RWE npower
Company Presentation
January 2009
RWE npower
PAGE 1
Introduction
RWE Group – Key Information
RWE npower
PAGE 2
RWE npower as part of RWE Group
>
RWE npower is a leading UK energy company, operating within the RWE Group, one of Europe’s largest
industrial companies
>
The RWE Group has over 60,000 employees worldwide. RWE npower employs over 11,500 employees at 60
sites across the UK
>
The turnover for the RWE Group was €42.5 billion in 2007. RWE npower’s turnover for 2007 was €8.9 billion
>
RWE’s core businesses electricity, gas and energy services
>
RWE’s core markets are Germany, UK and central Eastern Europe
RWE npower
PAGE 3
RWE Group Structure – April 2008
RWE AG (Group Centre)
CEO
RWE
Power
CFO
RWE
Dea
HR
RWE
Supply & Trading
COO
RWE
Energy
CSO
RWE
Innogy
RWE npower
RWE npower 2007
% of Total RWEGroup1
8,925
20%
724
11%
>
Revenue (€ million)
>
Operating Result (€ million)
>
Employees
11,975
19%
>
Generation Capacity (MW)
10,825
24%
1 Excluding
American Water
RWE npower
PAGE 4
More Growth, Less CO2 – Our Strategic Roadmap for 2012
What we aim to do
Target for 2012
Defend and expand existing margins in RWE key
markets Germany and UK
GER: defend/grow margins on current volumes
UK:
defend/grow volumes and profitability
Increase level of regional diversification
Share of non-German operating result grows from 36%
(2007) to 40 – 50%
Boost proportion of renewables in our generation
portfolio while creating value
More than tripling of installed base to 4,500 MW
Reduce carbon exposure
Reduction by 20% by 2015 (compared to 2006
emissions)
Strengthen gas midstream activities
Profitably increase contracted European gas supply
purchase volume from 40 to 60 bcm p.a.
Grow equity gas business organically
Doubling of hydrocarbon production by 2012/2013 to
12 bcm p.a.
RWE npower
PAGE 5
RWE Today: One of the Top 5 Integrated European Utilities
RWE Core Markets
Leading Positions in Core Markets
Product
Electricity
Gas
No. 2
No. 3
No. 3
No. 3
Market
United Kingdom
Poland
Germany
Czech
Republic
Netherlands
Slovakia
Luxembourg
UK
> No. 2 in
Hungary
Hungary
Germany
CentralEastern
Europe
Austria
> No. 3 in
Slovakia
> No. 1 in
the Czech
Republic
> Leading position
in Hungary
> Starting position
in Poland
Electricity
Gas
Water
Europe
Among top 5
No. 6
We have leading positions in two of Europe’s largest markets as well as in strongly growing
CEE markets and own a large upstream position in both Europe and North Africa.
RWE npower
PAGE 6
Outlook for 2008
20071
€ million
External revenue
20081
forecast
42,507
Above previous year
EBITDA
7,902
At least on last year’s level
Operating result
6,520
At least on last year’s level
RWE Power
2,617
+ > 10%
RWE Dea
492
+ > 10%
RWE Supply & Trading
532
Below last year’s level
RWE Energy
2,355
Single-digit percent increase
RWE npower
724
Below last year’s level
Net income
2,659
+ > 10%
Recurrent net income
2,977
+ > 10%
Capex on fixed assets
4,065
ca. € 6 bn
1 Water
Division reported as discontinued operations. Capex 2007 including Water Division, 2008 excluding Water Division
RWE npower
PAGE 7
The Five Values of RWE
> Customer Focus
We put customers first in becoming the
supplier of choice in our chosen markets.
We build enduring commercial
relationships which extend well beyond
the transaction. We are a respected
household name, acting with clarity and
honestly in everything we do. We act
decisively in building strong internal and
external relationships.
> Performance
We deliver commercial excellence by
creating the environment and
opportunities for all our people to achieve
their potential. We are passionate about
communication and teamwork in building
a culture of outstanding achievements.
> Forward Thinking
We encourage distinctive solutions to satisfy our
customers and achieve our business goals. We
challenge ourselves and the markets in the shaping
the future, whilst respecting the past. We are
leaders that anticipate chance and act in a timely
fashion.
> Trust
We put the business first whilst building a culture of
mutual recognition and respect. We all play our
part within our team and trust our colleagues to
play theirs. We act openly and honestly with
sensitivity.
> Reliability
We are committed to delivering our promises. We
take responsibility for all our actions considering
their impact on the business community and
environment.
RWE npower
PAGE 8
RWE npower
Key Information
RWE npower
PAGE 9
About RWE npower
> In August 2004 we combined all our businesses under one name: RWE npower
> We produce more than 10% of the electricity used in England and Wales
> We have more than 6,600,000 residential customer accounts and 400,000 business
customers including BT, Ford and Wembley Stadium
> We have been awarded the prestigious CommunityMark by Business in the Community for
our investment in the community
> For the second year running, we have been rated in the Times Top 50 companies ‘Where
Women want to Work’ and the Times Top 100 graduate employers
RWE npower
PAGE 10
From National Power to RWE npower
> 1991
Privatisation: National Power formed
> 2000
De-merger: National Power plc split into separate companies, Innogy and International
Power. Both listed in the FTSE.
