 8 34.2 44.0% Workplace health and safety Enel considers employee health, safety and general well-be- ing to be its most valuable asset, one to be preserved both at work and at home. We are therefore commied to de- veloping and promoting a strong culture of safety that ensures a healthy work environment and protection for all those working with and for the Group. Safeguarding our own health and safety and that of the people with whom we interact is the responsibility of everyone who works for Enel. For this reason, as provided for in the Group “Stop Work Policy“, everyone is required to promptly repo and halt any situation of risk or unsafe behavior. The constant commit- ment of us all, the integration of safety both in corporate processes and training, the repoing and detailed analysis of all information, near misses, safety warnings, non-com- pliance, controls, rigor in the selection and management of contractors, the sharing of experience and best practices throughout the Group as well as benchmarking against the leading international players are all cornerstones of Enel’s culture of safety. During 2021, the “Data Driven Safety“ ap- proach was fuher developed. It seeks to develop “selective prevention“ safety indicators that help identify the country, technology and area at greatest risk of fatal events in order to direct prevention and protection interventions for inter- nal employees and contractors. The Group’s approach to suppliers is to consider each of them as a paner with whom the key principles of safety and the environment are to be shared. These include the Zero Accidents goal and the impoance of the Stop Work Policy, tools that make it possible to promptly repo and halt any situation of risk that could harm people or the environ- ment. At all stages, from qualication to contract award, the Group has adopted specic tools to monitor the manage- ment of Health, Safety and Environmental requirements. Ac- curate monitoring is associated with a continuous process of on-site inspections and consequence management, de- ned on the basis of the supplier’s safety and environmental risk prole, with a view to improving peormance. In addition, during 2021 the Contractor Safety Panership program continued. It is based on sharing Enel’s core values for safety. In paicular, the Safety Suppo process proposes lines of improvement and internal experience is made avail- able to suppliers to suppo the training of contractor sta, while keeping the responsibilities of the contractor well separated from Enel. Enel is commied to increasing safety and environmental skills both in terms of technical know-how and cultural ap- proach, all with a view to promoting a new way of working that is safer for people and more sustainable for the envi- 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 218 Integrated Annual Repo 2021218 ronment. To this end, in 2021 the SHE Factory unit expand- ed its eo in the production, distribution and provision of courses and training material for Enel sta and contractors. The following table repos the main workplace safety indi- cators. 2021 2020 Change Hours worked millions of hours 423.362 403.333 20.028 5.0% Enel millions of hours 123.421 125.264 (1.843) -1.5% Contractors (1) millions of hours 299.940 278.069 21.871 7.9% Total injuries (TRI) no. 1,212 1,308 (96) -7.3 % Enel no. 156 196 (40) -20.4% Contractors no. 1,056 1,112 (56) -5.0% Injury frequency rate (TRI) (2) i 2.863 3.243 (0.380) -11.7% Enel i 1.264 1.565 (0.301) -19.2% Contractors i 3.521 3.999 (0.478) -12.0% Fatal injuries no. 9 9 - - Enel no. 3 1 2 - Contractors no. 6 8 (2) -25.0% Fatal injury frequency rate i 0.021 0.022 (0.001) -3.4% Enel i 0.024 0.008 0.016 - Contractors i 0.020 0.029 (0.009) -31.0% “Life changing“ injuries (3) no. 4 - 4 - Enel no. 1 - 1 - Contractors no. 3 - 3 - “Life changing“ injury frequency rate i 0.009 - 0.009 - Enel i 0.008 - 0.008 - Contractors i 0.010 - 0.010 - (1) The 2020 gures reect a more accurate calculation. (2) This index is calculated as the ratio between the number of injuries (all injury events including those with three or fewer missed days of work) and hours worked/1,000,000. (3) Injuries whose consequences caused permanent changes in the life of the individual (amputation of a limb, paralysis, neurological damage, etc.). In 2021, the total recordable injury (TRI) declined by 7.3% compared with 2020. The decline was found for both Enel employees (-20.4%) and contractor employees (-5.0%). In 2021, there were: • 9 fatal accidents, of which 3 involving Enel Group em- ployees (2 in Italy and 1 in Brazil), and 6 fatal accidents involving contractors (2 in Brazil, 2 in Chile, 1 in Italy and 1 in Spain); • 4 “life changing“ accidents, of which 1 involving an Enel employee in Brazil and 3 involving contractors (1 each in Brazil, Colombia and Spain). The causes of these fatal accidents were mainly associated with electrical (7), mechanical (5) and chemical (1) incidents. The Enel Group has established a structured health man- agement system, based on prevention measures to de- velop a corporate culture that promotes psycho-physical health, organizational well-being and a balance between personal and professional life. With this in mind, the Group conducts global and local awareness campaigns to pro- mote healthy lifestyles, sponsors screening programs aimed at preventing the onset of diseases and guarantees the provision of medical services. The Enel Group has a sys- tematic and ongoing process for identifying and assessing work-related stress risks, in accordance with the Stress at Work Prevention and Well-being at Work Promotion pol- icy, for the prevention, identication and management of stress in work situations, also providing recommendations aimed at promoting a culture of organizational well-being. In 2021, the Enel Group focused on strengthening the measures and programs targeting well-being issues, which are increasingly vital in ensuring not only the well-being of its workers in the context of a pandemic but also looking to the future and to new ways of working. The Group also constantly monitors epidemiological and health developments in order to implement preventive and protective measures for the health of employees and those who work with the Group, both locally and globally. Since the outset of the COVID-19 emergency in February 2020, Enel has taken steps to protect the health of all workers and en- sure the continuity of electricity supply to the communities in which it operates, primarily by seing up specic global and country task forces and, subsequently, establishing a 219People centricity 219 unit responsible for overseeing this process. The purpose of this Pandemic Emergency Management unit is to monitor of emergencies, dene strategy and global policies and their adoption in every area of the Group and (19) Cumulative 2015-2021 gures for total number of SDG 7 beneciaries to date. (20) Cumulative 2015-2021 gures for total number of SDG 8 beneciaries to date. (21) Cumulative 2015-2021 gures for total number of SDG 4 beneciaries to date. direct, integrate and monitor all prevention, protection, safe- guard and response actions intended to protect the health of its employees and contractors, also in relation to external health risk factors not strictly related to work. Responsible relations with communities Establishing solid and lasting relationships with local communities in the countries in which Enel operates is a fundamental pillar of the Group’s strategy. This, together with devoting unswerving aention to social and environ- mental factors, has enabled Enel, on the one hand, to im- plement a new balanced model of equitable development that leaves no one behind and, on the other, to create long-term shared value for all stakeholders. This model has been incorporated along the entire value chain: from proactive analysis of the needs of communi- ties right from the development phases of new business to the establishment of sustainable worksites and plants, managing assets and plants to make them sustainable development platforms to the benet of the territories in which they are located. A fuher evolution is the ex- tension of this approach to the design, development and supply of energy services and products, as well as pro- cess innovation, leveraging new technologies and help- ing to build increasingly circular, inclusive and sustainable communities. In line with the Sustainable Development Goals (SDGs), Enel makes a concrete contribution to the sustainable progress of the territories in which it operates. This com- mitment is fully integrated into our purpose and corpo- rate values, from the expansion of infrastructure to ed- ucation and vocational training programs, and projects to suppo cultural and economic activities. Specic in- itiatives have been designed to promote access to en- ergy and rural and suburban electrication, addressing energy povey and promoting social inclusion for the most vulnerable segments of the population, also using new technologies and circular economy approaches and adopting a strategy that fully incorporates sustainability into our business model and activities. Various initiatives have been developed globally for the protection of biodi- versity, in line with the Group’s decarbonization strategy. There are two major challenges in paicular: the equita- ble and sustainable energy transition and the post-pan- demic recovery. The energy transition represents an impoant accelera- tor of growth and modernization of industry, thanks to the potential it oers in terms of economic development, well-being, quality of life and equality. Far-sighted poli- cies are necessary to seize these oppounities, ensuring a just and inclusive transition and taking paicular ac- count of the needs of the social categories most exposed to change. Enel is convinced that, in order to generate lasting prot, value must be shared with the entire envi- ronment in which it operates. With the continuation of the COVID-19 pandemic, our commitment to suppo communities has also contin- ued, with the activation of specic initiatives to sustain socio-economic recovery through the development of local marketplaces, facilitating access to credit and pro- moting inclusive business models to suppo the weaker segments of the population, with paicular aention to people in physically, socially and economically vulnera- ble positions. Many digitalization projects have also been undeaken to suppo connectivity in rural areas, com- puter literacy, the paicipation of women in STEM elds, e-commerce platforms and online or oine solutions with a positive impact on local economies. In 2021, Enel developed over 2,400 sustainability projects involving more than 7.5 million beneciaries in the coun- tries in which it operates. Projects to ensure access to aordable, reliable, sustainable and modern energy (SDG 7) have involved 13.2 million people to date, (19) those to foster the economic and social development of commu- nities (SDG 8) have reached 3.7 million beneciaries, (20) while initiatives to promote quality education (SDG 4) have beneted 3 million people. (21) In order to identify the best ideas for each area, the pro- cess involves sharing with local communities and listen- ing to stakeholders, leading to the identication of eec- tive measures to respond to local needs in synergy with company objectives. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 220 Integrated Annual Repo 2021220 The ideas that emerged from stakeholder engagement and constant dialogue with communities represent the basis for the construction of long-term panerships with the active involvement of non-governmental organiza- tions and staups, companies and institutions rooted in the territory. An approach that leads to the implementa- tion of a wide range of projects in dierent areas, thanks in pa to the activation of viuous ecosystems such as the Open Innovability® platform, which is based on openness and sharing, facilitating and promoting the identication of innovative social ideas and solutions. In 2021, over 580 panerships were active at an interna- tional level, fostered in pa by a range of tools such as, for example, crowdsourcing platforms (openinnovability. com) and the Innovation Hub network. Sustainable supply chain In addition to meeting ceain quality standards, the ser- vices of our vendors must also go hand in hand with the adoption of best practices in terms of human rights and working conditions, health and safety and environmental and ethical responsibility. Our procurement procedures are designed to guarantee service quality in full respect of the principles of economy, eectiveness, timeliness, fair- ness and transparency. The procurement process plays a central role in value creation in its various forms (safety, savings, timeliness, quality, earnings, revenue, exibility) as a result of ever-greater interaction and integration with the outside world and the dierent pas of the company organization. About 6,900 qualied suppliers had an active contract in place at the end of 2021. Vendor management involves three essential stages, which integrate social, environmental and governance issues: the qualication system, the denition of general terms and conditions of contract, and the Supplier Per- formance Management (SPM) system in the evaluation process. Enel’s global vendor qualication system (with about 14,000 active qualications at December 31, 2021) enables us to accurately assess businesses that intend to paicipate in tender processes through the analysis of compliance with technical, nancial, legal, environmental, health and safety, human and ethical rights and integrity requirements, representing a guarantee for the Compa- ny. As regards the tendering and bargaining process, Enel continued to introduce aspects related to sustainability in tendering processes, not only with the introduction of a specic “K for sustainability“ factor, but also through the use of mandatory sustainability requirements that take ac- count of the environmental, social and safety characteris- tics of suppliers. To facilitate the application and monitor- ing of these requirements, in 2021 the rst version of the sustainability requirements library was implemented on the WeBUY purchasing poal, a coded list of sustainability actions that buyers can apply as mandatory requirements in the tender phase. In the early months of 2021, all the standards (Product Category Rules) necessary to obtain the “Environmental Product Declaration“ were published. This ceication seeks to quantify, ceify and communi- cate the impacts generated during the entire life cycle of a supply relationship (in terms of CO 2 emissions, water con- sumption, impact on the soil, recycled material, etc.). This process enables us to obtain a sector benchmark and de- ne improvement plans with the suppliers involved (more than 200 in 13 strategic product categories that account for some 50% of the Group’s annual spending on supplies). Fuhermore, specic contractual clauses regarding sus- tainability are also envisaged in all contracts for works, ser- vices and supplies, including respect for and protection of human rights and compliance with ethical and social ob- ligations. The SPM system is designed to monitor vendor services in terms of the quality, timeliness and sustainabil- ity of contract execution. We also continued working on those activities that enable the ever-greater integration of environmental, social and governance issues in the supply chain strategy, creating shared value with vendors. These include meetings and information initiatives with contractors on sustainability is- sues, with specic regard to safeguarding health and safety. 221People centricity 221 The circular economy For Enel, the circular economy represents a strategic driver in rethinking the existing development model by combining innovation, competitiveness and sustainability in order to re- spond to today’s great environmental and social challenges. The Group’s vision is based on ve pillars that act through three main levers: design (i.e., planning, materials used), meth- ods of use (i.e., the extension of useful life, sharing, product as a service) and the closure of cycles (i.e., reuse, remanufactur- ing, recycling). For the result to be eectively transformative, the circular approach must inevitably embrace the entire value chain. For this reason, it has been implemented in all the Group’s activities, acting both through the Business Lines, as re- gards technologies and business models, and through the countries, as regards cross-sectoral synergies, collabora- tions and ecosystems. Since 2018, a global project has been operational with suppliers to measure the circularity of what we purchase, reward the most viuous and co-innovate to rethink assets and products together. The generation and distribution areas have been innovating in order to rethink the value chain of new installed assets, such as sma me- ters, photovoltaics and wind power, from a circular point of view and leveraging their assets during operations. The Global Energy and Commodity Management Business Line is suppoing this transition by extending its skills to the ar- EXTENDING USEFUL LIFE SHARING PLATFORMS PRODUCT AS SERVICE CIRCULAR INPUTS CirculAbility Model NEW LIFE CYCLES All solutions designed to preserve the value of an asset at the end of its life cycle thanks to reuse, regeneration, upcycling or recycling, in synergy with other pillars. Model of production and use based in renewable inputs or inputs from previous life cycles (reuse and recycling). Approach to the design and operation of an asset or product intended to extend its useful life, such as modular design, facilitated repair or predictive maintenance. Systems for joint management by multiple users of products, goods or skills. A business model in which the customer purchases a service for a specied period of time, while the company retains ownership of the product, maximizing usage and useful life. I n c r e a s e i n l o a d f a c t o r I n c r e a s e i n l o a d f a c t o r % e c i e n c y % r e n e w a b l e % r e u s e % r e c y c l e % n o t r e n e w a b l e I n c r e a s e i n u s e f u l l i f e % u p c y c l i n g % r e u s e % r e c y c l e % w a s t e M a t e r i a l s a n d e n e r g y U s e 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 222 Integrated Annual Repo 2021222 eas of new materials and secondary raw materials. Enel X is marketing itself as an accelerator of the circularity of its customers, both by continuously measuring and improving its products and services and by providing measurement and consulting services to customers to increase their cir- cularity. Since the initial stages of adopting a circular approach, Enel has placed a strong focus on measuring the envi- ronmental and economic benets of circularity, with the awareness that a model that exceeds and, ideally, elimi- nates the consumption of non-renewable resources must be measurable in order to be not only sustainable but also economically competitive. Since the 2020 Capital Markets Day, for example, the Group has introduced a new circular- ity indicator for generation assets, supplementing existing indicators on direct emissions. This additional indicator photographs the evolution over the years of the consump- tion of materials per MWh generated on a whole life basis, measuring the consumption of materials throughout the life cycle: from production to installation, to decommis- sioning of generation assets. A business model based on circularity requires maximum collaboration between all key players: this is why Enel con- siders it essential to open lines of communication and col- laboration with those who share this vision, involving sup- ply chains and promoting common initiatives (including training) to safeguard natural resources and increase the competitiveness of a country. Finally, in the belief that the transition to a circular econ- omy will generate multiple economic, social and environ- mental benets, we believe that Group nance can play a key role in accelerating this transition by providing nan- cial assistance to companies and projects that implement circular business models, suppoing the development of the new innovative technologies necessary to enable the functioning of new circular business models. 223Signicant events in 2021 223 Signicant events in 2021 Enel closes Unit I of Bocamina coal-red plant three years ahead of date set in Chile’s National Decarbonization Plan On January 4, 2021, the Enel Group disconnected and ceased operations at Unit I of the Bocamina coal-red power plant, which is located in the Chilean municipality of Coronel. The 128 MW Unit I was disconnected three years before the date set in Chile’s National Decarboni- zation Plan. With this milestone, coupled with the closure of Tarapacá coal plant on December 31, 2019 and the ex- pected closure of Enel’s last coal facility in the country, Bocamina’s Unit II, by May 2022, steady progress is being made towards the decarbonization of Enel’s Chilean gen- eration mix. Moody’s upgrades Enel’s long-term rating to “Baa1“ On January 15, 2021, Moody’s Investors Service (Moody’s) announced that it had upgraded its long-term rating of Enel SpA to “Baa1“ from the previous level of “Baa2“. Among the rating drivers prompting the upgrade, Moody’s cited: • low earnings volatility driven by large scale and geo- graphical diversication; • stable earnings stemming from regulated networks and contracted generation, which account for 80% of the Group’s EBITDA; • solid nancial prole, with funds from operations/net debt in excess of 20%. Enel issues hybrid bonds On February 25, 2021, the Board of Directors of Enel SpA authorized the issue, by December 31, 2021, of one or more non-conveible subordinated hybrid bonds, includ- ing perpetual bonds, for up to a maximum of €3 billion. The bonds are to be placed exclusively with European and non-European institutional investors, including through private placements. In execution of that resolution, on March 4, 2021 Enel issued a new perpetual hybrid bond of €2.25 billion. Enel agrees the largest ever sustainability- linked revolving credit facility On March 5, 2021, Enel and its Dutch subsidiary Enel Fi- nance International NV (EFI) signed the largest ever sus- tainability-linked revolving credit facility in the amount of €10 billion, with a term of ve years. The facility, which will be used to meet the Group’s nan- cial requirements, is linked to a key peormance indicator consisting of direct greenhouse gas emissions (i.e., Group Scope 1 CO 2 equivalent emissions from the production of electricity and heat), contributing to the achievement of the United Nations Sustainable Development Goal (SDG) 13 “Climate Action“ and in line with the Group’s Sustain- ability-Linked Financing Framework, for which Vigeo Eiris provided a second-pay opinion. The facility replaces the previous €10 billion revolving credit line obtained by Enel and EFI in December 2017 and has a lower all-in cost than the earlier facility. Voluntary paial public tender oer for the shares and American Depositary Shares of Enel Américas SA As pa of the process of corporate reorganization aimed at integrating the non-conventional renewable energy business of the Enel Group in Central and South Ameri- ca (excluding Chile) into the listed Chilean subsidiary Enel Américas SA, on March 15, 2021, Enel SpA, as previous- ly announced to investors, launched a voluntary paial public tender oer for Enel Américas common stock and American Depositary Shares (ADSs) up to a maximum over- all amount of 7,608,631,104 shares (including the shares represented by ADSs), equal to 10% of the company’s out- standing share capital at that date (the Oer). The Oer was structured as a voluntary public tender oer in the United States and a voluntary public tender oer in Chile. The Of- fer period ran from March 15 to April 13, 2021. The Oer was conditional upon the eectiveness of the merger of EGP Américas SpA into Enel Américas SA, which occurred on April 1, 2021. The total outlay of 1,065.2 billion Chilean pesos (equal to around €1.3 billion, calculated at the ex- change rate prevailing on April 15, 2021 of 847.87 Chilean pesos for 1 euro) was funded through internally generat- ed cash ows and existing borrowing capacity. Following completion of the voluntary paial public tender oer and the merger of EGP Américas, Enel holds about 82.3% of Enel Américas’ currently outstanding share capital. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 224 Integrated Annual Repo 2021224 Sale of 50% of Open Fiber On April 30, 2021, the Board of Directors of Enel SpA re- solved to initiate the procedures for the sale of 10% of the share capital of Open Fiber SpA to CDP Equity SpA (CDPE), subject to the simultaneous completion of the sale, exam- ined and favorably evaluated by the Board of Directors of Enel at its meeting of December 17, 2020, of 40% of Open Fiber to Macquarie Asset Management as well as the pay- ment to Open Fiber, in line with the commitments of the shareholders already envisaged in the relative current in- dustrial plan, of a capital injection totaling up to €194 mil- lion, of which €97 million peaining to Enel. The contracts for the sale of the entire equity investment, equal to 50% of the share capital, in Open Fiber, of which 40% to Macquarie Asset Management and 10% to CDPE, were concluded on August 5, 2021. The contract for the sale to Macquarie Asset Management of 40% of the share capital of Open Fiber provided for a price of €2,120 mil- lion, including the transfer of 80% of the Enel poion of the shareholders’ loan granted to Open Fiber, including accrued interest. The contract for the sale to CDPE of 10% of the share capital of Open Fiber provided in turn for a price of €530 million, including the transfer to CDPE of 20% of the Enel poion of the shareholders’ loan grant- ed to Open Fiber, including accrued interest. These con- tracts also provided for the payment to Enel of the earn- outs linked to future and unceain events detailed in the press releases of December 17, 2020 and April 30, 2021. On December 3, 2021, Enel SpA nalized the sale of its entire investment in Open Fiber SpA, equal to 50% of that company’s share capital, to Macquarie Asset Manage- ment and CDPE, following satisfaction of all the condi- tions set out in the contracts agreed with them, 40% to Macquarie Asset Management for about €2,199 million and 10% to CDPE for about €534 million. The total proceeds received by Enel therefore amounted to about €2,733 million, and resulted in the recognition of income at the Group level of around €1,763 million. Enel updates its US commercial paper program under SDG 13, the rst of its kind in the United States On May 11, 2021, Enel, acting through its US subsidiary Enel Finance America LLC, updated its $3 billion com- mercial paper program established in 2019, expanding it to $5 billion and connecting it to the UN Sustainable Development Goal (SDG) 13 “Climate Action“. In line with Enel’s Sustainability-Linked Financing Framework, the program reects the Enel Group’s objectives for reducing direct greenhouse gas emissions for 2023 and 2030\. The program is pa of Enel’s sustainable nance strategy, in line with the objective to achieve a share of sustainable nance sources as a propoion of the Group’s total gross debt equal to 48% in 2023 and more than 70% in 2030. Enel successfully places a triple-tranche €3.25 billion sustainability-linked bond on the eurobond market, also launching a tender oer for conventional bonds at the same time On June 8, 2021, Enel Finance International NV (EFI) launched a triple-tranche sustainability-linked bond for institutional investors on the eurobond market totaling €3.25 billion. The bond is linked to the achievement of Enel’s sustainable objective related to the reduction of di- rect greenhouse gas emissions (Scope 1), contributing to the United Nations Sustainable Development Goal (SDG) 13 “Climate Action“ and in line with the Group’s Sustain- ability-Linked Financing Framework. At the same time, EFI launched a non-binding voluntary tender oer for the repurchase of four outstanding series of conventional bonds, which was completed on June 15, 2021. Accord- ingly, the company will purchase in cash conventional euro-denominated bonds with a total nominal value of €1,069,426,000. The success of the transaction will make it possible to accelerate the Group’s goals for increasing the ratio of sustainable nance sources as a propoion of the Group’s total gross debt. Enel Green Power stas commercial operation of South America’s largest wind farm, Lagoa dos Ventos in Brazil On June 10, 2021, the Enel Group’s Brazilian renewable energy subsidiary Enel Green Power Brasil Paicipações Ltda began commercial operation of the 716 MW Lagoa dos Ventos wind farm, the largest wind facility currently in operation in South America and Enel Green Power’s larg- est wind farm worldwide. The construction of the 716 MW facility involved an investment of around 3 billion Brazilian reals, equivalent to about €620 million. Enel is also invest- ing around €360 million in a 396 MW wind project, which will bring the total capacity of Lagoa dos Ventos to about 1.1 GW. Purchase of treasury shares serving the 2021 Long-Term Incentive Plan and completion of buyback program On June 17, 2021, the Board of Directors of Enel SpA, im- plementing the authorization granted by the Sharehold- ers’ Meeting held on May 20, 2021, approved the launch of a share buyback program for 1.62 million shares (the 225Signicant events in 2021 225 Program), equivalent to about 0.016% of Enel’s share cap- ital. The Program was introduced to serve the 2021 Long- Term Incentive Plan for the management of Enel and/or of its subsidiaries pursuant to Aicle 2359 of the Italian Civil Code (2021 LTI Plan) which was also approved by Enel’s Shareholders’ Meeting of May 20, 2021. In order to implement the Program, the Company appointed an au- thorized intermediary to make the purchases. In line with Enel’s commitment to sustainable development, the pur- chase price of the shares acquired by the intermediary was linked to the achievement of the peormance objec- tive of the 2021 LTI Plan represented by the direct green- house gas emissions (Scope 1 GHG) per kWh equivalent produced by the Enel Group in 2023. Over the course of the Program, a total of 1,620,000 Enel shares (equal to 0.015934% of share capital) were ac- quired at a volume-weighted average price of €7.8737 per share, for a total of €12,755,458.734\. Considering the treasury shares already owned, as of December 31, 2021 Enel held 4,889,152 treasury shares, equal to 0.048090% of share capital. First sustainability-linked EIB loan of €600 million to e-distribuzione On July 1, 2021, e-distribuzione and the European Invest- ment Bank (EIB) signed the rst €300 million tranche of a €600 million sustainability-linked loan agreement. The transaction is the EIB’s rst sustainability-linked loan, linked to Enel’s ability to achieve its target for direct greenhouse gas emissions (Scope 1), in line with the Unit- ed Nations’ Sustainable Development Goal (SDG) 13 “Cli- mate Action“ and with the Group’s Sustainability-Linked Financing Framework. Criminal proceeding against e-distribuzione concerning an accident - Italy On July 1, 2021, e-distribuzione SpA was notied of a pro- ceeding against a number of its employees and managers and e-distribuzione SpA itself pursuant to Legislative De- cree 231/2001, initiated by the Public Prosecutor’s Oce of Taranto, following the accident that occurred on the night between June 27 and 28, 2021 in which an employ- ee of a contractor was harmed. The proceeding is in an entirely initial phase and the identication of the persons under investigation suspects is provisional and has been done, in the investigation phase, to enable paicipation in the non-repeatable technical assessment ordered by the Public Prosecutor. The December 15, 2021 repo of the Public Prosecutor’s technical expe has been led and included in the case documentation. Enel places a $4 billion multi-tranche sustainability-linked bond on the US and international markets, fuher accelerating the achievement of its sustainable nance targets On July 8, 2021, Enel Finance International NV (EFI) placed a $4 billion multi-tranche sustainability-linked bond linked to the achievement of Enel’s sustainability objec- tive related to the reduction of direct greenhouse gas emissions (Scope 1), contributing to the United Nations Sustainable Development Goal (SDG) 13 “Climate Action“, in line with the Group’s Sustainability-Linked Financing Framework. The issue was intended to nance the re- demption (which took place on July 20, 2021) of four con- ventional EFI bonds with an aggregate nominal value of $6 billion. The transaction is pa of the Group’s strategy to fuher accelerate the achievement of the Group’s tar- gets for sustainable nance sources as a propoion of the Group’s total gross debt. Enel signs an agreement with ERG to acquire 527 MW of hydro plants On August 2, 2021, the subsidiary Enel Produzione SpA signed an agreement for the acquisition of the entire share capital of ERG Hydro Srl (wholly owned by ERG SpA), which holds a pofolio of hydroelectric plants with an in- stalled capacity of 527 MW and has an enterprise value of €1,000 million, for €1,039 million. On January 3, 2022, Enel Produzione SpA nalized the ac- quisition of the entire share capital of ERG Hydro Srl from ERG Power Generation SpA. Enel Produzione paid around €1,039 million, to which was added at closing an initial price adjustment of around €226 million concerning the mark-to-market valuation of ceain hedging derivatives of ERG Power Generation relating to pa of the electricity to be generated in the future by ERG Hydro’s plants. The sale agreement also envisages a fuher adjustment of the price in the coming months, which will mainly be based on changes in ERG Hydro’s net working capital and net nancial position, as well as water reserves in ceain basins included in the sale. The plants owned by ERG Hydro, located in the Umbria, Lazio, and Marche re- gions, have an installed capacity of 527 MW and an aver- age annual output of around 1.5 TWh. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 226 Integrated Annual Repo 2021226 Enel successfully places a €3.5 billion triple-tranche sustainability-linked bond on the eurobond market, while launching a tender oer for conventional bonds denominated in US dollars On September 21, 2021, Enel Finance International NV (EFI) launched a €3.5 billion triple-tranche sustainabili- ty-linked bond for institutional investors on the eurobond market. The bond is linked to the achievement of Enel’s sustainability objective related to the reduction of direct greenhouse gas emissions (Scope 1), contributing to the United Nations Sustainable Development Goal (SDG) 13 “Climate Action“, in line with the Group’s Sustainabil- ity-Linked Financing Framework. At the same time, EFI launched a non-binding voluntary tender oer for the paial repurchase of three series of outstanding conven- tional bonds, which was completed on October 4, 2021 in the overall amount of about $1.47 billion, thereby accel- erating the achievement of the Group’s targets for sus- tainable nance sources as a propoion of the Group’s total gross debt. On October 5, 2021, following the results at the Early Ex- piry Date of the Tender Oer launched on September 21, EFI repurchased and canceled conventional bonds in the total amount of $1.47 billion. Enel unveils Gridspeise, the company dedicated to the digital transformation of power grids On September 23, 2021, the Enel Group presented Grid- speise, wholly owned by Enel through the subsidiary Enel Global Infrastructure and Networks. The company will leverage Enel’s skills in the testing, assessment and large-scale implementation of advanced technologies of the operation of sma grids around the world to provide DSOs with proven solutions. Penalty proceedings initiated by the Energy Directorate General of the government of the Canary Islands - Spain On October 6, 2021, the Directorate General of Energy of the government of the Canary Islands (Energy Direc- torate General) notied Edistribución Redes Digitales SLU (EDRD) of three resolutions initiating an equal num- ber of disciplinary proceedings (ES.AE.LP 006/2019ES, AE.LP 007/2019ES and AE.LP 008/2019), respectively, for alleged violations consisting in the unjustied refus- al or alteration of the permit for connection to a point on the grid and failure to comply with the operation and proper functioning obligations of a contact service for complaints and accidents. On October 29, 2021, EDRD led wrien briefs in each proceeding. The penalties that could be imposed in the three proceedings amount to €11 million, €18 million and €28 million respectively. On January 24, 2022, the Energy Directorate General noti- ed EDRD of a new resolution, dated November 18, 2021, with which a fuher disciplinary procedure was being in- itiated for the alleged commission of ve infringements classied as continuous and serious and of two infringe- ments classied as very serious and not continuous, in- dicating a possible ne of up to €94 million. The alleged infringements again refer to applications for access and connection to the grid, the execution of connections, the processing of customer requests, the information pro- vided, the systems implemented and delays in execution. At present, no penalties have been imposed. Consent solicitation for hybrid bond holders On October 28, 2021, Enel SpA launched a consent so- licitation aimed at holders of a non-conveible subordi- nated hybrid bond issued by the Company in the amount of €900 million, seeking to align its terms and conditions with those of the non-conveible subordinated hybrid perpetual bonds issued by Enel in 2020 and 2021. On December 9, 2021, the Noteholders’ Meeting ap- proved the proposed changes to the terms and condi- tions of the bond. More specically, the approved chang- es establish, inter alia, that: • the bond, initially issued with a specied long-term maturity date, will become due and payable and hence will have to be repaid by Enel only in the event of the winding up or liquidation of the Company; • the events of default previously envisaged in the terms and conditions and additional documentation that govern the bond are eliminated. Funac and ICMS tax relief - Brazil With Law 20416 of February 5, 2019, the state of Goiás shoened from January 27, 2015 to April 24, 2012 the period of operation of the Funac fund (established with Law 17555 of January 20, 2012) and the tax benet sys- tem (established with Law 19473 of November 3, 2016) that allowed Celg Distribuição SA (Celg-D) to obtain reim- bursement of payments of ceain amounts by oseing against payment obligations in respect of the ICMS - Im- posto sobre Circulação de Mercadorias e Serviços (tax on the circulation of goods and services). On February 25, 2019, Celg-D appealed the provisions of Law 20416 before the Cou of the state of Goiás, l- ing a writ of mandamus and an accompanying petition 227Signicant events in 2021 227 for a precautionary suspension, which was denied on a preliminary basis on February 26, 2019. Celg-D appealed this ruling and the Cou of the state of Goiás allowed the appeal on June 11, 2019. On October 1, 2019, the Cou of the state of Goiás issued an order revoking the pre- cautionary measure previously granted in favor of Celg-D and, accordingly, the eects of the law were restored as from that date. Celg-D led an appeal against this deci- sion, claiming that the right to guarantee tax credits has both a legal and contractual basis and that, therefore, the actions that the state of Goiás has taken in order to fully suspend the application of these laws are patently un- founded. On October 2, 2019, the appeal led by Celg-D was denied. On November 21, 2019, Celg-D challenged this decision before the Superior Tribunal de Justiça (STJ). On February 27, 2020, the Tribunal de Justiça (TJ) declared inadmissible the appeal by Celg-D, which on May 5, 2020 appealed this decision before the STJ. These proceedings are under way. As pa of the proceedings on the mer- its (writ of mandamus), on July 14, 2021, the Cou of the state of Goiás raised a question of constitutional legiti- macy before a specialized section of the same Cou. On October 5, 2021, the Public Prosecutor concluded that the question of constitutionality was inadmissible. On November 9, 2021, the specialized section of the TJ accepted the position of the Public Prosecutor and re- jected the constitutionality issue, ordering the referral of the case to the trial judge. It is impoant to note that the coverage of the Funac fund is provided for in the agreement for the acquisition of Celg-D by Enel Brasil SA. On April 26, 2019, Law 20468 was promulgated. With the law, the state of Goiás fully revoked the tax relief referred to above. On May 5, 2019, Celg-D led an ordinary peti- tion and a request for a precautionary suspension against the state of Goiás to contest this law. On September 16, 2019, the Cou of the state of Goiás denied the petition for precautionary relief, citing the absence of any danger in delay, a requirement for the granting of precautionary relief. On September 26, 2019, Celg-D led an appeal (agravo de instrumento) before the Cou of the state of Goiás against the decision denying the precautionary suspension, claiming that the repeal of the tax credit law is unconstitutional to the extent that these credits were established in accordance with applicable law and con- stitute acquired rights. On September 7, 2020, the state of Goiás submied its reply to the precautionary petition led with the appeal. With measure issued at the hearing of July 20, 2021, and subsequently conrmed on Septem- ber 17, 2021, the Cou of the state of Goiás denied the precautionary relief requested by Celg-D. Moreover, the Brazilian association of electricity distribu- tion companies (ABRADEE) had led an action for a ruling on constitutionality with the Constitutional Cou of Bra- zil (Supremo Tribunal Federal) with regard to Laws 20416 and 20468. This was denied on June 3, 2020 with an in- dividual Decision by the judge-rappoeur for lack of for- mal requirements. On June 24, 2020, the ABRADEE led an appeal (agravo regimental) against that decision. On September 21, 2020, the Supreme Cou of Brazil, with- out going into the merits of the case, rejected ABRADEE’s appeal for formal reasons and the proceeding was con- cluded. On October 15, 2020, ABRADEE led an appeal against this decision. On March 8, 2021, the Brazilian Su- preme Cou denied ABRADEE’s appeal and the decision became nal on April 5, 2021. Closure of La Spezia coal-red plant On December 2, 2021, Enel received nal authorization from Italy’s Ministry for the Ecological Transition for the denitive closure of the coal-red plant at the “Eugenio Montale“ thermoelectric power facility of La Spezia. Hybrid bonds On December 16, 2021, the Board of Directors of Enel SpA authorized Enel to issue, by December 31, 2022, one or more non-conveible subordinated hybrid bonds, in- cluding perpetual bonds, in the maximum amount of up to €3 billion. These bonds are to be placed exclusively with European and non-European institutional investors, including through private placements. The Board of Di- rectors also revoked the previous resolution of February 25, 2021, concerning the issue of one or more bonds by the Company, for the poion not yet implemented, amounting to about €0.75 billion, without prejudice to all eects arising from issues already carried out. Criminal proceedings connected with Pietraa plant - Italy With regard to the Pietraa thermal generation plant, the Perugia Public Prosecutor had staed an investiga- tion involving a number of ocers of Enel Produzione SpA, as well as ceain third paies who are today owners of the land adjacent to the plant – formerly Enel’s – on which ash was found. The alleged oenses are as follows: failure to restore the site (Aicle 452-terdecies of the Italian Criminal Code) for a number of areas aected by the spillage of ash pro- duced up to the 1980s by the Pietraa power plant and ash from other company plants, and other areas where contamination with polychlorinated biphenyls (“PCBs“) was found associated with decommissioned mining equipment; environmental pollution (Aicle 452-bis of the Criminal Code) connected with the PCB contamina- 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 228 Integrated Annual Repo 2021228 tion, with respect to which Enel Produzione SpA was also charged with administrative liability pursuant to Legisla- tive Decree 231/2001. In the summer of 2019, Enel Produzione SpA led a peti- tion for dismissal, which was accepted by the prosecutor for the crime of environmental pollution, with consequent dismissal of the charge pursuant to Legislative Decree 231/2001. A number of environmental associations led an objec- tion to the dismissal, and on February 21, 2020 a hearing was held before the investigating magistrate, which end- ed with dismissal of the charges (May 28, 2020), which, in brief, accepted all of Enel’s defenses and conrmed the dismissal of any other possible charges – even if not brought by the Prosecutor’s Oce – relating to the pos- sible health eects caused by the presence of the ash. Accordingly, the criminal proceedings are continuing with sole regard to the crime of failure to restore the site, with respect to which in December 2019 the Enel Pro- duzione SpA employees presented an application for a stay of proceedings with probation, consisting in the im- plementation of a program agreed with the Prosecutor’s Oce for propoionate and fair restoration with respect to the complaints led against the defendants. The pro- bation hearing was held on October 29, 2020, when the investigating magistrate of the Cou of Perugia granted the request for probation. The hearing was then post- poned to February 18, 2021, when the program proposed by Enel Produzione was approved, seing a deadline of nine months for its execution. At a hearing on December 16, 2021, the judge, after con- siderable discussion, veried the compliance of the pro- gram and dismissed the charges as a consequence of the positive outcome of the probationary activities. EIB and Enel agree a €120 million sustainability-linked loan for the energy transition in Italy On December 20, 2021, Enel and the European Invest- ment Bank (EIB) agreed a sustainability-linked loan of €120 million to suppo the energy transition in Italy. The EIB loan to Enel Italia is pa of the bank’s sustainability-linked loan program connected with Enel’s achievement of the objective of reducing direct greenhouse gas emissions (Scope 1), in line with the United Nations Sustainable De- velopment Goal (SDG) 13 “Climate Action“ and with the Group’s Sustainability-Linked Financing Framework. Enel renews panership with Cinven in Unet Latam On December 21, 2021, Enel SpA, acting through Enel X International Srl, a wholly-owned subsidiary of Enel X Srl, signed a new agreement with a holding company con- trolled by Sixth Cinven Fund and a holding company con- trolled by Seventh Cinven Fund – both funds managed by the international private equity company Cinven – for the indirect purchase, through a holding company, of about 79% of the capital of Unet Latam SLU by Sixth Cinven Fund for €1,320 million and the simultaneous sale of 80.5% of the company’s capital to Seventh Cinven Fund for around €1,240 million, in order to renew the existing panership in Unet. Enel X International will simulta- neously receive some €140 million through the Unet’s available reserves, a gure subject to potential adjust- ments at closing. Under this agreement, Enel X International will therefore retain an indirect investment of 19.5% in Unet, while the Seventh Cinven Fund will hold the remaining 80.5%. Hydroelectric concessions - Italy Italian regulations governing large-scale hydroelectric concessions were most recently modied by the “Simpli- cations Decree“ (Decree Law 135 of 2018 ratied with Law 12 of February 11, 2019), which introduced a series of innovations regarding the granting of such conces- sions upon their expiry and the valorization of the assets and works connected to them to be transferred to the new concession holder. This legislation also introduced a number of changes in the maer of concession fees, establishing a xed and variable component of fees, as well as an obligation to provide free power to public bod- ies (220 kWh of power for each kW of average nominal capacity of the facilities covered by the concession). In implementation of this national law and under specic enabling authority, various regions (Lombardy, Piedmont, Emilia-Romagna, Friuli-Venezia Giulia, the Province of Trento, Calabria and Basilicata) enacted regional laws. In the view of Enel Green Power Italy and Enel Produzione, both the national law and the regional implementing leg- islation violate Community principles and constitutional principles such as propey rights, the principle of legal ceainty, the principle of propoionality and legitimate expectations and the freedom of enterprise. In paicu- lar, the rules do not expressly provide for the transfer of the business unit from the outgoing to the successor concession holder, and also establish inadequate criteria for the valorization of the works to be transferred, which 229Signicant events in 2021 229 threatens to create what is essentially a mechanism for expropriation, in violation of constitutional principles. The provision for the payment of the new dual-compo- nent fee and the obligation to supply free electricity for the existing holders of current concessions entails the introduction in the concession relationships of an unex- pected and unreasonable element of signicant nancial imbalance, in clear violation of the principle of reasona- bleness and propoionality of the fee that constitutional case law has established must be respected in the event that changes worsening the position of a pay are intro- duced in the context of long-term relationships. Enel Green Power Italy and Enel Produzione challenged the rst implementing acts issued under the individu- al regional laws and the subsequent payment notices of fees and the monetization of free electricity supplies before the competent judicial authorities (Regional Ad- ministrative Cou and Regional Water Resources Cou) asking that they be declared void and raising the question of constitutional illegitimacy of both the national law and the regional laws. The Piedmont Regional Administrative Cou with ruling no. 1085 of November 25, 2021, and the Lombardy Regional Administrative Cou with ruling no. 2900 of December 23, 2021, in the cases brought by Enel Green Power Italy against the respective regions, deferred their jurisdiction in favor of the Superior Water Resources Cou, before which Enel Green Power Italy will have to rele its dispute for the proceeding to continue. The government challenged a number of the regional im- plementing laws before the Constitutional Cou, claiming the violation of various constitutional principles. Enel Green Power Italy paicipated in the aforementioned proceedings concerning constitutional legitimacy under- taken by the government before the Constitutional Cou against the Province of Trento and the Regions of Lom- bardy, Piedmont and Basilicata. The trade associations (Utilitalia and Elericità Futura) also presented briefs in the context of the proceedings brought before the Constitutional Cou by the govern- ment. In addition, other sector operators have proposed legal actions against the implementing measures issued under the individual regional laws, requesting that they be declared void. With regard to the constitutionality proceeding before the Constitutional Cou against the Regional Law of Lombardy, the Council of Ministers decided to abandon its appeal of Lombardy Regional Law 5/2020, “as the Lombardy Region, with a subsequent regional law, has amended the provisions involved in the challenge that en- able us to consider the complaint of illegitimacy to have been superseded“. However, these changes did not aect the constitutionality issues raised by Enel in its accom- panying appeal. It is reasonable to believe that, following the formal acceptance by the Region of the government’s withdrawal of its action, the Constitutional Cou will de- clare the proceeding extinct, with the consequent foei- ture of Enel’s action as well. Enel joins forces with Intesa Sanpaolo to acquire Mooney and create a European ntech company On December 23, 2021, Enel SpA, acting through its wholly-owned subsidiary Enel X Srl, and Intesa Sanpaolo SpA, acting through its subsidiary Banca 5 SpA, signed an agreement with Schumann Investments SA, a company controlled by the international private equity fund CVC Capital Paners Fund VI, to acquire 70% of Mooney Group SpA, a ntech company operating in proximity banking and payments. Specically, Enel X will acquire 50% of Mooney’s share capital, while Banca 5, which currently holds a 30% stake in Mooney, will increase its interest to 50%, puing the payments company under the joint con- trol of both paies. The agreement, based on an enterprise value for 100% of Mooney of €1,385 million, provides for Enel X to pay be- tween €334 million and €361 million at closing. The price consists of €220 million for the equity and a variable com- ponent linked to a price adjustment mechanism at clos- ing. At the same time, Intesa Sanpaolo will pay between €88 million and €94 million at closing. That price consists of €88 million for the equity and a variable component linked to a price adjustment mechanism at closing. Enel X Italia and tax credit fraud - Italy As one pa of its Vivi Meglio business, Enel X Italia sup- plies energy eciency devices to companies involved in the energy upgrading and/or seismic improvement of condominiums and/or individual dwellings. In these activities, in conjunction with the service/prod- uct supply contract, Enel X Italia (as assignee) signs a framework agreement for the purchase of tax credits ac- quired by a company (as assignor) – under the provisions of the various types of building/energy upgrade incentive available under law (such as the superbonus 110%, the fa- cades bonus, the ecobonus, the sismabonus or the reno- vation bonus) –for the redevelopment of buildings owned by third paies (customers), with whom Enel X Italia has no contractual relationship. Beginning in October/November 2021, following requests 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 230 Integrated Annual Repo 2021230 for information from the Finance Police (Guardia di Finan- za) regarding the alleged fraudulent nature of ceain tax credits, Enel X Italia peormed an audit and found a num- ber of irregularities in relation to some of the tax credits acquired, promptly repoing them to the Public Prosecu- tor’s Oce of Rome. In light of the ndings of the audits and under the pro- visions of the new regulations issued in November 2021 with the publication of Decree Law 157/2021 (the “An- ti-fraud Decree“) containing urgent measures to com- bat fraud in the sector of tax and economic benets“), the purchase of tax credits was temporarily suspended before being resumed in December 2021 with the imple- mentation of new oversight methods. Between December 23, 2021 and January 31, 2022, as pa of a number of investigations into alleged fraud in relation to legislation on energy redevelopment projects, three preventive seizure orders were notied to Enel X Italia (pursuant to Aicle 31 of the Code of Criminal Pro- cedure), issued by the Public Prosecutors of the Cous of Rome and Naples, in relation to tax credits purchased by Enel X Italia from companies for some €45 million. The seizures involved the imposition of a block on the “Credit assignment platform“ poal of the Revenue Agency and a corresponding reduction in the ceiling on osetable tax credits in the tax account of the company and the asso- ciated assignees. In consideration of the fact that at the time of the seizure these credits had in turn already been assigned by Enel X Italia to nancial institutions, the precautionary measures were not imposed directly against the company, which however promptly informed the assignees of the sei- zures, inviting them to comply with the provisions of the judicial authorities. From the seizure orders notied it was possible to asceain that other operators in the sector had also received such notices. 231Regulatory and rate issues 231 Regulatory and rate issues The European regulatory framework Sustainable nance (taxonomy) The taxonomy is a classication system that establishes a list of eco-sustainable assets to guide institutional inves- tors in making informed decisions and then redirect capital ows to those assets. The rst delegated act establishing the technical screening criteria for around 60 economic activities, including the generation of electricity from pho- tovoltaic, wind, hydroelectric and geothermal resources and distribution, was published by the European Commis- sion in June 2021 and entered force in January 2022. On December 31, 2021, the Commission sent Member States a draft complementary delegated act for consul- tation, seing out a number of conditions for fossil gas and nuclear power to be classied as transitional activities aligned with the taxonomy. Some activities in which Enel is engaged, such as retail and trading, are not covered by the taxonomy so far. Proposed legislation in consultation with nancial impacts in 2021 On July 14, 2021, the European Commission published the “Fit for 55“ (FF55) package, which is a series of proposals that seek to reduce net emissions within the European Un- ion by 55% by 2030 compared with their 1990 levels. Renewable Energy Directive (RED II) Among the proposed changes to current EU energy legis- lation, the revision of the Renewable Energy Directive plays a leading role, given that a much larger share of renewable energy sources in the energy mix of the Member States will also be necessary to achieve the new climate objec- tives. The European Commission proposal establishes a framework for the deployment of renewables in all sectors of the economy, with paicular aention to sectors where progress has been slow (transpo, buildings and industry). Among the key points of the revision is an increase in the minimum binding share of renewables in nal energy con- sumption in the EU to 40% by 2030, eectively doubling the share of RES in the energy mix over the course of just one decade (2021-2030). This 40% target is signicantly higher than that agreed in the previous revision of the di- rective in 2018 (32%) and is suppoed by higher EU and national targets, including: a new target of 49% for re- newable energy used in European buildings; a mandatory minimum increase in RES in industry of 1.1% per year; the transformation into a binding target of the existing goal of increasing the use of RES in heating and cooling by 1.1% per year; the introduction of new minimum targets for the use of green hydrogen in industry and transpo (50% and 2.6% per year respectively). Finally, another notewohy aspect of the European Com- mission proposal would be the creation of a new cred- it mechanism aimed at promoting the use of renewable electricity in transpo and a commitment to remove barri- ers in the authorization process for new RES plants. EU Emissions Trading System (ETS) The European Commission is also proposing a reform of the EU ETS in order to strengthen it and increase its ambi- tion in line with the EU climate commitments set out in the FF55 package. The proposed revision conrms the central role of the EU ETS as one of the main climate policy tools of the European Union, increasing the resilience of the mar- ket to economic shocks. A greater contribution to decar- bonization is also requested from the sectors already cov- ered by the EU ETS, while a proposal to extend the mech- anism to new sectors (e.g., maritime, hydrogen production via electrolyzers) has also been put out for consultation, as has the possibility of creating a separate ETS market for the road transpo and buildings sectors. Although the EU ETS reform is still in consultation, its pub- lication alone has had an impact on supply and demand in the ETS market, having changed the expectations of oper- ators and therefore prices on the market itself. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 232 Integrated Annual Repo 2021232 Carbon Border Adjustment Mechanism (CBAM) One of the most innovative elements the FF55 package, one that is likely to spark debate, is the CBAM, a tari to be applied to impoed goods produced in countries with lower environmental standards than those in the EU. The objective of the CBAM mechanism is to reduce the risk of carbon leakage. This is to ensure that impoed products are treated no less favorably than domestic products man- ufactured in facilities subject to the EU ETS mechanism. As installations covered by the EU ETS are subject to a carbon price assessed on the basis of their actual emissions, im- poed products included in the CBAM scope should also be assessed on the basis of their actual greenhouse gas emissions. However, in order to enable companies to adapt to this system, the proposal envisages a transitional pe- riod without nancial adjustment. This mechanism will be phased in and would initially apply only to a select number of goods at high risk of carbon leakage: iron and steel, ce- ment, feilizers, aluminum and electricity generation. Energy eciency and buildings The proposed revision of the Energy Eciency Directive aims to establish more ambitious binding European tar- gets for 2030 (+36% compared with the previous +32.5%), in line with the objective of reducing greenhouse gases by 55% by 2030\. The directive introduces a system for calcu- lating the indicative contributions that each Member State must establish in order to achieve the EU target and, among the measures, proposes a doubling of the annual energy saving obligation for end uses. The public sector is called upon to make an even larger energy saving contribution, equal to 1.7% per year, in addition to the 3% renovation ob- ligation for the public building stock. The directive impos- es measures on the Member States designed to alleviate energy povey, increasing energy eciency measures for vulnerable customers through ad hoc nancing. In December 2021, the European Commission published the proposed revision of the directive on the energy per- formance of buildings, aimed at reducing their energy con- sumption in order to achieve zero emissions by 2050 for buildings as well. The measures seek in paicular to increase the rate of renovation for buildings with the worst energy peormance by introducing minimum peormance stand- ards and strengthening energy peormance ceicates. The targets also envisage the achievement of progressively higher standards staing from 2030 for the entire residen- tial sector. In order to beef up measures for electric mobility as well, the changes envisage measures to increase charg- ing points and pre-cabling in the residential sector. Energy Taxation Directive (ETD) The European Commission believes that Directive 2003/96/EC is now obsolete and does not adequately reect the revised EU climate and energy policy. The pro- posed revision of Directive 2003/96/EC addresses two main areas of reform: the provision of a new structure for the tax rates and the broadening of the tax base with the abolition of some subsidies. • The proposal delineates a new structure of minimum tax rates based on the actual energy content and en- vironmental peormance of fuels and electricity, rath- er than volume as is currently the case. The minimum rates will be expressed in €/GJ for each product, also in order to allow a direct comparison between fuels and between emerging uses of electricity. In paicular, the proposal groups energy products and electricity into general categories, which are classied according to energy content and environmental peormance: the new system will therefore ensure that the most pollut- ing fuels are taxed at the highest rate. Member States will have to ensure that this ranking is replicated at the national level. • Under this new structure, conventional fossil fuels (e.g., diesel and gasoline) and unsustainable biofuels will be subject to the higher minimum rate of €10.75/GJ when used as motor fuel and €0.9/GJ when used for heating. • To take account of their potential role in suppoing de- carbonization in the medium term, despite being fossil based, fuels such as natural gas, LPG and non-renew- able fuels of non-biological origin shall be subject to a minimum rate of €7.17/GJ when used as motor fuel and €0.6/GJ when used for heating for a transitional peri- od of 10 years before being taxed at the same rate as conventional fossil fuels. In order to reect the potential of sustainable but non-advanced biofuels in suppoing decarbonization, they would be subject to tax at half the reference rate, i.e., a minimum of €5.38/GJ when used as motor fuel and €0.45/GJ when used for heating. • The lowest minimum tax rate (€0.15/GJ) will apply to electricity (regardless of use), sustainable biofuels and biogas and renewable fuels of non-biological origin (such as, for example, renewable hydrogen). Low-car- bon hydrogen and related fuels will also benet from the same rate for a transitional period of 10 years. The rate applicable to this group is set signicantly below the reference rate, as electricity and these fuels can signicantly suppo the EU’s clean energy transition towards achieving the EU Green Deal targets and, ulti- mately, climate neutrality by 2050. 233Regulatory and rate issues 233 Sustainable mobility The main initiatives with a focus on the transpo sector concern: • a proposal to revise the regulation on CO 2 emission per- formance levels for new passenger cars and light com- mercial vehicles, requiring passenger car emissions to decrease by 55% and van emissions to fall by 50% by 2030 compared with 2021 levels and by 100% by 2035; • a proposed revision of the alternative fuels infrastruc- ture directive to give drivers access to a reliable network across Europe for recharging or refueling vehicles. The proposal requires Member States to increase charg- ing capacity in line with zero-emission passenger car registrations and to install public, interoperable and user-friendly charging points at regular intervals along major European motorway corridors. In addition, objec- tives are set for the development of the infrastructure necessary to supply electricity to ships and airplanes while they are in pos and airpos respectively; • in addition to these measures, the European Commis- sion’s proposal for two new legislative initiatives, “ReFu- elEU Aviation“ and “FuelEU Maritime“, targeted at reduc- ing greenhouse gas emissions for aviation and maritime transpo, seing increasingly stringent emission limits for ships and planes, and envisaging measures to pro- mote renewable or low-carbon fuels. To complement the measures contained in the “Fit for 55“ package, in December 2021 the European Commission completed the issue of a new package of transpo ini- tiatives. The main proposals contained in the December package concern: • a revision of the TEN-T regulation in which, among other aspects, the role of zero-emission transpo and the related infrastructure is reinforced as one of the priorities for the completion of the European trans- po network and the structure of the TEN-T network is modied; • the issue of the “EU Urban Mobility Framework“ com- munication encouraging the transition towards ze- ro-emission mobility at the local level (cities and re- gions), with the adoption of Sustainable Urban Mobility Plans (SUMPs) and Sustainable Urban Logistics Plans (SULPs), as well as facilitating access to and sharing of mobility data to suppo decision-making processes and establishing new funding programs for new pro- jects (such as Horizon Europe 2021-2023). At the end of 2021, the proposals in the rst and second packages are being discussed both within the European Council and the European Parliament. Talks are expected to continue throughout much of 2022. Decarbonization package for the hydrogen and gas market On December 15, 2021, the European Commission pub- lished proposals to decarbonize the gas market through the uptake of renewable and low-carbon gases, including hydrogen. In paicular, the proposal sets out a new regulatory frame- work for the hydrogen sector, including infrastructure, and standards for the ceication of low-carbon gases that ensure a 70% reduction in greenhouse gas emissions. Among the salient points of the package are rules on ver- tical and horizontal unbundling and on third-pay access in the hydrogen sector, with less stringent provisions until 2030 and exemptions for existing and new geographically conned hydrogen networks. The gas package provides for separate remuneration mechanisms for gas and hy- drogen infrastructures, but allows nancial transfers to develop the hydrogen network and tari discounts. Finally, under the provisions of the gas package, 5% blending of hydrogen and natural gas should be accepted by TSOs at the border. Digital technology During 2021, in addition to the publication of the com- munication “European digital decade: digital targets for 2030“, which illustrates the objectives and methods of Eu- rope’s digital transformation by 2030, the implementation activities for the European Green Deal and the strategies for data and aicial intelligence published by the Euro- pean Commission in 2019 and 2020, respectively, guided the debate on the digitization and use of data. A number of legislative and non-legislative initiatives have been pro- posed with the aim of making Europe digitally sovereign and creating a fair and competitive digital economy. The proposed measures range from the concept of data sov- ereignty to the creation of a single market for data and in- itiatives involving aicial intelligence and cyber security. The main proposals regarded: • the aicial intelligence regulation, published in April 2021, as the world’s rst aempt to govern aicial in- telligence (AI). The European Commission proposes an ex-ante list of “AI“ products considered to be high risk, such as the safety components of critical infrastruc- tures, which must undergo testing before obtaining ceication; • a proposed EU Data Act governing data access and in- teroperability aimed at establishing a platform for each country (interoperable with the others) in which con- sumers can easily share energy data with third paies; 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 234 Integrated Annual Repo 2021234 • a proposed Digital Services Act, which would establish a common set of obligations and responsibilities of inter- mediaries within the single market regarding the oer of cross-border digital services, while ensuring a high level of protection for all users, regardless of where they reside in the EU. Fuhermore, during the course of 2021 discussion re- sumed on a proposal to revise the e-privacy regulation, published by the European Commission in 2017. Negotia- tions between institutions began in February 2021 and are still ongoing. Baeries In December 2020, the European Commission present- ed a proposal to revise the regulation on baeries and waste baeries, which would replace the current direc- tive. The proposal pursues three objectives: to enhance the operation of the internal market (including products, processes, waste baeries and recycled materials) by en- suring a level playing eld through a common set of rules; to promote the circular economy; and to reduce environ- mental and social impacts at all stages of the baery life cycle. Key elements of the proposal include mandatory requirements for all baeries placed on the EU market, requirements for end-of-life management of baeries, as well as new collection targets for poable waste baeries and requirements to facilitate the reuse of industrial ve- hicle and electric vehicle baeries as stationary storage baeries. Throughout 2021, both the European Council and the European Parliament continued the analysis of the proposal: once their positions have been nalized, in- formal negotiations (trilogues) will begin on reaching an agreement. State aid Revision of State aid guidelines On January 7, 2021, the response to the public consultation on the State aid guidelines for climate, environment and energy (CEEAG) was published. On June 7, the European Commission published a draft revision of the CEEAG, which was issued for a nal pub- lic consultation lasting until August 2. The CEEAG are of considerable impoance for the energy sector and for the Enel Group, as they will guide investment suppo for de- carbonization in the coming years. The draft text includes a new section dedicated to aid for the reduction of green- house gas emissions, including aid for the production of renewable and low-carbon energy, aid for energy ecien- cy, including high-eciency cogeneration, aid for hydro- gen, aid for storage and baeries and aid for the reduction or prevention of emissions from industrial processes. An entire chapter has been dedicated to sustainable mobility, which governs aid for electric mobility and charging infra- structure, including the maritime sector. Energy eciency measures for buildings are also regulated, including bat- teries and charging of electric vehicles. The proposed rules also ocially recognize that nancing for natural or legal monopoly power grids does not represent State aid. Final- ly, aid to nuclear technologies and fossil fuels are excluded from the scope of the guidelines. The document prepared and issued on August 2 incorporated the new proposals of the European Commission, underscoring the need to explicitly include all types of storage, including stand-alone systems, among the technologies allowed in the section dedicated to aid for the reduction of greenhouse gas emissions. This suggestion was successfully incorporated in the nal text of the guidelines published on December 21, 2021, which entered force on January 1, 2022. On October 6, the European Commission published the draft revision of the General Block Exemption Regulation (GBER) with impoant changes to the sections relating to climate, environmental protection and energy, including an update of the notication thresholds. The GBER denes specic categories of State aid that, under ceain condi- tions, are compatible with the Treaty on the Functioning of the European Union (TFEU) and exempts these categories from the obligation of prior notication to the Commission and its approval. The draft regulation proposes to expand the scope for Member States to nance dierent types of green projects, such as those to reduce CO 2 emissions, sustainable mobility and charging infrastructure. It also introduces new green conditions that large energy-inten- sive businesses must meet to receive aid in the form of re- duced tax rates, as well as provisions on storage, hydrogen and building renovation projects that improve their energy peormance and renewable energy communities. At the same time, the European Commission launched a public consultation ending on December 8, the date by which the contribution of the Enel Group was submied. The doc- ument prepared commented positively on the revision of the GBER but called for a more ambitious commitment to storage, proposing to include all types and suggesting that Member States be given exibility for measures to suppo the electrication of the system. 235Regulatory and rate issues 235 On November 25, the European Commission adopted the revised rules on State aid in favor of major impoant projects of common European interest (IPCEI), which are to enter force from January 1, 2022. The communication sets out the criteria for the Commission’s evaluation of the aid that Member States grant to cross-border IPCEIs that remedy market failures and enable cuing-edge innova- tions in key sectors and investments in technologies and infrastructures, with positive spillovers for the entire EU economy. On December 2 for Italy and December 20 for Romania, the European Commission approved the map for granting regional aid from January 1, 2022 to December 31, 2027 within the framework of the revised regional aid guidelines. Cases of State aid In June, the European Commission approved State aid schemes nanced by the Recovery and Resilience Facility (RRF) for a number of Member States. Italy’s €191.5 bil- lion recovery and resilience plan (of which €68.9 billion in grants and €122.6 billion in loans) will allocate 37% of to- tal spending to suppo measures for climate objectives, including large-scale restructuring investments aimed at improving the energy eciency of buildings, interven- tions to promote the use of renewable energy sources, including hydrogen, and the reduction of greenhouse gas emissions from transpo, with investments in sustainable urban mobility. Plans were also approved for Spain (€69.5 billion), Greece (€30.5 billion) and Romania (€14.2 billion). On July 9, the European Commission approved Italian plans to paially compensate energy-intensive business- es for higher electricity prices resulting from indirect costs of emissions allowances under the EU Emissions Trading System (ETS). The scheme will cover the indirect costs of emissions incurred in the 2020-2030 period, with a provisional budget of about €1.49 billion. On November 27, the European Commission approved a €2.27 billion Greek aid scheme to suppo renewable electricity generation and high-eciency cogeneration. On December 9, the European Commission approved a €3 billion scheme under the Spanish RRF to suppo research, development, innovation, environmental pro- tection and energy eciency in the automotive industry value chain. On December 21, the European Commission approved a €1.4 billion scheme for the development of renewable energy in the non-interconnected islands of Greece, in paicular for hybrid power plants that generate and store both solar and wind power. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 236 Integrated Annual Repo 2021236 Regulatory framework by Business Line Thermal Generation and Trading Italy Generation and the wholesale market For 2021, the Brindisi Sud, Sulcis, Pooferraio and As- semini plants were declared eligible for the cost reim- bursement scheme. The Sulcis, Pooferraio and Assemini plants were declared eligible for the cost reimbursement scheme for 2022. The Poo Empedocle plant is eligible for long-term cost reimbursement until 2025, while plants located on the smaller islands are automatically eligible for cost reim- bursement for all years in which they are declared essen- tial, including 2021 and 2022. Admission to the cost reim- bursement scheme guarantees coverage of the operat- ing costs of the aforementioned plants, including a return on capital invested. Generation cost reimbursement, net of plant revenue, is granted by the Regulatory Authority for Energy, Networks and the Environment (ARERA) with measures authorizing payments on account and a nal balance payment based on applications submied by op- erators. For 2021 and 2022, the remainder of essential capacity was contracted under alternative contracts which pro- vide for the obligation, on the Ancillary Services Market (ASM), to oer to go up/down to prices no higher/lower than the values identied using methods established by ARERA for a xed premium. With Resolution no. 43/2021/R/eel ARERA rejected the requests submied by Enel Produzione for the recalcula- tion of the notional revenue for the costs of compliance with the ETS for the Brindisi Sud plant for years from 2017 to 2020, with a consequent reduction in the reimburse- ments due to the plant for those years. With the subse- quent Resolution no. 67/2021/R/eel ARERA redetermined the payment on account for the Brindisi reimbursement valid for 2019 in order to align the calculation criteria of the notional revenue with Resolution no. 43/2021/R/eel. In April 2021, Enel Produzione led an appeal against Res- olution no. 43/2021/R/eel before the Lombardy Region- al Administrative Cou, for which the ruling is currently pending. In December 2021, a supplementary appeal was led against Resolution no. 476/2021/R/eel, which ap- plied the same criteria as those adopted in Resolution no. 43/2021/R/eel to determine the payment on account for the Brindisi Sud plant reimbursement for 2020. On June 28, 2019, the Minister for Economic Develop- ment issued a decree approving the denitive rules gov- erning the capacity remuneration mechanism (the ca- pacity market). On November 6 and November 28, 2019 two auctions were held with delivery in 2022 and 2023 respectively: Enel was awarded capacity for both years. A number of operators and a sectoral trade association contested the decree and the results of the two auctions before the Lombardy Regional Administrative Cou. Two operators also challenged the European Commission decision approving the Italian mechanism before the EU Cou, for which the ruling is currently pending. In April 2021, the Lombardy Regional Administrative Cou sus- pended its ruling pending a ruling of the EU cou, having found grounds to request a preliminary nding concern- ing those proceedings. ARERA has conrmed the transitional capacity payment mechanism for 2020 and 2021 in order to ensure conti- nuity with the new capacity market, which will produce a nancial impact staing from 2022. With the Decree of the Minister for the Ecological Transi- tion of October 28, 2021, the new capacity market regu- lation was approved. It will apply to auctions with delivery from 2024. In execution of the decree, Terna has launched the auction procedures for 2024, which will take place on February 21, 2022. Pursuant to the decree, the results of the 2024 auction will be used as the basis for assessing whether to hold an auction for the 2025 delivery year. Legislative Decree 210 of 8 November 2021 transposing Directive (EU) 2019/944 on common rules for the internal market for electricity provided for the establishment of a forward mechanism for Terna to use competitive tenders to procure new electricity storage systems to suppo the integration of renewables and grid security. The amount of capacity to be procured will be deter- mined on the basis of a development program for new storage systems dened on the basis of a proposal devel- oped by Terna in coordination with distributors. The procured storage capacity will be made available to market operators through a centralized platform man- aged by the Energy Markets Operator (EMO). The procurement mechanism will be approved by the Minister for the Ecological Transition on the basis of a proposal formulated by the grid operator drawn up in accordance with criteria established by ARERA. Imple- 237Regulatory and rate issues 237 mentation of the measure is subject to approval by the European Commission. At the end of November 2021, Legislative Decree 199/2021 implementing Directive 2018/2001 on the pro- motion of the use of energy from renewable sources was published in the Gazzea Uciale. The decree also con- tains provisions on the conguration of self-consumption and renewable energy communities, which are already governed in Italy by the experimental regulations intro- duced with Law 8/2020 (ratifying Decree Law 162/2019, the “Milleproroghe“ omnibus extension act) and subse- quent implementation measures (ARERA Resolution no. 318/2020/R/eel and Ministerial Decree of September 16, 2020 of the Ministry for Economic Development). Legis- lative Decree 199/2021 establishes that within 90 days of the date of entry into force of the decree ARERA shall adopt one or more measures specifying the implementa- tion rules and, within 180 days, the Ministry for the Eco- logical Transition shall update the incentive mechanisms for renewable resource plants included in the collective self-consumption arrangements or renewable energy communities referred to in the experimental regulations. The laer shall continue to apply pending the issue of these measures. Iberia Urgent measures to mitigate the impact of rising natural gas prices on the retail gas and electricity markets, consumer protection and the introduction of transparency in the wholesale and retail electricity and natural gas markets On September 16, 2021, Royal Decree Law (RDL) 17/2021 of September 14 containing urgent measures to mitigate the impact of the increase in natural gas prices on the retail gas and electricity markets came into force. The legislation requires a reduction in the remuneration re- ceived for electricity generated by non-emiing plants that are in peninsular areas and do not receive regulated remuneration. This reduction is a function of the monthly gas price and will be in eect until March 31, 2022. RDL 23/2021 of October 26, 2021, containing urgent measures in the eld of energy for the protection of consumers and the introduction of transparency in the wholesale and retail markets for electricity and natural gas, claried that the power generated by the plants concerned already sold using forward hedging instru- ments with a xed price will be excluded. Renewable energy auctions January 20, 2021 saw the rst renewable energy auction held as pa of the new remuneration scheme envisaged under Royal Decree 960/2020, based on the provisions of Order TED/1161/2020. A total of 2,993 MW were awarded, of which 1,995 MW of photovoltaic power and 998 MW of wind power at an average price of €24.73/ MWh. The second renewable energy auction took place on October 19, 2021, held under the economic regime for renewable energy. A total of 3,124 MW were awarded, of which 2,258 MW of wind power and 866 MW of photo- voltaic power at an average price of €30.59/MWh. On December 30, 2021, the procedure for adjudicating the third auction, scheduled for April 6, 2022, began for 500 MW of solar thermoelectric, biomass, photovoltaic and other technologies, and a fuher 140 MW for small- scale photovoltaic projects with local paicipation. Proposal for a ministerial decree on the price of natural gas in the Canary Islands and Melilla In November 2021, work began on a proposal for an or- der approving the price of natural gas for the genera- tion of electricity in the Canary Islands and Melilla. It es- tablishes the reference unit values of the remuneration scheme and addresses a number of technical issues. The order will allow the use of natural gas in the Non-Penin- sular Territories of the Canary Islands and Melilla and sets the price to be paid for the generation units of these ter- ritories for the use of this fuel. Order to revise fuel prices in Non-Peninsular Territories (NPT) Order TEC/1260/2019 of December 26, 2019 revised the technical and nancial parameters for the remunera- tion of generation units in the electrical systems of the Non-Peninsular Territories (NPT) for the second regula- tory period (2020-2025). With regard to fuel prices, the order established that within three months the prices of energy products and logistics would be revised with a ministerial order with eect from January 1, 2020. On August 7, 2020, Order TED/776/2020 of August 4 was published in Spain’s Ocial Journal, revising these prices. On November 16, 2021 the Supreme Cou issued ruling no. 1337/2021 on the appeal lodged by Endesa against this order, requesting the publication of a new ministe- rial order by the government (Ministry for the Ecological Transition and the Demographic Challenge) to regulate fuel auctions. Proposed capacity market ordinance In April 2021, the Ministry for the Ecological Transition and the Demographic Challenge (MITECO) began the preparation of a proposal for an order creating a capacity market in the peninsular electrical system. The propos- al provides for an auction system (“pay as bid“) that will be used to auction the xed power requirements (MW) identied in a demand coverage analysis peormed by the system operator, Red Eléctrica de España SAU (REE). The auction system is open to existing and new genera- 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 238 Integrated Annual Repo 2021238 tion, storage and demand management facilities, seing ceain requirements regarding the maximum CO 2 emis- sion rights of paicipating plants. The draft order also governs aspects relating to the var- ious types of auction envisaged, the rights and obliga- tions of the capacity service providers, including their remuneration and the penalties applicable in the event of non-compliance by the providers. Royal Decree Law 12/2021 of June 24 adopting urgent measures in the eld of energy taxation On June 25, 2021, the Royal Decree Law 12/2021 of June 24 was published in Spain’s Ocial Journal. It adopted urgent measures in tax maers in order to reduce the impact of the increase in the price of electricity on cus- tomers. In paicular, the legislation contains the follow- ing measures: • a reduction of value added tax from 21% to 10%, eec- tive until 31 December 2021, for the supply of electric- ity with contracted power equal to or less than 10 kW, provided that the arithmetic average price of the daily market of the last calendar month preceding the last day of the billing period exceeds €45/MWh, and in any case for the beneciaries of the Social Bonus who are seriously vulnerable or at risk of social exclusion. This VAT reduction was subsequently extended until April 30, 2022 with Royal Decree Law 29/2021 of December 21, which adopts urgent measures in the energy eld for the promotion of electric mobility, self-consump- tion and the expansion of renewable energy; • a temporary suspension of the tax on the value of electricity generation during the 3rd Quaer of 2021, which was extended until December 31, 2021 with Royal Decree 17/2021 of September 14 and then until March 31, 2022 with Royal Decree Law 29/2021. The royal decree law also establishes that if a surplus of income is generated by the electricity sector in 2020, it will be used in its entirety to cover the temporary imbal- ances in the 2021 tax year. Royal Decree Law 29/2021 of December 21 adopting urgent measures in the energy eld for the promotion of electric mobility, self-consumption and the expansion of renewable energy On December 22, 2021, Royal Decree Law 29/2021 was published in Spain’s Ocial Journal. It adopts urgent measures in the energy eld for the promotion of elec- tric mobility, self-consumption and the expansion of re- newable energy. Among other provisions, the legislation envisages the following measures: • with regard to taxation, the reduction of the special excise duty on electricity and value added tax is ex- tended until April 30, 2022, as noted above, and the suspension of the tax on the value of electricity gen- eration is extended until March 31, 2022; • a number of changes are introduced in the rules gov- erning access and connection permits, extending the deadlines provided for in Royal Decree Law 23/2021 in order to facilitate the development of projects and allowing the voluntary restitution of access and con- nection permits obtained or in force before the entry into force of this royal decree law, with the return of guarantees. Europe Russia Electricity and capacity markets Government Decree 1977 of December 1, 2020 provid- ed for an indexation rate of 11.4% for regulated capacity rates for generators that begin selling capacity through long-term capacity auctions (KOM) from January 1, 2021 after the termination of the long-term capacity supply contract period (DPM). The Federal Antitrust Service dened the regulated rates for 2021 (Order 1227/20 of December 17, 2020). More specically, the rates for the 1st Half of 2021 were not changed from their level in the 2nd Half of 2020. Con- versely, the rates for Enel Russia plants in the 2nd Half of 2021 were modied as follows: KGRES: electricity +2.9%, capacity +4.4%; NGRES: electricity +2.5%, capacity +28%; SGRES: electricity +1.8%, capacity +3.4% The Federal Antitrust Service has set regulated rates for 2022, with an increase of 3% compared with the 2nd Half of 2021. Latin America Chile Rate revision - Introduction of the temporary electricity price stabilization mechanism On November 2, 2019, Law 21.185 of the Ministry of En- ergy was published, introducing a temporary electricity price stabilization mechanism for customers subject to rate regulation. Consequently, the prices to be applied to regulated customers in the 2nd Half of 2019 were lowered to those applied in the 1st Half of 2019 (Decree 20T/2018) and were dened as “stabilized prices for reg- ulated customers“ (PEC). Between January 1, 2021 and the expiry of this mecha- nism, the prices to be applied will be those set every six months on the basis of Aicle 158 of the Electricity Law and may not exceed the level of the PECs noted above adjusted for consumer price ination. Any dierences between the amount invoiced by ap- plying the stabilization mechanism and the theoretical 239Regulatory and rate issues 239 amount that could be invoiced considering the price that would have been applied in accordance with the contractual terms and conditions agreed with the vari- ous electricity distribution companies will be accounted for as receivables for invoices to be issued to generation companies up to a maximum of $1,350 million until 2023. These dierences will be recognized in US dollars and will not accrue interest until the end of 2025\. Any imbalances in favor of the generation companies must be recovered no later than December 31, 2027. Argentina Rate revision - New resolutions The generation companies sell the energy they produce and their capacity on the market at a price set by the market regulator, CAMMESA, which is also responsible for any subsequent rate adjustments or discounting. The latest rate adjustment establishing new remunera- tion for generation companies was established with Res- olution no. 440 published on May 21, 2021, which resulted in an increase of 29%. This rate adjustment was applied retroactively staing from February 2021, when the rates established with Resolution no. 31 of 2020 were applied. On November 2, 2021, Resolution no. 1.037/21 was pub- lished, establishing the application of another tax in ad- dition to the provisions of Resolution no. 440 for invoices issued by generation companies that expo energy pro- duced using thermal and hydro power plant technologies to neighboring interconnected countries for all services peormed in the period between September 1, 2021 and February 28, 2022. The revenue raised collected by CAMMESA with this new tax will be allocated to a stabilization fund for the whole- sale electricity market, whose ultimate purpose will be to nance new energy infrastructure and which will be allo- cated on the basis of a decision of the Energy Secretariat. Enel Green Power Italy The Ministerial Decree of July 4, 2019 provided for com- petitive procedures based on Dutch auctions (selection of projects on the basis of price) and registers (selection of projects on the basis of an environmental criterion), depending on the installed capacity and by technology groups, including photovoltaic systems. In paicular, up to October 2021, seven procedures will be held with: • Dutch auctions for plants with a capacity of more than 1 MW; • registers for plants with a capacity of less than 1 MW. Unlike previous decrees, the Ministerial Decree of July 4, 2019 provides for a new method for suppoing renewa- ble sources through two-way contracts for dierences under which the successful tenderer returns any posi- tive dierences between the zonal price and the auction price. At September 30, 2021 the indicative annual cumulative cost was around €2.7 billion, compared with a ceiling of €5.8 billion for termination of the incentive mechanism. On November 30, 2021, Legislative Decree 199 of No- vember 8, 2021 transposing Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources (the RED II Decree) was published in the Gazzea Uciale. The decree provides that capacity not assigned in the auction procedures referred to in the Ministerial Decree of July 4, 2019 shall be put up for auction in subsequent procedures in 2022, until the publication of the new auc- tion schedule for the next ve years. In addition, the measure conrmed the same Dutch auc- tion mechanisms for plants with a capacity greater than 1 MW, providing for an exception for plants with a ca- pacity greater than 10 MW, which will be able to use the mechanism even though they have not completed the authorization process. Plants with a capacity of less than 1 MW, on the other hand, will have direct access to incentives, with the ex- ception of innovative technology plants, which will be able to access the subsidies through specic tenders. Iberia In the 1st Half of 2021, the preparation of all the regula- tions for access and connection to the grids for the new generation of renewables was completed. In December 2021, Royal Decree 1183/2020 on access and connec- tion to grids was published. In January 2021, Circular 1/2021 of the Access and Competition Commission was approved and in May 2021 the detailed specications for access to the grid were established with the Resolution of the National Commission for Markets and Competi- tion. Until July 1, 2021 no requests for access and con- nection to the grids can be made for new renewable generation projects (a situation that has continued since July 2020). Staing on July 1, applications may be sub- mied in accordance with the new rules. In general, the 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 240 Integrated Annual Repo 2021240 new technical criteria will open up a signicant volume of grid access capacity. Eective measures are being incor- porated to curb grid access speculation. The legislation provides for the possibility of launching calls for tenders to grant grid access capacity at both the Just Transition nodes and the rest of the network nodes, with variations depending on circumstances. On January 26, 2021, auctions for 3,000 MW of renew- ables generation capacity took place, governed by the Resolution of December 10, 2020, of the State Secre- tariat for Energy. Enel Green Power España was awarded 50 MW of photovoltaic solar capacity. In total, 2,036 MW of photovoltaic capacity and 998 MW of wind capacity were auctioned. In June 2021, work began on a bill reducing the remu- neration of non-GHG emiing generation plants placed in service before the entry into force of the Law 1/2005 (ETS) in propoion to the increased revenue obtained from the incorporation into the wholesale electrici- ty market price of the value of emission allowances for marginal technologies. In November 2021, a ministerial order was published to govern the basis for the Access Capacity Contest in the Fair Transition Hub of Teruel organized in response to the closure of a large coal-red power plant owned by Endesa. In the auction, for which proposal must be submied in January 2022, 1,200 MW of grid access capacity will be awarded to the best proposals for renewables genera- tion and storage projects with a high degree of technical maturity and environmental and socio-economic impact. On September 14, 2021, the Council of Ministers ap- proved a royal decree law containing reform measures for the electricity system to reduce the increase in electrici- ty bills for consumers. The main feature of the legislation is a temporary reduction in revenue from generation in consideration of the increase in the cost of gas from en- try into force of the measure until March 31, 2022. In October 2021, Royal Decree 23/2021 claried various aspects of this reduction, including the exclusion from the reduction mechanism of power produced by gener- ation plants covered by hedging instruments that meet ceain characteristics. Each month, producers must make a responsible statement ceifying the existence of these contracts. Most of the power generated by Endesa is sold under forward contracts. On October 19, 2021, a second auction was held under the new remuneration scheme for renewables estab- lished with Order TED/1161/2020. The auction concluded with a weighted average price of €31.65/MWh for pho- tovoltaic power and €30.18/MWh for wind power. Europe Greece Following approval by the European Commission, the Minister of Energy extended the remuneration mech- anism for interruptibility services until September 30, 2021\. Interruptibility is a demand response service in which willing industrial consumers will interrupt their consumption when required in exchange for a fee xed by auction. The scheme is nanced by all generators op- erating on the mainland, including EGPH, through the transfer of a percentage of their revenue. The percent- age applied diers depending on the generation tech- nology used: wind = 1.8% (previously 2%), small hydro = 0.8% (previously 1%), PV = 3.6% (no change). The decision of the Regulatory Authority for Energy (RAE) no. 988/2021 published in December 2020 set the UOCC contribution for 2022 at €0.581/MWh (in 2021 it was €0.325/MWh). This rate applies to monthly revenue from electricity generation for all renewable and cogeneration units in operation and serves to cover the operating and investment costs of DAPEEP, the Greek operator respon- sible for managing renewable generation incentives and the issue of guarantees of origin. Romania Law 259/2021 approved a series of measures to pro- tect consumers and businesses, with the introduction of a claw-back mechanism on the revenue of renewable and low carbon energy generators in consideration of the high price of power. For the period November 2021 \- March 2022, sales from renewable electricity, hydroe- lectric and nuclear power at prices above €90/MWh will be taxed in arrears at 80%. 241Regulatory and rate issues 241 Latin America Colombia Energy-transition law On July 10, 2021, Law 2099 was promulgated. It seeks to modernize current legislation and establishes specic provisions for the energy transition in order to boost the promotion, development and use of non-convention- al sources of energy, paly with a view to accelerating the country’s economic recovery process and strength- ening companies supplying electricity and gas. The law establishes tax benets for investments in non-conven- tional sources of energy, ecient energy management, the development of hydrogen, the development of in- frastructure projects to improve the electricity supply service, electric mobility and the sma measurement of consumption. Noh America United States Renewables incentives In June 2021, the United States Depament of the Treas- ury amended the administrative guidelines for section 45 of the Production Tax Credit (PTC) for investments in wind plants and for section 48 of the Investment Tax Credit (ITC) for investments in solar plants, giving pro- jects additional time to be put into service on the condi- tion that they meet the “continuity requirements“ within the “continuity safe harbor“ mechanism. The guidelines also claried how to meet the continuity requirements. Specically, the guidelines: • extend the period for entering service to six years for plants that staed construction in 2016, 2017, 2018 or 2019; • extend the period for entering service to ve years for plants that staed construction in 2020; and • provide taxpayers who do not rely on the continuity safe harbor to demonstrate continuity using the “con- tinuous eos“ standard rather than the more restric- tive “continuous construction“ standard, regardless of whether the project has begun construction. Forced labor in the solar supply chain In June 2021, US customs authorities responded to re- pos by issuing a “withhold release order“ (WRO) on silicon-based products manufactured by the company Hoshine Silicon Industry Co. Ltd (Hoshine) and its subsid- iaries, since they have been accused of exploiting their workforce. The WRO restricts the impo into the United States of polysilicon products made by Hoshine. The eect on the US solar industry was the halt of ship- ments of photovoltaic modules by US customs, resulting in a delay in the delivery of solar equipment to end users, including Enel. All photovoltaic equipment manufacturers had to pro- duce clear documentation of their supply chain to meet US customs requirements. The documentation had to prove the specic origin of metallurgical grade silicon in impoed photovoltaic products and demonstrate the absence of any Hoshine product in any pa of the mining or manufacturing process. Enel’s Code of Ethics and corporate procedures do not permit the exploitation of workers by any Group supplier or subcontractor. Neveheless, Enel is strengthening its controls, reviewing its supply chain and monitoring the implementation of the WRO by customs ocials. In a separate but connected development, in December 2021, President Biden signed the Uyghur Forced Labor Prevention Act (UFLPA). UFLPA requires US customs au- thorities to apply a presumption that goods “mined, pro- duced, or manufactured in whole or in pa“ in the Xin- jiang Uyghur Autonomous Region are made with forced labor and, therefore, are prohibited from being impoed into United States. Goods covered by this presumption shall not be allowed to enter unless the impoer proves that it has: • fully complied with government guidelines and regu- lations; • responded fully and substantially to all US customs in- quiries; and • determined “with clear and convincing evidence“ that the goods were not produced using forced labor. Polysilicon is one of the three industries on which appli- cation of the WRO is focused, and this focus extends to photovoltaic equipment that could contain raw materials mined in the Xinjiang Uyghur Autonomous Region. Implementation of the law will be guided by an admin- istrative regulation process under way since February 2022, which is expected to be completed by June 2022. As stated in Enel’s Human Rights Policy, the Group con- demns any violation of human rights and imposes the same standard on its paners and suppliers. The Code of Ethics and Enel’s corporate procedures therefore do not permit the exploitation of workers by any supplier or subcontractor of the Group. More specically, all companies that intend to paicipate in an Enel Group tender and, therefore, who wish to be- 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 242 Integrated Annual Repo 2021242 come pa of the Company’s group of qualied suppliers, must recognize the company policies, in paicular those relating to the management of their business in compli- ance with internationally recognized human rights, in- cluding the prohibition on the use of forced labor. This requirement is included in the contracts that suppliers sign. In addition, Enel’s supplier qualication system ensures the careful selection and evaluation of companies wish- ing to paicipate in procurement procedures. The sys- tem evaluates compliance with technical, nancial, le- gal, environmental, health and safety, human rights and ethical integrity requirements in order to guarantee the quality and reliability of the contracts awarded. In addition to the regular supplier qualication process, Enel conducts factory assessments, focused on evalu- ating and monitoring the quality, production, risk man- agement and logistics of each plant. Since 2021, Enel has implemented a chapter on supply chain sustainabil- ity, which addresses the key aspects of forced labor and ethical practices. The “In Broad Daylight: Uyghur Forced Labor and Glob- al Solar Supply Chains“ repo includes four suppliers with whom Enel has contractual relationships in the list of companies allegedly exposed to forced labor through their supply chains. Accordingly, the Group intensied its human rights controls: • requiring suppliers to provide detailed traceability in- formation on their supply chain; • requesting in-person visits to the sites of suppliers and sub-suppliers in order to verify compliance with the terms and conditions contained in their contracts with Enel; • sharing best practices in relation to the content of the ethical codes (or similar documents) of Enel’s suppliers. As of February 2022, no evidence has been found that Enel’s suppliers and subcontractors produce goods and materials in conditions that do not respect human rights. Enel has also adopted an ecosystem approach, working together with other utilities, suppliers and sector asso- ciations, to promote international industry statements aimed at guaranteeing full respect for human rights. In this context and in a global eo to ensure that the so- lar industry supply chain is free from forced labor, Enel Green Power Noh America, based in the United States, has signed the Solar Industry Forced Labor Prevention Pledge and has undeaken to suppo the development of a supply chain traceability protocol by the Solar Ener- gy Industries Association. In Europe, Enel Green Power has also signed SolarPower Europe’s public declaration on forced labor in the Xinjiang region of China. Bipaisan Infrastructure Law In November 2021, President Biden signed a $1 trillion Bipaisan Infrastructure Law, unlocking funds for new spending on roads, bridges, aqueducts, broadband and other projects in scal years 2022-2026. The new law also contains provisions to incentivize the expansion of the country’s electricity grid and suppo existing and new clean energy technologies. It also con- tains provisions to suppo existing nuclear power plants and hydroelectric plants, clean up abandoned mining lands and facilitate access to critical minerals needed for clean energy production. Of potential interest to Enel, the bipaisan infrastructure law includes the following provisions: • EV charger infrastructure: the United States Depa- ment of Energy (DOE) and the United States Depa- ment of Transpoation (DOT), through the Federal Highway Administration, will spend $5 billion on the National EV Formula Program to create a national net- work of EV chargers along interstate highways. The funds will be split over ve years between the states. The plan is geared towards fostering condence in electric vehicles by ensuring that drivers always have a place to recharge. The two depaments will also work with states to spend $2.5 billion over ve years on al- ternative fuel infrastructure subsidies; • electric buses: the DOT, through the Federal Transit Administration, will spend $5.3 billion over ve years in grants to transpoation agencies for the Low or No Emission Vehicle Program. The program suppos transpo agencies in purchasing or leasing low\- or zero-emission buses and other vehicles using tech- nologies such as baeries; • electric school buses: the US Environmental Protec- tion Agency, through the Clean School Bus Program, will spend $5 billion over ve years in the form of grants and discounts to states or local government agencies, as well as contractors. Eligible contractors include for-prot or non-prot entities that have the ability to sell clean school buses, zero-emission buses, charg- ing or refueling facilities, or other equipment need- ed to charge, power or maintain clean/zero-emission school buses, or arrange funding for that sale; • second life of EV baeries for grid services: the DOE intends to award grants for research, development and demonstration projects seeking to give a second life to EV baeries that have been used to power elec- tric vehicles, as well as for technologies and processes for the nal recycling and disposal of EV baeries; • demand response: the law sets a new standard for considering investment in demand response to ex- pand the reach of the federal energy management program to include demand response in state energy conservation plans; 243Regulatory and rate issues 243 • improve the grid: the DOE is authorized to allocate $5 billion to cooperation agreements or grants to strengthen and improve grid resilience and reliability, as well as an additional $3 billion for the existing Sma Grid Investment Matching Grant Program; • transmission policy: the law provides $2.5 billion in loans and/or direct funding to private transmission developers to provide nancial stability for proposed transmission projects. The DOE can make its network available to the private individual, make loans or enter into public-private panerships. Political action In May 2021, the state of Texas enacted a law in response to an extreme cold weather event that occurred in Feb- ruary 2021. The legislation ordered the Public Utility Commission (PUC) to develop and implement rules in the natural gas and electricity sectors to meet the energy needs of the electricity system during extreme weather events and periods of low renewable energy production. Legislation was approved to securitize most of the liabil- ities deriving from the February storm, reducing the total amount for which market operators would be liable for (thus reducing Enel’s liability). Legislation was also passed to restrict companies from entering into agreements with foreign-owned compa- nies from China, Iran, Noh Korea and Russia if those agreements provide the laer with direct or remote ac- cess to the Texas power grid. In August 2021, the state of Illinois enacted a law to raise the state’s Renewable Pofolio Standard (RPS) targets, provide incentives for electric vehicles and e-buses, and create new energy storage and network modernization programs. Illinois will switch to 100% clean energy by 2050, with in- terim targets of 50% by 2040 and 40% by 2030. The leg- islation translates into the closure of private coal plants of over 25 MW by 2030. Publicly owned coal/natural gas plants will close by 2045. By 2030, Illinois will have 1 mil- lion electric vehicles on the road, with $10 million availa- ble annually to conve state and local eets. There are also policies to create goals for baery storage systems (BESS). Project work contracts will be required for all new indus- trial-scale solar and wind projects, and the renewable energy industry is required to repo on diversity and in- clusion goals as of April 2022. In July 2021, the Missouri legislature approved a change in the tax assessment of wind farms that increased the tax exposure for assets that have been operating in the state for more than 5 years from 35% of the estimated value to 37.5%. New Jersey has implemented an industrial-scale solar re- newable energy incentive program that is administered by the state’s Bureau of Public Utilities. Additionally, in July 2021, the New Jersey legislature passed a law that will allow solar development on agricultural land, enabling the state to meet its solar development goals. Connecticut passed a law in June 2021 that sets a baery power storage target of 1 GW by 2030. Colorado and Nevada both passed laws in June 2021 that require utilities in each state to join a regional transmis- sion organization by 2030. Canada Canada announced a reinforced climate plan called “A Healthy Environment and a Healthy Economy“ at the United Nations Climate Change Conference (COP26) in November 2021 in order to achieve the Paris Agree- ment’s strengthened goal of reducing emissions by 40- 45% from 2005 levels by 2030. The Canadian Net-Zero Emissions Accountability Act, which became law on June 29, 2021, enshrines Canada’s commitment to achieving net-zero emissions by 2050. The law ensures transpar- ency and accountability as the government works to achieve its goals. The Minister of Environment and Climate Change will es- tablish the country’s emissions reduction plan for 2030 by the end of March 2022. The law requires public paicipation and independent advice to guide the Canadian government’s eos. As pa of the plan, the government launched the $8 billion Net-Zero Accelerator Fund to help large polluters reduce their emissions. In August 2021, the government launched a ve-year $2.19 billion fund to help transpoation service provid- ers move away from fossil fuel engines and switch to zero-emission vehicles. The Zero Emission Transit Fund is pa of the federal government’s $11.9 billion invest- ment in public transpoation and adds to Canada In- frastructure Bank’s planned $1.19 billion investment in zero-emission buses through its three-year growth plan. This fund seeks to suppo public transpo and school bus operators to plan the switchover to electric vehicles, suppoing the purchase of 5,000 zero-emission buses and building suppo infrastructure, including charging stations. Municipalities, school districts and private pa- nerships will be able to work with the government to ex- ploit potential oppounities. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 244 Integrated Annual Repo 2021244 During the federal election in September 2021, the Lib- eral Pay (currently in oce) pledged to double Cana- da’s existing clean energy capacity to reach its net-zero emissions target by 2050. The Canadian Infrastructure Bank is injecting $5 billion to advance clean energy gen- eration, transmission and storage and have pledged to invest an additional $1 billion over the next four years to suppo renewable energy and grid modernization projects. While the federal government has no direct responsibility for Canada’s power grids (they are under provincial jurisdiction), the government has commied itself to: • introduce a Clean Electricity Standard to achieve a 100% net-zero emissions electricity system by 2035; • develop additional investment tax credits for a range of renewable energy and baery storage solutions to accelerate the deployment of clean energy into the grid; • create a Pan-Canadian Grid Council in panership with provinces, territories, indigenous peoples, the private sector, labor organizations and civil society: – the Grid Council will work to establish national standards, best practices and incentives to pro- mote investment in infrastructure, sma grids, grid integration and innovation in the electricity sector, with the aim of making Canada the world’s most reliable, aordable and carbon-free electricity pro- ducer; – the Grid Council will promote the most cost-eec- tive approaches to planning and developing the electricity system in Canada, while promoting com- petitiveness to sell more clean Canadian power to the United States. Africa, Asia and Oceania South Africa The state-owned utility Eskom has staed transmission unbundling with the creation in December of the Nation- al Transmission Company South Africa (NTCSA), which is expected to be operational in 2022. Unbundling will fa- cilitate competition in the power generation sector and improve access to the grid on a non-discriminatory ba- sis. India In 2021, the government granted independent power producers (IPPs) an extension of two and a half months to commission renewable energy plants due to the COV- ID emergency, provided that the IPPs did not request fuher extensions or increases in the rates under their power purchase agreements (PPA). The Government subsequently eased this requirement by allowing IPPs to request fuher extensions based on the conditions set out in their PPAs. Enel Green Power India took advantage of the extension for the 285 MW Coral Project. The Ministry of Energy has introduced two rules that strengthen the “must-run“ status for renewable projects, safeguarding IPPs against arbitrary cuailment and en- suring rapid recovery in the event of a change in law. To promote renewable energy projects, the government had waived transmission rates for renewable projects that sold electricity produced through long-term PPAs. The government then expanded the scope of this dero- gation by also allowing the cancellation of transmission rates for projects with sho-term sales contracts and on power exchanges. The non-applicability of transmission rates represents an advantage for our projects. South Korea The main scheme to suppo the development of renew- ables in Korea is the Renewable Pofolio Standard (RPS), which obliges conventional generators with a capacity of more than 500 MW to procure a ceain amount of electricity from renewable sources annually. This share will gradually rise from 2% in 2012 to 25% by 2030\. In 2021 the share was 9%. Compliance with the RPS (the percentage of electricity generated from renewables) can be achieved by build- ing renewable plants or by purchasing green ceicates (RECs). The number of RECs that a RES generator can sell for each MWh produced depends on the so-called “mul- tiplier“ which diers depending on the energy source. The multiplier values were updated in August 2021: the very advantageous multiplier (x4) for BESS+RES was abolished, while that for onshore wind was increased from x1 to x1.2; solar PV is still less than 1 (x0.8). Another impoant regulatory reform in 2021 was the in- troduction of a series of tools to facilitate the procure- ment of renewable energy by companies paicipating in the RE100 initiative, with the (voluntary) objective of using 100% of green energy to drive their businesses. Among the most interesting tools for Enel Green Power is the REC trading platform, which allows the direct exchange of RECs between generators and companies. However, Third Pay PPAs and Direct PPAs can also represent new and potentially aractive routes to market by allowing the purchase and sale of renewable electricity between end users and generators without going through the en- ergy market. 