Our initiatives for strengthening submarine interconnections
with the Balkans; from the electricity bridge with Montenegro to the
interconnections with Croatia and Albania.

Terna is developing projects for new submarine
interconnections in the Balkan area with the objective of contributing to the
diversification of sources and energy supply areas and of reducing the price of
electricity in Italy, in addition to increasing the safety levels of the
Italian electricity system.

The Balkan area is characterized by a significant unused energy potential with
particular regard to considerable hydro resources as well as opportunities for
renewable sources plants and lignite and carbon mines.

The most significant project is the new submarine
interconnection with Montenegro. The new connection will represent the first
1000 MW “electricity bridge” with the Balkan area. 415 km in length
between Villanova (Abruzzo) and Tivat (Montenegro), 390 km of which made of
submarine cable and 25 km of land cable for a total of 760 million euros of
investments. The “electricity bridge” is undergoing the preliminary project
planning phase on the part of Terna and of Montenegro’s grid operator, Prenos;
agreements are being finalized for building the interconnection and drafting a
development plan for Montenegro’s grid infrastructures linked to this cable. On
February 6, 2010 an intergovernmental agreement was signed between Italy and
Montenegro. On December 2, 2009 Terna began the authorization procedure for the
Italian segment of the new cable.

The initiatives for new connections with the Balkans which
are in progress are:

the new submarine interconnection with Croatia, for which
feasibility studies were conducted by Terna and by the Croatian grid operator
HE-OPS; discussions are underway on a possible building schedule;

the new interconnection with Albania, for which contacts
with initiative promoters of new generation plants in Albania are underway.