vattenfall heat sweden 16:th of june 2014. 2 | group presentation 2014

Vattenfall Heat Sweden

16:th of June 2014

2 | Group Presentation 2014

Visit to Vattenfall June 16, 2014 at Uppsala Heat and Power Plant Address: Bolandsgatan 13 Sonia Ericsson Zillén will meet you and show you to the conference room Date/Time Event/Topic 14.00-14.30 Meet & Greet –coffe & sandwiches 14.30-15.30 The Swedish Heat market challanges 15.30-15.55 Heat in Vattenfall Sweden 15.55-16.30 Heat in Vattenfall Uppsala 16.30-16.45 New district heat driven innovations 16.45-18.00 Tour in Heat and Power plant Uppsala 18.00 Bus leaving to hotel – pick up at the entrence 19.00 Dinner at Magnussons Krog Drottninggatan 1 – in central Uppsala beside the Fyris stream

This is Vattenfall

• One of Europe’s largest electricity producers

• 100%-owned by the Swedish state

• Main markets: Nordic countries, Germany, Netherlands

• Vattenfall also has operations in:UK (mainly within wind power)

• Main products:Electricity, Heat, Gas

• Operations span the entire energy value chain:Production, Distribution, Trading, Sales and energy advice


Key data 2013


Key facts

Net sales 171,684 MSEK

(19,379 MEUR*)

Underlying operating profit 27,900 MSEK

(3,149 MEUR*)

Reported operating profit -6,453 MSEK

(-728 MEUR*)

Electricity generation 181.7 TWh

Sales of electricity 203.3 TWh

Sales of heat 30.2 TWh

Sales of gas 55.8 TWh

Number of employees (FTE) 31,819

Number of customers:

Electricity 6.2 million

Gas 1.9 million

Electricity network 4.3 millionExchange rate EUR/SEK 8.8591. Values in EUR shown only to facilitate comparisons between SEK and EUR

Electricity generation

Vattenfall produces electricity and heat from six energy sources:

Hydro Nuclear Coal Wind Biomass Gas

History of Vattenfall


2010–2013Consolidation phase

2000–2009Major expansion in Europe

1950–2000Organic growth and national market deregulation

1909Founding of The Swedish StatePower Board

1951Inauguration of Harsprånget,

A hydro power plant in Sweden

1970–1980Construction of 12 nuclearreactors in Sweden

1999–2009Acquisitions in Germany,Poland and the Netherlands

2010Inauguration of UK offshorewind farm Thanet

2011–2012Divestments of non-core operationsin Belgium, Finland and Poland

1909–1916First large hydro power plants:

Porjus, Olidan, Älvkarleby, Sweden

1909–1950Part of developing the Swedish energy system

From a domestic Swedish hydro power generator to an European energy company

Generation volume and installed capacity per region


Group total generation (2013) Electricity 181.7 TWhHydro 35.6 TWhNuclear 51.9 TWhFossil 87.9 TWhWind 3.9 TWhBiomass, waste 2.4 TWhHeat 30.2 TWh(Gas sales 55.8 TWh)

*

20 374

14%*

81%

4% *

Nordic

18 732

*

*

13%* *

*****

*

89

* *

*

* *

Nordic

93

35%

56%

6% *

Electricity generation, TWh

Electricity capacity, MW

*

*

*

*Nordic

Volume, TWh

Confidentiality class: High (C3)

Heat market in Sweden

• Heat Market ~ 75 TWh/year •District Heat 67%•Electricity 22%•Biofuels 16%•Oil 5%


District heating in Sweden

• ~ 50 TWh/year• Available in more than 500 cities/towns/villages

The largest companies

Fortum samägt av Stockholms stad 8

E.ON 5,5

Göteborg Energi 3,6

Vattenfall 3,4

Tekniska verken Linköping 1,5

Mälarenergi Västerås 1,5

~TWh/year


The use of district heating in Sweden


Swedish district heating fuel input


District heating prices

Confidentiality class: High (C3)14

Heat Swedens operations

UppsalaHeat supplied annually 1700 GWh

Electricity supplied annually 200 GWh

Employees 169

Fuels Peat, Waste, Oil, Bio fuel

DrefvikenHeat supplied annually 600 GWh


Employees 33

Fuels Bio fuel, Oil, Waste

Vänersborg Heat supplied annually 300 GWh

Electricity supplied annually -

Employees 14 Fuels Waste Heat, Bio oil

MotalaHeat supplied annually 200 GWh


Employees 12

Fuels Bio fuel, Oil

NyköpingHeat supplied annually 320 GWh


Employees 31

Fuels Bio fuel, Oil

Kalix DH Heat supplied annually 200 GWh

Munksund 500 GWh


Employees 12

Fuels Peat, Bio fuel, Oil

Gotlands EnergiHeat supplied annually 235 GWh


Employees (3)

Fuels Bio fuel

Västerbergslagens EnergiHeat supplied annually 250 GWh


Employees 45

Fuels Bio fuel, Oil


Products

• District Heating 3 400 GWh• Electricity 450 GWh

• Process heat 700 GWh

• Steam 90 GWh• District cooling 45 GWh


Customers and market

Customers are companies and private households, about 14 000 customers, 17 000 connections and 245 000 DEQ. Increased competition from other heating alternatives.Unregulated heat market.