245Regulatory and rate issues 245 Infrastructure and Networks Italy Rates for the fth regulatory period (2016-2023) are gov- erned by ARERA Resolution no. 654/2015/R/eel. This peri- od lasts eight years and is divided into two sub-periods of four years each (NPR1 for 2016-2019 and NPR2 for 2020- 2023). With regard to the NPR2 period, ARERA published Reso- lution no. 568/2019/R/eel, with which it updated rates for distribution and metering services in force in the 2020- 2023 period, publishing the new integrated texts (TIT 2020-2023 and TIME 2020-2023). With Resolution no. 639/2018/R/com, ARERA set the value of the WACC for distribution and metering activities, valid for the 2019-2021 period, at 5.9%. The method for determining the WACC for the 2022-2027 period was updated with Resolution 614/2021/R/com, es- tablishing a value of 5.2% for electricity distribution and metering. The regulation provides for an update of the value for 2025-2027, as well as the possibility of annual up- dating (in 2023 and 2024) should ceain nancial indica- tors lead to a change in the WACC of at least 0.5%. As for distribution and metering rates, ARERA approved both the denitive reference rates for 2020, calculated by taking into account the actual balance sheet data for 2019 (Resolution no. 131/2021/R/eel), and the provisional refer- ence rates for 2021 on the basis of the preliminary balance sheet data for 2020 (Resolution no. 159/2021/R/eel). The denitive reference rates for 2021 are expected to be pub- lished in 2022. As regards service quality, ARERA, with Resolution no. 646/2015/R/eel as amended, established output-based regulation for electricity distribution and metering servic- es, including the principles for regulation for 2016-2023 (TIQE 2016-2023). With Resolution no. 566/2019/R/eel, ARERA completed the update of the TIQE for the 2020- 2023 semi-period, proposing tools to bridge gaps in qual- ity of service still existing between the various areas of the country, taking account of the time needed to implement interventions on the grid as well as the eects of climate change. With Resolutions nos. 212/2021/R/eel and 537/2021/R/eel, ARERA specied the bonuses for resilience interventions completed by e-distribuzione in 2019 and 2020 eligible for the bonus-penalty mechanism envisaged under the provi- sions of Resolution no. 668/2019/R/eel, which introduced an incentive mechanism for investments to increase the resilience of distribution grids in terms of resistance to loads deriving from extreme weather events. With regard to relations between distributors and trad- ers, on January 1, 2021 the new version of the Electrici- ty Transpo Grid Code came into force with Resolution no. 261/2020/R/eel, which due to the reduction in the time required to terminate transpo contracts due to the default of sellers, reduced the credit exposure of distributors. Consequently, the value of guarantees that all sellers must give to distributors to cover the trans- po service provided was reduced (passing from a level of coverage ranging from 3 to 5 months of the trader’s turnover to a new range between 2 and 4 months). Energy eciency - White ceicates The decree of the Ministry for Ecological Transition of May 21, 2021 amended the ministerial decree of Janu- ary 11, 2017 as already amended by the decree of the Ministry for Economic Development of May 10, 2018. The measure set the national quantitative targets for electricity and gas distribution companies for the years 2021-2024 and also reduced the objectives for 2020 by 60%. The decree also updated the methods for distribu- tion companies to meet the obligation and for reimburs- ing the related costs. Iberia Methodology for calculating rates and electrical system charges On March 18, 2021, Royal Decree 148/2021 of March 9, 2021 was published in Spain’s Ocial Journal, which establishes the methodology for calculating electric- ity system charges. Fuhermore, on March 28, Circular 3/2021 of March 17 of the National Markets and Com- petition Commission (CNMC) was published, amending Circular 3/2020 of 15 January, which had established the methodology for calculating electricity transmission and distribution rates. The new rates for access to the trans- mission and distribution grid, as well as the new charg- es for the electricity system, entered into force on June 1, 2021, by way of the Resolution of March 18, 2021 of the CNMC, which established the access rates for the electricity transmission and distribution grids applicable from June 1, 2021, and Order TED/371/2021 of April 19, which established the rates for the electricity system and capacity payments applicable from June 1, 2021. On September 15, 2021, Royal Decree Law 17/2021 of September 14 was published, containing urgent meas- ures to mitigate the impact of the rise in natural gas prices in the gas and electricity retail markets. It reduced charges for the electricity system by about 96% from September 16, 2021 to December 31, 2021 compared with those in eect from June 1, 2021. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 246 Integrated Annual Repo 2021246 Methodology for calculating charges for the gas system On December 30, 2020, Royal Decree 1184/2020 of December 29 was published, establishing the meth- odology for calculating gas system charges. It entered into force on October 1, 2021. On September 29, 2021, Order TED/1023/2021 of September 27 was published, establishing charges for the gas system for the period between October 1, 2021 and September 30, 2022. The amount to be recovered for charges for this period is €26.9 million. Electricity rates for 2021 On December 29, 2020, Order TEC/1271/2020 of De- cember 22 was published in Spain’s Ocial Journal, es- tablishing various costs for the electricity system for 2021 and extending the electricity access rates until the rates taris set by the National Markets and Competition Commission (CNMC) come into force. Similarly, on March 23, 2021, the Resolution of March 18, 2021 of the CNMC was published in Spain’s Ocial Journal, approving the access rates for the transmission and distribution grids to be applied staing from June 1, 2021. On April 22, 2021, Order TED/371/2021 of April 19, 2021 was published in Spain’s Ocial Journal, establishing electricity system charges applicable from June 1, 2021. Finally, Royal Decree Law 17/2021 of September 14 re- duced electricity rates by about 96% in the period from its entry into force until December 31 2021. Electricity rates for 2022 On December 22, 2021, the Resolution of December 16, 2021 of the National Markets and Competition Com- mission (CNMC) was published in Spain’s Ocial Journal, establishing the access rates for the electricity trans- mission and distribution grids applicable from January 1, 2022, which represent an average reduction of 5.4% compared with their values at June 1, 2021. On December 30, Order TED/1484/2021 of December 28 was published in Spain’s Ocial Journal, seing the elec- tricity system rates to be applied from January 1, 2022 and establishing various regulated costs of the electrici- ty system for 2022. The new charges for 2022 represent an average reduction of about 31% compared with the charges approved on June 1, 2021. Natural gas rates for 2021 Circular 6/2020 of July 22 of the National Markets and Competition Commission (CNMC) approved the meth- odology for calculating rates for transpo, local networks and natural gas regasication. In addition, it established that this Commission must set access rates for regasi- cation plants and, if necessary, the billing deadlines for the period of operation of the transpo and distribution rates applicable from October 1, 2020. On December 29, 2020, the Resolution of December 21 of the Directorate General for Energy Policy and Mines was published, establishing the natural gas last reso rate (TUR) to be applied from January 1, 2021, with an average increase of 4.6% and 6.3% for last reso rate 1 (TUR 1) and last reso rate 2 (TUR 2), respectively, due to the increase in the cost of the commodity. These values remained in force throughout the 1st Half of 2021 as the necessary condition for any change (a variance of +/-2% in the cost of the commodity) was not met. On June 30, 2021, the Resolution of June 24, 2021 of the Directorate General for Energy Policy and Mines was published, establishing the natural gas last reso rate (TUR) to be applied staing from July 1, 2021, with a con- sequent increase of 2.9% and 3.9% for last reso rate 1 (TUR 1) and last reso rate 2 (TUR 2), respectively, due to the increase in the cost of the commodity. Finally, on September 29, 2021, the Resolution of Sep- tember 26, 2021 of the Directorate General for Energy Policy and Mines was published, which approves the nat- ural gas last reso rate (TUR) to be applied from Octo- ber 1, 2021, which in compliance with Royal Decree Law 17/2021 of September 14 translated into an increase of 0.9%, 4.6% and 11.2% for last reso rate 1 (TUR 1), last reso rate 2 (TUR 2) and last reso rate 3 (TUR 3), re- spectively. Natural gas rates for 2022 On December 27, the Resolution of December 22, 2021 of the Directorate General for Energy Policy and Mines was published, establishing the last reso rate for natural gas to be applied in the 1st Quaer of 2022. Taking account of the provisions of Royal Decree Law 17/2021 of Sep- tember 14, it translated into an increase of about 5.4%, 6.8% and 7.5% for last reso rate 1 (TUR 1), last reso rate 2 (TUR 2) and last reso rate 3 (TUR 3), respectively. Proposed remuneration for distribution activities from 2017 to 2019 During November 2021, work began on preparing a pro- posed order approving the incentive or penalty for the reduction of losses in the electricity distribution grid for 2016, the modication of base remuneration for 2016 for several distribution companies and the modication of the remuneration for electricity distribution companies for 2017, 2018 and 2019. Direct subsidies to electricity distribution companies On December 22, 2021, Royal Decree 1125/2021 was published in Spain’s Ocial Journal, promoting the dig- itization of distribution grids and charging infrastructure on public roads with suppo from European funds under the Recovery, Transformation and Resilience Plan. The aid will amount to €525 million for 2021-2023, which 247Regulatory and rate issues 247 will be allocated among distributors based on their share of distribution remuneration. Distribution companies must present these projects, which they will co-nance at 50%, in their annual investment plans, together with supplementary information concerning the impact on employment, the industrial value chain and the penetra- tion of renewables, as well as digital programs to improve customer service quality. Legislation establishing the National Fund for the Sustainability of the Electricity System (FNSSE) On June 1, 2021, the Council of Ministers approved a bill establishing the National Fund for the Sustainability of the Electricity System, which is awaiting approval by the Congress of Deputies. It is intended to divide the cost of policies to promote renewable energy, high-ecien- cy cogeneration and energy recovery from waste among the various energy vectors. The FNSSE, which will be implemented gradually over a 5-year period, will be nanced with contributions from operators in the various energy sectors, taxes deriving from Law 15/2012, the proceeds of auctions of CO 2 emission rights and, up to a limit of 10% of the annual value of the Fund, with funding from the general State budget or with EU funds. Europe Romania In Romania, electricity distributors (DSOs) purchase elec- tricity on wholesale markets to cover grid losses. The price recognized ex-ante by the regulator for such pur- chases in 2021 was largely exceeded by the closing prices on the wholesale electricity markets, with a serious im- pact on the cash ows of the DSOs. The rate mechanism provides for the recovery of grid losses: the dierence with purchase costs for the year t is recouped through distribution rates for the year t+2, but the circumstances generated pressure on the 2021 balance sheets of the DSOs, with a negative impact on working capital. Latin America Chile CNE Resolution no. 176/2020 - Exclusive activity On June 9, 2020, CNE Resolution no. 176 was published. It establishes the substance of the obligation for exclu- sive operation and separate accounts in the provision of public electricity distribution services in conformity with Law 21.194\. Under the provisions of the resolution, companies hold- ing concessions for the public electricity distribution service operating in the Chilean national electricity sys- tem will have to set up as companies exclusively engaged in distribution activities and will only be able to exercise economic activities involved in the provision of the pub- lic distribution service, in compliance with applicable legislation. The rules established in the resolution shall apply from January 1, 2021. Where a company is unable to comply by that date for legitimate reasons, subject to notifying the CNE the application of the resolution may be postponed, but in any case not later than January 1, 2022. Law 21.249 - Exceptional measures suppoing end users of health, electricity and gas services On August 8, Law 21.249 was approved, introducing ex- ceptional measures suppoing the most vulnerable cus- tomers, measures that, in large pa, Enel Distribución Chile was already implementing voluntarily. The meas- ures include a moratorium on the interruption of supply due to arrears and make it possible to pay electricity bill arrears in installments for customers dened as vulner- able. These measures were extended and strengthened with Law 21.340 until December 31, 2021 or the end of the state of emergency declared in response to the COVID-19 pandemic. ”Average bare price“ On March 20, 2021, the Ministry of Energy published the average “bare price“ to be applied staing from July 1, 2020, while on May 20, 2021 the Ministry of Energy also published the average bare price to be applied staing from January 1, 2021. Considering the price stabilization mechanism established with Law 21.185, the publication of this decree had no eect on end-user rates. ”Sho-term bare price“ On December 3, 2020, the Ministry of Energy published Decree 12T/2020, seing the “bare price“ for the supply of electricity with eect from October 1, 2020. On March 22, 2021, the Ministry of Energy published De- cree 3T/2021, seing the “bare price“ for the supply of electricity with eect from April 1, 2021. Determination of 2020-2024 distribution rate The price determination process for the 2020-2024 pe- riod is still under way. For the moment, the rates contin- ue to be applied in accordance with the methodology in force for the 2016-2020 period. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 248 Integrated Annual Repo 2021248 Argentina Rate revisions Until a revision of the denitive full rate is approved, the reg- ulator ENRE is entitled to set provisional rate adjustments in order to ensure stability in the provision of services. On March 21, 2021, Resolution ENRE no. 79/2021 estab- lished new transitional rates, which were subsequently in- creased by 9% with Resolution no. 106 of April 30, 2021, pending completion of the renegotiation of the full rate. Resolutions ENRE no. 263 and no. 266/2021 approved new rates to be applied staing from August 1, 2021. They only adjusted the seasonal stabilized price for large customers (with consumption of more than 300 kWh per month) as required by Resolution 748/21 of the Secretariat of Energy. The average rate was increased from $5.020 to $5.176/kWh (+3.1%). Brazil Rate revision for Enel Distribuição Ceará The latest full rate revisions approved for each Brazilian distribution company belonging to the Enel Group date back to 2018 (for Enel Distribuição Rio de Janeiro and Enel Distribuição Goiás) and 2019 (for Enel Distribuição Ceará and Enel Distribuição São Paulo). The next rate reviews are scheduled for 2023. The latest rate adjustments are summarized below: Average increase Company Rate adjustment date High voltage Low voltage Enel Distribuição Rio de Janeiro March 2021 +10.38% +4.63% Enel Distribuição Ceará April 2021 +10.21% +8.54% Enel Distribuição São Paulo June 2021 +3.67% +11.38% Enel Distribuição Goiás October 2021 +14.21% +17.32% Colombia The Energy and Gas Regulation Commission (CREG) deter- mines the remuneration methodology for the distribution grid. Distribution rates are set every ve years and updated monthly based on the producer price index. Rate revisions With Resolution no. 122 of 2020, the Energy and Gas Reg- ulation Commission (CREG) set the distribution rates for Codensa for the period 2018-2023. In June 2021, with Resolution no. 068 of 2021, CREG ap- proved the update of the Codensa investment plan. Peru In Peru, the process for determining distribution rates takes place every four years and is referred to as the “Seing the Aggregate Distribution Value“ (VAD). Exceptionally, the last rate cycle set a duration of ve years. Therefore, in 2018 the process of determining the VAD was completed for the years 2018-2022. The Peruvian regulations use a “model company“ approach. In each rate process, the investment and operating costs necessary to meet the demand for electricity in the conces- sion area are set and will be incorporated in the rate paid to the distributor. The VAD is determined individually for each distribution company with more than 50,000 customers. 249Regulatory and rate issues 249 End-user Markets Italy The current regulatory framework governing the process of eliminating regulated prices in the electricity sector (Law 124/2017 – the Competition Act – as most recent- ly amended by Decree Law 152/2021 implementing the NRRP, ratied with Law 233/2021) provides for a stag- gered postponement of the removal of price protection: to January 1, 2021 for small businesses, to January 1, 2023 for micro-enterprises and to January 2024 for domestic customers. As regards the gas sector, the elimination of price protections is scheduled to occur on January 1, 2023 for domestic customers and condominiums. With regard to the end of price safeguards for small rms in the electricity sector (January 1, 2021), the Ministry for Economic Development issued a decree implementing the Competition Act on December 31, 2020, delegating the Regulatory Authority for Energy, Networks and the Environment (ARERA) to dene the measures governing the transition to the free market based on ceain criteria and guidelines. With Resolution no. 491/2020/R/eel, AR- ERA established a last reso service (“gradual safeguards service“) for small businesses without a supplier, to be assigned by auction on a territorial basis for a period of three years. A ceiling of 35% was set for the market share that can be assigned to each supplier. In March 2021, Enel Energia and Servizio Elerico Nazi- onale (together with Enel Italia) appealed the ministerial decree before the Lazio Regional Administrative Cou, contesting the imposition of the antitrust cap at 35% and the lack of provisions (e.g., a social clause) for the reimbursement of the residual costs of Servizio Elerico Nazionale following the loss of customers. With regard to the laer point, in March 2021, Servizio Elerico Na- zionale and Enel Italia also challenged Resolution no. 491/2020/R/eel with an appeal before the Lombardy Re- gional Administrative Cou. At the moment, no hearing has yet been set for these appeals. With ruling no. 18/2021, the Lombardy Regional Ad- ministrative Cou granted the appeals led by Servizio Elerico Nazionale and Enel Energia, voiding Resolution no. 279/2017/R/com. The resolution had established an incentive mechanism to increase the use of electronic invoices with customers on the regulated markets and made the compensation for the seller of the dieren- tial between the discount granted to customers and the avoided cost conditional upon reaching ceain thresh- olds. With Resolution no. 477/2021/R/com, ARERA con- sequently also amended, with eect from 2022, the rules governing the recovery of amounts relating to previous years. Electricity With Resolution no. 604/2020/R/eel, ARERA updated for 2021 the rate component covering the marketing costs of the operators of the enhanced protection service (RCV) and the levels of the PCV fee, which represents the reference price for sellers on the free market. With Resolution no. 402/2021/R/eel, the updating of the RCV and the PCV for 2022 was postponed to the 1st Quaer of 2022, with eect from April 1, 2022, taking ac- count of the need to cover the costs incurred by opera- tors from January 2022 in the upcoming determinations. With ruling no. 565 of March 27, 2020, the Lombardy Regional Administrative Cou paially voided Resolu- tion no. 119/2019/R/eel, with which ARERA had intro- duced changes to the compensation mechanism for the amounts not collected by operators of the enhanced protection service in respect of fraudulent withdrawals of power. In paicular, the Regional Administrative Cou voided the pa of the resolution in which it provided for a reduction in the amounts subject to reimbursement for amounts invoiced in the period prior to its entry into force (April 2, 2019). With Resolution no. 240/2020/R/eel, ARERA amended the rules in compliance with the provi- sions of the Regional Administrative Cou. With Resolution no. 32/2021/R/eel, ARERA established a mechanism to reimburse arrears relating to the general system charges paid by the sales companies on the free and safeguard markets to distribution companies but not collected from end users (for the safeguard market, this only applies to customers that can be disconnected). For customers who cannot be disconnected on the safe- guard market, the mechanism for reimbursing non-re- coverable charges is governed by Aicle 44 of the TIV (Integrated Sales Code). Gas With Resolution no. 401/2021/R/gas, ARERA postponed the update of the QVD component to the 1st Quaer of 2022, with eect from April 1, 2022, taking account of the need to cover the costs incurred by operators sta- ing from January 2022. This decision was prompted by the need for fuher evaluation of the ongoing evolution of the structure of the retail markets as well as by the need to align the remuneration methods of the various regulated entities. In Aicles 31-quinquies and 37.1 leer b) of the TIVG (Integrated Gas Sales Code), ARERA regulates specic mechanisms for the reimbursement of arrears for pro- viders of the last reso service and the default service on distribution grids. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 250 Integrated Annual Repo 2021250 Iberia Energy eciency Law 18/2014 of October 15, which approves urgent measures for growth, competitiveness and eciency, created the National Energy Eciency Fund to achieve energy eciency objectives. Order TED/275/2021 of March 18 established a contri- bution of €27.7 million to the National Energy Ecien- cy Fund for Endesa, corresponding to the obligation for 2021. In December 2021, the Ministry for the Ecological Transi- tion and the Demographic Challenge staed preparation of a proposed order seing the contribution to the Na- tional Energy Eciency Fund for 2022, establishing the amount proposed for Endesa at €26 million. Consumer protection measures: Social Bonus On October 16, Order TED/1124/2021 of October 8 was published in Spain’s Ocial Journal, establishing the dis- tribution of the 2021 obligation for funding the Social Bonus, with Endesa’s share being set at 34.72%. In Octo- ber, the National Competition and Markets Commission (CNMC) began hearings on its proposal to distribute the funding of the Social Bonus for 2022, with the percent- age proposed for Endesa set at 33.50%. On October 27, 2021, Royal Decree Law 23/2021 of Octo- ber 26 containing urgent measures in the eld of energy for the protection of consumers and the introduction of transparency in the wholesale and retail electricity and natural gas markets was published in Spain’s Ocial Journal. The main consumer protection provisions in the decree are: • discounts through the Social Bonus mechanism have been increased from 25% to 60% for vulnerable cus- tomers and from 40% to 70% for severely vulnerable customers for the period from October 27, 2021 to March 31, 2022. Subsequently, Royal Decree 29/2021 of December 22, extended this measure until April 30, 2022; • the State budget contribution to the Social Bonus mechanism for heating was increased by €100 million to a total of €203 million, with the minimum benet rising from €25 to €35 in 2021. Similarly, Royal Decree Law 21/2021 of 26 October was published, extending the social protection measures to address situations of social and economic vulnerability. Note that the “COVID vulnerable“ Social Bonus catego- ry has been extended, representing a 25% discount on the PVPC rate for unemployed workers, those in wage supplementation programs (ERTE) and businesses with reduced working hours due to COVID precautions, until February 28, 2022. Consumer protection measures: electricity supply guarantee On September 15, 2021, Royal Decree 17/2021 of Sep- tember 14 containing urgent measures to mitigate the impact of the rise in natural gas prices in retail gas and electricity markets was published in Spain’s Ocial Jour- nal, establishing a minimum essential supply for vulner- able customers (recipients of the electricity Social Bo- nus) in arrears with their utility bills and extending the payment period by six months (beyond the existing four months), during which supplies cannot be interrupted and power will be reduced to 3.5 kW only for customers with a larger supply. Similarly, Royal Decree Law 21/2021 of October 26 ex- tended the moratorium on interruption of supplies of electricity and gas to vulnerable domestic customers (recipients of the Social Bonus) until February 28, 2022. Consumer protection measures: tax measures On June 25, 2021, Royal Decree Law 12/2021 of June 24 was published in Spain’s Ocial Journal, adopting urgent measures in the eld of energy taxation and electricity generation and on the management of regulatory fees and rates for water use. Specically, the royal decree law reduced VAT from 21% to 10% on the electricity bills of consumers with low voltage service and contracted power up to 10 kW until December 31, 2021, provided 251Regulatory and rate issues 251 that the average monthly price on the wholesale mar- ket in the previous month is greater than €45/MWh. For consumers beneing from the Social Bonus program, 10% VAT will apply regardless of the wholesale market price. Royal Decree 17/2021 of September 14 containing urgent measures to mitigate the impact of the increase in nat- ural gas prices on the retail gas and electricity markets reduced the electricity tax from 5.1% to 0.5% from Sep- tember 15, 2021 to December 31, 2021. Both measures were extended until April 30, 2022 with Royal Decree 29/2021 of December 22. Europe Romania As from January 1, 2021, Romania began implementa- tion of the provisions of Regulation (EU) 2019/943 on the elimination of regulated prices for end users. In the 2nd Half of 2021, the Romanian authorities adopt- ed specic legislation (Government Emergency Order 118/2021, Law 259/2021, Government Emergency Order 130/2021) establishing a combination of price-capping and osets. Latin America Free market In all Latin American countries, distribution companies can supply electricity to their customers on the regu- lated market. However, they can also apply free market conditions if customers exceed ceain limits. The limits for the free market by country are as follows: Country kW threshold Argentina >30 kW Brazil >1,000 kW or >500 kW (1) Colombia >100 kW or 55 MWh-month Costa Rica Not applicable (2) Guatemala >100 kW Panama >100 kW Peru >200 kW (3) (1) The >500 kW threshold applies if the electricity consumed was gen- erated using renewable sources, which are subsidized by the gov- ernment through a discount on rates. (2) The concept of free-market customer does not apply in Costa Rica. (3) D.S. 018-2016-EM establishes that: \- the installed power supply of customers who can choose between the regulated market and the free market (those with a power sup- ply of between 200 and 2,500 kW) is measured for each point of supply; \- customers whose power supply exceeds 2,500 kW for each point of supply are free-market customers. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Outlook Enel is the largest private-sector renewables company in the world Investing in Enel means investing in a decarbonized business model that leaves no one behind. Enel is the largest private-sector electricity distribution company in the world Enel´s grids, which are the most highly digitalized in the world, will be the foundation of the energy transition. Enel had the largest customer base among private-sector companies The electrication of energy consumption will enable Enel to create value for itself and for its customers. A simple, predictable and aractive dividend policy Enel retains a dividend policy based on a xed and increasing dividend until 2024. 5. REPORT ON OPERATIONS 252 Integrated Annual Repo 2021 253 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 254 Integrated Annual Repo 2021254 Outlook for operations The progressive roll-out of COVID-19 vaccines in 2021 created the conditions for strong growth at a global level. In this environment, the Group experienced a sound re- covery in operating indicators in terms of generation, di- stribution and sales to end users of electricity. In paicu- lar, the Enel Group accelerated the construction of new renewables capacity during the year, with over 5 GW of new installed capacity worldwide, representing the abso- lute record for the Group, with an increase of more than 2 GW on the new capacity installed in 2020. At the same time, macroeconomic conditions were shar- ply inuenced by strong growth in the prices of commo- dities, such as gas and coal, which have a direct impact on the price of electricity. This prompted the authorities of some European countries to intervene in an aempt to calm the increase in electricity prices for consumers, with measures that in some cases penalized companies operating in electricity generation and sales. In this context, the geographical diversication of the Group, its integrated business model along the entire va- lue chain, a sound nancial structure and a high degree of digitalization have enabled Enel to display considerable resilience, which is reected in our peormance and - nancial position. In November 2021, the Group presented its new Strategic Plan, also providing a vision of the evolution of the busi- ness in this decade. More specically, the Strategic Plan focuses on four stra- tegic lines of action. • Allocate capital to suppo the supply of decarbonized electricity. Between 2021 and 2030, the Enel Group plans to mobili- ze investments totaling €210 billion, of which €170 billion invested directly by the Group (an increase of 6% com- pared with the previous Plan) and €40 billion catalyzed by third paies. With these investments, the Enel Group expects to achieve total renewables capacity of about 154 GW by 2030, tripling the Group’s renewables pofolio compa- red with 2020, as well as increasing the grid’s customer base by 12 million and promoting the electrication of energy consumption, increasing the volume of electri- city sold by almost 30% while at the same time focusing on the development of beyond-commodity services, such as public electric mobility or behind-the-meter storage, in collaboration with paners. • Enable the electrication of customer energy demand. The Group’s strategic actions will seek to increase value for customers in the business-to-consumer (B2C), bu- siness-to-business (B2B) and business-to-government (B2G) segments, increasing the level of electrication of these customers while simultaneously improving the services we deliver. In “Tier 1” countries, it is expected that this targeted strategy, combined with investments in the basic asset, will increase the Group’s integrated margin by to 2.6 times between 2021 and 2030, with the suppo of a unied platform capable of managing the world’s largest customer base among private operators. • Leverage the creation of value throughout the value chain. In order to enhance the strategy of focusing on custo- mers through the use of platforms, in 2021 the Group created the Global Customer Operations Business Line, which is responsible for dening the commer- cial strategy and for directing the allocation of capi- tal towards customer needs, leveraging electrication while achieving excellent service levels. The refocusing of the Group will go hand in hand with the simplication and rebalancing of its pofolio, through: – a focus on “Tier 1” countries; – using resources made available from the disposal of assets that no longer suppo the Group’s strategy; and – mergers and acquisitions designed to improve posi- tioning, acquire skills or generate synergies. • Achieve sustainable Net-Zero objectives in advance. The Group has moved its “Net-Zero” commitment forward by 10 years, from 2050 to 2040, for all emissions along the value chain. The Group plans to abandon ther- mal generation by 2040, replacing it with new renewables capacity and hybridize renewables with storage solutions. Fuhermore, we expect that by 2040 the electricity sold by the Group will be generated entirely from renewables and, by the same year, the Group will exit the retail gas sales business. As a result of the strategic lines of action described abo- ve, between 2020 and 2030 the Group’s ordinary EBITDA is expected to increase at a compound annual growth rate of 5-6%, with the ordinary prot of the Group expected to in- crease at a compound annual rate of 6-7%. 255Outlook for operations 255 With regard to the period covered by the 2022-2024 Plan, in 2024 the Group’s ordinary EBITDA is forecast to reach €21- 21.6 billion, compared with €19.2 billion in 2021. The Group’s ordinary prot is expected to rise to €6.7-6.9 billion in 2024, compared with €5.6 billion in 2021. Enel’s dividend policy for the 2022-2024 period remains simple, predictable and aractive. Shareholders should re- ceive a xed dividend per share (DPS) that is expected to increase by 13% between 2021 and 2024, reaching €0.43 per share. The following developments are expected in 2022: • an acceleration of investments in renewable energy, especially in Iberia and Noh America, to suppo indu- strial growth and as pa of the Group’s decarbonization policies; • an increase in investments in distribution grids, especially in Italy, with the aim of fuher improving service quality and increasing the exibility and resilience of the grid; • an increase in investments dedicated to the electri- cation of consumption, with the aim of leveraging the growth of the customer base, and to achieving conti- nuous eciency gains, suppoed by the development of global business platforms. Based on the foregoing, the nancial targets on which the Group’s 2022-2024 Plan is based are repoed below. Financial targets 2021 2022 2023 2024 Prot growth Ordinary EBITDA (€ billions) 19.2 19-19.6 20-20.6 21-21.6 Ordinary prot (€ billions) 5.6 5.6-5.8 6.1-6.3 6.7-6.9 Value creation Dividend per share (€) 0.38 0.40 0.43 0.43 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 256 Integrated Annual Repo 2021256 Other information Non-EU subsidiaries At the date of approval by the Board of Directors of the nancial statements of Enel SpA for 2021 – March 17, 2022 – the Enel Group meets the “conditions for the listing of shares of companies with control over companies establi- shed and regulated under the law of non-EU countries” (hereinafter “non-EU subsidiaries”) established by CON- SOB with Aicle 15 of the Markets Regulation (approved with Resolution no. 20249 of December 28, 2017). Specically, we repo that: • in application of the materiality criteria for the purpo- ses of consolidation referred to in Aicle 15, paragraph 2, of the CONSOB Markets Regulation, 44 non-EU subsidiaries of the Enel Group have been identied to which the rules in question apply on the basis of the consolidated accounts of the Enel Group at December 31, 2020; • they are: 1) Almeyda Solar SpA (a Chilean company merged into Enel Green Power Chile SA on January 1, 2021); 2) Ampla Energia e Serviços SA (a Brazilian com- pany belonging to Enel Américas SA); 3) Aurora Wind Project LLC (a United States company belonging to Enel Noh America Inc.); 4) Celg Distribuição SA - Celg D (a Brazilian company belonging to Enel Américas SA); 5) Cimarron Bend Wind Holdings I LLC (a United Sta- tes company belonging to Enel Noh America Inc.); 6) Codensa SA ESP (a Colombian company merged into Emgesa SA ESP on March 1, 2022); 7) Companhia Ener- gética do Ceará \- Coelce (a Brazilian company belon- ging to Enel Américas SA); 8) Dolores Wind SA de Cv (a Mexican company belonging to Enel Green Power SpA); 9) EGPNA Preferred Wind Holdings LLC (a United States company belonging to Enel Noh America Inc.); 10) Eletropaulo Metropolitana Eletricidade de São Pau- lo SA (a Brazilian company belonging to Enel Américas SA); 11) Emgesa SA ESP (a Colombian company belon- ging to Enel Américas SA, renamed Enel Colombia SA ESP on March 1, 2022); 12) Empresa Distribuidora Sur SA - Edesur (an Argentine company belonging to Enel Américas SA); 13) Enel Américas SA (a Chilean com- pany directly controlled by Enel SpA); 14) Enel Brasil SA (a Brazilian company belonging to Enel Américas SA); 15) Enel Chile SA (a Chilean company directly controlled by Enel SpA); 16) Enel Distribución Chile SA (a Chilean company belonging to Enel Chile SA); 17) Enel Distribu- ción Perú SAA (a Peruvian company belonging to Enel Américas SA); 18) Enel Finance America LLC (a United States company belonging to Enel Noh America Inc.); 19) Enel Founa SA (a Panamanian company belonging to Enel Américas SA); 20) Enel Generación Chile SA (a Chilean company belonging to Enel Chile SA); 21) Enel Generación Perú SAA (a Peruvian company belonging to Enel Américas SA); 22) Enel Green Power Brasil Par- ticipações Ltda (a Brazilian company merged into Enel Brasil SA on November 4, 2021); 23) Enel Green Power Cachoeira Dourada SA (a Brazilian company belonging to Enel Américas SA); 24) Enel Green Power Chile SA (a Chilean company belonging to Enel Chile); 25) Enel Green Power Diamond Vista Wind Project LLC (a United States company belonging to Enel Noh America Inc.); 26) Enel Green Power México S de RL de Cv (a Mexican company belonging to Enel Green Power SpA); 27) Enel Green Power Noh America Inc. (a United States com- pany belonging to Enel Noh America Inc.); 28) Enel Green Power Perú SAC (a Peruvian company belonging to Enel Américas SA); 29) Enel Green Power Ralesna- ke Creek Wind Project LLC (a United States company belonging to Enel Noh America Inc.); 30) Enel Green Power RSA (Pty) Ltd (a South African company belon- ging to Enel Green Power SpA); 31) Enel Green Power RSA 2 (RF) (Pty) Ltd (a South African company belonging to Enel Green Power SpA); 32) Enel Kansas LLC (a Uni- ted States company belonging to Enel Noh America Inc.); 33) Enel Noh America Inc. (a United States com- pany directly controlled by Enel SpA); 34) Enel Perú SAC (a Peruvian company belonging to Enel Américas SA); 35) Enel Rinnovabile SA de Cv (a Mexican company be- longing to Enel Green Power SpA); 36) Enel Russia PJSC (a Russian company directly controlled by Enel SpA); 37) Enel X Noh America Inc. (a United States company belonging to Enel Noh America Inc.); 38) Geotérmica del Noe SA (a Chilean company belonging to Enel Chi- le SA); 39) High Lonesome Wind Power LLC (a United States company belonging to Enel Noh America Inc.); 40) Red Di Wind Project LLC (a United States company belonging to Enel Noh America Inc.); 41) Rock Creek Wind Project LLC (a United States company belonging to Enel Noh America Inc.); 42) Thunder Ranch Wind Project LLC (a United States company belonging to Enel Noh America Inc.); 43) Tradewind Energy Inc. (a United States company belonging to Enel Noh Ame- rica Inc.); 44) White Cloud Wind Project LLC (a United States company belonging to Enel Noh America Inc.); 257Other information 257 • the balance sheet and income statement of the above companies included in the repoing package used for the purpose of preparing the 2021 consolidated nan- cial statements of the Enel Group will be made available to the public by Enel SpA (pursuant to Aicle 15, para- graph 1a) of the Markets Regulation) at least 15 days pri- or to the day scheduled for the Ordinary Shareholders’ Meeting called to approve the 2021 nancial statemen- ts of Enel SpA together with the summary statements showing the essential data of the latest annual nancial statements of subsidiaries and associated companies (pursuant to the applicable provisions of Aicle 77, pa- ragraph 2-bis, of the CONSOB Issuers Regulation ap- proved with Resolution no. 11971 of May 14, 1999); • the aicles of association and composition and powers of the control bodies from all the above subsidiaries have been obtained by Enel SpA and are available in updated form to CONSOB where the laer should re- quest such information for supervisory purposes (pur- suant to Aicle 15, paragraph 1b) of the Markets Regu- lation); • Enel SpA has veried that the above subsidiaries: – provide the auditor of the Parent, Enel SpA, with in- formation necessary to peorm annual and interim audits of Enel SpA (pursuant to Aicle 15, paragraph 1 (leer c-i) of the Markets Regulation); – use an administrative and accounting system ap- propriate for regular repoing to the management and auditor of the Parent, Enel SpA, of income state- ment, balance sheet and nancial data necessary for preparation of the consolidated nancial statements (pursuant to Aicle 15, paragraph 1 (leer c-ii) of the Markets Regulation). Disclosures on nancial instruments The disclosures on nancial instruments required by Aicle 2428, paragraph 2, no. 6-bis of the Italian Civil Code are repoed in the following notes to the consolidated nan- cial statements: 46 “Financial instruments by category”, 47 “Risk management”, 49 “Derivatives and hedge accoun- ting” and 50 “Assets and liabilities measured at fair value”. Atypical or unusual operations Pursuant to the CONSOB Notice of July 28, 2006, the Group did not carry out any atypical or unusual operations in 2021. Such operations include transactions whose signicance, size, nature of the counterpaies, subject maer, method for calculating the transfer price or timing could give rise to doubts concerning the propriety and/or completeness of disclosure, conicts of interest, preservation of com- pany assets or protection of non-controlling shareholders. Subsequent events Signicant events following the close of the year are di- scussed in note 57 “Events after the repoing period” to the consolidated nancial statements. Transactions with related paies For more information on transactions with related paies, please see note 52 “Related paies” to the consolidated nancial statements. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 258 Integrated Annual Repo 2021258 Reconciliation of equity and prot of Enel SpA and the corresponding consolidated gures Pursuant to CONSOB Notice no. DEM/6064293 of July 28, 2006, the following table provides a reconciliation of Group prot for the year and equity with the correspon- ding gures for the Parent. Millions of euro Income statement Equity Income statement Equity at Dec. 31, 2021 at Dec. 31, 2020 Separate nancial statements - Enel SpA 4,762 34,967 2,326 30,743 Carrying amount of and impairment losses on consolidated equity investments (8,947) (104,958) 687 (85,641) Equity and prot (calculated using the same accounting policies) of the consolidated companies and groups and those accounted for using the equity method, net of non-controlling interests 13,089 94,975 4,091 78,099 Translation reserve - (8,125) - (7,046) Goodwill - 13,821 (274) 13,779 Intercompany dividends (5,805) - (4,146) - Elimination of unrealized intercompany prots, net of tax eects and other minor adjustments 90 (1,027) (74) (1,609) TOTAL ATTRIBUTABLE TO OWNERS OF THE PARENT 3,189 29,653 2,610 28,325 NON-CONTROLLING INTERESTS 668 12,689 1,012 14,032 CONSOLIDATED FINANCIAL STATEMENTS 3,857 42,342 3,622 42,357 259Other information 259 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Sale of Open Fiber As pa of the “Stewardship” business model, Open Fiber was sold in 2021, with the recognition of a capital gain of €1,763 million. Energy transition The Group continued the energy transition process by increasing its investment in new renewable generation capacity and digitalization. Impact of climate change In its valuation processes, the Group has taken account of the long-term impacts of climate change. 6. Consolidated nancial statements CONSOLIDATED FINANCIAL STATEMENTS 260 Integrated Annual Repo 2021 261 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 262 Integrated Annual Repo 2021 Consolidated nancial statements Consolidated Income Statement Millions of euro Notes 2021 2020 of which with related paies of which with related paies Revenue Revenue from sales and services (1) (2) 10.a 84,104 7,010 63,642 4,038 Other income 10.b 3,902 6 2,362 10 [Subtotal] 88,006 66,004 Costs Electricity, gas and fuel (1) 11.a 49,093 13,826 26,026 5,385 Services and other materials (1) 11.b 19,609 3,152 18,366 2,958 Personnel expenses 11.c 5,281 4,793 Net impairment losses/(reversals) on trade receivables and other receivables 11.d 1,196 1,285 Depreciation, amoization and other impairment losses 11.e 8,691 7,163 Other operating costs 11.f 2,095 218 2,202 202 Capitalized costs 11.g (3,117) (2,385) [Subtotal] 82,848 57,450 Net results from commodity contracts (1) 12 2,522 24 (99) 1 Operating prot (2) 7,680 8,455 Financial income from derivatives 13 2,718 1,315 Other nancial income (2) 14 1,882 138 2,676 62 Financial expense from derivatives 13 1,257 2,256 Other nancial expense 14 6,114 32 4,485 71 Net income/(expense) from hyperination 20 57 Share of prot/(loss) of equity-accounted investments 15 571 (299) Pre-tax prot 5,500 5,463 Income taxes 16 1,643 1,841 Prot from continuing operations 3,857 3,622 Prot/(Loss) from discontinued operations - - Prot for the year (owners of the Parent and non-controlling interests) 3,857 3,622 Aributable to owners of the Parent 3,189 2,610 Aributable to non-controlling interests 668 1,012 Earnings per share Basic earnings per share Basic earnings per share 0.31 0.26 Basic earnings per share from continuing operations 0.31 0.26 Basic earnings/(loss) per share from discontinued operations - - Diluted earnings per share Diluted earnings per share 0.31 0.26 Diluted earnings per share from continuing operations 0.31 0.26 Diluted earnings/(loss) per share from discontinued operations - - (1) The figures for 2020 have been adjusted, for comparative purposes only, to take account of the effects associated with the change in classification connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical settlement. The change in classification had no impact on operating profit. For more details, please see note 7 to these consolidated financial statements. (2) For comparative purposes only, €87 million in 2020 in respect of the component recognized through profit or loss deriving from the remeasurement at fair value of the financial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassified from financial income to revenue. The latter classification had an impact of the same amount on operating profit. For more details, please see note 7 to these consolidated financial statements. 263Consolidated nancial statements Statement of Consolidated Comprehensive Income Millions of euro Notes 2021 2020 Prot for the year 3,857 3,622 Other comprehensive income/(expense) that may be subsequently reclassied to prot or loss (net of taxes) Eective poion of change in the fair value of cash ow hedges (725) (268) Change in the fair value of hedging costs 195 (99) Share of the other comprehensive expense of equity-accounted investments (645) (9) Change in the fair value of nancial assets at FVOCI 11 (1) Change in translation reserve (90) (4,510) Other comprehensive income/(expense) that may not be subsequently reclassied to prot or loss (net of taxes) Remeasurement of net liabilities/(assets) for dened benet plans 30 (353) Change in the fair value of equity investments in other companies - (21) Total other comprehensive income/(expense) for the year 36 (1,224) (5,261) Comprehensive income/(expense) for the year 2,633 (1,639) Aributable to: \- owners of the Parent 2,562 (1,028) \- non-controlling interests 71 (611) 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 264 Integrated Annual Repo 2021 Statement of Consolidated Financial Position Millions of euro Notes ASSETS at Dec. 31, 2021 at Dec. 31, 2020 of which with related paies of which with related paies Non-current assets Propey, plant and equipment 18 84,572 78,718 Investment propey 21 91 103 Intangible assets 22 18,070 17,668 Goodwill 23 13,821 13,779 Deferred tax assets 24 11,034 8,578 Equity-accounted investments 25 704 861 Non-current nancial derivative assets 26 2,772 14 1,236 21 Non-current contract assets 27 530 304 Other non-current nancial assets 28 5,704 1,120 5,159 1,144 Other non-current assets 30 3,268 119 2,494 [Total] 140,566 128,900 Current assets Inventories 32 3,109 2,401 Trade receivables 33 16,076 1,321 12,046 863 Current contract assets 27 121 176 Tax assets 530 446 Current nancial derivative assets 26 22,791 32 3,471 Other current nancial assets 29 8,645 157 5,113 190 Other current assets 31 5,002 123 3,578 164 Cash and cash equivalents 34 8,858 5,906 [Total] 65,132 33,137 Assets classied as held for sale 35 1,242 1,416 TOTAL ASSETS 206,940 163,453 265Consolidated nancial statements Millions of euro Notes LIABILITIES AND EQUITY at Dec. 31, 2021 at Dec. 31, 2020 of which with related paies of which with related paies Equity aributable to owners of the Parent Share capital 10,167 10,167 Treasury share reserve (36) (3) Other reserves 1,721 (39) Retained earnings 17,801 18,200 [Total] 29,653 28,325 Non-controlling interests 12,689 14,032 Total equity 36 42,342 42,357 Non-current liabilities Long-term borrowings 37 54,500 880 49,519 984 Employee benets 38 2,724 2,964 Provisions for risks and charges (non-current poion) 39 7,197 5,774 Deferred tax liabilities 24 9,259 7,797 Non-current nancial derivative liabilities 26 3,339 1 3,606 Non-current contract liabilities 27 6,214 194 6,191 161 Other non-current nancial liabilities 40 120 - Other non-current liabilities 41 4,525 3,458 [Total] 87,878 79,309 Current liabilities Sho-term borrowings 37 13,306 6 6,345 21 Current poion of long-term borrowings 37 4,031 109 3,168 108 Provisions for risks and charges (current poion) 39 1,126 1,057 Trade payables 43 16,959 4,082 12,859 2,205 Income tax liabilities 712 471 Current nancial derivative liabilities 26 24,607 3,531 Current contract liabilities 27 1,433 12 1,275 16 Other current nancial liabilities 44 625 622 Other current liabilities 42 12,959 80 11,651 37 [Total] 75,758 40,979 Liabilities included in disposal groups classied as held for sale 35 962 808 Total liabilities 164,598 121,096 TOTAL LIABILITIES AND EQUITY 206,940 163,453 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 266 Integrated Annual Repo 2021 Statement of Changes in Consolidated Equity (note 36) Millions of euro Share capital and reserves aributable to owners of the Parent Share capital Share premium reserve Treasury share reserve Reserve for equity instruments \- perpetual hybrid bonds Legal reserve Other reserves Translation reserve Hedging reserve Hedging costs reserve Reserve from measurement of nancial instruments at FVOCI Reserve from equity- accounted investments Actuarial reserve Reserve from disposal of equity interests without loss of control Reserve from acquisitions of non- controlling interests Retained earnings Equity aributable to owners of the Parent Non- controlling interests Total equity At December 31, 2019 10,167 7,487 (1) - 2,034 2,262 (3,802) (1,610) (147) 21 (119) (1,043) (2,381) (1,572) 19,081 30,377 16,561 46,938 Distribution of dividends - - - - - - - - - - - - - - (3,487) (3,487) (1,356) (4,843) Purchase of treasury shares - (11) (2) - - - - - - - - - - - - (13) - (13) Equity instruments - perpetual hybrid bonds - - - 2,386 - - - - - - - - - - - 2,386 - 2,386 Reserve for share-based payments (LTI bonus) - - - - - 6 - - - - - - - - - 6 - 6 Reclassication for cuailment of dened benet plans (IAS 19) following signing of the 5th Endesa Collective Bargaining Agreement - - - - - - - - - - - 106 - - (106) - - - Reclassications - - - - - - - - - - - - - - (1) (1) - (1) Monetary restatement (IAS 29) - - - - - - - - - - - - - - 105 105 147 252 Transactions in non-controlling interests - - - - - - (257) (13) - - - (28) - 280 (2) (20) (709) (729) Comprehensive income/ (expense) for the year - - - - - - (2,987) (294) (95) (22) (9) (231) - - 2,610 (1,028) (611) (1,639) of which: \- other comprehensive income/(expense) - - - - - - (2,987) (294) (95) (22) (9) (231) - - - (3,638) (1,623) (5,261) \- prot/(loss) for the year - - - - - - - - - - - - - - 2,610 2,610 1,012 3,622 At December 31, 2020 10,167 7,476 (3) 2,386 2,034 2,268 (7,046) (1,917) (242) (1) (128) (1,196) (2,381) (1,292) 18,200 28,325 14,032 42,357 Distribution of dividends - - - - - - - - - - - - - - (3,791) (3,791) (1,266) (5,057) Coupons paid to holders of hybrid bonds - - - - - - - - - - - - - - (71) (71) - (71) Reclassications - 20 (20) - - - - - - - - - - - - - - - Purchase of treasury shares - - (13) - - 36 - - - - - - - - (36) (13) - (13) Reserve for share-based payments (LTI bonus) - - - - - 9 - - - - - - - - - 9 - 9 Equity instruments - perpetual hybrid bonds - - - 3,181 - - - - - - - - - - - 3,181 - 3,181 Monetary restatement (IAS 29) - - - - - - - - - - - - - - 318 318 225 543 Change in the consolidation scope - - - - - - - (10) - - 55 - - - - 45 31 76 Transactions in non-controlling interests - - - - - - (1,234) 18 - - - (140) 3 449 (8) (912) (404) (1,316) Comprehensive income/ (expense) for the year - - - - - - 155 (359) 203 11 (648) 11 - - 3,189 2,562 71 2,633 of which: \- other comprehensive income/ (expense) - - - - - - 155 (359) 203 11 (648) 11 - - - (627) (597) (1,224) \- prot/(loss) for the year - - - - - - - - - - - - - - 3,189 3,189 668 3,857 At December 31, 2021 10,167 7,496 (36) 5,567 2,034 2,313 (8,125) (2,268) (39) 10 (721) (1,325) (2,378) (843) 17,8 01 29,653 12,689 42,342 Consolidated nancial statements 267 Millions of euro Share capital and reserves aributable to owners of the Parent Share capital Share premium reserve Treasury share reserve Reserve for equity instruments \- perpetual hybrid bonds Legal reserve Other reserves Translation reserve Hedging reserve Hedging costs reserve Reserve from measurement of nancial instruments at FVOCI Reserve from equity- accounted investments Actuarial reserve Reserve from disposal of equity interests without loss of control Reserve from acquisitions of non- controlling interests Retained earnings Equity aributable to owners of the Parent Non- controlling interests Total equity At December 31, 2019 10,167 7,4 87 (1) - 2,034 2,262 (3,802) (1,610) (147) 21 (119) (1,043) (2,381) (1,572) 19,081 30,377 16,561 46,938 Distribution of dividends - - - - - - - - - - - - - - (3,487) (3,487) (1,356) (4,843) Purchase of treasury shares - (11) (2) - - - - - - - - - - - - (13) - (13) Equity instruments - perpetual hybrid bonds - - - 2,386 - - - - - - - - - - - 2,386 - 2,386 Reserve for share-based payments (LTI bonus) - - - - - 6 - - - - - - - - - 6 - 6 Reclassication for cuailment of dened benet plans (IAS 19) following signing of the 5th Endesa Collective Bargaining Agreement - - - - - - - - \- - - 106 - - (106) - - - Reclassications - - - - - - - - - - - - - - (1) (1) - (1) Monetary restatement (IAS 29) - - - - - - - - - - - - - - 105 105 147 252 Transactions in non-controlling interests - - - - - - (257) (13) - - - (28) - 280 (2) (20) (709) (729) Comprehensive income/ (expense) for the year - - - - - - (2,987) (294) (95) (22) (9) (231) - - 2,610 (1,028) (611) (1,639) of which: \- other comprehensive income/(expense) - - - - - - (2,987) (294) (95) (22) (9) (231) - - - (3,638) (1,623) (5,261) \- prot/(loss) for the year - - - - - - - - - - - - - - 2,610 2,610 1,012 3,622 At December 31, 2020 10,167 7,476 (3) 2,386 2,034 2,268 (7,046) (1,917) (242) (1) (128) (1,196) (2,381) (1,292) 18,200 28,325 14,032 42,357 Distribution of dividends - - - - - - - - - - - - - - (3,791) (3,791) (1,266) (5,057) Coupons paid to holders of hybrid bonds - - - - - - - - - - - - - - (71) (71) - (71) Reclassications - 20 (20) - - - - - - - - - - - - - - - Purchase of treasury shares - - (13) - - 36 - - - - - - - - (36) (13) - (13) Reserve for share-based payments (LTI bonus) - - - - - 9 - - - - - - - - - 9 - 9 Equity instruments - perpetual hybrid bonds - - - 3,181 - - - - - - - - - - - 3,181 \- 3,181 Monetary restatement (IAS 29) - - - - - - - - - - - - - - 318 318 225 543 Change in the consolidation scope - - - - - - - (10) - - 55 - - - - 45 31 76 Transactions in non-controlling interests - - - - - - (1,234) 18 - - - (140) 3 449 (8) (912) (404) (1,316) Comprehensive income/ (expense) for the year - - - - - - 155 (359) 203 11 (648) 11 - - 3,189 2,562 71 2,633 of which: \- other comprehensive income/ (expense) - - - - - - 155 (359) 203 11 (648) 11 - - - (627) (597) (1,224) \- prot/(loss) for the year - - - - - - - - - - - - - - 3,189 3,189 668 3,857 At December 31, 2021 10,167 7,496 (36) 5,567 2,034 2,313 (8,125) (2,268) (39) 10 (721) (1,325) (2,378) (843) 17,801 29,653 12,689 42,342 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 268 Integrated Annual Repo 2021 Consolidated Statement of Cash Flows Millions of euro Notes 2021 2020 of which with related paies of which with related paies Pre-tax prot 5,500 5,463 Adjustments for: Net impairment losses/(reversals) on trade receivables and other receivables 11.d 1,196 1,285 Depreciation, amoization and other impairment losses 11.e 8,691 7,163 Net nancial (income)/expense (1) 13-14 2,751 2,693 Net (gains)/losses from equity-accounted investments 15 (571) 299 Changes in net working capital: (1,097) (1,654) \- inventories 32 (649) (8) \- trade receivables 33 (4,951) (458) (1,350) 33 \- trade payables 43 4,357 1,877 698 (86) \- other contract assets 27 56 (15) \- other contract liabilities 27 75 (4) (142) \- other assets/liabilities (1) 15 31 (837) 34 Accruals to provisions 1,578 834 Utilization of provisions (1,300) (1,202) Interest income and other nancial income collected 13-14 1,653 138 1,705 62 Interest expense and other nancial expense paid 13-14 (4,411) (32) (3,690) (71) Net (income)/expense from measurement of commodities (304) 188 Income taxes paid 16 (1,846) (1,575) Net capital gains (1,771) (1) Cash ows from operating activities (A) 10,069 11,508 Investments in propey, plant and equipment 18-21 (10,545) (8,330) Investments in intangible assets 22 (1,656) (1,218) Investments in non-current contract assets (907) (649) Investments in entities (or business units) less cash and cash equivalents acquired 8 (283) (33) Disposals of entities (or business units) less cash and cash equivalents sold 8 61 154 (Increase)/Decrease in other investing activities 2,455 (41) Cash ows used in investing activities (B) (10,875) (10,117) New long-term borrowings 46,3 15,895 3,924 Repayments of borrowings 46,3 (11,321) (118) (1,950) (104) Other changes in net nancial debt 3,339 (712) (176) Payments for acquisition of equity investments without change of control and other transactions in non-controlling interests (1,295) (1,067) Issues/(Redemptions) of hybrid bonds 2,213 588 Sale/(Purchase) of treasury shares (13) (13) Dividends and interim dividends paid (4,970) (4,742) Coupons paid to holders of hybrid bonds (71) - Cash ows from/(used in) nancing activities (C) 3,777 (3,972) Impact of exchange rate uctuations on cash and cash equivalents (D) 17 (497) Increase/(Decrease) in cash and cash equivalents (A+B+C+D) 2,988 (3,078) Cash and cash equivalents at the beginning of the year (2) 6,002 9,080 Cash and cash equivalents at the end of the year (3) 8,990 6,002 (1) For comparative purposes only, in 2020 the component recognized through profit or loss deriving from the remeasurement at fair value of the financial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 was reclassified from financial income to revenue. The latter classification did not have an impact on cash flows from operating activities. (2) Of which cash and cash equivalents equal to €5,906 million at January 1, 2021 (€9,029 million at January 1, 2020), short-term securities equal to €67 million at January 1, 2021 (€51 million at January 1, 2020) and cash and cash equivalents pertaining to “Assets held for sale” in the amount of €29 million at January 1, 2021. (3) Of which cash and cash equivalents equal to €8,858 million at December 31, 2021 (€5,906 million at December 31, 2020), short-term securities equal to €88 million at December 31, 2021 (€67 million at December 31, 2020) and cash and cash equivalents pertaining to “Assets held for sale” in the amount of €44 million at December 31, 2021 (€29 million at December 31, 2020). 269Notes to the consolidated nancial statements 269 Notes to the consolidated nancial statements Basis of presentation 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 1. Form and content of the consolidated nancial statements Enel SpA has its registered oce in Viale Regina Margher- ita 137, Rome, Italy, and since 1999 has been listed on the Milan stock exchange. There were no changes in the company name in 2021. Enel is an energy multinational and is one of the world’s leading integrated operators in the electricity and gas in- dustries, with a special focus on Europe and Latin America. The consolidated nancial statements as at and for the year ended December 31, 2021 comprise the nancial statements of Enel SpA, its subsidiaries and Group hold- ings in associates and joint ventures, as well as the Group’s share of the assets, liabilities, costs and revenue of joint operations (“the Group”). A list of the subsidiaries, associates, joint operations and joint ventures included in the consolidation scope is at- tached. These consolidated nancial statements were approved and authorized for publication by the Board of Directors on March 17, 2022. These consolidated nancial statements have been audit- ed by KPMG SpA. Basis of presentation The consolidated nancial statements as at and for the year ended December 31, 2021 have been prepared in accordance with international accounting standards (In- ternational Accounting Standards - IAS and International Financial Repoing Standards - IFRS) issued by the In- ternational Accounting Standards Board (IASB), the inter- pretations of the IFRS Interpretations Commiee (IFRSIC) and the Standing Interpretations Commiee (SIC), recog- nized in the European Union pursuant to Regulation (EC) no. 1606/2002 and in eect as of the close of the year. All of these standards and interpretations are hereinafter re- ferred to as the “IFRS-EU”. The consolidated nancial statements have also been pre- pared in conformity with measures issued in implementa- tion of Aicle 9, paragraph 3, of Legislative Decree 38 of February 28, 2005. The consolidated nancial statements consist of the con- solidated income statement, the statement of consolidat- ed comprehensive income, the statement of consolidated nancial position, the statement of consolidated changes in equity and the consolidated statement of cash ows and the related notes. The assets and liabilities recognized in the statement of consolidated nancial position are classied on a “current/ non-current basis”, with separate repoing of assets held for sale and liabilities included in disposal groups held for sale. Current assets, which include cash and cash equiv- alents, are assets that are intended to be realized, sold or consumed during the normal operating cycle of the Group; current liabilities are liabilities that are expected to be seled during the normal operating cycle of the Group. The consolidated income statement classies costs on the basis of their nature, with separate repoing of prot from continuing operations and prot/(loss) from discontinued operations aributable to owners of the Parent and to non-controlling interests. The consolidated statement of cash ows is prepared us- ing the indirect method, with separate repoing of any cash ows by operating, investing and nancing activities associated with discontinued operations. In paicular, although the Group does not diverge from the provisions of IAS 7 in the classication of items: • cash ows from operating activities repo cash ows from core operations, interest on loans granted and ob- tained and dividends received from associates or joint ventures; • investing activities comprise investments in propey, plant and equipment and intangible assets and dispos- als of such assets and contract assets related to ser- vice concession arrangements. They include, also, the eects of business combinations in which the Group acquires or loses control of companies, as well as other minor investments; • cash ows from nancing activities include cash ows generated by liability management transactions and leases, dividends and interim dividends paid to owners of the Parent and non-controlling interests and the ef- 270 Integrated Annual Repo 2021270 fects of transactions in non-controlling interests that do not change the status of control of the companies involved; • a separate item is used to repo the impact of exchange rates on cash and cash equivalents and their impact on prot or loss is eliminated in full in order to neutralize the eect on cash ows from operating activities. For more information on cash ows as repoed in the statement of cash ows, please see the note on “Cash ows” in the Repo on Operations. The consolidated nancial statements have been prepared on a going concern basis using the cost method, with the exception of items measured at fair value in accordance with IFRS, as explained in the measurement bases applied to each individual item, and of non-current assets and dis- posal groups classied as held for sale, which are meas- ured at the lower of their carrying amount and fair value less costs to sell. The consolidated nancial statements are presented in euro, the functional currency of the Parent Enel SpA. All gures are shown in millions of euro unless stated other- wise. The consolidated income statement, the statement of consolidated nancial position and the consolidated statement of cash ows repo transactions with related paies, the denition of which is given in note 2.2 “Signi- cant accounting policies”. The consolidated nancial statements provide compara- tive information in respect of the previous year. (22) “Information is material if omiing, misstating or obscuring it could reasonably be expected to inuence the decisions that the primary users of general purpose nancial statements make on the basis of those nancial statements, which provide nancial information about a specic repoing entity.” 2. Accounting policies 2.1 Use of estimates and management judgment Preparing the consolidated nancial statements under IF- RS-EU requires management to take decisions and make estimates and assumptions that may impact the carrying amounts of revenue, costs, assets and liabilities and the re- lated disclosures concerning the items involved as well as contingent assets and liabilities at the repoing date. The estimates and management’s judgments are based on pre- vious experience and other factors considered reasonable in the circumstances. They are formulated when the carry- ing amount of assets and liabilities is not easily determined from other sources. The actual results may therefore dier from these estimates. The estimates and assumptions are periodically revised and the eects of any changes are re- ected through prot or loss if they only involve that period. If the revision involves both the current and future periods, the change is recognized in the period in which the revision is made and in the related future periods. In order to enhance understanding of the consolidated - nancial statements, the following sections examine the main items aected by the use of estimates and the cases that reect management judgments to a signicant degree, un- derscoring the main assumptions used by management in measuring these items in compliance with the IFRS-EU. The critical element of such valuations is the use of assumptions and professional judgments concerning issues that are by their very nature unceain. Changes in the conditions underlying the assumptions and judgments could have a substantial impact on future results. The information included in the consolidated nancial statements is selected on the basis of a materiality analysis carried out in accordance with the requirements of Prac- tice Statement 2 “Making Materiality Judgments”, issued by the International Accounting Standards Board (IASB), and on the basis of investor expectations. (22) In addition, as regards the impact of COVID-19, the continuing instability connect- ed with the pandemic creates unceainty in forecasts for future developments in the macroeconomic, nancial and business environment in which the Group operates, which is reected in the assessments and the estimates produced by management regarding the carrying amounts of the as- sets and liabilities aected by greater volatility. Please see note 6 “COVID-19 disclosures” for details on the areas of the nancial statements most aected by the COVID-19 pan- demic, drawing on the information available at December 31, 2021 and considering the constantly evolving scenario. With regard to the eects of climate change issues, the Group believes that climate change represents an implic- it element in the application of the methodologies and models used to peorm estimates in the valuation and/or measurement of ceain accounting items. Fuhermore, the Group has also taken account of the impact of climate change in the signicant judgments made by management. In this regard, the main items included in the consolidat- ed nancial statements at December 31, 2021 aected by management’s use of estimates and judgments refer to the impairment of non-nancial assets, obligations connected with the energy transition, including those for decommis- sioning and site restoration of ceain generation plants, and the impairment of inventories of a number of coal-red plants. For fuher details on these items, see note 18 “Prop- ey, plant and equipment”, note 23 “Goodwill”, note 32 “In- ventories” and note 39 “Provisions for risks and charges”. 271Notes to the consolidated nancial statements 271 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Use of estimates Revenue from contracts with customers Revenue from supply of electricity and gas to end users is recognized at the time the electricity or gas is delivered and includes, in addition to amounts invoiced on the basis of pe- riodic (and peaining to the year) meter readings or on the volumes notied by distributors and transpoers, an esti- mate of the electricity and gas delivered during the period but not yet invoiced that is equal to the dierence between the amount of electricity and gas delivered to the distribu- tion network and that invoiced in the period, taking account of any network losses. Revenue between the date of the last meter reading and the year-end is based on estimates of the daily consumption of individual customers, primarily de- termined on their historical information, adjusted to reect the climate factors or other maers that may aect the es- timated consumption. For more details on such revenue, see note 10.a “Revenue from sales and services”. Impairment of non-nancial assets When the carrying amount of propey, plant and equip- ment, investment propey, intangible assets, right-of-use assets, goodwill and investments in associates/joint ven- tures exceeds its recoverable amount, which is the higher of the fair value less costs to sell and the value in use, the assets are impaired. Impairment tests are carried out in accordance with the provisions of IAS 36, as described in greater detail in note 23 “Goodwill”. In order to determine the recoverable amount, the Group generally adopts the value in use criterion. Value in use is based on the estimated future cash ows generated by the asset, discounted to their present value using a pre-tax discount rate that reects the current market assessment of the time value of money and of the specic risks of the asset. Future cash ows used to determine value in use are based on the most recent Business Plan, approved by the manage- ment, containing forecasts for volumes, revenue, operating costs and investments. These projections cover the next three years. For subsequent years, account is taken of: • assumptions concerning the long-term evolution of the main variables considered in the calculation of cash ows, as well as the average residual useful life of the assets or the duration of the concessions, based on the specic characteristics of the businesses; • a long-term growth rate equal to the long-term growth of electricity demand and/or ination (depending on the country and business) that does not in any case exceed the average long-term growth rate of the market in- volved. The recoverable amount is sensitive to the estimates and assumptions used in the calculation of cash ows and the discount rates applied. Neveheless, possible changes in the underlying assumptions on which the calculation of such amounts is based could generate dierent recover- able amounts. The analysis of each group of non-nancial assets is unique and requires management to use estimates and assumptions considered prudent and reasonable in the specic circumstances. In the current scenario, the analysis of impairment indica- tors has become even more impoant as an aempt was also made to assess whether the impact of the COVID-19 pandemic could reduce the carrying amount of ceain non-nancial assets as at December 31, 2021. For this rea- son, the Group has carefully considered the eects of the COVID-19 pandemic in determining the existence of impair- ment indicators for non-nancial assets. Fuhermore, in line with its business model and in the con- text of the acceleration of the decarbonization of the gen- eration mix and driving the energy-transition process, the Group has also carefully assessed whether climate change issues have aected the reasonable and suppoable as- sumption used to estimate expected cash ows. In this re- gard, where necessary, the Group has also taken account of the long-term impact of climate change, in paicular by considering in the estimation of the terminal value a long- term growth rate in line with the change in electricity de- mand determined using energy models for each country. Information on the main assumptions used to estimate the recoverable amount of assets with reference to the impacts relating to climate change, as well as information on chang- es in these assumptions, is provided in note 23 “Goodwill”. Expected credit losses on nancial assets At the end of each repoing period, the Group recogniz- es a loss allowance for expected credit losses on trade re- ceivables and other nancial assets measured at amoized cost, debt instruments measured at fair value through other comprehensive income, contract assets and all other assets in scope. Loss allowances for nancial assets are based on assump- tions about risk of default and on the measurement of ex- pected credit losses. Management uses judgment in mak- ing these assumptions and selecting the inputs for the im- pairment calculation, based on the Group’s past experience, current market conditions as well as forward-looking esti- mates at the end of each repoing period. The expected credit loss (i.e., ECL) – determined consider- ing probability of default (PD), loss given default (LGD), and exposure at default (EAD) – is the dierence between all contractual cash ows that are due in accordance with the contract and all cash ows that are expected to be received (including all shofalls) discounted at the original eective interest rate (EIR). In paicular, for trade receivables, contract assets and lease receivables, including those with a signicant - nancial component, the Group applies the simplied ap- 272 Integrated Annual Repo 2021272 proach, determining expected credit losses over a period corresponding to the entire life of the asset, generally equal to 12 months. Based on the specic reference market and the regulatory context of the sector, as well as expectations of recovery after 90 days, for such assets, the Group mainly applies a default denition of 180 days past due to determine ex- pected credit losses, as this is considered an eective in- dication of a signicant increase in credit risk. Accordingly, nancial assets that are more than 90 days past due are generally not considered to be in default, except for some specic regulated markets. For trade receivables and contract assets the Group mainly applies a collective approach based on grouping trade re- ceivables and contract assets into specic clusters, taking into account the specic regulatory and business context. Only if the trade receivables are deemed to be individually signicant by management and there is specic informa- tion about any signicant increase in credit risk, does the Group apply an analytical approach. In case of individual assessment, PD is mainly obtained from an external provider. Conversely, for collective assessment, trade receivables are grouped based on shared credit risk characteristics and past due information, considering a specic denition of default. Based on each business and local regulatory framework as well as dierences in customer pofolios also in terms of risk, default rates and recovery expectations, specic clus- ters are dened. The contract assets are considered to have substantially the same risk characteristics as the trade receivables for the same types of contracts. In order to measure the ECL for trade receivables on a collective basis, as well as for contract assets, the Group considers the following assumptions related to ECL pa- rameters: • PD, assumed as to be the average default rate, is cal- culated on a cluster basis and taking into consideration minimum 24 month historical data; • LGD is a function of the default bucket’s recovery rates, discounted at the EIR; and • EAD is estimated as the carrying exposure at the repo- ing date net of cash deposits, including invoices issued but not expired and invoices to be issued. Based on specic management evaluations, the for- ward-looking adjustment can be applied considering qualitative and quantitative information in order to reect possible future events and macroeconomic scenarios, which may aect the risk of the pofolio or the nancial instrument. For additional details on the key assumptions and inputs used please see note 46 “Financial instruments by cate- gory”. Depreciable amount of ceain elements of Italian hydroelectric plants subsequent to enactment of Law 134/2012 Law 134 of August 7, 2012 containing “urgent measures for growth” (published in the Gazzea Uciale of August 11, 2012), introduced a sweeping overhaul of the rules gov- erning hydroelectric concessions. Among its various pro- visions, the law establishes that ve years before the expi- ration of a major hydroelectric water diversion concession and in cases of lapse, relinquishment or revocation, where there is no prevailing public interest for a dierent use of the water, incompatible with its use for hydroelectric gen- eration, the competent public entity shall organize a pub- lic call for tenders for the award for consideration of the concession for a period ranging from 20 to a maximum of 30 years. In order to ensure operational continuity, the law also gov- erns the methods of transferring ownership of the busi- ness unit necessary to operate the concession, including all legal relationships relating to the concession, from the outgoing concession holder to the new concession holder, in exchange for payment of a price to be determined in ne- gotiations between the depaing concession holder and the grantor agency, taking due account of the following elements: • for intake and governing works, penstocks and outow channels, which under the consolidated law governing waters and electrical plants are to be relinquished free of charge (Aicle 25 of Royal Decree 1775 of December 11, 1933), the revalued cost less government grants re- lated to assets, also revalued, received by the conces- sion holder for the construction of such works, depre- ciated for ordinary wear and tear; • for other propey, plant and equipment, the market val- ue, meaning replacement value, reduced by estimated depreciation for ordinary wear and tear. While acknowledging that the new regulations introduce impoant changes as to the transfer of ownership of the business unit with regard to the operation of the hydroe- lectric concession, the practical application of these prin- ciples faces diculties, given the unceainties that do not permit the formulation of a reliable estimate of the value that can be recovered at the end of existing concessions (residual value). Accordingly, management has decided it could not pro- duce a reasonable and reliable estimate of residual value. The fact that the legislation requires the new concession holder to make a payment to the depaing concession holder prompted management to review the depreciation schedules for assets classied as to be relinquished free of charge prior to Law 134/2012 (until the year ended on December 31, 2011, given that the assets were to be relin- 273Notes to the consolidated nancial statements 273 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements quished free of charge, the depreciation period was equal to the closest date between the term of the concession and the end of the useful life of the individual asset), cal- culating depreciation no longer over the term of the con- cession but, if longer, over the useful life of the individual assets. If additional information becomes available to ena- ble the calculation of residual value, the carrying amounts of the assets involved will be adjusted prospectively. Determining the fair value of nancial instruments The fair value of nancial instruments is determined on the basis of prices directly observable in the market, where available, or, for unlisted nancial instruments, using spe- cic valuation techniques (mainly based on present val- ue) that maximize the use of observable market inputs. In rare circumstances where this is not possible, the inputs are estimated by management taking due account of the characteristics of the instruments being measured. For more information on nancial instruments measured at fair value, please see note 50 “Assets and liabilities measured at fair value”. In accordance with IFRS 13, the Group includes a meas- urement of credit risk, both of the counterpay (Credit Valuation Adjustment or CVA) and its own (Debit Valua- tion Adjustment or DVA), in order to adjust the fair value of nancial instruments for the corresponding amount of counterpay risk, using the method discussed in note 50 “Assets and liabilities measured at fair value”. Changes in the assumptions made in estimating the input data could have an impact on the fair value recognized for those instruments, especially in current conditions where markets are volatile and the economic outlook is highly un- ceain and subject to rapid change. Development expenditure In order to determine the recoverability of development expenditure, the recoverable amount is estimated mak- ing assumptions regarding any fuher cash outow that is expected to be incurred before the asset is ready for use or sale, the discount rates to be applied and the expected period of benets. Pensions and other post-employment benets Some of the Group’s employees paicipate in pension plans oering benets based on their wage history and years of service. Ceain employees are also eligible for other post-employment benet schemes. The expenses and liabilities of such plans are calculated on the basis of estimates carried out by consulting actuaries, who use a combination of statistical and actuarial elements in their calculations, including statistical data on past years and forecasts of future costs. Other components of the estimation that are considered include moality and re- tirement rates as well as assumptions concerning future developments in discount rates, the rate of wage increas- es, the ination rate and trends in healthcare cost. These estimates can dier signicantly from actual devel- opments owing to changes in economic and market con- ditions, increases or decreases in retirement rates and the lifespan of paicipants, as well as changes in the eective cost of healthcare. Such dierences can have a substantial impact on the quantication of pension costs and other related expens- es. With regard to the COVID-19 pandemic, the Group has carefully analyzed the possible impacts of the economic crisis generated by the emergency on the actuarial as- sumptions used in the measurement of the actuarial liabil- ities and assets serving the plans. For more details on the main actuarial assumptions adopt- ed, please see note 38. Provisions for risks and charges For more details on provisions for risks and charges, please see note 39 “Provisions for risks and charges”. Note 55 “Contingent assets and liabilities” also provides information regarding the most signicant contingent as- sets and liabilities for the Group at year end. Litigation The Group is involved in various civil, administrative and tax disputes connected with the normal pursuit of its activi- ties that could give rise to signicant liabilities. It is not al- ways objectively possible to predict the outcome of these disputes. The assessment of the risks associated with this litigation is based on complex factors whose very nature requires recourse to management judgments, even when taking account of the contribution of external advisors as- sisting the Group, about whether to classify them as con- tingent liabilities or liabilities. Provisions have been recognized to cover all signicant li- abilities for cases in which legal counsel feels an adverse outcome is likely and a reasonable estimate of the amount of the expense can be made. Obligations associated with generation plants, including decommissioning and site restoration Generation activities may entail obligations for the opera- tor with regard to future interventions that will have to be peormed following the end of the operating life of the plant. Such interventions may involve the decommissioning of plants and site restoration, or other obligations linked to the type of generation technology involved. The nature of such obligations may also have a major impact on the ac- counting treatment used for them. In the case of nuclear power plants, where the costs re- gard both decommissioning and the storage of waste fuel and other radioactive materials, the estimation of the future cost is a critical process, given that the costs will 274 Integrated Annual Repo 2021274 be incurred over a very long span of time, estimated at up to 100 years. The obligation, based on nancial and engineering as- sumptions, is calculated by discounting the expected fu- ture cash ows that the Group considers it will have to pay to meet the obligations it has assumed. The discount rate used to determine the present value of the liability is the pre-tax risk-free rate and is based on the economic parameters of the country in which the plant is located. That liability is quantied by management on the basis of the technology existing at the measurement date and is re- viewed each year, taking account of developments in stor- age, decommissioning and site restoration technology, as well as the ongoing evolution of the legislative framework governing health and environmental protection. Subsequently, the value of the obligation is adjusted to reect the passage of time and any changes in estimates. Onerous contracts In order to identify an onerous contract, the Group esti- mates the non-discretionary costs necessary to full the obligations assumed (including any penalties) under the contract and the economic benets that are presumed to be obtained from the contract. Leases When the interest rate implicit in the lease cannot be readily determined, the Group uses the incremental bor- rowing rate (IBR) at the lease commencement date to cal- culate the present value of the lease payments. This is the interest rate that the lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right of use asset in a similar economic environment. When no observable inputs are available, the Group estimates the IBR making assumptions to reect the terms and condi- tions of the lease and ceain lessee-specic estimates. One of the most signicant judgments for the Group in adopting IFRS 16 is determining this IBR necessary to cal- culate the present value of the lease payments required to be paid to the lessor. The Group approach to deter- mine an IBR is based on the assessment of the following three key components: • the risk free rate, that consider the currency ows of the lease payments, the economic environment where the lease contract has been negotiated and also the lease term; • the credit spread adjustment, in order to calculate an IBR that is specic for the lessee considering any un- derlying Parent or other guarantee; • the lease related adjustments, in order to reect into the IBR calculation the fact that the discount rate is directly linked to the type of the underlying asset, rath- er than being a general incremental borrowing rate. In paicular, the risk of default is mitigated for the lessors as they have the right to reclaim the underlying asset itself. For more information on lease liabilities, please see note 46 “Financial instruments by category”. Income tax Recovery of deferred tax assets At December 31, 2021, the consolidated nancial state- ments repo deferred tax assets in respect of tax loss- es or tax credits usable in subsequent years and income components whose deductibility is deferred in an amount whose future recovery is considered by management to be highly probable. The recoverability of such assets is subject to the achieve- ment of future prots sucient to absorb such tax losses and to use the benets of the other deferred tax assets. Signicant management judgment is required to assess the probability of recovering deferred tax assets, consid- ering all negative and positive evidence, and to determine the amount that can be recognized, based upon the likely timing and the level of future taxable prots together with future tax planning strategies and the tax rates applicable at the date of reversal. However, where the Group should become aware that it is unable to recover all or pa of recognized tax assets in future years, the consequent adjustment would be taken to prot or loss in the year in which this circumstance arises. The recoverability of deferred tax assets is reviewed at the end of each period. Deferred tax assets not recog- nized are reassessed at each repoing date in order to verify the conditions for their recognition. Where required, the Group monitored the recovery times of deferred tax assets as well as those relating to the re- versal of deductible temporary dierences, if any, as a re- sult of the greater unceainty caused by the COVID-19 pandemic. For more detail in deferred tax assets recognized or not recognized, please see note 24 “Deferred tax assets and liabilities”. 275Notes to the consolidated nancial statements 275 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Management judgment Identication of cash generating units (CGUs) For impairment testing, if the recoverable amount cannot be determined for an individual asset, the Group identi- es the smallest group of assets that generate largely in- dependent cash inows. The smallest group of assets that generates cash inows that are largely independent of the cash inows from other assets or group of assets is a CGU. Identifying such CGUs involves management judgments regarding the specic nature of the assets and the busi- ness involved (geographical segment, business segment, regulatory framework, etc.) and the evidence that the cash inows of the group of assets are largely independent of those associated with other assets (or groups of assets). The assets of each CGU are also identied on the basis of the manner in which management manages and monitors those assets within the business model adopted. In par- ticular, the number and scope of the CGUs are updated systematically to reect the impact of new business com- binations and reorganizations carried out by the Group, and to take account of external factors that could inu- ence the ability of assets to generate independent cash inows. In paicular, if ceain specic identied assets owned by the Group are impacted by adverse economic or operating conditions that undermine their capacity to contribute to the generation of cash ows, they can be isolated from the rest of the assets of the CGU, undergo separate analysis of their recoverability and be impaired where necessary. The CGUs identied by management to which the goodwill recognized in these consolidated nancial statements has been allocated and the criteria used to identify the CGUs are indicated in note 23 “Goodwill”. Determining the useful life of non-nancial assets In determining the useful life of propey, plant and equip- ment and intangible assets with a nite useful life, the Group considers not only the future economic benets – contained in the assets – obtained through their use, but also many other factors, such as physical wear and tear, the technical, commercial or other obsolescence of the product or service produced with the asset, legal or similar limits (e.g., safety, environmental or other restrictions) on the use of the asset, if the useful life of the asset depends on the useful life of other assets. Fuhermore, in estimating the useful lives of the assets concerned, the Group has taken account of its commit- ment under the Paris Agreement. For more information on this issue, please see note 18 “Propey, plant and equip- ment”. Determination of the existence of control Under the provisions of IFRS 10, control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to aect those returns through its power over the investee. Power is dened as the current ability to direct the relevant activities of the investee based on existing substantive rights. The existence of control does not depend solely on owner- ship of a majority investment, but rather it arises from sub- stantive rights that each investor holds over the investee. Consequently, management must use its judgment in as- sessing whether specic situations determine substantive rights that give the Group the power to direct the relevant activities of the investee in order to aect its returns. For the purpose of assessing control, management analyz- es all facts and circumstances including any agreements with other investors, rights arising from other contractu- al arrangements and potential voting rights (call options, warrants, put options granted to non-controlling share- holders, etc.). These other facts and circumstances could be especially signicant in such assessment when the Group holds less than a majority of voting rights, or similar rights, in the investee. Following such analysis of the existence of control, in ap- plication of IFRS 10 the Group consolidated ceain com- panies (Emgesa and Codensa) on a line-by-line basis even though it did not hold more than half of the voting rights, determining that the requirements for de facto control ex- isted. Fuhermore, even if it holds more than half of the voting rights in another entity, the Group considers all the rele- vant facts and circumstances in assessing whether it con- trols the investee. The Group reassesses whether or not it controls an in- vestee if facts and circumstances indicate that there are changes to one or more of the elements considered in verifying the existence of control. Determination of the existence of joint control and of the type of joint arrangement Under the provisions of IFRS 11, a joint arrangement is an agreement where two or more paies have joint control. Joint control exists only when the decisions over the rele- vant activities require the unanimous consent of the par- ties that share joint control. A joint arrangement can be congured as a joint venture or a joint operation. Joint ventures are joint arrangements whereby the paies that have joint control have rights to the net assets of the arrangement. Conversely, joint op- erations are joint arrangements whereby the paies that have joint control have rights to the assets and obligations for the liabilities relating to the arrangement. In order to determine the existence of the joint control and the type of joint arrangement, management must apply judgment and assess its rights and obligations arising from the arrangement. For this purpose, the management con- siders the structure and legal form of the arrangement, the 276 Integrated Annual Repo 2021276 terms agreed by the paies in the contractual arrangement and, when relevant, other facts and circumstances. Following that analysis, the Group has considered its interest in Asociación Nuclear Ascó-Vandellós II as a joint operation. The Group re-assesses whether or not it has joint control if facts and circumstances indicate that changes have oc- curred in one or more of the elements considered in veri- fying the existence of joint control and the type of the joint arrangement. For more information on the Group’s investments in joint ventures, please see note 25 “Equity-accounted invest- ments”. Determination of the existence of signicant inuence over an associate Associates are those in which the Group exercises signi- cant inuence, i.e., the power to paicipate in the nancial and operating policy decisions of the investee but not exer- cise control or joint control over those policies. In general, it is presumed that the Group has a signicant inuence when it has an ownership interest of 20% or more. In order to determine the existence of signicant inuence, management must apply judgment and consider all facts and circumstances. The Group re-assesses whether or not it has signicant in- uence if facts and circumstances indicate that there are changes to one or more of the elements considered in ver- ifying the existence of signicant inuence. For more information on the Group’s equity investments in associates, please see note 25 “Equity-accounted invest- ments”. Application of “IFRIC 12 - Service concession arrangements” to concessions IFRIC 12 applies to “public-to-private” service concession arrangements, which can be dened as contracts under which the operator is obligated to provide public services, i.e., give access to major economic and social services for a ceain period of time, on behalf of a public entity (the gran- tor). In these contracts, the grantor conveys to an operator the right to manage the infrastructure used to provide ser- vices. More specically, IFRIC 12 gives guidance on the accounting by operators for “public-to-private” service concession ar- rangements in the event that: • the grantor controls or regulates what services the op- erator must provide with the infrastructure, to whom it must provide them, and at what price; and • the grantor controls – through ownership, benecial en- titlement or otherwise – any signicant residual interest in the infrastructure at the end of the term of the ar- rangement. In assessing the applicability of these requirements for the Group, as operator, management carefully analyzed existing concessions. On the basis of that analysis, the provisions of IFRIC 12 are applicable to some of the infrastructure of a number of companies that operate primarily in Brazil. Fuher details about the infrastructure used in the service concession arrangements in the scope of IFRIC 12 are pro- vided in note 19 “Infrastructure within the scope of ‘IFRIC 12 - Service concession arrangements’”. Revenue from contracts with customers In the process of applying IFRS 15, the Group has made the following judgments (fuher details about the most signif- icant eect on the Group’s revenue are provided in note 10.a “Revenue from sales and services”). Fuhermore, during the year, the Group carefully moni- tored the eects of the unceainties linked to the COV- ID-19 pandemic on the recognition of its revenue, in par- ticular as regards the main areas aected by signicant judgments. Identication of the contract The Group carefully analyzes the contractual terms and conditions on a jurisdictional level in order to determine when a contract exists and the terms of that contract’s en- forceability so as to apply IFRS 15 only to such contracts. Identication and satisfaction of peormance obligations When a contract includes multiple promised goods or services, in order to assess if they should be accounted for separately or as a group, the Group considers both the individual characteristics of goods/services and the na- ture of the promise within the context of the contract, also evaluating all the facts and circumstances relating to the specic contract under the relevant legal and regulatory framework. To evaluate when a peormance obligation is satised, the Group evaluates when the control of the goods or services is transferred to the customer, assessed primarily from the perspective of the customer. Determination of the transaction price The Group considers all relevant facts and circumstanc- es in determining whether a contract includes variable consideration (i.e., consideration that may vary or de- pends upon the occurrence or non-occurrence of a fu- ture event). In estimating variable consideration, the Group uses the method that beer predicts the consideration to which it will be entitled, applying it consistently throughout the contract and for similar contracts, also considering all available information, and updating such estimates until the unceainly is resolved. The Group includes the esti- mated variable consideration in the transaction price only to the extent that it is highly probable that a signicant re- versal in the cumulative revenue recognized will not occur when the unceainty is resolved. 277Notes to the consolidated nancial statements 277 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Principal versus agent assessment The Group considers that it is an agent in some con- tracts in which it is not primarily responsible for fullling the contract and therefore it does not control goods or services before they are being transferred to customers. For example, the Group acts as an agent in some contracts for electricity/gas network connection services and other related activities depending on local legal and regulatory framework. Allocation of transaction price For contracts that have more than one peormance obli- gation (e.g., “bundled” sale contracts), the Group generally allocates the transaction price to each peormance ob- ligation in propoion to its stand-alone selling price. The Group determines stand-alone selling prices considering all information and using observable prices when they are available in the market or, if not, using an estimation meth- od that maximizes the use of observable inputs and apply- ing it consistently to similar arrangements. If the Group evaluates that a contract includes an option for additional goods or services (e.g., customer loyalty pro- grams or renewal options) that represents a material right, it allocates the transaction price to this option since the option gives rise to an additional peormance obligation. Contract costs The Group assesses recoverability of the incremental costs of obtaining a contract either on a contract-by-contract basis, or for a group of contracts if those costs are associ- ated with the group of contracts. The Group suppos the recoverability of such costs on the basis of its experience with other similar transactions and evaluating various factors, including potential renew- als, amendments and follow-on contracts with the same customer. The Group amoizes such costs over the average custom- er term. In order to determine this expected period of ben- et from the contract, the Group considers its past experi- ence (e.g., “churn rate”), the predictive evidence from sim- ilar contracts and available information about the market. Classication and measurement of nancial assets At initial recognition, in order to classify nancial assets as nancial assets at amoized cost, at fair value through other comprehensive income and at fair value through prot or loss, management assesses both the contractual cash ow characteristics of the instrument and the busi- ness model for managing nancial assets in order to gen- erate cash ows. In order to evaluate the contractual cash ow character- istics of the instrument, management peorms the SPPI test at an instrument level, in order to determine if it gives rise to cash ows that are solely payments of principal and interest (SPPI) on the principal amount outstanding, per- forming specic assessment on the contractual clauses of the nancial instruments, as well as quantitative analysis, if required. The business model determines whether cash ows will result from collecting contractual cash ows, selling the nancial assets, or both. For more details, please see note 46 “Financial instruments by category”. Hedge accounting Hedge accounting is applied to derivatives in order to re- ect into the nancial statements the eect of risk man- agement strategies. Accordingly, at the inception of the transaction the Group documents the hedge relationship between hedging in- struments and hedged items, as well as its risk manage- ment objectives and strategy. The Group also assesses, both at hedge inception and on an ongoing basis, wheth- er hedging instruments are highly eective in oseing changes in the fair values or cash ows of hedged items. On the basis of management’s judgment, the eective- ness assessment based on the existence of an econom- ic relationship between the hedging instruments and the hedged items, the dominance of credit risk in the changes in fair value and the hedge ratio, as well as the measure- ment of the ineectiveness, is evaluated through a qualita- tive assessment or a quantitative computation, depending on the specic facts and circumstances and on the char- acteristics of the hedged items and the hedging instru- ments. For cash ow hedges of forecast transactions designated as hedged items, management assesses and documents that they are highly probable and present an exposure to changes in cash ows that aect prot or loss. Fuhermore, during the year, the Group carefully moni- tored the possible eects of the unceainties linked to the COVID-19 pandemic on its hedge relationships. For additional details on the key assumptions about eec- tiveness assessment and ineectiveness measurement, please refer to note 49.1 “Derivatives and hedge account- ing”. Leases The complexity of the assessment of the lease contracts, and also their long-term expiring date, requires consider- able professional judgments for application of IFRS 16\. In paicular, this regards: • the application of the denition of a lease to the cases typical of the sectors in which the Group operates; • the identication of the non-lease component in the lease; • the evaluation of any renewable and termination op- tions included in the lease in order to determine the term of leases, also considering the probability of their exercise and any signicant leasehold improvements on 278 Integrated Annual Repo 2021278 the underlying asset, taking due consideration of recent interpretations issued by the IFRS Interpretations Com- miee; • the identication of any variable lease payments that depend on an index or a rate to determine whether the changes of the laer impact the future lease payments and also the amount of the right-of-use asset; • the estimate of the discount rate to calculate the pres- ent value of the lease payments; fuher details on as- sumptions about this rate are provided in the paragraph “Use of estimates”. For more information on leases, please see note 20 “Leases”. Unceainty over income tax treatments The Group determines whether to consider each uncer- tain income tax treatment separately or together with one or more other unceain tax treatments as well as whether to reect the eect of unceainty by using the most like- ly amount or the expected value method, based on which approach beer predicts the resolution of the unceainty for each unceain tax treatments, taking account of local tax regulations. The Group makes signicant use of professional judgment in identifying unceainties about income tax treatments and reviews the judgments and estimates made in the event of a change in facts and circumstances that could change its assessment of the acceptability of a specic tax treatment or the estimate of the eects of unceainty, or both. For more information on income taxes, please see note 16 “Income taxes”. 2.2 Signicant accounting policies Related paies Related paies are mainly those that share the same par- ent with Enel SpA, the companies that directly or indirectly are controlled by Enel SpA, the associates or joint ventures (including their subsidiaries) of Enel SpA, or the associates or joint ventures (including their subsidiaries) of any Group company. Related paies also include entities that operate post-employment benet plans for employees of Enel SpA or its associates (specically, the FOPEN and FONDENEL pension funds), as well as the members of the boards of statutory auditors, and their immediate family, and the key management personnel, and their immediate family, of Enel SpA and its subsidiaries. Key management personnel com- prises management personnel who have the power and di- rect or indirect responsibility for the planning, management and control of the activities of the Company. They include directors (whether executive or not). Subsidiaries Subsidiaries are all entities over which the Group has con- trol. The Group controls an entity, regardless of the nature of the formal relationship between them, when it is ex- posed, or has rights, to variable returns deriving from its involvement and has the ability, through the exercise of its power over the investee, to aect its returns. The gures of the subsidiaries are consolidated on a full line-by-line basis as from the date control is acquired until such control ceases. Consolidation procedures The nancial statements of subsidiaries used to prepare the consolidated nancial statements were prepared at December 31, 2021 in accordance with the accounting policies adopted by the Group. If a subsidiary uses dierent accounting policies from those adopted in preparing the consolidated nancial statements for similar transactions and facts in similar cir- cumstances, appropriate adjustments are made to ensure conformity with Group accounting policies. Assets, liabilities, revenue and expenses of a subsidiary ac- quired or disposed of during the year are included in or excluded from the consolidated nancial statements, re- spectively, from the date the Group gains control or until the date the Group ceases to control the subsidiary. Prot or loss for the year and the other comprehensive in- come are aributed to owners of the Parent and non-con- trolling interests, even if this results in a loss for non-con- trolling interests. All intercompany assets and liabilities, equity items, reve- nue, expenses and cash ows relating to transactions be- tween entities of the Group are eliminated in full. Changes in ownership interest in subsidiaries that do not result in loss of control are accounted for as equity trans- actions, with the carrying amounts of the controlling and non-controlling interests adjusted to reect changes in their interests in the subsidiary. Any dierence between the amount to which non-controlling interests are adjust- ed and the fair value of the consideration paid or received is recognized in consolidated equity. When the Group ceases to have control over a subsidiary, any interest retained in the entity is remeasured to its fair value, recognized through prot or loss, at the date when control is lost, recognizing any gain or loss from the loss of control through prot or loss. In addition, any amounts previously recognized in other comprehensive income in respect of the former subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities. 