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7/22/2019 Facts Figures 2012
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1RWE Facts & Figures | Updated September 2012
FACTS & FIGURES
September 2012
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3RWE Facts & Figures | Updated September 2012
91 Market dataElectricity
> Generation
> Fuels> Trading
> Grid
> Supply
Gas
> Trading
> LNG
> Storage> Downstream
> Supply
> Turkish market
> Czech market
92
93
113115
118
121
133
134
136
138
140
141
145
146
151 RWEElectricity> Generation
> Fuels
> Trading
> Grid
> Supply
Gas
> Upstream
> Storage
> Trading
> Downstream
Investor Relations
152
153
184
187
189
190
197
198
207
209
212
219
4 OrganisationRWE in a nutshell
Board
StructureGermany: Power Generation
Germany: Sales/Distribution Networks
Netherlands/Belgium
United Kingdom
Central Eastern and South Eastern Europe
Renewables
Upstream Gas & Oil
Trading/Gas Midstream
5
7
810
12
14
17
20
22
24
26
28 Strategy & financingStrategy
RWE share
Fixed income financing
Risk management
29
47
50
58
62 Political environmentOverview
Combined Heat and Power (CHP) ActRenewable Energy Act
Climate policy
Emissions trading
Large Combustion Plant Directive (LCPD)
Grid
63
6465
72
75
80
82
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RWEMarket dataPolitical environmentStrategy & financingOrganisation
RWE Facts & Figures | Updated September 2012 4
5 RWE in a nutshell
7 Board
8 Structure
10 Germany: Power Generation
12 Germany: Sales/Distribution Networks14 Netherlands/Belgium
17 United Kingdom
20 Central Eastern and South Eastern Europe
22 Renewables
24 Upstream Gas & Oil
26 Trading/Gas Midstream
Organisation
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RWE markets
RWE today:
One of the leading integrated European utilitiesLeading positions in core markets
We have leading positions in two of Europes largest markets as well as in fast growing SEE/CEE markets and
own a large upstream position in both Europe and North Africa.1 Market positions of the RWE Group in terms of sales.
GasElectricityMarket1
Product
Germany No. 1 No. 3
UK No. 4 No. 4
> No. 2 in
Hungary> No. 3 in
Slovakia
> No. 5 inPoland
> Presence inthe Czech
Republic> Presence in
Turkey
> No. 1 in the
CzechRepublic
> No. 2 inSlovakia
> Leadingposition inHungary
CentralEastern andSouth EasternEurope
Total Europe No. 3 No. 6
Netherlands No. 2 No. 1
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWERWE in a nutshell
x/yRWE markets with establishedmarket positions
Growth markets under observation(initial activities in some cases)
Additional marketsespecially for renewables
Additional marketsespecially for upstream gas & oil
Forecast average growthof electricity/gasconsumptionin % p.a. (2011 2020)
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RWEs customers as of 31 December 2011
1 Figure relates to drinking water and sewage water. Population served in Continental Europe.
0 5 10 15 20
Water
Gas
Electricity
Million
17
8
151
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWERWE in a nutshell
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The Executive Board of RWE AG
Dr. Rolf PohligChief Financial Officer(appointed until 31 December 2012)
Alwin FittingChief Human Resource Officer(appointed until 31 March 2013)
Dr. Rolf Martin SchmitzDeputy Chairman of the Executive BoardChief Operating Officer(appointed until 30 April 2014)
Dr. Leonhard BirnbaumChief Commercial Officer(appointed until 30 September 2013)
Dr. Bernhard GntherMember of the Executive Board(appointed until 30 June 2017)
Peter TeriumChief Executive Officer of theExecutive Board(appointed until 31 August 2016)
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEBoard
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The RWE Group
NET4GASGas transmission system operator in the Czech Republic(unbundled)
Internal servicesRWE ConsultingRWE IT
RWE ServiceRWE Technology
Germany
RWEDeutschland
Essent RWE npower RWE East RWE Innogy RWE Dea RWE Supply &Trading
RWE Power
CentralEastern andSouth EasternEurope
UnitedKingdom
Netherlands/Belgium
Trading/GasMidstream
UpstreamGas & Oil
Renewables
PowerGeneration
Sales/DistributionNetworks
RWE AG (Group Centre)
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEStructure
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RWE Group structure: a mirror of the value chain
> Integrated business model: strong presence in all parts of the energy value chain
> Stability and growth: well balanced portfolio of leading market positions in mature andgrowing markets in Europe
Raw material production Power generation
RWE DeaRWE Dea RWE PowerRWE Power
EssentEssent
RWE EastRWE East
ConventionalConventional
RenewablesRenewables
RWE Supply& TradingRWE Supply& Trading
RWE npowerRWE npower
EssentEssent
RWE EastRWE East
RWE DeutschlandRWE Deutschland
NET4GAS1NET4GAS1
1 Gas transmission system operator in the Czech Republic (unbundled).
RWE npowerRWE npower
Gas and oilGas and oil
LigniteLignite
RWE InnogyRWE Innogy
EssentEssent
RWE PowerRWE Power
RWE npowerRWE npower
RWE PowerRWE Power
RWE EastRWE East
RWE InnogyRWE Innogy
Wood pelletsWood pellets
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEStructure
Energy trading/gas midstream
Electricity andgas networks
Electricityand gas sales
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Who we are
Germany: Power Generation (I)
> RWE Power, with two registered offices in Essen and Cologne, isGermanys biggest electricity producer.
> The company banks on a broad energy mix and to a large extent is ableto draw on its own raw material base (e.g. lignite).
> Our power plants have an installed capacity of more than 31 GW.
> Enhancing flexibility in the power plant fleet and in the opencast mines isone of the main challenges. Increasing electricity price volatility requiresthe development of market-oriented power plant dispatch and an increase
in the flexibility parameters of the power stations.> With a 43 percent efficiency rate, our twin-unit plant BoA 2&3 was
commissioned in August 2012. It is the worlds most advanced lignite-firedpower station.
Key figures 2011 2010
EBITDA ( million) 3,252 4,510
Operating result ( million) 2,700 4,000
Workforce1 15,371 15,409
1 Converted to full-time positions.
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEGermany
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Power plant new build project
Generation capacity1 as of 31 Dec 2011 (MW) Power generation1 2011 (billion kWh)
Hard coal 9,555
Gas 5,228
Pumped storage, oil, other 2,489
Renewables 313
Nuclear 3,901
Lignite 9,799
31,285
Hard coal 34.0
Gas 11.8
Pumped storage, oil, other 2.2
Renewables 1.4
Nuclear 34.3
Lignite 68.3
152.0
Westfalen D+E, Hamm
> Fuel: hard coal> Capacity: 1,528 MW> Efficiency: 46%> Start of operation:
End of 2013
1 Including minor capacities of the Sales/Distribution Networks business area.
Two new hard coal-fired units will replace two 160-megawatt units
commissioned in 1962/63 and expand the capacity of the site. Owing tothe high efficiency of about 46%, the specific carbon emissions of the twonew units will be about 20% lower than the current average of hard coal-fired power plants in Germany.
Major power plants in Germany
Hard coalPower plant
NuclearNuclear powerplant
OtherHydro powerRefuseincineration
Natural gasPower plantThermal power plant
Gas and steamWaste gasrecycling
LigniteOpencast pitPower plantFactory
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEGermany
Germany: Power Generation (II)
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Who we are
> The RWE Groups German distribution network, sales and energyefficiency operations are pooled in RWE Deutschland AG since January
2011.> It is the RWE Groups largest affiliate, encompassing the German regional
companies enviaM, KEVAG, LEW, Swag and VSE.
> Furthermore, the company holds direct stakes in some 70 regional andmunicipal utilities.
> Significant importance is accorded to partnerships with municipalities. Via
its subsidiaries, RWE Deutschland ensures the reliable and efficientoperation of electricity, gas and water distribution networks in more than3,500 cities and communities and in several regions is responsible forstreet lighting.
