Tomas Björnsson, Vice President Strategy & Market Intelligence

Paris, 2015-09-28

1

Four things to consider for generation adequacy in a “high renewable” electricity systemIEA Electricity Security Workshop

Decarbonization agenda will drive a significant growth in renewables –regardless of chosen policy route…

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

GHG45 +EE

+RES35

GHG40 +EE

+RES30

GHG40Ref2010

Electricity Generation (TWh), 2030*

Oil

Solids

Nuclear

Gas

RES

Note: Not exact numbers. Calculation made from numbers in the IA page 71: Total Gross Electricity Generation is presented in TWh. Generation technology in one digit shares of total.

Source: Impact Assessment accompanying the Communication “A policy framework for climate and energy in the period from 2020 up to 2030”

Impact assessment from “A policy framework for climate and energy in the period from 2020 up to 2030”

+233% +249% +269% +316%

…as will general technology development (regardless of policy)

Levelized electricity cost wind

Cost range conventional technologies

0

50

100

150

200

250

20202015 2025 2030 2025 203020202015

• Technology developments. Supply chain & installation efficiency drive down

levelized cost of electricity of renewables

• Conventional thermal technology facing increasing levelized cost levels

through rising CO2 prices (or cost) and decreasing operating hours

Levelized electricity cost PV

EUR/MWh

offshoreonshore

Confidentiality – Medium (C2)

3

For Sweden, generation adequacy challenges will be enhanced as the nuclear fleet starts to be decommissioned

4

40

35

30

25

20

15

10

5

0

27

Reliable capacityInstalled capacity

WindSolarNuclearCondenseGas turbines HydroBack pressure

20

150

140

130

80

70

60

50

120

110

100

90

40

30

10

0

135

Power production

Installed and reliable ”Capacity” 2014, GW Power production ”Energy” 2014, TWh

Sweden´s capacity requirement

an extreme winter

Sweden´s consumption

30% of

reliable

capacity

40% of

energy

Sweden has a challenging demand profile over the year

5

17

18

16

15

14

13

12

11

10

9

TW

h

DecNovOctSepAugJulJunMayAprMarFebJan

Sum of power consumption per month

Power consumption 2014 per month – Capacity from 8 ���� 27 GW

4 important areas to address the need for flexibility

6

Transmission infrastructure& integrated market

Flexibility of hydro power

Stronger coupling of heating and power systems

Demand-side management

Transmission capacity and an integrated market reduces the capacity deficit

60

50

40

0

30

20

10

70

80

67

GW

2015

CondenseGasturbines Back pressure HydroNuclearWindImport cap Nordic

Nordic “reliable capacity” + full import

*Availability according to SvKs assumptions winter 14/15: Hydro 85%, Nuclear 84%, Wind 6%, Condense 90%, Backpressure 76%. 7

Unlikelihood of simultaneous max peaks

73

• Unlikelihood of simultaneous Nordic

peaks reduces current peak from 73 to

67 GW

• Possibility to rely on interconnectors

and imports reduces urgency of

securing domestic capacity

1

Demand-side participation will be essential to “resolve” peak situations - extreme peaks occur only a handful of hours per year

8

1 344

846

387

14840400

1 590

1 199

724

431295

19994

8

>21>22>25 >23 >20>24>27 >26

10 year winter

Normal demand

Number of hours with high demand > X GW

Much to gain from permanently reducing peak demand - and from allowing for active demand-

side participation

2

Stronger coupling of heating & power systems valuable from a system perspective

3

Flexible CHP example - Ringkjøbing district heating plant (Denmark, 6 October 2014)

1. Prices not high

enough for CHP to

start

2. Heat demand is met

by thermal storage

3. Prices >30EUR/MWh

� economically viable

to run gas engine in

CHP to meet heat demand and obtain

revenues from

electricity

4. Solar fields heat water

5. Thermal storagemeets demand until

23:00

6. Gas boilers heat water

7. Prices are

<20EUR/MWh

� electric boilers heat

water

• 2 CHPs (one gas engine and a gas turbine)

• 1 electric boiler

• 4 gas boilers

• Heat storage

• Large scale solar heating field

Source: PointCarbon

Hydro power flexibility will be essential to utilize (or at least preserve)

Demand 2015 & net demand 2050

(net demand = demand – wind and solar production)

Consumption minus wind and solar production, assuming significant RES growth (Feb 2015 vs 2050)

10

Net demand variability and ramp rates increase for all operational timeframes (yearly,

seasonal, weekly, daily, hourly) – for system to manage, flexibility of hydro power, heat

infrastructure, DSM and imports will play important roles

4

4 important areas to address the need for flexibility

11

Transmission infrastructure& integrated market

Flexibility of hydro power

Stronger coupling of heating and power systems

Demand-side management

12

Thank You