Italy's Terna to spend record sums on grid for shift to renewables

FILE PHOTO: Terna high voltage pylons are seen in Montalto di Castro, central Italy, April 27, 2016. REUTERS/Max Rossi

MILAN (Reuters) - Italy’s Terna said on Thursday it would spend a record 6.2 billion euros ($7.1 billion) on its power grid to deal with the shift toward the production of more renewable energy.

In its 2019-2023 plan, the state-controlled company also promised to pay higher dividends as it forecast an average growth in core earnings of more than 4 percent.

“The energy transition process is moving faster than expected and renewables and the phasing out of fossil fuels will have a major impact,” Chief Executive Luigi Ferraris told analysts.

Terna, one of the world’s biggest power grid players, makes most of its money from returns set by the regulator to help it improve its high voltage transmission grid.

The company, which expects its regulated asset base to grow to 18.5 billion euros by 2023, said two planned interconnections with Montenegro and France would come into operation during the plan.

State Grid Corporation of China is Terna’s second-biggest shareholder, after Italian state lender Cassa Depositi e Prestiti.

Terna, which also manages assets in South America, said it would be developing non-core businesses in connectivity using dark-fibre infrastructure.

The group, which sees revenues of around 2.7 billion euros in 2023 from 2.197 billion euros last year, said its dividend would grow an average of 7 percent a year in the first three years. It expects to pay out 75 percent of profits to investors in 2022-2023. euros)

Reporting by Stephen Jewkes; Editing by Edmund Blair