Q3 2025 Terna SpA Earnings Call

November 13, 2025

In listen only mode. Please be advised that today's conference is being recorded.

Operator: At this time, all participants are in listen-only mode. Please be advised that today's conference is being recorded. I would like to hand the conference over to our host speaker today, Mr. Stefano Gamberini, Head of Investor Relations. Please go ahead, sir.

Operator: Attention. At this time, all participants are in listen-only mode. Please be advised that today's conference is being recorded. I would like to hand the conference over to our host speaker today, Mr. Stefano Gamberini, Head of Investor Relations. Please go ahead, sir.

I would like to hand, the conference over to our host speaker today, Mr. Stefano Gamberini head of Investor Relations. Please go ahead Sir.

Thank you very much.

Good afternoon, everyone and welcome to the presentation of pen nine month results 2025.

Stefano Gamberini: Thank you very much. Good afternoon, everyone, and welcome to the presentation of Terna S.p.A.'s nine-month results 2025. This call will be hosted by our CFO, Francesco Beccali. Following the presentation, there will be the Q&A session, so we kindly ask you to send your question to our email address, investor.relations@terna.it. Please, Francesco.

Stefano Gamberini: Thank you very much. Good afternoon, everyone, and welcome to the presentation of Terna's 9 Month Results 2025. This call will be hosted by our CFO, Francesco Beccali. Following the presentation, there will be the Q&A session. We kindly ask you to send your question to our email address, investor.relations@terna.it. Please, Francesco.

This call will be hosted by our CFO Francesco Big Rally.

Following the presentation, there will be the Q&A session. So we kindly ask you to spend your quest.

Through our email address investor relations at <unk>.

The IP.

Please Francesco.

Okay.

Thank you Stefano and good afternoon, everyone.

Francesco Beccali: Thank you, Stefano, and good afternoon, everyone. Before looking at the figures, I like to take a moment to highlight some of our most recent achievements. Let's start with grid development, where we have made significant progress across multiple fronts in the past few months. Starting with the Tyrrhenian Link, one of the flagship projects in our 2024, 2028 industrial plan. Let me remind you that before the summer, we completed the laying of the first submarine cable of the eastern section, and on 16 September, Terna and Nexans began the first installation phase of the western section, connecting Sicily and Sardinia. Once completed, it will set a world record for the deepest high voltage subsea cable installation, reaching 2,150 meters below sea level. This project will also represent a significant step towards Italy's decarbonization target.

Francesco Beccali: Thank you, Stefano, and good afternoon, everyone. Before looking at the figures, I'd like to take a moment to highlight some of our most recent achievements. Let's start with grid development, where we have made significant progress across multiple fronts in the past few months. Starting with the Tyrrhenian Link, one of the flagship projects in our 2024-28 industrial plan. Let me remind you that before the summer, we completed the laying of the first submarine cable of the eastern section, and on 16 September 2024, Terna S.p.A. and Nexans began the first installation phase of the western section, connecting Sicily and Sardinia. Once completed, it will set a world record for the deepest high-voltage subsea cable installation, reaching 2,150m below sea level. This project will also represent a significant step towards Italy's urbanization target.

Before moving at the peers.

I'd like to take a moment to highlight some of our most recent achievement let's.

So let's start with good development.

We have made significant progress across multiple fronts in the past few months.

Starting with the Iranian Inc. One of the flagship project in our <unk>.

24, 28 industrial plan, let me remind you that before from the summer we completed.

<unk> of the first submarine cable of the Eastern section and on September 16.

Derma and Exxon began the first in celestial phase of the Western section connecting Cc in Sardinia.

Once completed set.

Set a world record for the deepest high voltage subsea cable installation, reaching 2150 meters below sea level.

This project.

Also represents a significant step towards Italy urbanization target.

On October 21st.

Francesco Beccali: On 21 October, the Ministry of Environment and Energy Security formally launched the authorization process for the Central Link project, which plans to rebuild the 220 kW backbone between Umbria and Tuscany, a crucial step to enhance transmission capacity, grid robustness, and renewable integration. Shortly after, on 27 October, the ministry initiated the authorization procedure for the Sardinian Link, a project to reconstruct and modernize Sardinia's grid infrastructure, strengthening the island's transmission capacity and ensuring a more stable and resilient electricity system. These projects are included in the development plan and are scheduled beyond the business plan horizon. A distinctive feature of both the Central and Sardinian Links will be the use of Terna's proprietary 5-Phase technology in their construction, an innovative design that represents a major step forward in the evolution of transmission infrastructure.

The industry of environment and energy security formally launched the authorization process for the Central link project, which plans to rebuild the 220 kilowatt backbone between Umbria and Tuscany, a crucial step in and.

Francesco Beccali: On 21 October 2024, the Ministry of Environment and Energy Security formally launched the authorization process for the Central Link project, which plans to rebuild the 220 kV backbone between Umbria and Tuscany, a crucial step to enhance transmission capacity, grid robustness, and renewable integration. Shortly after, on 27 October 2024, the Ministry initiated the authorization procedure for the Sardinian Link, a project to reconstruct and modernize Sardinia's grid infrastructure, strengthening the island's transmission capacity and ensuring a more stable and resilient electricity system. These projects are included in the development plan and are scheduled beyond the business plan horizon. A distinctive feature of both the Central and Sardinian Links will be the use of Terna's proprietary five-phases technology in their construction, an innovative design that represents a major step forward in the evolution of transmission infrastructure.

Transmission capacity, greater robustness and renewable integration.

Shortly after our October seven the Ministry and shifted the authorization procedure for the surgeon unique projects to reconstruct and modernize.

Vignette grid infrastructure strengthening the iron transmission capacity and ensuring a more stable and resilient electricity system.

These projects.

Included in the development plan and the scheduled beyond the business plan horizon.

The feature of both the central and Sardinia links will be the use of tablets prefer proprietary five phases technology in their construction and innovative design that represents a major step forward in the evolution of transmission infrastructure.

These new pylons are lighter more environmental integrated and capable of increasing transfer capacity, while reducing electric and magnetic fields contributing to a more efficient and sustainable growth of the group.

Francesco Beccali: These new pylons are lighter, more environmentally integrated, and capable of increasing transport capacity while reducing electric and magnetic fields, contributing to a more efficient and sustainable growth of the grid. With regard to the authorization update, we signed a five-year memorandum of understanding with the Marche region to enhance the planning of new infrastructure, and the ministry kicked off the approval process for overhauling the city of Ferrara's electricity grid. Lastly, in September, Terna completed the acquisition of part of the high voltage grid in Rome from Acea for EUR 227 million, an operation aimed at strengthening the continuity and security of the electricity transmission service.

Francesco Beccali: These new pylons are lighter, more environmentally integrated, and capable of increasing transport capacity while reducing electric and magnetic fields, contributing to a more efficient and sustainable growth of the grid. Moreover, with regard to the authorization updates, we signed a five-year memorandum of understanding with the Marche region to enhance the planning of new infrastructure, and the Ministry kicked off the approval process for overhauling the city of Ferrara's electricity grid. Lastly, in September, Terna completed the acquisition of part of the high-voltage grid in Rome from Acea for EUR 227 million, an operation aimed at strengthening the continuity and security of the electricity transmission service. This acquisition will also look for more effective decision-making on renewal and development investments across the central Italy transmission network, while having only a limited impact on Terna's financial leverage and remaining neutral for our credit rating.

Moreover.

With regard to hear authorization update we signed a five year memorandum of understanding with the market region to enhance the planning of new infrastructure and the Ministry kicked off the project approval process for overall in the <unk>.

GTO Pharos electricity grid lock.

Velocity.

<unk> completed the acquisition of part of the <unk> touch cleaning room from a chair for 227 million euros.

And operations aimed at strengthening the continuing to secure accretive electricity transmission services.

This acquisition will.

Also for more effective decision, making or a renewal and development investments across the central Italy transmission network.

