March 20, 2024 [Reuters] – Italian power grid company Terna (TRN.MI), opens new tab said on Tuesday it would invest 16.5 billion euros ($18 billion) over the next five years to help the country integrate renewable energy sources into its economy and make the network digital and more flexible.
This will represent a 65% increase in capital expenditure in the group’s 2024-2028 plan drafted by new Chief Executive Giuseppina Di Foggia, compared to a previous strategy.
The plan does not explicitly mention M&A, but Di Foggia said Terna was considering the possibility of buying distribution assets.
New regulations give incentives to power distributors “to sell some assets that could be useful for our transmission activity… we are doing preliminary assessments on this,” Di Foggia said, without elaborating.
According to media reports last month Terna could spend 1.5 billion euros to buy distribution assets from utilities in Italy.
In its industrial plan, Terna said it expected to boost its adjusted core earnings by over 8% percent on average every year to 2028.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) are expected to reach 3.25 billion euros in 2028 from 2.17 billion euros recorded last year.
The Italian government aims to generate 65% of its electricity from renewable energy sources by 2030, phasing out coal by 2028 and reducing gas-fired power stations, according to its draft energy and climate plan (PNIEC).
Terna will work to prepare the power system to manage increasing volumes of renewable energy, which is mainly intermittent and will come from widespread sources.
Among the projects set out in the plan are the Tyrrhenian Link, a submarine cable that will connect Sicily with Campania and Sardinia; the Adriatic Link, a connection between the regions of Abruzzo and Marche; and an interconnection between Italy and Tunisia.
The group, which counts State Grid of China as one of its shareholders, said its new dividend policy foresees 4% minimum annual growth in dividend per share, taking 2023 as the reference year.
It said it will pay 0.3396 euros per share on 2023 results, while for 2024 the dividend per share (DPS) would be equal to whatever is higher between 4% growth versus 2023 and a 75% payout ratio.
The group also said it could issue hybrid debt to keep its credit rating stable.
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