1. Natural Gas in the German Residential & Commercial Market

2. Key Questions What is the current situation? How does the framework change? Which are the consequences from using natural gas in the residential & commercial market? Which are the strategic answers of the gas industry? Which opportunities does mCHP offer?

3. apartments Source: state officies of statistics inclusing federal states from 1991 New Buildings – Overall Downward Trend With Declining Market Share 2006: 140,000 homes w/natural gas Forecast for 2030: -50%; of which 50% w/natural gas 2030

4. Loss in Market Shares as a Result of Upcoming Competition Market shares space heating/hot water absolute Source: E.ON Ruhrgas

5. High energy requirements of existing homes in the long term But: Existing Homes Remaining Core Market with High Energy Requirements Share of homes [%] Heat demand

6. Existing Residential Buildings in Germany 31 Dec 2006, Federal Office of Statistics Total residential buildings: 17.7 million Total apartments: 39.0 million Large potential for technologies involving renewable energies

7. The Gas Customers Voice: Rising Demand for Renewable Energies in Existing Homes 0% 5% 10% 15% 20% 19921993199419951996199719981999200020012002200320042005 Natural gas users increasingly shifting their focus to renewable energies 58 %60 %78 %58 %60 %61 %64 %59 %87 % Source: E.ON Ruhrgas Risk of losing approx. 5.7 bn m³/a

8. Key Questions What is the current situation? How does the framework change? Which are the consequences from using natural gas in the residential & commercial market? Which are the strategic answers of the gas industry? Which opportunities does mCHP offer?

9. Driver 1: Uncertain Trend in Energy Prices Natural gas Extra- light fuel oil Electricit y ? ? Source: Federal Ministry of Economics Dynamic development in particular for gas/oil

10. (10) EnEV (11) Betriebskosten Mietwohnungen (12) CO 2 -Gebäude- Sanierungsprg. (13) Energetische Modernisierung v. soz. Infrastruktur (14) EEWärmeG (15) Energetische Sanierung v. Bundesgebäuden (6) Einführung moderner Energie- management- systeme (14) EEWärmeG (1) KWK (2) Ausbau EE-Strom (3) CO 2 -arme KW-Technologien (18) Umstellung Kfz-St. auf CO 2 -Basis Driver 2: Energy and Climate Policy (Meseberg Package): power: 14%R & C: 46% (7) Förderprogramme für Klimaschutz und Energieeffizienz … (9) Einspeiseregelung für Biogas in Erdgasnetze (25) Energieforschung und Innovation Industry: 25% others: 15% Affecting all sectors Sector- specific Share 2006 [%] 14 out of 29 measures relevant to natural gas, residential and commercial (R & C) premium markets strongly affected

11. Most Important Consequences of Meseberg Package in Residential & Commercial Market (Date: Jan 2008) Amended EnEV* (new buildings) 2009 (and possibly 2012) More stringent limit values for primary energy requirements -30% each 2009: knock-out criterion for gas condensing boiler 2012: knock-out criterion for gas condensing boiler + solar Renewable Energies Heat Act (currently only new buildings) Compliance options Solar (4% collector area/m 2 useful area) Gas condensing boiler + solar Electric heat pump (>50%, min 3.3/4.0) Problematic for some EHPs. Gas heat pump (>50%, COP min 1.2) OK, achievable with gas heat pump Bio oil (>50%, in condensing appliance). Biomethane (>50%, only CHP) Discrimination against biomethane µCHP Possibly incentive for µCHP. (Mandatory) connection to group/district heat Discrimination against gas (w/renewable energies/CHP). Additional efficiency (-15% vs. EnEV*).

12. Key Questions What is the current situation? How does the framework change? Which are the consequences from using natural gas in the residential & commercial market? Which are the strategic answers of the gas industry? Which opportunities does mCHP offer?

13. Consequences Gas condensing technology alone no option in future for new buildings Take proactive steps to secure position of natural gas in new buildings as a trend market Goal: Defend nationwide gas supplies – object to extreme political stance (no natural gas in new buildings from 2020) Establish new technology options Existing buildings continue to be mass market with (so far) relatively free choice of technology Condensing boilers to be developed further as the basic technology with a focus on existing homes (costs, condensing boiler/solar, biomethane) Sales lost as a result of improved efficiencies/renewable energies to be compensated for by substitution of fuel oil Focus: customers with service connection as target group

14. Key Questions What is the current situation? How does the framework change? Which are the consequences from using natural gas in the residential & commercial market? Which are the strategic answers of the gas industry? Which opportunities does mCHP offer?

15. Bio- methan e Strategic Answer, Part 1: Expand Technology Portfolio - Combine Natural Gas and Renewable Energies Highly efficient condensing heating systems (existing) Gas heat pump to use ambient heat Natural gas Solar & gas condensing boiler

16. Strategic Answer, Part 2: Expand Technology Portfolio - Combine Heat and Power hocheffiziente Brennwertheizungen (Bestand) Umweltwärme durch Gaswärmepumpe Solarthermie & Gas-Brennwertkessel (Micro) CHP Bio- methan e Natural gas Highly efficient condensing heating systems (existing) Gas heat pump to use ambient heat Solar & gas condensing boiler

17. Key Questions What is the current situation? How does the framework change? Which are the consequences from using natural gas in the residential & commercial market? Which are the strategic answers of the gas industry? Which opportunities does mCHP offer?

18. Natural Gas-Based CHP to Curb CO 2 Emissions Existing single-family home as an example (annual heat + power balance) 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 district heat coal gas condensing power mix D gas condensing power with combined-cycle packaged CHP (group heat) micro CHP (optimised) CO 2 emissions in t/a e = 40% e = 32% e = 38% boiler

19. Opportunity: mCHP to Increase Gas Sales BW Grid electricity Gas µKWK - 2,900 kWh EFH + 5,000 kWh + 25% Gas: 21,000 kWh Electricity: 4,400 kWh Supplies Gas: 26,000 kWh Electricity: 1.500 kWh Supplies BW Grid electricity Gas µKWK + 28,000 kWh + 40% MFH Gas: 69,000 kWh Electricity: 42,000 kWh Gas: 97,000 kWh Electricity: 20,000 kWh Supplies - 22,000 kWh

20. Requirements for mCHP under Renewable Energies Heat Act Stirling concepts on the edge? Threshold value: 15% primary energy savings compared to grid electricity and condensing boiler EWärmeG (BaWü) EEWärmeG (Bund) total efficiency [%] electr. power ratio [-]

21. There is a future for natural gas in the domestic sector – but not this one … No solar panel, no wall insulation – lets go …. !