Francesco Beccali: These acquisitions will also look for more effective decision-making for renewal and development investments across the Central Italy transmission network, while having only a limited impact on Terna's financial leverage and remaining neutral for our credit rating. Beyond infrastructure development, we have also made important progress on the procurement front. Let's move to the next slide. We continue to effectively manage potential supply chain risks through timely and efficient mitigation actions. As of today, around 88% of our 2024-2028 CapEx plan is already covered by procurement contracts, up from more than 80% in March. All major projects, including the Tyrrhenian, Adriatic, and Sa.Co.I.3 links, are fully contracted. For the Elmed interconnections between Italy and Tunisia, the cable portion is already secured, while tenders for the converter stations are currently underway.

Having only a limited impact on <unk> financial leverage and remain neutral for our credit rating.

Beyond infrastructure development. We have also made important progress on the procurement front, let's move to the next slide.

Francesco Beccali: Beyond infrastructure development, we have also made important progress on the procurement front. Let's move to the next slide. We continue to effectively manage potential supply chain risks through timely and efficient mitigation actions. As of today, around 88% of our 2024-2028 CAPEX plan is already covered by procurement contracts, up from more than 80% in March. All major projects, including the Tyrrhenian, Adriatic, and SACOI III links, are fully contracted. For the element interconnection between Italy and Tunisia, the cable portion is already secured, while tenders for the converter stations are currently underway. The residual and first portion of the planned procurement contracts primarily relate to projects scheduled for the latter part of the period, whose procurement will naturally be finalized over time. That means now to regulation.

Okay.

We continue to effectively manage.

Potential supply chain risk through timely and efficient mitigation actions.

As of today.

Around 88% of our 2024 28 Capex plan is already covered by procurement contracts up for more than 80% in March.

All much of projects, including the Iranian Adriatic and accord three lettings are fully contracted for the element interconnection between Italy, and Tunisia camera portion is already secure while tenders for the converter stations are currently underway.

The first portion of plant procurement contracts, primarily related to projects scheduled for the latter part of the period with procurement will naturally be finalized over time.

Francesco Beccali: The residual and third portion of the, of planned procurement contracts primarily relates to projects scheduled for the latter part of the period, whose procurement will naturally be finalized over time. Passing now to regulation. A few days ago, ARERA published Resolution 476 of 2025, verifying whether the conditions for the activation of the trigger mechanism for 2026 were met. As the variation in market parameters of the formula remained below the 30 basis points threshold defined in the regulatory framework, the current WACC of 5.5% for electricity transmission will remain unchanged in 2026.

Turning now to regulation, Chile, as a growth arena publisher resolution 476 of 2025 verifying whether the conditions for the professional or the trigger mechanism.

Francesco Beccali: Two days ago, ARERA published Resolution 476 of 2025, verifying whether the conditions for the activation of the trigger mechanism for 2026 were met. As the variation in market parameters of the formula remained below the 30 basis point threshold defined in the regulatory framework, the current WACC of 5.5% for electricity transmission will remain unchanged in 2026. As regards to the ROS mechanism, the regulator published in August Resolution 390 of 2025, launching the experimental phase of the ROS integrale mechanism for the 2026 and 2027 period. In October, Terna S.p.A. submitted to ARERA its 2026-2027 business plan and proposals for incentives linked to operational and performance efficiency. The business plan will be the reference for the fast money-slow money mechanism, and for the new incentive penalty mechanism introduced by the regulator for the accuracy of CAPEX.

For 2026 and <unk>.

As the variation in market parameters of the photos are remain below the 30 basis point threshold defined in the regulatory framework the government for Iraq of five 5% for electricity transmission will remain unchanged in 2026.

As regards gross mechanism.

No regulator of published in August the resolution 390 of transplant five.

Francesco Beccali: As regards to ROS mechanism, the regulator published in August the Resolution 390 of 2025, launching the experimental phase of ROS Integrale mechanism for 2026 and 2027 period. In October, Terna submitted to ARERA its 2026/2027 business plan and proposals for incentives linked due to operational and performance efficiency. The business plan will be the reference for the fast money, slow money mechanism and for the new incentive penalty mechanism introduced by the regulator for the accuracy of CapEx. Still on the regulatory side, in October, ARERA also published Resolutions 440, recognizing Terna EUR 93 million of output-based incentives for additional inter-zonal transmission capacity and investment efficiency. Finally, regarding shareholder remuneration, today, the board of directors approved the 2025 interim dividend at EUR 0.1192 per share, flat compared to last year interim dividend.

Launching the experimental phase of Ross Integra, let mechanism for 2026, and 2000 2007 period.

In October <unk> submitted to <unk> in 2026 to 27 business plan and proposals for incentives linked to operational and performance efficiency.

This plant will be the reference for the fast money for ammonia mechanism and for the new incentive penalty mechanism introduced by the regulator for VR courtesy of Capex.

Still from the regulatory side.

In October.

Francesco Beccali: Still on the regulatory side, in October, ARERA also published Resolution 440, recognizing Terna €93 million of out-based incentives for additional interzonal transmission capacity and investment efficiency. Finally, regarding shareholder remuneration, today, the board of directors approved the 2025 interim dividend at €11.92 per share, flat compared to last year's interim dividend. Please note that the new dividend policy communicated to the market in March sets a minimum dividend per share equal to the 2024 dividend for the entire duration of the 2024-28 business plan. Now, let me briefly give you the usual overview of the Italian electricity market. Turning to the next slide. As you can see from the chart, in the first nine months of 2025, national demand was about 233 terawatt-hours, recording a negligible contraction of 1.2% in comparison with the same period of last year, when national demand was about 236 terawatt-hours.

<unk> also published for resolution 414, reorganizing parallel 93 million euros of output based incentives for additional infrastructure and transmission capacity and investment efficiency.

Finally regarding shareholder remuneration.

The board of directors approved the 2025 interim dividend at $11 92 per share.

Compared to last year in <unk>. Please note that the new dividend policy communicated to tomorrow to the market March set a minimum dividend per share equal to the <unk> 24 dividend for the entire duration of the 'twenty 'twenty four 'twenty eight plus.

Francesco Beccali: Please note that the new dividend policy communicated to the market in March sets a minimum dividend per share equal to the 2024 dividend for the entire duration of the 2024/2028 business plan. Let me briefly give you the usual overview of the Italian electricity market, turning to the next slide. As you can see from the chart, in the first 9 months of 2025, national demand was about 233 TWh, recording a negligible contraction of 1.2% in comparison with the same period of last year, when national demand was about 236 TWh. Over the period, renewable sources covered about 43% of national demand, in line with the level registered last year.

Now let me briefly give you the usual overview of the Italian electricity market turning to the next slide.

As you can see from the chart in the first nine months of 2025 National demand was about 233 Terawatt hour.

<unk> contraction of one 2% in comparison with the same period of last year when national demand was about one 256 Terawatt hour.

Over the period renewable sources covered about 43% of national demand.

Francesco Beccali: Over the period, renewable sources covered about 43% of national demand, in line with the level registered last year. For what concerns national net total production, this stood at 201 TWh, up by 1% compared to the same period of 2024. In the period, renewable sources accounted for about 50% of the national net total production, essentially in line with the level recorded in the same period of last year, when renewable energy sources covered about 51% of net total production. To conclude, let me highlight the remarkable increase in photovoltaic production, which grew by 23% versus the first nine months of last year, compensating the reduction in hydro generation. With renewables continuing to play a major role in Italy's power mix, flexibility becomes crucial. Before moving to the financial results of the company, let's turn to storage and the progress made under the MAXI mechanism.

Line with the level of interest throughout last year for what concern National net total production. These stood at 201 Terawatt hour up by 1% compared to the same period of 2024.

Francesco Beccali: For what concerns national net total production, this stood at 201 terawatt hour, up by 1% compared to the same period of 2024. In the period, renewable sources accounted for about 50% of the national net total production, essentially in line with the level recorded in the same period of last year, when renewable energy sources covered about 51% of net total production. To conclude, let me highlight the remarkable increase in photovoltaic production, which grew by 23% versus the first 9 months of last year, compensating the reduction in hydro generation. With renewables continuing to play a major role in Italy's power mix, flexibility becomes crucial. Before moving to the financial results of the company, let's turn the storage to storage and the progress made under the MACSE mechanism, moving to the next slide.

