Presentation of the intervention of Corrado Santini, Senior Partner of F2i - Fondi Italiani per le Infrastrutture, on the infrastructure situation in Southern Italy and investments in the water, waste and photovoltaic areas

1. Private and confidential
Infrastructures in Southern Italy
Investments in water services, waste sector and photovoltaics
Corrado Santini – Senior Partner of F2i
April 7th
2014

2. Private and confidential
2
Water services

3. Private and confidential
3
Water services (1/2)
(*) Source: BCG, Bluebook.
(**) Including Germany, France, UK and Spain
SEWAGE
SERVICES
% of serviced population(*)
WATER PURIFICATION
SERVICES
% of serviced population(*)
LEAKS IN THE
NETWORK
% on managed water(*)
 Compared to Europe, the Italian sector of
water services presents numerous structural
critical points:
- average 30 year old plants;
- low service coverage with just 85% and 70%
of the population having access to sewage
and waster purification services respectively
(compared to an average of 95% in the main
European countries);
- large leakages in the network, 32% on
average (compared to average 17% in the
main European countries).
 A lack in water infrastructures is prevalent in
Southern Italy and on the islands.
(**)
(**)
(**)
38%
40%
32%
29%
25%
32%
17%
0% 20% 40% 60%
Islands
South
Centre
North-East
North-West
ITALY
EUROPE
57%
70%
70%
79%
78%
70%
95%
0% 20% 40% 60% 80% 100%
78%
85%
84%
82%
91%
85%
95%
0% 20% 40% 60% 80% 100%
Islands
South
Centre
North-East
North-West
ITALY
EUROPE
Islands
South
Centre
North-East
North-West
ITALY
EUROPE

4. Private and confidential
4
Water services (2/2)
*Source: BCG, Bluebook. F2i analysis
**Excluding impact on consumptions (+) and estimating that works targeted by the investments will be carried out by Southern companies
 The lack of water infrastructures in Italy is mainly due to poor
investments since the 90s (around 1 bil €/year, ie 17 €/year per
inhabitant, compared to 70 €/year per inhabitant registered in
Germany, France and UK).
 The approved area action plans include investments for around
60 bil € over the next 30 years (2 bil €/year), i.e. 34 €/year per
inhabitant.
 The planned investments for the south and the islands account
for approximately 0.8 bil €/year.
 Such amounts represent 2.5% of Southern Italy's GDP (a rate
that is twice bigger compared to Northern and Central Italy).
 Considering that these investments are double the amount of the
(insufficient) investments performed to date, they represent a
potential 0.1-0.2% growth of Southern Italy's GDP (functional
to the increase in investments compared to the past).**
€/inhabitant 73 76 75 17
‰ on GDP 2.9‰ 3.3‰ 3.0‰ 0.8‰
6.0
5.0 4.8
1.0
Germania Francia UK Italia
€/inhabitant 34 28 35 31 38 42
‰ on GDP 1.4‰ 1.0‰ 1.2‰ 1.2‰ 2.4‰ 2.6‰
Investments in water services from 1996 to 2008
Yearly average (bil €)*
Planned investments until 2040 in Italy
Yearly average (bil €)**
2.0
0.4 0.4 0.4
0.5
0.3
ITALY North
West
North
East
Centre South Islands

5. Private and confidential
5
Waste sector

6. Private and confidential
6
Waste sector (1/2)
 For the waste sector, the European regulations demand (i) a
progressive dismissal of landfills, (ii) the increase of
sorting and recycling, and (iii) the application of the waste
to energy (WTE) process as an ultimate disposal
technique.
 Italy – along with Spain – is the one that most resorts to
landfills among the major European countries (49% of urban
waste was disposed in 2011 – compared to a European
average of 37%).
 Resorting to landfills is particularly evident in the south of
Italy, where many regions largely exceed 60%.
 As the dismissal of the current landfills is constantly
postponed, the EU initiated four infringement procedures
against Italy (exceeding assignment of waste management,
and illegal or unregulated landfills).
 Sorting in Italy accounted for around 40% in 2012.
Compared with the best European rate (Germany, over 60%),
Italy also suffers from the delay of the southern regions in
this industry (Apulia, Calabria and Sicily are below 20%).
Ue Ger Francia UK Italia Spagna
Discarica Termovalorizzazione Riciclaggio e Compostaggio
37%
23%
40%
37%
63%
28%
35%
37%
49%
12%
39%
49%
18%
33%
63%
8%
29%
Landfill <30%
Landfill 30%-60%
Landfill >60%
% rate of disposal in landfills in Italy per region in 2011(**)
Waste treatment techniques in Europein 2011(*)
(*) Source: Eurostat.
(**) Source: ISPRA.
Landfills Waste to energy Recycle and composting

