Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — Investor Day (2016)
22 slides from Norsk Hydro Asa's investor day presentation, 2016
Slide 1: Energy
Energy Arvid Moss Capital Markets Day 2016
Slide 2: Energy asset overview
Energy asset overview The second largest hydropower operator in Norway • 3 production areas • 26 power stations Sogn • Annual production 10 TWh • Net spot sales 2-6 TWh • 41 generators/2260 MVA/ Telemark 2040 MW Røldal-Suldal • 190 employees • Competence center on energy for Hydro’s aluminium busine
Slide 3: Energy has a dual mission in Hydro
Energy has a dual mission in Hydro Strong, sustainable value creator and energy provider throughout the value chain To own, operate and maximize To provide competitive power sourcing value of Hydro’s energy assets and global energy competence 150
Slide 4: Energy: Securing power supply, maximizing asset value
Energy: Securing power supply, maximizing asset value Signed wind power contract with New power contracts to Neuss, Increased activities to improve Nordic Wind Power DA, Norway Germany. Fully supplied until 2025 industrial framework conditions in Brazil CMD CMD 2015 2016 Hydro Energia in Amendment t
Slide 5: Energy strategic priorities
Energy strategic priorities • Realize full potential of strong asset • Mature captive growth • Capitalize on strong climate position base and competencies opportunities over time • Further improve operational and • Raise income potential from • Capture value of the green certificate commercial perfo
Slide 6: Power Markets
Power Markets HYDRO
Slide 7: Impact of global «Energiewende» becomes evident
Impact of global «Energiewende» becomes evident Transitioning to a low carbon, reliable and affordable energy supply • New renewable generation continues to surprise Observed delink between global GDP and CO2 emissions Index (2000=100) • Unsubsidized solar and wind power cost projects at record-low
Slide 8: Main factors influencing the market prices for power
Main factors influencing the market prices for power A geographical break-down Norway Coal and CO2 Hydrology/Weather Transmission capacity EU and national energy policy USA Germany Coal Coal, gas and CO2 Gas Weather Renewables EU and national energy policy Global drivers US shale oil and gas China s
Slide 9: Nordic power prices decline over the last years
Nordic power prices decline over the last years Lower CO2 and coal prices as key factors. Forward curve reflects current coal, CO2, gas prices and supply side Nordic power prices halved from 2008 to 2016, EUR/MWh (real 2016) Nordic system price, EUR/Mwh (nominal) 60 60 55 55 50 50 45 45 40 40 35 35
Slide 10: Energy in Hydro - Update on selected topics
Energy in Hydro - Update on selected topics 157
Slide 11: Value creation in Energy dependent on wide array of factors
Value creation in Energy dependent on wide array of factors Volume Expiring Power and new Price contracts Commercial Drivers Sustaining and operational CAPEX competence CAPEX and OPEX & Earnings for taxes new GWh 158
Slide 12: Contractual obligations impacting Energy figures
Contractual obligations impacting Energy figures Repricing of internal contracts incurs losses 2008: Nordic system prices and EEX forward curves, in EUR/MWh (nominal) 90 • Hydro entered into a 250 MW contract for 2013-2020 as part of long- term sourcing efforts to Norwegian smelters (incl Husnes), 8
Slide 13: Maintaining industrial ownership of RSK volumes and value within the reversion regime
Maintaining industrial ownership of RSK volumes and value within the reversion regime June law amendment allows private industrial ownership and physical hydropower offtake from minority stakes Model for industrial ownership (ANS/DA) Merge into a larger publicly-owned asset with one or several owner
Slide 14: Securing long-term competitive power sourcing for smelters
Securing long-term competitive power sourcing for smelters 2.3* TWh/year from 2021 sourced in Norway and Germany since last CMD Sourcing platform for fully-owned smelters, Norway** Sourcing platform for JVs and Neuss smelter*** TWh TWh 20 20 15 15 10 10 5 5 0 0 2015 2016 2017 2018 2019 2020 2021 202
Slide 15: Providing competitive global energy sourcing and competence
Providing competitive global energy sourcing and competence Commercial competence, analytical capability and market insight B&A Primary Metal Rolled Products Assist with updating of energy sourcing strategies Analyze energy markets and provide insight Optimize electric power portfolio Lead power sou
Slide 16: Energy mid-term goals
Energy mid-term goals Creating shareholder value by maximizing value of own hydropower assets and ensuring reliable and competitive energy supply for Hydro Ambitions Target Timeframe Progress1 Status • Improve safety performance, strive for injury free environment TRI <2 2020 0 YTD2 • Robust industr
Slide 17: Sustainability and climate agenda
Sustainability and climate agenda 164
Slide 18: The climate paradox
The climate paradox Increasing share of aluminium production is coal-based CO2 emissions and main energy source in Aluminium production by power source Mill tonnes aluminium production by country Tonne CO2 / tonne aluminium 20 Coal 90 An industry challenge Forecast 18 Companies need to act 80 16 Gov
Slide 19: Our global industry’s most ambitious climate strategy
Our global industry’s most ambitious climate strategy Carbon-neutral from a life-cycle perspective by 2020 Production Products Recycling 166
Slide 20: Lowering our life-cycle emissions through several measures
Lowering our life-cycle emissions through several measures Production Use phase Recycling World-class technology pilot and Meeting the needs of the automotive Strengthened position renewable energy industry • New used beverage can recycling line in Germany • Support for technology pilot • New castin
Slide 21: Hydro on track for 2020 target
Hydro on track for 2020 target Hydro’s CO2 emissions from a life-cycle perspective Million kg Co2 2.5 Most important factors 2.0 affecting 2020 target: 1.5 • Use phase benefits 1.0 • Recycling of post consumed scrap 0.5 • Own reductions in 0.0 2012 2013 2014 2015 2016 2017 2018 2019 2020 emissions -
Slide 22: Sustainability will become more and more important
Sustainability will become more and more important Competitiveness and sustainability can go hand-in-hand Producers Users Civil society 169