Orsted · OMXCOP:ORSTED
Orsted — Ørsted — Investor Day (February 2017)
25 slides from Orsted's investor day presentation, Feb 2, 2017
Slide 1: Bioenergy & Thermal Power
BIOENERGY & THERMAL POWER Thomas Dalsgaard, Executive Vice President Meet the Management, 2 February 2017 57
Slide 2: Thomas Dalsgaard
Thomas Dalsgaard EVP Wind Power Bioenergy & Thermal Power 2011 – Executive Vice President, Bioenergy & Thermal Power Distribution & Customer Solutions 2010 – 11 DONG Energy, Senior Vice President 2008 – 10 DONG Energy, Vice President DONG Energy 2004 – 08 IMF, Washington D.C., USA, Senior economist
Slide 3: Ongoing transformation of business model
Ongoing transformation of business model From To 1. Bio-converted DK CHPs • Biomass-based heat producer with power as flexible back-up • Setting new standards for effective, smart and safe plants operations Fossil-fired power 2. REnescience organic growth in waste-to-energy producer with heat • Proo
Slide 4: Transformation of DK business well underway
Transformation of DK business well underway Major reductions in power … as well as in OPEX spend… …and FTE numbers generation capacity since 2009… OPEX (DKK bn) # of FTEs Danish portfolio of central plants (GWe) 40% 48% 58% 5.0 2.9 ~1,9001 3.0 1.5 ~8001 2009 2016 2009 2016 2009 2016 1. Adjusted for
Slide 5: Bio-conversions progressing as planned
Bio-conversions progressing as planned Conversion CHP (MWe/MWth)1 Herning (77/150) Avedøre 2 (394/541) Studstrup 3 (362/513) Avedøre 1 (254/359) CoD 2009 CoD 2014 CoD 2016 CoD 2016 Primary Wood chips / Primary Natural Primary Primary Gas Wood pellets Coal Wood pellets Coal Wood pellets fuel types wo
Slide 6: Bioenergy & Thermal Power will exit coal by 2023
Bioenergy & Thermal Power will exit coal by 2023 Biomass conversions facilitate First major utility to fully exit coal zero coal from 2023 • Putting further action behind DONG Energy fuel composition (%) DONG Energy’s vision for leading the energy transformation 100% 100% 100% 3% 12% • Heat customer
Slide 7: Smart Plant Programme: Running the power plant of the future
Smart Plant Programme: Running the power plant of the future – smart, green and safe Smart Plant Programme will cover five priority areas The 3-year programme kicked off January 2017 Reduce cost of fuel ownership across Smart Plant 2020 roadmap: 01 the full supply chain from ‘cargo to silo’ Fuel & l
Slide 8: REnescience: A growth opportunity in the global waste market
REnescience: A growth opportunity in the global waste market Global MSW1 disposal2, Global MSW1 generation2, Waste management - a growing global mega-trend % billion tons 01 Global population growth (7bn 9bn people over next two decades) Compost Other Landfill/ 69% dumped 02 Rapidly growing middle
Slide 9: Converting household waste to green gas, green power, and recyclables
Converting household waste to green gas, green power, and recyclables REnescience process REnescience Northwich Value proposition DONG Energy IP REnescience High green gas yield, Unsorted bioreactor low CO2 footprint municipal waste Cheaper and more convenient than Warm water, enzymes 3. GREEN ENERG
Slide 10: REnescience Northwich – first commercial plant after successful demonstration in Denmark
REnescience Northwich – first commercial plant after successful demonstration in Denmark Facts about the facility • 5 MW of baseload electricity generation (supported through Renewable Obligation Certificates) • 120,000 tons of mixed waste processed per year • CoD May 2017 (currently under construct
Slide 11: Reinforcing REnescience competitiveness through cost-out and recycling-up programmes
Reinforcing REnescience competitiveness through cost-out and recycling-up programmes Cost-out programme – reducing net treatment costs Recycling-up programme – increasing recycling rate 1.00 0.70 72 1.20 1.20 0.70 20 1.00 Today Sourcing Engineering Technology Other 2021 Target Today Digestate Inerts
Slide 12: REnescience project pipeline is being developed
REnescience project pipeline is being developed Denmark Malaysia UK • Pursuing entry into the Danish market 2017/2018 • Expected FID Q4-17 / Q1-18 • FID Feb-16, COD Q2-17 • Signed partnership memorandum with • Project pipeline under local waste operator Cenviro development Netherlands • Project with
