SE Utilities & Infras - Sector/Renewables, /Endesa, Spain/Portugal/Hydrogen, Iberdrola, , Enagas, Enel, Naturgy, Atlantia, Enav, Terna, Spain/Renewables, Italy/Spain/Covid [2020-10-15]

The EC has presented its Renovation Wave strategy, that aims to at least double renovation rates in the building sector in the next ten years and make sure renovations lead to higher energy and resource efficiency. The document is clear in stating that the decarbonization and efficiency of buildings will be necessary to achieve the proposed -55% emissions reduction target by 2030 compared to the 1990 levels. On this purpose, the Commission will increase the standardization and use of certificates for the building sector, while setting up the bar of renewable energies and decarbonized gases to substitute fossil fuels in the energy supply mix for heating and cooling systems.

La Repubblica publishes that the Board of Enel, that will be held today (October 15), will not discuss on Macquarie’s offer for its 50% stake in Open Fiber. Endesa’s CEO Jose Bogas may have stated that between 2020 and the end of 2022 the company could invest €7.5bn, i.e. €1.7bn more than initially planned in the strategic plan. Spain and Portugal’s governments have presented the 31st Spanish-Portuguese Summit document, stating they will cooperate to create a European hydrogen market. Large Spanish utilities, including Endesa, Iberdrola, Naturgy and EDP Spain, would have pointed out the role of green hydrogen for the decarbonization of hard-to-abate-sectors, including heavy transport and industrial processes.

We publish our 9M20 preview for Iberdrola: EBITDA performance is obviously impacted by the Covid-19 related economic deceleration and forex depreciation in Brazil. These effects should have been partially compensated by the mainly contribution from new capacity additions in renewables and in CCGTs in Mexico as well as the positive review of the price cap in the UK. ASPI may be valued €10-11bn pre-discount in the agreement for the sale to CDP. ART provided several details on ASPI’s new financial plan: tariff increases are confirmed to be at 1.75% and IRR on past investments was set at 13.7%.

Abu Dhabi’s Mubadala, through its subsidiary Mubadala Petroleum & Petrochemicals, has announced that it has acquired a 3% stake in Enagas. Enel, through its subsidiary Enel Green Power would have agreed the sale of 100% stake in its wind farm of 42MW in Bulgaria to Met Group. Enel has acquired 251,840 shares in the period 5-9 October, reaching 0.03% of its share capital.

El Economista reports that Naturgy and may have reopened negotiations with Egypt to reach a solution for the plant of Dalmietta. Atlantia’s traffic figures for week 41 confirmed the Unauthorized redistribution of this report is prohibited. This intended for Nicolo Pessina deterioration of the recovery trans for both motorways and airports. On Enav, en-route September traffic declined 60%.

Terna has announced yesterday to have inaugurated the new power line connecting Capri to the mainland. CEO Stefano Donnarumma said during the event that the company will invest €14-15m in the next years to support the energy transition. Caisse de dépôt et placement du Québec has reached an agreement to purchase 216MW solar PV plants from Q-Energy, located throughout Spain.

Number of Covid-19 cases are on the way up: (1) In Italy the number of total cases increases +7,332 or +2.01% vs Tuesday’s +1.64%. Ongoing infections up by +5,252. Daily reported deaths are 43. (2) In Spain, the number of total cases increased +5,104 reaching 908,056. A total of 33,413 deaths have been reported as of 14 October, with +486 deaths recorded in the last 7 days.

SECTOR/RENEWABLES – EC PRESENTS ITS RENOVATION WAVE: HIGHER PENETRATION OF RENEWABLES AND UPDATED REGULATORY FRAMEWORK CRUCIAL TO CUT EMISSIONS IN THE BUILDING SECTOR

The European Commission has presented its Renovation Wave strategy, that aims to at least double renovation rates in the building sector in the next ten years and make sure renovations lead to higher energy and resource efficiency.

They point out that the achievement in full of Strategy’s targets will result in 35 million building units renovated by 2030. Moreover, the EC observes that 85% of the EU’s building stock were built before 2001 and 85-95% of the buildings that exist today will still be standing in 2050.

Find attached link to EC’s press release: https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1835

Renovation Wave document: https://ec.europa.eu/energy/sites/ener/files/eu_renovation_wave_strategy.pdf

Key Commission actions and indicative timelines: https://ec.europa.eu/energy/sites/ener/files/renovation_wave_strategy_-_annex.pdf

Main points to highlight are the following:

Buildings currently responsible for 36% of EU’s greenhouse gas emissions – According to the Commission, buildings are responsible for c. 40% of the EU's energy consumption and 36% of greenhouse gas emissions, but only 1% of buildings undergo energy efficient renovation every year. To achieve the 55% emission reduction target, by 2030 the EU should reduce buildings’ greenhouse gas emissions by 60%, their final energy consumption by 14% and energy consumption for heating and cooling by 18%.

