Terna (AO) | Hold | Waiting for the new plan by the new CEO

Research evidence excerpt

Terna (AO) | Hold | Waiting for the new plan by the new CEO

not expect a

material change in the group's strategy.

Business plan. The new business plan is currently expected in the second half of the year. We could expect that the change in

management will postpone it until 2027. The new business plan could add more clarity on the financial flexibility of the company,

in case of a further increase in investments.

2027 trigger. Allowed WACC for 2027 is at risk of triggering, based on the current mark-to-market. This will also depend on the

inclusion or exclusion of France from the basket.

ROSS integrale (full). The full implementation of the ROSS (total expenditure mechanism) will start in 2028, along with the new

regulatory period. ARERA could introduce a capex efficiency program with premiums or penalties related to the change in costs

compared with the budget. In addition, TERNA is waiting for the approval of its proposals on the new kinds of output-based

incentives (OBIs), in addition to the existing ones (mainly related to dispatching services and inter-zonal services).

FER-X vs. FER-Z. FER-Z is the newer mechanism. MASE published only a consultation document. FER-X is an asset-based support:

incentive is linked to a specific renewable plant and its output. FER-Z is a profile/portfolio-based support: incentive is linked to

delivering a standard energy profile, not simply to one plant. This should support a more market-integrated renewable capacity,

likely using portfolios of RES plus flexibility/storage to deliver baseload/peakload-style profiles. While FER-X pays/hedges

individual renewable plants, FER-Z tries to create a more useful renewable “shape” for the electricity system, pushing operators

toward aggregation, storage and market integration.