RWE – a sustainable electricity supply for the future

Dr. Hans-Peter Meurer, RWE AG

TBLI Europe 2006, Paris, November 9/10, 2006

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Key demands for a sustainable energy supply

CC

EE SS

C Competitiveness

Provision of a cost-efficientEuropean energy supply

E Environmental compatibility

Climate protection Minimization of classic emissions

(NOX/SO2/dust)

Preservation of resources

S Security of supply

Consideration of whole value chain: fuel supply, generation, transport, distribution, service

The well-balanced application of target criteria ensures a sustainable, long term orientated energy supply.

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Boundary conditions which determine RWE´sgeneration portfolio: Ressources

Fuel mix *) Advantage Challenge

Lignite 40,5% domestic source high CO2 emissions

low production costs medium SO2, NOx emissions

Hard coal 18,4% availability high CO2 emissions moderate costs medium / high SO2, NOx emissions

Nuclear 24,1% availability nuclear safety CO2 free electricity generation disposal of spent fuels and waste low production costs

Gas 14,6% low C02 emissions medium to high generation costs

Water 1,4% CO2 free electricity generation extension nearly unpossible

Wind 0,6% CO2 free electricity generation high generation and transport costs

impact on landscape

*) contribution to own generation in 2005

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Boundary conditions which determine RWE´sstrategy: Regulatory framework

Germany:

100% liberalized market

LCPD alike pollutant legislation since 1980

Ownership of mining, generation, transport, distribution, retail

Access to transport grid supervised by Federal Grid Agency

Emissions trading installed

UK:

100 % liberalized market

Adaption to LCPD until 2008

Ownership of generation and retail

Emissions trading installed

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RWE´s strategy: No regret

Maintain a broad based fuel mix

Increase efficiency in electricity generation

Develop new technical solutions for electricity generation and CO2 abatement

Take into account future costs for CO2 emissions

Support the efficient use of energy

Make use of emissions trading and JI/CDM

Flexibility is a key element to meet future challenges and to secure a no-regret-strategy.

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Technology of today: New Power Plant Projects in Continental Europe

Topping gasturbinesWeisweiler2 x 190 MW

Construction and operation permit received in Feb. 2005) Start of construction in April 2005 Expected start of commercial operation: July 2006 Budget: €150m

BoA 2/3twin unitNeurath2 x 1,050 MW

Permit received in June 2005 Start of construction in January 2006 Expected start of commercial operation: January 2010 Budget: €2.2bn

Hard coal-firedpower plantHamm2 x 800 MW

Announced in November 2005 (poss. with partners) Expected commissioning: 2012 Budget: €1,500m

CCGT plantLingen850 MW

Construction option: kept open Preliminary approval received in December 2004 Budget: €400m

Hard coal & bio mass fired power plantNetherlands2 x 800 MW

Announced in April 2006 Expected commissioning: 2012 / 2013 Budget: €1,600m

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Technology of today:Modernizing our UK power plant portfolio

Replantingsteam turbinesat Aberthaw

Turbine contracts already placed All three units will be retrofitted by 2008 Thermal efficiency will increase from 36.5% to 38.9% Additional capacity of 69 MW

Replantingsteam turbinesat Tilbury

Programme of turbine improvements underway All three available units will be upgraded by the end of 2007 Reduction of fuel input and emissions by up to 1.5% Additional capacity of up to 15 MW per unit achievable

Flue gasdesulphurizationat Aberthaw

Retrofit three units to comply with"Large Combustion Plant Directive"

Preliminary enabling work has begun Scheduled to be completed by 2008

Upgrading turbines at CCGT plants

Investigating options for improving efficiencyand output at Didcot B and Little Barford

Target heat rate improvement of +1%

New buildof a CCGTplant

Final decision not yet taken: investments will depend on environmental legislation and market conditions

Option 1: Applied for consent to build a 2,000 MW plant in Pembroke Option 2: 1,500 MW consented site at Staythorpe

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Extra investment will lead to significantly improved efficiency rates and lower fuel consumption, so that electricity production may be kept constant and CO2 outputbe reduced

Technology of tomorrow: Increase in efficiency – the priority development target for CO2 reduction

700°C power plant (hard coal & lignite) Efficiency increase of 4%pts possible Projects: COMTES700 – Component Test Facility for a 700°C

Power Plant – initiated by a group of major European power generators (incl. RWE) and material tests in existing power plants of RWE and others

Budget: €22m

Lignite pre-drying/ALPC (Advanced lignite pulverized coal) Efficiency increase of 4%pts possible Technology successfully proved, from 1993 on, at an RWE pre-

drying plant in Frechen To introduce this technology on a commercial scale, RWE has

started the construction of a lignite pre-drying prototype plant at the BoA 1 plant (Niederaussem). Operations will start at the end of 2007.

Budget: €50m for construction and operation

Lignite pre-drying plant at Frechen

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1) IGCC: Integrated gasification combined cycle2) CCS: carbon capture and storage

Technology of the Future: RWE to gain leadership in Europe in CO2-free power plant technology

RWE Power plans to develop and build a CO2-free 450 MW-coal-fired IGCC1) plant including CO2 transport and storage in Germany to demon-strate the whole CCS2)-chain. Commissioning is scheduled for 2014.

In parallel, CO2 scrubbing for lignite and hard coal will be developed further for advanced conventional power plant technology, also as aretrofit option.

1

2

3 In addition, RWE npower will conduct a feasibility study for aclean coal 1000 MW hard coal fired power plant at Tilbury.

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Efficiencyincreases

Time schedule for development of technology

BeyondCO2-free power plant with CO2 sequestrationand storage

TodayExploitation of existing efficiency potential

TomorrowIncreased efficiency due to new power plant technology

Commissioning

CO2

sequestrationand storage

2012 2016 2020

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Down stream energy efficiency

Continue to invest in decentralized, good CHP (biomass and gas fired power plants)

Expand energy services and consultation of small and medium business customers to use energy effectively

Support campaigns to save energy in households and small business: - dena *) initiative in Germany- Energy Efficiency Commitment in UK

*) dena: German Energy Agency

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CDM/JI projects enable RWE to access cost-effective opportunities to reduce greenhousegas emissions

Options presently pursued: Direct investment in CDM/JI projects: RWE Power has set up a budget totaling €150 million

until 2012 for investments in greenhouse gas abatement projects like utilizing coal mine gas otherwise emitted to the atmosphere

Purchasing carbon credits from third party-projects: Means to make CDM/JI projects developed by third parties financially viable. Example: Decomposition of greenhouse gas emissions in chemical plants in China.

Participating in carbon funds: RWE has been contributing to the Prototype Carbon Fundof the World Bank since 2000. This fund kick-started the global carbon credit market.

Clean Development Mechanism (CDM):

Emission reductions caused by investment of an industrialized country in a country without reduction commitments are credited to the emission accountof the investor country

Joint Implementation (JI):

Emission reductions caused by investment of one industrialized country in a second industrialized country are credited to the emission account ofthe investor country

Germany/UK

Germany/UK China

Emission rights Russia

Emission rights

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And what do others say:

Dow Jones Sustainability Indexes World and STOXX 2007:Industry Leader for Multiutilities

Climate Leadership Index of Carbon Disclosure Project 2006:„Best in Class“ in Utility Sector