In 2014, we created the foundations for the energy transition 2.0

Transcription

1 50Hertz balance sheet press conference In 2014, we created the foundations for the energy transition 2.0 Balance sheet press conference Berlin, 09/03/2015 Boris Schucht, CEO; Udo Giegerich, CFO 1 / 40

2 Agenda Business development in 2014 Key company figures in 2014 Outlook 2 2 / 40

3 Business environment in Strong change of context in the energy industry in connection with high degree of uncertainty for all players 2. Solid results for 2014 characterised by non-recurrent effects and record investments 3. Politics: by reforming the Renewable Energy Sources Act and providing the first proposal for a new market model, the German Federal Government has addressed important issues; but grid development facing opposition in a few federal states Caution: grid development, which is the key for the energy transition, should not be sacrificed in favour of regional interests, otherwise this important industrial project will not succeed! 4. Closer cooperation with many players from politics, civil society and energy industry due to the fundamental changes in the system 3 / 40

4 Energy transition laying the foundation Record share of renewables in consumption Work continues on the network development plan Closer cooperation between TSOs and DSOs "Ten-point plan" Grid expansion projects in the direction of Scandinavia Current grid expansion projects in Germany by 50Hertz on the right track Creating acceptance for the realisation of the network development plan 4 / 40

5 EEG generation units in the 50Hertz grid area Photovoltaik Wind Biomasse Sonstige EE Installed capacity in MW * As at: 31/12/2014; *temporary value Source: master data for EEG Feed-in in TWh Einspeisung in TWh * As at: 31/12/2014; *temporary value, verified values for 2014 will be available in June 2015 Source: 50Hertz RES are in constant development in the 50Hertz area. Power generation from these sources accounted for about 42 % (40 TWh) of power consumed in 2014 (95 TWh). 5 / 40

6 TSO and 50Hertz disturbance rates Disturbances in the grid are "traditionally" below average at 50Hertz - failure rates in Germany are very low compared to those of other countries. 6 / 40

7 Grid expansion projects at 50Hertz in kV grid connection to the substation in Förderstedt 12 km Bärwalde Schmölln 380-kV overhead line 46 km Grid connection of the Parchim/Süd substation 1 km South-West Interconnector 2 (SWI 2) Vieselbach Altenfeld 57 km 380-kV reinforcement Wolmirstedt 6 km Grid connection offshore wind farm (OWF) Baltic 2 ~ 135 km Grid connection OWFs Wikinger and Arkona-Becken Südost ~ 100 km SWI 3 Altenfeld Redwitz (up to state border Thuringia/Bavaria) ~ 26 km 3rd interconnector to Poland (up to German-Polish border) ~ 10 km 380 kv overhead line "Nordring Berlin" ~ 80 km Uckermark line Neuenhagen Vierraden Bertikow ~ 120 km Bertikow Pasewalk ~ 30 km Wolmirstedt Perleberg ~ 106 km Grid connections offshore wind farms in the Baltic Sea ~ 100 km Kriegers Flak Combined Grid Solution 16 Grid connection of the Jessen/Nord substation 17 Grid connection of the Putlitz/Süd substation Completed in 2014 Under construction Approval procedure ongoing ~ 15 km ~ 3 km ~ 5 km ~ 60 km ~ 200 km ~ 500 km X X X Commissioned in 2014 Under construction Planning procedure ongoing 7 / 40

8 Progress of offshore projects in the Baltic Sea 2011 Commissioning of Baltic 1 (48.3 MW) 2012 Start of construction Baltic 2 (planned: 288 MW) 2014 Start of project realisation for "Ostwind1" and order of the submarine cables for the grid connection in the "Westlich Adlergrund" region 2015 Completion of grid connection Baltic 2 in Allocation of grid capacity on the connecting cables to the approved OWF Wikinger (350 MW) Order of submarine cables for offshore cluster "Westlich and Arkona-Becken Adlergrund" Südost (385 MW) by the FNA. for up to 730 million EUR, being the highest contract volume at 50Hertz so far 8 / 40

9 Grid development and storage NOR (85 TWh) DE (0.04 TWh*) CH (9 TWh) SWE (34 TWh) AUT (3 TWh) * Maximum available storage capacity of water reservoirs in MW Maximum available storage capacity of pumped storage in 2011 (in TWh) , , ,0.3, NOR SWE CH AUT DE Annual surpluses in Germany from RES Surpluses due to fluctuating feed-in Need for controlled power generation Hours per year The World Energy Council study shows the high economic value between Germany and Scandinavia (between 7 and 12 GW) Source: World Energy Council, / 40