Key figures 2011 2010External revenue ( million) 20,354 18,456
EBITDA ( million) 2,167 2,218
Operating result ( million) 1,505 1,575
Workforce1
20,398 18,775
Germany: Sales/Distribution Networks (I)
1 Converted to full-time positions.
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEGermany
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Gas customers1 (thousand) External gas sales 2011 (billion kWh)
Electricity customers1 (thousand) External electricity sales 2011 (billion kWh)
Industrial andcorporate customers 31.4
Residential andcommercial customers 25.5
Distributors 60.4
117.3
2009 2010 2011
6,823 6,674 6,959
2009 2010 2011
1,064 1,0911,295
Industrial andcorporate customers 24.0
Residential and
commercial customers 27.5
Distributors 31.8
83.3
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEGermany
1 Households and small commercial enterprises.
1 Households and small commercial enterprises.
Germany: Sales/Distribution Networks (II)
2,000
4,000
6,000
8,000
0
1,000
1,500
500
0
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Who we are
> Essent is the largest energy company in the Netherlands. The companyhas a well-balanced and flexible generation portfolio (consisting primarily
of gas and hard coal power stations). In total, Essent had 3.1 GW ingeneration capacity at the end of 2011 and produced some 11.5 billionkWh of electricity in 2011.
> By investing into processes to co-fire biomass at our Amer andEemshaven power stations we intend to further increase the proportionof renewables in our energy mix.
> In 2011, 2.2 million and 1.9 million households and small commercialenterprises were supplied with electricity and gas in the Netherlands,respectively.
> Two new gas power stations went online at the beginning of 2012.A state-of-the-art hard coal-fired power plant is currently being built.
Key figures 2011 2010External revenue ( million) 5,818 6,510
EBITDA ( million) 462 660
Operating result ( million) 245 391
Workforce1
3,794 3,899
Netherlands/Belgium (I)
1 Converted to full-time positions.
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWENetherlands/Belgium
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Power generation 2011 (billion kWh)
Generation capacity as of 31 Dec 2011 (MW)
Hard coal 916
Renewables(Biomass co-firing) 331
Gas 1,897
3,144
Hard coal 5.1
Renewables 1.3
Gas 5.1
11.5
Essents major power plants (2012)
Bio-energiecentrale CuijkBiomass, 25 MW
Claus C, MaasbrachtGas, 1,304 MW
Claus A, MaasbrachtGas, 610 MWSwentibold, Geleen
Gas, 245 MW
Amercentrale, GeertruidenbergCoal, gas, biomass, 1,226 MW
Moerdijk II, MoerdijkGas, 426 MW
Moerdijk I, MoerdijkGas, 339 MW
+ various midsize cogeneration power plants
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWENetherlands/Belgium
Netherlands/Belgium (II)
Energiecentrale EemshavenCoal/Biomass, 1,560 MW(under construction)
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Electricity and gas customers1 (thousand)
External electricity sales 2011 (billion kWh) External gas sales 2011 (billion kWh)
2,019
2,339
2,016
2,329
2,024
2,346
0
1000
2000
3000
Electricity Gas
2009
2010
2011
Industrial andcorporate customers 50.8
Residential andcommercial customers 36.9
87.7
Industrial andcorporate customers 10.3
Residential andcommercial customers 10.7
21.0
Power plant new build project
> Fuel: hard coal/biomass> Capacity: 2x780 MW> Efficiency: ~46%> Start of operation: 2014
The 50 hectare site in Eemshaven which can be partially fuelled by
biomass is being built to generate electricity primarily for the Dutchmarket. With an efficiency of more than 46% it will be one of theworlds most modern hard coal-fired power stations.
Eemshaven
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWENetherlands/Belgium
1 Households and small commercial enterprises.
Netherlands/Belgium (III)
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Electricity and gas customers (households and small commercial enterprises, thousand)
External electricity sales 2011 (billion kWh) External gas sales 2011 (billion kWh)
Industrial andcorporate customers 2.2
Residential and
commercial customers 38.0
40.2
Industrial and
corporate customers 32.9
Residential andcommercial customers 17.4
50.3
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWE
Electricity Gas Total
2010
2011
United Kingdom
3,877 3,935
2,561 2,636
6,438 6,571
United Kingdom (III)
2,000
4,000
6,000
8,000
0
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWE
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Who we are
> RWE East, based in Prague, is a subsidiary wholly owned by RWE AG.It began overseeing RWEs affiliates in Central Eastern and South
Eastern Europe as well as Turkey as of 1 January 2011.> These affiliates include RWE Transgas in the Czech Republic,
RWE Hungria in Hungary, RWE Polska in Poland, VSE in Slovakiaand RWE Holding in Turkey. RWE East also heads up projects,e.g. in Croatia and Romania.
> In 2011, the company sold just under 24 billion kWh of electricity as well
as 59 billion kWh of gas.
Key figures 2011 2010External revenue ( million) 4,990 5,297
EBITDA ( million) 1,364 1,440
Operating result ( million) 1,109 1,173
Workforce1
11,328 11,163
Central Eastern and South Eastern Europe (I)
1 Converted to full-time positions.
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWECEE and SEE
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWE
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External gas sales 2011 (billion kWh)
External electricity sales 2011 (billion kWh)
RWE TurkeyElectricity:
presence
RWE Polska:
Electricity: No. 5VSE
Electricity: No. 3Gas: No. 2
RWE TransgasElectricity: presenceGas: No. 1
RWE HungriaElectricity: No. 2
Gas: leading position
RWE East core markets
Growth markets under observation
Other RWE Group core markets
Markets and market positions in terms of sales
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWECEE and SEE
Central Eastern and South Eastern Europe (II)
Industrial andcorporate customers 9.2
Residential andcommercial customers 8.7
Industrial andcorporate customers 27.4
Residential andcommercial customers 27.0
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWE
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Who we are
> RWE Innogy was established in February 2008; it pools the RWE Groupsrenewables expertise and power stations, focussing regionally on Europe.
> Onshore and offshore wind power projects are a focus of the company'sactivities. RWE Innogy will also expand its biomass and hydroelectricactivities. We also support the development of new technologies for thefuture.
> RWE Innogy was launched with 1,100 MW in 2008. At present, we alreadyoperate a power plant capacity of around 2.4 GW.
> We are especially strong in our home market in Germany, followed by theUnited Kingdom, Spain, the Netherlands, Poland and Italy.
Key figures 2011 2010External revenue ( million) 443 366
EBITDA ( million) 338 211
Operating result ( million) 181 72
Workforce1
1,493 1,232
Renewables (I)
1 Converted to full-time positions.
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWERenewables
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWE
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Generation capacity as of March 2012 (MW)RWE Innogys asset base by region (MW)
Offshore wind projects
SpainPortugal
France Switzerland
CzechRepublic
BE
Poland
Italy
DE
New technologies
Hydro
Onshore wind Biomass
Offshore wind
UK
NL
Onshore wind 1,607
Biomass 110
2,4111
Hydro 542
Offshore wind 150
In operation Under construction
North Hoyle1, UK, 60 MW:
Completely commissioned 2004
Thornton Bank I2, BE, 30 MW:Completely commissioned 2009
Rhyl Flats, UK, 90 MW:Completely commissioned 2009
Thornton Bank II+III2, BE,295 MW
Gwynt y Mr3, UK, 576 MW
Nordsee Ost, GER, 295 MW
Greater Gabbard4, UK,504 MW
1 RWE Innogy (33%), owned by Zephyr Investments Ltd.2 RWE Innogy (27%), owned by C-Power consortium.3 RWE Innogy (60%), Stadtwerke Munich (30%) and Siemens (10%).4 RWE Innogy (50%), Scottish and Southern Energy (50%).
1 Including minor capacities in solar and biogas.
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWERenewables
Renewables (II)
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Who we are
> Headquartered in Hamburg, RWE Dea is active in the internationalexploration and production of gas and oil, benefiting from its extensive
experience over a corporate history spanning more than 100 years.> RWE Dea has production facilities in Germany, the United Kingdom,
Norway, Denmark and Egypt and holds licenses in Algeria, Ireland, Libya,Mauritania, Poland, Turkmenistan and Trinidad and Tobago. In Germany,RWE Dea also operates large-scale underground storage facilities fornatural gas.
> RWE Dea produced 2,664 million cubic metres of gas and 2,478 thousandcubic metres of oil during fiscal 2011, resulting in a total output of31.8 million barrels of oil equivalent.
> In 2014, a production level of 40 million barrel of oil equivalent and anoperating result of about 800 million after planned disposals is expected.
