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

The World's energy can be produced much more efficiently 2 Global CO 2 emissions from coal: 30% Global CO 2 emissions: 9% Source: Morgan Stanley Research Feb Power plat efficiency level OthersDONG EnergyGlobal Average - 31% 0 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…

Avedøre Multi Fuel Power Plant -movie introduction 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

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

From black to green energy 6 An electron in g CO 2 /kWh 100 g CO 2 /kWh An electron in 2020: 50% CO 2 -reduction An electron in 2040: 85% CO 2 -reduction To provide reliable energy without CO 2 VISION STRATEGY  Eliminate 50% of CO 2 -emission per kWh before 2020  Eliminate 85% of CO 2 -emission per kWh before ) 2006 total heat and power production 28,5 TWh eleq/ CO 2 - emissions 18,2 mt = 638 g CO 2 /kWh 15 / / 15

85/15 implies more focus on renewables and gas 7 STRATEGY TO 2015  More balanced thermal portfolio  Significant position within offshore wind 6000 MW 2008: 19 TWh2015: ~ 34 TWh Coal and oilGasBiomass and waste CONSIDERABLE CHALLENGES  Technical  Commercial (business model)  Regulatory Wind (onshore and offshore) Biomass Gas Wind and hydro New tech

With change comes opportunities… 8 Source: IPCC, Climate Change 2007 Synthesis report Necessary Reductions Business Opportunities

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

Cellulosic biomass (Waste) Ethanol C5 molasses Lignin biofuel 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 Inbicon – from biomass to ethanol

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

Renescience – from waste to energy 12 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 Facts REnescience means Renewables, Science and Renaissance of the energy system

Better Place - powering transport 13 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  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 CO 2 emission from an electrical car would be only 50% of that of a conventional car

Electricity markets and pricing 14 Electricity Markets  Day Ahead  Intraday (24h to 60min before)  Intrahour (60-15 min before) Example of prices on the day ahead market

15 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

 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% 16 Trade across borders and optimal utilisation of high- performing thermal plants is the backbone of wind integration Coal plant efficiency

Increasing wind power is also an economic challenge 17  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

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. Interaction and integration is key to realizing the full potential of new energy technologies 18 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.

Market driven mobilisation through decentralised storage and exploitation of synergies From system challenge… …to business opportunity 19 Parts of consumption is moved from peak demand to low peaks in demand Wind powerThermal – heat bound Thermal – not heat boundConsumption Hour Production and consumption in DK West, Jan Tools for balancing the system  Thermal production  Import / export  Flexible consumption / energy storage Market driven development should be ensured by assessing the regulatory and infrastructural challenge of flexible consumption  Electricity production  System responsibility  Wholesale market  Sales  Distribution

The Power Hub -a crucial element in the "intelligent power consumption" 20 DONG Energy Power control room DONG Energy Power control room Power markets Power Hub of large and medium size consumption units Wind farm controller Aggregation of electric cars Power plant master controller Aggregation of micro units heat pumps, freezers etc. Power Hub of medium-size power production units Power Hub of medium-size power production units Power Hub of consumption aggregators Ancillary services and grid optimisation Emergency generators Hydropower

Thank you for your attention 21 Knud Pedersen, Vice President Group R&D, DONG Energy