Ad hoc funding from the NextGenerationEU; €275bn per year are needed by 2030 – The EC will ensure that part of the funds coming from NextGenerationEU, in particular from the €672.5bn (€310bn grants and €250bn loans) Resilience and Recovery Facility, will be allocated to building efficiency. They observe that building renovation is one of the sectors facing the largest investment gap in the EU. The Commission estimates that in order to achieve the proposed 55% climate target by 2030, c. €275bn of additional investments are needed per year. Member States can reduce risk perception and scale up market incentives such as energy-saving tariffs and energy-saving tenders to attract private intermediaries and aggregators. Stronger regulation and standards to incentivize public and private renovation – In

Unauthorized redistribution of this report is prohibited. This intended for Nicolo Pessina order to incentivize investments in the renovation of existing buildings, the EC will propose to introduce a stronger obligation to have Energy Performance Certificates alongside a phased introduction of mandatory minimum energy performance standards for existing buildings. Moreover, the EU Taxonomy will include technical screening criteria for the buildings sector, to direct private capital towards sustainable investments in energy renovation. Renewable in building sector set to increase; decarbonized gases to play a role – The revision of the Renewable Energy Directive by June 2021 will consider strengthening the existing renewable heating and cooling targets in accordance with the proposed higher climate target for 2030 and could introduce a requirement to use minimum levels of renewables in buildings. It will also promote the use of decarbonised gases that can create local synergies with municipal and agricultural waste recycling and industrial sectors. Currently, heating and cooling systems are responsible for 80% of energy consumed in residential buildings. Commission to evaluate the inclusion of buildings emission under the EU ETS – The EC also states that the upcoming impact assessments for the revision of key climate and energy legislation, that includes the European Emissions Trading System (EU ETS), envisaged by June 2021 will look into extending the use of emission trading to include emissions from buildings. Interestingly, the Commission will also examine how the EU budget resources alongside the EU ETS revenues could be used to fund national energy efficiency and savings schemes. Circular economy model has to be adapted to building sector as well – The Commission will promote the development of standardised sustainable industrial solutions and the reuse of waste material. It will develop a 2050 roadmap for reducing whole life-cycle carbon emissions in buildings, including through the use of biobased products, and review material recovery targets.

The EC is clear in stating that the decarbonization and efficiency of buildings will be necessary to achieve the proposed -55% emissions reduction target by 2030 compared to the 1990 levels. On this purpose, the Commission will increase the standardization and use of certificates for the building sector, while setting up the bar of renewable energies and decarbonized gases to substitute fossil fuels in the energy supply mix for heating and cooling systems.

ENEL (O) - BOARD OF TODAY IS UNLIKELY TO TAKE A DECISION ON OPEN FIBER

La Repubblica publishes that the Board of Enel, that will be held today (October 15), will not discuss on Macquarie’s offer for its 50% stake in Open Fiber.

The article adds that on Monday Macquarie may have re-send its offer, reiterating the one for Enel’s 50% stake (€2.65bn) and adding another one in the case they would buy a 40% stake and State-controlled public lender CDP the remaining 10% stake.

Open Fiber is equity-consolidated at Enel with a book value of c€400m. Therefore, the sale of its stake at the suggested price would generate a >€2bn capital gain, corresponding to c3% of its total market capitalization.

ENEL (O) – ENDESA COULD INCREASE INVESTMENTS UP TO €7.5BN BETWEEN 2020 AND 2022

El Periodico de la Energia reports that Endesa’s CEO Jose Bogas may have stated that between 2020 and the end of 2022 the company could invest €7.5bn, i.e. €1.7bn more than initially planned in the strategic plan.

Unauthorized redistribution of this report is prohibited. This intended for Nicolo Pessina Mr. Bogas also highlighted that a supportive regulatory framework and a reduction of the tax burden would be needed to unleash the full potential of Endesa’s investments in Spain.

Finally, CEO would have stated that public-private partnership between the government and large companies will be needed to boost the economic recovery and increase employment in the country.

