thermal power in sweden, market outlook to 2020, 2011 ...7.4 germany thermal power market, market...

Thermal Power in Germany, Market Outlook to 2020, 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

GDPE5097IDB \ Published JUL 2012

© GlobalData. This report is a licensed product and is not to be photocopied

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Thermal Power in Germany, Market Outlook to 2020, 2012 Update - Capacity, Generation, Regulations, Power Plants, Companies

Reference Code – GDPE5097IDB

Publication Date – JULY 2012

Table Of Contents




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1 Table of Contents

1 Table of Contents 2

1.1 List of Tables 7

1.2 List of Figures 9

2 Executive Summary 10

2.1 Thermal Technology, Moderate Growth in Thermal Power Installed Capacity in Germany 10

2.2 Thermal Power Domination to be Replaced by Renewable Energy in Germany’s Installed

Capacity Mix 11

2.3 The Global Thermal Power Market Scenario - Robust Growth to Continue 12

3 Introduction 13

3.1 Thermal Power Markets: Technology Types 13

3.1.1 Coal Fired Power Plants 13

3.1.2 Gas Fired Power Plants 14

3.1.3 Oil Fired Power Plants 14

3.1.4 Co-Firing Power Plant 14

3.1.5 Supercritical and Ultra-supercritical Generation 15

4 Global Thermal Power Market Scenario: 2000-2020 16

4.1 Global Thermal Power Market, Installed Capacity and Generation, 2000-2020 16

5 Germany Power Market Scenario 18

5.1 Overview 18

5.2 Germany Power Market, Cumulative Installed Capacity and Generation by Fuel Type, MW, 2000-

2020 18

6 Germany Thermal Power Market, 2000-2020 23

6.1 Germany Thermal Power Market, Historical and Forecast Installed Capacity and Power

Generation, 2000-2020 23

7 Germany Thermal Power Market, Market Share of Top Power Equipment

Manufacturing Companies, 2011 27

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7.1 Germany Thermal Power Market, Market Share of Steam Turbine Manufacturing Companies,

2011 27

7.2 Germany Thermal Power Market, Market Share of Gas Turbine Manufacturing Companies, 2011

27

7.3 Germany Thermal Power Market, Market Share of Power Boiler Manufacturing Companies, 2011

27

7.4 Germany Thermal Power Market, Market Share of Heat Recovery Steam Generator (HRSG)

Manufacturing Companies, 2011 27

7.5 Germany Thermal Power Market, Market Share of Turbogenerator Manufacturing Companies,

2011 27

7.6 Germany Thermal Power Market, Market Share of Phase Shifting Transformers Manufacturing

Companies, 2011 27

7.7 Germany Thermal Power Market, Market Share of Turbo Gear Manufacturing Companies, 2011 28

8 Germany Thermal Power Plants 29

8.1 Germany Thermal Power Market, Leading Thermal Power Plants (Active), 2011 29

8.2 Germany Thermal Power Market, Leading Thermal Power Plants (Upcoming), 2011 29

9 Germany Thermal Power Market, Regulatory Scenario 31

9.1 Germany, Thermal Power Market, Regulatory Scenario, Overview 31

9.2 Germany Thermal Power Market, Regulatory Scenario, Major Policies 31

9.3 Germany, Thermal Power Market, Regulatory Scenario, Amendment of the German Act against

Restraints on Competition 32

9.4 Germany, Thermal Power Market, Regulatory Scenario, Amendment of the German Energy Act 32

9.5 Germany, Thermal Power Market, Regulatory Scenario, Large Combustion Plant Directive 33

9.6 Germany, Thermal Power Market, Regulatory Scenario, Amendment of German Greenhouse Gas

Emission Trading Law 33

9.7 Germany, Thermal Power Market, Regulatory Scenario, Grid Expansion Acceleration Act

(NABeG) 34

9.8 Germany, Thermal Power Market, Regulatory Scenario, Target Grid 2050 34

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9.9 Germany, Thermal Power Market, Regulatory Scenario, Renewable Energy Policies 34

9.10 Germany, Thermal Power Market, Regulatory Scenario, Nuclear Energy Policies 35

9.10.1 Legislation to Extend the Life of Nuclear Power Plants (2010) 35

9.10.2 New Nuclear Power Plant Developments in 2011 35

9.11 Germany, Thermal Power Market, Regulatory Scenario, Initiatives towards Reducing

Greenhouse and Carbon Dioxide Emissions 36

10 Germany Thermal Power Market, Deals Scenario 37

10.1 Germany Thermal Power Market Deals Volume versus Value Analysis, 2004-2012 37

10.2 Germany Thermal Power Market, Deals by Type, 2011 - 2012 38

10.3 Power Market, Germany, Major Deals, 2009-2012 40

10.3.1 Debt Offerings 40

10.3.2 Asset Finance 49

10.3.3 Acquisitions 56

11 E.ON AG, Company Snapshot 59

11.1 E.ON AG, Key Facts 59

11.2 E.ON AG, Company Overview 59

11.3 E.ON AG, Business Overview 60

11.3.1 Generation 61

11.3.2 Germany 61

11.3.3 Optimization & Trading 61

11.3.4 Other EU Countries 62

11.3.5 Renewables 62

11.3.6 Russia 63

11.4 E.ON AG, Major Products and Services 63

11.5 E.ON AG, SWOT Analysis 64

11.5.1 Overview 64

11.5.2 E.ON AG, Strengths 65

11.5.3 E.ON AG, Weaknesses 66

11.5.4 E.ON AG, Opportunities 67

11.5.5 E.ON AG, Threats 68

11.6 Locations and Subsidiaries 69

11.6.1 Head Office 69

11.6.2 Other Locations & Subsidiaries 70

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12 Vattenfall AB, Company Snapshot 72

12.1 Vattenfall AB, Key Facts 72

12.2 Vattenfall AB, Company Overview 72

12.3 Vattenfall AB, Business Overview 72

12.3.1 Distribution and Sales 73

12.3.2 Generation 74

12.3.3 Renewables 74

12.4 Vattenfall AB, Major Products and Services 75

12.5 Vattenfall AB, SWOT Analysis 75

12.5.1 Overview 75

12.5.2 Vattenfall AB, Strengths 76

12.5.3 Vattenfall AB, Weaknesses 77

12.5.4 Vattenfall AB, Opportunities 78

12.5.5 Vattenfall AB, Threats 79

12.6 Vattenfall AB, Locations and Subsidiaries 81


12.6.2 Other Locations & Subsidiaries 81

13 RWE Power AG, Company Snapshot 84

13.1 RWE Power AG, Key Facts 84

13.2 RWE Power AG, Company Overview 84

13.3 RWE Power AG, Business Overview 84

13.4 RWE Power AG, Major Products and Services 85

13.5 RWE Power AG, SWOT Analysis 86

13.5.1 Overview 86

13.5.2 RWE Power AG, Strengths 86

13.5.3 RWE Power AG, Weaknesses 87

13.5.4 RWE Power AG, Opportunities 88

13.5.5 RWE Power AG, Threats 88

13.6 RWE Power AG, Locations and Subsidiaries 89


13.7 RWE Power AG, Other Locations & Subsidiaries 89

14 Appendix 91

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14.1 Abbreviations 91

14.2 Market Definitions 92

14.2.1 Power 92

14.2.2 Installed Capacity 92

14.2.3 Electricity Generation 92

14.2.4 Electricity Consumption 92

14.2.5 Thermal Power Plant 92

14.2.6 Hydropower Plant 92

14.2.7 Nuclear Power 92

14.2.8 Renewable Energy Resources 92

14.3 Coverage 92

14.4 GlobalData’s Methodology 92

14.4.1 Secondary research and analysis 93

14.4.2 Primary Research and Analysis 93

14.5 Disclaimer 93

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1.1 List of Tables

Table 1: Thermal Power Market, Global, Thermal Installed Capacity (MW) and Thermal Power Generation (GWh), 2000-2020 17

Table 2: Power Market, Germany, Cumulative Installed Capacity by Fuel Type, MW, 2000-2020 20

Table 3: Power Market, Germany, Annual Power Generation by Fuel Type, GWh, 2000-2020 22

Table 4: Thermal Power Market, Germany, Cumulative Thermal Installed Capacity, MW, 2000-2020 24

Table 5: Thermal Power Market, Germany, Cumulative Thermal Power Generation, GWh,2000-2020 26

Table 6: Thermal Power Market, Germany, Leading Active Thermal Power Projects (MW) 29

Table 7: Thermal Power Market, Kuwait, Leading Upcoming Thermal Power Projects, 2011 30

Table 8: Thermal Power Market, Germany, Financing Trends, Deal Value ($m) and Volume (Number), 2004-2012 38

Table 9: Thermal Power Market, Germany, Deals by Type (%), 2011-2012 39

Table 10: Siemens Announces Private Placement Of 1.05% Bonds For $1.5 Billion 40

Table 11: Siemens Completes Private Placement Of 1.65% Bonds For $1.5 Billion 41

Table 12: RWE Completes Public Offering Of 4.75% Bonds Due 2034 for $918.5 Million 42

Table 13: RWE Prices Public Offering Of 7% Bonds Due 2072 for $500 Million 43

Table 14: RWE Completes Debt Offering of 4.625 % Subordinated Fixed to Floating Rate Notes for $2,219m 44

Table 15: RWE Completes Public Offering of $2,087.37m Euro Benchmark Bonds 45

Table 16: E.ON Completes Private Placement for $2036.79 Million 46

Table 17: EnBW Energie Baden Issues Six and Thirty Year Euro Bonds 47

Table 18: RWE Completes 6.12% Bond Offering For $1.6 Billion 48

Table 19: Gemeinschaftskraftwerk Announces Project Financing of $486 Million for Bremen Gas Fired Power Plant in Germany 49

Table 20: Raetia Energie & SWS Invests $4,180 Million for Coal-Fired Power Plant 51

Table 21: SudWestStrom And Ratia Energie To Invest $3,968 Million In Brunsbuttel Coal Fired Power Plant, Germany 52

Table 22: Siemens and Advance Energy to Invest $1,947 Million for Wustermark and Szeged Gas Fired Plants in Germany and Hungary 53

Table 23: E.ON Invests $1,776 Million in Datteln Power Plant 54

Table 24: E.ON Invests $$1,570 Million for Staudinger Power Station 55

Table 25: EWE Acquires 51% Stake in Stadtwerke Bremen 56

Table 26: Evonik Industries and RBV Verwaltungs Sell 51% Stake in Evonik Steag to KSBG Kommunale for $860.8 Million 57

Table 27: E.ON AG, Key Facts 59

Table 28: E.ON AG, Major Products and Services 64

Table 29: E.ON AG, SWOT Analysis 65

Table 30: E.ON AG, Subsidiaries 70

Table 31: Vattenfall AB, Key Facts 72

Table 32: Vattenfall AB, Major Products and Services 75

Table 33: Vattenfall AB, SWOT Analysis 76

Table 34: Vattenfall AB, Other Locations 81

Table 35: Vattenfall AB, Subsidiaries 82

Table 36: RWE Power AG, Key Facts 84

Table 37: RWE Power AG, Major Products and Services 85

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Table 38: RWE Power AG, SWOT Analysis 86

Table 39: RWE Power AG, Other Locations 89

Table 40: RWE Power AG, Subsidiaries 90

Table 41: Abbreviations 91

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1.2 List of Figures

Figure 1: Thermal Power Market, Germany, Cumulative Thermal Installed Capacity, MW, 2000, 2011, 2020 10

Figure 2: Power Market, Germany, Cumulative Installed Capacity by Fuel Type, GWh, 2000, 2011, 2020 11

Figure 3: Thermal Power Market, Global, Thermal Power Generation, GWh, 2000, 2011, 2020 12

Figure 4: How a Thermal Power Plant Works 13

Figure 5: Thermal Power Market, Global, Thermal Installed Capacity (MW) and Thermal Power Generation (GWh), 2000-2020 16

Figure 6: Power Market, Germany, Cumulative Installed Capacity by Fuel Type, MW, 2000-2020 19

Figure 7: Power Market, Germany, Annual Power Generation by Fuel Type, GWh, 2000-2020 21

Figure 8: Thermal Power Market, Germany, Cumulative Thermal Installed Capacity, MW, 2000-2020 23

Figure 9: Thermal Power Market, Germany, Cumulative Thermal Power Generation, GWh,2000-2020 25

Figure 10: Thermal Power Market, Germany, Financing Trends, Deal Value ($m) and Volume (Number), 2004-2012 37

Figure 11: Thermal Power Market, Germany, Deals by Type (%), 2011-2012 39

Thermal Power in Germany, Market Outlook to 2020, 2012 Update




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2 Executive Summary

2.1 Thermal Technology, Moderate Growth in Thermal Power Installed Capacity in Germany

The thermal cumulative installed capacity of Germany increased marginally over the period 2000-

2011 at a Compound Annual Growth Rate (CAGR) of 0.2% from 83,900 Megawatt (MW) in 2000 to

85,333 MW in 2011. Historically, a decline in thermal capacities was witnessed due to the

decommissioning of various aged power plants with high emission levels between 2004-2007 and

later . Over the period 2012-2020, thermal installed capacity is expected to see a moderate growth

at a CAGR of 1.6% from 88,289 MW to 100,083 MW. Thermal capacity accounts for the majority

share of power generation in Germany.

Figure 1: Thermal Power Market, Germany, Cumulative Thermal Installed Capacity, MW,

2000, 2011, 2020

0

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2000 2011 2020

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Source: GlobalData, Power eTrack, Capacity and Generation Database (July 9, 2012)

Note: Figures from 2011 onwards are estimates





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2.2 Thermal Power Domination to be Replaced by Renewable Energy in Germany’s Installed Capacity Mix

During the period 2000 to 2011, the total installed capacity in Germany increased from 120,642 MW

to 169, 870 MW at a CAGR of 3.2%. Historically, the total installed capacity mix was dominated by

thermal fuel sources, which accounted for 50.2% or 85,333 MW of the country‟s cumulative installed

capacity in 2011. The country‟s thermal capacity is dominated by coal-fired power plants owing to

the country‟s good coal reserves. The government of Germany is planning to build additional thermal

power plants during the forecast period 2012-2020, and majority of these projects will be coal-fired

plants. There is a high stress on clean coal projects in order to reduce emissions from coal-fired

thermal power plants. However, the country is augmenting its installed capacity through the use of

renewable energy sources: namely wind, solar and other renewable to free its oil and gas reserves

for export to other countries,while reducing the green house gas emissions. Due to an increased

use of renewable energy, during the forecasted period, the domination of thermal resources in the

installed capacity mix of the country is expected to be replaced by renewable energy based

capacity. The share of renewable energy based capacity is expected to go up from 36.2% to 47.3%

from 2012-2020.

Figure 2: Power Market, Germany, Cumulative Installed Capacity by Fuel Type, GWh,

2000, 2011, 2020

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Thermal Hydro Nuclear Renewables







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2.3 The Global Thermal Power Market Scenario - Robust Growth to Continue

Economic and industrial growth all over the world has led to a sharp rise in energy demand globally

The rise in energy demand is likely to continue in the near future. To meet this demand, thermal

power has become a viable option for power generation.

Over the period 2000-2011, the global thermal power generation grew from 9,538,749 GWh in 2000

to 14,724,889 GWh by 2011 at a CAGR of 4%. It is further expected to grow at a CAGR of 3.2%

from 2012 - 2020.

Figure 3: Thermal Power Market, Global, Thermal Power Generation, GWh, 2000, 2011,

2020

0

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2000 2011 2020

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Source: GlobalData, Power eTrack, Capacity and Generation Database (May 30, 2012)






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3 Introduction

3.1 Thermal Power Markets: Technology Types

In a fossil fuel power plant, the chemical energy stored in fossil fuels such as coal, fuel oil, natural

gas or oil shale is converted into electrical energy for continuous use and distribution across a wide

geographic area. Each fossil fuel power plant is a highly complex, custom-designed system. The

following figure illustrates how the conversion from coal to electricity takes place.

Figure 4: How a Thermal Power Plant Works

Source: Tennessee Valley Authority

The first conversion of energy takes place in the boiler. Coal is burnt in the boiler furnace to produce

heat. The heat from the coal combustion boils water in the boiler to produce steam, which pushes

the turbine blades to rotate the turbine before being condensed and pumped back into the boiler to

repeat the cycle. The rotation of the turbine rotates the generator rotor to produce electricity.

3.1.1 Coal Fired Power Plants

Chunks of coal are crushed and heated in a furnace to produce steam from water. Though coal is

the cheapest fuel available, it causes the maximum amount of pollution.





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3.1.2 Gas Fired Power Plants

Natural gas, because it is a cleaner fuel to burn, is being widely used to produce power. The recent

rise in environmental concerns has led to the popularity of natural gas as a fuel for power. Moreover,

natural gas-fired power plants are also cheaper and easier to build.

3.1.3 Oil Fired Power Plants

Oil is used primarily for transportation and in homes, but a small proportion of oil is also used for

producing electricity.

Three technologies are used to convert oil into electricity:

3.1.3.1 Conventional steam

Oil is burned to heat water, which in turn produces steam.

3.1.3.2 Combustion turbine

Oil is burned under pressure to produce hot exhaust gases which spin a turbine to generate

electricity.

3.1.3.3 Combined-Cycle Technology

Oil is first heated in a turbine, using the heated exhaust gases to generate electricity. After these

exhaust gases are recovered, they heat water in a boiler, creating steam to drive a second turbine.

3.1.4 Co-Firing Power Plant

Co-firing refers to burning two or more fuels together to generate electricity. Generally coal is

combined with biomass, wood and agricultural waste to reduce the amount of greenhouse gases

released. Co-firing can take place in existing coal plants with little or no modifications required.

3.1.4.1 Direct Co-firing

Direct co-firing is the simplest, cheapest and most common method, in which biomass fuel and coal

are burned together in the same furnace.

3.1.4.2 Indirect Co-firing

In indirect co-firing, a gassifier is used to convert solid biomass into a clean gas fuel. This gas fuel is

further cleansed of impurities and burned in the same furnace as the coal. With indirect co-firing, a

wider range of biomass can be used as fuel to produce electricity.

3.1.4.3 Completely Separate Biomass Boiler

It is possible to increase the steam pressure of the coal power plants by using the thermal energy

produced by a separate biomass-fired boiler. Here, coal and biomass are fed into separate boilers

and the steam generated is jointly fed to the common turbine.





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3.1.5 Supercritical and Ultra-supercritical Generation

Conventional power plants boil water to produce sub-critical steam while supercritical power

generation uses supercritical steam. At supercritical pressures, water is heated directly to produce

steam, skipping the boiling point temperature. Due to the improved thermodynamics of expanding at

higher temperatures and pressures through steam turbines, power generation becomes more

efficient, using less coal.

Ultra-supercritical steam generation is currently the most advanced and efficient way of producing

electricity by coal. The unit operates at sub-critical pressure and at advance steam temperatures of

1,100 degrees Fahrenheit, thus increasing the efficiency of the plant.

Fossil fuels like natural gas, coal, liquid fuels and other petroleum forms are expected to continue

supplying the majority of energy used worldwide. Presently, fossil fuels provide for the majority of the

world‟s energy demand and this percentage has remained more or less constant in the last ten

years. Among the fossil fuels, dependence on coal for energy production is expected to increase

from 2000 to 2020, followed by natural gas.





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4 Global Thermal Power Market Scenario: 2000-2020

4.1 Global Thermal Power Market, Installed Capacity and Generation, 2000-2020

A majority of thermal power plants are fed by coal as it is very abundant, and is more economical

than oil or natural gas. However, many countries are switching over to Combined Cycle Gas

Turbine (CCGT) technology, which uses natural gas as fuel, due to concerns regarding

environmental pollution.