279Notes to the consolidated nancial statements 279 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Investments in associates and joint ventures An associate is an entity over which the Group has signi- cant inuence. Signicant inuence is the power to paic- ipate in decisions concerning the nancial and operating policies of the investee without having control or joint con- trol over the investee. A joint venture is a joint arrangement over which the Group exercises joint control and has rights to the net assets of the arrangement. Joint control is the sharing of control of an arrangement, whereby decisions about the relevant ac- tivities require unanimous consent of the paies sharing control. The Group’s investments in associates and joint ventures are accounted for using the equity method. Under the equity method, these investments are initially recognized at cost and any goodwill arising from the dier- ence between the cost of the investment and the Group’s share of the net fair value of the investee’s identiable as- sets and liabilities at the acquisition date is included in the carrying amount of the investment. After the acquisition date, their carrying amount is adjusted to recognize changes in the Group’s share of prot or loss of the associate or joint venture in Group prot or loss. Adjust- ments to the carrying amount may also be necessary fol- lowing changes in the Group’s share in the associate or joint venture as a result of changes in the other comprehensive income of the investee. The Group’s share of these changes is recognized in the Group’s other comprehensive income. Dividends received from joint ventures and associates re- duce the carrying amount of the investments. Gains and losses resulting from transactions between the Group and the associates or joint ventures are eliminated to the extent of the interest in the associate or joint venture. The nancial statements of the associates or joint ventures are prepared for the same repoing period as the Group. When necessary, adjustments are made to bring the ac- counting policies in line with those of the Group. After application of the equity method, the Group deter- mines whether it is necessary to recognize an impairment loss on its investment in an associate or joint venture. If there is objective evidence of a loss of value, the entire carrying amount of the investment undergoes impairment testing pursuant to IAS 36 as a single asset. For more in- formation on impairment, please see the section “Impair- ment of non-nancial assets” in note 2.1 “Use of estimates and management judgment”. If the investment ceases to be an associate or a joint ven- ture, the Group recognizes any retained investment at its fair value, through prot or loss. Any amounts previously recognized in other comprehensive income in respect of the former associate or joint venture are accounted for as if the Group had directly disposed of the related assets or liabilities. If the ownership interest in an associate or a joint venture is reduced, but the Group continues to exercise a signicant inuence or joint control, the Group continues to apply the equity method and the share of the gain or loss that had previously been recognized in other comprehensive income relating to that reduction is accounted for as if the Group had directly disposed of the related assets or liabilities. When a poion of an investment in an associate or joint venture meets the criteria to be classied as held for sale, any retained poion of an investment in the associate or joint venture that has not been classied as held for sale is accounted for using the equity method until disposal of the poion classied as held for sale takes place. Joint operations are joint arrangements whereby the Group, which holds joint control, has rights to the assets and obligations for the liabilities relating to the arrange- ment. For each joint operation, the Group recognized as- sets, liabilities, costs and revenue on the basis of the pro- visions of the arrangement rather than the interest held. Where there is an increase in the interest in a joint ar- rangement that meets the denition of a business: • if the Group acquires control, and had rights over the assets and obligations for the liabilities of the joint ar- rangement immediately before the acquisition date, then the transaction represents a business combination achieved in stages. Consequently, the Group applies the requirements for a business combination achieved in stages, including the remeasurement of the interest it held previously in the joint operation at its fair value at the acquisition date; • if the Group obtains joint control (i.e., it already had an interest in a joint operation without holding joint con- trol), the interest previously held in the joint operation shall not be remeasured. For more information on the Group’s investments in asso- ciates and joint ventures, please see note 25 “Equity-ac- counted investments”. Translation of foreign currency items Transactions in currencies other than the functional cur- rency are initially recognized at the spot exchange rate prevailing on the date of the transaction. Monetary assets and liabilities denominated in a foreign currency other than the functional currency are subse- quently translated using the closing exchange rate (i.e., the spot exchange rate prevailing at the repoing date). Non-monetary assets and liabilities denominated in for- eign currency that are recognized at historical cost are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities in foreign currency measured at fair value are translated using the exchange rate at the date the fair value was determined. Any exchange dierences are recognized through prot or loss. 280 Integrated Annual Repo 2021280 In determining the spot exchange rate to use on initial rec- ognition of the related asset, expense or income (or pa of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration in foreign currency paid or received, the date of the transac- tion is the date on which the Group initially recognizes the non-monetary asset or non-monetary liability associated with the advance consideration. If there are multiple advance payments or receipts, the Group determines the transaction date for each payment or receipt of advance consideration. Translation of nancial statements denominated in a foreign currency For the purposes of the consolidated nancial statements, all revenue, expenses, assets and liabilities are stated in euro, which is the presentation currency of the Parent. In order to prepare the consolidated nancial statements, the nancial statements of consolidated companies with functional currencies other than the presentation curren- cy used in the consolidated nancial statements are trans- lated into euros by applying the closing exchange rate to the assets and liabilities, including goodwill and consolida- tion adjustments, and the average exchange rate for the period to the income statement items on the condition it approximates the exchange rates prevailing at the date of the respective transactions. Any resulting exchange gains or losses are recognized as a separate component of equity in a special reserve. The gains and losses are recognized propoionately in the income statement on the disposal (paial or total) of the subsidiary. When the functional currency of a consolidated company is the currency of a hyperinationary economy, the Group restates the nancial statements in accordance with IAS 29 before applying the specic conversion method set out below. In order to consider the impact of hyperination on the local currency exchange rate, the nancial position and peormance (i.e., assets, liabilities, equity items, revenue and expenses) of a company whose functional currency is the currency of a hyperinationary economy are translated into the Group’s presentation currency (the euro) using the exchange rate prevailing at the repoing date, except for comparative amounts presented in the previous year’s - nancial statements which are not adjusted for subsequent changes in the price level or subsequent changes in ex- change rates. Business combinations Business combinations initiated before January 1, 2010 and completed within that nancial year are recognized on the basis of IFRS 3 (2004). Such business combinations were recognized using the purchase method, where the purchase cost is equal to the fair value at the date of the exchange of the assets acquired and the liabilities incurred or assumed, plus costs directly aributable to the acquisition. This cost was allocated by recognizing the assets, liabilities and identiable contin- gent liabilities of the acquired company at their fair values. Any positive dierence between the cost of the acquisition and the fair value of the net assets acquired aributable to owners of the Parent was recognized as goodwill. If the dif- ference is negative, it is recognized through prot or loss. The carrying amount of non-controlling interests was de- termined in propoion to the interest held by non-con- trolling shareholders in the net assets. In the case of busi- ness combinations achieved in stages, at the acquisition date, any adjustment to the fair value of the net assets ac- quired previously was recognized in equity; the amount of goodwill was determined for each transaction separately based on the fair values of the acquiree’s net assets at the date of each exchange transaction. Business combinations carried out as from January 1, 2010 are recognized on the basis of IFRS 3 (2008), which is re- ferred to as IFRS 3 (Revised) hereafter. More specically, business combinations are recognized using the acquisition method, where the acquisition cost (the consideration transferred) is equal to the fair value at the acquisition date of the assets acquired and the liabili- ties incurred or assumed, as well as any equity instruments issued by the acquirer. The consideration transferred in- cludes the fair value of any asset or liability resulting from a contingent consideration arrangement. Costs directly aributable to the acquisition are recog- nized through prot or loss. The consideration transferred is allocated by recognizing the assets, liabilities and identiable contingent liabili- ties of the acquired company at their fair values as at the acquisition date. The excess of the consideration trans- ferred, measured at fair value as at the acquisition date, the amount of any non-controlling interest in the acquiree plus the fair value of any equity interest in the acquiree previously held by the Group (in a business combination achieved in stages) over the net amount of the identia- ble assets acquired and the liabilities incurred or assumed measured at fair value is recognized as goodwill. If the dif- ference is negative, the Group veries whether it has cor- rectly identied all the assets acquired and liabilities as- sumed and reviews the procedures used to determine the amounts to recognize at the acquisition date. If after this assessment the fair value of the net assets acquired still exceeds the total consideration transferred, this excess represents a gain on a bargain purchase and is recognized through prot or loss. The carrying amount of non-controlling interests is deter- mined either in propoion to the interest held by non-con- 281Notes to the consolidated nancial statements 281 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements trolling shareholders in the net identiable assets of the acquiree or at their fair value as at the acquisition date. In the case of business combinations achieved in stages, at the date of acquisition of control the previously held equi- ty interest in the acquiree is remeasured to fair value and any positive or negative dierence is recognized in prot or loss. Any contingent consideration is recognized at fair value at the acquisition date. Subsequent changes to the fair val- ue of the contingent consideration classied as an asset or a liability, or as a nancial instrument within the scope of IFRS 9, are recognized in prot or loss. If the contin- gent consideration is not within the scope of IFRS 9, it is measured in accordance with the appropriate IFRS-EU. Contingent consideration that is classied as equity is not re-measured, and its subsequent selement is accounted for within equity. If the fair values of the assets, liabilities and contingent li- abilities can only be calculated on a provisional basis, the business combination is recognized using such provisional values. Any adjustments resulting from the completion of the measurement process are recognized within 12 months of the acquisition date, restating comparative gures. Fair value measurement For all fair value measurements and disclosures of fair val- ue, that are either required or permied by IFRS, the Group applies IFRS 13. Fair value is dened as the price that would be received to sell an asset or paid to transfer a liability, in an orderly transaction, between market paicipants, at the measure- ment date (i.e., an exit price). The fair value measurement assumes that the transaction to sell an asset or transfer a liability takes place in the prin- cipal market, i.e., the market with the greatest volume and level of activity for the asset or liability. In the absence of a principal market, it is assumed that the transaction takes place in the most advantageous market to which the Group has access, i.e., the market that maximizes the amount that would be received to sell the asset or minimizes the amount that would be paid to transfer the liability. The fair value of an asset or a liability is measured using the assumptions that market paicipants would use when pricing the asset or liability, assuming that market paic- ipants act in their economic best interest. Market paici- pants are independent, knowledgeable sellers and buyers who are able to enter into a transaction for the asset or the liability and who are motivated but not forced or otherwise compelled to do so. When measuring fair value, the Group considers the char- acteristics of the asset or liability, in paicular: • for a non-nancial asset, a fair value measurement takes into account a market paicipant’s ability to generate economic benets by using the asset in its highest and best use or by selling it to another market paicipant that would use the asset in its highest and best use; • for liabilities and own equity instruments, the fair val- ue reects the eect of non-peormance risk, i.e., the risk that an entity will not fulll an obligation, including among others the credit risk of the Group itself; • in the case of groups of nancial assets and nancial li- abilities with oseing positions in market risk or credit risk, managed on the basis of an entity’s net exposure to such risks, it is permied to measure fair value on a net basis. In measuring the fair value of assets and liabilities, the Group uses valuation techniques that are appropriate in the circumstances and for which sucient data are availa- ble, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. Propey, plant and equipment Propey, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes expenses directly arib- utable to bringing the asset to the location and condition necessary for its intended use. The cost is also increased by the present value of the es- timate of the costs of decommissioning and restoring the site on which the asset is located where there is a legal or constructive obligation to do so. The corresponding lia- bility is recognized under provisions for risks and charges. The accounting treatment of changes in the estimate of these costs, the passage of time and the discount rate is discussed in note 39 “Provisions for risks and charges”. Propey, plant and equipment transferred from custom- ers to connect them to the electricity distribution network and/or to provide them with other related services is ini- tially recognized at its fair value at the date on which con- trol is obtained. Borrowing costs that are directly aributable to the ac- quisition, construction or production of a qualifying asset, i.e., an asset that takes a substantial period of time to get ready for its intended use or sale, are capitalized as pa of the cost of the assets themselves. Borrowing costs as- sociated with the purchase/construction of assets that do not meet such requirement are expensed in the period in which they are incurred. Ceain assets that were revalued at the IFRS-EU transi- tion date or in previous periods are recognized at their fair value, which is considered to be their deemed cost at the revaluation date. Where individual items of major components of propey, plant and equipment have dierent useful lives, the com- ponents are recognized and depreciated separately. Subsequent costs are recognized as an increase in the carrying amount of the asset when it is probable that fu- ture economic benets associated with the cost incurred to replace a pa of the asset will ow to the Group and the 282 Integrated Annual Repo 2021282 cost of the item can be measured reliably. All other costs are recognized in prot or loss as incurred. The cost of replacing pa or all of an asset is recognized as an increase in the carrying amount of the asset and is depreciated over its useful life; the carrying amount of the replaced unit is derecognized through prot or loss. Propey, plant and equipment, net of its residual value, is depreciated on a straight-line basis over its estimated useful life, which is reviewed annually. Any changes in de- preciation criteria shall be applied prospectively. For more information on estimating useful life, please see note 2.1 “Use of estimates and management judgment”. Depreciation begins when the asset is available for use. The estimated useful life of the main items of propey, plant and equipment is as follows: Civil buildings 10-70 years Buildings and civil works incorporated in plants 10-100 years Hydroelectric power plants: \- penstock 7-85 years \- mechanical and electrical machinery 5-60 years \- other xed hydraulic works 5-100 years Thermal power plants: \- boilers and auxiliary components 3-53 years \- gas turbine components 3-53 years \- mechanical and electrical machinery 3-53 years \- other xed hydraulic works 3-53 years Nuclear power plants 50 years Geothermal power plants: \- cooling towers 20-25 years \- turbines and generators 25-30 years \- turbine pas in contact with uid 10-25 years \- mechanical and electrical machinery 20-40 years Wind power plants: \- towers 20-30 years \- turbines and generators 20-30 years \- mechanical and electrical machinery 15-30 years Solar power plants: \- mechanical and electrical machinery 20-30 years Public and aistic lighting: \- public lighting installations 10-20 years \- aistic lighting installations 20 years Transpo lines 12-50 years Transformer stations 20-55 years Distribution plants: \- high-voltage lines 10-60 years \- primary transformer stations 5-55 years \- low- and medium-voltage lines 5-50 years Meters: \- electromechanical meters 3-34 years \- electricity balance measurement equipment 3-30 years \- electronic meters 6-35 years The useful life of leasehold improvements is determined on the basis of the term of the lease or, if shoer, on the duration of the benets produced by the improvements themselves. Land is not depreciated as it has an indenite useful life. Assets recognized under propey, plant and equipment are derecognized either upon their disposal (i.e., at the date the recipient obtains control) or when no future eco- nomic benet is expected from their use or disposal. Any gain or loss, recognized through prot or loss, is calculat- ed as the dierence between the net disposal proceeds, determined in accordance with the transaction price re- quirements of IFRS 15, and the carrying amount of the derecognized assets. Assets to be relinquished free of charge The Group’s plants include assets to be relinquished free of charge at the end of the concessions. These mainly regard major water diversion works and the public lands used for the operation of the thermal power plants. Within the Italian regulatory framework in force until 2011, if the concessions are not renewed, at those dates all in- take and governing works, penstocks, outow channels and other assets on public lands were to be relinquished free of charge to the State in good operating condition. Accordingly, depreciation on assets to be relinquished was calculated over the shoer of the term of the concession and the useful life of the assets. In the wake of the legislative changes introduced with Law 134 of August 7, 2012, the assets previously classied as assets “to be relinquished free of charge” connected with the hydroelectric water diversion concessions are now considered in the same manner as other categories of “propey, plant and equipment” and are therefore depre- ciated over the useful life of the asset (where this exceeds the term of the concession), as discussed in the section above on the “Depreciable amount of ceain elements of Italian hydroelectric plants subsequent to enactment of Law 134/2012”, which you are invited to consult for more details. In accordance with Spanish laws 29/1985 and 46/1999, hydroelectric power stations in Spanish territory operate under administrative concessions at the end of which the plants will be returned to the government in good oper- ating condition. The terms of the concessions extend up to 2067. A number of generation companies that operate in Lat- in America hold administrative concessions with similar conditions to those applied under the Spanish concession system. These concessions will expire in 2071. Infrastructure serving a concession not within the scope of “IFRIC 12 - Service concession arrangements” As regards the distribution of electricity, the Group is a concession holder in Italy for this service. The concession, granted by the Ministry for Economic Development, was issued free of charge and terminates on December 31, 2030\. If the concession is not renewed upon expiry, the grantor is required to pay an indemnity. The amount of the indemnity will be determined by agreement of the paies 283Notes to the consolidated nancial statements 283 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements using appropriate valuation methods, based on both the carrying amount of the assets themselves and their prof- itability. In determining the indemnity, such protability will be rep- resented by the present value of future cash ows. The in- frastructure serving the concession is owned and available to the concession holder. It is recognized under “Propey, plant and equipment” and is depreciated over the useful lives of the assets. Enel also operates under administrative concessions for the distribution of electricity in other countries (including Spain and Romania). These concessions give the right to build and operate distribution networks for an indenite period of time. Infrastructure within the scope of “IFRIC 12 - Service concession arrangements” Under a “public-to-private” service concession arrange- ment within the scope of “IFRIC 12 - Service concession arrangements” the operator acts as a service provider and, in accordance with the terms specied in the contract, it constructs/upgrades infrastructure used to provide a public service and/or operates and maintains that infra- structure for the years of the concession. The Group, as operator, does not account for the infra- structure within the scope of IFRIC 12 as propey, plant and equipment and it recognizes and measures revenue in accordance with IFRS 15 for the services it peorms. In paicular, when the Group provides construction or up- grade services, depending on the characteristics of the service concession arrangement, it recognizes: • a nancial asset, if the Group has an unconditional con- tractual right to receive cash or another nancial asset from the grantor (or from a third pay at the direction of the grantor), that is the grantor has lile discretion to avoid payment. In this case, the grantor contractually guarantees to pay to the operator specied or deter- minable amounts or the shofall between the amounts received from the users of the public service and spec- ied or determinable amounts (dened by the contract), and such payments are not dependent on the usage of the infrastructure; and/or • an intangible asset, if the Group receives the right (a li- cense) to charge users of the public service provided. In such a case, the operator does not have an unconditional right to receive cash because the amounts are contin- gent on the extent that the public uses the service. If the Group (as operator) has a contractual right to re- ceive an intangible asset (a right to charge users of public service), borrowing costs are capitalized using the criteria specied in note 18 “Propey, plant and equipment”. However, for construction/upgrade services, both types of consideration are generally classied as a contract asset during the construction/upgrade period. For more details about such consideration, please see note 10.a “Revenue from sales and services”. Leases The Group holds propey, plant and equipment for its various activities under lease contracts. At inception of a contract, the Group assesses whether a contract is, or contains, a lease. For contracts entered into or changed on or after January 1, 2019, the Group has applied the denition of a lease un- der IFRS 16, that is met if the contract conveys the right to control the use of an identied asset for a period of time in exchange for consideration. Conversely, for contracts entered into before January 1, 2019, the Group determined whether the arrangement was or contained a lease under IFRIC 4. Group as a lessee At commencement or on modication of a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone price. The Group recognizes a right-of-use asset and a lease lia- bility at the commencement date of the lease (i.e., the date the underlying asset is available for use). The right-of-use asset represents a lessee’s right to use an underlying asset for the lease term; it is initially measured at cost, which includes the initial amount of lease liabili- ty adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to retire and remove the underlying asset and to re- store the underlying asset or the site on which it is located. Right-of-use assets are subsequently depreciated on a straight-line basis over the shoer of the lease term and the estimated useful lives of the right-of-use assets, as follows: Average residual life (years) Buildings 7 Ground rights of renewable energy plants 32 Vehicles and other means of transpo 5 If the lease transfers ownership of the underlying asset to the Group at the end of the lease term or if the cost of the right-of-use asset reects the fact that the Group will exer- cise a purchase option, depreciation is calculated using the estimated useful life of the underlying asset. In addition, the right-of-use assets are subject to impair- ment and adjusted for any remeasurement of lease liabili- ties. The lease liability is initially measured at the present value of lease payments to be made over the lease term. In cal- 284 Integrated Annual Repo 2021284 culating the present value of lease payments, the Group uses the lessee’s incremental borrowing rate at the lease commencement date when the interest rate implicit in the lease is not readily determinable. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs. After the commencement date, the lease liability is meas- ured at amoized cost using the eective interest method and is remeasured upon the occurrence of ceain events. The Group applies the sho-term lease recognition ex- emption to its lease contracts that have a lease term of 12 months or less from the commencement date. It also ap- plies the low-value assets recognition exemption to lease contracts for which the underlying asset is of low-value whose amount is estimated not material. For example, the Group has leases of ceain oce equipment (i.e., personal computers, printing and photocopying machines) that are considered of low-value. Lease payments on sho-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term. The Group presents right-of-use assets that do not meet the denition of investment propey in “Propey, plant and equipment” and lease liabilities in “Borrowings”. Consistent with the requirement of the standard, the Group presents separately the interest expense on lease liabilities under “Other nancial expense” and the depreci- ation charge on the right-of-use assets under “Deprecia- tion, amoization and impairment losses”. Group as a lessor When the Group acts as a lessor, it determines at the lease inception date whether each lease is a nance lease or an operating lease. Leases in which the Group essentially transfers all the risks and rewards associated with ownership of the underlying asset are classied as nance leases; otherwise, they are classied as operating leases. To make this assessment, the Group considers the indicators provided by IFRS 16\. If a contract contains lease and non-lease components, the Group allocates the consideration in the contract applying IFRS 15. The Group accounts for rental income arising from oper- ating leases on a straight-line basis over the lease terms and it recognizes it as other revenue. Investment propey Investment propey consists of the Group’s real estate held to earn rentals and/or for capital appreciation rath- er than for use in the production or supply of goods and services. Investment propey is measured at acquisition cost less any accumulated depreciation and any accumulated im- pairment losses. Investment propey, excluding land, is depreciated on a straight-line basis over the useful lives of the related as- sets. Impairment losses are determined on the basis of the cri- teria described in the section below.. The breakdown of the fair value of investment propey is detailed in note 50 “Assets and liabilities measured at fair value”. Investment propey is derecognized either when it has been transferred (i.e., at the date the recipient obtains control) or when it is permanently withdrawn from use and no future economic benet is expected from its dis- posal. Any gain or loss, recognized through prot or loss, is calculated as the dierence between the net disposal proceeds, determined in accordance with the transaction price requirements of IFRS 15, and the carrying amount of the derecognized assets. Transfers are made to (or from) investment propey only when there is a change in use. Intangible assets Intangible assets are identiable assets without physical substance controlled by the Group and capable of gen- erating future economic benets. They are measured at purchase or internal development cost when it is probable that the use of such assets will generate future economic benets and the related cost can be reliably determined. The cost includes any directly aributable expenses nec- essary to make the assets ready for their intended use. Development expenditure is recognized as an intangible asset only when the Group can demonstrate the technical feasibility of completing the asset, its intention and ability to complete development and to use or sell the asset and the availability of resources to complete the asset. Research costs are recognized as expenses. Intangible assets with a nite useful life are recognized net of accumulated amoization and any impairment losses. Amoization is calculated on a straight-line basis over the asset’s estimated useful life, which is reassessed at least annually; any changes in amoization policies are reected on a prospective basis. For more information on estimating useful life, please see note 2.1 “Use of estimates and man- agement judgment”. Amoization commences when the asset is ready for use. Consequently, intangible assets not yet available for use are not amoized, but are tested for impairment at least annually. The Group’s intangible assets have a nite useful life, with the exception of a number of concessions and goodwill. Intangible assets with indenite useful lives are not amor- tized, but are tested for impairment annually. The assessment of indenite useful life is reviewed annual- ly to determine whether the indenite useful life continues to be suppoable. If not, the change in useful life from in- 285Notes to the consolidated nancial statements 285 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements denite to nite is accounted for as a change in account- ing estimate. Intangible assets are derecognized either at the time of their disposal (at the date when the recipient obtains con- trol) or when no future economic benet is expected from their use or disposal. Any gain or loss, recognized through prot or loss, is calculated as the dierence between the net consideration received in the disposal, determined in accordance with the provisions of IFRS 15 concern- ing the transaction price, and the carrying amount of the derecognized assets. The estimated useful life of the main intangible assets, distinguishing between internally generated and acquired assets, is as follows: Development expenditure: \- internally generated 2-26 years \- acquired 3-26 years Industrial patents and intellectual propey rights: \- internally generated 3-10 years \- acquired 2-50 years Concessions, licenses, trademarks and similar rights: \- internally generated 20 years \- acquired 1-40 years Intangible assets from service concession arrangements: \- internally generated - \- acquired 5 years Other: \- internally generated 2-28 years \- acquired 1-28 years The Group also presents costs to obtain a contract with a customer capitalized in accordance with IFRS 15 as intan- gible assets. The Group recognized such costs as an asset only if: • the costs are incremental, that is they are directly at- tributable to an identied contract and the Group would not have incurred them if the contract had not been ob- tained; • the Group expects to recover them, through reimburse- ments (direct recoverability) or the margin (indirect re- coverability). In paicular, the Group generally capitalizes trade fees and commissions paid to agents for such contracts if the cap- italization criteria are met. Capitalized customer contract costs are amoized on a systematic basis, consistent with the paern of the trans- fer of the goods or services to which they relate, and un- dergo impairment testing to identify any impairment loss- es to the extent that the carrying amount of the asset rec- ognized exceeds the recoverable amount. The Group amoizes the capitalized customer contract costs on a straight-line basis over the expected period of benet from the contract (i.e., the average term of the cus- tomer relationship); any changes in amoization policies are reected on a prospective basis. Goodwill Goodwill represents the future economic benets arising from other assets acquired in a business combination that are not individually identied and separately recognized. For fuher details, please see the section of the account- ing policies “Business combinations”. Goodwill arising on the acquisition of subsidiaries is rec- ognized separately. After initial recognition, goodwill is not amoized, but is tested for impairment at least annually as pa of the CGU to which it peains. For the purpose of impairment testing, goodwill is allocat- ed, from the acquisition date, to each CGU that is expect- ed to benet from the synergies of the combination. Goodwill relating to equity investments in associates and joint ventures is included in their carrying amount. Impairment of non-nancial assets At each repoing date, propey, plant and equipment, in- vestment propey, intangible assets, right-of-use assets, goodwill and equity investments in associates/joint ven- tures are reviewed to determine whether there is evidence of impairment. CGUs to which goodwill, intangible assets with an indef- inite useful life and intangible assets not yet available for use are allocated are tested for recoverability annually or more frequently if there is evidence suggesting that the assets can be impaired. If such evidence exists, the recoverable amount of any in- volved asset is estimated on the basis of the use of the as- set and its future disposal, in accordance with the Group’s most recent Business Plan. For the estimate of the recov- erable amount, please see note 2.1 “Use of estimates and management judgment”. The recoverable amount is determined for an individu- al asset, unless the asset does not generate cash inows that are largely independent of those from other assets or groups of assets and therefore it is determined for the CGU to which the asset belongs. If the carrying amount of an asset or of a CGU to which it is allocated is greater than its recoverable amount, an im- pairment loss is recognized in prot or loss and presented under “Depreciation, amoization and other impairment losses”. Impairment losses of CGUs are rstly charged against the carrying amount of any goodwill aributed to it and then against the other assets, in propoion to their carrying amount. If the reasons for a previously recognized impairment loss no longer apply, the carrying amount of the asset is re- 286 Integrated Annual Repo 2021286 stored through prot or loss, under “Depreciation, amor- tization and other impairment losses”, in an amount that shall not exceed the carrying amount that the asset would have had if the impairment loss had not been recognized. The original amount of goodwill is not restored even if in subsequent years the reasons for the impairment no longer apply. If ceain specic identied assets owned by the Group are impacted by adverse economic or operating condi- tions that undermine their capacity to contribute to the generation of cash ows, they can be isolated from the rest of the assets of the CGU, undergo separate analysis of their recoverability and be impaired where necessary. Inventories Inventories are measured at the lower of cost and net realizable value except for inventories involved in trading activities, which are measured at fair value with recog- nition through prot or loss. Cost is determined on the basis of average weighted cost, which includes related ancillary charges. Net estimated realizable value is the es- timated normal selling price net of estimated costs to sell or, where applicable, replacement cost. For the poion of inventories held to discharge sales that have already been made, the net realizable value is de- termined on the basis of the amount established in the contract of sale. Inventories include environmental ceicates (for exam- ple, green ceicates, energy eciency ceicates and European CO 2 emissions allowances) that were not uti- lized for compliance in the repoing period. As regards CO 2 emissions allowances, inventories are allocated be- tween the trading pofolio and the compliance pofo- lio, i.e., those used for compliance with greenhouse gas emissions requirements. Within the laer, CO 2 emissions allowances are allocated to sub-pofolios on the basis of the compliance year to which they have been assigned. Inventories also include nuclear fuel stocks, use of which is determined on the basis of the electricity generated. Materials and other consumables (including energy com- modities) held for use in production are not wrien down if it is expected that the nal product in which they will be incorporated will be sold at a price sucient to enable recovery of the cost incurred. Financial instruments Financial instruments are any contract that gives rise to a nancial asset of one entity and a nancial liability or equity instrument of another entity; they are recognized and measured in accordance with IAS 32 and IFRS 9. A nancial asset or liability is recognized in the consol- idated nancial statements when, and only when, the Group becomes pay to the contractual provision of the instrument (i.e., the trade date). Trade receivables arising from contracts with custom- ers, in the scope of IFRS 15, are initially measured at their transaction price (as dened in IFRS 15) if such receiva- bles do not contain a signicant nancing component or when the Group applies the practical expedient allowed by IFRS 15. Conversely, the Group initially measures nancial assets other than the above-mentioned trade receivables at their fair value plus, in the case of a nancial asset not measured at fair value through prot or loss, transaction costs. Financial assets are classied, at initial recognition, as nancial assets at amoized cost, at fair value through other comprehensive income and at fair value through prot or loss, on the basis of both the Group’s business model and the contractual cash ow characteristics of the instrument. For this purpose, the assessment to determine wheth- er the instrument gives rise to cash ows that are solely payments of principal and interest (SPPI) on the principal amount outstanding is referred to as the SPPI test and is peormed at an instrument level. The Group’s business model for managing nancial as- sets refers to how it manages its nancial assets in order to generate cash ows. The business model determines whether cash ows will result from collecting contractual cash ows, selling the nancial assets, or both. For purposes of subsequent measurement, nancial as- sets are classied in four categories: • nancial assets measured at amoized cost (debt in- struments); • nancial assets at fair value through OCI with reclas- sication of cumulative gains and losses (debt instru- ments); • nancial assets designated at fair value through OCI with no reclassication of cumulative gains and losses upon derecognition (equity instruments); and • nancial assets at fair value through prot or loss. Financial assets measured at amoized cost This category mainly includes trade receivables, other - nancial assets and loan assets. Financial assets at amoized cost are held within a busi- ness model whose objective is to hold nancial assets in order to collect contractual cash ows and whose con- tractual terms give rise, on specied dates, to cash ows that are solely payments of principal and interest on the principal amount outstanding. Such assets are initially recognized at fair value, adjusted for any transaction costs, and subsequently measured at amoized cost using the eective interest method and are subject to impairment. Gains and losses are recognized in prot or loss when the asset is derecognized, modied or impaired. 287Notes to the consolidated nancial statements 287 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Financial assets at fair value through other comprehensive income (FVOCI) - Debt instruments This category mainly includes: • listed debt securities held by the Group reinsurance company and not classied as held for trading; and • the tax credits provided for by Decree Law 34/2020 (the “Revival Decree”). Financial assets at fair value through other comprehensive income are assets held within a business model whose objective is achieved by both collecting contractual cash ows and selling nancial assets and whose contractual cash ows give rise, on specied dates, to cash ows that are solely payments of principal and interest on the princi- pal amount outstanding. Changes in fair value for these nancial assets are recog- nized in other comprehensive income as well as loss al- lowances that do not reduce the carrying amount of the nancial assets. When a nancial asset is derecognized (e.g., at the time of sale), the cumulative gains and losses previously recog- nized in equity (except impairment and foreign exchange gains and losses to be recognized in prot or loss) are re- versed to prot or loss. Financial assets at fair value through other comprehensive income (FVOCI) - Equity instruments This category includes mainly equity investments in other entities irrevocably designated as such upon initial recog- nition. Gains and losses on these nancial assets are never reclas- sied to prot or loss. The Group may transfer the cumula- tive gain or loss within equity. Equity instruments designated at fair value through OCI are not subject to impairment testing. Dividends on such investments are recognized in prot or loss unless they clearly represent a recovery of a pa of the cost of the investment. Financial assets at fair value through prot or loss This category mainly includes: securities, equity invest- ments in other companies, nancial investments in funds held for trading and nancial assets designated as at fair value through prot or loss at initial recognition. Financial assets at fair value through prot or loss are: • nancial assets with cash ows that are not solely pay- ments of principal and interest, irrespective of the busi- ness model; • nancial assets held for trading because acquired or incurred principally for the purpose of selling or repur- chasing in the sho term; • debt instruments designated upon initial recognition, under the option allowed by IFRS 9 (fair value option), if doing so eliminates, or signicantly reduces, an ac- counting mismatch; • derivatives, including separated embedded derivatives, held for trading or not designated as eective hedging instruments. Such nancial assets are initially recognized at fair value with subsequent gains and losses from changes in their fair value recognized through prot or loss. This category also includes listed equity investments which the Group had not irrevocably elected to classify at fair val- ue through OCI. Dividends on listed equity investments are also recognized as other income in the income statement when the right of payment has been established. Financial assets that qualify as contingent consideration are also measured at fair value through prot or loss. Impairment of nancial assets At each repoing date, the Group recognizes a loss allow- ance for expected credit losses on trade receivables and other nancial assets measured at amoized cost, debt instruments measured at fair value through other com- prehensive income (FVOCI), contract assets and all other assets within the scope of IFRS 9. In compliance with IFRS 9, as from January 1, 2018, the Group adopted a new impairment model based on the determination of expected credit losses (ECL) using a for- ward-looking approach. In essence, the model provides for: • the application of a single framework for all nancial assets; • the recognition of expected credit losses on an ongo- ing basis and the updating of the amount of such losses at the end of each repoing period, reecting changes in the credit risk of the nancial instrument; • the measurement of expected losses on the basis of reasonable information, obtainable without undue cost, about past events, current conditions and forecasts of future conditions. For trade receivables, contract assets and lease receiva- bles, including those with a signicant nancial compo- nent, the Group adopts the simplied approach, determin- ing expected credit losses over a period corresponding to the entire life of the asset, generally equal to 12 months. For all nancial assets other than trade receivables, con- tract assets and lease receivables, the Group applies the general approach under IFRS 9, based on the assessment of a signicant increase in credit risk since initial recogni- tion. Under such approach, a loss allowance on nancial assets is recognized at an amount equal to the lifetime expected credit losses, if the credit risk on those nancial assets has increased signicantly, since initial recognition, considering all reasonable and suppoable information, including also forward-looking inputs. If at the repoing date the credit risk on nancial assets has not increased signicantly since initial recognition, the Group measures the loss allowance for those nancial assets at an amount equal to 12-month expected credit losses. 288 Integrated Annual Repo 2021288 For nancial assets on which a loss allowance equal to life- time expected credit losses has been recognized in the previous repoing period, the Group measures the loss al- lowance at an amount equal to 12-month expected credit losses when the condition regarding a signicant increase in credit risk is no longer met. The Group recognizes in prot or loss, as an impairment gain or loss, the amount of expected credit losses (or re- versal) that is required to adjust the loss allowance at the repoing date to the amount that is required to be recog- nized in accordance with IFRS 9. The Group applies the low credit risk exemption, avoiding the recognition of loss allowances at an amount equal to lifetime expected credit losses due to a signicant increase in credit risk of debt securities at fair value through OCI, whose counterpay has a strong nancial capacity to meet its contractual cash ow obligations (e.g., investment grade). For more information on the impairment of nancial assets, please see note 46 “Financial instruments by category”. Cash and cash equivalents This category includes deposits that are available on de- mand or at very sho term, as well as highly liquid sho- term nancial investments that are readily conveible into a known amount of cash and which are subject to insignif- icant risk of changes in value. In addition, for the purpose of the consolidated statement of cash ows, cash and cash equivalents do not include bank overdrafts at the repoing date. Financial liabilities at amoized cost This category mainly includes borrowings, trade payables, lease liabilities and debt instruments. Financial liabilities, other than derivatives, are recognized when the Group becomes a pay to the contractual claus- es of the instrument and are initially measured at fair value adjusted for directly aributable transaction costs. Finan- cial liabilities are subsequently measured at amoized cost using the eective interest rate method. The eective in- terest rate is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the nancial instrument or a shoer period, where ap- propriate, to the carrying amount of the nancial asset or liability. Financial liabilities at fair value through prot or loss Financial liabilities at fair value through prot or loss in- clude nancial liabilities held for trading and nancial lia- bilities designated upon initial recognition as at fair value through prot or loss. Financial liabilities are classied as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative nancial in- struments entered into by the Group that are not desig- nated as hedging instruments in hedge relationships as dened by IFRS 9. Separated embedded derivatives are also classied as at fair value through prot or loss unless they are designated as eective hedging instruments. Gains or losses on liabilities at fair value through prot or loss are recognized through prot or loss. Financial liabilities designated upon initial recognition at fair value through prot or loss are designated at the in- itial date of recognition, only if the criteria in IFRS 9 are satised. In this case, the poion of the change in fair value aribut- able to own credit risk is recognized in other comprehen- sive income. The Group has not designated any nancial liability as at fair value through prot or loss, upon initial recognition. Financial liabilities that qualify as contingent consideration are also measured at fair value through prot or loss. Derecognition of nancial assets and liabilities Financial assets are derecognized whenever one of the following conditions is met: • the contractual right to receive the cash ows associat- ed with the asset expires; • the Group has transferred substantially all the risks and rewards associated with the asset, transferring its rights to receive the cash ows of the asset or assuming a contractual obligation to pay such cash ows to one or more beneciaries under a contract that meets the re- quirements provided by IFRS 9 (the “pass through test”); • the Group has not transferred or retained substantially all the risks and rewards associated with the asset but has transferred control over the asset. Financial liabilities are derecognized when they are extin- guished, i.e., when the contractual obligation has been dis- charged, cancelled or expired. When an existing nancial liability is replaced by another from the same lender on substantially dierent terms, or the terms of an existing liability are substantially modi- ed, such an exchange or modication is treated as the derecognition of the original liability and the recognition of a new liability. The dierence in the respective carrying amounts is recognized in prot or loss. Derivative nancial instruments A derivative is a nancial instrument or another contract: • whose value changes in response to the changes in an underlying variable such as an interest rate, commodity or security price, foreign exchange rate, a price or rate index, a credit rating or other variable; • that requires no initial net investment, or one that is smaller than would be required for a contract with simi- lar response to changes in market factors; • that is seled at a future date. Derivative instruments are classied as nancial assets or liabilities depending on the positive or negative fair value and they are classied as “held for trading” within “Other 289Notes to the consolidated nancial statements 289 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements business models” and measured at fair value through prof- it or loss, except for those designated as eective hedging instruments. All derivatives held for trading are classied as current as- sets or liabilities. Derivatives not held for trading purposes, but measured at fair value through prot or loss since they do not qualify for hedge accounting, and derivatives designated as eective hedging instruments are classied as current or not cur- rent on the basis of their maturity date and the Group in- tention to hold the nancial instrument till maturity or not. For more details about derivatives and hedge accounting, please see note 49 “Derivatives and hedge accounting”. Embedded derivatives An embedded derivative is a derivative included in a “combined” contract (the so-called “hybrid instrument”) that contains another non-derivative contract (the so- called “host contract”) and gives rise to some or all of the combined contract’s cash ows. The main Group contracts that may contain embedded derivatives are contracts to buy or sell non-nancial items with clauses or options that aect the contract price, vol- ume or maturity. A derivative embedded in a hybrid contract containing a nancial asset host is not accounted for separately. The nancial asset host together with the embedded deriva- tive is required to be classied in its entirety as a nancial asset at fair value through prot or loss. Contracts that do not represent nancial instruments to be measured at fair value are analyzed in order to iden- tify any embedded derivatives, which are to be separat- ed and measured at fair value. This analysis is peormed when the Group becomes pay to the contract or when the contract is renegotiated in a manner that signicantly changes the original associated cash ows. Embedded derivatives are separated from the host con- tract and accounted for as derivatives when: • the host contract is not a nancial instrument meas- ured at fair value through prot or loss; • the economic risks and characteristics of the embed- ded derivative are not closely related to those of the host contract; • a separate contract with the same terms as the em- bedded derivative would meet the denition of a de- rivative. Embedded derivatives that are separated from the host contract are recognized in the consolidated nancial statements at fair value with changes recognized in prot or loss (except when the embedded derivative is pa of a designated hedge relationship). Contracts to buy or sell non-nancial items In general, contracts to buy or sell non-nancial items that are entered into and continue to be held for receipt or delivery in accordance with the Group’s normal ex- pected purchase, sale or usage requirements are out of the scope of IFRS 9 and then recognized as executory contracts, according to the “own use exemption”. A contract to buy or sell non-nancial items is classied as “normal purchase or sale” if it is entered into: • for the purpose of the physical selement; • in accordance with the entity’s expected purchase, sale or usage requirements. Moreover, contracts to buy or sell non-nancial items with physical selement (for example, xed-price forward con- tracts on energy commodities) do not qualify for the own use exemption and are recognized as derivatives meas- ured at fair value through prot or loss only if: • they can be seled net in cash; and • they are not entered into in accordance with the Group’s expected purchase, sale or usage requirements. The Group recognizes the fair value gain or loss on con- tracts for the purchase or sale of energy commodities still outstanding at the repoing date on a net basis under the item “Net results from commodity contracts”. Subsequently, at the selement date: • the fair value gain or loss on closed contracts for the sale of energy commodities as well as the related rev- enue, together with the impact on prot or loss of the derecognition of the derivative, are recognized under “Other revenue”; • the fair value gain or loss on closed contracts for the purchase of energy commodities as well as the related cost, together with the impact on prot or loss of the derecognition of the derivative, are recognized under “Electricity, gas and fuel” and “Services and other ma- terials”. The Group analyzes all contracts to buy or sell non-- nancial assets on an ongoing basis, with a specic focus on forward purchases and sales of electricity and energy commodities, in order to determine if they shall be classi- ed and treated in accordance with IFRS 9 or if they have been entered into for “own use”. Oseing nancial assets and liabilities The Group osets nancial assets and liabilities when: • there is a legally enforceable right to set o the recog- nized amounts; and • there is the intention of seling on a net basis or real- izing the asset and seling the liability simultaneously. Hyperination In a hyperinationary economy, the Group adjusts non-monetary items, equity and items deriving from in- dex-linked contracts up to the limit of recoverable amount, using a price index that reects changes in general pur- chasing power. The eects of initial application are recognized in equity 290 Integrated Annual Repo 2021290 net of tax eects. Conversely, during the hyperination- ary period (until it ceases), the gain or loss resulting from adjustments is recognized in prot or loss and disclosed separately in nancial income and expense. Staing from 2018, this standard applies to the Group’s transactions in Argentina, whose economy has been de- clared hyperinationary from July 1, 2018. Non-current assets (or disposal groups) classied as held for sale and discontinued operations Non-current assets (or disposal groups) are classied as held for sale if their carrying amount will be recov- ered principally through a sale transaction, rather than through continuing use. This classication criterion is applicable only when non-current assets (or disposal groups) are available in their present condition for immediate sale and the sale is highly probable. If the Group is commied to a sale plan involving loss of control of a subsidiary and the requirements provided for under IFRS 5 are met, all the assets and liabilities of that subsidiary are classied as held for sale when the classi- cation criteria are met, regardless of whether the Group will retain a non-controlling interest in its former subsid- iary after the sale. The Group applies these classication criteria as envis- aged in IFRS 5 to an investment, or a poion of an in- vestment, in an associate or a joint venture. Any retained poion of an investment in an associate or a joint venture that has not been classied as held for sale is accounted for using the equity method until disposal of the poion that is classied as held for sale takes place. Non-current assets (or disposal groups) and liabilities of disposal groups classied as held for sale are presented separately from other assets and liabilities in the state- ment of nancial position. The amounts presented for non-current assets or for the assets and liabilities of disposal groups classied as held for sale are not reclassied or re-presented for prior pe- riods presented. Immediately before the initial classication of non-cur- rent assets (or disposal groups) as held for sale, the car- rying amounts of such assets (or disposal groups) are measured in accordance with the accounting standard applicable to those assets or liabilities. Non-current as- sets (or disposal groups) classied as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses for any initial or subsequent write-down of the assets (or disposal groups) to fair value less costs to sell and gains for their reversals are recognized in prot or loss from continuing opera- tions. Non-current assets are not depreciated (or amoized) while they are classied as held for sale or while they are pa of a disposal group classied as held for sale. If the classication criteria are no longer met, the Group ceases to classify the non-current assets (or disposal groups) as held for sale. In this case they are measured at the lower of: • the carrying amount before the asset (or disposal group) was classied as held for sale, adjusted for any depreciation, amoization or reversals of impairment losses that would have been recognized if the asset (or disposal group) had not been classied as held for sale; and • the recoverable amount, which is equal to the greater of its fair value net of costs to sell and its value in use, as calculated at the date of the subsequent decision not to sell. Any adjustment to the carrying amount of a non-current asset that ceases to be classied as held for sale is in- cluded in prot or loss from continuing operations. A discontinued operation is a component of the Group that either has been disposed of, or is classied as held for sale, and: • represents a separate major business line or geo- graphical segment; • is pa of a single coordinated plan to dispose of a sep- arate major business line or geographical segment; or • is a subsidiary acquired exclusively with a view to re- sale. The Group presents, in a separate line item of the income statement, a single amount comprising the total of: • the post-tax prot or loss of discontinued operations; and • the post-tax gain or loss recognized on the measure- ment at fair value less costs to sell or on the disposal of the assets or disposal groups constituting the dis- continued operation. The corresponding amount is restated in the income statement for prior periods presented in the nancial statements, so that the disclosures relate to all operations that are discontinued by the end of the current repo- ing period. If the Group ceases to classify a component as held for sale, the results of the component previously presented in discontinued operations are reclassied and included in prot or loss from continuing operations for all periods presented. Environmental ceicates Some Group companies are aected by national regula- tions governing green ceicates and energy eciency ceicates (so-called “white ceicates“), as well as the EU Emissions Trading System. Green ceicates accrued in propoion to electricity generated by renewable energy plants and energy e- ciency ceicates accrued in propoion to energy sav- 291Notes to the consolidated nancial statements 291 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements ings achieved that have been ceied by the compe- tent authority are treated as non-monetary government grants related to income and are recognized at fair value, under other operating prot, with recognition of an as- set under other non-nancial assets, if the ceicates are not yet credited to the ownership account, or under inventories, if the ceicates have already been credited to that account. At the time the ceicates are credited to the ownership account, they are reclassied from other assets to inven- tories. Revenue from the sale of such ceicates is recognized under revenue from contracts with customers, with a corresponding decrease in inventories. For the purposes of accounting for charges arising from regulatory requirements concerning green ceicates, energy eciency ceicates and CO 2 emissions allow- ances, the Group uses the “net liability approach”. Under this accounting policy, environmental ceicates received free of charge and those self-produced as a result of Group’s operations that will be used for com- pliance purposes are recognized at nominal value (nil). In addition, charges incurred for obtaining (in the market or in some other transaction for consideration) any missing ceicates to full compliance requirements for the re- poing period are recognized through prot or loss on an accruals basis under other operating costs, as they rep- resent “system charges” consequent to compliance with a regulatory requirement. Employee benets Liabilities related to employee benets paid upon or after ceasing employment in connection with dened bene- t plans or other long-term benets accrued during the employment period are determined separately for each plan, using actuarial assumptions to estimate the amount of the future benets that employees have accrued at the repoing date (using the projected unit credit method). More specically, the present value of the dened benet obligation is calculated by using a discount rate deter- mined on the basis of market yields at the end of the re- poing period on high-quality corporate bonds. If there is no deep market for high-quality corporate bonds in the currency in which the bonds are denominated, the corre- sponding yield of government securities is used. The liability, net of any plan assets, is recognized on an accruals basis over the vesting period of the related rights. These appraisals are peormed by independent actuaries. If the plan assets exceed the present value of the related dened benet obligation, the surplus (up to the limit of any cap) is recognized as an asset. As regards the liabilities/(assets) of dened benet plans, the cumulative actuarial gains and losses from the ac- tuarial measurement of the liabilities, the return on the plan assets (net of the associated interest income) and the eect of the asset ceiling (net of the associated inter- est) are recognized in other comprehensive income when they occur. For other long-term benets, the related ac- tuarial gains and losses are recognized through prot or loss. In the event of a change being made to an existing de- ned benet plan or the introduction of a new plan, any past service cost is recognized immediately in prot or loss. In addition, the Group is involved in dened contribution plans under which it pays xed contributions to a sepa- rate entity (a fund) and has no legal or constructive obli- gation to pay fuher contributions if the fund does not hold sucient assets to pay all employee benets relat- ing to employee service in the current and prior periods. Such plans are usually aimed to supplement pension benets due to employees post-employment. The related costs are recognized through prot or loss on the basis of the amount of contributions paid in the period. Termination benets Liabilities for benets due to employees for the early ter- mination of employee service arise out of the Group’s de- cision to terminate an employee’s employment before the normal retirement date or an employee’s decision to ac- cept an oer of benets in exchange for the termination of employment. The event that gives rise to an obligation is the termination of employment rather than employee service. Termination benets are recognized at the earlier of the following dates: • when the entity can no longer withdraw its oer of benets; and • when the entity recognizes a cost for a restructuring that is within the scope of IAS 37 and involves the pay- ment of termination benets. The liabilities are measured on the basis of the nature of the employee benets. More specically, when the ben- ets represent an enhancement of other post-employ- ment benets, the associated liability is measured in ac- cordance with the rules governing that type of benets. Otherwise, if the termination benets due to employees are expected to be fully seled before 12 months of the close of the period in which the benets are recognized, the entity measures the liability in accordance with the requirements for sho-term employee benets; if they are not expected to be fully seled before 12 months of the close of period in which the benets are recognized, the entity measures the liability in accordance with the requirements for other long-term employee benets. Share-based payments The Group undeakes share-based payment transac- tions seled with equity instruments as pa of the remu- 292 Integrated Annual Repo 2021292 neration policy adopted for the Chief Executive Ocer/ General Manager and for key management personnel. The most recent long-term incentive plans provide for the grant to recipients of an incentive represented by an equity component and a monetary component. In order to sele the equity component through the bo- nus award of Enel shares, a program for the purchase of treasury shares to suppo these plans was approved. For more details on share-based incentive plans, please see note 51 “Share-based payments”. The Group recognizes the services rendered by employ- ees as personnel expenses and indirectly estimates their value, and the corresponding increase in equity, on the basis of the fair value of the equity instruments (i.e., Enel shares) at the grant date. This fair value is based on the observable market price of Enel (on the Mercato Tele- matico Azionario (electronic stock exchange) organized and operated by Borsa Italiana SpA), taking account of the terms and conditions under which the shares were granted (with the exception of vesting conditions exclud- ed from the measurement of fair value). The cost of these share-based payment transactions set- tled with equity instruments is recognized through prot or loss, with a balancing entry in a specic equity item, over the period in which the service and return peor- mance conditions are met (vesting period). The overall expense recognized is adjusted at each re- poing date until the vesting date to reect the best estimate available to the Group of the number of equity instruments for which the service and peormance con- ditions other than market conditions will be satised, so that the amount recognized at the end is based on the eective number of equity instruments that satisfy the service and peormance conditions other than market conditions at the vesting date. No expense is recognized for awards which ultimately do not vest because the peormance conditions other than market conditions and/or the service conditions have not been satised. Conversely, the transactions are consid- ered to have vested irrespective of whether the market or non-vesting conditions are satised, provided that all the other peormance and/or service conditions are sat- ised. Provisions for risks and charges Provisions are recognized where there is a legal or con- structive obligation as a result of a past event at the end of the repoing period, the selement of which is expect- ed to result in an outow of resources whose amount can be reliably estimated. Where the impact is signicant, the accruals are determined by discounting expected future cash ows using a pre-tax discount rate that reects the current market assessment of the time value of money and, if applicable, the risks specic to the liability. If the provision is discounted, the periodic adjustment of the present value for the time factor is recognized as a nancial expense. When the Group expects some or all charges to be reim- bursed, the reimbursement is recognized as a separate asset, but only when the reimbursement is viually ceain. Where the liability relates to decommissioning and/or site restoration in respect of propey, plant and equipment, the initial recognition of the provision is made against the related asset and the expense is then recognized in prot or loss through the depreciation of the asset involved. Where the liability regards the treatment and storage of nuclear waste and other radioactive materials, the pro- vision is recognized against the related operating costs. A liability for restructuring refers to a program planned and controlled by management that materially changes the scope of a business undeaken by the Group or the manner in which the business is conducted. Such a lia- bility is recognized when a constructive obligation is es- tablished, i.e., when the Group has approved a detailed formal restructuring plan and has staed to implement the plan or has announced its main features to those af- fected by it. Provisions do not include liabilities in respect of unceain income tax treatments that are recognized as tax liabili- ties. The Group could provide a warranty in connection with the sale of a product (whether a good or service) from contracts with customers in the scope of IFRS 15, in ac- cordance with the contract, the law or its customary busi- ness practices. In this case, the Group assesses whether the warranty provides the customer with assurance that the related product will function as the paies intended because it complies with agreed-upon specications or whether the warranty provides the customer with a ser- vice in addition to the assurance that the product com- plies with agreed-upon specications. After the assessment, if the Group establishes that an assurance warranty is provided, it recognizes a separate warranty liability and corresponding expense when trans- ferring the product to the customer, as additional costs of providing goods or services, without aributing any of the transaction price (and therefore revenue) to the warranty. The liability is measured and presented as a provision. Otherwise, if the Group determines that a service warran- ty is provided, it accounts for the promised warranty as a peormance obligation in accordance with IFRS 15, rec- ognizing the contract liability as revenue over the period the warranty service is provided and the costs associated as they are incurred. Finally, if the warranty includes both an assurance ele- ment and a service element and the Group cannot rea- sonably account for them separately, then it accounts for both of the warranties together as a single peormance obligation. 293Notes to the consolidated nancial statements 293 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements In the case of contracts in which the unavoidable costs of meeting the obligations under the contract exceed the economic benets expected to be received under it (on- erous contracts), the Group recognizes a provision as the lower of the excess of unavoidable costs of meeting the obligations under the contract over the economic bene- ts expected to be received under it and any compensa- tion or penalty arising from failure to full it. Changes in estimates of accruals to the provisions ad- dressed here are recognized through prot or loss in the period in which the changes occur, with the exception of those in the costs of decommissioning, retiring and/or restoration resulting from changes in the timetable and costs necessary to extinguish the obligation or from a change in the discount rate. These changes increase or decrease the carrying amount of the related assets and are taken to prot or loss through depreciation. Where they increase the carrying amount of the assets, it is also determined whether the new carrying amount of the as- sets is fully recoverable. If this is not the case, a loss equal to the unrecoverable amount is recognized through prot or loss. Decreases in estimates are recognized up to the carrying amount of the assets. Any excess is recognized immedi- ately in prot or loss. For more information on the estimation criteria adopted in determining provisions for retiring and/or restoration of propey, plant and equipment, especially those asso- ciated with decommissioning nuclear power plants and storage of waste fuel and other radioactive materials, please see note 2.1 “Use of estimates and management judgment”. Revenue from contracts with customers The Group recognizes revenue from contracts with cus- tomers in order to represent the transfer of promised goods or services to the customers at an amount that reects the consideration to which the Group expects to be entitled in exchange for those goods or services. The Group applies this core principle using a ve-step model: • identify the contract with the customer (step 1). The Group applies IFRS 15 to contracts with customers in the scope of the standard when the contract is le- gally enforceable and all the criteria envisaged for step 1 are met: If the criteria are not met, any consideration received from the customer is generally recognized as an ad- vance; • identify the peormance obligations in the contract (step 2). The Group identies all goods or services promised in the contract, separating them into peormance obli- gations to account for separately if they are both: ca- pable of being distinct and distinct within the context of the contract. As an exception, the Group accounts for as a single peormance obligation a series of distinct goods or services that are substantially the same and that have the same paern of transfer to the customer over time. In assessing the existence and the nature of the per- formance obligations, the Group considers all of the contract’s features as mentioned in step 1. For each distinct good or service identied, the Group determines whether it acts as a principal or agent, respectively if it controls or not the specied good or service that is promised to the customer before its control is transferred to the customer. When the Group acts as agent, it recognizes revenue on a net basis, corresponding to any fee or commission to which it expects to be entitled; • determine the transaction price (step 3). The transaction price represents the amount of con- sideration to which the Group expects to be entitled in exchange for transferring goods or services to a cus- tomer, excluding amounts collected on behalf of third paies (e.g., some sale taxes and value-added taxes). The Group determines the transaction price at incep- tion of the contract and updates it each repoing pe- riod for any changes in circumstances. When the Group determines the transaction price, it considers whether the transaction price includes var- iable consideration, non-cash consideration received from a customer, consideration payable to a customer and a signicant nancing component; • allocate the transaction price (step 4). The Group allocates the transaction price at contract inception to each separate peormance obligation to depict the amount of consideration to which the Group expects to be entitled in exchange for transfer- ring the promised goods or services. When the contract includes a customer option to acquire additional goods or services that represents a material right, the Group allocates the transaction price to this peormance obligation (i.e., the option) and defers the relative revenue until those future goods or services are transferred or the option ex- pires. The Group generally allocates the transaction price on the basis of the relative stand-alone selling price of each distinct good or service promised in the contract (that is, the price at which the Group would sell that good or service separately to the customer); • recognize revenue (step 5). The Group recognizes revenue when (or as) each peor- mance obligation is satised by transferring the prom- ised good or service to the customer, which is when the customer obtains control of the good or service. 294 Integrated Annual Repo 2021294 To this end, the Group rst determines if one of the over-time criteria is met. For each peormance obligation satised over time, the Group recognizes revenue over time by measuring progress toward the complete satisfaction of that per- formance obligation using an output method or an in- put method and applies a single method of measuring progress from contract inception until full satisfaction and to similar peormance obligations and in similar circumstances. When the Group cannot reasonably measure the pro- gress, it recognizes revenue only to the extent of the costs incurred that are considered recoverable. If the peormance obligation is not satised over time, the Group determines the point in time at which the customer obtains the control, considering whether the indicators of the transfer of control collectively indi- cate that the customer has obtained control. Depending on the type of transaction, the broad crite- ria used under IFRS 15 are summarized below: – revenue from the sale of goods is recognized at the point in time at which the customer obtains the control of goods if the Group considers that the sale of goods is satised at a point in time; – revenue from providing services is recognized on the basis of the progress towards complete sat- isfaction of the peormance obligation measured with an appropriate method that beer depicts this progress if the Group considers that the per- formance obligation is satised over time. The cost incurred method (cost-to-cost method) is consid- ered appropriate for measuring progress, except when specic contract analyses suggest the use of an alternative method, which beer depicts the Group’s peormance obligation fullled at the re- poing date. The Group does not disclose the information about the remaining peormance obligations in existing contracts if the peormance obligation is pa of a contract that has an original expected duration of one year or less and if the Group recognizes revenue in the amount to which it has a right to invoice the customer. More information on the application of this revenue rec- ognition model is provided in note 2.1 “Use of estimates and management judgment” and in note 10.a “Revenue from sales and services”. If the Group peorms by transferring goods or services to a customer before the customer pays the consider- ation or before payment is due, it recognizes a contract asset relating to the right to consideration in exchange for goods or services transferred to the customer. If a customer pays the consideration before the Group transfers goods or services to the customer, the Group recognizes a contract liability when the payment is made (or the payment is due) that is recognized as revenue when the Group peorms under the contract. Other revenue The Group recognizes revenue other than that deriving from contracts with customers mainly referring to: • revenue from the sale of energy commodities based on contracts with physical selement, which do not qualify for the own use exemption and therefore is recognized at FVTPL in accordance with IFRS 9; • changes in the fair value of seled contracts to sell en- ergy commodities with physical selement, which do not qualify for the own use exemption and therefore are recognized at FVTPL in accordance with IFRS 9; • operating lease revenue accounted for on an accruals basis in accordance with the substance of the relevant lease agreement. Other operating income Other operating income primarily includes gains on dis- posal of assets that are not an output of the Group’s ordi- nary activities and government grants. Grants related to assets, including non-monetary grants at fair value, are recognized where there is reasonable assurance that they will be received and that the Group will comply with all conditions aaching to them as set by the government, government agencies and similar bodies whether local, national or international. When loans are provided by governments at a below-mar- ket rate of interest, the benet is regarded as a govern- ment grant. The loan is initially recognized and measured at fair value and the government grant is measured as the dierence between the initial carrying amount of the loan and the funds received. The loan is subsequently meas- ured in accordance with the requirements for nancial liabilities. Government grants are recognized in prot or loss on a systematic basis over the periods in which the Group rec- ognizes as expenses the costs that the grants are intend- ed to compensate. Where the Group receives government grants in the form of a transfer of a non-monetary asset for the use of the Group, it accounts for both the grant and the asset at the fair value of the non-monetary asset received at the date of the transfer. Capital grants, including non-monetary grants at fair val- ue, i.e., those received to purchase, build or otherwise ac- quire non-current assets (for example, an item of propey, plant and equipment or an intangible asset), are deducted from the carrying amount of the asset and are recognized in prot or loss over the depreciable/amoizable life of the asset as a reduction in the depreciation/amoization charge. If there is insucient information to enable ade- 295Notes to the consolidated nancial statements 295 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements quate aribution to the non-current assets to which they refer, grants related to assets are recognized as deferred income under other liabilities, and credited to prot or loss on a systematic basis over the useful life of the asset. Financial income and expense from derivatives Financial income and expense from derivatives includes: • income and expense from derivatives measured at fair value through prot or loss on interest rate and cur- rency risks; • income and expense from fair value hedge derivatives on interest rate risk; • income and expense from cash ow hedge derivatives on interest rate and currency risks. Other nancial income and expense For all nancial assets and liabilities measured at amor- tized cost and interest-bearing nancial assets classied as at fair value through other comprehensive income, in- terest income and expense are recognized using the ef- fective interest rate method. Interest income is recognized to the extent that it is prob- able that the economic benets will ow to the Group and the amount can be reliably measured. Other nancial income and expense include also changes in the fair value of nancial instruments other than de- rivatives. Dividends Dividends are recognized when the unconditional right to receive payment is established. Dividends and interim dividends payable to the Parent’s shareholders and non-controlling interests are recog- nized as changes in equity in the period in which they are approved by the Shareholders’ Meeting and the Board of Directors, respectively. Income taxes Current income taxes Current income taxes for the year, which are recognized under “income tax liabilities” net of payments on account, or under “tax assets” where there is a credit balance, are determined using an estimate of taxable income and in conformity with the applicable regulations. Such liabilities and assets are determined using the tax rates and tax laws that are enacted or substantively en- acted by the end of the repoing period in the countries where taxable income has been generated. Current income taxes are recognized in prot or loss with the exception of current income taxes related to items recognized outside prot or loss that are recognized in equity. Deferred tax liabilities and assets Deferred tax liabilities and assets are calculated on the temporary dierences between the carrying amounts of liabilities and assets in the nancial statements and their corresponding amounts recognized for tax purposes on the basis of tax rates in eect on the date the temporary dierence will reverse, which is determined on the basis of tax rates that are enacted or substantively enacted as at the end of the repoing period. Deferred tax liabilities are recognized for all taxable tem- porary dierences, except when such liability arises from the initial recognition of goodwill or in respect of taxa- ble temporary dierences associated with investments in subsidiaries, associates and joint ventures, when the Group can control the timing of the reversal of the tem- porary dierences and it is probable that the temporary dierences will not reverse in the foreseeable future. Deferred tax assets are recognized for all deductible tem- porary dierences, the carry forward of tax losses and any unused tax credits. For more information concerning the recoverability of such assets, please see the appropriate section of the discussion of estimates. Deferred taxes and liabilities are recognized in prot or loss, with the exception of those in respect of items rec- ognized outside prot or loss that are recognized in eq- uity. Deferred tax assets and deferred tax liabilities are oset only if there is a legally enforceable right to oset current tax assets with current tax liabilities and when they relate to income taxes levied by the same taxation authority on either the same taxable entity or dierent taxable entities which intend either to sele current tax liabilities and as- sets on a net basis, or to realize the assets and sele the liabilities simultaneously, in each future period in which signicant amounts of deferred tax liabilities or assets are expected to be seled or recovered. Unceainty over income tax treatments In dening “unceainty“, it shall be considered whether a paicular tax treatment will be accepted by the relevant taxation authority. If it is deemed probable that the tax treatment will be accepted (where the term “probable“ is dened as “more likely than not“), then the Group rec- ognizes and measures its current/deferred tax asset or liabilities applying the requirements in IAS 12. Conversely, when the Group feels that it is not likely that the taxation authority will accept the tax treatment for income tax purposes, the Group reects the unceainty in the manner that best predicts the resolution of the un- ceain tax treatment. The Group determines whether to consider each unceain tax treatment separately or to- gether with one or more other unceain tax treatments 296 Integrated Annual Repo 2021296 based on which approach provides beer predictions of the resolution of the unceainty. In assessing whether and how the unceainty aects the tax treatment, the Group assumes that a taxation authority will accept or not an unceain tax treatment supposing that the tax- ation authority will examine amounts it has a right to ex- amine and have full knowledge of all related information when making those examinations. The Group reects the eect of unceainty in accounting for current and de- ferred tax using the expected value or the most likely amount, whichever method beer predicts the resolution of the unceainty. Since unceain income tax positions meet the denition of income taxes, the Group presents unceain tax liabili- ties/assets as current tax liabilities/assets or deferred tax liabilities/assets. 3\. New and amended standards and interpretations The Group has applied the following standards, interpre- tations and amendments that took eect as from January 1, 2021. • “Amendments to IFRS 9, IAS 39, IFRS 7, and IFRS 16 – Interest Rate Benchmark Reform – Phase 2”, issued in August 2020. The amendments supplement those is- sued in 2019 (Interest Rate Benchmark Reform - Phase 1) and address issues that could aect nancial repo- ing after a benchmark has been reformed or replaced with an alternative benchmark rate. The objectives of the Phase 2 amendments are to assist companies: (i) in applying the IFRSs when changes occur in contractual cash ows or hedge relationships due to the reform of the benchmarks for determining interest rates; and (ii) in providing information to users of nancial state- ments. In addition, when the Phase 1 exemptions cease to ap- ply, companies are required to amend the documen- tation of hedge relationship to reect the changes re- quired under the IBOR reform by the end of the year in which the changes are made (such changes do not constitute the discontinuation of the hedge relation- ship). When the description of a hedged element in the documentation of the hedge relationship is changed, the amounts accumulated in the hedging reserve shall be considered to be based on the alternative bench- mark rate on the basis of which the future hedged cash ows will be determined. The amendments will require providing additional dis- closures about the entity’s exposure to the risks aris- ing from the interest rate benchmark reform and relat- ed risk management activities. • “Amendment to IFRS 16: COVID 19-related rent con- cessions beyond 30 June 2021”, issued on May 28, 2020 in order to permit lessees to not account for rent concessions (rent payment holidays, deferral of lease payments, reductions in rent for a period of time, pos- sibly followed by rent increases in future periods) as lease modications if they are a direct consequence of the COVID-19 pandemic and meet ceain conditions. According to IFRS 16, a lease modication is a change in the scope of a lease, or the consideration for a lease, that was not pa of the original terms and conditions of the lease. Accordingly, rent concessions would rep- resent lease modications unless they were provided for in the original lease agreement. The amendment applies only to lessees, while lessors are required to apply the current provisions of IFRS 16. The amendment was to be applied until June 30, 2021 but, in consideration of the persistence of the impacts of the COVID-19 pandemic, on March 31, 2021, the IASB extended the period of application of the practi- cal expedient to June 30, 2022. The application of the amendments did not have a ma- terial impact on these consolidated nancial statements. 4. Argentina - Hyperinationary economy: impact of the application of IAS 29 As from July 1, 2018, the Argentine economy has been considered hyperinationary based on the criteria estab- lished by “IAS 29 - Financial repoing in hyperination- ary economies”. This designation is determined following an assessment of a series of qualitative and quantitative circumstances, including the presence of a cumulative ination rate of more than 100% over the previous three years. For the purposes of preparing the consolidated nancial statements at December 31, 2021, and in accordance with IAS 29, ceain items of the statements of nancial position of the investees in Argentina have been remeas- ured by applying the general consumer price index to historical data in order to reect changes in the purchas- ing power of the Argentine peso at the repoing date for those companies. 297Notes to the consolidated nancial statements 297 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Bearing in mind that the Enel Group acquired control of the Argentine companies on June 25, 2009, the remeas- urement of the non-monetary nancial statement gures was conducted by applying the ination indices staing from that date. In addition to being already reected in the opening statement of nancial position, the account- ing eects of that remeasurement also include chang- es during the period. More specically, the eect of the remeasurement of non-monetary items, the equity items and the income statement items recognized in 2021 was recognized in a specic line of the income statement un- der nancial income and expense. The associated tax ef- fect was recognized in taxes for the year. In order to also take account of the impact of hyperin- ation on the exchange rate of the local currency, the income statement balances expressed in the hyperina- tionary currency have been translated into the Group’s presentation currency (euro) applying, in accordance with IAS 21, the closing exchange rate rather than the aver- age rate for the year in order to adjust these amounts to present values. The cumulative changes in the general price indices at December 31, 2018, December 31, 2019, December 31, 2020 and December 31, 2021 are shown in the following table. Periods Cumulative change in general consumer price index From July 1, 2009 to December 31, 2018 346.30% From January 1, 2019 to December 31, 2019 54.46% From January 1, 2020 to December 31, 2020 35.41% From January 1, 2021 to December 31, 2021 49.73% In 2021, the application of IAS 29 generated net nancial income (gross of tax) of €20 million. The following tables repo the eects of IAS 29 on the balance at December 31, 2021 and the impact of hyper- ination on the main income statement items for 2021, dierentiating between that concerning the revaluation on the basis of the general consumer price index and that due to the application of the closing exchange rate rather than the average exchange rate for the period, in accord- ance with the provisions of IAS 21 for hyperinationary economies. Millions of euro Cumulative hyperination eect at Dec. 31, 2020 Hyperination eect for the period Exchange dierences Cumulative hyperination eect at Dec. 31, 2021 Total assets 962 594 (190) 1,366 Total liabilities 192 173 (19) 346 Equity 770 421 (1) (171) 1,020 (1) The gure includes loss for the year, equal to €122 million. Millions of euro IAS 29 eect IAS 21 eect Total eect at Dec. 31, 2021 Revenue 143 (26) 117 Costs 182 (1) (25) (2) 157 Operating prot (39) (1) (40) Net nancial income/(expense) (13) - (13) Net income/(expense) from hyperination 20 - 20 Pre-tax prot (32) (1) (33) Income taxes 90 (3) 87 Loss for the year (owners of the Parent and non- controlling interests) (122) 2 (120) Aributable to owners of the Parent (80) 27 (53) Aributable to non-controlling interests (42) (25) (67) (1) Includes impact on depreciation, amoization and impairment losses of €62 million. (2) Includes impact on depreciation, amoization and impairment losses of €(2) million. 298 Integrated Annual Repo 2021298 5\. Climate change disclosures (23) “Eects of climate-related maers on nancial statements”, which completes an aicle wrien by Nick Anderson, member of the International Accounting Standards Board, on this issue in November 2019. The move towards “net zero” is under way worldwide and the processes of decarbonization and electrication of the global economy are crucial to avoiding the serious conse- quences of an increase in temperatures of over 1.5 °C. With this outlook, the Group has set its strategic guide- lines as follows: • allocate capital to suppo a decarbonized electricity supply; • enable the electrication of customers’ energy demand; • leverage the creation of value along the value chain; • bring forward achievement of the sustainable “net-ze- ro” goals to 2040. The Group has considered the risks related to climate change and the commitments established under the Paris Agreement in the preparation of these consolidated nan- cial statements at December 31, 2021, which appropriately reect the eects of achieving the carbon neutrality ob- jectives on assets, liabilities, and prot and loss, highlight- ing its signicant and foreseeable impacts as required un- der the Conceptual Framework of the IFRS. In this regard, in accordance with the provisions of the document published by the IFRS Foundation on November 20, 2020, (23) the Group provides explicit information in the notes to these consolidated nancial statements regard- ing how climate change is reected in our accounts. For a more eective and comprehensive communication concerning climate change disclosures prepared as pa of the notes to these consolidated nancial statements, we have mapped this disclosure as shown below, providing references to the various sections where issues associated with climate change are addressed. Topic Note Content Estimates and judgments concerning climate change Note 2.1 “Use of estimates and management judgment” • Reference to management’s use of estimates and judgments with regard to climate change (taking account of their materiality within nancial repoing). • Focus on estimating expected cash ows from specic assets/CGUs (section: "Impairment of non-nancial assets”). • Focus of the eects of the Group’s commitments under the Paris Agreement and their impact on the estimation of the useful life of the assets involved (section “Determining the useful life of non-nancial assets”). Sustainable investment Note 18 “Propey, plant and equipment” Note 22 “Intangible assets” • Focus on assets involved in renewable generation, infrastructure connected with the development of the grid and investment in expanding the e-Mobility, e-City, e-Industries, and e-Home businesses. • Focus on the development of intellectual propey for achieving strategic objectives such as decarbonization, electrication and the development of platform models. Measurement of non- nancial assets Note 11.e “Depreciation, amoization and other impairment losses” Note 18 “Propey, plant and equipment” Note 23 “Goodwill” • Focus on the eects related to the commitments of the Group in line with the Paris Agreement with regard to the measurement of non-nancial assets, with paicular regard to the residual useful life of ceain assets and impairment testing. Provisions Note 39 “Provisions for risks and charges” • Focus on the impact of climate change on provisions for risks and charges connected with generation plants, including those for decommissioning and restoration of sites, and provisions for restructuring plans linked to the energy transition (which include decarbonization and digitization). Sustainable nance Note 46.3 “Borrowings” Note 57 “Events after the repoing period” Focus on: • issues of sustainability-linked bonds connected with the achievement of sustainability objectives in line with the SDGs issued by the UN; • green bonds used to nance specic sustainable Group projects and initiatives; • sustainable loans connected with the achievement of Sustainable Development Goals (SDGs). Share-based payments Note 51 “Share-based payments” • Description of long-term incentive plans anchored to achievement of specic climate-related targets. Environmental compliance Note 11.f “Other operating costs” • Description of the costs connected with environmental compliance obligations under national and international regulations (in paicular those concerning CO 2 emission allowances, green ceicates and energy eciency ceicates). Note 39 “Provisions for risks and charges” • Description of costs generated by not having sucient environmental ceicates to meet environmental compliance regulations. Note 2.2 “Signicant accounting policies” • Description of accounting treatment of environmental ceicates (sections: “Environmental ceicates” and “Inventories”). 299Notes to the consolidated nancial statements 299 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 6. COVID-19 disclosures In view of the challenges posed by current circumstanc- es, the Group carefully monitors the evolution of the COVID-19 pandemic with regard to the main areas and countries in which it operates, in line with the recom- mendations of ESMA primarily contained in the public statements (24) published in March, May, July and October 2020, and of CONSOB in its warning notices nos. 6/2020 of April 9, 2020, 8/2020 of July 16, 2020 and 1/2021 of February 16, 2021. The Group analyzed the impacts of COVID-19 on busi- ness operations, the nancial position and peormance, also identifying the main risks and unceainties to which it is exposed. Note also that, due to the continuing unceainty regard- ing the future evolution of the macroeconomic, nancial and business environment in which the Group operates, the impacts of the COVID-19 pandemic for the purpos- es of the Integrated Annual Repo at December 31, 2021 are reected in the assessments and estimates made by management concerning the carrying amount of the income statement items, assets and liabilities that expe- rience the greatest volatility (in paicular, revenue and costs, propey, plant and equipment, goodwill, employee benets, and nancial instruments). 7. Restatement of comparative disclosures Reclassication of commodity contracts with physical selement In order to improve the representation of contracts en- tered into for the purchase or sale of commodities with physical selement (that do not qualify for the own use exemption) measured at fair value through prot or loss (within the scope of IFRS 9), the Group modied their presentation in the consolidated nancial statements in 2021. More specically, in 2020: • the unrealized fair value gain or loss on energy com- modity sales contracts outstanding at the repoing date were presented under “Revenue from sales and services”; • the unrealized fair value gain or loss on energy com- modity purchase contracts outstanding at the repo- ing date were presented under “Electricity, gas and fuel” and “Services and other materials”. In 2021, the unrealized fair value gain or loss on contracts for the purchase or sale of energy commodities out- standing at the repoing date are recognized on a net basis under the item “Net results from commodity con- tracts”. The new presentation method constitutes a change in ac- counting policy, in accordance with “IAS 8 - Accounting policies, changes in accounting estimates and errors”. Accordingly, it was necessary to restate the income state- ment balances for previous periods for comparative pur- poses only, with no impact on either net prot or equity. Reclassication of the remeasurement at fair value of assets in respect of concession arrangements (IFRIC 12) in Brazil In order to improve the representation of the remeas- urement at fair value of nancial assets in respect of concession arrangements within the scope of applica- tion of IFRIC 12 in Brazil in prot or loss, in 2021, the gain was reclassied from nancial income to revenue from contracts with customers (IFRS 15) since it refers to the remeasurement at fair value of contract assets. That said, the following table repos the reclassications made to costs, revenue, net results from commodity con- tracts and nancial income in order to restate the com- parative gures at December 31, 2020. (24) ESMA 71-99-1290 of March 11, 2020; ESMA 32-63-951 of March 25, 2020; ESMA 31-67-742 of March 27, 2020; ESMA 32-63-972 of May 20, 2020; ESMA 32-61-417 of July 21, 2020 and ESMA 32-63-1041 of October 28, 2020. 300 Integrated Annual Repo 2021300 Impact on the income statement Millions of euro Notes 2020 Eect of reclassication of energy commodity contracts with physical selement IFRS 9 Eect of reclassication of remeasurement at fair value of nancial assets in respect of concession arrangements within scope of IFRIC 12 in Brazil 2020 restated Revenue Revenue from sales and services 10.a 62,623 932 87 63,642 Other income 10.b 2,362 2,362 [Subtotal] 64,985 932 87 66,004 Costs Electricity, gas and fuel 11.a 25,049 977 26,026 Services and other materials 11.b 18,298 68 18,366 Personnel expenses 11.c 4,793 4,793 Net impairment losses/(reversals) on trade receivables and other receivables 11.d 1,285 1,285 Depreciation, amoization and other impairment losses 11.e 7, 16 3 7, 16 3 Other operating costs 11.f 2,202 2,202 Capitalized costs 11.g (2,385) (2,385) [Subtotal] 56,405 1,045 57,45 0 Net results from commodity contracts 12 (212) 113 (99) Operating prot 8,368 87 8,455 Financial income from derivatives 13 1,315 1,315 Other nancial income 14 2,763 (87) 2,676 Financial expense from derivatives 13 2,256 2,256 Other nancial expense 14 4,485 4,485 Net income/(expense) from hyperination 57 57 Share of prot/(loss) of equity-accounted investments 15 (299) (299) Pre-tax prot 5,463 5,463 Income taxes 16 1,841 1,841 Prot from continuing operations 3,622 3,622 Prot/(Loss) from discontinued operations - - Prot for the year (owners of the Parent and non-controlling interests) 3,622 3,622 Aributable to owners of the Parent 2,610 2,610 Aributable to non-controlling interests 1,012 1,012 Earnings per share Basic earnings per share Basic earnings per share 0.26 0.26 Basic earnings per share from continuing operations 0.26 0.26 Basic earnings/(loss) per share from discontinued operations \- \- Diluted earnings per share Diluted earnings per share 0.26 0.26 Diluted earnings per share from continuing operations 0.26 0.26 Diluted earnings/(loss) per share from discontinued operations \- \- The gures presented in the comments and the tables of the notes to these consolidated nancial statements at December 31, 2021 are uniform and comparable with each other. 301Notes to the consolidated nancial statements 301 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Changes in the consolidation scope 8\. Main acquisitions and disposals during the year In the two periods under review, the consolidation scope changed as a result of a number of transactions: 2020 • In January 2020, the Wild Plains project company, 100% owned by Tradewind, was sold. The sale did not have an impact on prot or loss. • On May 11, 2020 Endesa Energía sold 80% of Endesa Soluciones for €21 million. The interest, which had pre- viously been consolidated on a line-by-line basis, was accounted for using the equity method. • On July 7, 2020, Enel Green Power España acquired 100% of Parque Eólico Tico SLU, Tico Solar 1 SLU and Tico Solar 2 SLU for a total of €40 million. • On September 14, Endesa Generación Pougal ac- quired 100% of Suggestion Power (Unipessoal) Ltda for a total of €6 million. • On September 17, 2020, Enel X International acquired 60% of Viva Labs AS for a total of €3 million. • Enel Green Power Panama acquired 100% of Jaguito So- lar and Progreso Solar in 2020 for a total of €2 million. In addition to the above changes in the consolidation scope, the following transactions, although they do not represent transactions involving the acquisition or loss of control, gave rise to a change in the interest held by the Group in the investees in 2020: • the disposal of a number of 50% owned joint ventures in Enel Noh America’s hydroelectric pofolio. In Decem- ber 2019, the entire pofolio had been classied as held for sale in accordance with IFRS 5. The gain recognized in prot or loss was €2 million; • Enel SpA increased its interest in Enel Américas by 5.03% under the provisions of share swaps entered into with a nancial institution. The Group’s total stake therefore reached 65% in 2020; • Enel SpA increased its interest in Enel Chile by 2.89% un- der the provisions of two share swaps entered into with a nancial institution. The Group’s total stake therefore reached 64.93% in 2020. 2021 • On January 8, 2021, 100% of Tynemouth Energy Storage was sold for €1 million. The sale did not have any signif- icant impact on prot or loss. • On January 20, 2021 100% of Enel Green Power Bulgaria was sold for a total of €35 million. The sale did not have any signicant impact on prot or loss. • On March 10, 2021, Enel Green Power Italy acquired 100% of e-Solar Srl, the owner of a photovoltaic pro- ject with an authorized capacity of 170.11 MW, for €2.7 million. • On March 29, 2021, Enel X Srl acquired 100% of City- Poste Payment SpA, an Italian company that oers consumers access to payment services through both physical and digital channels, enabling them to carry out numerous types of transactions with private- and public-sector entities. • In the 1st Quaer of 2021 the consolidation scope changed with the full consolidation of Australian renew- able energy companies previously accounted for using the equity method due to a change in governance ar- rangements at the companies, without the acquisition of an additional interest. The purchase price allocation process was completed in December 2021 and essen- tially conrmed the carrying amount of the net assets acquired following an impairment loss of about €9 mil- lion. • On May 13, 2021 EGP Solar 1 LLC was sold for a total of about €4 million. • In the rst nine months of 2021, Enel Green Power Es- paña acquired 100% of 30 renewables companies for a total of €86 million. • On September 8, 2021, Genability was sold by Enel X Noh America for about €6 million. • The purchase price allocation process for Viva Labs AS, acquired on September 17, 2020 by Enel X International, was completed in September, following which the car- rying amounts recognized at the acquisition date were conrmed. Other changes In addition to the above changes in the consolidation scope, the following transactions, which although they do not represent transactions involving the acquisition or loss of control, gave rise to a change in the interest held by the Group in the investees: • on March 15, Enel SpA launched a paial voluntary ten- der oer for up to a maximum of 7,608,631,104 shares of Enel Américas, equal to 10% of the share capital at that date. The oer period began on March 15 and ended on April 13, 2021.The tender oer was subject to the merger 302 Integrated Annual Repo 2021302 of EGP Américas SpA into Enel Américas SA being com- pleted, which took place on April 1, 2021. The total price was €1,271 million. Following completion of the paial voluntary tender oer and the completion of the EGP Américas merger, Enel owns about 82.3% of the out- standing share capital of Enel Américas; • on November 24, Enel Green Power RSA 2 (Pty) Ltd sold a stake in the investments held in Oyster Bay Wind Farm, Garob Wind Farm, Aced Renewables Hidden Valley and Soetwater Wind Farm for a total of ZAR 340 million, cor- responding to about €19 million. Following the transac- tion, the Group’s interest in those companies decreased from 60% to 55%; • on December 3, Enel SpA nalized the sale of the entire stake held in Open Fiber SpA, equal to 50% of the laer’s share capital, to Macquarie Asset Management and CDP Equity SpA for a total of about €2,733 million. The capital gain realized by the Group on a consolidated basis came to about €1,763 million. Acquisition of CityPoste Payment On March 29, 2021, Enel X Srl acquired 100% of CityPoste Payment SpA, a payment institution authorized to oper- ate by the Bank of Italy in the provision of payment servic- es both digitally (using a proprietary platform) and using physical sites (its network of points of sale). In December 2021 the identication of the fair value of the assets acquired and liabilities assumed was completed, following which negative goodwill of about €1 million was recognized. Millions of euro Carrying amount pre March 29, 2021 Adjustments for purchase price allocation Amount recognized at March 29, 2021 Net assets acquired 2 20 22 Cost of the acquisition 21 21 Goodwill/(Negative goodwill) 19 (1) Acquisitions of renewable energy companies in Spain In the rst nine months of 2021 Enel Green Power España acquired 100% of 30 renewable energy companies for a total of €86 million for the development and construction of photovoltaic and wind plants in Spain. Determination of goodwill Millions of euro Net assets acquired 86 Cost of the acquisition 86 (of which paid in cash) 75 Goodwill/(Negative goodwill) - The total price of the transaction amounted to €103 million as it includes repayment of the debt of the acquired com- panies due to the previous shareholders in the amount of €17 million. 303Notes to the consolidated nancial statements 303 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Sale of Open Fiber On December 3, 2021, Enel SpA nalized the sale of the entire stake held in Open Fiber SpA, equal to 50% of the laer’s share capital, to Macquarie Asset Management and CDP Equity SpA for a total of about €2,733 million. The capital gain realized by the Group on a consolidated basis came to about €1,763 million. The price was collected in full. Millions of euro Value of the transaction 2,733.3 Value of the investment at December 2, 2021 (614.5) Early selement of nancial asset with Open Fiber and related income (310.6) Reversal of OCI reserve (45.1) Consolidated capital gain 1,763.1 9. Segment repoing The representation of the nancial position and peor- mance by business segment and geographical segment presented here is based on the approach used by man- agement in monitoring Group peormance for the two years being compared. 304 Integrated Annual Repo 2021304 Peormance by business segment Results for 2021 (1) Millions of euro Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Holding and other Total repoing segment Eliminations and adjustments Total Revenue and other income from third paies 22,883 7, 24 4 17, 16 4 37,39 6 1,513 20 1,786 88,006 - 88,006 Revenue and other income from transactions with other segments 10,272 2,282 3,492 1,312 28 1,977 148 19,511 (19,511) - Total revenue 33,155 9,526 20,656 38,708 1,541 1,997 1,934 107,517 (19,511) 88,006 Total costs 32,791 4,710 13,446 37,762 1,258 2,083 422 92,472 (19,511) 72,961 Net results from commodity contracts 535 (55) - 2,044 - - (2) 2,522 - 2,522 Depreciation and amoization 929 1,297 2,692 410 222 188 36 5,774 - 5,774 Impairment losses 2,568 392 205 1,126 37 51 2 4,381 - 4,381 Impairment gains (12) (10) (35) (203) (6) (2) - (268) - (268) Operating prot (2,586) 3,082 4,348 1,657 30 (323) 1,472 7,680 - 7,680 Capital expenditure 822 5,662 (2) 5,296 643 367 139 68 12,997 - 12,997 (1) Segment revenue includes both revenue from third paies and revenue from transactions with other segments. (2) Does not include €111 million regarding units classied as “held for sale”. Results for 2020 (1) (2) (3) (4) Millions of euro Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Holding and other Total repoing segment Eliminations and adjustments Total Revenue and other income from third paies 14,332 5,852 15,919 28,793 1,097 2 9 66,004 - 66,004 Revenue and other income from transactions with other segments 7,404 1,840 3,510 715 24 1,868 145 15,506 (15,506) - Total revenue 21,736 7,69 2 19,429 29,508 1,121 1,870 154 81,510 (15,506) 66,004 Total costs 19,615 3,113 11,909 26,651 969 1,911 340 64,508 (15,506) 49,002 Net results from commodity contracts (421) 68 - 264 - (6) (4) (99) - (99) Depreciation and amoization 778 1,252 2,597 366 150 172 28 5,343 - 5,343 Impairment losses 950 728 621 1,079 18 11 1 3,408 - 3,408 Impairment gains (43) (67) (47) (141) - (4) (1) (303) - (303) Operating prot 15 2,734 4,349 1 ,817 (16) (226) (218) 8,455 - 8,455 Capital expenditure 694 4,629 3,937 460 303 103 71 10,197 - 10,197 (1) Segment revenue includes both revenue from third paies and revenue from transactions with other segments. (2) The gures for revenue from third paies and transactions with other segments have been calculated more accurately. (3) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. The change in classication had no impact on operating prot. For more details, please see note 7 to these consolidated nancial statements. (4) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more details, please see note 7 to these consolidated nancial statements. 305Notes to the consolidated nancial statements 305 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Peormance by geographical segment Results for 2021 (1) Millions of euro Italy Iberia Latin America Europe Noh America Africa, Asia and Oceania Other, eliminations and adjustments Total Revenue and other income from third paies 44,282 20,800 16,956 2,335 1 ,479 240 1,914 88,006 Revenue and other income from transactions with other segments 1,135 252 1 13 34 1 (1,436) - Total revenue 45,417 21,052 16,957 2,348 1,513 241 478 88,006 Total costs 40,751 17,412 12,867 2,063 748 135 (1,015) 72,961 Net results from commodity contracts 1,967 543 53 38 (81) 4 (2) 2,522 Depreciation and amoization 2,107 1,754 1,177 186 356 65 129 5,774 Impairment losses 1 ,747 1,797 536 87 161 32 21 4,381 Impairment gains (22) (170) (9) (65) \- \- (2) (268) Operating prot 2,801 802 2,439 115 167 13 1,343 7,680 Capital expenditure 3,842 2,203 3,722 455 2,293 217 (2) 265 12,997 (1) Segment revenue includes both revenue from third paies and revenue from transactions with other segments. (2) Does not include €111 million regarding units classied as “held for sale”. Results for 2020 (1) (2) (3) Millions of euro Italy Iberia Latin America Europe Noh America Africa, Asia and Oceania Other, eliminations and adjustments Total Revenue and other income from third paies 31,418 17,006 13,897 2 ,074 1,333 152 124 66,004 Revenue and other income from transactions with other segments 785 164 6 11 34 1 (1,001) - Total revenue 32,203 17,170 13,903 2,085 1,367 153 (877) 66,004 Total costs 24,205 13,480 9,713 1,576 622 98 (692) 49,002 Net results from commodity contracts (174) 85 (40) - 33 - (3) (99) Depreciation and amoization 1,835 1,640 1,230 185 306 36 111 5,343 Impairment losses 1,209 268 1,225 136 536 31 3 3,408 Impairment gains (10) (160) (3) (126) (3) - (1) (303) Operating prot 4,790 2,027 1,698 314 (61) (12) (301) 8,455 Capital expenditure 2,842 1,638 2,860 411 1,816 417 213 10,197 (1) Segment revenue includes both revenue from third paies and revenue from transactions with other segments. (2) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. The change in classication had no impact on operating prot. For more details, please see note 7 to these consolidated nancial statements. (3) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more details, please see note 7 to these consolidated nancial statements. 306 Integrated Annual Repo 2021306 Financial position by business segment At December 31, 2021 Millions of euro Thermal Generation and Trading Enel Green Power Infrastructure and Networks End- user Markets Enel X Services Holding and other Total repoing segment Eliminations and adjustments Total Propey, plant and equipment 9,384 36,205 38,635 49 600 587 12 85,472 - 85,472 Intangible assets 216 5,016 21,473 4,030 788 370 143 32,036 - 32,036 Non-current and current contract assets 1 1 525 - 77 4 - 608 43 651 Trade receivables 4,814 2,601 6,731 6,533 547 882 435 22,543 (6,451) 16,092 Other 4,319 826 2,614 3,812 383 635 1,614 14,203 (6,107) 8,096 Operating assets 18,734 (1) 44,649 (2) 69,978 14,424 2,395 (3) 2,478 2,204 154,862 (12,515) 142,347 Trade payables 5,730 3,701 4,390 7, 12 9 726 982 169 22,827 (5,843) 16,984 Non-current and current contract liabilities 102 216 7,316 62 13 13 - 7,722 (75) 7,6 47 Sundry provisions 4,586 936 3,810 466 58 671 620 11,147 (89) 11,058 Other 4,125 1,901 8,104 4,575 148 1,070 2,582 22,505 (6,245) 16,260 Operating liabilities 14,543 6,754 (4) 23,620 12,232 945 (5) 2,736 3,371 64,201 (12,252) 51,949 (1) Of which €2 million regarding units classied as “held for sale”. (2) Of which €999 million regarding units classied as “held for sale”. (3) Of which €136 million regarding units classied as “held for sale”. (4) Of which €28 million regarding units classied as “held for sale”. (5) Of which €57 million regarding units classied as “held for sale”. At December 31, 2020 (1) Millions of euro Thermal Generation and Trading Enel Green Power Infrastructure and Networks End- user Markets Enel X Services Holding and other Total repoing segment Eliminations and adjustments Total Propey, plant and equipment 10,747 30,655 36,718 154 516 699 9 79,498 1 79,499 Intangible assets (1) 184 4,883 21,490 3,775 676 383 114 31,505 - 31,505 Non-current and current contract assets 4 1 340 - 42 14 - 401 79 480 Trade receivables 2,670 2,053 6,493 4,034 358 755 368 16,731 (4,679) 12,052 Other 1,433 1,095 2,674 756 297 769 1,327 8,351 (2,139) 6,212 Operating assets (1) 15,038 (2) 38,687 (3) 67,7 15 8,719 1,889 (4) 2,620 1,818 136,486 (6,738) 129,748 Trade payables 2,816 2,751 5,405 4,678 426 868 99 17,043 (4,160) 12,883 Non-current and current contract liabilities 147 152 7, 17 2 42 5 8 - 7,526 (60) 7,466 Sundry provisions 3,528 947 3,794 400 46 603 587 9,905 (108) 9,797 Other 1,133 1,434 7,856 2,245 179 1,101 2,607 16,555 (2,323) 14,232 Operating liabilities 7,624 5,284 (5) 24,227 7, 3 6 5 656 2,580 3,293 51,029 (6,651) 44,378 (1) The gures for 2020 have been adjusted to reect a more accurate allocation. (2) Of which €3 million regarding units classied as “held for sale”. (3) Of which €855 million regarding units classied as “held for sale”. (4) Of which €11 million regarding units classied as “held for sale”. (5) Of which €35 million regarding units classied as “held for sale”. 