© vattenfall ab the swedish power market presented for invest in sweden agency and sun microsystems...

© Vattenfall AB

The Swedish Power Market

Presented for Invest in Sweden Agency and Sun Microsystems

Stockholm 20 March, 2009

Sandra Grauers Nilsson, Vattenfall Power Consultant

© Vattenfall AB 2

Content

• Energy and Electricity in Sweden

• The Nordic Power Market

• Consumer prices in Europe

• Supplier vs. Distributor in the Nordic Power Market

© Vattenfall AB 3

Content

• Energy and Electricity in Sweden

• The Nordic Power Market

• Consumer prices in Europe

• Supplier vs. Distributor in the Nordic Power Market

© Vattenfall AB 4

Total energy supply in Sweden 1973–2007

Source: Swedenergy

© Vattenfall AB 5

Electricity generation in Sweden by power type, TWh/year

Source: Swedenergy

© Vattenfall AB 6

Installed wind power generation capacity in MW 2002-2007

Source: Swedenergy

© Vattenfall AB 7

In 2006, 97% of the electricty production was CO2-free

Source: Swedish Energy Agency

© Vattenfall AB 8

Development of renewable electricity generation 2000–2007

Source: Swedenergy

© Vattenfall AB 9

Emissions of CO2 equivalents in the world, tonnes per capita

Source: Swedish Environmental Protection Agency

© Vattenfall AB 10

Ownership of electricity generation capacity

Source: Swedenergy

© Vattenfall AB 11

Changes in ownership of electricity generation 1996-2007

Source: Swedenergy

© Vattenfall AB 12

Content

• Energy and Electricity in Sweden

• The Nordic Power Market

• Consumer prices in Europe

• Supplier vs. Distributor in the Nordic Power Market

© Vattenfall AB 13

The Nordic Market - four countries

050

100150

Finland

050

100150

Sweden

050

100150

Norway

050

100150

Denmark

Wind powerGas turbinesCondensingCombined heat and powerNuclear powerHydro power

• 14 million customers, 73.000 MW, 390 TWh/year

• Full regulated TPA (third party access)

• National Grid companies, TSOs

• Some 350 power generating companies, 450 supplying companies and 550 regulated distribution companies

• The Nordic Power Exchange - Nord Pool• Spot Market

• Futures Markets

• (EUA, CER

• Green certificates)

Production capacity a normal year, TWhSource: Swedenergy

© Vattenfall AB 14

The Nordic Market

• Generation in Sweden, The Nordic region, Europe

• The 400/200 kV grid

EU 27 +Norway~ 3000 TWh

Otherrenewables

Net imports

Hydro

NuclearFossil fuelsThe NordicCountries ~ 380 TWh

Sweden ~ 150 TWh

Source: Swedenergy

Markets for electricity trade

Source: Swedenergy

© Vattenfall AB 16

The Nordic Power Exchange – traded volumes, TWh/year

Clearing - (OTC)

Futures

Elspot

Source: Swedish Energy Agency

Electricity consumption and price in the Nordic countries

SEK/MWh

340

350

360

370

380

390

400

dec-96 jun-98 dec-99 jun-01 dec-02 jun-04 dec-05 jun-07 dec-08

0

100

200

300

400

500

600

700

800

900

1000

Norden, TWh

Systempris, SEK/MWh

Source: Swedenergy

© Vattenfall AB 18

Nordic spot prices – hydro power reservoirs

TWh, EUR/MWh, EUR/ton

-30

-10

10

30

50

70

90

110

130

jan-00 jan-01 jan-02 jan-03 jan-04 jan-05 jan-06 jan-07

"Överskott" "Underskott" Systempris Nord Pool, €/MWh EUA, €/ton

Source: Swedenergy

The Nordic Power SystemProduction capability, normal year

CHPIndustrial

Hydro power (normal year)

