Enel Chile: Hydrology Weak Again

2025-07-21 06:36:36 ET

Enel Chile ( ENIC ) is quite interesting. There should be secular growth in RABs to support the regulated utility business. For the generation business, quite a lot of money is going into this BESS opportunity, which should create more arbitrage-based revenue as well as capacity storage revenue. This is in addition to general growth in capacity as the company continues to grow its renewable generation capacity, but most of the Genco investment is going into batteries (a.k.a. BESS). The company should be able to continue longer-term earnings and revenue growth, though there is a shortfall risk of internal production due to once again poor hydrology conditions upon which the company substantially relies. Lower rates could also threaten the returns on the distribution concession offered by regulators on the RAB in the regulated utilities business for the future tariff period, though returns are stable for now, and the company expects improvement overall, so we take their word for it. The company wants to maximize its internal sourcing....

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