307Notes to the consolidated nancial statements 307 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Financial position by geographical segment At December 31, 2021 Millions of euro Italy Iberia Latin America Europe Noh America Africa, Asia and Oceania Other, eliminations and adjustments Total Propey, plant and equipment 27,335 23,075 18,671 3,440 10,853 1,948 150 85,472 Intangible assets 2,313 16,071 11,414 772 557 179 730 32,036 Non-current and current contract assets 94 5 517 - 18 13 4 651 Trade receivables 7,372 3,886 4,414 583 215 51 (429) 16,092 Other 4,555 2,474 1,398 217 259 140 (947) 8,096 Operating assets 41,669 (1) 45,511 36,414 5,012 11,902 2,331 (2) (492) (3) 142,347 Trade payables 9,684 2,509 4,333 481 1,208 136 (1,367) 16,984 Non-current and current contract liabilities 4,109 3,109 30 438 - - (39) 7,647 Sundry provisions 3,395 4,211 2,426 130 120 32 744 11,058 Other 5,749 3,945 4,509 328 1,482 64 183 16,260 Operating liabilities 22,937 (4) 13,774 11,298 1,377 2,810 232 (5) (479) (6) 51,949 (1) Of which €2 million regarding units classied as “held for sale”. (2) Of which €999 million regarding units classied as “held for sale”. (3) Of which €136 million regarding units classied as “held for sale”. (4) Of which €6 million regarding units classied as “held for sale”. (5) Of which €22 million regarding units classied as “held for sale”. (6) Of which €57 million regarding units classied as “held for sale”. At December 31, 2020 Millions of euro Italy Iberia Latin America Europe Noh America Africa, Asia and Oceania Other, eliminations and adjustments Total Propey, plant and equipment 26,762 23,355 16,492 3,255 8,134 1,345 156 79,499 Intangible assets 2,047 15,919 11,612 787 483 169 488 31,505 Non-current and current contract assets 105 10 297 1 16 2 49 480 Trade receivables 5,948 2,166 3,686 436 181 48 (413) 12,052 Other 2,624 1,804 1,368 178 253 55 (70) 6,212 Operating assets 37,486 (1) 43,254 33,455 (2) 4,657 (3) 9,067 1,619 (4) 210 129,748 Trade payables 6,881 2, 274 3,387 318 1,076 105 (1,158) 12,883 Non-current and current contract liabilities 4,060 3,006 17 425 - - (42) 7,466 Sundry provisions 2,468 3,910 2,542 100 128 24 625 9,797 Other 5,033 3,033 3,420 330 1,289 79 1,048 14,232 Operating liabilities 18,442 12,223 9,366 1,173 (5) 2,493 208 (6) 473 44,378 (1) Of which €5 million regarding units classied as “held for sale”. (2) Of which €2 million regarding units classied as “held for sale”. (3) Of which €46 million regarding units classied as “held for sale”. (4) Of which €816 million regarding units classied as “held for sale”. (5) Of which €2 million regarding units classied as “held for sale”. (6) Of which €33 million regarding units classied as “held for sale”. 308 Integrated Annual Repo 2021308 The following table reconciles segment assets and liabilities and the consolidated gures. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Total assets 206,940 163,453 Equity-accounted investments 704 861 Non-current nancial derivative assets 2,772 1,236 Other non-current nancial assets 5,704 5,159 Non-current tax assets included in “Other non-current assets” 2,286 1,539 Other current nancial assets 8,645 5,113 Current nancial derivative assets 22,791 3,471 Cash and cash equivalents 8,858 5,906 Deferred tax assets 11,034 8,578 Tax assets 1,694 1,294 Financial and tax assets of “Assets held for sale” 105 548 Segment assets 142,347 129,748 Total liabilities 164,598 121,096 Long-term borrowings 54,500 49,519 Non-current nancial derivative liabilities 3,339 3,606 Other non-current nancial liabilities 120 - Sho-term borrowings 13,306 6,345 Current poion of long-term borrowings 4,031 3,168 Other current nancial liabilities 625 622 Current nancial derivative liabilities 24,607 3,531 Deferred tax liabilities 9,259 7,797 Income tax liabilities 712 471 Other tax liabilities 1,274 886 Financial and tax liabilities of “Liabilities included in disposal groups held for sale” 876 773 Segment liabilities 51,949 44,378 309Notes to the consolidated nancial statements 309 Information on the consolidated income statement 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Revenue 10.a Revenue from sales and services – €84,104 million Millions of euro 2021 2020 Change Sale of electricity 46,963 34,745 12,218 35.2% Transpo of electricity 10,732 10,710 22 0.2% Fees from network operators 800 932 (132) -14.2% Transfers from institutional market operators 833 1,395 (562) -40.3% Sale of gas 4,823 2,718 2,105 7 7.4% Transpo of gas 599 611 (12) -2.0% Sale of fuel 1,791 602 1,189 - Fees for connection to electricity and gas networks 787 759 28 3.7% Construction contracts (1) 1,268 819 449 54.8% Sale of environmental ceicates 107 35 72 - Sale of value-added services 1,093 862 231 26.8% Other sales and services 855 764 91 11.9% Total IFRS 15 revenue (1) 70,651 54,952 15,699 28.6% Sale of commodities under contracts with physical selement 24,314 7, 513 16,801 - Fair value gain/(loss) on commodity sales contracts with physical selement closed during the period (2) (10,893) 1,156 (12,049) - Other revenue 32 21 11 52.4% Total revenue from sales and services (1) (2) 84,104 63,642 20,462 32.2% (1) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more details, please see note 7 to the consolidated nancial statements. (2) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. For more details, please see note 7 to these consolidated nancial statements. Revenue from the “Sale of electricity” amounted to €46,963 million, an increase of €12,218 million compared with the previous year (+35.2%). The increase mainly reects higher sales volumes and prices, mainly in Italy (€7,367 million), Brazil (€2,037 million) and Spain (€2,058 million), where the rise was also due to the recognition of an indemnity paid to Endesa (€186 million) in relation to the CO 2 emission rights assigned free of charge under the “Plan Nacional de Asignación de Derechos de Emisión” (PNA). “Transfers from institutional market operators” decreased by €562 million compared with the previous year, mainly due to a decline in compensation for extra-peninsular generation in Spain following an increase in prices. Revenue from the “Sale of gas“ in 2021 amounted to €4,823 million (€2,718 million in 2020), an increase of €2,105 million compared with the previous year. The increase is mainly at- tributable to an increase in quantities sold in Spain. Revenue from the “Sale of fuel” increased by €1,189 million, especially by Enel Global Trading due to the rise in gas prices. The increase in the “Sale of commodities under contracts with physical selement” (€16,801 million) mainly regards gas sales. This positive eect was paially oset by the deterio- ration in peormance of the measurement of contracts set- tled in 2021 (-€12,049 million), mainly involving gas contracts. The following table shows the net fair value gain or loss on contracts for the sale or purchase of commodities with physical selement measured at fair value through prot or loss within the scope of IFRS 9. 310 Integrated Annual Repo 2021310 Millions of euro 2021 2020 Change Fair value gain/(loss) on contracts for energy commodities with physical selement (within the scope of IFRS 9) closed in the period Sales contracts Sale of electricity 4,368 2,478 1,890 76.3% Fair value gain/(loss) on closed contracts (1,705) 353 (2,058) - Total electricity 2,663 2,831 (168) -5.9% Sale of gas 19,576 4,723 14,853 - Fair value gain/(loss) on closed contracts (9,335) 791 (10,126) - Total gas 10,241 5,514 4,727 85.7% Sale of environmental ceicates 370 312 58 18.6% Fair value gain/(loss) on closed contracts 147 12 135 - Total environmental ceicates 517 324 193 59.6% Total revenue 13,421 8,669 4,752 54.8% Purchase contracts Purchase of electricity 3,677 2,828 849 30.0% Fair value gain/(loss) on closed contracts (1,220) (47) (1,173) - Total electricity 2,457 2,781 (324) -11.7% Purchase of gas 19,951 4,661 15,290 - Fair value gain/(loss) on closed contracts (8,057) 684 (8,741) - Total gas 11,894 5,345 6,549 - Purchase of environmental ceicates 810 92 718 - Fair value gain/(loss) on closed contracts 145 139 6 4.3% Total environmental ceicates 955 231 724 - Total costs 15,306 8,357 6,949 83.2% Net revenue/(costs) on contracts for energy commodities with physical selement (within the scope of IFRS 9) closed in the period (1,885) 312 (2,197) - Unrealized fair value gain/(loss) on outstanding contracts for energy commodities with physical selement (IFRS 9) Sales contracts Electricity (1,606) (197) (1,409) - Gas (16,285) (668) (15,617) - Environmental ceicates (495) (67) (428) - Total (18,386) (932) (17,454) - Purchase contracts Electricity (2,169) (108) (2,061) - Gas (13,801) (869) (12,932) - Environmental ceicates (508) (68) (440) - Total (16,478) (1,045) (15,433) - Net unrealized fair value gain/(loss) on outstanding contracts for energy commodities with physical selement (IFRS 9) (1,908) 113 (2,021) - TOTAL REVENUE/(COSTS) ON CONTRACTS WITH PHYSICAL SETTLEMENT (WITHIN THE SCOPE OF IFRS 9) (3,793) 425 (4,218) - 311Notes to the consolidated nancial statements 311 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Revenue from contracts with customers (IFRS 15) breaks down into “point in time” and “over time” revenue as indi- cated in the following tables. Millions of euro 2021 Italy Iberia Latin America Europe Noh America Africa, Asia and Oceania Other, eliminations and adjustments Total Over time Point in time Over time Point in time Over time Point in time Over time Point in time Over time Point in time Over time Point in time Over time Point in time Over time Point in time Total IFRS 15 revenue 29,187 1,178 19,707 402 16,525 245 1,598 654 805 17 194 26 - 113 68,016 2,635 2020 Italy Iberia Latin America Europe Noh America Africa, Asia and Oceania Other, eliminations and adjustments Total Over time Point in time Over time Point in time Over time (1) Point in time Over time Point in time Over time Point in time Over time Point in time Over time Point in time Over time Point in time Total IFRS 15 revenue 21,107 441 16,355 460 13,520 200 1,418 580 586 51 67 79 16 72 53,069 1,883 (1) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more details, please see note 7 to the consolidated nancial statements. 312 Integrated Annual Repo 2021312 With regard to the release to prot or loss by time class of “peormance obligations”, please see note 27 “Current/ Non-current contract assets/(liabilities)”. The table below gives a breakdown of revenue from sales and services by geographical segment. Millions of euro 2021 2020 (1) Italy 33,304 24,904 Europe Iberia 18,896 16,169 France 970 503 Switzerland 2,918 99 Germany 1,085 1,860 Austria 245 66 Slovenia 195 2 Romania 1,534 1,322 Greece 121 110 Bulgaria - 9 Belgium 522 18 Czech Republic 435 33 Hungary 12 165 Russia 552 533 Netherlands 96 2,743 United Kingdom 3,736 399 Other European countries 1,160 73 Americas United States 601 502 Canada 33 25 Mexico (2) 202 152 Brazil (3) 9,381 6,753 Chile 3,151 2,811 Peru 1,111 1,118 Colombia 2,188 2,022 Argentina 887 816 Panama 150 136 Costa Rica 14 22 Guatemala 67 44 Other Africa 114 84 Asia 371 129 Oceania 53 20 Total 84,104 63,642 (1) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. For more details, please see note 7 to these consolidated nancial statements. (2) The gures for 2020 have been reallocated more accurately among Mexico, Costa Rica and Guatemala. (3) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more details, please see note 7 to the consolidated nancial statements. 313Notes to the consolidated nancial statements 313 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Peormance obligations The following table provides information about the Group’s peormance obligations arising from contracts with cus- tomers with reference to the main revenue streams only, with a summary of the specic judgments made and the related revenue recognition policies. For information on the use of estimates with revenue from contracts with customers, please see note 2.1 “Use of esti- mates and management judgment”. Type of product/ service Nature and timing of satisfaction of peormance obligation Accounting policies Sale/transpo of electricity/gas to end users An electricity/gas supply agreement signed with an end user includes a single peormance obligation (sale and transpo of the commodity) because the Group has determined that the contract does not provide distinct goods/services and the promise is satised by transferring control over the commodity to the customer when it is delivered at the point of delivery. In order to determine the nature of the promise included in such contracts, the Group carefully analyzes the facts and circumstances applicable to each contract and commodity. However, the Group considers that the peormance obligation provided for in a repetitive service contract, such as a supply or transpo contract for the provision of electricity/gas to end users, is typically satised over time (because the customer simultaneously receives and consumes the benets of the commodity as it is delivered) as pa of a series of distinct goods/services (i.e., each unit of commodity) that are substantially the same and have the same paern of transfer to the customer. In these cases, the Group applies an output method to recognize revenue in the amount to which it has a right to invoice the customer if that amount corresponds directly with the value to the customer of the peormance completed to date. Revenue from the sale and transpo of electricity/gas to end users is recognized when these commodities are delivered to the customer and is based on the quantities provided during the period, even if these have not yet been invoiced. It is determined using estimates as well as periodic meter readings. Where applicable, this revenue is based on the rates and related restrictions established by law or by the Regulatory Authority for Energy, Networks and the Environment (ARERA) and analogous foreign authorities during the applicable period. Network connection services The network connection fees received from customers for connecting them to the electricity/gas distribution networks require a specic Group assessment to take into consideration all terms and conditions of the connection arrangements. This assessment is intended to determine whether the contract includes other distinct goods or services, such as for example the right to obtain ongoing access to the infrastructure in order to receive the commodity or, when the connection fee is a “non-refundable up-front fee” paid at or near contract inception, a material right that gives rise to a peormance obligation. In paicular, in some countries in which the Group operates, it has determined that the nature of the consideration received represents a “non-refundable up-front fee” whose payment provides a material right to the customer. In order to determine if the period over which this material right should be recognized extends beyond the initial contractual period, the Group takes into consideration the applicable local legal and regulatory framework applicable to the contract and aecting the paies. In such cases, if there is an implied assignment of the material right and an obligation from the initial customer to the new customer, the Group recognizes the connection fee over a period beyond the relationship with the initial customer, considering the concession terms as the period during which the initial customer and any future customer can benet from the ongoing access without paying an additional connection fee. As a consequence, the fee is recognized over the period for which the payment creates an obligation for the Group to make the lower prices available to future customers (i.e., the period during which the customer is expected to benet from the ongoing access service without having to pay an “up-front fee” upon renewal). Revenue from monetary and in-kind fees for connection to the electricity and gas distribution network is recognized on the basis of the satisfaction of the peormance obligations included in the contract. The identication of distinct goods or services requires a careful analysis of the terms and conditions of the connection arrangements, which could vary from country to country based on the local context, regulations and law. In order to nalize this assessment, the Group considers not only the characteristics of the goods/services themselves (i.e., the good or service is capable of being distinct) but also the implied promises for which the customer has a valid expectation as it views those promises as pa of the negotiated exchange, that is goods/services that the customer expects to receive and has paid for (i.e., the promise to transfer the good or service to the customer is separately identiable from other promises in the contract). Fuhermore, the Group acts as an agent in some contracts for electricity/gas network connection services and other related activities, depending on local legal and regulatory framework. In such cases, it recognizes revenue on a net basis, corresponding to any fee or commission to which it expects to be entitled. Construction contracts The construction contracts typically include a peormance obligation satised over time. For these contracts, the Group generally considers it appropriate to use an input method for measuring progress, except when a specic contract analysis suggests the use of an alternative method that beer depicts the Group’s peormance obligation fullled at the repoing date. For construction contracts that include a peormance obligation satised over time, the Group recognizes revenue over time by measuring progress toward the complete satisfaction of that peormance obligation. The cost-to-cost method is generally considered the best method to depict the Group’s peormance obligation fullled at the repoing date. The amount due from customers under a construction contract is presented as a contract asset; the amount due to customers under a construction contract is presented as a contract liability. 314 Integrated Annual Repo 2021314 10.b Other income – €3,902 million Millions of euro 2021 2020 Change Grants related to income 33 12 21 - Grants for environmental ceicates 291 342 (51) -14.9% Grants related to assets (electricity and gas business) 26 24 2 8.3% Sundry reimbursements 305 371 (66) -17.8% Gains on the disposal of subsidiaries, associates, joint ventures, joint operations and non-current assets held for sale 1,781 15 1,766 - Gains on the disposal of propey, plant and equipment and intangible assets 66 58 8 13.8% Service continuity bonuses 48 40 8 20.0% Other income 1,352 1,500 (148) -9.9% Total 3,902 2,362 1,540 65.2% “Sundry reimbursements” amounted to €305 million, a decrease of €66 million compared with the previous year, with most of the reduction coming in Italy due to a de- crease in penalties and reimbursements for damages re- corded at e-distribuzione and Enel Energia. Gains on the disposal of entities amounted to €1,781 mil- lion in 2021, an increase of €1,766 million, mainly reecting the recognition in 2021 of the capital gain on the sale of Enel SpA’s interest in Open Fiber (€1,763 million). “Other income” decreased by €148 million, mainly due to the decline registered by e-distribuzione in other income from the electricity business (€288 million), primarily re- ecting the reimbursement of system charges and grid fees. This negative eect was paially oset by the increase registered at Enel Green Power Noh America in income from tax panerships (€44 million) and an increase in in- come from the eco-bonus subsidy relating to energy and seismic upgrading posted by Enel X Italia (€84 million). The following tables show a breakdown of total revenue by business segment based on the approach used by man- agement to monitor the Group’s peormance during the two years being compared. Millions of euro 2021 Thermal Generation and Trading Enel Green Power Infrastructure and Networks End- user Markets Enel X Services Holding and other Total repoing segment Eliminations and adjustments Total Total IFRS 15 revenue 17, 2 13 8,843 20,078 38,238 1,394 1,972 138 87,876 (17,225) 70,651 Sale of commodities under contracts with physical selement 26,691 - - 14 - - - 26,705 (2,391) 24,314 Fair value gain/(loss) on commodity sales contracts with physical selement closed during the period (10,895) - - 1 - - - (10,894) 1 (10,893) Other revenue 5 6 15 - 3 14 17 60 (28) 32 Total revenue from sales and services 33,014 8,849 20,093 38,253 1,397 1,986 155 103,747 (19,643) 84,104 Other income 141 677 563 455 144 11 1,779 3,770 132 3,902 TOTAL REVENUE 33,155 9,526 20,656 38,708 1,541 1,997 1,934 107,517 (19,511) 88,006 315Notes to the consolidated nancial statements 315 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Millions of euro 2020 Thermal Generation and Trading Enel Green Power Infrastructure and Networks End- user Markets Enel X Services Holding and other Total repoing segment Eliminations and adjustments Total Total IFRS 15 revenue (1) 9,812 7, 143 18,462 29,143 1,022 1,835 136 67, 5 5 3 (12,601) 54,952 Sale of commodities under contracts with physical selement 10,192 - - 15 - - - 10,207 (2,694) 7,513 Fair value gain/(loss) on commodity sales contracts with physical selement closed during the period 1,164 - - (7) - - - 1,157 (1) 1,156 Other revenue 6 7 6 - 4 6 3 32 (11) 21 Total revenue from sales and services 21,174 7, 15 0 18,468 29,151 1,026 1,841 139 78,949 (15,307) 63,642 Other income 562 542 961 357 95 29 15 2,561 (199) 2,362 TOTAL REVENUE (1) (2) 21,736 7,69 2 19,429 29,508 1,121 1,870 154 81,510 (15,506) 66,004 (1) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more details, please see note 7 to these consolidated nancial statements. (2) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. The change in classication had no impact on operating prot. For more details, please see note 7 to these consolidated nancial statements. Costs 11.a Electricity, gas and fuel – €49,093 million Millions of euro 2021 2020 Change Electricity 29,579 16,158 13,421 83.1% Gas 27,046 7, 9 52 19,094 - Fair value gain/(loss) on contracts for purchase of electricity and gas with physical selement closed during the period (1) (9,277) 637 (9,914) - Nuclear fuel 107 117 (10) -8.5% Other fuels 1,638 1,162 476 41.0% Total (1) 49,093 26,026 23,067 88.6% (1) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. The change in classication had no impact on operating prot. For more details, please see note 7 to these consolidated nancial statements. Costs for the purchase of “Electricity” mainly increased due to a rise in volumes purchased in an environment of in- creasing average prices compared with the previous year, mainly aributable to Italy (€8,098 million), Spain (€2,564 million) and Latin America (€2,428 million). The increase in costs for the purchase of “Gas” reects the increase in quantities handled, mainly due to a rise in gen- eration, as well as the increase in the cost of purchasing gas from third paies. The fair value loss on closed contracts with physical sele- ment changed from a fair value gain in the previous year, with a dierence of €9,914 million, of which €8,741 million aributable to gas and €1,173 million to electricity. The increase in “Other fuels” is mainly aributable to the increase in the volume of generation and the rise in com- modity prices. 316 Integrated Annual Repo 2021316 11.b Services and other materials – €19,609 million Millions of euro 2021 2020 Change Wheeling 9,023 9,619 (596) -6.2% Maintenance and repairs 1,410 1,127 283 25.1% Telephone and postal costs 180 172 8 4.7% Communication services 127 116 11 9.5% IT services 967 823 144 17.5 % Leases and rentals 126 396 (270) -68.2% Other services 4,246 3,648 598 16.4% Purchase of environmental ceicates 1,279 673 606 90.0% Fair value gain on contracts for purchase of environmental ceicates with physical selement closed during the period (1) 145 139 6 4.3% Other materials 2,106 1,653 453 27.4% Total (1) 19,609 18,366 1,243 6.8% (1) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. The change in classication had no impact on operating prot. For more details, please see note 7 to these consolidated nancial statements. Costs for services and other materials amounted to €19,609 million in 2021, an increase of €1,243 million com- pared with 2020. This change essentially reected: • a decline in costs for wheeling, mainly in Spain, aribut- able to a decline in the average price applied; • future costs connected with the conversion of plants in Italy for the purposes of the energy transition. More specically, these costs regard provisions associated with the acceleration of the energy-transition process, which aected almost all of Enel Produzione’s plants with the NextGen project (€426 million). In application of the Group strategy to accelerate the elimination of the use of fossil fuels from the generation process and increasing our green capacity, we have commied our- selves to launching a radical process to decommission and secure Italian generation facilities that use tradi- tional energy sources that are no longer in line with Eu- ropean standards, with a view to conveing them into renewable energy facilities or installing storage systems and other circular economy initiatives; • an increase in costs for systems assistance, computer maintenance and IT development, mainly in Italy; • a decline in costs for leases and rentals, mainly reect- ing the closure of a dispute in Spain, which permied the reversal of provisions previously recognized in the amount of about €300 million; • an increase in costs for the purchase of environmen- tal ceicates, aributable to a signicant increase in the prices of CO 2 , the increase in production at thermal generation plants and an expansion of trading in emis- sion allowances; • an increase of €598 million in “Other services”, essen- tially reecting the increase in costs for services con- nected with the electricity and gas business (€154 mil- lion), those related to the value-added services busi- ness (€150 million) and expenses for professional and technical services (€147 million). 11.c Personnel expenses – €5,281 million Millions of euro 2021 2020 Change Wages and salaries 3,238 3,133 105 3.4% Social security contributions 853 824 29 3.5% Italian post-employment benets 104 103 1 1.0% Post-employment and other long-term benets 85 (485) 570 - Early retirement incentives 10 152 (142) -93.4% Early retirement incentives connected with restructuring agreements 806 882 (76) -8.6% Other costs 185 184 1 0.5% Total 5,281 4,793 488 10.2% 317Notes to the consolidated nancial statements 317 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Personnel expenses amounted to €5,281 million in 2021, an increase of €488 million. The Group’s workforce decreased by 438 employees, mainly reecting the negative balance between new hires and terminations (-461 employees) due to early-retirement incentive policies and changes in the consolidation scope (+23 employees), essentially aributable to: • the sale of Enel Green Power Bulgaria; • the acquisition of CityPoste Payment SpA in Italy. The increase in “Wages and salaries” substantially reects the cost incurred as a result of new hiring at companies in Italy, the United States and Argentina. The €570 million increase in “Post-employment and oth- er long-term benets” is mainly aributable to the 2020 modication in Spain of the electricity discount benet for employees following the renewal of the 5th Endesa Collec- tive Bargaining Agreement, which led to the release of the associated provision in the amount of €515 million. Expenses for early retirement incentives in 2021 amounted to €816 million, down €218 million, with the change largely accounted for by Spain (€732 million) due to the eect of the accrual in 2020 to the provision for the Plan de Salida prompted by elimination of the extinguishment option of the individual agreement concerning the suspension of employment relationships for ceain individual contracts as a result of the signing of the new collective bargaining agreement mentioned earlier, only paly oset by an in- crease in costs for early retirement incentives in Italy (€480 million) associated with corporate restructuring programs. The table below shows the average number of employees by category, along with a comparison with the previous year, and the headcount as of December 31, 2021. No. Average (1) Headcount (1) 2021 2020 at Dec. 31, 2021 Senior managers 1,386 1,397 1,377 Middle managers 11,797 11,258 12,242 Oce sta 35,449 36,027 35,556 Blue collar 17,344 18,396 17, 10 4 Total 65,976 67, 07 8 66,279 (1) For companies consolidated on a propoionate basis, the headcount corresponds to Enel’s percentage share of the total. 11.d Net impairment losses/(reversals) on trade receivables and other receivables – €1,196 million Millions of euro 2021 2020 Change Impairment losses on trade receivables 1,361 1,505 (144) -9.6% Impairment losses on other receivables 94 46 48 - Total impairment losses on trade receivables and other receivables 1,455 1,551 (96) -6.2% Impairment gains on trade receivables (258) (194) (64) -33.0% Impairment gains on other receivables (1) (72) 71 98.6% Total impairment gains on trade receivables and other receivables (259) (266) 7 2.6% NET IMPAIRMENT LOSSES/(REVERSALS) ON TRADE RECEIVABLES AND OTHER RECEIVABLES 1,196 1,285 (89) -6.9% The item, equal to €1,196 million, includes impairment losses and gains on trade receivables and other receiva- bles. The net impairment losses on trade receivables de- creased by a total of €208 million, essentially reecting the eect of the recognition in 2020 of greater impairment losses on trade receivables in respect of traders. 318 Integrated Annual Repo 2021318 11.e Depreciation, amoization and other impairment losses – €8,691 million Millions of euro 2021 2020 Change Propey, plant and equipment 4,414 4,118 296 7. 2 % Investment propey 3 2 1 50.0% Intangible assets 1,357 1,223 134 11.0% Other impairment losses 2,926 1,857 1,069 57.6 % Other reversals of impairment losses (9) (37) 28 75.7% Total 8,691 7, 16 3 1,528 21.3% The increase in “Depreciation, amoization and other im- pairment losses” in 2021 essentially reected: • an increase in depreciation and amoization in Italy (€102 million) due to an acceleration of the depreciation rates for rst-generation electronic meters (1G) in order to reect the planned installation schedule for 2G me- ters provided for in the Open Meter plan; • an increase in depreciation and amoization in Spain for new plants entering service (€72 million); • impairment losses recognized in 2021 on ceain plants or CGUs in Italy (€989 million), Spain (€1,488 million), Mexico (€155 million), Chile (€32 million) and Australia (€30 million); • the impairment loss recognized on Group's headquar- ters building in Rome (€45 million); • the impairment losses recognized in Costa Rica (€126 million) on the hydroelectric plant operated under a concession arrangement by PH Chucas. These eects were paially oset by: • the eect of the impairment losses recognized in 2020 on the Bocamina II plant in Chile (€737 million); • the eect of the impairment losses recognized in 2020 on the Mexico, Argentina and Australia CGUs in the total amount of €750 million. 11.f Other operating costs – €2,095 million Millions of euro 2021 2020 Change System charges - emissions allowances 41 90 (49) -54.4% Charges for energy eciency ceicates 239 277 (38) -13.7% Charges for purchases of green ceicates 64 61 3 4.9% Losses on disposal of propey, plant and equipment and intangible assets 75 65 10 15.4% Taxes and duties 1,132 1,130 2 0.2% Other 544 579 (35) -6.0% Total 2,095 2,202 (107) -4.9% Other operating costs decreased by €107 million com- pared with the previous year, mainly due to a reduction in environmental compliance charges and association dues in Italy. 11.g Capitalized costs – €(3,117) million Millions of euro 2021 2020 Change Personnel (1,022) (836) (186) -22.2% Materials (1,120) (846) (274) -32.4% Other (975) (703) (272) -38.7% Total (3,117) (2,385) (732) -30.7% Capitalized costs increased by €732 million, mainly due to greater investment in distribution plants in Latin America and distribution grids associated with the development of the Grid Blue Sky project and to the installation of sec- ond-generation meters in Italy in 2021. 319Notes to the consolidated nancial statements 319 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 12\. Net results from commodity contracts – €2,522 million Millions of euro 2021 2020 Change Commodity derivatives \- income from seled derivatives 11,456 4,346 7, 1 10 - \- expense from seled derivatives 9,331 4,912 4,419 90.0% Net income/(expense) from seled commodity derivatives 2,125 (566) 2,691 - \- income from outstanding derivatives 4,572 634 3,938 - \- expense from outstanding derivatives 2,267 280 1,987 - Net income from outstanding commodity derivatives 2,305 354 1,951 - Outstanding contracts for energy commodities with physical selement \- results from outstanding contracts to sell energy commodities with physical selement (1) (18,386) (932) (17,454) - \- results from outstanding contracts to purchase energy commodities with physical selement (1) 16,478 1,045 15,433 - Net results from outstanding contracts for energy commodities with physical selement (1) (1,908) 113 (2,021) - NET RESULTS FROM COMMODITY CONTRACTS (1) 2,522 (99) 2,621 - (1) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. The change in classication had no impact on operating prot. For more details, please see note 7 to these consolidated nancial statements. Net results from commodity came to €2,522 million in 2021 (net expense of €99 million in 2020), and breaks down as follows: • net income from commodity derivatives totaling €4,430 million (net expense of €212 million in 2020), including derivatives designated as cash ow hedges and de- rivatives measured at fair value through prot or loss. More specically, net income from derivatives seled in the period amounted to €2,125 million (net expense of €566 million in 2020) and the net fair gain on outstand- ing derivatives came to €2,305 million (net fair value gain of €354 million in 2020); • net fair value loss on energy commodity contracts with physical selement still outstanding at the repoing date amounting to €1,908 million (net fair value gain of €113 million in 2020). For more information on derivatives, please see note 49 “Derivatives and hedge accounting”. 13\. Net nancial income/(expense) from derivatives – €1,461 million Millions of euro 2021 2020 Change Income: \- income from derivatives designated as hedging derivatives 2,097 639 1,458 - \- income from derivatives at fair value through prot or loss 621 676 (55) -8.1% Total income 2,718 1,315 1,403 - Expense: \- expense from derivatives designated as hedging derivatives (599) (1,945) 1,346 69.2% \- expense from derivatives at fair value through prot or loss (658) (311) (347) - Total expense (1,257) (2,256) 999 44.3% NET FINANCIAL INCOME/(EXPENSE) FROM DERIVATIVES 1,461 (941) 2,402 - In 2021, net income from derivatives on interest and ex- change rates amounted to €1,461 million (net expense of €941 million in 2020) and breaks down as follows: • net income from derivatives designated as hedging de- rivatives in the amount of €1,498 million (net expense of €1,306 million in 2020), mainly in regard of cash ow hedges; • net expense from derivatives at fair value through prot or loss in the amount of €37 million (net income of €365 million in 2020). The net balances recognized in 2021 and 2020 on both hedging derivatives and those at fair value through prot or loss mainly referred to the hedging of currency risk. For more information on derivatives, see note 49 “Derivatives and hedge accounting”. 320 Integrated Annual Repo 2021320 14. Net other nancial income/(expense) – €(4,212) million Other nancial income Millions of euro 2021 2020 Change Interest income from nancial assets (current and non-current): \- interest income at eective rate on non-current securities and nancial assets 116 110 6 5.5% \- interest income at eective rate on current nancial investments 89 69 20 29.0% Total interest income at the eective interest rate 205 179 26 14.5% Exchange gains 1,219 2,182 (963) -44.1% Income on equity investments 6 23 (17) -73.9% Income from hyperination 824 529 295 55.8% Other income (1) 452 292 160 54.8% TOTAL OTHER FINANCIAL INCOME 2,706 3,205 (499) -15.6% (1) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more details, please see note 7 to these consolidated nancial statements. Other nancial income amounted to €2,706 million, a de- crease of €499 million compared with the previous year. The decline mainly reects a decrease in income from ex- change gains of €963 million, essentially aributable to the impact of exchange rate developments on net nan- cial debt denominated in currencies other than the euro. This eect was paially oset by the following factors: • an increase in income from hyperination (€295 mil- lion), recognized by the Argentine companies as a re- sult of the application of IAS 29 on nancial repoing in hyperinationary economies; for more information, see note 4 of these consolidated nancial statements; • the recognition of nancial income of €73 million in Spain, largely connected with interest on arrears ac- crued in respect of Endesa’s right to be compensated for the reduction in remuneration received in the past with regard to the assignment of CO 2 emission rights under the “Plan Nacional de Asignación de Derechos de Emisión” (PNA); • an increase in income deriving from the impairment loss on hedged liabilities in fair value hedge relation- ships (€57 million); • an increase in interest income at the eective rate (€26 million), mainly relating to sho-term nancial in- vestments. Other nancial expense Millions of euro 2021 2020 Change Interest expense on nancial debt (current and non-current): \- interest on bank borrowings 346 291 55 18.9% \- interest expense on bonds 1,881 1,887 (6) -0.3% \- interest expense on other borrowings 137 149 (12) -8.1% Total interest expense 2,364 2,327 37 1.6% Financial expense on debt management transactions 702 - 702 - Exchange losses 2,559 1,245 1,314 - Adjustment to post-employment and other employee benets 107 109 (2) -1.8% Adjustment to other provisions 129 150 (21) -14.0% Expense from equity investments - 1 (1) - Expense from hyperination 804 472 332 70.3% Other expenses 253 653 (400) -61.3% TOTAL OTHER FINANCIAL EXPENSE 6,918 4,957 1,961 39.6% 321Notes to the consolidated nancial statements 321 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements “Other nancial expense” amounted to €6,918 million, an overall increase of €1,961 million compared with 2020, es- sentially reecting the following factors: • the recognition of expense on debt management trans- actions, regarding: – Enel Finance International in the amount of €634 million for the recognition of nancial expense on the cash consideration paid in connection with voluntary non-binding tender oer (“tender oer”) for the re- purchase, and subsequent cancellation, of a number of series of outstanding conventional bonds; – Enel SpA in the amount of €68 million for the recog- nition of nancial expense connected with the con- sent solicitation for non-conveible subordinated hybrid bonds conveed into perpetual hybrid bonds. This expense represents the dierence between the fair value of the hybrid instrument and the carrying amount of the bond. With regard to the tender oer and consent solicita- tion, the amount of the amoized cost adjustment for the bonds involved in these transactions was released to prot or loss, which produced an increase in interest expense compared with 2020. However, the aforemen- tioned debt management transactions, together with the new sustainability-linked bond issues, have reduced the Group’s borrowing costs, providing an impoant tool for protection against potential rate increases; • an increase in exchange losses in the amount of €1,314 million, primarily aributable to the impact of exchange rate developments on net nancial debt denominated in currencies other than the euro; • an increase in expense from hyperination of €332 mil- lion, recognized by the Argentine companies as a re- sult of the application of IAS 29 on nancial repoing in hyperinationary economies; for more information, see note 4 of these consolidated nancial statements. These eects were substantially oset by the reduction in nancial expense associated with the impairment loss on the nancial asset connected with the sale of Slovak Power Holding (€472 million). 15\. Share of prot/(loss) of equity-accounted investments – €571 million Millions of euro 2021 2020 Change Share of prot of associates 624 131 493 - Share of loss of associates (53) (430) 377 87.7% Total 571 (299) 870 - The share of prot/(loss) of equity-accounted investments improved by €870 million compared with the previous year. The change was essentially due to the impairment loss on the investment in Slovak Power Holding (€908 million), paly oset by the change in the share of prot/(loss) at- tributable to owners of the Parent of, mainly, the Pou- guese company Tejo Energia Produção e Distribuição de Energia Eléctrica (€14 million). 16. Income taxes – €1,643 million Millions of euro 2021 2020 Change Current taxes 2,023 1,898 125 6.6% Adjustments for income taxes relating to prior years 145 (168) 313 - Total current taxes 2,168 1,730 438 25.3% Deferred tax expense 313 180 133 73.9% Deferred tax income (838) (69) (769) - TOTAL 1,643 1,841 (198) -10.8% 322 Integrated Annual Repo 2021322 The tax rate for 2021 came to 30%, compared with 34% in 2020. The reduction essentially reects the combined eect of the following permanent dierences: • a decrease in the tax impact of extraordinary items com- pared with the previous year (€431 million), taking account of the taxation associated with the revaluation of the as- sets of Slovenské elektrárne; • the application of the preferential “paicipation exemp- tion” mechanism to the capital gain realized on the sale of the investment in Open Fiber (€401 million); • the adjustments of deferred and current taxation following the tax reforms approved by the Argentine and Colombian governments, which increased the tax rate from 25% to 35% in Argentina and from 30% to 35% in Colombia; • the adjustment of the tax credit held by Enel Iberia (€211 million); • the tax eect of the application of hyperination account- ing in Argentina (€49 million); • the non-recognition of pa of the deferred tax assets as- sociated with the impairment loss recognized on PH Chu- cas due to the unceainty about their future recoverability (€27 million); • the reversal of the tax credit of Enel Green Power SpA (€25 million) following the reorganization of the Enel Green Power Business Line in Latin America, which was complet- ed in April 2021. For more information on changes in deferred tax assets and liabilities, see note 24. The following table provides a reconciliation of the theoretical tax rate and the eective tax rate. Millions of euro 2021 2020 Pre-tax prot/(loss) 5,500 5,463 Theoretical taxes 1,320 24% 1,311 24% Change in tax eect on impairment losses, capital gains and negative goodwill (229) 202 Net eect on deferred taxation recognized with timing mismatch 70 16 Tax reforms in Argentina and Colombia 166 - Adjustment of tax credit of Enel Iberia 211 - Preferential tax treatment of Open Fiber capital gain (401) - Deferred tax assets not recognized on tax losses 75 - Sundry tax eects of hyperination accounting in Argentina 49 - Reversal of tax credit for Astrid operation 25 - IRAP 276 249 Other dierences, eect of dierent tax rates abroad compared with the theoretical rate in Italy, and other minor items 81 63 Total 1,643 1,841 323Notes to the consolidated nancial statements 323 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 17. Basic and diluted earnings/(loss) per share Both of these indicators are calculated on the basis of the average number of ordinary shares for the year, equal to 10,166,679,946, adjusted by the average number of treas- ury shares held. The number of treasury shares, with a par value of €1 each, held at December 31, 2021 was equal to 4,889,152 (3,269,152 at December 31, 2020). Millions of euro 2021 2020 Prot for the year aributable to owners of the Parent (basic) 3,189 2,610 of which from: \- continuing operations 3,189 2,610 \- discontinued operations - - Eect of preference rights on dividends (e.g. preference shares) - - Dividends on equity instruments (e.g., hybrid bonds) (71) - Other - - Prot for the year aributable to ordinary owners of the Parent (basic) 3,118 2,610 of which from: \- continuing operations 3,118 2,610 \- discontinued operations - - Number of shares (units) Number of ordinary shares issued at 1 January 10,166,679,946 10,166,679,946 Eect of treasury shares held (4,111,452) (2,067,594) Eect of share options exercised - - Other - - Weighted average number of ordinary shares outstanding (total) for basic earnings per share 10,162,568,494 10,164,612,352 Prot for the year aributable to ordinary owners of the Parent (basic) 3,118 2,610 Eect of dilution: \- interest on conveible bonds - - \- other - - Prot for the year aributable to ordinary owners of the Parent (diluted) 3,118 2,610 of which: \- continuing operations 3,118 2,610 \- discontinued operations - - Number of shares (units) Weighted average number of ordinary shares outstanding (total) for basic earnings per share 10,162,568,494 10,164,612,352 Eect of conversion of conveible notes - - Other - - Weighted average number of ordinary shares outstanding (total) for diluted earnings per share 10,162,568,494 10,164,612,352 Basic earnings per share Basic earnings per share 0.31 0.26 Basic earnings per share from continuing operations 0.31 0.26 Basic earnings/(loss) per share from discontinued operations - - Diluted earnings per share Diluted earnings per share 0.31 0.26 Diluted earnings per share from continuing operations 0.31 0.26 Diluted earnings/(loss) per share from discontinued operations - - 324 Integrated Annual Repo 2021324 Information on the statement of consolidated nancial position 18\. Propey, plant and equipment – €84,572 million The breakdown of and changes in propey, plant and equipment for 2021 is given below. Millions of euro Land Buildings Plant and machinery Industrial and commercial equipment Other assets Leased assets Leasehold improvements Assets under construction and advances Total Cost net of accumulated impairment losses 637 10,263 159,411 523 1,487 2,994 443 8,896 184,654 Accumulated depreciation - 5,456 97,8 07 380 1,155 819 319 - 105,936 Balance at Dec. 31, 2020 637 4,807 61,604 143 332 2, 175 124 8,896 78,718 Capital expenditure 3 39 1,883 22 73 1 9 8,404 10,434 Assets entering service 28 884 4,741 8 55 8 15 (5,739) - Exchange dierences (16) 113 (2) 1 (7) 35 1 103 228 Change in the consolidation scope - - 129 - (2) 8 - 147 282 Disposals (1) (3) (110) (1) (11) (19) - (15) (160) Depreciation - (190) (3,766) (22) (88) (304) (30) - (4,400) Impairment losses (8) (191) (2,425) (1) - (4) - (155) (2,784) Reversals of impairment losses - - 8 - - - - - 8 Other changes - 6 1,312 1 12 731 9 178 2,249 Reclassications from/to assets held for sale - - - - (1) (2) - - (3) Total changes 6 658 1,770 8 31 454 4 2,923 5,854 Cost net of accumulated impairment losses 643 11,115 163,443 547 1,551 3,722 482 11,819 193,322 Accumulated depreciation - 5,650 100,069 396 1,188 1,093 354 - 108,750 Balance at Dec. 31, 2021 643 5,465 63,374 151 363 2,629 128 11,819 84,572 “Plant and machinery” included assets to be relinquished free of charge with a carrying amount of €7,946 million at December 31, 2021 (€8,083 million at December 31, 2020), largely regarding power plants in Iberia and Latin America amounting to €3,672 million at December 31, 2021 (€3,808 million at December 31, 2020), and the electricity distri- bution grid in Latin America totaling €3,506 million at De- cember 31, 2021 (€3,626 million at December 31, 2020). For more information on “Leased assets”, please see note 20 below. The types of capital expenditure made during 2021 are summarized below by class of asset, comprising the var- ious categories of propey, plant and equipment and in- tangible assets, including the poion classied as held for sale. These expenditures, totaling €12,201 million at De- cember 31, 2021, increased by €2,653 million on 2020, in- creases that were paicularly concentrated in solar power plants. 325Notes to the consolidated nancial statements 325 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Millions of euro 2021 2020 Change Power plants: \- thermal 550 452 98 21.7% \- hydroelectric 402 332 70 21.1% \- geothermal 120 145 (25) -17. 2 % \- nuclear 157 137 20 14.6% \- alternative energy sources 4,947 4,007 940 23.5% Total power plants 6,176 5,073 1,103 21.7% Electricity distribution grids (1) 4,389 3,288 1,101 33.5% Enel X (e-Mobility, e-City, e-Industries, e-Home) 367 303 64 21.1% Retail customers 643 460 183 39.8% Other 626 424 202 47.6 % TOTAL (2) 12,201 9,548 2,653 2 7. 8 % (1) The gure for 2021 does not include €907 million in respect of infrastructure investments within the scope of IFRIC 12 (€649 million in 2020). (2) The gure for 2021 includes €111 million regarding units classied as “held for sale”. The Enel Group, in line with the Paris Agreement on CO 2 emissions reductions and guided by energy eciency and energy-transition objectives, has invested above all in generation plants that exploit alternative energy sources. Capital expenditure on generation plants mainly regards solar plants and wind farms in the United States, Colom- bia, Iberia, Italy, India, Chile and Russia. In order to respond to ever more variable climate devel- opments and, therefore, enhance the resilience of grids, the Group continued to invest in the Distribution Busi- ness Line (€4,389 million). The €1,101 million increase is mainly aributable to greater investments in Italy, Brazil and Iberia for the Grid Blue Sky project (a new platform operating model that envisages the redesign of systems, processes and work organization to leverage assets more eectively, including through the use of aicial intelli- gence) and for quality and remote control activities. In Italy, following the introduction of measures to revive the economy and to encourage energy upgrading and seismic resilience, Enel X has undeaken greater in- vestments in the development of the e-Home business associated with the Vivi Meglio initiative, while in Spain e-Home posted an increase as a result of greater sales volumes compared with 2020. In Noh America and Ko- rea, its investments in storage increased. Exchange gains amounted to €228 million. The “Change in the consolidation scope” in 2021 mainly refers to the consolidation of the Australian renewables companies, which had previously been equity-account- ed, following changes in governance arrangements with- out the purchase of additional interests, as well as the acquisition of 30 renewable energy companies by Enel Green Power España. “Impairment losses” amounted to €2,784 million and are mainly aributable to the energy-transition process ini- tiated by the Group, which in 2021 led to the recognition of impairment losses on the Italian thermal generation plants of Torrevaldaliga Nord, Fusina, La Spezia and Brin- disi, the Spanish generation plants of Baleares, Canarias, Ceuta and Melilla and the Bocamina II plant in Chile. This item was also aected by the impairment loss on as- sets in Australia and Mexico. “Reclassications from/to assets held for sale” refer mainly to the propey and other assets of the Italian companies Enel X Paytipper SpA, Paytipper Network Srl and CityPoste Payment SpA. “Other changes” include the provision for plant retirement and site restoration costs in the amount of €861 million, mainly in Spain and Italy, new leases of €723 million, im- pairment losses on the propey, plant and equipment of the Argentine companies operating in a hyperination- ary economy in the amount of €576 million and the eect of capitalizing interest on loans specically dedicated to capital expenditure on propey, plant and equipment of €182 million (€154 million in 2020). The following table re- pos capitalized nancial expense on propey, plant and equipment and intangible assets, including the poion classied as held for sale, and that on other non-current assets. 326 Integrated Annual Repo 2021326 Millions of euro 2021 Rate % 2020 Rate % Change Enel Green Power - - - - - Enel Green Power Brazil - 12 2.4% (12) - Enel Green Power Noh America 17 0.2% 10 0.2% 7 70.0% Enel Green Power México 10 4.3% 23 4.1% (13) -56.5% Enel Green Power South Africa 61 6.3% 47 6.3% 14 29.8% Enel Américas Group 23 3.7% 7 5.8% 16 - Enel Chile Group 80 7.0 % 21 7. 2% 59 - Endesa Group (1) 4 1.5% 3 1.7% 1 33.3% Enel Russia Group 18 8.5% 10 7. 2 % 8 80.0% EGP India Group 8 8.3% 1 7.5 % 7 - EGP Australia Group 1 0.2% 1 3.4% - - Enel Green Power Colombia - 2 1.3% (2) - Enel Produzione 2 2.1% 4 4.3% (2) -50.0% Nuove Energie 1 0.5% 1 0.5% - - Enel Green Power Italia 5 3.3% 1 3.3% 4 - Enel Green Power Chile - 4 4.6% (4) - Enel Finance International 12 1.8% 15 1.8% (3) -20.0% Total (2) 242 162 80 49.4% (1) The amount for the EGP Spain Group is included in that for the Endesa Group. (2) The total for 2021 also includes -€5 million in capitalized nancial expense in respect of intangible assets (€7 million in 2020), €4 million in other non-current assets (€1 million in 2020) and €61 million peaining to assets held for sale. At December 31, 2021, contractual commitments to pur- chase propey, plant and equipment amounted to €1,437 million. 327Notes to the consolidated nancial statements 327 20. Leases The table below shows changes in right-of-use assets in 2021. Millions of euro Leased land Leased buildings Leased plant Other leased assets Total Total at Dec. 31, 2020 707 551 479 438 2 ,175 Increases 442 86 1 203 732 Exchange dierences 37 1 (2) (1) 35 Depreciation (38) (114) (34) (118) (304) Other changes (1) (7) (3) 2 (9) Total at Dec. 31, 2021 1,147 517 441 524 2,629 Lease liabilities and changes during the year are shown in the table below. 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 19. Infrastructure within the scope of “IFRIC 12 - Service concession arrangements” Service concession arrangements, which are recognized in accordance with IFRIC 12, regard ceain infrastructure serving concessions for electricity distribution in Brazil, Costa Rica and Colombia. The following table summarizes the salient details of those concessions. Millions of euro Grantor Activity Country Concession period Concession period remaining Renewal option Amount recognized among contract assets at Dec. 31, 2021 Amount recognized among nancial assets at Dec. 31, 2021 Amount recognized among intangible assets at Dec. 31, 2021 Enel Distribuição Rio de Janeiro Brazilian government Electricity distribution Brazil 1997-2026 5 years Yes 112 838 404 Enel Distribuição Ceará Brazilian government Electricity distribution Brazil 1998-2028 7 years Yes 63 620 395 Enel Green Power Mourão Brazilian government Electricity generation Brazil 2016-2046 25 years No - 5 - Enel Green Power Paranapanema Brazilian government Electricity generation Brazil 2016-2046 25 years No - 23 - Enel Distribuição Goiás Brazilian government Electricity distribution Brazil 2015-2045 24 years No 252 69 643 Enel Green Power Volta Grande Brazilian government Electricity generation Brazil 2017-2047 26 years No - 243 - Enel Distribuição São Paulo Brazilian government Electricity distribution Brazil 1998-2028 7 years No 91 1,001 609 PH Chucas Costa Rican Electricity Institute Hydroelectric plant Costa Rica 2012-2031 10 years No - 101 47 USME ZE SAS Empresa de Transpoe del Tercer Milenio \- Transmilenio SA e-Mobility Colombia 2021-2035 16 years No - 6 - Fontibon ZE SAS Empresa de Transpoe del Tercer Milenio \- Transmilenio SA e-Mobility Colombia 2021-2035 16 years No - 47 - Total 518 2,953 2,098 The assets classied under nancial assets are measured at fair value at the end of the concessions. For more infor- mation, see note 50 “Assets and liabilities measured at fair value”. 328 Integrated Annual Repo 2021328 Millions of euro Total at Dec. 31, 2020 2,068 Increases 526 Payments (165) Other changes 118 Total at Dec. 31, 2021 2,547 of which medium to long term 2,288 of which sho term 259 Note that in 2021, despite the eects of the pandemic, no changes or renegotiations were made to leases. Millions of euro 2021 Depreciation of right-of-use assets 304 Interest expense on lease liabilities 72 Expense relating to sho-term leases (included in costs for services and other materials) 46 Expense relating to leases of low-value assets (included in costs for services and other materials) - Variable lease payments (included in costs for services and other materials) 22 Total 444 21. Investment propey – €91 million Millions of euro 2021 Cost net of accumulated impairment losses 159 Accumulated depreciation 56 Balance at Dec. 31, 2020 103 Exchange dierences (1) Depreciation (3) Impairment losses (4) Other changes (4) Total changes (12) Cost net of accumulated impairment losses 129 Accumulated depreciation 38 Balance at Dec. 31, 2021 91 Investment propey at December 31, 2021 amounted to €91 million, a decrease of €12 million on the previous year. The Group’s investment propey consists of propeies in Italy, Spain, Brazil and Chile, which are free of restrictions on their sale or the remiance of income and proceeds of disposal. In addition, the Group has no contractual obliga- tions to purchase, construct or develop investment prop- ey or for repairs, maintenance or enhancements. The change in 2021 was mainly due to impairment losses recognized on a number of assets in Italy and Spain. For more information on the valuation of investment prop- ey, see notes 50 “Assets and liabilities measured at fair value”, and 50.2 “Assets not measured at fair value in the statement of nancial position”. 329Notes to the consolidated nancial statements 329 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 22. Intangible assets – €18,070 million A breakdown of and changes in intangible assets for 2021 are shown below. Millions of euro Development expenditure Industrial patents & intellectual propey rights Concessions, licenses, trademarks and similar rights Service concession arrangements Other Leasehold improvements Assets under development and advances Contract costs Total Cost net of accumulated impairment losses 44 2,985 12,988 5,452 4,821 10 1,337 1,581 29,218 Accumulated amoization 23 2,418 1,568 3,344 3,326 4 - 867 11,550 Balance at Dec. 31, 2020 21 567 11,420 2,108 1,495 6 1,337 714 17,668 Capital expenditure 4 91 92 - 117 - 874 478 1,656 Assets entering service (1) 335 10 - 202 - (547) 1 - Exchange dierences (1) (9) (238) 23 12 - (6) 1 (218) Change in the consolidation scope - - 1 - 27 - 85 - 113 Disposals - - (4) (8) 1 - (1) - (12) Amoization (2) (289) (162) (305) (369) - - (248) (1,375) Impairment losses (1) (1) - (126) (10) - - - (138) Reversals of impairment losses - 1 - - - - - - 1 Other changes 1 49 2 406 (7) (6) 18 1 464 Reclassications from/to assets held for sale (1) (3) - - (84) - - (1) (89) Total changes (1) 174 (299) (10) (111) (6) 423 232 402 Cost net of accumulated impairment losses 43 3,512 12,842 5,781 5,092 - 1,760 2,063 31,093 Accumulated amoization 23 2,771 1,721 3,683 3,708 - - 1,117 13,023 Balance at Dec. 31, 2021 20 741 11,121 2,098 1,384 - 1,760 946 18,070 Enel’s intellectual propey (IP) pofolio comprises a set of critical information for sustainable growth. The Open In- novability® ecosystem generates innovation through the creation and sharing of internal and external solutions that give life to ideas that require appropriate forms of le- gal protection. Intellectual propey plays a dual role: rst, it enables control over inventive solutions, technologies and knowledge generated by both the Group and the in- novation ecosystems of which Enel is a pa with the in- volvement of universities, research bodies, suppliers, pro- grammers and consultants; second, intellectual propey rights enable the safe and sustainable propagation of the technological solutions through which electrication, plat- formization and stewardship programs are implemented. At December 31, 2021, the Group had applied for 892 patents in 146 technological families. Of these, 749 have been granted and 143 are pending. The pofolio ensures protection in all the markets in which the Group is pres- ent. Enel’s pofolio also includes 15 utility models and 170 design registrations. Together with patents, utility models and designs, IP rights also include industrial secrets of both a technical and commercial nature which are constantly codied and maintained in line with the provisions of the Trade Secrets Management procedure (see below). The Group also owns 1,576 trademarks, of which 1,455 have already been registered, with 121 applications pending. The Enel Green Power and Thermal Generation Global Business Line is involved in the development of innova- tive technical solutions in solar generation that seek (i) to increase the photovoltaic output of plants by increasing charge transfer mechanisms at the micro and nanometric level in correspondence with dierent layers both in single and heterojunction cells and in tandem systems and (ii) to create an innovative system for the rapid and automatable installation of photovoltaic panels on prefabricated sup- po structures, generating signicant reductions in instal- lation times while increasing in the precision and scalability of installation and, therefore, the Group’s competitiveness at the international level. These solutions cover a total of 11 patent families currently comprising 28 national and international patent applications pending and 7 national patents granted. The patent assets of Global Infrastructure and Networks contribute signicantly to the strategy of creating plat- 330 Integrated Annual Repo 2021330 forms and exploiting network externalities in the services market, as well as to the automation of user management. The Grid Blue Sky project, whose launch was announced last year, is contributing to the creation of a new global op- erating platform for the Group’s grids. In consideration of the high intensity of IP generated, fuher analysis of the project was conducted, which is discussed in more detail later in this section. In the Enel X Global Business Line, the development of solutions with an impact on IP assets essentially regarded applications in the telemedicine business and urban livea- bility platforms. The Sma Axistance eWell app is an espe- cially impoant example of the former, a health program designed and managed by specialists from the Policlinico Gemelli Foundation and delivered through a telemedicine platform and an app, both created by Enel X and protected by copyright. Urban liveability solutions include the 15 Min- utes City Index, an urban planning indicator developed in collaboration with the University of Florence, for which Enel X is the holder of a trade secret and an Italian patent ap- plication. Using open data, the 15 Minutes City Index evalu- ates essential services (public transpo, hospitals, schools, etc.), identifying underserved areas for each municipality and individual micro-district (with respect to population density), thereby suppoing urban planning. As regards the electric mobility business, the IP pofolio comprises a diversied range of forms of protection, including patents for inventions, designs, trade secrets, utility models and copyrights with a technological content. Notable exam- ples of these include: (i) the patent family for bidirection- al high-power charging infrastructures, with applications initially deposited in the United States and subsequently initiated at the international level; (ii) the trade secrets con- nected with strategic mobility platforms; (iii) the copyright on the Juice Pass app; (iv) the community design to protect the aesthetic form of Juice Media, an innovative product that enables the simultaneous oer of electric charging and multimedia adveising services in a single structure; and (v) the Juice Pole Mini designs, which are protected in Europe, India, Chile, Norway, the United States, Canada and the United Kingdom. The Group is also using copyright and trade-secret pro- tections for the innovative IP-dense solutions it is develop- ing concerning climate models and advanced quantitative models for the analysis of energy systems in order to sup- po decarbonization and electrication in the main geo- graphical areas in which we operate, using an integrated and future-oriented vision. At an organizational and communication level, during 2021, Enel followed up on two lines of actions intended at achieving strategic, responsible and sustainable manage- ment of its intellectual propey. On the one hand, a new Intellectual Propey Management procedure was adopted at the Group level. On the other, in the wake of the survey of the Group’s IP pofolio in 2020, an intellectual propey repoing project was continued, to be incorporated within the broader scope of the Enel Group’s non-nancial re- poing. The following table repos service concession arrange- ments that do not fall within the scope of IFRIC 12 and had a balance as at December 31, 2021. Millions of euro Grantor Activity Country Concession period Concession period remaining Renewal option at Dec. 31, 2021 Initial fair value Endesa Distribución Eléctrica - Electricity distribution Spain Indenite Indenite - 5,678 5,673 Codensa Republic of Colombia Electricity distribution Colombia Indenite Indenite - 1,176 1,839 Enel Distribución Chile (formerly Chilectra) Republic of Chile Electricity distribution Chile Indenite Indenite - 1,254 1,667 Enel Distribución Perú (formerly Empresa de Distribución Eléctrica de Lima Noe) Republic of Peru Electricity distribution Peru Indenite Indenite - 525 548 E-Distribuţie Muntenia Romanian Ministry for the Economy Electricity distribution Romania 2005-2054 33 years Yes 119 191 Assets with an indenite useful life amounted to €8,633 million (€8,892 million at December 31, 2020), essentially accounted for by concessions for distribution activities in Spain (€5,678 million), Colombia (€1,176 million), Chile (€1,254 million) and Peru (€525 million), for which there was no statutory or currently predictable expiration date. 331Notes to the consolidated nancial statements 331 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements On the basis of the forecasts developed, cash ows for each CGU, with which the various concessions are asso- ciated, were sucient to recover the carrying amount. The change during the year was essentially aributable to changes in exchange rates. For more information on ser- vice concession arrangements, see note 19. The change in the consolidation scope for 2021 mainly reected the acquisition by Enel Green Power España of 100% of 30 renewables companies in Spain. Impairment losses amounted to €138 million in 2021 and mainly regarded impairment losses recognized on the PH Chucas hydro plant. For more information, see note 11.e. “Other changes” repoed the design costs connected with the acquisition of a number of Brazilian vehicle companies. 23\. Goodwill – €13,821 million Millions of euro at Dec. 31, 2020 Change in consol. scope Exchange dierences Impairment losses Oseing cost with accum. impairment losses Other changes at Dec. 31, 2021 Cost Cumulative impairment Net carrying amount Cost Cumulative impairment Net carrying amount Iberian Peninsula 11,177 (2,392) 8,785 - - - - - 11,177 (2,392) 8,785 Chile 1,205 - 1,205 2 2 - - - 1,209 - 1,209 Argentina 275 (253) 22 - - - - - 275 (253) 22 Peru 564 - 564 - 2 - - - 566 - 566 Colombia 530 - 530 - (3) - - - 527 - 527 Brazil 1,273 - 1,273 - 30 - - - 1,303 - 1,303 Central America 25 - 25 (1) 1 - - - 25 - 25 Mexico 18 (18) - - - - - - 18 (18) - Enel Green Power Noh America 70 - 70 - - - - - 70 - 70 Enel X Noh America 184 - 184 - 15 - - - 199 - 199 Enel X Asia Pacic 84 - 84 - - - - - 84 - 84 Enel X Rest of Europe (1) 46 (3) 43 - - - - - 46 (3) 43 Enel X Italy - - - - - - - - - - - Market Italy (2) 580 - 580 - - - - - 580 - 580 Enel Green Power Italy 20 - 20 - - - - 1 21 - 21 Romania 407 (13) 394 - (7) - - - 400 (13) 387 Total 16,458 (2,679) 13,779 1 40 - - 1 16,500 (2,679) 13,821 (1) Includes Tynemouth and Viva Labs. (2) Includes Enel Energia. 332 Integrated Annual Repo 2021332 Goodwill matrix at December 31, 2020 Millions of euro Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other Total Enel Green Power Italy - 20 - - - - - 20 Market Italy (1) - - - 580 - - - 580 Iberia - 1,190 5,788 1,807 - - - 8,785 Argentina - 3 19 - - - - 22 Brazil - 397 876 - - - - 1,273 Chile - 992 213 - - - - 1,205 Colombia - 307 223 - - - - 530 Peru 43 201 320 - - - - 564 Central America - 25 - - - - - 25 Romania - - 336 58 - - - 394 Enel Green Power Noh America - 70 - - - - - 70 Enel X Noh America - - - - 184 - - 184 Enel X Asia Pacic - - - - 84 - - 84 Enel X Rest of Europe (2) - - - - 43 - - 43 Total 43 3,205 7,7 7 5 2,445 311 - - 13,779 (1) Includes Enel Energia. (2) Includes Viva Labs. The increase of €42 million in goodwill was mainly arib- utable to “Exchange dierences” of €40 million, with the main changes regarding Brazil and the United States. The criteria used to identify the cash generating units (CGUs) are based on revenue separation, which is con- sidered the main criterion in view of the nature of our business, taking due account of the operational rules and regulations of the markets in which they operate and the corporate organization. For the purposes of impairment testing of goodwill, the CGUs are grouped on the basis of expected synergies, consistent with management’s strate- gic and operational vision, within the operating segments identied for segment repoing purposes. Goodwill matrix at December 31, 2021 Millions of euro Thermal Generation and Trading Enel Green Power Infrastructure and Networks End-user Markets Enel X Services Other Total Enel Green Power Italy - 21 - - - - - 21 Market Italy (1) - - - 580 - - - 580 Iberian Peninsula - 1,190 5,788 1,807 - - - 8,785 Argentina - 3 19 - - - - 22 Brazil - 423 880 - - - - 1,303 Chile - 996 213 - - - - 1,209 Colombia - 304 223 - - - - 527 Peru 44 202 320 - - - - 566 Central America - 25 - - - - - 25 Romania - - 330 57 - - - 387 Enel Green Power Noh America - 70 - - - - - 70 Enel X Noh America - - - - 199 - - 199 Enel X Asia Pacic - - - - 84 - - 84 Enel X Rest of Europe (2) - - - - 43 - - 43 Total 44 3,234 7,7 7 3 2,444 326 - - 13,821 (1) Includes Enel Energia. (2) Includes Tynemouth and Viva Labs. 333Notes to the consolidated nancial statements 333 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Note also that in 2021, the existing CGUs underwent ex- tensive analysis to assess the possible presence of signi- cant changes pursuant to IAS 36, paragraph 72. This analysis led to a modication of existing CGUs for Spain only, where in the Peninsular Territories the charac- teristics of the market as well as the planning and man- agement levels of ceain plants enabled the full imple- mentation of the strategy of integrating generation and commercial pofolios, leveraging the entire value chain. The situation diers for assets in the Non-Peninsular Terri- tories, which are subject to specic regulation by viue of the special features of their market. Under local regulations, the remuneration of the power generation companies for their operations in these terri- tories must be based on rates governed using parameters established by the regulator. Therefore, given the dierence between local regulations and those applicable on the Iberian Peninsula, where plant assets are managed on a fully commercial basis, it is clear that pursuant to IAS 36, paragraph 72, it was necessary to modify the existing CGU for Spain in 2021. More specical- ly, two separate CGUs have been identied: • one comprises mainland Iberia (Iberian Peninsula); • the other comprises the Non-Peninsular Territories (Iberia NPT), for which the related cash ows are largely independent of those generated in the peninsular area, given the regulation of the related market. Therefore, at December 31, 2021, the CGUs independently underwent impairment testing and an impairment loss of €1,488 million was recognized for plants in the Non-Pen- insular Territories. The recoverable amount of the goodwill recognized was estimated by calculating the value in use of the CGUs us- ing discounted cash ow models, which involve estimating expected future cash ows and applying an appropriate discount rate, selected on the basis of market inputs such as risk-free rates, betas and market-risk premiums. Cash ows were determined on the basis of the best in- formation available at the time of the estimate, taking ac- count of the specic risks of each CGU, and drawn: • for the explicit period, from the Business Plan approved by the Board of Directors of the Parent on November 22, 2021, containing forecasts for volumes, revenue, oper- ating costs, capital expenditure, industrial and commer- cial organization and developments in the main mac- roeconomic variables (ination, nominal interest rates and exchange rates) and commodity prices. The explicit period of cash ows considered in impairment testing was three years; • for subsequent years, from assumptions concerning long-term developments in the main variables that de- termine cash ows, the average residual useful life of assets or the duration of the concessions. More specically, the terminal value is calculated based on the specic characteristics of the businesses related to the various CGUs subject to impairment testing: • perpetuity, for the businesses of large-hydro (LH) power generation and of distribution, in which the licenses and public concessions are of a long-term nature and are easily renewable; as well as for the Enel X businesses, as they feature the development of specic know-how that is sustainable over the long term; • annuity, for CGUs that are predominantly characterized by retail business, for which the residual life is, there- fore, essentially correlated with the average duration of the customer relationships; as well as for businesses of conventional thermal power generation (Generation and Trading). This method is also used for the renewable en- ergy (Enel Green Power) businesses to take account of: (i) the value resulting from the remaining useful lives of the plants; and (ii) the residual value, in the event of plant decommissioning, associated with licensing rights, the competitiveness of the production facilities (in terms of natural resources), and network interconnectivity. The nominal growth rate (g-rate) is equal to the long-term rate of growth in electricity and/or ination (depending on the country and business involved) and in any case no higher than the average long-term growth rate of the ref- erence market. The analysis of the impact of climate change on factors relevant to the business is a complex activity that requires the construction of a scenario framework and coherent analysis of the various dimensions involved. More informa- tion is available in the section at the end of this note en- titled “Analysis of energy transition scenarios and climate change impacts used in the valuation models”. The Group conrmed its strategic direction based on the trends associated with the energy transition. The use of capital has been focused on decarbonization through the development of generation assets that use renewable sources, on the enabling infrastructures linked to the de- velopment of networks and on the implementation of plat- form models, making the most of technological and digi- tal evolution, which will foster the electrication of energy consumption, as well as the development of new services for end users. Specically, in 2021 Enel’s decarbonization roadmap was updated to capture the acceleration in the spread of renewables and the reduction in thermal gen- eration capacity envisaged in the new 2022-2024 Strate- gic Plan and in the 2030 ambitions presented at the 2021 Capital Markets Day, seing the following objectives in line with the Paris Agreement: 334 Integrated Annual Repo 2021334 Time horizon Greenhouse gas (GHG) reduction target Sho term 2024 • Direct emissions of Scope 1 greenhouse gases to 140 gCO 2eq / kWh (-36% compared with 2021) Medium term 2030 • Direct emissions of Scope 1 greenhouse gases to 82 gCO 2eq / kWh (-80% compared with 2017, consistent with the 1.5 °C path as ceied by the SBTi) • 55% reduction in indirect Scope 3 emissions associated with gas consumption by end users compared with 2017 Long term 2040 • Full decarbonization of energy mix Note also that the Group took account of the impacts of climate change in the long term. More specically: • we consider a long-term growth rate in the estimation of the terminal value that is in line with the change in electricity demand over the 2022-2050 period, based on the specic features of the businesses concerned, adopting ceain assumptions concerning the increase in temperature due to climate change and trends con- nected with the energy transition; • we assume that the Group will incur the costs provi- sioned for decommissioning of fossil fuel generation plants in line with the goal of zero direct (Scope 1) and indirect emissions from retail activities (Scope 3); • we peorm a sensitivity analysis of the estimation of the long-term growth rate, as detailed below. The value in use calculated as described above was found to be greater than the amount recognized on the state- ment of nancial position for all CGUs, with the exception indicated below. In order to verify the robustness of the value in use of the CGUs, sensitivity analyses were conducted for the main value drivers, in paicular WACC, the long-term growth rate and margins, the outcomes of which fully suppoed that value. The table below repos the composition of the main goodwill values for the companies within each CGU, along with the discount rates applied and the time horizon over which the expected cash ows have been discounted. 335Notes to the consolidated nancial statements 335 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Millions of euro Amount of goodwill Growth rate (1) Pre-tax WACC discount rate (2) Explicit period of cash ows Terminal value (3) Amount of goodwill Growth rate (1) Pre-tax WACC discount rate (2) Explicit period of cash ows Terminal value (3) at Dec. 31, 2021 at Dec. 31, 2020 Iberian Peninsula 8,785 1.64% 3.93% 3 years Perpetuity/25 years EGP/14 years G&T 8,785 1.65% 4.06% 3 years Perpetuity/24 years EGP/11 years G&T Chile 1,209 2.02% 6.58% 3 years Perpetuity/25 years EGP/6 years G&T 1,205 1.97% 6.95% 3 years Perpetuity/25 years EGP/7 years G&T Argentina 22 24.11% 46.75% 3 years Perpetuity/8 years G&T 275 11.79% 41.61% 3 years Perpetuity/1 year G&T/5 years LH Peru 566 2.31% 6.64% 3 years Perpetuity/23 years EGP/9 years G&T 564 2.30% 6.73% 3 years Perpetuity/24 years EGP/10 years G&T Colombia 527 3.11% 8.82% 3 years Perpetuity/28 years EGP/16 years G&T 530 3.04% 8.54% 3 years Perpetuity/28 years EGP/17 years G&T Brazil 1,303 3.30% 9.09% 3 years Perpetuity/26 years EGP/7 years G&T 1,273 3.25% 9.35% 3 years Perpetuity/26 years EGP/8 years G&T Central America 25 2.03% 7.85% 3 years 19 years 25 1.97% 8.15% 3 years 22 years Enel Green Power Noh America 70 2.03% 5.01% 3 years 26 years 70 1.97% 5.49% 3 years 25 years Enel X Noh America 199 2.03% 7.6 2 % 3 years Perpetuity 184 1.97% 8.25% 3 years Perpetuity Enel X Asia Pacic 84 2.03% 8.81% 3 years Perpetuity 84 2.02% 9.07% 3 years Perpetuity Enel X Rest of Europe 43 2.03% 8.24% 3 years Perpetuity 39 2.02% 8.70% 3 years Perpetuity Enel Green Power Italy 21 1.52% 4.94% 3 years Perpetuity/23 years 20 1.38% 5.44% 3 years Perpetuity/24 years Market Italy 580 1.48% 9.14% 3 years 15 years 580 1.30% 9.98% 3 years 15 years Romania 387 2.06% 7.56% 3 years Perpetuity/25 years 394 2.35% 7.98% 3 years Perpetuity/26 years CGUs with no recognized goodwill but that underwent impairment testing given the presence of the indicators provided for in IAS 36 Iberia NPT (Non- Peninsular Territories) (4) - - 3.42% 5 years 5 years n.a. n.a. n.a. n.a. n.a. Australia (5) - 0.91% 5.50% 3 years 25 years - 1.35% 4.42% 3 years 26 years Mexico (6) - 3.36% 8.77% 3 years 24 years 18 1.43% 8.83% 3 years 25 years (1) Perpetual growth rate for cash ows after the explicit forecast period. (2) Pre-tax WACC calculated using the iterative method: the discount rate that ensures that the value in use calculated with pre-tax cash ows is equal to that calculated with post-tax cash ows discounted with the post-tax WACC. (3) The terminal value has been estimated on the basis of a perpetuity or an annuity with a rising yield for the years indicated in the column (G&T = Generation & Trading, EGP = Enel Green Power, LH = Large Hydro). (4) With Iberia NPT, it became necessary to peorm the test following the deterioration in local market and regulatory conditions. (5) With regard to Australia, it became necessary to peorm the test following the deterioration in macroeconomic conditions. (6) With regard to Mexico, it became necessary to peorm the test following the deterioration in industrial and commercial peormance. At December 31, 2021, in the impairment tests peormed on the CGUs with no goodwill recognized, a post-tax im- pairment loss of €1,116 million was found for the Iberia NPT CGU, one of €113 million for the Mexico CGU and one of €21 million for the Australia CGU. 336 Integrated Annual Repo 2021336 Analysis of energy transition scenarios and climate change impacts used in the valuation models Analyzing the impact of climate change on factors relevant to our business is a complex endeavor that requires the construction of a scenario framework and consistent anal- yses along the various dimensions involved. In paicular, the transition scenarios describe the possi- ble industrial and technological congurations in specic contexts of social, economic and policy evolution, cor- responding to dierent greenhouse gas (GHG) emission trends, while the physical scenarios describe the possible future trends in variables. In 2021, Enel revised the medium- and long-term energy transition scenarios, within the overall framework ensuring their consistency with the climate scenario, and dened three alternative scenario narratives. • Paris scenario – calls for achieving the objectives of the Paris Agreement, so it is a level of climate ambition that is signicantly higher than business as usual. The greater ambition is suppoed by greater electrication of energy consumption and a growing development of renewables. • Slow Transition scenario – characterized by a slower en- ergy transition that does not achieve the objectives of the Paris Agreement. This scenario involves a slower in- crease in renewables and in the electrication process that of the Paris scenario, paicularly over the sho term (i.e., delays in implementation of the energy tran- sition). • Best Place scenario: designed to test assumptions that improve upon the Paris scenario. Here, too, the objec- tives of the Paris Agreement are achieved, but the sce- nario considers a wider range of technology options, such as a greater penetration of green hydrogen (i.e., produced using renewable energy) used more widely in hard-to-abate sectors, thereby facilitating the decar- bonization process towards net zero emissions. (25) At December 28, 2021. At Enel, we have selected the Paris scenario, which calls for achieving the Paris Agreement objectives, as the bench- mark for long-term planning, unlike last year when the benchmark was the stated-policies scenario. We did this on the belief that the world’s governments, businesses, organizations, and people will work together eectively to mitigate greenhouse gas emissions. The increased com- mitment to net zero emissions in 2021 among nations that currently account for 88% of global emissions (25) and the success of COP26 suppo the decision to select a sce- nario that achieves the Paris objectives as Enel’s long-term benchmark. As for the possibility of assuming achievement of the more challenging Paris Agreement objective, i.e., to stabilize average global temperatures to within +1.5 °C, as a benchmark for long-term planning, there remain evident unceainties that a number of countries could remain on business-as-usual trajectories, thereby slowing the decar- bonization process towards net zero emissions by 2050. Given this external environment, the Enel Group imple- ments a business model that is in line with the highest am- bition of the Paris Agreement and so is consistent with an increase in average global temperatures of 1.5 °C by 2100. Enel has set a long-term objective of reaching zero direct emissions (Scope 1) with fully renewable power generation and zero emissions connected with the retail sale of ener- gy (Scope 3). The assumptions for trends in commodities prices feed- ing the Paris scenario are consistent with the external sce- narios that achieve the objectives of the Paris Agreement. More specically, we assume sustained growth in the price of CO 2 through 2030, caused by a gradual reduction in the supply of permits as demand increases, as well as stabili- zation in the price of coal due to declining demand. As for gas, we expect pricing pressures to lessen in the coming years as we see a realignment between global supply and demand. Finally, we are forecasting a gradual stabilization in oil prices, with demand expected to peak by around 2030. 337Notes to the consolidated nancial statements 337 ~127 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements (2) (2) 2020 ~127 ~42 2 CO (1) 24.7 (2) In the following tables, the values for “Enel scenario” rep- resent the assumptions in the Group’s baseline scenario (26) Climate Action Tracker Thermometer, estimates of global heating at 2100 considering existing “Policies and action” and “2030 targets only” (November 2021 update). used for various applications, including planning activities and determining impairment. (1) Sources: IEA, Sustainable Development Scenario and Net Zero Scenario; BNEF; IHS green case scenario, Enerdata green scenario. N.B. The scenarios used as benchmarks have been published at various points throughout the year and may not be up to date with the latest market trends. (2) Actuals. The two alternative scenarios, i.e., Slow Transition and Best Place, are used for strategic stress testing, risk assess- ment, and the identication of business oppounities. The Group has selected three of the global climate path- ways developed by the Intergovernmental Panel on Climate Change (IPCC): • SSP1-RCP 2.6: compatible with a range of global warm- ing below 2 °C from pre-industrial levels (1850-1900) by 2100. In the analyses that consider both physical and transition variables, the Group associates this scenario with the Paris and Best Place scenarios. • SSP2-RCP 4.5: compatible with an intermediate sce- nario that calls for an average temperature increase of about 2.7 °C by 2100 from pre-industrial levels. This sce- nario forecasts global warming in line with the estimates of temperature increases that consider current policy around the world (26) ; in the analyses that consider both physical and transition variables, the Group associates the SSP2-RCP 4.5 scenario with the Slow Transition scenario. • SSP5-RCP 8.5: compatible with a scenario where no paicular measures to combat climate change are im- plemented. This scenario forecasts an increase in global temperatures of about +4.4 °C from pre-industrial lev- els by 2100. The following describes the overall eects of the transition scenarios and physical scenarios for electricity demand in the main countries in which the Group operates. Average benchmark Max benchmark Min benchmark Enel scenario 2030 2030 43.2 50.3 ~68 ~72 ~62 ~67 ~70 ~73 ~45 ~65 2020 (2) Brent ($/barrel) API2 ($/ton) 9.3 ~21 ~20 ~13 2030 ~95 ~87 ~53 2020 2030 2020 EU - ETS (€/ton) TTF (€/MWh) 338 Integrated Annual Repo 2021338 (27) -2.1% 19% 0.8% Italy and Spain Integrated energy system models enable the quantica- tion of individual demands for service in a country. This level of detail therefore makes it possible to discriminate the specic eects that a change in temperature can have on energy requirements. Similarly to the previous year, the speed of the energy transition has had a much greater impact on electricity demand than the increase in temperature as a result of climate change. Decarbonization policies, together with technological innovation, social responsibility, and con- sequent changes in consumer behavior, will play an active role in trends in electricity demand and in the energy mix generally. However, analysis makes it clear that an increase in temperature as a result of climate change will lead to an increase in electricity demand, even if limited within a (27) Heating Degree Days (HDD); Cooling Degree Days (CDD). range of one percentage point for both Italy and Spain. Considering the integrated view, the potential eect of more ambitious transition scenarios has a more signicant impact on electricity demand than the increase in temper- ature resulting from climate change. Although the trends in degree days (both HDD and CDD) in the various climate scenarios are similar between the two countries, the percentage dierences in electricity demand in Spain for the three scenarios are lower than in Italy. The essential dierence concerns the energy system by 2030, for which Spain’s existing national energy plan is already very ambitious and in line with RCP 2.6, meaning that the Slow Transition scenario is closer to the Paris sce- nario. Therefore, we expect less volatility in energy system trends and in electricity demand over the 2031-2050 pe- riod. Italy - Average impact on electricity demand (2031-2050) of the three transition scenarios paired with RCP 2.6 and 4.5 Paris RCP 2.6 to Slow Transition RCP 4.5 Paris RCP 2.6 to Best Place RCP 2.6 Baseline RCP 2.6 Paris Baseline RCP 2.6 Paris -1.3% 19% Temperature eect Temperature eect Transition eect Transition eect Baseline RCP 4.5 Slow Transition Baseline RCP 2.6 Best Place Italy 339Notes to the consolidated nancial statements 339 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements -1.6% 15% 0.5% Spain - Average impact on electricity demand (2031-2050) of the three transition scenarios paired with RCP 2.6 and 4.5 Paris RCP 2.6 to Slow Transition RCP 4.5 Paris RCP 2.6 to Best Place RCP 2.6 In order to investigate the eect of temperature on tran- sition scenarios fuher and at the same time expand the range of assumptions regarding climate change, a sensitivi- ty analysis was carried out by associating the Slow Transition scenario with RCP 8.5, in addition to RCP 4.5\. An assumption of a fuher temperature increase, without changing the en- ergy transition, results in a more limited change in demand equal to -0.8% for Italy and -0.6% for Spain. Eect of temperature and transition on electricity demand, average over specied period of temperature and transition contributions for dierent combinations of transition scenarios and climate pathways Paris to Slow Transition RCP 4.5 Paris to Slow Transition RCP 8.5 Paris to Best Place Transition eect Temperature eect from RCP 2.6 to RCP 4.5 Total impact Transition eect Temperature eect from RCP 2.6 to RCP 8.5 Total impact Transition eect Temperature eect from RCP 2.6 to RCP 2.6 Total impact Italy 2022-2030 2031-2050 -1.3% -2.1% 0.0% 0.8% -1.3% -1.3% -1.3% -2.1% 0% 1.3% -1.3% -0.8% 2.7% 19.0% 0.0% 0.0% 2.7% 19.0% Spain 2022-2030 2031-2050 -0.9% -1.6% 0.0% 0.5% -0.9% -1.1% -0.9% -1.6% 0.0% 0.9% -0.9% -0.6% 3.1% 15.2% 0.0% 0.0% 3.1% 15.2% As a nal consideration, however, note that, in the future, greater than forecast electrication of residential heating could change both the sign and the size of the tempera- ture eect in both countries. It is therefore necessary to monitor developments in the share of electrication of heating during the annual review. Baseline RCP 2.6 Paris Baseline RCP 2.6 Paris -1.1% 15% Temperature eect Temperature eect Transition eect Transition eect Baseline RCP 4.5 Slow Transition Baseline RCP 2.6 Best Place Spain 340 Integrated Annual Repo 2021340 Latin America In Latin American countries, the impact of temperature trends, quantied through the heating degree days (HDD) and cooling degree days (CDD) metrics, was estimated us- ing econometric forecasting models based on historical elasticity. The analysis shows that Brazil could experience a signi- cant increase in demand due to the increase in tempera- ture, with an estimated increase of between 0.8% and 1.5% in prospective demand (calculated as the average of the demand forecasts in the 2030-2050 period). The driving factor would be the greater demand for cooling expect- ed in the country. This change is also conrmed using a system modeling approach. However, these forecasts are subject to a signicant degree of unceainty given the vol- atility of Brazilian economic growth. Argentina could also experience an increase in demand linked to an increase in temperature, estimated at between 0.3% and 0.6% of prospective demand. Similarly to Brazil, this forecast depends largely on the impact of macroeco- nomic developments in this country on electricity demand. The same considerations can also be extended to the oth- er countries in which the Group is present. In paicular, in the rest of Latin America, where we again observe the positive elasticity of electricity demand to temperatures, the expected rise in temperature would still have less im- pact than economic growth. In fact, in Chile and Colombia, historical evidence still shows a strong coupling between the growth of electricity demand and GDP growth, with demand from the industrial sector accounting for around 50% of electricity consumption. Fuhermore, the variabil- ity of the macroeconomic context could have repercus- sions on the electrication of the residential and service sectors, which represent the most immediate drivers of the increase in electricity demand in the event of an in- crease in temperatures. The following table summarizes the main temperature ef- fects in the Latin American countries, with ranges obtained by applying a 95% condence interval to our baseline case: . Upper bound Country Temperature eect (annual average) from RCP 2.6 to RCP 4.5 from RCP 2.6 to RCP 8.5 TWh % TWh % Argentina 0.68 0.3 1.37 0.6 Brazil 7.9 2 0.8 15.83 1.5 Chile 0.05 0.0 0.10 0.1 Colombia 0.08 0.1 0.17 0.1 Lower bound Country Temperature eect (annual average) from RCP 2.6 to RCP 4.5 from RCP 2.6 to RCP 8.5 TWh % TWh % Argentina 0.57 0.3 1.15 0.5 Brazil 2.48 0 4.96 0 Chile 0.01 0.0 0.01 0.0 Colombia 0.02 0.0 0.05 0.0 Eect of the variation in temperature on electricity demand in the main Latin American countries in which the Group operates (average 2030-2050). 341Notes to the consolidated nancial statements 341 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 342 Integrated Annual Repo 2021342 24. Deferred tax assets and liabilities – €11,034 million and €9,259 million The following tables detail changes in deferred tax assets and liabilities by type of timing dierence and calculated based on the tax rates established by applicable regula- tions, as well as the amount of deferred tax assets oset- table, where permied, with deferred tax liabilities. Millions of euro Increase/ (Decrease) taken to prot or loss Increase/ (Decrease) taken to equity Change in the consolidation scope Exchange dierences Other changes Reclassications of assets held for sale at Dec. 31, 2020 at Dec. 31, 2021 Deferred tax assets: \- dierences in the carrying amount of propey, plant and equipment and intangible assets 2,123 342 - - (7) 11 - 2,469 \- accruals to provisions for risks and charges and impairment losses with deferred deductibility 1,725 340 1 - (4) (27) - 2,035 \- tax loss carried forward 508 249 - - 10 18 - 785 \- measurement of nancial instruments 561 53 1,622 - 5 7 - 2,248 \- employee benets 898 (16) (9) - 2 (4) - 871 \- other items 2,763 (133) (6) - 13 (8) (3) 2,626 Total 8,578 835 1,608 - 19 (3) (3) 11,034 Deferred tax liabilities: \- dierences on non- current and nancial assets 5,442 141 3 - (83) 54 (19) 5,538 \- measurement of nancial instruments 470 (107) 1,150 - 7 7 - 1,527 \- other items 1,885 275 10 10 19 4 (9) 2,194 Total 7,797 309 1,163 10 (57) 65 (28) 9,259 Non-oseable deferred tax assets 6,346 Non-oseable deferred tax liabilities 4,230 Excess net deferred tax liabilities after any oseing 341 “Deferred tax assets” recognized at December 31, 2021, as the recovery of such assets is considered reasonably ceain, totaled €11,034 million (€8,578 million at Decem- ber 31, 2020). Deferred tax assets increased by €2,456 million during the year, essentially due to the recognition of greater de- ferred tax assets associated with the following factors: • impairment losses, mainly in Italy and Spain; • developments in the fair value of cash ow hedge de- rivatives; • provisions for retirement, renovation and digitalization, mainly in Italy. Noted that deferred tax assets (in the amount of €187 million) were not recorded on prior and current-year tax losses in the amount of €754 million because, on the ba- sis of current estimates of future taxable income, it is not highly likely that such assets will be recovered. “Deferred tax liabilities” amounted to €9,259 million at December 31, 2021 (€7,797 million at December 31, 2020). They essentially include the determination of the tax eects of the adjustments to assets acquired as pa of the nal allocation of the cost of acquisitions made in the various years and the deferred taxation in respect of the dierences between depreciation charged for tax purposes, including accelerated depreciation, and de- preciation based on the estimated useful lives of assets. Deferred tax liabilities increased by a total of €1,462 mil- 343Notes to the consolidated nancial statements 343 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements lion due, in paicular, to: • developments in the fair value of cash ow hedge de- rivatives; • tax reforms in Argentina and Colombia. These eects were paially oset by the reversals of de- ferred taxes following the depreciation, amoization and impairment of the amounts allocated in the past to prop- ey, plant and equipment and intangible assets at the time of the acquisition of control as a result of purchase price allocation. 25\. Equity-accounted investments – €704 million The following table shows changes in the main invest- ments in joint ventures and associates accounted for using the equity method. Millions of euro % held Impact on prot or loss Change in consolidation scope Dividends Reclassications from/to assets held for sale Other changes % held at Dec. 31, 2020 at Dec. 31, 2021 Joint ventures Slovak Power Holding 104 50.0% 523 - - - (627) - 50.0% EGPNA Renewable Energy Paners 115 20.0% 8 - - - (2) 121 20.0% Zacapa Topco Sàrl 115 20.6% (1) - - (2) 2 114 20.6% Project Kino companies 40 20.0% (19) - - - - 21 20.0% Tejo Energia Produção e Distribuição de Energia Eléctrica 46 43.8% (17) - (16) - (1) 12 43.8% Rocky Caney Holding 45 20.0% 5 - - - - 50 20.0% Drift Sand Wind Project 35 50.0% 3 - - - 2 40 50.0% Front Marítim del Besòs 33 61.4% - - - - - 33 61.4% Enel Green Power Bungala 31 51.0% - (31) - - - - 100.0% Rusenergosbyt 46 49.5% 44 - (42) - 3 51 49.5% Energie Electrique de Tahadda 22 32.0% 1 - (2) - (3) 18 32.0% Transmisora Eléctrica de Quillota 9 50.0% - - (6) - (3) - - PowerCrop 2 50.0% 4 - (2) (1) (3) - 50.0% Associates CESI 60 42.7% - - - - (1) 59 42.7% Tecnatom 28 45.0% (2) - - - 1 27 45.0% Suministradora Eléctrica de Cádiz 12 33.5% 3 - (5) - - 10 33.5% Compañía Eólica Tierras Altas 8 37.5 % 1 - (1) - - 8 37.5 % Cogenio Srl 12 20.0% 2 - (1) - (1) 12 20.0% Other 98 16 4 (16) (1) 27 128 Total 861 571 (27) (91) (4) (606) 704 The investment in Slovak Power Holding is accounted for using the equity method. Under the provisions of specif- ic agreements, its carrying amount can be adjusted to a lower amount resulting from the application of a price formula that governs the possible sale of the investment itself and which is subject to multiple conditions to be assessed based on dierent scenarios’ probability of oc- currence. At December 31, 2020, the fair value calculat- ed using that price formula (€104 million) was lower than the amount obtained using the equity method. In 2021, due to the recognition of a signicant reduction in the OCI reserves relating to hedging derivatives (€687 million) and the recognition through prot or loss of the prot or loss (€555 million) for the period and previous years not previously recognized (due to the adjustments to the low- er fair value), the carrying amount of the investment was reduced to zero. In addition, a provision for impairment losses on investments of €28 million was established. Apa from these developments, the change in equity-ac- counted investments is mainly aributable to: • dividends distributed in the period in the amount of €91 million, mainly by Rusenergosbyt and Tejo Energia Produção e Distribuição de Energia Eléctrica; 344 Integrated Annual Repo 2021344 • the eects of changes in the consolidation scope, mainly relating to the consolidation of companies be- longing to the Enel Green Power Bungala Group, previ- ously measured using the equity method (€31 million). These negative eects were oset by the “Impact on prot or loss” item, which includes the prot or loss rec- ognized by the companies in propoion to the share held in these companies by the Enel Group. It is mainly accounted for by the prot contributed by Rusenergos- byt (€44 million). The following tables provide a summary of nancial information for the main joint ventures and associates of the Group not classied as held for sale in accordance with IFRS 5. Millions of euro Non-current assets Current assets Total assets Non-current liabilities Current liabilities Total liabilities Equity at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 Joint ventures Slovak Power Holding 12,194 10,813 1,854 676 14,048 11,489 6,762 6,922 5,369 802 12,131 7,724 1,917 3,765 Zacapa Topco Sàrl 1,393 1,253 176 117 1,569 1,370 871 729 143 90 1,014 819 555 551 Rusenergosbyt 3 2 141 120 144 122 - - 120 106 120 106 24 16 Tejo Energia Produção e Distribuição de Energia Eléctrica 34 82 107 128 141 210 25 21 14 33 39 54 102 156 Energie Electrique de Tahadda 49 62 22 18 71 80 4 5 10 6 14 11 57 69 Associates CESI 198 202 28 25 226 227 25 17 - - 25 17 201 210 Tecnatom 61 60 58 58 119 118 24 23 26 33 50 56 69 62 Suministradora Eléctrica de Cádiz 64 67 36 32 100 99 23 18 48 45 71 63 29 36 Compañía Eólica Tierras Altas 19 21 6 3 25 24 2 2 3 2 5 4 20 20 Millions of euro Total revenue Pre-tax prot/(loss) Prot/(Loss) from continuing operations 2021 2020 2021 2020 2021 2020 Joint ventures Slovak Power Holding 3,417 2,954 190 163 137 120 Zacapa Topco Sàrl 267 221 15 7 (4) (3) Rusenergosbyt 2,288 2,198 112 112 90 90 Tejo Energia Produção e Distribuição de Energia Eléctrica 126 114 (7) 17 (16) 8 Energie Electrique de Tahadda 36 33 7 5 4 3 Associates CESI 140 122 (7) (14) (8) (16) Tecnatom 97 78 7 (5) 7 (5) Suministradora Eléctrica de Cádiz 14 25 10 21 8 14 Compañía Eólica Tierras Altas 13 8 4 - 3 - 345Notes to the consolidated nancial statements 345 Millions of euro Total revenue Pre-tax prot/(loss) Prot/(Loss) from continuing operations 2021 2020 2021 2020 2021 2020 Joint ventures Slovak Power Holding 3,417 2,954 190 163 137 120 Zacapa Topco Sàrl 267 221 15 7 (4) (3) Rusenergosbyt 2,288 2,198 112 112 90 90 Tejo Energia Produção e Distribuição de Energia Eléctrica 126 114 (7) 17 (16) 8 Energie Electrique de Tahadda 36 33 7 5 4 3 Associates CESI 140 122 (7) (14) (8) (16) Tecnatom 97 78 7 (5) 7 (5) Suministradora Eléctrica de Cádiz 14 25 10 21 8 14 Compañía Eólica Tierras Altas 13 8 4 - 3 - 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Millions of euro Non-current assets Current assets Total assets Non-current liabilities Current liabilities Total liabilities Equity at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 Joint ventures Slovak Power Holding 12,194 10,813 1,854 676 14,048 11,489 6,762 6,922 5,369 802 12,131 7,724 1,917 3,765 Zacapa Topco Sàrl 1,393 1,253 176 117 1,569 1,370 871 729 143 90 1,014 819 555 551 Rusenergosbyt 3 2 141 120 144 122 - - 120 106 120 106 24 16 Tejo Energia Produção e Distribuição de Energia Eléctrica 34 82 107 128 141 210 25 21 14 33 39 54 102 156 Energie Electrique de Tahadda 49 62 22 18 71 80 4 5 10 6 14 11 57 69 Associates CESI 198 202 28 25 226 227 25 17 - - 25 17 201 210 Tecnatom 61 60 58 58 119 118 24 23 26 33 50 56 69 62 Suministradora Eléctrica de Cádiz 64 67 36 32 100 99 23 18 48 45 71 63 29 36 Compañía Eólica Tierras Altas 19 21 6 3 25 24 2 2 3 2 5 4 20 20 346 Integrated Annual Repo 2021346 26. Derivatives Millions of euro Non-current Current at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 Derivative nancial assets 2,772 1,236 22,791 3,471 Derivative nancial liabilities 3,339 3,606 24,607 3,531 For more information on derivatives classied as non-cur- rent nancial assets, please see note 49 for hedging deriv- atives and trading derivatives. 27. Current/Non-current contract assets/(liabilities) Millions of euro Non-current Current at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 Contract assets 530 304 121 176 Contract liabilities 6,214 6,191 1,433 1,275 Non-current assets deriving from contracts with custom- ers (contract assets) refer mainly to assets under develop- ment resulting from public-to-private service concession arrangements recognized in accordance with IFRIC 12 and which have an expiration of beyond 12 months (€517 mil- lion). These cases arise when the concession holder has not yet obtained full right to recognize the asset from the grantor, in that there remains a contractual obligation to ensure that the asset is completed and can be remunerat- ed through rates. The gure at December 31, 2021 includes investments for the year in the amount of €907 million. Current contract assets mainly concern construction con- tracts in progress (€98 million) to be invoiced, payments on which are subject to the fulllment of a peormance obligation. The carrying amount at December 31, 2021 of non-cur- rent contract liabilities is mainly aributable to distribution operations in Italy (€3,252 million), Spain (€2,521 million) and Romania (€438 million) as a result of the accounting treatment of revenue from connections of new customers, which are deferred over the average duration of the asso- ciated contracts. Current contract liabilities include the contractual liabilities related to revenue from connections to the electricity grid expiring within 12 months in the amount of €1,016 million, mainly recognized in Italy and Spain, as well as liabilities for construction contracts in progress (€392 million). As required under IFRS 15, the following table repos the reversal to prot or loss of contract liabilities by time band. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Within 1 year 1,433 1, 275 Within 2 years 498 481 Within 3 years 480 461 Within 4 years 479 460 Within 5 years 477 459 More than 5 years 4,280 4,330 Total 7,6 47 7,466 347Notes to the consolidated nancial statements 347 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 28\. Other non-current nancial assets – €5,704 million Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Equity investments in other companies measured at fair value 72 70 2 2.9% Financial assets and securities included in net nancial debt (see note 28.1) 2,692 2 ,745 (53) -1.9% Service concession arrangements 2,890 2,300 590 25.7% Non-current nancial prepayments 50 44 6 13.6% Total 5,704 5,159 545 10.6% “Other non-current nancial assets” increased by €545 million, mainly reecting the increase in nancial assets in respect of service concession arrangements in Brazil and Costa Rica. This factor was paially oset by a decline in nancial assets included in net nancial debt, as detailed in note 28.1. The following is a breakdown of equity investments in oth- er companies measured at fair value. Millions of euro at Dec. 31, 2021 % held at Dec. 31, 2020 % held Change Empresa Propietaria de la Red SA 5 11.1% 5 11.1% - European Energy Exchange 13 2.4% 13 2.4% - Athonet Srl 7 16.0% 7 16.0% - Korea Line Corporation 1 0.3% 1 0.3% - Hubject GmbH 10 12.5% 10 12.5% - Termoeléctrica José de San Maín SA 11 4.2% 10 3.3% 1 Termoeléctrica Manuel Belgrano SA 12 4.7% 11 3.7% 1 Other 13 13 - Total 72 70 2 28.1 Other non-current nancial assets included in net nancial debt – €2,692 million Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Securities 403 408 (5) -1.2% Other nancial assets 2,289 2,337 (48) -2.1% Total 2,692 2,745 (53) -1.9% “Securities” are primarily represented by nancial instru- ments measured at fair value through other comprehen- sive income in which the Dutch insurance companies in- vest a poion of their liquidity. The reduction in “Other nancial assets” is mainly arib- utable to: • a decline of €271 million in the nancial assets of Enel SpA, essentially associated with the disposal of the in- vestment in Open Fiber; • the reclassication of €90 million of the current poion of the nancial assets of e-distribuzione in respect of the Energy and Environmental Services Fund (€55 mil- lion) and the amount receivable in respect of the reim- bursement of the extraordinary costs incurred by dis- tributors for the early replacement of electromechani- cal meters with electronic devices (€35 million). These factors were paially oset by: • an increase of €198 million the nancial assets of Enel Finance International, mainly regarding the Slovak Pow- er Holding BV loan; • an increase of €42 million in nancial assets for depos- its; • an impairment loss of €25 million on the amount due to Enel Produzione from EP Slovakia BV associated with the sale of 50% of the investment in Slovak Power Hold- ing. 348 Integrated Annual Repo 2021348 29. Other current nancial assets – €8,645 million Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Current nancial assets included in net nancial debt (see note 29.1) 8,467 4,971 3,496 70.3% Other 178 142 36 25.4% Total 8,645 5,113 3,532 69.1% “Other current nancial assets” increased by €3,532 mil- lion, mainly reecting the increase in current nancial as- sets included in net nancial debt, as detailed in note 29.1, as well as the increase in the current poion of nancial assets in respect of service concession arrangements. 29.1 Other current nancial assets included in net nancial debt – €8,467 million Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Current poion of long-term nancial assets 1,538 1,428 110 7.7 % Securities at FVTPL 1 - 1 - Securities at FVOCI 87 67 20 29.9% Financial assets and cash collateral 6,485 3,223 3,262 - Other 356 253 103 40.7% Total 8,467 4,971 3,496 70.3% The increase in the item is mainly aributable to: • €3,262 million in respect of an increase in cash collat- eral paid to counterpaies for derivatives transactions; • €110 million in respect of the increase in the current poion of long-term nancial assets, which essentially reects: – the increase in nancial assets relating to the decit of the Spanish electricity system (€47 million); – an increase in nancial assets for security deposits (€61 million). 30. Other non-current assets – €3,268 million Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Amounts due from institutional market operators 242 186 56 30.1% Other assets 3,026 2,308 718 31.1% Total 3,268 2,494 774 31.0% “Amounts due from institutional market operators“ in- creased by €56 million, mainly in Spain as a result of the remuneration of distribution operations. “Other assets“ at December 31, 2021 included tax assets in the amount of €2,286 million (€1,539 million at December 31, 2020), security deposits in the amount of €340 million (€330 million at the end of 2020) and non-monetary grants to be received in respect of green ceicates amounting to €56 million (€73 million at December 31, 2020). The change for the year mainly reected the tax assets recognized by distribution companies connected with the PIS/COFINS dispute in Brazil in the amount of €596 million. 349Notes to the consolidated nancial statements 349 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 31. Other current assets – €5,002 million Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Amounts due from institutional market operators 2,205 1,265 940 74.3% Advances to suppliers 326 309 17 5.5% Amounts due from employees 29 30 (1) -3.3% Amounts due from others 1,071 956 115 12.0% Sundry tax assets 1,164 848 316 37.3% Current accrued income and prepayments 207 170 37 21.8% Total 5,002 3,578 1,424 39.8% “Amounts due from institutional market operators“ include amounts due in respect of the Italian system in the amount of €1,519 million (€890 million at December 31, 2020) and the Spanish system in the amount of €667 million (€337 million at December 31, 2020). The increase was essentially aributable to the increase in amounts receivable in Italy in respect of the Energy and Environmental Services Fund, mainly held by e-distribuzione (€346 million) and Servizio Elerico Nazionale (€1,046 million), primarily connected with equalization mechanisms. The increase of €316 million in sundry tax assets is mainly aributable to an increase in credits for indirect taxes and duties in Spain (€169 million) and Latin America (€194 mil- lion), paially oset by a decline in such items in Italy (€42 million). “Amounts due from others“ increased, mainly due to an in- crease in receivables for seled derivatives transactions in commodities (€303 million), primarily registered in Italy and Spain, paially oset by a decrease in assets in respect of security deposits and an increase in loss allowances. 32\. Inventories – €3,109 million Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Raw and ancillary materials, and consumables: \- fuels 1,023 595 428 71.9% \- materials, equipment and other inventories 1,793 1,542 251 16.3% Total 2,816 2,137 679 31.8% Environmental ceicates: \- CO 2 emissions allowances 139 159 (20) -12.6% \- green ceicates 3 5 (2) -40.0% \- white ceicates 16 7 9 - Total 158 171 (13) -7.6 % Buildings held for sale 49 52 (3) -5.8% Payments on account 86 41 45 - TOTAL 3,109 2,401 708 29.5% “Raw and ancillary materials, and consumables“ consist of materials and equipment used to operate, maintain, and construct power plants and distribution networks, as well as fuel inventories to cover the Group’s requirements for generation and trading activities. The overall increase in inventories in 2021 (€708 million) is mainly aributable to an increase in inventories of fuel and materials, devices and other inventories recorded above all in Italy (€358 million), Spain (€195 million) and Latin Ameri- ca (€89 million), notably gas inventories to meet the needs of the Group, and an increase in stocks of low- and medi- um-voltage materials. 350 Integrated Annual Repo 2021350 33\. Trade receivables – €16,076 million Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Customers: \- electricity sales and transpo 10,111 7,986 2,125 26.6% \- distribution and sale of gas 2,658 900 1,758 - \- other assets 3,158 2,945 213 7. 2 % Total trade receivables due from customers 15,927 11,831 4,096 34.6% Trade receivables due from associates and joint ventures 149 215 (66) -30.7% TOTAL 16,076 12,046 4,030 33.5% Trade receivables due from customers are recognized net of loss allowances, which totaled €3,663 million at the end of the year, compared with a balance of €3,287 million at the end of the previous year. Specically, the increase in 2021, totaling €4,030 million, mainly recognized in Italy (€1,495 million), Spain (€1,625 million) and Latin America (€728 million), was aributable to an increase in trade receivables for the sale and trans- po of electricity and gas, paially oset by an increase in net loss allowances. For more information on trade receivables, see note 46 “Financial instruments by category”. 34\. Cash and cash equivalents – €8,858 million Cash and cash equivalents, detailed in the following table, increased by €2,952 million as a result of an increase in cash collateral paid by counterpaies in derivatives trans- actions, paially oset by the decrease, especially for the Parent, aributable to cash outows linked to the acqui- sition of additional equity interests in subsidiaries in Latin America. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Bank and postal deposits 8,118 5,699 2,419 42.4% Cash and cash equivalents on hand 8 42 (34) -81.0% Other investments of liquidity 732 165 567 - Total 8,858 5,906 2,952 50.0% 351Notes to the consolidated nancial statements 351 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 35\. Assets classied as held for sale and liabilities included in disposal groups classied as held for sale – €1,242 million and €962 million Changes in assets classied as held for sale during 2021 break down as follows: Millions of euro at Dec. 31, 2020 Reclassication from/to current and non-current assets Disposals and changes in the consolidation scope Investments Other changes at Dec. 31, 2021 Propey, plant and equipment 781 3 (42) 111 46 899 Intangible assets 58 88 (2) - - 144 Goodwill - 1 - - - 1 Deferred tax assets 18 3 - - (5) 16 Equity-accounted investments 489 4 (614) - 125 4 Non-current nancial assets 11 30 - - (1) 40 Cash and cash equivalents 29 13 (1) - 3 44 Inventories, trade receivables and other current assets 30 45 (4) - 23 94 Total 1,416 187 (663) 111 191 1,242 Changes in liabilities included in disposal groups held for sale in 2021 break down as follows: Millions of euro at Dec. 31, 2020 Reclassication from/to current and non-current liabilities Disposals and change in consolidation scope Other changes at Dec. 31, 2021 Long-term borrowings 687 - - 95 782 Provisions for risks and charges, non- current poion 2 6 (1) 3 10 Deferred tax liabilities 17 28 (1) 2 46 Non-current nancial liabilities 57 - - (17) 40 Other non-current liabilities - 5 - - 5 Sho-term borrowings - 2 - - 2 Other current nancial liabilities 12 - - (6) 6 Trade payables and other current liabilities 33 54 (1) (15) 71 Total 808 95 (3) 62 962 Assets classied as held for sale and liabilities included in dis- posal groups classied as held for sale at December 31, 2021 amounted to €1,242 million and €962 million, respectively, and mainly refer to a number of renewables companies held for sale in Africa and ceain Enel X companies in Italy, which, following decisions by management, meet the requirements of IFRS 5 for classication within this aggregate. A number of companies previously classied as available for sale were sold in 2021, in paicular the investment held by Enel SpA in Open Fiber, the Enel Green Power companies in Bulgaria and the solar plant owned by the Panamanian com- pany Llano Sanchez Solar Power One SA. At December 31, 2020, the aggregate included the Enel Produzione business unit formed of the “Eore Majorana” site at Termini Imerese (€4 million), which at December 31, 2021 was again classied under “Propey, plant and equip- ment” as the preliminary sales contract was terminated. 