Thank you. Good afternoon, everyone, and welcome to Terna's full year 2025 results presentation.

The call will be hosted by our CEO and General Manager, Giuseppina Di Foggia, and our CFO, Francesco Beccali. Following the presentation, we will have the Q&A session.

We kindly ask you to send any question you might have to our email address, [email protected]. Please, Giusi.

Thank you, Stefano. Good afternoon, everyone.

Let me start by giving you an overview of the key highlights of 2025. This year confirms we are on track with the execution of our plan while accelerating investments and maintaining financial strength.

In March 2025, we updated our 2024-2028 Industrial Plan. Total investment now stands at €17.7 billion, 7% higher compared with the previous version of our plan and with a consistent plus €17.7% versus the 2022 plan.

Out of this amount, €16.6 billion are allocated to regulated investments. As of today, this is Terna's largest investment program.

At the beginning of last year, we also presented our National Development Plan. It foresees more than €23 billion of investments between 2025 and 2034.

Once projects in this plan are completed, transmission capacity between Southern and Northern Italy will increase from 16 to 39 GW. Our execution remains strong.

In 2025, we obtained authorizations for 38 projects representing around €1 billion of investments. Overall, about 92% of the 2024-2028 plan is now authorized.

On procurement, 88% of the capex plan is already secured through contracts. Financially, we remain solid.

In 2025, our long-term ratings were upgraded by both Moody's and Standard & Poor's, reflecting similar actions taken regarding the Republic of Italy. We issued €1.5 billion of green bonds.

Today, around 80% of our funding is raised through ESG-linked debt instruments. In January 2026, we issued an €850 million hybrid green bond.

We achieved a record-low subordination premium below 60 basis points for a corporate hybrid in Europe. Operationally, in 2025, we delivered solid performance ahead of guidance, with EBITDA growing by 7% and net income up 5%.

Investments markedly accelerated by 31%, reaching €3.5 billion. Let me briefly turn to the Italian electricity system.

In 2025, the energy transition continued to move forward with around 7 GW of new renewable capacity installed. We also launched the first auctions under the long-term schemes, FER X and MACSE.

Moving now to the integration of renewables. Installed wind and solar capacity reached 57 GW at the end of 2025, with an increase of 7 GW compared with the previous year.

The pace remains aligned with the trajectory towards the 2030 National Energy and Climate Plan targets. On top of this, more than 22 GW of renewable capacity have already been contracted through the long-term support schemes designed by the Italian government.

These projects are expected to enter into operation over the coming years. Looking ahead, once the updated FER X framework is approved at European level, the system will be on a credible and sustainable path to the 2030 targets.

This will be supported by the capacity market, MACSE, an innovative long-term storage procurement scheme managed by Terna on behalf of institutions, and Terna's grid investments. At the beginning of 2026, transmission level connection requests stood at around 326 GW.

The reduction from last year is actually a positive signal, showing a more consolidated pipeline and stronger project quality. Indeed, projects that have already secured preliminary connection solutions increased to 79 GW in January 2026, compared with 52 GW at the end of 2024.

This volume already exceeds the additional capacity required to meet the national 2030 targets. Overall, renewable deployment continues at scale with a progressively more mature pipeline.

This brings us to storage. Next slide.

The growth of renewables requires a parallel scale-up of storage. Installed battery storage increased from around 13 GWh in 2024 to almost 18 GWh in 2025.

In recent years, storage capacity has increased mainly thanks to the development of utility-scale assets contracted through the capacity market scheme to guarantee system adequacy. In the coming years, storage capacity will continue to grow alongside renewables, supported by MACSE auctions.

This has already started. The first MACSE auction was held in September 2025.

10 GWh were awarded, with delivery expected by 2028. The auction was significantly oversubscribed.

Offers received were more than four times higher than the auctioned amount, with the average awarded price one-third of the reserve premium. Similarly to renewables, we have around 300 GW of connection requests from storage plants and several gigawatts of projects either with clearance or ready to build.

Already today, projects with clearance exceeded by far 2030 system needs. Summing up this slide, MACSE provides a highly innovative framework to support the development of storage technologies.

Turning now to Italian electricity demand. In 2025, national electricity demand reached 311 TWh, broadly stable year-on-year.

Renewables covered 41% of demand and 48% of domestic production. Photovoltaic generation exceeded 44 TWh, up more than 25%, while hydroelectric production returned to more standard levels after the record seen in 2024.

