Dr.-Ing. Peter Birkner, Executive Member of the Board, Mainova AG

Frankfurt am Main, Germany, October 23, 2012

The Power to Change –The Contribution of Municipal Companies

Transforming the Energy Sector – Looking beyond National Borders

Study of electrical power engineering and doctoral thesisat Technische Universität München (Dipl.-Ing., Dr.-Ing.)

Positions within RWE Group

Lechwerke AG, Augsburg, GER (11/1987 – 12/2004; Vice President, Business Unit Grid)

Wendelsteinbahn GmbH, Brannenburg, GER (1/2004 – 12/2008; Managing Director)

Vychodoslovenska energetika a.s., Kosice, SK (1/2005 – 8/2008; Member of the Board)

RWE Rhein-Ruhr Netzservice GmbH, Siegen, GER (9/2008 – 6/2011; Managing Director)

Mainova AG, Frankfurt, GER (7/2011 to today; Chief Technical Officer and Member of the Board)

Chairman Networks Committee, Eurelectric, Brussels (6/2008 to today)

Visiting Professor (Electrical Power Engineering) Technicka Universita v Kosiciach, (6/2005 to today)

Lecturer (Electrical Power Engineering) at Universität Bonn (1/2009 to today) and

Universität Wuppertal (6/2010 to today)

Curriculum Vitae Peter Birkner

Numerous publications and lectures on power engineering and economics

Mainova AG, a German player–Generation, sales and grid

Sales area house-hold customers

Grid areaGeneration area

Sales volumes:• Electricity : 8,609 Mio. kWh• Gas: 14,077 Mio. kWh• Heat: 1,973 Mio. kWh• Water: 42,318 Tsd. m3

Complete supply, partly heat

Complete supply except electricity, partly heat

Service area natural gas

Service area of Mainova affiliated companies

Service area of local and regional gas companies supplied by Mainova

Sales area big customers

Physical consequences of the German „Energiewende“

Providing electricity at the right time – smart market

1

2

Agenda: The power to change –The contribution of municipal companies

4

3 Providing electricty at the right place – smart grid

5 Technical strategy of Mainova

4

Interaction of smart grids and smart markets

6 New technologies and new challenges

The German „Energiewende“ is ambitious and is based on renewables, tough savings and imports

*) Assuming substantial efficiency increase and energy savings but also signigicant electricity imports!

*)

1

Limited import and export capacitiesAll European countries are increasing theinstalled capacity of renewables Renewable energy sources show asynchonous generation patternAre the electricity savings realistic?

We have to do some homework!

EU

GER

?

5

?

Percentageof power generation

Max

imum

cons

umpt

ion

Avai

labl

e po

wer

pla

nts

(con

vent

iona

l)

Impo

rt / E

xpor

t

Pum

ped

hydr

o st

orag

e

2010

2020

2050

Installed capacity of renewables

18 % 35 % 80 %

Pow

er

100 %

0 %

50 %

5 %

2000

A rate of 35 % of renewable Energy means to double the installed generation capacity

122 %

Note: The national energy concept assumes substantial efficiencyincrease and energy savings but also signigicant electricityimports!

1

+

Increasing the installed capacity of renewableswithout reversible storage results in a saturation

1

Installed renewable power

Renewable energies

Generation power /Power consumption

Time

Storage +

Absorption

SupplementStorage -

Renewable generation curves (today and tomorrow)

Conventional load curve

In the case that there are more than 35 % of renewables within the total

energy mix, the installed capacity has to be higher than the sum of maxi-

mum consumption, storage and export

Installed capacity

35%

Demand of energy (100%)

Conventional energies

Energy absorption

Additional loads (electrolysis, thermal storage, export)

Energy supplement

Additional generation (gas turbine, import)

Energy storage

Reversible storage, shifting loads and generation (P2G, batteries, pumped hydro storage)

Import / export 7

The presented scenario is modified through supporting and hindering factors

Supporting factors (less renewable capacity, less storage capacity)

Import and export of energy

Creating an European overlay grid (DC)

Coordination of demand and generation on a national level (reduction of synchronism)

Hindering factors (more renewable capacity, more storage capacity)

