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

2. Regional Approach

3. 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 Regional Approach Rationale Requires The connection to European markets along the South North axis, through energy infrastructure The development of international exchanges along the South-South axis

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

5. 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

6. Electricity sector: The Corridor approach 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

7. 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

8. 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

9. Terna projects in the Mediterranean Region

10. 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)

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

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

13. Thank you for your attention