Net total production reached 268 TWh, up 2% as a consequence of the reduction of net import flows. In the first two months of 2026, demand has increased by 3.1%, confirming the upward trend observed from last September.

Looking forward, we expect that demand will increase, driven by both electrification as well as the deployment of data centers. As of today, there are around 80 GW of connection requests from data centers, confirming that the Italian electricity grid is considered reliable by investors.

These connections require very high quality power supply, redundancy in the grid, and efficient authorization processes. Terna has started aligning grid planning with the expected expansion of digital infrastructure.

Moving on to infrastructure development. Execution remains a key focus.

Between 2023 and 2025, we obtained authorizations for more than €6 billion of projects. Today, around 92% of the 2024-2028 capex plan is authorized.

On procurement, contracts signed over the same period amount to approximately €11.6 billion. 88% of our 2024-2028 capex plan is already secured by contracts.

This provides strong visibility on delivery. In the period 2023 to 2025, around €5.5 billion of projects entered into operation.

Looking now at our main projects. On the Tyrrhenian Link, we completed the installation of the first marine cables both on the western and eastern branches.

For the Adriatic Link, construction sites for substations and underground cables were opened in 2025. Finally, SA.CO.I.3, connecting Sardinia, Corsica, and Tuscany, advanced with the first phase of the overhead line in Corsica.

Concluding, authorization, procurement, and constructions are progressing in parallel, significantly stepping up our execution. Next slide, please.

The changing generation mix is reducing system inertia and short-circuit power. As a result, the power system reacts faster and more sharply to disturbances, making it increasingly challenging to ensure supply quality and security.

What happened in the Iberian Peninsula in April 2025 clearly highlighted these risks. The security plan 2025-2028 provides, among other measures, a deployment plan for electrical equipment, partially already in operation, aimed at improving system stability and regulation: 27 synchronous condensers, out of which 17 already in service; 25 reactors, with 16 already in service; 25 stabilizing resistors, the first one installed in 2025, to enhance dynamic stability.

In a faster and more complex system, a robust security plan means anticipating risk and ensuring a resilient and reliable energy system. Moving on to digitalization.

Next slide. In 2025, we invested more than €600 million in digital transformation.

Firstly, process digitalization. We significantly broadened the scope of process digitalization.

At the same time, we ensured full compliance with regulatory framework requirements. Secondly, digital twin.

By creating real-time virtual replicas of our physical assets and systems, we enhanced our operational effectiveness, covering over 60% of our operations. In the last few years, Terna has become a data-driven company.

In 2025, we focused on integrating artificial intelligence into a wide range of fields, from procurement to finance, dispatching to maintenance, legal to HR. We have fostered a shared understanding through a dedicated awareness program for all employees.

In addition, we have made significant progress on infrastructure resilience and cybersecurity. We have accelerated automation systems in our substations, ensuring full IT and telecom operability for critical assets.

We have also strengthened business continuity, enhancing cybersecurity measures. Summing up, the commitment to digital transformation is a key pillar of Terna's strategy to manage the system more efficiently, proactively, and at scale.

This brings us to innovation. In our approach, innovation focuses on anticipating emerging trends, developing high-impact solutions and technologies, and supporting their industrial adoption.

In 2025, we developed 100 innovation projects. 17 of them have reached industrial validation and 65 are ongoing projects.

In an innovation culture, failure isn't a setback, but a source of learning. That's why even when a project doesn't move forward, it can generate insights that strengthen what comes next.

Let me briefly highlight a few projects that have already reached industrial-scale validation. Grid-forming technologies support system stability in a context of increasing renewable energy penetration.

Operational improvement projects enhance safety and electrical infrastructure maintenance efficiency. Terna Works is an innovative app which simplifies data collection during site inspections and allows for real-time monitoring of grid works.

Our corporate venture capital investment during the year totaled €8 million in innovative startups. We also obtained nine patents.

All in all, innovation is a structured process aimed at delivering transformative impacts. Turning now to sustainability.

Terna is committed to reducing the CO2 emissions by 46% by 2030 compared to 2019 levels. As of today, we have reduced Scope 1 and 2 emissions by 31%.

We are also committed to setting a net-zero target by 2050 according to the Science Based Targets initiative guidelines. We reduced the leakage rate of SF6, the insulating gas used in high-voltage equipment, by 27% compared with last year.