Grid congestions on a national level

Congestions on cross border lines

Installation of renewable energy sources in neighboring countries

Available power

Time

Available power

Time

Synchronism

(T↓)

Diversity

(T↑)

Region 1

Region 2

Region 1

Region 2

Total Total

1

From a technology point of view the German„Energiewende“ will be implemented in three steps

1

- Connection to the network- Extension and increase of flexibilty

of the network- Optimization and increase of flexibility

of thermal power plants

- Load shifts (DSM)- Increase of conventional electricity storage- New efficient applications for electrical

energy (e.g. heat pumps, electric vehicles)

- Reversible storage of electricity - New types of power sources (OPV)- Alternative use of CO2 (alga)- Dynamic stability of the system

by 2020 by 2030 by 2050

Energy supply and supplement

Penetration of renewable energy

35 %

80 %

45 %

Energy absorption

New reversible storages

Mainova has the know-how and the ability to make „Energiewende“ a reality

Existing devices can be used in orderto increase the flexibility of the system

2

Technologies for increasing flexibility in the electrical system

CCGT power plants(Irsching, block 4, η = 60%)

Flexible CHPs(Frankfurt, thermal connection of

steam and gas turbines as wellas boilers decouples electicity generation from heat production)

Virtual power plants(Frankfurt)

Controlled electrolytic processes(Frankfurt, 70 MW, production of Cl2)

Controlled cold-storage depots(Frankfurt)

1

3

5

4

1

2

3

4

5

2

(Concept)(Concept)

Chemical and thermal energies are indispensablein order to create enough storage capacities

Density of

Mechanical energy (1 m³ water, 4 000 m high)

Thermal energy(1 m³ water, 10 K warmer)

Chemical energy(1 m³ gas, 0.8 kg)

Batteries(100 kg Li-Ion batteries)

Hydrogen should be able to fix the storage challenge. Extended production of CH4 (energy con-tent three times higer) might be not necessary

H2O

H2

O2

„Pow

er–to–gas (H2 )

–to–gas–grid“Electrical cooling device

(compression) with storage

„Power–to–thermal–storage / –to–thermal–grid“

Hea

t

2

Elec-tricity

Elec-tricity

Sto-rage-

Sto-rage+

„Pow

er–to–gas (H2 )

–to–gas–tank“

„Pow

er–to–gas (H2 )

–to–others (industry)“

Electrolyticreactor

(Frankfurt)

* All numbers mentioned are corresponding with an energy volume of about 40 MJ (ca. 11 kWh)

Compressor (Frankfurt)

(Concept)

The coupling of energies is the technical key competence of „Energiewende“

Electrical power

Heat

Natural gasG2PG2H

G2PG2H

G2H G2P H2P P2H

CHP steam turbine

- „Invertierted“ power plant

- Electricalheating

- Heat pump

- OrganicRancinecycle

P2G

- Elektrolyticreactor H2

- Sabatier reactor CH4

CHPgas turbine

3

Gasboiler

CCGT

RES

RES

~

Districtheating

Thermal storage withelectrical heatingElectrical grid

Closed gas turbine cycle

Heat exchanger

Gasgrid

H2 storage

Elektrolyse zurH2 Erzeugung

H2OTemperature control

Control unit

2

The urban power plantbecomes the energy hub of the future

13

Middle till long time periods (days, weeks, months)x 100 MW, high voltage

Import and exportPumped hydro storage Air pressure storage

Power to gas (electrolysis,sabatier)

Compensation of days without wind or cloudy days

Short time period(minutes, hours)x 1 MW, middle and low voltage

Import and exportDomestic thermal inertiaDomestic demand (DSM, DR)Batteries (immobile, mobile)Thermal storages

Compensation of cloud fields or night-time

All storage concepts can contribute to stabilize the grid!

Storage concepts and their application

A mix from different storage concepts will be used in the future

2

14

The current „energy-only-market“ neither awards flexible power plants nor storages

Bisheriger Preisverlauf

Bisheriger Mengenverlauf

Flexible CCGT power plants are under price and volume pressure

Similar prices for peak and base put storages under pressure

2

?

?

