Slide 1: 2021-2025 Industrial Plan Update, March 24th 2022
eZ] 2021 24 lerna 20>: ) March 24h 2022 INDUSTRIAL PLAN ») UPDATE RAIVING N AR GY
Slide 2: Agenda
Agenda Sustainability 3 Energy Scenario and System Strategy 7 10-year National Development Plan 11 Strategy 15 2021 – 2025 Group Financial Targets and Dividend Policy 22 Closing Remarks 27 Annexes 29 2
Slide 3: Sustainability
Sustainability 3
Slide 4: Driving Energy - The Role of Terna
Sustainability Driving Energy - The Role of Terna Resiliency Quality of service Withstanding grid stresses and Ensuring continuity of return to normal operating state the service TSO Role Adequacy Efficiency Meeting the expected Managing the system respecting the demand in any condition requirements
Slide 5: ESG as a growth driver
Sustainability ESG as a growth driver Environment Social Acceleration of green innovation Energy Governments and companies committed ▪ Low cost PV and wind energy Transition to a zero emissions future ▪ Electric vehicles ▪ Introduction of «Net Zero» policies ▪ EU Green Deal, international climate pl
Slide 6: NexTerna: new People Strategy
Sustainability NexTerna Talents Skills NEW Engagement and well-being PEOPLE STRATEGY Diversity and inclusion Employee centricity ORGANIZATION AS A new model for grid TRUE ENABLING development, exercise and FACTOR maintenance Inclusive leadership People care and skills CHANGE Virtual and physical spa
Slide 7: Energy Scenario and System Strategy
Energy Scenario and System Strategy 7
Slide 8: Italian decarbonization targets
Energy Scenario and System Strategy Italian decarbonization targets -55% -40% -24% CO2 emissions reduction Actual CEP 1 Green Deal 2030 2030 65% 55% 36% RES share in electricity consumption Actual NECP Green Deal 2030 2 20303 +60/70 GW +40 GW 34 GW PV and wind capacities Actual NECP Green Deal 2030
Slide 9: RES Evolution in Italy
Energy Scenario and System Strategy RES Evolution in Italy PV AND WIND INSTALLED CAPACITY EVOLUTION* GW ~90 - 100 71 PV Wind ▪ +60/70 GW of RES ▪ Increasing system 34 complexity 32 33 ▪ System investments acceleration needed 2 2005 2019 2020 2021 2030 PNIEC Green Deal / Fit-for-55 *2021 provisional
Slide 10: System Strategy towards Energy Transition
Energy Scenario and System Strategy System Strategy towards Energy Transition 2030 INFRASTRUCTURE RENEWABLE MARKET DESIGN STORAGE DEVELOPMENT INTEGRATION ▪ Strengthening of grids and ▪ Identifying the right mix of ▪ Implementing new hydroelectric ▪ Increasing installations, through interconnections
Slide 11: 10-year National Development Plan
10-year National Development Plan 11
Slide 12: Grid Investments
10-year National Development Plan Grid Investments A Plan to ▪ Increase transport capacity solving grid congestions support the ▪ Grid rationalization in the main metropolitan areas €bn 18.1 energy ▪ Increase foreign interconnections transition ▪ Increase safety and resiliency of the system 14.4 Hig
Slide 13: Main ongoing and future projects
10-year National Development Plan Main ongoing and future projects MAIN ONGOING PROJECTS MAIN NEW PROJECTS ITALY-AUSTRIA EE 2023 INTERCONNECTION WITH ITALY-FRANCE EE 2022 SWITZERLAND VALCHIAVENNA RATIONALIZATION COLUNGA-CALENZANO EE 2023 ADRIATIC LINK EE 2028 GIGLIO INTERCONNECTION NORTH-BENEVENTO A
Slide 14: Benefits for the System
10-year National Development Plan Benefits for the System -5.6 mn 4,600 km tonnes of CO2 per year obsolete lines removed Increasing grid resiliency Benefits +6 GW foreign interconnections for the -70% system +8 GW energy not supplied exchange capacity between market zones Supporting the gradual clos
Slide 15: Strategy
Strategy 15
Slide 16: Domestic Regulated Activities: Capex and RAB
Strategy Domestic Regulated Activities DOMESTIC REGULATED CAPEX1 RAB EVOLUTION2 €bn €bn CAGR2020-2025 7% 9.5 8.9 22.7 7.3 17.9 16.9 Plan Plan Updated 2020-2024 2021-2025 Plan 2021-2025 2021 2022 2025 1. Excluding EU contributions 16 2. Calendar RAB including WIP. RAB inflation at 1.3% on average dur
Slide 17: Domestic Regulated Activities: Capex by category
Strategy Domestic Regulated Activities CATEGORY CUMULATED CAPEX MAIN PROJECTS Development 5.6€bn ▪ ▪ Tyrrhenian Link SA.CO.I 3 ▪ ▪ Solving grid congestions RES integration Asset Renewal 2.6€bn ▪ ▪ Quality of Service Quality of Processes and Efficiency ▪ Quality of the environment ▪ Voltage regulatio