At the same time, 92% of the group's waste was recovered. The Terna Foundation is fully operational, addressing electric education and energy poverty for a just transition.

We also continue to receive remarkable external ESG recognition. Terna is among the top 1% of electric utilities worldwide, as recognized in Standard & Poor's Sustainability Yearbook.

We have been recognized as best in class by Sustainalytics and as a Top Employer by the Top Employers Institute. As you can see, in 2025, Terna has been confirmed as a global leader in sustainability.

Next slide, please, and our main results. In 2025, the group delivered strong results despite a demanding comparison with 2024.

Revenues reached €4.0 billion, up 10%. EBITDA increased by 7% to €2.75 billion.

Net income reached €1.11 billion, up 5%. Capex amounted to €3.5 billion, up 31%.

Net debt reached €13 billion, reflecting the higher investment level. We delivered solid performance while accelerating investments.

Now I hand over the CFO for a deeper look at the 2025 figures. Please, Francesco.

Thanks, Giusi. Let's start, as usual, with revenue analysis.

In 2025, total revenues increased by 10%, reaching €4,030 million, up by €353 million versus last year. The growth was attributable both to regulated and non-regulated activities, which contributed for €182 million and €170 million, respectively.

For a clearer view, let me take a closer look at the evolution of revenues, turning to the next slide. Regulated revenues reached €3,279 million, with an increase of 6% compared to the previous year.

Such growth was mainly driven by the increase in RAB, the early recognition in tariff of depreciation related to capital expenditure carried out starting from 2024, and the fast money component set on the conventional capitalization rate defined under the ROSS application. These factors more than offset the WACC reduction from 5.8% to 5.5% in 2025, and the lower output-based incentives contribution versus last year.

Non-regulated revenues reached €754 million, recording a strong year-on-year growth of 29%. This performance was mainly driven by the higher contribution from the Equipment segment, that includes Tamini and Brugg Cables, as well as from the Energy Solutions segment, thanks to the increased volume of orders intake.

Now let's go through operating cost analysis. As you can see in the chart, total operating costs stood at around €1.3 billion, 15% higher than last year.

The regulated activities cost trend is mainly driven by the increase in labor and external costs, partially offset by higher capitalizations. Excluding the IFRIC effect, the regulated operating expenses grew at a rate below 5%, reflecting the higher level of capitalization.

Non-regulated opex dynamics were primarily related to the growing activities in Energy Services, Tamini, and Brugg. This growth was mainly driven by higher business activities and costs for materials and procurement.

As of the end of 2025, the group's workforce amounted to 7,117 employees, an increase of 797 compared with 31st of December 2024. This increase is directly linked to the need to support the execution of the ambitious investment plan outlined in the update of the '24-'28 Industrial Plan and the expansion of non-regulated activities.

Regarding EBITDA, further analysis onto the next slide. Thanks to the acceleration in revenues, in 2025, group EBITDA reached €2.8 billion, 7% higher than the previous year.

The improvement was mainly attributable to regulated activities, which contributed for about €150 million more versus last year, showing an EBITDA above €2.6 billion. EBITDA from non-regulated activities increased by more than 30% to €140 million.

Thanks to a very dynamic market, this growth is mainly attributable to the Equipment segment, driven both by higher market revenues and improved margins. The other businesses, such as the Energy Solutions, Connectivity, and Private Interconnectors segments, also contributed to the improvement in results.

Let's now have a look to the lower part of the P&L, turning to the next slide. D&A amounted to €961 million.

The increase versus last year figure was mainly due to the impact of new assets becoming operational in the period, net of lower impairment charges recorded during the period. As a consequence, EBIT reached €1,790 million, 7% higher versus 2024.

We reported net financial expenses at €182 million. The increase versus last year was mainly attributable to the new financings raised during 2025 and lower financial income in the period, partially mitigated by higher capitalized financial expenses.

The cost of debt was around 2.7% in the year. Taxes stood at €495 million, €40 million higher versus last year, and our tax rate was at 30.8%.

As a result, group net income reached €1.1 billion, 5% higher versus last year. Finally, let me remind you that under the dividend policy we announced in March last year, starting from 2025, the DPS is set at the higher of two levels: a 4% annual growth based on the 2023 DPS of 33.96 euro cents per share, and the 39.62 euro cents per share paid as the 2024 dividend, which effectively represents the floor for Terna's dividend policy.