Former price

Former volume

Today the data hub model is used in most of the European countries

16

Data Hub Model – Used in most of the European Countries

Wholesaler

Retailer

TSO

DSO

Hub(Data service provider)

One combined role as an option:

DSO as a data hub and market facilitator (Eurelectric)

In Germany there is a seperate role called

Meter operator / Data service provider (MSB / MDL)

Data transfer andcommunicationmanagement

2

Request for data

Smartmeter

Meteroperator

In Germany a new gateway model is being designed at moment

17

Gateway Model – The future German (BSI) model

Wholesaler

Retailer

TSO

DSO

Gateway administrator

Smartmeter

Meteroperator

One combined role as an option

Gate-way

Gate-wayoperator

Data transfer

Communicationmanagement

Remark: the„data service provider“ (MDL) role most probabely will disappear

2

Offer of data

Electrical grids play a central role in the future andtherefore they have to be developed into „Smart Grids“

Grid

Generation Central DispersedSolar park Solar cellsWind park μ-CHPCCGT BiomassCHP ……

Remote Close to Load

Load Central DispersedCities Houses

Airports, skyscrapers Farms Cold-storage depots ……

3

Renewable Energies have to be integrated into the grid

380 kV220 kV

110 kV 20 kV10 kV

0,4 kV

Wind

SolarPower generation

Grid integration

Storage optionsDSM ***BatteriesEV

DSM ***BatteriesPower 2 Gas(H2, CH4)Biogasbased generation **

Conventional generation *Pumped hydro powerCompressed air

DSM ***Conventional generation *Power 2 Gas(H2, CH4)Compressed air

No support for distribution grid

3

Overload / congestions

Voltage

Challenges

* Generation using gas produced by power to gasdevices

** Biogas is stored in a tank and used when wind and sun are not available

*** DSM is using thermal inertia as a storage

2

Transmission grids have to integrate new powerfuland remotely positioned renewable energy sources

2012 –2022

++ ++Challenges can be solved with

conventional / available technologies

Distribution Grids have to be adjustedsubstantially and in a smart way to their new tasks

Time

Feed-in

Take-off

Today‘sgrid take-offcapacity

Voltage Load

Today‘sgrid feed-incapacity

Voltage Load

Voltage

Length

Low load + high feed-in

Low loard +basic feed-in

100 % UN

90 % UN

110 % UN

Partial load + no feed-in

High load +no feed-in

To control means to take grid-related measures (load flow, reactive power) or to influence loads, generation or decentralized storage (active power)

Load monitoring and load control allow the maximum use of assets

3

Integration of renewables is supportedby „Smart Grids“ – The pilot project iNES

3

22

Prinziples of grid automation within the project iNES –Grid interventions first – Customer impacts last

3

Operating principle

The active grid elements (1) are adressed first and the active ele-ments on the customer side (2) last

The sensor is independent of any Smart Meter system

iNES Sensor

Active element

(grid)

+ -

Active element

(customer)

2

1

SensorSensor 1 - voltage control transformer2 - reactive power control grid3 - active power control customer side

Quality and network extension

The intervention frequency of the active element on the customer side is registered. This parameter can be used as an indicator for the necessary grid reinforcement or extensionThe more interventions on the customer side the DSO is allowed to execute within one year, the smaller and later the network reinforcement or externsion will be. However, a higher amount of renewable energy will be “deleted“ through these interventions

Active element

(grid)

23

Two characteristic test sites in the Frankfurt area with a high density of PV have been choosen:

Rural radial LV-grid Bergen-Enkheim Relocated farms with large PV systems,1 MV/LV transformer station

Urban interconnected LV-grid Bornheim Properties from the ABG between Dortelweiler Straße and Preun-gesheimer Straße with large PV systems,3 MV/LV transformer stations

Implementation

Two characteristic test sites in the Frankfurt area with a high density of PV have been choosen:

Rural radial LV-grid Bergen-Enkheim Relocated farms with large PV systems,1 MV/LV transformer station

Urban interconnected LV-grid Bornheim Properties from the ABG between Dortelweiler Straße and Preun-gesheimer Straße with large PV systems,3 MV/LV transformer stations

