By Shahzad ParachaBy Shahzad Paracha

Power Generation : Gas & Electricity

Regional & UK Outlook 2010-2020 & Opportunities

Regional Outlook

2

UK Outlook – Investments by Industry

3

UK Distributors & Margins Forecasts

4

Investments in Renewables & Impact on Energy Prices (UK)

5

£200 Bln Industry Investments & £ 100 Bln in Wind (Mostly) from 2010-2020 to meet:

Electricity Generation Capacity Mix - Nuclear & Coal (40%), Gas fired Plants (30%) & Alternative Energy (30%)

Investment Support:

Tax Payers, high Energy Prices (£200 per customer), Stable carbon Price mechanism, Government Subsidies,

incentives & Tax Breaks

Investment in line with:

Efficient & Low cost to Serve Energy Mix for B2B & B2C

For sustainable Gas Supply security & reduced dependency

Part of CERT - 34% by 2020

2009 Successful Pilot in US delivered 6% rise in prices - $150 per household

6 2020 Post Round 3 - Offshore Vs Onshore Wind Capacity Split - 50:50

6000 Turbines in Pipeline @ 2.5 per day

UK Dual Fuel Wholesale Costs & Projected Margins

Dual Fuel Projected Gross Margins 2010 - 2012

0

50

100

150

200

250

2008 2009 2010F 2011F 2012F

Electricity Gas Dual Fuel

Demand Growth:

Driver – Nuclear & Gas fired Plants

2 – 4% Growth - Residential & Industrial Segments

Rise in G.M’s 2010 – 2012: High Gas Prices – Over-suppy to meet demand e.g. LNG, GTL

Electricity Prices - Moderate Rise & Decline in Futures Market i.e.

Cheap hedging costs

Hedging Strategies

Electricity costs under different hedging strategies

Gas costs under different hedging strategies

Suppliers - 12 months Hedge costs to rise potentially but will Cost Less as in Past for 2010-2012

Wholesale Prices & Costs

Wholesale electricity forward prices Vs 18mth hedge

Wholesale gas forward prices Vs 18mth hedge

2010-2012 – Overall Rise in Gross Margins with decline in demand & Futures Markethence CHEAP Wholesale Costs

30% Regional LNG Demand Growth by 2020

EU: 10% & BRIC’s: 50%

Gas Supplier Qatar Will meet 20% of UK Gas demand from 2011

UK - 2nd Largest Gas Markets in EU

1999 – 2009 Average demand growth 6%

Gas Fired Power Generation to drive Gas demand till 2020

UK Gas Supply 2016 Proportion:

Domestic production 20%, Imports 80% (Norway 35%, LNG 35%, Continent 10%)

Current Gas Imports 40%

UK Supply Cover Storage

15 days Vs 100 in France & SC/AC only 4%

Investments In Gas Storage :

From 2010-2020 : 14 bcm (SC/AC - 11%)

• Will lead Supply Cover Storage – 45 days

10

Regional & UK Gas Demand & Storage

AnnualConsumption (bcm)

Storage Capacity (bcm)

Storage capacity/ Annual consumption (%)

UK 99 4 4

Germany 101 9 19

Italy 86 13 15

France 46 11 25