Global thermal power installed capacity grew from 2,292,149 MW in 2000 to 3,577,712 MW in

2011 at a CAGR of 4.1%. Global thermal power generation grew from 9,538,749 GWh in 2000 to

14,724,889 GWh in 2011 at a CAGR of 4%. During the forecast period, capacity is expected to

grow from 3,746,709 MW in 2012 to 4,691,657 MW in 2020 at a CAGR of 2.9%. Similarly, global

power generation is expected to grow from 15,495,599 GWh in 2012 to 19,984,059 GWh in 2020

at a CAGR of 3.2%.

Figure 5: Thermal Power Market, Global, Thermal Installed Capacity (MW) and Thermal Power

Generation (GWh), 2000-2020

0

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Table 1: Thermal Power Market, Global, Thermal Installed Capacity (MW) and Thermal Power

Generation (GWh), 2000-2020

Year Thermal Installed Capacity (MW) Thermal Power Generation (GWh)

2000 2,292,149 9,538,749

2001 2,373,704 9,816,178

2002 2,478,601 10,269,424

2003 2,589,039 10,813,892

2004 2,686,631 11,261,536

2005 2,787,844 11,803,625

2006 2,929,288 12,355,294

2007 3,051,595 13,149,767

2008 3,154,113 13,275,872

2009 3,270,070 13,086,372

2010 3,419,965 13,931,168

2011 3,577,712 14,724,889

2012 3,746,709 15,495,599

2013 3,911,877 16,304,407

2014 4,067,409 17,092,925

2015 4,235,663 17,916,016

2016 4,334,155 18,400,632

2017 4,417,265 18,776,803

2018 4,504,216 19,174,470

2019 4,595,267 19,579,865

2020 4,691,657 19,984,059

CAGR 2000-2011 (%) 4.1 4

CAGR 2012-2020 (%) 2.9 3.2

CAGR 2000-2020 (%) 3.6 3.8



In recent years, rising power demand and significant economic development across the world has

led to increased thermal power generation. However, the fall in electricity demand due to the

economic recession resulted in sharp fall in the growth rate of electricity consumption in 2008 and

2009. The year 2009 recorded a decline in terms of power generation. However, thermal power

generation picked up in 2010 and is expected to continue increasing from 2011 onwards with the

increase in demand and the construction of various new power plants throughout the world.





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5 Germany Power Market Scenario

5.1 Overview

Germany is the fourth-largest economy in the world (in terms of GDP, 2010), and the largest

economy in Europe. In 2010, the GDP of Germany stood at $3.6 trillion according to 2011

estimates by World Bank. The country ranked sixth in the world in terms of installed power

generation capacity in 2011, behind the US, China, Japan, Russia and India. Thermal power

generation dominates the power generation market, with thermal power estimated to account for

around half of the cumulative installed generation capacity (49.6%) in 2011, followed by wind and

solar with respective shares of 16.9% and 14.4%. Coal-fired power plants dominated Germany‟s

power generation market in 2011, with an estimated share of 31.6% of the total installed capacity

The German electricity market is the largest power market in Europe in terms of annual

consumption. Though Germany has several hundred municipal energy utilities, the market is

dominated by four major power utilities: RWE, E.ON, Vattenfall and EnBW. In 2011, the total

electricity consumption in Germany was estimated to be 529.6 TWh, and consumption grew at a

CAGR of 0.5% for 2000–2011. The industrial sector has been accounting for the bulk of the power

demand in the country, followed by households and the service sector. The electricity consumption

in the transport sector is very small. The country has been a net exporter of electricity and traded

electricity with Sweden, France, the Netherlands, Luxembourg, Switzerland, Denmark, Austria,

Czech Republic and Poland in 2011. In 2011, Germany imported and exported 48.7 TWh and 51.5

TWh of electricity, respectively.

5.2 Germany Power Market, Cumulative Installed Capacity and Generation by Fuel Type, MW, 2000-2020

Over the period 2000-2011, the total installed capacity in Germany grew at a CAGR of 3.2% from

120,642 MW in 2000 to 169,870 MW in 2011. Over the forecasted period of 2012-2020, the total

installed capacity is expected to grow at a CAGR of 3.1%, from 169,870 MW in 2012 to 233,521

MW by 2020. There are currently 9 operable nuclear reactors in Germany and in the past it was

unsure about its nuclear phase out plan. However, the recent Japanese nuclear disaster resulted

in the country deciding to phase out nuclear energy from its energy mix altogether. The plan was

proposed by the Green Party which joined the coalition government in 1998. In 2011, the German

government passed a legislation of closing all nuclear power plants by 2022.

Germany has commitments to meet the Kyoto targets and reduce the greenhouse gas emission

while meeting the energy requirements of the country. Some of the factors like reducing the

greenhouse gas emissions and to decrease its dependency on fuel imports are acting as key

drivers for the country to switch from nuclear energy to renewable energy sources. Challenges

being faced by the country in the field of nuclear energy include government opposition for nuclear

expansion plans, planned nuclear phase out of nuclear energy and safety of nuclear facilities.

However, the nuclear phase out plan will favor the decommissioning and renewable power

generation industries. Over the period 2012-2020, the nuclear power installed capacity is expected

to decline at a CAGR of 4.9%, reaching 8,052 MW by 2020.

The total electricity generation in Germany increased from 544,344 GWh in 2000 to 581,021 GWh

by 2011 at a CAGR of 0.6%. In 2009, there was a drop in power generation due to the economic





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downturn, and only 566,325 GWh of electricity was generated. Thermal generation accounts for a

share of 61.3% of the total power generation. The remaining portion is composed mainly of

nuclear power and renewable resources, with a limited amount from hydropower. Efforts are

underway to phase out the use of nuclear power, and increase reliance on renewable energy

sources, and Germany has an ambitious target of increasing the renewable share of gross

electricity consumption to 30% by 2020. Power generation from biomass is still relatively

moderate, but is expected to increase rapidly in the future as a new Biomass Act demands

renewed attention for this renewable energy source. The small hydro sector is well established

but, as in so many other countries, growth is expected to be subdued as a result of environmental

sensitivities.The electricity generation is predicted to increase from 596,874 GWh in 2012 to

725,833 MW by 2020, at a CAGR of 2.5%.

Figure 6: Power Market, Germany, Cumulative Installed Capacity by Fuel Type, MW, 2000-2020

0

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Table 2: Power Market, Germany, Cumulative Installed Capacity by Fuel Type, MW, 2000-2020

Year Thermal Capacity Hydro Capacity Nuclear Capacity Renewable Capacity Total Capacity

2000 83,900 8,192 21,177 7,373 120,642

2001 83,200 8,100 21,283 10,230 122,813

2002 77,300 8,347 21,283 13,683 120,613

2003 77,300 8,132 21,283 16,978 123,693

2004 79,400 8,017 20,643 19,899 127,959

2005 77,500 8,313 20,679 23,527 130,019

2006 77,200 8,937 20,339 27,252 133,728

2007 78,500 10,721 19,263 30,879 139,363

2008 80,200 10,632 18,353 35,348 144,533

2009 79,700 10,817 19,709 41,803 152,029

2010 82,600 11,061 20,339 51,281 165,281

2011 85,333 11,067 12,003 61,467 169,870

2012 88,289 11,816 12,003 70,102 182,210

2013 91,780 11,966 12,003 75,627 191,377

2014 92,958 12,116 12,003 80,713 197,790

2015 94,138 12,266 10,728 86,020 203,152

2016 95,321 12,416 10,728 90,552 209,017

2017 96,507 12,566 9,444 94,940 213,458

2018 97,696 12,776 9,444 100,075 219,991

2019 98,888 13,468 8,052 105,569 225,976

2020 100,083 14,159 8,052 111,227 233,521

CAGR 2000-2011 (%) 0.2 2.8 -5.0 21.3 3.2

CAGR 2012-2020 (%) 1.6 2.3 -4.9 5.9 3.1

CAGR 2000-2020 (%) 0.9 2.8 -4.7 14.5 3.4







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Figure 7: Power Market, Germany, Annual Power Generation by Fuel Type, GWh, 2000-2020

0

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2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Po

we

r G

en

era

tio

n (

GW

h)

Thermal Hydro Nuclear Other Renewable







Page(22)

Table 3: Power Market, Germany, Annual Power Generation by Fuel Type, GWh, 2000-2020

Year Thermal Generation Hydro Generation Nuclear Generation Renewable Generation Total Generation

2000 346,500 23,054 160,660 14,130 544,344

2001 354,800 21,734 162,340 18,982 557,856

2002 357,600 22,083 156,300 24,360 560,343

2003 376,000 15,170 156,320 31,261 578,751

2004 370,500 17,397 158,380 37,052 583,329

2005 370,800 17,198 154,610 44,603 587,211

2006 372,900 18,401 158,700 52,515 602,516

2007 382,600 19,609 133,200 61,404 596,813

2008 371,100 18,519 140,880 69,386 599,885

2009 341,900 17,479 127,710 79,236 566,325

2010 358,100 19,172 133,010 91,609 601,891

2011 356,184 17,010 102,311 105,516 581,021

2012 369,411 22,230 89,011 116,222 596,874

2013 384,520 22,950 88,840 125,691 622,001

2014 390,181 23,670 88,614 137,360 639,826

2015 395,897 24,390 79,236 151,935 651,458

2016 401,667 25,110 79,272 161,702 667,751

2017 407,491 25,830 69,562 172,425 675,308

2018 413,367 26,528 69,475 184,901 694,270

2019 419,297 27,758 58,935 198,144 704,133

2020 425,278 28,989 59,206 212,360 725,833

CAGR 2000-2011 (%) 0.3 -2.7 -4.0 20.1 0.6

CAGR 2012-2020 (%) 1.8 3.4 -5.0 7.8 2.5

CAGR 2000-2020 (%) 1.0 1.2 -4.9 14.5 1.4







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6 Germany Thermal Power Market, 2000-2020

6.1 Germany Thermal Power Market, Historical and Forecast Installed Capacity and Power Generation, 2000-2020

Figure 8: Thermal Power Market, Germany, Cumulative Thermal Installed Capacity, MW, 2000-2020







Page(24)

Table 4: Thermal Power Market, Germany, Cumulative Thermal Installed Capacity, MW, 2000-2020

Year Coal Capacity Gas Capacity Oil Capacity







Page(25)

Figure 9: Thermal Power Market, Germany, Cumulative Thermal Power Generation, GWh,2000-2020

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Th

erm

al P

ow

er

Ge

ne

ratio

n (

GW

h)

Coal Gas Oil


Note: Figures from 2011 onwards are estimates)





Page(26)

Table 5: Thermal Power Market, Germany, Cumulative Thermal Power Generation, GWh,2000-2020

Year Coal Generation Gas Generation Oil Generation

2000 291,400 49,200 5,900

2001 293,200 55,500 6,100

2002 292,600 56,300 8,700

2003 304,700 61,400 9,900

2004 298,800 61,400 10,300

2005 288,200 71,000 11,600

2006 289,000 73,400 10,500

2007 297,100 75,900 9,600

2008 275,200 86,700 9,200

2009 253,500 78,800 9,600

2010 262,900 86,800 8,400

2011 264,996 83,232 7,956

2012 272,858 89,059 7,494

2013 280,762 96,708 7,050

2014 283,025 100,535 6,622

2015 285,296 104,391 6,211

2016 287,576 108,277 5,815

2017 289,864 112,192 5,435

2018 292,160 116,138 5,069

2019 294,466 120,113 4,718

2020 296,779 124,118 4,381

CAGR 2000-2011 (%) -0.9 4.9 2.8

CAGR 2012-2020 (%) 1.1 4.2 -6.5

CAGR 2000-2020 (%) 0.1 4.7 -1.5







Page(27)

7 Germany Thermal Power Market, Market Share of Top Power Equipment Manufacturing Companies, 2011

7.1 Germany Thermal Power Market, Market Share of Steam Turbine Manufacturing Companies, 2011

In 2011, General Electric Company was the only company that supplied steam turbines in

Germany with a 100% market share. However, in 2010, Hitachi Power Europe GmbH was the key

supplier of steam turbines which contributed 96% of the overall installations in the country.

Siemens AG was the second largest supplier of steam turbines with a share of 3%, followed by

other small companies which had a market share of 1% in 2010.

7.2 Germany Thermal Power Market, Market Share of Gas Turbine Manufacturing Companies, 2011

In 2011, General Electric Company was the leading supplier of gas turbines in Germany with a

market share of 92%. The only other player in Germany‟s gas turbine market was Siemens AG

with a market share of 8%.

7.3 Germany Thermal Power Market, Market Share of Power Boiler Manufacturing Companies, 2011

In 2011, there was no activity in the power boiler market in Germany. However, in 2010 Alstom SA

was the only company that supplied power boilers in Germany and had a 100% market share.

7.4 Germany Thermal Power Market, Market Share of Heat Recovery Steam Generator (HRSG) Manufacturing Companies, 2011

In 2011, smaller players dominated the market of HRSG systems in Germany with a 100% market

share. However, in 2010, AE&E Lentjes GmbH had been the market leader with a 100% market

share in the HRSG market in Germany.

7.5 Germany Thermal Power Market, Market Share of Turbogenerator Manufacturing Companies, 2011

In 2011, there was no activity in the turbogenerator market in Germany. However, in 2010

Siemens AG was the leading supplier of turbogenerators in the country with a market share of

47%. Foster Wheeler AG was the second largest supplier of turbogenerators with a share of 44%,

followed by E.ON AG which had a market share of 9% in 2010.

7.6 Germany Thermal Power Market, Market Share of Phase Shifting Transformers Manufacturing Companies, 2011

In 2011, there was no activity in the phase shifting transformers market in Germany. However, in

2010 Siemens AG dominated the phase shifting transformers market in the country with a market

share of 50%. ABB Ltd. was the only other leading supplier of phase shifting transformers in the

country with a market share of 25%, while other smaller players held the remaining 25% of the

share in 2010.





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7.7 Germany Thermal Power Market, Market Share of Turbo Gear Manufacturing Companies, 2011

In 2011, there was no activity in the turbo gears market in Germany. However, in 2010 A. Friedr.

FLENDER AG was the leading supplier of turbo gear systems in the country with a market share

of 38%. Renk AG was the second largest supplier of turbo gears in the country with a market

share of 22%, followed by Voith Turbo BHS Getriebe GmbH, Lufkin Industries and Allen Gears

with a market share of 20%, 13% and 7%, respectively in 2010.





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8 Germany Thermal Power Plants

8.1 Germany Thermal Power Market, Leading Thermal Power Plants (Active), 2011

The leading 10 active thermal power plants in Germany made up a total installed capacity of

23,385 MW in 2011. This was 13.6% of the cumulative installed total capacity of Germany in 2011.

All the top ten power plants are coal fired power plants. The top most active thermal power plant in

Germany is Niederaussem Coal Fired Power Plant and has a total capacity of 3,800 MW.

Table 6: Thermal Power Market, Germany, Leading Active Thermal Power Projects (MW)

Plant Name Plant Type State or Province Capacity

(MW) Year

Online Owner Name

Niederaussem Coal Fired Power Plant Steam Turbine

North Rhine-Westphalia 3,800 NA RWE Power AG

Janschwalde Power Station Steam Turbine Brandenburg 3,000 1989 Vattenfall Europe AG

Niederaussem Power Plant Steam Turbine

North Rhine-Westphalia 2,852 1963 RWE Power AG

Frimmersdorf Power Plant Steam Turbine North Rhine-

Westphalia 2,100 1959 RWE Power AG

Neurath Power Plant I Steam Turbine North Rhine-


Weisweiler Power Plant Steam Turbine North Rhine-


Scholven Power Station Steam Turbine Nordrhein-Westfalen 2,056 1968 E.ON Kraftwerke GmbH

Boxberg Power Station Steam Turbine Saxony 1,900 1978 Vattenfall Europe AG

Lippendorf Power Station Steam Turbine Bohlen 1,782 1999 EnBW Energie Baden-Wurttemberg AG

and Vattenfall Europe AG

GKM Steam Turbine Power Plant

Steam Turbine with Cogen

Baden-Wurttemberg 1,695 1954

EnBW Kraftwerke AG, MVV RHE Gmbh and RWE Power AG

Source: GlobalData, Power eTrack, Power Plants Database (July 6, 2012)

NA- Not Available

8.2 Germany Thermal Power Market, Leading Thermal Power Plants (Upcoming), 2011

The majority of the upcoming thermal power plants will use coal as their primary fuel to generate

electricity. The Neurath (BOA 2 & 3) Power Plant II project will be the largest power project in

Germany with an installed capacity of 2,200 MW and is expected to come online in 2012. The

other majority of the leading power plant projects will use combined cycle technology and steam

turbine with cogen to generate power in order to maximize efficiency and minimize power plant

emissions due to the country‟s commitment to reduce its carbon footprint.





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Table 7: Thermal Power Market, Kuwait, Leading Upcoming Thermal Power Projects, 2011

Plant Name Plant Type State or

Province Status Fuel

Category Capacity

(MW) Year

Online Owner Name

Neurath (BOA 2 & 3) Power Plant II Steam Turbine

North Rhine-Westphalia

Under Construction Coal 2,200 2012 RWE Power AG

Brunsbuttel (Sud West Strom) Power Plant Steam Turbine

Schleswig-Holstein Planned Coal 1,820 2017

SudWestStrom Kraftwerk GmbH &

Co. KG and Repower AG

Moorburg Hard Coal Fired Power Plant

Steam Turbine with Cogen Hamburg

Under Construction Coal 1,640 2014 Vattenfall Europe AG

Westfalen D-E Power Plant Steam Turbine

North Rhine-Westphalia

Under Construction Coal 1,600 2013 RWE Power AG

Lubmin Combined Cycle Power Plant

Combined Cycle Gas Turbine

(CCGT) Mecklenburg-Vorpommern Planned Gas 1,200 NA

E.On AG and Gazprom Germania

GmbH

Mecklar-Marbach Power Plant Steam Turbine

Baden-Wurttemberg Planned Gas 1,100 2014 DONG Energy A/S

Staudinger Power Station Block 6 Steam Turbine Hesse Planned Coal 1,100 2017

E.ON Kraftwerke GmbH

GKM Power Plant Unit 9 Steam Turbine

with Cogen Baden-

Wurttemberg Under

Construction Coal 911 2015

RWE Power AG, EnBW Kraftwerke AG and MVV Energie AG

Haiming Combined Cycle Power Plant

Combined Cycle Gas Turbine

(CCGT) Land Bayern Planned Gas 850 2014 OMV Gas & Power

GmbH

Ingelheimer Aue Power Station

Steam Turbine with Cogen

Rhineland-Palatinate

Under Construction Coal 820 NA

Kraftwerke Mainz-Wiesbaden AG

Source: Global Data, Power eTrack, Power Plant Database (July 6, 2012)

NA- Not Available





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9 Germany Thermal Power Market, Regulatory Scenario

9.1 Germany, Thermal Power Market, Regulatory Scenario, Overview

In Germany, the energy policy is coordinated by the Federal Ministry of Economics and

Technology. Prior to 2006, Germany‟s electricity market was one of the few European Union

countries that had no independent regulator. However, since 2006, the responsibility for

implementing the legal framework has been with the German energy regulatory authority, the

Federal Network Agency. The Federal Network Agency is responsible for electricity, gas,

telecommunications, post and the railway markets. The agency has many ruling chambers.

Electricity division comes under ruling chamber eight. In the electricity and gas market, the agency

is responsible for ensuring non-discriminatory third-party access to networks and regulating the

fees. The agency is responsible for securing efficient and transparent energy markets, regulating

and controlling the tariff prices and the terms of supply to the power companies. The German

energy polices are designed to increase the energy security, efficiency and environmental

compatibility. The government has main focus on the growth of renewable energy sources in

Germany.

