Statkraft Investor Update July 2014 Disclaimer This presentation - PowerPoint PPT Presentation

Statkraft Investor Update July 2014

Disclaimer This presentation has been prepared by, and the information contained herein (unless otherwise indicated) has been provided by Statkraft AS (the "Company"). By attending the meeting or otherwise viewing this presentation you agree to be bound by the following conditions. This document and the information therein are being furnished to you solely for your information and may not be reproduced, redistributed or passed on, in whole or in part, to any other person. This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this document, nor the fact of its distribution or reception, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This document is not a prospectus and does not comply with rules or regulations regarding investor information, and has not been approved by or filed with any stock exchange or regulatory authority. Amongst others, this document does not disclose risks and other significant issues related to an investment in any securities. Investors should only subscribe for any transferable securities on the basis of information in a relevant prospectus and term sheet, and not on the basis of any information provided herein. The information contained in this document has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of the Company, or any of its affiliates, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The information contained in this document is provided as at the date of this document and is subject to change without notice. This document may not be distributed or delivered to any person or in any jurisdiction where such distribution is unlawful or restricted. This document may not be delivered in the United States or to any person or entity in the United States. 2

Agenda Statkraft overview 1. Strategy and market dynamics 2. Financial update 3. Funding and liquidity 4. Summary 5. Appendix 3

Statkraft at a glance NO NO No. 1 power generator NOK 47.5 47.5 bn UNDERLYING GROSS REVENUES 2013 (~35%) NOK 12.4 bn UNDERLYING EBITDA 2013 UK UK SWE 55.9 TWh Wind power initiatives No. 4 power generator POWER GENERATION 2013 (~5%) 95 % 95 HYDRO POWER GER Flexible power generation 16.0 GW EUROPE EU PE INSTALLED CAPACITY 2013 Trading activities SE EUROPE 100% OWNED BY THE KINGDOM OF NORWAY OUTSIDE EUROPE Hydropower development Integration of hydropower A-/Baa1 S&P / MOODY’S CREDIT RATINGS (stable outlooks) Hydropower Gas power District heating 4 Wind power Distribution grid

Key credit strengths  Strong market position - A low-cost and flexible generator of renewable electricity  Stable cash flow - Long-term industrial contracts stabilize cash flow  Capex flexibility - Adjust investment program to financial capacity  Owned by the Norwegian state (AAA/Aaa) - Historically strong support from owner - No substantial changes in the State’s owner strategy in White paper published in June 2014 5

Agenda Statkraft overview 1. Strategy and market dynamics 2. Financial update 3. Funding and liquidity 4. Summary 5. Appendix 6

A changing energy landscape Market challenges Market opportunities  Attractive support schemes driven by  Flat energy demand in Europe and European transformation to renewable more production from new renewables energy  Growing concerns in Europe about  New business opportunities closer to affordability and security of supply end users and through integration of  Traditional “utility business model” intermittent renewable capacity challenged by a transformed value chain  Strong growth in emerging markets 7

Strategic focus areas European Flexible • Maintain and develop low cost, flexible hydropower Generation • Stabilize cash flow through power contracts Market Operations • Develop Trading and Origination in selected global markets Hydropower in • Build integrated operations in South East Europe, South America and South Asia Emerging Markets • Onshore wind in Norway, Sweden and UK Wind Power • Become lead operator in offshore wind power in UK • Become amongst the most profitable district heating companies in District Heating Norway and Sweden 8

European Flexible Generation  Low-cost European hydropower production - Total cash cost in 2013: 7.2 EUR/MWh - Full cost incl. depreciation: 10.2 EUR/MWh 1  Peak supplier with high degree of flexibility - 80% of installed capacity within highly flexible hydropower - Europe’s largest reservoir capacity (~40 TWh)  Unique information base and power market Blåsjø , one of Europe’s largest hydropower reservoirs, modelling with multi-year energy storage capacity (7.8 TWh) - Production optimised relative to power prices and water inflows - Water can be stored for up to three years in some reservoirs 1 Annual Report 2013: 80 NOK/MWh. Incl. property tax and depreciations, excl. sales costs, overhead, net financial items and tax. Based on normal production from power plants under own management in Norway, Sweden, Germany and the UK. 9

