The German Wind Resource and Norwegian Hydro – Interesting Possibilities Lars Audun Fodstad, SVP, Statkraft Energy AS, BMU 5th July 2010, Berlin

90% 264 35% 20 COUNTRIES 3200 EMPLOYEES.. WITHIN RENEWABLES IN EUROPE No. 1 RENEWABLE ENERGY 90% 264 POWER AND DISTRICT HEATING PLANTS 35% OF NORWAY’S POWER GENERATION ...IN MORE THAN 20 COUNTRIES 3200 EMPLOYEES.. Statkraft is today Europe’s largest generator of renewable energy, and our ambition is definitely to play a role in this extremely exciting and potent market. There is so much potential for Succeeding commercially Extending and strengthening Norway’s proud traditions as a leading energy nation Helping bring pure, renewable energy to the world and make a difference in the larger picture Our ambitions span a number of renewable energy sources. They include maximising the potential and value creation as an industrial developer in Norway, as a European swing producer that makes the most of our flexible assets and as a green global developer that contributes to sustainable development through hydropower activities in growth markets outside Europe. Let me briefly cover some of our areas and dwell on some interesting aspects.

FROM STATKRAFT’S KEY AREAS European Flexible Generation and Market Operations Develop and optimize hydro portfolio in Norway and Sweden, including small hydro in Norway Evaluate European growth opportunities for flexible hydropower, including France Build and upgrade gasfired power plants in core markets (Continent/UK) side 3

THE North sea area wind power development – 2020 scenario Offshore: 40 000 MW Total onshore/offshore: 100 000 MW Creating a Wind Belt onshore/offshore from UK via France, Belgium, The Netherlands, Germany, Denmark and Southern Sweden side 4

Grid and grid integration - Main challenges Infrastructure Development Connecting VarRES to Load centres Flexibility options Storage facilities Enabling market development See entsoe’s TYNDP Handling the wind production’s variability Wind power developing from a minor to a main part of the production portfolio with dispatch priority Creates new need for flexibility in the other parts of the electricity system side 5

Transmission challenges Bringing 40 000 MW onshore HVAC can and will be used for relatively small capacities over shorter distances HVDC has to be used for larger capacities and longer distances –the new VSC technology is able to operate without a grid backup Bringing 100 000 MW to the load centres Upgrading AC overhead lines HVDC cable connections? Difficult, but it has to be done Source: entsoe TYNDP side 6

THE WIND PRODUCTION’S VARIABILITY

FLEXIBILITY CHALLENGES Ref. TradeWind 2020 Variations in wind power production Europe looked upon as one bus bar Max. 54 % of installed capacity Min. 9 % of Installed capacity Difference 45 % of installed capacity or 95 GW Less than four days between top and bottom Regional example: The Netherlands as one bus bar Max. 93 % of installed capacity Min. 0 % of installed capacity Rises from 7 to 90 % of installed capacity (6 GW in 2030) in six hours (time resolution for wind data) side 8

FLEXIBILITY OPTIONS Production Storage DSM/Smart Grids Nuclear Fossil fired, gas and coal Reservoir based hydro Storage Pumped Storage CAES Batteries/EV DSM/Smart Grids Connecting and further develop the Norwegian hydro resource to deliver a significant part of the needed flexibility? side 9

EUROPEAN Hydro Flexibility – SLIDE I Reservoir based hydro power in the production mix In general used for storage and peak power production In Norway developed for storage and base load Key factors for hydro as storage and peak power Annual Energy Production, inflow TWh Reservoir Capacity TWh Installed Capacity MW Hydro Energy Production, Storage Capacity and Rated Power (1998) UCTE 86 TWh 57 TWh 49 GW Norway 112,6 TWh 84,1 TWh 27,3 GW NORDEL, ex.NO 76,2 TWh 38,6 TWh 19,1 GW

EUROPEAN Hydro Flexibility – SLIDE II Ratio between Annual Production/Installed Capacity, i.e. the number of hours necessary to deliver Annual Production UCTE 1755 h Norway 4125 h NORDEL, ex.NO 3980 h Ratio between Reservoir Capacity/Installed Capacity, i.e. the number of hours necessary to empty the reservoirs without any inflow UCTE 1160 h Norway 3080 h NORDEL, ex.NO 2020 h

NORWEGIAN HYDRO FLEXIBILITY OPTIONS – SLIDE I Installed capacity 28 GW Can contribute a lot to balancing, regulation, peak and back-up production except for some hours at winter peak load Example: The existing 1 GW connection to Denmark Expansion possibilities in Southern Norway 7 - 8 GW Converting from base load to peak load production by installing additional generators in the existing power stations Pumped storage Installed capacity 1 GW Mainly built for seasonal pumping Expansion possibilities in Southern Norway 15 - 20 GW Storage capacity for continuous pumping 120 hours Using only existing reservoirs both upstream and downstream side 12

NORWEGIAN HYDRO FLEXIBILITY OPTIONS – SLIDE II Norway has alone close to 50 % of the hydro reservoir capacity in Europe To take advantage of this huge flexibility resource it is necessary to connect it to nodes in the wind belt side 13

From the wind belt to Norway Power flow From the wind belt to Norway High wind generation Insufficient transmission capacity to the load centres Low demand Low, zero or negative prices From Norway via the wind belt to the load centres on the continent and UK Low wind generation The transmission capacity to the load centres are idle High demand High prices side 14