9.2 Germany Thermal Power Market, Regulatory Scenario, Major Policies

Germany has a number of regulations and incentives to support clean generation in the country.

The country has already closed a number of old reactors, after the Japan nuclear crisis in 2011,

and aim to shut down various other nuclear power plants prior to 2023. Therefore, there is high

focus on increasing renewable installed capacity in Germany. The government has granted

incentives in the forms of tax relief, capital cost grants and subsidies for renewable power. Such

allowances are expected to help offset the increased amounts of capital required to install more

expensive plants, such as those associated with biomass installations. They also provide

incentives, subsidies and national funding for the development of Carbon Capture and Storage

(CCS) technologies. This would help reduce the carbon emissions from thermal power plants,

which currently act as the dominant source of power generation in the country. The Renewable

Energy Sources Act (EEG) guarantees payment for renewable electricity fed into the public grid,

and this is the most successful instrument promoting renewable energy in the country. With these

measures, the government aims to have a broader mix of fuels for electricity generation by 2020.

The country pays feed-in-tariffs for biomass, geothermal, wind and solar energy powered power

plants. The tariffs are provided for 20 years in the case of biomass, geothermal and solar

technologies, and for wind technology the tariffs are provided for 12 years.

Germany has very stringent emission regulations, and follows Technical Instructions on Air Quality

Control (TA Luft). The German government has set up ambitious targets aimed at cutting the

country's Carbon Dioxide (CO2) emissions by 40%, relative to 1990 levels, by 2020. With these

limits in place, even stricter policies are expected to be enforced in the future.

Over the past few years, energy policy discussions in Germany have primarily revolved around the

Kyoto Protocol, the federal government‟s integrated energy and climate program, and emissions

trading. In addition, Germany's electricity policy is influenced by EU regulations.

Some of the important policy objectives in the electricity industry are:





Page(32)

Electricity security: Germany relies heavily on a cooperative arrangement with other EU

member countries and Eastern European countries. It is participating in the development

of Trans-European Energy Network that intends to integrate the electricity systems of EU

member countries and Eastern European countries (including Russia). The ongoing

changes in the international political set up, such as European integration and EU

enlargement have led to policy shifts, favoring market-based mechanisms as an

instrument of electricity security. One example is the development of the internal gas and

electricity market in the EU.

Future of nuclear energy: Nuclear energy was central to Germany's economic

development and formed an important part of the domestic energy policy. However, after

coming to power in 1998 with its coalition member (the Green Party), the Social

Democratic Party (SPD), framed a declaration to phase out all nuclear power plants. The

German government also increased taxes on electricity as a measure to conserve energy

and promote the use of renewable energy. Following the nuclear accident in Japan in

2011, the government decided to accelerate the move away from nuclear energy. This has

led to a government focus on renewable energy sources, expansion of the electricity grid,

energy savings and flexible fossil-fired plants.

Utility restructuring: Utility restructuring is an important element of the advancement of

European integration and enlargement and is an essential step for developing a common

EU electricity market. Deregulation is likely to reduce barriers in electricity transactions

within the EU and is intended to lower electricity prices for European consumers. The

Trans-European Energy Network is expected to contribute to energy security throughout

the EU by enhancing system flexibility.

9.3 Germany, Thermal Power Market, Regulatory Scenario, Amendment of the German Act against Restraints on Competition

The Federal Ministry of Economics and Technology (BMWi) has submitted a draft bill for the 8th

amendment to the German Act against Restraints on Competition (Gesetz gegen

Wettbewerbsbeschränkungen – GWB). This amendment calls for the extension of Section 29 of

the GWB, previously set to expire on December 31, 2012, by another five years. Section 29

restricts energy companies (power as well as petroleum) from using their market strengths to

derive unfair advantages in the markets in which they operate. This amendment is being made in

order to create conditions for fair competition in the energy market.

9.4 Germany, Thermal Power Market, Regulatory Scenario, Amendment of the German Energy Act

The German Energy Act is being amended to bring in the X-Factor or Xgen (a statutory general

sector-related productivity rate) through the Incentive Regulation Ordinance (ARegV). The X-

Factor is part of a formula in the ARegV to determine the level of revenue caps on the grid-related

fees that German network operators can charge. The German Federal Court of Justice had held in

June 2011 that the X-Factor, as contained in the ARegV cannot be applied as it lacks a statutory

basis under the German Energy Act. The German government decided therefore to amend the

Act. The Federal Council (Bundesrat) has no objections to the current amendment and hence it is

expected to be added to the Federal Law Gazette, after being signed by the President.





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The 2020 Allocation Ordinance (Zuteilungsverordnung 2020 - ZuV 2020) states that certain

industries and heat-emitting sectors, such as the power sector, will be allocated free-of-charge

trading allowances for the period 2013-2020, if their greenhouse gas emission targets are met.

Industries where carbon leakages are normal will be given the full amount of allowances, while

allowances for other industries will be reduced to 30% of the original allocated amount by 2013.

The deadline for the receipt of applications for such allowances is January 23, 2012.

9.5 Germany, Thermal Power Market, Regulatory Scenario, Large Combustion Plant Directive

The LCPD is a European Union directive aimed at reducing acidification, ground level ozone and

particulate matter by curbing emissions of sulphur dioxide, nitrogen oxide and dust particles from

power plants. The revised LCPD directive of 2008 includes all plants with a capacity of more than

50 MW. The power plants have two options for compliance to the LCPD directive. They must use

either Emissions Limit Values (ELV), or the second and more flexible option of the National

Emissions Reduction Plan (NERP).

ELV is based on the concentration of flue gas in the emissions produced by the power

plant. However, there is no constraint on the total annual emissions. This option is

problematic for plants operating to cater base electricity demand.

NERP sets a yearly cap on emissions, but allows flexibility through trade in any of the

proposed emission trading schemes.

9.6 Germany, Thermal Power Market, Regulatory Scenario, Amendment of German Greenhouse Gas Emission Trading Law

The Emission Trading Scheme (ETS) has been a positive step in the effort to deal with human-

induced climate change and also forms the basis of a global system. However, there have been

some challenges faced during the ETS implementation process, as some countries have issued

more permits than are required in the first phase. This has resulted in low carbon prices, which has

translated into it being less expensive for firms to buy spare permits than to pay fines or invest in

reducing emission levels. These are key concerns that need to be resolved, meaning that the

scheme will need to be reworked.

The EU member states are working to promote energy efficiency and ensure that cogeneration

installations are allocated enough allowances to cover all of their emissions under the National

Allocation Plans (NAP). Cogeneration is an efficient conversion technology and should not be

submitted to reduce allocations of emission allowances. The governments of the member states

are keen on promoting the use of energy-efficient technologies and encourage the use of CHP.

The member states use different allocation methodologies for emission trading. However, it is

essential that they make the right use of the policy tools available under the European ETS in

order to provide incentives to highly efficient cogeneration. This will allow for the wider operation of

this energy-efficient technology.





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9.7 Germany, Thermal Power Market, Regulatory Scenario, Grid Expansion Acceleration Act (NABeG)

The main elements of NABeG were presented in 2011. The act is one of the measures introduced

by the government to accelerate the grid planning and approval process. The objective of the act

is to plan and approve new grid construction projects within five years. An important basis for this

is the Dena ll study conducted by Dena, which estimated that an additional 3,600km of additional

lines will be required to be built or upgraded in Germany by 2020. According to the act, BNA will

be responsible for sector planning for all high voltage lines under the Federal Requirement Plan by

determining the necessary land corridors. Section 1 of NABeG states it is of “pre-eminent public

interest”, by effect of which grid construction will be given priority over site preservation.

9.8 Germany, Thermal Power Market, Regulatory Scenario, Target Grid 2050

The government introduced the Target Grid 2050 concept in 2011 in order to promote the

expansion of grid network. The Target Grid 2050 takes into consideration the existing grids and

the ones planned under the Power Grid Expansion Act in order to forecast the expected grid

infrastructure in future. The future grid is expected to cover the following aspects:

Upgrades and modifications to the existing grid infrastructure.

Planning for overlay grids and possible pilot routes.

North Sea Grid and other offshore connections.

Interconnections of the German grid with the European network.

9.9 Germany, Thermal Power Market, Regulatory Scenario, Renewable Energy Policies

As EU regulations, Germany is targeted to achieve 18% of its final energy consumption from

renewable energy sources by 2020, meaning that it has been focusing heavily on increasing its

renewable power generation.

Renewable electricity generation in Germany is supported through Feed-In Tariffs (FITs). Power

generation from all renewable technologies is eligible for FITs, but should have applied for

registration with the Register of Installations. Those of a capacity greater than 100kw are eligible

for tariffs if they are able to reduce their power output remotely in the event of grid overload.

Operators of renewable installations selling electricity directly to consumers are not entitled for the

tariffs.

FITs are regulated by the Renewable Energy Sources Act (EEG) which came into force on

January 01, 2009. The act aspires to augment the share of renewable energy sources in

Germany‟s total energy supply to at least 30% by 2020. The act does not limit renewable energy

sources in terms of installed capacity or annual power generation to be covered under the FIT

scheme. The scheme provides FITs for installations for a period of 20 years, plus the year of

commissioning. The scheme differentiates installations by their by technology and size and is

financed by final consumers. To foster technical development in the sector, FITs are reduced by a

fixed rate on a yearly basis.

In June 30, 2011, the German government adopted the „Act on the Amendment of the Legal

Framework for the Promotion of Electricity Generation from Renewable Energies‟ (Gesetz zur





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Neuregelung des Rechtsrahmens für die Förderung der Stromerzeugung aus erneuerbaren

Energien). The act completely revised the EEG and comes into force on January 01, 2012. It

includes new FIT rates for different renewable technologies. FITs for 2011 and 2012 are

applicable to installations commissioned from the January 01, 2011 and January 01, 2012,

respectively.

The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) created

an Energy and Climate Fund (Energie- und Klimafonds – EKFG) in 2011. The fund was originally

expected to be supported by revenues from contractual agreements with the operators of nuclear

power plants and auctioning the carbon emission allowances. However, after the amendment in

July 2011, the revenues from nuclear contracts will not flow into the fund. The amendment is a

result of a nuclear power exit from 2012. The fund is aimed at supporting renewable energy

technologies, energy efficient applications, energy storage and grid technology.

9.10 Germany, Thermal Power Market, Regulatory Scenario, Nuclear Energy Policies

9.10.1 Legislation to Extend the Life of Nuclear Power Plants (2010)

This legislation was introduced in 2010 to extend the life of nuclear power plants in Germany for

an average of 12 years. Plants built before 1980 were allowed to operate for eight more years than

previously laid out under the 2002 Nuclear Phase Out Law, and newer reactors were permitted to

operate for a further 14 years. The German parliament also passed the Nuclear Fuel Tax Act that

meant nuclear power plant operators were obliged to pay an annual fuel tax for the use of uranium

233 and 235, and plutonium 239 and 241 from 2011. The revenue from these taxes will go into a

special energy and climate fund.

This legislation was passed in view of the repeated lobbying of nuclear power plant operators to

extend the operation license of the power plants by 40 years and then by up to 60 years. While the

government prior to 2009 wanted nuclear power plants to be phased out by 2022, the present

government granted extensions of eight and fourteen years, depending on when the plants started

operating, in return for the nuclear fuel tax revenue extracted from nuclear power plant operators.

9.10.2 New Nuclear Power Plant Developments in 2011

In March 2011, the German Chancellor, Angela Merkel, ordered under a decree that nuclear

power plants that started operations on or before 1980 should be immediately shut down. This led

to the immediate shut down of Biblis-A, Neckarwestheim 1, Brunsbütel, Biblis-B, Isar 1,

Unterweser and Phillipsburg 1. The Krümmel reactor, which was already in the process of being

shut down, was added to the list of the permanently shut down reactors.

On May 30, 2011, the government returned to the 2022 phase out plan but without abandoning the

nuclear taxes that had previously been imposed. Nuclear power plant operators went to court

claiming compensation. In September 2011, the Hamburg Tax Court cancelled the collection of

nuclear fuel taxes by the government. It also granted a request by E.ON to be refunded €96m.

Nuclear power plant operators are also demanding compensation for the confiscation of

generating rights for the eight reactors that were asked to shut down after the Fukushima incident.





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9.11 Germany, Thermal Power Market, Regulatory Scenario, Initiatives towards Reducing Greenhouse and Carbon Dioxide Emissions

The German government has set up ambitious targets aimed at cutting the country's CO2

emissions by 2020, by 40% relative to 1990 levels. The Federal Environment Agency has

identified several measures in the industrial, residential and transport sectors in order to achieve

this target by 2020.

Carbon Capture and Storage (CCS): CO2 reduction is a top priority for the German

government. The 5th Energy Research Programme provides the frame work for the

development of Carbon Capture and Storage technology for reducing CO2 emission.

A portfolio of 10 CCS research projects with a three year funding of $11m has been started by the

government under the national research program Geotechnologien. Besides the national program,

German federal government provides incentives, subsidies and national funding for the

development of CCS technologies. The first pilot CCS project is operational in the Schwarze

pumped power station in Germany.





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10 Germany Thermal Power Market, Deals Scenario

10.1 Germany Thermal Power Market Deals Volume versus Value Analysis, 2004-2012

In Germany, 2008 was the best year for the thermal power deals, as the volume and value of

thermal deals reached 37 and $30,681m respectively, attaining their highest levels historically.

The thermal power deals volume and value went down to 29 and $28,736m, respectively, in 2009

due to the advent of global economic recession. With continued economic crisis the deals market

in Germany witnessed a drastic fall with deal value going down from $5,905m in 2010 to as low as

$1,117m 2011. However, the market seems to recover with deal value already reaching $4,585m

in 2012 (till date).

Figure 10: Thermal Power Market, Germany, Financing Trends, Deal Value ($m) and

Volume (Number), 2004-2012

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 (till

date)

Dea

l V

alu

e (

$m

)

0

5

10

15

20

25

30

35

40

Dea

l V

olu

me

Deal Value Deal Volume

Source: GlobalData, Power eTrack Deals Database (July 6, 2012)





Page(38)

Table 8: Thermal Power Market, Germany, Financing Trends, Deal Value ($m) and Volume

(Number), 2004-2012

Year Deal Value ($m) Deal Volume

2004 6,343 7

2005 1,444 7

2006 13,158 19

2007 13,354 15

2008 30,680 37

2009 28,736 29

2010 5,905 6

2011 1,117 7

2012 (till date) 4,584 6


10.2 Germany Thermal Power Market, Deals by Type, 2011 - 2012

In 2011 and 2012 (till date), there were a total of 13 deals of which five were of debt offerings type,

fiver of asset finance type, and three were acquisitions, aggregating a value of $5,702m. In terms

of both value and volume the asset finance type of deals prevailed in the market, as the total deal

volume and value reached to five deals and $654m, respectively, in 2011. In 2012, due to some

increased investments through debt offerings, five deals with the value $4,584m have already

been announced indicating a growth in investments. The total value of the deals in 2011 and 2012

(till date) was recorded as 5,702m.





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Figure 11: Thermal Power Market, Germany, Deals by Type (%), 2011-2012

Debt Offerings

81%

Asset Finance

11%

Acquisition

8%


Table 9: Thermal Power Market, Germany, Deals by Type (%), 2011-2012

Deal Type Deals Value ($m) % Share

Debt Offerings 4,585 81

Asset Finance 654 11

Acquisitions 463 8






Page(40)

10.3 Power Market, Germany, Major Deals, 2009-2012

10.3.1 Debt Offerings

10.3.1.1 Siemens Announces Private Placement Of 1.05% Bonds for $1.5 Billion

Table 10: Siemens Announces Private Placement Of 1.05% Bonds For $1.5 Billion

Deal Type Debt Offering Deal Sub Type Private Placement

Deal in Brief

Siemens AG, an electronics and electrical engineering company, through Siemens Financieringsmaatschappij NV, commenced a private placement of 1.05% bonds due August 16, 2017, for gross proceeds of $1,500m. Barclays PLC, Credit Suisse Group AG, Credit Suisse Group AG and JPMorgan Chase & Co. are acting as underwriters to the company in the placement.

Deal Information

Deal Status Announced

Announced Date 10-Feb-2012

Companies Information

Target Company Information

Company Name Siemens AG

Business Description

Siemens AG (Siemens) is a leading electronics and electrical engineering company. It operates principally in the industrial, energy and healthcare sectors. It operates around 285 major production and manufacturing plants across the world. Siemens has a significant presence in the renewable energy sector. It offers products and solutions for the generation of electricity through renewable energy sources including wind, photovoltaic, biomass and hydropower as well as from fossil fuels and oil and gas. The company designs and builds wind turbines with capacities ranging from 1.3 MW to 3.6 MW. It specializes in designing and developing rotor blades used in wind turbines. The company so far designs turbines for various applications. It offers maintenance services to offshore and onshore wind farms. Siemens provides financial products and services such as commercial finance, equity and project finance, treasury and investment management, and project and export finance. In addition, Siemens offers insurance solutions such as claims management; and functions as a broker of company-financed insurances for employees on business trips and foreign assignments. It also carries out real estate business. The company operates in more than 190 countries worldwide. Siemens is headquartered in Munich, Germany.

Advisor Information

Company Being Advised Under Writer

Siemens AG Barclays PLC

Credit Suisse Group AG

Deutsche Bank AG

JPMorgan Chase & Co.

Deal Financials

Deal Value ($ million) 1,500





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Securities Type Offered Bonds

Interest Rate (%) 1.05

Maturity Date 16-Aug-2017

10.3.1.2 Siemens Completes Private Placement Of 1.65% Bonds for $1.5 Billion

Table 11: Siemens Completes Private Placement Of 1.65% Bonds For $1.5 Billion

Deal Type Debt Offering Deal Sub Type Public Offering

Deal in Brief

Siemens AG, an electronics and electrical engineering company, through its wholly-owned subsidiary Siemens Financieringsmaatschappij N.V., completed the private placement of 1.65% bonds, due August 16, 2019, for gross proceeds of $1,500m. Barclays PLC, Credit Suisse Group AG, Credit Suisse Group AG and JPMorgan Chase & Co. acted as underwriters to the company for the offering. The company intends to use the proceeds from the offering to repay its maturing debts and for general corporate purposes.

Deal Rationale

The company intends to use the proceeds from the offering to repay its maturing debts and for general corporate purposes.

Deal Information

Deal Status Completed

Announced Date 09-Feb-2012

Completed Date 16-Feb-2012






Advisor Information


Siemens AG Barclays PLC





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Deal Financials

Deal Value ($ million) 1,500



Maturity Date 16-Aug-2009

10.3.1.3 RWE Completes Public Offering Of 4.75% Bonds Due 2034 for $918.5 Million

Table 12: RWE Completes Public Offering Of 4.75% Bonds Due 2034 for $918.5 Million


Deal in Brief

RWE AG, a company engaged in the generation, transmission and supply of electricity and gas, through its wholly-owned subsidiary RWE Finance B.V., completed the public offering of 4.75% bonds, due January 31, 2034, for gross proceeds of £600m ($918.48m). The bonds were priced at 99.82% of the principal amount. Barclays Capital Inc., Bank of America Merrill Lynch, BBVA Securities, Inc., Lloyds Bank Corporate Markets and Mitsubishi UFJ Securities International plc acted as underwriters in the offering. The company intends to use the proceeds from the offering to fund its working capital and to finance plans for expanding its offshore wind farms.

Deal Rationale

The company intends to use the proceeds from the offering to fund its working capital and to finance plans for expanding its offshore wind farms.

