© Vattenfall AB The Swedish Power Market Presented for Invest in Sweden Agency and Sun Microsystems Stockholm 20 March, 2009 Sandra Grauers Nilsson, Vattenfall Power Consultant

© Vattenfall AB 2 Content Energy and Electricity in Sweden The Nordic Power Market Consumer prices in Europe Supplier vs. Distributor in the Nordic Power Market

© Vattenfall AB 3 Content Energy and Electricity in Sweden The Nordic Power Market Consumer prices in Europe Supplier vs. Distributor in the Nordic Power Market

© Vattenfall AB 4 Total energy supply in Sweden 1973–2007 Source: Swedenergy

© Vattenfall AB 5 Electricity generation in Sweden by power type, TWh/year Source: Swedenergy

© Vattenfall AB 6 Installed wind power generation capacity in MW Source: Swedenergy

© Vattenfall AB 7 In 2006, 97% of the electricty production was CO2-free Source: Swedish Energy Agency

© Vattenfall AB 8 Development of renewable electricity generation 2000–2007 Source: Swedenergy

© Vattenfall AB 9 Emissions of CO 2 equivalents in the world, tonnes per capita Source: Swedish Environmental Protection Agency

© Vattenfall AB 10 Ownership of electricity generation capacity Source: Swedenergy

© Vattenfall AB 11 Changes in ownership of electricity generation Source: Swedenergy

© Vattenfall AB 12 Content Energy and Electricity in Sweden The Nordic Power Market Consumer prices in Europe Supplier vs. Distributor in the Nordic Power Market

© Vattenfall AB 13 The Nordic Market - four countries Wind power Gas turbines Condensing Combined heat and power Nuclear power Hydro power 14 million customers, MW, 390 TWh/year Full regulated TPA (third party access) National Grid companies, TSOs Some 350 power generating companies, 450 supplying companies and 550 regulated distribution companies The Nordic Power Exchange - Nord Pool Spot Market Futures Markets (EUA, CER Green certificates) Production capacity a normal year, TWh Source: Swedenergy

© Vattenfall AB 14 The Nordic Market Generation in Sweden, The Nordic region, Europe The 400/200 kV grid EU 27 +Norway ~ 3000 TWh Other renewables Net imports Hydro Nuclear Fossil fuels The Nordic Countries ~ 380 TWh Sweden ~ 150 TWh Source: Swedenergy

Markets for electricity trade Source: Swedenergy

© Vattenfall AB 16 The Nordic Power Exchange – traded volumes, TWh/year Clearing - (OTC) Futures Elspot Source: Swedish Energy Agency

Electricity consumption and price in the Nordic countries SEK/MWh Source: Swedenergy

© Vattenfall AB 18 Nordic spot prices – hydro power reservoirs TWh, EUR/MWh, EUR/ton Source: Swedenergy

The Nordic Power System Production capability, normal year CHP Industrial Hydro power (normal year) CHP District heating Gas turbine Wind power Oil condensing power Incremental operating costs Electricity consumption Nuclear power Coal condensing power Source: Swedenergy

The Nordic Power System Production capability, dry year ) Less supply 1) Less Hydro Power 3) Higher production costs Incremental operating costs Söre/kWh Source: Swedenergy

© Vattenfall AB 21 Runoff variations in relation to normal year runoff 1952−2007 Source: Swedenergy

© Vattenfall AB 22 Content Energy and Electricity in Sweden The Nordic Power Market Consumer prices in Europe Supplier vs. Distributor in the Nordic Power Market

23 Electricity prices in Europe households kWh/year, 2:nd half 2007 EUR/kWh Source: Eurostat

Källa: 24 Electricity prices for the industry MWh/year, incl network and taxes, 2:nd half 2007 EUR/kWh Eurostat

© Vattenfall AB 25 Content Energy and Electricity in Sweden The Nordic Power Market Consumer prices in Europe Supplier vs. Distributor in the Nordic Power Market

© Vattenfall AB 26 l Production and sales in competition l Transmission and distribution as a monopoly Two Separate Legal Entities Source: Swedenergy

© Vattenfall AB 27 Electricity network regulation should aim to achieve... Efficient operation of the national grid as well as the regional and local networks Reasonable tariffs vs. service provided Competition in sales of electricity by creating non- discriminatory conditions for all Source: Swedenergy

© Vattenfall AB 28 Structure of Network Utilities in Sweden National Grid, Svenska kraftnät kV Regional networks - 10 operators kV Local networks operators < 40 kV, 5.3 million customers, average cust./co. Source: Swedenergy

© Vattenfall AB 29 The deregulated electricity market Grid Generator Market Place Supplier Trader Customer CompetitionMonopoly Regional net Local net Customer TSO Production Consumption Customer Supplier Source: Swedenergy

© Vattenfall AB Thank you!

© Vattenfall AB 31 Extra material

© Vattenfall AB 32 Storage levels in the regulating reservoirs Source: Swedenergy

© Vattenfall AB 33 Source: Swedenergy

© Vattenfall AB 34 The residential and service sector has abandoned oil for electricity and district heating.. Source: Swedish Energy Agency

© Vattenfall AB 35..and the base for district heating has gone from fossil fuel to biomass Source: Swedish Energy Agency

© Vattenfall AB 36 Simultaneously, industry has switched to biomass and electricity Source: Swedish Energy Agency