As a result, the proposed dividend for 2025 is 39.62 euro cents per share, fully in line with our policy. Moving now to capex analysis.

In 2025, total capex amounted to €3.5 billion, about 31% higher than last year, demonstrating Terna's ability to consistently deliver on its commitments. Indeed, we invested about €3.3 billion in regulated activities.

Among the main projects of the period, it's worth mentioning the Tyrrhenian Link, the SA.CO.I.3, the Adriatic Link, the Chiaramonte Gulfi-Ciminna power line, and the modernization of the high-voltage grid in the locations which hosted the Winter Olympics in 2026. Moreover, we should also consider the investment in measures under our defense plan, which are essential to ensure grid resilience and security, including the installation of synchronous compensators, shunt reactors, and damping resistor systems.

As far as capex categories are concerned, development capex represented 60%, in line with 2024, of our total regulated capex. Defense capex stood at 13%, while asset renewal and efficiency was 27%.

Non-regulated and other capex reached €193 million. This mainly included capitalized financial charges and other investments.

Beyond our capex investments, let me remind you that last September we completed the acquisition from Acea of part of Rome's high-voltage grid, covering 481 km of lines and three primary substations. This transaction supports more efficient network operations, particularly across the Rome metropolitan area.

Now regarding net debt and cash flow analysis, let's turn to the next slide. The net debt at the end of 2025 was €13 billion, around €1.8 billion higher than 2024 year-end levels, primarily due to the capex acceleration made on the national grid and the dividend payment.

Cash flow generation for the period amounted to approximately €2.5 billion, driven by around €2.1 billion of operating cash flow and around €436 million from working capital and other items. Thanks to our solid cash flow generation, we were able to cover more than 70% of capex spendings in the period, and we estimate to reach an FFO to net debt ratio around 14% in 2025.

Let me give you a deeper analysis on our debt profile, moving to slide 22. The group's financial management is based on efficient criteria and the achievement and preservation of a solid and sustainable financial structure, with the aim of mitigating potential financial risks.

Diversification of funding sources, balance between short and medium-long-term instruments, as well as proactive debt management are the hallmarks of the adopted financial strategy. At the end of December 2025, we registered a fixed-floating ratio on gross debt of around 78%, with an average duration of approximately six years.

This solid financial structure was further recognized during the year by Moody's and Standard & Poor's Global Ratings, which respectively upgraded Terna's long-term ratings to Baa1 and A-, following a similar action on the Republic of Italy. Now, turning to our sustainable financing profile, which represents a core pillar of Terna's capital strategy, let's have a look at the next slide.

Terna is the Italian leader in green bond issuance and one of the reference issuers in the European sustainable debt market. Today, around 80% of our funding is raised through ESG debt instruments.

Our outstanding green bonds, including hybrids, amount to €6.5 billion, alongside €4.7 billion of EIB financing and €2.5 billion of ESG-linked loans. This diversified structure ensures long maturities, competitive pricing, and strong alignment with our regulated investment plan.

2025 marked several important milestones. We secured long-term institutional financing to support the Adriatic Link project.

We successfully launched our first European green bond with very strong demand. We updated our Green Bond Framework in line with evolving EU standards and received the highest possible external assessment.

Additionally, it needs to be mentioned that in early 2026, we further strengthened our capital structure with a hybrid green bond issued at a record-low subordination premium level. These achievements confirm the robustness of our funding platform and reinforce Terna's positioning as a benchmark issuer in sustainable capital markets.

Moving on to 2026 guidance now. For 2026, we expect revenues of approximately €4.41 billion and EBITDA of €2.93 billion, representing a yearly increase of around 9% and 7%, respectively.

This growth is expected to translate into higher group net income, rising from €1.11 billion in 2025 to more than €1.12 billion in 2026. This net profit guidance includes the impact of about €40 million of higher IRAP taxation related to the recent energy decree.

Excluding this effect, we expect the underlying 2025 net profit growth of around 5% to continue in 2026. In terms of capital expenditures, we plan to invest €4.2 billion.

Now I leave the floor to our CEO for the closing remarks. Please, Giusi.

Thank you, Francesco. Let me close with three final considerations.

First, our role in the system continues to grow. In the current context of rising geopolitical tensions, expanding renewables is key to energy independence and more stable electricity prices.