Key figures 2011 2010External revenue ( million) 1,766 1,353
EBITDA ( million) 923 619
Operating result ( million) 558 305
Workforce1
1,362 1,363
Upstream Gas & Oil (I)
1 Converted to full-time positions.
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEUpstream Gas & Oil
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWE
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Development of reserves and resources (million m3 OE)
Gas production 2011 (million m3 OE) Oil production 2011 (million m3)
Germany 1.8
Norway 0.3
2.6United Kingdom 0.5
Germany 0.9
Denmark 0.2
2.5
Egypt 0.5
Norway 0.9
102111 137 133
104
3126
48
91
40
5651
0
50
100
150
200
250
2 0 1 0 2 0 1 0 G e s a mt 2 0 1 1 2 0 1 1 G e s a mt
Gas Oil Total
66
158
79
237
162
228
2011
Reserves
Provenresources
2010
Capital expenditure ( million)
POLITICAL ENVIRONMENT RWEUpstream Gas & Oil
Upstream Gas & Oil (II)
477 505606
855
507
701
2006 2007 2008 2009 2010 2011
1,000
800600
400
200
0
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWE
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Who we are
> RWE Supply & Trading is a leading European energy trading company,acting as the Groups hub for all tradable commodities (such as power,
gas, coal, oil, and emission certificates). The division thus functions as aninterface between the RWE Group and the global wholesale markets forenergy and energy-related raw materials.
> The headquarters in Essen boast Europes largest and most sophisticatedenergy trading floor. Additional trading floors or subsidiary and affiliateoffices are located in London, Swindon, Den Bosch, Geneva, Singaporeand New York.
> With an annual gas procurement of approx. 45 billion cubic metresRWE Supply & Trading is one of the strongest competitors in theEuropean gas industry.
Key figures 2011 2010External revenue ( million) 5,750 7,517
EBITDA ( million) -784 -7
Operating result ( million) -800 -21
Workforce1
1,562 1,512
Trading/Gas Midstream (I)
1 Converted to full-time positions.
Trading/Gas Midstream
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWE
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Energy sales to industrial customers 2011 (billion kWh)
21%
7%
4%
22%
47%
15.923.2
GasElectricityAluminium, steel & mining
Fine chemicals &pharmaceuticals
Glass, paper & cement
Primary industry/petrochemistry
Transport, automotive & other
Trading floors and subsidiary/affiliate offices
25%
8%
12%
32%
23%
Trading volumes 2011
> 1,435 billion kWh of power
> 753 billion cubic meters of gas
> 618 million barrels of oil
> 644 million CO2 certificates
Trading/Gas Midstream
Trading/Gas Midstream (II)
Organisation RWEMarket dataPolitical environment
Strategy & financing
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Organisation RWEMarket dataPolitical environmentStrategy & financing
28
29 Strategy
47 RWE share
50 Fixed income financing
58 Risk management
Strategy & financing
RWE Facts & Figures | Updated September 2012
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RWEs journey over the next five years
> Cornerstones of strategy remain
> Adjust execution of strategy to changing
framework conditions No further nuclearambitions with
existing operations phasing out
Continued expansion of renewables
including position in photovoltaic> Increasing partnerships to reduce risks and
leverage capital base
> Disciplined investment approach: operating
cash flow to cover dividends and capex by2014/15 at the latest
Strategy
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWESt t
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More international, while maintaining a regionally
focused strategyCore markets in Northwest andCentral Europe
Regional growth markets mainlyCEE/SEE, especially Turkey
Renewables business in and around ourtraditional core markets
Upstream gas & oil position/projectsmainly in Europe, Caspian region, Africaand Trinidad & Tobago
Additional markets for upstream gas & oil
Additional markets especially for renewables business
RWE markets with established market positionsGrowth markets under observation/first activities
Strategy
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWESt t
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More sustainable:
Three levers to execute our strategyLower CO2 emissions More renewables Efficient use of energy
> Reduce specific CO2
emissions by more than20% by 2020 comparedto 2005
> Increase renewable
generation capacity toat least 20% by 2020
> Increase efficiency of
fossil fuelled powerplants
> Offer efficiencyenhancing energyproducts to endcostumers
20%
40%35%
5%~
~
~
~
~46 GW
Estimatedgeneration
portfolio 2020
Nuclear
Coal (partlyhighly efficient)
Gas/other
Renewables
Strategy
0,50
0,55
0,60
0,65
0,70
0,75
0,80
0,850,90
2005 2008 2011 2014 2017 2020
Specific CO2 emissionsexposure
Actual
Target path
t/MWh
0.900.85
0.80
0.75
0.70
0.65
0.60
0.55
0.50
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEStrategy
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More robust, with a well balanced portfolio approach
Active along the whole value chain
Balanced generation portfolio across alltechnologies
Invest in most economic renewabletechnologies
Exposure via RWE Dea to globalunregulated commodity prices
5.8bnGermany
~2/3International
~1/3
5.8bn Regulated~30%Unregulated~70%
Operating result 2011
Continuous contribution from stableregulated business
Broad geographic diversification in
known territory to minimise regulatoryand political risks
Strategy
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEStrategy
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Key priorities 2012/2013
> 2012 programme ontrack to be completed
> Measures of newprogramme fully
identified> RWE 2015 is laying
the foundation forfurther efficienciespost 2014
> Completion ofgas price reviewsenvisaged for 2013at the latest
> Structural solutionsto eliminate gas-to-oilspread
> Renegotiationscontinue for remaining
contracts with acombined volumeof11 bcm
> Divestments of up to 7 billion by the endof 2013
> Majority of sales
processes underway> Disposal of 19% in
VSE (GER) closed
>Agreement for sale ofBerliner Wasserbe-triebe signed
Disposalprogramme
Gas supplycontracts
Efficiencyenhancement
Strategy
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEStrategy
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RWE 2015 four action fields to align RWE with
changing market environment> Identify opportunities of energy market transformation
>Align execution of strategy to changing marketenvironment
> Eliminate structural and operational duplications and clarifyinterfaces
> Establish European generation company
> Drive efficiency enhancements and operational excellence
> Realise efficiencies of 1 bn by 2014 compared to 2012
>Align management and employees across all parts of RWE
> Foster high performance culture
Strategy
Structures/Roles
Functionalexcellence
Culturalchange
Strategy
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEStrategy
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Streamlined and disciplined investment programme
> Peak of investment programmein 2010/2011
> Finalising conventional powergeneration programme mainly
in 2012 and 2013> More than 60% of our capex will be
spent in our international businesses
> Sustainable long-term capex level ofup to 5 bn p.a. of which day-to-daycapex up to 2.5 bn p.a.
> Approx. 16 bn capex programmefor 2012 2014 of which c. 8 bnfor growth/efficiency enhancement,thereof c. 6 bn in our growth areasRenewables, CEE/SEE andUpstream Gas & Oil
> Committed capex(including day-to-day, approx.):
2012 2013 201495% 85% 65%
billion
2009 2010 2011 2012e 2013e 2014e
5.96.4
~4 5 p.a.1~ 66.4
~1.9 Replacement, of which~20% efficiency enhancement
~6.5 Day-to-day
~7.6 Growth
~16Renewables,Upstream, CEE/SEE (~6.0)
1 After planned divestments.
Strategy
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6 billion earmarked for growth areas until 2014
> Target capacity of 4.5 GW(in operation or under construction) by 2014
> Growth opportunities mainly in generation
> Regional focus on Turkey and Poland
> 2014 targets post planneddisposals:
Gas and oil productionof ~ 40 mm boe
Operating result of ~ 800m
> Development focus on UK,Norwegian and North Africangas fields
> Longer term growth secured throughcontinued successful exploration effort
Upstream Gas & Oil2
Renewables (RWE Innogy)2CEE/SEE2
~ 30% ~ 6 bn1
1 Growth and replacement capex, excluding day-to-day capex.2 Divisional split; regional overlap due to potential upstream and renewable investments in Central Eastern/South Eastern Europe.
