Wednesday, June 26, 2024

Terna unveils $18 billion investment plan for 2024-2028

Italian power grid company Terna has announced an ambitious €16.5 billion ($18 billion) investment plan over the next five years. The investment aims to integrate renewable energy sources into the Italian economy and improve the flexibility and digitization of the national power grid.


Terna increases capital spending by 65% and evaluates $1.5 billion acquisition

Capital spending outlined in Terna’s 2024-2028 plan marks a significant 65 percent increase over previous strategies. The new plan was developed under the leadership of the company’s new CEO, Giuseppina Di Foggia. Although the plan does not explicitly mention mergers and acquisitions (M&A), the CEO indicated that the company is considering the purchase of distribution assets. “New regulations provide incentives for power distributors to sell assets that could benefit our transmission activities. We are currently conducting preliminary assessments on this opportunity”, the manager commented, without providing further details. Recent media reports suggest that Terna may allocate about 1.5 billion euros to acquire distribution assets from various utilities in Italy. In its business plan, the company forecasts an annual increase of more than 8% in adjusted core earnings through 2028. Earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to rise from 2.17 billion euros last year to 3.25 billion euros by 2028.

Terna supports Italian renewable energy goals

The Italian government has set a goal of generating 65% of its electricity from renewable sources by 2030, with plans to phase out coal by 2028 and reduce dependence on gas-fired power plants, as outlined in the draft energy and climate plan (PNIEC). Terna’s strategic projects include the development of several key infrastructures to support this transition. Notable projects include the Tyrrhenian Link, a submarine cable connecting Sicily with Campania and Sardinia; the Adriatic Link, connecting Abruzzo and Marche regions; and an interconnection between Italy and Tunisia. The company, which counts State Grid of China among its shareholders, also announced a new dividend policy. This policy guarantees a minimum 4% annual growth in dividends per share, using 2023 as the base year. For 2023, Terna will pay 0.3396 euros per share, while for 2024 the dividend per share will be whichever is higher between a 4% growth from 2023 or a 75% payout ratio. In addition, the group mentioned the possibility of issuing hybrid debt as a measure to maintain its credit rating.