In the period renewable sources accounted for about 50% of the National net total production.

Essentially in line with the level recorded in the same period of last year when the renewable energy sources covered about 51% of net total production.

To conclude let me highlight the remarkable increase in footfall type production, which grew by 23% versus the first nine months of last year compensating the reduction in hydro generation.

With the renewables continuing to play a major role in Italy's power.

Flexibility becomes crucial so before moving to the financial results of the company, let's turn to storage to storage.

And the progress made under the Max <unk> moving to the next slide.

Yes.

Francesco Beccali: Moving to the next slide. As you know, storage is the next frontier of the energy transition, essential to ensure flexibility and a system increasingly powered by renewables. As of 30 September 2024, Italy's total electrochemical storage capacity stood at 17.4 gigawatt-hours, mostly small-scale systems, of which around 4.4 gigawatt-hours were installed since December 2024. While small-scale installations still represent the majority, we are now witnessing a sharp acceleration in large-scale battery projects. In September, we successfully held the first auction under the MAXI framework. The auction awarded a total of 10 gigawatt-hours of storage capacity, fully covering the demand. Results confirmed strong market interest in the mechanism, with bids exceeding demand by more than four times, and average clearing prices around 65% lower than the reserve premium, around EUR 30,000 per megawatt-hour and year, compared to a cap of EUR 37,000.

As you know.

Storage is the next frontier of heavy transition.

Francesco Beccali: As you know, storage is the next frontier of the energy transition, essential to ensure flexibility and a system increasingly powered by renewables. As of 30 September, Italy's total electrochemical storage capacity stood at 17.4 GWh, mostly small scale systems, of which around 4.4 GWh were installed since December 2024. While small scale installations still represent the majority, we are now witnessing a sharp acceleration in large scale battery projects. In September, we successfully held the first auction under the MACSE framework. The auction awarded a total of 10 GWh of storage capacity, fully covering the demand.

Essentially to ensure flexibility in the system.

Pleasingly powered by our renewables.

As of September 30.

Intel is total electric chemical storage capacity stood at $17 four give a gigawatt hour, mostly small scale systems.

Of which around four four gigawatt hour were installed since December 2024.

Why is more scale installations still represent the majority we are now witnessing a sharp acceleration in large scale battery projects in <unk>.

We successfully held the first auction under the Master framework.

The options awarded a total of 10 gigawatts hour of storage capacity fully covering the demand.

Results confirmed strong market interest in the mechanism with meat exceeding demand by more than four times, an average fleet in prices around 65% lower than the research premium.

Francesco Beccali: Results confirmed strong market interest in the mechanism, with bids exceeding demand by more than 4 times and average clearing prices around 65% lower than the reserve premium, around EUR 30,000 per MWh and year, compared to a cap of EUR 37,000. The contracted facilities are expected to enter into operation by 2028, alongside renewable plants from the FER auctions, helping to balance the system and reduce reliance on fossil fuels for power generation in line with the national decarbonization objectives. On this, the first auction of the so-called Transitional FER closed in September, with final rankings expected by 11 December. It saw strong participation, awarding up to 12 GW of wind and solar capacity to be commissioned by 2028.

30000 euros per megawatt hour in year compared to a cap of 37%.

Numerous.

The contracted facility.

It is expected to enter into operation by 2028, alongside the renewable plants from the Fedex options, helping to balance the system and reduce reliance on fossil fuels for power generation in line, we've been assured the carbonization objectives.

Francesco Beccali: The contracted facilities are expected to enter into operation by 2028, alongside renewable plants from the FERIX auctions, helping to balance the system and reduce reliance on fossil fuels for power generation, in line with the national decarbonization objectives. The first auction of the so-called transitional FERIX closed in September, with final rankings expected by 11 December 2024. Its strong participation awarded up to 12 gigawatts of wind and solar capacity to be commissioned by 2028. A second FERIX auction, which focused on resilient photovoltaic systems, was held in October and offered an additional capacity of almost 2 gigawatts. The final rankings are expected by the end of December. Overall, these results mark a major step forward in Italy's energy transition. Now, let's move to the main figures of the period at slide number 8.

Amit.

The first option.

Of the so called transitional phase closed in September with final rankings expected by December 11.

It saw strong participation awarding up to 12 gigawatts of wind and solar capacity to be commissioned by 2028.

The second Fedex auction, which focused on our resilient portable type systems.

Francesco Beccali: The second FER auctions, which focused on a resilient photovoltaic system, was held in October and offered an additional capacity of almost 2 GW. The final rankings are expected by the end of December. Overall, these results mark a major step forward in Italy's energy transition. Now, let's move to the main figures of the period at slide number 8. In the first nine months of 2025, group revenues and EBITDA increased by 9% and 7% respectively versus last year, increasing by approximately 135 million and 134 million EUR compared to the first nine months of 2024.

In October and offered an additional capacity of almost two gigawatts. The final rankings are expected by the end of December.

Overall these results Mark a major step forward in the energy transition.

Now, let's move to the main figures of the period slide number eight.

In the first nine months of 2025 group revenues and EBITDA.

Francesco Beccali: In the first nine months of 2025, group revenues and EBITDA increased by 9% and 7%, respectively, versus last year, increasing by approximately EUR 135 million and EUR 134 million compared to the first nine months of 2024. We also reported a group net income of EUR 853 million, with a growth of 5% compared to the same period of last year. Group CAPEX reached around EUR 2.1 billion, marking an increase of approximately 23% versus the first nine months of last year and setting a new record in Terna S.p.A.'s history. This confirms once again our effort to accelerate investments to serve system needs. To support this CAPEX acceleration, at the end of September 2025, net debt stood at EUR 11.7 billion, slightly higher compared to the value recorded at 2024 year-end of about EUR 11.2 billion. Now, let's have a closer look at the results moving forward. Let's start, as usual, with revenues analysis.

Increased by 9% and 7% respectively versus last year, increasing by approaching approximately $135 million and 134 million euros compared to the first nine months of 2024.

Yeah.

We also reported a group net income of 853 million euros with a growth of 5% compared to the same period of last year.

Francesco Beccali: We also reported a group net income of EUR 853 million with a growth of 5% compared to the same period of last year. Group CapEx reached around EUR 2.1 billion, marking an increase of approximately 23% versus the first nine months of last year and setting a new record in Terna's history. This confirms once again our effort to accelerate investments to serve system needs. To support this CapEx acceleration, at the end of September 2025, net debt stood at EUR 11.7 billion, slightly higher compared to the value recorded at 2024 year-end of about EUR 11.2 billion. Now, let's have a closer look at the results moving forward. Let's start as usual with revenues analysis.

Yes.

Group Capex reached around $2 1 billion euros, marking an increase of approximately 23% versus the first nine months of last year and setting a new record Internet's history.

This confirms once again, our effort to accelerate investments to serve system needs.

To support the discovery of consolidation at the end of September 2025, net debt stood at 11 7 billion euros slightly iron.

Compared to the value recorded at 20 to 24 year end of about $11 2 million.

Now, let's have a closer look at good results moving forward.

Let's start as usual with revenues analysis.

The first nine months of 2025 total revenues increased by 9%, reaching 2 billion anytime in the 92 million euros up about 135 million euros versus last year.

Francesco Beccali: In the first 9 months of 2025, total revenues increased by 9%, reaching EUR 2.882 billion, up by EUR 235 million versus last year. The growth was attributable both to regulated and non-regulated activities, which contributed for EUR 135 million and EUR 99 million respectively. Let's now take a closer look at the evolution of revenues, turning to the next slide. Regulated revenues reached EUR 2.357 billion, with an increase of more than 6% versus previous year. The growth was mainly driven by the rapid growth deriving from the recognition in tariffs of 2024 capital expenditure, including the update and revaluation of capital cost parameter.

