The Strategic Plan

The Strategic PlanApproved by the Company’s Board of Directors, the Strategic Plan for the period 2011-2015 was presented in February 2011. The following items constitute a summary of it.

Traditional regulated activities

In the next five years Ternai will invest about 5 billion euro to modernize the grid, an increase of 700 million euro, amounting to 15%, compared to the figure announced in the previous Plan (4.3 billion euro). The investment for development, for which an incentivized remuneration is provided for, constitutes about 82% of the total and increases from 3.3 billion euro to 4 billion euro. The increase in investment is reflected in the Company’s regulated asset base (RAB), which grows from 9 billion euro to 12.4 billion euro at the end of the Plan, with an average annual increase of 6.6%. The investment provided for by the Plan on the regulated part amounts to an annual average of about one billion euro. In particular, the Plan includes the reorganization of the electricity grid in Italy’s largest metropolitan areas: Milan, Turin, Genoa, Rome, Naples, and Palermo. In addition to these works there are the new electric stations for the collection and injection into the grid of renewable energy and the equipment for regulating the flows of electricity and the voltage.

Non-traditional activities

Terna is analyzing investment opportunities in non-traditional activities, leveraging the capabilities developed in managing large-scale works and its knowledge of the electricity market. The Plan triples the investment in such activities and provides for appropriations of up to one billion euro. In particular, during 2011 Terna plans to develop additional photovoltaic projects amounting to about 50 MWp. The Company will also examine investment opportunities in the field of energy efficiency and for the construction and management of infrastructure for connecting renewable-energy plants to the local grid in the Balkans. In the presence of appropriate regulation, the Company may consider investment in the field of energy storage, aimed at making the grid more secure and efficient in the areas that are most congested because of the presence of renewable-energy plants.      

Improvement of margins

Increased revenue and cost containment will enable the Group to improve its profitability from the current 74% to 78% at the end of the period covered by the Plan. From 2011 to 2015, the average annual increase in Group regulated revenues will be about 6%, thanks to the increase in investment. In spite of the growth of investment, the costs regarding the regulated activities remain essentially stable.

Solidity of the financial structure

The cash absorption generated by the Investment Plan and the dividend policy will lead to an increase of 2.6 billion euro in net debt at the end of the Plan, which is lower than provided for in the previous Business Plan. The capital structure remains sound. During the period covered by the Plan, the ratio between the Company’s debt and its regulated asset base (RAB) always stays under 60%. The conditions of the debt remain very competitive also because of the Group’s excellent rating level. 

Dividend policy confirmed

The 2011-2015 Strategic Plan confirms the Company’s dividend policy. As with the sale of Terna Participações, part of the capital gain recorded with the sale of non-traditional businesses will support the aforesaid policy, which provides for a 4% annual increase, taking 2008 as the base year.     

For further information: strategic plan