Snam: increased investments in the 2021-2025 plan with significant growth opportunities to 2030 thanks to acceleration of the transition towards net zero

Snam: increased investments in the 2021-2025 plan with significant

growth opportunities to 2030 thanks to acceleration of the

transition towards net zero

Vision to 2030

• 23 billion euros of investment opportunities in the 2021-2030 period in three growth areas (energy networks, energy storage and green energy projects) to be a global leader in green gas infrastructure
• 2022-2030EBITDA CAGR between 6% and 8%
• Main growth initiatives:

Energy networks

• 12 billion euros of investment for the existing H2-ready network
• 3 billion euros of investment in the first tranche of an Italian hydrogen backbone to connect Italy to countries with higher demand like Germany
• Entering the share capital of gas pipelines interconnecting Algeria, Tunisia and Italy Energy storage
• New plan to leverage on Snam's European leadership in gas storage and evolve towards an international green energy storage platform
• Tests confirmed the possibility to store 100% hydrogen in Snam's sites
• 3 billion euros of investments in the regulated asset base
• 2 billion euros of investments in new energy storage activities and new geographies Green energy projects
• New growth phase: from pilot projects to green gas scalable projects
• 3 billion euros of investments identified in Italy and abroad

• De Nora: possible IPO in 2022 and supporting the company's growth through the setting up of an Italian electrolysers Gigafactory for hydrogen production by leveraging on the IPCEI programme
• Leader in emissions reduction: first EU TSO to set a target to reduce Scope 3 indirect emissions by 2030 (-46% from associate companies, -55% of economic intensity from the supply chain emissions)
• ESG scorecard in 14 areas, updated to 2025. New target: sustainable finance (at >80% of the funding by 2025 vs. current 60%)

Investments and main targets to 2025

• Total investments in the 2021-2025 period: 8.1 billion euros (+700 million euros vs. the 2020-2024 plan) due to acceleration in storage, and investments in green energy projects
• RAB: >2.5% annual average growth over the 2021-2025 period; >3.5% in the 2025-2030 period
• EBITDA: 4.5% annual average growth in the 2022-2025 period;
• Net Income: 3% annual average growth in the 2022-2025 period;

This press release is available at	Snam Press Office
www.snam.it	T+ 39 02.37037273 [e-mail]
	Snam Investor Relations
	T+39 02.37037898 [e-mail]

• Dividends: growth at 5% to 2022 confirmed, minimum growth of 2.5% in 2022-2024 extended to 2025

San Donato Milanese (MILAN), November 29th, 2021 - Snam CEO Marco Alverà today presents the 2021-2025 plan with a vision to 2030, approved this morning by the Board of Directors' meeting chaired by Nicola Bedin.

"With our new plan to 2025 and vision to 2030 - Marco Alverà, Snam CEO said - we continue and accelerate Snam's evolution. Over the last six years, we have started work on the repurposing of our infrastructure, strengthened our international presence and launched new start-ups in the energy transition Snam will progressively focus on three macro-areas: energy transport, storage and new projects in hydrogen and biomethane. Thanks to our technical competences, green gas know-how and capacity to execute and deliver complex projects, we aim to become a multi- commodity infrastructure company. We will play a key role in a decisive decade for the energy transition, aiming to seize new growth opportunities in Italy and internationally, leveraging on the enabling role of energy infrastructure to reach a net zero economy.

More specifically, in the medium term, we will build the first route to transport hydrogen from North Africa and Southern Italy to higher demand centres, consolidating Italy's potential to become a hub for renewable energy produced in North Africa and the Middle East. We will increasingly focus on storage, and grow our investments in green gas. We will reduce our own CO2 footprint, targeting net zero on our own operations by 2040 and setting reduction objectives also for our Scope 3 emissions from associates and suppliers. Towards this path we will continue to deliver attractive shareholder returns while keeping ESG at the centre of our strategy, in line with our purpose and to the benefit of all stakeholders."

Vision to 2030

Snam is well positioned for the future energy system

Over the last years, Snam has repositioned to be a key player in the major transformation underway in the energy sector.