10 Planned interconnectors (I): Combined Grid Solution between Germany and Denmark - The EU-funded Combined Grid Solution (CGS) is to connect the offshore wind farms Baltic 2 (DE) and Kriegers Flak (DK) to the grid via a German-Danish interconnector. - Joint feasibility study shows: CGS favourable both from a technical and a cost perspective compared to a "normal" grid connection of Baltic /01/2015: Cooperation agreement for technical concept of interconnector between Energinet.dk and 50Hertz. Start of tendering procedures in / 40

11 Planned interconnectors (II): Hansa PowerBridge between Germany and Sweden Hurva Central West EEZ Sweden EEZ Denmark Gate 8 EEZ Germany Gate 3 Coastal waters Gate 9 East Gate 1 - For 50Hertz: access to Swedish pumped storage; for Svenska kraftnät: access to favourable German renewables. - Long-term strategy: extension of HVDC links within Germany for optimal use of solar, wind and water power. - Memorandum of Understanding and feasibility study 2014 show promising business case with great economic benefit for Europe, Sweden and Germany. Bentwisch Lubmin 1 cm Güstrow 25 km 11 / 40

12 2014: 50Hertz milestones Commissioning of 380-kV line Bärwalde Schmölln, construction during ongoing operation of the existing line, no acceptance problems. Planning approval decision for the Uckermark line. Further development of the grid infrastructure Reduction of the total line length despite ongoing grid expansion. Commissioning of the Förderstedt substation. Agreement on phase shifters with Polish transmission system operator. Submarine cable project for offshore wind farm cluster Westlich Adlergrund initiated, largest project in the history of the company, total value of 1.5 billion EUR. Memorandum of Understanding on German-Swedish interconnector project Hansa PowerBridge / 40

13 Strengthening cooperation Transparency agreements 2014: conclusion of transparency agreements with the federal states Mecklenburg-Western Pomerania and Saxony- Anhalt: joint statement on early information, transparency and public participation during line construction projects. TSO-DSO cooperation Ten-point plan for a secure supply of electricity with the distribution system operators of the 50Hertz control area: further development of the ancillary services frequency and voltage maintenance as well as close cooperation during operational management and system restoration, integrating the opportunities offered by distributed generation. Joint international security drill Unique German-Czech security exercise DRILL with the Czech TSO ČEPS as well as authorities and rescue workers of both countries proved the importance of cross-border cooperation in emergency situations / 40

14 Cooperation principles also apply to dialogue with citizens because... Transparency Inform people extensively at an early stage Document discussion and changes in planning Focus on dialogue Listen, answer any questions, explain plans, explore how much leeway there is Activity Not just reacting, but also taking action Partnerships With authorities, companies, NGOs and citizens at eye level Participatory culture Interpret planning as a joint process 14 / 40

15 ... creating acceptance is a planning guideline at 50Hertz Understanding for the grid development through 1. Participation 2. Bundling 3. Underground cabling 4. Use of existing lines 5. Compensation payments to municipalities 6. Reimbursement for land owners 7. Compensation and replacement measures 8. Ecological forest aisle management 9. New design of power poles Bundling options in the project area Objective: As little impact as possible on people, nature and landscape. 15 / 40

16 Annual import and export at control area borders North-eastern Germany - an important energy exporting region 16 / 40

17 System security: interventions in grid and market Power volumes and costs for redispatch ( 13.1 EnWG) Quantity in GWh Share of conv. feed-in 1 2 6,00% 5,00% 4,00% 3,00% 2,00% 1,00% 0,00% Costs in million High annual redispatch costs could be significantly lowered through grid development TenneT redispatch towards 50Hertz International redispatch National redispatch 50Hertz grid area 1 Power consumption (delivery to final consumers as per EEG) in the 50Hertz control area 2 Temporary values 17 / 40

18 System security: interventions in grid and market Power volumes and costs to reduce wind power feed-in ( 13.2 EnWG / 14 EEG) Volume in GWh 50 Share of RES feed-in 1 1,00% 0,80% 0,60% 0,40% 0,20% Costs in million ,00% Reduction of wind power plant output does not have much influence to date (0.66 % of feed-in) 1 Feed-in of renewable energy in the 50Hertz control area 2 Temporary values 18 / 40

19 Agenda Business development in 2014 Key company figures in 2014 Outlook / 40

20 Investment activities in 2014 at all-time high Onshore Offshore Instandhaltung Plan Instandhaltung Offshore Onshore Record investment volume, mainly due to high offshore investments. 20 / 40

21 Clear increase in investment volume Capex 2014: 572 million EUR Drivers [+42.3 % compared to 2013] Onshore 264 million EUR [+6.5 % compared to 2013] Investments in process improvement Replacement investments 3% 2% 5% Investments in nonelectrical installations 90% Integration of renewable energy sources 308 (53.9%) 264 (46.1%) Offshore 308 million EUR [+100.0% compared to 2013] Significant increase in onshore investments and 100 % increase in offshore investments lead to the achievement of the planned value. 21 / 40