Francesco Beccali: In the first nine months of 2025, total revenues increased by 9%, reaching EUR 2,882 million, up by EUR 235 million versus last year. The growth was attributable both to regulated and non-regulated activities, which contributed for EUR 135 million and EUR 99 million, respectively. Let's now take a closer look at the evolution of revenues, turning to the next slide. Regulated revenues reached EUR 2,357 million, with an increase of more than 6% versus previous year. The growth was mainly driven by the rapid growth deriving from the recognition in tariffs of 2024 capital expenditure, including the update and revaluation of capital cost parameters. The early recognition in tariffs of depreciation related to 2024 capital expenditure, one year in advance compared to the previous regulatory framework, and the fast money component set on the conventional capitalization rate defined under the ROS application.

The growth was attributable both to our regulated and nonregulated activities, which contributed for.

$135 million and 99 million with respect.

Let's now take a closer look at the evolution of revenues turning can answer the next slide.

Okay.

Regulated revenues reached <unk> 2 billion and 357 million euros.

With an increase of more than 6% versus previous year.

The growth was mainly driven by the rapid growth deriving from the recognition in times of 2020 for capital expenditure, including the update and revaluation of capital cost per meter.

The early recognition and timing of depreciation related to 2000 and deferred capital expenditure one year in advance compared to the previous regulatory framework.

Francesco Beccali: The early recognition in tariffs of depreciation related to 2024 CapEx, one year in advance compared to the previous regulatory framework. The fast money component, set on the conventional capitalization rate defined under the roles of application. These factors more than offset the weighted average cost of capital reduction from 5.8% to 5.5% in 2025, and the lower output-based incentives contribution versus last year. Non-regulated revenues reached EUR 525 million, recording a double-digit increase of 23% in comparison with the same period of last year. The improvement mainly reflects the higher contribution from the equipment segment, which includes Tamini and Brugg Kabel, and from the energy services segment. Now let's go to operating cost analysis.

And the first morning component set on the conventionals capitalization rate defined under garage from application.

These factors more than offset the weighted average cost of capital reduction from five 8% to five 5% in 2025, and the alumina output based incentives contribution versus last year.

Francesco Beccali: These factors more than offset the weighted average cost of capital reduction from 5.8% to 5.5% in 2025 and the lower out-based incentives contribution versus last year. Non-regulated revenues reached EUR 525 million, recording a double-digit increase of 22.3% in comparison with the same period of last year. The improvement mainly reflects the higher contribution from the equipment segment, which includes Tamini and Brook Cables, and from the energy services segment. Now, let's go to operating cost analysis. As you can see in this chart, total operating cost stood at EUR 856 million, 13% higher than last year. The regulated activities' cost increase is mainly driven by the rise in the headcounts and the higher average cost of labor, partially offset by higher capitalizations. The non-regulated activities were primarily impacted by higher costs for material and services related to the development of activities, mainly in the energy services segment and equipment segment.

Nonregulated revenues.

<unk> reached the 525 million euros recording a double digit increase of 22, 3% in comparison with the same period of last year.

The improvement mainly reflects the higher contribution from the treatment segment, which includes <unk> and <unk> and from the energy services segment.

Now, let's go through operating cost analysis.

As you can see in this chart total operating costs stood at $856 million, 13% higher than last year.

Francesco Beccali: As you can see in this chart, total operating costs stood at EUR 866 million, 13% higher than last year. The regulated activities cost increase is mainly driven by the rise in the headcounts and the higher average cost of labor, partially offset by higher capitalizations. The non-regulated activities were primarily impacted by higher costs for material and services related to the development of activities, mainly in the energy services segment and equipment segment. This increase were driven by higher volume of activities, reflected also in revenues growth. Regarding EBITDA, moving to the next slide. Thanks to the acceleration in revenues, 9 months 2025 group EBITDA reached EUR 2.026 billion, 7% higher than the same period of last year.

The regulated activities cost increase is mainly driven.

While the rise in the App counts.

And the average cost of <unk>, partially offset by higher capitalization.

Nonregulated activities.

Mainly impacted by higher cost for materials and services related to level.

Our development of activities.

Mainly in the energy services segment and equipment segment.

These increases were driven by higher volume of activities that affected also in revenues growth.

Francesco Beccali: These increases were driven by higher volume of activities, reflected also in revenues growth. Regarding EBITDA, moving to the next slide. Thanks to the acceleration in revenues, nine months 2025 group EBITDA reached EUR 2,026 million, 7% higher than the same period of last year. The improvement was mainly attributable to regulated activities, which contributed for about EUR 99 million more versus the first nine months of the previous year, showing an EBITDA of EUR 1,923 million. EBITDA from non-regulated activities increased by 51% to EUR 103 million, mainly driven by a stronger contribution from the equipment segment, with improving margins from both the Tamini and Brook Cables groups, as well as better results from the energy services. Let's now have a look to the lower part of the P&L, turning to the next slide. DNA amounted to EUR 679 million.

Regarding EBITDA moving to the next slide.

Thanks to the acceleration in revenues nine months 2025 group EBITDA reached two.

And 26 million euros.

7% higher than the same period of last year.

The improvement was mainly attributable to regulated activities, which contributed for about 99 million euros more versus the first nine months of the previous year, showing an EBITDA of 1000 923 million.

Francesco Beccali: The improvement was mainly attributable to regulated activities, which contributed for about EUR 99 million more versus the first nine months of the previous year, showing an EBITDA of EUR 1,923 million. EBITDA from non-regulated activities increased by 51% to EUR 103 million, mainly driven by a stronger contribution from the equipment segment, with improving margins from both the Tamini and Brugg Kabel groups, as well as better results from the energy services. Let's now have a look to the lower part of the P&L, turning to the next slide. D&A amounted to EUR 679 million. The rise versus last year's figure was mainly related to the entry into service of new infrastructures. The EBIT reached EUR 1,348 million, 7% higher versus the first nine months of 2024.

EBITDA from nonregulated activities increased by 51% to 103 million euros, mainly driven by a stronger contribution from the equipment segment with improving margins from both the <unk> and <unk> camera groups as well as better results from the energy services.

Let's now have a look to the lower part of the P&L.

On the next slide.

Okay.

DNA amounted to 679 million euros.

Versus last year figure was mainly related to the entry into service of new infrastructures.

Francesco Beccali: The rise versus last year figure was mainly related to the entry into service of new infrastructures. As a consequence, the EBIT reached EUR 1,348 million, 7% higher versus the first nine months of 2024. The net financial expenses amounted to EUR 132 million. The slight year-on-year increase of EUR 27 million is mainly due to the drawdown of new financing and the lower financial income resulting from cash investments, partially offset by higher capitalized financial charges. Taxes stood at EUR 362 million, EUR 24 million higher versus last year, essentially due to improved results. Our tax rate was 29.8% compared to 29.4% in the nine months of 2024. As a result, group net income reached EUR 853 million, marking a 5% growth versus the same period of last year. Moving now to CAPEX analysis.

As a consequence.

Mid <unk>.

Reached $1 billion and 348 million euros.

7% higher versus the first nine months of 2024.

The net financial expenses amounted to 132 million.

Francesco Beccali: The net financial expenses amounted to EUR 132 million. The slight year-on-year increase of EUR 27 million is mainly due to the drawdown of new financing and the lower financial income resulting from cash investments, partially offset by higher capitalized financial charges. Taxes stood at EUR 362 million, EUR 24 million higher versus last year, essentially due to improved results. Our tax rate was 29.8% compared to 29.4% in the nine months of 2024. As a result, group net income reached EUR 853 million, marking a 5% growth versus the same period of last year.

The slight year on year increase of $27 million is mainly due to the slowdown of new financing and the lower financial income, resulting from cash investments, partially offset by higher capitalized financial charges.

Okay.

Taxes stood at 362 million euros 24 million on year versus last year or so.

Due to improved results our tax rate was 29, 8% compared to 29, 4% in.

The nine months of 2024.

As a result group net income reached 853 million, marking a 5% growth versus the same period the same period of last year.

Moving now to Capex analysis.