This requires continued investment in the transmission grid. Renewables and storage installations are in line with the trajectory towards the 2030 national targets.

Looking ahead, we see a robust pipeline of requests for connection with more than 22 GW of new renewable capacity already contracted. Thanks to capacity market auctions, system adequacy is under control.

Electricity demand is growing more slowly than expected, but electrification and new consumption from data centers are coming through strongly in the near term. In this context, the transmission grid is becoming increasingly important and the role of the TSO is key to enabling the energy transition.

Second, execution. With the €17.7 billion of investments in our industrial plan, a high level of authorized projects, and strong procurement coverage, we are delivering with discipline and visibility.

We are progressing on major infrastructure projects also thanks to €3.5 billion of investments during the year. Our anticipatory investments in security and grid resilience are what set our approach apart internationally.

Digitalization and innovation are fully integrated into our strategy, and we are recognized as global sustainability leaders. Finally, financial results.

Over the past few years, we have combined accelerating investments with steady growth in earnings and dividends. In 2025, results grew by 5% despite a tough comparison with 2024.

We expect this trend to continue in 2026 before the impact of additional IRAP, an Italian regional tax, come through. We have maintained financial discipline and achieved rating upgrades.

This reflects the strength of our regulated model and our focus on execution. In conclusion, looking ahead, our priorities remain clear: deliver the plan, support system security and flexibility, maintain a sound financial balance, and create sustainable and predictable value.

Thank you for your attention.

Thank you, Giusi and Francesco. Let's now open the Q&A session.

Okay. Giusi, could you comment on how the current geopolitical situation may impact Terna and the Italian electricity system?

Let me start saying that the current geopolitical situation in the Middle East has no direct impact on Terna. Our business is regulated and this gives us strong visibility on returns.

It also protects us against inflation, and in addition, our investment plan focuses on domestic infrastructure, which limits exposure to international volatility. There may be some indirect effects mainly on the cost of key materials and on supply chain dynamics.

For this reason, we are already applying mitigation strategies to preserve both timelines and capex discipline. Let me also recall that our regulatory framework protects us from increases in raw material prices since these are recognized in the regulated asset base.

Looking at the broader system level, the current scenario further reinforces the strategic relevance of the energy transition and of grid development. It shows the need to accelerate progress towards energy independence.

In Italy today, this can only be achieved by focusing on renewables and grid investments. Overall, to conclude, we do not expect a material impact on Terna's fundamentals, and if anything, today's context further underlines the need for energy independence and the central role of electricity grids.

Thank you. A follow-up on this.

What is your view on the impact generated by the conflict in the electricity bill and which could be the potential solution?

As I mentioned earlier, accelerating the installation of renewables is the only midterm solution to increase Italy's energy independence. More renewables mean less dependence on imported energy and commodities.

This helps stabilize and potentially reduce electricity prices for consumers. Replacing gas generation with cost-efficient renewable generation secured by long-term contracts such as contracts for difference produces two main effects.

The first one is the wholesale electricity price, Prezzo Unico Nazionale, known as PUN. The PUN decreases, becomes less volatile, and less dependent on the price of gas.

We are already seeing this effect. Since 2023, the number of hours in which the PUN price fell below €30 per megawatt hour has increased, rising from 57 hours in 2023 to 195 hours in 2025.

On 25 May 2025, the PUN was zero for six consecutive hours. The second effect, contracts for difference reduce volatility in electricity bills.

They guarantee stable revenues for generators and more predictable procurement costs for consumers, regardless of fluctuations in the spot price for gas or electricity. According to GSE, Italy's energy services operator, the FER X auctions held in 2025 will generate benefits of roughly €450 million per year.

Thanks to the development of renewables, in the medium term, only around one-third of the electricity bill will depend on the volatile price of fossil fuels. Today, that share is around two-thirds.

Finally, to conclude, it is worth recalling that transmission costs already represent a limited component of the electricity bill. Terna's share is around 4% of the bill, and I underline this 4% because it's lower than the EU average and more than offset by the benefits generated for the system.

Very well. Now about renewables development target.

What is your updated scenario?

Let me start by clarifying an important point. As regards the achievement of the 2030 National Energy and Climate Plan targets, we can rely on detailed forecasts that reflect recent trends as well as the authorization already issued and results of the auctions already held.

Annual renewable installations are progressing consistently with the NECP trajectory. This trajectory remains the benchmark for the pace and scale of renewable deployment in Italy.