22 Personnel % % % % 893 Full time equivalents* at 31/ Moderate increase in personnel compared to the increase in investment volume. * Includes active and inactive employees as well as trainees of Eurogrid GmbH, 50Hertz Transmission GmbH and 50Hertz Offshore GmbH 22 / 40

23 Adjusted net result* Adjusted result 2014 Non-recurrent regulatory effects Reserves (particularly taxes) Nonrecurrent operational effects Net result 2014 Non-recurrent operational results in 2014 have positive influence on result. * IFRS Eurogrid GmbH, 50Hertz Transmission GmbH and 50Hertz Offshore GmbH 23 / 40

24 Balance sheet* Assets in million EUR Fixed assets 2,744 2, % Current assets % Liquid assets % 4,150 3, % Liabilities Equity 1,169 1, % Provisions % Long-term liabilities % Short-term liabilities 1,780 1, % Regulatory liabilities (net) % 4,150 3, % Equity ratio (=equity/total assets) 28% 34% -6 Debt-equity ratio (=net financial debt/equity) 1% 18% -18 Debt-equity ratio without fiduciary operations 60% 25% 35 * IFRS Eurogrid GmbH, 50Hertz Transmission GmbH and 50Hertz Offshore GmbH 24 / 40

25 Profit and loss statement* in million EUR Revenues (gross) 8,569 8, % Neutral business 7,593 7, % Revenue from the grid business % Other income % Total of the proceeds and income 1, % Energy and material costs % Personnel costs % Other costs % EBITDA % Depreciation and amortisation % Financial result n.a. Taxes % Net result % * IFRS Eurogrid GmbH, 50Hertz Transmission GmbH and 50Hertz Offshore GmbH 25 / 40

26 Cash flow statement* in million Net result Change in non-cash expenses/income Operating cash flow 870 1,008 of which changes in regulatory liabilities of which tax payments Cash flow from investment activities of which cash payments for investments in assets Readily available cash flow of which payments from fiduciary operations (esp. EEG) Cash flow from financing activities of which profit transfer Cash-relevant change in cash funds Adjusted operating cash flow * IFRS Eurogrid GmbH, 50Hertz Transmission GmbH and 50Hertz Offshore GmbH 26 / 40

27 Financing Issuer Guarantors Eurogrid GmbH 50Hertz Transmission GmbH 50Hertz Offshore GmbH Tools 2.5 bn Euro Medium Term Note Programme (EMTN) Terms and conditions EUR Bond 500 m Coupon 3,875% Term 10 years Final maturity Oct 2020 Joint Bookrunners BNP Paribas, Dexia, ING and RBS Registered bond 50 m Coupon 3,000% Term 30 years Final maturity Dec 2044 Revolving Credit Facility 350 m Participation of 11 main banks: Commerzbank, BNP Paribas, KBC, HSBC, ING, Helaba, Morgan Stanley, Rabobank, RBS, IL Brandenburg, IB Berlin Term until 06/2016 Cash Management Line 150 m "until further notice" credit line at principal bank BNP Paribas 27 / 40

28 Agenda Business development in 2014 Key company figures in 2014 Outlook / 40

29 Outlook: five issues currently in the focus 1. Further development of Renewable Energy Sources Act & EEG surcharge 2. Electricity market design and capacity mechanisms 3. Grid development, DC power links and price zone debate 4. Grid fees - regional differences and grid fee regime March 2015: solar eclipse and system management 29 / 40

30 Further development of Renewable Energy Sources Act and EEG surcharge 1. Political aim to make the development of RES more cost-effective was successful. 2. Continued exploitation of efficiency potentials as a result of tendering concepts expected calls for tenders in other parts of the world prove their worth. 3. Relief of increase on EEG account by shifting from solar to onshore wind power development. 4. EEG account: Slower growth of solar power in 2014 than predicted, after years of prefinancing by TSOs buffer now operative, positive for development in the year to come. EEG surcharge stays relatively stable in the current outlook for / 40

31 Claims of the Green Paper on electricity market design Green paper claims 50Hertz Optimise grid development Keep a uniform price zone Operate system securely Boost accounting grid responsibility Continue development of spot and control power markets Optimise grid fees Continue examining capacity mechanisms Intensify European cooperation We welcome and strongly support the conclusions and further development concepts of the green paper. 31 / 40

