March 10, 2020 / 6:36 PM / 4 months ago

UPDATE 1-Terna pledges record-high spend to upgrade Italian grid

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MILAN, March 10 (Reuters) - Italy’s Terna has pledged to spend a record amount on the country’s power grid over the next five years to meet growing demand for electricity from green energy as climate targets bite.

In its new business plan, Terna said it would hike investments by 20% to 7.3 billion euros ($8.3 billion) in the period to 2024.

Most will be spent on streamlining its domestic network and strengthening cross-border connections to make Italy an energy hub for the Mediterranean.

“Our financial commitment... is a new investment record in line with the Green New Deal and the Italian decarbonisation strategy,” Chief Executive Luigi Ferraris said.

Through its “Green New Deal” laid out in December, the European Union has pledged to achieve climate-neutrality by 2050.

Italy is planning to phase out its coal-fired power plants by 2025 while increasing the share of electricity generated by clean energy to 55% in 2030 from 35% in 2018.

This will require grid extensions to reach new renewable energy sites and storage facilities as well as laying new high-tension lines to better connect parts of the country such as the islands.

Terna, one of the world’s biggest power grid players, also promised shareholders fatter returns, pledging 8% yearly growth in dividends to 2022.

It said revenues would grow 5% annually in the period to reach 2.94 billion euros, up from 2.29 billion euros last year, while core earnings would grow more than 4% a year to 2.17 billion euros, against 1.74 billion euros in 2019.

Terna, which expects its regulated asset base to grow 5% a year to 19.7 billion euros, makes most of its money from returns set by the regulator to help it improve its transmission grid.

According to the IEA’s 2019 World Energy Outlook, global electricity demand is expected to grow by 60% by 2040.

While the main focus in the plan will remain the domestic grid, the group said it would continue operating power assets in Brazil, Uruguay and Peru while also looking for selected growth opportunities elsewhere.

State Grid Corporation of China is Terna’s second-biggest shareholder, after Italian state lender Cassa Depositi e Prestiti. ($1 = 0.8834 euros) (Reporting by Stephen Jewkes; Editing by Valentina Za and Jan Harvey)

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