Deal Information


Completed Date 17-Jan-2012



Company Name RWE AG


RWE AG (RWE) is a management holding company of the RWE Group. The company carries out the generation, trading, transmission and supply of electricity and gas. RWE is one of the Europe‟s five leading electricity and gas companies. The company operates through its wholly and partially owned subsidiaries. It serves a range customer base including over 16 million electric customers and nearly 8 million gas customers. REW operates through seven segments based on national and functional business area, namely, Germany, Netherlands/Belgium, the UK, Central and Eastern Europe, Renewable, Upstream gas & oil, and Trading/gas midstream. The company has its operational presence in the UK, Poland, Italy, Russia, Spain, Netherlands, Hungary, Belgium, Czech Republic, Turkey, Norway, Slovakia, Switzerland, the US, Ireland, Costa Rica, Austria and Croatia. The company is headquartered at Essen, Germany.





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Advisor Information


RWE AG Barclays Capital Inc.

Merrill Lynch & Co., Inc.

BBVA Securities, Inc.

Lloyds Bank Corporate Markets

Mitsubishi UFJ Securities International plc

Deal Financials

Deal Value (GBP million) 600 Deal Value ($ million) 918.48



Maturity Date 31-Jan-2034

10.3.1.4 RWE Prices Public Offering Of 7% Bonds Due 2072 for $500 Million

Table 13: RWE Prices Public Offering Of 7% Bonds Due 2072 for $500 Million


Deal in Brief

RWE AG, an integrated energy company with focus on electricity and gas business, priced the public offering of 7% bonds, due October 12, 2072, for gross proceeds of $500m. The bonds are priced at 101.631% of the principal amount to yield 6.625% at maturity. Goldman Sachs International, JPMorgan Chase & Co. and Nomura Holdings, Inc. are acting as underwriters to the company for the offering.

Deal Information

Deal Status Pricing

Announced Date Jun 21, 2012



Company Name RWE AG







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Advisor Information


RWE AG Goldman Sachs International


Nomura Holdings, Inc.

Deal Financials

Deal Value ($ million) 500


Interest Rate (%) 7

Maturity Date 12-Oct-2072

10.3.1.5 RWE Completes Debt Offering of 4.625 % Subordinated Fixed to Floating Rate Notes for

$2,219m

Table 14: RWE Completes Debt Offering of 4.625 % Subordinated Fixed to Floating Rate Notes for

$2,219m


Deal in Brief

RWE AG, a company engaged in the generation, trading, transmission, and supply of electricity and gas, completed the offering of 4.625 % subordinated fixed to floating rate notes, for gross proceeds of EUR 1,750 million ($2,219 million). The company received net proceeds of approximately EUR1,735.6 million ($2,200.67 million), after deducting the expenses and commission. The notes were issued at a price of 99.677% of the principal amount. The interest on the notes is payable annually, commencing from September 28, 2011. The notes do not have a final maturity date. The notes may redeem in whole but not in part at the option of the company at their principal amount plus any remuneration accrued and any deferred remuneration payments on September 28, 2015 and September 28, 2020 and thereafter on any floating remuneration payment date. Deutsche Bank AG, Morgan Stanley & Co. International plc, BNP Paribas SA, Goldman Sachs International and The Royal Bank of Scotland Group PLC acted as joint book runners and mangers for the offering. The company intends to use the net proceeds from the offering for general corporate purposes.

Deal Rationale

The company intends to use the net proceeds from the offering for general corporate purposes.

Deal Information


Announced Date 13-Sep-2010

Completed Date 21-Sep-2010



Company Name RWE AG





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Advisor Information

Company Being Advised Book Runner

RWE AG Deutsche Bank AG

Morgan Stanley & Co. International plc

BNP Paribas SA

Goldman Sachs International

The Royal Bank of Scotland Group PLC

Deal Financials

Deal Value (EUR million) 1,750 Deal Value ($ million) 2,219

Securities Type Offered Other


Net Proceeds ($ million) 2,200.67

10.3.1.6 RWE Completes Public Offering of $2,087.37m Euro Benchmark Bonds

Table 15: RWE Completes Public Offering of $2,087.37m Euro Benchmark Bonds


Deal in Brief

RWE AG, a power generation company, raised EUR1,500m ($2,087.37m) through the issuance of Euro Benchmark bonds. The bonds were issued at 99.5%, bear a coupon rate of 2.25% and will mature on October 2011. Calyon S.A., Landesbank Baden-Württemberg and UniCredit S.p.A acted as joint book-running managers in the offering.

Deal Rationale

RWE intends to use the proceeds from the offering to finance its planned acquisition of Essent.

Deal Information


Completed Date 09-Jun-2009







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Company Name RWE AG



Advisor Information

Company Being Advised Legal Advisor

RWE AG Hengeler Muller


RWE AG Credit Agricole CIB S.A.

Landesbank Baden-Wurttemberg

UniCredit S.p.A.

Deal Financials

Deal Value (EUR million) 1,500 Deal Value ($ million) 2,087.37

Securities Type Offered Other


Maturity Date 09-Oct-2011

10.3.1.7 E.ON Completes Private Placement for $2036.79 Million

Table 16: E.ON Completes Private Placement for $2036.79 Million

Deal Type Debt Offering Deal Sub Type Private Placement

Deal in Brief

E.ON AG, an energy company, through its subsidiary E.ON International Finance B.V., raised EUR1,500 million through the issuance of Euro benchmark bonds. The bonds issued at a price of 99.55%, bear a coupon rate of 5.5% and will mature on January 2016. Commerzbank AG, ING Wholesale Banking and The Royal Bank of Scotland acted as the joint bookrunners for the offering.

Deal Information


Completed Date 08-Jan-2009







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Company Name E.ON AG


E.ON AG (E.ON) is one of the leading power and gas companies in the world. The company undertakes power generation, gas production and supply, gas storage and transport, trading, carbon sourcing, and power and gas distribution. It generates power from diverse sources including wind, hydro, nuclear, coal, natural gas, oil, solar and bio energy. It is involved in natural gas exploration and production in the North Sea. It procures significant portion of its gas from Russia, Norway, Germany and the Netherlands. Its storage and transport operations include underground gas storage reservoirs, and interests in the Nord Stream AG. The company trades gas, electricity, biomass, coal, freight, and carbon allowances. It purchases carbon certificates from owners of certified emission reduction projects. It operates an extensive power distribution network across Europe and the US. It operates gas distribution network across Europe. E.ON is headquartered in Dusseldorf, Germany.

Advisor Information


E.ON AG Commerzbank AG

ING Wholesale Banking


Deal Financials

Deal Value (EUR million) 1,500 Deal Value ($ million)

2,036.79



Maturity Date 08-Jan-2016

10.3.1.8 EnBW Energie Baden Issues Six and Thirty Year Euro Bonds

Table 17: EnBW Energie Baden Issues Six and Thirty Year Euro Bonds


Deal in Brief

EnBW Energie Baden-Wurttemberg AG, a German nuclear power company, issued a 4.125%, 6 year euro Bond and a 6.125%, 30-year euro bond for a total value of EUR1350 million ($1901.6 miilion). BNP Paribas, Commerzbank AG, Royal Bank of Scotland Group Plc, Morgan Stanley & Co. Incorporated, DZ Bank AG, UniCredit CAIB AG and LBBW are acted as underwriters for the offering.

Deal Information


Completed Date 01-Jul-2009



Company Name EnBW Energie Baden-Wurttemberg AG





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EnBW Energie Baden-Wuerttenberg AG (EnBW) is an energy holding company. It supplies electricity and gas to around 5.5 million customers including industrial, commercial, and retail customers, as well as public utilities, and municipalities. The company operates in Germany, Switzerland, Austria, Hungary, Czech Republic and Poland. EnBW is headquartered in Karlsruhe, Germany.

Advisor Information


EnBW Energie Baden-Wurttemberg AG

BNP Paribas SA

Commerzbank AG


Morgan Stanley

DZ BANK AG

UniCredit CAIB AG

Deal Financials

Deal Value (EUR million) 1,350 Deal Value ($ million)

1,901.60


10.3.1.9 RWE Completes 6.12% Bond Offering for $1.6 Billion

Table 18: RWE Completes 6.12% Bond Offering For $1.6 Billion


Deal in Brief

RWE AG, a power generation company through its subsidiary RWE Finance B.V., completed public offering of 6.12% bonds due 2039, for gross proceeds of GBP1,000 million ($1,648.55 million). The bonds were issued at 98.86% to yield 6.21%. Barclays Capital, Inc., BNP Paribas Securities Corp. and Credit Suisse Group AG acted as joint book-running managers in the offering.

Deal Rationale

RWE intends to use the proceeds from the offering to acquire Essent

Deal Information


Completed Date 25-Jun-2009



Company Name RWE AG


RWE AG (RWE) is a management holding company of the RWE Group. The company carries out the





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generation, trading, transmission and supply of electricity and gas. RWE is one of the Europe‟s five leading electricity and gas companies. The company operates through its wholly and partially owned subsidiaries. It serves a range customer base including over 16 million electric customers and nearly 8 million gas customers. REW operates through seven segments based on national and functional business area, namely, Germany, Netherlands/Belgium, the UK, Central and Eastern Europe, Renewable, Upstream gas & oil, and Trading/gas midstream. The company has its operational presence in the UK, Poland, Italy, Russia, Spain, Netherlands, Hungary, Belgium, Czech Republic, Turkey, Norway, Slovakia, Switzerland, the US, Ireland, Costa Rica, Austria and Croatia. The company is headquartered at Essen, Germany.

Advisor Information


RWE AG Hengeler Muller


RWE AG Barclays Capital Inc.

BNP Paribas Securities Corp.


Deal Financials

Deal Value (GBP million) 1,000 Deal Value ($ million) 1,648.55



Maturity Date 25-Jun-2009

10.3.2 Asset Finance

10.3.2.1 Gemeinschaftskraftwerk Announces Project Financing of $486 Million for Bremen Gas Fired

Power Plant in Germany

Table 19: Gemeinschaftskraftwerk Announces Project Financing of $486 Million for Bremen Gas

Fired Power Plant in Germany

Deal Type Asset Finance Deal Sub Type

Project Finance

Deal in Brief

Gemeinschaftskraftwerk Bremen GmbH & Co. KG, a power generation company, announced project financing of €337m ($485.543m) in the construction and development of a gas fired power plant in the town of Mittelsburen, Bremen, Germany. The financing will be provided by BayernLB, Commerzbank AG, DekaBank and Helaba. The total project cost is estimated to be €445m ($641.15m) and will have a total installed capacity of 445 MW. The investment per MW will be approximately $1.44m. The financing will run for the construction period plus another 18 years. Gemeinschaftskraftwerk Bremen GmbH & Co. KG includes German utilities such as swb AG, Deutsche Bahn Energie, TOBI and Mainova. The plant is constructed to supplement renewable energy sources because they can rapidly and flexibly respond to changes in the supply and demand for electricity. The plant is expected to become operational by 2013. Bremer Landesbank Capital Markets Plc, KfW IPEX-Bank GmbH and Landesbank Baden-Wurttemberg are acting as initial mandated lead arrangers or joint book runners for the Gemeinschaftskraftwerk with respect to the transaction.





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Deal Information


Announced Date 17-Aug-2011


Owner/Sponsor Company Information

Company Name Gemeinschaftskraftwerk Bremen GmbH & Co. KG

Company Name BayernLB Parent Bayerische Landesbank


BayernLB is a Bavarian commercial bank for large and middle-market corporate customers in Germany and Europe and also for retail customers. It is an integral part of the Sparkassen-Finanzgruppe in Bavaria and is a high-performance regional bank with a focus on Europe and international expertise. In terms of total assets and credit volume, it is one of Germany's top Landesbanks.

Company Name Commerzbank AG


Commerzbank AG (Commerzbank) offers a range of financial services to private and corporate customers; small and mid-sized companies; and large and multinational corporate clients principally in Europe. It offers retail and commercial banking services and financial management tools tailored to the individual needs of corporate clients. The bank operates through six business segments, which include Private Customers, Mittelstandsbank, Central and Eastern Europe, Corporates & Markets, Asset Based Finance, and Portfolio Restructuring Unit. Commerzbank serves around 15 million customers through over 60 sites in more than 50 countries. It operates around 1200 branches in Germany. Commerzbank is headquartered in Frankfurt, Germany.

Company Name DekaBank


DekaBank is a German Savings Bank Finance Group's central asset manager.

Company Name Helaba


Helaba is one of Germany's leading regional banks, with a focus on international growth regions. The Bank offers the full range of financial services to corporations, banks, institutional investors and private customers from a single source, provides Sparkassen with high-quality financial products and services, and finances development programmes for the state of Hesse as part of the public development and infrastructure business.

Advisor Information


Gemeinschaftskraftwerk Bremen GmbH & Co. KG

Landesbank Baden-Wurttemberg

KfW IPEX-Bank GmbH

Bremer Landesbank Capital Markets Plc

Deal Financials





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Deal Value Local (mn) 337

Deal Value (US$ m) 485.54

Total Cost Local (mn) 445.00

Total Cost (US$ m) 641.15

Owner Equity Local (mn) 108.00

Owner Equity USD (mn) 155.61

Owner Equity(%) 24.27

Debt(%) 75.73

Tenor (Months/Year) 18

Valuation Multiples Information

Powerplant Valuation Multiple

Capacity MWH Transaction Implied Value $ / MW

(Bcf) (Bcf)

Ethanol Information

Type Acquired Capacity (Million Liters)

Transaction Implied Values (US$/Liters per day)

Production 80.00 1000000.00

10.3.2.2 Raetia Energie & SWS Invests $4,180 Million for Coal-Fired Power Plant

Table 20: Raetia Energie & SWS Invests $4,180 Million for Coal-Fired Power Plant

Deal Type Asset Finance Deal Sub Type Self Funded

Deal in Brief

Raetia Energie AG, a Swiss company, active in the production and trade of electricity for the national, international and local energy markets and SudWestStrom (SWS), a power generation company, completed investment of EUR3,000 million ($4,179.81 million), for the construction and development of a coal-fitrd power plant to be located in Brunsbuttel, Germany. The plant will have a total installed capacity of 1,820 MW, comprising of two units with a capacity of 910 MW each. It will generate 11,500 GWh of energy per year. Shearman & Sterling LLP, acted as a legal advisor to Raetia Energie with respect to the investment.

Deal Information


Completed Date/Expected Completion Date 22-Jun-2009



Company Name Raetia Energie AG


Raetia Energie AG Iis engaged in the production and trade of electricity for the national, international and local energy markets.The company is headquatered in Switzerland.





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Company Name SWS Group Parent Bord Gais Eireann


SWS Group provides diversified services to public and private sector clients. The company operates in five divisions: Forestry, Outsourcing, Business Services, Property, and Natural Resources.

Advisor Information


Raetia Energie AG Shearman & Sterling LLP

Deal Financials

Deal Value Local (mn) 3,000

Deal Value (US$ m) 4,179.81

10.3.2.3 SudWestStrom and Ratia Energie to Invest $3,968 Million in Brunsbuttel Coal Fired Power Plant,

Germany

Table 21: SudWestStrom And Ratia Energie To Invest $3,968 Million In Brunsbuttel Coal Fired

Power Plant, Germany


Deal in Brief

Sudwestdeutsche Stromhandels GmbH (SudWestStrom) and Ratia Energie AG, a power generation companies, announced to investment EUR3,000 million ($3,967.68 million) for the construction and development of coal fired power plant to be located in Brunsbuttel, Germany. The total installed capacity of the project will be 1820 MW, comprising of two units of 910 MW each. The project will produce about 11,500 GWh of electricity annually. Ratia Energie will be the major share holder in the project. The company has received approval for the construction of the project. Sudwestdeutsche Stromhandels GmbH (SudWestStrom) is a joint venture between around 60 municipal utilities in Germany.

Deal Information


Announced Date 02-Apr-2009



Company Name Sudwestdeutsche Stromhandels GmbH

Company Name Repower AG


Repower AG (Repower), formerly Ratia Energie AG, is an electricity company. It engages in producing, transmission and distribution of electricity. The company operates hydro power plants, thermal plant, nuclear, and wind farms. Its project portfolio include Merchantline Tirano, Hydroelectric Taschinas, Hydroelectric Chlus, and Hydroelectric Tomul. The company generates hydropower, nuclear power and wind power through its power plants located in Switzerland and Italy. It serves wide spectrum of customer base





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ranging from household and commercial customers to large consumers in Switzerland, Italy, Germany, and Central and Eastern European markets. The company operates through its own distribution grids to produce and provide power. Repower is headquartered in Poschiavo, Switzerland.

Deal Financials



10.3.2.4 Siemens and Advance Energy to Invest $1,947 Million for Wustermark and Szeged Gas Fired

Plants in Germany and Hungary

Table 22: Siemens and Advance Energy to Invest $1,947 Million for Wustermark and Szeged Gas

Fired Plants in Germany and Hungary


Deal in Brief

Siemens Project Ventures GmbH, a wholly owned subsidiary of Siemens AG and Advanced Power Ltd, a renewable energy company, announced to invest EUR1,500 million ($1,946.94 million) for the construction and development of two gas fired power plants to be located in Germany and Hungary. The combined total installed capacity of the projects will be 2,080 MW, of which 1,200 MW Wustermark facility to be located at Brandenburg and 880 MW of Szeged facility to be located in Szeged. Advanced Power will be responsible for the construction of the project. Siemens hold 50% stake and Advance Energy holds other 50% stake in the project. The constructions of the projects are expected to start in 2012 and to be operational by 2015.

Deal Information


Announced Date 05-Aug-2010






Company Name Advance Energy Ltd





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Advance Energy Ltd (AVD) is an upstream energy company. The company principally focuses on the acquisition and exploration of petroleum and gas properties, and production of crude oil and gas. It acquires underperforming assets and re-evaluates them to identify untapped recoverable reserves. The project portfolio of the company include Mother Lode Phase I Project, Mother Lode Phase II Project and Mother Lode Phase III Project. The company carries out its operations through its wholly owned subsidiaries, namely, Advance Exploration and Production, Inc., AEPI Midstream, Inc. and Advance Wolfberry Inc. Advance Energy has its operations in Texas, US. It is headquartered in Perth, Australia.

Deal Financials



10.3.2.5 E.ON Invests $1,776 Million in Datteln Power Plant

Table 23: E.ON Invests $1,776 Million in Datteln Power Plant


Deal in Brief

E.ON AG, an integrated power and gas company – generating and distributing electricity, and retailing power and gas, completed investment of EUR1,200 million ($1,775.74 million), for the construction and development of Datteln Power Plant, a coal-fired power station located in Datteln, Germany. The plant has a total installed capacity of 1,050 MW. The plant is expected to come online by 2011.

Deal Information


Completed Date/Expected Completion Date 09-Dec-2009






Deal Financials







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10.3.2.6 E.ON Invests $$1,570 Million for Staudinger Power Station

Table 24: E.ON Invests $$1,570 Million for Staudinger Power Station


Deal in Brief

E.ON AG, an integrated power and gas companies – generating and distributing electricity, and retailing power and gas, completed investment of EUR1,200 million ($1569.72 million), for the construction and development of a hardcoal- fired generating unit at Staudinger power station located in Hessen near Frankfurt, Germany. The unit will have an installed capacity of 1,100 MW, bringing the total installed capacity of the plant to 1,674 MW. It is expected to be commissioned by 2013.

