Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

Risk Reward – ERG SpA (ERG.MI)

KEY EARNINGS INPUTS

Drivers Dec 2025 Dec 2026e Dec 2027e Dec 2028e

Total RES Installed Capacity (€) 3,975 4,099 4,349 4,749

INVESTMENT DRIVERS RISKS TO PT/RATING MS ESTIMATES VS. CONSENSUS

Power prices (reflected in merchant exposure, RISKS TO UPSIDE FY Dec 2026e

PPA trends and Green certificates) Higher-than-expected achieved power prices 1.17 Capacity growth: development timelines (de- (wholesale or via PPAs) EPS

bottlenecking Italian RES project permitting Capacity growth: fewer permitting hurdles in (€) 1.07 1.25

key) EU or more ambitious US expansion 1.18

WACC inputs amidst current bond market Sustainable finance incentives reducing CoD

volatility

RISKS TO DOWNSIDE DPS

1.00 1.15

Commodity risk leading to lower-than-expected (€)

GLOBAL REVENUE EXPOSURE 1.02 power prices

Project delays and/or weather impacts

0-10% North America Higher bond yields driving up WACC and/or Mean Morgan Stanley Estimates

0-10% UK ERPs increasing on back of evolving Italian risk Source: Refinitiv, Morgan Stanley Research

90-100% Europe ex UK profile

Source: Morgan Stanley Research Estimate OWNERSHIP POSITIONING

View explanation of regional hierarchies here

Inst. Owners, % Active 68.4%

MS ALPHA MODELS HF Sector Long/Short Ratio 1.5x

HF Sector Net Exposure 1.8%

3/5 3 Month Refinitiv; MSPB Content. Includes certain hedge fund MOST Horizon

exposures held with MSPB. Information may be

Source: Refinitiv, FactSet, Morgan Stanley Research; 1 is inconsistent with or may not reflect broader market

the highest favored Quintile and 5 is the least favored trends. Long/Short Ratio = Long Exposure / Short

Quintile exposure. Sector % of Total Net Exposure = (For a

particular sector: Long Exposure - Short Exposure) /