Nordic-European power market integration  Current transmission capacity between Nordic and Europe of 4000 MW  Planned capacity increase of 3870 MW before 2020 and another 3450 MW before 2025  Price effect NO2-DE + NO2-UK: 3-5 EUR/MWh*  Increased possibility to utilize our flexible assets Power transmission cables (MW) Planned expansions Source: Statnett * Statnett estimate with the two cables, compared to a scenario with no new cables from Norway. 10

Market Operations  A major player on Europe’s power exchanges  Special expertise within physical and financial power trading  Active in all energy-related commodities  Market access for small renewable producers  Expanding power trading activities in Europe, as well as in Brazil and India  Strategy for long-term contracts 11

Long-term contracts stabilize earnings GWh  ~ 20 TWh sold on long-term contracts 30 000 with power-intensive Nordic industry  Corresponding to ~ 40% of Statkraft’s 20 000 annual mean power production for Nordic hydropower 10 000 0 2014 2016 2018 2020 2022 2024 Statutory priced lease agreements Statkraft's share of leasing agreements Long-term market contracts 12

International Hydropower has been reorganized and strengthened Statkraft has increased ownership and fully integrated activities in South America and South Asia (from 60 % to 67 %) Statkraft has reduced ownership to activities in less developed markets in South East Asia, Africa and Central America (from 60 % to 50 %) SN Power Statkraft 13

Kjøllefjord Onshore and offshore wind power in the Nordics and UK  In operation/under construction - Norway: 244 MW Stamåsen - Sweden: 525 MW Hitra Mörttjärnberget Smøla - UK: 460 MW Björkhöjden Ögonfägnaden  Licensed/under development - Onshore: Norway 735 MW Sweden 290 MW Baillie UK ~ 50 MW Berry Burn Em Tollarpabjär Dogger Bank - Offshore: Dudgeon 402 MW (Statkraft 30%) Dudgeon Dogger Bank 4800 MW Sheringham Shoal (Statkraft 25%) Alltwalis 14

Allocation of investments 2014-2018 Geographical allocation Technology allocation District Innovation heating 3 % 3 % Trading & origination Emerging 3 % markets Onshore 38 % WP 18 % Hydropower 64 % Norway 43 % Europe ex Offshore Norway WP 19 % 9 %  Investment ambition 2014-2018: NOK 61 billion, of which 51% is committed  Subject to financial capacity and maintaining current ratings 15

Solid base in the Nordic region Estimated annual contribution after committed capex (2018) EBITDA Power generation (72 TWh) Outside Outside Europe Europe 5 % 8 % Europe Europe outside Nordic outside Nordic 13 % 11 % Nordic outside Nordic outside Norway Norway 10 % 14 % Norway Norway 67 % 72 %  Increased diversification, but still dominated by Norwegian hydropower 16

Construction activities Completed in 2013 On-going projects in 2014 4 small-scale hydro, Norway (12 MW) Nedre Røssåga 1 and 2, Norway (+100 MW)   Knapsack II, Germany (430 MW) Kjensvatn, Norway (11 MW)   European Brokke Nord/Sør, Norway (24 MW) Flexible  Generation Eiriksdal/Makkoren, Norway (56 MW)  10 small-scale hydro, Norway (25 MW)  Baillie, UK (53 MW) Mörttjärnberget, Sweden (85 MW) Compl. Q2   Stamåsen, Sweden (60 MW) Ögonfägnaden, Sweden (99 MW)   Wind Power Tollarpabjär, Sweden (3 MW)  Björkhöjden, Sweden (270 MW)  Berry Burn, UK (67 MW) Compl. Q2   Binga, Philippines (126 MW)  Kargi, Turkey (102 MW)  Cetin, Turkey (517 MW) International  Devoll, Albania (243 MW) Hydropower  Cheves, Peru (171 MW)  Bajo Frio, Panama (58 MW)  Ås, Norway (24 MW)  Sandefjord, Norway (23 MW) District Heating  Kungsbacka, Sweden (12 MW) Capacity for total project, incl. partners’ share 17