> Operating resultof 500 million by 2014
> Balanced generation portfolioacross countries andtechnologies:
Regional diversification
across core markets Focus on most cost
competitive technologiesto minimise regulatory risk
> Large project pipeline of c. 14 GW
> 1.1 GW currently under construction
~ 10%
~ 60%
Strategy
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By 2014 we will have renewed more than 25% of our
electricity generation fleet
Strategy
H1 20122010 H2 2012 Q1 2013 2014
BoA Neurath2.1 GW lignite
Moerdijk 20.4 GW CCGT
Claus C1.3 GW CCGT
Staythorpe1.7 GW CCGT
Lingen0.9 GW CCGT
Denizli0.8 GW CCGT
Pembroke2.2 GW CCGT
Hamm1.5 GW Hard coal
Eemshaven1.6 GW Hard coal
2013/2014
Gas
Lignite
Hard coal
12.5 GW
out of (2011)
49.2 GW
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RWE Innogy major project portfolio
bn1 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Gwynt y Mr(Wind offshore, 576 MW, 60%)
2.4
Greater Gabbard(Wind offshore, 504 MW, 50%) 1.9
Markinch (Biomass CHP,45 MWel, 88 MWth, 100%)
0.3
Nordsee Ost2
(Wind offshore, 295 MW, 100%)0.9
Capacity and earnings targets for RWE Innogy until 2014 are mainly driven by 4 major projects
Large scale projects, especially in offshore wind, play a vital role in achieving European renewable targets as
growth potential in other areas is limited
Utilities like RWE have a competitive advantage in these large-scale projects
1 Capex at 100% share; UK offshore includes investment for grid connection.2 The construction schedule had to be revised in 2012 due to the delay in the offshore grid connection. In light of latest statements by
grid operator TenneT there is a risk of even further delays.
gy
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Gas/other1
Nuclear
20%
40%35%
5%
Renewables
Coal (partly highly efficient)
~
~~
~
~ 46 GW
1 Including approx. 8% of others, mainly pumped storage.
In 2020 approx. 20% of RWEs generation capacity
will be in renewables
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEStrategy
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External revenue Operating resultEBITDA
Stable portfolio: 30% of operating result derived from
regulated businesses (2011)
Unregulated
business 80%
Regulatedbusiness 20%
Regulated business particularly includes:
> German electricity and gas networks
> Electricity supply in Hungary
> Eastern European electricity and gas networks and storage
> Continental European water business
> Renewables
Unregulated
business ~70%
Regulatedbusiness ~30%
Unregulated
business ~70%
Regulatedbusiness ~30%
51,686million
5,814million
8,460million
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Strict investment discipline provides platform for
sustainable dividendsMid-term target to cover investments and dividends by cash flows from operating activities
billion
2010 2011 2014/2015e
8.8
5.5
9.4
5.5
> Capex level will normalisebeyond 2013
> Pay-out ratio of
50% - 60% of recurrent netincome
> Flexibility to adjustinvestments to meet cashflow, if necessary
Dividends (incl. minority payments; year of payment)
Capex in property, plant & equipment and financial assets
Cash flows from operating activities
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Further efficiency enhancements of 1 bn initiated
2013 2014 Total
750
250
1,000
In million 1 bn programme nowbacked bottom-up byoperational measures
Several hundred individualmeasures across the wholeRWE group
Programme includesc. 300 m from workforcereduction in 2013/14
Fully accretive to operatingresult (i.e. post cost inflationand one-off cost of
programme)
~250Reduced IT-spending
~300Staff reduction
~450Other cost reductions
and efficiency improvements
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Outlook for 2012 / 2013
million
Dividend 2.00/share Pay out ratio of 50% 60% of recurrent net income
8,460
5,814
2,479
EBITDA
Operatingresult
Recurrentnet income
2011 2012eafter further disposals1
2013e
1 Expected earnings dilution from the remaining up to 7 bn divestment programme:
in bn EBITDA Operating result Recurrent net income
2012 no major dilution effect expectedFull year effect (after 2013) ~0.5 ~0.4 ~0.3
The 2013 outlook is based on commodity prices as of January 2012.
in the order of 2011
in the order of 2011
in the order of 2011
after further disposals1
in the order of 2011
in the order of 2011
~9,000
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Major M&A transactions since FY 2008
70%2009Breagh gas field and surrounding exploration licenses, UK
100%2011Energy Resources Holding B.V. (ERH, 30% in EPZ)
Acquisitions Year of acquisitionPercentage of
participation
Urvasco Energa S.A., Spain 2008 100%
Fri-El S.p.A., Italy 2008 50%
Powerhouse Holding B.V., Netherlands 2008 100%
Greater Gabbard Offshore Windparks Ltd., UK 2008 50%Excelerate Energy, USA 2008 50%
Luxempart Energie S.A. (holds stake in SOTEG S.A.), Luxembourg 2009 49 to 100%
Favorit GmbH, Germany 2009 100%
Essent N.V., Netherlands 2009 100%
from 100 to 0%2011Thyssengas, Germany
from 100 to 25,1%2011Amprion, Germany
Divestments Year of divestment Percentage stake
Rhenag, Germany 2008 8.23%
Tarragona Power, Spain 2008 50%
American Water, USA 20082009
from 100 to 60.5%from 60.5 to 0%
swb, Germany1 2009 51% less one share
1 Divestment by Essent in order to obtain approval for acquisition of Essent N.V. by RWE.
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In 2011, RWE spent 2,875 million onenvironmental protection
1 Including capital expenditure.
2 E.g. operation of flue gasdesulphurisation units.
3 Mainly purification of wastewater.
Climate protection 1,845 64
Clean air2 407 14
Waste disposal 208 7
Water protection3 298 10
Nature and landscapeprotection 93 3
Noise abatement 20 1
Brownfield sites,soil contamination 4 0
(2010: 2,863 million)
Rounding differences may occur.
Total: 2,875million1
million %
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWERWE Share
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RWE AG shareholder structureas of December 2011
> 260,000 shareholders own 614.7 million shares
> Free float: 85%(excluding RW Energie-Beteiligungsgesellschaft)
15%RW Energie-Beteiligungsgesellschaft
BlackRock 5%
Mondrian Investment 3%
Other institutional shareholders 63%
Shares of subscribed capital
Private shareholders 13%
Employee shareholders 1%
> 86% of all RWE shares are held by institutional
investors> The regional breakdown is as follows:
Germany 34%USA/Canada 12%UK/Ireland 19%Continental Europe (excl. Germany) 19%
Rest of the world 2%
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWERWE Share
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RWE share profileas of August 2012
703714703712German Security Identification No.
RWE3 GY (Xetra)RWE GY (Xetra)Bloomberg
RWE3 GR (Frankfurt/Main)RWE GR (Frankfurt/Main)
Share information Non-par-value sharesCommon shares Preference shares
Total number of shares
Total number of shares outstanding
Total number of treasury shares
575.7 million common shares
575.4 million common shares
0.3 million common shares
39.0 million preference shares
39.0 million preference shares
Reuters RWEG.DE (Xetra)
RWEG.F (Frankfurt/Main)
RWEG_p.DE (Xetra)
RWEG_p.F (Frankfurt/Main)
ISIN DE 000703 7129 DE 000703 7145
US CUSIP No. (ADR) 74975E303
Listings Germany official
Frankfurt/Main
Dsseldorf
Xetra
Abroad
New York, OTC trading(Sponsored level-one ADR programmefor common shares)
Germany official
Frankfurt/Main
Dsseldorf
Xetra
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Dividend per share
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Dividend yield based on year-end price of RWE common shares
RWE's dividend history
Bonus0.10
4.2%
3.50
1 Truncated fiscal year of RWE AG from 1 July to 31 December 2001.
1
3.2%
4.5%4.0% 3.7%
2.8%
1.00 1.00 1.251.50 1.75
3.3%
3.15
4.50
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
7.1%
5.2%
3.50 3.50
7.0%
%
2.00
7.4%
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEFixed income financing
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RWE AG Group Finance
Asset Management Committee (AMC)
> Defines investment strategy
> Sets guidelines for the implementation
> Members: CFOs of RWE AG, RWE Power, RWE npower, RWE Dea,enviaM, Lechwerke, Swag, Head of Finance of RWE AG
As of 30 June 2012.
