European Power Generation Strategy Summit

Transcription

1 European Power Generation Strategy Summit The Nordic Power Market - is it different from other power markets? Prague 4 December 2012 Lars Jacobsson, Market Framework Coordination, BD Asset Optimisation and Trading

2 Vattenfall A European energy company Vattenfall is an integrated European energy company Owned by the Swedish state Focus on Sweden, Germany, The Netherlands Number 5 in electricity generation Number 1 in heat production Group strategy: Reduce CO 2 exposure Facts & Figures (2011) Net sales MSEK Number of employees: 38,000 Electricity generation: 167 TWh Heat generation: 45 TWh Number of customers: 7,7 million electricity 2,2 million gas

3 Europe s largest electricity generators (2010) Where do we invest..?

4 Investment plan for Vattenfall plans to invest 147 billion SEK during the period billion SEK in production of electricity and heat 33 billion SEK in electricity and district heating networks, IT and gas storage And what does the change look like..

5 Increasing investments in low CO2-emitting technologies Low CO 2 emitting share of plant investments What is the role of windpower?

6 Vattenfall Wind Power has accelerated growth in , resulting in GWh of annual wind production by end of 2011 Vattenfall Wind Markets and Assets, End 2011 [MW] 1) Historical Annual Growth, Vattenfall Wind Power [GWh] Onshore Offshore Cumulative production Added production/a TOTAL Onshore capacity: Offshore capacity: Annual production: 620 MW 845 MW GWh Let s look at some fundamental prerequisites for the common Nordic electricity power market

7 Normalized electricity production mix in the Nordic region In total around 400 TWh/year About the same size as the UK market Very low CO2 emissions The generation is very different in the different countries. What is the total result in the common Nordic market Source: Swedenergy

8 Nordic production per generation type TWh 12 Nuclear Other Thermal Power Hydro Wind Power Source: Nord Pool Spot 8 What is the role of hydro power.?

9 The Nordic annual cycle. Using the hydro resources is key Hydro power spring flood 12 TWh / Week 10 Hydro inflow 8 6 Hydro from reservoir Hydro 4 2 Nuclear and Thermal 0 January December An efficient use of the hydro resources is key 9

10 Hydro inflows are volatile TWh/ year Total Scandinavian hydro inflow has varied 90 TWh That is almost equivalent to the entire Scandinavian nuclear power generation And what about interconnection between Nordic countries and connection to surrounding markets.? 10

11 Interconnection capacity in the Nordic Market Existing links Approved links Planned links Link capacities in MW Sweden Norway 600 Finland Russia Estonia Denmark 600 Latvia Lithuania Belarus Poland Great Britain Holland Germany Ukraine And how are the assets used? 11

12 Nord Pool Spot Nord Pool Spot operates the leading markets for buying and selling power in Europe: Elspot day-ahead market in the Nordic and Baltic regions Elbas intraday markets in the Nordic and Baltic regions N2EX market in the UK 370 companies from 20 countries trade on Nord Pool Spot s markets In 2011, 316 terawatt hours (TWh) were traded at Nord Pool Spot. Source: Nord Pool Spot 12 And what is the result when it comes to prices?

13 System price EUR/MWh System price Source: Nord Pool Spot No political interference with the market even when the price 13 was high! Demand response to be developed. Let s look ahead.

14 Vattenfall s view on the development of the Nordic electricty market until 2030 supply and demand Prognosis - Supply and demand Strong growth in supply expected, in combination with slow demand growth. And what kinds of generation technologies dominate.?

15 Wind power will contribute significantly to the growth of production capacity in the Nordics Prognosis - Production capacity Growth in new production capacity until 2030 gives a surplus of 56 TWh net, which according to the prognosis means that the Nordic region will continue to show lower electricity prices than the European continent. Generation adequacy OK until 2025 in Sweden What about future prices..?

16 Prices at Nord Pool EUR/MWh System price FM-weekly prices FM-monthly prices Source: Nord Pool Spot 16 How is windpower supported in e g Sweden and Norway..

17 The Tradable Green Certificate system in Sweden and Norway Overall Goal To increase the production of electricity from renewable energy sources by 26,4 TWh from 2012 to 2020 in Sweden and in Norway. A quota system will always deliver the right amount of renewables Entitled Energy Sources All production from Wind, Biomass, Hydro power, Solar, Wave and Geothermal Supply 1 MWh/certificate during 15 years (ends 2035) Banking allowed, not borrowing Demand A quota obligation for electricity suppliers Electricity-intensive industry exempted from quota obligations Total cost for end customers approx 0,6 0,9 c /kwh (compare the cost in Germany 2013: c 5,3/kWh) All stakeholders are satisfied with this system. Does it deliver..?

18 SEK/MWh Windproducers income: Electricity price + certificate price Electricity FWD System Price + Certificate price El Fwd YR Cert March -06 El Fwd YR Cert March -07 El Fwd YR Cert March -08 El Fwd YR Cert March -09 El Fwd YR Cert March -10 El Fwd YR Cert March -11 El Fwd YR Cert March -12 El Fwd YR Cert March -13 El Fwd YR Cert March Span where land based wind breaks even Today there is an overdelivery of renewables in Sweden. But so Trade date far no political intervention. Let s turn to the retail business

19 Customer switching in Sweden is the second largest in EU Around 10 % of all customers Is customer switching really a good criterion for a well functioning market? By 2015 there will be an integrated Nordic retail market based on the Supplier Centric Model Let s summarize the Nordic electricity market: Source: Statistics Sweden

20 Summary of the situation in the Nordic market The common Nordic power market works very well. The regulatory framework for the wholesale market has been very stable Still, the trust in the market is low, especially in Sweden The Swedish Norwegian quota system to support renewables is by all stakeholders considered to be a very efficient model. The gross growth in production capacity from now to 2030 is considerable, approximately 112 TWh. This leads to two conclusions: The Nordic countries will continue to have a lower electricity price than the rest of Europe This brings opportunities for electricity exports, which in turn allows the EU s climate goals of reduced carbon emissions to be achieved at a lower cost. Finally, some words about the transmission issue

21 The sense of urgency has to increase. Almost 100 possible bottlenecks have been identified in Europe in the coming decade, mainly because of renewables integration (unless new transmission assets are developed). There has been delay to the delivery of one third of the investments, mostly because of social resistance and longer permitting procedures Only 52 out of 495 projects in TYNDP 2010 have been commissioned Big problems, what can be done? One example..

22 New technology can facilitate the licensing procedure The technology is there today The Swedish South link with HVDC VSC technology is decided and contracted. 190 out of 250 km is underground, which is in most cases less controversial. More and more land based applications of HVDC are emerging on the map Conversion of existing AC lines to DC to increase the capacity should be investigated In most cases an earlier commissioning date has a high socioeconomic value! 190 km HVDC 2018 AC-DC conversion? Thank you for your attention South Link HVDC 251 km 75% cabel Q4-2014