TYRRHENIAN LINK

Promoter – Financial Intermediary

TERNA - RETE ELETTRICA NAZIONALE SPA

Location

• Italy

Description

The investment consists of an undersea high-voltage direct 950 km long current cable, connecting the Italian peninsula with Sicily (East section) and connecting Sicily with Sardinia (West section). The East section (Campania to Sicily) will have an installed capacity of 1000 MW (500 MWx2) and an approx. length of 480 km. The West section (Sicily to Sardinia) will have a total capacity of 1000 MW (500 MWx2) and an approx. length of 470 km. The investment will include associated works such as terrestrial underground cables and relevant connections.

Additionality and Impact

The Project contributes to addressing multiple market failures, with significant impacts and net economic benefits for Italy and for the regions concerned, which are "Cohesion Regions".

Thanks to the Project, the Country can progress towards its energy and climate plans faster and achieve a more cost-effective decarbonisation and energy transition. The high quality of the results of the Project is underpinned by significant experience and competence of the Promoter with the development and operation of this type of infrastructure.

The support of the Bank, which is urgent and time-sensitive, contributes to the acceleration of the Project's implementation, by lowering the associated cost of funding and offering a tenor longer than those usually available in the market. The EIB commitment is expected to contribute to crowding-in other financers, as it would send a strong signal about the long-term soundness of the Project and credit worthiness of the Borrower.

The value added provided by the EIB is even more tangible under the current market instability and turmoil generated by the pandemic and the Russia-Ukraine conflict, considering also the magnitude of the Project.

Objectives

The Tyrrhenian Link will ensure electricity transmission between Italian mainland and the two islands of Sicily and Sardinia. The result will be an enhanced stability of the electrical system of the two islands and allow a more flexible integration of the renewable energy sources, necessary to fulfil the objective of phasing-out of coal power plants according the targets established by the Integrated National Energy and Climate Plan (INECP). Such plan foresee that, in 2030, renewables will cater for more than half of gross electricity consumption 55.4% with a complete phase-out of coal by 2025 that represent 8 GW of reduced generation capacity, of which 1 GW is located in Sardinia.

Sector(s)

• Energy - Electricity, gas, steam and air conditioning supply

Proposed EIB finance (Approximate amount)

EUR 1900 million

Total cost (Approximate amount)

EUR 3800 million

Environmental aspects

Given its technical characteristics, the project does not fall under either Annex I or Annex II of the Environmental Impact assessment (EIA) Directive and, according to Italian law, will not be subject to a mandatory EIA. The Tyrrhenian Link will run across coastal and marine areas and an "Appropriate Assessment" on the possible impacts to the marine environment through habitat damage or loss, noise, chemical pollution, heat and electromagnetic field emissions was completed for the East Section and is being carried out for the West Section of the cable. The Environmental and Social due-diligence will focus on the review of the assessments carried out for the project under the current authorization framework, which refers to national and European contest (e.g. Habitats and Water Framework Directives and others), and the associated feedbacks from competent authorities.

Procurement

The promoter has to ensure that contracts for implementation of the project will be tendered in accordance with the applicable EU procurement legislation, 2014/25/EU and with the Italian Public Procurement Act (D.lgs. 50/16).

Status

Signed - 8/11/2022