> 2001
Final change from generation company to vertical integrated energy supplier.
> 2002
100% merger with RWE AG
> 2004
Company renamed RWE npower
> 2008
npower renewables created as UK arm of RWE Innogy
RWE npower
PAGE 11
Customer Acquisition
> RWE npower entered the residential electricity through acquisition of several former
regional supply monopolies
> This began with Midland Electricity (MEB) in 1999
> Followed by Yorkshire Electricity and Northern Electricity supply businesses in 2001
> Also acquired two independent suppliers; Calortex and Independent Energy
RWE npower
PAGE 12
RWE npower’s vision
To become the UK’s leading integrated energy company
Building a powerful
future
Turning people
into fans
With power
comes responsibility
Turning customers
into fans
RWE npower
PAGE 13
Responsible Energy
>
Our Corporate Responsibility policy sets out our approach to delivering an affordable and secure supply of energy to our
customers with the least impact on the environment possible
>
The Corporate Responsibility Committee is responsible for developing policy, setting targets and objectives for corporate
responsibility
>
Our partnership with Macmillan Cancer Support is now worth over £2 million. npower people were instrumental in
choosing Macmillan as our corporate charity and in continuing the partnership
>
Health through Warmth (HTW) was set up in 2000 – a partnership between npower, the NHS and the charity National
Energy Action (NEA). Its objective is to help vulnerable people living in cold, damp homes to improve their living
conditions. From 2000 – 2007, HTW has accessed £29.5m of practical help to improve the comfort and quality of life of
vulnerable people
RWE npower
PAGE 14
Energy Management Environment
RWE npower
PAGE 15
GB Generation Installed Capacity
British
Energy
15%
Centrica
5%
Others
19%
Others
23%
British
Energy
19%
Centrica
4%
Drax 5%
SSE
11%
EDF 7%
Scottish
Power 9%
E.ON 14%
RWE 15%
>
GB Generation Market Share 2007
Drax 8%
SSE
12%
Scottish
Power 7% RWE 9%
EDF 8%
E.ON 12%
Big 6 have approximately 50% of GB installed capacity
– Includes all the opted-out coal plant
>
British Energy has 15% of installed capacity and generates about 18% of total from nuclear power plants
>
Most other non-Big 6 companies generally have a gas-biased portfolio
– Major exceptions: Drax, International Power, BE, NDA
RWE npower
PAGE 16
Retail Business
Energy at Home and Work
RWE npower
PAGE 17
RWE npower is number 1 in electricity volume
Electricity Retail Volume Share TWh 2007
Others
14%
npower
17%
Others
British22%
Energy
8%
British
Energy
8%
EDF
Energy
17%
British
Gas
13%
SSE
16%
Gas Retail Volume Share TWh 2007
E.ON UK
16%
British
Gas
35%
GDF 6%
SSE
7%
npower
10%
E.ON UK
14%
Source: Cornwall Associates 2007
RWE npower
PAGE 18
We segment our customers in terms of behaviour to understand their
long-term value
Targeted Marketing
Driven Through
Brand/Promotions
> Cross sell
> Target advertising
> Sponsorship
Channel
> Remote
> Face-to face
Product/Proposition
> Payment method
> Dual fuel
> Green products
Service/Operational
Excellence
> Billing
> Call centre
> Meter reading
> Our strategy is to deliver segmented propositions which differentiate us from the competition
> We know the marketing channels and products that work best for each customer segment
> This supports our dual goals of growing market share while maintaining margins
RWE npower
PAGE 19
In the last five years we have transformed our product range to meet
our customers’ needs
Products & Services
Core
Green
Innovation
> Gas
> ‘Juice’
> ‘Gas Guardian’
> Electricity
> National Trust
partnership
> ‘Tracker’
product
> Dual Fuel
> Payment
methods
Energy Services
> npower
hometeam
> Installation &
service
Future
> Wind
> DCHP1
> CO2
management
> Solar
> Heat pumps
> Juice – a green electricity product matched to the output from the UK’s first offshore wind farm North
Hoyle
> National Trust partnership – green energy affinity programme donating £15/customer/year for low
carbon initiatives to the National Trust
> Gas Guardian – ‘price promise’ product fixed to competitors gas offering at a time of rising prices
> Tracker – launched in early 2007 and was the first product of its type; Tracker reflects changes in
wholesale energy costs by following an independent pricing index
> Formation of npower hometeam boosted through the acquisition of Homerserve’s gas service
business – provide heating maintenance and installation services
1
Domestic Combined Heat & Power
RWE npower
PAGE 20
We are preparing for the challenges of future growth
Challenges
RWE npower Actions
Environmental and social obligations
Developing affordable green energy products
Customer retention
Continue to improve customer service &
value proposition
Continuing strong competition
Maintain brand strength and develop further
