Transcript Slide 1

Presentation Arise
Ockelbo, oktober 2014
Per-Erik Eriksson
Arise in brief
Development since 2009
 Arise one of the largest independent wind power
operators in Sweden with the business model to:
– Sell electricity produced by own and co-owned onshore wind farms
– Develop, sell and manage wind farms for others
– 368 MW operational and under management, of which 266 MW owned
 Focus on the growing Swedish wind power market
− Long term government support and commitment to increase renewable
energy production
− Additional growth potential in Norway and Scotland
 Strong track-record of developing and operating wind
farms
– Vertically integrated business with industrial approach
– Successful track-record in securing revenues at competitive levels
 Arise AB is traded on NASDAQ OMX Stockholm since
2010
− Current market cap. of SEK ~ 600 million
− Strong shareholder base
300
80%
70%
60%
50%
40%
30%
20%
10%
0%
250
200
150
100
50
0
2009
2010
2011
2012
Total income, MSEK
2013
2014
RTM
EBITDA margin, %
800
715
700
599
600
500
351
400
247
300
200
100
36
88
0
 Experienced and reputable organization
2009
2010
2011
2012
2013
Current
run-rate
Power production, GWh
RTM = Rolling Twelve Months
2
A successful track record of developing and
operating onshore wind farms
Arise’s portfolio (30 September 2014)
Number of
projects
Geographic distribution of wind farms
Number of
WTGs
Total capacity
(MW)
Average capacity
per WTG
1
Oxhult, 24.9 MW
2
Råbelöv, 10.4 MW
3
Idhult, 16.6 MW
4
Södra Kärra, 10.8 MW
5
Blekhem, 10.8 MW
6
Gettnabo, 12.5 MW
7
Skäppentorp, 3.1 MW
8
Brunsmo, 12.5 MW
9
Fröslida, 22.5 MW
10
Kåphult, 17.5 MW
11
Jädraås, 101.5 MW
12
Skogaby, 7.2 MW
13
Stjärnarp, 5.4 MW
14
Bohult, 12.8 MW
Wind farms in operation or construction phase
In operation
Under construction
14
113
266
2.4
-
-
-
-
Project portfolio
Permits received/acquired
8
88
275
3.1
Permit applications
13
172
554
3.2
Project planning finalised
1
6
12
2.0
Signed land lease agreements
5
30
77
2.6
41
409
1,183
2.9
Total portfolio
11
 Arise has all relevant resources to develop, construct and operate onshore
wind power projects expeditiously and cost efficiently
4
– Proprietary competence has been built up from the execution and operation of projects
 In addition to the portfolio above, Arise has two projects under development in
Scotland (approx. 120 MW)
5
14
1 9
10 13
12
2
3
7
6
8
In operation (164.6 MW)
Arise’s share in JV
3
Jädraås wind farm – a successful project from
start to finish
General project information
Project start / finished
Number of WTGs
Capacity
Estimated production
Estimated lifetime
Buyer (50%)
Commentary
Nov 2011 / June 2013
66
203 MW
570 GWh
25 years
Platina Partners (Arise hold 50%)
Project management
Arise (including installation, turbines,
construction, grid connection and data)
Suppliers
NCC, Vestas, Siemens, ABB, Vattenfall
Day-to-day operations
Arise
 Jädraås wind farm, situated in Ockelbo Municipality close to Gävle, is
Northern Europe’s largest onshore wind farm
 When acquiring the project all permits where in order, however Arise
had to manage financing, detailed planning, grid connection and
procurement of suppliers
 Construction included the creation of a road network, the casting of
foundations, transport of materials, establishment of electricity grids,
as well as the construction and installation of the 119 metre high
turbines
 Thorough preparations coupled with an experienced and competent
management delivered the project according to time schedule and
below budget
 Total investment approx. SEK 3.2 billion
4
Produktion 2013 (MWh), ej full produktion
5
Produktion 2014
6
Historical power and certificate price
development
Swedish electricity and certificate spot price 2009-2014YTD
Commentary
1,300
 Prices are trading below 5 year
average
1,200