It also confirms that the annual installation rate is increasing. As of December 2025, we recorded 57 GW of solar and wind capacity, with about 15 GW installed in the last two years.

An additional 22 GW of new renewable capacity to be connected to medium-voltage and high-voltage networks have already been authorized and contracted through auctions and other schemes. In addition, in recent years, about 2 to 3 GW per year have been connected to low-voltage networks.

Finally, we expect a new FER X auction in 2026, likely similar in size to the previous one. These projections are aligned with the targets defined in the Italian National Energy and Climate Plan, which foresees 107 GW of wind and solar capacity installed by 2030.

To conclude, all this confirms that the targets are in reach.

Now still on renewables. When can we expect the EU to approve the final FER X incentive scheme, and what is the real bottleneck for accelerating the installation of renewables?

The approval of the final FER X scheme by the European Commission is expected in the coming months. The auction calendar and the volumes to be auctioned will be defined once the scheme receives formal approval.

The most recent major policy measure is the DL Bollette, the government decree issued on 20 February 2026, to address rising energy costs while also tackling structural issues in the Italian electricity system. Alongside measures designed to support households and businesses, the decree introduces provisions to facilitate the integration of new renewable power plants.

In particular, referring to the Article 7, the Article 7 deals with the virtual saturation of the grid, which in recent years has slowed down new connections. The decree revises how available grid capacity is calculated and accelerates the reallocation of grid connections that were reserved but not used within the required timeframe, thereby freeing up capacity for new investments.

At the same time, the grid operator is required to provide more transparent and updated information, while additional simplifications are introduced to speed up project integration. To conclude, in summary, there are no real bottlenecks, and the roughly 15 GW of new renewable capacity sourced over the last two years proves this.

This decree should produce several positive effects: first, it will accelerate connection processes, simplify administrative procedures, and also enable more efficient grid planning and implementation. This will also allow a more efficient allocation of capital.

Thanks a lot, Giusi. Now, can you elaborate more regarding data center development?

Would it impact your investment plan for development of the grid?

As mentioned before during the presentation, grid connection requests linked to data center development have experienced strong growth in recent years. The volumes requested are now almost 100 times the currently installed capacity, and today, requests amount to around 80 GW.

For this reason, data centers are expected to become one of the main drivers of electricity demand growth in the mid to long term. The key challenge is grid planning.

These facilities need extremely high quality power supply, redundancy in the network, and efficient authorization processes. Without early coordination, effective network planning becomes difficult, which could lead to delays and higher costs.

In Italy, we have already started aligning grid planning with this expected expansion, and the strong interest in developing data center projects in Italy confirms both the reliability of Terna as a system operator and also the credibility of our long-term development plan. Good news.

Okay. Now change topic about regulation.

Could you elaborate about next expected decisions from new ARERA board in 2026, please?

Yes, one of the next decisions from ARERA will concern future steps on ROSS regulation. The goal is to further align TSO objectives with the system interests, price reduction, power system security, service continuity.

At this stage, the authority has not given indications on when a consultation paper on these incentive schemes might be published. However, since the application of the schemes under Resolution 390/2025 is also envisaged for the 2026-2027 period, it is possible that ARERA may launch a public consultation later this year.

Thank you. The final question for you, Giusi, about non-regulated business 2025 EBITDA contribution.

What are the growth drivers behind this acceleration compared to the previous year?

Our market-based strategy is delivering results. By focusing on businesses closely linked to energy transition, such as equipment manufacturing and energy solutions, we are seeing tangible growth.

In 2025, a very dynamic market environment led to a 29% increase in revenues, with a strong contribution from our industrial activities. Tamini recorded revenue growth of 34%, while Brugg grew by 14%, with margins expanding significantly for both companies.

Energy Services also performed very well, with revenues up 50%, exceeding €260 million. These activities are more exposed to macroeconomic fluctuations and geopolitical risks.

However, our exposure to Middle Eastern countries is limited to a few tens of millions of euros, no problem. Looking ahead, we currently expect to confirm double-digit growth in non-regulated activities also in 2026.

Thank you, Giusi. Now, I think that probably the next questions are for Francesco.

Could you give some color about how output-based incentives are accounted in 2025?

Sure. Let me remind you that the current year marked the first implementation of the new incentive scheme aimed at reducing dispatching costs and which covers the 2025-2030 period.

