Management of the Italian electric system Current status and challenges

1. Management of the Italian electric system Current status and challenges Luca D’Agnese GRTN CEO Beijing, 24-25 October 2005

2. Summary • POWER SYSTEM FEATURES AND DEVELOPMENTS • OPERATIONAL EXPERIENCE • NTC assessment • Integrated control and telecontrol system • CHALLENGES

3. 220 AUSTRIA SWITZERLAND SLOVENIA 430 FRANCE 3850 2650 300 20002000 500 0350 Market zones and Transmission constraints (Winter limits – peak hours) 36001700 34002000 Power System Features (*) updated at the end of year 2004

4. Load Demand Available capacity Capacity vs. Load Demand Summer load demand 2003-2007 GW CAGR*** +3,3% 69,4 67,2 Import 65,1 Power plants changes* 60,1 54,4 56,7 58,3 54,1 53,5 53,1 Internal generation Reserve margins (GW, % of load demand) 2003 2004 2005 2006 2007 1,3 (2%) 6,6 (12%) 11 (20%) 10,5 (19%) 11,1 (19%) * New power plants and changes due to conversion to combined cycle ** Available capacity increase *** Compound Average Growth Rate

5. Austria Switzerland UDINE OVEST CORDIGNANO REDIPUGLIA VEDELAGO SANDRIGO SALGAREDA PLANAIS France VENEZIA N. RFX LEINI’ DOLO CAMIN RONDISSONE VENAUS ACC. ADRIA PIOSSASCO FERRERO CASTELNUOVO LA CASELLA FERRARA CASANOVA CARPI VIGNOLE PARMA S.DAMASO RUBIERA MAGLIANO MARTIGNONE . RAVENNA C COLUNGA VADO FORLI’ LIGURE S.MARTINO LA SPEZIA CALENZANO MARGINONE POGGIO A CAIANO FANO TAVARNUZZE ACCIA LIVORNO CANDIA IOLO PIAN DELLA SPERANZA SUVERETO ROSARA TERAMO S.GIACOMO VILLANOVA MONTALTO TORVALDALIGA N . TORVALDALIGA S. ROMA LARINO VALMONTONE ROMA S. CEPRANO FOGGIA ANDRIA LATINA BARI OVEST S.MARIA GARIGLIANO C.V. BENEVENTO FIUME SANTO S.SOFIA PATRIA CODRONGIANOS BRINDISI STRIANO MONTECORVINO MATERA TARANTO N. GALATINA LAINO Linea a 400 kV c.c. Greece ROSSANO VILLASOR SELARGIUS RUMIANCA PORTOSCUSO SCANDALE FEROLETO CAGLIARI SUD RIZZICONI SORGENTE PATERNO’ CHIAROMONTE G. Transmission system critical areas 380 kV line overloads High-medium critical area SOAZZA Slovenia AIROLO EDOLO RONCOV. S:FIORANO DIVACCIA MONFALCONE ALBERTVILLE TURBIGO Area NOGAROLE MALCONTENTA ROCCA TRINO N. VILLARODIN DUGALE OSTIGLIA CAORSO PORTO TOLLE Others 7,5% PORTO CORSINI 2,8% Puglia PIASTRA 3,5% BARGI 4,8% Trentino’s path Liguria 5,9% ROSEN Piem.-Valle d'Ao. 7,9% PIOMBINO Lombardia 8,7% VILLAVALLE Naples 11,2% Campania-Calabria 13,8% PRESENZANO Milan North-East 34,0% ATI SARLUX Overload* Power Plants Electrical Station Electrical station under construction Single-circuit line Double-circuit line Line under construction ISAB *telemeasured on 380kV-220kV network

6. Yearly time-period percentage of critical market separation North–C.North 23% C.North-C.South 14% C.South- South 1% South- Calabria 5% Calabria- Sicily 49% C.North-Sardinia 31% Grid Reinforcements New lines 2006-2010 Udine Ovest - Okroglo Trino - Lacchiarella Redipuglia - Udine Ovest Venezia N. - Cordignano Fano-Abbadia Colunga – Calenzano* Sardinia – Mainland Interconnection Foggia - Benevento Montecorvino - Benevento Chiaramonte - Ciminna Sorgente - Rizziconi Grid reinforcement to avoid market zone separations and inter-area congestions Other new line to improve security/quality of the grid and to increase the interconnection capacity * 380kV conversion

7. Summary • POWER SYSTEM FEATURES AND DEVELOPMENTS • OPERATIONAL EXPERIENCE • NTC assessment • Integrated control and telecontrol system • CHALLENGES

8. MW MW MW IMPORT IMPORT IMPORT t t t Off-Peak hours Peak hours Off-Peak hours Off-Peak hours Peak hours Off-Peak hours Off-Peak hours Peak hours Off-Peak hours NTC assessment Changes & review of applied methodology 2003 2004 2005 Off-peak hours/peak hours, 2 NTC values for modulation Balanced, 4 NTC values for modulation Flat, 1 NTC value

9. Integrated Control and Telecontrol System PRESENT SYSTEM NEW SYSTEM • Fixed configuration • Hierarchical • Business continuity based on back-up • Technology obsolescence • Not linkable • Flexible configuration • Not hierarchical • Business continuity based on other control centers • New technology • Easy integration with other systems • Network visibility enlargement • Advanced EMS functions • New System Features: • 3 Control centers • 3-5 Telecont. Centers • 250 RTU • Data acquisition: • Central acquisition concentrators at Control centers (SIA-C) • Regional acquisition concentrators (SIA-R)

10. Summary • POWER SYSTEM FEATURES AND DEVELOPMENTS • OPERATIONAL EXPERIENCE • NTC assessment • Integrated control and telecontrol system • CHALLENGES

11. Internal Generation Power plants rated power for different technologies and sources % of total installed capacity 100% 100% 100% Wind power plants & Others Hydro power plants Thermal power plants Combined cycled and coal power plants increase % Steam turbine 52% 37% 40% % Combined Cycle 12% 23% 23%

12. 755 11 194 344 Wind Power plants increase Development of wind farms by the end of 2007, Scenario 2005 MW AUSTRIA SWITZERLAND SLOVENIA FRANCE TOTAL (MW) 1.603 Sardinia At the end of 2007 43% of off-peak load demand Sicily At the end of 2007 38% of off-peak load demand 299 (Values updated by the end of August 2005)

13. TSO Integration Overview • Development plan System planning • Financial plan • Direct assignment or bidding • Pre-authorisation discussions • Support discussions with local authorities • New investments • choice of asset owner • authorisation • construction GRTN Network management • Development • Authorisation application • Work execution + Terna • Plant dispatching • Grid supervision/reconfiguration System Operation Network ownership • Physical operation of grid • Co-ordinated schedule of maintenance of grid and other transmission facilities Maintenance • Proposals for grid maintenance works • Work execution