- Low coal and CO2 prices
SEK / MWh
- Macroeconomics
1,100
- Good availability in Swedish
and Finnish nuclear power
1,000
 Slight improvement in forward
prices during the summer:
900
800
- Correction from extreme low
price environment
700
- Hydrological balance
improving (deficit)
600
 The certificate price has been
negatively affected by a surplus
in the system
500
400
300
200
100
0
Aug-09
Aug-10
Electricity price. Spot
Aug-11
Aug-12
Certificate price. Spot
Aug-13
Aug-14
Average 2009-2014
Source: Nord Pool Spot, NASDAQ OMX Commodities Europe, SKM, Bloomberg
7
Timmar
Antalet fullasttimmar ökar
Parker byggda, år
Attractive fundamentals for wind power in
Sweden
Availability of land
Strong wind resources
Strong grid
Balance power
Wind (5%)
Thermal (11%)
Hydro (41%)
Nuclear (43%)
9m 2013
 Sweden has one of the lowest
population densities in Europe
and large land areas available
for wind power
 Many potential project sites
offer attractive average wind
speeds
 Sweden has a strong
electricity grid that covers a
large portion of the country
 Load factor is the most
critical component in making
wind power profitable
 Interconnectivity with
neighboring countries
enables export and import to
balance supply and demand
 Large share of hydro power in
Sweden and the other Nordic
countries offers a large
resource of balance power for
intermittent renewable capacity
in Sweden and neighboring
countries
Sweden is resource wise one of the most attractive onshore wind power markets in Europe
Source: Svenska kraftnät, the Swedish Energy Agency
9
Development of wind power in Sweden
Targets for renewable energy in Sweden
Installed wind power in Sweden
TWh
TWh
30.0
12.0
MW
5,000
4,470
4,500
25.0
10.0
10.4
20.0
3,745
4,000
3,500
8.0
2,798
15.0
6.0
2.8
10.0
3,000
2,500
2,163
2,000
1,560
4.0
1,500
1,067
831
13.3
5.0
2.0
404
452
509
571
0.9
0.9
1.0
1,000
500
0.0
0.0
2002 - 2011
2012
2013 - 2020
1.4
2.0
2.5
3.5
6.1
7.0
9.9
0.6
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
TWh
0
MW
 The Swedish electricity certificate market was established in 2003 with
the goal of increasing renewable electricity production by 25 TWh
between 2002-2020. Up until 31 December 2011 Sweden reached an
increase of 13.3 TWh
 Swedish wind power capacity has increased rapidly since the
government renewable energy target was set in 2002 and the
certificate market was established. Current installed capacity is ~10
TWh or ~4,500 MW
 Since 1 January 2012, Sweden and Norway have a common market
for electricity certificates. The goal is to increase renewable production
by 26.4 TWh jointly, i.e. 13.2 TWh per country. Sweden added a total
of 2.8 TWh in 2012 of which 68% was wind power
 In 2009 the Swedish Government set a planning frame of 30 TWh
wind power by 2020, comprising of 20 TWh onshore and 10 TWh
offshore
 Another 10.4 TWh is still to be added until 2020 (including 2013)
 Wind power growth will thus be integral in reaching the targets set out
by the Swedish government
Source: Swedish Energy Agency
10
Reserv
11
Rule of thumb
 Megawatt (MW) = Capacity measure
– 1 wind turbine generator (WTG) 1.6-3.0 MW
 Megawatt hour (MWh) = Energy (production) measure
– 1 MW wind power  2,400 – 3,600 MWh in a full year
– 1,000,000 MWh = 1,000 GWh = 1 TWh
– 1 TWh ~ 135 WTG á 2.5 MW
 Swedish long-term target framework for wind power is 30 TWh
− Of which 20 TWh onshore wind power (3,000 – 5,000 WTG’s)
 Investment cost
− ~ EUR 1.5 million / MW
− ~ EUR 3-4 million / WTG
12
Our conclusions
Mid and long term Nordic price development
 Power prices:
- Mid term:
Side wards:
Price development on coal sets the scene as well as
industrial energy consumption in Europe
- Long term:
Up:
Need for new production capacity due to aging nuclear
fleet in Sweden, new interconnectors to regions with higher
power prices.