The track record in implementing and managing projects in natural gas transport and storage, new skills in green gases and energy transition new trends, an increased international footprint in promising areas also for integrated greenfield projects, the large number of partnerships with different investors across different geographies, coupled with a strategy focused on ESG, will be key to develop the energy system of the future, competitive, safe and with zero net emissions.

Snam will be able to take advantage of new and relevant development opportunities throughout the next decisive decade, in which a strong acceleration of the energy transition is required to achieve net zero targets with rising investments; more specifically, in energy transport and storage infrastructure, as well as in projects along the entire green gases value chain. For this reason, in addition to the plan to 2025, which includes investments already in the money today, Snam has developed a longer-term vision to 2030.

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New energy transition trends

Achieving global climate targets will require significant investment in decarbonising the energy sector over the next 30 years. Thus, a new "supercycle" of public and private investment of around 100-150 trillion dollars by 2050 is expected (source: Bloomberg New Energy Finance, New Energy Outlook 2021) equal to approx. 5 trillion dollars per year, for energy system innovation across the value chain.

The main trends that will drive the race to net zero are:

• Renewables penetration, mainly from solar and wind, to decarbonise power generation and, at the same time, bring it to around 50% of the energy mix from current 20%
• growth in hydrogen, between 100 and 200 times today's size to reach a 15% to 35% range in the energy mix
• technology development in carbon capture and storage.

With reference to total investments needed, a significant share will be in infrastructure to transport and store green gas.

Green hydrogen has great development prospects in this decade, thanks to a faster than expected decline in costs to reach a competitive threshold of 2 dollar/kg (or 50 dollars/MWh) achievable by 2026 in resources-rich areas and thanks to growing international policy support. To date, according to the Hydrogen Council, 500 green hydrogen projects have been announced globally, equivalent to over 90GW of electrolysis capacity and 150 billion dollars in investment. Long- distance hydrogen transport by connecting production and consumption areas through repurposed existing infrastructures such as Snam's, will be key as the centralised development model is most efficient (delivering hydrogen at 2-4 dollars/kg by 2030 compared to 4-10 dollars/kg for the decentralised model based on local hydrogen production, according to Snam's estimates for Italy).

Gas storage will be key to ensuring energy security and limiting price volatility in view of the increasing penetration of intermittent renewable energy. Underground storage facilities such as those operated by Snam, among Europe's leaders in natural gas storage which runs 20 bcm through its system, are the most cost-effective technological solution. Forward looking, decarbonised hydrogen will be the best way to store energy on a seasonal basis, in salt caverns and depleted reservoirs. The cost for developing 10TWh of hydrogen in depleted underground storage, in the range of about 1 billion euros, is approximately 1,000 times cheaper than batteries.

Up to 23 billion euros of weighted opportunities in networks, energy storage and green energy projects over the 2021-2030 period

Against this backdrop, Snam will progressively focus on three areas in the next decade:

• Energy networks: evolution towards a multi-commodity infrastructure able to transport not only natural gas in the transition phase, but also biomethane and hydrogen as well as

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carbon dioxide, wherever necessary. A dedicated hydrogen network will be progressively developed by repurposing existing pipelines;

• Storage: evolution towards a multi-commodity energy storage company (natural gas, biomethane, hydrogen, carbon dioxide), also considering sector coupling solutions, for instance through batteries;
• Green energy projects: move from pilot to scalable projects towards the development of integrated green gas projects (biomethane and hydrogen), along the entire value chain to foster market development and contribute to decarbonisation. We will continue the evolution of our existing platforms and pursue bigger hydrogen, biomethane and CCS projects in Italy and abroad.