352 Integrated Annual Repo 2021352 36. Equity – €42,342 million 36.1 Equity aributable to owners of the Parent – €29,653 million Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Share capital 10,167 10,167 - Treasury share reserve (36) (3) (33) Other reserves 1,721 (39) 1,760 Share premium reserve 7,4 9 6 7,476 20 Reserve for equity instruments - perpetual hybrid bonds 5,567 2,386 3,181 Legal reserve 2,034 2,034 - Other reserves 2,313 2,268 45 Translation reserve (8,125) (7,046) (1,079) Hedging reserve (2,268) (1,917) (351) Hedging costs reserve (39) (242) 203 Reserve from measurement of nancial instruments at FVOCI 10 (1) 11 Reserve from equity-accounted investments (721) (128) (593) Actuarial reserve (1,325) (1,196) (129) Reserve from disposal of equity interests without loss of control (2,378) (2,381) 3 Reserve from acquisitions of non-controlling interests (843) (1,292) 449 Retained earnings 17,801 18,200 (399) Equity aributable to owners of the Parent 29,653 28,325 1,328 Share capital – €10,167 million At December 31, 2021, the fully subscribed and paid-up share capital of Enel SpA totaled €10,166,679,946, rep- resented by the same number of ordinary shares with a par value of €1.00 each. Enel SpA’s share capital was un- changed compared with the amount repoed at Decem- ber 31, 2020. At December 31, 2021, based on the shareholders regis- ter and the notices submied to CONSOB and received by the Parent pursuant to Aicle 120 of Legislative Decree 58 of February 24, 1998, as well as other available informa- tion, shareholders with interests of greater than 3% in the Parent’s share capital were the Ministry for the Economy and Finance (with a 23.585% stake), BlackRock Inc. (with a 5.000% stake held for asset management purposes) and Capital Research and Management Company (with a 5.000% stake held for asset management purposes). Treasury share reserve – €(36) million At December 31, 2021, treasury shares are represented by 4,889,152 ordinary shares of Enel SpA with a par value of €1.00 each (3,269,152 at December 31, 2020), purchased through an authorized intermediary for a total of €36 mil- lion. The dierence between the amount paid and the par value is recognized as a reduction in equity in the share premium reserve. Other reserves – €1,721 million Share premium reserve – €7,496 million Pursuant to Aicle 2431 of the Italian Civil Code, the share premium reserve contains, in the case of the issue of shares at a price above par, the dierence between the is- sue price of the shares and their par value, including those resulting from conversion from bonds. The reserve, which is a capital reserve, may not be distributed until the legal reserve has reached the threshold established under Ai- cle 2430 of the Italian Civil Code. Reserve for equity instruments - perpetual hybrid bonds – €5,567 million This reserve repos the nominal value, net of transac- tion costs, of the non-conveible subordinated perpet- ual hybrid bonds denominated in euros for international investors. The change during the year reected the subscription of new non-conveible subordinated perpetual hybrid bonds in an amount, net of transaction costs, of €2,214 million and the conversion of bonds already in issue and conveed into perpetual hybrid bonds in the amount, net of transaction costs, of €967 million. In 2021, the Group paid €71 million in coupons to holders of perpetual hybrid bonds. 353Notes to the consolidated nancial statements 353 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Legal reserve – €2,034 million The legal reserve is formed of the pa of prots that, pursuant to Aicle 2430 of the Italian Civil Code, cannot be distributed as dividends. Other reserves – €2,313 million These include €2,215 million related to the remaining poion of the adjustments carried out when Enel was transformed from a public entity to a joint-stock com- pany. Pursuant to Aicle 47 of the Consolidated Income Tax Code (Testo Unico Imposte sul Reddito, or “TUIR”), this amount does not constitute taxable income when dis- tributed. Translation reserve – €(8,125) million The decrease for the year, of €1,079 million, was mainly due to the change in the consolidation scope connected with the purchase of 17.3% of Enel Américas, paially o- set by the net depreciation of the functional currencies used by the foreign subsidiaries against the Group pres- entation currency (the euro). Hedging reserve – €(2,268) million This includes the net loss recognized in equity from the measurement of cash ow hedge derivatives. Hedging costs reserve – €(39) million In application of IFRS 9, this reserve includes the fair val- ue gains and losses on currency basis points and forward points. Reserve from measurement of nancial instruments at FVOCI – €10 million This includes net unrealized fair value losses on nancial assets. Reserve from equity-accounted investments – €(721) million The reserve repos the share of comprehensive income to be recognized directly in equity of equity-accounted investees. The change in 2021 is mainly aributable to the change in the hedging reserve of Slovak Power Hold- ing following the sharp rise in commodity prices. Actuarial reserve – €(1,325) million This reserve includes actuarial gains and losses in respect of employee benet liabilities, net of tax eects. Reserve from disposal of equity interests without loss of control – €(2,378) million This item mainly repos: • the gain posted on the public oering of Enel Green Power shares, net of expenses associated with the dis- posal and the related taxation; • the sale of non-controlling interests recognized as a re- sult of the Enersis (now Enel Américas and Enel Chile) capital increase; • the capital loss, net of expenses associated with the disposal and the related taxation, from the public oer- ing of 21.92% of Endesa; • the disposal to third paies of the non-controlling in- terest in Enel Green Power Noh America Renewable Energy Paners; • the eects of the merger into Enel Américas of Endesa Américas and Chilectra Américas; • the disposal to third paies of a non-controlling inter- est without loss of control in a number of companies in South Africa. The change in the reserve in 2021 is associated with the sale of additional interests in a number of companies in South Africa. Reserve from acquisitions of non-controlling interests – €(843) million This reserve mainly includes the surplus of acquisition prices with respect to the carrying amount of the equi- ty acquired following the acquisition from third paies of fuher interests in companies already controlled in Latin America. The change for the year (€449 million) mainly reects the eects of the increase of 17.3% in the interest held in Enel Américas following the completion of the voluntary par- tial tender oer and the completion of the merger of EGP Américas into Enel Américas. Following these transactions, Enel owns approximately 82.3% of the outstanding share capital of Enel Américas. Retained earnings – €17,801 million This reserve repos earnings from previous years that have not been distributed or allocated to other reserves. 354 Integrated Annual Repo 2021354 The table below shows the changes in gains and losses recognized directly in other comprehensive income, in- cluding non-controlling interests, with specic repoing of the related tax eects. Millions of euro at Dec. 31, 2020 Change at Dec. 31, 2021 Total Of which owners of the Parent Of which non- controlling interests Gains/ (Losses) recognized in equity during the year Released to prot or loss Taxes Total Of which owners of the Parent Of which non- controlling interests Total Of which owners of the Parent Of which non- controlling interests Translation reserve (11,700) (6,458) (5,242) (90) - - (90) 155 (245) (11,790) (6,303) (5,487) Hedging reserve (2,236) (1,921) (315) 506 (1,805) 574 (725) (359) (366) (2,961) (2,280) (681) Hedging costs reserve (244) (242) (2) 208 (7) (6) 195 203 (8) (49) (39) (10) Reserve from measurement of nancial instruments at FVOCI - 1 (1) 11 - - 11 11 - 11 12 (1) Share of OCI of equity-accounted associates (175) (177) 2 (642) - (3) (645) (648) 3 (820) (825) 5 Reserve from measurement of equity investments in other companies (32) (32) - - - - - - - (32) (32) - Actuarial reserve (1,828) (1,276) (552) 40 - (10) 30 11 19 (1,798) (1,265) (533) Total gains/(losses) recognized in equity (16,215) (10,105) (6,110) 33 (1,812) 555 (1,224) (627) (597) (17,439) (10,732) (6,707) 36.2 Dividends Amount distributed (millions of euro) Dividend per share (euro) Dividends distributed in 2020 Dividends for 2019 3,334 0.328 Interim dividends for 2020 (1) - - Special dividends - - Total dividends distributed in 2020 3,334 0.328 Dividends distributed in 2021 Dividends for 2020 3,638 0.358 Interim dividends for 2021 (2) - - Special dividends - - Total dividends distributed in 2021 3,638 0.358 (1) Approved by the Board of Directors on November 5, 2020, and paid as from January 20, 2021 (interim dividend of €0.175 per share for a total of €1,779 million). (2) Approved by the Board of Directors on November 4, 2021, and paid as from January 26, 2022 (interim dividend of €0.19 per share for a total of €1,932 million). The dividend for 2021 is equal to €0.38 per share, for a to- tal of €3,863 million (of which €0.19 per share, for a total of €1,932 million, already paid as an interim dividend as from January 26, 2022). It will be proposed to the Shareholders’ Meeting of May 19, 2022 at single call. These consolidated nancial statements do not take ac- count of the eects of the distribution to shareholders of the dividend for 2021, except for the liability in respect of shareholders for the interim dividend for 2021, which was approved by the Board of Directors on November 4, 2021 for a potential maximum of €1,932 million, and paid as from January 26, 2022 net of the poion peaining to the 4,889,152 treasury shares held as at the record date of January 25, 2021. In 2021, the Group also paid €71 million to holders of per- petual hybrid bonds. 355Notes to the consolidated nancial statements 355 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Capital management The Group’s objectives for managing capital comprise safeguarding the business as a going concern, creating value for stakeholders and suppoing the development of the Group. In paicular, the Group seeks to maintain an ad- equate capitalization that enables it to achieve a satisfac- tory return for shareholders and ensure access to external sources of nancing, in pa by maintaining an adequate rating. In this context, the Group manages its capital structure and adjusts that structure when changes in economic conditions so require. There were no substantive changes in objectives, policies or processes in 2021. To this end, the Group constantly monitors developments in the level of its debt in relation to equity. The situation at December 31, 2021 and 2020 is summarized in the follow- ing table. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Non-current nancial debt 54,620 49,519 5,101 Net current nancial position 24 (1,359) 1,383 Non-current nancial assets and long-term securities (2,692) (2,745) 53 Net nancial debt 51,952 45,415 6,537 Equity aributable to owners of the Parent 29,653 28,325 1,328 Non-controlling interests 12,689 14,032 (1,343) Equity 42,342 42,357 (15) Debt/equity ratio 1.23 1.07 0.16 The increase in the debt/equity ratio, which measures - nancial leverage, is essentially aributable to the increase in net nancial debt, mainly reecting the funding require- ments of investments in the year, the payment of dividends and extraordinary transactions in non-controlling interests connected with the acquisition of additional interests in Enel Américas. See note 45 for a breakdown of the individual items in the table. 36.3 Non-controlling interests – €12,689 million The following table presents the composition of non-con- trolling interests by geographical segment. Millions of euro Non-controlling interests Prot/(Loss) for the year aributable to non-controlling interests at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 Italy 1 2 - - Iberia 5,238 5,869 193 468 Latin America 6,511 7,206 467 477 Europe 635 638 5 55 Noh America 151 160 6 6 Africa, Asia and Oceania 153 157 (3) 6 Total 12,689 14,032 668 1,012 The decrease in the poion aributable to non-controlling interests mainly reects dividends and the increase in the percentage holding in Enel Américas. The nancial disclosure requirements of IFRS 12 for sub- sidiaries with signicant non-controlling interests are re- poed below. 356 Integrated Annual Repo 2021356 Millions of euro Non-current assets Current assets Total assets at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 Subsidiaries Enel Américas 28,959 21,337 4,711 4,582 33,670 25,919 Enel Chile 9,887 9,295 (642) 170 9,245 9,465 Endesa 43,217 41,819 3,853 1,386 47,070 43,205 Millions of euro Non-current liabilities Current liabilities Total liabilities Equity Equity aributable to owners of the Parent Non-controlling interests at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 Subsidiaries Enel Américas 11,320 8,827 6,073 5,495 17,393 14,322 16,277 11,597 11,556 6,643 4,721 4,954 Enel Chile 3,356 3,027 1,178 1,066 4,534 4,093 4,711 5,372 2,921 3,326 1,790 2,046 Endesa 15,196 12,869 11,449 7, 10 1 26,645 19,970 20,425 23,235 15,187 17,366 5,238 5,869 Millions of euro Total revenue (1) Pre-tax prot/(loss) Prot/(Loss) from continuing operations Prot/(Loss) aributable to owners of the Parent Prot/(Loss) aributable to non-controlling interests 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 Subsidiaries Enel Américas (2) 13,581 10,437 1,516 1,187 757 738 337 274 420 464 Enel Chile 3,114 2,816 128 (133) 104 (40) 57 (25) 47 (15) Endesa 20,217 16,614 769 1,965 589 1,551 396 1,082 193 469 (1) In order to ensure a uniform comparison of the data, revenue for 2020 was restated by excluding the pa of income from commodity contracts, in line with the presentation of revenue in the notes to the nancial statements. (2) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more details, please see note 7 to the consolidated nancial statements. 357Notes to the consolidated nancial statements 357 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 37. Borrowings Millions of euro Non-current Current at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 Long-term borrowings 54,500 49,519 4,031 3,168 Sho-term borrowings - - 13,306 6,345 Total 54,500 49,519 17, 337 9,513 For more information on the nature of borrowings, see note 46.2 “Financial liabilities by category”. 38\. Employee benets – €2,724 million The Group provides its employees with a variety of bene- ts, including deferred compensation benets, additional months’ pay for having reached age limits or eligibility for old-age pension, loyalty bonuses for achievement of sen- iority milestones, supplemental retirement and health- care plans, residential electricity discounts and similar benets. More specically: • for Italy, the item “Pension benets” regards estimated accruals made to cover benets due under the supple- mental retirement schemes of retired executives and the benets due to personnel under law or contract at the time the employment relationship is terminated. For the foreign companies, the item refers to post-em- ployment benets, of which the most material regard the pension benet schemes of Endesa in Spain, which break down into three types that dier on the basis of employee seniority and company. In general, under the framework agreement of October 25, 2000, employees paicipate in a specic dened contribution pension plan and, in cases of disability or death of employees in service, a dened benet plan which is covered by appropriate insurance policies. In addition, the group has two other limited-enrollment plans (i) for current and retired Endesa employees covered by the elec- tricity industry collective bargaining agreement prior to the changes introduced with the framework agree- ment noted earlier and (ii) for employees of the Catalan companies merged in the past (Fecsa/Enher/HidroEm- pordà). Both are dened benet plans and benets are fully ensured, with the exception of the former plan for benets in the event of the death of a retired employ- ee. Finally, the Brazilian companies have also established dened benet plans; • the item “Electricity discount” comprises benets re- garding electricity supply associated in paicular with foreign companies; • the item “Health insurance” refers to benets for cur- rent or retired employees covering medical expenses; • “Other benets” mainly regard the loyalty bonus, which is adopted in various countries and for Italy is repre- sented by the estimated liability for the benet entitling employees covered by the electricity workers national collective bargaining agreement to a bonus for achieve- ment of seniority milestones (25th and 35th year of ser- vice). It also includes other incentive plans, which pro- vide for the award to ceain Company managers of a monetary bonus subject to specied conditions. The following table repos changes in the dened bene- t obligation for post-employment and other long-term employee benets at December 31, 2021, and December 31, 2020, respectively, as well as a reconciliation of that obligation with the actuarial liability. 358 Integrated Annual Repo 2021358 Millions of euro 2021 2020 Pension benets Electricity discount Health insurance Other benets Total Pension benets Electricity discount Health insurance Other benets Total CHANGES IN ACTUARIAL OBLIGATION Actuarial obligation at the sta of the year 4,408 403 217 222 5,250 5,691 904 263 242 7, 10 0 Current service cost 17 2 4 28 51 18 3 4 38 63 Interest expense 214 3 7 3 227 249 5 7 4 265 Actuarial (gains)/losses arising from changes in demographic assumptions 192 - (6) - 186 45 12 6 1 64 Actuarial (gains)/losses arising from changes in nancial assumptions (664) (14) 6 (1) (673) 105 19 (2) 2 124 Experience adjustments 452 31 (9) - 474 466 (21) (7) (8) 430 Past service cost (17) - - (3) (20) (24) (504) (13) (1) (542) (Gains)/Losses arising from selements (4) - - - (4) (584) - - - (584) Exchange dierences 14 (1) (1) - 12 (1,206) (1) (30) (7) (1,244) Employer contributions - - - - - - - - - - Employee contributions - - - - - 1 - - - 1 Benets paid (379) (15) (12) (58) (464) (358) (16) (11) (48) (433) Other changes 7 1 - (1) 7 5 2 - (1) 6 Liabilities included in disposal groups classied as held for sale - - - - - - - - - - Actuarial obligation at year- end (A) 4,240 410 206 190 5,046 4,408 403 217 222 5,250 CHANGES IN PLAN ASSETS Fair value of plan assets at the sta of the year 2,299 - - - 2,299 3,374 - - - 3,374 Interest income 121 - - - 121 160 - - - 160 Expected return on plan assets excluding amounts included in interest income 38 - - - 38 85 - - - 85 Exchange dierences 17 - - - 17 (782) - - - (782) Employer contributions 252 15 12 28 307 342 16 11 21 390 Employee contributions - - - - - 1 - - - 1 Benets paid (379) (15) (12) (28) (434) (358) (16) (11) (21) (406) Other payments - - - - - (523) - - - (523) Changes in the consolidation scope - - - - - - - - - - Fair value of plan assets at year-end (B) 2,348 - - - 2,348 2,299 - - - 2,299 EFFECT OF ASSET CEILING Asset ceiling at the sta of the year 13 - - - 13 45 - - - 45 Interest income 1 - - - 1 3 - - - 3 Changes in asset ceiling 12 - - - 12 (24) - - - (24) Exchange dierences - - - - - (11) - - - (11) Changes in the consolidation scope - - - - - - - - - - Asset ceiling at year-end (C) 26 - - - 26 13 - - - 13 Net liability in statement of nancial position (A-B+C) 1,918 410 206 190 2,724 2,122 403 217 222 2,964 359Notes to the consolidated nancial statements 359 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Millions of euro 2021 2020 (Gains)/Losses taken to prot or loss Service cost and past service cost 9 (509) Net interest expense 107 108 (Gains)/Losses arising from selements (4) (61) Actuarial (gains)/losses on other long-term benets 22 31 Other changes 1 (9) Total 135 (440) Millions of euro 2021 2020 Change in (gains)/losses in OCI Expected return on plan assets excluding amounts included in interest income (38) (85) Actuarial (gains)/losses on dened benet plans (13) 626 Changes in asset ceiling excluding amounts included in interest income 12 (24) Other changes (1) (1) Total (40) 516 The change in the cost recognized in prot or loss was equal to €575 million. The impact on the income state- ment is, therefore, greater than in the previous year, due mainly to the signing in 2020 of the 5th Endesa Collective Bargaining Agreement, which modied the electricity dis- count benet for current and former employees, with the consequent reversal of the associated provision. The liability recognized in the statement of nancial posi- tion at the end of the year is repoed net of the fair value of plan assets, amounting to €2,348 million at December 31, 2021. Those assets, which are entirely in Spain and Bra- zil, break down as follows. at Dec. 31, 2021 at Dec. 31, 2020 Investments quoted in active markets Equity instruments 8% 7% Fixed-income securities 54% 63% Investment propey 3% 2% Other - - Unquoted investments Assets held by insurance undeakings - - Other 35% 28% Total 100% 100% The main actuarial assumptions used to calculate the lia- bilities in respect of employee benets and the plan assets, which are consistent with those used the previous year, are set out in the following table. Italy Iberia Latin America Other countries Italy Iberia Latin America Other countries 2021 2020 Discount rate 0.00%-0.80% 0.00%-1.16% 5.60%-9.67% 0.80%-8.40% 0.00%-0.50% 0.00%-0.61% 2.55%-7.95% 0.75%-6.30% Ination rate 1.50% 2.20% 3.00% -8.00% 1.50%-4.01% 0.50% 1.00% 3.00%-4.85% 0.75%-3.83% Rate of wage increases 0.80%-1.80% 2.20% 3.80%-8.00% 2.50%-10.00% 0.50%-2.50% 1.00% 3.80%-5.04% 2.25%-3.83% Rate of increase in healthcare costs 2.50% 4.40% 7.12%-8.00% - 1.50% 3.20% 7.12%-8.00% - Expected rate of return on plan assets - 0.57% 9.30%-9.46% - - 0.57% 6.08%-7.33% - 360 Integrated Annual Repo 2021360 The following table repos the outcome of a sensitivity analysis that demonstrates the eects on the dened ben- et obligation of changes reasonably possible at the end of the year in the actuarial assumptions used in estimating the obligation. Pension benets Electricity discount Health insurance Other benets Pension benets Electricity discount Health insurance Other benets at Dec. 31, 2021 at Dec. 31, 2020 Decrease of 0.5% in discount rate 225 27 11 - 239 30 11 (1) Increase of 0.5% in discount rate (184) (30) (14) (10) (190) (30) (15) (11) Increase of 0.5% in ination rate 2 (4) (2) (6) (1) (5) (3) (7) Decrease of 0.5% in ination rate 28 (2) 9 (2) 33 2 7 (4) Increase of 0.5% in remuneration 14 (3) (2) - 14 (2) (3) (3) Increase of 0.5% in pensions currently being paid 14 (3) (2) (5) 15 (2) (3) (6) Increase of 1% in healthcare costs - - 20 1 - - (2) - Increase of 1 year in life expectancy of active and retired employees 98 (3) 14 (5) 27 (11) 2 (34) The sensitivity analysis used an approach that extrapolates the eect on the dened benet obligation of reasonable changes in an individual actuarial assumption, leaving the other assumptions unchanged. The contributions expected to be paid into dened benet plans in the subsequent year amount to €196 million. The following table repos expected benet payments in the coming years for dened benet plans. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Within 1 year 392 366 In 1-2 years 364 337 In 2-5 years 1,077 971 More than 5 years 1,714 1,534 Expected payments are increasing in general. This is main- ly due to Brazil, where forecasts have been impacted by rising life expectancy and a signicant increase in expect- ed ination. The amount of future payments shown in the table, not being subject to discounting, is signicantly af- fected by this increase. Finally, it should be noted that the liability does not increase in the same manner, as the in- ationary eects are oset by the eects of discounting. 361Notes to the consolidated nancial statements 361 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 39. Provisions for risks and charges – €8,323 million Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Non-current Current Total Non-current Current Total Provision for litigation, risks and other charges: \- nuclear decommissioning 666 - 666 596 - 596 \- site retirement, removal and restoration 3,066 203 3,269 2,017 99 2,116 \- litigation 790 44 834 734 86 820 \- environmental ceicates - 32 32 - 42 42 \- taxes and duties 267 28 295 288 43 331 \- other 821 347 1,168 757 343 1,100 Total 5,610 654 6,264 4,392 613 5,005 Provision for early retirement incentives and other restructuring plans 435 293 728 623 444 1,067 Provision for restructuring programs connected with the energy transition 1,152 179 1,331 759 - 759 TOTAL 7, 197 1,126 8,323 5,774 1,057 6,831 Millions of euro Accrual Reversal Utilization Discounting Provisions for site retirement and restoration Change in the consolidation scope Exchange dierences Other changes Reclassications of liabilities included in disposal groups held for sale at Dec. 31, 2020 at Dec. 31, 2021 Provision for litigation, risks and other charges: \- nuclear decommissioning 596 - - - 1 69 - - - - 666 \- site retirement, removal and restoration 2,116 455 (13) (87) 3 799 8 (14) 2 - 3,269 \- litigation 820 213 (113) (124) 44 - - (3) (3) - 834 \- environmental ceicates 42 15 (4) (21) - - - - - - 32 \- taxes and duties 331 64 (41) (21) 6 - - - (44) - 295 \- other 1,100 338 (95) (162) 14 (7) - (3) (11) (6) 1,168 Total 5,005 1,085 (266) (415) 68 861 8 (20) (56) (6) 6,264 Provision for early retirement incentives and other restructuring plans 1,067 16 (15) (361) - - - - 21 - 728 Provision for restructuring programs connected with the energy transition 759 687 (18) (95) 16 - - (1) (17) - 1,331 TOTAL 6,831 1,788 (299) (871) 84 861 8 (21) (52) (6) 8,323 Nuclear decommissioning provision At December 31, 2021, the provision reected solely the costs that would be incurred at the time of decommis- sioning of nuclear plants by Enresa, a Spanish public entity responsible for such activities in accordance with Royal Decree 1349/2003 and Law 24/2005. In general, the costs are quantied on the basis of a stand- ard contract between Enresa and the electricity compa- nies approved by the Ministry for the Economy in Septem- ber 2001, which regulates the retirement and closing of nuclear power plants. The time horizon envisaged, three years, corresponds to the period from the termination of power generation to the transfer of plant management to Enresa (so-called “post-operational costs“) and takes ac- count, among the various assumptions used to estimate the amount, of the quantity of unused nuclear fuel expect- ed at the date of closure of each of the Spanish nucle- ar plants on the basis of the provisions of the concession agreement. Site retirement, removal and restoration provision This provision represents the present value of the esti- mated cost for the retirement and removal of non-nuclear plants where there is a legal or constructive obligation to 362 Integrated Annual Repo 2021362 do so. The provision mainly regarded the Endesa Group and Enel Produzione. The change in the provision in 2021 was mainly linked to the redetermination of the future re- tirement costs of ceain plants in Iberia and Italy and an increase in provisions for retirement costs resulting from the Group’s decision to promote the termination of gener- ation from coal-red power plants and reconve plans as pa of the energy transition. The following table summarizes the temporal breakdown of payments connected with the site retirement, removal and restoration provision. Millions of euro Payments by time bracket (nominal value) Discounted amount Within 1 year 652 651 In 1-5 years 929 896 More than 5 years 2,671 1,722 Total 4,252 3,269 Litigation provision The litigation provision covers contingent liabilities in re- spect of pending litigation and other disputes. It includes an estimate of the potential liability relating to disputes that arose during the year, as well as revised estimates of the potential costs associated with disputes initiated in prior years. The balance for litigation mainly regards the companies in Spain (€181 million), Italy (€133 million) and Latin America (€497 million). The increase compared with the previous year, equal to €14 million, mainly reects the increase in the provision in Italy, Iberia and Brazil, reecting provisions for new dis- putes, oset by an increase in uses in Peru following the resolution of a number of disputes. Provision for environmental ceicates The provision for environmental ceicates covers costs in respect of shofalls in the environmental ceicates needed for compliance with national or supranational en- vironmental protection requirements and mainly regards Enel Energía and Endesa Energía. Provision for taxes and duties The provision for taxes and duties covers the estimated liability deriving from tax disputes concerning direct and indirect taxes. The balance of the provision also includes the provision for current and potential disputes concerning local prop- ey tax (whether the Imposta Comunale sugli Immobili (ICI) or the Imposta Municipale Unica (IMU)) in Italy. In Ita- ly, the Group has taken due account of developments in land registry regulations (which with eect from January 1, 2016 excluded machinery, devices, equipment and oth- er plant specic to a production process from the calcu- lation of the imputed rent for buildings classied in land registry group D, which includes generation plants) in es- timating the liability for such taxes, both for the purposes of quantifying the probable risk associated with pending litigation and generating a reasonable valuation of prob- able future charges on positions that have not yet been assessed by the Revenue Agency and municipalities. Other provisions Other provisions cover various risks and charges, mainly in connection with regulatory disputes and disputes with local authorities regarding various duties and fees or oth- er charges. The increase of €68 million in other provisions is, in ad- dition to provisions for new insurance indemnities, mainly aributable to Enel Global Trading for provisions recog- nized by the company in view of a possible adjustment of the gas contract price to the market price by the supplier. Provision for early retirement incentives and other restructuring plans The provision for early retirement incentives and other restructuring plans includes the estimated charges relat- ed to binding agreements for the voluntary termination of employment contracts in response to organizational needs. The reduction of €339 million for the year main- ly reects uses of provisions for incentives established in Spain (Acuerdo de Salida Voluntaria) and Italy in previous years to cover the early termination of employment for ceain employees. Provision for restructuring programs connected with the energy transition Enel, in its role as a leader of the energy transition, has placed decarbonization and growth of renewables around the world at the center of its strategy. 363Notes to the consolidated nancial statements 363 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements In this context, Enel has begun restructuring the activi- ties associated with the energy-transition process, which involves thermal generation plants in all the geographi- cal areas in which the Group operates. The consequent revision of processes and operating models will require changes in the roles and skills of employees, which the Group intends to implement with highly sustainable plans based on redeployment programs, with major upskilling and reskilling plans and voluntary individual early retire- ment agreements. The energy transition is also based on the progressive and expansive development of digital tools, as digitization is essential to responding to multiple external forces and making informed and well-consid- ered decisions at every level within the Group. A provision was therefore established in 2020 for restruc- turing programs, which at December 31, 2021 amounted to €1,331 million, which is mainly aributable to Spain and Italy, and represents the estimated costs that the Group will incur following the acceleration of the energy tran- sition, for all direct and indirect activities related to the review of processes and operating models and the roles and skills of employees. 40. Other non-current nancial liabilities – €120 million Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Other non-current nancial liabilities 120 - 120 - Total 120 - 120 - “Other non-current nancial liabilities” repo the non-cur- rent poion of liabilities in respect of the Spanish electri- cal system decit in the amount of €120 million (€0 million at December 31, 2020), which are included in net nancial debt. 41. Other non-current liabilities – €4,525 million Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Accrued operating expenses and deferred income 498 500 (2) -0.4% Other items 4,027 2,958 1,069 36.1% Total 4,525 3,458 1,067 30.9% The change in “Other items” reected an increase of €42 million in amounts due to institutional market operators, an increase of €156 million in liabilities for tax panerships beyond 12 months in the United States and an increase in liabilities relating to the outcome of the PIS/COFINS dis- pute in Brazil (already discussed under “Other non-current assets”) in the amount of €766 million. 364 Integrated Annual Repo 2021364 42. Other current liabilities – €12,959 million Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Amounts due to customers 1,950 1,481 469 31.7% Amounts due to institutional market operators 2,961 4,012 (1,051) -26.2% Amounts due to employees 471 438 33 7.5 % Other tax liabilities 1,274 886 388 43.8% Amounts due to social security institutions 205 207 (2) -1.0% Contingent consideration 45 53 (8) -15.1% Put options granted to non-controlling shareholders 4 1 3 - Current accrued expenses and deferred income 395 346 49 14.2% Dividends 2,191 2,135 56 2.6% Other 3,463 2,092 1,371 65.5% Total 12,959 11,651 1,308 11.2% “Amounts due to customers“ include €1,169 million (€822 million at December 31, 2020) in security deposits related primarily to amounts received from customers in Spain as pa of electricity and gas supply contracts. Following the nalization of the contract, deposits for electricity sales, the use of which is not restricted in any way, are classied as current liabilities given that the Parent does not have an unconditional right to defer repayment beyond 12 months. Amounts due to institutional market operators include liabilities arising from the application of equalization mechanisms to electricity purchases on the Italian market amounting to €1,976 million (€2,444 million at December 31, 2020), on the Spanish market amounting to €938 mil- lion (€1,538 million at December 31, 2020) and on the Latin American market amounting to €47 million (€30 million at December 31, 2020). The increase in “Other” liabilities is mainly aributable to Italy in respect of expired derivatives on energy commod- ities. The increase in “Other tax liabilities” is mainly aributable to Italy following the sta in 2021 of the Group selement mechanism for VAT obligations by the Parent, Enel SpA. 43\. Trade payables – €16,959 million The item amounted to €16,959 million (€12,859 million at December 31, 2020) and includes payables in respect of electricity supplies, fuel, materials, equipment associated with tenders, and other services. More specically, trade payables falling due in less than 12 months amounted to €16,865 million (€12,282 million at December 31, 2020), while those falling due in more than 12 months amounted to €94 million (€577 million at De- cember 31, 2020). 365Notes to the consolidated nancial statements 365 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 44\. Other current nancial liabilities – €625 million Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Accrued nancial expense and deferred nancial income 539 535 4 0.7% Other items 86 87 (1) -1.1% Total 625 622 3 0.5% Other current nancial liabilities are viually unchanged on December 31, 2020. Other items mainly regard liabilities for accrued interest. 45\. Net nancial position and long-term nancial assets and securities – €51,952 million The following table shows the net nancial position and long-term nancial assets and securities on the basis of the items on the statement of consolidated nancial po- sition. Millions of euro Notes at Dec. 31, 2021 at Dec. 31, 2020 Change Long-term borrowings 37 54,500 49,519 4,981 10.1% Other non-current nancial borrowings (1) 40 120 - 120 - Sho-term borrowings 37 13,306 6,345 6,961 - Other current nancial borrowings (2) 12 5 7 - Current poion of long-term borrowings 37 4,031 3,168 863 27. 2% Other non-current nancial assets included in net nancial debt 28.1 (2,692) (2,745) 53 1.9% Other current nancial assets included in net nancial debt 29.1 (8,467) (4,971) (3,496) -70.3% Cash and cash equivalents 34 (8,858) (5,906) (2,952) -50.0% Total 51,952 45,415 6,537 14.4% (1) The item “Other non-current nancial borrowings” is represented by “Other non-current nancial liabilities” in the statement of nancial position. (2) The item “Other current nancial borrowings” is included under “Other current nancial liabilities” in the statement of nancial position. The net nancial debt of the Enel Group at December 31, 2021 and December 31, 2020 is repoed below in accord- ance with Guideline 39, issued on March 4, 2021, by ESMA, applicable as from May 5, 2021, and with warning notice no. 5/2021 issued by CONSOB on April 29, 2021, recon- ciled with net nancial debt as provided for in the pres- entation methods of the Enel Group. The references to the CESR Recommendations contained in previous CONSOB communications shall be considered to have been replaced by references to the ESMA Guide- line cited above, including the references in Communica- tion no. DEM/6064293 of July 28, 2006 regarding the net nancial position. 366 Integrated Annual Repo 2021366 Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Liquidity Cash and cash equivalents on hand 8 42 (34) -81.0% Bank and post oce deposits 8,118 5,699 2,419 42.4% Liquid assets 8,126 5,741 2,385 41.5% Cash equivalents 732 165 567 - Securities 88 67 21 31.3% Sho-term loan assets 6,841 3,476 3,365 96.8% Current poion of long-term loan assets 1,538 1,428 110 7.7 % Other current nancial assets 8,467 4,971 3,496 70.3% Liquidity 17, 3 2 5 10,877 6,448 59.3% Current nancial debt Bank debt (1,329) (711) (618) -86.9% Commercial paper (10,708) (4,854) (5,854) - Other sho-term borrowings (1) (1,281) (785) (496) -63.2% Current nancial debt (including debt instruments) (13,318) (6,350) (6,968) - Current poion of long-term bank borrowings (989) (1,369) 380 27.8 % Bonds issued (current poion) (2,700) (1,412) (1,288) -91.2% Other borrowings (current poion) (342) (387) 45 11.6% Non-current nancial debt (current poion) (4,031) (3,168) (863) -2 7. 2 % Current nancial debt (17,349) (9,518) (7,831) -82.3% Net current nancial debt (24) 1,359 (1,383) - Non-current nancial debt Bank borrowings (12,579) (8,663) (3,916) -45.2% Other borrowings (2) (2,942) (2,499) (443) -17.7 % Non-current nancial debt (excluding current poion and debt instruments) (15,521) (11,162) (4,359) -39.1% Bonds (39,099) (38,357) (742) -1.9% Trade payables and other non-interest-bearing non-current liabilities with a signicant nancing component - - - - Non-current nancial debt (54,620) (49,519) (5,101) -10.3% Net nancial debt as per CONSOB instructions (54,644) (48,160) (6,484) -13.5% Long-term nancial assets and securities 2,692 2 ,745 (53) -1.9% NET FINANCIAL DEBT (51,952) (45,415) (6,537) -14.4% (1) Includes current nancial borrowings included in “Other current nancial liabilities” in the statement of nancial position. (2) Includes other non-current nancial borrowings presented under “Other non-current nancial liabilities” in the statement of nancial position. This statement of the net nancial position does not in- clude nancial assets and liabilities in respect of deriva- tives, since derivative contracts, even if not designated as hedges for hedge accounting purposes, are in any case entered into by the Group for hedging purposes. At December 31, 2021, those nancial assets and liabili- ties are repoed separately in the statement of nancial position under the following items: “Non-current nancial derivative assets” in the amount of €2,772 million (€1,236 million at December 31, 2020), “Current nancial derivative assets” in the amount of €22,791 million (€3,471 million at December 31, 2020), “Non-current nancial derivative lia- bilities” in the amount of €3,339 million (€3,606 million at 31 December, 2020) and “Current nancial derivative lia- bilities” in the amount of €24,607 million (€3,531 million at December 31, 2020). 367Notes to the consolidated nancial statements 367 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Financial instruments 46. Financial instruments by category This note provides disclosures necessary for users to assess the signicance of nancial instruments for the Group’s nancial position and peormance. 46.1 Financial assets by category The following table repos the carrying amount for each category of nancial asset provided for under IFRS 9, bro- ken down into current and non-current nancial assets, showing hedging derivatives and derivatives measured at fair value through prot or loss separately. Millions of euro Non-current Current Notes at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 Financial assets at amoized cost 46.1.1 4,092 3,966 34,671 22,967 Financial assets at FVOCI 46.1.2 443 448 87 67 Financial assets at fair value through prot or loss Derivative nancial assets at FVTPL 46.1.3 277 52 19,664 2,765 Other nancial assets at FVTPL 46.1.3 2,662 2,087 141 301 Total nancial assets at fair value through prot or loss 2,939 2,139 19,805 3,066 Derivative nancial assets designated as hedging instruments Fair value hedge derivatives 46.1.4 61 50 - 28 Cash ow hedge derivatives 46.1.4 2,434 1,134 3,127 678 Total derivative nancial assets designated as hedging instruments 2,495 1,184 3,127 706 TOTAL 9,969 7,7 37 57,69 0 26,806 For more information on the recognition and classication of current and non-current derivative assets, please see note 49 “Derivatives and hedge accounting”. For more information on fair value measurement, see note 50 “Assets and liabilities measured at fair value”. 46.1.1 Financial assets measured at amoized cost The following table repos nancial assets measured at amoized cost by nature, broken down into current and non-current nancial assets. Millions of euro Non-current Current Notes at Dec. 31, 2021 at Dec. 31, 2020 Notes at Dec. 31, 2021 at Dec. 31, 2020 Cash and cash equivalents - - 34 8,759 5,702 Trade receivables 33 1,301 1,200 33 14,775 10,846 Current poion of long-term loan assets - - 29.1 1,538 1,331 Cash collateral - - 29.1 6,485 3,223 Other nancial assets 28.1 2,289 2,337 29.1 315 253 Financial assets from service concession arrangements at amoized cost 28 260 243 29 64 9 Other nancial assets at amoized cost 242 186 2,735 1,603 Total 4,092 3,966 34,671 22,967 368 Integrated Annual Repo 2021368 Impairment of nancial assets at amoized cost Financial assets measured at amoized cost amounted to €38,763 million at December 31, 2021 (€26,933 million at December 31, 2020) and are recognized net of loss allow- ances for expected credit losses totaling €4,051 million at December 31, 2021 (€3,624 million at the end of the pre- vious year). The Group mainly has the following types of nancial as- sets measured at amoized cost subject to impairment testing: • cash and cash equivalents; • trade receivables and contract assets; • loan assets; • other nancial assets. While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the identied impair- ment loss was immaterial. The expected credit loss (ECL) – determined using proba- bility of default (PD), loss given default (LGD) and exposure at default (EAD) – is the dierence between all contractual cash ows that are due in accordance with the contract and all cash ows that are expected to be received (i.e., all sho- falls) discounted at the original eective interest rate (EIR). For calculating ECL, the Group applies two dierent ap- proaches: • the general approach, for nancial assets other than trade receivables, contract assets and lease receivables. This approach, based on an assessment of any signif- icant increase in credit risk since initial recognition, is peormed comparing PD at origination with PD at the repoing date, at each repoing date. Then, based on the results of the assessment, a loss al- lowance is recognized based on 12-month ECL or life- time ECL (i.e., staging): – 12-month ECL, for nancial assets for which there has not been a signicant increase in credit risk since initial recognition; – lifetime ECL, for nancial assets for which there has been a signicant increase in credit risk or which are credit impaired (i.e., defaulted based on past due in- formation); • the simplied approach, for trade receivables, contract assets and lease receivables with or without a signi- cant nancing component, based on lifetime ECL with- out tracking changes in credit risk. A forward-looking adjustment can be applied considering qualitative and quantitative information in order to reect future events and macroeconomic developments that could impact the risk associated with the pofolio or - nancial instrument. Depending on the nature of the nancial assets and the credit risk information available, the assessment of the in- crease in credit risk can be peormed on: • an individual basis, if the receivables are individually sig- nicant and for all receivables which have been individ- ually identied for impairment based on reasonable and suppoable information; • a collective basis, if no reasonable and suppoable infor- mation is available without undue cost or eo to meas- ure expected credit losses on an individual instrument basis. When there is no reasonable expectation of recovering a nancial asset in its entirety or a poion thereof, the gross carrying amount of the nancial asset shall be reduced. A write-o represents a derecognition event (e.g., the right to cash ows is legally or contractually extinguished, trans- ferred or expired). The following table repos expected credit losses on - nancial assets measured at amoized cost on the basis of the general simplied approach. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Gross amount Loss allowance for expected credit losses Total Gross amount Loss allowance for expected credit losses Total Cash and cash equivalents 8,759 - 8,759 5,702 - 5,702 Trade receivables 19,739 3,663 16,076 15,333 3,287 12,046 Loan assets 10,861 234 10,627 7,352 208 7, 14 4 Other nancial assets at amoized cost 3,455 154 3,301 2,170 129 2,041 Total 42,814 4,051 38,763 30,557 3,624 26,933 To measure expected losses, the Group assesses trade receivables and contract assets with the simplied ap- proach, both on an individual basis (e.g., government enti- ties, authorities, nancial counterpaies, wholesale sellers, traders and large companies, etc.) and a collective basis (e.g., retail customers). 369Notes to the consolidated nancial statements 369 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements In the case of individual assessments, PD is generally ob- tained from external providers. Otherwise, in the case of collective assessments, trade re- ceivables are grouped on the basis of their shared credit risk characteristics and information on past due positions, con- sidering a specic denition of default. Based on each business and local regulatory framework, as well as dierences between customer pofolios, including their default and recovery rates (comprising expectations for recovery beyond 90 days): • the Group mainly denes a defaulted position as one that is 180 days past due. Accordingly, beyond this time lim- it, trade receivables are presumed to be credit impaired; and • specic clusters are dened on the basis of specic mar- kets, business and risk characteristics. Contract assets substantially have the same risk character- istics as trade receivables for the same types of contracts. In order to measure ECL for trade receivables on a collective basis, as well as for contract assets, the Group uses the fol- lowing assumptions regarding the ECL parameters: • PD, assumed equal to the average default rate, is calcu- lated by cluster and considering historical data from at least 24 months; • LGD is a function of the recovery rates for each cluster, discounted using the eective interest rate; and • EAD is estimated as equal to the carrying amount at the repoing date net of cash deposits, including invoices is- sued but not past due and invoices to be issued. The following table repos changes in the loss allowance for expected credit losses on loan assets in accordance with the general approach. Millions of euro ECL 12-month allowance ECL lifetime allowance Opening balance at Jan. 1, 2020 78 153 Accruals 354 8 Uses - - Reversals to prot or loss (4) (4) Other changes (363) (14) Closing balance at Dec. 31, 2020 65 143 Opening balance at Jan. 1, 2021 65 143 Accruals - 9 Uses - - Reversals to prot or loss (25) (9) Other changes 25 26 Closing balance at Dec. 31, 2021 65 169 The following table repos changes in the loss allowance for expected credit losses on trade receivables in accord- ance with the simplied approach. Millions of euro Opening balance at Jan. 1, 2020 2,980 Accruals 1,505 Uses (819) Reversals to prot or loss (194) Other changes (185) Closing balance at Dec. 31, 2020 3,287 Opening balance at Jan. 1, 2021 3,287 Accruals 1,361 Uses (709) Reversals to prot or loss (258) Other changes (18) Closing balance at Dec. 31, 2021 3,663 370 Integrated Annual Repo 2021370 The following table repos changes in the loss allowance for expected credit losses on other nancial assets at am- oized cost in accordance with the simplied approach. Millions of euro ECL lifetime allowance Opening balance at Jan. 1, 2020 159 Accruals 22 Uses - Reversals to prot or loss (23) Other changes (29) Closing balance at Dec. 31, 2020 129 Opening balance at Jan. 1, 2021 129 Accruals 87 Uses - Reversals to prot or loss (21) Other changes (41) Closing balance at Dec. 31, 2021 154 Note 47 “Risk management” provides additional informa- tion on the exposure to credit risk and expected losses. 46.1.2 Financial assets at fair value through other comprehensive income The following table shows nancial assets at fair value through other comprehensive income by nature, broken down into current and non-current nancial assets. Millions of euro Non-current Current Notes at Dec. 31, 2021 at Dec. 31, 2020 Notes at Dec. 31, 2021 at Dec. 31, 2020 Investments in other companies at FVOCI 28 40 40 - - Securities 28.1 403 408 29.1 87 67 Total 443 448 87 67 Changes in nancial assets at FVOCI Investments in other companies Millions of euro Non-current Current Opening balance at Jan. 1, 2020 64 - Purchases 6 - Sales - - Changes in fair value through OCI (21) - Other changes (9) - Closing balance at Dec. 31, 2020 40 - Opening balance at Jan. 1, 2021 40 - Purchases 2 - Sales - - Changes in fair value through OCI - - Other changes (2) - Closing balance at Dec. 31, 2021 40 - 371Notes to the consolidated nancial statements 371 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Securities at FVOCI Millions of euro Non-current Current Opening balance at Jan. 1, 2020 416 61 Purchases 124 - Sales (54) - Changes in fair value through OCI (3) - Reclassications (75) 75 Other changes - (69) Closing balance at Dec. 31, 2020 408 67 Opening balance at Jan. 1, 2021 408 67 Purchases 165 - Sales (87) - Changes in fair value through OCI 2 - Reclassications (85) 85 Other changes - (65) Closing balance at Dec. 31, 2021 403 87 46.1.3 Financial assets at fair value through prot or loss The following table shows nancial assets at fair value through prot or loss by nature, broken down into current and non-current nancial assets. Millions of euro Non-current Current Notes at Dec. 31, 2021 at Dec. 31, 2020 Notes at Dec. 31, 2021 at Dec. 31, 2020 Derivatives at FVTPL 49 277 52 49 19,664 2,765 Investments in liquid assets - - 34 99 204 Financial assets at FVTPL - - 29, 29.1 41 97 Securities - - 29.1 1 - Equity investments in other companies at FVTPL 28 32 30 - - Financial assets from service concession arrangements at FVTPL 28 2,630 2,057 - - Total 2,939 2,139 19,805 3,066 46.1.4 Derivative nancial assets designated as hedging instruments For more information on derivative nancial assets, please see note 49 “Derivatives and hedge accounting”. 372 Integrated Annual Repo 2021372 46.2 Financial liabilities by category The following table shows the carrying amount for each category of nancial liability provided for under IFRS 9, broken down into current and non-current nancial liabil- ities, showing hedging derivatives and derivatives meas- ured at fair value through prot or loss separately. Millions of euro Non-current Current Notes at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 Financial liabilities measured at amoized cost 46.2.1 54,914 50,254 42,330 29,598 Financial liabilities at fair value through prot or loss Derivative nancial liabilities at FVTPL 46.4 169 29 19,696 2,887 Total nancial liabilities at fair value through prot or loss 169 29 19,696 2,887 Derivative nancial liabilities designated as hedging instruments Fair value hedge derivatives 46.4 5 - - - Cash ow hedge derivatives 46.4 3,165 3,577 4,911 644 Total derivative nancial liabilities designated as hedging instruments 3,170 3,577 4,911 644 TOTAL 58,253 53,860 66,937 33,129 For more information on fair value measurement, please see note 50 “Assets and liabilities measured at fair value”. 46.2.1 Financial liabilities measured at amoized cost The following table shows nancial liabilities at amoized cost by nature, broken down into current and non-current nancial liabilities. Millions of euro Non-current Current Notes at Dec. 31, 2021 at Dec. 31, 2020 Notes at Dec. 31, 2021 at Dec. 31, 2020 Long-term borrowings 46.3 54,500 49,519 46.3 4,031 3,168 Sho-term borrowings - - 46.3 13,306 6,345 Trade payables 43 94 577 43 16,865 12,282 Other nancial liabilities 320 158 8,128 7, 8 03 Total 54,914 50,254 42,330 29,598 373Notes to the consolidated nancial statements 373 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 46.3 Borrowings 46.3.1 Long-term borrowings (including the poion falling due within 12 months) – €58,531 million The following table repos the nominal value, carrying amount and fair value of long-term borrowings including the poion falling due within 12 months. Long-term borrowings by category and type of interest rate (1) Millions of euro Nominal value Carrying amount Current poion Poion due in more than 12 months Fair value Nominal value Carrying amount Current poion Poion due in more than 12 months Fair value Changes in carrying amount 2021- 2020 at Dec. 31, 2021 at Dec. 31, 2020 Bonds: \- listed, xed rate 27, 8 57 27,413 2,119 25,294 30,279 23,629 23,052 1,041 22,011 27,470 4,361 \- listed, oating rate 2,574 2,557 434 2,123 2,545 2,817 2,800 260 2,540 2,937 (243) \- unlisted, xed rate 11,293 11,207 50 11,157 12,670 13,262 13,184 - 13,184 15,753 (1,977) \- unlisted, oating rate 622 622 97 525 728 733 733 111 622 828 (111) Total bonds 42,346 41,799 2,700 39,099 46,222 40,441 39,769 1,412 38,357 46,988 2,030 Bank borrowings: \- xed rate 2,414 2,405 238 2,167 2,298 790 782 254 528 833 1,623 \- oating rate 10,139 10,109 751 9,358 10,037 9,278 9,250 1,115 8,135 9,259 859 \- use of revolving credit lines 1,054 1,054 - 1,054 1,054 - - - - - 1,054 Total bank borrowings 13,607 13,568 989 12,579 13,389 10,068 10,032 1,369 8,663 10,092 3,536 Leases: \- xed rate 2,477 2,477 242 2,235 2,477 1,979 1,979 225 1,754 1,979 498 \- oating rate 70 70 17 53 70 89 89 22 67 89 (19) Total leases 2,547 2,547 259 2,288 2,547 2,068 2,068 247 1,821 2,068 479 Other non-bank borrowings: \- xed rate 571 595 69 526 569 607 639 74 565 630 (44) \- oating rate 34 22 14 8 25 191 179 66 113 160 (157) Total other non- bank borrowings 605 617 83 534 594 798 818 140 678 790 (201) Total xed-rate borrowings 44,612 44,097 2,718 41,379 48,293 40,267 39,636 1,594 38,042 46,665 4,461 Total oating-rate borrowings 14,493 14,434 1,313 13,121 14,459 13,108 13,051 1 ,574 11,477 13,273 1,383 TOTAL 59,105 58,531 4,031 54,500 62,752 53,375 52,687 3,168 49,519 59,938 5,844 (1) Does not include other non-current nancial borrowings repoed under “Other non-current nancial liabilities” in the statement of nancial position that are included in long-term nancial debt. 374 Integrated Annual Repo 2021374 The table below repos long-term nancial debt by cur- rency and interest rate. Long-term nancial debt by currency and interest rate (1) Millions of euro Carrying amount Nominal value Carrying amount Nominal value Current average nominal interest rate Current eective interest rate Current average nominal interest rate Current eective interest rate at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 Euro 32,041 32,387 25,581 26,089 1.6% 1.9% 2.2% 2.6% US dollar 17,51 8 17,62 9 18,500 18,589 4.2% 4.3% 4.5% 4.7% Pound sterling 3,901 3,976 3,955 3,998 5.0% 5.2% 5.1% 5.3% Colombian peso 1,341 1,341 1,283 1,283 6.5% 6.5% 6.8% 6.8% Brazilian real 1,720 1,753 1,832 1,864 8.8% 8.9% 5.3% 5.3% Swiss franc 343 344 328 329 1.8% 1.8% 1.8% 1.8% Chilean peso/UF 423 428 368 374 5.2% 5.2% 4.9% 5.0% Peruvian sol 415 415 388 388 5.2% 5.2% 5.8% 5.8% Russian ruble 427 427 281 286 6.8% 7.3 % 7. 1 % 7. 1 % Other currencies 402 405 171 175 Total non-euro currencies 26,490 26,718 27, 10 6 27, 286 TOTAL 58,531 59,105 52,687 53,375 (1) Does not include other non-current nancial borrowings repoed under “Other non-current nancial liabilities” in the statement of nancial position. Long-term nancial debt denominated in currencies other than the euro decreased by €616 million, largely aributa- ble to the changes in debt denominated in US dollars. Change in the nominal value of long-term debt (1) Millions of euro Nominal value Repayments Change in the consolidation scope New borrowings Other changes Exchange dierences Nominal value at Dec. 31, 2020 at Dec. 31, 2021 Bonds 40,441 (9,049) - 10,368 (900) 1,486 42,346 Borrowings 12,934 (2,272) 183 5,527 (131) 518 16,759 \- of which leases 2,068 (165) 2 526 - 116 2,547 Total nancial debt 53,375 (11,321) 183 15,895 (1,031) 2,004 59,105 (1) Does not include changes in the nominal value of other non-current nancial borrowings repoed under “Other non-current nancial liabilities” in the statement of nancial position. 375Notes to the consolidated nancial statements 375 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements The nominal value of long-term debt amounted to €59,105 million at December 31, 2021, an increase of €5,730 mil- lion compared with December 31, 2020. The increase in debt reected new borrowings of €15,895 million, ex- change losses of €2,004 million and the consolidation of the debt of a number of Australian companies amounting to €183 million. These factors were only paially oset by repayments of €11,321 million and other changes in the debt equal to €1,031 million, of which €900 million were aributable to the change in the accounting treatment of non-conveible subordinated hybrid bonds in euros issued by Enel SpA and conveed into perpetual hybrid bonds in 2021. Repayments in 2021 involved bonds in the amount of €9,049 million and loans in the amount of €2,272 million. Specically, repayments in 2021 included: • €1,069 million in respect of the repurchase and subse- quent cancellation of pa of four series of convention- al bonds in euros by Enel Finance International in June 2021 through a non-binding voluntary tender oer; • $6,000 million (equivalent to €5,101 million at the repay- ment date) in respect of the cash repurchase of four conventional bonds denominated in US dollars by Enel Finance International in July 2021 following the exercise of a repurchase option; • $1,472 million (equivalent to €1,275 million at the repay- ment date) in respect of the repurchase and subsequent cancellation of pa of two series of conventional bonds denominated in US dollars by Enel Finance International in October 2021 through a voluntary non-binding tender oer; • €533 million in respect of xed-rate bonds issued by Enel Finance International, maturing in July 2021; • the equivalent of €292 million in respect of hybrid bonds denominated in British pounds issued by Enel SpA, matur- ing in September 2021; • the equivalent of €171 million in respect of the repayment of bonds in local currency by Emgesa, maturing in January 2021; • the equivalent of €114 million in respect of the repayment of bonds in local currency by Enel Distribuição São Paulo, maturing in September 2021. The main repayments of loans made during the year included: • €200 million in respect of a oating-rate loan of Enel SpA; • the equivalent of €196 million in respect of a oating-rate loan in US dollars of Enel SpA; • €178 million in respect of Endesa loans, of the which €166 million in sustainable loans; • €294 million in respect of sustainable loans of the Group’s Italian companies; • the equivalent of €1,019 million relating to South American companies. New borrowings in 2021 involved €10,368 million in bonds and €5,527 million in loans. The table below shows the main characteristics of nancial transactions carried out in 2021 and translated into euros at the exchange rate prevailing at December 31, 2021. 376 Integrated Annual Repo 2021376 Issuer/Borrower Issue/ Grant date Amount in millions of euro Currency Interest rate Interest rate type Maturity Bonds Enel Finance International 17.06.2021 1,000 EUR 0.00% Fixed rate 17.06.2027 Enel Finance International 17.06.2021 1,250 EUR 0.50% Fixed rate 17.06.2030 Enel Finance International 17.06.2021 1,000 EUR 0.875% Fixed rate 17.06.2036 Enel Finance International 12.07.2021 1,104 USD 1.375% Fixed rate 12.07.2026 Enel Finance International 12.07.2021 883 USD 1.875% Fixed rate 12.07.2028 Enel Finance International 12.07.2021 883 USD 2.250% Fixed rate 12.07.2031 Enel Finance International 12.07.2021 662 USD 2.875% Fixed rate 12.07.2041 Enel Finance International 28.09.2021 1,250 EUR - Fixed rate 28.05.2026 Enel Finance International 28.09.2021 1,000 EUR 0.375% Fixed rate 28.05.2029 Enel Finance International 28.09.2021 1,250 EUR 0.875% Fixed rate 28.09.2034 Enel Distribuição São Paulo 30.04.2021 114 BRL IPCA + 4.26% Floating rate 15.04.2031 Enel Distribuição São Paulo 04.10.2021 91 BRL CDI + 1.64% a.a Floating rate 04.10.2028 Total bonds 10,487 Bank borrowings Enel SpA 05.05.2021 200 EUR Euribor 6M + 0.3% Floating rate 03.05.2024 Enel SpA 12.10.2021 308 USD USD SOFR 3M CMP 5LB + 0.7% Floating rate 12.10.2025 Enel SpA 30.12.2021 1,000 EUR Euribor 6M + 0.4% Floating rate 05.03.2026 e-distribuzione 30.07.2021 150 EUR Euribor 6M + 0.257% Floating rate 30.07.2036 e-distribuzione 22.12.2021 150 EUR Euribor 6M + 0.275% Floating rate 22.12.2036 Endesa 15.04.2021 150 EUR Euribor 3M + 0.82% Floating rate 18.04.2028 Endesa 28.06.2021 75 EUR 0.27% Fixed rate 28.06.2028 Endesa 30.07.2021 75 EUR 0.26% Fixed rate 30.07.2028 Endesa 30.07.2021 50 EUR 0.26% Fixed rate 30.07.2028 Endesa 15.10.2021 125 EUR 0.09% Fixed rate 15.10.2026 Endesa 15.10.2021 75 EUR 0.11% Fixed rate 15.10.2026 Endesa 27.10.2021 100 EUR 0.25% Fixed rate 27.10.2028 Endesa 22.11.2021 250 EUR Euribor 6M + 0.313% Floating rate 22.11.2036 Endesa 09.12.2021 275 EUR 0.00% Fixed rate 09.12.2024 Endesa 17.12.2021 225 EUR 0.156% Fixed rate 17.12.2024 Enel Distribuição Ceará 06.01.2021 69 USD 1.225% Fixed rate 06.01.2023 Enel Distribuição São Paulo 19.04.2021 74 USD 1 .974% Fixed rate 19.04.2024 Enel Distribuição São Paulo 09.09.2021 68 USD 2.365% Fixed rate 09.09.2025 Codensa 14.05.2021 87 COP COP IBR 3M + 0.75% Floating rate 14.05.2026 Codensa 15.07.2021 65 COP COP IBR 6M + 0.5% Floating rate 15.07.2026 Codensa 30.11.2021 56 COP COP IBR 3M + 0.085% Floating rate 30.11.2026 Enel Chile 03.12.2021 132 USD USD LIBOR + 1.10% Floating rate 03.12.2026 Enel Brasil 15.09.2021 61 USD 1.91% Fixed rate 16.09.2024 Total bank borrowings 3,820 377Notes to the consolidated nancial statements 377 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements The following table repos the impact on gross long-term debt of hedges to mitigate currency risk. Structure of long-term nancial debt by currency after hedging (1) Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Initial debt structure Impact of hedge Debt structure after hedging Initial debt structure Impact of hedge Debt structure after hedging Carrying amount Nominal value % Carrying amount Nominal value % Euro 32,041 32,387 54.8% 16,657 49,044 83.0% 25,581 26,089 48.9% 18,423 44,512 83.4% US dollar 17,51 8 17,6 2 9 29.8% (13,423) 4,206 7. 1 % 18,500 18,589 34.8% (14,955) 3,634 6.8% Pound sterling 3,901 3,976 6.7% (3,976) - \- 3,955 3,998 7.5 % (3,998) - - Colombian peso 1,341 1,341 2.3% - 1,341 2.3% 1,283 1,283 2.4% - 1,283 2.4% Brazilian real 1,720 1,753 3.0% 1,028 2,781 4.7% 1,832 1,864 3.5% 794 2,658 5.0% Swiss franc 343 344 0.6% (344) - \- 328 329 0.6% (329) - - Chilean peso/ UF 423 428 0.7% - 428 0.7% 368 374 0.7% - 374 0.7% Peruvian sol 415 415 0.7% - 415 0.7% 388 388 0.7% - 388 0.7% Russian ruble 427 427 0.7% - 427 0.7% 281 286 0.5% - 286 0.5% Other currencies 402 405 0.7% 58 463 0.8% 171 175 0.4% 65 240 0.5% Total non-euro currencies 26,490 26,718 45.2% (16,657) 10,061 17. 0 % 27, 10 6 27, 286 51.1% (18,423) 8,863 16.6% TOTAL 58,531 59,105 100.0% - 59,105 100.0% 52,687 53,375 100.0% - 53,375 100.0% (1) Does not include other non-current nancial borrowings repoed under “Other non-current nancial liabilities” in the statement of nancial position. The amount of oating-rate debt that is not hedged against interest rate risk is the main risk factor that could adversely impact prot or loss (raising borrowing costs) in the event of an increase in market interest rates. Millions of euro 2021 2020 Pre-hedge % Post-hedge % Pre-hedge % Post-hedge % Floating rate 27,811 38.4% 22,478 31.0% 19,458 32.6% 13,672 22.9% Fixed rate 44,612 61.6% 49,945 69.0% 40,267 67.4% 46,053 77.1% Total 72,423 72,423 59,725 59,725 At December 31, 2021, 38.4% of nancial debt was oat- ing rate (32.6% at December 31, 2020). Taking account of hedges of interest rates considered eective pursuant to the IFRS-EU, 31.0% of net nancial debt at December 31, 2021 (22.9% at December 31, 2020) was exposed to inter- est rate risk. These gures are in line with the limits estab- lished in the risk management policy. The following table shows the impact of the IBOR reform on long-term nancial debt for the main indices (for more details, please see the section “Reform of benchmarks for the determination of interest rates - IBOR reform” in note 49.1). Millions of euro Notional amount at Dec. 31, 2021 Long-term nancial debt Phase 1 Phase 2 USD LIBOR/SOFR 888 - GBP LIBOR/SONIA \- - Total 888 \- 378 Integrated Annual Repo 2021378 Long-term debt - Main covenants The Group’s main long-term nancial liabilities are gov- erned by covenants that are commonly adopted in inter- national business practice. These liabilities primarily re- gard bond issues carried out within the framework of the Global/Euro Medium Term Notes program, issues of sub- ordinated unconveible hybrid bonds (so-called “hybrid bonds”) and loans granted by banks and other nancial institutions (including the European Investment Bank and Cassa Depositi e Prestiti SpA). The main covenants regarding bond issues carried out within the framework of the Global/Euro Medium Term Notes program of Enel and Enel Finance International NV (including the green bonds of Enel Finance International NV guaranteed by Enel SpA, which are used to nance the Group’s so-called “eligible green projects“) and those re- garding bonds issued by Enel Finance International NV on the US market guaranteed by Enel SpA can be summarized as follows: • negative pledge clauses under which the issuer and the guarantor may not establish or maintain mogages, liens or other encumbrances on all or pa of its assets or revenue to secure ceain nancial liabilities, unless the same encumbrances are extended equally or pro rata to the bonds in question; • pari passu clauses, under which the bonds and the as- sociated security constitute a direct, unconditional and unsecured obligation of the issuer and the guarantor and are issued without preferential rights among them and have at least the same seniority as other present and future unsubordinated and unsecured bonds of the issuer and the guarantor; • cross-default clauses, under which the occurrence of a default event in respect of a specied nancial liability (above a threshold level) of the issuer, the guarantor or, in some cases, “signicant” subsidiaries, constitutes a default in respect of the liabilities in question, which be- come immediately repayable. Since 2019, Enel Finance International NV has issued a number of “sustainable” bonds on the European market (as pa of the Euro Medium Term Notes - EMTN bond issue program) and on the American market, both guaranteed by Enel SpA, linked to the achievement of a number of the Sustainable Development Goals (SDGs) of the United Na- tions that contain the same covenants as other bonds of the same type. The main covenants covering Enel’s hybrid bonds, includ- ing the perpetual hybrid bond issues, which will only be repaid in the event of the dissolution or liquidation of the Company, can be summarized as follows: • subordination clauses, under which each hybrid bond is subordinate to all other bonds issued by the company and has the same seniority with all other hybrid nancial instruments issued, being senior only to equity instru- ments; • prohibition on mergers with other companies, the sale or leasing of all or a substantial pa of the company’s assets to another company, unless the laer succeeds in all obligations of the issuer. The main covenants envisaged in the loan contracts of Enel and Enel Finance International NV and the other Group companies, including the sustainability-linked loan facility agreements obtained by Enel SpA, can be summa- rized as follows: • negative pledge clauses, under which the borrower and, in some cases, the guarantor are subject to limitations on the establishment of mogages, liens or other encum- brances on all or pa of their respective assets, with the exception of expressly permied encumbrances; • disposals clauses, under which the borrower and, in some cases, the guarantor may not dispose of their as- sets or operations, with the exception of expressly per- mied disposals; • pari passu clauses, under which the payment undeak- ings of the borrower have the same seniority as its other unsecured and unsubordinated payment obligations; • change of control clauses, under which the borrower and, in some cases, the guarantor could be required to renegotiate the terms and conditions of the nancing or make compulsory early repayment of the loans granted; • rating clauses, which provide for the borrower or the guarantor to maintain their rating above a ceain spec- ied level; • cross-default clauses, under which the occurrence of a default event in respect of a specied nancial liability (above a threshold level) of the issuer or, in some cases, the guarantor constitutes a default in respect of the lia- bilities in question, which become immediately repayable. In some cases, the covenants are also binding for the sig- nicant companies or subsidiaries of the obligated paies. All the borrowings considered specify “events of default” typical of international business practice, such as, for ex- ample, insolvency, bankruptcy proceedings or the entity ceasing trading. In addition, the guarantees issued by Enel in the interest of e-distribuzione SpA for ceain loans to e-distribuzi- one SpA from Cassa Depositi e Prestiti SpA require that at the end of each six-month measurement period Enel’s net consolidated nancial debt shall not exceed 4.5 times annual consolidated gross operating prot. 379Notes to the consolidated nancial statements 379 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Finally, the debt of Endesa SA, Enel Américas SA, Enel Chile SA and the other Spanish and Latin American subsidiaries (notably Enel Generación Chile SA) contain covenants and events of default typical of international business practice. 46.3.2 Sho-term borrowings – €13,306 million At December 31, 2021 sho-term borrowings totaled €13,306 million, an increase of €6,961 million compared with December 31, 2020, and break down as follows: Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Sho-term bank borrowings 1,329 711 618 Commercial paper 10,708 4,854 5,854 Cash collateral and other nancing on derivatives 918 370 548 Other sho-term borrowings (1) 351 410 (59) Sho-term borrowings 13,306 6,345 6,961 (1) Does not include other current borrowings included in “Other current nancial liabilities” of the statement of nancial position included in nancial debt. Commercial paper liabilities totaling €10,708 million con- cerned issues by Enel Finance International, Enel Finance America and Endesa. The main commercial paper programs include: • €6,000 million of Enel Finance International linked to sustainability objectives; • €4,000 million of Endesa linked to sustainability objec- tives; • $5,000 million (equivalent to €4,414 million at Decem- ber 31, 2021) of Enel Finance America linked to sustain- ability objectives. During 2021, Enel Finance America expanded its commercial paper program from $3,000 million to $5,000 million. At December 31, 2021 commercial paper issues linked to sustainability objectives amounted to €10,343 million. 46.4 Derivative nancial liabilities For more information on derivative nancial liabilities, please see note 49 “Derivatives and hedge accounting”. 46.5 Net gains and losses The following table shows net gains and losses by category of nancial instruments, excluding derivatives. Millions of euro 2021 2020 Net gain/(loss) Of which impairment loss/gain Net gain/(loss) Of which impairment loss/gain Financial assets at amoized cost (915) (1,194) (1,326) (1,334) Financial assets at FVOCI Equity investments at FVOCI - - 1 - Other nancial assets at FVOCI 15 - 6 - Total nancial assets at FVOCI 15 - 7 - Financial assets at FVTPL Financial assets at FVTPL 28 25 (125) (346) Financial assets designated upon initial recognition (fair value option) - - - - Total nancial assets at FVTPL 28 25 (125) (346) Financial liabilities measured at amoized cost (4,325) - (1,385) - Financial liabilities at FVTPL Financial liabilities held for trading - - - - Financial liabilities designated upon initial recognition (fair value option) - - - - Total nancial liabilities at FVTPL - - - - For more details on net gains and losses on derivatives, please see note 13 “Net nancial income/(expense) from derivatives”. 380 Integrated Annual Repo 2021380 47. Risk management Financial risk management governance and objectives As pa of its operations, the Enel Group is exposed to a va- riety of nancial risks, notably interest rate risk, commodity risk, currency risk, credit and counterpay risk and liquidity risk. The Group’s governance arrangements for nancial risks include internal commiees and the establishment of spe- cic policies and operational limits. Enel’s primary objec- tive is to mitigate nancial risks appropriately so that they do not give rise to unexpected changes in results. The Group’s policies for managing nancial risks provide for the mitigation of the eects on peormance of chang- es in interest rates and exchange rates with the exclusion of translation risk (connected with consolidation of the accounts). This objective is achieved at the source of the risk, through the diversication of both the nature of the nancial instruments and the sources of revenue, and by modifying the risk prole of specic exposures with deriv- atives entered into on over-the-counter markets or with specic commercial agreements. As pa of its governance of compliance risks, the Enel Group monitors non-risk-reducing positions in OTC de- rivatives contracts in relation to the threshold values es- tablished under the EMIR (Regulation (EU) no. 648/2012) for the various asset classes. In 2021, the Group was posi- tioned below those clearing thresholds for all asset class- es, maintaining its classication as a non-nancial coun- terpay. There were no changes in the sources of exposure to such risks compared with the previous year. Finally, the impact of COVID-19 on risk management is- sues was limited and in any case not such as to directly and materially inuence the valuation of derivative instruments and the outcome of the assessment of the eectiveness of hedges of exchange rates, interest rates and commodities. The nancial underlyings were not aected by the adverse impact of COVID-19 either, and no changes were recorded in the exposures. Interest rate risk Interest rate risk derives primarily from the use of nancial instruments and manifests itself as unexpected changes in charges on nancial liabilities, if indexed to oating rates and/or exposed to the unceainty of nancial terms and conditions in negotiating new debt instruments, or as an unexpected change in the value of nancial instruments measured at fair value (such as xed-rate debt). The main nancial liabilities held by the Group include bonds, bank borrowings, borrowings from other lenders, commercial paper, derivatives, cash deposits received to secure commercial or derivative contracts (guarantees, cash collateral). The Enel Group mainly manages interest rate risk through the denition of an optimal nancial structure, with the dual goal of stabilizing borrowing costs and containing the cost of funds. This goal is pursued through the diversication of the po- folio of nancial liabilities by contract type, maturity and interest rate, and modifying the risk prole of specic ex- posures using OTC derivatives, mainly interest rate swaps and interest rate options. The term of such derivatives does not exceed the maturity of the underlying nancial li- ability, so that any change in the fair value and/or expected cash ows of such contracts is oset by a corresponding change in the fair value and/or cash ows of the hedged position. Proxy hedging techniques can be used in a number of re- sidual circumstances, when the hedging instruments for the risk factors are not available on the market or are not suciently liquid. For the purpose of EMIR compliance, in order to test the actual eectiveness of the hedging techniques adopted, the Group subjects its hedge pofolios to periodic statis- tical assessment. Using interest rate swaps, the Enel Group agrees with the counterpay to periodically exchange oating-rate in- terest ows with xed-rate ows, both calculated on the same notional principal amount. Floating-to-xed interest rate swaps transform oat- ing-rate nancial liabilities into xed rate liabilities, there- by neutralizing the exposure of cash ows to changes in interest rates. Fixed-to-oating interest rate swaps transform xed rate nancial liabilities into oating-rate liabilities, thereby neu- tralizing the exposure of their fair value to changes in in- terest rates. Floating-to-oating interest rate swaps transform the in- dexing criteria for oating-rate nancial liabilities. Some structured borrowings have multi-stage cash ows hedged by interest rate swaps that at the repoing date, and for a limited time, provide for the exchange of xed- rate interest ows. Interest rate options involve the exchange of interest dif- ferences calculated on a notional principal amount once ceain thresholds (strike prices) are reached. These thresholds specify the eective maximum rate (cap) or the minimum rate (oor) to which the synthetic nancial instrument will be indexed as a result of the hedge. Ceain hedging strategies provide for the use of combinations of options (collars) that establish the minimum and maximum rates at the same time. In this case, the strike prices are normally set so that no premium is paid on the contract (zero cost collars). Such contracts are normally used when the xed interest rate that can be obtained in an interest rate swap is con- sidered too high with respect to market expectations for future interest rate developments. In addition, interest rate 381Notes to the consolidated nancial statements 381 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements options are also considered most appropriate in periods of greater unceainty about future interest rate develop- ments because they make it possible to benet from any decrease in interest rates. The following table repos the notional amount of interest rate derivatives at December 31, 2021 and December 31, 2020 broken down by type of contract. Millions of euro Notional amount at Dec. 31, 2021 at Dec. 31, 2020 Floating-to-xed interest rate swaps 7,70 0 7,323 Fixed-to-oating interest rate swaps 722 173 Fixed-to-xed interest rate swaps - - Floating-to-oating interest rate swaps 391 276 Interest rate options 50 50 Total 8,863 7,82 2 For more details on interest rate derivatives, please see note 49 “Derivatives and hedge accounting”. Interest rate risk sensitivity analysis Enel analyzes the sensitivity of its exposure by estimating the eects of a change in interest rates on the pofolio of nancial instruments. More specically, sensitivity analysis measures the po- tential impact on prot or loss and on equity of market scenarios that would cause a change in the fair value of derivatives or in the nancial expense associated with un- hedged gross debt. These market scenarios are obtained by simulating parallel increases and decreases in the yield curve as at the re- poing date. There were no changes introduced in the methods and as- sumptions used in the sensitivity analysis compared with the previous year. With all other variables held constant, the Group’s pre-tax prot would be aected by a change in the level of interest rates as follows. Millions of euro 2021 Pre-tax impact on prot or loss Pre-tax impact on equity Basis points Increase Decrease Increase Decrease Change in nancial expense on gross long-term oating-rate debt after hedging 25 23 (23) - - Change in fair value of derivatives classied as non-hedging instruments 25 38 (38) - - Change in fair value of derivatives designated as hedging instruments Cash ow hedges 25 - - 67 (67) Fair value hedges 25 - - - - At December 31, 2021, 24.5% (24.6% at December 31, 2020) of gross long-term nancial debt was oating rate. Taking account of eective cash ow hedges of interest rate risk (in accordance with the provisions of the IFRS-EU), 84.5% of gross long-term nancial debt was hedged at December 31, 2021 (86.3% at December 31, 2020). Currency risk Currency risk mainly manifests itself as unexpected changes in the nancial statement items associated with transactions denominated in a currency other than the presentation currency. The Group’s consolidated nancial statements are also exposed to translation risk as a result of the conversion of the nancial statements of foreign subsidiaries, which are denominated in local currencies, into euros as the Group’s presentation currency. The Group’s exposure to currency risk is connected with the purchase or sale of fuels and power, investments (cash ows for capitalized costs), dividends and the purchase or sale of equity investments, commercial transactions and nancial assets and liabilities. The Group policies for managing currency risk provide for the mitigation of the eects on prot or loss of changes in the level of exchange rates, with the exception of the translation eects connected with consolidation. In order to minimize the exposure to currency risk, Enel im- plements diversied revenue and cost sources geograph- ically, and uses indexing mechanisms in commercial con- 382 Integrated Annual Repo 2021382 tracts. Enel also uses various types of derivatives, typically on the OTC market. The derivatives in the Group’s pofolio of nancial instru- ments include cross currency interest rate swaps, currency forwards and currency swaps. The term of such contracts does not exceed the maturity of the underlying instru- ment, so that any change in the fair value and/or expected cash ows of such instruments osets the corresponding change in the fair value and/or cash ows of the hedged position. Cross currency interest rate swaps are used to transform a long-term nancial liability denominated in a currency other than the presentation currency into an equivalent liability in the presentation currency. Currency forwards are contracts in which the counter- paies agree to exchange principal amounts denominat- ed in dierent currencies at a specied future date and exchange rate (the strike). Such contracts may call for the actual exchange of the two principal amounts (deliverable forwards) or payment of the dierence generated by dif- ferences between the strike exchange rate and the prevail- ing exchange rate at maturity (non-deliverable forwards). In the laer case, the strike rate and/or the spot rate can be determined as averages of the rates observed in a given period. Currency swaps are contracts in which the counterpaies enter into two transactions of the opposite sign at dier- ent future dates (normally one spot, the other forward) that provide for the exchange of principal denominated in dif- ferent currencies. The following table repos the notional amount of trans- actions outstanding at December 31, 2021 and December 31, 2020, broken down by type of hedged item. Millions of euro Notional amount at Dec. 31, 2021 at Dec. 31, 2020 Cross currency interest rate swaps (CCIRSs) hedging debt denominated in currencies other than the euro 21,123 20,636 Currency forwards hedging currency risk on commodities 6,183 5,469 Currency forwards/CCIRSs hedging future cash ows in currencies other than the euro 5,034 3,971 Other currency forwards 926 990 Total 33,266 31,066 More specically, these include: • CCIRSs with a notional amount of €21,123 million to hedge the currency risk on debt denominated in cur- rencies other than the euro (€20,636 million at Decem- ber 31, 2020); • currency forwards and cross currency swaps with a total notional amount of €11,217 million used to hedge the currency risk associated with purchases of natural gas and fuel and expected cash ows in currencies other than the euro (€9,440 million at December 31, 2020); • other currency forwards, which include OTC derivatives transactions carried out to mitigate currency risk on expected cash ows in currencies other than the pres- entation currency connected with the purchase of in- vestment goods in the renewables and infrastructure and networks sectors (new generation digital meters), on operating costs for the supply of cloud services and on revenue from the sale of renewable energy. At December 31, 2021, 45% (51% at December 31, 2020) of Group long-term debt was denominated in currencies other than the euro. Taking account of hedges of currency risk, the percentage of debt not hedged against that risk amounted to 17% at December 31, 2021 (17% at December 31, 2020). Currency risk sensitivity analysis The Group analyzes the sensitivity of its exposure by es- timating the eects of a change in exchange rates on the pofolio of nancial instruments. More specically, sensitivity analysis measures the poten- tial impact on prot or loss and equity of market scenarios that would cause a change in the fair value of derivatives or in the nancial expense associated with unhedged gross medium/long-term debt. These scenarios are obtained by simulating the apprecia- tion/depreciation of the euro against all of the currencies compared with the value observed as at the repoing date. There were no changes in the methods or assumptions used in the sensitivity analysis compared with the previous year. With all other variables held constant, the pre-tax prot would be aected by changes in exchange rates as follows. 383Notes to the consolidated nancial statements 383 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Millions of euro 2021 Pre-tax impact on prot or loss Pre-tax impact on equity Exchange rate Increase Decrease Increase Decrease Change in fair value of derivatives classied as non-hedging instruments 10% 485 (592) - - Change in fair value of derivatives designated as hedging instruments Cash ow hedges 10% - - (2,458) 3,003 Fair value hedges 10% (50) 61 - - Commodity price risk The risk of uctuations in the price of energy commodities such as electricity, gas, oil, CO 2 , etc. is generated by the vol- atility of prices and structural correlations between them, which create unceainty in the margin on purchases and sales of electricity and fuels at variable prices (e.g., indexed bilateral contracts, transactions on the spot market, etc.). The exposures on indexed contracts are quantied by breaking down the contracts that generate exposure into the underlying risk factors. To contain the eects of uctuations and stabilize margins, in accordance with the policies and operating limits deter- mined by the Group’s governance and leaving an appropri- ate margin of exibility to seize any sho-term oppouni- ties that may present themselves, Enel develops and plans strategies that impact the various phases of the industrial process linked to the production and sale of electricity and gas (such as forward procurement and long-term com- mercial agreements), as well as risk mitigation plans and techniques using derivative contracts (hedging). As regards electricity sold by the Group, Enel mainly uses xed-price contracts in the form of bilateral physical con- tracts (PPAs) and nancial contracts (e.g., contracts for dif- ferences, VPP contracts, etc.) in which dierences are paid to the counterpay if the market electricity price exceeds the strike price and to Enel in the opposite case. The resid- ual exposure in respect of the sale of energy on the spot market not hedged with such contracts is aggregated by uniform risk factors that can be managed with hedging transactions on the market. Proxy hedging techniques can be used for the industrial pofolios when the hedg- ing instruments for the specic risk factors generating the exposure are not available on the market or are not suciently liquid. In addition, Enel uses pofolio hedging techniques to assess oppounities for neing intercom- pany exposures. The Group mainly uses plain vanilla derivatives for hedging (more specically, forwards, swaps, options on commodi- ties, futures, contracts for dierences). Some of these products can be indexed to a variety of un- derlyings (coal, gas, oil, CO 2 , dierent geographical areas, etc.) and the approaches can be assessed and adapted to specic needs. Enel also engages in proprietary trading in order to main- tain a presence in the Group’s reference energy com- modity markets. These operations consist in taking on exposures in energy commodities (oil products, gas, coal, CO 2 ceicates and electricity) using nancial derivatives and physical contracts traded on regulated and over-the- counter markets, optimizing prots through transactions carried out on the basis of expected market developments. The following table repos the notional amount of out- standing transactions at December 31, 2021 and Decem- ber 31, 2020, broken down by type of instrument. Millions of euro Notional amount at Dec. 31, 2021 at Dec. 31, 2020 Forward and futures contracts 90,273 48,064 Swaps 12,122 1,862 Options 1,076 576 Embedded - 7 Total 103,471 50,509 For more details, please see note 49 “Derivatives and hedge accounting”. Sensitivity analysis of commodity price risk The following table presents the results of the analysis of sensitivity to a reasonably possible change in the com- modity prices underlying the valuation model used in the scenario at the same date, with all other variables held constant. The impact on pre-tax prot of shifts of +15% and -15% in the price curve for the main commodities that make up the fuel scenario and the basket of formulas used in the 384 Integrated Annual Repo 2021384 contracts is mainly aributable to the change in the price of electricity, gas and petroleum products and, to a lesser extent, of CO 2 . The impact on equity of the same shifts in the price curve is primarily due to changes in the price of electricity, petroleum products and, to a lesser extent, CO 2 . The Group’s exposure to changes in the prices of other commodities is not material. Millions of euro 2021 Pre-tax impact on prot or loss Pre-tax impact on equity Commodity price Increase Decrease Increase Decrease Change in the fair value of trading derivatives on commodities 15% (621) 632 - - Change in the fair value of derivatives on commodities designated as hedging instruments 15% - - 72 (88) Credit and counterpay risk The Group’s commercial, commodity and nancial trans- actions expose it to credit and counterpay risk, i.e., the possibility of a deterioration in the creditwohiness of a counterpay that has an adverse impact on the expected value of the creditor position or, for trade payables only, increases average collection times. Accordingly, the exposure to credit risk is aributable to the following types of transactions: • the sale and distribution of electricity and gas in free and regulated markets and the supply of goods and services (trade receivables); • trading activities that involve the physical exchange of assets or transactions in nancial instruments (the commodity pofolio); • trading in derivatives, bank deposits and, more general- ly, nancial instruments (the nancial pofolio). In order to minimize credit risk, credit exposures are man- aged at the region/country/Global Business Line level by dierent units, thereby ensuring the necessary segregation of risk management and control activities. Monitoring the consolidated exposure is carried out by Enel SpA. In addition, at the Group level the policy provides for the use of uniform criteria – in all the main regions/countries/Global Business Lines and at the consolidated level – in measuring commercial credit exposures in order to promptly identify any deterioration in the quality of outstanding receivables and any mitigation actions to be taken. The policy for managing credit risk associated with com- mercial activities provides for a preliminary assessment of the creditwohiness of counterpaies and the adoption of mitigation instruments, such as obtaining collateral or unsecured guarantees. In addition, the Group undeakes transactions to factor receivables without recourse, which results in the com- plete derecognition of the corresponding assets involved in the factoring, as the risks and rewards associated with them have been transferred. Finally, with regard to nancial and commodity transac- tions, risk mitigation is pursued with a uniform system for assessing counterpaies at the Group level, including im- plementation at the level of regions/countries/Global Busi- ness Lines, as well as with the adoption of specic stand- ardized contractual frameworks that contain risk mitiga- tion clauses (e.g., neing arrangements) and possibly the exchange of cash collateral. Despite the deterioration in the collection status of some customer segments, which was taken into account in the assessment of the impairment of trade receivables, to date the Group pofolio has displayed resilience to the global pandemic. This reects the strengthening of digital collec- tion channels and a sound diversication of commercial customers with a low exposure to the impacts of COVID (e.g., utilities and distribution companies). Loan assets Millions of euro at Dec. 31, 2021 Staging Basis for recognition of expected credit loss allowance Average loss rate (PD*LGD) Gross carrying amount Expected credit loss allowance Carrying amount Peorming 12 m ECL 0.6% 10,585 65 10,520 Underpeorming Lifetime ECL 27.8 % 72 20 52 Non-peorming Lifetime ECL 73.0% 204 149 55 Total 10,861 234 10,627 385Notes to the consolidated nancial statements 385 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Contract assets, trade receivables and other nancial assets: individual measurement Millions of euro at Dec. 31, 2021 Average loss rate (PD*LGD) Gross carrying amount Expected credit loss allowance Carrying amount Contract assets - 110 \- 110 Trade receivables Trade receivables not past due 0.7% 5,339 39 5,300 Trade receivables past due: \- 1-30 days 1.2% 489 6 483 \- 31-60 days 3.4% 89 3 86 \- 61-90 days 10.2% 59 6 53 \- 91-120 days 50.0% 34 17 17 \- 121-150 days 31.6% 19 6 13 \- 151-180 days 26.9% 26 7 19 \- more than 180 days (credit impaired) 77.1% 1,813 1,397 416 Total trade receivables 7,868 1,481 6,387 Other nancial assets Other nancial assets not past due 1.9% 1,712 32 1,680 Other nancial assets past due: \- 1-30 days - 352 \- 352 \- 31-60 days - 244 \- 244 \- 61-90 days - \- \- - \- 91-120 days - 2 \- 2 \- 121-150 days - \- \- - \- 151-180 days - \- \- - \- more than 180 days (credit impaired) 13.9% 332 46 286 Total other nancial assets 2,642 78 2,564 TOTAL 10,620 1,559 9,061 Millions of euro at Dec. 31, 2020 Average loss rate (PD*LGD) Gross carrying amount Expected credit loss allowance Carrying amount Contract assets 4.3% 23 1 22 Trade receivables Trade receivables not past due 1.3% 4,953 66 4,887 Trade receivables past due: \- 1-30 days 1.5% 453 7 446 \- 31-60 days 2.8% 106 3 103 \- 61-90 days 12.8% 39 5 34 \- 91-120 days 28.0% 25 7 18 \- 121-150 days 12.9% 31 4 27 \- 151-180 days 100.0% 53 53 \- \- more than 180 days (credit impaired) 83.8% 1,692 1,418 274 Total trade receivables 7,352 1,563 5,789 Other nancial assets Other nancial assets not past due 3.1% 1,243 38 1,205 Other nancial assets past due: \- 1-30 days 15.6% 499 78 421 \- 31-60 days - 11 \- 11 \- 61-90 days - \- \- - \- 91-120 days - \- \- - \- 121-150 days - \- \- - \- 151-180 days 40.0% 5 2 3 \- more than 180 days (credit impaired) 6.3% 79 5 74 Total other nancial assets 1,837 123 1,714 TOTAL 9,212 1,687 7,525 386 Integrated Annual Repo 2021386 Contract assets, trade receivables and other nancial assets: collective measurement Millions of euro at Dec. 31, 2021 Average loss rate (PD*LGD) Gross carrying amount Expected credit loss allowance Carrying amount Contract assets 11.5% 26 2 24 Trade receivables Trade receivables not past due 1.7% 4,603 77 4,526 Trade receivables past due: \- 1-30 days 2.8% 3,321 94 3,227 \- 31-60 days 9.9% 272 27 245 \- 61-90 days 15.3% 183 28 155 \- 91-120 days 26.1% 111 29 82 \- 121-150 days 32.4% 111 36 75 \- 151-180 days 33.3% 90 30 60 \- more than 180 days (credit impaired) 58.5% 3,180 1,861 1,319 Total trade receivables 11,871 2,182 9,689 Other nancial assets Other nancial assets not past due - 804 76 728 Other nancial assets past due: \- 1-30 days - 7 \- 7 \- 31-60 days - \- \- - \- 61-90 days - \- \- - \- 91-120 days - \- \- - \- 121-150 days - \- \- - \- 151-180 days - 1 \- 1 \- more than 180 days (credit impaired) - 1 \- 1 Total other nancial assets 813 76 737 TOTAL 12,710 2,260 10,450 Millions of euro at Dec. 31, 2020 Average loss rate (PD*LGD) Gross carrying amount Expected credit loss allowance Carrying amount Contract assets 1.2% 163 2 161 Trade receivables Trade receivables not past due 0.6% 5,487 32 5,455 Trade receivables past due: \- 1-30 days 7. 2 % 554 40 514 \- 31-60 days 16.2% 154 25 129 \- 61-90 days 26.4% 110 29 81 \- 91-120 days 36.6% 71 26 45 \- 121-150 days 43.1% 58 25 33 \- 151-180 days 100.0% 79 79 - \- more than 180 days (credit impaired) 100.0% 1,468 1,468 \- Total trade receivables 7,981 1,724 6,257 Other nancial assets Other nancial assets not past due 2.2% 274 6 268 Other nancial assets past due: \- 1-30 days - 3 \- 3 \- 31-60 days - 1 \- 1 \- 61-90 days - \- \- - \- 91-120 days - \- \- - \- 121-150 days - \- \- - \- 151-180 days - \- \- - \- more than 180 days (credit impaired) - 55 \- 55 Total other nancial assets 333 6 327 TOTAL 8,477 1,732 6,745 387Notes to the consolidated nancial statements 387 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Liquidity risk Liquidity risk manifests itself as unceainty about the Group’s ability to discharge its obligations associated with nancial liabilities that are seled by delivering cash or an- other nancial asset. Enel manages liquidity risk by implementing measures to ensure an appropriate level of liquid nancial resources, minimizing the associated oppounity cost and maintain- ing a balanced debt structure in terms of its maturity pro- le and funding sources. In the sho term, liquidity risk is mitigated by maintaining an appropriate level of unconditionally available resources, including liquidity on hand and sho-term deposits, avail- able commied credit lines and a pofolio of highly liquid assets. In the long term, liquidity risk is mitigated by maintaining a balanced maturity prole for our debt, access to a range of sources of funding on dierent markets, in dierent cur- rencies and with diverse counterpaies. The mitigation of liquidity risk enables the Group to main- tain a credit rating that ensures access to the capital mar- ket and limits the cost of funds, with a positive impact on its nancial position and peormance. The Group holds the following undrawn lines of credit and commercial paper programs. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Expiring within one year Expiring beyond one year Expiring within one year Expiring beyond one year Commied credit lines 438 14,822 4,028 14,531 Uncommied credit lines 888 - 802 - Commercial paper 3,709 - 7,591 - Total 5,035 14,822 12,421 14,531 Maturity analysis The table below summarizes the maturity prole of the Group’s long-term debt. Millions of euro At Dec. 31, 2021 Maturing in Less than 3 months From 3 months to 1 year 2023 2024 2025 2026 Beyond Bonds: \- listed, xed rate 59 2,060 2,078 4,691 2,150 3,782 12,593 \- listed, oating rate 128 306 466 357 298 191 811 \- unlisted, xed rate 50 - - 1,320 - 1,094 8,743 \- unlisted, oating rate - 97 97 97 97 97 137 Total bonds 237 2,463 2,641 6,465 2,545 5,164 22,284 Bank borrowings: \- xed rate 65 173 206 945 197 334 485 \- oating rate 96 655 756 1,261 1,072 2,313 3,956 \- use of revolving credit lines - - 50 - 4 1,000 - Total bank borrowings 161 828 1,012 2,206 1,273 3,647 4,441 Leases: \- xed rate 67 175 213 166 151 147 1,558 \- oating rate 4 13 15 13 13 9 3 Total leases 71 188 228 179 164 156 1,561 Other non-bank borrowings (1) : \- xed rate 11 58 73 80 66 74 233 \- oating rate 3 11 - 120 5 1 2 Total other non-bank borrowings 14 69 73 200 71 75 235 TOTAL 483 3,548 3,954 9,050 4,053 9,042 28,521 (1) Includes other non-current nancial borrowings repoed under “Other non-current nancial liabilities” in the statement of nancial position. 388 Integrated Annual Repo 2021388 Commitments to purchase commodities In conducting its business, the Enel Group has entered into contracts to purchase specied quantities of commodities at a ceain future date for its own use, which qualify for the own use exemption provided for under IFRS 9. The following table repos the undiscounted cash ows associated with outstanding commitments at December 31, 2021. Millions of euro at Dec. 31, 2021 2022-2025 2026-2030 2031-2035 Beyond Commitments to purchase commodities: \- electricity 71,244 22,916 16,201 13,932 18,195 \- fuels 58,042 11,542 34,027 8,038 4,435 Total 129,286 34,458 50,228 21,970 22,630 48\. Oseing nancial assets and nancial liabilities At December 31, 2021, the Group did not hold oset posi- tions in assets and liabilities, as it is not the Enel Group’s poli- cy to sele nancial assets and liabilities on a net basis. 49. Derivatives and hedge accounting The following tables show the notional amount and the fair value of derivative nancial assets and derivative nancial liabilities eligible for hedge accounting or measured at FVTPL, classied on the basis of the type of hedge rela- tionship and the hedged risk, broken down into current and non-current instruments. The notional amount of a derivative contract is the amount on the basis of which cash ows are exchanged. This amount can be expressed as a value or a quantity (for ex- ample tons, conveed into euros by multiplying the no- tional amount by the agreed price). Amounts denominated in currencies other than the euro are translated at the o- cial closing exchange rates provided by the World Markets Renitiv (WMR) Company. Millions of euro Non-current Current Notional Fair value Notional Fair value at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 DERIVATIVE ASSETS Fair value hedge derivatives: \- on interest rates 139 138 19 22 - - - - \- on exchange rates 672 639 42 28 - 79 - 28 Total 811 777 61 50 - 79 - 28 Cash ow hedge derivatives: \- on interest rates 404 161 19 21 - - - - \- on exchange rates 14,980 5,061 1,356 685 2,690 698 104 51 \- on commodities 2,693 2,541 1,059 428 3,469 2,165 3,023 627 Total 18,077 7,763 2,434 1,134 6,159 2,863 3,127 678 Trading derivatives: \- on interest rates - 50 - 2 50 - 1 - \- on exchange rates 26 71 - 4 2,154 3,430 23 79 \- on commodities 1 ,147 379 277 46 48,304 21,424 19,640 2,686 Total 1,173 500 277 52 50,508 24,854 19,664 2,765 TOTAL DERIVATIVE ASSETS 20,061 9,040 2,772 1,236 56,667 27,796 22,791 3,471 389Notes to the consolidated nancial statements 389 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Millions of euro Non-current Current Notional Fair value Notional Fair value at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 DERIVATIVE LIABILITIES Fair value hedge derivatives: \- on interest rates 660 - 5 - - - - - \- on exchange rates - - - - - - - - Total 660 - 5 - - - - - Cash ow hedge derivatives: \- on interest rates 6,807 7, 2 01 620 938 653 122 9 2 \- on exchange rates 7, 2 24 16,310 1,244 2,491 1,892 3,766 49 263 \- on commodities 3,312 1,535 1,301 148 2,067 1,466 4,853 379 Total 17, 3 4 3 25,046 3,165 3,577 4,612 5,354 4,911 644 Trading derivatives: \- on interest rates - 50 - 4 150 100 73 88 \- on exchange rates 73 28 2 3 3,555 984 60 41 \- on commodities 884 89 167 22 41,595 20,910 19,563 2,758 Total 957 167 169 29 45,300 21,994 19,696 2,887 TOTAL DERIVATIVE LIABILITIES 18,960 25,213 3,339 3,606 49,912 27,348 24,607 3,531 49.1 Derivatives designated as hedging instruments Derivatives are initially recognized at fair value, on the trade date of the contract and are subsequently re-measured at their fair value. The method of recognizing the result- ing gain or loss depends on whether the derivative is des- ignated as a hedging instrument, and if so, the nature of the item being hedged. Hedge accounting is applied to derivatives entered into in order to reduce risks such as interest rate risk, currency risk, commodity price risk and net investments in foreign operations when all the criteria provided by IFRS 9 are met. At the inception of the transaction, the Group docu- ments the relationship between hedging instruments and hedged items, as well as its risk management objec- tives and strategy. The Group also documents its assess- ment, both at hedge inception and on an ongoing basis, of whether hedging instruments are highly eective in oseing changes in fair values or cash ows of hedged items. For cash ow hedges of forecast transactions designat- ed as hedged items, the Group assesses and documents that they are highly probable and present an exposure to changes in cash ows that aect prot or loss. Depending on the nature of the risk exposure, the Group designates derivatives as either: • fair value hedges; • cash ow hedges. For more details about the nature and the extent of risks arising from nancial instruments to which the Group is exposed, please see note 47 “Risk management”. To be eective a hedge relationship shall meet all of the following criteria: • existence of an economic relationship between hedg- ing instrument and hedged item; • the eect of credit risk does not dominate the value changes resulting from the economic relationship; • the hedge ratio dened at initial designation shall be equal to the one used for risk management purpos- es (i.e., same quantity of the hedged item that the en- tity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge the quantity of the hedged item). Based on the IFRS 9 requirements, the existence of an economic relationship is evaluated by the Group through a qualitative assessment or a quantitative computation, depending on the following circumstances: • if the underlying risk of the hedging instrument and the hedged item is the same, the existence of an eco- nomic relationship will be provided through a qualita- tive analysis; • on the other hand, if the underlying risk of the hedging instrument and the hedged item is not the same, the existence of the economic relationship will be demon- strated through a quantitative method in addition to a qualitative analysis of the nature of the economic rela- tionship (i.e., linear regression). In order to demonstrate that the behavior of the hedging instrument is in line with those of the hedged item, dier- ent scenarios will be analyzed. 390 Integrated Annual Repo 2021390 For hedging of commodity price risk, the existence of an economic relationship is deduced from a ranking matrix that denes, for each possible risk component, a set of all standard derivatives available in the market whose rank- ing is based on their eectiveness in hedging the consid- ered risk. In order to evaluate the credit risk eects, the Group con- siders the existence of risk mitigating measures (collat- eral, mutual break-up clauses, neing agreements, etc.). The Group has established a hedge ratio of 1:1 for all the hedge relationships (including commodity price risk hedging) as the underlying risk of the hedging derivative is identical to the hedged risk, in order to minimize hedg- ing ineectiveness. The hedge ineectiveness will be evaluated through a qualitative assessment or a quantitative computation, depending on the following circumstances: • if the critical terms of the hedged item and hedging instrument match and there are no other sources of ineectiveness included the credit risk adjustment on the hedging derivative, the hedge relationship will be considered fully eective on the basis of a qualitative assessment; • if the critical terms of the hedged item and hedging in- strument do not match or there is at least one source of ineectiveness, the hedge ineectiveness will be quantied applying the dollar oset cumulative meth- od with hypothetical derivative. This method compares changes in fair value of the hedging instrument and the hypothetical derivative between the repoing date and the inception date. The main causes of hedge ineectiveness can be the fol- lowing: • basis dierences (i.e., the fair value or cash ows of the hedged item depend on a variable that is dier- ent from the variable that causes the fair value or cash ows of the hedging instrument to change); • timing dierences (i.e., the hedged item and hedging instrument occur or are seled at dierent dates); • quantity or notional amount dierences (i.e., the hedged item and hedging instrument are based on dierent quantities or notional amounts); • other risks (i.e., changes in the fair value or cash ows of a derivative hedging instrument or hedged item re- late to risks other than the specic risk being hedged); • credit risk (i.e., the counterpay credit risk dierently impacts the changes in the fair value of the hedging instruments and hedged items). Fair value hedges Fair value hedges are used to protect the Group against exposures to changes in the fair value of assets, liabilities or rm commitment aributable to a paicular risk that could aect prot or loss. Changes in the fair value of derivatives that qualify and are designated as hedging instruments are recognized in the income statement, together with changes in the fair value of the hedged item that are aributable to the hedged risk. If the hedge no longer meets the criteria for hedge ac- counting, the adjustment to the carrying amount of a hedged item for which the eective interest rate method is used is amoized to prot or loss over the period to maturity. Cash ow hedges Cash ow hedges are applied in order to hedge the Group exposure to changes in future cash ows that are aribut- able to a paicular risk associated with a recognized asset or liability or a highly probable transaction that could aect prot or loss. The eective poion of changes in the fair value of deriv- atives that are designated and qualify as cash ow hedges is recognized in other comprehensive income. The gain or loss relating to the ineective poion is recognized imme- diately in the income statement. Amounts accumulated in equity are reclassied to prot or loss in the periods when the hedged item aects prot or loss (for example, when the hedged forecast sale takes place). If the hedged item results in the recognition of a non-- nancial asset (i.e., propey, plant and equipment or inven- tories, etc.) or a non-nancial liability, or a hedged forecast transaction for a non-nancial asset or a non-nancial liability becomes a rm commitment for which fair value hedge accounting is applied, the amount accumulated in equity (i.e., hedging reserve) shall be removed and included in the initial amount (cost or other carrying amount) of the asset or the liability hedged (i.e., “basis adjustment”). When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the income state- ment. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was repoed in equity is immediately transferred to the income statement. For hedge relationships using forwards as a hedging in- strument, where only the change in the value of the spot element is designated as the hedging instrument, ac- counting for the forward element (prot or loss vs. OCI) is dened case by case. This approach is actually applied by the Group for hedging of currency risk on renewables assets. Conversely, for hedge relationships using cross currency interest rate swaps as hedging instruments, the Group 391Notes to the consolidated nancial statements 391 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements separates foreign currency basis spread, in designating the hedging derivative, and presents them in other com- prehensive income (OCI) as hedging costs. With specic regard to cash ow hedges of commodity risk, in order to improve their consistency with the risk management strategy, the Enel Group applies a dynamic hedge accounting approach based on specic liquidity requirements (the so-called “liquidity-based approach“). This approach requires the designation of hedges through the use of the most liquid derivatives available on the market and replacing them with others that are more eective in covering the risk in question. Consistent with the risk management strategy, the liquid- ity-based approach allows the roll-over of a derivative by replacing it with a new derivative, not only in the event of expiry but also during the hedge relationship, if and only if the new derivative meets both of the following require- ments: • it represents a best proxy of the old derivative in terms of ranking; • it meets specic liquidity requirements. Satisfaction of these requirements is veried quaerly. At the roll-over date, the hedge relationship is not dis- continued. Accordingly, staing from that date, changes in the eective fair value of the new derivative will be rec- ognized in equity (the hedging reserve), while changes in the fair value of the old derivative are recognized through prot or loss. Reform of benchmarks for the determination of interest rates – IBOR reform Overview Interbank Oered Rates (“IBORs”) are benchmark rates at which banks can borrow funds on the interbank market on an unsecured basis for a given period ranging from overnight to 12 months, in a specic currency. In recent years there have been a number of cases of manipulation of these rates by the banks contributing to their calculation. For this reason, regulators around the world have begun a sweeping reform of interest rate benchmarks that includes the replacement of some benchmarks with alternative risk-free rates (the IBOR re- form). The Group’s main exposure is based on Euribor, USD LI- BOR and GBP LIBOR. Euribor is still considered compliant with the European Benchmarks Regulation (BMR) and this permits market paicipants to continue to use it for both existing and new contracts. In line with the most recent guidance issued by the major regulatory bodies: • the 1-month, 3-month and 6-month USD LIBOR benchmarks will become unrepresentative after June 30, 2023 and the alternative reference rate will be the Secured Overnight Financing Rate (SOFR); • the 1-month, 3-month and 6-month GBP LIBOR benchmarks will become unrepresentative after De- cember 31, 2021 and the alternative reference rate will be the Sterling Overnight Index Average (SONIA). As a result of the IBOR reform, a number of temporary exceptions to the rules on hedge relationships have been allowed in implementation of the amendments to IFRS 9 issued in September 2019 (Phase 1) and August 2020 (Phase 2) to address, respectively: • pre-replacement issues that impact nancial repoing in the period preceding the replacement of an existing interest rate benchmark with an alternative risk-free rate (Phase 1); and • post-replacement issues that could impact nancial repoing when an existing interest rate benchmark is reformed or replaced and there is there no longer any initial unceainty, but hedge contracts and rela- tionships still need to be updated to reect the new benchmark rates (Phase 2). Impact of the IBOR reform on the Group In a context of unceainty regarding the IBOR transition in the various countries, the Group has determined the overall number and nominal value of the contracts im- pacted by the reform. In addition, a number of contractu- al amendments have already been implemented in con- tracts previously indexed to GBP LIBOR and others will be amended in 2022-2023 on the basis of the evolution of the IBOR reform and best market practice. Debt and derivatives The Group’s oating rate debt is mainly benchmarked against Euribor and USD LIBOR and is almost entirely hedged using nancial derivatives. At the repoing date, the Group is planning to take no action with regard to Euribor since, as stated above, this benchmark has been comprehensively reformed to com- ply with the European Benchmarks Regulation. Despite the continuity with Euribor, replacement clauses may be required and could therefore be implemented by the Group in the new contracts in accordance with the evolu- tion of accepted market practice. During 2021, the Group obtained new US dollar loans indexed to SOFR and proactively changed its existing exposure in derivatives by switching from GPB LIBOR to SONIA. The main focus over the coming months will be how to change existing USD LIBOR to USD SOFR expo- sures and how to use the new, alternative risk-free rates for new nancial transactions. The Group’s derivative instruments are managed through contracts that are mainly based on framework agree- ments dened by the International Swaps and Derivatives Association (ISDA). 