Ulf Eriksen, Head of Nordic & UK Trading & Origination in Statkraft, on the European renewables expansion. Presentation held on the conference Fornybarkonferansen in Bergen, Norway June 2014.

1. EUROPEAN RENEWABLES
EXPANSION
Ulf Eriksen, Statkraft
Bergen, 11 June 2014

2. 1 2 3Will Europe’s green
revolution continue?
Impacts on the
power market
Renewable
expansion
2

3. Statkraft at a glance
Peru
163 MW
(+ project)
Chile
94 MW
Turkey
20 MW
(+ projects)
Nepal 21 MW
Philippines
179 MW
Brazil
77 MW
Panama
(project)
Zambia
7 MW
Norway
12 518 MW Sweden
1 315 MW Finland
66 MW
UK
273 MW
Laos 100 MW
Germany
2 692 MW
India
82 MW
Installed capacity*
17 600 MW
Power production
(2013)
56 TWh
97%
renewable
energy
3 600
employees
AGUA IMARA
SN POWER
STATKRAFT
* Includes: Statkraft’s share of installed capacity. Statkraft SF’s share of installed capacity in Laos.
Albania
(project)
3

4. Statkraft is Europe’s largest RES producer
-
10
20
30
40
50
60
70
Renewableelectricityproduction(TWh)
Top 10 renewable electricity producers in Europe in 2012 *Top 10 electricity producers in Europe in 2012 *
Renewables Fossils / Nuclear
-
100
200
300
400
500
600
700
Electricityproduction(TWh)
4
* Adjusted figures – production outside Europe not included. Source: PWC

5. District Heating
Strategic focus areas
European Flexible Generation
Wind Power
Hydropower in Emerging Markets
Trading and OriginationInvestments directed to
1) Regulated income in Europe
2) Growth in emerging markets
5

6. Trondheim
Oslo
Stockholm
London Düsseldorf
Sofia
Amsterdam
Istanbul
Bukarest
Beograd
6
Nordic & UK T&O
European T&O
Global carbon
Trading & Origination (T&O) in Statkraft
2014: Trading activities in Brazil and India

7. RENEWABLE EXPANSION
7

8. EU’s climate and energy targets
 EU targets for 2020
- 20 % GHG reduction
- 20 % renewables
- 20 % energy efficiency
 Proposed EU targets for 2030
- 40 % GHG reduction
- 27 % renewables
 EU target for 2050
- 80-95 % GHG reduction
8

9. 9

10. Germany’s plan: «Energiewende»
Switch from coal and nuclear to renewables
0
100
200
300
400
500
600
700
2005 2010 2015 2020 2025 2030 2040 2050
Conventional
Renewables
10
Power production in Germany 2005-2050, TWh per year
Source: DLR and Fraunhofer IWES

11. Technology development:
Wind is competitive - Solar picks up pace
11

12. 0
5000
10000
15000
20000
25000
30000
35000
PV generation in Germany
Strong growth in solar power generation
2013 PV solar capacity:
 Germany: 35,700 MW
 Europe: 80,000 MW
 Global: 137,000 MW
12
GWh

13. Source: EWEA
Changes in EU electricity generation 2013
13
-10000
-5000
0
5000
10000
New
Decommissioned
MW
Wind PV Gas Coal Biomass Hydro CSP Fuel oil Nuclear

14. Electricity consumption is falling
14
1000
1500
2000
2500
3000
3500
4000
1980 1985 1990 1995 2000 2005 2010
TWh
EU27 Demand Growth
EU27 Demand Growth Trend (2% p.a.)
0
200
400
600
800
1980 1985 1990 1995 2000 2005 2010
TWh
Germany Demand Growth
Eurelectric Historic growth CERA
0
100
200
300
400
500
1980 1985 1990 1995 2000 2005 2010
TWh
UK Demand Growth
Eurelectric CERA Historic Growth

15. MARKET IMPACTS
15

16. Drivers of energy markets
16
0
10
20
30
40
50
60
70
80
90
100 German
spot
Nordic spot
EUR/MWh
2005 2006 2007 2008 2009 2010 2011 2012 2013
Financial
crisis
EU ETS 1
Nordic
hydrology
Fuel price
rise
Nordic
hydrology
German
renewables

17. Solar production affects peak prices
17
0
10
20
30
40
50
60
70
80
90
100
00:00
01:00
02:00
03:00
04:00
05:00
06:00
07:00
08:00
09:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
22:00
23:00
EUR/MWh
German power price 15may13 German power price 15may08
0
5000
10000
15000
20000
25000
0
10
20
30
40
50
60
70
80
90
100
00:00
01:00
02:00
03:00
04:00
05:00
06:00
07:00
08:00
09:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
22:00
23:00
MWh/h
EUR/MWh
German power price 15may13 German power price 15may08 Solar production

18. 18
Price spikes: A story of the past
0
50
100
150
200
250
300
350
400
450
500
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2006 2007 2008 2009 2010 2011 2012 2013
Number of hours with high prices (>150 €/MWh)
DE FR NL IT CZ HU

19. Deteriorated markets reflected in valuation of European utilities
19
Value development1 1/1-2008 vs 28/2-2014
%
0
25
50
75
100
-48%
-72%
-65%
-54%
-69%
1 Not adjusted for dividend

20. Value chain is changing
20

21. Time for new business models?
 Statkraft has direct sales of 8.700 MW
in Germany
- 5000 MW is remote controlled
 Statkraft market share: 25% of
German wind power
 Statkraft turns local power production
into a big virtual renewable power
plant
8 700 MW – market access
5 000 MW – remote control
21

22. The future is electric!
22

23. WILL EUROPE’S GREEN
REVOLUTION CONTINUE?
23

24. Coal is back…
Development of coal vs gas prices Carbon price (EUA) development
24
0
5
10
15
20
25
30
35
40
Dec_14
0
0,2
0,4
0,6
0,8
1
1,2
1,4
1,6
1,8
2
11.mar.11 11.mar.12 11.mar.13 11.mar.14
Coal
Gas

25. Coal plants have the competitive edge
25
Variable operating costs (€/MWh)
CO2 costs
Fuel costs
Variable OpEx
0
5
10
15
20
25
30
35
40
45
CCGT KullkraftverkCoal plant
EEX power price,
Germany 2014

26. Total RES investments in Europe is declining
26
Q1 2004 – Q4 2013 $BN

27. Global investments in renewable and fossil
power production
0
50
100
150
200
250
300
350
2010 2011 2012 2013
Renewables
Fossil fuel
27

28. 28
Todays European
power market
RES entering
the market

29. THANK YOU29