Across these three areas, Snam has identified, on weighted basis, regulated or contractualised investment opportunities of up to 23 billion euros by 2030. Of these:

• Energy networks: up to 15 billion euros, of which 12 billion euros in natural gas and biomethane transport (70% of which in replacements with H2 ready standards over 3,000 km of pipelines as well as maintenance, the remaining part for the conversion of six dual- fuel compression stations, support to new demand such as the Sardinia project and new connections, as well as initiatives on emission reductions and digitalisation) and 3 billion euros in hydrogen transport by repurposing 2,700 km of network from Mazara del Vallo to Passo Gries and Tarvisio for the transport of hydrogen from Italy to higher demand areas in Northern Europe, thus enhancing the test and assessment work carried out in past years on the infrastructure network. This is the first step to enable exports to Northern Europe, Germany more specifically. This conversion will be carried out both through the repurposing of existing infrastructures and newbuild. Snam has recently announced an agreement with Eni to buy a 49.9% stake owned by the latter in two companies (TTPC and TMPC), that manage the gas pipelines linking Algeria to Italy via Tunisia and the Mediterranean basin. This transaction, subject to the approval of competent authorities, is strategic for supply security and to promote the creation of a hydrogen backbone connecting North Africa with Italy.
• Storage: up to 5 billion euros, of which 3 billion euros in natural gas and biomethane storage (consolidation of existing activities, development of H2-ready investments, conversion of six dual-fuel compression stations) and 2 billion euros in new energy storage (including hydrogen, CO2 and natural gas and biomethane). Among these projects, an agreement just signed to buy a minority stake in dCarbonX, a company operating in geo-energy to develop hydrogen and carbon dioxide storage solutions in Ireland and the UK. This partnership envisages for Snam the path towards further increasing its stake and will aim first at developing three offshore hydrogen storage initiatives dCarbonX is bringing forward teaming up with ESB, the main Irish integrated utility.
  Moreover, Snam signed a MoU with Téréga to cooperate in joint initiatives for carbon capture and storage (CCS) in France. To this respect, the two companies have already identified a project (Pycasso) aimed at decarbonising factories in Southern France and

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Northern Spain through carbon capture and storage as well as the repurposing of depleted storage sites;

• New green energy projects: up to 3 billion euros, leveraging on existing platforms to develop sizeable hydrogen initiatives also by means of grants and funding opportunities such as PNRR and IPCEI, and biomethane (development of existing portfolio of biomethane plants for a total potential capacity of 150MW).

These investment opportunities are expected to generate regulated returns (energy networks and gas storage) or low double/high-single digit returns with a contractualised model (energy storage and green energy projects). Snam estimates an EBITDA CAGR between 6% and 8% from 2022 to 2030.

2021-2025 Plan

Investments of 8.1 billion euros for hydrogen-ready infrastructure and green energy projects Snam foresees investments of 8.1 billion euros 700 million euros more than 7.4 billion euros of the 2020-2024 plan. The plan includes the maintenance, upgrade and development of its infrastructure, net zero investments and the acceleration of the energy transition. Investments aligned to the European taxonomy account for 47% of the total (an increase compared to 40% in the previous plan).

Regulated activities are substantially in line with the previous plan even though with a different mix.

Investments in the energy networks in Italy amount to 5.6 billion euros (5.8 billion euros in the previous plan). Replacements to upgrade the network with "hydrogen ready" pipelines continue, with 1,300 km coming on line. Investments are also planned to achieve the net zero target, including the dual-fuel conversion of the first three compression stations. Other investments include the start of the construction of the virtual pipeline in Sardinia, the first portions of the network as well as ordinary maintenance activity. The investment plan also includes new connections linked to the energy transition.

Investments in energy storage amount to 1.2 billion euros; a significant increase versus 900 million euros in previous plan thanks to the conversion of three dual fuel compression stations (coherently with emissions reduction targets), the construction and upgrading of gas storage wells, the replacement and upgrading of certain components, and maintenance activities. These investments will support the growing need for flexibility which will increase with the further development of renewables. Furthermore, these investments will enable the prospect to store hydrogen.

With regards to investments to adapt the infrastructure to a "hydrogen ready" perspective, to date almost all of Snam's pipelines are capable of transporting up to 100% hydrogen based on ASMEB31.12 regulation. Approximately 70% of these pipes can transport pure hydrogen with no or limited reductions on the maximum operating pressure, whereas around 30% needs more significant reductions. These limitations could be overcome by means of future evolution in the technical standards.

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