7. Private and confidential
7
Waste sector (2/2)
€/inhabitant 41 31 47 51
‰ on GDP 1.7 ‰ 1.1 ‰ 1.8 ‰ 3.2‰
Potential yearly investment until 2020 in Italy
to build new WTE plants
(€ bil/year) (**)
#
plants
Capacity per plant
(thousend tons/year)
Capacity per
inhabitant
(kg/day/inhab.)
Germany 70 429 1.0
France 130 154 0.8
Italy 52 100 0.2
North 29 170 0.5
Center 15 67 0,24
South 8 157 0,17
Existing WTE plant in Europe and in Italy(*)
*Source: "Zero landfill" project, Cassa Depositi e Prestiti
(2014).
**Source: F2i estimates.
***Excluding the impact on consumption (+) and estimating
prudently that 50% of the investments will be executed by
a company outside Southern Italy (parametric values
based on recent WTE cases in Northern Italy, where 50%
of the works were deployed by foreigner companies)
 Compared to other countries, Italy's WTE capacity is
limited, especially in the south.
 To be able to achieve the German levels of disposal
(1 kg/day/inhab.), Italy should invest approximately
2.5 billion Euro/year from now until 2020 (of
which 1 bil €/year in the south), for a total of 15
billion Euros.
 The approximative estimated impact on Southern
Italy's GDP would be over 0.15%.
2.5
0.9
0.5
1.0
Italia North Centre South

8. Private and confidential
8
Photovoltaic sector

9. Private and confidentialPhotovoltaic sector (1/3)
 In photovoltaics, Italy ranks second at a European level
for installed power (16.4 GW at the end of 2012),
following Germany (32.3 GW).
 In 2012, new plants in Italy generated additional 3.6 GW
(+28% vs 2011), with a total investment of around 7 bil €
(1.8 bil € per MW).
 New plants were planned in 2013 on the national territory
accounting for around 1.5 GW (+9% vs 2012) (**),
i.e. 1.5-2
bil €.
 In 2012 the solar production covered around 6% of total
consumption of electric power in Italy (5% in
Germany).
 In Italy, 44% of the installed capacity is located in the
north, 37% in the south and 19% in central Italy.
 Apulia, with 14.9%, represents the biggest value,
followed by Lombardy (11.1%) and Emilia Romagna
(10%).
9
Regionaldistribution ofinstalled power at theend of2012 (**)
North: 44%
Centre: 19%
South: 37%
Installed power
GW bil MW
inhab.
Production
(TWh/year)
Corres
p.
hours
% elect.
power
Used power
Germ
.
32.3 394 27.9 864 5%
Italy 16.4 274 18.9 1,150 6%
Spa. 5.1 108 8.2 1,600 3%
Fra. 4.0 64 4.0 990 1%
GB 1.8 28 1.3 725 0.5%
Photovoltaic plants in Europein 2012 (*)
(*) Source: EPIA – Global Market Outlook for Photovoltaics 2013-2017
(**) Source: GSE
Installed power of
photovoltaic plants: 16,420
MW
Partitioning per installed
power class
0.1-1.0
1.1-3.0
3.1-5.0
5.1-8.0
8.1-12.0
12.1-15.0

10. Private and confidentialPhotovoltaic sector (2/3)
 The decrease in management and investment costs is leading the photovoltaic sector towards what is referred to as "grid parity"
(already achieved by some plants in Sicily).
10
The cost for more competitive photovoltaic plants (on industrial scale and
located in the south) will be lower compared to combined cycle gas plants.
0,00
0,05
0,10
0,15
0,20
0,25
0,30
0,35
2010 2012 2014 2016 2018 2020
Combined cycle
gas
FV FV cost range
LCOE – Levelised Cost of Electricity,€/kWh
LCOE HFV per
ground system plant
in Sicily
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00

11. Private and confidentialPhotovoltaic sector (3/3)
11
Expected investments in photovoltaics in Italy for the
upcoming years
To match Germany's performance (in terms of MW per bil
inhabitants), Italy should install a further 7,200 MW, with an
estimated investment of total 8 bil €.
If this target is achieved by 2020, the yearly investment would
account for around 1 bil €/year.
As Southern Italy is highly exposed to sun, it should be able to
attract much more than the 37% rate achieved in the past with total
investments.
It should be prudently considered that, according to the current
incidence data of the investments in the south compared to total
investments, the empirically estimated impact on Southern Italy's
GDP would be essentially zero.
€/inhabitant 17 16 16 18
‰ on GDP 0.7 ‰ 0.6 ‰ 0.6 ‰ 1.1‰
Potential yearly investment until 2020 in Italy
to build new photovoltaic plants
(€ bil/year) (*)
*Source: F2i estimates.
**Excluding the impact on consumption and estimating prudentially that 70% of photovoltaic panels will be imported (-)
1.0
0.4
0.2
0.4
ITALIA North Centre South

12. Private and confidential
12
Summary

13. Private and confidential
13
Possible investments in the upcoming years in Southern Italy in water
services, waste sector and photovoltaics
Industry:
water services
Industry:
waste (WTE)
Industry:
photovoltaics
Total
Yearly investments in Italy
2.0 bil € (for 30
years)
2.5 bil € (for 8 years) 1.0 bil € (for 8 years) 5.5 bil €
Percentage for the south: 40% 40% 40% 40%
Yearly investments in Southern Italy: 0.8 bil € 1.0 bil € 0.4 bil € 2.2 bil €
€ per inhabitant/year 40 € 50 € 18 € 108 €
‰ on Southern Italy's GDP 2.5‰ 3.2‰ 1.1‰ 6.8‰
Impact on Southern Italy's GDP* + 0.1%/+0.2% 0.15% 0% 0.25-0.35%
*Provisional estimates. Excluding the impact on consumptions (+) and assuming parametric values of the impact of imports (-) [+0.1%/+0.2%].