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UPDATE 1-Italy's Terna pledges record spending to get grid ready for energy transition

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MILAN, Nov 19 (Reuters) - Italian power grid operator Terna has pledged to spend a record 8.9 billion euros ($10.5 billion) on its grid in the next five years to meet the demands of a growing shift towards green energy.

The future of Europe’s energy transition away from fossil fuels to cleaner sources is widely seen as hinging on the development of more efficient digitalized grids able to cope with less predictable flows from solar and wind power.

“We need to act now to ensure that we bequeath a more reliable, efficient and decarbonised electricity system to future generations,” Terna CEO Stefano Donnarumma said.

In its new 2021-2025 plan, Terna bumped up investments by 22% to iron out bottlenecks along its 66,000 km grid, strengthen cross-border connections and get the network ready for the energy transition.

The company said it would spend an additional amount of up to 300 million euros on new opportunities abroad, adding it would also look to develop new lines of business such as hydro-pumping electricity storage and renewable energy.

Terna, which is controlled by state lender CDP, makes most of its revenues from developing its high voltage domestic power grid but also has some operations in Latin America.

Group core earnings are expected to rise to 2.21 billion euros in 2025 from an expected 1.84 billion euros next year, according to the plan, while net profit at the end of the plan is seen at 1 billion euros.

Dividend per share will grow by an average of 8% a year between 2021 and 2023, it said. ($1 = 0.8452 euros) (Reporting by Stephen Jewkes; Editing by Susan Fenton)