Deal Information


Completed Date/Expected Completion Date

19-Mar-2009






Asset Information

Asset Name Asset Type Asset Classification Installed Capacity Location

Tangshan Thermal Power Plant Thermal Power Thermal power 600.00MW Hebei

Deal Financials







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10.3.3 Acquisitions

10.3.3.1 EWE Acquires 51% Stake in Stadtwerke Bremen

Table 25: EWE Acquires 51% Stake in Stadtwerke Bremen

Deal Type Acquisition Deal Sub Type Majority Acquisition

Deal in Brief

EWE AG, an energy company, completed the acquisition of 51% stake in Stadtwerke Bremen AG (swb AG), a provider of energy and water services in the municipal districts of Bremen and Bremerhaven and their surrounding areas, from Free Hanseatic City of Bremen, for a purchase consideration of approximately EUR680 million ($903 million). Following the acquisition, EWE owns 100% stake in swb and Bremer Verkehrsgesellschaft mbH, a subsidiary of the Free Hanseatic City of Bremen hold one share in swb. Clifford Chance LLP acted as legal advisor to swb and Mummert & Company Corporate Finance GmbH acted as financial advisor to Free Hanseatic City for the transaction.

Deal Rationale

The acquisition of swb will enable EWE to expand its services in the region of north-western Germany.

Deal Information


Announced Date 01-Apr-2009

Completed Date 21-Oct-2009

% Acquired 51


Acquirer Company Information

Company Name EWE Aktiengesellschaft


EWE Aktiengesellschaft (EWE), otherwise known as EWE AG, is a multi-service group. The group distributes electricity, natural gas and water. It provides telecommunications and information technology services. It operates in the regions of Ems, Elbe, Weser, Lower Saxony and Bremen. It produces natural gas from offshore regions of Germany, the Netherlands, the UK and Denmark. It supplies natural gas to Germany, Poland and Turkey. It generates electricity through renewable energy. It procures electricity and natural gas from third parties. EWE is headquartered in Oldenburg, Germany.

Vendor Company Information

Company Name City of Free Hanseatic


City of Free Hanseatic


Company Name SWB AG






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SWB AG (SWB) is an energy and utility company, based in Germany. The company provides energy and water services in the municipal districts of Bremen and Bremerhaven. It provides services such as generation, extraction, procurement, transmission, and sale of electrical energy, heat, natural gas, and water; erection and operation of the plants; consultancy, promotion, cooperative erection, and operation of plants or equipment for reducing the requirement of energy and water; and exploitation, treatment, storage, sorting, processing, and marketing of waste and other substances. The company was incorporated in the year 1854. SWB is headquartered in Bremen, Germany.

Advisor Information


EWE Aktiengesellschaft Clifford Chance LLP

Company Being Advised Financial Advisor

City of Free Hanseatic Mummert & Company Corporate Finance GmbH

Deal Financials

Deal Value - Estimated

Maximum Value ($ million) 903

Financial Information (SWB AG)

(Trailing Twelve Months Ended 31-Dec-2008)

Revenue (US$ million) 1,722.98

Total Assets (US$ m) 2,570.18

Net Assets (US$ m) 720.53

Book Value (US$ m) 606.58

Total Shares (m) 0.21

Operating Margin(%) 6.81

Cash Value Per Share (US$) 180.67

Net Assets Per Share Ratio (US$) 3,431.10

Book Value Per Share (US$) 2,888.49

Earnings per share (US$ ) 264.43

10.3.3.2 Evonik Industries and RBV Verwaltungs Sell 51% Stake in Evonik Steag to KSBG Kommunale for

$860.8 Million

Table 26: Evonik Industries and RBV Verwaltungs Sell 51% Stake in Evonik Steag to KSBG

Kommunale for $860.8 Million

Deal Type Acquisition Deal Sub Type Majority Acquisition

Deal in Brief

Evonik Industries AG, a diversified energy and chemical company, and RBV Verwaltungs GmbH (RBV), completed the sale of 51% of its stake in Evonik Steag GmbH, a power producing unit of Evonik Industries, to KSBG Kommunale Beteiligungsgesellschaft GmbH & Co. KG (KSBG), for a consideration of €651m





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($860.86m). Evonik Steag owns and operates around 9.4 GW of predominantly coal-fired power generation concentrated mostly in Germany. In addition, the company also owns and operates power plants in Turkey, Colombia and the Philippines. An option agreement was concluded in connection with the sale of the 51% stake, under the agreement KSBG has an option to purchase the remaining 49% of shares between January 1, 2014 and December 31, 2017, while RBV has an option to sell the remaining 49% of the shares between January 1, 2016 and December 31, 2016.

Deal Information


Announced Date 17-Dec-2010

Completed Date 02-Mar-2011

% Acquired 51


Acquirer Company Information

Company Name KSBG Kommunale Beteiligungsgesellschaft GmbH & Co. KG

Vendor Company Information

Company Name Evonik Industries AG


Evonik Industries AG (Evonik) is a specialty chemical manufacturing company. It operates as a subsidiaary of RAG-Stiftung. The company is also involved in the busines of coal power, renewable energies, trading and real estate. Its chemicals find applications in the automotive, pharmaceuticals, cosmetic, plastic and rubber industries. The company specializes in the production of electricity from coal and renewable energy sources. Evonik focuses on engineering and consulting expertise in the design, building and operation of power plants. The company's business operations are classified into five segments, namely, Consumer, Health & Nutrition; Resource Efficiency; Specialty Materials; Services; and Real Estate. The company has manufacturing facilities in 26 countries. Geographically, the company operates across Africa, South America, North America, Australia, Europe and Asia. Evonik is headquartered in Essen, Germany.

Company Name RBV Verwaltungs GmbH


Company Name Evonik Steag GmbH Parent Evonik Industries AG

Deal Financials

Deal Value (EUR million)

651 Deal Value ($ million)

860.86





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11 E.ON AG, Company Snapshot

11.1 E.ON AG, Key Facts

Table 27: E.ON AG, Key Facts

Corporate Address

E.ON-Platz 1, Duesseldorf, Nordrhein-Westfalen, 40479, Germany Ticker Symbol, Exchange EOAN, [XETRA]

Telephone +49 211 45790 No. of Employees 78,506

Fax +49 211 4579501 Fiscal Year End December

URL www.eon.com Revenue (in USD Million) 173,876 (2011)

Industry Clean Technology, Energy and Utilities

Locations Austria, Bulgaria, Czech Republic, Denmark, Finland, Germany, Hungary, Italy, Netherlands, Poland, Romania, Russian Federation, Slovakia, Spain, Sweden, Turkey, United Kingdom, United States

Source: Annual Report, Company Website, GlobalData, Power etrack, Company‟s‟ Database (July 9,2012)

11.2 E.ON AG, Company Overview

E.ON AG (E.ON) is one of the leading power and gas companies in the world. The company

undertakes power generation, gas production and supply, gas storage and transport, trading,

carbon sourcing, and power and gas distribution. It generates power from diverse sources

including wind, hydro, nuclear, coal, natural gas, oil, solar and bio energy. It is involved in natural

gas exploration and production in the North Sea. It procures significant portion of its gas from

Russia, Norway, Germany and the Netherlands. Its storage and transport operations include

underground gas storage reservoirs, and interests in the Nord Stream AG. The company trades

gas, electricity, biomass, coal, freight, and carbon allowances. It purchases carbon certificates

from owners of certified emission reduction projects. It operates an extensive power distribution

network across Europe and the US. It operates gas distribution network across Europe. E.ON is

headquartered in Dusseldorf, Germany.

E.ON is focused on the development of clean and green energy. It is involved in the development

of renewable energy. It endeavors for increase in gas production. It has formulated plans for

enhancing its presence in new markets like Russia. It is pursuing the divestment of certain non-

core operations.

The company reported revenues of (Euro) EUR 125,191.00 million during the fiscal year ended

December 2011, an increase of 18.84% over 2010. The operating loss of the company was EUR

757.00 million during the fiscal year 2011, as against an operating income of EUR 11,199.00

million during 2010. The net loss of the company was EUR 2,219.00 million during the fiscal year

2011, as against a net profit of EUR 5,853.00 million during 2010.





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11.3 E.ON AG, Business Overview

E.ON AG (E.ON) carries out integrated power and gas operations across the world. The company

is involved in the generation, transmission, distribution and trading of electricity. It undertakes

exploration, production, transportation, storage, distribution and trading of natural gas. It has

facilities in Europe, North America and Russia.

For the fiscal year ended December 2011, the company reported power generation installed

capacity of 69,557 MW, growth of 2% over that of fiscal year 2010.

E.ON has classified its operations into five global units and 12 regional units. The five global units

are Gas, Trading, Generation, Renewables, and New Build & Technology. Of these, New Build &

Technology is not a reporting segment. The company has operations in Germany, Sweden, the

Netherlands, Romania, Bulgaria, Slovakia, the UK, Italy, France, Spain, Hungary and Czechia.

The company reported Russia as a special-focus region. Germany has also been reported as a

separate segment. The Other EU countries segment contained Sweden, the UK, Czechia and

Hungary, and other remaining companies, as sub-segments.

The New Build & Technology segment integrates the project management and engineering

expertise across diverse operations of the company. It leverages the company's capabilities for the

construction and improvement of power generation facilities. It coordinates the various research

and development projects within the company. It provides vital support to the company's

Innovation Centers.

The company is implementing its group-wide E.ON 2.0 program. The program includes the

combination of E.ON Ruhrgas and E.ON Energy Trading, for the formation of new segment,

named Optimization and Trading, effective January 1, 2012. .E.ON Ruhrgas's exploration and

production unit will be considered as own segment, effective January 1, 2012. The company plans

to invest €0.6 billion in this unit for 2012.

For the fiscal year ended December 2011, E.ON reported owned generation of 271.2 billion kWh,

a decrease of approximately 2% over that of fiscal year 2010.

For the fiscal year ended December 2011, E.ON reported production of 3.6 million barrels of oil

equivalent (MMboe) of oil/condensates and 1,175 million standard cubic meters (mmscm) of gas,

a decrease of approximately 31% and 22% over those of fiscal year 2010.

For the fiscal year ended December 2011, the company reported electricity revenue of €59,946m,

gas revenue of €46,068m, and other revenue of €6,940m. The electricity revenue grew 8.66% in

fiscal year 2011. The gas and other revenue grew 45.18% and 16.34% in fiscal year 2011. Other

revenue consisted of revenue generated from services and other trading activities.

In February 2012, E.ON's supervisory board aided in the development of further plans for the

transformation of the company into a European stock corporation (SE). The final decision is

expected in March 2012. This could lead to negotiations on the structure of the SE with a

committee consisting of European employee representatives, in May 2012. On March 8, 2012, the

company intended to sell E.ON Energy from Waste AG, a producer of heat and power from waste,

for up to €1.8 billion ($2.4 billion), reported by banking sources. In January 2012, E.ON entered

into an agreement with MPX for the formation of joint venture. The joint venture would be involved

in the development of power generation, supply and trading operations in Brazil. The companies





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have planned to build power generation capacity of 20,000 MW in Chile and Brazil. As per the

terms of the agreement, MPX will raise nearly BRL1 billion. Of this, E.ON will invest BRL850m.

The joint venture could enable E.ON to penetrate the Brazilian power market.

11.3.1 Generation

11.3.1.1 Overview

E.ON has established significant power generation operations across Europe. It operates facilities

in Sweden, Germany, Spain, France, Italy, the UK and the Benelux countries. It comprises fossil-

fired power plants and nuclear power plants.

For the fiscal year ended December 2011, the unit reported installed capacity of 46,846 MW, a

decrease of 1.67% over that of fiscal year 2010, due to shutdown of nuclear operations at Isar 1,

Brunsbuttel, Unterweser and Krummel. The company plans to invest €1.6 billion in this unit for

2012.

For the fiscal year ended December 2011, the unit reported owned generation of 170.8 billion

kWh, a decrease of 6.61% over that of fiscal year 2010.

11.3.1.2 Financials

For the fiscal year ended December 2011, the unit reported revenue of €14,979m, an increase of

1.61% over that of fiscal year 2010. For the fiscal year ended December 2011, the unit reported

EBIDTA of €2,114m, a decrease of 43.73% over that of fiscal year 2010.

11.3.1.3 Key Strategies

E.ON is focused on the optimization of its conventional power generation facilities. It plans to shut

down 6 GW of installed capacity during 2012-2015. It is involved in fossil new-build projects like

Datteln 4 and Maasvlakte 3.

11.3.2 Germany

11.3.2.1 Overview

In Germany, E.ON AG operates numerous power plants including Brokdorf, Grohnde, Heyden,

Scholven F, Wilhelmshaven, and Schkopau plants.

11.3.2.2 Financials





The company endeavors to expand its intermediate and low voltage networks in Germany. It is

focused on the expansion of metering and control technology, and switching equipment.

11.3.3 Optimization & Trading

11.3.3.1 Overview

The Optimization & Trading unit is a merged unit of E.ON's gas and trading activities, effective

January 1, 2012. E.ON's Gas unit operates across the entire gas value chain across the world. It

undertakes exploration, production, transportation, storage, distribution and trading of natural gas.





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The major subsidiaries include E.ON Ruhrgas, E.ON Foldgaz, and Ferngas Nordbayern. For the

fiscal year ended December 2011, the unit reported gas production from the North Sea at 1,175

mmscm.

The Trading unit buys and sells natural gas, electricity, coal, oil, biomass, freight and carbon

allowances. E.ON Ruhrgas purchased 660.5 billion kWh of natural gas from Germany, Russia,

Norway, the Netherlands and other countries. For the fiscal year ended December 2011, the unit

reported trading volumes of power at 1,967 billion kWh; 2,480 billion kWh of gas; 598 million

metric tons of carbon allowances; 92 million metric tons of oil; and 269 million metric tons of coal.

The company plans to invest €0.6 billion in this unit for 2012.

For the fiscal year ended December 2011, the Gas unit reported revenue of €23,012m, an

increase of 7.79% over that of fiscal year 2010. For the fiscal year ended December 2011, the unit

reported EBIDTA of €1,553m, a decrease of 21.36% over that of fiscal year 2010.

For the fiscal year ended December 2011, the Trading unit reported revenue of €70,463m, an

increase of 46.95% over that of fiscal year 2010. For the fiscal year ended December 2011, the

unit reported negative EBIDTA of €631m, as against EBIDTA of €1,205m in fiscal year 2010.


The company is focused on the integration and combination of its gas supply, storage and LNG

businesses. It is involved in negotiations for bringing its long-term gas supply agreements at

competitive levels. It pursues organic growth in oil production from the North Sea.

11.3.4 Other EU Countries

11.3.4.1 Overview

The Other EU countries segment consisted of Sweden, the UK, Czechia and Hungary, and other

remaining companies, as sub-segments.

For the fiscal year ended December 2011, the unit reported owned generation of 7.3 billion kWh, a

decrease of 9.87% over that of fiscal year 2010. The company plans to invest €1.1 billion in this

unit for 2012.

11.3.4.2 Financials





E.ON is focused on the expansion of infrastructure in Hungary and Czechia. It has formulated

plans for maintenance projects across its various regional energy networks.

11.3.5 Renewables

11.3.5.1 Overview

The Renewables unit comprises the company's power generation facilities based on wind, solar,

hydro and biomass fuel sources. As on December 31, 2011, E.ON had nearly 2 GW of installed

capacity through renewable sources, an increase of approximately 17% over that of fiscal year

2010. The company plans to invest €1.6 billion in this unit for 2012.





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For the fiscal year ended December 31, 2011, the unit reported owned generation of 24 billion

kWh, an increase of 8.10% over that of fiscal year 2010.

E.ON is involved in the construction of its 17th wind farm in North America. It has aggregate

installed capacity of 2.2 GW in the US. It commissioned three gas-fired power plants with

aggregate capacity of 1.2 GW in Russia. It is involved in the construction of 0.8 GW coal-fired

power generation plant in Russia. This plant is scheduled for in-service in 2014.

11.3.5.2 Financials



EBIDTA of €1,459m, an increase of 20.87% over that of fiscal year 2010.


The company plans to invest €7 billion for the renewable segment during 2012-2015. It is focused

on the construction of large offshore wind farms in the Baltic Sea and the North Sea. It is involved

in the construction of onshore wind farms in the US and Europe. Besides, it is evaluating

investments in new pumped-storage hydro projects. The company plans to focus on wind farm

design, planning, construction and operation, instead of being the sole owner and operator of wind

farms.

11.3.6 Russia

11.3.6.1 Overview

In Russia, the company operates various plants including Surgutskaya GRES-2, Berezovskaya

GRES, and Shaturskaya GRES. As on December 31, 2011, Russia had installed capacity of 9,944

MW. E.ON commissioned gas-fired units at Yaivinskaya and Surgutskaya power generation

facilities. The company plans to invest €0.4 billion in this unit for 2012.

For the fiscal year ended December 2011, Russia reported owned generation of 62.5 billion kWh,

an increase of 12% over that of fiscal year 2010.

11.3.6.2 Financials



EBIDTA of €553m, an increase of 46.68% over that of fiscal year 2010.


The company is involved in various new-build projects including construction of Berezovskaya

power station.

11.4 E.ON AG, Major Products and Services

E.ON is a German power generation and gas production and distribution company. The company

is engaged in the exploration and production of oil and gas and the operation of electricity

generation facilities. The company‟s key products and services include the following:





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Table 28: E.ON AG, Major Products and Services Products:

Crude oil

Electricity

Natural gas

Liquified Natural Gas

Services:

Electricity Distribution

Gas Distribution

Wholesale Power Marketing


11.5 E.ON AG, SWOT Analysis

11.5.1 Overview

E.ON AG (E.ON) operates across the entire value chain of the power and gas business, ranging

from power generation and gas production to distribution and sales to customers. It operates in

about 30 countries, with leading positions in key markets such as Germany, the UK, Sweden, and

Eastern Europe. Declined operational performance and discontinued operations are few causes

for concern to the company, affecting its profitability. Nevertheless, strategic investments amid the

rising demand for electricity coupled with increasing focus on renewable energy would boost the

company‟s sales by several folds. However, destabilization of various operating countries, growing

competition and volatile macro environment could pose several challenges to the company in

sustaining profitable growth.





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Table 29: E.ON AG, SWOT Analysis

Strengths Weakness Strong Market Position Business Model: Integrated and Diversified Growth Prospect: Key Growth Markets

Declined Operational Performance

Discontinued Operations

Opportunities Threats

Growing Focus on Renewable Energy Strategic Investment Approach Business Partnerships Growing Demand for Electricity

Destabilization of Middle East and North Africa Reliability Concern of Russian Gas Supplies Volatile Macro Environment

Source: Company Website, Annual Reports, GlobalData, Power etrack, Company‟s‟ Database (July 9,2012)

11.5.2 E.ON AG, Strengths

11.5.2.1 Strong Market Position

A strong position in its existing and emerging businesses will help E.ON achieve profitable growth,

stellar performance and successful expansion of its portfolio. E.ON is one of the largest energy

service providers with leading positions in key markets such as Germany, the UK, Sweden, and

Eastern Europe. The company is one of the largest wind power producers in the world. It is one of

the world's largest investor owned power and gas companies with operations extending across

Europe, Russia and North America. E.ON is a pillar of gas supply security in Europe. As of 2011, it

has a generation capacity of nearly 69,557 MW comprising 20,763 MW in Germany and 48,794

MW in other countries. The company is a top energy trader and an energy supplier serving

approximately 30 million customers. E.ON is also the UK market leader in combined heat and

power units. The leading market position of the company enhances its brand image and enables it

to attract new customers in the existing and overseas markets.

11.5.2.2 Business Model: Integrated and Diversified

E.ON AG has presence across the energy value chain, which enables it to cater to a substantial

customer base and avail various cost advantages. The company‟s business operations range from

the production of oil and gas through conversion into electricity, transmission, distribution, trading,

and supply of energy to customers. Its integrated power and gas business model aims to exploit

opportunities arising from looming capacity shortages and converging European power and gas

markets. The company focuses on creating value by expanding its asset base in electricity and

gas in Europe, while continuing to reduce carbon exposure and invest in renewable energy. The

company‟s diverse business lines include production, distribution, trading and retail of power and





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gas. It utilizes a diverse generation mix, including nuclear, hard coal, biomethane, oil/gas, wind

and other sources. Geographically, the company has presence in more than 30 countries and

serves about 30 million customers in Europe. The company‟s integrated business model and

diversity in generation and geography enables it to operate efficiently and to capitalize on the

emerging opportunities

11.5.2.3 Growth Prospect: Key Growth Markets

E.ON AG operates in the highly attractive and fast-growing Russian and Italian electricity markets.