Francesco Beccali: Moving now to CapEx analysis. In the first nine months of 2025, total CapEx reached around EUR 2.1 billion, up by 23% year-on-year, confirming the solid CapEx acceleration in line with plan targets. We invested about EUR 973 million in regulated activities. Among the main projects of the period, it is worth mentioning the Tyrrhenian Link, the Adriatic Link, Sa.Co.I.3, the modernization of the high voltage grid in the locations due to host the Winter Olympics in 2026, and the Chiaramonte Gulfi-Scoglitti power line. Moreover, we should consider the investments planned under the Defense Plan, which play a crucial role in reinforcing the resilience of the national transmission system through the installation of synchronous compensators, shunt reactors, and damping resistor systems. Among CapEx categories, development CapEx represented 66.7% of total regulated investments.

In the first nine months of 2025 total capex reached around $2 1 billion euros up by 23% year on year, confirming a solid capex acceleration in line with plan target.

Francesco Beccali: In the first nine months of 2025, total CAPEX reached around EUR 2.1 billion, up by 23% year-on-year, confirming the solid CAPEX acceleration in line with planned targets. We invested about EUR 1,972 million in regulated activities. Among the main projects of the period, it is worth mentioning the Tyrrhenian Link, the Adriatic Link, SACOI III, the modernization of the high-voltage grid in the locations due to the Winter Olympics in 2026, and the Chiaramonte Gulfi-Minna power line. Moreover, we should consider the investments planned under the defense plan, which play a crucial role in reinforcing the resilience of the national transmission system through the installation of synchronous compensators, shunt reactors, and dumping resistor systems. Among CAPEX categories, development CAPEX represented 57% of total regulated investments. Defense CAPEX stood at 13%, while asset renewal and efficiency was at 30%. Non-regulated and other CAPEX stood at EUR 115 million.

We invested about $1 million and 972 million euros.

Related activities.

Among the main projects of the period. It is worth mentioning that Avenue link very.

Let me ask it link correctly, the modernization of the high voltage grid in the locations you towards the Winter Olympics in 2000 franchisees and the care monitoring all fishermen power line.

Moreover, if we consider the investment plan under the defense plan, which play a crucial role.

Forcing the resilience of the national transmission system through the installation of synchronous compensator shunt reactor and dumping resistors assistance.

Among capex categories.

Development Capex represented 57%.

Of total liquid investments defense Capex stood at 13%, while asset renewal and efficiency was up 30%.

Francesco Beccali: Defense CapEx stood at 13%, while asset renewal and efficiency was at 30%. Non-regulated and other CapEx stood at EUR 115 million. This includes capitalized financial charges and other investments. Turning to the next slide, cash flow generation from the period amounted to around EUR 2.2 billion. This was the result of around EUR 1.5 billion of operating cash flow and around EUR 700 million of working capital and other items. Net debt at the end of September 2025 was about EUR 11.7 billion, around EUR 500 million higher than 2024 year-end level, primarily due to the CapEx acceleration and the dividend payment. Let's now make a deeper analysis of our debt profile, moving to slide 17.

Nonregulated and other Capex stood at 115 million euros. This includes capitalized financial charges and other investments.

Francesco Beccali: This includes capitalized financial charges and other investments. Turning to the next slide, cash flow generation for the period amounted to around EUR 2.2 billion. This was the result of around EUR 1.5 billion of operating cash flow and around EUR 700 million of working capital and other items. Net debt at the end of September 2025 was about EUR 11.7 billion, around EUR 500 million higher than 2024 year-end level, primarily due to the CAPEX acceleration and the dividend payment. Let's now make a deeper analysis of our debt profile, moving to slide 17. At the end of September 2025, we registered a fixed floating ratio on gross debt of around 83%, with an average duration of approximately six years.

Turning to the next slide.

Cash flow generation for the period amounted to around $2 2 million euros.

This was the result of around $1 5 billion of operating cash flow and around 700 million euros of working capital and other items.

Debt at the end of September 25 was about $11 7 billion euros around 500 million euros or even in 2020 for yearend level, primarily due to the capex acceleration and the dividend payment.

Let's now make a deeper analysis of our debt profile moving to slide 17.

Okay.

At the end of September 2025.

Francesco Beccali: At the end of September 2025, we registered a fixed floating ratio on gross debt of around 83%, with an average duration of approximately 6 years. Consistent with Terna's strategic approach of aligning capital allocation with sustainability goals to enhance long-term value, as of the end of September, Terna's sustainable financing portfolio included EUR 3.75 billion in senior green bonds and EUR 1.85 billion in perpetual subordinated hybrid green bonds. On this, let me remind you about the successful launch of the first European green bond with a total nominal amount of EUR 750 million made in July. This bond, which received a very favorable market response, will pay an annual coupon of 3%.

Our fixed floating ratio on gross debt of around 83% with an average duration of approximately six years.

Consistent with 10, our strategic approach of aligning capital allocation with sustainability goals to enhance long term value as of the end of September sediments sustainable financing portfolio included $3 75 billion in senior Green months, and 185 billion euros.

Francesco Beccali: Consistent with Terna's strategic approach of aligning capital allocation with sustainability goals to enhance long-term value, as of the end of September, Terna's sustainable financing portfolio included EUR 3.75 billion in senior green bonds and EUR 1.85 billion in perpetual subordinated hybrid green bonds. On this, let me remind you about the successful launch of the first European green bond, with a total nominal amount of EUR 750 million made in July. These bonds, which received a very favorable market response, will pay an annual coupon of 3%. In addition, Terna can rely on EUR 2 billion in ESG-linked term loans, three ESG-linked revolving credit facilities for a total of approximately EUR 4.3 billion, and EUR 2 billion Euro Commercial Paper Program dedicated to the issuance of short-term conventional or ESG notes.

In perpetual subordinated.

<unk> hybrid Green bond.

Our needs.

Let me remind you about the successful launch of the first European Green bond with a total nominal amount of 750 million euros, mainly in July this month, which received a very favorable market response will pay a number of 3%.

In addition, <unk> relies on 2 billion euros.

Francesco Beccali: In addition, Terna can rely on EUR 2 billion in an ESG-linked term loans, three ESG-linked revolving credit facilities, for a total of approximately EUR 4.3 billion, and a EUR 2 billion Euro Commercial Paper programme dedicated to the issuance of short-term conventional or ESG loans. As already communicated to the market, in July, the European Investment Bank, Terna, Intesa Sanpaolo, and SACE have signed agreements totaling EUR 1.5 billion to support the development and construction of the Adriatic Link, the submarine power cable linking the Italian regions of Marche and Abruzzo. Thank you for your attention. Let me now conclude this presentation with some closing remarks. First of all, I would like to emphasize that we remain strongly focused on executing our industrial plan.

In <unk> term loans, three ESG linked revolving credit facilities for a total of approximately $4 million and 300 million euros, and 2 billion Euro Euro commercial paper program dedicated to the issuance of short term conventional or ESG.

To conclude.

As already communicated to the market.

Francesco Beccali: To conclude, as already communicated to the market, in July, the European Investment Bank, Terna S.p.A., Intesa Sanpaolo, and SACE have signed agreements totaling EUR 1.5 billion to support the development and construction of the Adriatic Link, the submarine power cable linking the Italian regions of Marche and Abruzzo. Thank you for your attention. Let me now conclude this presentation with some closing remarks. First of all, I would like to emphasize that we remain strongly focused on executing our industrial plan. As highlighted during the presentation, alongside delivering a solid set of results, we continue to make tangible progress across all our main projects, while keeping a disciplined approach on the procurement front despite a still challenging environment. All of this confirms once again our ability to deliver on our commitment. At the same time, the broader energy transition continues to advance rapidly.

The European investment Bank, Terna, and fitness and Paolo and Sasha <unk> signed agreements totaling $1 5 billion euros to support the development and construction of the ITT, Inc. The submarine power cable linking Italian regions of market.

Thank you for your attention let me now conclude this presentation with some closing remarks.

Okay.

First of all I will.

I'd like to emphasize that we remain strongly focused on executing our <unk> surplus.

As highlighted during the presentation.

