LEADERS: Renato Mazzoncini, CEO of A2A | Morning Finance

Yes, welcome to the Life Tower of A2A.

Yes. No, I must say we are very happy, partly because it completely regenerates our way of working. Imagine that we come from a beautiful historic building, but with all the small closed rooms as they were in the 40s, where it was difficult to meet and work together. Here instead, this campus is something else. Almost 2,000 people reside here, it's very nice. We are about to complete it. This is 145 meters high, 27 floors, 28 floors plus two other buildings below. In short, it's a very large campus and we are very proud of it.

Well, I would say the red threads are actually two. One is that of public service. I think that apart from healthcare and partly education, since I also dedicate some time to teaching, all the other public services that citizens need in one way or another, I have followed them. And so this is something I like very much, that is, I like the idea that infrastructure, as you say, accompanied by a well-delivered service, is not enough to have the infrastructure, right? It's not enough to have the RFI tracks if you don't have the railway operators on top, whether in Italy or Italo or others who work well on them. And so this is certainly the thing that has been fun in my professional career, being able to deal with this. Then, of course, I am an electrical engineer, the first job of my life was the redesign of the power supply network for the new high-speed lines. That is pure infrastructure, in the sense that we had the problem at the time that the 3,000 volts direct current with which the network had been built since the end of the 19th century could not handle the power of the new high-speed trains. So we had to switch to the French mechanism with 25,000 volts alternating current and redesign the entire network. So, well, of course, I come from a very technical initial experience in the transport sector. Then I had a decent career, reaching the position of State Administrator, and now, yes, since May 2020, in the middle of Covid, I took the position at A2A, which I am enjoying very much.

Well, first of all, I want to point out something that I think is very important and which is talked about, I don't know why, very little. In the midst of the energy crisis in Europe and Italy in 2024, because the growth started obviously from the Russian-Ukrainian conflict in 2022 and the price remained very high and then started to fall perhaps in 2024, now it remains at high prices. In 2024, Italy in terms of competitiveness becomes the fourth country in the world for exports, beating Korea and Japan. Today we only have the United States, China, and Germany ahead of us. This is interesting because since in the storytelling the problem of Italy is competitiveness, the fact that in the midst of the energy crisis we beat the rankings, becoming the fourth country for exports in the world at the time with 630 billion, now we are around 660. This says a lot about the fact that competitiveness certainly requires many ingredients, including the price of energy, but it is certainly not the only one and perhaps not even the most important. After that, the problem is what is the price of energy. I imagine a world that will eventually be decarbonized and where renewables will be, let's say, the fundamental backbone. Well, the difference is that renewables should cost the same everywhere in the world, while fossil fuels cost less if you have them at home, if you have them in your subsoil. This difference is enormous. So Italy and Europe, which have never had coal, oil, and gas, obviously found themselves especially in this phase, but the same thing happened in the 70s with the oil crises, they found themselves in great difficulty. So we must continue to push for renewables because, on the contrary, a solar panel, a wind turbine costs substantially the same amount here and in other countries. The countries that are most advantaged today are, let's say, the United States, which are the only net energy exporter besides the Arab countries, but the Arab countries are fundamentally not industrial countries, so in terms of competitiveness they are not a problem, they are just a supplier, let's say, of energy, while the United States are also an industrial country and therefore the competition is very strong. So today we must manage to bring the energy price well below €100. With renewables, I think we can tend to reach €60-70 as a regular energy price. And I repeat, especially the big difference is that this is a price that will be quite similar all over the world. Then there is a difference that can be generated related to the fact that if you put a solar panel in the middle of the desert in Saudi Arabia, that desert belongs to no one, the land has no cost, there is also a bit more sun, while here in the cost of energy you pay the price of the land, the price of permitting and the price of all the design part that was necessary to arrive with a complexity decidedly greater than that of a desert to produce the plant. This will always generate a bit of difference, but certainly much less than having or not having oil at home.

The phase-out of Russia, starting from the tail, is quite marginal because very little already arrives from Russia today. The real problem that caused the TTF to jump from €30 to 80 is the situation in Hormuz, because what happened after the closure of flows from Russia, which are already largely closed, is that LNG procurement increased. The problem with LNG is that LNG gives you much more security because it can come from many places, it can come from the United States, from Qatar, but the problem is that it exposes you more to geopolitical risks. Simply, if you are attached to a pipe like the TAP, for example, Azerbaijan-Italy, and that TAP can only be supplied by Azerbaijan, but Azerbaijan can also only sell to that pipe, so to speak, it's a... So this stabilizes the infrastructure, the pipeline stabilizes the relationships and prices a bit. If instead, as we also do, you buy LNG, for example from the United States, the ship you have purchased and that is bringing LNG to us can be bought and resold multiple times while crossing the Atlantic, also because it takes a few days, from some Asian country, for example. China is extremely exposed, not having gas, oil, and also fossil fuels. Demand is always growing with some fluctuations and it is a very important competitor on the market. So what happens? Because as soon as there is a geopolitical tension, the price rises more, it moves faster than it moved when the connections were fundamentally only via pipeline. On the other hand, it is clear that if, as happened with the pipeline, it is boycotted, sabotaged, and in a moment you are without gas, while with LNG terminals you will always have a supply, so safer but more exposed from a geopolitical point of view to prices. After that, today Hormuz, everyone is still betting that it will last a short time, fundamentally because both parties probably have an interest in finding a way to close it, unlike the war in Ukraine, where predictions of the end of a war are much more uncertain and financial markets are betting on the fact that when the war ends, prices will drop immediately. So much so that when we talk to our clients, businesses, but I must also say citizens, imagine how many times I am asked the question how do I protect myself, what should I do?