Capturing the value potential in New Energy Alexandra Bech Gjørv Head of New Energy 10-01-2006
Strong drivers for new energy solutions Energy demand will increase by 60 % by 2030 20000 Mtoe 15000 10000 5000 Other renewables Hydro Nuclear Coal Gas Oil 0 2002 2030 Date: 10-01-2006 Page: 2
Strong drivers for new energy solutions Replacement of oil and gas reserves is challenging Date: 10-01-2006 Page: 3
Strong drivers for new energy solutions Security of supply mbbl/d 140 120 100 80 60 40 20 0 2002 2030 Outside OPEC OPEC Unconventional oil Date: 10-01-2006 Page: 4
Strong drivers for new energy solutions Increased awareness of climate change Source: Prof. Socolow, Princeton Uni. US Date: 10-01-2006 Page: 5
Strong drivers for new energy solutions New energy companies attract investment capital Date: 10-01-2006 Page: 6
Strong drivers for new energy solutions EU: 70 000 employed within wind energy 1 000 employees 250 200 150 100 50 0 2005 2015 Date: 10-01-2006 Page: 7
Strong drivers for new energy solutions Authorities establishing incentives to meet challenges Date: 10-01-2006 Page: 8
Predicting broad future energy mix Date: 10-01-2006 Page: 9
A significant growth market in new energy TWh/year MBbl/day 1400 1200 3 2 1000 800 600 930 600 2,5 1 400 200 0 52 2 120 160 60 170 1 35 0,5 Wind Solar Biopower Geothermal Wave Bio-fuel 2002 2030 for power and 2020 bio-fuels Power in TWh/year and equivalent Mbbl/day, Bio-fuels in Mbbl/day Source: IEA Date: 10-01-2006 Page: 10
Power from fossil fuels large uncertainties Incentives for renewables 30.11.05 133 /MWh!!!! 90 /MWh Wave and tidal? 60 45 30 15 0 2002? Power price Norway 2007: 34 /MWh Power price Germany 2007: 44 /MWh Nuclear Sources: NordPool, Hydro and Dale Simbeck (US consultant) In Offshore wind UK?? Biopower Onshore wind Norway? Incentives 2038 Date: 10-01-2006 Page: 11
Industrial peers engage in several technologies Shell BP TOTAL Statoil Hydro Vattenfall Statkraft E-on Dong GE Wind Solar Hydro Biopower Geothermal Carbon capture Hydrogen Biofuel Date: 10-01-2006 Page: 12
Hydro is positioned in the most mature new energy technologies Anticipated market potential - 2015 High Wind offshore Bio-fuel Wind nearshore Solar crystalline Bio-power Wind onshore Solar thin film Low Wave Tidal Hydrogen fuel cells Geothermal Hydrogen Small hydro R&D 2005 Maturity of technology Commercial Hydro currently engaged Venture investment Hydro limited or not engaged Date: 10-01-2006 Page: 13
Hydro develops natural resources in innovative and efficient ways A unique capability platform Our talents Stakeholder management for access to resources Competence in large scale project execution Offshore/geo experience Metals and chemical processes and logistics Relevant R&D and material science Commercial player in the relevant markets Our values Date: 10-01-2006 Page: 14
Hydro s New Energy ambitions Increasing our activities in new energy solutions Capabilities in place for significant growth A preferred partner through our technical, operational and commercial skills Date: 10-01-2006 Page: 15
Our New Energy business Date: 10-01-2006 Page: 16
Hydrogen solutions for Europe Hydrogen fuelling systems from Hydro Reykjavik Reykjavik Reykjavik Hamburg Berlin Date: 10-01-2006 Page: 17
Hydrogen solutions for Europe Hydrogen fuelling systems from Hydro Hamburg Reykjavik Date: 10-01-2006 Page: 18
Hydrogen solutions for Europe Hydrogen fuelling systems from Hydro Reykjavik Berlin Date: 10-01-2006 Page: 19
Wind hydrogen at Utsira Date: 10-01-2006 Page: 20
Hydro Technology Ventures New Energy - Solar - Wind - Bio - Enabling - Distributed - Oceanic renewables Oil and Gas - Accelerated application of new technology Energi vekst Date: 10-01-2006 Page: 21
Investment in exciting energy technologies Wave power: Large resources, challenging developments Date: 10-01-2006 Page: 22
Our wind adventure Date: 10-01-2006 Page: 23
A successful early start at Havøygavlen A significant 140 mill. NOK position in 2001 Learning from tough terrain, complex winds and harsh climate Good commercial positioning gives IRR well above cost of capital Date: 10-01-2006 Page: 24
An attractive onshore portfolio in Norway Finnmark Excellent wind conditions Incentive system in place 2007 El-certificate system Norway/Sweden Fosen and Central Norway South Western Norway Date: 10-01-2006 Page: 25
Annual global wind power development Actual 1990-2004 Forecast 2005-2009 Prediction 2010-2014 MW 30 000 25 000 20 000 15 000 10 000 5 000 0 1990 2004 2009 2014 Source: BTM Consult ApS - March 2005 Existing capacity Onshore (forecast) Offshore (forecast) Prediction Date: 10-01-2006 Page: 26
Why offshore wind? Stronger, more stable winds Shortage of good land sites Avoiding community and environmental conflicts Economies of scale Date: 10-01-2006 Page: 27
Challenging marine operations Date: 10-01-2006 Page: 28
Hydro s E&P skills create value in New Energy Expertise in marine operations Complex permitting is no obstacle Preferred partner through track record in project development, contract and risk management Date: 10-01-2006 Page: 29
Acquired significant position offshore UK Very attractive winds and support schemes Scira: 315 MW Offshore shallow waters Positioned for GBP 300 million investment Many uncertainties still an option Date: 10-01-2006 Page: 30
Hywind taking the next step Capturing even better winds Cost effective and robust Minimum offshore work Site independent, less conflicts Date: 10-01-2006 Page: 31
Successful test of breakthrough technology 3 year R&D program Hydro patented solutions Next step is full-scale demo Date: 10-01-2006 Page: 32
Commercialization Commercial park Demo park Demo Technical focus Cost focus Market focus Date: 10-01-2006 Page: 33
A truly global potential Deepwater sites near major consumption areas, with price/incentive premium Map: NASA Date: 10-01-2006 Page: 34
125 TWh Hywind Hywind a challenger to Ormen Lange? The gas in Ormen can generate 125 TWh/year for 20 years Same as two offshore blocks of Hywind Forever! Date: 10-01-2006 Page: 35
Hywind Date: 10-01-2006 Page: 36
Forward-looking statements/ use of non-gaap financial measures In order to utilize the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, Hydro is providing the following cautionary statement: This presentation contains certain forward-looking statements with respect to the financial condition, results of operations and business of the Company and certain of the plans and objectives of the Company with respect to these items. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. The actual results and developments may differ materially from those expressed or implied in the forward-looking statements due to any number of different factors. These factors include, but are not limited to, changes in costs and prices, changes in economic conditions, and changes in demand for the Company's products. Additional information, including information on factors which may affect Hydro's business, is contained in the Company's 2004 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission. With respect to each non-gaap financial measure Hydro uses in connection with its financial reporting and other public communications, Hydro provides a presentation of what Hydro believes to be the most directly comparable GAAP financial measure and a reconciliation between the non-gaap and GAAP measures. This information can be found in Hydro s earnings press releases, quarterly reports and other written communications, all of which have been posted to Hydro s website (www.hydro.com). Date: 10-01-2006 Page: 37
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