Terna, the company that manages the Italian electricity grid, is once again accelerating its investments, allocating €10 billion (of which €1.7 billion in 2022) for the country’s energy transition and development. This is the main news contained in the 2021-2025 "Driving Energy" Industrial Plan update presented on 24 March 2022 by the group's CEO, Stefano Donnarumma. In terms of energy policy, Terna places the development of sustainable infrastructures and the integration of three crucial factors for the future of the country at the core of its strategy. These three factors are: the enhancement of renewable sources, the implementation of storage systems and the growth of interconnections with foreign countries.
Frontline 24/7
New boost to investments in the Terna's 2021-2025 Industrial plan update
24/3/2022
5 minutes
From the operator of the Italian national transmission grid, a €10 billion plan for a strategy based on the development of sustainable infrastructures and the integration of three factors: the enhancement of renewable sources, the implementation of storage systems and the growth of interconnections with foreign countries.
Donnarumma summarises the goals of the new plan as follows: «A significant increase in investments for the development and modernisation of the Italian electricity grid, a further strengthening of Terna as director of the energy transition, an even more sustainable future that is free of polluting emissions, an action aimed at promoting greater energy autonomy in the country, thanks to a more incisive development of renewable energies. All this represents our concrete commitment, both from an industrial and an institutional point of view».
The investments envisaged by the 2021-2025 Business Plan. In detail, Terna plans to invest €9.5 billion to develop, modernise and strengthen the Italian national electricity transmission grid. The funds will be distributed as follows:
€5.6 billion for the development of the national electricity transmission grid (mainly by building high-voltage direct current lines);
€2.6 billion for asset renewal and efficiency (with the replacement, where possible, of overhead lines paired with the laying of underground cables);
€1.3 billion for the Safety Plan (improving voltage regulation and system stability).
«These investments will be essential for achieving the decarbonisation goals that Italy and Europe have set for themselves. They will also enable the integration of renewable sources and the electrification of consumption, as well as ever higher levels of service quality, at the lowest cost for citizens and businesses».
Terna's Chief Executive Officer Stefano Donnarumma
In addition, a total of €1.2 billion will be spent on digitalisation and innovation, concentrating efforts on the most technological solutions for remote control of power stations and transmission infrastructures. In this way, Terna strengthens its role as director of the Italian electricity system, in line with the goals of the Integrated National Energy and Climate Plan and the targets of the Green Deal set at international level, which provide for a reduction in greenhouse gas emissions of at least 55% by 2030.
Terna's investments are «essential for achieving the goals that Italy and Europe have set themselves. They will also enable the integration of renewable sources and the electrification of consumption, as well as guaranteeing ever greater security and efficiency of supply, the adequacy of the system and the highest levels of service quality, at the lowest cost for citizens and businesses».
Financial statement objectives by the end of the plan. From an accounting point of view, with the update to the Plan, Terna has adjusted its financial statement targets: the new target for 2025 revenues is set at €3.08 billion; on the other hand, as regards profitability, over the same time horizon, EBITDA should reach €2.14 billion. The average annual growth will therefore be higher than 4% for turnover and 3% for EBITDA.
In particular, in 2022, revenues are expected to increase to €2.74 billion and EBITDA to €1.9 billion. Net earnings per share will amount to 39 euro cents in 2022 and 45 euro cents in 2025, net of the ongoing valuation of international assets. In terms of remuneration, Terna confirms its dividend policy: from 2022 to 2023. the average annual growth of the coupon will be 8% compared to the 2021 dividend. For 2024 and 2025, a payout of 75% is expected, with a minimum guaranteed dividend equal to the dividend pertaining to the year 2023.
Despite the acceleration in investments, Terna aims to preserve a solid and sustainable capital structure throughout the Plan, with the aim of maintaining the current rating level, a net cost of debt equal to 1.3% and a net debt/RAB ratio of around 60% by 2025.
2021 figures. The updated Business Plan comes after a 2021 closed by Terna with improving economic indicators: revenues, equal to €2.604 billion, grew by 4.6% compared to 2020, while net profit reached €789.4 million, an improvement of €3.9 million compared to the previous year. In terms of profitability, the 2021 EBITDA reached €1.85 billion, for an increase of 2.4% on an annual basis. Total investments made by the Terna Group last year amounted to €1.52 billion, up 12.6% against 2020.
The dividend for the 2021 financial year amounts to 29.11 euro cents per share, of which 9.82 cents already paid on account and 19.29 to be paid from 22 June with detachment of the coupon on 20 June. Finally, in order to further reduce the Group's risk profile, Terna has evaluated the opportunity to begin a valuation process of its assets in South America, with the aim of selling up to 100% of its LatAm portfolio.