Slide 13: On track to deliver on targets set out in IPO
On track to deliver on targets set out in IPO AREA 2015 2016 TARGETS FROM IPO PROSPECTUS CURRENT (BASED ON 2015) EXPECTATION EBITDA Heat 346 407 • Expected to more than double from 2015 to 2017 (DKKm) Power -446 -607 • Subject to market conditions, underlying improvement (DKKm) (-934 excl. over medi
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Slide 15: Appendix
Appendix 71
Slide 16: New heat contracts and bio-conversions are key value drivers
New heat contracts and bio-conversions are key value drivers Heat price is regulated by Danish Heat Supply Act Value drivers from new heat contracts DKK/MWh, Illustrative example CHP 01 Tax 01.Sharing of Replacing fossil fuels with biomass implies tax savings that advantage advantage Heat EBITDA imp
Slide 17: Elsam case
Elsam case Elsam timeline Pending claims for damages and economic – cases brought by competition authorities exposure 2003-2004 Elsam 03-04: Alleged abuse of a dominant position in the form of excessive • Claims for Damages. Based on Elsam 03-04 and 05-06, 1,106 pricing in the Western Danish market
Slide 18: Key features of bio-conversions
Key features of bio-conversions Typical plant modifications Logistics Storage Plant • Crane for unloading • Silo for keeping pellets dry • Mill/burner upgrade • Chips stored in the open • New boiler required for gas/coal-to-chips • Conveyor belt to transport chips/pellets from vessel to storage/plan
Slide 19: Power is sold day-ahead, intraday and as ancillary services
Power is sold day-ahead, intraday and as ancillary services BTP CHP production is competitive with Ancillary services ensure stability of electricity condensing production grid Nordic power plant merit order and demand curve, Illustrative Illustration of ancillary services Price (X): Response time D
Slide 20: Bioenergy & Thermal Power well-positioned in ancillary services and power markets
Bioenergy & Thermal Power well-positioned in ancillary services and power markets Continuous work to improve plant flexibility Solid competitive position in DK and NW Europe Example of initiatives to improve plant flexibility (not exhaustive) • CHP production enables cost-efficient and swift Bypass
Slide 21: Diversified biomass sourcing portfolio across geographies and fuels
Diversified biomass sourcing portfolio across geographies and fuels DONG Energy consumed 1.6 Mt of biomass in 2016 Diversified sources of biomass expected to almost double by 2020 Wood pellet origin, 2016 Biomass consumption, ‘000 t1 Russia, 5% Other, 4% US, 9% • Mix of contracts with different ~2,8
Slide 22: DONG Energy adheres to strict sustainability criteria
DONG Energy adheres to strict sustainability criteria Combustion of biomass from sustainable forestry Ensuring sustainable sourcing of biomass is CO2-neutral Standard of Sustainable Biomass Program (SBP) CO2 • Protection of key ecosystems or habitats • Forest productivity and health is maintained •
Slide 23: Substantial CO2-reduction compared with coal
Substantial CO2-reduction compared with coal Across the life-cycle, emissions reduction of ~90% Under EU regulation, biomass is considered vs. coal1 CO2-neutral Life-cycle emissions by technology, gCO2/kWh 1,000 ~90% • EU regulation assumes that carbon released when 900 biomass is burned will be re-
Slide 24: Policies are supportive of further resource utilisation
Policies are supportive of further resource utilisation EU Country City • The EU Waste Framework • Growing number of country-level • Waste planning and target- Directive set a target of 50% targets to move away from setting takes place at a highly recycling of household waste by landfill and increas
Slide 25: 10 largest biomass-fired facilities globally
10 largest biomass-fired facilities globally Biomass plants – capacity1 MW output Drax 1,250 650 1,900 DONG Energy - Avedøre 900 Hofor - Amagerværket 250 400 650 E.ON - Åbyverket 640 DONG Energy - Studstrup 513 EPH - Lynemouth 420 DONG Energy - Skærbæk 320 MGT Power - Teesside 299 Fortum - Vartan 28