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The power transmission grid in Italy is owned by Terna, which was previously a wholly owned subsidiary of Enel, an Italy-based international power group. Enel reduced its holdings in the company to satisfy Italy's energy liberalisation goals, and it held only 5% of the shares of Terna by 2005. While Terna is unbundled in terms of ownership, the functional unbundling of distribution system operators has not been fully addressed.
While Enel remains the dominant generator and distributor of electricity in Italy, other companies have emerged as significant players in the sector. The most important of these include Edison (controlled by France's EDF since May 2012), Edipower (a 70% stake that was acquired by utility A2A for EUR1.25bn in May 2012), Acea, Energia Italia and Belgium's Electrabel.
Many of these companies have extended their market share by purchasing the former assets of Enel. Endesa Italia purchased Elettrogen; Edison purchased Eurogen; and a consortium of Belgium's Electrabel, Italy's Acea, and Italy's Energia Italia purchased Interpower, rebranding it Tirreno Power. Another large generator is Sorgenia, which is 46% owned by Austria's Verbund. Enel remains Italy's biggest power generator, also via its renewables arm Enel Green Power.
In Q421, Italian energy firm ENI announced the launch of an IPO for a subsidiary business unit focusing in power and renewables. The so-called ENI P&R firm will seek to focus ENI into a power retail firm with scope to develop over 6GW of renewable capacity by 2025 and 25GW by 2030, with this action posing some upside risks to our forecasts. The P&R firm will seek to grow the ENI consumer base from 10mn customers to over 15mn by the end of the decade, while also rapidly developing charging networks for electric vehicles.
With over 72mn end users around the world, Enel is Italy's largest power company and Europe's second biggest listed utility by installed capacity. The company produces, distributes and sells electricity and gas in 34 countries across Europe, North America and Latin America, generating energy with a managed capacity of more than 89GW, selling gas and distributing electricity across a network spanning approximately 2.2mn km. The Company Profile section of this report dedicated to Enel contains additional information and views on the company's strategy for the coming years and our outlook for it.
Enel's strategic plan for 2019-2021 included an EUR5.4bn investment in digitalisation, with 84% of this capital expenditure to be focused on assets. In particular, the company expected to invest approximately EUR4bn in networks digitalisation.
Over Q421 Enel expanded its outlook to 2030 and expects 154GW of renewable energy capacity by 2030, up from the 145GW previously forecasted. Between 2021 and 2030, the group aims to raise EUR210bn, of which EUR170bn will be invested directly through Enel's ownership and stewardship business models. Furthermore, Enel has also brought forwards to achieve net zero emissions for both direct and indirect discharges from 2050 to 2040.
Edison is one of Italy's main power generators and distributors, with 93 hydroelectric power stations (of which 55 mini-hydroelectric), 46 wind farms and 64 PV power plants and an installed capacity in Italy of over 2,000MW in renewable sources. The company also owns 14 thermoelectric plants, generating around 15.9GW. Edison has a target to produce 40% of its energy from green sources by 2030, and an emissions target of 0.26kg of CO2 per kilowatt hour produced.
ERG used to operate in the oil and gas sector but exited the business via the sale of TotalErg and is now focusing exclusively on the power sector. In the 2018-2022 period, ERG plans to invest in expanding its portfolio of renewables assets in Italy and abroad, including via acquisitions, and in the 'repowering & reblading' of existing wind power plants in Italy. As a result of these operations, the company plans to increase its power generation fleet by 850MW.
ERG announced over Q222 its ambitions to scale up its renewable capacity over the coming five years. The company will look to invest EUR2.8bn over a range of renewable projects in order to reach a total renewable capacity portfolio of 4.6GW The firm aims to focus on the deployment of 650MW of new solar projects across France, Spain and Italy.
Terna is the principal owner of the national transmission grid for high-voltage electricity, holding more than 97% of the national electricity infrastructure. Its structure is the result of the unification between ownership and management of the national transmission grid, which came into effect in November 2005. Terna has been listed on the Italian Stock Exchange since 2004. The State Grid Corporation of China is one of Terna's leading shareholders, after the acquisition from Cassa Depositi and Prestiti in 2014.
According to the company's latest strategic plan (2019-2023), Terna plans to invest EUR6.1bn in Italy, with developing and modernising the Italian grid assets being the main focus of its strategy. As part of the strategy, the company will focus on new electricity interconnections between Italy's neighbouring countries and higher technological and smart energy infrastructure. The main projects in the company's portfolio, and already under development, are reinforcing international interconnections (with France and Montenegro, in particular), with the aim of increasing the capacity for cross-border exchange and promoting the progressive integration of European markets.
New projects planned are the interconnection with Austria and the projects SACOI3, which will connect Sardinia, Corsica and Italy. Terna will also implement projects to improve connections with the different areas of the domestic market, installing undersea connections and a series of transmission lines, particularly in Sicily and the Central-South region of Italy. Furthermore, projects are in place to rationalise the grids in a number of large metropolitan areas such as Milan, Rome, Naples and Palermo.
Towards the end of March 2022, Terna, the Italian power transmission system operator (TSO), approved a new industrial action plan, termed ‘Driving Energy’. This will see EUR10bn spent between 2022 and 2025 on the Italian grid network. This will see EUR5.6bn of investment into the expansion of the transmission grid with a focus on the development of new high-voltage direct current (HVDC) lines. A new route, the Tyrrhenian Link, will connect Sardinia, Sicily and Campania while other interconnector projects will enhance connections between Emilia-Romagna and Tuscany. The firm will also invest EUR2.6bn into upgrading and maintaining existing infrastructure and ensuring greater functionality in bringing on renewable capacity.