Rwe Ag · XETR:RWE
Rwe — Corporate Update (December 2009)
18 slides from Rwe's corporate update, Dec 9, 2009
Slide 1: The Need for Smart Megawatts
Investor and Analyst Conference Call Essen, December 9, 2009 The Need for Smart Megawatts Power Generation in Europe – Facts & Trends Thomas Birr, Vice President Strategy Dr. Thomas Glimpel, Head of Portfolio Management Ingo Alphéus, Vice President Investor Relations
Slide 2: Concerns about tight capacity: are they still justified?
Until recently, expectations about the future of the European generation market were mainly driven by concerns about tight capacity Are these concerns still justified? What has changed since then? Are there new challenges? RWE – Conference Call on Power Generation in Europe – Facts & Trends | Decemb
Slide 3: The future capacity situation in Europe is far from being solved
The future capacity situation in the converging markets in Europe1 is far from being solved Existing > Ageing power plants with low efficiency conventional power > Stricter CO2 allocation (full auctioning) Shutdowns plants will go offline in the coming years > Flue gas requirements/Large Combustion
Slide 4: The issue of tight capacity has only been delayed, not solved
The issue of tight capacity has only been delayed, not solved New-build power Of the 300 GW of new-build power plant capacity in Europe already announced, plant capacity just 55 GW are likely to come online by 2015 and an additional 15 GW by 2020 Shutdowns Some 40 GW of old generation capacity, or 5
Slide 5: Main challenge: integration of increasing renewables capacity
But this is not the full story: the main challenge in Europe will be the integration of increasing renewables capacity > Huge wind and solar new build anticipated in the EU 27 More than 50% of > Capacity in 2008: Development of expected investment 65 GW wind, 9.5 GW photovoltaic and 0.01 GW solar th
Slide 6: Not just a need for capacity, but for flexible capacity
Therefore, there is not just a need for capacity, but for flexible capacity Existing > The value of existing power plants will rise as long as new-build projects power plants are cancelled or delayed > Existing power plants can be retrofitted with limited capex to make them more flexible New > Flexi
Slide 7: Generation mix in the North-Western Block
Generation mix in the North-Western Block1 Net capacity: 330 GW (2008) Average age by fuel (2008) [in years] Oil 5% Wind 9% Wind 11 Other Renewables 4% Hard coal 14% Gas/Oil 19 Nuclear 26 Hydro 19% Hard coal 33 Gas 15% Lignite 33 Hydro 42 Lignite 6% Nuclear 28% 0 10 20 30 40 50 Gross generation: 1,5
Slide 8: Wind is volatile and often not there when needed
Not only is wind volatile, but most of the time it is not there when it is urgently needed ... Correlation of average power generation from wind and average day temperature in °C MW 4,500 Average power generation from wind over the respective day 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 < -5
Slide 9: More wind doesn't always result in more power generation
… and more wind doesn't always result in more power generation Illustrative Wind turbines are pitched in case of heavy storms to avoid damages % Actual generation / capacity installed 100 Wind speed Standardised wind 90 park power 80 70 60 50 40 30 20 10 Time 0 0:10 3:10 6:10 9:10 12:10 15:10 18:10
Slide 10: Hard coal-fired power generation can be flexible
Hard coal-fired power generation can be flexible Comparison of ramp capacities New hard coal-fired 1,600 MW plant – between old hard coal and new hard coal 2 flexible 800 MW units for mid-merit regime MW 1,000 New hard coal Max. cap. ~800 MW 800 Min. cap. ~200 MW Max. gradient +/- 27 MW/min 600 400
Slide 11: Combined-cycle gas turbines offer steep ramp capacities
Combined-cycle gas turbines offer steep ramp capacities to cope with volatile wind generation Comparison of ramp capacities New gas-fired 875 MW plant, (old CCGT vs. new CCGT) > 58% efficiency for peak times MW 1,000 New CCGT Max. cap. ~875 MW 800 Min. cap. ~260 MW1 Max. gradient +/- 38 MW/min 600 4
Slide 12: Nuclear: base load and high-tech flexibility
Nuclear is not only able to provide base load at rather negligible variable costs, but also high tech in flexibility Steep ramp rates of nuclear, already used e.g. in Negative hourly power prices are even too France to ensure system stability, steeper than CCGT low for almost zero variable costs MW
Slide 13: Flexible hard coal vs. big hard coal in a standard scenario
Flexible hard coal vs. big hard coal in a standard scenario NEW flexible hard coal unit vs. NEW big less flexible hard coal unit Power generation of plant in MW (right scale) NEW big hard coal unit ramp: 300 , 1100 1,050 MW down to 420 MW 250 900 NEW flexible hard coal unit ramp: 800 MW down to 200
Slide 14: RWE power plant portfolio 2008 vs. 2013/14
RWE power plant portfolio – 2008 vs. 2013/14: Strong investments in “smarter” and “greener” megawatts Renewables Low 0 g/kWh 0 g/kWh 4.5 GW (2013) Nuclear 6 GW 0 g/kWh 2 GW Gas 380 g/kWh 0 g/kWh 10 GW Pump 1.5 GW (2008) 480 g/kWh (2013) storage 7 GW (2008) Hard coal CO2 intensity Greener 850 g/kWh 1
Slide 15: RWE's strategy to fetch flexibility premia is threefold
RWE’s strategy to fetch flexibility premia is threefold Sprinting Lurking Gliding, diving and rising Ramp capacity CCGT Ramp capacity hard-coal Ramp capacity nuclear, e.g. Biblis, Lingen1 plant Hamm or new lignite, e.g. Neurath 100% 100% 100% Net capacity Net capacity Net capacity 80% 80% 80% 60% 60
Slide 16: Centralised pan-European asset management
Centralised pan-European asset management: moving assets closer to the market to generate additional margin Long-term gas supply contracts Emissions World coal Wholesale and gas markets trading market power market Industrial, small and medium enterprises, municipalities, residential Sells power to r
Slide 17: Conclusion (I)
Conclusion (I) Power demand will go different ways in Europe. While in Germany demand is expected to reach pre-crisis levels only in a few years, forecasts for CEE/SEE show earlier and stronger consumption growth With demand back to “normal”, EU reserve margins in Central Europe will tighten. The li
Slide 18: Conclusion (II)
Conclusion (II) RWE currently has some 9,000 MW of additional “smart megawatts“ under construction to cope with volatile demand. They can earn a flexibility premium compared to conventional technology In emerging regions (like CEE and SEE) the main driver is to build the most efficient technology to