The energy infrastructure in the Mediterranean a TSO

The energy infrastructure in the Mediterranean: a TSO point of view 2 nd OPERATIONAL MEETING OF THE PAM PANEL ON EXTERNAL TRADE AND INVESTMENTS IN THE MEDITERRANEAN Geneva, May 5, 2011 Enrico Zagari, North Africa Area - Terna Spa

Regional Approach

Regional Approach Rationale The connection to European markets along the South North axis, through energy infrastructure In the middle and long term, a large part of investments in energy infrastructure foreseen in the Mediterranean region will be localized in the southern side Requires The development of international exchanges along the South-South axis

The regional energy scenario Energy scenario: development drivers Demographic trend Development of GDP Energy Source Availability (renewable and conventional)

The Gas Sector The electricity scenario depends on the gas scenario The gas sector: a changing framework • Still primary source of electricity generation in the southern side • Ongoing changes in the reference market (shale gas) • Difficulties in infrastructures development planning • Slow down of investments in gas pipeline • Slow down in the auction procedures for the allocation of long term extraction rights To monitor the ongoing phenomena

Electricity sector: The Corridor approach drives the development activities (instead of point to point connections) International exchange development doesn’t require the local market opening Euro-Mediterranean initiatives in phases of development: • Industrial initiatives § Desertec (German lead initiative for promotion and trade of RES from MENA to Europe and promotion of sustainable development) § Medgrid (French lead initiative aiming at the realization of an Euromediterranean grid and to promote trade of RES) • Institutional initiatives: Paving The Way for Mediterranean Solar Plan ( EU project for the harmonization of the electricity regulatory framework and for the promotion of the use of renewable energy sources) Terna is involved in all three initiatives

Development of the Energy infrastructures The Vertical corridors South North corridor from MENA to Europe: • The Western corridor: from Morocco to/through Spain • The Central corridor: from the center of North Africa to/through Italy • The Eastern corridor: from the Middle East to/through Turkey

Development of the Energy infrastructures The Horizontal corridors • Maghreb: Tunisia, Algeria, Morocco • Mashreq: Egypt and the Middle East The connection Maghreb – Mashreq : a Terna proposal already envisaged

Terna projects in the Mediterranean Region

Terna North Africa projects Italy is the natural base for South North electricity exchanges • Strategic position in the Mediterranean • Strong and well-interconnected electricity system with the rest of Europe • Advanced know-how in managing international exchanges and grid interconnections (SAPEI, SACOI, the only three-terminal in the Mediterranean, and Greece Italy) New interconnections are under construction (Italy-Montenegro) or in phase of development (Italy – Algeria and Italy-Tunisia)

Terna Projects Connections to Europe Existing Submarine connections Under construction In phase of development Envisaged Italy - Greece

The investments Infrastructure investments are preconditions for economic and social development These investments represent a low level of risk in the presence of appropriate institutional conditions (international agreements, involvement of IFIs) Strengthening of North South cooperation Essential precondition Development of the energy infrastructure

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