Find attached link to the article: https://elperiodicodelaenergia.com/bogas-endesa-podriamos-invertir-1-700-millones-mas-hasta-2022-si-se-reduce-la-presion-regulatoria-y-la-carga-fiscal/

SPAIN/PORTUGAL/HYDROGEN – GOVERNMENTS TO COLLABORATE TO DEVELOP GREEN HYDROGEN MARKET IN EUROPE

Spain and Portugal’s governments have presented the 31st Spanish-Portuguese Summit document, in which they analyse the state of relationship between the two countries as well as the next steps on the European and international agenda.

Interestingly, the document reports that both countries are committed to strengthening the role of renewable gases in the energy transition and in particular the role of green hydrogen for decarbonisation of their economies.

More in detail, the document reports that the two countries will cooperate to create a European hydrogen market.

We recall that Spain’s hydrogen strategy will mobilize investments of €8.9bn by 2030 to develop up to 4GW of electrolysers, while Portugal in its national strategy estimated €7 to €9bn investments and up to 2GW of electrolysers by 2030. SingletrackCMS__Mail_Job__c:{SingletrackCMS__Content2__c= Find attached link to the document: https://www.lamoncloa.gob.es/presidente/actividades/Documents/2020/Declaracio%CC%81n_XXXI_Cumbre_Hispano_portuguesa.pdf

SPAIN/HYDROGEN – LARGE UTILITIES HIGHLIGHT ROLE OF GREEN HYDROGEN FOR DECARBONIZATION OF HARD-TO-ABATE SECTORS

Europa Press reports that large Spanish utilities, including Endesa, Iberdrola, Naturgy and EDP Spain, would have pointed out, at the webinar organized by Spanish Electric Power Association Alec, the role of green hydrogen in Spain’s energy transition process.

In particular, according to Iberdrola, Endesa and EDP Spain, green hydrogen represents an alternative way to store intermittent, renewable energy and to achieve the decarbonization of hard-to-abate sectors, such as industrial processes and heavy transportation.

Naturgy on its side would have stated that renewable hydrogen can be transported through the existing gas infrastructure and that it could be an enabler for integration of gas and electricity networks.

Find attached link to the article: https://www.europapress.es/economia/energia-00341/noticia-gobierno-cree-hidrogeno-verde-incentivara-creacion-cadenas-valor-industrial-espana-20201014181715.html

IBERDROLA (N) – 9M20 PREVIEW: FLATTISH EBITDA; NI POSITIVELY IMPACTED BY GAMESA CAPITAL GAIN

Iberdrola will report its 9M20 results on 21 October before the market opens. A conference call will follow at 9.30am. Main lines to highlight are the following, in our view:

Unauthorized redistribution of this report is prohibited. This intended for Nicolo Pessina EBITDA: €7,370m (-2%) – The EBITDA breakdown should be: (1) Networks: €3,569 m (-9%) – The decrease should be explained by lower remuneration in Spain due to the new regulation and in the US due to IFRS adjustments, as well as in Brazil where the company should be affected by forex. (2) Liberalized business: €2,008m (+10%) - The growth is mainly explained by the review of the tariff cap in the UK from 4Q19 and in Mexico due to full contribution of new capacity; (3) Renewable energies: €1,762m (+5%) – The increase is mainly explained by new capacity additions; (4) Others & Adjustments: €31m.

Net Income: €2,674m (+6%) – The reported Net Income includes the capital gain of Siemens Gamesa of €505m. Excluding the previous effect, Net Income should be at €2.3bn (-5%).

Net Debt: €38.6bn (+9%) – We estimate capex of €5.3bn.

Mediobanca View – 9M20 EBITDA performance is obviously impacted by the Covid-19 related economic deceleration and forex depreciation in Brazil. These effects should have been partially compensated by the mainly contribution from new capacity additions in renewables and in CCGTs in Mexico as well as the positive review of the price cap in the UK.

ATLANTIA (N) – CDP MAY BE VALUE ASPI €10-11BN PRE-DISCOUNT, IL SOLE

Latest updates on the change to ASPI’s governance and on the revision of the concession include:

Il Sole publishes (source) that ASPI may be valued €10-11bn in the sale to CDP and that the discount for the risk of future damage claims may be of 10%. As a result, the price for Atlantia’s 88% stake would be of ~€8bn. According to the article, no more than €1-2bn of which could come from additional debt given that ASPI already has a sizeable amount of debt. The idea to minimize CDP’s financial commitment would be to set up two vehicles: the first would buy the 88% of ASPI and would be 51% owned by a second vehicle including CDP and other Italian investors and the other 49% by foreign investors; the second vehicle would be only 51% owned by CDP, so that CDP would have a 23% of ASPI in transparency. The foreign investors potentially interested include Blackstone, China Merchant, PGGM, KKR, Australian Super, Stone Peak, Brookfield, Macquarie and IFM. The other Italian investors should include pension funds, Poste and F2i; an industrial player such as ASTM or Toto Group may also be involved. As for the timing, CDP’s offer is expected for Monday morning. If of interest, Atlantia would halt the dual track process and give CDP a 10-week exclusivity for the due diligence; As for the valuation of ASPI, Il Messaggero reports (source) that the value would be in the €9-10bn range including debt. Moreover, CDP may present only a manifestation of interest on 19 October and not a binding offer lacking final approval of the new financial plan. On the other hand, La Stampa highlights (source) that Atlantia would have asked for a binding offer by 19 October with a clear indication of the price, the methodology to calculate it, the discount for the risk and the maximum potential deviation following the due diligence; Il Corriere mentions (source) damage claims for €1.5bn by the Genoa Municipality. However, these would be mostly paid with the compensation package that ASPI has already agreed with the Government; Repubblica (source) remains cautious on the positive outcome of the talks with CDP as an agreement on several key points such as the price has to be found yet. Il Fatto explains (source) that the talks with CDP restarted last weekend when the Government informed Atlantia that it would discuss the decree for the termination of the concession at a meeting scheduled for last Tuesday. Unauthorized redistribution of this report is prohibited. This intended for Nicolo Pessina

ATLANTIA (N) – ASPI: ART PROVIDES DETAILS ON THE NEW PROPOSED FINANCIAL PLAN

ART released yesterday (source) the advice requested by the MIT on the new financial plan for the ASPI concession. In our view, the following are the most relevant details for the calculation of the tariffs:

Tariff increases are confirmed to be 0% for FY20 and 1.75% constant in FY21-38; Traffic is estimated to grow at a CAGR of 1.2% in FY20-38, from 47.6bn vkm to 60.2bn; The IRR for the on the capital invested so far and the on the works in progress is set at 13.71% based on the old tariff model; Net invested capital at the end of FY19 is set at €13.9bn including: €7.9bn for concession rights net of provisions for repairs, €6.1bn for the goodwill related to the transfer of the concessions from Autostrade to ASPI with the re-organization of 2003; adjustments related to the re-alignments to Italian GAAPs for €3.8bn related to the concession rights and for -€2.8bn related to the goodwill; -€1.9bn adjustment related to investments not recognized by the MIT; €0.8bn for financial adjustments (poste figurative); Capex plan is of €12.4bn in total, €1.0bn related to works already in progress and the rest to new works; Efficiency factor was set at 1.12% for 10 years (vs. 2.2% for 5 years indicated in ART’s model for ASPI in 2019); The latest budgeted inflation rate of 0.8% was confirmed until FY38; Allowed costs for the calculation of the operating charge include €1.2bn of additional maintenance costs in FY20-24 and €333m compensation for Covid-19 in 2Q20. The Covid compensation is below the theoretical one of €532m due to the 1.75% cap to the tariff increase; The compensation package of €3.4bn agreed with the Government in July was confirmed and includes: €1.11bn for tariff discounts in FY20-29 (5% in FY21-24, then gradually decreasing to 1% in FY29); €140m for toll exemptions in the area of Genoa until FY31, €250m for tariff discounts due to traffic disruptions related to planned works; €1.2bn of non-remunerated works, €700m related to the reconstruction of the Genoa bridge; The extension of the ASPI network of >2.8km is considered as excessive being well above the optimal range indicated by ART in 2017 of 180-315km.

ART also highlights several relevant differences between the newly proposed financial plan and the tariff model it elaborated for ASPI in 2019. In particular:

According to ART the 1.75% tariff increase should be considered as a cap rather than as a linear annual increase. Art also highlights that the average annual tariff increase related to the operational and construction charges only (therefore excluding any additional charge) would be of 1.08%. Excluding also any adjustment to capital invested, the average would be of 0.87%; The inclusion in the capital invested of the adjustments for the re-alignment to the Italian GAAPs may not be compliant with ART’s tariff model. Their exclusion would drive to an average tariff increase of 1.58%; The recognition of a compensation for the Covid-19 may drive to similar requests from other motorway operators; ART suggests to include the €1.2bn additional maintenance costs in the capex and not in the opex and they look as extraordinary maintenance and would impact on the tariff only in proportion to the execution of the works; ART argues that ASPI used several of its assumptions in order to maximize the expected