392 Integrated Annual Repo 2021392 The ISDA has revised its standardized contracts in light of the IBOR reform and amended the choices for oating rates within the 2006 ISDA denitions to include replace- ment clauses that would apply upon the permanent dis- continuation of specic key benchmarks. These changes took eect on January 25, 2021. Transactions represent- ed in the 2006 ISDA denitions carried out on January 25, 2021 or later include adjusted oating-rate options (e.g., the choice of oating rate with replacement clause), while transactions completed before that date (previous deriv- ative contracts) continue to be based on the 2006 ISDA denitions. For this reason, the ISDA published an IBOR Fallback Pro- tocol to facilitate multilateral amendments to include the amended denitions. The Group is assessing whether to: (i) adopt that protocol in the light of its exposure and developments in the IBOR reform or (ii) adjust in advance any contracts impacted bi- laterally by the reform. Hedge relationships At the repoing date, hedged items and hedging instru- ments are primarily indexed to Euribor, USD LIBOR and GBP SONIA. The Group has assessed the impact of unceainty engen- dered by the IBOR reform on hedge relationships at De- cember 31, 2021 with reference to both hedging instru- ments and hedged items. Both the hedged items and the hedging instruments will change their parameterization from interbank market-based benchmarks (IBORs) to al- ternative risk-free rates (RFRs) as a result of the contrac- tual amendments that will take eect in the coming years. In paicular, unceainty remains as to how the replacement will take place with regard to both hedging instruments and hedged items indexed to USD LIBOR. The Group manages the unceainty associated with these hedge relationships by continuing to apply the temporary exceptions provided for in the amendments to IFRS 9 issued in September 2019 (Phase 1). It was therefore felt that the benchmark indices for determining the interest rates on which the cash ows of the hedged items or the hedging instruments are based would not change as a consequence of the IBOR reform. The exception was applied for the following hedge rela- tionship requirements: • determine if a forecast transaction is highly probable; • establish whether the future hedged cash ows will arise in a discontinued cash ow hedge relationship; • assess the economic relationship between the hedged item and the hedging instrument. The hedge relationships impacted may become ineective aributable to dierent replacements of existing bench- marks with alternative risk-free benchmarks. In any case, the Group will seek to implement the replacements at the same time. In addition, the Group changed the reference to GBP LIBOR in its interest rate hedging instruments used in cash ow hedge relationships with the new, economically equivalent, SONIA benchmark at the end of 2021. There is therefore no longer any unceainty as to how and when the replace- ment can take place both with reference to the hedged items and the hedging instruments. Consequently, the Group no longer applies the amendments to IFRS 9 issued in September 2019 (Phase 1) to these hedge relationships and, consequently, has begun to apply the amendments to IFRS 9 issued in August 2020 (Phase 2), modifying the formal designation of the hedge relationship as required by the IBOR reform and without considering this event as a termination of the hedge relationship. Fuhermore, for cash ow hedge relationships, in modify- ing the description of the hedged item in the hedge rela- tionship, the amounts accumulated in the hedging reserve were considered on the basis of the alternative benchmark index in relation to which the future hedged cash ows are determined. The following table provides details of the notional amounts of the hedging instruments for which the amendments to IFRS 9 (both Phase 1 and Phase 2) were applied as at De- cember 31, 2021, broken down by the alternative bench- mark index used for determining the interest rate. Millions of euro Notional amount at Dec. 31, 2021 Hedging instruments (1) Phase 1 Phase 2 USD LIBOR/SOFR 1,315 - GBP LIBOR/SONIA \- 1,309 Total 1,315 1,309 (1) Since the hedge relationships mentioned are considered highly eective, the amounts specied in the table as de facto “hedging instruments” represent the equivalent amounts of the associated hedged items. 393Notes to the consolidated nancial statements 393 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Unamended contracts including those with specic replacement clauses The Group is monitoring the evolution of the transition from the old interest rate benchmarks to the new rates, review- ing the overall amounts of contracts that have not yet been indexed to the new benchmark rates and, among these, the amounts of contracts which already include specic re- placement clauses. The Group considers a contract to have not yet incorporated an alternative benchmark rate when the interest rate of the contract is indexed to an interest rate benchmark still involved in the IBOR reform and, therefore, when unceainties still exist as to how and when replace- ment with the new benchmark will take place. 49.1.1 Hedge relationships by type of risk hedged Interest rate risk The following table shows the notional amount and the average interest rate of instruments hedging the interest rate risk on transactions outstanding at December 31, 2021 and December 31, 2020, broken down by maturity. Millions of euro Maturity 2022 2023 2024 2025 2026 Beyond Total At Dec. 31, 2021 Interest rate swaps Total notional amount 653 169 729 582 942 5,588 8,663 Notional amount related to IRS in euro 128 169 639 582 729 4,582 6,829 Average IRS rate in euro 5.0651 4.2791 0.8596 1.9099 2.2703 1.6826 Notional amount related to IRS in US dollars 353 - 44 - - 674 1,071 Average IRS rate in US dollars 3.5227 0.6950 2.4672 Millions of euro Maturity 2021 2022 2023 2024 2025 Beyond Total At Dec. 31, 2020 Interest rate swaps Total notional amount 122 461 178 155 591 6,115 7,6 2 2 Notional amount related to IRS in euro - 135 178 155 591 5,295 6,354 Average IRS rate in euro 5.0139 4.1593 4.4380 1.9058 1.8321 Notional amount related to IRS in US dollars 122 326 - - - 639 1,087 Average IRS rate in US dollars 2.0350 3.5227 2.4648 The following table shows the notional amount and the fair value of the hedging instruments on the interest rate risk of transactions outstanding as at December 31, 2021 and December 31, 2020, broken down by type of hedged item. Millions of euro Fair value Notional amount Fair value Notional amount Hedging instrument Hedged item Assets Liabilities Assets Liabilities at Dec. 31, 2021 at Dec. 31, 2020 Fair value hedges Interest rate swaps Floating-rate borrowings/bonds 13 (1) 241 15 - 126 Interest rate swaps Fixed-rate borrowings/bonds 6 (4) 558 7 - 12 Cash ow hedges Interest rate swaps Floating-rate bonds - (167) 1,190 - (232) 1,190 Interest rate swaps Floating-rate loan assets 13 (1) 164 21 - 161 Interest rate swaps Floating-rate borrowings 6 (461) 6,510 - (708) 6,133 Total 38 (634) 8,663 43 (940) 7,6 2 2 394 Integrated Annual Repo 2021394 The following table shows the notional amount and the fair value of hedging derivatives on interest rate risk as at December 31, 2021 and December 31, 2020, broken down by type of hedge. Millions of euro Notional amount Fair value assets Notional amount Fair value liabilities Derivatives at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 Fair value hedges Interest rate swaps 139 138 19 22 660 - (5) - Total 139 138 19 22 660 - (5) - Cash ow hedges Interest rate swaps 404 161 19 21 7,460 7,32 3 (629) (940) Total 404 161 19 21 7, 46 0 7,3 2 3 (629) (940) TOTAL INTEREST RATE DERIVATIVES 543 299 38 43 8,120 7, 323 (634) (940) The notional amount of derivatives classied as hedg- ing instruments at December 31, 2021 came to €8,663 million, with a corresponding negative fair value of €596 million. Compared with December 31, 2020, the notional amount increased by €1,041 million, mainly reecting: • the expiry of interest rate swaps amounting to €122 million; • the consolidation of Australian companies holding in- terest rate swaps amounting to €340 million; • new interest rate swaps amounting to €952 million. The amount also reects the reduction of €129 million in the notional amount of amoizing interest rate swaps. The improvement in the fair value of €301 million mainly reects developments in the yield curve. Fair value hedge derivatives The following table repos net gains and losses recog- nized through prot or loss in respect of fair value hedge derivatives and the hedged item that are aributable to interest rate risk both in 2021 and the previous year. Millions of euro 2021 2020 Net gain/(loss) Net gain/(loss) Interest rate hedging instruments (11) 15 Hedged item (8) (14) Ineective poion (19) 1 The following table shows the impact of fair value hedges of interest rate risk in the statement of nancial position at December 31, 2021 and December 31, 2020. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Notional amount Carrying amount Fair value used to measure ineectiveness in the year Notional amount Carrying amount Fair value used to measure ineectiveness in the year Interest rate swaps 799 14 14 138 22 22 395Notes to the consolidated nancial statements 395 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements The following table shows the impact of the hedged item of fair value hedges in the statement of nancial position at December 31, 2021 and December 31, 2020. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Carrying amount Cumulative adjustment of fair value of hedged item Fair value used to measure ineectiveness in the year Carrying amount Cumulative adjustment of fair value of hedged item Fair value used to measure ineectiveness in the year Fixed-rate borrowings 518 6 (5) 20 7 (7) Floating-rate borrowings 306 (11) 9 146 15 (15) Total 824 (5) 4 166 22 (22) Cash ow hedge derivatives The following table shows the cash ows expected in coming years from cash ow hedge derivatives on inter- est rate risk. Millions of euro Fair value Distribution of expected cash ows at Dec. 31, 2021 2022 2023 2024 2025 2026 Beyond Cash ow hedge derivatives on interest rates Positive fair value 19 3 2 1 3 3 5 Negative fair value (629) (139) (121) (96) (78) (66) (163) The following table shows the impact of cash ow hedges of interest rate risk in the statement of nancial position at December 31, 2021 and December 31, 2020. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Notional amount Carrying amount Fair value used to measure ineectiveness in the year Notional amount Carrying amount Fair value used to measure ineectiveness in the year Interest rate swaps 7,864 (610) (610) 7,484 (919) (919) The following table shows the impact of the hedged item of cash ow hedges in the statement of nancial position at December 31, 2021 and December 31, 2020. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Fair value used to measure ineectiveness in the year Fair value at the designation date of CFH derivatives through prot or loss Hedging reserve Hedging costs reserve Ineective poion of carrying amount of CFH derivatives Fair value used to measure ineectiveness in the year Fair value at the designation date of CFH derivatives through prot or loss Hedging reserve Hedging costs reserve Ineective poion of carrying amount of CFH derivatives Floating-rate bonds 167 - (167) - - 232 - (232) - - Floating-rate loan assets (12) - 12 - - (21) - 21 - - Floating-rate borrowings 417 (32) (417) - (6) 653 (44) (653) - (11) Total 572 (32) (572) - (6) 864 (44) (864) - (11) 396 Integrated Annual Repo 2021396 Currency risk The following table repos the maturity prole of the notional amount and associated average contractual ex- change rate for the instruments hedging currency risk on transactions outstanding at December 31, 2021 and De- cember 31, 2020. Millions of euro Maturity 2022 2023 2024 2025 2026 Beyond Total At Dec. 31, 2021 Cross currency interest rate swaps (CCIRS) Total notional amount of CCIRS 258 1 ,574 4,638 1,002 1,153 12,814 21,439 Notional amount for CCIRS EUR/USD - 1,104 2,158 661 1,104 8,632 13,659 Average exchange rate EUR/USD 1.3350 1.1345 1.1742 1.1790 1.2094 Notional amount for CCIRS EUR/GBP - - 1,012 - - 3,678 4,690 Average exchange rate EUR/GBP 0.8765 0.8241 Notional amount for CCIRS EUR/CHF - - 218 - - 126 344 Average exchange rate EUR/CHF 1.0642 1.2100 Notional amount for CCIRS USD/BRL 98 132 295 155 49 244 973 Average exchange rate USD/BRL 4.8123 5.2217 5.5483 5.2921 5.3875 3.5655 Notional value for CCIRS EUR/BRL 160 339 402 79 - 77 1,057 Average exchange rate EUR/BRL 6.4122 6.4379 6.2482 6.7126 3.9197 Currency forwards Total notional amount of forwards 4,324 1,320 371 4 - - 6,019 Notional amount - currency forwards EUR/USD 3,064 1,268 371 4 - - 4,707 Average currency forward rate - EUR/USD 1.1600 1.1900 1.1800 1.1800 Notional amount - currency forwards USD/BRL 311 - - - - - 311 Average currency forward rate - USD/BRL 5.6500 Notional amount - currency forwards USD/COP 284 - - - - - 284 Average currency forward rate - USD/COP 3,964 Notional amount - currency forwards EUR/CLP 145 - - - - - 145 Average currency forward rate - EUR/CLP 818.9400 Notional amount - currency forwards EUR/CAD 107 - - - - - 107 Average currency forward rate - EUR/CAD 1.2400 397Notes to the consolidated nancial statements 397 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Millions of euro Maturity 2021 2022 2023 2024 2025 Beyond Total At Dec. 31, 2020 Cross currency interest rate swaps (CCIRS) Total notional amount of CCIRS 859 1,702 3,120 3,088 1,336 10,882 20,987 Notional amount for CCIRS EUR/USD 185 1,630 2,038 1,223 1,223 6,928 13,227 Average exchange rate EUR/USD 1.1348 1.1213 1.2493 1.1039 1.1593 1.2397 Notional amount for CCIRS EUR/GBP 278 - - 946 - 3,443 4,667 Average exchange rate EUR/GBP 0.8248 0.8765 0.7876 Notional amount for CCIRS EUR/CHF - - - 208 - 120 328 Average exchange rate EUR/CHF 1.0642 0.9040 Notional amount for CCIRS USD/BRL 395 71 64 - - 244 774 Average exchange rate USD/BRL 4.3935 4. 1779 5.1967 3.4489 Currency forwards Total notional amount of forwards 3,684 1,871 12 - - - 5,567 Notional amount - currency forwards EUR/USD 2,671 1,786 12 - - - 4,469 Average currency forward rate - EUR/USD 1. 1473 1.1535 1.1976 Notional amount - currency forwards USD/BRL 379 37 - - - - 416 Average currency forward rate - USD/BRL 5.2226 5.4405 Notional amount - currency forwards USD/COP 187 - - - - - 187 Average currency forward rate - USD/COP 3,782 Notional amount - currency forwards EUR/CLP 121 - - - - - 121 Average currency forward rate - EUR/CLP 716.8847 Notional amount - currency forwards EUR/RUB 100 - - - - - 100 Average currency forward rate - EUR/RUB 91.8464 398 Integrated Annual Repo 2021398 The following table shows the notional amount and the fair value of the hedging instruments on the currency risk of transactions outstanding as at December 31, 2021 and December 31, 2020, broken down by type of hedged item. Millions of euro Fair value Notional amount Fair value Notional amount Hedging instrument Hedged item Assets Liabilities Assets Liabilities at Dec. 31, 2021 at Dec. 31, 2020 Fair value hedges Cross currency interest rate swaps (CCIRS) Fixed-rate borrowings/bonds in foreign currencies 12 - 595 28 - 639 Cross currency interest rate swaps (CCIRS) Floating-rate borrowings in foreign currencies 30 - 77 28 - 79 Cash ow hedges Cross currency interest rate swaps (CCIRS) Floating-rate borrowings/ nancial assets in foreign currencies 88 (19) 953 67 (15) 579 Cross currency interest rate swaps (CCIRS) Fixed-rate borrowings in foreign currencies 43 (58) 2,553 50 - 484 Cross currency interest rate swaps (CCIRS) Floating-rate bonds in foreign currencies 37 - 344 12 - 356 Cross currency interest rate swaps (CCIRS) Fixed-rate bonds in foreign currencies 1,159 (1,095) 16,601 588 (2,374) 18,499 Cross currency interest rate swaps (CCIRS) Future cash ows denominated in foreign currencies - (75) 316 7 (4) 351 Currency forwards Future cash ows denominated in foreign currencies 7 (3) 378 3 (12) 574 Currency forwards Future commodity purchases denominated in foreign currencies 106 (36) 4,802 5 (309) 4,167 Currency forwards Purchases of investment goods and other in foreign currency 20 (7) 839 4 (40) 825 Total 1,502 (1,293) 27, 4 5 8 792 (2,754) 26,553 Cash ow hedges and fair value hedges include: • CCIRSs with a notional amount of €19,749 million used to hedge the currency risk on xed-rate debt denomi- nated in currencies other than the euro, with a positive fair value of €61 million; • CCIRSs with a notional amount of €1,690 million used to hedge the currency risk on oating-rate debt denomi- nated in currencies other than the euro, with a positive fair value of €61 million; • currency forwards with a notional amount of €5,180 million used to hedge the currency risk associated with purchases of natural gas, purchases of fuel and expect- ed cash ows in currencies other than the euro, with a positive fair value of €74 million; • currency forwards with a notional amount of €839 mil- lion and a positive fair value of €13 million in respect of OTC transactions to mitigate the currency risk on ex- pected cash ows in currencies other than the pres- entation currency connected with the purchase of in- vestment goods in the renewables and infrastructure and networks sectors (new generation digital meters), on operating costs for the supply of cloud services and on revenue from the sale of renewable energy. 399Notes to the consolidated nancial statements 399 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements The following table repos the notional amount and fair value of foreign exchange derivatives at December 31, 2021 and December 31, 2020, broken down by type of hedge. Millions of euro Notional amount Fair value assets Notional amount Fair value liabilities Derivatives at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 Fair value hedges CCIRS 672 718 42 56 - - - - Total 672 718 42 56 - - - - Cash ow hedges Currency forwards 4, 117 476 133 12 1,902 5,090 (46) (361) CCIRS 13,553 5,582 1,327 724 7, 2 14 14,687 (1,247) (2,393) Total 17,670 6,058 1,460 736 9,116 19,777 (1,293) (2,754) TOTAL EXCHANGE RATE DERIVATIVES 18,342 6,776 1,502 792 9,116 19,777 (1,293) (2,754) The notional amount of CCIRSs at December 31, 2021 amounted to €21,439 million (€20,987 million at Decem- ber 31, 2020), an increase of €452 million. Cross currency interest rate swaps with a total amount of €859 million ex- pired, while new derivatives amounted to €6,470 million, of which €3,532 million in respect of bond issues denom- inated in US dollars in July 2021. In addition, following the early redemption of conventional bonds in US dollars by Enel Finance International during the year, cross currency interest rate swaps of €5,909 million were terminated ear- ly. The amount also reects developments in the exchange rate of the euro against the main other currencies and the eect of amoization, which caused their notional amount to increase by €750 million. The notional amount of currency forwards at December 31, 2021 amounted to €6,019 million (€5,566 million at De- cember 31, 2020), an increase of €453 million. The expo- sure to currency risk, especially that associated with the US dollar, is mainly due to purchases of natural gas, pur- chases of fuel and cash ows in respect of investments. Changes in the notional amount are connected with nor- mal developments in operations. Fair value hedge derivatives The following table repos net gains and losses recog- nized through prot or loss, reecting changes in the fair value of fair value hedge derivatives and the hedged item that are aributable to currency risk for 2021 and the pre- vious year. Millions of euro 2021 2020 Net gain/(loss) Net gain/(loss) Interest rate hedging instruments 1 44 Hedged item (2) (51) Ineective poion (1) (7) The following table shows the impact of fair value hedges of currency risk in the statement of nancial position at December 31, 2021 and December 31, 2020. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Notional amount Carrying amount Fair value used to measure ineectiveness in the year Notional amount Carrying amount Fair value used to measure ineectiveness in the year Cross currency interest rate swaps (CCIRS) 672 42 37 718 56 56 400 Integrated Annual Repo 2021400 The following table shows the impact of the hedged item of fair value hedges in the statement of nancial position at December 31, 2021 and December 31, 2020. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Carrying amount Cumulative adjustment of fair value of hedged item Fair value used to measure ineectiveness in the year Carrying amount Cumulative adjustment of fair value of hedged item Fair value used to measure ineectiveness in the year Fixed-rate borrowings in foreign currency 639 (35) (44) 637 34 (34) Floating-rate borrowings in foreign currency - - - 79 28 (28) Total 639 (35) (44) 716 62 (62) Cash ow hedge derivatives The following table shows the cash ows expected in com- ing years from cash ow hedge derivatives on currency risk. Millions of euro Fair value Distribution of expected cash ows at Dec. 31, 2021 2022 2023 2024 2025 2026 Beyond Cash ow hedge derivatives on exchange rates Positive fair value 1,460 305 407 247 180 205 1,780 Negative fair value (1,293) (9) 13 (66) (49) (27) (256) The following table shows the impact of cash ow hedges of currency risk in the statement of nancial position at December 31, 2021 and December 31, 2020. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Notional amount Carrying amount Fair value used to measure ineectiveness in the year Notional amount Carrying amount Fair value used to measure ineectiveness in the year Cross currency interest rate swaps (CCIRS) 20,767 80 82 20,269 (1,669) (1,463) Currency forwards 6,019 87 89 5,566 (349) (342) Total 26,786 167 171 25,835 (2,018) (1,805) 401Notes to the consolidated nancial statements 401 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements The following table shows the impact of the hedged item of cash ow hedges in the statement of nancial position at December 31, 2021 and December 31, 2020. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Fair value used to measure ineectiveness in the year Hedging reserve Hedging costs reserve Ineective poion of carrying amount of CFH derivatives Fair value used to measure ineectiveness in the year Hedging reserve Hedging costs reserve Ineective poion of carrying amount of CFH derivatives Floating-rate borrowings in foreign currencies (69) 69 - - (52) 52 - - Fixed-rate borrowings in foreign currencies 15 (15) - - (50) 50 - - Floating-rate bonds in foreign currencies (37) 37 - - (12) 12 - - Fixed-rate bonds in foreign currencies (66) 66 (2) - 1,580 (1,580) (205) - Future cash ows denominated in foreign currencies (hedged with CCIRSs) 75 (75) - - (3) 3 - - Future cash ows denominated in foreign currencies (hedged with forwards) (2) 2 1 - 7 (7) (3) - Future commodity purchases denominated in foreign currencies (72) 72 - - 305 (305) - 1 Purchases of investment goods and other in foreign currency (15) 15 (3) - 30 (30) (5) (1) Total (171) 171 (4) - 1,805 (1,805) (213) - 402 Integrated Annual Repo 2021402 Commodity price risk Millions of euro Maturity 2022 2023 2024 2025 2026 Beyond Total At Dec. 31, 2021 Commodity swaps Notional value on power 124 164 168 149 146 472 1,223 Average commodity swap price on power (€/MWh) 51.8 53.7 47.5 46.6 46.0 33.2 Notional value on gas 131 372 129 11 17 93 753 Average commodity swap price on gas (€/MWh) 63.8 13.7 12.1 9.4 12.0 9.6 Notional amount on oil 669 244 99 - - - 1,012 Average commodity swap price on oil ($/bbl) 86.4 92.9 79.4 Commodity forwards/futures Notional value on power 319 637 302 288 248 856 2,650 Average commodity forward/future price on power (€/MWh) 29.7 43.3 20.0 19.7 18.7 16.6 Notional value on coal/shipping 14 - - - - - 14 Average commodity forward/future price on coal/shipping ($/ton) 90.8 Notional value on gas 3,315 1,048 5 - - - 4,368 Average commodity forward/future price on gas (€/MWh) 15.1 18.9 18.0 Notional value on CO 2 476 61 - - - - 537 Average commodity forward/future price on CO 2 (€/ton) 46.1 38.4 Notional value on oil 600 57 - - - - 657 Average commodity forward/future price on oil ($/bbl) 37.7 51.6 Commodity options Notional value on power 10 21 21 21 21 134 228 Average commodity option price on power (€/MWh) 26.3 29.3 29.9 29.8 29.8 32.6 Notional value on gas 99 - - - - - 99 Average commodity option price on gas (€/MWh) 50.5 Millions of euro Maturity 2021 2022 2023 2024 2025 Beyond Total At Dec. 31, 2020 Commodity swaps Notional value on power 78 65 64 65 53 281 606 Average commodity swap price on power (€/MWh) 40.3 37. 9 37.7 37.7 37.6 37.7 Notional value on coal/shipping 32 2 - - - - 34 Average commodity swap price on coal/shipping ($/ton) 51.2 57.9 Notional value on gas - - - - - - - Average commodity swap price on gas (€/MWh) Commodity forwards/futures Notional value on power 1,065 244 246 197 191 741 2,684 Average commodity forward/future price on power (€/MWh) 43.2 25.0 19.1 17. 9 17.4 15.2 Notional value on gas 1,521 973 17 20 20 108 2,659 Average commodity forward/future price on gas (€/MWh) 14.3 14.9 15.2 4.9 4.9 2.5 Notional value on CO 2 317 134 37 - - - 488 Average commodity forward/future price on CO 2 (€/ton) 24.2 26.6 27.9 Notional value on oil 744 413 - - - - 1,157 Average commodity forward/future price on oil ($/bbl) 45.0 44.3 Commodity options Notional value on power - 8 9 9 9 45 80 Average commodity option price on power (€/MWh) 29.7 26.4 26.4 26.4 31.7 403Notes to the consolidated nancial statements 403 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements The following table repos the notional amount and fair value of instruments hedging commodity price risk on transactions outstanding at December 31, 2021 and De- cember 31, 2020, broken down by type of commodity. Millions of euro Notional amount Fair value assets Notional amount Fair value liabilities at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 Derivatives Cash ow hedges Derivatives on power: \- swaps 820 369 640 70 401 236 (263) (56) \- forwards/futures 769 2,066 351 361 1,881 571 (598) (16) \- options 229 70 49 - - - (18) - Total derivatives on power 1,818 2,505 1,040 431 2,282 807 (879) (72) Derivatives on coal/shipping: \- swaps - 34 - 11 - - - - \- forwards/futures 14 - 3 - - - - - \- options - - - - - - - - Total derivatives on coal/shipping 14 34 3 11 - - - - Derivatives on gas and oil: \- swaps 669 - 69 - 1,095 - (99) - \- forwards/futures 3,094 1,674 2,557 456 1,932 2,189 (5,150) (455) \- options 30 11 3 18 70 - (26) - Total derivatives on gas and oil 3,793 1,685 2,629 474 3,097 2,189 (5,275) (455) Derivatives on CO 2 : \- swaps - - - - - - - - \- forwards/futures 537 482 410 139 - 5 - - \- options - - - - - - - - Total derivatives on CO 2 537 482 410 139 - 5 - - TOTAL COMMODITY DERIVATIVES 6,162 4,706 4,082 1,055 5,379 3,001 (6,154) (527) The table repos the notional amount and fair value of de- rivatives hedging commodity price risk at December 31, 2021 and at December 31, 2020, broken down by type of hedge. The positive fair value of cash ow hedge derivatives on commodities regards derivatives on gas and oil commod- ities in the amount of €2,629 million, derivatives on CO 2 (€410 million), derivatives on power (€1,040 million) and, to a lesser extent, hedges of coal purchases requested by the generation companies in the amount of €3 million. The rst category primarily regards hedges of uctuations in the price of natural gas, for both purchases and sales, carried out for oil commodities and gas products. The CO 2 category mainly includes hedging transactions undeaken for Enel Group compliance purposes. The power category mainly includes medium/long-term hedging transactions, especially in Spain and Noh Amer- ica. Cash ow hedge derivatives on commodities included in liabilities regard derivatives on gas and oil commodities in the amount of €5,275 million (mainly for derivatives hedg- ing sales) and derivatives on power in the amount of €879 million. 404 Integrated Annual Repo 2021404 Cash ow hedge derivatives The following table shows the cash ows expected in com- ing years from cash ow hedge derivatives on commodity price risk. Millions of euro Fair value Distribution of expected cash ows at Dec. 31, 2021 2022 2023 2024 2025 2026 Beyond Cash ow hedge derivatives on commodities Positive fair value 4,082 2,960 720 122 72 45 163 Negative fair value (6,154) (4,892) (858) (126) (84) (58) (136) The following table shows the impact of cash ow hedges of commodity price risk in the statement of nancial posi- tion at December 31, 2021 and December 31, 2020. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Notional amount Carrying amount Fair value used to measure ineectiveness in the year Notional amount Carrying amount Fair value used to measure ineectiveness in the year Power swaps 1,221 377 377 605 23 23 Coal/shipping swaps - - - 34 11 11 Gas and oil swaps 1,764 (30) (30) - - - Power forwards/futures 2,675 (223) (223) 2,717 375 356 Coal/shipping forwards/futures 14 3 3 - - - Gas and oil forwards/futures 5,027 (2,592) (2,592) 3,794 (20) (20) CO 2 forwards/futures 537 410 410 487 139 139 Power options 204 7 7 70 - - Gas and oil options 99 (24) (24) - - - Total 11,541 (2,072) (2,072) 7,7 07 528 509 The following table shows the impact of the hedged item of cash ow hedges in the statement of nancial position at December 31, 2021 and December 31, 2020. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Fair value used to measure ineectiveness in the year Hedging reserve Hedging costs reserve Ineective poion of carrying amount of CFH derivatives Fair value used to measure ineectiveness in the year Hedging reserve Hedging costs reserve Ineective poion of carrying amount of CFH derivatives Future transactions in power (297) 297 - (29) (316) 374 - 24 Future transactions in coal/ shipping (3) 3 - - (11) 11 - - Future transactions in gas and oil 2,751 (2,751) - (2) 20 (20) - - Future transactions in CO 2 (410) 410 - - (139) 139 - - Total 2,041 (2,041) - (31) (446) 504 - 24 Finally, with regard to cash ow hedge derivatives on com- modity prices, in 2021 the entire commodities market experienced major price swings. The greatest impact in terms of changes in the hedging reserve is aributable to future transactions in gas, which of all commodities was the one most aected by the high volatility. 405Notes to the consolidated nancial statements 405 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 49.2 Derivatives at fair value through prot or loss The following table shows the notional amount and the fair value of derivatives at FVTPL as at December 31, 2021 and December 31, 2020. Millions of euro Notional amount Fair value assets Notional amount Fair value liabilities at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 at Dec. 31, 2021 at Dec. 31, 2020 Derivatives at FVTPL on interest rates: \- interest rate swaps 50 50 1 2 100 100 (71) (88) \- interest rate options - - - - 50 50 (2) (4) on exchange rates: \- currency forwards 2,180 3,501 23 83 3,628 1,012 (62) (44) \- CCIRSs - - - - - - - - on commodities Derivatives on power: \- swaps 777 144 (78) 14 1,088 109 (198) (18) \- forwards/futures 23,207 5,493 3,368 75 17, 97 0 5,626 (2,927) (428) \- options 3 137 78 24 113 9 (16) (12) Total derivatives on power 23,987 5,774 3,368 113 19,171 5,744 (3,141) (458) Derivatives on coal: \- swaps 35 47 4 4 133 16 23 (1) \- forwards/futures 213 200 63 40 455 144 (148) (27) \- options - - - - - - - - Total derivatives on coal 248 247 67 44 588 160 (125) (28) Derivatives on gas and oil: \- swaps 2,904 635 (1,049) 81 4,199 259 1,843 (34) \- forwards/futures 19,001 13,993 16,706 2,108 16,755 14, 121 (17,374) (1,999) \- options 232 185 268 165 399 170 (402) (173) Total derivatives on gas and oil 22,137 14,813 15,925 2,354 21,353 14,550 (15,933) (2,206) Derivatives on CO 2 : \- swaps - - - - - - - - \- forwards/futures 3,079 770 557 209 1,366 290 (530) (72) \- options - - - - - 5 - (5) Total derivatives on CO 2 3,079 770 557 209 1,366 295 (530) (77) Derivatives on other: \- swaps - - - - 1 13 (1) (7) \- forwards/futures - 195 - 9 - 234 - (1) \- options - - - - - - - - Total derivatives on other - 195 - 9 1 247 (1) (8) Embedded derivatives - 4 - 3 - 3 - (3) TOTAL 51,681 25,354 19,941 2,817 46,257 22,161 (19,865) (2,916) At December 31, 2021 the notional amount of trading deriv- atives on interest rates came to €200 million. The negative fair value of €72 million improved by €18 million on the pre- vious year, mainly due to developments in the yield curve. At December 31, 2021, the notional amount of derivatives on exchange rates was €5,808 million. The overall increase in their notional value of €1,295 million and the decrease in the associated net fair value of €78 million mainly reected normal operations and developments in exchange rates. 406 Integrated Annual Repo 2021406 Fair value measurement At December 31, 2021, the notional amount of derivatives on commodities came to €91,930 million. The fair value of trading derivatives on commodities classied as assets mainly reects the market valuation of hedges of gas and oil amounting to €15,925 million, derivatives on power amounting to €3,368 million, derivatives on CO 2 amount- ing to €557 million and, to a lesser extent, derivatives on coal totaling €67 million. The fair value of trading derivatives on commodities classied as liabilities mainly regards hedges of gas and oil amounting to €15,933 million, derivatives on power amounting to €3,141 million and derivatives on CO 2 and coal in the amount of €530 million and €125 million, re- spectively. These amounts include transactions managed within the trading pofolios and transactions that, although estab- lished for hedging purposes, did not meet the require- ments for hedge accounting. The “other” category includes hedges using weather deriv- atives. In addition to commodity risk, the Group companies are also exposed to changes in volumes associated with weather conditions (for example, temperature impacts the consumption of gas and power). 50. Assets and liabilities measured at fair value The Group determines fair value in accordance with IFRS 13 whenever such measurement is required by the IFRSs as a recognition or measurement criterion. Fair value is dened as the price that would be received to sell an asset or paid to transfer a liability, in an orderly trans- action, between market paicipants, at the measurement date (i.e., an exit price). The best proxy of fair value is market price, i.e., the current publicly available price actually used on a liquid and active market. The fair value of assets and liabilities is classied in ac- cordance with the three-level hierarchy described below, depending on the inputs and valuation techniques used in determining their fair value: • Level 1, where the fair value is determined on the basis of quoted prices (unadjusted) in active markets for iden- tical assets or liabilities that the entity can access at the measurement date; • Level 2, where the fair value is determined on the basis of inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (such as prices) or indirectly (derived from prices); • Level 3, where the fair value is determined on the basis of unobservable inputs. This note also provides detailed disclosures concerning the valuation techniques and inputs used to peorm these measurements. To that end: • recurring fair value measurements of assets or liabilities are those required or permied by the IFRSs in the state- ment of nancial position at the close of each period; • non-recurring fair value measurements are those re- quired or permied by the IFRSs in the statement of - nancial position in paicular circumstances. For general information or specic disclosures on the ac- counting treatment of these circumstances, please see note 2 “Accounting policies”. 50.1 Assets measured at fair value in the statement of nancial position The following table shows, for each class of assets meas- ured at fair value on a recurring or non-recurring basis in the statement of nancial position, the fair value measure- ment at the end of the repoing period and the level in the fair value hierarchy into which the fair value measurements of those assets are classied. 407Notes to the consolidated nancial statements 407 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Millions of euro Non-current assets Current assets Notes Fair value Level 1 Level 2 Level 3 Fair value Level 1 Level 2 Level 3 at Dec. 31, 2021 at Dec. 31, 2021 Equity investments in other companies at FVOCI 28 41 4 15 22 - - - - Securities at FVOCI 28.1, 29.1 404 404 - - 87 87 - - Securities at FVTPL 29.1 - - - - 1 1 - - Equity investments in other companies at FVTPL 28 32 23 - 9 - - - - Financial assets from service concession arrangements at FVTPL 28 2,630 - 2,630 - - - - - Loan assets and other nancial assets measured at fair value 28 25 - - 25 140 140 - - Fair value hedge derivatives: \- on interest rates 49 19 - 19 - - - - - \- on exchange rates 49 42 - 42 - - - - - Cash ow hedge derivatives: \- on interest rates 49 19 - 19 - - - - - \- on exchange rates 49 1,356 - 1,356 - 104 - 104 - \- on commodities 49 1,059 332 387 340 3,023 1,066 1,681 276 Trading derivatives: \- on interest rates 49 - - - - 1 - 1 - \- on exchange rates 49 - - - - 23 - 23 - \- on commodities 49 277 114 162 1 19,640 8,236 11,404 - Inventories measured at fair value 49 - - - - 55 53 2 - Contingent consideration 30, 31 - - - - 15 - 2 13 The fair value of “Equity investments in other companies at FVOCI” is determined for listed companies on the basis of the quoted price at the close of the year, while that for unlisted companies is based on a reliable valuation of the relevant assets and liabilities. “Financial assets from service concession arrangements at FVTPL” concern electricity distribution operations in Brazil, mainly by Enel Distribuição Rio de Janeiro, Enel Distribuição Ceará, and Enel Distribuição São Paulo, as well as the gener- ation plant of PH Chucas in Costa Rica, and are accounted for in accordance with IFRIC 12. Fair value was estimated as the net replacement cost based on the most recent rate information available and on the general price index for the Brazilian market. The current poion of “Loan assets and other nancial as- sets measured at fair value” essentially regards investments of liquidity. Their fair value is determined using Level 1 mar- ket inputs. Level 3 of the non-current poion of “Loan assets and other nancial assets measured at fair value” repos the receiv- able in respect of the sale of Slovak Power Holding, which amounted to €25 million at December 31, 2021. Its fair value was determined using the contractual price formula. The fair value of derivative contracts is determined using the ocial prices for instruments traded on regulated markets. The fair value of instruments not listed on a regulated mar- ket is determined using valuation methods appropriate for each type of nancial instrument and market data as of the end of the repoing period (such as interest rates, exchange rates, volatility), discounting expected future cash ows on the basis of the market yield curve and translating amounts in currencies other than the euro using exchange rates pro- vided by the World Markets Renitiv (WMR) Company. Derivatives on interest rates and exchange rates are all measured using Level 2 inputs. The fair value of derivatives on commodities is almost al- ways measured using Level 1 or Level 2 inputs, as the deter- mination is based on market inputs as these contracts are entered into with exchange counterpaies, leading sector operators or nancial institutions. Marginal exceptions for both cash ow hedges and trading transactions include ceain derivatives relating to weather derivatives, which are measured on the basis of ceied historical data for the underlying variables as well as cer- tain long-term nancial contracts (viual power purchase agreements, or VPPAs), for which internal measurement models were also used in pa in order to measure these in- struments over longer time horizons, given the illiquidity of the underlying variables. In accordance with the IFRSs, the Group assesses credit risk, both of the counterpay (Credit Valuation Adjustment or CVA) and its own (Debit Valuation Adjustment or DVA), in order to adjust the fair value of nancial instruments for the 408 Integrated Annual Repo 2021408 corresponding amount of counterpay risk where neces- sary. More specically, the Group measures CVA/DVA us- ing a Potential Future Exposure valuation technique for the net exposure of the position and subsequently allocating the adjustment to the individual nancial instruments that make up the overall pofolio. All of the inputs used in this technique are observable on the market. 50.2 Assets not measured at fair value in the statement of nancial position For each class of assets not measured at fair value on a recurring basis but whose fair value must be repoed, the following table repos the fair value at the end of the year and the level in the fair value hierarchy into which the fair value measurements of those assets are classied. Millions of euro Non-current assets Current assets Notes Fair value Level 1 Level 2 Level 3 Fair value Level 1 Level 2 Level 3 at Dec. 31, 2021 at Dec. 31, 2021 Investment propey 21 150 15 - 135 - - - - Inventories 32 - - - - 50 - 1 49 The table repos the fair value of investment propey and inventories of real estate not used in the business in the amount of €150 million and €50 million respectively. The amounts were calculated with the assistance of apprais- als conducted by independent expes, who used dierent methods depending on the specic assets involved. 50.3 Liabilities measured at fair value in the statement of nancial position The following table repos for each class of liabilities measured at fair value on a recurring or non-recurring basis in the statement of nancial position the fair value measurement at the end of the repoing period and the level in the fair value hierarchy into which the fair value measurements are classied. Millions of euro Non-current liabilities Current liabilities Notes Fair value Level 1 Level 2 Level 3 Fair value Level 1 Level 2 Level 3 at Dec. 31, 2021 at Dec. 31, 2021 Fair value hedge derivatives: \- on interest rates 49 5 - 5 - - - - - \- on exchange rates 49 - - - - - - - - \- on commodities 49 - - - - - - - - Cash ow hedge derivatives: \- on interest rates 49 620 - 620 - 9 - 9 - \- on exchange rates 49 1,244 - 1,244 - 49 - 49 - \- on commodities 49 1,301 416 742 143 4,853 2,366 2,480 7 Trading derivatives: \- on interest rates 49 - - - - 73 - 73 - \- on exchange rates 49 2 - 2 - 60 - 60 - \- on commodities 49 167 72 95 - 19,563 7,6 28 11,934 1 Contingent consideration 40, 41 84 - - 84 45 - 43 2 Contingent consideration mainly regards a number of eq- uity investments held by the Group in Noh America and Greece, whose fair value was determined on the basis of the contractual terms and conditions. 409Notes to the consolidated nancial statements 409 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 50.4 Liabilities not measured at fair value in the statement of nancial position For each class of liabilities not measured at fair value in the statement of nancial position but whose fair value must be repoed, the following table repos the fair value at the end of the period and the level in the fair value hierarchy into which the fair value measurements of those liabilities are classied. Millions of euro Notes Fair value Level 1 Level 2 Level 3 at Dec. 31, 2021 Bonds: \- xed rate 46.3.1 42,949 39,709 3,240 - \- oating rate 46.3.1 3,273 147 3,126 - Bank borrowings: \- xed rate 46.3.1 2,298 \- 2,298 - \- oating rate 46.3.1 11,091 \- 11,091 - Non-bank borrowings: \- xed rate 46.3.1 3,046 \- 3,046 - \- oating rate 46.3.1 95 \- 95 - Total 62,752 39,856 22,896 \- For listed debt instruments, the fair value is given by ocial prices. For unlisted instruments the fair value is determined using appropriate valuation techniques for each category of nancial instrument and market data at the close of the year, including the credit spreads of Enel. Other information 51. Share-based payments Staing in 2019, the Shareholders’ Meeting of Enel SpA (“Enel” or the “Company”) has each year approved the adoption of long-term share-based incentive plans for the management of Enel and/or its subsidiaries pursuant to Aicle 2359 of the Italian Civil Code. Each of the incentive plans approved (the 2019 Long-Term Incentive Plan, the 2020 Long-Term Incentive Plan and the 2021 Long-Term Incentive Plan; referred to hereinafter, respectively, the “2019 LTI Plan”, the “2020 LTI Plan” and the “2021 LTI Plan” and, jointly, the “Plans”) provides for the grant of ordinary Company shares (“Shares”) to the respective beneciaries subject to the achievement of specic peormance tar- gets. Plan beneciaries are the Chief Executive Ocer/General Manager of Enel and Enel Group managers in the positions most directly responsible for company peormance or considered to be of strategic interest. The Plans provide for the award to the beneciaries of an incentive consist- ing of a monetary component and an equity component. This incentive – determined, at the time of the award, as a base value calculated in relation to the xed remuner- ation of the individual beneciary – may vary depending on the degree of achievement of each of the three-year peormance targets of the Plans, ranging from zero up to a maximum of 280% or 180% of the base value in the case, respectively, of the Chief Executive Ocer/General Man- ager or the other beneciaries. The Plans establish that, of the total incentive eectively vested, the bonus will be fully paid in shares in the amount of (i) up to 100% of the base value for the Chief Executive Ocer/General Manager and (ii) up to 50% of the base val- ue for the other beneciaries. The actual award of the bonus under the Plans is subject to the achievement of specic peormance targets dur- ing the three year peormance period. If these targets are achieved, 30% of both the equity and cash components of the incentive will be paid in the rst year following the end of the peormance period and the remaining 70% will be paid in the second year following the end of the per- formance period. The payment of a substantial poion of long-term variable remuneration (70% of the total) is therefore deferred to the second year following the end of the peormance period of the individual Plans. The following table provides information on the 2019 LTI Plan, the 2020 LTI Plan and the 2021 LTI Plan. For more information on the characteristics of the Plans, please see the information documents prepared pursuant 410 Integrated Annual Repo 2021410 to Aicle 84-bis of the CONSOB Regulation issued with Resolution no. 11971 of May 14, 1999 (the Issuers Regu- lation), which are available to the public in the section of (28) The date on which the Board of Directors approved the procedures and timing for granting the 2019 LTI Plan to the beneciaries (taking account of the proposal issued by the Nomination and Compensation Commiee at its meeting of November 11, 2019). (29) On the occasion of the approval of the consolidated nancial statements of the Enel Group at December 31, 2021, the Board of Directors will verify the level of achievement of the peormance targets of the 2019 LTI Plan. (30) The date on which the Board of Directors approved the procedures and timing for granting the 2020 LTI Plan to the beneciaries (taking account of the proposal issued by the Nomination and Compensation Commiee at its meeting of September 16, 2020). (31) On the occasion of the approval of the consolidated nancial statements of the Enel Group at December 31, 2022, the Board of Directors will verify the level of achievement of the peormance targets of the 2020 LTI Plan. (32) The date on which the Board of Directors approved the procedures and timing for granting the 2021 LTI Plan to the beneciaries (taking account of the proposal issued by the Nomination and Compensation Commiee at its meeting of June 9, 2021). (33) On the occasion of the approval of the consolidated nancial statements of the Enel Group at December 31, 2023, the Board of Directors will verify the level of achievement of the peormance targets of the 2021 LTI Plan. (34) Shares purchased in the period between September 23 and December 2, 2019, equal to about 0.015% of share capital. (35) Shares purchased in the period between September 3 and October 28, 2020, equal to about 0.017% of share capital. (36) Shares purchased in the period between June 18 and July 21, 2021, equal to about 0.016% of share capital. (37) The gure has been restated from that published in the nancial statements for 2020. (38) The gure has been restated from that published in the nancial statements for 2020. Enel’s website (www.enel.com) dedicated to the Sharehold- ers’ Meetings held respectively on May 16, 2019, May 14, 2020 and May 20, 2021. Grant date Peormance period Verication of achievement of targets Payout 2019 LTI Plan 12.11.2019 (28) 2019-2021 2022 (29) 2022-2023 2020 LTI Plan 17.09.2020 (30) 2020-2022 2023 (31) 2023-2024 2021 LTI Plan 16.09.2021 (32) 2021-2023 2024 (33) 2024-2025 In implementation of the authorizations granted by the Shareholders’ Meetings held on May 16, 2019, May 14, 2020 and May 20, 2021 and in compliance with the associated terms and conditions, the Board of Directors approved — at its meetings of September 19, 2019, July 29, 2020 and June 17, 2021 — the launch of share buyback programs to serve the 2019 LTI Plan, the 2020 LTI Plan and the 2021 LTI Plan respectively. The number of Shares whose purchase was authorized by the Board of Directors for each Plan, the actual number of Shares purchased, the associated weighted average price and total value are shown below. Purchases authorized by the Board of Directors Actual purchases Number of shares Number of shares Weighted average price (euros per share) Total value (euros) 2019 LTI Plan No more than 2,500,000 for a maximum amount of €10,500,000 million 1,549,152 (34) 6.7779 10,499,999 2020 LTI Plan 1,720,000 1,720,000 (35) 7.4366 12,790,870 2021 LTI Plan 1,620,000 1,620,000 (36) 7.8737 12,755,459 As a result of the purchases made to suppo the 2019 LTI Plan, the 2020 LTI Plan and the 2021 LTI Plan, at December 31, 2021 Enel holds a total of 4,889,152 treasury shares, equal to about 0.048% of share capital. The following information concerns the equity instruments granted in 2019, 2020 and 2021. 2021 2020 2019 Number of shares granted at the grant date Fair value per share at the grant date Number of shares potentially available for award Number of shares granted at the grant date Fair value per share at the grant date Number of shares potentially available for award Number of shares granted at the grant date Fair value per share at the grant date Number of shares potentially available for award 2019 LTI Plan 1,529,182 1,529,182 1,538,547 6.983 1,538,547 2020 LTI Plan 1,638,775 1,638,775 (37) 7.38 1,638,775 (38) 2021 LTI Plan 1,577,773 7.001 1,577,773 411Notes to the consolidated nancial statements 411 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements The fair value of those equity instruments is measured on the basis of the market price of Enel Shares at the grant date. (39) The cost of the equity component is determined on the basis of the fair value of the equity instruments granted and is recognized over the duration of the vesting period through an equity reserve. The total costs recognized by the Group through prot or loss amounted to €9 million in 2021 (€5 million in 2020). There have been no terminations or amendments involving the 2019 LTI Plan, the 2020 LTI Plan or the 2021 LTI Plan. (39) For the 2019 LTI Plan, the grant date is November 12, 2019, i.e., the date of the meeting of the Board of Directors that approved the procedures and timing of the grant under the 2019 LTI Plan to the beneciaries. For the 2020 LTI Plan, the grant date is September 17, 2020, i.e., the date of the meeting of the Board of Directors that approved the procedures and timing of the grant under the 2020 LTI Plan to the beneciaries. For the 2021 LTI Plan, the grant date is September 16, 2021, i.e., the date of the meeting of the Board of Directors that approved the procedures and timing of the grant under the 2021 LTI Plan to the beneciaries. 52\. Related paies As an operator in the eld of generation, distribution, transpo and sale of electricity and the sale of natural gas, Enel carries out transactions with a number of companies directly or indirectly controlled by the Italian State, the Group’s controlling shareholder. The table below summarizes the main types of transac- tions carried out with such counterpaies. Related pay Relationship Nature of main transactions Single Buyer Fully controlled (indirectly) by the Ministry for the Economy and Finance Purchase of electricity for the enhanced protection market Cassa Depositi e Prestiti Group Directly controlled by the Ministry for the Economy and Finance Sale of electricity on the Ancillary Services Market (Terna) Sale of electricity transpo services (Eni Group) Purchase of transpo, dispatching and metering services (Terna) Purchase of postal services (Poste Italiane) Purchase of fuels for generation plants and natural gas storage and distribution services (Eni Group) ESO - Energy Services Operator Fully controlled (directly) by the Ministry for the Economy and Finance Sale of subsidized electricity Payment of A3 component for renewable resource incentives EMO - Energy Markets Operator Fully controlled (indirectly) by the Ministry for the Economy and Finance Sale of electricity on the Power Exchange (EMO) Purchase of electricity on the Power Exchange for pumping and plant planning (EMO) Leonardo Group Directly controlled by the Ministry for the Economy and Finance Purchase of IT services and supply of goods In addition, the Group conducts essentially commercial transactions with associates or companies in which it holds non-controlling interests. Finally, Enel also maintains relationships with the pension funds FOPEN and FONDENEL, as well as Fondazione Enel and Enel Cuore, an Enel non-prot company devoted to providing social and healthcare assistance. All transactions with related paies were carried out on normal market terms and conditions, which in some cas- es are determined by the Regulatory Authority for Energy, Networks and the Environment. The following tables summarize transactions with related paies, associates and joint ventures outstanding at De- cember 31, 2021 and December 31, 2020 and carried out during the period. 412 Integrated Annual Repo 2021412 Millions of euro Single Buyer EMO ESO Cassa Depositi e Prestiti Group (1) Other Total 2021 Associates and joint ventures Overall total 2021 Total in nancial statements % of total Income statement Revenue from sales and services - 3,018 275 3,165 210 6,668 342 7,010 84,104 8.3% Other income - - - 5 - 5 1 6 3,902 0.2% Other nancial income - - - 15 - 15 123 138 1,882 7.3 % Electricity, gas and fuel purchases 4,613 6,363 - 2,572 - 13,548 278 13,826 49,093 28.2% Costs for services and other materials - 75 3 2,874 57 3,009 143 3,152 19,609 16.1% Other operating costs 6 198 - 13 1 218 - 218 2,095 10.4% Net results from commodity contracts - - - 13 - 13 11 24 2,522 1.0% Other nancial expense - - - 10 - 10 22 32 6,114 0.5% (1) The gure includes Open Fiber SpA, which was considered an associate last year. Millions of euro Single Buyer EMO ESO Cassa Depositi e Prestiti Group (1) Other Total at Dec. 31, 2021 Associates and joint ventures Overall total at Dec. 31, 2021 Total in nancial statements % of total Statement of nancial position Other non-current nancial assets - - - - - - 1,120 1,120 5,704 19.6% Non-current nancial derivative assets - - - - - - 14 14 2,772 0.5% Other non-current assets - - - 119 - 119 - 119 3,268 3.6% Trade receivables - 469 9 659 36 1,173 148 1,321 16,076 8.2% Current nancial derivative assets - - - - - - 32 32 22,791 0.1% Other current nancial assets - - - - 1 1 156 157 8,645 1.8% Other current assets - - 76 21 2 99 24 123 5,002 2.5% Long-term borrowings - - - 536 - 536 344 880 54,500 1.6% Non-current contract liabilities - - - 187 7 194 - 194 6,214 3.1% Non-current nancial derivative liabilities - - - - - - 1 1 3,339 - Sho-term borrowings - - - - - - 6 6 13,306 - Current poion of long-term borrowings - - - 89 - 89 20 109 4,031 2.7% Trade payables 1,903 641 1 1,466 12 4,023 59 4,082 16,959 24.1% Current contract liabilities - - - 12 - 12 - 12 1,433 0.8% Other current liabilities - - - 38 38 76 4 80 12,959 0.6% Other information Guarantees issued - 40 - 11 59 110 - 110 Guarantees received - - - 138 36 174 - 174 Commitments - - - 401 - 401 - 401 (1) The gure includes Open Fiber SpA, which was considered an associate last year. 413Notes to the consolidated nancial statements 413 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Millions of euro Single Buyer EMO ESO Cassa Depositi e Prestiti Group (1) (1) The gure includes Open Fiber SpA, which was considered an associate last year. Other Total 2021 Associates and joint ventures Overall total 2021 Total in nancial statements % of total Income statement Revenue from sales and services - 3,018 275 3,165 210 6,668 342 7,010 84,104 8.3% Other income - - - 5 - 5 1 6 3,902 0.2% Other nancial income - - - 15 - 15 123 138 1,882 7.3 % Electricity, gas and fuel purchases 4,613 6,363 - 2,572 - 13,548 278 13,826 49,093 28.2% Costs for services and other materials - 75 3 2,874 57 3,009 143 3,152 19,609 16.1% Other operating costs 6 198 - 13 1 218 - 218 2,095 10.4% Net results from commodity contracts - - - 13 - 13 11 24 2,522 1.0% Other nancial expense - - - 10 - 10 22 32 6,114 0.5% (1) The gure includes Open Fiber SpA, which was considered an associate last year. Millions of euro Single Buyer EMO ESO Cassa Depositi e Prestiti Group (1) Other Total at Dec. 31, 2021 Associates and joint ventures Overall total at Dec. 31, 2021 Total in nancial statements % of total Statement of nancial position Other non-current nancial assets - - - - - - 1,120 1,120 5,704 19.6% Non-current nancial derivative assets - - - - - - 14 14 2,772 0.5% Other non-current assets - - - 119 - 119 - 119 3,268 3.6% Trade receivables - 469 9 659 36 1,173 148 1,321 16,076 8.2% Current nancial derivative assets - - - - - - 32 32 22,791 0.1% Other current nancial assets - - - - 1 1 156 157 8,645 1.8% Other current assets - - 76 21 2 99 24 123 5,002 2.5% Long-term borrowings - - - 536 - 536 344 880 54,500 1.6% Non-current contract liabilities - - - 187 7 194 - 194 6,214 3.1% Non-current nancial derivative liabilities - - - - - - 1 1 3,339 - Sho-term borrowings - - - - - - 6 6 13,306 - Current poion of long-term borrowings - - - 89 - 89 20 109 4,031 2.7% Trade payables 1,903 641 1 1,466 12 4,023 59 4,082 16,959 24.1% Current contract liabilities - - - 12 - 12 - 12 1,433 0.8% Other current liabilities - - - 38 38 76 4 80 12,959 0.6% Other information Guarantees issued - 40 - 11 59 110 - 110 Guarantees received - - - 138 36 174 - 174 Commitments - - - 401 - 401 - 401 414 Integrated Annual Repo 2021414 Millions of euro Single Buyer EMO ESO Cassa Depositi e Prestiti Group Other Total 2020 Associates and joint ventures Overall total 2020 Total in nancial statements % of total Income statement Revenue from sales and services - 808 295 2,542 187 3,832 206 4,038 63,642 (1) (2) 6.3% Other income - - - - 1 1 9 10 2,362 0.4% Financial income - - - - - - 62 62 2,676 (2) 2.3% Electricity, gas and fuel purchases 2,038 2,059 - 1,122 - 5,219 166 5,385 26,026 (1) 20.7% Costs for services and other materials - 38 3 2,728 44 2,813 145 2,958 18,366 (1) 16.1% Other operating costs 6 183 - 9 1 199 3 202 2,202 9.2% Results from commodity contracts - - - 1 - 1 - 1 (99) (1) -1.0% Other nancial expense - - - 13 - 13 58 71 4,485 1.6% (1) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. The change in classication had no impact on operating prot. For more details, please see note 7 to these consolidated nancial statements. (2) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more details, please see note 7 to these consolidated nancial statements. Millions of euro Single Buyer EMO ESO Cassa Depositi e Prestiti Group Other Total at Dec. 31, 2020 Associates and joint ventures Overall total at Dec. 31, 2020 Total in nancial statements % of total Statement of nancial position Other non-current nancial assets - - - - - - 1,144 1,144 5,159 22.2% Non-current nancial derivative assets - - - - - - 21 21 1,236 1.7% Trade receivables - 35 15 569 29 648 215 863 12,046 7. 2 % Other current nancial assets - - - - 1 1 189 190 5,113 3.7% Other current assets - 9 84 63 2 158 6 164 3,578 4.6% Long-term borrowings - - - 625 - 625 359 984 49,519 2.0% Non-current contract liabilities - - - 4 6 10 151 161 6,191 2.6% Sho-term borrowings - - - - - - 21 21 6,345 0.3% Current poion of long-term borrowings - - - 89 - 89 19 108 3,168 3.4% Trade payables 554 83 746 748 5 2,136 69 2,205 12,859 17. 1 % Current contract liabilities - - - - 1 1 15 16 1,275 1.3% Other current liabilities - - - 15 13 28 9 37 11,651 0.3% Other information Guarantees issued - 250 - 13 83 346 - 346 Guarantees received - - - 157 36 193 - 193 Commitments - - - 102 2 104 - 104 415Notes to the consolidated nancial statements 415 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Millions of euro Single Buyer EMO ESO Cassa Depositi e (1) The gures for 2020 have been adjusted, for comparative purposes only, to take account of the eects associated with the change in classication connect- ed with the fair value measurement of outstanding contracts at the end of the period for the purchase and sale of commodities with physical selement. The change in classication had no impact on operating prot. For more details, please see note 7 to these consolidated nancial statements. (2) For comparative purposes only, €87 million in 2020 in respect of the component recognized through prot or loss deriving from the remeasurement at fair value of the nancial assets connected with service concession arrangements involving distribution operations in Brazil falling within the scope of IFRIC 12 have been reclassied from nancial income to revenue. The laer classication had an impact of the same amount on operating prot. For more details, please see note 7 to these consolidated nancial statements. Millions of euro Single Buyer EMO ESO Cassa Depositi e Prestiti Group Other Prestiti Group Other Total 2020 Associates and joint ventures Overall total 2020 Total in nancial statements % of total Income statement Revenue from sales and services - 808 295 2,542 187 3,832 206 4,038 63,642 (1) (2) 6.3% Other income - - - - 1 1 9 10 2,362 0.4% Financial income - - - - - - 62 62 2,676 (2) 2.3% Electricity, gas and fuel purchases 2,038 2,059 - 1,122 - 5,219 166 5,385 26,026 (1) 20.7% Costs for services and other materials - 38 3 2,728 44 2,813 145 2,958 18,366 (1) 16.1% Other operating costs 6 183 - 9 1 199 3 202 2,202 9.2% Results from commodity contracts - - - 1 - 1 - 1 (99) (1) -1.0% Other nancial expense - - - 13 - 13 58 71 4,485 1.6% Total at Dec. 31, 2020 Associates and joint ventures Overall total at Dec. 31, 2020 Total in nancial statements % of total Statement of nancial position Other non-current nancial assets - - - - - - 1,144 1,144 5,159 22.2% Non-current nancial derivative assets - - - - - - 21 21 1,236 1.7% Trade receivables - 35 15 569 29 648 215 863 12,046 7. 2 % Other current nancial assets - - - - 1 1 189 190 5,113 3.7% Other current assets - 9 84 63 2 158 6 164 3,578 4.6% Long-term borrowings - - - 625 - 625 359 984 49,519 2.0% Non-current contract liabilities - - - 4 6 10 151 161 6,191 2.6% Sho-term borrowings - - - - - - 21 21 6,345 0.3% Current poion of long-term borrowings - - - 89 - 89 19 108 3,168 3.4% Trade payables 554 83 746 748 5 2,136 69 2,205 12,859 17. 1 % Current contract liabilities - - - - 1 1 15 16 1,275 1.3% Other current liabilities - - - 15 13 28 9 37 11,651 0.3% Other information Guarantees issued - 250 - 13 83 346 - 346 Guarantees received - - - 157 36 193 - 193 Commitments - - - 102 2 104 - 104 416 Integrated Annual Repo 2021416 With regard to disclosures on the remuneration of di- rectors, members of the Board of Statutory Auditors, the General Manager and key management personnel, provid- ed for under IAS 24, please see the following tables. Millions of euro 2021 2020 Change Remuneration of members of the Board of Directors and Board of Statutory Auditors and the General Manager Sho-term employee benets 5 6 (1) -16.7% Other long-term benets 1 4 (3) -75.0% Total 6 10 (4) -40.0% Millions of euro 2021 2020 Change Remuneration of key management personnel Sho-term employee benets 13 13 - - Other long-term benets 4 8 (4) -50.0% Total 17 21 (4) -19.0% In November 2010, the Board of Directors of Enel SpA ap- proved a procedure governing the approval and execution of transactions with related paies carried out by Enel SpA directly or through subsidiaries. The procedure (both the version in eect until June 30, 2021 and the version amended in June 2021 and in eect from July 1, 2021 are available at hps://www.enel.com/investors/governance/ bylaws-rules-policies/) sets out rules designed to ensure the transparency and procedural and substantive propri- ety of transactions with related paies. It was adopted in implementation of the provisions of Aicle 2391-bis of the Italian Civil Code and the implementing regulations issued by CONSOB. In 2021, no transactions were carried out for which it was necessary to make the disclosures required In the rules on transactions with related paies adopted with CONSOB Resolution no. 17221 of March 12, 2010, as amended. 417Notes to the consolidated nancial statements 417 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 53\. Government grants - Disclosure pursuant to Aicle 1, paragraphs 125-129, of Law 124/2017 Pursuant to Aicle 1, paragraphs 125-129, of Law 124/2017 as amended, the following provides information on grants received from Italian public agencies and bodies, as well as donations by Enel SpA and the fully consolidated subsidi- aries to companies, individuals and public and private enti- ties. The disclosure comprises: (i) grants received from Ital- ian public entities/State entities; and (ii) donations made by Enel SpA and Group subsidiaries to public or private paies resident or established in Italy. The following disclosure includes payments in excess of €10,000 made by the same grantor/donor during 2021, even if made in multiple nancial transactions. They are recognized on a cash basis. Pursuant to the provisions of Aicle 3-quater of Decree Law 135 of December 14, 2018, ratied with Law 12 of Feb- ruary 11, 2019, for grants received, please refer to the in- formation contained in the National Register of State Aid referred to in Aicle 52 of Law 234 of December 24, 2012. Grants received in millions of euro Financial institution/Grantor Beneciary Amount Notes Anpal Enel Green Power Italy Srl 0.02 Instalment of grant received in rst instance FNC-C-05468, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Green Power Italy Srl 0.05 Instalment of grant received in second instance FNC-C-06952, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Green Power Italy Srl 0.09 Instalment of grant received in rst instance FNC-C-05468, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Invitalia Enel Green Power Italy Srl 8.44 Instalment of grant received under 3SUN Development Contract, nanced under Invitalia Measure of November 17, 2017 Anpal Enel Energia SpA 0.03 Instalment of grant received in rst instance FNC-C-05468, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Energia SpA 0.15 Instalment of grant received in second instance FNC-C-06952, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Energia SpA 0.04 Instalment of grant received in rst instance FNC-C-10223, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Servizio Elerico Nazionale SpA 0.03 Instalment of grant received in rst instance FNC-C-05468, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Servizio Elerico Nazionale SpA 0.03 Instalment of grant received in second instance FNC-C-06952, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Servizio Elerico Nazionale SpA 0.02 Instalment of grant received in rst instance FNC-C-10223, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Global Trading SpA 0.01 Instalment of grant received in second instance FNC-C-06952, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Global Trading SpA 0.01 Instalment of grant received in rst instance FNC-C-10223, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel X Srl 0.01 Instalment of grant received in rst instance FNC-C-05468, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel X Srl 0.03 Instalment of grant received in second instance FNC-C-06952, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 418 Integrated Annual Repo 2021418 Grants received in millions of euro Financial institution/Grantor Beneciary Amount Notes Anpal Enel X Srl 0.01 Instalment of grant received in third instance FNC-C-10223, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Sole Srl 0.01 Instalment of grant received in third instance FNC-C-10223, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Produzione SpA 0.03 Instalment of grant received in rst instance FNC-C-05468, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Produzione SpA 0.05 Instalment of grant received in second instance FNC-C-06952, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Produzione SpA 0.06 Instalment of grant received in third instance FNC-C-10223, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Global Services Srl 0.01 Instalment of grant received in rst instance FNC-C-05468, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Global Services Srl 0.13 Instalment of grant received in second instance FNC-C-06952, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Global Services Srl 0.02 Instalment of grant received in rst instance FNC-C-10223, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal e-distribuzione SpA 0.44 Instalment of grant received in rst instance FNC-C-05468, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal e-distribuzione SpA 0.19 Instalment of grant received in second instance FNC-C-06952, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal e-distribuzione SpA 0.20 Instalment of grant received in third instance FNC-C-10223, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Global Infrastructure and Networks Srl 0.09 Instalment of grant received in second instance FNC-C-06952, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Global Infrastructure and Networks Srl 0.07 Instalment of grant received in third instance FNC-C-10223, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Italia SpA 0.03 Instalment of grant received in rst instance FNC-C-05468, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Italia SpA 0.07 Instalment of grant received in second instance FNC-C-06952, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Anpal Enel Italia SpA 0.02 Instalment of grant received in rst instance FNC-C-10223, nanced through the New Skills Fund referred to in Aicle 88 of Decree Law of May 19, 2020 and the ministerial decree of October 9, 2020 Ministry of Universities and Research (MUIR) Enel Italia SpA 0.03 Instalment of grant received for rst and second progress status repo for Project SE4I, nanced under MUIR NOP “R&I” 2014-2020, Decree of Director 1735/Ric. of July 13, 2017 “Notice for the presentation of industrial research and experimental development projects in the 12 specialist areas indicated in the 2015-2020 NRP” 10.43 Total 419Notes to the consolidated nancial statements 419 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Donations made in millions of euro Grantor Beneciary Amount Notes Enel SpA Enel Cuore Onlus 0.04 2021 donation Enel SpA OECD International Energy Agency (IEA) 0.08 2021 donation Enel SpA Ashoka Italy Onlus 0.02 2021 donation Enel SpA European University Institute 0.10 2021 donation Enel SpA Università Commerciale Luigi Bocconi 0.07 Donation to suppo study grants Enel X Srl Enel Cuore Onlus 0.04 2021 donation Enel Produzione SpA Ente della zona industriale di Poo Marghera 0.02 2021 association dues Enel Produzione SpA Assocarboni 0.03 Enel 2021 paicipation Enel Produzione SpA Fondazione Centro Studi Enel 0.09 50% advance on 2021 donation Enel Produzione SpA Enel Cuore Onlus 0.13 Balance of 2021 donation Enel Produzione SpA Enel Cuore Onlus 0.04 2021 donation Enel Produzione SpA Enel Cuore Onlus 0.03 2021 special donation Enel Produzione SpA Fondazione Centro Studi Enel 0.09 2021 donation Enel Produzione SpA Assonime 0.03 2021 association dues Enel Italia SpA ASES - Agricoltori, Sostenibilità E Sviluppo (Associazione non prot) 0.02 Donation for #lanaturanonsiferma project Enel Italia SpA Comune di Brindisi 0.01 Donation to suppo Brindisi Brilla project under patronage of City of Brindisi, implemented in collaboration with Associazione Il Cielo Itinerante. The project is intended to encourage young people to study STEM elds (Science, Technology, Engineering and Mathematics) Enel Italia SpA Enel Cuore Onlus 0.11 Donation to nance institutional activities, mainly aimed at suppoing projects consistent with the purposes of the association Enel Italia SpA Fondazione Accademia Nazionale “Santa Cecilia” 1.20 Donation to suppo the Foundation’s cultural activities Enel Italia SpA Fondazione Centro Studi Enel 0.15 Donation to suppo research projects and advanced training Enel Italia SpA Fondazione Maggio Musicale Fiorentino 0.40 Donation to suppo the Foundation’s cultural activities Enel Italia SpA Moige - Movimento italiano genitori Onlus 0.10 Donation to suppo the Young Ambassadors Campaign for digital citizenship to counter cyber risk, bullying and cyberbullying in all its forms Enel Italia SpA Società Cooperativa Sociale Camelot Onlus 0.02 Donation to suppo the project with the Sustainable Development School to create learning courses for teachers in order to promote global citizenship education Enel Italia SpA Fondazione Teatro alla Scala 0.60 Donation to suppo the Foundation’s cultural activities e-distribuzione SpA Enel Cuore Onlus 2.44 80% balance of 2019 donation e-distribuzione SpA Enel Cuore Onlus 0.52 20% of 2021 donation e-distribuzione SpA Fondazione Centro Studi Enel 1.40 50% balance of 2020 donation e-distribuzione SpA Fondazione Centro Studi Enel 1.41 50% of 2021 donation e-distribuzione SpA Centro Vaccinale - Varese 0.01 Donation of grid connection for healthcare facilities involved in ghting COVID-19 Enel Energia SpA Anigas 0.08 Balance of 2020 association dues Enel Energia SpA Anigas 0.10 Advance on 2021 association dues Enel Energia SpA Anigas 0.10 Balance of 2021 association dues Enel Energia SpA Conmprese 0.01 2021 association dues Enel Energia SpA Fondazione Centro Studi Enel 1.23 Balance of 2020 donation Enel Energia SpA Fondazione Centro Studi Enel 1.01 50% advance on 2021 donation Enel Energia SpA Assonime 0.02 2021 association dues Enel Energia SpA Enel Cuore Onlus 1.26 80% balance of 2019 donation Enel Energia SpA Enel Cuore Onlus 0.37 50% of 2021 donation Enel Global Trading SpA Enel Cuore Onlus 0.04 2021 donation Enel Global Trading SpA Fondazione Centro Studi Enel 0.10 2021 donation to suppo research projects and advanced training 13.50 Total 420 Integrated Annual Repo 2021420 54\. Contractual commitments and guarantees The commitments entered into by the Enel Group and the guarantees given to third paies are shown below. Millions of euro at Dec. 31, 2021 at Dec. 31, 2020 Change Guarantees given: \- sureties and other guarantees granted to third paies 4,937 11,451 (6,514) Commitments to suppliers for: \- electricity purchases 71,244 67,400 3,844 \- fuel purchases 58,042 41,855 16,187 \- various supplies 1,631 1,511 120 \- tenders 4,668 3,604 1,064 \- other 6,187 4,348 1,839 Total 141,772 118,718 23,054 TOTAL 146,709 130,169 16,540 Compared with December 31, 2020, the increase of €3,844 million in commitments for electricity purchases is essential- ly aributable to companies in Latin America, in paicular in Brazil, and mainly reects exchange rate eects, high prices due to ination in the period and dierences in the state of progress of outstanding contracts. The increase of €16,187 million in commitments for fuel pur- chases mainly regards gas supplies, especially in Spain and Italy, and reected the increase in demand for natural gas and in gas prices, as well as exchange rate eects. For more details on the expiry of commitments and guar- antees, please see the section “Commitments to purchase commodities” in note 47. The Group, acting through its subsidiary Enel Italia, has also entered into two guarantee contracts with which it provid- ed Open Fiber with the turnover necessary to paicipate in two calls for tenders organized by Infratel (respectively, on June 3, 2016 and August 8, 2016), which Open Fiber itself did not have at the time of paicipation in those tenders. None- theless, to date the protability and nancial position now achieved by Open Fiber makes it highly unlikely that the guar- antee will be called in. 55\. Contingent assets and liabilities The following repos the main contingent assets and lia- bilities at December 31, 2021, which are not recognized in the consolidated nancial statements as they do not meet the requirements provided for in IAS 37. Brindisi Sud thermal generation plant - Ash dispute - Italy With regard to the criminal investigation initiated by the Public Prosecutor’s Oce of the Cou of Lecce in 2017 concerning the use of y ash in the cement industry, the Brindisi Sud power plant was involved in a criminal inves- tigation that resulted in the issue of a preventive seizure order that allowed operation of the plant subject to cer- tain technical requirements. The order also provided for the seizure of Enel Produzione assets and receivables in an amount of about €523 million. On August 1, 2018, the Lecce Public Prosecutor lifted its seizure of the plant, with the consequent termination of the judicial custody/ad- ministration of the facility and the restitution of the other seized assets to Enel Produzione. The lifting of the seizure order was granted as a result of the fact that during the investigation the independent expes appointed by the investigating magistrate at the Cou of Lecce issued a re- po, led rst in preliminary form on July 16, 2018 and de- nitively on October 10, 2018, that conrmed the non-haz- ardous nature of the ash, nding it suitable for use in the cement-making process, as well as the appropriateness of the operation of the plant. Although the seizure was lifted, the preliminary investigation continued both against the accused individuals and the company pursuant to Legis- lative Decree 231 of June 8, 2001. Following the hearing of January 22, 2019, ordered by the investigating magistrate at the request of the Public Prosecutor to receive testimo- ny from the expes on their repo, the expes reiterat- ed the non-hazardous nature of the ash produced by the plant and the possibility of their use in the production of cement. 421Notes to the consolidated nancial statements 421 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Subsequently, a pre-trial hearing was conducted in 2021, following which the pre-trial hearing judge granted peti- tions to paicipate in the trial as civil plainti led by the City of Brindisi, which quantied damages at about €27 million, requesting a provisional award of €8 million, and by the Re- gion of Puglia, which has not yet quantied the damages requested. The pre-trial hearing judge remanded all of the defendants before the Cou of Brindisi at the hearing of December 9, 2021. Brindisi Sud thermal generation plant - Criminal proceedings against Enel employees \- Italy Again with regard to the Brindisi Sud thermal generation plant, a criminal proceeding was held before the Cou of Brindisi. A number of employees of Enel Produzione – cit- ed as a liable pay in civil litigation – have been accused of causing criminal damage and dumping of hazardous sub- stances with regard to the alleged contamination of land adjacent to the plant with coal dust as a result of actions be- tween 1999 and 2011. At the end of 2013, the accusations were extended to cover 2012 and 2013\. As pa of the pro- ceeding, injured paies, including the Province and City of Brindisi, have submied claims for total damages of about €1.4 billion. In its decision of October 26, 2016, the Cou of Brindisi: (i) acquied nine of the thieen defendants for not having commied the oense; (ii) ruled that it did not have to proceed for two of the defendants as the oense was time- barred; and (iii) convicted the remaining two defendants, sentencing them with all the allowances provided for by law to nine months’ imprisonment. With regard to payment of damages, the Cou’s ruling also: (i) denied all claims of pub- lic paies and associations acting in the criminal proceed- ing to recover damages; and (ii) granted most of the claims led by the private paies acting to recover damages, refer- ring the laer to the civil cous for quantication without granting a provisional award. The convicted employees and the civilly liable defendant, Enel Produzione, as well as one of the employees for whom the expiry of period of limitations had been declared, appealed the conviction. On February 8, 2019, the Lecce Cou of Appeal: (i) conrmed the trial cou ruling regarding the criminal convictions of two Enel Produzione executives; (ii) denied the claims for damages of some private appellants; (iii) granted some claims for dam- ages, which had been denied in the trial cou, referring the paies, like the others – whose claims had been granted by the trial cou – to the civil cous for quantication, without granting a provisional award; (iv) conrmed for the rest the ruling of the Cou of Brindisi except for extending litigation costs to the Province of Brindisi, which had not been award- ed damages at either the trial cou or on appeal. With a subsequent ruling, the Cou of Appeal of Lec- ce granted the appeal lodged by the Province of Brindisi against the ruling, acknowledging that a material error had been made and therefore recognizing the generic entitle- ment of the Province to damages. The defendants led an appeal against ruling with the Cou of Cassation. Follow- ing the hearing of October 1, 2020, the Cou of Cassation oveurned the ruling of the Cou of Appeal of Lecce, with referral to another section of the same cou for a new pro- ceeding. The new proceeding was held before the mixed criminal section of the Cou of Appeal of Lecce, which, at the hearing of November 10, 2021, acquied the defend- ants for not having commied the oense and consequent- ly revoked the civil rulings. In addition to the proceeding above, two criminal proceed- ings are also under way before the Cous of Reggio Cal- abria and Vibo Valentia against a number of employees of Enel Produzione for the oense of illegal waste disposal in connection with alleged violations concerning the disposal of waste from the Brindisi plant. Enel Produzione was not named a liable pay for civil damages in these proceedings. Both of the aforementioned trials were resolved positively for the employees of Enel Produzione: as regards the pro- ceedings before the Cou of Vibo Valentia, at the hearing of June 17, 2021, the Cou read out the operative poion of the ruling, declaring that it should not proceed against the defendants as the oences with which they were charged were time-barred under the statute of limitations, also de- nying the aggravating circumstance referred to in Aicle 434, paragraph 2 of the Criminal Code. The criminal pro- ceedings before the Cou of Reggio Calabria had ended previously at the hearing of June 23, 2016\. The cou ac- quied the defendants because it found that no crime had been commied for nearly all the most serious charges and for expiration of the statute of limitations for one serious charge and for all of the remaining charges involving minor oenses. Enel, Enel Energia and Servizio Elerico Nazionale antitrust proceeding - Italy On May 11, 2017, the Competition Authority announced the beginning of proceedings for alleged abuse of a dominant position against Enel SpA (Enel), Enel Energia SpA (EE) and Servizio Elerico Nazionale SpA (SEN), with the concomitant peormance of inspections. The proceeding was initiated on the basis of complaints led by the Italian Association of Energy Wholesalers and Traders (AIGET) and the company Green Network SpA (GN), as well as a number of complaints from individual consumers. On December 20, 2018 the Competition Authority issued its nal ruling, with which it levied a ne on Enel SpA, SEN and EE of €93,084,790.50, for abuse of a dominant position in violation of Aicle 102 of the Treaty on the Functioning of the European Union (TFEU). 422 Integrated Annual Repo 2021422 The disputed conduct consisted in the adoption of a strat- egy to exclude competitors from the free market for retail power supply on the pa of the Group’s operating compa- nies, in paicular EE, who allegedly used the privacy con- sent given by consumers to channel their oers within the Group in order to contact SEN customers who were still being served on the regulated market. With regard to other allegations made with the measure to initiate the proceeding, concerning the organization and peormance of sales activities at physical locations (Enel Points and Enel Point Paner Shops) and winback policies repoed by GN, the Competition Authority reached the conclusion that the preliminary ndings did not provide sucient evidence of any abusive conduct on the pa of Enel Group companies. The companies involved challenged the measures of the Competition Authority and led an appeal to void the ruling before the Lazio Regional Administrative Cou. The deci- sion of that cou, led on October 17, 2019, paially upheld the appeals led by SEN and EE, declaring that the abusive conduct had been engaged in for a period of 1 year and 9 months, rather than the original period of 5 years and 5 months, and requiring the Authority to recalculate the pen- alty in accordance with the criteria specied in the ruling. With the same ruling, the Regional Administrative Cou denied Enel’s appeal – which challenged the joint and sev- eral liability of the Parent with SEN and EE. The ruling had no autonomous nancial impact on the Competition Author- ity’s obligation to recalculate the penalty. With a measure dated November 27, 2019, the Competition Authority set the recalculated penalty at €27,529,786.46. The rulings of the Regional Administrative Cou were challenged on appeal before the Council of State by the three Enel Group companies and a precautionary request was presented at the same time asking for the suspension of the measure for recalculating the penalty levied by the Competition Authority. With an order of July 20, 2020, the Council of State, after the joinder of the three appeals, sus- pended the ruling and ordered that the issue be submied for a preliminary ruling before the Cou of Justice of the European Union (CJEU) pursuant to Aicle 267 of the TFEU, formulating a number of questions aimed at clarifying the interpretation of the concept of “abuse of a dominant po- sition” to be applied to the present case. On September 11 and 18, 2020, the CJEU notied EE and SEN and Enel, respectively, of the initiation of a proceeding pursuant to Aicle 267 of the TFEU. The companies then led briefs and, subsequently, EE and SEN paicipated at a hearing on September 9, 2021. At the following hearing of December 9, 2021, the conclusions of the Advocate General were pre- sented to the CJEU. Pending the opening of the proceedings before the CJEU, Enel, EE and SEN led an additional precautionary petition to the Council of State asking for the suspension of the en- forceability of the contested ruling of the Regional Admin- istrative Cou and the measure recalculating the penalty. With three separate orders with identical content – pub- lished on November 16, 2020 – the Council of State grant- ed the request for suspension led by the Enel companies and, as a guarantee of payment of the penalty in the event of an unfavorable nal ruling, required the issue of a rst demand surety in favor of the Competition Authority in an amount equal to that of the recalculated penalty suspend- ed with the precautionary orders. The guarantee was duly provided. With a separate ruling, the Council of State also set the date of the nal trial session of the appeal for November 11, 2021. That hearing was postponed pending a decision from the CJEU. BEG litigation - Italy, France, the Netherlands, Luxembourg Following an arbitration proceeding initiated by BEG SpA (BEG) in Italy, Enelpower SpA (Enelpower) obtained a rul- ing in its favor in 2002, which was upheld by the Cou of Cassation in 2010, which entirely rejected the petition for damages with regard to alleged breach by Enelpower of an agreement concerning the construction of a hydroelectric power station in Albania. Subsequently, BEG, acting through its subsidiary Albania BEG Ambient, led suit against Enel- power and Enel SpA (Enel) in Albania concerning the maer, obtaining a ruling from the District Cou of Tirana on March 24, 2009, upheld by the Albanian Cou of Cassation, order- ing Enelpower and Enel to pay toious damages of about €25 million for 2004 as well as an unspecied amount of toious damages for subsequent years. Following the rul- ing, Albania BEG Ambient demanded payment of more than €430 million from Enel. With a ruling of June 16, 2015, the rst level was complet- ed in the additional suit lodged by Enelpower SpA and Enel SpA with the Cou of Rome asking the Cou to asceain the liability of BEG SpA for having evaded compliance with the arbitration ruling issued in Italy in favor of Enelpower SpA through the legal action taken by Albania BEG Ambient Shpk. With this action, Enelpower SpA and Enel SpA asked the Cou to nd BEG liable and order it to pay damages in the amount that the other could be required to pay to Al- bania BEG Ambient Shpk in the event of the enforcement of the ruling issued by the Albanian cous. With the ruling, the Cou of Rome found that BEG SpA did not have stand- ing to be sued, or alternatively, that the request was not ad- missible for lack of an interest for Enel SpA and Enelpower SpA to sue, as the Albanian ruling had not yet been declared enforceable in any cou. The Cou ordered the seing o of cou costs. Enel SpA and Enelpower SpA appealed the ruling before the Rome Cou of Appeal, asking that it be oveurned in full. The ruling is at the decision stage. 423Notes to the consolidated nancial statements 423 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements On November 5, 2016, Enel SpA and Enelpower SpA led a petition with the Albanian Cou of Cassation, asking for the ruling issued by the District Cou of Tirana on March 24, 2009 to be voided. The proceeding is still pending. On May 20, 2021, the European Cou of Human Rights (ECHR) issued a ruling with which it decided the appeal brought by BEG against the Italian State for violation of Ai- cle 6.1 of the European Convention on Human Rights. With this decision, the Cou denied BEG's request to reopen the arbitration proceedings, and also rejected BEG's claim for pecuniary damages amounting to about €1.2 billion due to the absence of a causal link with the disputed conduct, granting it only €15,000.00 in non-pecuniary damages. Nonetheless, on December 29, 2021, BEG, with an action that the Company and its legal counsel deem unfounded and specious, also decided to sue the Italian State before the Cou of Milan, to demand, as a consequence of the ECHR ruling, damages for toious liability in an amount of about €1.8 billion. In this case, BEG also involved Enel and Enelpower by way of a claim of joint and several liability. The initial hearing is currently scheduled for April 27, 2022. Enel and Enelpower are preparing their defense for the appear- ance in cou. Proceedings undeaken by Albania BEG Ambient Shpk (ABA) to obtain enforcement of the ruling of the District Cou of Tirana of March 24, 2009 France In February 2012, ABA led suit against Enel and Enelpow- er with the Tribunal de Grande Instance in Paris in order to render the ruling of the Albanian cou enforceable in France. Enel SpA and Enelpower SpA challenged the suit. Following the beginning of the case before the Tribunal de Grande Instance, between 2012 and 2013 Enel France was served with a number of “Saisie Conservatoire de Créanc- es” (orders for the precautionary aachment of receiva- bles) in favor of ABA to conserve any receivables of Enel in respect of Enel France. On January 29, 2018, the Tribunal de Grande Instance is- sued a ruling in favor of Enel and Enelpower, denying ABA the recognition and enforcement of the Tirana cou’s rul- ing in France for lack of the requirements under French law for the purposes of granting exequatur. Among other issues, the Tribunal de Grande Instance ruled that: (i) the Al- banian ruling conicted with an existing decision (the arbi- tration ruling of 2002); and that (ii) the fact that BEG sought to obtain in Albania what it was not able to obtain in the Italian arbitration proceeding, resubmiing the same claim through ABA, represented fraud. ABA appealed that ruling. With a ruling of May 4, 2021, the Paris Cou of Appeal denied the appeal by ABA in full, or- dering it to reimburse Enel and Enelpower €200,000.00 each for legal costs. In paicular, the Cou of Appeal fully upheld the ruling of the Tribunal de Grande Instance with regard to the conict of the Albanian ruling with the 2002 arbitration award, which, having the value of res judicata under French law, does not require the cou to assess the issue raised. On June 21, 2021, ABA led an appeal with the Cour de Cas- sation against the ruling of the Paris Cou of Appeal. Enel and Enelpower are preparing their defense for the appear- ance before the Cour de Cassation. Finally, Enel and Enel- power initiated a separate proceeding to obtain release of the precautionary aachments granted to ABA and which are no longer valid as a result of the appeal ruling. The Netherlands At the end of July 2014, ABA led suit with the Cou of Amsterdam to render the ruling of the Albanian cou en- forceable in the Netherlands. With a ruling of June 29, 2016, the trial cou recognized the Albanian ruling in the Neth- erlands and therefore ordered Enel and Enelpower to pay €433,091,870.00 to ABA, in addition to costs and ancillary charges of €60,673.78. With the same ruling, the Cou of Amsterdam denied ABA’s request to declare the ruling pro- visionally enforceable. In a ruling of July 17, 2018, the Amsterdam Cou of Appeal upheld the appeal advanced by Enel and Enelpower, ruling that the Albanian judgment cannot be recognized and en- forced in the Netherlands. The Cou of Appeal found that the Albanian decision was arbitrary and manifestly unrea- sonable and therefore contrary to Dutch public order. The proceeding before the Cou of Appeal continued with regard to the subordinate question raised by ABA with which it asked the Dutch cou to rule on the merits of the dispute in Albania and in paicular the alleged toious lia- bility of Enel and Enelpower in the failure to build the power plant in Albania. On December 3, 2019, the Amsterdam Cou of Appeal issued a denitive ruling in which it fully quashed the trial cou judgment of June 29, 2016, rejecting any claim made by ABA. The Cou came to this conclusion after arming its jurisdiction over ABA’s subordinate claim and re-analyz- ing the merits of the case under Albanian law, nding no toious liability on the pa of Enel and Enelpower. Accord- ingly, Enel and Enelpower are therefore not liable to pay any amount to ABA, which was in fact ordered by the Cou of Appeal to reimburse the companies for the losses in- curred in illegitimate conservative seizures, to be quantied as pa of a specic procedure, and the costs of the trial and appeal proceedings. ABA led an appeal of the ruling with the Supreme Cou of the Netherlands. Following the ling of the opinion of the Advocate General, who ruled in favor of Enel and Enelpower, requesting the denial of the appeal lodged by ABA, on July 16, 2021 the Supreme Cou completely rejected ABA's claims, ordering it to reimburse 424 Integrated Annual Repo 2021424 cou costs. The decision of the Cou of Appeal has thus become nal and, therefore, no more proceedings are pending in the Netherlands. Luxembourg In Luxembourg, again at the initiative of ABA, J.P. Morgan Bank Luxembourg SA was also served with an order for a number of precautionary seizures of any receivables of both Enel Group companies in respect of the bank. In parallel ABA led a claim to obtain enforcement of the ruling of the Cou of Tirana in Luxembourg. The pro- ceeding is still in the initial stages and no ruling has been issued. United States and Ireland In 2014, ABA had initiated two proceedings requesting execution of the Albanian ruling before the cous of the State of New York and Ireland, which both ruled in favor of Enel and Enelpower, respectively, on February 23 and February 26, 2018. Accordingly, there are no lawsuits pending in Ireland or New York State. Environmental incentives - Spain With the Decision of the European Commission of No- vember 27, 2017 on the issue of environmental incentives for thermal power plants, the Commission reached the preliminary conclusion that the environmental incen- tive for coal power plants provided for in Spain’s Order ITC/3860/2007 represents State aid pursuant to Aicle 107, paragraph 1, of the Treaty on the Functioning of the European Union (TFEU), expressing doubts about the compatibility of the incentive with the internal market while recognizing that the incentives are in line with the European Union’s environmental policy. The Commission's Directorate-General for Competition has initiated a for- mal enquiry pursuant to Aicle 108, paragraph 2, of the TFEU in order to establish whether the incentive in ques- tion constituted state aid compatible with the internal market. On April 13, 2018, Endesa Generación SA, acting as an interested third pay, submied comments con- testing this interpretation. Subsequently, on September 8, 2021, the appeal of the decision lodged by Gas Natural (now Naturgy) with the Cou of Justice of the European Union (CJEU) was denied. The enquiry under Aicle 108 of the TFEU is still open. Social Bonus - Spain With the rulings of October 24 and 25, 2016 and No- vember 2, 2016, the Spanish Tribunal Supremo declared Aicle 45, paragraph 4 of the Spain’s Electricity Indus- try Law 24 of December 26, 2013 void for incompatibility with Directive 2009/72/EC of the European Parliament and of the Council of July 13, 2009, granting the appeals led by Endesa against the obligation to nance the So- cial Bonus mechanism. The Tribunal Supremo recognized Endesa’s right to receive all amounts that had been paid to users under the Social Bonus system, provided for in the law declared void by the Tribunal Supremo, for a total of about €214 million plus interest. The government chal- lenged these rulings of the Tribunal Supremo, requesting that they be oveurned, but the related appeals were de- nied. Subsequently, the government initiated two proceedings before the Constitutional Cou requesting the reopen- ing of the Tribunal Supremo proceedings so that the lat- ter may ask for a preliminary ruling from the European Cou of Justice (CJEU). The Constitutional Cou granted the appeals and, accordingly, the Tribunal Supremo sub- mied a petition for a preliminary ruling from the CJEU. All paies, including Endesa, presented their respective wrien conclusions. On October 14, 2021, after the Ad- vocate General had issued a favorable opinion to Endesa, the CJEU issued a preliminary ruling in favor of Endesa, recognizing the incompatibility of Aicle 45, paragraph 4, of the Electricity Industry Law with the Directive referred to above. On December 21, 2021 the Tribunal Supremo issued a nal ruling with which it conrmed the provisions of the previous ruling of October 24, 2016\. In paicular, the Tribunal Supremo found that the social bonus nanc- ing scheme provided for in Aicle 45, paragraph 4, of the Electricity Industry Law is inapplicable as it does not com- ply with Aicle 3.2 of Directive 2009/72/EC, and voided Royal Decree 968/2014. “Endesa I” industrial relations dispute - Spain After a series of meetings of the Comisión Negociado- ra of the 5th Endesa Collective Bargaining Agreement (Comisión Negociadora) which began in October 2017 and continued throughout 2018, in view of the impossi- bility of reaching an agreement between the social pa- ners, Endesa notied the workers and their union repre- sentatives that, with eect from January 1, 2019, the 4th Collective Bargaining Agreement must be considered terminated under the terms of the “framework guarantee contract” and the “agreement on the voluntary suspen- sion or resolution of employment contracts in the peri- od 2013-2018”, applying from that date the provisions of general labor law, as well as the applicable legal criteria established in the maer. Despite the resumption of negotiations within the Comisión Negociadora in February 2019, the interpre- tative dierences between Endesa and the trade union representatives regarding the eects of the resolution of the 4th Collective Bargaining Agreement with regard, in paicular, to the social benets granted to retired per- sonnel, led to the initiation of a suit by the unions rep- resented in the company. On March 26, 2019 a hearing 425Notes to the consolidated nancial statements 425 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements was held before the cou of rst instance, which issued a ruling in favor of Endesa, upholding the company’s po- sition concerning the legitimacy of abolishing ceain so- cial benets for retired personnel as a consequence of the termination of the 4th Endesa Collective Bargaining Agreement. The unions appealed this decision before the Tribunal Supremo, while the initial ruling remained provi- sionally enforceable. Endesa entered the proceeding. In December 2019, Endesa’s largest union decided to waive its appeal before the Tribunal Supremo in order to volun- tarily submit the dispute to arbitration before the Servi- cio Interconfederal de Mediación y Arbitraje (SIMA) with a view to resolving the main issues concerning the 5th Endesa Collective Bargaining Agreement with the com- pany. The other trade unions involved refused to join the arbitration proceeding, electing to go ahead with the proceedings before the Tribunal Supremo. On January 21, 2020, the arbitration award was issued, with the amendment of ceain pas of the 5th Ende- sa Collective Bargaining Agreement, which was subse- quently signed by the social paners. It entered force on January 23, 2020. On the same date, Endesa also signed two fuher collective bargaining agreements (a “frame- work guarantee contract” and an “agreement on vol- untary measures to suspend or terminate employment contracts”) with all the unions present in the company. On June 17, 2020, the 5th Endesa Collective Bargaining Agreement was published in the Spanish Ocial Journal (Boletín Ocial del Estado), taking full eect. On July 7, 2021, the Tribunal Supremo issued a decision (notied on July 22, 2021) in which it denied the appeals lodged by the aforementioned unions in full, upholding the ruling of the cou of rst instance of March 26, 2019. In paicular, the Tribunal Supremo armed that social benets (including those relating to electricity prices) originate exclusively in the collective bargaining agree- ments, both for employees currently in service and those who have retired, as well as for their family members, with the consequence that the termination of such agree- ments (as happened in the case of the 4th Collective Bargaining Agreement) produces the general contrac- tual regulation of the conditions established therein for employees currently in service and, for those who have retired and their family members, the denitive extinction of all their rights, until new regulations are introduced with the 5th Endesa Collective Bargaining Agreement. Numer- ous individual suits have been led by sta and former employees who had agreed to paicipate in termination incentive agreements in order to obtain judicial conr- mation that the termination of the 4th Endesa Collective Bargaining Agreement did not aect them. The majori- ty of these proceedings were suspended or were being suspended pending the denition of the collective action pending before the Tribunal Supremo, as the ruling of the laer, in regarding a “collective dispute”, would have the value of res judicata in respect of individual proceedings concerning the same issue. As a result of the ruling of the Tribunal Supremo of July 7, 2021, the suspension of many of these proceedings was revoked in order to enable the cou to deny the suits. “Endesa II” industrial relations dispute - Spain On December 30, 2020, the Audiencia Nacional noti- ed Endesa a petition for a “collective dispute” initiated by three trade unions with minority representation led on December 16, 2020 concerning the cancellation of some “derogatory provisions” of the 5th Endesa Collec- tive Bargaining Agreement. The plaintis claim that the contested “derogatory provisions” would imply the ille- gitimate abolition of social benets and economic rights of workers. Endesa considers these provisions to be fully legitimate, in line with the arguments made during pro- ceeding concerning the reduction of social benets for retired personnel. With a ruling of November 15, 2021, the petitions of the plainti unions were rejected, with veri- cation of the legitimacy of the 5th Endesa Collective Bar- gaining Agreement. The ruling was appealed by the trade unions before the Tribunal Supremo. Furnas-Tractebel litigation - Brazil In 1998 the Brazilian company CIEN (now Enel CIEN) signed an agreement with Tractebel for the delivery of electricity from Argentina through its Argentina-Brazil interconnection line. As a result of Argentine regulatory changes introduced as a consequence of the economic crisis in 2002, Enel CIEN was unable to make the electric- ity available to Tractebel. In October 2009, Tractebel sued Enel CIEN, which sub- mied its defense. Enel CIEN cited force majeure as a re- sult of the Argentine crisis as the main argument in its defense. Out of cou, the Tractebel has indicated that it plans to acquire 30% of the interconnection line involved in the dispute. On February 14, 2019, Enel CIEN received notice of an order beginning expe witness operations, which are still under way. The amount involved in the dis- pute is estimated at about R$118 million (about €28 mil- lion), plus interest, revaluations and unspecied damages. For analogous reasons, in May 2010 Furnas had also led suit against Enel CIEN for failure to deliver electricity, re- questing payment of about R$571.6 million (about €91 million), in addition to unspecied damages, seeking to acquire ownership (in this case 70%) of the interconnec- tion line. The proceeding was decided in Enel CIEN’s favor with a ruling of the Tribunal de Justiça with a denitive ruling of October 18, 2019, which denied all of the claims of Furnas. 426 Integrated Annual Repo 2021426 (40) The trading name of Ampla is Enel Distribuição Rio de Janeiro. (41) The trading name of Coelce is Enel Distribuição Ceará. (42) The trading name of Eletropaulo is Enel Distribuição São Paulo. tablished specically to pursue the expansion project. The contracts provided for the payment of a monthly fee by Coelce, which was also required to maintain the net- works. Those contracts, between cooperatives established in special circumstances and the then public-sector com- pany, do not specically identify the grids governed by the agreements, which prompted a number of the coop- eratives to sue Coelce asking for, among other things, a revision of the fees agreed in the contracts. These proceedings include the suit led by Cooperativa de Eletricação Rural do Vale do Acarau Ltda (Coperva) with a value of about R$374 million (about €59.3 million). Coelce was granted rulings in its favor from the trial cou and the cou of appeal, but Coperva led a fuher ap- peal (Embargo de Declaração) based on procedural is- sues, which was also denied by the appeal cou in a ruling of January 11, 2016\. On February 3, 2016, Coperva lodged an extraordinary appeal before the Superior Tribunal de Justiça (STJ) against the appeal cou ruling on the merits, which was granted on November 5, 2018 for the ruling issued in the previous appeal (Embargo de Declaração). On December 3, 2018, Coelce led an appeal (Agravo In- terno) against this ruling of the STJ. The proceedings are currently pending. AGM litigation - Brazil In 1993, Celg-D, (42) the Association of Municipalities of Goiás (AGM), the State of Goiás and the Bank of Goiás reached an agreement (Convenio) for the payment of municipal debts to Celg-D through the transfer of the poion of ICMS - Imposto sobre Circulação de Merca- dorias e Serviços (tax on the circulation of goods and services) that the State would have transferred to those governments. In 2001 the paies to the agreement were sued by the individual municipal governments to obtain a ruling that the agreement was invalid, a position then up- held by the Supreme Federal Cou on the grounds of the non-paicipation of the local governments themselves in the agreement process. In September 2004, Celg-D reached a selement with 23 municipalities. Between 2007 and 2008, Celg-D was again sued on numerous occasions by a number of municipal governments (there are currently 65 pending suits) seeking the restitution of amounts paid under the agreement. Despite the ruling that the agreement was void, Celg-D argues that the pay- ment of the debts on the pa of the local governments is legitimate, as electricity was supplied in accordance with the supply contracts and, accordingly, the claims for res- Cibran litigation - Brazil Companhia Brasileira de Antibióticos (Cibran) has led six suits against the Enel Group company Ampla Energia e Serviços SA (Ampla) (40) to obtain damages for alleged losses incurred as a result of the interruption of electric- ity service by the Brazilian distribution company between 1987 and 2002, in addition to non-pecuniary damages. The Cou ordered a unied technical appraisal for those cases, the ndings of which were paly unfavorable to Ampla. The laer challenged the ndings, asking for a new study, which led to the denial of pa of Cibran’s peti- tions. Cibran subsequently challenged the ndings of the new study and the ruling was in favor of Ampla. The rst suit, led in 1999 and regarding the years from 1995 to 1999, was adjudicated in September 2014 when the cou of rst instance issued a ruling against Amp- la, levying a ne of about R$200,000 (about €46,000) as well as other damages to be quantied separately. Ampla appealed the ruling and the appeal was upheld by the Tri- bunal de Justiça, which denied all of Cibran’s claims. The ruling became denitive on August 24, 2020. With regard to the second case, led in 2006 and re- garding the years from 1987 to 1994, on June 1, 2015, the cous issued a ruling ordering Ampla to pay R$96,465,103 (about €23 million) plus interest in pecuniary damages and R$80,000 Brazilian (about €19,000) in non-pecuniary damages. On July 8, 2015 Ampla appealed the decision with the Tribunal de Justiça of Rio de Janeiro, which on November 6, 2019 issued a ruling on merits granting Am- pla’s petition and denying all of Cibran’s claims. On No- vember 25, 2019, Cibran led an appeal against the rul- ing of the Tribunal de Justiça of Rio de Janeiro, which was preliminarily denied for formal reasons on September 10, 2020. On January 29, 2021, Cibran appealed (Agravo de Instrumento) the decisions before the Superior Tribunal de Justiça (STJ), which was denied on June 8, 2021. On June 22, 2021, Cibran led an appeal (Agravo Interno) with the STJ and the proceeding is pending. A ruling from the cou of rst instance is still pending for the remaining four suits for the years 2001 and 2002. The value of all the disputes is estimated at about R$612.1 million (about €96.02 million). Coperva litigation - Brazil As pa of the project to expand the grid in rural areas of Brazil, in 1982 Companhia Energética do Ceará SA (Coelce), (41) then owned by the Brazilian government and now an Enel Group company, had entered into contracts for the use of the grids of a number of cooperatives es- 427Notes to the consolidated nancial statements 427 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements titution of amounts paid should be denied. The proceedings pending before the Goiás State Cou include: (i) a suit led by the Municipio de Aparecida de Goiânia, which is pending at the preliminary stage at rst instance, for an amount of approximately R$726 million (about €113.4 million); (ii) a suit led by the Municipio de Quirinópolis, also pending at the preliminary stage of the proceeding at rst instance for an amount of about R$388 million (about €61.48 million); and (iii) a suit led by the Municipio de Anápolis with the cou of rst instance after a failed aempt at conciliation between the paies and now pending in the preliminary stages, for an amount of about R$368.7 million (about €54.4 million). The total value of the suits is equal to about R$3.92 bil- lion (about €621.5 million). The contingent liability deriv- ing from this dispute is covered by the “Funac” provision established during the privatization of Celg-D. ANEEL litigation - Brazil In 2014, Eletropaulo (43) initiated an action before the Bra- zilian federal cous seeking to void the administrative measure of the Agência Nacional de Energia Elétrica (ANEEL, the national electricity agency), which in 2012 retroactively introduced a negative coecient to be ap- plied in determining rates for the following regulatory period (2011-2015). With this provision, the Authority or- dered the restitution of the value of some components of the network previously included in rates because they were considered non-existent and denied Eletropaulo’s request to include additional components in rates. The administrative measure of ANEEL was challenged and on September 9, 2014 it was suspended on a precautionary basis. The rst-instance proceeding is still in its prelim- inary stages and the value of the suit is about R$1,288 million (about €204.1 million). El Quimbo - Colombia A number of legal actions (“acciones de grupo” and “ac- ciones populares”) brought by residents and shermen in the aected area are pending with regard to the El Quimbo project for the construction of a 400 MW hy- droelectric plant in the region of Huila (Colombia). More specically, the rst collective action, currently in the pre- liminary stage, was brought by around 1,140 residents of the municipality of Garzón, who claim that the construc- tion of the plant would reduce their business revenue by 30%. A second action was brought, between August 2011 and December 2012, by residents and businesses/asso- (43) The trading name of Eletropaulo is Enel Distribuição São Paulo. ciations of ve municipalities of Huila claiming damages related to the closing of a bridge (Paso El Colegio). With regard to acciones populares, or class action lawsuits, in 2008 a suit was led by a number of residents of the area demanding, among other things, that the environmental permit be suspended. As pa of this action, on Septem- ber 11, 2020, the Huila Cou issued an unfavorable ruling against Emgesa, sentencing it to fulll the obligations al- ready provided for in the environmental license. ANLA has submied a request for clarication of the ruling. Another acción popular was brought by a number of sh farming companies over the alleged impact that lling the Quimbo basin would have on shing in the Betania basin downstream from Quimbo. After a number of precaution- ary rulings, on February 22, 2016, the Huila Cou issued a ruling allowing generation to continue for six months. The cou ordered Emgesa to prepare a technical design that would ensure compliance with oxygen level require- ments and to provide collateral of about 20,000,000,000 Colombian pesos (about €5.5 million). The Huila Cou subsequently extended the six-month time limit, and therefore, in the absence of contrary cou rulings the Quimbo plant is continuing to generate elec- tricity as the oxygenation system installed by Emgesa has so far demonstrated that it can maintain the oxygen lev- els required by the cou. On March 22, 2018, ANLA and CAM jointly presented the nal repo on the monitoring of water quality downstream of the dam of the El Quimbo hydroelectric plant. Both authorities conrmed the com- pliance of Emgesa with the oxygen level requirements. After the paies had led briefs, on January 12, 2021, it was learned that the ruling of rst instance of the Cou of Huila had been issued (it was subsequently notied to the company on February 1, 2021). The ruling, while ac- knowledging that the oxygenation system implemented by Emgesa had mitigated the risks associated with the protection of fauna in the Bethany basin, imposed a se- ries of obligations on the environmental authorities in- volved, as well as on Emgesa itself. In paicular, the lat- ter is required to implement a decontamination project to ensure that the water in the basin does not generate risks for the ora and fauna of the river, which will be sub- ject to verication by ANLA, and to make permanent the operation of the oxygenation system, adapting it to com- ply with the parameters established by ANLA. On March 4, 2021, Emgesa challenged the appeal ruling before the Council of State. On December 31, 2021, the Council of State ruled that Emgesa’s appeal was admissible. The proceeding is con- tinuing at the appeal level. 