Slide 18: Regulatory milestones and output-based incentives
Strategy Regulatory milestones and output-based incentives 2022 2023 2024 2025 ▪ End of NPR2 and start of ROSS WACC 2025-2027 update ▪ Set of 2022-2024 WACC at 5% Possible annual WACC update based on kd graduality formula according to trigger mechanism ▪ New regulation for quality of ▪ Introduction
Slide 19: Non Regulated Activities
Strategy Non Regulated Activities Seizing market opportunities to create value for the system INDUSTRIAL ENERGY SOLUTIONS ▪ Transformers ▪ High Voltage (EPC/BOO/O&M) ▪ HV and LMV Cables ▪ Smart Grid (EPC/BOO/O&M) ▪ Services ▪ Photovoltaic (EPC/O&M) ▪ Energy Efficiency CONNECTIVITY DIGITAL ▪ Monitori
Slide 20: International Activities
Strategy International Activities NEW INTERNATIONAL STRATEGY ▪ LatAm valorization Gradual transition ▪ Potential entry into the USA towards other ▪ Consolidation of the European position geographies Confirming focus on the Enhancing strategic Enhancing skills in the industrial role as relationships
Slide 21: Innovation and Digitalization
Strategy Innovation and Digitalization APPROACH TECHNOLOGICAL CLUSTERS Technologies clustering takes into account More efficient Smart digital and green Global technology trends solutions to technologies manage energy and power Energy sector peculiarity Energy transition challenge Growing focus on d
Slide 22: 2021-2025 Group Financial Targets and Dividend Policy
2021 – 2025 Group Financial Targets and Dividend Policy 22
Slide 23: Guidance 2022 and 2025
2021 – 2025 Group Financial Targets and Dividend Policy Guidance 2022 and 2025 FY 2021 FY 2022 Guidance FY 2025 €bn Actual Guidance Guidance €mn €bn €bn Revenues 2,605 2.74 3.08 EBITDA 1,855 1.90 2.14 Capex1 1,521 1.7 10.0 Cumulated 2021-2025 EPS€cents 39.3 39 45 Increasing growth and value creation
Slide 24: Dividend Policy
2021 – 2025 Group Financial Targets and Dividend Policy Dividend Policy € cents CAGR 8% For 2024 and 2025 29.11 the payout ratio is expected to be 75% with a guaranteed minimum dividend equal to the 2023 dividend 2021 2022 2023 24
Slide 25: Financial Efficiency and Financial Structure
2022 – 2025 Group Financial Targets and Dividend Policy Financial Efficiency and Financial Structure ▪ Gross Debt @ ~91% Fix rate1 ▪ Net Debt / RAB2 ~60% in 2025 ▪ Average Cost of Net Debt 2021-2025 @ 1.3% ▪ Average duration of ~5 years 1 ▪ Strong commitment to maintain current rating level FINANCIA
Slide 26: ESG KPIs
2022 – 2025 Group Financial Targets and Dividend Policy ESG KPIs TARGET CAPITAL KPI 2025 2030 Human ▪ % share of women in the company (base year: 2019) 20% 22% ▪ % share of women in the company net of workers (base year: 2019) 25% 27% ▪ Workplace Safety Index for Terna Group’s employees ≤1 ≤1 Social
Slide 27: Closing Remarks
Closing Remarks 27
Slide 28: Reinforcing Terna's institutional role for the Country
Closing Remarks Generating further benefits for the system and confirming of Terna’s role in driving the current energy transition Focus on creating sustainable value over time for shareholders and communities Guaranteeing low risk profile and financial stability Ensuring access to a safe, efficient
Slide 29: Annexes
Annexes Za Terna WAN Driving Energy
Slide 30: 2022 Total Grid Fee update
Annexes 2022 Total Grid Fee update* 2021 2022 Transmission Transmission 1.95€bn 1.91€bn Resolution 565/2020 Resolution 622/2021 36% + + 46% Dispatching Dispatching 0.11€bn 0.11€bn 18% Resolution 599/2020 Resolution 629/2021 = = RAB remuneration 2.06€bn 2.02€bn Allowed Opex Allowed D&A *ARERA Resolut
Slide 31: P&L Targets
Annexes P&L Targets REVENUES EBITDA €bn €bn CAGR >4% CAGR >3% 3.08 2.49 2.61 2.14 1.81 1.86 2020 2021 2025 2020 2021 2025 Note: P&L values restated for International deconsolidation 31
Slide 32: Disclaimer
Disclaimer THIS DOCUMENT HAS BEEN PREPARED BY TERNA S.P.A. (THE “COMPANY”) FOR THE SOLE PURPOSE DESCRIBED HEREIN. IN NO CASE MAY IT BE INTERPRETED AS AN OFFER OR INVITATION TO SELL OR PURCHASE ANY SECURITY ISSUED BY THE COMPANY OR ITS SUBSIDIARIES. THE CONTENT OF THIS DOCUMENT HAS A MERELY INFORMATI
Slide 33: Notes
Notes SERN yy wa Terna WAN driving Enersy ue
Slide 34: investor.relations@terna.it www.terna.it
investor.relations@terna.it www.terna.it 34
Slide 35: Terna - Driving Energy
Ly) aa lerna AS Driving Energy