Russia is one of the world‟s largest electricity markets with annual growth of 5%. The company is

one of the leading thermal power producers in Russia. It has 9,944 MW of generating capacity in

the fast-growing, heavily industrialized regions of Central Russia, Ural, and Western Siberia, giving

the company access to this high-growth market. Russian generation capacity increased by 1,200

MW mainly due to the new gas fired units at Sargutskaya and Yaivinskaya stations; and sales

increased by 29% due to higher power prices. Besides, E.ON has also been active in the Italian

energy market. The company has installed capacity of more than 6,000 MW in Italy, which made it

the fourth-largest power producer in Italy. The company also enhanced access to the new regional

market units of France, Spain, and Netherlands. Operations in key growth energy markets will

allow the company to tap emerging opportunities with ease and grow as a strong global player.

11.5.3 E.ON AG, Weaknesses

11.5.3.1 Declined Operational Performance

The company recorded decline in its financial performance in the fiscal year 2011. Its operating

loss of the company was €757m during the fiscal year 2011, a decrease of 107% over the fiscal

year 2010. However, it recorded revenue of €125,191m during the fiscal year 2011. Operating

margins declined due to early shutdown of few nuclear power stations in Germany, as well as

continued margin pressure in gas wholesale business. Its owned power generation assets

recorded declined generation by 2% to 271.2 billion kWh in 2011, compared to 276.1 billion kWh

during 2010. Its gas procurement from producers in and outside Germany was declined by 4% at

660.5 billion kWh. Such decline in the operational performance, resulted negative effect on the

company's growth and expansion plans.

Besides, the company‟s deteriorating profitability ratios indicate that it has been underperforming

and is not in a position to deliver value as expected by its shareholders. In 2011, the company

recorded considerable decline in its various profitability indicators. The company's negative

operating margin was 0.61% during fiscal year 2011, as compared to 10.63% in 2010. Its return on

capital employed, return on assets and return on working capital were -0.71%, -1.45% and -

16.74% in 2011, compared to 9.72%, 3.83% and 131.63% respectively in 2010. Such a decline in

financial performance could have a negative effect on the company's growth and expansion plans.

11.5.3.2 Discontinued Operations

The company as part of its business re-alignment strategy divested and discontinued some of its

assets. It has plans to divest €15 billion worth of assets by the end of 2013. During 2011, the

company sold off UK power distribution system to PPL Corporation of the United States. It also

sold off its stakes at Stadtwerke Karlsruhe and Stadtwerke Duisburg, after the disposal of Thuga





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Group, in July 2011. In early April 2011, E.ON sold off its 100% shares in the E.ON Rete to a

consortium, a gas distribution network in Italy. In December 2011, the company entered into a

contract to sell of its wholly owned subsidiary, E.On Bulgaria to Energo-Pro, Czech Republic.

Besides, the company is in process of selling its 40% stake in HEAG Sudhessische Energie AG,

under a concrete agreement entered in February 2012. However, the agreement is pending due to

approval by various municipal and supervisory board authorities. Further, the company under its

portfolio streamlining measure sold of its stake in Gazprom, by reclassifing its stake in the firm.

Such discontinued operations and sales off its operational assets reflect its financial disability and

resource management.

11.5.4 E.ON AG, Opportunities

11.5.4.1 Growing Focus on Renewable Energy

The market for renewable energy is growing rapidly and is anticipated to exceed €200 billion by

2020. The present growth rate for wind energy is around 15%, 12% for bio-natural gas and 20%

for solar energy. According to EU Commission, Germany is expected to double the share of

renewable energy sources in the final energy consumption to 18% by 2020. E.ON has planned to

expand its renewable generating capacity to 10 GW by 2015. In 2011, it recorded 26% increase in

sales from renewables mainly due to increased generating capacity in the United Kingdom,

Denmark and the US. It is also developing and building offshore wind farms and foresees potential

demand for biomass and solar-thermal energy.

According to in-house date, large wind offshore projects in Europe and Asia-Pacific are scheduled

to be completed in 2018-2020. During 2011, the company achieved 600 MW of increase in

renewable capacity. Besides, the company recorded increase in generation units by 29% to 10.2

billion kWh from its wind & solar assets. Apart from expanding its global renewable energy

portfolio, the company is promoting the development of new renewable technologies. The

increasing importance of renewable energy coupled with the strong focus of the company on

expanding its generation portfolio would promote its growth and boost its revenues.

11.5.4.2 Strategic Investment Approach

E.ON has planned capital investments of €7 billion for the period 2012, of which one fifth will be

spent on the maintenance of existing assets and the remaining towards organic growth prospects.

Its planned investment for 2012 includes 23% towards generation, 23% towards renewables, 15%

towards Germany, 9% towards optimization & trading, 9% towards exploration & production; 6%

for Russian operations and the remaining 15% towards other EU countries. Its investment

approach is mainly focused towards Germany, with substantial investment for expansion of

conventional generation portfolio along with power and gas infrastructure. During 2012, E.On

plans to invest €1.6 billion for the expansion and maintenance of conventional generation portfolio;

about €1.6 billion towards renewable assets with focus upon offshore and onshore wind farms in

Europe and the US. Besides, it also has plans to invest approximately €0.6 billion each towards

trading for gas transport and storage infrastructure; and for exploration & production with

investments towards development of gas and oil fields. Moreover, its one sixth of planned

investments is towards Other EU countries segment with focus upon energy network maintenance

in Sweden and infrastructure expansion in Hungary and Czechia. E.On‟s planned investment

consists of €5.7 billion for 2013, with main focus upon generation and other EU countries segment.





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These investments enable the company to continue to operate successfully and to grow even in

uncertain market conditions.

11.5.4.3 Business Partnerships

E.ON could stimulate its growth through various business partnerships. In 2011, the company

forged a strategic partnership with Brazil‟s MPX, for the expansion and construction of

conventional and renewable sources with total generating capacity of around 20 GW. It would

provide opportunity to be largest private energy player in Brazil with 20% market share in the

generation energy market. It is also focusing upon the expansion and potential partnerships in

Turkey and India. Such strategy of expanding in high growth markets through various partnerships

would enable the company to reap higher benefits, mitigating business risks.

11.5.4.4 Growing Demand for Electricity

The demand for electricity is growing on year-on-year basis, which will in turn open new growth

opportunities for the company. In 2008, non-OECD nations consumed around 47% of the world‟s

total electricity, and their share of world consumption would grow during the projection period and

by 2035, non-OECD nations would account for almost 60% of world electricity use. During the

forecast period, total net generation in the OECD nations is expected to grow at a steady pace per

year. E.ON has global presence and could leverage its strengths to cash in on the growing

demand for electricity.

11.5.5 E.ON AG, Threats

11.5.5.1 Destabilization of Middle East and North Africa

Recent destabilization of the Middle East and North Africa resulting in steep hikes of Brent and

other crude oil prices pose several new challenges to E.On. According to The Institute of Energy

Economics, Japan (IEEJ), the Brent crude future price reached $110/barrel at the end of February,

2011, and topped $115/barrel on March 1. For the near future, crude oil prices are expected to

remain firm driven by an actual Libyan oil supply interruption and the destabilization's expected

spillover to major oil producing countries. In several cases, gas prices rise some six months after

crude oil hikes are reported. Responding to hike in petroleum products price following the Brent

spike, the gas prices in European countries are expected to soar substantially toward the second

half of 2011. As a result, gas prices could deviate further from the current gas supply/demand

situation, which would turn a cause for concern to E.On. In such light, the request to peg long-term

contract gas prices to spot prices is difficult to withdraw for E.On, which is urgently required to

promote its business realignment.

11.5.5.2 Reliability Concern of Russian Gas Supplies

E.ON AG procures natural gas from Russia, Norway, Germany, Netherlands and the UK. For the

fiscal year ended 2011, the company‟s subsidiary E.ON Ruhrgas, purchased a total of 660.5 billion

kWh of gas, was procured from both domestic and foreign producers. The company procured 27%

from Russia, followed by 23% from Norway, 22% from Germany, and 18% from Netherlands. The

recent events in some Eastern European countries have heightened concerns in parts of Western

Europe about the reliability of Russian gas supplies. The company‟s reliance on a few markets

highlighting uncertainty and non-reliability of gas supplies could increase its business risk.





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11.5.5.3 Volatile Macro Environment

E.ON could face several challenges while executing its expansion strategy due to global economic

slowdown. According to The World Bank, overall global GDP is expected to be 3.3% in 2011,

before picking up to 3.5% in 2012, well below the 8.1% growth rate in 2007. Economic growth

slowed sharply in Europe, the US and Japan. Though economic recovery continued in the first half

of 2010, it was affected by the turmoil in sovereign debt markets during the second quarter of

2010. The world economy expanded at an annual rate of approximately 5.25% during the first half

of 2010. Although Europe has overcome various crises, economic recovery is still weak. In 2010,

fears of a sovereign debt crisis surfaced in various European countries, including Portugal, Ireland,

Italy, Greece, Spain, and Belgium. Such crises could lead to increasing deficit, followed by an

increase in debt and economic downturn, ultimately leading to high defaults. In November 2010,

the IMF warned about a possible, full-blown sovereign debt crisis in the rich nations. The current

uncertainties in economic conditions influence international capital market and make it difficult for

the company to plan budgets and forecasting.

11.6 Locations and Subsidiaries

11.6.1 Head Office

E.ON AG

E.ON-Platz 1

Duesseldorf

Nordrhein-Westfalen

ZIP: 40479

Tel: 49 211 45790

Fax: 49 211 4579501





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11.6.2 Other Locations & Subsidiaries

Table 30: E.ON AG, Subsidiaries E.ON Engineering AcademyRatcliffe-on-Soar Power Station

Nottingham

Zip: NG11 0EG

Tel: 44 2476 191500

Url: www.eon-engineeringacademy.com

Fax: 44 2476 190701

United Kingdom

E.ON Kainuu OyKeskuskatu 24

SUOMUSSALMI

Zip: 89600

Tel: 358 08 0092000

Fax: 358 01 02261521

Finland

E.ON Distribucion S.L.Calle del Medio, 12

Santander

Zip: 39003

Tel: 34 942 246000

Fax: 34 942 246034

Spain

Source: Company Website, Annual Reports

E.ON France S.A.S.5, rue d'Athenes

Paris

Zip: 75009

Tel: 33 1 44633998

Url: www.eon-france.com

Fax: 33 1 44633999

France

E.ON Ceska republika, s.r.o.Stredisko sluzeb zakaznikum

Postovni prihradka 54

Brno

Zip: 65654

Tel: 420 840 111333

Url: www.eon.cz

Czech Republic


E.ON Energie AGBrienner Strabe 40

Munchen

Zip: 80333

Tel: 49 89 125401

Url: www.eon-energie.com

Fax: 49 89 12543906

Germany


E.ON Ruhrgas AGHuttropstraße 60

Essen

Zip: 45138

Tel: 49 201 18400

Url: www.eon-ruhrgas.com

Fax: 49 201 1843766

Germany

E.ON UK plcWestwood Way

Westwood Business Park

Coventry

Zip: CV4 8LG

Tel: 44 24 76424000

Url: www.eon-uk.com

Fax: 44 24 76425432

United Kingdom

E.ON U.S. LLC220 West Main Street

11th Floor

Louisville

KY

Zip: 40202

Tel: 1 502 6273225

Url: www.eon-us.com

United States

E.ON Sverige ABCarl Gustaf's a Vag 1

Malmo

Zip: 205 09

Tel: 46 40 255000

Url: www.eon.se

Sweden

E.ON Russia PowerKrasnopresnenskaya nab.

18 B, 23rd Floor

Moscow

Zip: 123317

Url: www.eon-russia.com

Russian Federation

E.ON Italia S.p.A.Via Amerigo Vespucci

Milano

Zip: 20124

Tel: 39 2 89448001

Url: www.endesaitalia.it

Italy

E.ON EspanaEd. Torre Picasso

Pl. 19. Pza. Pablo Ruiz Picasso s/n

E.ON Climate & Renewables GmbHVolkinger Strabe 4

Dusseldorf





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Madrid

MAD

Zip: 28020

Tel: 34 91 4184400

Url: www.eon-espana.com

Fax: 34 91 4184424

Spain

Zip: 40219

Tel: 49 211 45794100

Url: www.eon.com/en/unternehmen

Germany

E.ON Kraftwerke GmbHTresckowstrasse 5

Hannover

Zip: 30457

Tel: 49 511 43902

Url: www.eon-kraftwerke.com

Fax: 49 511 4393334

Germany

CHN Group Ltd.CHN House, Straits Road

Lower Gornal

Dudley

West Midlands

Zip: DY3 2UY

Tel: 44 1384 212992

Url: www.chngroup.co.uk

Fax: 44 1384 456773

United Kingdom

SAKAB ABNorton Cottage

Box 171

Kumla

Zip: 69285

Tel: 46 19 305100

Url: www.sakab.se

Fax: 46 19 577021

Sweden

Karlshamn Kraft ABMunkahusvägen 181

Box 65

Karlshamn

Zip: 374 21

Tel: 46 454 8502000

Url: www.karlshamnkraft.se

Fax: 46 454 19724

Sweden

E.ON Bayern AGHeinkelstrabe 1

Regensburg

Zip: 93049

Tel: 49 941 383900

Url: www.eon-bayern.com

Fax: 49 941 38393399

Germany

E.ON Energy Projects GmbHArnulfstrasse 56

Munchen

Zip: 80335

Tel: 49 89 125409

Url: www.eon-energy-projects.com

Fax: 49 89 12544121

Germany

E.ON Avacon AGSchillerstr. 3

Helmstedt

Zip: 38350

Tel: 49 5351 12330084

Url: www.eon-avacon.com

Fax: 49 5351 12383008

Germany

E.ON Wasserkraft GmbHLuitpold Strabe 27

Landshut

Zip: 84034

Tel: 49 8 7169402

Url: www.eon-wasserkraft.com

Germany

Interargem GmbHSchelpmilser Weg 30

Bielefeld

Zip: 33609

Tel: 49 521 33980

Url: www.interargem.de

Fax: 49 521 3398199

Germany

E.ON Engineering GmbHAlexander-von-Humboldt-Straße 1

Gelsenkirchen

Zip: 45896

Tel: 49 2 96015010

Url: www.eon-engineering.com

Fax: 49 2 96015011

Germany

E.ON BENELUX BVCapelseweg 400

Rotterdam

Zip: 3068 AX

Tel: 31 10 2895711

Url: www.eon-benelux.com

Fax: 31 10 2895088

Netherlands

E.ON Ruhrgas UK North Sea Limited129 Wilton Road

London

Zip: SW1V 1JZ

Tel: 44 20 30043700

Url: www.eon-ruhrgas-uk.com

Fax: 44 20 30043710

United Kingdom






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12 Vattenfall AB, Company Snapshot

12.1 Vattenfall AB, Key Facts

Table 31: Vattenfall AB, Key Facts

Corporate Address

Vattenfall AB, Jamtlandsgatan 99, Stockholm, Sodermanland and Uppland, Sweden



URL www.vattenfall.com Revenue (US$ m) 27,852 (2011)

Industry Clean Technology, Energy and Utilities

Locations Denmark, Estonia, Finland, Germany, Latvia, Netherlands, Poland, Sweden


12.2 Vattenfall AB, Company Overview

Vattenfall AB (Vattenfall) involves in power generation, transmission, distribution and sales of

electricity. It is also engaged in the production, distribution and sales of heat and other power

related services to private households and public and private industry players. It conducts energy

trading and lignite mining. Vattenfall operates in three major core markets namely, Sweden,

Germany, and the Netherlands. Vattenfall operates through three business segments, namely,

Generation, Distribution and Sales, and Renewables. Vattenfall is headquartered in Stockholm,

Sweden.

Vattenfall wants to be more profitable through cost cutting programme, which is aimed at reducing

SEK6 billion in costs by year-end 2013 and in fiscal 2011 it has reduced annual costs SEK4 billion.

The company is concentrating on core business by disposing non-core assets a fast pace

corresponding to a value of SEK37 billion.

12.3 Vattenfall AB, Business Overview

Vattenfall AB (Vattenfall) generates power through wind, nuclear, hydro, natural gas, coal and

biomass. It has presence in all parts of the electricity value chain. The company distributes and

sells electricity and heat to industrial customers, private households, and conducts gas production

and sales. Vattenfall operates in three major core markets namely, Sweden, Germany, and the

Netherlands. The company‟s trading unit, Vattenfall Energy Trading, provides portfolio and risk

management services to business customers. In 2011, the company generated 51% of power

through fossil fuels, 25% through nuclear power, 21% of power through hydro, and other 3%. In

2011, Vattenfall‟s power generation decreased by 3.3% to 166.7 TWh.

Vattenfall operates through three business segments, namely, Generation, Distribution and Sales,

and Renewables.





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In January 2012, Vattenfall completed the sale of Vattenfall Heat Poland S.A. to the Polish gas

company PGNiG S.A. In January 2012, the company completed the sale of the electricity

distribution network and heat businesses in Finland to the Lakeside Network Investments

consortium. In the same month, the company completed the sale of Nuon Belgium NV and Nuon

Power Generation Walloon NV in Belgium to ENI. In January 2012, Vattenfall reached a

consortium agreement with three partners in France, namely, ArcelorMittal, Rhodia, SNCF for the

coming hydro concessions later this year. On the occasion of the renewal of French hydroelectric

concessions, the four partners, l join forces under the name Force Hydro to bid for the

concessions tender to be launched by the French state in 2012. By targeting 2000 MW of the 5300

MW expected to be renewed in the coming years, Force Hydro aims to become a key player in

large hydro power generation in France. In December 2011, the company became a partner of

KIC InnoEnergy (KIC) and the primary goal of KIC consortium is to develop smart grids. In

December 2011, Vattenfall is participating in a unique project that allows wind energy to be stored

and converted to hydrogen gas. Vattenfall would be working on this project with collaboration of

other companies such as, Total and Siemens, as well as research institutions and environmental

organizations. In December 2011, the company announced that the market is waiting for its Volvo

V60 Plug-in Hybrid car, which is being jointly developed by Volvo Cars and Vattenfall and the

commercial production starts in the autumn of 2012. In the same month the company sold its

electricity distribution and district heating businesses in Finland to Lakeside Network Investments

consortium. In December 2011, the company completed the sale of Polish electricity sales and

distribution company Gornoslaski Zaklad Energetyczny. In November 2011, Vattenfall and the City

of Hamburg agreed to operate the electricity distribution and district heating in Hamburg as

partners. The City of Hamburg will acquire 25.1% of Vattenfall‟s electricity distribution and district

heating networks in Hamburg. In November 2011, the company purchased the licence for the new

wind farm from the German company, Sandbank Power GmbH & Co. for the construction of wind

farm with a power capacity of 576 MW. In October 2011, the company announced that it would

build a wind farm for SEK1.4 billion. In August 2011, the company reached an agreement with

Polish gas company PGNiG S.A. for the sale of Vattenfall Heat Poland S.A.

12.3.1 Distribution and Sales

12.3.1.1 Overview

Vattenfall‟s Distribution and Sales segment deals with end-customer market and includes the

unbundled and regulated electricity distribution business. It is responsible for electricity sales and

heat businesses, the regulated electricity distribution business and other downstream businesses.

