1. 6/1/2014 Power exchange for electricity Opportunities or constraints? Practical experiences with spot and intra-day trading linked to the Nord Pool markets. purpose and opportunities Conny Arnfeldt Mälarenergi AB

2. 6/1/2014 Agenda 1.Company presentation 2.How do we work with production planning and what systems do we use 3.Physical contracts with spot and ELBAS trading 4.Financial contracts and how to use it for securing production prices 5.Questions

3. 6/1/2014 Company presentation

4. 6/1/2014 Quick facts Mälarenergi is a public owned company We are approx. 544 staff In 2007 our turnover was over 250 M We have the largest cogeneration plant in Sweden Our district heating network is one of the biggest in Sweden We had the first district cooling network in Sweden

5. 6/1/2014 What do we provide to our customers District heating Electric power Water and sewage Services (internal and external) Electricity distribution (local grid) Urban data communication Network (fiber based)

6. 6/1/2014 Production numbers Electricity production - cogeneration 1 000 GWh - hydro power 200 GWh (41 stations) Electricity distribution (grid) 1 940 GWh Electricity trading 3 000 GWh District heating 1 700 GWh District cooling 17 GWh Domestic water 10 Mm3

7. 6/1/2014 Production planning

8. 6/1/2014 How do we work with production planning? Our base load electric production is based on our district heating load. And that load varies with: - climate - social patterns - industrial customers We also have the possibility to run our production in partial or full condensing mode. (cooling with seawater)

9. 6/1/2014 What tools do we use for production planning? Production planning (excel based tool) Nestor (heat load prediction) Pomax (database and communication system) Aiolos (electric load prediction)

10. 6/1/2014 How does it work?

11. 6/1/2014 Weather forecast (SMHI)

12. 6/1/2014 Nestor – heat load prediction

13. 6/1/2014 Pomax – production plan

14. 6/1/2014 Pomax – electric consumption

15. 6/1/2014 Pomax – balance planning

16. 6/1/2014 Physical contracts with spot and ELBAS trading

17. 6/1/2014 Physical contracts with Nordpool spot Our base load production is made as a single bid on NP spot for the next day. And the condensing production is made as block bid on NP spot.

18. 6/1/2014 Example on single and block bid

19. 6/1/2014 BUT THE WORLD IS NOT PERFECT! Deviations from plan will happen

20. 6/1/2014 What type of deviations is common for us? Failure on production plant Change in weather or error in weather forecast Errors in consumption forecast Depending on the sign of the deviation we then have to buy or sell to get into balance again

21. 6/1/2014 District heating balancing

22. 6/1/2014 How to solve deviations from plan during intra-day? We must stay in balance with the plan we sent to our TSO the day before. To solve the deviation, we have some options: - Regulate it internally - ELBAS trading - Bilateral trading with other companies - Run with imbalance (not an option!)

23. 6/1/2014 ELBAS trading

24. 6/1/2014 But ELBAS is not only used for deviations If prices on ELBAS is lower than our own production cost then its better to buy than to produce it our self. And if prices on ELBAS is higher than our cost for condense mode production or more expensive production plants then its better to sell more.

25. 6/1/2014 Why do we prefer to use ELBAS? It gives us a secure and anonymous way to trade with many counterparts if needed which gives us: - lower cost to find counterpart - a fast way to get into balance again - economical and structural safety - less dependency on the few big companies It contributes to an optimal usage of our own and others production facilities. Because the coupling between cost and environment load is strong, lower cost -> lower environment load

26. 6/1/2014 Financial contracts and how to use it for securing production prices

27. 6/1/2014 Financial contracts Financial products are handled by the trading department at Mälarenergi And we use our trading department to secure production prices to some extent. We also secure CO2, fuel prices and currency with financial contracts.

28. 6/1/2014 Questions? conny.arnfeldt@malarenergi.se Phone +46-21-395354