To attract new capacity the power price has to increase
 Certificate prices:
- Mid term:
Up:
Proposed quota increase by the authority will reduce
current surplus and increase price. Positive political
momentum
- Long term:
?:
Depending on how the demand for new environmental
friendly production develops
13
The Swedish national grid and bidding areas
The Swedish national grid
 The Swedish electricity grid can be divided into three levels: local grids, regional
transmission grids and the national transmission grid
 Svenska Kraftnät manages Sweden's national grid, which includes about 15,000 km
transmission lines, substations and international 400 and 220 kV interconnectors
 Efficiency, safety and the long-term planning are three primary aims. Expansion
planning, maintenance and operational supervision are required to fulfil this
 As system operator, Svenska Kraftnät is responsible for maintaining balance in the
power system
The four bidding areas
 In November 2011, Svenska Kraftnät divided the Swedish electricity market into four
bidding areas
 The decision to introduce bidding areas was part of the EU’s attempt to create a
common European electricity market
 The borders between the bidding areas are drawn where there are congestions in the
national grid for electricity
 The bidding areas help identify where in Sweden the national grid needs to be
expanded and where increased electricity production is required to better meet regional
consumption and thus reduce the need to transport electricity long distances
 The surplus demand in Southern Sweden and surplus supply in Northern Sweden, in
combination with limited grid capacity, leads to, on average, slightly higher prices in the
southern part of the country
 In addition, producers in generation deficit regions generally receive a grid benefit
versus a grid cost in surplus regions
Source: Svenska Kraftnät
14
The Swedish – Norwegian certificate system
Introduction to the certificate system
 The certificate system is a market based support system that first
came into effect in May 2003 in Sweden and is designed to
support the build-out of new renewable energy capacity
 Through the certificate system, producers of renewable energy
receive electricity certificates during the first 15 years of
operation for each produced MWh
-
-
Supply is determined by the amount of renewable energy
production entitled to receive certificates and the number of such
certificates producers decide to sell
Demand is determined by the statutory quota obligation and the
total electricity consumption
 The system is financed by consumers of energy (some energy
intensive industries are exempt) via the electricity bill
Current and new proposed quota obligation
30%
25%
20%
15%
10%
5%
0%
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
Current quota
New proposed quota
-
The joint market is supported by the existing Swedish certificate
system and the introduction of a Norwegian certificate system
-
The combined objective of the two systems is 26.4 TWh of new
renewable energy in the period 2012-2020
 The next checkpoint in the certificate system is 2015 when the
regulators have the opportunity to adjust imbalances. In February
2014, the regulators in Sweden and Norway proposed technical
adjustments to the certificate quota level as a measure to reduce
the surplus of certificates/spur demand in order to achieve the
common goal
-
In order to ensure that the objectives are achieved, the regulators
may propose technical changes to the system energy every four
years at pre-determined checkpoints/control stations
 The proposed adjustments would be implemented from, and
including, 2016 and mean that the quota obligations are
increased by approximately 8 TWh per year between 2016-2019
 In 2012 Norway joined Sweden in the certificate system to create
a joint certificate market up until and including 2035
 A combination of high build-out pace of renewables and lower
than expected electricity consumption have resulted in a surplus
of certificates. The Swedish Energy Agency therefore proposed
an adjustment of the current quota obligation in February 2014
The government regulated certificate system is a robust
market based system with long-term commitment
Source: Swedish Energy Agency
15
Variations in wind energy
Energy content of wind
Energy content of wind
 The output of wind energy is dependant on the energy content of the wind and how it varies over time. Statistics on the output of all wind
turbines that have been officially registered with the Swedish Energy Agency show that between 1991 and 2010 the energy content varied
from 84% to 116% of an average year with a standard deviation of 9%
 Average monthly production varies from around 5% of an annual production in July and over 11% in November and December
16