12.3.1.2 Production

For the fiscal year ended December 2011, Distribution and Sales segment‟s gas sales decreased

by 11.5% to 51.6 TWh and heat sales decreased by 9.9% to 31.7 TWh. Electricity generation

decreased by 7.4%, to 15.1 TWh of which fossil based power decreased by 5.3% to 14.2 TWh and

biomass power decreased by 30.8% to 0.9 TWh. In 2011, external sales of electricity increased by

1.9% to 137.9 TWh.

12.3.1.3 Financials

For the fiscal year ended December 2011, Distribution and Sales segment‟s net sales decreased

by 6.2% to SEK155,299m and operating profit decreased by 33.4% to SEK 11,123m.





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12.3.1.4 Market View

The economic slowdown in its markets dampened demand for electricity, and warm weather

during the second half of the year led to lower sales of gas and heat. In 2011, several major

customers signed contracts to the company which will help the segment to boost its revenues and

expects more contracts to be signed in 2012. In Sweden, GE Real Estate AB, with its subsidiary

Roxanne Properties AB, extended its contract with Vattenfall, for a total of 66 GWh/year and

Metsä Tissue AB signed a new contract for three of its plants. Vattenfall will deliver 200 GWh/year

during a three year period. In the Netherlands, 2,000 members of NIFE, signed a new contract for

220 GWh and in Germany.

12.3.2 Generation

12.3.2.1 Overview

Vattenfall‟s Generation segment develops and builds production assets, generates electricity and

heat, and sells electricity in the wholesale market. The segment is further divided into three

divisions, namely, Asset Development, Production, and Asset Optimization and Trading. Asset

Development division involves in project development and execution of new build generation

projects in electricity and large modification projects in thermal power, heat, infrastructure, nuclear

power and hydro power. It is also responsible for the group‟s research and development activities

and engineering consulting business. Production division operates the company‟s lignite mining

and power generation assets and hydro plants. This division also operates combined heat and

power plants in Germany, Denmark and the Netherlands. Asset Optimization and Trading division

involves in optimizing the dispatch of all of company‟s generation assets.

12.3.2.2 Production

For the fiscal year ended December 2011, Generation segment generated 148.2 TWh of power

out of which 34.5 TWh is produced through hydro, followed by nuclear with 42.5 TWh, fossil fuel

with 70.8 TWh, others with 0.4 Twh. In 2011, Generation segment‟s heat sales decreased by

16.8% to 9.9 TWh and electricity generation decreased by 3.7% to 148.2 TWh.

12.3.2.3 Financials

For the fiscal year ended December 2011, the Generation segments net sales decreased by 5.2%

to SEK123,111m and operating profit decreased by 65.3% to SEK10,545m.


German parliament decided in June 2011 on a total nuclear phase out. All German nuclear plants

to be phased out by end of 2022. The estimated dismantling periods for Vattenfalls nuclear plants

include Brunsbuttel nuclear plant between 2019-2032 and Krummel nuclear plant will be

dismantled between 2019-2036.

12.3.3 Renewables

12.3.3.1 Overview

Vattenfall‟s Renewables segment involves in asset development, operation, and maintenance of

Vattenfall‟s renewable energy operations. It develops, operates, and maintains wind power and

upstream biomass. Renewables segment is further divided into four business units, namely,

onshore wind projects, offshore wind projects, generation wind, and biomass.





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12.3.3.2 Production

For the fiscal year ended December 2011, Renewable segment generated 3.4 TWh of power

through wind and reported 0.3 TWh external sales of electricity.

12.3.3.3 Financials

For the fiscal year ended December 2011, Renewables segment‟s net sales decreased by 50.7%

to SEK3,131m and reported operating profit of SEK496m as against net loss of SEK1,620m in the

previous year.


Growth in global wind power market will bring good business to the company. Global installation

capacity is expected to reach 765,236 MW by 2020 from 199,109 MW in 2010, at a CAGR of

nearly 14.4% during the period 2010-2020. Such growth in wind power market will bring huge

opportunities to the company. In the fourth quarter 2011, Vattenfall purchased license to build

Sandbank offshore wind farm from the German company Sandbank Power GmbH & Co. Permits

are currently in place for 96 wind turbines which will deliver a combined output of 576 MW.

Construction of the new Sandbank wind farm will commence when DanTysk is completed in early

2014.

12.4 Vattenfall AB, Major Products and Services

Vattenfall provides electricity, district heating and other related services to private households and

public and private industry sectors; and also trades in energy markets and conducts lignite mining.

The group‟s key products and services include the following:

Table 32: Vattenfall AB, Major Products and Services Products:

Electricity

Heat

Service:

Consultancy


12.5 Vattenfall AB, SWOT Analysis

12.5.1 Overview

Vattenfall AB (Vattenfall) is an energy company that holds significant market position in Europe.

The company's diversified energy mix and business operations, significant market position and

focus on research and development offers a competitive advantage. However, declining financial

performance and liquidity position remains a matter of major concerns to the company.

Additionally, changing laws and regulations and intense competition could pose challenges to its

operations. Nevertheless, the company has growth opportunities through strategic initiatives and

renewable energy market.





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Table 33: Vattenfall AB, SWOT Analysis

Strengths Weakness Diversified Business Operations Significant Market Position Focus on Research and Development

Declining Performance Weak Liquidity Position

Opportunities Threats

Business Restructuring Investments in Renewable Energy Growing Global Wind Power Market

High Cost of Offshore Wind Projects Laws and Regulations Intensifying Market Competition Sluggish Global Economic Growth


12.5.2 Vattenfall AB, Strengths

12.5.2.1 Diversified Business Operations

Vateenfall is well diversified both in terms of geography and in its balance of electricity, heat and

gas production. It has a balanced production mix comprising hydro, nuclear, coal, natural gas,

wind and biomass power, reducing its sensitivity to price changes or regulations that could affect

the profitability of the individual sources of energy. The company‟s biggest wind farms include

Thanet, Horns rev and Ormonde. Its largest power plants include Ringhals, Forsmark and

Janschwalde. Vattenfall operates through three segments, namely, Generation, Distribution and

Sale, and Renewables. Its Generation segment is further classified into Asset Development,

Production and Asset optimization and Trading. Its Asset Development division focuses on project

development and execution of new build generation projects in electricity and large modification

projects in thermal power, heat, infrastructure, nuclear power and hydro power. The Production

division operates lignite mining, power generation assets (including hydro power but excluding

other renewable generation assets) and combined heat and power (CHP) plants in Germany,

Denmark and the Netherlands. The company‟s Asset Optimization and Trading optimizes the

dispatch of all of Vattenfall‟s generation assets and hedges the production output of those assets

for maximum profitability within a given risk mandate. Vattenfall‟s Distribution and Sales segment

focuses on electricity sales and heat businesses, the regulated electricity distribution business and

other downstream business. The company‟s Renewable segment engages in asset development,

and operation and maintenance of renewable energy operations (except for hydro power). Thus,

the company‟s diversified operations and diverse mix of generation portfolio reduces the risk and

offers a unique competitive advantage.





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12.5.2.2 Significant Market Position

Vattenfall is one of the leading electricity generators in the Europe. It is the fifth largest generator

of electricity in Europe and the largest generator of heat. In Sweden, the company has

approximately 50% of the generation market, providing about 20% of the total electricity supply in

the deregulated market. The company is Sweden‟s largest network operator with 900,000 network

operators and in the Swedish retail market, the company has 15%-20% of market share. In

Germany, the company is the third largest electricity producer providing approximately 13% of

electricity used. The company has approximately 3.3 million customers and 2.6 million customers

in Germany. Vattenfall through its Dutch subsidiary Nuon, produces and supplies gas, electricity,

heat, and cooling. In the Netherlands, Nuon is the largest electricity supplier, largest supplier of

retail gas (based on number of customers), third largest electricity generator, and second largest

heat producer. Nuon serves approximately 2.6 million consumers, businesses and organizations in

the Netherlands and in Belgium. Besides, Vattenfall is a leading company engaging in the

development and demonstration of CCS technology (reduces Co2 emissions). Additionally, the

company is a major developer of wind power in the UK. In Belgium, Nuon is the third largest

electricity supplier and the third largest gas market supplier. Such strong market position across

various countries in Europe provides it an edge over its international and domestic competitors.

12.5.2.3 Focus on Research and Development

Vattenfall is one of the leading electricity generators in the Europe. The company has more than

65% of electricity generation in the Nordic and Central Europe market. Under electricity

generation, the company holds No.1 position in Sweden market; No.3 position in Germany,

Belgium, Finland and Netherlands and No.5 position in Poland. Under electricity and commodity

trading, it holds No.3 position in all the countries it operates. This was possible because of the

factors like risk diversification, competent management, and financial flexibility. During fiscal year

2010, the company generated 52% of the total electricity from fossil fuels followed by nuclear

(25%), Hydro (21%), and Others (2%). Furthermore, the company is increasing its portfolio of

assets in the wind energy sector. Such strong market position across various countries in Europe

provides it an edge over its international and domestic competitors.

12.5.3 Vattenfall AB, Weaknesses

12.5.3.1 Declining Performance

The company‟s declining financial performance reduces its customer‟s confidence. During the

fiscal year ended 2011, the company recorded revenue of SEK181,040m, a decrease of 15.23%

over 2010. Its operating profit also reduced to SEK23,209m in fiscal 2011, as compared to

SEK29,853m in fiscal 2010. Besides, the net profit of the company declined to SEK10,416m in

fiscal 2011, a decrease of 21% over 2010. During fiscal 2011, the company‟s total electricity

generation decreased by 3.3% to 166.7 TWh. Nuclear power generation decreased by 2.5%,

hydro power decreased by 2.5% and fossil-based power decreased by 5.2%. Wind power

generation increased by 55% to 3.4 TWh, and electricity generation based on biomass decreased

by 13% to 1.3 TWh (1.5). Additionally, Vattenfall‟s sales of heat decreased by 11.7% to 41.6 TWh

and gas decreased by 14.9% to 53.8 TWh.





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12.5.3.2 Weak Liquidity Position

Vattenfall‟s weak liquidity position indicates that the company is not in a position to meet its short

term obligations. During the fiscal 2011, the company current assets reduced to SEK146,115m, as

compared to current assets of SEK153,169m in fiscal 2010. Besides, the company‟s current

liabilities increased to SEK35,108m in fiscal 2011, as compared to current liabilities of

SEK33,184m in fiscal 2010. During fiscal 2011, the company‟s current ratio decreased from 4.62

in fiscal 2010 to 4.16 in fiscal 2011. Additionally, the company‟s cash and equivalents reduced to

SEK11,268m during fiscal 2011, whereas its cash and cash equivalents were SEK12,595m in

fiscal 2010. Lack of sufficient cash or cash equivalents would negatively affect the working capital

requirements of the company, thereby hampering growth and expansion plans.

12.5.4 Vattenfall AB, Opportunities

12.5.4.1 Business Restructuring

Restructuring of its business activities would help the company in enhancing its operations and

performance. In a strategic move, the company sold various businesses, in implementing its new

strategy. Under its revised strategic goal, the company is concentrating on its three core markets,

namely, Sweden, Germany and the Netherlands. It is also progressing its projects in other

countries that are key under its new strategic goal. In January 2012, the company legally

completed the sale Polish subsidiary Vattenfall Heat Poland S.A.(VHP), to Polish gas company

PGNiG S.A. The sale covers complete VHP operations including the combined heat and power

plants as well as the heat generation plants. During the same month, Vattenfall completed the sale

of its Finland's heat and electricity distribution network businesses to Lakeside Network

Investments, a consortium including companies such as 3i Group plc, 3i Infrastructure plc,

Ilmarinen Mutual Pension Insurance and GS Infrastructure Partners. The total purchase price of

transaction was around SEK14 billion. In January 2012, Vattenfall sold its Belgium businesses,

Nuon Belgium NV and Nuon Power Generation Walloon NV to ENI S.p.A for total cash

consideration of SEK1.4 billion. In December 2011, the company sold its Polish electricity sales

and distribution company Gornoslaski Zaklad Energetyczny(GZE) to Tauron Polska Energia S.A.

In July 2011, the company sold Vattenfall Power Consultant AB to Poyry PLC, to divest its non-

core assets. In May 2011, the company signed an agreement with Tullow Oil plc. According to the

agreement, Vattenfall would sell Nuon Exploration and Production B.V. to Tullow Oil plc. Such

restructuring and divestment is expected to provide better financial flexibility, by reducing its debt

burden and support the company to achieve its primary goal of becoming a leading

environmentally sustainable energy production company.

12.5.4.2 Investments in Renewable Energy

The company is focusing on sustainable energy development. It is investing in renewable energy

sources such as wind and hydro. Vattenfall's under its long term strategy is investing SEK26 billion

in wind power during 2011-2015. In January 2012, the company signed consortium agreement

with three partners, namely, ArcelorMittal, Rhodia and SNCF. According to the agreement, the four

partners together would bid for the concessions tender in France under the name Force Hydro,

aiming to become a key player in large hydro power generation in France. Recently, Vattenfall

purchased licenses from Sandbank Power GmbH & Co to build new wind farm in the North Sea.

The project is named Sandbank 24 and the construction will begin in 2014. The initial capacity of





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Sandbank 24 is around 576Mw and is estimated to expand further. Participation in such projects

provides support to the company's ongoing energy turnaround in Germany.

In October 2011, the company announced to build wind farm Zuidlob in west of Zeewolde in the

Netherlands. The company invested SEK1.4 billion in Zuidlob wind farm. The Zuidlob will be

Vattenfall´s largest onshore wind farm with an installed capacity of 122MW. The project is

expected to commission in mid 2013. In August 2011, Vattenfall also commenced the operation of

offshore wind farm Ormonde in the Irish Sea. The company together with Scottish Power

Renewables developing East Anglia project, which is the largest wind farm with a capacity of 7200

MW. In November 2010, the company launched offshore wind farm in England‟s south east coast.

The newly built, Thanet Offshore Wind Farm, comprises more than 100 turbines. It has a

generation capacity equal to the annual consumption of over 200,000 residential customers in the

UK.

12.5.4.3 Growing Global Wind Power Market

Growth in global wind power market is a positive sign for the company's wind energy business.

The key driver for the growth in wind installed capacity is favorable government policies for the

renewable energy sector, worldwide. In US, the wind power installations posted a buoyant growth

during 2001-2010. In Germany, the wind power installed capacity has also grown exponentially

during the 2000s.

Considering the UK market, in 2010, UK's total renewable power capacity contributed for high

share (excluding hydro) of the overall electricity capacity. As Vattenfall is the number one operator

of wind power in Sweden and the number two operator of offshore wind power in Europe, growth

in wind power market will support the company in its expansion initiatives in wind energy segment.

12.5.5 Vattenfall AB, Threats

12.5.5.1 High Cost of Offshore Wind Projects

Growth opportunities for the company could be limited by higher costs to develop offshore wind

projects. Compared to onshore wind farms, investment costs to develop offshore wind projects are

higher due to larger structures, complex logistics involved in installing towers, and higher costs of

offshore foundation, construction, installation, and grid connection. Turbine costs increase

significantly with increase in water depth; cost of cables for connecting deep offshore wind farms

to the grid also become a major factor. In winters, ice flows could cause problems to the sea bed

where turbines are installed.

Offshore wind turbines are estimated to be 25-30% more expensive and foundation costs are 2.5

to 3 times higher than those of onshore wind farms. Transmission cables are also more expensive

and therefore, transmission of wind power from wind turbines to transformer stations lead to

increased costs. Offshore turbines are the most expensive; accounting for 50-55% of the total

cost, though the share of turbines in the total cost is relatively less compared to onshore wind

projects, where they form around 70-75% of the cost. The other major components in terms of cost

share are foundation costs, which form around 17-20% of the total cost and cables and

transformer station costs, which form around 15-17% of the cost. The share of cable costs

increase with movement into deeper waters for wind power installations.





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12.5.5.2 Laws and Regulations

New government regulations related to the company‟s operations may result in significant

additional expenses, thus hampering its business growth. The company is subject to numerous

rules and regulations of various governments, national and local, in its area of operations.

Furthermore, it is also subject to various environmental norms and regulations relating to safety

and environmental protection. In a number of countries, these regulations and policies are likely to

be modified in the near future. In addition, the company‟s projects are in various phases of

development and any such change in policy may lead to increase in expenses, thereby affecting

its profitability.

12.5.5.3 Intensifying Market Competition

Vattenfall faces mounting competition from its competitors in its domestic markets. The industry

factors such as consolidation and expansion of various big players is further intensifying the

competition. Deregulation has opened up European markets for the numerous industrial players.

Competitors are expanding and capturing home markets. To gain a notable share of the markets,

various companies initiated quoting lower prices. Such price competition bearing higher costs of

production is affecting balances of various industrial players. Moreover, selective acquisitions by

several companies are playing vital role in leading to higher electricity prices and their ability to

grow. Thus, such heavy competition is a threat even to Vattenfall and its operations in various

markets. Additionally, intense competition poses a serious threat to the company‟s expansion

plans as well as creates a barrier while foraying into other markets, thus limiting its growth

potential.





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12.6 Vattenfall AB, Locations and Subsidiaries

12.6.1 Head Office

Vattenfall AB

Birger Jarlsgatan 33

Stockholm

ZIP: 162 87

Tel: 46 8 7395000

Fax: 46 8 178506

12.6.2 Other Locations & Subsidiaries

Table 34: Vattenfall AB, Other Locations

Vattenfall European AffairsAvenue de Tervueren 8

Brussels

Zip: 1040

Tel: 32 2 7377380

Fax: 32 2 7377386

Belgium

Vattenfall Estonia OUSuur-Joe 52

Parnu

Zip: 800 42

Tel: 372 44 77210

Fax: 372 44 77212

Estonia

Vattenfall Latvia SIA Riga International Airport

Riga

Zip: LV–1053

Tel: 371 70 68750

Fax: 371 70 68749

Latvia

Vattenfall UK78 Pall Mall

London

Zip: SW1Y 5ES

Tel: 44 20 31783973

United Kingdom






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Table 35: Vattenfall AB, Subsidiaries

Thanet Offshore Wind Limited20-22 Bedford Row

London

Zip: WC1R 4JS

Fax:

United Kingdom

Vattenfall Vindkraft Lillgrund ABStockholm

Zip: 16287

Tel: 46 40 6642290

Sweden

Ringhals ABVaeroebacka

Zip: 430 22

Tel: 46 340 667000

Url: www.ringhals.se

Fax: 46 340 665184

Sweden

Forsmarks Kraftgrupp ABJamtlandsgatan 99

Stockholm

Zip: 16287

Tel: 46 8 7395000

Fax: 46 8 378804

Sweden

Vattenfall Poland sp. z o.o.59 Zlota Street

Warsaw

Zip: 00-120

Tel: 48 22 5875000

Url: www.vattenfall.pl

Poland

Vattenfall Heat Poland SAModlinska 15

Warsaw

Zip: 03-216

Tel: 48 225 874900

Url: www.vattenfall.pl

Fax: 48 225 144208

Poland

Vattenfall Mega Norge NUFStockholm

Zip: 16287

Tel: 46 873 95000

Url: www.vattenfall.com

Fax: 46 817 8506

Sweden

Vattenfall Nederland BVKruisweg 803 A

Hoofddorp

Zip: 2132 NG

Tel: 31 23 5570150

Fax: 31 23 5570151

Netherlands

Vattenfall Europe AGChausseestrabe 23

Berlin

Zip: DE-10115

Tel: 49 30 81822051

Url: www.vattenfall.de

Fax: 49 30 81822055

Germany

Kernkraftwerk Brunsbuttel GmbHOtto-Hahn-Strasse

Brunsbuttel

Zip: 25541

Fax: 49 4852 892509

Germany

Vattenfall Verkko OyPatamaenkatu 7 pl2

Tampere

Zip: 33901

Tel: 358 20 5861911

Fax: 358 20 5864240

Finland

Vattenfall OyMaistraatinportti 4A

Helsinki

Zip: SF-00240

Tel: 358 20 58611

Url: www.vattenfall.fi

Fax: 358 20 5867499

Finland





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Vattenfall Danmark A/SStoberigade 12-14

Kobenhavn SV

Zip: 2450

Tel: 45 88 275000

Url: www.vattenfall.dk

Fax: 45 33 858586

Denmark

WEMAG AGObotritenring 40

Schwerin

Zip: 19053

Tel: 49 385 7552755

Url: www.wemag.com

Fax: 49 385 7552222

Germany

Mullverwertung Borsigstrasse GmbHBorsigstrasse 6

Hamburg

Zip: 22113

Tel: 49 40 731890

Url: www.mvb-hh.de

Fax: 49 40 73189115

Germany






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13 RWE Power AG, Company Snapshot

13.1 RWE Power AG, Key Facts

Table 36: RWE Power AG, Key Facts

Corporate Address RWE Power AG, Huyssenallee 2, Essen, Nordrhein-Westfalen, Germany



URL www.rwe.com Revenue ( US$ m) 5,333

Industry Energy and Utilities, Environmental and Waste Management Services

Locations Germany


13.2 RWE Power AG, Company Overview

RWE Power AG (RWE Power) is a Germany-based electricity generating company. The company

is principally engaged in the production of nuclear energy, windmill, lignite, hard coal-and gas-fired

nuclear, and hydro power in Continental Europe. It also focuses on the transmission and

distribution of power. The company is one of the largest producers of lignite in the world, with over

100 million metric tons a year of production. RWE Power is the largest electricity generator in

Germany. The power plant portfolio consists of 24 large-scale power plants and numerous smaller

generating facilities. The company also operates eight natural gas fired power plants. RWE Power

is headquartered in Essen, Germany.