Investmentguidelines
Master KAGs: RWE AG Group> Spezialfonds: 6
> Subfunds: 36
> RWE AG subsidiaries: 2.2 bn
> RWE Pensionstreuhand e.V. (PTV): 3.1 bn
>
RWE Pensionsfonds AG (PF): 6.6 bn
> UK Pension Trust - RWE npower: 4.1 bn
Asset
managementcontract
Recommendations &reporting
Investment strategy,guidelines & restrictions
> Centralised asset management by RWE AG
Internal management External management
Master KAGs: PTV + PF
>
Spezialfonds: 4> Subfunds: 66
Management of financial assets: centralised structure
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEFixed income financing
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RWE's corporate treasury basis for groupwidefinancial risk management
RWE AG: Corporate Treasury
Liquidity transfer via cashpool Hedging (fx, interest rates) Intercompany loans
RWE subsidiaries
> RWE AG acts solely as external counterparty for financial transactions (excluding regulatory requirements)
> Corporate Group Treasury has the overall responsibility for treasury operations
> Central database for group-wide financial risk management
External market
Capital marketRatings
FX deals (incl. derivatives)Interest deals (incl. derivatives )
CP programmeMoney market
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEFixed income financing
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Capital market debt maturities and sources of financingas of 30 June 2012
Capital market debt maturities1
in bn
Strong sources of financing
Maturities of debt issued Hybrid (first call date)Accumulated outstanding debt (incl. hybrid)
0.0
0.5
1.0
1.5
2.0
2.5
2012
2016
2020
2024
2028
2032
2036
2040
0
4
8
12
16
20
1 RWE AG and RWE Finance B.V., as of 30 June 2012
Balanced profile with limited maturitiesup to end of 2014 (~4.3 billion)
Fully committedsyndicated loan
(4.0bn up to Nov. 2015)
Commercial paper(up to 1 year)
$1.4bn ($5.0bn)
0.0bn
1.1bn (30 June 2012)
for liquidityback-up
MTN programme(up to 30 years)
30bn
15.9bn (30 June 2012)2
2 Bonds outstanding under the MTN-programme,i.e. excluding hybrids. Including hybrids: 19.7bn(incl. USD and CHF hybrid, issued 21 and 28 of June)
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEFixed income financing
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1 Includes interest and cross-currency swaps.
Capital market debt currency and interest exposureas of 30 June 2012
Bonds ( 15.9 bn) and hybrids ( 3.8 bn)Bonds, hybrids and other interest rate relatedpositions (e.g. commercial paper and cash)
Interest rate fixing expiry > 1 year
Interest rate fixing expiry < 1 year
18%
82%
20.5 bn1
33%
67%
19.7 bn1
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEFixed income financing
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Standard & Poor's(BBB+, stable outlook)
> On 27 July 2012, S&P downgraded the rating forRWE from A-, negative outlook, to BBB+, stable
outlook.> The downgrade reflects S&Ps view of a sustained
deterioration of RWE's business risk profile, as wellas the Groups weakened cash generation capacityand credit protection ratios in the medium term.
Additionally, S&P says that RWE has not made
significant headway in executing the announced7 bn disposal programme.
> S&P positively recognizes the capital measurestaken and believes that these measurers will helpstabilize the Groups financial risk profile at thecurrent level.
>
RWEs business risk profile is currently seen asstrong.
> The stable outlook reflects S&Ps assumption thatRWE will be able to maintain cash flow credit metricscommensurate with the ratings over the mediumterm.
Moody's(A3, negative Outlook)
Credit rating 2012 RWE AG
> On 6 July 2012, Moodys confirmed the rating forRWE with A3 negative outlook.
> In Moodys view, positive aspects like strongbusiness positions across the energy value chainand the track record of financial discipline andtransparency with RWEs leverage tolerance are toan extent offset by a difficult operating environmentwith negative pressure on cash flows and profitability
over 2012-13 from lower achieved power prices, thenegative gas/oil spread, the nuclear fuel tax and thephase-out of nuclear power generation in Germany.
> The negative outlook reflects both the execution riskaround its disposal programme as well as thechallenges it faces in dealing with pressures onearnings, both of which increase the uncertaintyaround RWE's ability to maintain its financial strengthat levels consistent with its rating.
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEFixed income financing
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> RWE Group companies have to hedge any FX risk with RWE AG> RWE AG measures the net position for each currency and hedges itself with external counterparties (banks)
> Measurement and limitation of FX risks is mainly based on an FX value at risk concept [VaR (95/1d)1 < 1m]
RWE has two different risk categories:
> Bonds which are held as fixedincome assets:
Rising interest rates may leadto lower bond prices
Average Value at Risk (95/1d)1 in 2011: 7m
> Measurement of exposure (caused by cash, term deposits, FX/IR derivatives etc.) for each bank
> RWE allocates for each bank a limit which is usually derived from the banks equity, rating and CDS
> Shares are part of RWEs asset portfolio
> Average Value at Risk (95/1d)1 of share price changes in 2011: 12m
RWE AG: Financial risk management
ForeignExchange(FX) Risk
InterestRate Risk
CounterpartyRisk (banks)
Equity Risk
Main financial risk factors are:
> Financing costs:
Rising interest rates may lead to higher financing cost Interest rate exposure from financing activities
is measured with Cash Flow at Risk
Average Cash Flow at Risk (95/1y)2 in 2011: 19m
RWE Group companies are subject to strict risk management which is regulated by group-wide directives
Financial derivatives are not to be used for speculative purposes and serve only to hedge risks arising from operations
1 Confidence level: 95%; holding period: 1 day.
2 Confidence level: 95%; holding period: 1 year.
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RWE bond programme
Major bonds issued by the RWE Group1
1 As of 31 July 2012.2 First occasion for RWE to redeem the hybrid bond.
3,853.7Total hybrid capital
XS0767140022A1ML2E7.00012.10.2017229.03.2012limited814.11,000.0PublicUSDRWE AGXS0652913988A1ML0G7.00020.03.2019220.03.2012perpetual956.7750.0PublicGBPRWE AGCH0185843049A1PGUU5.00026.07.2017228.06.2012Limited124.9150.0PublicCHFRWE AGCH0136594352A1MAVP5.25004.04.2017221.10.2011Limited208.1250.0PublicCHFRWE AGXS0542298012A1EWR04.62528.09.2015228.09.2010perpetual1,750.01,750.0PublicEURRWE AG
Hybrid bonds
16,080.5Total
24%3,818.7Redemptions from 2030 onwards17.02.204017.02.201030208.320,000.0PrivateJPYRWE AG
XS0437306904A0AJN26.12506.07.203906.07.2009301,275.61,000.0PublicGBPRWE Finance BVXS0735770637A1GZLK4.75031.01.203417.01.201222765.4600.0PublicGBPRWE Finance BVXS01625132117485375.75014.02.203314.02.200330600.0600.0PrivateEURRWE AGXS01470487628553286.25003.06.203026.04.200228969.4760.0PublicGBPRWE Finance BV
25%3,986.7Redemptions 2019 - 2023 XS01707327388787615.62506.12.202303.07.200320621.9487.5PublicGBPRWE Finance BV
XS0437307464A1AJN35.50006.07.202206.07.200913637.8500.0PublicGBPRWE Finance BVXS0412842857A0T6L66.50010.08.202109.02.200912,51,000.01,000.0PublicEURRWE Finance BVXS01279923366486636.50020.04.202120.04.200120727.1570.0PublicGBPRWE Finance BVXS0399647675A0T3SP6.62531.01.201920.11.2008101,000.01,000.0PublicEURRWE Finance BV
24%3,930.0Redemptions 2015 - 2018XS01728516509579555.12523.07.201823.07.200315980.0980.0PublicEURRWE Finance BVXS0158243013748536floating15.11.201715.11.200215100.0100.0PrivateEURRWE AGXS01279847476486616.25020.04.201620.04.200115850.0850.0PublicEURRWE Finance BVXS0412842428A0T6L55.00010.02.201509.02.200962,000.02,000.0PublicEURRWE Finance BV
27%4,345.1Redemptions 2012 - 2014XS0196302425A0DAN14.62523.07.201423.07.200410530.0530.0PublicEURRWE Finance BVXS0399648301A0T3SN5.75020.11.201320.11.200851,000.01,000.0PublicEURRWE Finance BVXS01470482598553296.37503.06.201326.04.200211803.6630.0PublicGBPRWE Finance BVXS0485309156A1ATAH2.00011.02.201311.02.20103203.5250.0PrivateUSDRWE Finance BVXS01470305548553276.12526.10.201226.04.2002111,808.01,808.0PublicEURRWE Finance BV
ISIN CodeGermanSecurities
Code
Coupon (%)Maturity DateIssuance DateTerm inYears
Volumein mn
Volume IssueCurrency
in mn
PlacementCurrency1Issuer
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Financial liabilities and assetsexcluding hybrid capital as of 30 June 2012
