European Power Markets: Performance and Prospects Trevor Sikorski Senior Principal, Global Power Services 7 October 2004

European Power Markets Headlines 2004 Spot Power Markets Converge? Volatility in Italy and Spain The CO2 Penalty Hurts Great Britain How Much are Your CO2 Credits Worth? The CO2 Factor in the Cost of New Entry 1/3/2019

The European Power Price Service The European Power Price Service (EPPS) brings all of this market intelligence together, providing detailed forecasts and analysis of the key factors and events shaping the industry. Understand and predict emerging price trends Test assumptions about the market Plan future investments strategies Make more informed decisions regarding long-term financing and the restructuring of power assets 1/3/2019

The Power Price Forecasting Model 1/3/2019

Prices Come Together 2004 European Spot Power Prices Some European power markets continue to move together, with the exception of Italy. 1/3/2019

Some Markets Track Closely… 2004 Spot Market Correlations GB Germany Netherlands Spain 1 56% 32% 70% 30% 35% 15% 1/3/2019

…While Others Remain Quite Volatile 2004 Day-ahead / Daily Volatility GB Germany Netherlands Spain Italy 15 Day 4.0% 4.3% 4.1% 14.2% 16.6% 45 Day 3.6% 4.2% 17.1% 14.4% 90 Day 6.6% 7.0% 10.5% 18.0% 17.6% 1/3/2019

The Cost of Power in Great Britain is on the Rise June 2004 — Great Britain Forward Power Curves Power prices are up 10 euros/MWh due to higher fuel costs and the inclusion of C02. 1/3/2019

…And is Likely to Remain High September 2004 — Gas Spark Spread Great Britain is the only country where prices are high enough to encourage new power plant construction. 1/3/2019

But If You Take Out the Cost of CO2 September 2004 — Green Spark Spreads Great Britain power prices fall below the point that would encourage new entry. 1/3/2019

What About the Rest of Europe? Great Britain is the only market that is taking into account the opportunity costs of carbon. 1/3/2019

How Much Are Your Carbon Credits Worth? Global Insight’s CO2 Price Forecasts 1/3/2019

And How Will They Impact Prices Across Europe? Forecast Prices Across Europe 1/3/2019

New Entry Costs Special Topic Nuclear and wind are by far the most expensive to build 1/3/2019

CO2 Is Influencing New Build Decisions Special Topic CO2 Is Influencing New Build Decisions New Entry Costs With CO2 = 8 €/MWh Gas is still the most competitive when you consider the cost of CO2. 1/3/2019

CO2 Price Would Have to Jump Dramatically to Shift to Nuclear… Special Topic CO2 Price Would Have to Jump Dramatically to Shift to Nuclear… New Build Costs With CO2 = 64 €/MWh 1/3/2019

The European Power Price Service Tracking the Events Shaping the Industry The influence of the EU Emissions Trading Scheme on prices and plant operations Emerging trends in the traded markets The evolution of spark spreads Country analysis for United Kingdom, Spain, Netherlands, Germany, and Italy Converging prices across power markets Market analysis Price movements Volatilities Correlations 1/3/2019

The European Power Price Service Service Deliverables An annual forecast report including: A detailed review of market prices in the preceding year Forecasts of plant mix, plant margins, and electricity prices out to 2020 Comprehensive country reports focusing on market developments Quarterly updates including: Revised, near-term forecasts going out three years Insight into recent developments affecting the sector Analysis of recent price behaviour in traded markets 1/3/2019

Global Insight Energy Premier economic analysis and consulting organization Most comprehensive coverage of countries, regions, and industries available from any single source Multi-fuel, quantitative consultancy Emphasis on European and North American energy markets Broad range of subscription, data, and consulting capabilities Power, Gas, Oil, Coal, and Emissions 1/3/2019

Contact Us More information regarding Global Insight’s European Power Price Service is available at: www.globalinsight.com/eupower For additional questions regarding our European energy services, please contact: Trevor Sikorski +44 (0) 20 8544 7866 trevor.sikorski@globalinsight.com 1/3/2019