Francesco Beccali: As highlighted during the presentation, alongside delivering a solid set of results, we continue to make tangible progress across all our main projects, while keeping a disciplined approach on the procurement front, despite a still challenging environment. All of this confirms once again our ability to deliver on our commitments. At the same time, the broader energy transition continues to advance rapidly. The recent FER 6.0 and Maxi auctions have shown clear evidence of this progress, with over 12 gigawatts of new renewable capacity awarded under the FER 6.0 scheme and 10 gigawatt hour of storage capacity contracted in the first Maxi auction, both at competitive prices well below the respective caps. These results confirm the market's strong momentum and the soundness of the regulatory framework supporting the transition. To conclude, we firmly confirm our full year 2025 guidance.

Along side delivering a solid set of <unk>, we continue to make tangible progress across all our main projects, while keeping a disciplined approach on the procurement front, despite a still challenging environment.

All of these confirmed once again, our ability to deliver on our commitments.

At the same time, the broader energy transition continues to advance rapidly.

<unk> and Max options have shown clear evidence of this progress with over 12 Gigawatts of new renewable capacity awarded under the <unk> scheme, and 10 gigawatt hour of storage capacity contracted in the first Marc silk both at competitive prices well below perspective.

Francesco Beccali: The recent FERIX and MAXI options have shown clear evidence of this progress, with over 12 gigawatts of new renewable capacity awarded under the FERIX scheme and 10 gigawatt-hour of storage capacity contracted in the first MAXI option, both at competitive prices well below the respective caps. These results confirm the market's strong momentum, and the soundness of the regulatory framework supporting the transition. To conclude, we firmly confirm our full year 2025 guidance. We expect to achieve revenues of EUR 4.03 billion, an EBITDA of EUR 2.7 billion, and a net profit of EUR 1.08 billion. In terms of investments, the group has set a target of approximately EUR 3.4 billion for 2025. Thank you for your attention. We are now ready for the Q&A session. Thank you, Francesco. Now we are ready to start with the Q&A session.

Caps.

These results confirm the market's strong momentum and the soundness of the regulatory framework supporting the transition.

To conclude we firmly confirm our full year 2025 guidance, we expect to achieve revenues of four point <unk> three.

Francesco Beccali: We expect to achieve revenues of EUR 4.03 billion, an EBITDA of EUR 2.7 billion, and a net profit of EUR 1.08 billion. In terms of investment, the group has set a target of approximately EUR 3.4 billion for 2025. Thank you for your attention. We are now ready for the Q&A session.

3 billion euros, and EBITDA of $2 7 million and the net profit of 1.8.

8 billion euros in terms of investments the group has set a target of approximately $3 4 million for 2025.

You forget attention we are now ready for the Q&A session.

Thanks Francesco.

Stefano Gamberini: Many thanks Francesco. Now we are ready to start with the Q&A session. Francesco, we received many questions regarding the press rumor about potential sale of transmission grid stakes. Could you comment about it?

Now we are ready to start.

With the Q&A session.

And as we received many questions regarding the press rumors about potential sale of transmission grids peak.

Francesco Beccali: Francesco, we received many questions regarding the press rumor about potential sale of transmission grid stakes. Could you comment about it? Despite we do not use to comment on press rumors, let me be clear on this point. At current stage, this is not an option on our table. We constantly analyze all the possible instruments available to finance the development and maintenance of the national transmission grid, and the results of these analyses are always reflected in the decisions set out in the industrial plan. In this sense, let me confirm what we have been stating since we presented the update of our plan back in March. Our CAPEX plan to 2028 is fully sustainable under financial standpoint.

Could you comment about it.

Despite this we do not use to comment on press rumors and let me be clear on this point.

Francesco Beccali: Despite we do not use to comment on press rumors, let me be clear on this point. At current stage, this is not an option on our table. We constantly analyze all the possible instruments available to finance the development and maintenance of the national transmission grid, and the results of this analysis are always reflected in the decisions set out in the industrial plan. In this sense, let me confirm what we have been stating since we presented the update of our plan back in March. Our CapEx plan to 2028 is fully sustainable under financial standpoint. The upgrade of our rating to A- for Standard & Poor's, and the revision of the outlook to positive from stable by Moody's, registered in April, are further confirmation of our financial solidity.

Our current stage and this is not an option on our table.

We constantly analyze all the possible instruments available to finance the development and maintenance of the national transmission grid and the results of these analyses are always reflected in the decision set out in the supplier.

<unk> net.

Let me confirm what we have been stating since we presented the update of our plan.

Back in March.

Our Capex plan to 2028 is fully sustainable under a financial standpoint, the upgrade of our ratings play managed costs and it improves and the revision of the outlook to positive from stable by Moody's registered in April a further confirmation of our financial stability as of today.

Francesco Beccali: The upgrade of our rating to A- for standard improvements and the revision of the outlook to positive from stable by Moody's registered in April are further confirmation of our financial solidity. As of today, the range of flexibility tools we could evaluate are the remaining hybrid issuance capacity, which is worth more than EUR 2 billion, as well as seeking additional public contributions to strengthen the financial structure, and considering options to valorize and monetize our non-regulated activities. Now move about out-of-base incentive. What is the number of OBIs accounted in the nine months 2025? Is your expectation for the full year confirmed? In the nine months revenues, there is no contribution coming from the out-of-base incentives related to dispatching services and market efficiency incentives. These will be recognized in the last quarter when we will have full visibility and uncertainty, in line with the accounting principle.

The range of flexibility tools, we couldnt evaluate.

Francesco Beccali: As of today, the range of flexibility tools we could evaluate are the remaining hybrid issuance capacity, which worth more than EUR 2 billion, as well as seeking additional public contributions to strengthen the financial structure and considering options to valorize and monetize our non-regulated activities.

The remaining IBM issuance capacity, which was more than $2 billion as well as seeking additional public contributions to strengthen the financial structure and considering options for <unk> and monetize our nonregulated activities.

Okay.

Now I'll move it about the output based incentive.

Stefano Gamberini: Now move about output-based incentives. What is the number of OBIs accounted in the nine months 2025? Is your expectation for the full year confirmed?

What is the number of <unk> accounted in the nine months 2025.

Is your expectation for the full year confirm.

In the nine months revenues there is no contribution coming from the output based incentives related to dispatch and services market efficiency incentives.

Francesco Beccali: In the nine months revenues, there is no contribution coming from the output-based incentives related to dispatching services market efficiency incentives. These will be recognized in Q4, when we will have full visibility and certainty, in line with the accounting principle. In the nine months, we have instead registered EUR 16 million relative to the inter-zonal incentives. With reference to the full year, our expectations reflect the update in the performance estimated for 2025, which allow us to reach and possibly exceed the guidance already provided after Q1 2025 of more than EUR 50 million of OBIs contribution.

That will be recognized in the last quarter.

And then.

When we will have full visibility.

And certainly in line with the accounting principle.

In the nine months, we have instead registered 716 salary.

Francesco Beccali: In the nine months, we have instead registered EUR 16 million relative to the interzonal incentives. With reference to the full year, our expectations reflect the update in the performance estimated for 2025, which allows us to reach and possibly exceed the guidance already provided after the first quarter of 2025 of more than EUR 50 million of OBIs contribution. Thank you. Still about guidance. Why are you not increasing the guidance for full year despite you are already at around 80% on full year net income guidance? Well, the strong results we registered in the first nine months increase the visibility and the reliability of the guidance we communicated back in March.

Relative to the infrastructure and incentives with reference to the full year, our expectations reflect the update in the performance estimated for 2025, which allow us to reach and possibly exceed the guidance already provided after the first quarter of 2025 of more than 50 million euros of Rbi's.

Okay.

Thank you still about guidance.

Stefano Gamberini: Thank you. Still about guidance, why are you not increasing the guidance for full year despite you are already at around 80% on full year net income guidance?

Why.

Not increasing the guidance for full year, despite the EU.

Reed at around 80% full year net income guidance.

Wow.

The strong results we registered in the first nine months increased the visibility and the reliability of the guidance we communicated back in March however.