1 Excluding variation margins which are netted against the fair values of the respective derivatives.
Financial assetsin billion euros
Securities Collateral, margin payments1
Cash/cashequivalents
Other: other financial receiv-ables, financial receivableswith non consolidated compa-nies, other loans receivable
2.9
0.4
3.3
0.8
0.8
2.22.2
0.7
0.3
1.0
0
2
4
6
8
10
6.6
0.7
7.3
Short term( 12 months)
Long term(> 12 months)
Total
Split ofsecurities
Interest bearinginstruments
Equity
Real estate(0%)
Alternativeinvestments (0%)
82.6 %
17.4 %
Financial liabilitiesin billion euros
2.8
13.716.5
0.6
0.6
0.3
1.4
1.1
1.8
1
2.8
0
5
10
15
20
25
Short term( 12 months)
Long term(> 12 months)
Total
Bonds, incl.other notespayable
Collateral, margin payments1
Loans withbanks
Other: including CP of 1.1bn, finance leasing, financialliabilities with non consolidatedcompanies, other financialliabilities
5.5
15.8
21.3
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWERisk management
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Group Wide Risk Management System
RWE AG Executive Board
Overall responsibility for group wide risk management system
Group ControllingCredit Risk Controlling Unit
Controlling of credit risks
Accounting Department
Controlling of risks in financialreporting
Operating Companies
Group Controlling
Controlling and coordination of group wide risk management system
Asset ManagementCommittee
Management of risks associatedwith investments in securities
Risk Management CommitteeResponsible for implementing, monitoring and refining group wide risk management system
Finance DepartmentFinancial Controlling Unit
Operating management offinancial risks
Commodity Management
Management ofcommodity risks
Group ControllingRisk Controlling Unit
Controlling of commodity risks
Organisation of risk management in the RWE Group
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> Overall responsibility for risk management system
> Establishes the rules and minimum standards
> Defines limits for aggregated market and credit risks
> Takes decisions on transactions that can result in substantial risks
> Defines the overall hedging strategy
> Responsible for tracking and monitoring commodity risks with regard to both the market and the credit side
> Is responsible for the approval of methods and models for the valuation of commodity risks
> Sets standards for risk measurement, monitors commodity risks and reports on these to the ExecutiveBoard
> Analyses and approves credit limits for large commodity counterparties, large suppliers and banks
> Handle operative commodity and credit risk management
> Control and monitor commodity risk positions
> Manages strategic commodity positions
> Grants approvals for detailed hedging strategies and large commodity transactions within the frameworkdetermined by the Executive Board
> Derives detailed limits for the commodity risks of the operating companies from the risk caps establishedby the Executive Board
RWE's commodity risk management infrastructure
CFO ofRWE AG
RWE AGExecutive Board
Group Controlling
Operatingcompanies
Commodity
Management
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RWE Supply & Trading commodity risk limit system
> RWE Supply & Trading is the RWE Groups interface to the wholesale markets for power and energy commodities,while serving as an internal transaction partner for hedging commodity risks
> The global risk limits in the energy trading business are set and constantly monitored by the Executive Board ofRWE AG
> Risk limits are then further detailed:
RWE AG Executive Board
Organisational Unit Commodity Management
RWE Supply & Trading Board
Global limits for market risks
Detailed market risk limits
Limits for single desks/books/traders
restrict
restrict
grants
grants
grants
Comments onadequacy of
limit requests tobe granted by
executive boardand monitorslimit utilization
Group Controlling
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Credit risk management at the RWE Group
1 EFET: European Federation of Energy Traders.
> Bundling of know-how in a central credit risk management unit
> RWE Supply & Trading was a key driver of the EFET1 standards for power and gas with more than130 EFET agreements having been signed so far
> RWE Supply & Trading plays a leading role in the development of exchanges/OTC clearing
> Counterparties are assessed using internal rating tools, where available external rating informationare also taken into account
> All counterparties are monitored on an ongoing basis and reviewed on a regular basis
> Credit capital costs are based on the rating/probability of default (PD) of a counterparty
> Performance determination includes credit risk charges
> Potential future credit exposure (= potential replacement value) is calculated with a Value-at-Risk-like
methodology> In addition, both current and future settlement exposure is measured
> Counterparty credit exposures are reviewed on a near-time basis
> Groupwide credit policy has been established. Above all, it is based on overall limitation andmaximum individual counterparty limits and tenors (based on the creditworthiness of a counterparty)for upper-size business
Driver of credit riskmitigation
Robust counterpartyrisk assessment andmonitoring
Clear creditincentives
State of the art
measurement andmonitoring of exposures
High-levelcredit policy
Organisation Strategy & financing RWEMarket dataPolitical environment
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63 Overview
64 Combined Heat and Power (CHP) Act
65 Renewable Energy Act
72 Climate policy
75 Emissions trading
80 Large Combustion Plant Directive (LCPD)82 Grid
Political environment
RWE Facts & Figures | Updated September 2012
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEOverview
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1 Announced or going through the legislative procedure.2 Renewable Energy Act.
3 Renewable Obligation Certificate.4 Sustainable Energy Incentive Scheme (Subsidieregeling duurzame energieproductie).
Major regulatory measures in RWEs core markets
Major regulatory measures in the Europeanutility markets
Core issueMarket design/
unbundlingEnergy
efficiencyCO2 reduction Renewables
Conventionalgeneration
EU
National
3rd SingleMarket Package
Energy Efficiency Directive1
ETS Directive
Renewable EnergyDirective
Carbon Tax
2012 Amendmentto the REA2
ROC3
NuclearPhase-out
2012 Amendment to the Energy Act
Climate Protection Act1 in North Rhine-Westphalia
Retail MarketReform1
Energy MarketReform1
ECO/ Green Deal
More with Less SDE+4Coal tax1
Industrial EmissionsDirective
Large CombustionPlant Directive
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWECHP
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German Combined Heat and Power Generation Act1
1 Figures and scheme taken from the amendment in 2012 effective July 19, 2012.
Issue Combined heat and power (CHP) legislation
Term Effective since April 2002, amended on January 1, 2009 and in July 2012. The provisions of this Actapply to all CHP plants commissioned after July 19, 2012.
Aim >Modernisation and new build of high efficient CHP plants for energy conservation and CO2 reduction> 25% share of CHP electricity generation by 2020
Object of subsidy >Electricity actually generated in CHP plants (back pressure) including internal consumption of industry
>Support is no longer connected to the feed into supply grids
>2009: Scope of the law extended to heating grids; 2012: scope extended to cooling grids as well as toheating and cooling storage
Levels of subsidy >The amount and duration of compensation varies depending on the year of operation as well as the sizeof the plant, whereby modernized plants and fuel cells are assigned a separate compensation category>Plants with commissioning date between January 1, 2009 and December 31, 2020 are eligible for thesubsidy
Volume >Annual cap of 750 million including 150 million for heating and cooling grids and heating and coolingstorage
> 396 million in 2010; 5,776 million since April 2002
Funding Allocation to total supplies to end customers from the public supply grid
Limitation of the burden on industry >Max. 0.05 ct/kWh for large consumers with a yearly consumption of more than 100,000 kWh
>Max. 0.025 ct/kWh for energy-intensive industry (> 4% of energy costs of gross production value)
Passing-on clause Network operators have the right to pass on all feed-in payments
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWERenewable Energy Act
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German Renewable Energy Act1 (I)
1 Figures and scheme taken from the German Renewable Energy Act effective as of January 1, 2012.
Issue Renewable energy legislation
Term >Effective since April 2000 and mainly amended on August 1, 2004, January 1, 2009 and January 2012
>Different support of plants with service lives of up to 20 years
Aim Supports introduction of renewables-based electricity generation plants and helps to meet the emissionsreduction target set by the federal government: min. 35% electricity production from renewables by 2020
Object of subsidy Electricity actually generated in renewable plants which feed into the supply grid
Levels of subsidy Different price schemes for existing and new renewable plants (wind, water, biomass, solar, biogas,geothermal energy)
Volume Approx. 16 billion feed-in tariffs in 2011 without system costs (grid, balancing power); projection for2012: 18 billion, projection for 2013: 19.3 billion
Funding Amount allocated to total supplies to end customers from the public supply grid was about 3.53 ct/kWhin 2011 and is about 3.592 ct/kWh in 2012
Limitation of the burden for industry Hardship clause came into effect as of January 1, 2006 and was extended on January 1, 2012; reducedamount if a company consumes more than 1 GWh (originally: 10 GWh) and electricity costs are at least
14% (originally: 15%) of gross production value. Reduction of the EEG surcharge to 10% for a share ofelectricity between 1 and 10 GWh, to 1% for a share of electricity between 10 and 100 GWh. Amount islimited to 0.05 ct/kWh for the share of electricity exceeding 100 GWh.