428 Integrated Annual Repo 2021428 Nivel de Tensión Uno proceedings - Colombia This dispute involves an “acción de grupo” brought by Cen- tro Médico de la Sabana hospital and other paies against Codensa seeking restitution of allegedly excess rates. The action is based upon the alleged failure of Codensa to ap- ply a subsidized rate that they claim the users should have paid as Tensión Uno category users (voltage of less than 1 kV) and owners of infrastructure, as established in Resolu- tion no. 82/2002, as amended by Resolution no. 97/2008. The suit is at a preliminary stage. The estimated value of the proceeding is about 337 billion Colombian pesos (about €96 million). Gabčíkovo dispute - Slovakia Slovenské elektrárne (SE) is involved in a number of cas- es before the national cous concerning the 720 MW Gabčíkovo hydroelectric plant, which is administered by Vodohospodárska Výsatavba Štátny Podnik (VV) and whose operation and maintenance, as pa of the privat- ization of SE in 2006, had been entrusted to SE for a pe- riod of 30 years under an operating agreement (the VEG Operating Agreement). Immediately after the closing of the privatization, the Pub- lic Procurement Oce (PPO) led suit with the Cou of Bratislava seeking to void the VEG Operating Agreement on the basis of alleged violations of the regulations gov- erning public tenders, qualifying the contract as a service contract and as such governed by those regulations. In November 2011 the trial cou ruled in favor of SE, where- upon the PPO immediately appealed the decision. In parallel with the PPO action, VV also led a number of suits, asking in paicular for the voidance of the VEG Op- erating Agreement. On December 12, 2014, VV withdrew unilaterally from the VEG Operating Agreement, notifying its termination on March 9, 2015, for breach of contract. On March 9, 2015, the decision of the appeals cou oveurned the ruling of the trial cou and voided the contract as pa of the ac- tion pursued by the PPO. SE lodged an extraordinary ap- peal against that decision before the Supreme Cou. At a hearing of June 29, 2016, the Supreme Cou denied the appeal. SE then appealed the ruling to the Constitutional Cou, which denied the appeal on January 18, 2017. In addition, SE lodged a request for arbitration with the Vienna International Arbitral Centre (VIAC) under the VEG Indemnity Agreement. Under that accord, which had been signed as pa of the privatization between the National Propey Fund (now MH Manazment - MHM) of the Slovak Republic and SE, the laer is entitled to an indemnity in the event of the early termination of the VEG Operating Agreement for reasons not aributable to SE. The arbitra- tion cou rejected the objection that it did not have juris- diction and the arbitration proceeding continued to ex- amine the merits of the case, with a ruling on the amount involved being deferred to any subsequent proceeding. On June 30, 2017, the arbitration cou issued its ruling de- nying the request of SE. In parallel with the arbitration proceeding launched by SE, both VV and MHM led two suits in the Slovakian cous to void the VEG Indemnity Agreement owing to the alleged connection of the laer with the VEG Operating Agree- ment. These proceedings were joindered and, on Septem- ber 27, 2017, a hearing was held before the Cou of Brati- slava in which the judge denied the request of the plain- tis for procedural reasons. Both VV and MHM appealed that decision. The appeal led by MHM was denied by the Bratislava Cou of Appeal on June 8, 2019, upholding the decision of the cou of rst instance in favor of SE. Simi- larly, the appeal led by VV was denied, upholding the trial cou decision in favor of SE. VV led a fuher appeal (do- volanie) against that decision on March 9, 2020, with the Supreme Cou, to which SE replied with a brief submied on June 8, 2020\. On March 24, 2021, the Supreme Cou oveurned the decision of the Bratislava Cou of Appeal, referring the judgment to the laer cou. On July 21, 2021, SE led an appeal before the Slovak Constitutional Cou, which was denied on July 29, 2021, and the proceeding is currently pending before the Bratislava Cou of Appeal. At the local level, SE was sued by VV for alleged unjustied enrichment (estimated at about €360 million plus interest) for the period from 2006 to 2015\. SE led counter-claims for all of the proceedings under way. Developments in those proceedings can be summarized as follows: • for 2006-2008, at the hearing of June 26, 2019, the Cou of Bratislava denied the claims of both paies for procedural reasons. The ruling in rst instance was ap- pealed by both VV and SE and the appeals for the years 2006 and 2008 are pending. As for the appeal pro- ceedings relating to 2007, in November 2019, SE had raised a preliminary question which was rejected by the Cou of Appeal on January 15, 2020. On August 18, 2020, SE led an appeal with the Constitutional Cou but the appeal was denied on September 18, 2021. The proceeding is therefore continuing before the Cou of Appeal; • the proceedings relating to the years from 2009 to 2011 and from 2013 to 2015 are all pending before the cou of rst instance. In a number of cases, briefs have been exchanged. For all the proceedings, hearings be- fore the cou of rst instance were scheduled but then were initially postponed to specied dates before be- ing postponed to dates to be determined owing to the pandemic; • the proceeding involving 2012 is pending before the Cou of Appeal level following VV’s appeal of the ruling in favor of SE by the cou of rst instance. Finally, in another proceeding before the Cou of Brati- slava, VV asked for SE to return the fee for the transfer from SE to VV of the technology assets of the Gabčíko- 429Notes to the consolidated nancial statements 429 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements vo plant as pa of the privatization, with a value of about €43 million plus interest. The paies exchanged briefs. At the hearing on November 19, 2019, the cou issued a pre- liminary decision on the case in which it noted the lack of standing of VV. At the hearing of October 1, 2020, the paies led their nal briefs and on December 18, 2020, the cou issued a decision in favor of SE, rejecting VV’s claims. On January 4, 2021, VV led an appeal against that decision, and the proceeding is pending. Chucas arbitration - Costa Rica PH Chucas SA (Chucas) is a special purpose entity estab- lished by Enel Green Power Costa Rica SA after it won a tender organized in 2007 by the Instituto Costarricense de Electricidad (ICE) for the construction of a 50 MW hy- droelectric plant and the sale of the power generated by the plant to ICE under a build, operate and transfer con- tract (BOT). On May 27, 2015, Chucas initiated an arbitration proceed- ing before the Cámara Costarricense-Noeamericana de Comercio (AMCHAM CICA) seeking reimbursement of the additional costs incurred to build the plant and as a result of the delays in completing the project as well as voidance of the ne levied by ICE for alleged delays in nalizing the works. In a decision issued in November 2017, the arbitra- tion board ruled in Chucas’ favor, granting recognition of the additional costs incurred in the amount of about $113 million (about €91 million) and legal costs and found that Chucas was not liable to pay the nes to ICE. ICE appealed the arbitration ruling before the Supreme Cou and on September 5, 2019 Chucas was notied of the ruling par- tially upholding ICE’s appeal to void the arbitration ruling for a number of formal procedural reasons. On September 11, 2019, Chucas led a “recurso de aclaración y adición” with the same cou and it was paially upheld on June 8, 2020. The Cou’s decision expanded on the ruling of Sep- tember 5, 2019 with information concerning the admis- sion of evidence deposited by Chucas without, however, modifying the decision concerning the voidance of the arbitration award. On July 14, 2020, Chucas led a new re- quest for arbitration with the AMCHAM CICA for a prelim- inary estimated amount of about $240 million. On August 14, 2020, ICE led its response, requesting the dismissal of the proceeding for lack of jurisdiction on the pa of the arbitration tribunal. The request for dismissal was denied by AMCHAM CICA. In parallel, ICE led precautionary ap- peals to the Tribunal Contencioso Administrativo against Chucas and the AMCHAM CICA seeking to suspend the arbitration proceedings. While these appeals were pre- liminarily upheld, they were subsequently denied. In May 2021, Chucas led its arbitration request complete with preliminary demands, quantifying the value of its claim at about $362 million (about €305 million). In June 2021, ICE led its defense, continuing to asse a lack of juris- diction. ICE has not made a counterclaim. On August 4, 2021, the arbitration tribunal rejected ICE's claim of lack of jurisdiction. The maer has now been submied for con- sideration to the rst section of the Supreme Cou. The arbitration proceedings remain suspended pending the Supreme Cou decision on jurisdiction. GasAtacama Chile - Chile On August 4, 2016, the Superintendencia de Electricidad y Combustibles (SEC) ned GasAtacama Chile (now Enel Generación Chile) $8.3 million (about 5.8 billion Chilean pesos) for information provided by the laer to the CDEC- SING (Centro de Despacho Económico de Carga) between January 1, 2011 and October 29, 2015, relating to the Min- imum Technical and Minimum Operating Time variables at the Atacama plant. Enel Generación Chile appealed this measure with the SEC, which denied the appeal on November 2, 2016\. Enel Generación Chile appealed this decision before the Santi- ago Cou of Appeal, which on April 9, 2019, issued a ruling reducing the ne to $432,000 (about 290 million Chilean pesos). Both Enel Generación Chile and the SEC appealed this decision before the Supreme Cou of Chile. On June 28, 2019, a hearing was held for both paies to submit arguments and on January 15, 2020 the Supreme Cou upheld the ruling of the Santiago Cou of Appeal, leaving unchanged the reduction in the ne established by that cou. The adjusted ne was paid on March 12, 2020. In parallel, Enel Generación Chile had also led an appeal before the Constitutional Cou, claiming that the legal provisions under which the SEC imposed the ne had been repealed at the time the penalty was issued. On July 17, 2018, the Constitutional Cou rejected Enel Gener- ación Chile’s appeal. In relation to this issue, some operators of the Sistema Interconectado del Noe Grande (SING), including Aes Gener SA, Eléctrica Angamos SA and Engie Energía Chile SA, sued Enel Generación Chile to obtain damages in an amount of about €58 million (the former) and about €141 million (the laer two). The disputes were joindered in pa in a single proceeding and are currently pending. After the suspension of the proceeding under the state of national emergency declared in response to the COVID-19 pan- demic, the plainti asked for the proceeding to resume, a request the cou granted. The cou ordered the no- tication of a measure that determines the substantive, peinent and disputed facts of the case. The preliminary phase has not yet begun. Kino arbitration - Mexico On September 16, 2020, Kino Contractor SA de Cv (Kino Contractor), Kino Facilities Manager SA de Cv (Kino Facili- ties) and Enel SpA (Enel) were notied of a request for arbi- 430 Integrated Annual Repo 2021430 tration led by Parque Solar Don José SA de Cv, Villanueva Solar SA de Cv and Parque Solar Villanueva Tres SA de Cv (together, “Project Companies”) in which the Project Com- panies alleged the violation (i) by Kino Contractor of ceain provisions of the EPC Contract and (ii) by Kino Facilities of ceain provisions of the Asset Management Agreement, both contracts concerning solar projects owned by the three companies ling for arbitration. Enel — which is the guarantor of the obligations assumed by Kino Contractor and Kino Facilities under the above contracts — has also been called into the arbitration pro- ceeding, but no specic claims have been led against it for the moment. The Project Companies, in which Enel Green Power SpA is a non-controlling shareholder, are controlled by CDPQ In- fraestructura Paicipación SA de Cv (which is controlled by Caisse de Dépôt et Placement du Québec) and CKD Infrae- structura México SA de Cv. After the request for arbitration and the related response from the defendants, the paies exchanged fuher intro- ductory briefs, in which the nancial claim of the counter- paies was quantied at about $140 million, while Kino Fa- cilities quantied its own counterclaim at about $3.3 million. The document production phase is currently under way. Tax litigation in Brazil Withholding tax - Ampla In 1998, Ampla Energia e Serviços SA (Ampla) nanced the acquisition of Coelce with the issue of bonds in the amount of $350 million (“Fixed Rate Notes” \- FRN) subscribed by its Panamanian subsidiary, which had been established to raise funds abroad. Under the special rules then in force, subject to maintaining the bonds until 2008, the interest paid by Ampla to its subsidiary was not subject to with- holding tax in Brazil. However, the nancial crisis of 1998 forced the Panama- nian company to renance itself with its Brazilian parent, which for that purpose obtained loans from local banks. The tax authorities considered this nancing to be the equivalent of the early redemption of the bonds, with the consequent loss of entitlement to the exemption from withholding tax. In December 2005, Ampla carried out a spin-o that in- volved the transfer of the residual FRN debt and the as- sociated rights and obligations to Ampla Investimentos e Serviços SA. On November 6, 2012, the Câmara Superior de Recursos Fiscais (the highest level of administrative cous) issued a ruling against Ampla, for which the company promptly asked that body for clarications. On October 15, 2013, Ampla was notied of the denial of the request for clari- cation (Embargo de Declaração), thereby upholding the previous adverse decision. The company provided security for the debt and on June 27, 2014 continued litigation be- fore the ordinary cous (Tribunal de Justiça). In December 2017, the cou appointed an expe to ex- amine the issue in greater detail in suppo of the future ruling. In September 2018, the expe submied a repo, requesting additional documentation. In December 2018, the company provided the additional documentation and is awaiting the cou’s assessment of the arguments and documents presented. The amount involved in the dispute at December 31, 2021 was about €211 million. IRPJ/CSLL - Eletropaulo On October 5, 2021, Eletropaulo received an assessment notice from the Brazilian tax authorities contesting the deductibility for income tax purposes (Imposto sobre a Renda das Pessoas Jurídicas \- IRPJ and Contribuição So- cial sobre o Lucro Líquido \- CSLL) of the amoization of the increased amounts generated by extraordinary cor- porate transactions carried out before the acquisition of the company by the Enel Group. The contested period runs from 2017 to 2019. Considering its position sound, the company presented its defense at the rst level of administrative adjudication. The amount involved in the dispute was about €110 million at December 31, 2021. PIS - Eletropaulo In July 2000, Eletropaulo led suit seeking a tax credit for PIS (Programa Integração Social) paid in application of regulations (Decree Laws 2.445/1988 and 2.449/1988) that were subsequently declared unconstitutional by the Supremo Tribunal Federal (STF). In May 2012, the Superior Tribunal de Justiça (STJ) issued a nal ruling in favor of the company that recognized the right to the credit. In 2002, before the issue of that favorable nal ruling, the company had oset its credit against other federal taxes. This behavior was contested by the federal tax authorities but the company, claiming it had acted correctly, chal- lenged in cou the assessments issued by the federal tax authorities. Following defeat at the initial level of adjudica- tion, the company appealed. The amount involved in the dispute at December 31, 2021 was about €106 million. ICMS - Ampla, Coelce and Eletropaulo The States of Rio de Janeiro, Ceará and São Paulo issued a number of tax assessments against Ampla Energia e Serviços SA (for the years 1996-1999 and 2007-2017), Companhia Energética do Ceará (Coelce) (2003, 2004, 2006-2012, 2015 and 2016) and Eletropaulo (2008-2020), challenging the deduction of ICMS - Imposto sobre Circu- lação de Mercadorias e Serviços (tax on the circulation of 431Notes to the consolidated nancial statements 431 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements goods and services) in relation to the purchase of ceain non-current assets. The companies challenged the as- sessments, arguing that they correctly deducted the tax and asseing that the assets, the purchase of which gen- erated the ICMS, are intended for use in their electricity distribution activities. The companies are continuing to defend their actions at the various levels of adjudication. The amount involved in the disputes totaled approximately €79 million at December 31, 2021. Withholding tax - Endesa Brasil On November 4, 2014, the Brazilian tax authorities issued an assessment against Endesa Brasil SA (now Enel Bras- il SA) alleging the failure to apply withholding tax to pay- ments of allegedly higher dividends to non-resident recip- ients. More specically, in 2009, Endesa Brasil, as a result of the rst-time application of the IFRS, had derecognized good- will, recognizing the eects in equity, on the basis of the correct application of the accounting standards it had adopted. The Brazilian tax authorities, however, asseed – during an audit – that the accounting treatment was in- correct and that the eects of the derecognition should have been recognized through prot or loss. As a result, the corresponding amount (about €202 million) was re- classied as a payment of income to non-residents and, therefore, subject to withholding tax of 15%. It should be noted that the accounting treatment adopted by the company was agreed with the external auditor and also conrmed by a specic legal opinion issued by a local rm. Following unfavorable rulings from the administrative cous, the company is continuing to defend its actions and the appropriateness of the accounting treatment in cou. The overall amount involved in the dispute at December 31, 2021 was about €58 million. ICMS - Coelce The State of Ceará has led various tax assessments against Companhia Energética do Ceará SA (Coelce) over the years (for tax periods from 2005 to 2014), contesting the determination of the deductible poion of the ICMS - Imposto sobre Circulação de Mercadorias e Serviços (tax on the circulation of goods and services) and in paicular the method of calculation of the pro-rata deduction with reference to the revenue deriving from the application of a special rate envisaged by the Brazilian government for the sale of electricity to low-income households (Baixa Renda). The company has appealed the individual assessments, ar- guing that the tax deduction was calculated correctly. The company is defending its actions in the various levels of jurisdiction. The overall amount involved in the dispute at December 31, 2021 was about €40 million. PIS - Eletropaulo In December 1995, the Brazilian government increased the rate of the federal PIS (Programa Integração Social) tax from 0.50% to 0.65% with the issue of a provisional meas- ure (Executive Provisional Order). Subsequently, the provisional measure was re-issued ve times before its denitive ratication into law in 1998\. Un- der Brazilian legislation, an increase in the tax rate (or the establishment of a new tax) can only be ordered by law and take eect 90 days after its publication. Eletropaulo therefore led suit arguing that an increase in the tax rate would only have been eective 90 days after the last Provisional Order, claiming that the eects of the rst four provisional measures should be considered void (since they were never ratied into law). This dispute ended in April 2008 with recognition of the validity of the increase in the PIS rate staing from the rst provisional measure. In May 2008, the Brazilian tax authorities led a suit against Eletropaulo to request payment of taxes corresponding to the rate increase from March 1996 to December 1998. Eletropaulo has fought the request at the various levels of adjudication, arguing that the time limit for the issue of the notice of assessment had lapsed. In paicular, since more than ve years have passed since the taxable event (December 1995, the date of the rst provisional measure) without issuing any formal instrument, the right of the tax authorities to request the payment of additional taxes and the authority to undeake legal action to obtain payment have been challenged. In 2017, following the unfavorable decisions issued in pre- vious rulings, Eletropaulo led an appeal in defense of its rights and its actions with the Superior Tribunal de Justiça (STJ) and the Supremo Tribunal Federal (STF). The proceed- ings are still pending while the amounts subject to dispute have been covered by a bank guarantee. With regard to the request of the Oce of the Aorney General of the Brazilian National Treasury Depament to replace the bank guarantee with a deposit in cou, the cou of second instance granted the petition. The com- pany therefore replaced the bank guarantee with a cash deposit and led a clarication motion against the related decision, which is currently awaiting a decision. The overall amount involved in the dispute at December 31, 2021 was about €39 million. FINSOCIAL - Eletropaulo Following a nal ruling issued by the Federal Regional Cou on September 11, 2011, Eletropaulo was recognized the right to compensation for ceain FINSOCIAL credits (so- cial contributions) relating to sums paid from September 1989 to March 1992. 432 Integrated Annual Repo 2021432 Despite the expiration of the relative statute of limitations, the Federal Tax Authority contested the determination of some credits and rejected the corresponding oseing, issuing tax assessments that the company promptly chal- lenged in the administrative cous, defending the legiti- macy of its calculations and actions. After an unfavorable ruling at rst instance, the company led an appeal before the administrative cou of second instance. The overall amount involved in the dispute at December 31, 2021 was about €37 million. Tax litigation in Spain Income tax - Enel Iberia, Endesa and subsidiaries In 2018, the Spanish tax authorities completed a general audit involving the companies of the Group paicipating in the Spanish tax consolidation mechanism. This audit, which began in 2016, involved corporate income tax, value added tax and withholding taxes (mainly for the years 2012 to 2014). With reference to the main claims, the companies involved have challenged the related assessments at the rst ad- ministrative level (Tribunal Económico-Administrativo Cen- tral \- TEAC), defending the correctness of their actions. With regard to the disputes concerning corporate income tax, the issues for which an unfavorable outcome is con- sidered possible amounted to about €155 million at De- cember 31, 2021: • Enel Iberia is defending the appropriateness of the cri- terion adopted for determining the deductibility of cap- ital losses deriving from stock sales (around €106 mil- lion) and ceain nancial expense (around €18 million); • Endesa and its subsidiaries are mainly defending the appropriateness of the criteria adopted for the deduct- ibility of ceain nancial expense (about €25 million) and costs for decommissioning nuclear power plants (about €6 million). In 2021, the Spanish tax authorities concluded a new gen- eral audit for the years from 2015 to 2018\. The companies involved challenged the related assessments at the rst level of administrative adjudication (TEAC), arguing that they had acted correctly. In relation to the main dispute regarding corporate income tax, which concerned the deductibility of ceain nancial charges, the dispute for which an adverse outcome is con- sidered possible has a value of about €232 million at De- cember 31, 2021 (Enel Iberia €219 million and Endesa SA €13 million). Income tax - Enel Green Power España SL On June 7, 2017, the Spanish tax authorities issued a notice of assessment to Enel Green Power España SL, contesting the treatment of the merger of Enel Unión Fenosa Renova- bles SA (“EUFER”) into Enel Green Power España SL in 2011 as a tax neutral transaction, asseing that the transaction had no valid economic reason. On July 6, 2017, the company appealed the assessment at the rst administrative level (Tribunal Económico-Adminis- trativo Central \- TEAC), defending the appropriateness of the tax treatment applied to the merger. The company has provided the suppoing documentation demonstrating the synergies achieved as a result of the merger in order to prove the existence of a valid economic reason for the transaction. On December 10, 2019, the TEAC denied the appeal and the company is continuing to defend its ac- tions in cou (Audiencia Nacional). The overall amount involved in the dispute at December 31, 2021 was about €98 million. Tax litigation in Italy Withholding tax - Enel Servizio Elerico Nazionale As a result of a tax audit initiated in March 2018 and fol- lowing a subsequent investigation conducted with ques- tionnaires submied to the banks involved as assignees in ceain transfers of receivables from Servizio Elerico Nazionale SpA (SEN) in respect of mass market customers under a framework agreement, on December 19, 2018, the Revenue Agency - Regional Directorate of Lazio - Large Taxpayers Oce, notied the company of an assessment in respect of the alleged violation of withholding tax obli- gations relating to the amounts paid to the banks as pa of the aforementioned transfers in 2013. In paicular, the dispute arises from an assessment by the Oce that: (i) reclassied, for tax purposes only, the assign- ment of receivables as a nancing transaction; (ii) asseed an alleged withholding obligation for the company com- mensurate with the cost of the transaction (as the dier- ence between the nominal value of the assigned receiva- bles and the transfer price), reconstructing the subsequent transactions involving the assigned receivables (fuher sales and/or securitizations with non-residents carried out by the banks), in which the company had no role. In the rst stages of the proceeding, which arose following SEN’s appeal of the assessment, the company’s objections concerning the illegitimacy of the Oce’s reclassication of the transaction for tax purposes and, consequently, of the payment ows were not upheld, despite signicant procedural violations in the assessment activity. Believing that it has valid legal grounds to continue the dispute, the company led an appeal with the Cou of Cassation, asseing the illegitimacy of the tax claim for vi- olation and false application of the rules that, in the view of the trial cou, permit the classication of the income generated by the assignment of receivables as “propey income”, which, consequently, would require SEN to apply withholding tax. The overall amount involved in the dispute at December 31, 2021 is about €81 million. 433Notes to the consolidated nancial statements 433 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 56. Future accounting standards The following provides a list of accounting standards, amendments and interpretations that will take eect for the Group after December 31, 2021. • “Amendments to IAS 1 - Classication of Liabilities as Current or Non-current”, issued in January 2020. The amendments regard the provisions of IAS 1 concern- ing the presentation of liabilities. More specically, the changes clarify: – the criteria to adopt in classifying a liability as current or non-current, specifying the meaning of right of an entity to defer selement and that that right must exist at the end of the repoing period; – that the classication is unaected by the intentions or expectations of management about when the entity will exercise its right to defer selement of a liability; – that the right to defer exists if and only if the enti- ty satises the terms of the loan at the end of the repoing period, even if the creditor does not verify compliance until later; and – that selement regards the transfer to the coun- terpay of cash, equity instruments, other assets or services. The amendments will take eect, subject to endorse- ment, for annual periods beginning on or after January 1, 2023, with earlier application permied. • “Amendments to IFRS 3 - Reference to the Conceptual Framework” issued in May 2020\. The amendments are intended to replace a reference to the denitions of as- sets and liabilities provided by the Revised Conceptual Framework for Financial Repoing issued in March 2018 (Conceptual Framework) without signicantly changing its provisions. The amendments also add to IFRS 3 a requirement that, for transactions and other events within the scope of “IAS 37 - Provisions, contingent liabilities and contin- gent assets” or “IFRIC 21 - Levies”, an acquirer applies IAS 37 or IFRIC 21 (instead of the Conceptual Frame- work) to identify the liabilities it has assumed in a busi- ness combination. Finally, the amendments clarify the existing guidelines in IFRS 3 for contingent assets acquired in a business combination, specifying that, if it is not sure that an as- set exists at the acquisition date, the contingent asset shall not be recognized. The amendments will take eect for annual periods be- ginning on or after January 1, 2022. • “Amendments to IAS 16 - Propey, Plant and Equipment: Proceeds before Intended Use”, issued in May 2020. The amendments prohibit a company from deducting from the cost of propey, plant and equipment amounts re- ceived from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognize such sales proceeds and relat- ed cost in prot or loss. The amendments will take ef- fect for annual periods beginning on or after January 1, 2022\. Early application is permied. • “Amendments to IAS 37 - Onerous Contracts - Costs of Fullling a Contract”, issued in May 2020. The amend- ments specify which costs an entity includes in deter- mining the cost of fullling a contract for the purpose of assessing whether the contract is onerous. To this end, the cost of fullling a contract comprises the costs that relate directly to the contract. These consist of the incremental costs of fullling that contract or the allotment of other costs that relate directly to fullling contracts. The amendments will take eect for annual periods beginning on or after January 1, 2022. Early ap- plication is permied. • “Annual improvements to IFRS Standards 2018-2020”, issued in May 2020. The document mainly comprises amendments to the following standards: – “IFRS 1 - First-Time Adoption of International Finan- cial Repoing Standards”; the amendment simplies the application of IFRS 1 by an investee (subsidiary, associate or joint venture) that becomes a rst-time adopter of IFRS Standards after its parent has al- ready adopted them. More specically, if the inves- tee adopts the IFRSs after its parent and applies IFRS 1.D16 (a), then the investee can elect to measure the cumulative translation dierences for all foreign op- erations at the amounts that would be included in the parent’s consolidated nancial statements, based on parent’s date of transition to the IFRSs; – “IFRS 9 - Financial Instruments”; with regard to fees included in the “10 per cent“ test for derecognition of nancial liabilities, the amendment claries the fees that an entity includes when assessing whether the terms of a new or modied nancial liability are substantially dierent from the terms of the origi- nal nancial liability. In determining those fees paid net of fees received, the borrower shall include only fees paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other pay’s behalf; – “IFRS 16 - Leases”; the International Accounting Standards Board amended Illustrative Example 13 accompanying “IFRS 16 - Leases”. Specically, the amendment eliminates the potential for confu- sion in the application of IFRS 16 created by the way in which Illustrative Example 13 had illustrated the requirements for lease incentives. The example had included a reimbursement relating to lease- hold improvements without explaining whether the reimbursement qualied as a lease incentive. The amendment removes the illustration of a re- imbursement relating to leasehold improvements from the example; 434 Integrated Annual Repo 2021434 – “IAS 41 - Agriculture”; the amendment removes the requirement for entities to exclude cash ows for tax- ation when measuring fair value. Accordingly, entities shall use pre-tax cash ows and a pre-tax rate to dis- count those cash ows. The amendments shall be applied prospectively for an- nual periods beginning on or after January 1, 2022. Early application is permied. • “Amendments to IAS 1 and IFRS Practice Statement 2 \- Disclosure of Accounting Policies”, issued in February 2021\. The amendments are intended to suppo entities in deciding which accounting policies to disclose in the nancial statements. The amendments to IAS 1 require companies to disclose their material accounting policy information rather than their signicant accounting pol- icies. A guide on how to apply the concept of materiality to disclosures on accounting policies is provided in the amendments to IFRS Practice Statement 2. The amend- ments will take eect for annual periods beginning on or after January 1, 2023. Early application is permied. • “Amendments to IAS 8 - Denition of Accounting Esti- mates”, issued in February 2021. The amendments clarify how companies should distinguish changes in account- ing policies from changes in accounting estimates. The denition of changes in accounting estimates has been replaced with a denition of accounting estimates as “monetary amounts in nancial statements that are sub- ject to measurement unceainty”. The amendments will take eect for annual periods beginning on or after Jan- uary 1, 2023. Early application is permied. • “Amendments to IAS 12 Income Taxes: Deferred Tax relat- ed to Assets and Liabilities arising from a Single Transac- tion”, issued in May 2021. The amendments require enti- ties to recognize deferred tax on transactions that at in- itial recognition give rise to equal taxable and deductible temporary dierences. The amendments will take eect, subject to endorsement, for annual periods beginning on or after January 1, 2023. Early application is permied. • “Amendments to IFRS 10 and IAS 28 - Sale or Contribu- tion of Assets between an Investor and its Associate or Joint Venture”, issued in September 2014. The amend- ments clarify the accounting treatment for sales or con- tribution of assets between an investor and its associates or joint ventures. They conrm that the accounting treat- ment depends on whether the assets sold or contributed to an associate or joint venture constitute a “business“ (as dened in IFRS 3). The IASB has deferred the eective date of these amendments indenitely. • “IFRS 17 - Insurance Contracts”, issued in May 2017. The standard will take eect for annual periods beginning on or after January 1, 2023, with earlier application permit- ted. The Group is assessing the potential impact of the future application of the new provisions. 57. Events after the repoing period Enel completes acquisition of 527 MW of hydro capacity from ERG On January 3, 2022, Enel Produzione SpA nalized the ac- quisition of the entire share capital of ERG Hydro Srl from ERG Power Generation SpA. Enel Produzione paid around €1,039 million for the company, as well as an initial price adjustment at closing of around €226 million to reect the mark-to-market valuation of ceain hedging deriv- atives of ERG Power Generation concerning pa of the future power to be generated by the ERG Hydro plants. The agreement also provides for an additional price ad- justment in the coming months, which will be calculated mainly on the basis of the changes in ERG Hydro’s net working capital and net nancial position, and the level of water reserves in ceain basins included in the sale. The plants owned by ERG Hydro, which are located in the Um- bria, Lazio, and Marche regions, have an installed capacity of 527 MW and an average annual output of around 1.5 TWh. Enel places a €2.75 billion “sustainability- linked bond” in three tranches on the eurobond market On January 10, 2022, Enel Finance International NV, the Dutch-registered nance company controlled by Enel SpA, placed a €2.75 billion “sustainability-linked bond” in three tranches, linked to the achievement of Enel’s sus- tainability objective for the reduction of direct green- house gas emissions (Scope 1), contributing to the achievement of the United Nations Sustainable Develop- ment Goal (SDG) 13 “Climate Action” and in line with the Group’s Sustainability-Linked Financing Framework. Fitch revises Enel’s long-term rating to “BBB+” and makes no change to the sho- term rating of “F-2”. The outlook is stable On February 4, 2022, Fitch Ratings announced that it has revised Enel SpA’s long-term rating to “BBB+” from the previous “A-”. The agency also conrmed Enel’s sho- term rating at “F-2”. The outlook remains stable. According to the agency, the change in Enel’s rating mainly reects the expected increase in nancial leverage in the medium term due to the investment oppounities that have prompted Enel to gradually expand its capital expenditure plans in response to the energy transition. 435435Notes to the consolidated nancial statements 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Russia-Ukraine conict On February 24, 2022, the Russian President announced “a special military operation” in Ukrainian territory that led to the outbreak of conict between the two countries. In the previous weeks, various aempts had been made to achieve a diplomatic solution to the strains between Russia and Ukraine that, following extensive and pro- longed military maneuvers by the Russian armed forces along the Ukrainian border, had persisted for some time. As the days went by, hostilities escalated, with an intensi- cation of clashes. The Russian military intervention in Ukraine triggered prompt reactions from various countries and interna- tional organizations. The European Council called on Russia to immediately cease hostilities and withdraw its armed forces from Ukraine in compliance with interna- tional law. The United Nations General Assembly, meet- ing in an emergency session, also approved a resolution condemning the Russian military action in Ukraine, asking Russia to withdraw the army. At the same time, the European Commission is address- ing the humanitarian crisis engendered by the conict in Ukraine, with the deployment of humanitarian aid and emergency aid programs, including increased nancial suppo to Ukraine. Negotiations are under way between the paies involved to seek a diplomatic solution that will prevent the situa- tion from becoming a threat to international peace and security. The European Union and other countries (e.g., the United States, the United Kingdom, Australia, Japan, Switzerland and others) have imposed severe sanctions on Russia, which, although of varying eectiveness, have impacted strategic sectors of the Russian economy and the nan- cial sector and imposed personal restrictions on the Rus- sian President and other political and business gures. The main European sanctions involve: • freezing Russian assets in the euro area; • blocking the access of Russian banks to European - nancial markets; • imposing expo control measures (including a ban on the expo of goods to Russia and Belarus in the avia- tion, maritime, space, technology and “dual-use” sec- tors); • freezing commercial transactions with the Ukrainian regions of Donetsk and Luhansk; • excluding major Russian banks from the international SWIFT transaction system; • blocking current accounts with the Sberbank banking group; • closing airspace to Russian ights; • freezing the personal assets of the Russian President, oligarchs, politicians and senior executives of the Rus- sian companies that suppo him. These sanctions have had an initial impact on the ex- change rate of the ruble, which has depreciated sharply against the euro and the US dollar, on local interest rates (which were increased to 20% by the Russian Central Bank) and on the share prices of companies listed on the Moscow Stock Exchange (with a signicant decline being recorded in March). Financial diculties have also been associated with an increased level of IT risk, to which businesses and gov- ernments are exposed, making it necessary to adopt ad- equate defense measures and stringent internal controls to safeguard their digital infrastructure. Considering this background, the Enel Group has activat- ed a task force to carefully monitor the status and evolu- tion of current developments and manage potential risks. Today, the Enel Group is present in Russia with a num- ber of companies in which it holds control or joint con- trol with other investors. More specically, the Enel Group controls: • Enel Russia PJSC (56.43% owned by Enel SpA), a com- pany listed on the Moscow Stock Exchange that gen- erates electricity, mainly with three thermal generation plants, and holds 100% stakes in three renewable gen- eration companies; • Enel Green Power Rus LLC (a 100% indirect subsidiary of Enel SpA), a company that provides services for the de- velopment of renewable energy projects and which holds 100% stakes in four renewable generation companies; • Enel X Rus LLC (a 99% indirect subsidiary of Enel SpA). Enel SpA also directly holds an investment of 49.5% in a joint venture (Rusenergosbyt LLC) operating in the End-us- er Markets Business Line. At the end of 2021, the three thermal generation plants operating in Russia had an installed capacity of 5,276 MW, while renewables installed wind capacity was equal to 228 MW (including 138 MW of paial additional capacity of the Murmansk Kolskaya Wind Farm plant, which is under con- struction). The contribution of the Russian companies to the main consolidated peormance aggregates in 2021 (consider- ing the average 2021 euro/ruble exchange rate of 87.18) is not signicant and includes revenue of €564 million (0.6% of the total consolidated revenue of the Enel Group), op- erating prot of €51 million (0.7% of total Enel Group oper- ating prot) and prot of €64 million (2.0% of Enel Group prot). At December 31, 2021, considering the end-2021 euro/ru- ble exchange rate of 85.35, the main statement of nancial position items of the Enel Group companies operating in Russia regarded: • under assets, €846 million of propey, plant and equip- ment, €47 million in deferred tax assets, €44 million in trade receivables and €123 million in cash and cash equivalents; 436 Integrated Annual Repo 2021436 • under liabilities, €428 million in borrowings, €54 million in deferred tax liabilities and €93 million in trade payables. The Enel Group is constantly monitoring the impact of the international crisis on its operations in Russia (with paicu- lar regard to the procurement of materials, services and labor) and evaluating developments in market variables (exchange rates, interest rates), rst and foremost taking consideration of the potential eects on peormance and nancial position of the depreciation of the ruble against the euro. Fuhermore, the Enel Group is also assessing de- velopments associated with the counter-sanctions being deployed by Russia against investments in the country. The Enel Group is conducting analyses to assess the in- direct impacts of the war in Ukraine on operations, the nancial situation and peormance in the main euro-ar- ea countries in which it operates, with paicular regard to shoages of raw materials from the areas aected by the conict and the generalized increase in commodity prices. The Enel Group does not have gas supply contracts (pipeline and LNG) with Russia, but in Italy measures are being evaluated at the regulatory level to reduce the de- mand for gas and to contain price volatility on the mar- kets. In Spain (where the Group is present with its subsid- iary Endesa SA), in addition to regulatory developments, we are analyzing the eects on nuclear fuel orders from Russia. Paicular aention is also paid to the impacts of the war on activities in Slovakia, where the Enel Group is present with the jointly controlled company Slovenské elektrárne AS (SE), of which Enel SpA indirectly holds 33%. It oper- ates in the generation of electricity from nuclear, thermal and hydroelectric sources with an installed capacity of 4 GW. SE’s nuclear plants have links with Russia involving technical-operational activities (supply of nuclear fuel and technology), investments (Russian suppliers involved in the construction of the MO3/4 plant who are currently not targeted by the sanctions) and loans (SE’s debt expo- (44) ESMA no. 71-99-1864 of March 14, 2022; CONSOB warning notice in the weekly bulletin of March 9-14, 2022. sure to Sberbank). In this highly uid situation, characterized by considera- ble regulatory unceainty and high and volatile prices, the Enel Group is carefully monitoring macroeconomic and business variables in order to develop the most accurate real-time estimates of impacts connected with regulatory changes, sanctions and restrictions on assets, as well as on suppliers and contracts applicable to the Enel Group, taking due account of the recommendations issued by national and supranational organizations on this issue. (44) Enel nalizes renewal of panership with Cinven in Unet Latam On March 24, 2022, Enel X International Srl (Enel X Inter- national), a wholly-owned subsidiary of Enel X Srl (Enel X), closed the agreement signed on December 21, 2021 with a holding company controlled by the Sixth Cinven Fund and a holding company controlled by the Seventh Cin- ven Fund acquiring indirectly, through a holding compa- ny, about 79% of the share capital of Unet Latam SLU (“Unet” or the “Company”) from the Sixth Cinven Fund and simultaneously selling 80.5% of the Company’s share capital to the Seventh Cinven Fund. As a result, Enel X In- ternational now indirectly retains a stake equal to 19.5% of Unet, renewing the panership in the Company with Cinven. More specically, Enel X International, which previously indirectly owned a stake of about 21% in the Company, exercised the call option to acquire around 79% of the share capital of Unet for €1,320 million. At the same time, Enel X International received around €207 million as a distribution of available reserves from Unet and simul- taneously sold 80.5% of the Company’s share capital to the Seventh Cinven Fund for about €1,186 million. Under the agreement, Enel X International, in addition to indirectly retaining 19.5% of the share capital of Unet, keeps representation on the laer and its holding com- pany’s boards of directors, retaining standard minority shareholder protection rights. 437 Declaration of the Chief Executive Ocer and the ocer in charge of nancial repoing of the Enel Group at December 31, 2021, pursuant to the provisions of Aicle 154-bis, paragraph 5, of Legislative Decree 58 of February 24, 1998 and Aicle 81-ter of CONSOB Regulation no. 11971 of May 14, 1999 1. The undersigned Francesco Starace and Albeo De Paoli, in their respective capacities as Chief Executive Ocer and ocer in charge of nancial repoing of Enel SpA, hereby ceify, taking account of the provi- sions of Aicle 154-bis, paragraphs 3 and 4, of Legisla- tive Decree 58 of February 24, 1998: a. the appropriateness with respect to the character- istics of the Enel Group and b. the eective adoption of the administrative and accounting procedures for the preparation of the consolidated nancial state- ments of the Enel Group in the period between Jan- uary 1, 2021 and December 31, 2021. 2. In this regard, we repo that: a. the appropriateness of the administrative and ac- counting procedures used in the preparation of the consolidated nancial statements of the Enel Group has been veried in an assessment of the internal control system for nancial repoing. The assess- ment was carried out on the basis of the guidelines set out in the “Internal Controls - Integrated Frame- work” issued by the Commiee of Sponsoring Or- ganizations of the Treadway Commission (COSO); b. the assessment of the internal control system for - nancial repoing did not identify any material issues. 3\. In addition, we ceify that the consolidated nancial statements of the Enel Group at December 31, 2021: a. have been prepared in compliance with the Inter- national Financial Repoing Standards endorsed by the European Union pursuant to Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of July 19, 2002; b. correspond to the information in the books and oth- er accounting records; c. provide a true and fair representation of the nancial position, nancial peormance and cash ows of the issuer and the companies included in the con- solidation scope. 4. Finally, we ceify that the Repo on Operations, ac- companied by the consolidated nancial statements of the Enel Group at December 31, 2021, contains a relia- ble analysis of operations and peormance, as well as the situation of the issuer and the companies included in the consolidation scope, together with a description of the main risks and unceainties to which they are ex- posed. Rome, March 17, 2022 Francesco Starace Chief Executive Ocer of Enel SpA Albeo De Paoli Ocer in charge of nancial repoing of Enel SpA 438 Repos Repo of the Board of Statutory Auditors 439439 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements REPORT OF THE BOARD OF STATUTORY AUDITORS TO THE SHAREHOLDERS’ MEETING OF ENEL SpA CALLED TO APPROVE THE FINANCIAL STATEMENTS FOR 2021 (pursuant to Article 153 of Legislative Decree 58/1998 ) Shareholders, During the year ended December 31, 2021 we performed the oversight activities envisaged by law at Enel SpA (hereinafter also “Enel” or the “Company”). In particular, pursuant to the provisions of Article 149, paragraph 1, of Legislative Decree 58 of February 24, 1998 (hereinafter the “Consolidated Law on Financial Intermediation”) and Article 19, paragraph 1 of Legislative Decree 39 of January 27, 2010 (hereinafter “Decree 39/2010”), we monitored: - compliance with the law and the corporate bylaws as well as compliance with the principles of sound administration in the performance of the Company’s business; - the Company’s financial reporting process and the adequacy of the administrative and accounting system, as well as the reliability of the latter in representing operational events; - the statutory audit of the annual statutory and consolidated accounts and the independence of the audit firm; - the adequacy and effectiveness of the internal control and risk management system; - the adequacy of the organizational structure of the Company, within the scope of our responsibilities; - the implementation of the corporate governance rules as provided for by the 2020 edition of the Italian Corporate Governance Code (hereinafter, the “Corporate Governance Code”), which the Company adopted during the year; (1) - the appropriateness of the instructions given by the Company to its subsidiaries to enable Enel to meet statutory public disclosure requirements. In performing our checks and assessments of the above issues, we did not find any particular issues to report. In compliance with the instructions issued by Consob with Communication no. DEM/1025564 of April 6, 2001, as amended, we report the following: • we monitored compliance with the law and the bylaws and we have no issues to report; • on a quarterly basis, we received adequate information from the Chief Executive Officer, as well as through our participation in the meetings of the Board of Directors ( 1 ) In March 2021, the Board of Directors completed the adoption of measures to ensure that Enel had implemented the amendments to the Italian Corporate Governance Code. Until that time, the Company had adopted the corporate governance rules provided for in the 2018 edition of the Corporate Governance Code for listed companies. 440 2 of Enel, on activities performed, general developments in operations and the outlook, and on transactions with the most significant impact on performance or the financial position carried out by the Company and its subsidiaries. We report that the actions approved and implemented were in compliance with the law and the bylaws and were not manifestly imprudent, risky, in potential conflict of interest or in contrast with the resolutions of the Shareholders’ Meeting or otherwise prejudicial to the integrity of the Company’s assets. For a discussion of the features of the most significant transactions, please see the report on operations accompanying the separate financial statements of the Company and the consolidated financial statements of the Enel Group for 2021 (in the section “Significant events in 2021”); • we did not find any atypical or unusual transactions conducted with third parties, Group companies or other related parties; • in the section “Related parties” of the notes to the separate financial statements for 2021 of the Company, the directors describe the main transactions with related- parties – the latter being identified on the basis of international accounting standards and the instructions of Consob – carried out by the Company, to which readers may refer for details on the transactions and their financial impact. They also detail the procedures adopted to ensure that related-party transactions are carried out in accordance with the principles of transparency and procedural and substantive fairness. The transactions were carried out in compliance with the approval and execution processes set out in the related procedure – adopted in compliance with the provisions of Article 2391-bis of the Italian Civil Code and the implementing regulations issued by Consob – described in the report on corporate governance and ownership structure for 2021. All transactions with related parties reported in the notes to the separate financial statements for 2021 of the Company were executed as part of ordinary operations in the interest of the Company and settled on market terms and conditions; • the Company declares that it has prepared its separate financial statements for 2021 on the basis of international accounting standards (IAS/IFRS) – and the interpretations issued by the IFRIC and the SIC – endorsed by the European Union pursuant to Regulation (EC) no. 1606/2002 and in force at the close of 2021, as well as the provisions of Legislative Decree 38 of February 28, 2005 and its related implementing measures, as it did the previous year. The Company’s separate financial statements for 2021 have been prepared on a going-concern basis using the cost method, with the exception of items that are measured at fair value under the IFRS-EU, as indicated in the accounting policies for the individual items of the financial statements. The notes to the separate financial statements give detailed information on the accounting standards and measurement criteria adopted, accompanied by an indication of the standards applied for the first time in 2021, 441 3 which as indicated in the notes did not have a significant impact in the year under review; • the separate financial statements for 2021 of the Company underwent the statutory audit by the audit firm, KPMG SpA, which issued an unqualified opinion, including with regard to the consistency of the report on operations and certain information in the report on corporate governance and ownership structure of the Company with the financial statements, as well as compliance with the provisions of law, pursuant to Article 14 of Decree 39/2010 and Article 10 of Regulation (EU) no. 537/2014. The report of KPMG SpA also includes: \- a discussion of key aspects of the audit report on the separate financial statements; and \- the declaration provided pursuant to Article 14, paragraph 2(e) of Decree 39/2010 stating that the audit firm did not identify any significant errors in the contents of the report on operations; • the Company declares that it has also prepared the consolidated financial statements of the Enel Group for 2021 on the basis of international accounting standards (IAS/IFRS) – and the interpretations issued by the IFRIC and the SIC – endorsed by the European Union pursuant to Regulation (EC) no. 1606/2002 and in force at the close of 2021, as well as the provisions of Legislative Decree 38 of February 28, 2005 and its related implementing measures, as it did the previous year. The 2021 consolidated financial statements of the Enel Group are also prepared on a going- concern basis using the cost method, with the exception of items that are measured at fair value under the IFRS-EU (as indicated in the discussion of measurement criteria for the individual items) and non-current assets (or disposal groups) classified as held for sale, which are measured at the lower of carrying amount and fair value less costs to sell. The notes to the consolidated financial statements provide a detailed discussion of the accounting standards and measurement criteria adopted, accompanied by an indication of standards applied for the first time in 2021, which did not have a significant impact in the year under review. Note also that, starting from 2021, in compliance with the provisions of Delegated Regulation (EU) 2019/815 of December 17, 2018 (the “ESEF Regulation”), the Company has (i) drawn up its entire Annual Financial Report (including the separate financial statements and the consolidated financial statements, the respective reports on operations and the associated certifications pursuant to Article 154-bis, paragraph 5, of the Consolidated Law on Financial Intermediation) in the single electronic reporting format XHTML (Extensible Hypertext Markup Language), and (ii) marked up (with specific tags) the schedules of the consolidated financial statements and the related explanatory notes using the iXBRL markup language (Inline eXtensible Business Reporting Language), 442 4 in accordance with the ESEF taxonomy issued annually by ESMA, in order to facilitate the accessibility, analysis and comparability of the annual financial reports; • the consolidated financial statements for 2021 of the Enel Group underwent statutory audit by the audit firm KPMG SpA, which issued an unqualified opinion, including with regard to the consistency of the consistency of the report on operations and certain information in the report on corporate governance and ownership structure with the consolidated financial statements, as well as compliance with the provisions of law, pursuant to Article 14 of Decree 39/2010 and Article 10 of Regulation (EU) no. 537/2014. The report of KPMG SpA also includes: \- a discussion of key aspects of the audit report on the consolidated financial statements; and \- the declaration provided pursuant to Article 14, paragraph 2(e) of Decree 39/2010 and Article 4 of Consob Regulation no. 20267 (implementing Legislative Decree 254 of December 30, 2016) concerning, respectively, a statement that the audit firm did not identify any significant errors in the contents of the report on operations and that it verified that the Board of Directors had approved the consolidated non-financial statement; Under the terms of its engagement, KPMG SpA also issued unqualified opinions on the financial statements for 2021 of the most significant Italian companies of the Enel Group. Moreover, during periodic meetings with the representatives of the audit firm, KPMG SpA, the latter did not raise any issues concerning the reporting packages of the main foreign companies of the Enel Group, selected by the auditors on the basis of the work plan established for the auditing of the consolidated financial statements of the Enel Group, that would have a sufficiently material impact to be reported in the opinion on those financial statements; • taking due account of the recommendations of the European Securities and Markets Authority issued on January 21, 2013, and most recently confirmed with the Public Statement of October 29, 2021, to ensure appropriate transparency concerning the methods used by listed companies in testing goodwill for impairment, in line with the recommendations contained in the joint Bank of Italy – Consob – ISVAP document no. 4 of March 3, 2010, and in the light of indications of Consob in its Communication no. 7780 of January 28, 2016, the compliance of the impairment testing procedure with the provisions of IAS 36 was expressly approved by the Board of Directors of the Company, having obtained a favorable opinion in this regard from the Control and Risk Committee in February 2022, i.e. prior to the date of approval of the financial statements for 2021; • we examined the Board of Directors’ proposal for the allocation of net profit for 2021 and the distribution of available reserves and have no comments in this regard; 443 5 • we note that the Board of Directors of the Company certified, following appropriate checks by the Control and Risk Committee and the Board of Statutory Auditors in March 2022, that as at the date on which the 2021 financial statements were approved, the Enel Group continued to meet the conditions established by Consob (set out in Article 15 of the Market Rules, approved with Resolution no. 20249 of December 28, 2017) concerning the accounting transparency and adequacy of the organizational structures and internal control systems that subsidiaries established and regulated under the law of non-EU countries must comply with so that Enel shares can continue to be listed on regulated markets in Italy; • we monitored, within the scope of our responsibilities, the adequacy of the organizational structure of the Company (and the Enel Group as a whole), obtaining information from department heads and in meetings with the boards of auditors or equivalent bodies of a number of the main Enel Group companies in Italy and abroad, for the purpose of the reciprocal exchange of material information. As from the second half of 2014, the organizational structure of the Enel Group is based on a matrix of global business lines and geographical areas. Taking account of the changes implemented most recently in 2021 and the early months of 2022, it is organized into: (i) global business lines, which are responsible for managing and developing assets, optimizing their performance and the return on capital employed in the various geographical areas in which the Group operates. The global business lines are: Enel Green Power, and Thermal Generation, Global Energy and Commodity Management, Global Infrastructure and Networks, Enel X Global Retail and Global E- Mobility; (ii) regions and countries, which are responsible for managing relationships with local institutional bodies, regulatory authorities, the media and other local stakeholders, as well as optimizing the customer portfolio and generation assets, pursuing the best integrated margin, while also providing staff and other service support to the global business lines and adopting appropriate security, safety and environmental standards. Regions and countries comprise: Italy, Iberia, Europe, Latin America, North America, and Africa, Asia and Oceania; (iii) global service functions, which are responsible for managing information and communication technology activities (Global Digital Solutions), procurement at the Group level (Global Procurement) and invoicing, credit and customer care processes (Global Customer Operations); and (iv) holding company functions, which among other things are responsible for managing governance processes at the Group level. They include: Administration, Finance and Control, Personnel and Organization, Communication, Legal and Corporate Affairs, Audit, and Innovation and Sustainability. The Board of Statutory Auditors feels that the organizational system described above is adequate to support the strategic development of the Company and the Enel Group and is also consistent with control requirements; 444 6 • during meetings with the boards of auditors or equivalent bodies of a number of the Group’s main companies in Italy and abroad, no material issues emerged that would require reporting here; • we monitored the independence of the audit firm, having received today from KPMG specific written confirmation that they met that requirement (pursuant to the provisions of Article 6, paragraph 2(a), of Regulation (EU) 537/2014) and paragraph 17 of international standard on auditing (ISA Italia) 260 and having discussed the substance of that declaration with the audit partner. In this regard, we also monitored – as provided for under Article 19, paragraph 1(e), of Decree 39/2010 – the nature and the scale of non-audit services provided to the Company and other Enel Group companies by KPMG SpA and the entities belonging to its network. The fees due to KPMG SpA and the entities belonging to its network are reported in the notes to the separate financial statements of the Company. Following our examinations, the Board of Statutory Auditors feels that there are no critical issues concerning the independence of KPMG SpA. We held periodic meetings with the representatives of the audit firm, pursuant to Article 150, paragraph 3, of the Consolidated Law on Financial Intermediation, and no material issues emerged that would require mention in this report. With specific regard to the provisions of Article 11 of Regulation (EU) 537/2014, KPMG SpA today provided the Board of Statutory Auditors with the “additional report” for 2021 on the results of the statutory audit carried out, which indicates no significant difficulties encountered during the audit or any significant shortcomings in the internal control system for financial reporting or the Enel accounting system that would raise issues requiring mention in the opinion on the separate and consolidated financial statements. The Board of Statutory Auditors will transmit that report to the Board of Directors promptly, accompanied by any comments it may have, in accordance with Article 19, paragraph 1(a), of Decree 39/2010. As at the date of this report, the audit firm also reported that it did not prepare any management letter for 2021; • we monitored the financial reporting process, the appropriateness of the administrative and accounting system and its reliability in representing operational events, as well as compliance with the principles of sound administration in the performance of the Company’s business and we have no comments in that regard. We conducted our checks by obtaining information from the head of the Administration, Finance and Control department (taking due account of the head’s role as the officer responsible for the preparation of the Company’s financial reports), examining Company documentation and analyzing the findings of the examinations performed by KPMG SpA. The Chief Executive Officer and the officer responsible for the preparation of the financial reports of Enel issued a statement (regarding the 445 7 Company’s 2021 separate financial statements) certifying (i) the appropriateness with respect to the characteristics of the Company and the effective adoption of the administrative and accounting procedures used in the preparation of the financial statements; (ii) the compliance of the content of the financial reports with international accounting standards endorsed by the European Union pursuant to Regulation (EC) no. 1606/2002; (iii) the correspondence of the financial statements with the information in the books and other accounting records and their ability to provide a true and fair representation of the performance and financial position of the Company; and (iv) that the report on operations accompanying the financial statements contains a reliable analysis of operations and performance, as well as the situation of the issuer, together with a description of the main risks and uncertainties to which it is exposed. The statement also affirmed that the appropriateness of the administrative and accounting procedures used in the preparation of the separate financial statements of the Company had been verified in an assessment of the internal control system for financial reporting (supported by the findings of the independent testing performed by a qualified external advisor) and that the assessment of the internal control system did not identify any material issues. An analogous statement was prepared for the consolidated financial statements for 2021 of the Enel Group.; • we monitored the adequacy and effectiveness of the internal control system, primarily through constant participation of the head of the Audit department of the Company in the meetings of the Board of Statutory Auditors and holding about half of the meetings jointly with the Control and Risk Committee, as well as through periodic meetings with the body charged with overseeing the operation of and compliance with the organizational and management model adopted by the Company pursuant to Legislative Decree 231/2001. In the light of our examination and in the absence of significant issues, the internal control and risk management system can be considered adequate and effective. In February 2022, the Board of Directors of the Company expressed an analogous assessment of the situation and also noted, in November 2021, that the main risks associated with the strategic targets set out in the 2022-2024 Business Plan were compatible with the management of the Company in a manner consistent with those targets; • in 2021 no petitions were received by the Board of Auditors nor did we receive any complaints concerning circumstances deemed censurable pursuant to Article 2408 of the Italian Civil Code; • we monitored the effective implementation of the Corporate Governance Code, verifying the compliance of Enel’s corporate governance arrangements with the recommendations of the Code. Detailed information on the Company’s corporate 446 8 governance system can be found in the report on corporate governance and ownership structure for 2021. In June 2021, the Board of Statutory Auditors verified that the Board of Directors, in evaluating the independence of non-executive directors, correctly applied the assessment criteria specified in the Corporate Governance Code and the principle of the priority of substance over form that must inform the application of the Code’s recommendations in general, adopting a transparent procedure, the details of which are discussed in the report on corporate governance and ownership structure for 2021\. With regard to the so-called “self-assessment” of the independence of its members, the Board of Statutory Auditors \- in June 2021 and February 2022 - ascertained that all standing statutory auditors met the relevant requirements set out in the Consolidated Law on Financial Intermediation and in the Corporate Governance Code. In the final part of 2021 and during the first two months of 2022, the Board of Statutory Auditors, with the support of an independent advisory firm, conducted a board review assessing the size, composition and functioning of the Board of Statutory Auditors, as has been done since 2018, similar to the review conducted for the Board of Directors since 2004. This is a best practice that the Board of Statutory Auditors intended to adopt even in the absence of a specific recommendation of the Corporate Governance Code, a “peer-to-peer review” approach, i.e. the assessment not only of the functioning of the body as a whole, but also of the style and content of the contribution provided by each of the auditors. The approach adopted in performing the board review for 2021 and the findings of that review are described in detail in the report on corporate governance and ownership structure for 2021, revealing the unanimous agreement of the members of the Board of Statutory Auditors concerning the complete adequacy of its size, membership and functioning. Compared with 2020, it was confirmed that the oversight body has adopted effective and efficient operating methods that comply with the reference regulatory framework. Note also that, based on the findings of the board review and taking account of the provisions of the policy on the diversity of its members (approved on January 29, 2018), the Board of Statutory Auditors - in view of the election of a new Board of Statutory Auditors following the expiry of its term, scheduled for the Shareholders' Meeting called to approve the separate financial statements of the Company for 2021 – issued specific guidance for the shareholders (available on the company website) regarding the qualifications that the members of the Board of Statutory Auditors should possess; 447 9 • During 2021, the Board of Statutory Auditors also participated in an induction program, characterized by specific studies to update directors and statutory auditors on corporate governance and climate change issues, with the aim of further developing their skills with the support of a qualified external expert; • we monitored the application of the provisions of Legislative Decree 254 of December 30, 2016 (hereinafter “Decree 254) concerning the disclosure of non-financial and diversity information by certain large undertakings and groups. In performing that activity, we monitored the adequacy of the organizational, administrative, reporting and control system established by the Company in order to enable the accurate representation in the consolidated non-financial statement for 2021 of the activity of the Enel Group, its results and its impacts in the non-financial areas referred to in Article 3, paragraph 1, of Decree 254, and have no comments in this regard. The audit firm, KPMG SpA, has issued, pursuant to Article 3, paragraph 10, of Decree 254 and Article 5 of Consob Regulation no. 20267 of January 18, 2018, its certification of the conformity of the information provided in the consolidated non- financial statement with the requirements of applicable law; • since the listing of its shares, the Company has adopted specific rules (most recently amended in September 2018) for the internal management and processing of confidential information, which also set out the procedures for the disclosure of documentation and information concerning the Company and the Group, with specific regard to inside information. Those rules (which can be consulted on the corporate website) contain appropriate provisions directed at subsidiaries to enable Enel to comply with statutory public disclosure requirements, pursuant to Article 114, paragraph 2, of the Consolidated Law on Financial Intermediation ; • in 2002 the Company also adopted (and has subsequently updated, most recently in February 2021) a Code of Ethics (also available on the corporate website) that expresses the commitments and ethical responsibilities involved in the conduct of business, regulating and harmonizing corporate conduct in accordance with standards of maximum transparency and fairness with respect to all stakeholders; • with regard to the provisions of Legislative Decree 231 of June 8, 2001 \- which introduced into Italian law a system of administrative (in fact criminal) liability for companies for certain types of offences committed by its directors, managers or employees on behalf of or to the benefit of the company - since July 2002 Enel has adopted a compliance program consisting of a “general part” and various “special parts” concerning the difference offences specified by Legislative Decree 231/2001 that the program is intended to prevent. For a description of the manner in which the model has been adapted to the characteristics of the various Italian companies of the Group, as well as a description of the purposes of the “Enel Global Compliance Program” for the Group’s foreign companies, please see the report on corporate 448 10 governance and ownership structure for 2021. The structure that monitors the operation and compliance with the program and is responsible for updating it is a collegial body. This body, appointed in July 2020, is still composed of three external members who jointly have specific professional expertise on corporate organization matters and corporate criminal law. The Board of Statutory Auditors received adequate information on the main activities carried out in 2021 by that body, including in meetings with its members. Our examination of those activities found no facts or situations that would require mention in this report; • in 2021, the Board of Statutory Auditors issued a favorable opinion (at the meeting of February 3, 2021) on the 2021 Audit Plan, in accordance with the provisions of Article 7.C.1, letter c) of the Corporate Governance Code for listed companies (which the Company still applied as at that date); • a report on the fixed and variable compensation accrued by those who served as Chairman of the Board of Directors, the Chief Executive Officer/General Manager and other directors in 2021 for their respective positions and any compensation instruments awarded to them is contained in the second section of the Report on Remuneration Policy for 2022 and Remuneration Paid in 2021 referred to in Article 123-ter of the Consolidated Law on Financial Intermediation (for the sake of brevity, “Remuneration Report” hereinafter), approved by the Board of Directors, acting on a proposal of the Nomination and Compensation Committee on April 6, 2022, which will be published in compliance with the time limits established by law. The design of these remuneration instruments is in line with best practices as it complies with the principle of establishing a link with appropriate financial and non-financial performance targets and pursuing the creation of shareholder value over the medium and long term. The proposals to the Board of Directors concerning such forms of compensation and the determination of the associated parameters were prepared by the Nomination and Compensation Committee, which is made up entirely of independent directors, drawing on the findings of benchmark analyses, including at the international level, conducted by an independent consulting firm. In addition, the second section of the Remuneration Report contains, in compliance with the applicable Consob regulations, specific disclosures on the remuneration received in 2021 by the members of the oversight body and by key management personnel (in aggregate form for the latter). The Board of Statutory Auditors also supervised the process of preparing the remuneration policy for 2022 – described in full in the first section of the Remuneration Report, without finding any critical issues. In particular, oversight activity examined the consistency of the various measures envisaged by that policy with (i) the provisions of Directive (EU) 2017/828 as transposed into Italian law, with (ii) the recommendations of the Italian Corporate Governance Code, as well as with 4 49 11 (iii) the results of the benchmark analysis carried out, including at the international level, by an independent consulting firm that the Nomination and Compensation Committee elected to engage. As indicated in the first section of the Remuneration Report, during the preparation of the remuneration policy for 2022, the Board of Statutory Auditors \- taking account of the recommendations in this regard by the Corporate Governance Code – asked the independent consulting firm to conduct an additional benchmark analysis to ascertain the adequacy of the remuneration paid to the members of the oversight body. This analysis was performed on the basis of the data reported in the documentation published on the occasion of 2021 shareholders' meetings by issuers belonging to a peer group composed \- unlike that used for the analogous analysis concerning the Board of Directors \- exclusively of Italian companies belonging the FTSE MIB index ( 2 ). The functions that the Italian legal system assigns to the Board of Statutory Auditors differentiate the latter from the bodies with oversight functions provided for in the one-tier and two-tier governance systems commonly adopted in other countries. For the purpose of identifying the peer group, the consultant, in agreement with the Board of Statutory Auditors, decided to exclude certain industrial companies belonging to the FTSE MIB index that have concentrated ownership structures, while evaluating some companies in the FTSE MIB index operating in the financial services industry. The analysis showed that, on the basis of the data as at December 31, 2020, Enel exceeds the peer group in terms of capitalization, is above the ninth decile in terms of revenue and slightly below the ninth decile in terms of number of employees. The same analysis also found that – against Enel's very high positioning compared with the companies included in the panel in terms of capitalization, revenue and number of employees \- the remuneration of the Chairman of the Board of Statutory Auditors and of the other Statutory Auditors is just under the peer group median for the Chairman and in line with the median for the other standing Statutory Auditors. The analysis also found that in 2020, on average, the boards of statutory auditors of the companies belonging to the panel were composed of four standing auditors compared with the three standing members of Enel's Board of Statutory Auditors, and held 25 meetings compared with the 27 meetings held by Enel's Board of Statutory Auditors. On the basis of the analysis, it therefore emerged that the competitiveness of the remuneration envisaged for the Chairman and the other standing members of Enel's Board of Statutory Auditors is similar to the positioning of the non-executive directors ( 2 ) The peer group consists of the following 19 companies: A2A, Atlantia, Assicurazioni Generali, Banco BPM, BPER Banca, Eni, Hera, Leonardo, Mediobanca, Nexi, Pirelli, Poste Italiane, Prysmian, Saipem, Snam, Terna, TIM, Unicredit and Unipol. 450 12 of Enel with regard to the remuneration paid to them in their capacity as directors. (net of attendance fees, which at Enel are not envisaged for participation in board meetings but are paid by some of the peer group companies used for the purpose of preparing the 2022 policy for directors’ remuneration). However, the consultant noted that to correctly assess the appropriateness of the remuneration paid to the members of the Board of Statutory Auditors, it would be advisable to assess its amount in the light of the overall effort required by the position, taking due consideration of the fact that the members of the Board of Statutory Auditors also participate in the meetings of the Board committees (a practice that enables them to perform their oversight of the effective implementation of the recommendations of the Corporate Governance Code within Enel) without receiving any additional remuneration for this activity. Finally, it should be noted that the benchmark analysis found a clear correlation between the competitiveness of the remuneration offered by the peer group companies to their respective boards of statutory auditors and the different work load required of them, as indicated by the number of meetings held in 2020. Accordingly, the analysis noted that companies in the financial services industry offer higher remuneration on average to the chairman and the standing members of their boards of statutory auditors, taking account of the greater number of meetings held. The analysis also found that the amount of remuneration paid to the Chairman and the standing members of Enel's Board of Statutory Auditors is substantially in line with that currently paid by the larger of the peer group companies in which the Ministry for the Economy and Finance holds a significant direct and/or indirect investment. The Board of Statutory Auditors’ oversight activity in 2021 was carried out in 28 meetings and with participation in the 16 meetings of the Board of Directors and participation in the annual Shareholders’ Meeting, and, through the chairman or one or more of its members, in the 17 meetings of the Control and Risk Committee (16 of which held jointly with the Board of Statutory Auditors), in the 12 meetings of the Nomination and Compensation Committee, in the 7 meetings of the Related Parties Committee and in the 5 meetings of the Corporate Governance and Sustainability Committee, for a total of 86 meetings. The delegated magistrate of the State Audit Court participated in the meetings of the Board of Statutory Auditors and those of the Board of Directors. During the course of this activity and on the basis of information obtained from KPMG SpA, no omissions, censurable facts, irregularities or other significant developments were found that would require reporting to the regulatory authorities or mention in this report. 451 13 Finally, the Board of Statutory Auditors notes that in 2021 and until March 31, 2022, the health emergency associated with the COVID-19 pandemic was still under way in Italy. Through that date, Italian authorities maintained a number of limitations on freedom of movement within the country to contain the contagion, among other things imposing bans on gatherings. In this context, the Board of Statutory Auditors, in the light of the measures to contain the COVID-19 pandemic, held many of its meetings in 2021 exclusively with the use of audio/video conference systems by all participants, which nevertheless ensured their identification and the exchange of documentation \- in accordance with the provisions of Article 25.4 of the Bylaws – and, more generally, the full performance of the oversight body’s functions. The Board of Statutory Auditors also notes that the Company's Board of Directors has called the ordinary Shareholders' Meeting for May 19, 2022 in a single call, establishing that – in the light of the uncertain developments in the COVID-19 pandemic and taking account of the continuing need to reduce travel and the risks associated with in-person participation at events and considering the provisions concerning the holding of company meetings in Article 106, paragraph 4, of Decree Law 18 of March 17, 2020, ratified with amendments by Law 27 of April 24, 2020 (3) \- it will be conducted in a manner that enables shareholders to participate exclusively through the shareholders’ representative designated by the Company referred to in Article 135-undecies of the Consolidated Law on Financial Intermediation, to whom shareholders may also confer proxies or sub- proxies pursuant to Article 135-novies of the Consolidated Law, also in derogation from the provisions of Article 135-undecies, paragraph 4, of the Consolidated Law. The Board of Statutory Auditors will ensure that the rights of the Shareholders can be exercised on the occasion of the aforementioned Shareholders' Meeting – as occurred on the occasion of the Enel Shareholders’ Meetings held using similar procedures on May 14, 2020 and May 20, 2021 \- within the limits permitted by the special procedures envisaged for holding the Meeting. The Board of Statutory Auditors will continue to carry out its oversight activity until the expiry of its term in close coordination with the Board of Directors and the audit firm to monitor the impact – including economic and financial repercussions \- of the COVID-19 pandemic, and more recently the sensitive geopolitical situation, on the Company and the Enel Group. In this latter regard, in performing its statutory oversight activities the Board of Statutory Auditors took due account of the recommendations contained in the joint Bank of Italy \- Consob \- IVASS \- UIF press release of March 7, 2022, as well as ( 3 ) Whose validity was extended until July 31, 2022 by Article 3, paragraph 1, of Decree Law 228 of December 30, 2021, ratified with amendments by Law 15 of February 25, 2022\. 452 14 Consob's warning notice of March 18, 2022, regarding the possible impact of the Russia- Ukraine conflict on the operations of listed companies. Based on the oversight activity performed and the information exchanged with the independent auditors KPMG SpA, we recommend that you approve the Company’s financial statements for the year ended December 31, 2021 in conformity with the proposals of the Board of Directors. Rome, April 14, 2022 The Board of Auditors [signed] ____________________ Barbara Tadolini \- Chairman [signed] ____________________ Romina Guglielmetti \- Auditor [signed] ____________________ Claudio Sottoriva - Auditor 453453 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Repo of the Audit Firm 454 455 456 457 458 459 460 Integrated Annual Repo 2021460 Aachments Subsidiaries, associates and other signicant equity investments of the Enel Group at December 31, 2021 In compliance with Aicles 38 and 39 of Legislative Decree 127/1991 and CONSOB Notice no. DEM/6064293 of July 28, 2006, a list of subsidiaries and associates of Enel SpA at December 31, 2021, pursuant to Aicle 2359 of the Ita- lian Civil Code, and of other signicant equity investments is provided below. Enel has full title to all investments. The following information is included for each company: name, registered oce, share capital, currency in which share capital is denominated, business segment, method of consolidation, Group companies that have a stake in the company and their respective ownership share, and the Group’s ownership share. The following provides a key to the icons representing the business segments. Business segment Description of business segments Group holding company Country holding company Enel Green Power Thermal Generation Trading Infrastructure and Networks Enel X End-user Markets Services Finance 461Aachments 461 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Parent Enel SpA Rome IT 10,166,679,946.00 EUR Holding 100.00% Subsidiaries 25 Mile Creek Windfarm LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% 400 Manley Solar LLC Boston US \- USD Line-by-line Enel X Finance Paner LLC 100.00% 100.00% 4814 Investments LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% ABC Solar 11 SpA Santiago de Chile CL 1,000,000.00 CLP Equity Enel Green Power Chile SA 100.00% 64.93% ABC Solar 3 SpA Santiago de Chile CL 1,000,000.00 CLP Equity Enel Green Power Chile SA 100.00% 64.93% Abu Renewables India Private Limited Gurugram IN 100,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% Aced Renewables Hidden Valley (RF) (Pty) Ltd Johannesburg ZA 1,000.00 ZAR AFS Enel Green Power RSA 2 (RF) (Pty) Ltd 55.00% 55.00% Acefat AIE Barcelona ES 793,340.00 EUR - Edistribución Redes Digitales SL (Sociedad Unipersonal) 14.29% 10.02% Adams Solar PV Project Two (RF) (Pty) Ltd Johannesburg ZA 10,000,000.00 ZAR Line-by-line Enel Green Power RSA (Pty) Ltd 60.00% 60.00% Adria Link Srl Gorizia IT 300,297.00 EUR Equity Enel Produzione SpA 50.00% 50.00% Aero-Tanna Srl Rome IT 15,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Agassiz Beach LLC Minneapolis US \- USD Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Agatos Green Power Trino Srl Rome IT 10,000.00 EUR Line-by-line Enel Green Power Solar Energy Srl 100.00% 100.00% Aguilón 20 SA Zaragoza ES 2,682,000.00 EUR Line-by-line Enel Green Power España SLU 51.00% 35.76% Alba Energia Ltda Rio de Janeiro BR 16,045,169.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Albany Solar LLC Wilmington US \- USD Line-by-line Aurora Distributed Solar LLC 100.00% 74. 13% Alliance SA Managua NI 6,180,150.00 NIO Equity Unet Latam SLU 49.90% 10.28% Alpe Adria Energia Srl Udine IT 900,000.00 EUR Equity Enel Produzione SpA 50.00% 50.00% Alta Farms Azure Ranchland Holdings LLC Dover US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Alta Farms Wind Project II LLC Andover US 1.00 USD Line-by-line Enel Green Power Azure Ranchland Holdings LLC 100.00% 100.00% 462 Integrated Annual Repo 2021462 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Alvorada Energia SA Niterói BR 22,317,415.92 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ampla Energia e Serviços SA Rio de Janeiro BR 2,498,230,386.65 BRL Line-by-line Enel Brasil SA 99.73% 82.05% Annandale Solar LLC Wilmington US \- USD Line-by-line Aurora Distributed Solar LLC 100.00% 74. 13% Apiacás Energia SA Rio de Janeiro BR 14,216,846.33 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Aquilla Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Aragonesa de Actividades Energéticas SA Teruel ES 60,100.00 EUR Line-by-line Endesa Red SA (Sociedad Unipersonal) 100.00% 70.11% Arano Desarrollos SL Madrid ES 3,010.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Aravalli Surya (Project 1) Private Limited Gurugram IN 8,100,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% Arcadia Power Inc. Washington DC US \- USD - Enel X Noh America Inc. 0.14% 0.14% Arena Power Solar 11 SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Arena Power Solar 12 SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Arena Power Solar 13 SLU Seville ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Arena Power Solar 20 SLU Seville ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Arena Power Solar 33 SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Arena Power Solar 34 SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Arena Power Solar 35 SLU Seville ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Asociación Nuclear Ascó-Vandellós II AIE Tarragona ES 19,232,400.00 EUR Propoional Endesa Generación SA 85.41% 59.88% Ateca Renovables SL Madrid ES 3,000.00 EUR Equity Baylio Solar SLU 19.72% 35.06% Dehesa de los Guadalupes Solar SLU 14.93% Seguidores Solares Planta 2 SL (Sociedad Unipersonal) 15.35% Athonet France SASU Paris FR 50,000.00 EUR - Athonet Srl 100.00% 16.00% Athonet Srl Trieste IT 68,927.57 EUR - Enel X Srl 16.00% 16.00% Athonet UK Ltd Bale, East Sussex GB 250,001.00 GBP - Athonet Srl 100.00% 16.00% Athonet USA Inc. Wilmington US 1.00 USD - Athonet Srl 100.00% 16.00% 463Aachments 463 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Atlántico Photovoltaic SAS ESP Barranquilla CO 2,000,000.00 COP Line-by-line Enel Green Power Colombia SAS ESP 100.00% 82.27% Atwater Solar LLC Wilmington US \- USD Line-by-line Aurora Distributed Solar LLC 100.00% 74. 13% Aurora Distributed Solar LLC Wilmington US \- USD Line-by-line Aurora Solar Holdings LLC 74. 13% 74. 13 % Aurora Land Holdings LLC Wilmington US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Aurora Solar Holdings LLC Wilmington US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Aurora Wind Holdings LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Aurora Wind Project LLC Andover US 1.00 USD Line-by-line Aurora Wind Holdings LLC 100.00% 100.00% Autumn Hills LLC Wilmington US \- USD Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Avikiran Energy India Private Limited Gurugram IN 73,300,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% Avikiran Solar India Private Limited New Delhi IN 253,659,580.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% Avikiran Surya India Private Limited Gurugram IN 100,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% Avikiran Vayu India Private Limited Gurugram IN 100,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% Azure Blue Jay Holdings LLC Dover US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Azure Blue Jay Solar Holdings LLC Andover US 1.00 USD Line-by-line Enel Green Power Azure Blue Jay Solar Holdings LLC 100.00% 100.00% Azure Sky Solar Project LLC Andover US 1.00 USD Line-by-line Azure Blue Jay Solar Holdings LLC 100.00% 100.00% Azure Sky Wind Holdings LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Azure Sky Wind Project LLC Andover US 1.00 USD Line-by-line Enel Green Power Azure Ranchland Holdings LLC 100.00% 100.00% Azure Sky Wind Storage LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Baikal Enterprise SL Palma de Mallorca ES 3,006.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Baleares Energy SL Palma de Mallorca ES 4,509.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Barnwell County Solar Project LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Baylio Solar SLU Seville ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Beaver Falls Water Power Company Wilmington US \- USD Line-by-line Beaver Valley Holdings LLC 67.50% 67.50% Beaver Valley Holdings LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% 464 Integrated Annual Repo 2021464 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Belomechetskaya WPS Moscow RU 3,010,000.00 RUB Line-by-line Enel Green Power Rus Limited Liability Company 100.00% 100.00% Bijou Hills Wind LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Bioenergy Casei Gerola Srl Rome IT 100,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Bison Meadows Wind Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Blair Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Blue Jay Solar I LLC Andover US 1.00 USD Line-by-line Azure Blue Jay Solar Holdings LLC 100.00% 100.00% Blue Jay Solar II LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Blue Star Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% BluRe MA San José LU 7,092,970.00 EUR - Slovenské elektrárne AS 5.00% 1.65% Bogaris PV1 SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Bogotá ZE SAS Bogotá CO 503,609,700.00 COP Line-by-line Codensa SA ESP 62.99% 39.74% Enel X Colombia SAS 37.01% Boiro Energía SA Boiro ES 601,010.00 EUR Equity Enel Green Power España SLU 40.00% 28.04% Bondia Energia Ltda Niterói BR 2,950,888.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Boone Stephens Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Bosa del Ebro SL Zaragoza ES 3,010.00 EUR Line-by-line Enel Green Power España SLU 51.00% 35.75% Boom Grass Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Boujdour Wind Farm Casablanca MA 300,000.00 MAD Equity Nareva Enel Green Power Morocco SA 90.00% 45.00% Bouldercombe Solar Farm Trust Sydney AU 10.00 AUD Line-by-line Enel Green Power Bouldercombe Trust 100.00% 100.00% Bouldercombe Solar (Pty) Ltd Sydney AU 100.00 AUD Line-by-line Enel Green Power Bouldercombe Holding (Pty) Ltd 100.00% 100.00% Bp Hydro Finance Panership Salt Lake City US \- USD Line-by-line Enel Green Power Noh America Inc. 24.08% 100.00% Enel Kansas LLC 75.92% Brandonville Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% 465Aachments 465 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Bravo Dome Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Brazoria West Solar Project LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Brazos Flat Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Brick Road Solar Holdings LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Brush County Solar Project LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Buckshutem Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Buckshutem Solar II LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Bualo Dunes Wind Project LLC Topeka US \- USD Line-by-line EGPNA Development Holdings LLC 75.00% 75.00% Bualo Jump LP Albea CA 10.00 CAD Line-by-line Enel Albea Wind Inc. 0.10% 100.00% Enel Green Power Canada Inc. 99.90% Bualo Spirit Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Bungala One Finco (Pty) Ltd Sydney AU 1,000.00 AUD Line-by-line Bungala One Propey (Pty) Ltd 100.00% 51.00% Bungala One Operation Holding Trust Sydney AU 100.00 AUD Line-by-line Enel Green Power Bungala (Pty) Ltd 50.00% 50.00% Bungala One Operations Holding (Pty) Ltd Sydney AU 100.00 AUD Line-by-line Enel Green Power Bungala (Pty) Ltd 51.00% 51.00% Bungala One Operations (Pty) Ltd Sydney AU 1,000.00 AUD Line-by-line Bungala One Operations Holding (Pty) Ltd 100.00% 51.00% Bungala One Operations Trust Sydney AU \- AUD Line-by-line Bungala One Operations Holding (Pty) Ltd 100.00% 51.00% Bungala One Propey Holding (Pty) Ltd Sydney AU 100.00 AUD Line-by-line Enel Green Power Bungala (Pty) Ltd 51.00% 51.00% Bungala One Propey Holding Trust Sydney AU 100.00 AUD Line-by-line Enel Green Power Bungala (Pty) Ltd 50.00% 50.00% Bungala One Propey (Pty) Ltd Sydney AU 1,000.00 AUD Line-by-line Bungala One Propey Holding (Pty) Ltd 100.00% 51.00% Bungala One Propey Trust Sydney AU \- AUD Line-by-line Bungala One Propey Holding (Pty) Ltd 100.00% 51.00% Bungala Two Finco (Pty) Ltd Sydney AU \- AUD Line-by-line Bungala Two Propey (Pty) Ltd 100.00% 51.00% Bungala Two Operations Holding (Pty) Ltd Sydney AU \- AUD Line-by-line Enel Green Power Bungala (Pty) Ltd 51.00% 51.00% Bungala Two Operations Holding Trust Sydney AU \- AUD Line-by-line Enel Green Power Bungala (Pty) Ltd 50.00% 50.00% Bungala Two Operations (Pty) Ltd Sydney AU \- AUD Line-by-line Bungala Two Operations Holding (Pty) Ltd 100.00% 51.00% 466 Integrated Annual Repo 2021466 Enel Green Power Desenvolvimento Ltda 0.00% Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Bungala Two Operations Trust Sydney AU \- AUD Line-by-line Bungala Two Operations Holding (Pty) Ltd 100.00% 51.00% Bungala Two Propey Holding (Pty) Ltd Sydney AU \- AUD Line-by-line Enel Green Power Bungala (Pty) Ltd 51.00% 51.00% Bungala Two Propey Holding Trust Sydney AU \- AUD Line-by-line Enel Green Power Bungala (Pty) Ltd 50.00% 50.00% Bungala Two Propey (Pty) Ltd Sydney AU \- AUD Line-by-line Bungala Two Propey Holding (Pty) Ltd 100.00% 51.00% Bungala Two Propey Trust Sydney AU 1.00 AUD Line-by-line Bungala Two Propey Holding (Pty) Ltd 100.00% 51.00% Business Venture Investments 1468 (Pty) Ltd Johannesburg ZA 100.00 ZAR Line-by-line Enel Green Power RSA (Pty) Ltd 100.00% 100.00% Buely Meadows Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% C&C Castelvetere Srl Rome IT 100,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% C&C Uno Energy Srl Rome IT 118,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Canastota Wind Power LLC Andover US \- USD Line-by-line Fenner Wind Holdings LLC 100.00% 100.00% Caney River Wind Project LLC Overland Park US \- USD Equity Rocky Caney Wind LLC 100.00% 20.00% Castiblanco Solar SL Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Castle Rock Ridge Limited Panership Albea CA \- CAD Line-by-line Enel Albea Wind Inc. 0.10% 100.00% Enel Green Power Canada Inc. 99.90% Catalana d’Iniciatives SCR SA Barcelona ES 30,862,800.00 EUR - Endesa Red SA (Sociedad Unipersonal) 0.94% 0.66% CCP.RO Bucharest SA Bucharest RO 79,800,000.00 RON - Enel Romania SA 9.52% 9.52% Cdec - Sic Ltda Santiago de Chile CL 709,783,206.00 CLP - Enel Green Power Chile SA 6.00% 3.90% Cedar Run Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Celg Distribuição SA - Celg D Goiás BR 5,664,951,979.22 BRL Line-by-line Enel Brasil SA 99.96% 82.24% Central Dock Sud SA Buenos Aires AR 1,231,270,567.54 ARS Line-by-line Enel Argentina SA 0.24% 33.94% Inversora Dock Sud SA 71.78% Central Geradora Fotovoltaica Bom Nome Ltda Salvador BR 4,979,739.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% 467Aachments 467 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Central Geradora Fotovoltaica São Francisco Ltda Niterói BR 113,749,250.00 BRL Line-by-line Enel Brasil SA 0.00% 82.27% Enel X Brasil SA 100.00% Central Geradora Termelétrica Foaleza SA Foaleza BR 151,935,779.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Central Hidráulica Güejar-Sierra SL Seville ES 364,213.34 EUR Equity Enel Green Power España SLU 33.30% 23.35% Central Térmica de Anllares AIE Madrid ES 595,000.00 EUR Equity Endesa Generación SA 33.33% 23.37% Central Vuelta de Obligado SA Buenos Aires AR 500,000.00 ARS Equity Central Dock Sud SA 6.40% 20.93% Enel Generación Costanera SA 1.30% Enel Generación El Chocón SA 33.20% Centrales Nucleares Almaraz-Trillo AIE Madrid ES \- EUR Equity Endesa Generación SA 24.18% 16.95% Centrum Pre Vedu A Vyskum SRO Kalná Nad Hronom SK 6,639.00 EUR Equity Slovenské elektrárne AS 100.00% 33.00% CESI - Centro Elerotecnico Sperimentale Italiano Giacinto Moa SpA Milan IT 8,550,000.00 EUR Equity Enel SpA 42.70% 42.70% Champagne Storage LLC Wilmington US 1.00 USD Line-by-line Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) 100.00% 100.00% Cheyenne Ridge II Wind Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Cheyenne Ridge Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Chi Black River LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Chi Minnesota Wind LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Chi Operations Inc. Andover US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Chi Power Inc. Naples US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Chi Power Marketing Inc. Wilmington US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Chi West LLC San Francisco US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Chinango SAC San Miguel PE 295,249,298.00 PEN Line-by-line Enel Generación Perú SAA 80.00% 55.02% Chisago Solar LLC Wilmington US \- USD Line-by-line Aurora Distributed Solar LLC 100.00% 74. 13% Chisholm View II Holding LLC Wilmington US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Chisholm View Wind Project II LLC Wilmington US \- USD Line-by-line Chisholm View II Holding LLC 62.79% 62.79% 468 Integrated Annual Repo 2021468 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Chisholm View Wind Project LLC New York US \- USD Equity EGPNA REP Wind Holdings LLC 100.00% 20.00% Cimarron Bend Assets LLC Wilmington US \- USD Line-by-line Cimarron Bend Wind Project I LLC 49.00% 100.00% Cimarron Bend Wind Project II LLC 49.00% Cimarron Bend Wind Project III LLC 1.00% Enel Kansas LLC 1.00% Cimarron Bend III HoldCo LLC Andover US 1.00 USD Line-by-line Enel Green Power Cimarron Bend Wind Holdings III LLC 100.00% 100.00% Cimarron Bend Wind Holdings I LLC Wilmington US \- USD Line-by-line Cimarron Bend Wind Holdings II LLC 100.00% 100.00% Cimarron Bend Wind Holdings II LLC Dover US 100.00 USD Line-by-line Cimarron Bend Wind Holdings LLC 100.00% 100.00% Cimarron Bend Wind Holdings III LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Cimarron Bend Wind Holdings LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Cimarron Bend Wind Project I LLC Wilmington US \- USD Line-by-line Cimarron Bend Wind Holdings I LLC 100.00% 100.00% Cimarron Bend Wind Project II LLC Wilmington US \- USD Line-by-line Cimarron Bend Wind Holdings I LLC 100.00% 100.00% Cimarron Bend Wind Project III LLC Wilmington US \- USD Line-by-line Cimarron Bend Wind Holdings III LLC 100.00% 100.00% Cipher Solar Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% CityPoste Payment Digital Srl Teramo IT 10,000.00 EUR AFS CityPoste Payment SpA 100.00% 100.00% CityPoste Payment SpA Teramo IT \- EUR AFS Enel X Srl 100.00% 100.00% CivDrone Haifa IL 1,093,350.00 ILS - Enel Global Infrastructure and Networks Srl 4.27% 4.27% Clear Sky Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Clinton Farms Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Cloudwalker Wind Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Codensa SA ESP Bogotá CO 13,487,545,000.00 COP Line-by-line Enel Américas SA 48.30% 39.74% Cogein Sannio Srl Rome IT 10,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Cogeneración El Salto SL Zaragoza ES 36,060.73 EUR Equity Enel Green Power España SLU 20.00% 14.02% 469Aachments 469 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Cogenio Srl Rome IT 2,310,000.00 EUR Equity Enel X Italia Srl 20.00% 20.00% Cohuna Solar Farm (Pty) Ltd Sydney AU 100.00 AUD Line-by-line Enel Green Power Cohuna Holdings (Pty) Ltd 100.00% 100.00% Cohuna Solar Farm Trust Sydney AU 1.00 AUD Line-by-line Enel Green Power Cohuna Trust 100.00% 100.00% Comanche Crest Ranch LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Comercializadora Eléctrica de Cádiz SA Cadiz ES 600,000.00 EUR Equity Endesa Red SA (Sociedad Unipersonal) 33.50% 23.49% Compagnia Poo di Civitavecchia SpA in liquidation Rome IT 14,730,800.00 EUR Equity Enel Produzione SpA 25.00% 25.00% Companhia Energética do Ceará \- Coelce Foaleza BR 914,346,885.76 BRL Line-by-line Enel Brasil SA 74.05% 60.92% Compañía de Trasmisión del Mercosur SA - CTM Buenos Aires AR 2,025,191,313.00 ARS Line-by-line Enel Brasil SA 74.15% 82.27%Enel CIEN SA 25.85% Enel SpA 0.00% Compañía Energética Veracruz SAC San Miguel PE 2,886,000.00 PEN Line-by-line Enel Perú SAC 100.00% 82.27% Compañía Eólica Tierras Altas SA Soria ES 13,222,000.00 EUR Equity Compañía Eólica Tierras Altas SA 5.00% 26.29% Enel Green Power España SLU 35.63% Conce Srl Rome IT 10,000.00 EUR Line-by-line Enel Global Thermal Generation Srl 100.00% 100.00% Concho Solar I LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Consolidated Hydro New Hampshire LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Consolidated Hydro Southeast LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Consolidated Pumped Storage Inc. Wilmington US 550,000.00 USD Line-by-line Enel Green Power Noh America Inc. 81.83% 81.83% Conza Green Energy Srl Rome IT 73,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Copper Landing Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Corporación Empresarial de Extremadura SA Badajoz ES 44,538,000.00 EUR - Endesa SA 1.01% 0.71% Corporación Eólica de Zaragoza SL La Puebla de Alnden ES 271,652.00 EUR Equity Enel Green Power España SLU 25.00% 17.53% Country Roads Solar Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Cow Creek Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% 470 Integrated Annual Repo 2021470 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Crocke Solar I LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Cross Trails Energy Storage Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Dairy Meadows Wind Project 1 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Dairy Meadows Wind Project 2 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Dairy Meadows Wind Project 3 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Daisy Patch Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Danax Energy (Pty) Ltd Sandton ZA 100.00 ZAR Line-by-line Enel Green Power RSA (Pty) Ltd 100.00% 100.00% Dara Solar Investment Srl Bucharest RO 592,400.00 RON Line-by-line Enel Green Power Romania Srl 100.00% 100.00% Dauphin Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% De Rock Int’l Srl Bucharest RO 5,629,000.00 RON Line-by-line Enel Green Power Romania Srl 100.00% 100.00% Enel Green Power SpA 0.00% Dehesa de los Guadalupes Solar SLU Seville ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Dehesa PV Farm 03 SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Dehesa PV Farm 04 SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Depuración Destilación Reciclaje SL Boiro ES 600,000.00 EUR Equity Enel Green Power España SLU 40.00% 28.04% Derivex SA Bogotá CO 715,292,000.00 COP - Emgesa SA ESP 5.00% 1.99% Desarrollo de Fuerzas Renovables S de RL de Cv Mexico City MX 33,101,350.00 MXN Line-by-line Enel Green Power México S de RL de Cv 99.99% 100.00% Energía Nueva Energía Limpia México S de RL de Cv 0.01% DI.T.N.E. - Distreo Tecnologico Nazionale sull’Energia - Società Consoile a Responsabilità Limitata Rome IT 436,535.29 EUR - Enel Produzione SpA 1.76% 1.76% Diamond Vista Holdings LLC Wilmington US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Distribuidora de Energía Eléctrica del Bages SA Barcelona ES 108,240.00 EUR Line-by-line Endesa Red SA (Sociedad Unipersonal) 55.00% 70.11% Hidroeléctrica de Catalunya SL 45.00% Distribuidora Eléctrica del Pueo de la Cruz SA Santa Cruz de Tenerife ES 12,621,210.00 EUR Line-by-line Endesa Red SA (Sociedad Unipersonal) 100.00% 70.11% 471Aachments 471 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Distrilec Inversora SA Buenos Aires AR 497,612,021.00 ARS Line-by-line Enel Américas SA 51.50% 42.37% Dmd Holding AS in liquidation Trenčín- Zlatovce SK 199,543,284.87 EUR - Slovenské elektrárne AS 2.94% 0.97% Dodge Center Distributed Solar LLC Wilmington US \- USD Line-by-line Aurora Distributed Solar LLC 100.00% 74. 13% Dolores Wind SA de Cv Mexico City MX 200.00 MXN Line-by-line Enel Rinnovabile SA de Cv 99.00% 100.00% Hidroelectricidad del Pacíco S de RL de Cv 1.00% Dominica Energía Limpia SA de Cv Mexico City MX 2,070,600,646.00 MXN Equity Tenedora de Energía Renovable Sol y Viento SAPI de Cv 60.80% 20.00% Dorset Ridge Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Dover Solar I LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Dragony Fields Solar Project LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Drift Sand Wind Holdings LLC Wilmington US \- USD Equity Enel Kansas LLC 50.00% 50.00% Drift Sand Wind Project LLC Wilmington US \- USD Equity Drift Sand Wind Holdings LLC 100.00% 50.00% Dwarka Vayu 1 Private Limited Gurgaon IN 100,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% E.S.CO. Comuni Srl Bergamo IT 1,000,000.00 EUR Line-by-line Enel X Italia Srl 60.00% 60.00% Eastwood Solar LLC Wilmington US \- USD Line-by-line Aurora Distributed Solar LLC 100.00% 74. 13% Ebenezer Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Edgaown Depot Solar 1 LLC Boston US \- USD Line-by-line Enel X MA Holdings LLC 100.00% 100.00% Edistribución Redes Digitales SL (Sociedad Unipersonal) Madrid ES 1,204,540,060.00 EUR Line-by-line Endesa Red SA (Sociedad Unipersonal) 100.00% 70.11% E-Distribuţie Banat SA Timisoara RO 382,158,580.00 RON Line-by-line Enel SpA 51.00% 51.00% E-Distribuţie Dobrogea SA Constanţa RO 280,285,560.00 RON Line-by-line Enel SpA 51.00% 51.00% E-Distribuţie Muntenia SA Bucharest RO 271,635,250.00 RON Line-by-line Enel SpA 78.00% 78.00% e-distribuzione SpA Rome IT 2,600,000,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% EF Divesture LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Ecientya Srl Bergamo IT 100,000.00 EUR Equity Enel X Italia Srl 50.00% 50.00% EGP Australia (Pty) Ltd Sydney AU 10,000.00 AUD Line-by-line Enel Green Power Australia (Pty) Ltd 100.00% 100.00% 472 Integrated Annual Repo 2021472 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding EGP Bioenergy Srl Rome IT 1,000,000.00 EUR Line-by-line Enel Green Power Puglia Srl 100.00% 100.00% EGP Fotovoltaica La Loma SAS in liquidation Bogotá CO 8,000,000.00 COP Line-by-line Enel Green Power Colombia SAS ESP 100.00% 82.27% EGP Geronimo Holding Company Inc. Wilmington US 1,000.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% EGP HoldCo 1 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 10 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 11 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 12 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 13 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 14 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 15 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 16 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 17 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 18 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 2 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 3 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 4 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 5 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 6 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 7 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 8 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP HoldCo 9 LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGP Magdalena Solar SA de Cv Mexico City MX 691,771,740.00 MXN Line-by-line Enel Rinnovabile SA de Cv 99.00% 100.00% Hidroelectricidad del Pacíco S de RL de Cv 1.00% EGP Matimba NewCo 1 Srl Rome IT 10,000.00 EUR Line-by-line Enel Green Power SpA 100.00% 100.00% 473Aachments 473 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding EGP Matimba NewCo 2 Srl Rome IT 10,000.00 EUR Line-by-line Enel Green Power SpA 100.00% 100.00% EGP Nevada Power LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% EGP Salt Wells Solar LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% EGP San Leandro Microgrid I LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% EGP Solar Services LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% EGP Stillwater Solar LLC Wilmington US \- USD Line-by-line Enel Stillwater LLC 100.00% 100.00% EGP Stillwater Solar PV II LLC Wilmington US 1.00 USD Line-by-line Stillwater Woods Hill Holdings LLC 100.00% 100.00% EGP Timber Hills Project LLC Los Angeles US \- USD Line-by-line Padoma Wind Power LLC 100.00% 100.00% EGPNA 2020 HoldCo 1 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 10 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 11 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 12 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 13 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 14 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 15 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 16 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 17 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 18 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 19 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 2 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 20 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 21 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 22 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 23 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 24 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% 474 Integrated Annual Repo 2021474 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding EGPNA 2020 HoldCo 25 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 26 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 27 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 28 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 29 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 3 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 30 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 4 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 5 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 6 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 7 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 8 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA 2020 HoldCo 9 LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA Development Holdings LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Development LLC 100.00% 100.00% EGPNA Hydro Holdings LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% EGPNA Preferred Wind Holdings II LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% EGPNA Preferred Wind Holdings LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% EGPNA Project HoldCo 1 LLC Dover US 100.