Francesco Beccali: Well, the strong results we registered in the first nine months increased the visibility and the reliability of the guidance we communicated back in March. However, as I've just underlined in the previous answer, we still need full visibility on some elements, such, for example, dispatching incentives, for which we need to wait the end of the year to determine the yearly performance with full certainty. Let me remind that this is the first year of the new dispatching incentives framework renewal. All the incentives we will account for this in 2025, will depend on 2025 performance.

As it is just underlying in the previous answer.

Francesco Beccali: However, as I've just underlined in the previous answer, we still miss full visibility on some elements, such, for example, dispatching incentives, for which we need to wait the end of the year to determine the early performance with full certainty. Let me remind that this is the first year of the new dispatching incentives framework renewal. All the incentives we will account for this in 2025 will depend on 2025 performance. Thank you. Given a resolution 440/2025 on interzonal incentives recognized to Terna S.p.A., do you upgrade guidance on OBIs? As we have already stated in the presentation, we wish to highlight that these around EUR 93 million of interzonal incentives improve the visibility on EUR 900 million guidance of total OBIs for the 2024-2028 period. As we always reported, these interzonal incentives will be accounted for over three years starting by next month.

We still missed full visibility on some elements such for example, dispatch incentives for which we need to wait to the end of the year to date remind yearly performance with full certainty.

Let me remind that this is the first year of the new dispatch incentive framework in Europe. So all the incentives.

We will account for this in 2025 will depend on 2025 performance. Thank you.

Given our resolution 442025 on an interest only incentive recognized to Stan do you upgrade guidance on <unk>.

Stefano Gamberini: Thank you. Given Resolution 440 2025 on inter-zonal incentives recognized to Terna, do you upgrade guidance on OBIs?

As we have already stated in the presentation.

Francesco Beccali: As we have already stated in the presentation, we wish to highlight that this around EUR 93 million of inter-zonal incentives improve the visibility on EUR 900 million guidance of total OBIs for the 2024/2028 period. As we always reported, these inter-zonal incentives will be accounted for over 3 years, starting by next month. In the first half of 2025, we have already registered EUR 16 million of inter-zonal incentives, recognized from previous year. We did not disclose the breakdown of our OBIs guidance among the different mechanisms. However, let me remind you that the overall amount mostly refers to existing output-based incentives framework, with a bigger contribution from the dispatching service and for a residual part relative to instead the ROS Integrale schemes backloaded.

We wish to highlight this around 93 million euros or in Brazil incentives.

Improved visibility on 900 million euros guidance of total <unk> for the 2020 for 2028 period.

As we always reported this in Brazil incentives will be accounted for over three years, starting by next one in the first half of 2025, we are already registered 16 million euros of intracellular incentive recognized from previous year.

Francesco Beccali: In the first half of 2025, we have already registered EUR 16 million of interzonal incentives recognized from previous year. We did not disclose the breakdown of our OBIs guidance among the different mechanisms. However, let me remind you that the overall amount mostly refers to existing out-of-base incentive framework, with a bigger contribution from the dispatching service, and for a residual part relative to instead the ROS integrale schemes backloaded. Okay. Can you comment on the ROS integrale expected incentives and potential timeline? The last resolution published by ARERA basically confirms ARERA's focus on the need to incentivize companies to deliver strategic high-value energy infrastructure in an efficient way. ARERA allows companies to submit proposals for new reward-only out-of-base incentives as part of their business plan, which will be subject to the regulator's scrutiny and approval.

We did not disclose the breakdown of our <unk> guidance among the different mechanism. However, let me remind you that the overall amount mostly referred to existing output based incentives framework with a bigger contribution from the dispatch and service and a residual part relative to instead.

The gross integralist schemes backloaded.

Okay can you comment on the Ross Integra.

Stefano Gamberini: Okay. Can you comment on the ROS Integrale expected incentives and potential timelines?

Texted incentives.

And potential timeline.

Okay.

In the last resolution.

Published by era, basically confirm set it is focused on the need to incentivize companies to deliver strategic.

Francesco Beccali: The last resolution, published by ARERA basically confirms ARERA's focus on the need to incentivize companies to deliver strategic, high value energy infrastructure in an efficient way. ARERA allows companies to submit proposals for new reward-only output-based incentives as part of their business plan, which will be subject to the regulator scrutiny and approval. We do not rule out the possibility the regulator will issue new incentives before the end of the current regulatory period.

<unk> value energy infrastructure in an efficient way I'd add allows companies to submit proposals for new reward only output based incentives as part of their business plan, which will be subject to the regulatory scrutiny and afterwards.

We do not rule out the possibility the regulator, we need new incentives before the end of the current regulatory period.

Francesco Beccali: We do not rule out the possibility the regulator will issue new incentives before the end of the current regulatory period. Okay. Now on data centers. Do you see any significant acceleration in data center projects? In Italy, the connection requests to the grid associated with the construction of data centers have experienced strong and continuous growth in recent years. As of 31 October 2024, the total high-voltage connection requests reached approximately 64 GW, with around 378 active requests. Geographically, around 80% of connection requests are concentrated in the northern part of Italy, especially in Lombardy, around Milan, confirming the region as the primary hub for data center development. For this reason, data centers will represent one of the drivers, together with the electrification of domestic consumption, and electric mobility, underlying the expected increase in power demand in future years.

Okay now on data centers do you see any significant acceleration in data Center project.

Stefano Gamberini: Okay. Now on data centers, do you see any significant acceleration in data center projects?

And if there is no.

Connection request to degree associated risk assessments of the centers I've experienced strong and continuous growth in recent years.

Francesco Beccali: In Italy, the connection request to the grid associated with the construction of data centers have experienced strong and continuous growth in recent years. As of 31 October of this year, the total high voltage connection request reached approximately 64 GW, with around 378 active requests. Geographically, around 80% of connection requests are concentrated in northern part of Italy, especially in Lombardy, around Milan, confirming the region as the primary hub for data center development. For this reason, data center will represent one of the drivers, together with electrification of domestic consumption and electric mobility, underlying the expected increase in power demand in future years.

As of the 31st of October of this year. The total high voltage connection requests reached approximately 64 gigawatt with around 378 active requests.

Geographically, but 80% of connection requests are concentrated in northern pass the feedback, especially in non material.

Confirming the regions as the primary.

Data Center development for this reason that the center will represent one of the drivers together with electrification of domestic consumption and increasingly will be an extra mobility underlying the expected increase in power demand in future years.

Yeah.

Now could you. Please provide an update of our authorization and procuring step start to sit over industrial 10 horizontal.

Stefano Gamberini: Now, could you please provide an update of authorization and procurement status over industrial plan horizon?

Francesco Beccali: Now, could you please provide an update of authorization and procurement status over industrial plan horizon? Sure. The procurement process for our investments is progressing in line with the industrial plan. Projects currently still in the authorization phase, with expected completion beyond the plan horizon, are not strategic and have a limited impact on total CAPEX. The authorization processes for major projects planned after 2028 will be launched in due course. As of today, all our main HVDC projects included in the current plan have received the necessary authorizations, and around 92% of the projects in the plan have completed the approval processes. Moreover, we are actively working to complete all authorization procedures according to the planned implementation timelines, both for 2030, and for the longer-term horizon toward 2024. On procurement, we are fully aware of the potential supply chain shortages and bottlenecks affecting the industry.

Sure.

The procurement process for our investments is progressing in line with Enoxaparin.

Francesco Beccali: Sure. The procurement process for our investment is progressing in line with industrial plan. Projects currently still in the authorization phase, with expected completion beyond the plan horizon, are not strategic and have a limited impact on total CapEx. The authorization processes for major projects planned after 2028 will be launched in due course. As of today, all our main HVDC projects included in the current plan have received the necessary authorizations, and around 92% of the projects in the plan have completed the approval process. Moreover, we are actively working to complete all authorization procedures according to the planned implementation timeline, both for 2030 and for the longer term horizon toward 2024. On procurement, we are fully aware of the potential supply chain shortages and bottlenecks affecting the industry. To manage this risk, we have taken several steps to ensure continuity.