Passing-on clause Grid operators have the right to pass on all surcharge payments to the suppliers
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Renewable Energy Act - Feed-in tariff rates2
ct/kWh
German Renewable Energy Act1 (II)
Hydropower 3.40 12.70
Landfill gas, sewage gas, pit gas 3.98 8.60
Biogas from biological waste or liquid manure 14.00 25.00
Biomass 6.0 25.30
Geothermal energy 25.00 30.00
Photovoltaics 13.5 19.5
Wind power onshoreoffshore
4.87 9.913.50 19.00
1 Figures and scheme taken from the German Renewable Energy Act effective as of January 1, 2012(PV: as of April 1, 2012).
2 Depending on size of plant, year of commissioning operation and technology.
Source: German Ministry for the Environment, Nature Conservation and Nuclear Safety.
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2000
2002
2004
2006
2008
2010
2012
2014
2016
bn
bnkWh
1601201101009080706050403020100
Renewable energy surcharges expected to increasefurtherDevelopment of power generated in accordance with the German Renewable Energy Act
(REA) and REA surcharges for 2000 2016 (forecast)
130 140 150
0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 10.0 16.09.0 12.011.0 14.013.0 15.0 17.0 18.0 19.0 20.0 21.0
170
22.0 23.0 24.0
Sources: German Energy and Water Association (BDEW), December 2011.German transmission system operators (www.eeg-kwk.net), data until 2010 as of May 2009, data from 2011 as of November 2010, datafrom 2012 on as of November 2011 (from 2012 on: fees for market premium, direct marketing and PV self consumption included).
Power generated (bn kWh)
Power generated (bn kWh, forecast)
Feed-in fees ( bn)
Feed-in fees ( bn, forecast)
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REA1 compensationGenerationsubsidized by REA1
1 REA = German Renewable Energy Act.2 Next to the power generation subsidised by the German REA of 92,266 GWh in 2011, another 12,332 GWh of power from renewable sources
(REA electricity) was sold on the free market (direct marketing in accordance with 17 REA).
3 Including avoided network fees.
Gross generation in Germany (2011)
614.5 billionkWh
Renewable energys share of total electricitygeneration in Germany
Lignite 24.9%
Hard coal 18.6%
Renewable energy 19.9%
Photovoltaic
Hydro
Wind26%
27%
1%
46%
Biomass
Nuclear 17.6%
Other 5.3%
Gas 13.7%
Photovoltaic
Hydro
Biomass
Wind
20%
2%
27%
51%
92 billion kWh2 16 bn3
Sources: Gross generation: BDEW, BMWI; REA generation + REA compensation: German transmission system operators(www.eeg-kwk.net) as of November 2010 (provisional data).
G R bl E A i d
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0
5
10
15
20
25
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Hydro Biomass Onshore wind Offshore wind Photovoltaic Other
1.61.2
2.2 2.63.6
4.55.8
7.9
20.7
22.1
9.0 10.0
12.3
16.0
18.0
19.3
3.1
3.8
5.2
0.3
0.1
4.0
4.3
0.2
23.7
11.1
0.2
7.3
German Renewable Energy Act compensation andforecast through 2016 billion (gross)
Source: Renewable Energy Act medium-term forecast of electricity transmission system operators. Data until 2010 as of May 2009, data for
2011 as of November 2010, data for 2012 onwards as of November 2011 (from 2012 onwards fees for market premium, directmarketing and photovoltaic self consumption included).
S b id ffi i t ib ti f G R bl
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Installed capacityMW
Subsidy efficiency: contribution of German RenewableEnergy Act subsidised power generation in 2011
Extra cost in millions of Euros, based on an average electricity price of 60/MWh
39 2 2,791 9 1,298 103 6,194
1 Next to the power generation subsidised by the German Renewable Energy Act of 92,266 GWh in 2011, another 12,332 GWh of
power from renewable sources (REA electricity) was sold on the free market (direct marketing in accordance with 17 EEG).Source: Renewable Energy Act medium-term forecast of electricity transmission system operators, November 2010 (provisional data).
Power generatedbn kWh1
Power generation
Power generation (including generation fromdirect marketing according to 17 EEG)
I t ll d it i G t d di
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Development of capacity (MW) in 2006 - 2010
Installed capacity in Germany compensated accordingto the Renewable Energy Act
Source: Federal Network Agency, EEG-Statistikbericht, August 2012.
0
10.000
20.000
30.000
40.000
50.000
2006 2007 2008 2009 2010
17,554
27,071
4,685
1,417
638
51,364
Photovoltaic
Wind
Biomass
Hydro
Others
Total
50,000
40,000
30,000
20,000
10,000
Th EU h t th 20% t t f 2020
ORGANISATION STRATEGY & FINANCING POLITICAL ENVIRONMENT MARKET DATA RWEClimate policy
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Greenhouse gas (GHG) emissions Renewable energy sources (RES) Energy efficiency
The EU has set three 20% targets for 2020.Achievement of some is challenging
Mt CO2e
> 2020 just interim step to even
tighter targets in 2050> Nuclear moratorium in Germany
has shifted balances by 45Mtper year
> Appears most challenging
> Addressed by EuropeanCommission now
> Country specific concerns: whenis a house properly insulated?How fast should we move?
Mtoe
Source: EuroStat, UNFCCC. GHG=Greenhouse Gas Emissions, CO2e=CO2 equivalent, OE=Oil equivalent. Latest available official data from 2009.
> EU RES target translates into
country-specific RES targets ofmember states
> Attractive RES subsidy schemesimplemented across Europe
Primary energy consumption (Mt OE)
4,000
4,250
4,500
4,750
5,000
5,250
5,500
5,750
1990
1995
2000
2005
2010
2015
2020
0%
5%
10%
15%
20%
25%
1990
1995
2000
2010
2015
2020
2005
Actual GHG emissions
20% target
20% target
RES share of finalenergy consumption
1,400
1,500
1,600
1,700
1,800
1,900
1990
1995
2000
2005
2010
2015
2020
EU 27EU 2520% target - EU25
EU 27 i t k t d hi i it 2020 i i
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> 2009 emissions stand 17% below the1990 level and therefore very close to
the target of -20% by 2020> Economic crisis accelerated the decline
in EU GHGs emissions
> Return to economic growth maytemporarily level off or reverse thedecline in emissions
> Impact of German nuclear moratoriumis assessed at around 45 mt additionalemissions per year
> Thats 1% of total EU emissions
> CO2 balances for the EU ETS haveturned negative and system is nowslightly short
EU 27 is on track towards achieving its 2020 emissionreduction target (-20%)
Absolute greenhouse gas emissions in the EU 27, 1970 2009, million ton CO2 equivalents.Source: EEA.
Official 2010 GHG inventory Scaled trend Mean estimate (2009)
Mt CO2 equivalents
-20% target
4,000
4,500
5,000
5,500
6,000
6,500
1970
1975
1980
1985
1990
1995
2000
2005
baseline
R bl tl it i f f t i
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Share of RES in the utility sector
%
Share of RES in final energy demand
%
0
5
10
15
20
25
2001 2005 2010 2020
> According to national renewable energyaction plans the targets for 2020 will be
met> To achieve these targets renewable
energy production needs to increaseat an annual growth rate of 5%
> To achieve the sub-target for the utilitysector, growth in the order of 9% per
year is required> This requires close to double the
growth seen between 2005-2010
> According to EU estimates, annualcapital investments need to doubleto 70bn
Renewable energy sources: currently it is far from certainthat EU target and utility sector sub-target will be achieved
20% EU target
+5%p.a.
0
10
20
30
40
2001 2005 2010 2020
+9%p.a.
