DONG Energy Welcome to Avedøre Multi Fuel Power Plant 22 February 2010 Knud Pedersen, Vice President, Group R&D

The World's energy can be produced much more efficiently Source: Morgan Stanley Research Feb. 2007 Power plat efficiency level Others DONG Energy Global Average - 31% 1 0,2 0,4 0,6 0,8 Avedøre Multi Fuel Power Plant Imagine if all power plants in the World were as efficient as DONG Energy's… Global CO2 emissions from coal: 30% Global CO2 emissions: 9% 2

Avedøre Multi Fuel Power Plant -movie introduction http://vital/Processer%20og%20services/Kommunikation/Brandguide/Sider/Film.aspx 3

DONG Energy – Overview DONG Energy is one of the leading energy companies in Northern Europe We are headquartered in Denmark. Our business is based on procuring, producing, distributing and trading in energy and related products in Northern Europe The average number of employees in 2008 was 5,347 EBITDA result in 2008: DKK 13,622 million Overview

DONG Energy is an integrated energy company -with activities across the entire energy value chain

From black to green energy 15 / 85 85 / 15 VISION To provide reliable energy without CO2 STRATEGY 320 g CO2/kWh 100 g CO2/kWh Eliminate 50% of CO2-emission per kWh before 2020 Eliminate 85% of CO2-emission per kWh before 2040 An electron in 2006 An electron in 2020: 50% CO2-reduction An electron in 2040: 85% CO2-reduction Reference for target is specific emissions in 2006 with 85% CO2-emitting electricity production [15% green electricity] and the first financial year of DONG Energy Recommendation is following targets 2020: 320 kg/MWh, 50% reduction in specific emissions 2040: 100 kg/MWh, 85% reduction in specific emissions Covers DONG Energy Power CO2 emissions based on all whole or partly owned electricity and heat installations Heat from combined heat and power production is included as electricity equivalents (calculated as potential electricity production based on fuel use for heat production) 1) 2006 total heat and power production 28,5 TWh eleq/ CO2- emissions 18,2 mt = 638 g CO2/kWh

85/15 implies more focus on renewables and gas Wind (onshore and offshore) Biomass CONSIDERABLE CHALLENGES Technical Commercial (business model) Regulatory Gas New tech 2008: 19 TWh 2015: ~ 34 TWh STRATEGY TO 2015 More balanced thermal portfolio Significant position within offshore wind 6000 MW Coal and oil Gas Biomass and waste Wind and hydro 7

With change comes opportunities… Business Opportunities Necessary Reductions Ved tryk kommer "forretningsmulighed" på skærmen Source: IPCC, Climate Change 2007 Synthesis report

DONG Energy initiatives -selected innovation examples Inbicon – from biomass to ethanol REnescience – from waste to energy Better Place – powering transportation Offshore wind – experience in integration of wind 9

Inbicon – from biomass to ethanol Ethanol replaces oil in transportation Biofuel replaces coal in power and heat generation C5 molasses increases food production or replaces more oil in transportation or produces bio-chemicals Ethanol C5 molasses Cellulosic biomass (Waste) The Goal of Inbicon is optimal use of biomass. We'll take a agricultural residue or energy crop, and convert it into fuel, feed and lignin biofuel pellets. Inbicon's technology provides a pathway that’s efficient, practical, sustainable, affordable. For six years, at our pilot plant in Denmark, Inbicon engineers have made cellulosic ethanol work. Our technical and financial studies done so far tell us that we can make cellulosic ethanol work on a commercial scale. Cracking the code of lignocellulosic biomass didn’t happen overnight. It began about 10 years ago in the wheat fields of Denmark. Let's take a closer look at Inbicon’s proven conversion technology. Lignin biofuel

Inbicon's proven technology Large demonstration plant in operation today: Annual output: 5,4 mill. liters ethanol 11,100 MT biofuel 11,250 MT C5-melasse Annual input: 30,000 MT Wheat straw December COP15 Limousines powered by Inbicon's bio-ethanol Kalundborg, Denmark – 7 December 2009

Renescience – from waste to energy Facts REnescience means Renewables, Science and Renaissance of the energy system Biotechnological separation of urban waste into: 1. Liquefied organic part for biofuel production e.g. biogas, ethanol or gasoline 2. Inorganic e.g. plastics may be converted to electricity and heat 3. Metals, glass and fertilizers for recycling All waste components are utilized as a resource

Better Place - powering transport Electric cars can utilise excess wind power and recharge at night using cheap electricity. Timing-control is essential One 2 MW wind turbine can provide 3,000 electric cars with energy. 700 turbines can fuel the total stock of Danish cars Recharge primarily takes place at night when excess wind-capacity is high Batteries are four times more effective as an energy provider compared to hydrogen Even if all electricity were provided solely by coal-fired power plants, the CO2 emission from an electrical car would be only 50% of that of a conventional car The electric engine can be a major contribution in the liberation of oil dependency of the transportation sector The electric engine is remarkably more efficient than combustion engines The change can reduce resources needs for transportation significantly

Electricity markets and pricing Day Ahead Intraday (24h to 60min before) Intrahour (60-15 min before) Example of prices on the day ahead market

Market forces put a price on flexibility In December 2009, negative electricity prices were introduced December alone had 9 hours with negative prices Price duration curve for 2009 Price peak at 200 EUR/MWh 56 hours with zero or negative prices

Trade across borders and optimal utilisation of high-performing thermal plants is the backbone of wind integration Danish wind power is optimised with Nordic hydro power and continental thermal power Gross trade in 2007 was 22 TWh, corresponding to 60% of consumption Net trade in 2007 was 1 TWh, corresponding to 3% of consumption High efficiency thermal plants balances wind power and utilise heat for district heating Average efficiency of Danish coal plants in 2006 was 55% Coal plant efficiency

Increasing wind power is also an economic challenge Already today Denmark exports a large share of the produced energy – at low prices Low prices for wind energy make wind investments less profitable if they are highly market driven. Even if regulated, the need for public financing to pursue RE will pose a threat Low prices are a threat to the vision of a low carbon society

Interaction and integration is key to realizing the full potential of new energy technologies The handles Operational optimization within and across sectors Trade within and across country borders Customer participation Strong infrastructure for transport of electricity, gas and heat is the backbone of dynamic interaction. The liberalized market is a prerequisite. New business opportunities is the driving force. FROM Coal, natural gas, wind, straw, manure, industrial waste, sun… TO Electricity, heat, fertilizer, ethanol… Trade between market players, sectors and countries, using transport infrastructure, markets and exchanges Development of new concepts for clever but busy customers, which gives them an opportnity to use energy intelligently.

From system challenge… …to business opportunity Parts of consumption is moved from peak demand to low peaks in demand Wind power Thermal – heat bound Thermal – not heat bound Consumption Hour Production and consumption in DK West, Jan 18 2009 Tools for balancing the system Thermal production Import / export Flexible consumption / energy storage Electricity production System responsibility Wholesale market Sales Distribution Market driven mobilisation through decentralised storage and exploitation of synergies Market driven development should be ensured by assessing the regulatory and infrastructural challenge of flexible consumption

The Power Hub -a crucial element in the "intelligent power consumption" Power markets Ancillary services and grid optimisation Power plant master controller DONG Energy Power control room Wind farm controller Power Hub of consumption aggregators Power Hub of medium-size power production units Aggregation of electric cars Power Hub of large and medium size consumption units Aggregation of micro units Emergency generators heat pumps, freezers etc. Hydropower

Thank you for your attention Knud Pedersen, Vice President Group R&D, DONG Energy knudp@dongenergy.dk