Projects currently still in a transition phase with expected completion beyond the planning horizon are not strategic and other limited.

Impact on total Capex utilization processes for measure project plan after transplant, yet will be announced in due course as of today, all our main etch PDC projects.

In the current plan.

I have received the necessity of recessions and around 92% of the projects and the plant is completed the approval process. Moreover, we are actively working to complete all organization procedures. According to the planned implementation timeline.

Both for <unk> and for the longer term horizon for 2024 on procurement, we are fully aware of the potential supply chain shortages and bottlenecks affecting the industry to manage this risk we are several steps to ensure continuity.

Francesco Beccali: To manage this risk, we have taken several steps to ensure continuity. Thanks in part to the support of Brook Cables and Tamini, around 88% of 2024-28 CAPEX is already covered by existing procurement contracts, up from 80% in March. Very well. Now, moving to the working capital, could you give a bit of color on the dynamics in nine months 2025 and your expectation for year-end working capital figure? In the third quarter, the working capital and other items report a decrease of about EUR 700 million compared to the end of 2024. This variation has a positive impact, obviously, on our cash flow.

In part to the support of broke cables and Dominion. Thus formats around 88% of 2024 continued capex is already covered by existing procurement contracts up from the 80% in March.

Francesco Beccali: Thanks, in part, to the support of Brugg Kabel and Tamini transformer, around 88% of 2024/2028 CapEx is already covered by existing procurement contracts, up from the 80% in March.

Now moving to the working capital could you give a bit of color on the dynamics in nine months 25, and your expectation for year end working capital figure.

Stefano Gamberini: Very well. Now, moving to the working capital, could you give a bit of color on the dynamics in 9 months 2025 and your expectation for year-end working capital figure?

In the first quarter of the working capital.

Francesco Beccali: In the third quarter, the working capital and other item reports a decrease of about EUR 700 million compared to the end of 2024. This variation has a positive impact, obviously, on our cash flow. This result is mainly attributable, on the one end, to an increase of about EUR 390 million in net pass-through energy payables, mainly due to higher debt from the essential plans for the security and electricity system, the so-called investimenti essenziali, and the capacity market. Partially offset by higher credits from the cost of procurement of procuring resources on dispatch market services. On top of that, we have to take account of the increase in other net liabilities, essentially due to the increase in security deposits received from operating...

No.

<unk> reports, a decrease of about $700 million.

Compared to the end of 2024.

These various as a positive impact obviously on our cash flow.

And as a result is mainly attributable underwent an.

Francesco Beccali: This result is mainly attributable, on the one end, to an increase of about EUR 390 million in net pass-through energy payables, mainly due to higher debt from the essential plants for the security and electricity system, the so-called unità essenziali, and the capacity market, partially offset by higher credit from the cost of procuring resources on the dispatching market services. On top of that, we have to take account of the increase in other net liabilities, essentially due to the increase in security deposits received from operators participating in the capacity market, and the higher planned subsidies received from third parties.

For an increase of about 390 million euros and net pass through energy payables, mainly due to higher debt from the essential plan for the security and electricity system, Mr. Paul Gay and invest in salad.

And the capacity mass market.

Partially offset by higher credits from the cost of procurement.

<unk> resources on the dispatch market.

Services.

On top of it being <unk> you have to take account of the increase in other network stability essentially due to the increase in security deposits received from operating operators participating in the capacity market and the IR plan subsidies received from third parties.

Francesco Beccali: operators participating in the capacity market, and the higher planned subsidies received from third parties. We also have to take into account the decrease of about EUR 156 million in the receivables resulting from regulated activities attributable to the collection of the previous year's dispatch and market efficiency incentive, partially offset by the higher receivables attributable to the transmission revenues, due to the tariffs update set by ARERA Resolution 579/2024/R/eel. Finally, this amount includes also the effect of the closing of the acquisition of high voltage grid portion from Acea. Regarding working capital forecast for year-end, due to the ordinary seasonality, let me remind that we expect a significant reduction in working capital liabilities, pending payment resolutions from ARERA.

Then we will have to take into account the decrease of about 156 million euros in the receivables, resulting from regulated activities attributable to the collection of the previous years.

Francesco Beccali: We also have to take into account the decrease of about EUR 156 million in the receivables resulting from regulated activities, attributable to the collection of the previous year's dispatching market efficiency incentive, partially offset by the higher receivables attributable to the transmission revenues due to the tariff update set by ARERA resolution 579 of 2024. Finally, this amount also includes the effect of the closing of the acquisition of the high-voltage grid portion from ACEA. Regarding working capital forecast for year-end, due to the ordinary seasonality, let me remind that we expect a significant reduction in working capital liabilities pending payment resolutions from ARERA. Thank you. Finally, about regulation. When do you expect new board of ARERA? Do you see any risk of ARERA changing approach towards the energy transition and those support for investment in the electricity networks?

Such a market efficiency incentives, partially offset by the higher receivables attributable to the transmission revenues due to the tariff update set by a resolution 579 of 2024.

Finally this amount includes also the effect of the closing of <unk> of the acquisition of high voltage agreed portion from us.

Regarding working capital forecast for year end <unk> into gear Vrs seasonality, let me remind that we expect a significant reduction in working capital liabilities.

Pending payment resuming should provide data.

Thank you.

Finally about regulation when do you expect new board of Maria.

Stefano Gamberini: Thank you. Finally, about regulation. When do you expect new board of ARERA? Do you see any risk of ARERA changing approach towards the energy transition and those support for investment in the electricity networks?

Do you see any risk of a changing approach towards the energy transition induce supra.

To close for investment in electricity networks.

Well.

As we always say that.

Francesco Beccali: Well, as we always say, the rationale underlying the energy transition in Italy is very strong because it basically allows to reduce the dependency of the country from imported energy and commodities. The energy transition could not go ahead without investment. We play a central role in such process. We understand that the new board of ARERA should be appointed before the end of the year. We do not expect a significant change in ARERA's approach towards the energy transition. Law 481 establishes that commissioners must be chosen among people of outstanding competence. We are confident that what we mentioned, we just mentioned, represent good rationales to prevent regulatory risk.

Francesco Beccali: Well, as we always say, the rationale underlying the energy transition in Italy is very strong because it basically allows to reduce the dependency of the country from imported energy and commodities. The energy transition could not go ahead without investment, and we play a central role in such processes. We understand that the new board of ARERA should be appointed before the end of the year, and we do not expect a significant change in ARERA's approach towards the energy transition. Law 481 establishes that commissioners must be chosen among people of outstanding competence. We are confident that what we just mentioned represents good rationales to prevent regulatory risk. Many thanks, Francesco. Thank you. The Q&A section is now over. As always, the investor relation team is available to answer any follow-up questions you might have. Thank you, everybody, for your participation, and have a nice evening.

Rationale underlying the energy transition in France.

He is very strong because it basically allows to reduce the dependence of the countries from imported energy and commodity <unk>.

The energy transition could not go ahead without investment and we play a central role in such process, we understand that the new board of how data should be appointed before the end of the and we do not expect a significant change in an era in Iran. As approach towards the energy transition.

191 establishes that commission is must be choosing among people of outstanding confidence we are confident.

What we mentioned just mentioned represent good rationale to prevent regulatory risk.

Maintain fantastic.

So the Q&A section.

Stefano Gamberini: Many thanks, Francesco.

Francesco Beccali: Thank you.

Stefano Gamberini: The Q&A section is now over. Always, as always, the Investor Relations team is available to answer any follow-up question you might have. Thank you everybody for your participation, have a nice evening.

It is now over.

Well, we said as always the Investor Relations team is available to answer any follow up questions you might have.

Thank you everybody for your participation and have a nice evening.

Thank you everybody this evening.

Francesco Beccali: Thank you, everybody. Nice evening.

Francesco Beccali: Thank you everybody. Nice evening.

Yes.

[music].

Q3 2025 Terna SpA Earnings Call

Request a DemoDemo

TEZ

Terna

Earnings