IEEFA Report Says Terna’s €16.6 Billion Plan Could Ease Grid Congestion, Cut Renewable Curtailment, And Improve Long-Term Competitiveness

New research suggests that Terna can strengthen Italy’s energy security by increasing investment in the power grid to support more renewable energy, all without raising costs for consumers. According to the latest analysis from Institute for Energy Economics and Financial Analysis, Terna’s current investment plan could help improve the country’s long-term competitiveness, ease grid congestion at major bottlenecks, and reduce the amount of renewable energy that is currently wasted due to curtailment. Terna plans to invest €16.6 billion in the grid between 2024 and 2028. To meet this goal, the company will have to significantly increase its capital spending compared to previous years, while still protecting its investment-grade credit rating.

The report highlights that the success of these investments will rely on ensuring stable funding through regulated cash flows, without putting unnecessary pressure on electricity tariffs or affecting energy affordability for customers. Despite the large scale of investment required, IEEFA’s findings show that Terna’s transmission charges could continue to remain close to their long-standing average of 4% of the total electricity bill until at least 2028. This indicates that major grid upgrades can be delivered without causing a noticeable increase in consumer costs.

One of the report’s authors, Jonathan Bruegel, emphasized that Italy’s future energy security and competitiveness rely heavily on the strength of its electricity grid. He noted that transmission investments are essential for reducing congestion and integrating more renewable energy. While the benefits of these upgrades may not be immediately visible, they have far-reaching long-term advantages, and Terna plays a central role in enabling this shift.

The study also points out that most of Italy’s renewable energy generation is located in the south, while the majority of electricity demand remains in the industrial north. This imbalance creates congestion that restricts the flow of clean energy and raises system costs. To address this, the report encourages Terna to prioritize reinforcing the north–south transmission corridor and improving cross-border interconnections. Bruegel added that, without timely project delivery, renewable integration could slow down, curtailment may rise, and overall system inefficiencies would continue.

The research further explains that Terna can maintain a strong financial position by using a mix of public and private funding sources. In 2024, 84% of Terna’s revenue came from regulated activities. Under Italy’s regulatory framework, returns are linked to investments that create greater value, giving Terna a clear incentive to improve efficiency and expand its investment capacity through strong project execution.

The company has also shown its ability to attract funding by issuing €1.6 billion in debt under the European Green Bond Standard, supported by strong demand from investors. Report co-author Kevin Leung noted that Terna’s financing challenge is significant but manageable. With predictable revenue under regulation, steady access to capital markets, and growing opportunities through green bond instruments, the company is well positioned to support the required upgrades. He also emphasized the importance of using innovative financing tools and targeted public funding to reduce the need for additional debt, especially for projects that provide high long-term value.

The report concludes that Italian regulators have multiple tools available to support grid modernization while limiting the impact on consumer bills. One of the most important steps is reducing the link between electricity bills and fluctuating gas prices, which is essential for keeping energy affordable. Other supportive measures include strengthening carbon pricing and implementing environmental tax reforms that account for the long-term social and economic benefits of clean energy.