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% EGPNA Project HoldCo 2 LLC Dover US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% EGPNA Project HoldCo 5 LLC Dover US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% EGPNA Project HoldCo 6 LLC Dover US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% EGPNA Project HoldCo 7 LLC Dover US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% EGPNA Renewable Energy Paners LLC Wilmington US \- USD Equity EGPNA REP Holdings LLC 20.00% 20.00% EGPNA REP Holdings LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% 475Aachments 475 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding EGPNA REP Solar Holdings LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% EGPNA REP Wind Holdings LLC Wilmington US \- USD Equity EGPNA Renewable Energy Paners LLC 100.00% 20.00% EGPNA Wind Holdings 1 LLC Wilmington US \- USD Equity EGPNA REP Wind Holdings LLC 100.00% 20.00% EGPNA-SP Seven Cowboy Holdings LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Elcogas SA in liquidation Pueollano (Ciudad Real) ES 809,690.40 EUR Equity Endesa Generación SA 40.99% 33.06% Enel SpA 4.32% Elcomex Solar Energy Srl Bucharest RO 4,590,000.00 RON Line-by-line Enel Green Power Romania Srl 100.00% 100.00% Enel Green Power SpA 0.00% Elecgas SA Pego PT 50,000.00 EUR Equity Endesa Generación Pougal SA 50.00% 35.06% Electra Capital (RF) (Pty) Ltd Johannesburg ZA 10,000,000.00 ZAR Line-by-line Enel Green Power RSA (Pty) Ltd 60.00% 60.00% Eléctrica de Jafre SA Barcelona ES 165,876.00 EUR Line-by-line Endesa Red SA (Sociedad Unipersonal) 52.54% 70.11% Hidroeléctrica de Catalunya SL 47.46% Eléctrica de Lijar SL Cadiz ES 1,081,821.79 EUR Equity Endesa Red SA (Sociedad Unipersonal) 50.00% 35.06% Eléctrica del Ebro SA (Sociedad Unipersonal) Barcelona ES 500,000.00 EUR Line-by-line Endesa Red SA (Sociedad Unipersonal) 100.00% 70.11% Electricidad de Pueo Real SA Cadiz ES 4,960,246.40 EUR Equity Endesa Red SA (Sociedad Unipersonal) 50.00% 35.06% Electrometalúrgica del Ebro SL Barcelona ES 2,906,862.00 EUR - Enel Green Power España SLU 0.18% 0.12% Eletropaulo Metropolitana Eletricidade de São Paulo SA São Paulo BR 3,079,524,934.33 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Elini Antwerp BE 76,273,810.00 EUR - Slovenské elektrárne AS 4.00% 1.32% Emerging Networks El Salvador SA de Cv San Salvador SV 2,000.00 USD Equity Livister Guatemala SA 1.00% 20.60% Livister Latam SLU 99.00% Emerging Networks Latam Inc. Wilmington US 100.00 USD Equity Ifx Networks Ltd 100.00% 20.60% Emerging Networks Panama SA Panama City PA 300.00 USD Equity Ifx/eni - Spc Panama Inc. 100.00% 20.60% Emgesa SA ESP Bogotá CO 655,222,312,800.00 COP Line-by-line Enel Américas SA 48.48% 39.89% 476 Integrated Annual Repo 2021476 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Emintegral Cycle SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Empresa Carbonífera del Sur SA Madrid ES 18,030,000.00 EUR Line-by-line Endesa Generación SA 100.00% 70.11% Empresa de Alumbrado Eléctrico de Ceuta Distribución SA (Sociedad Unipersonal) Ceuta ES 9,335,000.00 EUR Line-by-line Empresa de Alumbrado Eléctrico de Ceuta SA 100.00% 67.59% Empresa de Alumbrado Eléctrico de Ceuta SA Ceuta ES 16,562,250.00 EUR Line-by-line Endesa Red SA (Sociedad Unipersonal) 96.41% 67.5 9% Empresa de Generación Eléctrica Los Pinos SA San Miguel PE 7,928,044.00 PEN Line-by-line Enel Green Power Perú SAC 100.00% 82.27% Energética Monzón SAC 0.00% Empresa de Generación Eléctrica Marcona SAC San Miguel PE 3,368,424.00 PEN Line-by-line Enel Green Power Perú SAC 100.00% 82.27% Energética Monzón SAC 0.00% Empresa Distribuidora Sur SA - Edesur Buenos Aires AR 898,585,028.00 ARS Line-by-line Distrilec Inversora SA 56.36% 59.33% Enel Argentina SA 43.10% Empresa Eléctrica Pehuenche SA Santiago de Chile CL 175,774,920,733.00 CLP Line-by-line Enel Generación Chile SA 92.65% 56.27% Empresa Propietaria de la Red SA Panama City PA 58,500,000.00 USD - Enel SpA 11.11% 11.11% Endesa Capital SA Madrid ES 60,200.00 EUR Line-by-line Endesa SA 100.00% 70.11% Endesa Comercialização de Energia SA Poo PT 250,000.00 EUR Line-by-line Endesa Energía SA 100.00% 70.11% Endesa Energía Renovable SL (Sociedad Unipersonal) Madrid ES 100,000.00 EUR Line-by-line Endesa Energía SA 100.00% 70.11% Endesa Energía SA Madrid ES 14,445,575.90 EUR Line-by-line Endesa SA 100.00% 70.11% Endesa Financiación Filiales SA Madrid ES 4,621,003,006.00 EUR Line-by-line Endesa SA 100.00% 70.11% Endesa Generación II SA Seville ES 63,107.00 EUR Line-by-line Endesa SA 100.00% 70.11% Endesa Generación Nuclear SA Seville ES 60,000.00 EUR Line-by-line Endesa Generación SA 100.00% 70.11% Endesa Generación Pougal SA Lisbon PT 50,000.00 EUR Line-by-line Endesa Energía SA 0.20% 70.11% Endesa Generación SA 99.20% Enel Green Power España SLU 0.60% Endesa Generación SA Seville ES 1,940,379,735.35 EUR Line-by-line Endesa SA 100.00% 70.11% Endesa Ingeniería SLU Seville ES 965,305.00 EUR Line-by-line Endesa Red SA (Sociedad Unipersonal) 100.00% 70.11% 477Aachments 477 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Endesa Medios y Sistemas SL (Sociedad Unipersonal) Madrid ES 89,999,790.00 EUR Line-by-line Endesa SA 100.00% 70.11% Endesa Operaciones y Servicios Comerciales SL Madrid ES 10,138,580.00 EUR Line-by-line Endesa Energía SA 100.00% 70.11% Endesa Red SA (Sociedad Unipersonal) Madrid ES 719,901,723.26 EUR Line-by-line Endesa SA 100.00% 70.11% Endesa SA Madrid ES 1,270,502,540.40 EUR Line-by-line Endesa SA 0.02% 70.11% Enel Iberia Srl 70.10% Endesa Soluciones SL Madrid ES 2,874,621.80 EUR Equity Endesa X Servicios SLU 20.00% 14.02% Endesa X Servicios SLU Madrid ES 60,000.00 EUR Line-by-line Endesa SA 100.00% 70.11% Enel Albea Wind Inc. Albea CA 16,251,021.00 CAD Line-by-line Enel Green Power Canada Inc. 100.00% 100.00% Enel Américas SA Santiago de Chile CL 15,799,498,544.85 USD Line-by-line Enel Américas SA 0.00% 82.27% Enel SpA 82.27% Enel and Shikun & Binui Innovation Infralab Ltd Airpo City IL 38,000.00 ILS Equity Enel Global Infrastructure and Networks Srl 50.00% 50.00% Enel Argentina SA Buenos Aires AR 2,297,711,908.00 ARS Line-by-line Enel Américas SA 99.92% 82.25% Enel Generación Chile SA 0.08% Enel Bella Energy Storage LLC Wilmington US \- USD Line-by-line Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) 100.00% 100.00% Enel Brasil Central SA Rio de Janeiro BR 10,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Brasil SA Niterói BR 32,387,634,190.06 BRL Line-by-line Enel Américas SA 99.50% 82.27% Enel Brasil SA 0.50% Energía y Servicios South America SpA 0.00% Enel Chile SA Santiago de Chile CL 3,882,103,470,184.00 CLP Line-by-line Enel SpA 64.93% 64.93% Enel CIEN SA Rio de Janeiro BR 285,044,682.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Colina SA Santiago de Chile CL 82,222,000.00 CLP Line-by-line Enel Chile SA 0.00% 64.34% Enel Distribución Chile SA 100.00% Enel Cove Fo II LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Enel Cove Fo LLC Beaver US \- USD Line-by-line Enel Geothermal LLC 100.00% 100.00% 478 Integrated Annual Repo 2021478 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Distribución Chile SA Santiago de Chile CL 177,568,664,063.00 CLP Line-by-line Enel Chile SA 99.09% 64.34% Enel Distribución Perú SAA San Miguel PE 638,563,900.00 PEN Line-by-line Enel Perú SAC 83.15% 68.41% Enel Energia SpA Rome IT 302,039.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% Enel Energía SA de Cv Mexico City MX 25,000,100.00 MXN Line-by-line Enel Green Power México S de RL de Cv 100.00% 100.00% Energía Nueva de Iguu S de RL de Cv 0.00% Enel Energie Muntenia SA Bucharest RO 37,004,350.00 RON Line-by-line Enel SpA 78.00% 78.00% Enel Energie SA Bucharest RO 140,000,000.00 RON Line-by-line Enel SpA 51.00% 51.00% Enel Energy Australia (Pty) Ltd Sydney AU 200,100.00 AUD Line-by-line Enel Green Power Australia (Pty) Ltd 100.00% 100.00% Enel Energy South Africa Wilmington ZA 100.00 ZAR Line-by-line Enel X International Srl 100.00% 100.00% Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) Andover US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Enel Finance America LLC Wilmington US 200,000,000.00 USD Line-by-line Enel Noh America Inc. 100.00% 100.00% Enel Finance International NV Amsterdam NL 1,478,810,371.00 EUR Line-by-line Enel Holding Finance Srl 75.00% 100.00% Enel SpA 25.00% Enel Founa SA Panama City PA 100,000,000.00 USD Line-by-line Enel Green Power Panamá Srl 50.06% 41.18% Enel Future Project 2020 #1 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #10 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #11 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #12 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #13 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #14 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #15 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #16 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #17 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #18 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% 479Aachments 479 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Future Project 2020 #19 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #2 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #20 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #3 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #4 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #5 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #6 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #7 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #8 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Future Project 2020 #9 LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Enel Generación Chile SA Santiago de Chile CL 552,777,320,871.00 CLP Line-by-line Enel Chile SA 93.55% 60.74% Enel Generación Costanera SA Buenos Aires AR 701,988,378.00 ARS Line-by-line Enel Argentina SA 75.68% 62.25% Enel Generación El Chocón SA Buenos Aires AR 18,321,776,559.00 ARS Line-by-line Enel Argentina SA 8.67% 54.07% Hidroinvest SA 59.00% Enel Generación Perú SAA San Miguel PE 2,108,101,266.48 PEN Line-by-line Enel Perú SAC 83.60% 68.78% Enel Generación Piura SA San Miguel PE 73,982,594.00 PEN Line-by-line Enel Perú SAC 96.50% 79.39% Enel Generación SA de Cv Mexico City MX 7,100,100.00 MXN Line-by-line Enel Green Power México S de RL de Cv 100.00% 100.00% Energía Nueva de Iguu S de RL de Cv 0.00% Enel Geothermal LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Enel Global Infrastructure and Networks Srl Rome IT 10,100,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Enel Global Services Srl Rome IT 10,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Enel Global Thermal Generation Srl Rome IT 1,000,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Enel Global Trading SpA Rome IT 90,885,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% 480 Integrated Annual Repo 2021480 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Argentina SA Buenos Aires AR 463,577,761.00 ARS Line-by-line Enel Américas SA 99.86% 82.27% Enel Green Power SpA 0.00% Energía y Servicios South America SpA 0.14% Enel Green Power Aroeira 01 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Aroeira 02 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Aroeira 03 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Aroeira 04 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Aroeira 05 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Aroeira 06 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Aroeira 07 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Aroeira 08 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Aroeira 09 SA (formerly Enel Green Power São Gonçalo Paicipações SA) Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Australia (Pty) Ltd Sydney AU 100.00 AUD Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power Australia Trust Sydney AU 100.00 AUD Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power Azure Blue Jay Solar Holdings LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% 481Aachments 481 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Azure Ranchland Holdings LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Enel Green Power Boa Vista 01 Ltda Salvador BR 3,554,607.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Boa Vista Eólica SA Rio de Janeiro BR 104,890,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Bouldercombe Holding (Pty) Ltd Sydney AU 100.00 AUD Line-by-line Enel Green Power Australia (Pty) Ltd 100.00% 100.00% Enel Green Power Bouldercombe Trust Sydney AU 10.00 AUD Line-by-line Enel Green Power Australia Trust 100.00% 100.00% Enel Green Power Brejolândia Solar SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Bungala (Pty) Ltd Sydney AU 100.00 AUD Line-by-line Enel Green Power Australia (Pty) Ltd 100.00% 100.00% Enel Green Power Bungala Trust Sydney AU \- AUD Line-by-line Enel Green Power Australia (Pty) Ltd 100.00% 100.00% Enel Green Power Cabeça de Boi SA Niterói BR 270,114,539.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Cachoeira Dourada SA Cachoeira Dourada BR 64,339,835.85 BRL Line-by-line Enel Brasil SA 99.61% 82.07% Enel Green Power Cachoeira Dourada SA 0.15% Enel Green Power Calabria Srl Rome IT 10,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Enel Green Power Canada Inc. Montreal CA 85,681,857.00 CAD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Enel Green Power Cerrado Solar SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Chile SA Santiago de Chile CL 842,121,530.67 USD Line-by-line Enel Chile SA 99.99% 64.93% Enel SpA 0.01% Enel Green Power Cimarron Bend Wind Holdings III LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Enel Green Power Cohuna Holdings (Pty) Ltd Sydney AU 3,419,700.00 AUD Line-by-line Enel Green Power Australia (Pty) Ltd 100.00% 100.00% Enel Green Power Cohuna Trust Sydney AU \- AUD Line-by-line Enel Green Power Australia Trust 100.00% 100.00% Enel Green Power Colombia SAS ESP Bogotá CO 13,849,425,000.00 COP Line-by-line Enel Américas SA 100.00% 82.27% Enel Green Power Costa Rica SA San José CR 27,500,000.00 USD Line-by-line ESSA2 SpA 100.00% 82.27% 482 Integrated Annual Repo 2021482 Enel Green Power Desenvolvimento Ltda 0.10% Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Cove Fo Solar LLC Wilmington US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Enel Green Power Cremzow GmbH & Co. Kg Schenkenberg DE 1,000.00 EUR Line-by-line Enel X Germany GmbH 90.00% 90.00% Enel Green Power Cremzow Verwaltungs GmbH Schenkenberg DE 25,000.00 EUR Line-by-line Enel X Germany GmbH 90.00% 90.00% Enel Green Power Cristal Eólica SA Rio de Janeiro BR 144,784,899.00 BRL Line-by-line Enel Brasil SA 99.17% 82.27% Enel Green Power Cristal Eólica SA 0.00% Enel Green Power Desenvolvimento Ltda 0.83% Enel Green Power Cumaru 01 SA Niterói BR 204,653,590.90 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Cumaru 02 SA Niterói BR 210,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Cumaru 03 SA Rio de Janeiro BR 200,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Cumaru 04 SA Rio de Janeiro BR 200,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Cumaru 05 SA Rio de Janeiro BR 180,208,000.90 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Cumaru Paicipações SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Cumaru Solar 01 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Cumaru Solar 02 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% 483Aachments 483 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Damascena Eólica SA Rio de Janeiro BR 83,709,003.00 BRL Line-by-line Enel Brasil SA 99.16% 82.27% Enel Green Power Desenvolvimento Ltda 0.84% Enel Green Power Delna A Eólica SA Rio de Janeiro BR 549,062,483.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Delna B Eólica SA Rio de Janeiro BR 93,068,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Delna C Eólica SA Rio de Janeiro BR 31,105,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Delna D Eólica SA Rio de Janeiro BR 105,864,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Delna E Eólica SA Niterói BR 105,936,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda Rio de Janeiro BR 46,617,590.35 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Energía y Servicios South America SpA 0.00% Enel Green Power Development Srl Rome IT 20,000.00 EUR Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power Diamond Vista Wind Project LLC Wilmington US 1.00 USD Line-by-line Diamond Vista Holdings LLC 100.00% 100.00% Enel Green Power Dois Riachos Eólica SA Rio de Janeiro BR 130,354,009.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Egypt SAE Cairo EG 250,000.00 EGP Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power El Salvador SA de Cv El Salvador SV 22,860.00 USD Line-by-line Enel Green Power SpA 99.96% 99.99% Energía y Servicios South America SpA 0.04% Enel Green Power Elkwater Wind Limited Panership Albea CA 1,000.00 CAD Line-by-line Enel Albea Wind Inc. 1.00% 100.00% Enel Green Power Canada Inc. 99.00% Enel Green Power Elmsthorpe Wind LP Calgary CA 1,000.00 CAD Line-by-line Enel Albea Wind Inc. 0.10% 100.00% Enel Green Power Canada Inc. 99.90% Enel Green Power Emiliana Eólica SA Rio de Janeiro BR 135,191,530.00 BRL Line-by-line Enel Brasil SA 98.81% 82.27% Enel Green Power Desenvolvimento Ltda 1.19% Enel Green Power Emiliana Eólica SA 0.00% Enel Green Power España SLU Seville ES 11,152.74 EUR Line-by-line Endesa Generación SA 100.00% 70.11% 484 Integrated Annual Repo 2021484 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Esperança Eólica SA Rio de Janeiro BR 129,418,174.00 BRL Line-by-line Enel Brasil SA 99.14% 82.27% Enel Green Power Desenvolvimento Ltda 0.86% Enel Green Power Esperança Solar SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Fazenda SA Niterói BR 264,141,174.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Fontes dos Ventos 2 SA Rio de Janeiro BR 283,315,219.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Fontes dos Ventos 3 SA Rio de Janeiro BR 221,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Fontes II Paicipações SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Fontes Solar SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power France SAS Paris FR 100,000.00 EUR Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power Germany GmbH Berlin DE 25,000.00 EUR Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power Girgarre Holdings (Pty) Ltd Sydney AU 100.00 AUD Line-by-line Enel Green Power Australia (Pty) Ltd 100.00% 100.00% Enel Green Power Girgarre Trust Sydney AU 10.00 AUD Line-by-line Enel Green Power Australia Trust 100.00% 100.00% Enel Green Power Global Investment BV Amsterdam NL 10,000.00 EUR Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power Guatemala SA Guatemala City GT 67,208,000.00 GTQ Line-by-line Enel Américas SA 0.00% 82.27% ESSA2 SpA 100.00% Enel Green Power Hadros Wind Limited Panership - CA 1,000.00 CAD Line-by-line Enel Albea Wind Inc. 1.00% 100.00% Enel Green Power Canada Inc. 99.00% Enel Green Power Hellas SA Maroussi GR 159,187,850.00 EUR Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power Hellas Supply Single Member SA Maroussi GR 600,000.00 EUR Line-by-line Enel Green Power Hellas SA 100.00% 100.00% 485Aachments 485 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Enel Green Power Desenvolvimento Ltda 0.10% Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Hellas Wind Parks South Evia Single Member SA Maroussi GR 141,569,641.00 EUR Line-by-line Enel Green Power Hellas SA 100.00% 100.00% Enel Green Power Hilltopper Wind LLC (formerly Hilltopper Wind Power LLC) Dover US 1.00 USD Line-by-line Hilltopper Wind Holdings LLC 100.00% 100.00% Enel Green Power Horizonte Mp Solar SA Rio de Janeiro BR 431,566,053.00 BRL Line-by-line Alba Energia Ltda 0.01% 82.27% Enel Brasil SA 99.99% Enel Green Power India Private Limited New Delhi IN 113,504,823.00 INR Line-by-line Enel Green Power Development Srl 100.00% 100.00% Enel Green Power Italia Srl Rome IT 272,000,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% Enel Green Power Ituverava Noe Solar SA Rio de Janeiro BR 210,706,645.67 BRL Line-by-line Bondia Energia Ltda 0.09% 82.27% Enel Brasil SA 99.91% Enel Green Power Brasil Paicipações Ltda 0.00% Enel Green Power Ituverava Solar SA Rio de Janeiro BR 219,235,933.00 BRL Line-by-line Bondia Energia Ltda 0.00% 82.27% Enel Brasil SA 100.00% Enel Green Power Ituverava Sul Solar SA Rio de Janeiro BR 407,279,143.00 BRL Line-by-line Bondia Energia Ltda 0.00% 82.27% Enel Brasil SA 100.00% Enel Green Power Joana Eólica SA Rio de Janeiro BR 130,259,530.00 BRL Line-by-line Enel Brasil SA 98.84% 82.27% Enel Green Power Desenvolvimento Ltda 1.16% Enel Green Power Kenya Limited Nairobi KE 100,000.00 KES Line-by-line Enel Green Power RSA (Pty) Ltd 1.00% 100.00% Enel Green Power SpA 99.00% Enel Green Power Korea LLC Seoul KR 4,350,000,000.00 KRW Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power Lagoa do Sol 01 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Lagoa do Sol 02 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% 486 Integrated Annual Repo 2021486 Enel Green Power Desenvolvimento Ltda 0.80% Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Lagoa do Sol 03 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Lagoa do Sol 04 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Lagoa do Sol 05 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Lagoa do Sol 06 SA Teresina BR 1,000,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Lagoa do Sol 07 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Lagoa do Sol 08 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Lagoa do Sol 09 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Lagoa II Paicipações SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Lagoa III Paicipações SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Lagoa Paicipações SA (formerly Enel Green Power Projetos 45 SA) Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Lily Solar Holdings LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Enel Green Power Maniçoba Eólica SA Rio de Janeiro BR 90,722,530.00 BRL Line-by-line Enel Brasil SA 99.20% 82.27% 487Aachments 487 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Enel Green Power Desenvolvimento Ltda 0.10% Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Matimba Srl Rome IT 10,000.00 EUR Equity Enel Green Power SpA 50.00% 50.00% Enel Green Power Metehara Solar Private Limited Company - ET 5,600,000.00 ETB Line-by-line Enel Green Power Solar Metehara SpA 80.00% 80.00% Enel Green Power México S de RL de Cv Mexico City MX 662,949,966.00 MXN Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Rinnovabile SA de Cv 0.00% Enel Green Power Modelo I Eólica SA Rio de Janeiro BR 132,642,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Modelo II Eólica SA Rio de Janeiro BR 107,742,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Morocco SARLAU Casablanca MA 480,000,000.00 MAD Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power Morro do Chapéu I Eólica SA Rio de Janeiro BR 248,138,287.11 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Morro do Chapéu II Eólica SA Rio de Janeiro BR 206,050,114.05 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Morro do Chapéu Solar 01 SA (formerly Enel Green Power São Gonçalo III Paicipações SA) Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Mourão SA Rio de Janeiro BR 25,600,100.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Namibia (Pty) Ltd Windhoek NA 10,000.00 NAD Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power Noh America Development LLC Wilmington US \- USD Line-by-line Enel Noh America Inc. 100.00% 100.00% Enel Green Power Noh America Inc. Andover US \- USD Line-by-line Enel Noh America Inc. 100.00% 100.00% Enel Green Power Nova Olinda 01 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Nova Olinda 02 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Nova Olinda 03 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Nova Olinda 04 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% 488 Integrated Annual Repo 2021488 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Nova Olinda 05 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Nova Olinda 06 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Nova Olinda 07 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Nova Olinda 08 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Nova Olinda 09 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Novo Lapa 01 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Novo Lapa 02 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Novo Lapa 03 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Novo Lapa 04 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Novo Lapa 05 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Novo Lapa 06 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% 489Aachments 489 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Novo Lapa 07 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Novo Lapa 08 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power O&M Solar LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Enel Green Power Panamá Srl Panama City PA 3,001.00 USD Line-by-line Enel Américas SA 0.03% 82.27% ESSA2 SpA 99.97% Enel Green Power Paranapanema SA Niterói BR 162,567,500.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Paecipazioni Speciali Srl Rome IT 10,000.00 EUR Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power Pau Ferro Eólica SA Rio de Janeiro BR 125,124,000.00 BRL Line-by-line Enel Brasil SA 98.77% 82.27% Enel Green Power Desenvolvimento Ltda 1.23% Enel Green Power Pau Ferro Eólica SA 0.00% Enel Green Power Pedra do Gerônimo Eólica SA Rio de Janeiro BR 184,319,527.57 BRL Line-by-line Enel Brasil SA 98.86% 82.27% Enel Green Power Desenvolvimento Ltda 1.14% Enel Green Power Perú SAC San Miguel PE 973,213,507.00 PEN Line-by-line Enel Américas SA 100.00% 82.27% Energía y Servicios South America SpA 0.00% Enel Green Power Primavera Eólica SA Rio de Janeiro BR 143,674,900.01 BRL Line-by-line Enel Brasil SA 99.00% 82.27% Enel Green Power Desenvolvimento Ltda 1.00% Enel Green Power Puglia Srl Rome IT 1,000,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Enel Green Power RA SAE in liquidation Cairo EG 15,000,000.00 EGP Line-by-line Enel Green Power Egypt SAE 100.00% 100.00% Enel Green Power Ralesnake Creek Wind Project LLC (formerly Ralesnake Creek Wind Project LLC) Delaware US 1.00 USD Line-by-line Ralesnake Creek Holdings LLC 100.00% 100.00% Enel Green Power Roadrunner Solar Project Holdings II LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% 490 Integrated Annual Repo 2021490 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Roadrunner Solar Project Holdings LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Enel Green Power Roadrunner Solar Project II LLC Dover US 100.00 USD Line-by-line Enel Roadrunner Solar Project Holdings II LLC 100.00% 100.00% Enel Green Power Rockhaven Ranchland Holdings LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Enel Green Power Romania Srl Bucharest RO 2,430,631,000.00 RON Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power Roseland Solar LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Enel Green Power RSA (Pty) Ltd Johannesburg ZA 1,000.00 ZAR Line-by-line EGP Matimba NewCo 1 Srl 100.00% 100.00% Enel Green Power RSA 2 (RF) (Pty) Ltd Johannesburg ZA 120.00 ZAR AFS Enel Green Power RSA (Pty) Ltd 100.00% 100.00% Enel Green Power Rus Limited Liability Company Moscow RU 60,500,000.00 RUB Line-by-line Enel Green Power Paecipazioni Speciali Srl 1.00% 100.00% Enel Green Power SpA 99.00% Enel Green Power SpA Rome IT 272,000,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Enel Green Power Salto Apiacás SA (formerly Enel Green Power Damascena Eólica SA) Rio de Janeiro BR 274,420,832.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Sannio Srl Rome IT 750,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Enel Green Power São Abraão Eólica SA Rio de Janeiro BR 91,300,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power São Gonçalo 01 SA (formerly Enel Green Power Projetos 10) Teresina BR 105,245,553.82 BRL Line-by-line Alba Energia Ltda 0.00% 82.27% Enel Brasil SA 100.00% Enel Green Power São Gonçalo 02 SA (formerly Enel Green Power Projetos 11) Teresina BR 129,213,750.53 BRL Line-by-line Alba Energia Ltda 0.00% 82.27% Enel Brasil SA 100.00% Enel Green Power São Gonçalo 07 SA (formerly Enel Green Power Projetos 42 SA) Teresina BR 142,249,180.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power São Gonçalo 08 SA (formerly Enel Green Power Projetos 43 SA) Teresina BR 77,008,993.34 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power São Gonçalo 10 SA (formerly Enel Green Power Projetos 15) Teresina BR 124,817,216.25 BRL Line-by-line Alba Energia Ltda 0.00% 82.27% Enel Brasil SA 100.00% 491Aachments 491 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power São Gonçalo 11 SA (formerly Enel Green Power Projetos 44 SA) Teresina BR 82,202,330.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power São Gonçalo 12 SA (formerly Enel Green Power Projetos 22 SA) Teresina BR 75,750,090.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power São Gonçalo 14 Teresina BR 210,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power São Gonçalo 15 Teresina BR 180,779,180.90 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power São Gonçalo 17 SA Teresina BR 175,728,754.90 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power São Gonçalo 18 SA (formerly Enel Green Power Ventos de Santa Ângela 13 SA) Teresina BR 177,703,455.40 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power São Gonçalo 19 SA Teresina BR 174,189,501.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power São Gonçalo 21 SA (formerly Enel Green Power Projetos 16) Teresina BR 139,939,932.22 BRL Line-by-line Alba Energia Ltda 0.00% 82.27% Enel Brasil SA 100.00% Enel Green Power São Gonçalo 22 SA (formerly Enel Green Power Projetos 30) Teresina BR 138,733,692.21 BRL Line-by-line Alba Energia Ltda 0.00% 82.27% Enel Brasil SA 100.00% Enel Green Power São Gonçalo 3 SA (formerly Enel Green Power Projetos 12) Teresina BR 216,609,843.02 BRL Line-by-line Alba Energia Ltda 0.00% 82.27% Enel Brasil SA 100.00% Enel Green Power São Gonçalo 4 SA (formerly Enel Green Power Projetos 13) Teresina BR 124,870,989.57 BRL Line-by-line Alba Energia Ltda 0.00% 82.27% Enel Brasil SA 100.00% Enel Green Power São Gonçalo 5 SA (formerly Enel Green Power Projetos 14) Teresina BR 123,176,257.11 BRL Line-by-line Alba Energia Ltda 0.00% 82.27% Enel Brasil SA 100.00% 492 Integrated Annual Repo 2021492 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power São Gonçalo 6 SA (formerly Enel Green Power Projetos 19 SA) Teresina BR 180,887,848.28 BRL Line-by-line Alba Energia Ltda 0.00% 82.27% Enel Brasil SA 100.00% Enel Green Power Brasil Paicipações Ltda 0.00% Enel Green Power São Judas Eólica SA Niterói BR 143,674,900.00 BRL Line-by-line Enel Brasil SA 99.00% 82.27% Enel Green Power Desenvolvimento Ltda 1.00% Enel Green Power São Micael 01 SA (formerly Enel Green Power São Gonçalo 9 SA) Teresina BR 1,000.00 BRL Line-by-line Alba Energia Ltda 0.10% 82.27% Enel Brasil SA 99.90% Enel Green Power São Micael 02 SA (formerly Enel Green Power São Gonçalo 13) Teresina BR 1,000.00 BRL Line-by-line Alba Energia Ltda 0.10% 82.27% Enel Brasil SA 99.90% Enel Green Power São Micael 03 SA (formerly Enel Green Power São Gonçalo 16 SA) Teresina BR 1,000.00 BRL Line-by-line Alba Energia Ltda 0.10% 82.27% Enel Brasil SA 99.90% Enel Green Power São Micael 04 SA (formerly Enel Green Power São Gonçalo 20 SA) Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power São Micael 05 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Services LLC Wilmington US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Enel Green Power Shu SAE in liquidation Cairo EG 15,000,000.00 EGP Line-by-line Enel Green Power Egypt SAE 100.00% 100.00% Enel Green Power Singapore Pte Ltd Singapore SG 6,100,000.00 SGD Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power Solar Energy Srl Rome IT 10,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Enel Green Power Solar Metehara SpA Rome IT 50,000.00 EUR Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power Solar Ngonye SpA (formerly Enel Green Power Africa Srl) Rome IT 50,000.00 EUR AFS EGP Matimba NewCo 2 Srl 100.00% 100.00% Enel Green Power South Africa (Pty) Ltd Johannesburg ZA 1,000.00 ZAR Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power South Africa 3 (Pty) Ltd Gauteng ZA 1,000.00 ZAR Line-by-line Enel Green Power SpA 100.00% 100.00% 493Aachments 493 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Swift Wind LP Calgary CA 1,000.00 CAD Line-by-line Enel Albea Wind Inc. 0.10% 100.00% Enel Green Power Canada Inc. 99.90% Enel Green Power Tacaicó Eólica SA Rio de Janeiro BR 86,034,360.00 BRL Line-by-line Enel Brasil SA 98.76% 82.27% Enel Green Power Desenvolvimento Ltda 1.24% Enel Green Power Tefnut SAE in liquidation Cairo EG 15,000,000.00 EGP Line-by-line Enel Green Power Egypt SAE 100.00% 100.00% Enel Green Power Turkey Enerjí Yatirimlari Anoním Şírketí Istanbul TR 65,654,658.00 TRY Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power UB33 GmbH & Co. Kg Berlin DE 75,000.00 EUR Line-by-line Enel Green Power Germany GmbH 100.00% 100.00% Enel Green Power Ventos de Santa Ângela 1 SA Teresina BR 132,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Ângela Energias Renováveis SA 0.00% Enel Green Power Ventos de Santa Ângela 10 SA (formerly Enel Green Power Projetos 21) Teresina BR 171,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Ângela Energias Renováveis SA 0.00% Enel Green Power Ventos de Santa Ângela 11 SA (formerly Enel Green Power Projetos 23) Teresina BR 185,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Ângela Energias Renováveis SA 0.00% Enel Green Power Ventos de Santa Ângela 14 SA (formerly Enel Green Power Projetos 24) Teresina BR 241,769,350.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Ângela Energias Renováveis SA 0.00% Enel Green Power Ventos de Santa Ângela 15 SA (formerly Enel Green Power Projetos 25) Teresina BR 182,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Ângela Energias Renováveis SA 0.00% Enel Green Power Ventos de Santa Ângela 17 SA (formerly Enel Green Power Projetos 26) Teresina BR 198,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Ângela Energias Renováveis SA 0.00% Enel Green Power Ventos de Santa Ângela 19 SA (formerly Enel Green Power Projetos 27) Teresina BR 126,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Ângela Energias Renováveis SA 0.00% Enel Green Power Ventos de Santa Ângela 2 SA Teresina BR 249,650,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Ângela Energias Renováveis SA 0.00% 494 Integrated Annual Repo 2021494 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Ventos de Santa Ângela 20 SA (formerly Enel Green Power Projetos 28) Teresina BR 126,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Ângela Energias Renováveis SA 0.00% Enel Green Power Ventos de Santa Ângela 21 SA (formerly Enel Green Power Projetos 29) Teresina BR 113,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Ângela Energias Renováveis SA 0.00% Enel Green Power Ventos de Santa Ângela 3 SA (formerly Enel Green Power Projetos 4) Teresina BR 132,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Ângela Energias Renováveis SA 0.00% Enel Green Power Ventos de Santa Ângela 4 SA (formerly Enel Green Power Projetos 6) Teresina BR 132,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Ângela Energias Renováveis SA 0.00% Enel Green Power Ventos de Santa Ângela 5 SA (formerly Enel Green Power Projetos 7) Teresina BR 132,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Ângela Energias Renováveis SA 0.00% Enel Green Power Ventos de Santa Ângela 6 SA (formerly Enel Green Power Projetos 8) Teresina BR 132,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Ângela Energias Renováveis SA 0.00% Enel Green Power Ventos de Santa Ângela 7 SA (formerly Enel Green Power Projetos 9) Teresina BR 106,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Esperança Energias Renováveis SA 0.00% Enel Green Power Ventos de Santa Ângela 8 SA (formerly Enel Green Power Projetos 18) Teresina BR 132,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Ângela Energias Renováveis SA 0.00% Enel Green Power Ventos de Santa Ângela 9 SA (formerly Enel Green Power Projetos 20) Teresina BR 185,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Ângela Energias Renováveis SA 0.00% Enel Green Power Ventos de Santa Ângela ACL 12 (formerly Enel Green Power Projetos 36) Teresina BR 125,853,581.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de Santa Ângela ACL 13 SA (formerly Enel Green Power Projetos 17 SA) Teresina BR 115,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% 495Aachments 495 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Ventos de Santa Ângela ACL 16 SA (formerly Enel Green Power Projetos 38 SA) Teresina BR 128,700,091.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de Santa Ângela ACL 18 SA (formerly Enel Green Power Projetos 47 SA) Teresina BR 128,279,231.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de Santa Esperança 08 SA (formerly Enel Green Power Projetos 34 SA) Rio de Janeiro BR 110,200,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de Santa Esperança 1 SA (formerly Enel Green Power Fonte dos Ventos 1 SA) Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Ventos de Santa Esperança 13 (formerly Enel Green Power Projetos 33 SA) Rio de Janeiro BR 147,000,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de Santa Esperança 15 SA Rio de Janeiro BR 202,100,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de Santa Esperança 16 SA (formerly Enel Green Power Projetos 35 SA) Rio de Janeiro BR 183,700,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de Santa Esperança 17 SA (formerly Enel Green Power Projetos 31 SA) Rio de Janeiro BR 183,700,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de Santa Esperança 21 SA (formerly Enel Green Power Projetos 37 SA) Rio de Janeiro BR 202,100,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de Santa Esperança 22 SA (formerly Enel Green Power Projetos 39 SA) Rio de Janeiro BR 202,100,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de Santa Esperança 25 SA (formerly Enel Green Power Projetos 40 SA) Rio de Janeiro BR 110,200,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% 496 Integrated Annual Repo 2021496 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Ventos de Santa Esperança 26 SA (formerly Enel Green Power Projetos 41 SA) Rio de Janeiro BR 202,100,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de Santa Esperança 26 SA (formerly Enel Green Power Projetos 41 SA) 0.00% Enel Green Power Ventos de Santa Esperança 3 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Ventos de Santa Esperança 7 SA (formerly Enel Green Power Lagedo Alto SA) Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Ventos de Santa Esperança Paicipações SA (formerly Enel Green Power Cumaru 06 SA) Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Ventos de Santo Orestes 1 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Ventos de Santo Orestes 2 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Ventos de São Roque 01 SA Teresina BR 313,963,791.98 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de São Roque 02 SA Teresina BR 300,285,891.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de São Roque 03 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Ventos de São Roque 04 SA Teresina BR 270,507,771.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% 497Aachments 497 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Ventos de São Roque 05 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Ventos de São Roque 06 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Ventos de São Roque 07 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Ventos de São Roque 08 SA Teresina BR 138,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de São Roque 11 SA Teresina BR 301,267,691.98 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de São Roque 13 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Ventos de São Roque 16 SA Teresina BR 283,811,791.98 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de São Roque 17 SA Teresina BR 138,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de São Roque 18 SA Teresina BR 138,001,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Ventos de São Roque 19 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Ventos de São Roque 22 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% 498 Integrated Annual Repo 2021498 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Green Power Ventos de São Roque 26 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Ventos de São Roque 29 SA Teresina BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Green Power Verwaltungs GmbH Berlin DE 25,000.00 EUR Line-by-line Enel Green Power Germany GmbH 100.00% 100.00% Enel Green Power Vietnam LLC (Công ty TNHH Enel Green Power Viêt Nam) Ho Chi Minh City VN 231,933.00 USD Line-by-line Enel Green Power SpA 100.00% 100.00% Enel Green Power Villoresi Srl Rome IT 1,200,000.00 EUR Line-by-line Enel Green Power Italia Srl 51.00% 51.00% Enel Green Power Volta Grande SA (formerly Enel Green Power Projetos 1 SA) Niterói BR 565,756,528.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Zambia Limited Lusaka ZM 15,000.00 ZMW Line-by-line Enel Green Power Development Srl 1.00% 100.00% Enel Green Power RSA (Pty) Ltd 99.00% Enel Green Power Zeus II - Delna 8 SA Rio de Janeiro BR 129,639,980.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Zeus Sul 1 Ltda Rio de Janeiro BR 6,986,993.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Green Power Zeus Sul 2 SA Rio de Janeiro BR 1,000.00 BRL Line-by-line Enel Brasil SA 99.90% 82.27% Enel Green Power Desenvolvimento Ltda 0.10% Enel Holding Finance Srl Rome IT 10,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Enel Iberia Srl Madrid ES 336,142,500.00 EUR Line-by-line Enel SpA 100.00% 100.00% Enel Innovation Hubs Srl Rome IT 1,100,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Enel Insurance NV Amsterdam NL 60,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Enel Investment Holding BV Amsterdam NL 1,000,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Enel Italia SpA Rome IT 100,000,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Enel Kansas Development Holdings LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Enel Kansas LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% 499Aachments 499 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Land HoldCo LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Enel Logistics Srl Rome IT 1,000,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% Enel Minnesota Holdings LLC Minneapolis US \- USD Line-by-line EGP Geronimo Holding Company Inc. 100.00% 100.00% Enel Nevkan Inc. Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Enel Noh America Inc. Andover US 50.00 USD Line-by-line Enel SpA 100.00% 100.00% Enel Operations Canada Ltd Albea CA 1,000.00 CAD Line-by-line Enel Green Power Canada Inc. 100.00% 100.00% Enel Perú SAC San Miguel PE 5,361,789,105.00 PEN Line-by-line Enel Américas SA 100.00% 82.27% Enel Produzione SpA Rome IT 1,800,000,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% Enel Rinnovabile SA de Cv Mexico City MX 100.00 MXN Line-by-line Enel Green Power Global Investment BV 99.00% 100.00% Hidroelectricidad del Pacíco S de RL de Cv 1.00% Enel Roadrunner Solar Project Holdings II LLC Andover US \- USD Line-by-line Enel Green Power Roadrunner Solar Project Holdings II LLC 100.00% 100.00% Enel Roadrunner Solar Project Holdings LLC Dover US 100.00 USD Line-by-line Enel Green Power Roadrunner Solar Project Holdings LLC 100.00% 100.00% Enel Romania SA Buftea RO 200,000.00 RON Line-by-line Enel SpA 100.00% 100.00% Enel Rus Finance LLC Konakovo RU 10,000.00 RUB Line-by-line Enel Russia PJSC 100.00% 56.43% Enel Rus Wind Azov LLC Moscow RU 200,000,000.00 RUB Line-by-line Enel Russia PJSC 100.00% 56.43% Enel Rus Wind Kola LLC Murmansk City RU 10,000.00 RUB Line-by-line Enel Russia PJSC 100.00% 56.43% Enel Rus Wind Stavropolye LLC Region of Stavropol RU 350,000.00 RUB Line-by-line Enel Russia PJSC 100.00% 56.43% Enel Russia PJSC Yekaterinburg RU 35,371,898,370.00 RUB Line-by-line Enel SpA 56.43% 56.43% Enel Salt Wells LLC Fallon US \- USD Line-by-line Enel Geothermal LLC 100.00% 100.00% Enel Saudi Arabia Limited Al Khobar SA 1,000,000.00 SAR Line-by-line e-distribuzione SpA 60.00% 60.00% Enel Servicii Comune SA Bucharest RO 33,000,000.00 RON Line-by-line E-Distribuţie Banat SA 50.00% 51.00% E-Distribuţie Dobrogea SA 50.00% 500 Integrated Annual Repo 2021500 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel Solar Srl Panama City PA 10,100.00 USD Line-by-line Enel Green Power Panamá Srl 99.01% 82.27% ESSA2 SpA 0.99% Enel Sole Srl Rome IT 4,600,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% Enel Soluções Energéticas Ltda Rio de Janeiro BR 42,863,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Enel Soluções Energéticas Ltda 0.00% Enel Stillwater LLC Wilmington US \- USD Line-by-line Enel Geothermal LLC 100.00% 100.00% Enel Surprise Valley LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Enel Texkan Inc. Wilmington US 100.00 USD Line-by-line Chi Power Inc. 100.00% 100.00% Enel Trade Energy Srl Bucharest RO 2,437,050.00 RON Line-by-line Enel Romania SA 100.00% 100.00% Enel Trade Serbia doo Belgrade RS 300,000.00 EUR Line-by-line Enel Global Trading SpA 100.00% 100.00% Enel Trading Argentina Srl Buenos Aires AR 14,011,100.00 ARS Line-by-line Enel Américas SA 55.00% 82.26% Enel Argentina SA 45.00% Enel Trading Brasil SA Rio de Janeiro BR 5,280,312.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Trading Noh America LLC Wilmington US 10,000,000.00 USD Line-by-line Enel Noh America Inc. 100.00% 100.00% Enel Transmisión Chile SA Santiago de Chile CL 52,569,315,875.00 CLP Line-by-line Enel Chile SA 99.09% 64.34% Enel Uruguay SA Montevideo UY 20,000.00 UYU Line-by-line Enel Brasil SA 100.00% 82.27% Enel Vayu (Project 2) Private Limited Gurugram IN 45,000,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% Enel Wind Project (Amberi) Private Limited New Delhi IN 5,000,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% Enel X AMPCI Ebus Chile SpA Santiago de Chile CL 18,000,000.00 USD Equity Enel X Chile SpA 20.00% 12.99% Enel X AMPCI L1 Holdings SpA Santiago de Chile CL 18,000,000.00 USD Equity Enel X AMPCI Ebus Chile SpA 100.00% 12.99% Enel X AMPCI L1 SpA Santiago de Chile CL 18,000,000.00 USD Equity Enel X AMPCI L1 Holdings SpA 100.00% 12.99% Enel X Arecibo LLC Boston US \- USD Line-by-line Enel X Pr Holdings LLC 100.00% 100.00% Enel X Argentina SAU Buenos Aires AR 127,800,000.00 ARS Line-by-line Enel X International Srl 100.00% 100.00% 501Aachments 501 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel X Asputeck Ave. Project LLC Boston US \- USD Line-by-line Enel X Finance Paner LLC 100.00% 100.00% Enel X Australia Holding (Pty) Ltd Melbourne AU 21,224,578.00 AUD Line-by-line Enel X International Srl 100.00% 100.00% Enel X Australia (Pty) Ltd Melbourne AU 9,880.00 AUD Line-by-line Energy Response Holdings (Pty) Ltd 100.00% 100.00% Enel X Baery Storage Limited Panership Oakville CA 10,000.00 CAD Line-by-line Enel X Canada Holding Inc. 0.01% 100.00% Enel X Canada Ltd 99.99% Enel X Brasil Gerenciamento de Energia Ltda Sorocaba BR 5,538,403.00 BRL Line-by-line Enel X Ireland Limited 0.00% 100.00% EnerNOC UK II Limited 100.00% Enel X Brasil SA Niterói BR 324,725,892.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel X Canada Holding Inc. Oakville CA 1,000.00 CAD Line-by-line Enel X Canada Ltd 100.00% 100.00% Enel X Canada Ltd Mississauga CA 1,000.00 CAD Line-by-line Enel Noh America Inc. 100.00% 100.00% Enel X Chile SpA Santiago de Chile CL 3,800,000,000.00 CLP Line-by-line Enel Chile SA 100.00% 64.93% Enel X College Ave. Project LLC Boston US \- USD Line-by-line Enel X MA Holdings LLC 100.00% 100.00% Enel X Colombia SAS Bogotá CO 5,186,737,000.00 COP Line-by-line Codensa SA ESP 100.00% 39.74% Enel X Energy (Shanghai) Co. Ltd Shanghai CN 3,500,000.00 USD Line-by-line Enel X International Srl 100.00% 100.00% Enel X Federal LLC Boston US 5,000.00 USD Line-by-line Enel X Noh America Inc. 100.00% 100.00% Enel X Finance Paner LLC Boston US 100.00 USD Line-by-line Enel X Noh America Inc. 100.00% 100.00% Enel X Financial Services Srl Rome IT 1,000,000.00 EUR AFS Enel X Srl 100.00% 100.00% Enel X France SAS Paris FR 2,901,000.00 EUR Line-by-line Enel X International Srl 100.00% 100.00% Enel X Germany GmbH Berlin DE 25,000.00 EUR Line-by-line Enel X International Srl 100.00% 100.00% Enel X Hayden Rowe St. Project LLC Boston US 100.00 USD Line-by-line Enel X MA Holdings LLC 100.00% 100.00% Enel X International Srl Rome IT 100,000.00 EUR Line-by-line Enel X Srl 100.00% 100.00% Enel X Ireland Limited Dublin IE 10,841.00 EUR Line-by-line Enel X International Srl 100.00% 100.00% Enel X Italia Srl Rome IT 200,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% Enel X Japan KK Tokyo JP 655,000,000.00 JPY Line-by-line Enel X International Srl 100.00% 100.00% Enel X KOMIPO Solar Limited Seoul KR 8,472,600,000.00 KRW Line-by-line Enel X Korea Limited 80.00% 80.00% 502 Integrated Annual Repo 2021502 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel X Korea Limited Seoul KR 11,800,000,000.00 KRW Line-by-line Enel X International Srl 100.00% 100.00% Enel X Las Piedras LLC Boston US \- USD Line-by-line Enel X Pr Holdings LLC 100.00% 100.00% Enel X MA Holdings LLC Boston US 100.00 USD Line-by-line Enel X Finance Paner LLC 100.00% 100.00% Enel X MA PV Pofolio 1 LLC Boston US \- USD Line-by-line Enel X MA Holdings LLC 100.00% 100.00% Enel X MA PV Pofolio 2 LLC Boston US \- USD Line-by-line Enel X Noh America Inc. 100.00% 100.00% Enel X MA PV Pofolio 3 LLC Boston US \- USD Line-by-line Enel X Finance Paner LLC 100.00% 100.00% Enel X Mobility HPC Srl Rome IT 1,000,000.00 EUR Equity Enel X Srl 50.00% 50.00% Enel X Mobility Romania Srl Bucharest RO 6,937,800.00 RON Line-by-line Enel X International Srl 99.86% 100.00% Enel X Srl 0.14% Enel X Mobility Srl Rome IT 100,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% Enel X Morrissey Blvd. Project LLC Boston US 100.00 USD Line-by-line Enel X MA Holdings LLC 100.00% 100.00% Enel X New Zealand Limited Wellington NZ 313,606.00 AUD Line-by-line Energy Response Holdings (Pty) Ltd 100.00% 100.00% Enel X Noh America Inc. Boston US 1,000.00 USD Line-by-line Enel Noh America Inc. 100.00% 100.00% Enel X Norway AS Porsgrunn NO 1,000,000.00 NOK Line-by-line Enel X International Srl 100.00% 100.00% Enel X Perú SAC San Miguel PE 12,005,000.00 PEN Line-by-line Enel Perú SAC 100.00% 82.27% Enel X Polska Sp. zo.o. Warsaw PL 12,275,150.00 PLN Line-by-line Enel X Ireland Limited 100.00% 100.00% Enel X Pr Holdings LLC Boston US \- USD Line-by-line Enel X Finance Paner LLC 100.00% 100.00% Enel X Project MP Holdings LLC Boston US \- USD Line-by-line Enel X Project MP Sponsor LLC 100.00% 100.00% Enel X Project MP Sponsor LLC Boston US \- USD Line-by-line Enel X Noh America Inc. 100.00% 100.00% Enel X Romania Srl Bucharest RO 7,044,450.00 RON Line-by-line Enel X International Srl 99.97% 100.00% Enel X Srl 0.03% Enel X Rus LLC Moscow RU 8,000,000.00 RUB Line-by-line Enel X International Srl 99.00% 99.00% Enel X Srl Rome IT 1,050,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Enel X Services India Private Limited Mumbai City IN 45,000.00 INR Line-by-line Enel X International Srl 100.00% 100.00% Enel X Noh America Inc. 0.00% 503Aachments 503 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Enel X Singapore Pte Ltd Singapore SG 1,212,000.00 SGD Line-by-line Enel X International Srl 100.00% 100.00% Enel X Sweden AB Stockholm SE 50,000.00 SEK Line-by-line Enel X International Srl 100.00% 100.00% Enel X Taiwan Co. Ltd Taipei City TW 70,000,000.00 TWD Line-by-line Enel X Ireland Limited 100.00% 100.00% Enel X UK Limited London GB 32,626.00 GBP Line-by-line Enel X International Srl 100.00% 100.00% Enel X Wood St. Project LLC Boston US \- USD Line-by-line Enel X Finance Paner LLC 100.00% 100.00% Enelco SA Maroussi GR 60,108.80 EUR Line-by-line Enel Investment Holding BV 75.00% 75.00% Enelpower Contractor and Development Saudi Arabia Ltd Riyadh SA 5,000,000.00 SAR Line-by-line Enelpower SpA 51.00% 51.00% Enelpower do Brasil Ltda Rio de Janeiro BR 5,689,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Energía y Servicios South America SpA 0.00% Enelpower SpA Milan IT 2,000,000.00 EUR Line-by-line Enel SpA 100.00% 100.00% Energética Monzón SAC San Miguel PE 6,463,000.00 PEN Line-by-line Enel Green Power Perú SAC 100.00% 82.27% Energía y Servicios South America SpA 0.00% Energía Base Natural SLU Valencia ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Energía Ceuta XXI Comercializadora de Referencia SA Ceuta ES 65,000.00 EUR Line-by-line Empresa de Alumbrado Eléctrico de Ceuta SA 100.00% 67.59% Energía Eólica Ábrego SLU Valencia ES 3,576.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Energía Eólica Galerna SLU Madrid ES 3,413.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Energía Eólica Gregal SLU Madrid ES 3,250.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Energia Eolica Srl - EN.EO. Srl Rome IT 4,840,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Energía Global de México (Enermex) SA de Cv Mexico City MX 50,000.00 MXN Line-by-line Enel Green Power SpA 99.00% 99.00% Energía Global Operaciones Srl San José CR 10,000.00 CRC Line-by-line Enel Green Power Costa Rica SA 100.00% 82.27% Energía Limpia de Amistad SA de Cv Mexico City MX 33,452,769.00 MXN Equity Tenedora de Energía Renovable Sol y Viento SAPI de Cv 60.80% 20.00% Energía Limpia de Palo Alto SA de Cv Mexico City MX 673,583,489.00 MXN Equity Tenedora de Energía Renovable Sol y Viento SAPI de Cv 60.80% 20.00% 504 Integrated Annual Repo 2021504 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Energía Limpia de Pueo Libead S de RL de Cv Mexico City MX 2,953,980.00 MXN Line-by-line Enel Green Power México S de RL de Cv 0.01% 100.00% Enel Rinnovabile SA de Cv 99.99% Energía Marina SpA Santiago de Chile CL 2,404,240,000.00 CLP Equity Enel Green Power Chile SA 25.00% 16.23% Energía Neta Sa Caseta Llucmajor SL (Sociedad Unipersonal) Palma de Mallorca ES 9,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Energía Nueva de Iguu S de RL de Cv Mexico City MX 51,879,307.00 MXN Line-by-line Enel Green Power México S de RL de Cv 99.90% 99.91% Energía Nueva Energía Limpia México S de RL de Cv 0.01% Energía Nueva Energía Limpia México S de RL de Cv Mexico City MX 5,339,650.00 MXN Line-by-line Enel Green Power Guatemala SA 0.04% 99.99% Enel Green Power SpA 99.96% Energía XXI Comercializadora de Referencia SL Madrid ES 2,000,000.00 EUR Line-by-line Endesa Energía SA 100.00% 70.11% Energía y Naturaleza SLU Valencia ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Energía y Servicios South America SpA Santiago de Chile CL 12,120,575.70 USD Line-by-line Enel Américas SA 100.00% 82.27% Energías Alternativas del Sur SL Las Palmas de Gran Canaria ES 546,919.10 EUR Line-by-line Enel Green Power España SLU 54.95% 38.52% Energías de Aragón I SL Zaragoza ES 3,200,000.00 EUR Line-by-line Endesa Red SA (Sociedad Unipersonal) 100.00% 70.11% Energías de Graus SL Barcelona ES 1,298,160.00 EUR Line-by-line Enel Green Power España SLU 66.67% 46.74% Energías Especiales de Careón SA Santiago de Compostela ES 270,450.00 EUR Line-by-line Enel Green Power España SLU 77.00% 53.99% Energías Especiales de Peña Armada SA Madrid ES 963,300.00 EUR Line-by-line Enel Green Power España SLU 80.00% 56.09% Energías Especiales del Alto Ulla SA Madrid ES 19,594,860.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Energías Especiales del Bierzo SA Torre del Bierzo ES 1,635,000.00 EUR Equity Enel Green Power España SLU 50.00% 35.06% Energías Renovables La Mata SA de Cv Mexico City MX 656,615,400.00 MXN Line-by-line Enel Green Power México S de RL de Cv 99.00% 100.00% Energía Nueva de Iguu S de RL de Cv 1.00% Energie Electrique de Tahadda SA Tanger MA 510,270,000.00 MAD Equity Endesa Generación SA 32.00% 22.44% Energo Sonne Srl Bucharest RO 31,520.00 RON Line-by-line Enel Green Power Romania Srl 100.00% 100.00% Energotel AS Bratislava SK 2,191,200.00 EUR Equity Slovenské elektrárne AS 20.00% 6.60% 505Aachments 505 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Energy Hydro Piave Srl in liquidation Belluno IT 800,000.00 EUR Line-by-line Enel Produzione SpA 100.00% 100.00% Energy Response Holdings (Pty) Ltd Melbourne AU 630,451.00 AUD Line-by-line Enel X Australia Holding (Pty) Ltd 100.00% 100.00% Enerlive Srl Rome IT 6,520,000.00 EUR Line-by-line Maicor Wind Srl 100.00% 100.00% EnerNOC GmbH Munich DE 25,000.00 EUR Line-by-line Enel X Noh America Inc. 100.00% 100.00% EnerNOC Ireland Limited Dublin IE 10,535.00 EUR Line-by-line Enel X Ireland Limited 100.00% 100.00% EnerNOC UK II Limited London GB 21,000.00 GBP Line-by-line Enel X UK Limited 100.00% 100.00% Entech (China) Information Technology Co. Ltd Shenzhen CN 140,000.00 USD Equity EnerNOC UK II Limited 50.00% 50.00% Entech Utility Service Bureau Inc. Lutherville US 1,500.00 USD Line-by-line Enel X Noh America Inc. 100.00% 100.00% Envatios Promoción I SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Envatios Promoción II SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Envatios Promoción III SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Envatios Promoción XX SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Eólica Valle del Ebro SA Zaragoza ES 3,561,342.50 EUR Line-by-line Enel Green Power España SLU 50.50% 35.40% Eólica Zopiloapan SA de Cv Mexico City MX 1,877,201.54 MXN Line-by-line Enel Green Power México S de RL de Cv 56.98% 96.48% Enel Green Power Paecipazioni Speciali Srl 39.50% Eólicas de Agaete SL Las Palmas de Gran Canaria ES 240,400.00 EUR Line-by-line Enel Green Power España SLU 80.00% 56.09% Eólicas de Fuencaliente SA Las Palmas de Gran Canaria ES 216,360.00 EUR Line-by-line Enel Green Power España SLU 55.00% 38.56% Eólicas de Fueeventura AIE Pueo del Rosario ES \- EUR Equity Enel Green Power España SLU 40.00% 28.04% Eólicas de la Patagonia SA Buenos Aires AR 480,930.00 ARS Equity Enel Green Power España SLU 50.00% 35.06% Eólicas de Lanzarote SL Las Palmas de Gran Canaria ES 1,758,000.00 EUR Equity Enel Green Power España SLU 40.00% 28.04% Eólicas de Tenerife AIE Santa Cruz de Tenerife ES 420,708.40 EUR Equity Enel Green Power España SLU 50.00% 35.06% Eólicas de Tirajana SL Las Palmas de Gran Canaria ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 60.00% 42.07% Epresa Energía SA Cadiz ES 2,500,000.00 EUR Equity Endesa Red SA (Sociedad Unipersonal) 50.00% 35.06% E-Solar Srl Rome IT 2,500.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% 506 Integrated Annual Repo 2021506 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding ESSA2 SpA Santiago de Chile CL 701,166,335.30 USD Line-by-line Enel Américas SA 100.00% 82.27% Essaouira Wind Farm Casablanca MA 300,000.00 MAD Equity Nareva Enel Green Power Morocco SA 70.00% 35.00% European Energy Exchange AG Leipzig DE 40,050,000.00 EUR - Enel Global Trading SpA 2.38% 2.38% Expedition Solar Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Explorer Wind Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Explotaciones Eólicas de Escucha SA Zaragoza ES 3,505,000.00 EUR Line-by-line Enel Green Power España SLU 70.00% 49.08% Explotaciones Eólicas El Pueo SA Zaragoza ES 3,230,000.00 EUR Line-by-line Enel Green Power España SLU 73.60% 51.60% Explotaciones Eólicas Santo Domingo de Luna SA Zaragoza ES 100,000.00 EUR Line-by-line Enel Green Power España SLU 51.00% 35.76% Explotaciones Eólicas Saso Plano SA Zaragoza ES 5,488,500.00 EUR Line-by-line Enel Green Power España SLU 65.00% 45.57% Explotaciones Eólicas Sierra Costera SA Zaragoza ES 8,046,800.00 EUR Line-by-line Enel Green Power España SLU 90.00% 63.10% Explotaciones Eólicas Sierra La Virgen SA Zaragoza ES 4,200,000.00 EUR Line-by-line Enel Green Power España SLU 90.00% 63.10% Fayee Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Fazenda Aroeira Empreendimento de Energia Ltda Rio de Janeiro BR 2,362,045.90 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Fence Post Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Fenner Wind Holdings LLC Dover US 100.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Finsec Lab Ltd Tel Aviv IL 100.00 ILS Equity Enel X Srl 30.00% 30.00% Flagpay Srl Milan IT 10,000.00 EUR AFS PayTipper SpA 100.00% 55.00% Flat Rock Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Flat Top Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Flint Rock Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Florence Hills LLC Minneapolis US \- USD Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Flowing Spring Farms LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Fontibon ZE SAS Bogotá CO 392,420,000.00 COP Line-by-line Bogotá ZE SAS 100.00% 39.74% Fótons de Santo Anchieta Energias Renováveis SA Rio de Janeiro BR 577,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% 507Aachments 507 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Fotovoltaica Yunclillos SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Fourmile Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Franklintown Farm LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Freedom Energy Storage LLC Andover US \- USD Line-by-line Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) 100.00% 100.00% Front Marítim del Besòs SL Barcelona ES 9,000.00 EUR Equity Endesa Generación SA 61.37% 43.03% Frontiersman Solar Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% FRV Corchitos I SLU Madrid ES 75,800.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% FRV Corchitos II SOLAR SLU Madrid ES 22,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% FRV Gibalbín - Jerez SLU Madrid ES 23,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% FRV Tarifa SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% FRV Villalobillos SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% FRV Zamora Solar 1 SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% FRV Zamora Solar 3 SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Fundamental Recognized Systems SLU Rivas- Vaciamadrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Furatena Solar 1 SLU Seville ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Galaxy Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Ganado Solar LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Ganado Storage LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Garob Wind Farm (RF) (Pty) Ltd Johannesburg ZA 100.00 ZAR AFS Enel Green Power RSA 2 (RF) (Pty) Ltd 55.00% 55.00% Gas y Electricidad Generación SAU Palma de Mallorca ES 213,775,700.00 EUR Line-by-line Endesa Generación SA 100.00% 70.11% Gauley Hydro LLC Wilmington US \- USD Equity GRPP Holdings LLC 100.00% 50.00% Gauley River Management LLC Willison US 1.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Generadora de Occidente Ltda Guatemala City GT 16,261,697.33 GTQ Line-by-line Enel Green Power Guatemala SA 1.00% 82.27% ESSA2 SpA 99.00% 508 Integrated Annual Repo 2021508 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Generadora Eólica Alto Pacora Srl Panama City PA 10,100.00 USD Line-by-line Enel Green Power Panamá Srl 99.01% 82.27% ESSA2 SpA 0.99% Generadora Montecristo SA Guatemala City GT 3,820,000.00 GTQ Line-by-line Enel Green Power Guatemala SA 0.00% 82.27% ESSA2 SpA 100.00% Generadora Solar Austral SA Chiriquí PA 10,000.00 USD Line-by-line Enel Green Power Panamá Srl 100.00% 82.27% Generadora Solar de Occidente SA Panama City PA 10,000.00 USD Line-by-line Enel Green Power Panamá Srl 100.00% 82.27% Generadora Solar El Pueo SA Chiriquí PA 10,000.00 USD Line-by-line Enel Green Power Panamá Srl 100.00% 82.27% Generadora Solar Tolé Srl Panama City PA 10,100.00 USD Line-by-line Enel Green Power Panamá Srl 99.01% 82.27% ESSA2 SpA 0.99% Geotérmica del Noe SA Santiago de Chile CL 326,577,419,702.00 CLP Line-by-line Enel Green Power Chile SA 84.59% 54.92% Gibson Bay Wind Farm (RF) (Pty) Ltd Johannesburg ZA 1,000.00 ZAR Line-by-line Enel Green Power RSA (Pty) Ltd 60.00% 60.00% Girgarre Solar Farm (Pty) Ltd Sydney AU \- AUD Line-by-line Enel Green Power Girgarre Holdings (Pty) Ltd 100.00% 100.00% Girgarre Solar Farm Trust Sydney AU 10.00 AUD Line-by-line Enel Green Power Girgarre Trust 100.00% 100.00% Global Commodities Holdings Limited London GB 4,042,375.00 GBP - Enel Global Trading SpA 4.68% 4.68% Globyte SA San José CR 900,000.00 CRC - Enel Green Power Costa Rica SA 10.00% 8.23% Gloucester Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Gnl Chile SA Santiago de Chile CL 3,026,160.00 USD Equity Enel Generación Chile SA 33.33% 20.25% Goodwell Wind Project LLC Wilmington US \- USD Equity Origin Goodwell Holdings LLC 100.00% 20.00% Gorona del Viento El Hierro SA Santa Cruz de Tenerife ES 30,936,736.00 EUR Equity Unión Eléctrica de Canarias Generación SAU 23.21% 16.27% Grand Prairie Solar Project LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Gridspeise Latam SA São Paulo BR 2,010,000.00 BRL Line-by-line Enel Brasil SA 0.00% 100.00% Gridspeise Srl 100.00% Gridspeise Srl Rome IT 7,500,000.00 EUR Line-by-line Enel Global Infrastructure and Networks Srl 100.00% 100.00% GRPP Holdings LLC Andover US 2.00 USD Equity EGPNA REP Holdings LLC 50.00% 50.00% 509Aachments 509 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Guadarranque Solar 4 SLU Seville ES 3,006.00 EUR Line-by-line Endesa Generación II SA 100.00% 70.11% Guayepo Solar SAS Bogotá CO 1,000,000.00 COP Line-by-line Enel Green Power Colombia SAS ESP 100.00% 82.27% Gusty Hill Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% GV Energie Rigenerabili ITAL-RO Srl Bucharest RO 1,145,400.00 RON Line-by-line Enel Green Power Romania Srl 100.00% 100.00% Enel Green Power SpA 0.00% Hadley Ridge LLC Minneapolis US \- USD Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Hamilton County Solar Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Hansborough Valley Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Harmony Plains Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Harvest Ridge Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Harvest Ridge Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Hastings Solar LLC Wilmington US \- USD Line-by-line Aurora Distributed Solar LLC 100.00% 74. 13% Hatch Data Inc. San Francisco US 10,000.00 USD - Enel X Noh America Inc. 5.00% 5.00% Healand Farms Wind Project LLC Wilmington US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Hidroeléctrica de Catalunya SL Barcelona ES 126,210.00 EUR Line-by-line Endesa Red SA (Sociedad Unipersonal) 100.00% 70.11% Hidroeléctrica de Ourol SL Lugo ES 1,608,200.00 EUR Equity Enel Green Power España SLU 30.00% 21.03% Hidroelectricidad del Pacíco S de RL de Cv Colima MX 30,890,736.00 MXN Line-by-line Enel Green Power México S de RL de Cv 99.99% 99.99% Hidroamicell SL Barcelona ES 78,120.00 EUR Line-by-line Hidroeléctrica de Catalunya SL 75.00% 52.58% Hidroinvest SA Buenos Aires AR 55,312,093.00 ARS Line-by-line Enel Américas SA 41.94% 79.55% Enel Argentina SA 54.76% HIF H2 SpA Santiago de Chile CL 6,303,000.00 USD Equity Enel Green Power Chile SA 50.00% 32.46% High Chaparral Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% High Lonesome Storage LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% High Lonesome Wind Holdings LLC Wilmington US 100.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% 510 Integrated Annual Repo 2021510 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding High Lonesome Wind Power LLC Boston US 100.00 USD Line-by-line High Lonesome Wind Holdings LLC 100.00% 100.00% High Noon Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% High Street Corporation (Pty) Ltd Melbourne AU 2.00 AUD Line-by-line Energy Response Holdings (Pty) Ltd 100.00% 100.00% Hilltopper Wind Holdings LLC Wilmington US 1,000.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Hispano Generación de Energía Solar SL Jerez de los Caballeros ES 3,500.00 EUR Line-by-line Enel Green Power España SLU 51.00% 35.76% Honey Stone Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Honeybee Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Hope Creek LLC Crestview US \- USD Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Hope Ridge Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Horse Run Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Horse Wrangler Solar Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Hubject eRoaming Technology (Shanghai) Co. Ltd Shanghai CN 12,668,015.70 CNY - Hubject GmbH 100.00% 12.50% Hubject GmbH Berlin DE 65,943.00 EUR - Enel X International Srl 12.50% 12.50% Hubject Inc. Santa Monica US 100,000.00 USD - Hubject GmbH 100.00% 12.50% Hydro Energies Corporation Willison US 5,000.00 USD AFS Enel Green Power Noh America Inc. 100.00% 100.00% Idalia Park Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Idrosicilia SpA Milan IT 22,520,000.00 EUR Equity Enel SpA 1.00% 1.00% Ifx Networks Argentina Srl Buenos Aires AR 2,260,551.00 ARS Equity Ifx/eni - Spc V Inc. 99.85% 20.60% Minority Stock Holding Corp. 0.15% Ifx Networks Chile SA Santiago de Chile CL 6,235,913,725.00 CLP Equity Ifx/eni - Spc IV Inc. 41.20% 20.60% Servicios de Internet Eni Chile Ltda 58.80% Ifx Networks Colombia SAS Bogotá CO 15,734,959,000.00 COP Equity Ifx Networks Panama SA 58.33% 20.60% Ifx/eni - Spc III Inc. 41.67% Ifx Networks LLC Wilmington US 80,848,653.00 USD Equity Unet Latam SLU 100.00% 20.60% 511Aachments 511 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Ifx Networks Ltd Toola VG 50,001.00 USD Equity Ifx Networks LLC 100.00% 20.60% Ifx Networks Panama SA Panama City PA 21,000.00 USD Equity Ifx/eni - Spc Panama Inc. 100.00% 20.60% Ifx/eni - Spc III Inc. Toola VG 100.00 USD Equity Ifx Networks Ltd 100.00% 20.60% Ifx/eni - Spc IV Inc. Toola VG 100.00 USD Equity Ifx Networks Ltd 100.00% 20.60% Ifx/eni - Spc Panama Inc. Toola VG 100.00 USD Equity Ifx Networks Ltd 100.00% 20.60% Ifx/eni - Spc V Inc. Toola VG 100.00 USD Equity Ifx Networks Ltd 100.00% 20.60% Infraestructuras Pueo Santa María 220 SL Madrid ES 3,000.00 EUR Line-by-line Pueo Santa María Energía I SLU 50.00% 70.11% Pueo Santa María Energía II SLU 50.00% Infraestructuras San Serván 220 SL Madrid ES 12,000.00 EUR Equity Castiblanco Solar SL 10.20% 21.59%Navalvillar Solar SL 10.30% Valdecaballero Solar SL 10.30% Inkolan Información y Coordinación de obras AIE Bilbao ES 84,141.68 EUR - Edistribución Redes Digitales SL (Sociedad Unipersonal) 14.29% 10.02% International Multimedia University Srl in bankruptcy - IT 24,000.00 EUR - Enel Italia SpA 13.04% 13.04% Inversora Codensa SAS Bogotá CO 6,500,000.00 COP Line-by-line Codensa SA ESP 100.00% 39.74% Inversora Dock Sud SA Buenos Aires AR 828,941,660.00 ARS Line-by-line Enel Américas SA 57. 14% 47.01% Isamu Ikeda Energia SA Niterói BR 45,474,475.77 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Italgest Energy (Pty) Ltd Johannesburg ZA 1,000.00 ZAR Line-by-line Enel Green Power RSA (Pty) Ltd 100.00% 100.00% Jack River LLC Minneapolis US \- USD Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Jade Energia Ltda Rio de Janeiro BR 4,107,097.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Jaguito Solar 10 MW SA Panama City PA 10,000.00 USD Line-by-line Enel Green Power Panamá Srl 100.00% 82.27% Jessica Mills LLC Minneapolis US \- USD Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% JuiceNet GmbH Berlin DE 25,000.00 EUR Line-by-line Enel X International Srl 100.00% 100.00% JuiceNet Ltd London GB 1.00 GBP Line-by-line Enel X International Srl 100.00% 100.00% Julia Hills LLC Minneapolis US \- USD Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% 512 Integrated Annual Repo 2021512 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Juna Renewable Energy Private Limited Gurugram IN 36,600,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% Junia Insurance Srl Mosciano Sant’Angelo (Teramo) IT 100.00 EUR Line-by-line Enel X Srl 100.00% 100.00% Keeneys Creek Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Kelley’s Falls LLC Wilmington US \- USD AFS Enel Green Power Noh America Inc. 100.00% 100.00% Ken Renewables India Private Limited Gurugram IN 100,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% Khaba Renewable Energy Private Limited Gurugram IN 10,100,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% Khidrat Renewable Energy Private Limited Gurugram IN 38,100,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% King Branch Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Kings River Hydro Company Inc. Wilmington US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Kingston Energy Storage LLC Wilmington US \- USD Line-by-line Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) 100.00% 100.00% Kino Contractor SA de Cv Mexico City MX 100.00 MXN Line-by-line Enel Green Power México S de RL de Cv 99.00% 100.00% Hidroelectricidad del Pacíco S de RL de Cv 1.00% Kino Facilities Manager SA de Cv Mexico City MX 100.00 MXN Line-by-line Enel Green Power México S de RL de Cv 99.00% 100.00% Hidroelectricidad del Pacíco S de RL de Cv 1.00% Kongul Enerjí Sanayí Ve Tícaret Anoním Şírketí Istanbul TR 125,000,000.00 TRY Line-by-line Enel Green Power Turkey Enerjí Yatirimlari Anoním Şírketí 100.00% 100.00% Koporie WPS LLC Region of Leningrad RU 21,000,000.00 RUB Line-by-line Enel Green Power Rus Limited Liability Company 100.00% 100.00% Korea Line Corporation Seoul KR 122,132,520,000.00 KRW - Enel Global Trading SpA 0.25% 0.25% Kromschroeder SA Barcelona ES 627,126.00 EUR Equity Endesa Medios y Sistemas SL (Sociedad Unipersonal) 29.26% 20.51% Lake Emily Solar LLC Wilmington US \- USD Line-by-line Aurora Distributed Solar LLC 100.00% 74. 13% Lake Pulaski Solar LLC Wilmington US \- USD Line-by-line Aurora Distributed Solar LLC 100.00% 74. 13% Land Run Wind Project LLC Dover US 100.00 USD Line-by-line Sundance Wind Project LLC 100.00% 100.00% Lantern Trail Solar Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% 513Aachments 513 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Latamsolar Fotovoltaica Fundación SAS Bogotá CO 8,000,000.00 COP Line-by-line Enel Green Power Colombia SAS ESP 100.00% 82.27% Lathrop Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Lava Solar Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Lawrence Creek Solar LLC Minneapolis US \- USD Line-by-line Aurora Distributed Solar LLC 100.00% 74. 13% Lebanon Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Lemonade Solar Project LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Libey Energy Storage LLC Andover US \- USD Line-by-line Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) 100.00% 100.00% Libyan Italian Joint Company - Azienda Libico-Italiana (A.L.I) Tripoli LY 1,350,000.00 EUR - Enelpower SpA 0.33% 0.33% Lily Solar Holdings LLC Andover US 1.00 USD Line-by-line Enel Green Power Lily Solar Holdings LLC 100.00% 100.00% Lily Solar LLC Andover US \- USD Line-by-line Enel Kansas Development Holdings LLC 100.00% 100.00% Lindahl Wind Holdings LLC Wilmington US \- USD Line-by-line EGPNA Preferred Wind Holdings LLC 100.00% 100.00% Lindahl Wind Project LLC Wilmington US \- USD Line-by-line Lindahl Wind Holdings LLC 100.00% 100.00% Lile Elk Wind Holdings LLC Wilmington US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Lile Elk Wind Project LLC Wilmington US \- USD Line-by-line Lile Elk Wind Holdings LLC 100.00% 100.00% Lile Salt Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Lileville Power Company Inc. Boston US 100.00 USD AFS Enel Green Power Noh America Inc. 100.00% 100.00% Litus Energy Storage LLC Andover US \- USD Line-by-line Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) 100.00% 100.00% Livister Guatemala SA Guatemala City GT 742,000.00 GTQ Equity Livister Latam SLU 99.99% 20.60% Unet Guatema SA 0.01% Livister Latam SLU Madrid ES 2,442,066.00 EUR Equity Unet Latam SLU 100.00% 20.60% Llano Sánchez Solar Power One Srl Panama City PA 10,020.00 USD Line-by-line Enel Green Power Panamá Srl 99.80% 82.27% ESSA2 SpA 0.20% Lone Pine Wind Inc. Albea CA \- CAD - Enel Green Power Canada Inc. 10.00% 10.00% 514 Integrated Annual Repo 2021514 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Lone Pine Wind Project LP Albea CA \- CAD Equity Enel Green Power Canada Inc. 10.00% 10.00% Lower Valley LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Lucas Sostenible SL Madrid ES 1,099,775.00 EUR Equity Enel Green Power España SLU 35.29% 24.74% Luminary Highlands Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Luz de Angra Energia SA Rio de Janeiro BR 4,062,085.00 BRL Line-by-line Enel X Brasil SA 51.00% 41.96% Luz de Macapá Energia SA Rio de Janeiro BR 1,000.00 BRL Equity Enel X Brasil SA 51.00% 41.96% Maicor Wind Srl Rome IT 20,850,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Malaspina Energy Scarl in liquidation Bergamo IT 100,000.00 EUR Line-by-line Enel X Italia Srl 100.00% 100.00% Maple Canada Solutions Holdings Ltd - CA \- CAD Equity Enel X Canada Ltd 20.00% 20.00% Maple Energy Solutions LP - CA \- CAD Equity Enel X Canada Holding Inc. 20.00% 20.00% Marengo Solar LLC Wilmington US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Mae Srl Rome IT 6,100,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Marudhar Wind Energy Private Limited Gurugram IN 100,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% Más Energía S de RL de Cv Mexico City MX 61,872,926.00 MXN Line-by-line Enel Green Power México S de RL de Cv 99.99% 100.00% Hidroelectricidad del Pacíco S de RL de Cv 0.01% Mason Mountain Wind Project LLC Wilmington US \- USD Line-by-line Padoma Wind Power LLC 100.00% 100.00% Matrigenix (Pty) Ltd Johannesburg ZA 1,000.00 ZAR Line-by-line Enel Green Power RSA (Pty) Ltd 100.00% 100.00% Maty Energia Srl Rome IT 10,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% MC Solar I LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% McBride Wind Project LLC Wilmington US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Medidas Ambientales SL Burgos ES 60,100.00 EUR Equity Tecnatom SA 50.00% 15.78% Merit Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Metro Wind LLC Minneapolis US \- USD Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Mexicana de Hidroelectricidad Mexhidro S de RL de Cv Mexico City MX 181,728,901.00 MXN Line-by-line Enel Green Power México S de RL de Cv 99.99% 99.99% 515Aachments 515 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Mibgas SA Madrid ES 3,000,000.00 EUR - Endesa SA 1.35% 0.95% Midelt Wind Farm SA Casablanca MA 145,000,000.00 MAD Equity Nareva Enel Green Power Morocco SA 70.00% 35.00% Minglanilla Renovables 400 kV AIE Valencia ES \- EUR Propoional Energía Base Natural SLU 4.79% 25.35% Energía Eólica Ábrego SLU 7.98% Energía Eólica Galerna SLU 9.31% Energía Eólica Gregal SLU 9.31% Energía y Naturaleza SLU 4.79% Minicentrales Acequia Cinco Villas AIE Ejea de los Caballeros ES 3,346,993.04 EUR - Enel Green Power España SLU 5.39% 3.78% Minicentrales del Canal de las Bárdenas AIE Zaragoza ES 1,202,000.00 EUR - Enel Green Power España SLU 15.00% 10.52% Minicentrales del Canal Imperial-Gallur SL Zaragoza ES 1,820,000.00 EUR Equity Enel Green Power España SLU 36.50% 25.59% Minority Stock Holding Corp. Toola VG 100.00 USD Equity Ifx Networks Ltd 100.00% 20.60% Mira Energy (Pty) Ltd Johannesburg ZA 100.00 ZAR Line-by-line Enel Green Power RSA (Pty) Ltd 100.00% 100.00% Miranda Plataforma Logística SA Burgos ES 1,800,000.00 EUR - Nuclenor SA 0.22% 0.08% Moebius Tecnologia em Informática SA Rio de Janeiro BR 150,000.00 BRL Equity Unet Brasil Telecomunicação Ltda 70.00% 35.00% Monte Reina Renovables SL Madrid ES 4,000.00 EUR Equity FRV Zamora Solar 1 SLU 20.58% 14.43% Montrose Solar LLC Wilmington US \- USD Line-by-line Aurora Distributed Solar LLC 100.00% 74. 13% Moonbeam Solar Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Morgan Branch Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Mountrail Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% MPG Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Mucho Viento Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Muskegon County Solar Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Muskegon Green Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Mustang Run Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% 516 Integrated Annual Repo 2021516 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Nabb Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Napolean Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Nareva Enel Green Power Morocco SA Casablanca MA 98,750,000.00 MAD Equity Enel Green Power Morocco SARLAU 50.00% 50.00% Navalvillar Solar SL Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Negocios y Telefonía Nedetel SA Guayaquil EC 4,773,525.00 USD - Livister Latam SLU 70.00% 14.42% Net Botanic Internet Inteligente SA Rio de Janeiro BR 450,000.00 BRL Equity Unet Brasil Telecomunicação Ltda 70.00% 35.00% Nevkan Renewables LLC Wilmington US \- USD Line-by-line Enel Nevkan Inc. 100.00% 100.00% New York Distributed Storage Projects LLC Boston US \- USD Line-by-line Enel X Noh America Inc. 100.00% 100.00% Newbury Hydro Company LLC Andover US \- USD AFS Enel Green Power Noh America Inc. 100.00% 100.00% Ngonye Power Company Limited Lusaka ZM 10.00 ZMW AFS Enel Green Power Solar Ngonye SpA (formerly Enel Green Power Africa Srl) 80.00% 80.00% Nojoli Wind Farm (RF) (Pty) Ltd Johannesburg ZA 10,000,000.00 ZAR Line-by-line Enel Green Power RSA (Pty) Ltd 60.00% 60.00% Noh English Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Noh Rock Wind LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Nohland Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Nohstar Wind Project LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Nohumberland Solar Project I LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Nohwest Hydro LLC Wilmington US \- USD Line-by-line Chi West LLC 100.00% 100.00% Notch Bue Hydro Company Inc. Wilmington US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Nuclenor SA Burgos ES 102,000,000.00 EUR Equity Endesa Generación SA 50.00% 35.06% Nuove Energie Srl Poo Empedocle IT 5,204,028.73 EUR Line-by-line Enel Global Trading SpA 100.00% 100.00% Nxuba Wind Farm (RF) (Pty) Ltd Johannesburg ZA 1,000.00 ZAR AFS Enel Green Power RSA 2 (RF) (Pty) Ltd 51.00% 51.00% Nyc Storage (353 Chester) Spe LLC Wilmington US 1.00 USD Line-by-line Enel X Noh America Inc. 100.00% 100.00% Ochrana A Bezpecnost Se SRO Kalná Nad Hronom SK 33,193.92 EUR Equity Slovenské elektrárne AS 100.00% 33.00% Olathe Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% 517Aachments 517 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Olivum PV Farm 01 SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% OMIP - Operador do Mercado Ibérico (Pougal) SGPS SA Lisbon PT 2,610,000.00 EUR - Endesa SA 5.00% 3.51% Open Range Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Operador del Mercado Ibérico de Energía - Polo Español SA Madrid ES 1,999,998.00 EUR - Endesa SA 5.00% 3.51% Oravita Power Park Srl Bucharest RO 2,000.00 RON Line-by-line Enel Green Power Romania Srl 100.00% 100.00% Orchid Acres Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Origin Goodwell Holdings LLC Wilmington US \- USD Equity EGPNA Wind Holdings 1 LLC 100.00% 20.00% Origin Wind Energy LLC Wilmington US \- USD Equity Origin Goodwell Holdings LLC 100.00% 20.00% Osage Wind Holdings LLC Wilmington US 100.00 USD Line-by-line Enel Kansas LLC 50.00% 50.00% Osage Wind LLC Wilmington US \- USD Line-by-line Osage Wind Holdings LLC 100.00% 50.00% Oauquechee Hydro Company Inc. Wilmington US 100.00 USD AFS Enel Green Power Noh America Inc. 100.00% 100.00% Ovacik Eolíko Enerjí Elektrík Üretím Ve Tícaret Anoním Şírketí Istanbul TR 11,250,000.00 TRY Line-by-line Enel Green Power Turkey Enerjí Yatirimlari Anoním Şírketí 100.00% 100.00% Oxagesa AIE Alcañiz ES 6,010.00 EUR Equity Enel Green Power España SLU 33.33% 23.37% Oyster Bay Wind Farm (RF) (Pty) Ltd Johannesburg ZA 1,000.00 ZAR AFS Enel Green Power RSA 2 (RF) (Pty) Ltd 55.00% 55.00% Padoma Wind Power LLC Elida US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Palo Alto Farms Wind Project LLC Dallas US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Pampinus PV Farm 01 SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Paradise Creek Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Paravento SL Lugo ES 3,006.00 EUR Line-by-line Enel Green Power España SLU 90.00% 63.10% Parc Eòlic La Tossa - La Mola d’en Pascual SL Madrid ES 1,183,100.00 EUR Equity Enel Green Power España SLU 30.00% 21.03% Parc Eòlic Los Aligars SL Madrid ES 1,313,100.00 EUR Equity Enel Green Power España SLU 30.00% 21.03% Parco Eolico Monti Sicani Srl Rome IT 10,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% 518 Integrated Annual Repo 2021518 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Parque Amistad II SA de Cv Mexico City MX 1,413,533,480.00 MXN Line-by-line Enel Rinnovabile SA de Cv 99.00% 100.00% Hidroelectricidad del Pacíco S de RL de Cv 1.00% Parque Amistad III SA de Cv Mexico City MX 931,692,540.00 MXN Line-by-line Enel Rinnovabile SA de Cv 99.00% 100.00% Hidroelectricidad del Pacíco S de RL de Cv 1.00% Parque Amistad IV SA de Cv Mexico City MX 1,489,508,400.00 MXN Line-by-line Enel Rinnovabile SA de Cv 99.00% 100.00% Hidroelectricidad del Pacíco S de RL de Cv 1.00% Parque Eólico A Capelada SL (Sociedad Unipersonal) La Coruña ES 5,857,704.33 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Parque Eólico BR-1 SAPI de Cv Mexico City MX - MXN Line-by-line Enel Green Power México S de RL de Cv 0.50% 25.50% Enel Rinnovabile SA de Cv 25.00% Parque Eólico Carretera de Arinaga SA Las Palmas de Gran Canaria ES 1,603,000.00 EUR Line-by-line Enel Green Power España SLU 80.00% 56.09% Parque Eólico de Barbanza SA La Coruña ES 3,606,072.60 EUR Line-by-line Enel Green Power España SLU 75.00% 52.58% Parque Eólico de Barbanza SA 0.00% Parque Eólico de Belmonte SA Madrid ES 120,400.00 EUR Line-by-line Enel Green Power España SLU 50.17% 35.17% Parque Eólico de San Andrés SA La Coruña ES 552,920.00 EUR Line-by-line Enel Green Power España SLU 82.00% 57.49 % Parque Eólico de Santa Lucía SA Las Palmas de Gran Canaria ES 901,500.00 EUR Line-by-line Enel Green Power España SLU 65.67% 46.51% Parque Eólico de Santa Lucía SA 1.00% Parque Eólico Finca de Mogán SA Santa Cruz de Tenerife ES 3,810,340.00 EUR Line-by-line Enel Green Power España SLU 90.00% 63.10% Parque Eólico Montes de Las Navas SA Madrid ES 6,540,000.00 EUR Line-by-line Enel Green Power España SLU 75.50% 52.93% Parque Eólico Muniesa SL Madrid ES 3,006.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Parque Eólico Palmas dos Ventos Ltda Salvador BR 4,096,626.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Enel Green Power Desenvolvimento Ltda 0.00% Parque Eólico Pampa SA Buenos Aires AR 477,139,364.00 ARS Line-by-line Enel Green Power SpA 100.00% 100.00% Parque Eólico Punta de Teno SA Santa Cruz de Tenerife ES 528,880.00 EUR Line-by-line Enel Green Power España SLU 52.00% 36.46% Parque Eólico Sierra del Madero SA Madrid ES 7,193,970.00 EUR Line-by-line Enel Green Power España SLU 58.00% 40.66% 519Aachments 519 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Parque Eólico Tico SLU Zaragoza ES 234,900.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Parque Salitrillos SA de Cv Mexico City MX 100.00 MXN Equity Tenedora de Energía Renovable Sol y Viento SAPI de Cv 60.80% 20.00% Parque Solar Cauchari IV SA San Salvador de Jujuy AR 500,000.00 ARS Equity Enel Green Power Argentina SA 95.00% 82.27% Energía y Servicios South America SpA 5.00% Parque Solar Don José SA de Cv Mexico City MX 100.00 MXN Equity Tenedora de Energía Renovable Sol y Viento SAPI de Cv 60.80% 20.00% Parque Solar Villanueva Tres SA de Cv Mexico City MX 306,024,631.13 MXN Equity Tenedora de Energía Renovable Sol y Viento SAPI de Cv 60.80% 20.00% Parque Talinay Oriente SA Santiago de Chile CL 66,092,165,170.93 CLP Line-by-line Enel Green Power Chile SA 60.91% 78.64% Enel Green Power SpA 39.09% Pastis - Centro Nazionale per la ricerca e lo sviluppo dei materiali SCPA in liquidation Brindisi IT 2,065,000.00 EUR - Enel Italia SpA 1.14% 1.14% Paynesville Solar LLC Wilmington US \- USD Line-by-line Aurora Distributed Solar LLC 100.00% 74. 13% PayTipper Network Srl Cascina IT 40,000.00 EUR AFS PayTipper SpA 100.00% 55.00% PayTipper SpA Milan IT 3,000,000.00 EUR AFS Enel X Srl 55.00% 55.00% PDP Technologies Ltd Israel IL 1,129,252.00 ILS - Enel Global Infrastructure and Networks Srl 5.72% 5.72% Pegop - Energia Eléctrica SA Pego PT 50,000.00 EUR Equity Endesa Generación Pougal SA 0.02% 35.06% Endesa Generación SA 49.98% PH Chucas SA San José CR 100,000.00 CRC Line-by-line Enel Green Power Costa Rica SA 40.31% 53.48% ESSA2 SpA 24.69% PH Don Pedro SA San José CR 100,001.00 CRC Line-by-line Enel Green Power Costa Rica SA 33.44% 32.99% Globyte SA 66.54% PH Río Volcán SA San José CR 100,001.00 CRC Line-by-line Enel Green Power Costa Rica SA 34.32% 33.64% Globyte SA 65.66% Pilesgrove Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% 520 Integrated Annual Repo 2021520 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Pincher Creek LP Albea CA - CAD Line-by-line Enel Albea Wind Inc. 99.00% 100.00% Enel Green Power Canada Inc. 1.00% Pine Island Distributed Solar LLC Wilmington US \- USD Line-by-line Aurora Distributed Solar LLC 100.00% 74. 13% Planta Eólica Europea SAU Seville ES 1,198,532.32 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Point Rider Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Pomerado Energy Storage LLC Wilmington US 1.00 USD Line-by-line Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) 100.00% 100.00% Potoc Power Park Srl Bucharest RO 2,000.00 RON Line-by-line Enel Green Power Romania Srl 100.00% 100.00% PowerCrop Macchiareddu Srl Bologna IT 100,000.00 EUR AFS PowerCrop SpA (formerly PowerCrop Srl) 100.00% 50.00% PowerCrop Russi Srl Bologna IT 100,000.00 EUR AFS PowerCrop SpA (formerly PowerCrop Srl) 100.00% 50.00% PowerCrop SpA (formerly PowerCrop Srl) Bologna IT 4,000,000.00 EUR AFS Enel Green Power Italia Srl 50.00% 50.00% Prairie Rose Transmission LLC Minneapolis US \- USD Equity Prairie Rose Wind LLC 100.00% 20.00% Prairie Rose Wind LLC Albany US \- USD Equity EGPNA REP Wind Holdings LLC 100.00% 20.00% Primavera Energia SA Niterói BR 36,965,444.64 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Productive Solar Systems SLU Rivas- Vaciamadrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Productora de Energías SA Barcelona ES 60,101.22 EUR Equity Enel Green Power España SLU 30.00% 21.03% Productora Eléctrica Urgelense SA Lérida ES 8,400,000.00 EUR - Endesa SA 8.43% 5.91% Progreso Solar 20 MW SA Panama City PA 10,000.00 USD Line-by-line Enel Green Power Panamá Srl 100.00% 82.27% Promociones Energéticas del Bierzo SL Madrid ES 12,020.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Proveedora de Electricidad de Occidente S de RL de Cv Mexico City MX 89,708,835.00 MXN Line-by-line Enel Green Power México S de RL de Cv 99.99% 99.99% Proyecto Almería Mediterráneo SA Madrid ES 601,000.00 EUR Equity Endesa SA 45.00% 31.55% Proyectos Universitarios de Energías Renovables SL Alicante ES 27,000.00 EUR Equity Enel Green Power España SLU 33.33% 23.37% 521Aachments 521 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Proyectos y Soluciones Renovables SAC San Miguel PE 1,000.00 PEN Line-by-line Enel Green Power Paecipazioni Speciali Srl 99.90% 99.98% Energía y Servicios South America SpA 0.10% PSG Energy Private Limited Hyderabad IN 100,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% PT Enel Green Power Optima Way Ratai Jakaa ID 10,002,600.00 USD Line-by-line Enel Green Power SpA 90.00% 90.00% Pueo Santa María Energía I SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Pueo Santa María Energía II SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Pulida Energy (RF) (Pty) Ltd Johannesburg ZA 10,000,000.00 ZAR Line-by-line Enel Green Power RSA (Pty) Ltd 52.70% 52.70% Pumpkin Vine Wind Project LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Quatiara Energia SA Niterói BR 13,766,118.96 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Queens Energy Storage LLC Andover US \- USD Line-by-line Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) 100.00% 100.00% Raleigh Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Ranchland Solar Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Ranchland Wind Holdings LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Ranchland Wind Project II LLC Andover US 1.00 USD Line-by-line Ranchland Wind Holdings LLC 100.00% 100.00% Ranchland Wind Project LLC Andover US \- USD Line-by-line Rockhaven Ranchland Holdings LLC 100.00% 100.00% Ranchland Wind Storage LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Ralesnake Creek Holdings LLC Delaware US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Rausch Creek Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% RC Wind Srl Milan IT 10,000.00 EUR - Enel Green Power Italia Srl 0.50% 0.50% RE Arroyo LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Reaktoest SRO Trnava SK 66,389.00 EUR Equity Slovenské elektrárne AS 49.00% 16.17% Red Centroamericana de Telecomunicaciones SA Panama City PA 2,700,000.00 USD - Enel SpA 11.11% 11.11% Red Di Wind Holdings I LLC Dover US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% 522 Integrated Annual Repo 2021522 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Red Di Wind Holdings LLC Wilmington US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Red Di Wind Project LLC Dover US 1.00 USD Line-by-line Red Di Wind Holdings LLC 100.00% 100.00% Red Fox Wind Project LLC Wilmington US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Redes y Telecomunicaciones S de RL de Cv San Pedro Sula HN 82,395,000.00 HNL - Livister Latam SLU 80.00% 16.48% Renovables Andorra SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Renovables de Guatemala SA Guatemala City GT 1,924,465,600.00 GTQ Line-by-line Enel Green Power Guatemala SA 0.00% 82.27% ESSA2 SpA 100.00% Renovables La Pedrera SLU Zaragoza ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Renovables Manzanares 400 kV SL Madrid ES 5,000.00 EUR Equity Enel Green Power España SLU 27.86% 19.53% Renovables Mediavilla SLU Zaragoza ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Renovables Teruel SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Riverbend Farms Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Riverview LP Albea CA \- CAD Line-by-line Enel Albea Wind Inc. 99.00% 100.00% Enel Green Power Canada Inc. 1.00% Riverview Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Roadrunner Solar Project LLC Andover US 100.00 USD Line-by-line Enel Roadrunner Solar Project Holdings LLC 100.00% 100.00% Roadrunner Storage LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Rochelle Solar LLC Coral Springs US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Rock Creek Wind Holdings I LLC Dover US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Rock Creek Wind Holdings II LLC Dover US 100.00 USD Line-by-line Rock Creek Wind Holdings LLC 100.00% 100.00% Rock Creek Wind Holdings LLC Wilmington US \- USD Line-by-line EGPNA Preferred Wind Holdings II LLC 100.00% 100.00% Rock Creek Wind Project LLC Clayton US 1.00 USD Line-by-line Rock Creek Wind Holdings LLC 100.00% 100.00% Rockhaven Ranchland Holdings LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Rockhaven Wind Project LLC Andover US 1.00 USD Line-by-line Rockhaven Ranchland Holdings LLC 100.00% 100.00% 523Aachments 523 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Rocky Caney Holdings LLC Oklahoma City US 1.00 USD Equity Enel Kansas LLC 20.00% 20.00% Rocky Caney Wind LLC Albany US \- USD Equity Rocky Caney Holdings LLC 100.00% 20.00% Rocky Ridge Wind Project LLC Oklahoma City US \- USD Equity Rocky Caney Wind LLC 100.00% 20.00% Rodnikovskaya WPS Moscow RU 6,010,000.00 RUB Line-by-line Enel Green Power Rus Limited Liability Company 100.00% 100.00% Roha Renewables India Private Limited Gurugram IN 100,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% Rolling Farms Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Rusenergosbyt LLC Moscow RU 18,000,000.00 RUB Equity Enel SpA 49.50% 49.50% Rusenergosbyt Siberia LLC Krasnoyarsk City RU 4,600,000.00 RUB Equity Rusenergosbyt LLC 50.00% 24.75% Rustler Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Ruthton Ridge LLC Minneapolis US \- USD Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Saburoy SA Montevideo UY 100,000.00 UYU Equity Ifx Networks LLC 100.00% 20.60% Sacme SA Buenos Aires AR 12,000.00 ARS Equity Empresa Distribuidora Sur SA - Edesur 50.00% 29.66% Saddle House Solar Project LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Salmon Falls Hydro LLC Wilmington US \- USD AFS Enel Green Power Noh America Inc. 100.00% 100.00% Salt Springs Wind Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Salto de San Rafael SL Seville ES 462,185.98 EUR Equity Enel Green Power España SLU 50.00% 35.06% San Francisco de Borja SA Zaragoza ES 60,000.00 EUR Line-by-line Enel Green Power España SLU 66.67% 46.74% San Juan Mesa Wind Project II LLC Wilmington US \- USD Line-by-line Padoma Wind Power LLC 100.00% 100.00% Sanosari Energy Private Limited Gurugram IN 100,000.00 INR Line-by-line Avikiran Energy India Private Limited 100.00% 100.00% Santo Rostro Cogeneración SA Seville ES 207,340.00 EUR Equity Enel Green Power España SLU 45.00% 31.55% Sardhy Green Hydrogen Srl Sarroch IT 10,000.00 EUR Equity Enel Green Power Italia Srl 50.00% 50.00% Saugus River Energy Storage LLC Dover US 100.00 USD Line-by-line Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) 100.00% 100.00% Savanna Power Solar 10 SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% 524 Integrated Annual Repo 2021524 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Savanna Power Solar 12 SLU Seville ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Savanna Power Solar 13 SLU Seville ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Savanna Power Solar 4 SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Savanna Power Solar 5 SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Savanna Power Solar 6 SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Savanna Power Solar 9 SLU Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Se Služby Inžinierskych Stavieb SRO Kalná Nad Hronom SK 200,000.00 EUR Equity Slovenské elektrárne AS 100.00% 33.00% Seguidores Solares Planta 2 SL (Sociedad Unipersonal) Madrid ES 3,010.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Servicio de Operación y Mantenimiento para Energías Renovables S de RL de Cv Mexico City MX 3,000.00 MXN Line-by-line Enel Green Power Guatemala SA 0.01% 99.99% Energía Nueva Energía Limpia México S de RL de Cv 99.99% Servicios de Internet Eni Chile Ltda Santiago de Chile CL 2,768,688,228.00 CLP Equity Ifx Networks Ltd 0.10% 20.60% Ifx/eni - Spc IV Inc. 99.90% Servizio Elerico Nazionale SpA Rome IT 10,000,000.00 EUR Line-by-line Enel Italia SpA 100.00% 100.00% Setyl Srl Bergamo IT 100,000.00 EUR Equity Enel X Italia Srl 27.50% 27.50% Seven Cowboy Wind Project Holdings LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Seven Cowboy Wind Project II LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Seven Cowboy Wind Project LLC Andover US 1.00 USD Line-by-line Seven Cowboy Wind Project Holdings LLC 100.00% 100.00% Seven Cowboys Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Shiawassee Wind Project LLC Wilmington US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Shield Energy Storage Project LLC Wilmington US \- USD Line-by-line Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) 100.00% 100.00% Shikhar Surya (One) Private Limited Gurugram IN 10,100,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% SIET - Società Informazioni Esperienze Termoidrauliche SpA Piacenza IT 697,820.00 EUR Equity Enel Innovation Hubs Srl 41.55% 41.55% Silt Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% 525Aachments 525 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements 5.05% SAS Inversora Codensa Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Silver Dollar Solar Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Sinergia GP6 Srl Rome IT 10,000.00 EUR Equity Enel Green Power Italia Srl 100.00% 100.00% Sinergia GP7 Srl Rome IT 10,000.00 EUR Equity Enel Green Power Italia Srl 100.00% 100.00% Sistema Eléctrico de Conexión Valcaire SL Madrid ES 175,200.00 EUR Equity Enel Green Power España SLU 28.13% 19.72% Sistemas Energéticos Mañón Oigueira SA La Coruña ES 2,007,750.00 EUR Line-by-line Enel Green Power España SLU 96.00% 67.31% Skyview Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Sleep Hollow Solar I LLC Andover US 1.00 USD Line-by-line Brick Road Solar Holdings LLC 100.00% 100.00% Slovak Power Holding BV Amsterdam NL 25,010,000.00 EUR Equity Enel Produzione SpA 50.00% 50.00% Slovenské elektrárne - Energetické Služby SRO Bratislava SK 4,505,000.00 EUR Equity Slovenské elektrárne AS 100.00% 33.00% Slovenské elektrárne AS Bratislava SK 1,269,295,724.66 EUR Equity Slovak Power Holding BV 66.00% 33.00% Slovenské elektrárne Česká Republika SRO Moravská Ostrava CZ 295,819.00 CZK Equity Slovenské elektrárne AS 100.00% 33.00% Smoky Hill Holdings II LLC Wilmington US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Smoky Hills Wind Farm LLC Topeka US \- USD Line-by-line EGPNA Project HoldCo 1 LLC 100.00% 100.00% Smoky Hills Wind Project II LLC Lenexa US \- USD Line-by-line EGPNA Project HoldCo 1 LLC 100.00% 100.00% Snyder Wind Farm LLC Hermleigh US \- USD Line-by-line Texkan Wind LLC 100.00% 100.00% Socibe Energia SA Niterói BR 12,969,032.25 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Sociedad Agrícola de Cameros Ltda Santiago de Chile CL 5,738,046,495.00 CLP Line-by-line Enel Chile SA 57.50% 37.33% Sociedad de Inversiones K Cuatro SpA Santiago de Chile CL 316,318,800.00 CLP - Enel X Chile SpA 10.00% 6.49% Sociedad Eólica de Andalucía SA Seville ES 4,507,590.78 EUR Line-by-line Enel Green Power España SLU 64.75% 45.40% Sociedad Eólica El Puntal SL Seville ES 1,643,000.00 EUR Equity Enel Green Power España SLU 50.00% 35.06% Sociedad Eólica Los Lances SA Seville ES 2,404,048.42 EUR Line-by-line Enel Green Power España SLU 60.00% 42.07% Sociedad para el Desarrollo de Sierra Morena Cordobesa SA Cordoba ES 86,063.20 EUR - Endesa Generación SA 1.82% 1.27% Sociedad Pouaria Central Caagena SA Bogotá CO 89,714,600.00 COP Line-by-line Emgesa SA ESP 94.94% 39.87% 526 Integrated Annual Repo 2021526 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Società Elerica Trigno Srl Trivento IT 100,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Soetwater Wind Farm (RF) (Pty) Ltd Johannesburg ZA 1,000.00 ZAR AFS Enel Green Power RSA 2 (RF) (Pty) Ltd 55.00% 55.00% Solana Renovables SL Madrid ES 5,000.00 EUR Equity Enel Green Power España SLU 49.84% 34.94% Solas Electricity Srl Bucharest RO 740,000.00 RON Line-by-line Enel Green Power Romania Srl 100.00% 100.00% Soliloquoy Ridge LLC Minneapolis US \- USD Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Somerswoh Hydro Company Inc. Wilmington US 100.00 USD AFS Enel Green Power Noh America Inc. 100.00% 100.00% Sona Enerjí Üretím Anoním Şírketí Istanbul TR 50,000.00 TRY Line-by-line Enel Green Power Turkey Enerjí Yatirimlari Anoním Şírketí 100.00% 100.00% Sonak Solar Project LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Sotavento Galicia SA Santiago de Compostela ES 601,000.00 EUR Equity Enel Green Power España SLU 36.00% 25.24% South Italy Green Hydrogen Srl Rome IT 10,000.00 EUR Equity Enel Green Power Italia Srl 50.00% 50.00% South Rock Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% South Wind Energy Srl Bucharest RO 2,000.00 RON Line-by-line Enel Green Power Romania Srl 100.00% 100.00% Southwest Transmission LLC Cedar Blu US \- USD Line-by-line Chi Minnesota Wind LLC 100.00% 100.00% Spaan Hills LLC Minneapolis US \- USD Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Spinazzola SPV Srl Rome IT 10,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Spring Wheat Solar Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Stampede Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Sterling and Wilson Enel X e-Mobility Private Limited Mumbai IN 90,000,000.00 INR Equity Enel X International Srl 50.00% 50.00% Stillman Valley Solar LLC Wilmington US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Stillwater Woods Hill Holdings LLC Wilmington US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Stipa Nayaá SA de Cv Mexico City MX 1,811,016,348.00 MXN Line-by-line Enel Green Power México S de RL de Cv 55.21% 95.37% Enel Green Power Paecipazioni Speciali Srl 40.16% Stockyard Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Strinestown Solar I LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% 527Aachments 527 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Suave Energía S de RL de Cv Mexico City MX 1,000.00 MXN Line-by-line Enel Green Power México S de RL de Cv 0.10% 100.00% Enel Rinnovabile SA de Cv 99.90% Sublunary Trading (RF) (Pty) Ltd Bryanston ZA 13,750,000.00 ZAR Line-by-line Enel Green Power RSA (Pty) Ltd 57.00% 57.00% Sugar Pine Solar Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Suggestion Power (Unipessoal) Ltda Paço de Arcos PT 50,000.00 EUR Line-by-line Endesa Generación Pougal SA 100.00% 70.11% Suministradora de buses K Cuatro SpA Santiago de Chile CL 14,840,473,200.00 CLP - Sociedad de Inversiones K Cuatro SpA 99.00% 6.43% Suministradora Eléctrica de Cádiz SA Cadiz ES 12,020,240.00 EUR Equity Endesa Red SA (Sociedad Unipersonal) 33.50% 23.49% Suministro de Luz y Fuerza SL Barcelona ES 2,800,000.00 EUR Line-by-line Hidroeléctrica de Catalunya SL 60.00% 42.07% Summit Energy Storage Inc. Wilmington US 1,000.00 USD Line-by-line Enel Green Power Noh America Inc. 75.00% 75.00% Sun River LLC Bend US \- USD Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Sundance Wind Project LLC Dover US 100.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Sunower Prairie Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Swather Solar Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Sweet Apple Solar Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Tae Technologies Inc. Pauling US 53,207,936.00 USD - Enel Produzione SpA 1.12% 1.12% Tae Technologies Inc. 0.00% Tauste Energía Distribuida SL Zaragoza ES 60,508.00 EUR Line-by-line Enel Green Power España SLU 51.00% 35.76% Tecnatom SA Madrid ES 4,025,700.00 EUR Equity Endesa Generación SA 45.00% 31.55% Tecnoguat SA Guatemala City GT 30,948,000.00 GTQ Line-by-line ESSA2 SpA 75.00% 61.70% Tejo Energia \- Produção e Distribuição de Energia Eléctrica SA Lisbon PT 5,025,000.00 EUR Equity Endesa Generación SA 43.75% 30.67% Tenedora de Energía Renovable Sol y Viento SAPI de Cv Mexico City MX 2,892,643,576.00 MXN Equity Enel Green Power SpA 32.89% 32.90% Teploprogress JSC Sredneuralsk RU 128,000,000.00 RUB Line-by-line Enel Russia PJSC 60.00% 33.86% Tera Renewables India Private Limited Gurugram IN 100,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% 528 Integrated Annual Repo 2021528 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Termica Colleferro SpA Bologna IT 6,100,000.00 EUR Equity Cogenio Srl 60.00% 12.00% Termoeléctrica José de San Maín SA Buenos Aires AR 7,078,298.00 ARS - Central Dock Sud SA 0.42% 4.22% Enel Generación Costanera SA 1.68% Enel Generación El Chocón SA 5.60% Termoeléctrica Manuel Belgrano SA Buenos Aires AR 7,078,307.00 ARS - Central Dock Sud SA 0.47% 4.71% Enel Generación Costanera SA 1.89% Enel Generación El Chocón SA 6.23% Termotec Energía AIE in liquidation La Pobla de Vallbona ES 481,000.00 EUR Equity Enel Green Power España SLU 45.00% 31.55% Terrer Renovables SL Madrid ES 5,000.00 EUR Equity Baylio Solar SLU 11.66% 20.73% Dehesa de los Guadalupes Solar SLU 8.83% Seguidores Solares Planta 2 SL (Sociedad Unipersonal) 9.08% Testing Stand of Ivanovskaya GRES JSC Komsomolsk RU 118,213,473.45 RUB - Enel Russia PJSC 1.65% 0.93% Texkan Wind LLC Andover US \- USD Line-by-line Enel Texkan Inc. 100.00% 100.00% Thar Surya 1 Private Limited Gurgaon IN 100,000.00 INR Line-by-line Avikiran Surya India Private Limited 100.00% 100.00% Thunder Ranch Wind Holdings I LLC Dover US 100.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Thunder Ranch Wind Holdings LLC Wilmington US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Thunder Ranch Wind Project LLC Dover US 1.00 USD Line-by-line Thunder Ranch Wind Holdings LLC 100.00% 100.00% Thunderegg Wind Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Tico Solar 1 SLU Zaragoza ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Tico Solar 2 SLU Zaragoza ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Tobivox (RF) (Pty) Ltd Johannesburg ZA 10,000,000.00 ZAR Line-by-line Enel Green Power RSA (Pty) Ltd 60.00% 60.00% Toledo PV AIE Madrid ES 26,887.96 EUR Equity Enel Green Power España SLU 33.33% 23.37% Toplet Power Park Srl Bucharest RO 2,000.00 RON Line-by-line Enel Green Power Romania Srl 100.00% 100.00% Topwind Energy Srl Bucharest RO 2,000.00 RON Line-by-line Enel Green Power Romania Srl 100.00% 100.00% 529 Aachment 529 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Toro Renovables 400 kV SL Madrid ES 3,000.00 EUR - FRV Zamora Solar 1 SLU 8.28% 5.81% Torrepalma Energy 1 SLU Madrid ES 3,100.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Tradewind Energy Inc. Wilmington US 1,000.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Transmisora de Energía Renovable SA Guatemala City GT 233,561,800.00 GTQ Line-by-line Enel Green Power Guatemala SA 0.00% 82.27%ESSA2 SpA 100.00% Generadora Montecristo SA 0.00% Transpoadora de Energía SA-TESA Buenos Aires AR 2,584,473,416.00 ARS Line-by-line Enel Argentina SA 0.00% 82.27% Enel Brasil SA 60.15% Enel CIEN SA 39.85% Transpoes y Distribuciones Eléctricas SA in liquidation Girona ES 72,121.45 EUR Line-by-line Edistribución Redes Digitales SL (Sociedad Unipersonal) 73.33% 51.42% Trévago Renovables SL Madrid ES 3,000.00 EUR Equity Furatena Solar 1 SLU 17.73 % 24.89% Seguidores Solares Planta 2 SL (Sociedad Unipersonal) 17.77% Tsar Nicholas LLC Minneapolis US \- USD Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Tula WPS LLC Tula RU \- RUB Line-by-line Enel Green Power Rus Limited Liability Company 100.00% 100.00% Tulip Grove Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Tunga Renewable Energy Private Limited Gurugram IN 19,100,000.00 INR Line-by-line Avikiran Energy India Private Limited 100.00% 100.00% TWE Franklin Solar Project LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% TWE ROT DA LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Twin Lake Hills LLC Minneapolis US \- USD Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Twin Saranac Holdings LLC Wilmington US \- USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Tyme Srl Bergamo IT 100,000.00 EUR Equity Enel X Italia Srl 50.00% 50.00% Unet Argentina SA Buenos Aires AR 9,745,583.00 ARS Equity Unet Latam SLU 99.95% 20.60% Unet Panamá SA 0.05% Unet Brasil Paicipações Ltda Santo André BR 120,784,639.00 BRL Equity Zacapa Topco II Sàrl 100.00% 50.00% 530 Integrated Annual Repo 2021530 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Unet Brasil SA Barueri BR 29,800,000.00 BRL Equity Unet Brasil Telecomunicação Ltda 60.00% 30.00% Unet Brasil Telecomunicação Ltda Santo André BR 120,784,638.00 BRL Equity Unet Brasil Paicipações Ltda 100.00% 50.00% Unet Latam SLU 0.00% Unet Chile SpA Santiago de Chile CL 233,750,000.00 CLP Equity Unet Latam SLU 100.00% 20.60% Unet Colombia Paicipaciones SAS Bogotá CO 10,001,001,000.00 COP Equity Unet Latam SLU 100.00% 20.60% Unet Colombia SA Bogotá CO 1,180,000,000.00 COP Equity Unet Guatemala SA 0.00% 18.54% Unet Honduras SA 0.00% Unet Latam SLU 90.00% Unet Panamá SA 0.00% Unet Costa Rica SA San José CR 25,000.00 USD Equity Unet Latam SLU 100.00% 20.60% Unet Ecuador Uec SA Quito EC 9,865,110.00 USD Equity Unet Guatemala SA 0.00% 20.60% Unet Latam SLU 100.00% Unet El Salvador SA de Cv San Salvador SV 10,000.00 USD Equity Unet Guatemala SA 0.01% 20.60% Unet Latam SLU 99.99% Unet FTTH Guatemala Ltda Guatemala City GT 50,000.00 GTQ - Unet Latam SLU 51.00% 10.51% Unet Guatemala SA Guatemala City GT 3,000,000.00 GTQ Equity Unet Latam SLU 99.99% 20.60% Unet Panamá SA 0.01% Unet Honduras SA Tegucigalpa HN 194,520.00 HNL Equity Unet Latam SLU 99.99% 20.60% Unet Panamá SA 0.01% Unet Latam SLU Madrid ES 15,906,312.00 EUR Equity Zacapa Sàrl 100.00% 20.60% Unet México S de RL de Cv Mexico City MX 7,635,430.00 MXN Equity Unet Guatemala SA 1.31% 20.60% Unet Latam SLU 98.69% Unet Nicaragua SA Managua NI 2,800,000.00 NIO Equity Unet Guatemala SA 0.50% Ufinet Latam SLU 99.00% 20.60% Unet Panamá SA 0.50% 531Aachments 531 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Unet Panamá SA Panama City PA 1,275,000.00 USD Equity Unet Latam SLU 100.00% 20.60% Unet Paraguay SA Asunción PY 79,488,240,000.00 PYG Equity Unet Latam SLU 75.00% 15.45% Unet Perú SAC Lima PE 2,836,474.00 PEN Equity Unet Latam SLU 100.00% 20.60% Unet Panamá SA 0.00% Unet US LLC Wilmington US 1,000.00 USD Equity Unet Latam SLU 100.00% 20.60% Ukuqala Solar Proprietary Limited Johannesburg ZA 1,000.00 ZAR Line-by-line Enel Green Power RSA (Pty) Ltd 100.00% 100.00% Unión Eléctrica de Canarias Generación SAU Las Palmas de Gran Canaria ES 190,171,520.00 EUR Line-by-line Endesa Generación SA 100.00% 70.11% Upington Solar (Pty) Ltd Johannesburg ZA 1,000.00 ZAR Line-by-line Enel Green Power RSA (Pty) Ltd 100.00% 100.00% USME ZE SAS Bogotá CO 104,872,000.00 COP Line-by-line Bogotá ZE SAS 100.00% 39.74% Ustav Jaderného Výzkumu Rez AS Řež CZ 524,139,000.00 CZK Equity Slovenské elektrárne AS 27.77% 9. 17% Valdecaballero Solar SL Madrid ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% Vayu (Project 1) Private Limited Gurugram IN 30,000,000.00 INR Line-by-line Enel Green Power India Private Limited 100.00% 100.00% Vektör Enerjí Üretím Anoním Şírketí Istanbul TR 3,500,000.00 TRY AFS Enel SpA 100.00% 100.00% Ventos de Santa Ângela Energias Renováveis SA Rio de Janeiro BR 7,315,000.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santa Esperança Energias Renováveis SA Rio de Janeiro BR 4,727,414.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de Santo Orestes Energias Renováveis SA Rio de Janeiro BR 1,754,031.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Ventos de São Roque Energias Renováveis SA Rio de Janeiro BR 10,188,722.00 BRL Line-by-line Enel Brasil SA 100.00% 82.27% Vientos del Altiplano SA de Cv Mexico City MX 1,455,854,094.00 MXN Equity Tenedora de Energía Renovable Sol y Viento SAPI de Cv 60.80% 20.00% Villanueva Solar SA de Cv Mexico City MX 205,316,027.15 MXN Equity Tenedora de Energía Renovable Sol y Viento SAPI de Cv 60.80% 20.00% Viruleiros SL Santiago de Compostela ES 160,000.00 EUR Line-by-line Enel Green Power España SLU 67.00% 46.97% Viva Labs AS Oslo NO 104,724.90 NOK Line-by-line Enel X International Srl 60.00% 60.00% Wapella Blus Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Waseca Solar LLC Waseca US \- USD Line-by-line Aurora Distributed Solar LLC 100.00% 74. 13% 532 Integrated Annual Repo 2021532 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Waypost Solar Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Weber Energy Storage Project LLC Wilmington US \- USD Line-by-line Enel Energy Storage Holdings LLC (formerly EGP Energy Storage Holdings LLC) 100.00% 100.00% Wespire Inc. Boston US 1,625,000.00 USD - Enel X Noh America Inc. 11.21% 11.21% West Faribault Solar LLC Wilmington US \- USD Line-by-line Aurora Distributed Solar LLC 100.00% 74. 13% West Hopkinton Hydro LLC Wilmington US \- USD AFS Enel Green Power Noh America Inc. 100.00% 100.00% West Waconia Solar LLC Wilmington US \- USD Line-by-line Aurora Distributed Solar LLC 100.00% 74. 13% Western New York Wind Corporation Albany US 300.00 USD Line-by-line Enel Green Power Noh America Inc. 100.00% 100.00% Whaon-El Campo Solar Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% White Cloud Wind Holdings LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% White Cloud Wind Project LLC Andover US 1.00 USD Line-by-line White Cloud Wind Holdings LLC 100.00% 100.00% White Peaks Wind Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Whitetail Trails Solar Project LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Whitney Hill Wind Power Holdings LLC Andover US 99.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Whitney Hill Wind Power LLC Andover US \- USD Line-by-line Whitney Hill Wind Power Holdings LLC 100.00% 100.00% While’s Ferry Solar Project LLC Andover US 1.00 USD Line-by-line Enel Kansas LLC 100.00% 100.00% Wild Run LP Albea CA 10.00 CAD Line-by-line Enel Albea Wind Inc. 0.10% 100.00% Enel Green Power Canada Inc. 99.90% Wildcat Flats Wind Project LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Wilderness Range Solar Project LLC Andover US \- USD Line-by-line Enel Kansas LLC 100.00% 100.00% Wind Belt Transco LLC Andover US 1.00 USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Wind Energy Green Park Srl Bucharest RO 2,000.00 RON Line-by-line Enel Green Power Romania Srl 100.00% 100.00% Wind Parks Anatolis - Prinias Single Member SA Maroussi GR 15,803,388.00 EUR Line-by-line Enel Green Power Hellas Wind Parks South Evia Single Member SA 100.00% 100.00% Wind Parks Bolibas SA Maroussi GR 551,500.00 EUR Equity Enel Green Power Hellas SA 30.00% 30.00% 533Aachments 533 3 Group Strategy & Risk Management 2 Governance 1 Enel Group 4 Group Peormance 5 Outlook 6 Consolidated nancial statements Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Wind Parks Distomos SA Maroussi GR 556,500.00 EUR Equity Enel Green Power Hellas SA 30.00% 30.00% Wind Parks Folia SA Maroussi GR 424,000.00 EUR Equity Enel Green Power Hellas SA 30.00% 30.00% Wind Parks Gagari SA Maroussi GR 389,000.00 EUR Equity Enel Green Power Hellas SA 30.00% 30.00% Wind Parks Goraki SA Maroussi GR 551,500.00 EUR Equity Enel Green Power Hellas SA 30.00% 30.00% Wind Parks Gourles SA Maroussi GR 555,000.00 EUR Equity Enel Green Power Hellas SA 30.00% 30.00% Wind Parks Kafoutsi SA Maroussi GR 551,500.00 EUR Equity Enel Green Power Hellas SA 30.00% 30.00% Wind Parks Katharas Single Member SA Maroussi GR 19,932,048.00 EUR Line-by-line Enel Green Power Hellas Wind Parks South Evia Single Member SA 100.00% 100.00% Wind Parks Kerasias Single Member SA Maroussi GR 26,107,790.00 EUR Line-by-line Enel Green Power Hellas Wind Parks South Evia Single Member SA 100.00% 100.00% Wind Parks Milias Single Member SA Maroussi GR 19,909,374.00 EUR Line-by-line Enel Green Power Hellas Wind Parks South Evia Single Member SA 100.00% 100.00% Wind Parks Mitikas Single Member SA Maroussi GR 22,268,039.00 EUR Line-by-line Enel Green Power Hellas Wind Parks South Evia Single Member SA 100.00% 100.00% Wind Parks Petalo SA Maroussi GR 575,000.00 EUR Equity Enel Green Power Hellas SA 30.00% 30.00% Wind Parks Platanos Single Member SA Maroussi GR 13,342,867.00 EUR Line-by-line Enel Green Power Hellas Wind Parks South Evia Single Member SA 100.00% 100.00% Wind Parks Skoubi SA Maroussi GR 472,000.00 EUR Equity Enel Green Power Hellas SA 30.00% 30.00% Wind Parks Spilias Single Member SA Maroussi GR 28,267,490.00 EUR Line-by-line Enel Green Power Hellas Wind Parks South Evia Single Member SA 100.00% 100.00% Wind Parks Strouboulas SA Maroussi GR 576,500.00 EUR Equity Enel Green Power Hellas SA 30.00% 30.00% Wind Parks Vitalio SA Maroussi GR 361,000.00 EUR Equity Enel Green Power Hellas SA 30.00% 30.00% Wind Parks Vourlas SA Maroussi GR 554,000.00 EUR Equity Enel Green Power Hellas SA 30.00% 30.00% Winter’s Spawn LLC Minneapolis US \- USD Line-by-line Chi Minnesota Wind LLC 51.00% 51.00% Wkn Basilicata Development PE1 Srl Rome IT 10,000.00 EUR Line-by-line Enel Green Power Italia Srl 100.00% 100.00% Woods Hill Solar LLC Wilmington US \- USD Line-by-line Stillwater Woods Hill Holdings LLC 100.00% 100.00% Xaloc Solar SLU Valencia ES 3,000.00 EUR Line-by-line Enel Green Power España SLU 100.00% 70.11% X-bus Italia Srl Milan IT 15,000.00 EUR Equity Enel X Italia Srl 20.00% 20.00% 534 Integrated Annual Repo 2021534 Company name Headquaers Country Share capital Currency Segment Consolidation method Held by % holding Group % holding Yacylec SA Buenos Aires AR 20,000,000.00 ARS Equity Enel Américas SA 33.33% 27.4 2 % Yedesa-Cogeneración SA Almería ES 234,394.72 EUR Equity Enel Green Power España SLU 40.00% 28.04% Zacapa HoldCo Sàrl Luxembourg LU 76,180,812.49 EUR Equity Zacapa Topco Sàrl 100.00% 20.60% Zacapa LLC Wilmington US 100.00 USD Equity Zacapa Topco Sàrl 100.00% 20.60% Zacapa Sàrl Luxembourg LU 82,866,475.04 USD Equity Zacapa HoldCo Sàrl 100.00% 20.60% Zacapa Topco II Sàrl Luxembourg LU 12,000.00 EUR Equity Enel X International Srl 50.00% 50.00% Zacapa Topco Sàrl Luxembourg LU 30,000,000.00 EUR Equity Enel X International Srl 20.60% 20.60% Zephir 3 Constanta Srl Bucharest RO 1,031,260.00 RON Line-by-line Enel Green Power Romania Srl 100.00% 100.00% Zoo Solar Project LLC Andover US \- USD Line-by-line Tradewind Energy Inc. 100.00% 100.00% Concept design and realization Gpt Group Copy editing postScriptum di Paola Urbani Publication not for sale Edited by Enel Communications Disclaimer This Repo issued in Italian has been translated into English solely for the convenience of international readers Enel Societa per azioni Registered Oce 00198 Rome \- Italy Viale Regina Margherita, 137 Stock Capital Euro 10,166,679,946 fully paid-in Companies Register of Rome and Tax I.D. 00811720580 R.E.A. of Rome 756032 VAT Code 15844561009 © Enel SpA 00198 Rome, Viale Regina Margherita, 137 enel.com