Unauthorized redistribution of this report is prohibited. This intended for Nicolo Pessina cash-flows from past investments and the remuneration rate. For example, maintenance opex was maintained at €270m/year from FY21onward that is below the €500m of FY19-20; ART rejected ASPI’s complaints against the efficiency factor based on the fact that labour costs were the main cost item to achieve such additional efficiency being ASPI a price taker for the others. ART also confirms its view that the efficiency should be spread over 5 years instead of 10; ART argues that the dividend policy in ASPI’s financial plan would be too aggressive as it envisages additional €16bn of debt in FY20-38 more for dividend payments than for strengthening the capital structure. Total dividend payments in the plan elaborated by ASPI amount to €21bn in FY20-38.

ENAGAS (O) – MUBADALA ACQUIRES A 3% STAKE

Abu Dhabi’s Mubadala, through its subsidiary Mubadala Petroleum & Petrochemicals, has announced that it has acquired a 3% stake in Enagas.

In Spain, Mubadala is also the largest shareholder of Cepsa where it holds a 61.5% stake.

ENEL (O) - TO SELL ITS STAKE IN 42 MW WIND FARM IN BULGARIA

Reuters publishes that Enel, through its subsidiary Enel Green Power, has agreed the sale of 100% stake in its wind farm of 42MW in Bulgaria to Met Group. The closing of the transaction should be expected by year end.

The wind park is in operation since 2010 and last year generated 87.6GWh (c.24%).

The financials of the transaction have not been disclosed but the deal is small in the overall context of the group.

ENEL (O) – TREASURY STOCK REACHES 0.03%

Enel has acquired 251,840 shares in the period 5-9 October, for a total amount of €1.86m, corresponding to an average price c. €7.39/share.

After this last acquisition, Enel’s treasury stock amounts to 0.03% of its share capital.

NATURGY (U) – MAY REOPEN NEGOTIATIONS WITH EGYPT

El Economista reports that Naturgy and Eni may have reopened negotiations with Egypt to reach a solution for the plant of Dalmietta. Naturgy and Eni have already received favourable ruling from ICSID, Netherlands, Luxembourg, and the British Virgin Islands.

Find attached link to the article: http://www.ow47.rassegnestampa.it/abstract/pdf/2020/2020-10-14/2020101446604609.pdf

Recall that Naturgy communicated on 24 April that the agreement reached on February 27 with ENI and Egypt to amicably resolve the disputes affecting Union Fenosa Gas (UFG) - the 50%/50% partnership between Naturgy and ENI – was subject to the completion of certain conditions and milestones that, have not been met, and therefore it has finalized. Naturgy indicated that the US$2bn award issued in favor of UFG by ICSID on 31 August 2018, continues its enforcement process adding that the ICSID’s ruling had been validated by the High Court of the United Kingdom and discovery orders had been granted by US Courts.

Unauthorized redistribution of this report is prohibited. This intended for Nicolo Pessina View - Naturgy has always reiterated its openness to reach agreements with all the parties which may finally amicable resolve the disputes affecting UFG and to return to an agreed scheme, which may finally amicable resolve the disputes affecting Union Fenosa Gas, adding that this will not have any impact on the Naturgy’s shareholder remuneration policy nor on its overall liquidity position. The difficulties to reach a final (and friendly) agreement with the Government of Egypt has been clearly a headwind for Naturgy that should have cashed-in €0.6bn (plus that the assets outside Egypt valued at €0.1bn), an amount that should have been instrumental to strengthen its Balance Sheet. And therefore, any agreement with Egypt would be a positive since would allow Naturgy to move its strategic plan forward.

ATLANTIA (N) – 41W TRAFFIC FIGURES CONFIRM RECOVERY DETERIORATION

Atlantia released the usual update on the latest traffic figures for the second week of October (week 41). In detail:

ASPI (Italy): 10.4% decline is another relative low (worst since end of July); YTD remains stable at -26%; Autopistas (Spain) confirms the mid-teens deceleration (-16.5%) after the recovery seen in the first part of September. YTD stable at -31%; Sanef (France) was broadly stable at -10%; YTD unchanged at -24%; Brazil (Atlantia and Abertis combined) confirms to be the best performer with a +2.4%. YTD stable at -12%; Chile (Atlantia and Abertis combined): -22.1% is broadly in line with last week, which confirms the long-term recovery under way. YTD unchanged at -35%; RCO (Mexico): -3.4% is also in line with the past few weeks. YTD unchanged at -15%; AdR is unchanged at -82% (YTD -74%); ACA: no change at -75% (YTD broadly stable at -67%).