32 Grid development, DC power links and price zone debate 1. Integration of renewables: the development of renewable energy sources continues and increases in the north, but the power generated cannot completely be consumed locally. 2. System security: the systems are already operating at their load limits. In the future, the lines will be strained even further. 3. Access to favourable energy prices by all federal states: if Germany is unable to prove that the inner German bottlenecks are only temporary, breaking up into two price zones is a realistic scenario. The demonstration of the new construction projects in the network development plan shows the start and end points, but no specific routes. These are only determined afterwards during the approval procedure. 32 / 40

33 Overview of the effects of price zones within Germany in southern Germany in northern Germany On the energy stock exchange prices Increasing energy stock exchange Slightly dropping energy stock prices (+6 Euro/MWh) due to lack of exchange prices because of surplus generation capacity and expensive of cheap generation (wind, lignite). technology (gas, ROR, PSP, PV etc.). Conventional, CHP etc. are operated less frequently. Increase in electricity generation costs of approx. 600 million EUR each year in the north and south due to inefficiencies. Capacity instruments Markedly higher capacity prices as capacity deficit requires construction of new power plants (+2-3 Euro/MWh). Lower capacity prices due to capacity surplus. AS markets Renewable Energy Sources Act - EEG Division of the markets for the different types of control power / ancillary services leads to higher prices in the north and south. Costs for EEG funding increase in the north and south as the lower stock exchange prices in the north reduce revenues from wind power sales. 33 / 40

34 Grid fees differ significantly within Germany Causes of the grid fee differences: different concentration of RES generation, investment cycles, population and industry density. Basic issue: energy transition = national German project. However: high grid fees in those regions that make an important contribution to the energy transition. Possible courses of action: Maintaining the current grid fee regime Compromise: reducing the regional differences Nationwide uniform grid fee 34 / 40

35 "And yet it's coming!" - solar eclipse on 20/03/ MW Challenges in case of sunny weather: First reduction of solar power feed-in with approx. 12 GW, afterwards increase of about 19 GW in Germany The solar power traded at the stock exchange has to be balanced completely and punctually by many flexible generation units (procurement of more control power) Intensive coordination between the TSOs in Germany and Europe 12.6 GW 19.2 GW 00:00 00:45 01:30 02:15 03:00 03:45 04:30 05:15 06:00 06:45 07:30 08:15 09:00 09:45 10:30 11:15 12:00 12:45 13:30 14:15 15:00 15:45 16:30 17:15 18:00 18:45 19:30 20:15 21:00 21:45 22:30 23:15 Wolkenlos Orig. Wolkenlos SoFi Bedeckt Orig. Bedeckt SoFi TSOs follow market-oriented approach to control the situation. Installed solar power capacity 35 / 40

36 Thank you very much for your attention. Boris Schucht, CEO Udo Giegerich, CFO 50Hertz Transmission GmbH Eichenstraße 3A Berlin info@50hertz.com

37 Backup

38 Development of electricity consumption in the 50Hertz area Power consumption* in TWh 100,0 98,0 96,0 94,0 92,0 90,0 88,0 86,0 84,0 88,9 91,2 91,8 92,6 94,6 95,0 93,3 98,6 99,0 97,7 96,8 95,0 82, Regressive electricity consumption in the 50Hertz control area * Power consumption (delivery to end consumers as per EEG) in the 50Hertz control area, values excl. own consumption 38 / 40

39 Share of RES feed-in in power consumption for 2014 Germany 50Hertz Power consumption: 95 TWh 1,2 of which RES: 40 TWh 2 RES share: 26% RES share: 42% The share of fed-in renewable energy in the consumption of electricity is considerably higher in the 50Hertz control area than for Germany in its entirety. 1 Power consumption (delivery to end consumers as per EEG) in the 50Hertz control area 2 Temporary values 39 / 40

40 Investigated price zone layout for the year 2023 Generation 2023 Basis: NDP scenario B2023; NTC 12.5 GW Temporary bottleneck RES generation Conventional generation within Germany RES generation Conventional generation 220 TWh TWh TWh Erzeugte Energie NTC of 12.5 GW TWh Elektrische Nachfrage Assumptions in the scientific discussion*: - If the expansion and extension of high-voltage lines is not pursued, Germany will be divided into two separate electricity trading markets due to the bottleneck between north and south. There will then be two stock exchange prices. - The trade of electricity between northern and southern Germany will be limited. A socalled net transfer capacity (NTC) will be introduced. - As a result, less electricity will be generated in northern Germany. The need for transmission from north to south declines. - In order to lower the need for transmission to such an extent, that there is no excessive need for redispatch, the NTC should be fixed at GW. Erzeugte Energie Elektrische Nachfrage * The north-south division of the German price zone was discussed in the ENTSO-E bidding zone study, APG study 2012, Bettzüge / 40