channel offerings
Regulation
Proactively engaging with stakeholders
RWE npower
PAGE 21
Energy at Home and Work
> Since its launch in 1999 the npower brand has grown to be recognised be nearly 90% of the UK
population
> One of the UK’s leading energy brands
> Since 1999 customer base has grown from 500,000 to more then 6.6 million customer accounts
> npower business provides simple, essential energy services and products to its customers and is one of
the largest energy suppliers in this sector
> Sponsors of Test Cricket and proud to provide energy for the new Wembley Stadium
RWE npower
PAGE 22
Mixed Energy Generation
Mixed Energy Generation
CCGT
Coal-fired
Oil-fired
Cogen
Renewables
RWE npower
PAGE 23
Diverse Energy Generation
> RWE npower is one of the UK’s leading
electricity generators
> We have the capacity to generate around
10,800MW from coal, oil and gas fired power
stations along with wind, hydro and
co-generation plants
> We have a diverse fuel portfolio which ensures
a high degree of commercial flexibility to the
benefit of our customers
RWE npower
PAGE 24
RWE npower Generation
Didcot B
1,370MW
CCGT
Little Barford
680MW CCGT
Didcot A1
2,000MW
Coal
Great Yarmouth
420MW CCGT
Tilbury B1
1,000MW
Coal
Aberthaw
1,500MW
Coal
Cowes
140MW
OCGT
1
Fawley1
Littlebrook1
2,000MW Oil
1,000MW Oil
Opted-out under LCPD
RWE npower
PAGE 25
We have 3.6 GW of planned new gas plant and over 3 GW of coal site
options
RWE npower Key Fossil Plants & New Build Plans
New Build CCGT
Plant
New Build & Planned CCGT
>
Coal Site options
>
Blyth
Staythorpe
>
Pembroke
Staythorpe (1,650 MW)
– Construction started in 2007
– Alstom secured as EPC1 provider
– Commissioning expected in 2010
– Thermal efficiency of 58%
Pembroke (2,000 MW)
– Awaiting consent
– Alstom EPC1 option, option expires
30th Nov 08
– Commissioning expected in 2011
– Thermal efficiency of 59%
Further options: more than 8,000 MW
Coal Site Options
>
Blyth (1,600 – 2,400 MW)
>
Tilbury (1,600 MW)
Tilbury
1
Engineer, Procure & Construct
RWE npower
PAGE 26
npower cogen
> One of the largest cogeneration (combined heat and power) businesses in the UK
> 16 cogeneration plants on key customer sites with 2,000MW of total energy capacity
> Supplies power and heat to industrial customers as diverse as Lancaster University and
Esso
RWE npower
PAGE 27
npower renewables
> npower renewables is the UK arm of RWE Innogy. It is one of the UK’s leading renewable energy
developers
> npower renewables built the first offshore wind farm in the UK
> 17 onshore and 1 offshore wind farms with a total energy capacity of 400 MW
> 15 hydro sites located in Scotland and Wales with a total energy capacity of 59 MW
> Recently began construction of a £190m 90MW Rhyl Flats offshore wind farm scheme due to be fully
operational by mid 2009
RWE npower
PAGE 28
We are preparing for the challenges of future growth
Challenges
Environmental and CO2 targets
Uncertain energy markets
Maintain financial performance in a period
of rising investment
Engineering requirements
1
RWE npower Actions
>
Wind & CCGT1 new build
>
Nuclear framework discussions
>
R&D2 into CCS3
>
Pressing for regulatory clarity
>
Balanced new build strategy
>
Strong set of plant options
>
Planning ahead
>
Leveraging RWE Group scale economies
>
Substantial in-house expertise
>
Active recruitment
>
Knowledge share in RWE Group
Combined Cycle Gas Turbine; 2 Research and Development; 3 Carbon dioxide Capture & Storage
RWE npower
PAGE 29
Operations & Technology
Energy in Action
RWE npower
PAGE 30
Operations & Technology
> World leading in-house engineering expertise
supporting RWE npower Generation and RWE Innogy
> 700 staff in total with a turnover of ~£91m/annum
> Primary purpose is to support our own operations, but
also work for external customers through RWE Power
International
> Around 400 engineers and scientists providing
– Engineering support for current portfolio
– Expert advice on future generation strategy
– Research and Development
– Consents for new build
– Support for projects during construction
> Around 300 engineers and technicians providing
– Power plant repair and outage services
– Turbine rotor repair services at Ferrybridge workshops
RWE npower
PAGE 31
Starting from a strong position we aspire to become the UK’s leading
integrated energy company
Aspiration
We Will Get There By
Generation
Position
>
>
UK Market
>
>
Most developed energy market in
Europe
>
The best people
>
The strongest
generation options
Largest gas and second largest
electricity market in Europe
>
#2 Generation capacity
>
#1 Electricity sales volume
Retail
>
The brightest brand
The number 1 choice for
UK Retail customers
RWE npower
>
>
RWE npower
The right business
model
Significantly increase
market share
The leading UK energy
company in performance, innovation and
brand
RWE npower
PAGE 32