The key messages we get from the reported traffic figures are the following: i) the new equilibrium for Italian and French motorways reached in September following the re-opening of the schools looks increasingly only apparent with the recent deterioration driven by a pickup of the infections and by the restrictions recently re-introduced; ii) Spain looks in a similar situation although the deterioration of the trend started earlier and halted the potential recovery; iii) Brazil confirmed the outperformance already seen in the past few months having chosen not to do any lockdown; iii) Chile confirms to lag behind despite the gradual recovery under way, presumably due to the economic crisis started already with the protests of 4Q19; iv) airports remain the weakest area and the deterioration of the trend in Nice confirms that the recovery of the past two months was driven mostly by summer holiday traffic.

ENAV (O) – EN-ROUTE SEPTEMBER TRAFFIC DECLINES 60%

Eurocontrol-reported September traffic flows highlighted an 57% decline in terms of flights (-59% YTD), a deterioration vs. the -52% of August due to the rise of Covid infections, the re-introduction of travel restrictions and the end of the holiday season. The decline of international flights was of 62% (vs. -56% in August and -63% YTD). Overflights also deteriorated with a decline of 60% (-62 in August and -59% YTD). Domestic flights were again the best performing segment as they were the first to benefit from the removal of the restrictions and were down 30% (-46% YTD).

In terms of service units – more relevant for ENAV’s accounting – the decline of en-route traffic was of 60% (-60% YTD); the figure was 62% below Eurocontrol's regulatory estimates. Overall, 9M20 was 61% below estimates, therefore RP3 starts with a significant underperformance after the 1.5% positive deviation at the end of RP2.

Unauthorized redistribution of this report is prohibited. This intended for Nicolo Pessina Mediobanca View – The September performance confirms the expected deterioration of the underlying trend, as already anticipated by daily data from Eurocontrol and by several airports and air carriers. We note that the usual outperformance of overflights sustained by international traffic flows and by the high quality of service provided by Enav disappeared with Covid-19 as traffic remains for the time being mainly domestic. We also notice that the 57% decline of flights is better than the 70-80% decline of passengers preliminarily reported by several airports due to low load factors and to the fact that cargo traffic outperformed passenger traffic (-27% vs. -70% in 8M).

With Covid-19 infections in Europe rising since early August, demand weakened; therefore, many carriers cut their planned capacity. This suggests that the traffic pick-up in summer was mainly driven by leisure travellers, as confirmed by the September figures. Despite the weak cash earnings momentum, we believe that Enav remains attractive in the mid-*term as its regulatory framework provides for a high degree protection from traffic risk. While we recognize that the proposal of the EC to cap the recovery of the impact from lower traffic volumes in FY20-21 is a negative (€65-70m balance haircut in FY20-21 and limited positive/negative balance generation in FY22-24 as traffic estimates are reset), we appreciate the confirmation of the overall regulatory framework from FY22 onwards with the recovery of most of the missed revenues due to the Covid-19 pandemic.

TERNA (N) – CONNECTS CAPRI TO THE MAINLAND; WORKS TO INTEGRATE RENEWABLE ENERGY FROM SOUTHERN ITALY

Terna has announced yesterday to have inaugurated the new power line connecting Capri to the mainland. The company has invested €150m to complete a technologically advanced project able to supply Capri with renewable energy and eliminate polluting emissions thanks to the decommission of the current diesel generator plant located on the island, and at the same time increasing the security of supply.

Il Sole 24 Ore reports that CEO Stefano Donnarumma said during the event, to which also PM Conte participated, that the company will invest €14-15m in the next years to support the energy transition to contribute to the National Energy and Climate Plan with infrastructural works that will better integrate renewables and reduce electricity bottlenecks.

In an interview at local press Il Mattino, CEO has stated that Terna will work for the integration of the network in order to bring the energy produced from renewable sources from the South and the North of Italy.

The CEO has also mentioned in the interview two important projects on which the company is working. The Thyrrenian Link, that will connect Italy with Sicily and Sardinia, and the link Tunisia that will be submitted to the EU the next Spring and that would be partly financed with EU funds. These projects will be important to make out of Italy a European energy hub.

SPAIN/RENEWABLES – CDPQ ACQUIRES 216MW SOLAR PV ASSETS IN SPAIN FROM Q-ENERGY

Cinco Dias reports that Caisse de dépôt et placement du Québec (CDPQ) has reached an agreement to purchase 73 PV plants from Q-Energy. The plants have a total installed capacity of 216MW and are located throughout Spain.