Implementation

iNES – The „Smart Grid“ project of Mainova –Field tests in Frankfurt

The smart grid project is carried out in two characteristic areas.As a consequence the results are meaningful

3

Increasing number of companies

“The financial situation of European DSOs” – A Study of Eurelectric

In many European countries the regulatory return on invest (ROI) does not meet the expectations of the capital market

Value creation andvalue destruction ofEuropean DSOs

1 – DSOs who are not investing are creatingvalues

3 – DSOs who are in-vesting are destroyingvalues

The investment climat for European DSOsleaves space for improvement

The switch from efficiency regulation to incentivisingsmart grids is necessary

3

Supplier

Grid

Customer

Impact

DSO

Monitoring

Market

Time

Price

Load

Maximum

Intervention of DSO

Intervention of DSO means: priority over market, however, minimum impact on customer

Smart markets and smart grids –Basic functionalities and interaction

4

Price

26

Smart market: Influencing the customer by price signals Power balanceSmart grid: Influencing the customer by phsical signals Maximum use of network

ReactionIntervention

2

1

Investment program and R&D of Mainova AGare reflecting the principles discussed

Optimization and increase of flexibility of the Frankfurt CHP system

Establishment of wind generation within a radius of 100 km around Frankfurt

Using opportunities with respect to hydropower plants (including pumped hydro storages)

Analysis and observation of solar energy (silicon and organic PV)

Analysis of storage technologies

5

Power plants close to consumers reduce the necessary grid extension

Regional energy clusters make sense. However, energy autarky should be avoided

Solar energy has the potential to become an important urban energy source

R&D

Business

Rural area (smart country):Dominance of electric energyRenewable power generation (wind, solar, biomass)

Urban area (smart city):Media power, heat, gas (multi utility)Coupling of the media for energy storageand power bufferingEnergy generation on the basis of CHP

Coupling of the media (smart system):Central or decentralized

Rural and urban areas complete themselves by constructing the „smart system“ of the future

Fernwärme

Gas storageCHP Small CHP Solar

WindSolar

Frankfurt

Village

District heating

Heat storage

5

Summary and conclusions –Organic solar cells have a huge potential for urban use

29

Mainova is Europe's first energy company with an organic photovoltaic system connected to the public grid

The 70 centimeters wide and two meters long plastic solar cells have been installed within one day

Opposite to conventional solar cells, organic photovoltaic systems do not use any silicon, but they are based on an organic semiconductor consisting of hydrocarbon compounds (polymers)

Organic photovoltaic systems are able to produce power, even in partial shade and in diffuse radiation

Installation of organic solar cells at the premises of Mainova AG, Frankfurt

6

Volatility reduction of loadflow

Privat consumption (GER): 4 000 kWh/a, 11 kWh/day

Photovoltaic system: 4 000 kWh/a, (0,1 kW/m², 40 m²)

Battery storage system: 11 kWh/day

Battery capacity: 100 Wh/piece

Number of laptop batteries: 110 pieces (possibly used cells from the automotive industry)

Energy autonomous households

x 110

Summary and conclusions –Batteries are opening new options for stabilisation

6

30

Source :Handelsblatt

6

31

Important changes with impact on energy business

Migration within Germany (from East to West; urbanization)

Changes in the population structure(demographic change)

Automation of private houses

Use of new powerful technologies like e-mobility or heat pumps

Expansion of data centers and internet nods

Increasing use of information and communication technology

Electricity tariffs and future develop-ment of energy intensive industries

Summary and conclusions –The environment is changing

Fundamental task:

Regional and temporal compensation of the differences between generation and consumption with an adequate capacity

RES

~

Integration of efficient and volatile

generation and consumption parts

Virtually stationary compensation of load

and generation fluctuations

Dynamic balance between load and

generation fluctuations

Work on problem solutions

Problem recognizedProblem identification

begins Appropriate Market Design Needed

6

Summary and conclusions –The technical challenges of the Energiewende

Dr.-Ing. Peter Birkner, Executive Member of the Board, Mainova AG

Frankfurt am Main, October 23, 2012

Analyses – Conclusion – Action

Thank you for your attention!