For the first three-period, from 2025 to '27, Terna will receive a premium linked to the overall dispatching cost reduction compared to the 2023 actual MSD cost, increased by an extra component, a lump sum, which is related to the newly installed renewable capacity. In addition, there are further output-based incentives that will be recognized through mechanisms related to increased transmission capacity and efficiency in investment costs.

After reaching an almost record level in 2024, OBIs declined by over €200 million in '25, reaching a level slightly below the plan average amount for the period 2025-2028.

Okay. Now what is the expected level of output-based incentives for 2026?

OBIs in '26 will remain mainly linked to the mechanism for reducing dispatching market costs. For 2026, considering both dispatching and interzonal and including also the potential guarantee incentives, we expect to book over €200 million of incentives overall.

Thank you. Now, why net debt in 2025 was better than consensus?

Could you describe the dynamics of net working capital in 2025 and your expectations for 2026?

Net debt in '25 came in better than consensus mainly due to the stronger cash generation and due to a temporary positive contribution from net working capital. The latter was mainly driven by higher capex-related payables, following the acceleration of investments in the fourth quarter, as well as the collection of certain deposits from market operators, which are partly offset by the cash out for the acquisition of the high-voltage assets from Acea that we realized this year.

Let me highlight finally that we expect part of these working capital benefits to unwind in 2026.

Could you give a guidance on 2026 net debt? Do you see any risk for your financial solidity in 2026?

If you consider, on the one hand, the hybrid issuance completed in January, and on the other hand, the guidance we just provided on capex and net profit, we can expect an increase of net debt at the end of '26 slightly below the one registered in 2025. This confirms that our financial position remains extremely solid also for 2026.

In this sense, let me also underline once again that our capex plan to 2028 is fully sustainable under a financial standpoint, as confirmed by rating upgrades received in 2025. These actions confirmed, on the one hand, the strength of our capital structure in the business plan horizon without the need of additional instruments.

Anyway, let me also remind that the range of flexibility tools we could evaluate are the remaining hybrid issuance capacity, which is still around €1.5 billion, as well as seeking additional public contributions to strengthen the financial structure, and considering options to monetize our non-regulated activities.

Now, what is your expected value for WACC in 2026? What is the mark-to-market 2027 WACC based on forwards, and do you expect the regulator could change the basket of peers or taxation parameters?

For 2028, our Industrial Plan update assumptions are based on WACC at 5.5%. This reflects a prudent, long-term approach, also considering that ARERA is expected to consult on its proposals for the WACC framework ahead of the next regulatory period, which could modify also the current calculation methodology from 2028 onwards.

From a mark-to-market perspective for 2027, the current geopolitical situation and the resulting volatility, both in energy and financial markets as well as in macroeconomic conditions, suggest caution in extrapolating any short-term signals. We can express on potential outcomes only in the following months.

On top of that, let me add that as part of the consultation process, ARERA could indeed revise the current basket of comparables in case recent trends in interest rate spreads and credit ratings persist. Nevertheless, the regulator has not provided any indication to date that such changes are being considered.

Okay. About IRAP taxation, do you think there is a risk of an extension beyond 2027?

For what concerns IRAP, let me remind you that the decree foresees the application of additional 2% taxation only for 2026 and 2027, and this is the only financial impact on Terna accounts.

Okay. As a final question, could you remind us the main pillar that drive your investments this year and what could be a reasonable annual level of investments for Terna beyond your plan horizon?

Our capex guidance for 2026 is fully consistent with the trajectory we have outlined in our strategic plan, which foresees €17.7 billion of cumulative investments between 2024 and 2028. The further capex acceleration 2026 is mainly driven by system needs, increasing transport capacity, and I would say the scheduling of our biggest projects execution.

Finally, for what concerns instead the expected investments beyond plan horizon on the development segment, which is the biggest share of our investment plan, latest National Development Plan provides for investments of more than 23—€23 billion over the decade, of which about €14 billion are expected to come from 2029 and 2034. On top of this, Terna will, of course, continue to invest also in the security and the renewal of the grid.

Very well. I think that this last question concludes our Q&A session.

We think we have addressed all the key topics, and as always, the Investor Relations team is available for any follow-up or additional questions you may have. Thank you, everybody, for joining this presentation, and enjoy your evening.

Thank you very much.

Thank you. Bye-bye.