CHPDistrictheating

Gas turbine

Wind power

0 40 80 120 160 200 240 280 320 360 400

Oil condensingpower

Incrementaloperating costs

Electricity consumption

Nuclear power

Coal condensingpower

Source: Swedenergy

The Nordic Power SystemProduction capability, dry year

00 50 100 150 200 250 300 350 400

2) Less supply

1) Less Hydro Power

3) Higher production costs

Incrementaloperating costs

Söre/kWh

Source: Swedenergy

© Vattenfall AB 21

Runoff variations in relation to normal year runoff 1952−2007

Source: Swedenergy

© Vattenfall AB 22

Content

• Energy and Electricity in Sweden

• The Nordic Power Market

• Consumer prices in Europe

• Supplier vs. Distributor in the Nordic Power Market

23

Electricity prices in Europehouseholds 2 500-5 000 kWh/year, 2:nd half 2007

EUR/kWh

Source: Eurostat

0

0,05

0,1

0,15

0,2

0,25

0,3

eu

27

ea

12

Bu

lga

ria

La

tvia

Es

ton

ia

Lit

hu

an

ia

Gre

ec

e

Cro

ati

a

Ma

lta

Cze

ch

Re

pu

blic

Slo

ve

nia

Ro

ma

nia

Fin

lan

d

Fra

nc

e

Hu

ng

ary

Slo

va

kia

Po

lan

d

Sp

ain

Un

ite

d K

ing

do

m

No

rwa

y

Po

rtu

ga

l

Cy

pru

s

Lu

xe

mb

ou

rg

Sw

ed

en

Au

str

ia

Be

lgiu

m

Ne

the

rla

nd

s

Ire

lan

d

Ge

rma

ny

Ita

ly

De

nm

ark

Moms

Skatt

Energi+nät

Källa: 24

Electricity prices for the industry20-500 MWh/year, incl network and taxes, 2:nd half 2007

EUR/kWh

Eurostat

0

0,05

0,1

0,15

0,2

0,25

eu

27

ea

12

Es

ton

ia

Sw

ed

en

Bu

lga

ria

Fin

lan

d

La

tvia

Fra

nc

e

No

rwa

y

Cro

ati

a

Lit

hu

an

ia

Gre

ec

e

Po

rtu

ga

l

Lu

xe

mb

ou

rg

Ro

ma

nia

Cze

ch

Re

pu

blic

Po

lan

d

Ne

the

rla

nd

s

Slo

ve

nia

Sp

ain

Ma

lta

Au

str

ia

Un

ite

d K

ing

do

m

Be

lgiu

m

Slo

va

kia

Hu

ng

ary

Ire

lan

d

Ge

rma

ny

Cy

pru

s

Ita

ly

De

nm

ark

© Vattenfall AB 25

Content

• Energy and Electricity in Sweden

• The Nordic Power Market

• Consumer prices in Europe

• Supplier vs. Distributor in the Nordic Power Market

© Vattenfall AB 26

Production and sales in competition

Transmission and distribution as a monopoly

Two Separate Legal Entities

Source: Swedenergy

© Vattenfall AB 27

Electricity network regulation should aim to achieve...

• Efficient operation of the national grid as well as the regional and local networks

• Reasonable tariffs vs. service provided

• Competition in sales of electricity by creating non-discriminatory conditions for all

Source: Swedenergy

© Vattenfall AB 28

Structure of Network Utilities in Sweden

• National Grid, Svenska kraftnät - 400-220 kV

• Regional networks - 10 operators - 40-130 kV

• Local networks - 180 operators < 40 kV, 5.3 million customers, average 29.000 cust./co.

Source: Swedenergy

© Vattenfall AB 29

The deregulated electricity market

Grid

Generator

Generator

Generator

Market Place

Supplier

Trader

Customer Customer Customer

CompetitionMonopoly

Regional net

Local net

Customer

TSO

Production Consumption

Customer

Supplier

Source: Swedenergy

© Vattenfall AB

Thank you!

© Vattenfall AB 31

Extra material

© Vattenfall AB 32

Storage levels in the regulating reservoirs

Source: Swedenergy

© Vattenfall AB 33

Energy consumption by user (Statistics Sweden)

2003 2004 2005

TWh TWh TWh %

I ndustry ......................... 154 158 156 39

Transport ...................... 95 99 101 25

Housing, services, etc. .. 154 147 145 36

TOTAL ........................... 403 404 402 100

Source: Swedenergy

© Vattenfall AB 34

The residential and service sector has abandoned oil for electricity and district heating..

Source: Swedish Energy Agency

© Vattenfall AB 35

..and the base for district heating has gone from fossil fuel to biomass

Source: Swedish Energy Agency

© Vattenfall AB 36

Simultaneously, industry has switched to biomass and electricity

Source: Swedish Energy Agency