Ørsted transformation Converting and operating flexible power plants

Vice President, Regulatory Affairs Ulrik Stridbæk

15 June 2018

Ørsted today

2 February 2018

Headquartered in Denmark Listed in the Nasdaq OMX: ORSTED 5,638 employees Revenue in 2017 DKK 59.5 bn (GBP 7.1 bn / EUR 8.0 bn) EBITDA in 2017 DKK 22.5 bn (GBP 2.7 bn / EUR 3.0 bn ) Phase out the use of coal by 2023

3

Transforming from fossil to green energy

Share of green power

%

CO2-emissions

g / kWh

80

2007 2017

95

2020

13

64

2023

100

2020

20

151

2023

452

2017 2007

-96%

Conventional thermal business needed to adapt to the new energy system

1. Adjusted for divested activities

…and FTE numbers # of FTEs

… as well as in OPEX spend… OPEX (DKKbn)

Major reductions in power generation capacity since 2009… Danish portfolio of central plants (GWe)

5.0

3.0

2009 2016

40%

2.9

1.5

2009 2016

48%

~1,9001

~8001

2009 2016

58%

-60

-30

0

30

60

90

120

150

-2000

-1000

0

1000

2000

3000

4000

5000

€/M

Wh

Mw

h/h

Wind production Thermal production

Net import Consumption

Net import from North Net import from Germany

Price DK)

wind

price

thermal and net import

Investment in wind farm has reduced demand for thermal power without influencing security of supply

5 Source: Energinet market data and CEER

0

-1.000

3.000

1.000

4.000

2.000

-2.000

5.000

2018 2015 2000 2010 2005

Net import

Thermal production Solar production

Wind production

Production mix in Denmark’s power system

Mwh/h, 2000-2018

13-05-2018 14-05-2018 15-05-2018

Production variability in the Nordic power grid

Mwh/h, €/MWh, 13-15 May 2018 wind

price

thermal and net import

300 700 500 900 800 100 200 1.000 0 600 400

Spain

Luxembourg Denmark

Switzerland

France Austria Finland

The Netherlands Germnay

Italy

Greece

Estonia

EU-28

Hungary

Lithuania

Norway

Chech republic Poland

Slovak Republic

Malta

Latvia

Romania

Slovenia

Ireland Croatia

Sweden Portugal

Great Britain

Security of supply in Europe

Minutes lost per year per capita, 2014

Business model for thermal plants turned upside-down

6

Fossil fuels

Power producer

Heat as by-product

Sustainable biomass

Heat producer

Power as flexible back-up

From To

3,0

5,0

2017 2009

0,01,1

6,2

2023 2017 2009

Capacity of Danish Power Plants GWe

Coal consumption Million tonnes

7

Flexible power plants and X-border trade balance variation in wind and solar production

Source: Energinet

120,000

60,000

20,000

100,000

0

80,000

40,000

20,000 40,000 0 80,000 60,000

Thermal

Wind/Solar vs. thermal power production Daily values, Q4 2017

80,000

0 40,000

0

20,000

60,000

120,000

40,000

100,000

60,000 80,000 20,000

Wind/Solar power production vs. import/export Daily values, Q4 2017

Import Export

Wind/solar Wind/solar

8

More flexibility in thermal plants – improved operation, improved infrastructure and minor investments

Load gradients 4% /min 8% /min (Skærbæk 3)

60 MWe 20 MWe (Asnæs 2)

Minimum load with ancillary services

30% 13% of full load (Avedøre 2) Minimum load

Flexibility between products

Turbine bypass and heat accumulators to decouple heat and power production

Examples of initiatives to improve plant flexibility

Building flexibility into a new biomass CHP in Esbjerg

9

-40

-30

-20

-10

0

10

20

30

40

50

60

0 50 100 150 200 250 300

Back-pressure operation (incl. heat pump)

Full bypass + boiler

Bypass area

MW Power

MW Heat

Features of a new Esbjerg CHP (FiD expected in 2019)

The CHP co-produce heat and power in the range from 20-100%

Heat pump driven by flue gas condensation increases heat efficiency

Bypass (full and partial) opportunity makes it possible to only produce heat

The electric boiler can make the plant a net electricity consumer

Other possibilities such as GigaStorage and batteries for ancillary services are also considered

10

Seamless trade integrates wind and distributes flexible resources across the region

– Nordpool, EEX and other exchanges couples markets from North to South of Europe

– >70 % market share in Nordpool on the day-ahead market in 2017

– Connects hydro in Norway with the thermal plants and nuclear

– Zonal pricing in the Nordic Countries reveals grid congestions

Sourco: Nordpollspot.com: https://www.nordpoolgroup.com/Market-data1/#/nordic/map

EEX 49.94

DK1 48.04

SE3 48.04

SE2 48.04

SE1 48.04

NO4 48.04

NO3 48.04

NO2 48.00

NO1 48.00 NO5

48.00

SE4 64.08

DK2 64.08

GB 61.78

FI 58.42

EE 58.42

LV 64.08

LT 64.08

2016 The Nordics, UK and Germany

Japan

Capita 172 mill. 127 mill.

Power consump.

1250 TWh 1000 TWh

Power capacity

318 GW 290 GW (incl. nuclear)

Many similarities between Japan and Northern Europe

Sourco: Bloomberg Energy Finance (nuclear capacity for Japan from 2014 from IEA “Energy Policies of Japan 2016”,

11

The Energy Union: Integrate and decarbonise

Build and utilise infrastructure

Offshore wind potential at costs below 54 €/MWh Offshore wind potential at costs below 65 €/MWh

Offshore wind potential in North Seas

Potential at costs below 65€/MWh by 2030, including transmission

Source: BVG Associates for WindEurope, 2017 Source: ENTSO-E TYNDP (Ten year development plan). Overview of possible European energy futures up to 2040, based on energy scenarios.

12

Thank you

13

Effective enforcement of biomass sustainability criteria ensures real decarbonisation

Ørsted ensure sustainable sourcing of biomass Biomass sustainability criteria

Replanting of trees

Use of waste wood and thinnings

Independent certification and auditing

Protection of high conservation-value habitats

Biodiversity conservation

Other sustainability criteria (incl. legal and regulatory requirements)

Sustainable Biomass Partnership

~-90%

Wood pellets

~100

~50 ~50

Coal

~925

~115

~10

~800

Processing

Combustion

Transport

CO2 reductions from sustainable biomass-to-energy gCO2 / KWh

Biomass market are global

0

200

400

600

800

1000

1200

1400

1600

1800

Wood pellets (thousandtons)

Wood chips (thousandtons)

2016 2017

14