All t d CO ll 1 i G
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Allocated allowances EU 27 2011
Allocated allowances in United Kingdom 2011
Allocated allowances in Germany 2011
Allocated CO2 allowances1 in Germany,
UK and EU-27 (2011)
Electricity 54%
Other industries 4%
Metals 15%
Cement & lime 8%
Combustion 12%
Refineries 7%
Electricity 52%
Other industries 3%
Metals 11%
Cement & lime 6%
Combustion 20%
Refineries 8%
401 mtCO2
223 mtCO2
Electricity 55%
Other industries 5%
Metals 12%
Cement & lime 11%
Combustion 10%
Refineries 8%
1,993 mtCO2
1 Excluding auctioned certificates and new entrant reserves.
Source: EEA.
EU ETS E i i i G UK d EU 27 (2011)
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Emissions EU 27 2011
Emissions in United Kingdom 2011
Emissions in Germany 2011
EU ETS Emissions in Germany, UK and EU-27 (2011)
Electricity 68%
Metals 8%
Cement & lime 6%
Combustion 10%
Refineries 6%
Electricity 66%
Other industries 2%
Metals 6%
Cement & lime 4%
Combustion 13%
Refineries 8%
450 mtCO2
221 mtCO2
Electricity 60%
Other industries 4%
Metals 8%
Cement & lime 8%
Combustion 12%
Refineries 7%
1,879 mtCO2
Source: EEA.
Other industries 3%
CDM/JI projects give RWE access to cost effective
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Joint Implementation (JI)
Emission reductions through investmentby one industrialised country in a second
industrialised country are credited to theemission account of the investor country
Clean Development Mechanism (CDM)
Emission reductions through investment byan industrialised country in a country without
reduction commitments are credited to theemission account of the investor country
CDM/JI projects give RWE access to cost-effectivereduction of greenhouse gas emissions (I)
Source: UNFCCC; http://cdm.unfccc.int.
Germany/UK E.g. RussiaEmission rights
Investment
Germany/UK Emission rights E.g. China
Investment
CDM/JI projects give RWE access to cost effective
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Expected average annual certificates from registeredCDM projects by host country in September 2012
> By September 2012, a total of
4,547 registered CDM projects isexpected to supply more than 2.2billion certificates by the end of2012
> A substantial portion of thecertificate volumes contracted areaccounted for by Chinese projects
CDM/JI projects give RWE access to cost-effectivereduction of greenhouse gas emissions (II)
China 64.2%India 10.9%
Brazil 3.9%
Republic of Korea 3.1%
Mexico 2.0%
Indonesia 1.3%Vietnam 1.4%Uzbekistan 1.0%
Others 12.2%
Source: UNFCCC; http://cdm.unfccc.int.
RWEs current Kyoto credit portfolio for 2008 2012
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Projects by December 2011
million certificates
RWEs current Kyoto credit portfolio for 2008-2012
1 ERPA = Emission reduction purchase agreement.2 In Operation: Projects that have already issued certificates.3 Latest EU-directive for certificates implies no additional redemption capacity for RWE Power concerning the years 2013 till 2020,
but usage of certificates is still enabled post 2012. RWEs redemption capacity consists of the redemption capacity of RWE Power,RWE npower and Essent.
Contract volume by region
3
0
10
20
30
40
50
60
70
80
90100
~100in
validation
inoperation2
ERPA1
inoperation2
invalidation
ERPA1
RWE's redemptioncapacity
(2008 - 2020)3
Contract volume by technology
HydroN2OHFC23Energy EfficiencyWind
BiogasCMMBiomassMethane avoidanceSolarFugitiveothers
N2O
China
South Korea
Egypt
India
South-East-Asia
East-Europe
UkraineRussia
Least developed countries
South America
Contractvolume
Riskadjustedvolume
The EU Large Combustion Plant Directive (LCPD)
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The EU Large Combustion Plant Directive (LCPD)
Step 1
> Power plants had to choose whether to comply with the LCPD or request a limited life derogation (opt out)
> Power stations which opted out are allowed to run for 20,000 hours, or until the end of 2015, whichever comes sooner
Step 2
Those power stations which comply with the LCPD are governed in one of two ways 1:
> Emission Limit Value (ELV)The power station must adhere to specific limits to the amounts of pollutants produced on a milligram per cubic metre of waste gas basis
> National Emission Reduction Plan (NERP)A company is given an overall allowance (amount of a pollutant that can be emitted per year) of emissions it may produce.The emission allowances issued under NERP are tradable within a member state
Step 3
> In addition to the above, existing oil and coal-fired power plants must reduce nitrogen oxide emissions from 500 mg/Nm3 to 200 mg/Nm3
by January 1, 2016. This will entail fitting selective catalytic reduction (SCR) equipment
1 While most the EU member states, including Germany, chose to implement Emission Limit Values (ELV), a number have opted for National
Emission Reduction Plans (NERPs), while in the UK individual power plants could choose between being regulated on the ELV, or under a NERP.
Since 2008, coal and oil-fired power stations have been governed by the Large Combustion Plant Directive (LCPD). This imposes new limitson the amounts of sulphur dioxide (SO2), nitrogen oxides (NOx) and dust power stations can emit.
Due to the LCPD a shut down of 11 12 GW by the end
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Due to the LCPD a shut-down of 1112 GW by the endof 2015 (or earlier) is expected in the UK marketInstallation Operator Fuel Installed
capacity(MW)
Capacityopted in1
(MW)
Capacityopted out2
(MW)
FGD3 status
Eggborough British Energy Coal 1,960 1,960 - 2 out of 4 units fitted
Drax Drax Power Coal 3,870 3,870 - Fitted
Kingsnorth E.ON UK Coal/Oil 1,940 - 1,940 No FGD
Ratcliffe E.ON UK Coal 1,960 1,960 - FittedIronbridge E.ON UK Coal 940 - 940 No FGD
Grain E.ON UK Oil 1,300 - 1,300 No FGD
Cottam EDF Energy Coal 2,000 2,000 - Fitted
West Burton EDF Energy Coal 1,970 970 - Fitted
Rugeley International Power Coal 1,000 1,000 - Fitted
Didcot A RWE npower Coal/Gas 1,940 - 1,940 No FGD
Aberthaw RWE npower Coal 1,530 1,530 - FittedLittlebrook RWE npower Oil 1,370 - 1,370 No FGD
Fawley RWE npower Oil 1,000 - 1,000 No FGD
Tilbury RWE npower Coal 1,020 - 1,020 No FGD
Ferrybridge Scottish & Southern Energy Coal 1,960 980 980 Fitted
Fiddlers Ferry Scottish & Southern Energy Coal 1,960 1,960 - Fitted
Longannet Scottish Power Coal 2,304 2,304 - 3 out of 4units fitted
Cockenzie Scottish Power Coal 1,152 - 1,152 No FGDUskmouth Scottish & Southern Energy Coal 363 363 0 Fitted
Total 31,539 18,897 11,642
1 Compliant with LCPD emission limits (Drax, Eggboroughand Longannet in NERP).
2 Limitation of operating hours to 20,000 between Jan. 1, 2008 and Dec. 31, 2015. No requirement to fit FGD.
3 FGD: flue gas desulphurisation.
Source: DECC (DUKES).
The German Energy Industry Act: regulating grid access
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The German Energy Industry Act: regulating grid accessand grid fees in the electricity and gas markets
Unbundling of grids from generation, wholesale and retail
(number of grid operators)
Exploration/generation
Regulation of grid access andgrid fees
Retail
Competition
CustomersExchangetrading OTC
CompetitionCompetition
TransportBundesnetz-agentur1
(electricity: 4,gas: 14) Distribution
federal states(electricity and gas:
ca. 1,200)
DistributionBundesnetzagentur1
(electricity and gas:ca. 300)
1 Federal Network Agency.
The German Energy Industry Act: unbundling in the
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Informationunbundling
Accountingunbundling
Functionalunbundling
Legalunbundling
OU3 orISO4/ ITO5
The German Energy Industry Act: unbundling in theGerman energy grids (3rd Energy Package)
TSO1
1 TSO = Transport System Operator, to be certified by the national regulator.2 DSO = Distribution System Operator.3 OU = Ownership Unbundling, transmission system is directly completely unbundled.
4 ISO = Independent System Operator, only if transmission system was part of a vertically integrated company on 3 September 2009.5 ITO = Independent Transmission Operator, only if transmission system was part of a vertically integrated company on 3 September 2009.
DSO
2
>100,000customers
DSO2
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Investments before / since 2006