1. Portfolio- and Riskmanagement Optimization of energy costs and collateral Risks: Ralf Höper, Senior Portfolio Manager Vattenfall Europe Power Management GmbH September 30, 2009

2. 2 Moving… Market

3. 3 …without moving… Market

4. 4...move it! Market

5. 5 Vattenfall Europe Power Management GmbH Company2008 Hedgingvolumenca. 30 TWh Portfolio Manager5 Customerca. 60 Licence Since 2002

6. 6 Customer Development (Nordic and Germany) How it started –Bigger Muncipal utilities and some small trading companies –Products: Standard and non-standard power –Main focus: cost optimisation and market acess –Uncertain legal situation Today –Smaller utilities, joint ventures and industry –Outsourcing in case that energy is not core business –Strategic cross commodity approach (incl. financial products) –Information and know-how is key –Options –Added Convenience products (e.g. invoice service) Future –Paneuropean integration

7. 7 Internal Prices Distributors, Households, Industry Power Plants Sales Production Old Value-Added Wholesale Market Price Trading and Portfolio Management Power Plants Production New Value-Added Distributors, Households, Industry Sales Internal pricing process

8. 8 Looking back: Two price system On Demand delivery Wholesale prices Production Costs

9. 9 2016-01-19 Tytuł prezentacji, Imię i Nazwisko 9 Merging European market EU energy policy is main driver for convergence All national energy & emissions markets in EU 25 will converge towards an integrated European market Key features of this integrated European market: –Supply & demand determine prices –CO 2 is a major ‘global’ driver for electricity prices –First price correlation, then convergence –Price volatility driven by global commodities (i.e. oil, coal, gas) –Cross boarder trading to increase and more efficient For Poland, convergence towards this European market has significant implications Exchanges: Nordpool, EEX, APX, Powernext, TGE

10. 10 Forward market development: Poland

11. 11 Volatility…how to capitalize it? Risk ChanceProfit Loss Gaining on Flexibility Open contract set up Combination of wholesale products and structured products Active Diversification Market coupled Strategies Volatility is the most important ingredient for a profitable and efficient Portfoliomanagement Efficient Portfolios showing a well balanced risk-return- profile

12. 12 Flexibility to counter volatility t Euro/MW Market price curve Load forecast Oversupply Undersupply Low price: buy more High price: sell or buy less

13. 13 …the path to an integrated Riskmanagement Full supply Risk- management Competence Portfolio- management Structured Strategy Price …..where are you today and where do you want to be in the future?

14. Thank you for your attention….