ADDITIONAL INFRASTRUCTURE - benefit The only additional infrastructure needed is the connection between the wind belt and the Norwegian hydro resources Benefit from interaction between wind and hydro resources Taking care of excess wind power production otherwise lost Delivering balancing, reserve, peak and back-up power Reducing the need for fossil fired reserves both running and ready to start Reducing emissions side 15

Exchange with norway – example i Import of excess wind power 10000 MW in 1500 hours = 15 TWh Storage in Norwegian reservoirs 5000 MW reduced ordinary hydro production = 7,5 TWh 5000 MW pumping, total efficiency factor 0,7 = 5,25 TWh Export of ”Peak Power” 10000 MW in 1275 hours = 12,75 TWh Alternative fossil fired ”Peak Power” Result: 12,75 TWh saved RES and reduced emissions Page 17

Exchange with norway – example ii Import of excess wind power 10000 MW in 1000 hours = 10 TWh Storage in Norwegian reservoirs 5000 MW reduced ordinary hydro production = 5,0 TWh 5000 MW pumping, total efficiency factor 0,7 = 3,5 TWh Export of ”Peak Power” 10000 MW in 850 hours = 8,5 TWh Alternative fossil fired ”Peak Power” Result: 8,5 TWh saved RES and reduced emissions Page 18

EXISTING NORWEGIAN PUMPED STORAGE Hydro Developments with Pumped Storage Sira-Kvina, Duge power station, seasonal storage: 2x100 MW reversible units Head 215 m Reservoir capacity 1 400 Million m3 Tunnel length approx. 13 km Inaugurated 1978 Ulla-Førre, Saurdal power station, seasonal storage, see also following slides: 4x160 MW, two of them reversible units Head 450 m Reservoir capacity 3 105 Million m3 Inaugurated Page 19 19

SOME POSSIBLE PROJECTS Expansion Project Tonstad power station Further Expansion Possibilities in Sira-Kvina and several other Norwegian Hydro Power Systems located in South Norway Page 20 20

SIRA-KVINA MAIN DATA 7 power stations - 16 units Total capacity 1760 MW Annual production ~ 6 TWh Reservoir capacity 5,6 TWh

RESERVOIRS – POWER STATIONS Sira-Kvinas anlegg RESERVOIRS – POWER STATIONS All Connections Reservoirs - Power Plants are Tunnels All Power Plants are in Caverns All outlets into reservoir or sea Total Head Developed 930/900 m to the sea Page 22 22

WATERWAY ”Etasjeutbygging”

EXPANSION PROJECT TONSTAD - SLIDE I Head 430 m Tunnel length 11 km Existing installation 4x160 MW 1x320 MW Expansion 2x480 MW reversible units Page 24 24

EXPANSION PROJECT TONSTAD - SLIDE II

SIRA-KVINA FURTHER EXPANSION Tonstad power station Additional capacity 960 MW reversible Total capacity then 2880 MW (1920 MW reversible) Solhom power station Existing capacity 200 MW Additional capacity 1000 MW reversible Page 26 26

Exchange with norway - GERMAN REPORT 100% erneuerbare Stromversorgung bis 2050: klimaverträglich, sicher, bezahlbar Vorläufige Fassung vom 5. Mai 2010 Page 27

“Zusammenfassung und Empfehlungen” I Die Ergebnisse der Szenarien für 2050 im Überblick – Das Potenzial an regenerativen Energiequellen reicht aus, um den Strombedarf in Deutschland und Europa vollständig zu decken. – Dabei kann Versorgungssicherheit gewährleistet werden: Zu jeder Stunde des Jahres wird die Nachfrage gedeckt. Voraussetzung ist der Aufbau der entsprechenden Erzeugungskapazitäten und die Schaffung von Möglichkeiten für den Ausgleich zeitlich schwankender Einspeisung von Strom durch entsprechende Speicherkapazitäten. Page 28 28

“Zusammenfassung und Empfehlungen” II Die Ergebnisse der Szenarien für 2050 im Überblick – Eine vollständig nationale Selbstversorgung ist zwar darstellbar, aber keineswegs empfehlenswert. – Die Kosten der Stromversorgung können durch einen regionalen Verbund mit Dänemark und Norwegen oder einen größeren europäisch-nordafrikanischen Verbund im Vergleich zur nationalen Selbstversorgung erheblich gesenkt werden. Page 29 29

“Zusammenfassung und Empfehlungen” III Die Ergebnisse der Szenarien für 2050 im Überblick – Eine anspruchsvolle Energiespar- und Effizienzpolitik senkt die ökonomischen und ökologischen Kosten der Versorgung mit erneuerbaren Energien. Page 30 30

“Zusammenfassung und Empfehlungen” IV Die Ergebnisse der Szenarien für 2050 im Überblick – Der derzeitige Bestand an konventionellen Kraftwerken ist als „Brücke“ hin zu einer regenerativen Stromversorgung ausreichend. Bei einer durchschnittlichen betrieblichen Laufzeit von 35 Jahren kann der Übergang schrittweise gestaltet werden. Hierfür muss der jährliche Zubau an regenerativen Erzeugungskapazitäten bis etwa 2020 in moderatem Umfang weiter gesteigert werden. Page 31 31

The German Wind Resource and Norwegian Hydro A PERFECT MATCH?

Thank you! Lars Audun Fodstad Direct +47 24 06 74 30 Mobile +47 913 01 785 laf@statkraft.com Statkraft Energy AS Lilleakerveien 6 P.O.Box 200 Lilleaker NO-0216 Oslo, Norway www.statkraft.com