13.3 RWE Power AG, Business Overview

RWE Power AG (RWE Power) is a leading electricity production and generation company in

Germany. The company is a wholly owned subsidiary of RWE AG group, which is the largest

utilities company in Europe. The company principally engages in the production of nuclear energy,

windmill, lignite, hard coal-and gas-fired nuclear, and hydro power in Continental Europe. In

addition, it focuses on the transmission and distribution of power. The company carries out its

business activities in Germany and near by region.

The company owns and operates eight lignite power plants namely Neurath, Frimmersdorf,

Weisweiler, Goldenberg, Berrenrath, Fortuna Nord, Wachtberg and Niederaubem with a combined

installed capacity of 10,172 MW in 2010. It also owns and operates five nuclear power plants

namely Biblis A, Biblis B, KKW Emsland, Gundremmingen B and Gundremmingen C with a total

installed capacity of 6,295 MW.

RWE Power's hard coal power plants include Ensdorf C, Gersteinwerk Werne Kv2, GW

Bergkamen A, Ibbenburen, Rostock and Westfalen A-C. In addition, the company owns and





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operates eight gas power plants including Emsland B, C; Gersteinwerk F – I; Gersteinwerk Werne

Kv1; Weisweiler VGT G, H; Bochum; Dortmund; GuD Dormagen; and Huckingen. Further, the

company's contractually secured plants include STEAG; RuhrEnergie; SaarEnergie; Other hard

coal; Neckar; Rhein-Main-Donau; Kaunertal; Schluchsee; and SEO Vianden.

The principal subsidiaries through which the company operates include Kernkraftwerke Lippe-Ems

GmbH, Kernkraftwerk Gundremmingen GmbH, Kernkraftwerk Lingen GmbH,

Gemeinschaftskraftwerk Bergkamen A OHG, Gemeinschaftskraftwerk Steinkohle Hamm GmbH &

Co. KG, Grosskraftwerk Mannheim AG, RE GmbH, Restabwicklung SNR 300 GmbH, Rheinische

Baustoffwerke GmbH, Rheinbraun Brennstoff GmbH, RSB Logistic GmbH, RWE Power Climate

Protection GmbH, RWE Power Climate Protection China GmbH, Schluchseewerk

Aktiengesellschaft, Speicherbecken Geeste OHG, and SRS Eco Therm GmbH.

The company has expansion plans to increase its generation portfolio. Currently, RWE Power is

construcing its second large-scale project, which is a twinunit hard coal facility at Hamm, which

would have an installed capacity of 1,528 MW.

13.4 RWE Power AG, Major Products and Services

RWE Power is an electricity generating company engaged in the production of mineral like lignite

as well as it also produces electricity and heat. The key products and services offered by the

company include the following:

Table 37: RWE Power AG, Major Products and Services Products:

Electricity

Heat

Lignite

Services:

Transmission

Distribution

Sales






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13.5 RWE Power AG, SWOT Analysis

13.5.1 Overview

RWE Power AG (RWE Power) is among the leading power generation companies in Germany.

The company has the largest market share in the German electricity output and generates

substantial portion of the nation's electricity output. Besides, the company is the world's largest

producer of lignite. It operates around 24 large-scale power plants and various other smaller

generating facilities. The leading position in the domestic market combined with strong backing of

its parent company RWE AG helps RWE Power to enhance its competitive position. However,

stricter government regulations relating to CO2 emissions could have a far reaching affects on its

business and operations.

Table 38: RWE Power AG, SWOT Analysis

Strengths Weakness Leading Electricity Generator: Germany Support of the Parent Company Sturdy Research and Development Activities

Aging Facilities Low Production Affecting Sales

Opportunities Threats Rising Electricity Demand in Germany Expansion Initiatives Continued Growth in Thermal Energy Generation

Intense Competition Government Regulations

Volatile European Economy

Source: Company Website, Annual Report, GlobalData, Power etrack, Company‟s‟ Database (July 9,2012)

13.5.2 RWE Power AG, Strengths

13.5.2.1 Leading Electricity Generator: Germany

The company is a leading electricity generator in Germany. RWE Power operates in Germany and

Hungary principally as a generating utility and lignite producer. RWE Power is also the world‟s

largest producer of lignite and has production capacity of around 108 million tonnes a year. The

power plant portfolio consists of 24 large-scale power plants and numerous smaller generating

facilities. The company caters to almost 45 million customer needs. Besides, RWE Power in 2010

produced 165.1 billion kWh of electricity and corresponds to almost 73% of its parent company‟s

generation capacity. The leading presence of the company helps RWE Power to gain both

financially and in terms of catering to the requirements of a much larger customer base.

13.5.2.2 Support of the Parent Company

RWE Power operates as a part of RWE AG, which is among the leading utilities in the world. RWE

is among the five leading electricity and gas companies in Europe. It is the No.1 power producer in





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Germany, stands at No. 3 position in the Netherlands and the UK. The company continues to

expand its position in Central and South-Eastern Europe. RWE engages in the generation,

transmission, sales, and trade of electricity and gas. As one of the leading power utilities in

Europe, RWE provides electricity to over 16 million customers and gas to nearly 8 million

customers. With over 110 years of existence, the company has established a robust brand image

in the market. This leading market position of the parent company gives RWE Power a significant

edge over its competitors and helps to pursue future growth initiatives.

13.5.2.3 Sturdy Research and Development Activities

RWE Power carries out a number of research and development (R&D) activities to accelerate its

growth. The company‟s R&D arm focuses on activities that could help in cost reduction and

process improvement, quality assurance, process control, and system development. It also

focuses on improving the existing manufacturing processes. RWE Power along with General

Electric, Zublin and DLR is engaged in ADELE (Adiabatic compressed-air energy storage (CAES))

project. Through the Coal Innovation Centre, the company engages in various research projects

for reducing and using CO2 at its Niederaussem power plant in Bergheim, which is the world's

most modern lignite-fired power-station unit. RWE Power is also engaged in developing the IGCC

(Integrated Gasification Combined Cycle) technology for sustainable climate protection. Besides,

the company also invests and participates in various climate protection projects under the Clean

Development Mechanism (CDM) and Joint Implementation (JI). The focused R&D activities enable

RWE Power to develop environment friendly techniques and methods to generate power.

13.5.3 RWE Power AG, Weaknesses

13.5.3.1 Aging Facilities

The company‟s substantial power generation assets are older than the average age, which affects

the operational performance. Of the total hard coal generation plants, 48% are older than average,

followed by 52% of the lignite based power plants are older than average. Going further, 70% of

the gas/oil based power plants are older than average and 38% of nuclear plants are older than

the average age of the total plants in the category. With substantial generation assets under

various categories becoming older, the company needs to spend additional amount towards

maintenance related activities. Besides, chances of incidents such as frequency of outages and

other operational incidents also increases, which could put pressure on RWE Power‟s generation

ability. In addition, the cost to maintain the plants also increases substantially.

13.5.3.2 Low Production Affecting Sales

The company‟s substantial power generation assets are older than the average age, which affects

the operational performance. Of the total hard coal generation plants, 48% are older than average,

followed by 52% of the lignite based power plants are older than average. Going further, 70% of

the gas/oil based power plants are older than average and 38% of nuclear plants are older than

the average age of the total plants in the category. With substantial generation assets under

various categories becoming older, the company needs to spend additional amount towards

maintenance related activities. Besides, chances of incidents such as frequency of outages and

other operational incidents also increases, which could put pressure on RWE Power‟s generation

ability. In addition, the cost to maintain the plants also increases substantially.





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13.5.4 RWE Power AG, Opportunities

13.5.4.1 Rising Electricity Demand in Germany

The electricity consumption levels are rapidly growing across the Europe region an particularly in

Germany. The company is principally involved in providing reliable and competitively priced

electricity to its customers. RWE Power has a wide operational presence in German. Due to the

growth prospects in the country‟s installed capacity and requirement of power, RWE Power could

capitalize on its expansion initiatives.

13.5.4.2 Expansion Initiatives

RWE Power has massive expansion plans to increase its generation portfolio. Currently, RWE

Power is constructing its second large-scale project, which is a twin unit hard coal facility at

Hamm, which would have an installed capacity of 1,528 MW. The power station is expected to be

commissioned by the second half of 2013. It is also engaged in building a dual-block lignite-fired

power plant in Neurath, Germany. The plant once operational would be able to generate 2,100

MW of power. Besides, RWE Power is building a state-of-the-art brown coal power station on the

Lower Rhine, which would comprise of two units and once operational would have a gross

generation capacity of 3,000 MW. Such expansion initiatives would help RWE Power to further

expand its generation portfolio and cater to the increasing demand for electricity.

13.5.4.3 Continued Growth in Thermal Energy Generation

The company generates significant amount of its electricity utilizing thermal energy sources. As of

2011, RWE Power's generation portfolio comprised majorly of lignite based power plants, and hard

coal based power plants. Of the total installed capacity non-renewable sources based power

plants contribute for more than 75% of its total power generation.

Germany's good coal reserves will support investment in coal-fired power plants. The government

of Germany is planning to build additional thermal power plants during the forecast period 2011-

2030, and majority of these projects will be coal-fired plants. Also, huge importance is being given

to establish more clean coal projects to reduce emissions from coal-fired thermal power plants.

Such opportunities provide significant growth opportunities for the company.

13.5.5 RWE Power AG, Threats

13.5.5.1 Intense Competition

The company operates in a highly competitive environment, where it is faces tough competition

from various players in its different segments of operations. RWE Power major competitors are big

players and have a significant dominant position in their respective markets. If the company is

unable to compete effectively, then its results of operations and the financial position would be

adversely affected and may limit the company‟s ability to grow further.

13.5.5.2 Government Regulations

The company‟s businesses are regulated by various national and local environmental laws and

regulations concerning its operations, products and other activities in the various jurisdictions in

which it operates. Growing importance of climate change and the emphasis on reducing carbon

emissions is increasing the role of various renewable sources of energy. Governments of various

countries and especially Germany is considering for tighter CO2 regime from 2013 onwards.





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Germany's nuclear fuel tax 2011 – 2016 would put pressure on the company's operations. The

company‟s earnings could be affected by regulations concerning emissions, fuel consumption and

safety. Non-compliance with these limits could lead to penalty payments. In addition, the political

conditions of the country also affect the company‟s business. The change in government policies

and regulations could have a negative effect on RWE Power's growth and expansion strategies.

13.5.5.3 Volatile European Economy

RWE Power generates considerable electricity using nuclear power plants and constitutes for

almost 18.6% of the total net generation capacity. It is imperative for nuclear generation plants to

adhere to strict regulations and these plants are exposed to significant risks. This includes the

potentially harmful effects on the environment and human health resulting from the operation of

nuclear facilities and the storage, handling and disposal of radioactive materials such as spent

nuclear fuel; limitations on the amounts and types of insurance commercially available to cover

losses that might arise in connection with its nuclear operations; uncertainties with respect to

contingencies and assessment amounts if insurance coverage is inadequate; and uncertainties

with respect to the technological and financial aspects of decommissioning nuclear plants at the

end of their licensed lives. Thus, with an unfavorable outcome associated with nuclear power

generation, the company would have to face unprecedented liabilities and expenses which could

materially affect its revenues and earnings.

13.6 RWE Power AG, Locations and Subsidiaries

13.6.1 Head Office

RWE Power AG

Huyssenallee 2

Essen

Nordrhein-Westfalen

ZIP: 45128

Tel: 49 201 1201

Fax: 49 201 1224313

13.7 RWE Power AG, Other Locations & Subsidiaries

Table 39: RWE Power AG, Other Locations

Stuttgenweg 2

Cologne

Zip: 50935

Tel: 49 221 4800

Fax:

Germany






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Table 40: RWE Power AG, Subsidiaries

Kernkraftwerk Lingen GmbHSchuttorfer Strasse 100

Lingen

Zip: 49808

Tel: 49 591 8601285

Fax: 49 591 8601290

Germany

Gemeinschaftskraftwerk Bergkamen A oHG der Evonik Steag GmbH und der RWE Power AGWestenhellweg 110

Bergkamen

Zip: 59192

Tel: 49 2389 720

Germany

Gemeinschaftskraftwerk Steinkohle Hamm GmbH & Co. KGHuyssenallee

Essen

Zip: 45128

Tel: 49 201 1201

Germany

Grosskraftwerk Mannheim AGMarguerrestrasse 1

Mannheim

Zip: 68199

Tel: 49 621 8680

Germany

Restabwicklung SNR 300 GmbHKruppstr. 5

Essen

Zip: 45128

Germany

Rheinische Baustoffwerke GmbHAuenheimer Str 26

Bergheim

Zip: 50129

Tel: 49 2271 75125468

Fax: 49 2271 75125717

Germany

Schluchseewerk AGSackingen Strabe 67

Laufenburg

Zip: 79725

Tel: 49 7763 92780

Url: www.schluchseewerk.de

Germany

SRS Eco Therm GmbHNeuenkirchener Strasse 8

Salzbergen

Zip: 48499

Tel: 49 5976 945633

Url: www.srs-ecotherm.de

Fax: 49 5976 945621

Germany


Appendix




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14 Appendix

14.1 Abbreviations

Table 41: Abbreviations

Abbreviation Full Form

ARegV Incentive Regulation Ordinance

BMU The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety

BMWi The Federal Ministry of Economics and Technology

CCS Carbon Capture and Storage

EEG Renewable Energy Sources Act

EKFG Energie- und Klimafonds

ELV Emissions Limit Values

ETS Emission Trading Scheme

FITs Feed-In Tariffs

GWB Gesetz gegen Wettbewerbsbeschränkungen

LCPD Large Combustion Plant Directive

NAP National Allocation Plans

NERP National Emissions Reduction Plan

TA Luft Technical Instructions on Air Quality Control

IGCC Integrated Gasification Combined Cycles

CCGT Combined Cycle Gas Turbine

GHG Greenhouse Gas

CEE Central and Eastern European

CAGR Compounded Annual Growth Rate

MW Megawatt

kW Kilowatt

GWh Gigawatt Hour

kWh Kilowatt Hour

$m Dollar Million

lCPD Large Combustion Plants Directive

DTI Department of Trade and Industry

Ofgem Office of Gas and Electricity Markets

CHP Combined Heat and Power

Source: GlobalData

Appendix




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14.2 Market Definitions

14.2.1 Power

The rate of production, transfer, or energy use, usually related to electricity. Measured in watts and

often expressed in kilowatts (kW) or megawatts (MW), it is also known as "real" or "active" power.

14.2.2 Installed Capacity

Installed capacity refers to the generator‟s nameplate capacity as stated by the manufacturer or

the maximum rated output of a generator under given conditions. Installed capacity is given in

Megawatts (MW) on a nameplate physically fixed on the generator.

14.2.3 Electricity Generation

Producing electric energy by transforming other forms of energy. Also refers to the amount of

electric energy produced, expressed in Gigawatt hours (GWh).

14.2.4 Electricity Consumption

Electricity consumption is a sum of electricity generated, plus imports, minus exports, minus

transmission and distribution losses and measured in Gigawatt-hours (GWh).

14.2.5 Thermal Power Plant

A plant in which, turbine generators are driven by burning fossil fuels.

14.2.6 Hydropower Plant

A plant in which, the turbine generators are driven by falling water.

14.2.7 Nuclear Power

The electricity generated by the use of the thermal energy released from the fission of nuclear fuel

in a reactor.

14.2.8 Renewable Energy Resources

Naturally replenishing energy resources limited in the amount of energy that is available per unit of

time. For example, biomass, geothermal, solar, wind can all be termed as renewable resources.

14.3 Coverage

This databook gives detailed information on Germany‟s thermal power market. It examines the

country‟s power market structure at a macro level and provides historical and forecast numbers for

generation and capacity up to 2020. The thermal power market has been analyzed in further detail

and also provides historical and forecast numbers for generation and capacity up to 2020 by fuel

type. The databook also discusses the market‟s regulatory structure, competitive landscape and

leading active and upcoming thermal power projects. It also presents the key deals announced in

country‟s thermal power sector since 2009.

14.4 GlobalData’s Methodology

GlobalData‟s dedicated research and analysis teams consist of experienced professionals with

marketing, market research and consulting backgrounds in the power industry, and possessing

advanced levels of statistical expertise.

Appendix




Page(93)

GlobalData adheres to the codes of practice of the Market Research Society (www.mrs.org.uk)

and the Strategic and Competitive Intelligence Professionals (www.scip.org).

The following research methodology is followed for all country databooks.

14.4.1 Secondary research and analysis

Capacity and generation data is collected and validated using a number of secondary resources

including, but not limited to:

Government agencies, ministerial websites, industry associations, the World Bank,

statistical databases

Company websites, annual reports, financial reports, broker reports and investor

presentations

Industry trade journals, market reports and other literature

Globaldata‟s proprietary databases like the Capacity and Generation Database and Power Plant Database

Further to this, the following secondary information is collected and analyzed to forecast the

country‟s power market capacity and generation through to 2020:

Country‟s macroecocomic scenario

Government regulations, policies and targets

Government and private sector investments

Utility expansion plans

Historic track record of the sector

14.4.2 Primary Research and Analysis

Secondary research is further complemented through primary interviews with industry participants

to verify and fine-tune the market numbers obtained through secondary research and get first-

hand information on industry trends.

The participants are drawn from a diverse set of backgrounds, including equipment manufacturers,

industry associations, government bodies, utilities, distributors, and academia. The participants

include, but are not limited to, C-level executives, industry consultants, academic experts,

business development and sales managers, purchasing managers, plant managers, government

officials, and industry spokespeople.

14.5 Disclaimer

All Rights Reserved.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any

form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior

permission of the publisher, GlobalData.

This report is a licensed product and should not to be reproduced without prior permission.

http://www.scip.org/

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