Italian power grid operator Terna SpA (TRN.MI) said Monday its board has approved the sale of its solar-energy unit to an investment fund controlled by Terra Firma Capital Partners.

The deal values Terna's Rete Rinnovabili solar unit at between EUR620 million and EUR670 million in debt and equity, Terna said.

Rete Rinnovabili will be Italy 's largest photovoltaic company by the time of closing in March 2011, with up to 150 megawatts at peak capacity, Terna said. The output helps reduce Italian carbon dioxide emissions by 135 kilotons, contributing to the country's required compliance with environmental rules.

"We are very satisfied with the agreement," said Terna Chief Executive Flavio Cattaneo, noting the company had managed to set up, develop and dispose of Rete Rinnovabili in a "very short" time.

Terna shares rose on the news. At 1249 GMT, Terna shares are up 1.1%, or EUR0.03, at EUR3.15.

The sale price will allow Terna to reverse the EUR503 million increase in net debt reposted in the first six months of 2010.

Earlier Monday, Terna announced a 14% increase in its interim dividend, taking this year's payout to EUR0.08 a share.

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