Q-Energy will maintain the management of the solar PV plants. The article reports that the company already manages more than 150 renewable energy plants in Spain, Italy and Germany with a total power of more than 1.3GW.

According to the article, these assets could be the basis to boost CDPQ’s growth in Spain.

Unauthorized redistribution of this report is prohibited. This intended for Nicolo Pessina ITALY/CORONAVIRUS – DAILY DATA SHOW GROWTH PACE OF TOTAL NUMBER OF CASES AT +2.01% VS TUESDAY’S +1.64%. TOTAL NUMBER OF ONGOING INFECTIONS UP BY +5,252 DAILY DEATHS AT 43

The Government communicated the latest data on the Covid-19 infections as of Wednesday (14 October). We would highlight:

The number of total cases (on-going infections + deaths + recovered patients) increased to +372,799. This means a daily increase of +7,332, +2.01%. This compares with +5,901 (+1.64%) on 13 October, +4,619 (+1.30%) on 12 October, +5,456 (+1.56%) on 11 October, +5,724 (+1.67%) on 10 October, +5,372 (+1.59%) on 09 October, +4,458 (+1.33%) on 08 October, +3,678 (+1.11%) on 07 October, +2,677 on 06 October (+0.82%), +2,257 on 05 October (+0.69%), +2,578 on 04 October (+0.80%), +2,844 on 03 October (+0.89%), +2,499 on 02 October (+0.79%), +2,548 on 01 October (+0.81%), +1,851 on 30 September (+0.59%).

Total number includes: 92,445 on-going infections, 36,289 deaths & 244,065 recovered patients.

Number of on-going infections up by +5,252 (3.5% of daily swabs). This compares with +4,429 on 13 October (3.9% of daily swabs), +3,689 on 12 October (4.3% of daily swabs), +4,246 on 11 October (4.1% of daily swabs), +4,719 on 10 October (3.5% of daily swabs), +4,158 on 09 October (3.2% of daily swabs), +3,376 on 08 October (2.6% of daily swabs), +2,442 on 07 October (1.9% of daily swabs), +1,231 on 06 October (1.2% of daily swabs), +1,474 on 05 October (2.4% of daily swabs), +1,863 on 04 October (2.0% of daily swabs), +1,569 on 03 October (1.3% of daily swabs), +1,350 on 02 October (1.1% of daily swabs), +1,384 on 01 October (1.2% of daily swabs), +633 on 30 September (0.6% of daily swabs).

Out of the number of on-going infections, 539 (+25) are in intensive care (0.6% of the total).

Number of daily deaths is at +43 (out of which 17 in Lombardy) which means that the total number is 36,289 (out of which 17,011 in Lombardy). Latest data were: 13 October: +41, 12 October: +39, 11 October: +26, 10 October: +29, 09 October: +28, 08 October: +22, 07 October: +31, 06 October: +28, 05 October: +16, 04 October: +18, 03 October: +27, 02 October: +23, 01 October: +24, 30 September: +19.

Recoveries have increased by +2,037. This compares with +1,428 on 13 October, +891 on 12 October, +1,184 on 11 October, +976 on 10 October, +1,186 on 09 October, +1,060 on 08 October, +1,204 on 07 October, +1,418 on 06 October, +767 on 05 October, +697 on 04 October, +1,247 on 03 October, +1,126 on 02 October, +1,140 on 01 October, +1,198 on 30 September.

The number of total cases increases +7,332 or +2.01% vs Tuesday’s +1.64%. Ongoing infections up by +5,252. Daily reported deaths are 43.

I t w i l l b , Id=a0g4H00000NOW1bQAH}SingletrackCMS__Mail_Job__c:{SingletrackCMS__Content4__c=e interesting to monitor the spread of contagion and the occupancy rate of intensive care

Unauthorized redistribution of this report is prohibited. This intended for Nicolo Pessina units in the coming weeks, after that the government announced its decision to reinstate the obligation to wear face masks in public spaces, as well as to extend the national state of emergency to 31st January 2021.

SPAIN/CORONAVIRUS – CASES AT C.908K, WITH AN INCREASE OF +5,104; +486 DEATHS IN THE LAST 7 DAYS

The Spanish Government communicated the latest data on the Covid-19 infections as of Wednesday 14 October.