Heat Swedens fuel

Fuelmix:

Biooil3%

Raw bio fuel20%

RWW23%

Dry bio fuel7%

Waste heat4%

Peat refined16%

Peat2%

Fossil oil 3%

Waste22%


16 | BU Heat Sweden Operations | 11/04/23

• Market perspective

- Stabel market shares > 85 %

- Unregulated market with increased competition

• Growth potential for District heating

- Limited

• Changed customer behavior, inceased demand for new solutionsFocus on price, combined solutions

• Increased importance for climateCities want sustainabaility, Energy efficiency, CHP

• Politics and new legislation being discussedRegulation, TPA

Development and competition on market



• Tough competition (Heat pumps)

- Efficiency very important

- New price models

- New products, cooling etc

• Trust from our customers

- Increased dialogue

- Increased transparency

Challenges


Thanks!

Organisational structure as from January 2014


CEO

Nordic Continental/UK

Wind

Distribution Distribution

Sales Sales

Hydro Mining & Generation

Ringhals Heat

Forsmark Renewables

Decomm. & Waste Nuclear

Projects

Corporate Staff Functions

Asset Optimization and Trading

Chief Financial Officer

Operations Support



• Changed customer behavior, increased demand for new solutions- Prisfokus samt kombinationslösningar värme - kyla

- Lågt förtroende för stora energiföretag. Kunder tenderar att se fjärrvärmemarknaden som ett monopol och tycker att andra alternativ t.ex värmepumpar är mer oberoende.

- Allt fler aktörer väljer att certifiera nybyggda eller befintliga fastigheter med någon form av miljöcertifiering. Flera av certifieringssystemen är inte så väl anpassade till fjärrvärme och fjärrkyla.

- Kunderna efterfrågar lösningar, tjänster och uppföljning för att nå ökad energieffektivisering

• Increased importance for Climate- Städer vill ha hållbar utveckling och har som målsättning att kraftigt minska sina koldioxidutsläpp

- Ökat fokus på energieffektivisering som drivs av kundernas attityd, marknaden och förordningar - leder till minskad efterfrågan per kund

- 20/20/20 på europeisk nivå men även starka krav på klimatskydd från länder och städer. Fjärrvärme ses som en del av lösningen

- Fjärrvärme och el från kraftvärmeverk ses som en viktig del för hållbara städer, men ytterligare kommunikation behövs

• Politics and new legislation being discussed- Ny lagstiftning rörande energieffektivisering på EU-nivå och nationell nivå

- Reglerat tillträde till fjärrvärmenäten, uppdrag från Sveriges regering till EI

- Prisändringsprövning och likabehandling på fjärrvärmemarknaden, uppdrag från Sveriges regering till EI

Development and competition on market (2)

Nordic• Sticking to harmonized EU approach to

energy market regulation market provides the investment incentives

• Distributed generation and demand side participation less cost competitive in the Nordics compared with Continental

• General oversupply and low prices on the continent increasingly affecting Nordic market

Vattenfall has reorganized the Group into two regions

Continental/UK• Increasingly national approach to

energy market regulation regulator provides the investment incentives

• Energiewende (Germany)• New Energy Deal (Netherlands)• Energy Market Reform (UK)

• Increased cost competitiveness of solar energy and demand side participation in Germany. Change is faster than expected

• Effective 1 January 2014 the Group was reorganized in two regions: Nordic and Continental/UK

• The new organisational structure enables the regions to focus on their respective topics and opens up for opportunities for risk-sharing in the Continental operations over time


Vattenfall’s five strategic focus areas


• Work for a more efficient electricity market. Encourage the development of interconnectors.

• Manage implications of the EU Water Directive.

• Renewables growth

• Optimise the operational lifetime of existing nuclear power

reactors.

Strong Nordic

Position

• Rate of growth of new installed capacity to be higher than the average rate of growth for ten defined countries in northern and central Europe. This must be balanced against limited financial resources and a growing surplus capacity in the Nordic market.

Reduce CO 2 exposure from 88.4 billion tonnes in 2013 to 65 billion tonnes by 2012:

• Partnering/risk sharing

• Co-firing of biomass with coal

• Fuel switching.

• Lower operating hours in fossil plants due to more renewables

Vattenfall aspires to be perceived as a “Smart Energy Enabler” - meeting changing customer demands by developing current downstream business and prudently developing new profitable business models.

• Reduce cost level by a further SEK 4.5 billion by 2015.

• Continue to pursue Operational Excellence.

• Optimise maintenance investments.

• Divest or decommission non- core/non-performing assets.

Growth in renewables

Define measures to

reduce Vattenfall’s

CO2 exposure

Offer smart and

sustainable energy

solutions

Stronger focus on

Operational Excellence and cost-

cutting

Sustainable Heat and Electricity Production

Sustainable Consumption

Sustainable Financial Performance

1 2 3 4 5


Fact Vattenfall Heat

Total Germany Netherlands Sweden

Net turnover 2,316 m€ 1,686 m€ 316 m€ 314 m€

Electricity Sales 11.3 TWh 10.1 TWh 0.7 TWh 0.5 TWh

Heat Sales 19.6 TWh 13.3 TWh 2.3 TWh 4.0 TWh

Grid length ~5,500 km 2,300 km 1,750 km 1,000 km

Employees 2,300 FTE 1,400 FTE 500 FTE 400 FTE

Not: Data från December 2011

vattenfall heat sweden 16:th of june 2014. 2 | group presentation 2014

Documents

twh slide

sweden slide

twh sales of heat

twh hydro

twh electricity capacity

twh wind

twh nuclear

twh fossil