We would highlight:

The number of Coronavirus cases in Spain have reached 908,056* with a daily increase of +5,104. Previous days (not comparable with today’s cases) were: +2,657 on 13 October, +2,759 on 12 October, +5,986 on 9 October, +5,585 on 8 October, +5,075 on 7 October, +4,030 on 6 October, +2,099 on 5 October, +3,722 on 2 October, +3,715 on 1 October, +3,897 on 30 September, +2,586 on 29 September, +2,425 on 27 September.

Deaths in the last seven days were +486, but with a total revised to 33,413*. The highest numbers registered were +950 on 2 April and +932 on 3 April.

* Ministry of Health announced that since 11 May, the new strategy for diagnosis and control in the transition phase of the COVID-19 pandemic came into effect, whereby the Autonomous Communities must report confirmed cases individually and daily at the state level (vs previous daily report in aggregate form).

Click here for the Ministry of Health press release.

The number of total cases increased +5,104 reaching 908,056. A total of 33,413 deaths have been reported as of 14 October, with +486 deaths recorded in the last 7 days.

The Spanish Cabinet decided on Friday 9 October to declare a state of alarm in the Madrid region for a 15-day period, in attempt to get coronavirus infections under control. New restrictions include confinement for municipalities with more than 100,000 residents, as well as early closing times for establishments and limited capacity in bars and restaurants.

Moreover, the Catalan government on Wednesday 14 October approved the closure of all bars and restaurants in the region in a bid to slow the spread of the coronavirus. The measures will come into effect on Friday 16 October and remain in place for at least 15 days.

Company Date Event ABERTIS 15-oct 9M20 Results (Hochtief) (ATLANTIA) ENAGAS 20-oct 9M20 Results IBERDROLA 21-oct 9M20 Results AVANGRID 21-oct 9M20 Results ACEA 27-oct Presentation BP 2020-2024 RED ELECTRICA 28-oct 9M20 Results NATURGY 28-oct 9M20 Results

Unauthorized redistribution of this report is prohibited. This intended for Nicolo Pessina AENA 28-oct 9M20 Results EDPR 29-oct 9M20 Results EDP 29-oct 9M20 Results ITALGAS 30-oct 9M Results & BP 2020-2026 ENDESA 04-nov 9M20 Results 04-nov 9M20 Results ECORODOVIAS 04-nov 9M20 Results IBERDROLA 05-nov Capital Markets Day ENEL 05-nov 9M20 Results IREN 10-nov 9M20 Results ACEA 10-nov 9M20 Results ERG 11-nov 9M20 Results TERNA 11-nov 9M20 Results HERA 11-nov 9M20 Results FALCK 11-nov 9M20 Results RENEWABLES 12-nov 9M20 Results ASPI (ATLANTIA) 12-nov 9M20 Results ENAV 12-nov 9M20 Results REN 13-nov 9M20 Results ASTM 13-nov 9M20 Results ATLANTIA 13-nov 9M20 Results BOLOGNA 13-nov 9M20 Results AIRPORT SNAM 24-nov Presentation BP 2020-2024

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A2A (Neutral, TP EUR 1.40) - Exposed to Lower Wholesale Prices - pp 12 Unauthorized redistribution of this report is prohibited. This intended for Nicolo Pessina To see and download the full report and the relevant disclaimer contact Mediobanca

Italy – Coronavirus (VI) - 10 ideas to navigate a complex macro context - pp 10 To see and download the full report and the relevant disclaimer contact Mediobanca

REN - Redes Energéticas Nacionais (Outperform, TP EUR 2.90) - Attractive dividend and resilient business model - pp 9 To see and download the full report and the relevant disclaimer contact Mediobanca

Hera (Outperform from Neutral, TP EUR 4.00) - A Solid Model to Navigate Uncharted Waters - pp 9 To see and download the full report and the relevant disclaimer contact Mediobanca

Iren (Outperform, TP EUR 2.90) - Appealing Valuation for a Defensive Stock - pp 10 To see and download the full report and the relevant disclaimer contact Mediobanca

Kind Regards,

Javier Suarez Equity Research - Utilities & Infrastructures Tel: + 39 02 8829 036 Mobile: +39 366 921 1390 E-mail: [email protected]

Nicolo Pessina Equity Research - Utilities & Infrastructures Tel: +39 02 8829 796 Mobile: +39 334 605 4135 Email: [email protected]

Sara Piccinini Equity Research - Utilities & Infrastructures Tel: +39 02 8829 295 Mobile: +39 334 643 2289 Email: [email protected]

Jacopo Vismara Equity Research - Utilities & Infrastructures Tel: 39 02 88291 8587 Mobile: +39 366 753 6400 Email: [email protected]

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