Full of Energy - Energie AG OberÃ¶sterreich

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ANNUAL REPORT2007/2008THE GROUPGROUP MANAGEMENT REPORTTHE ENERGY SEGMENTTHE WASTE MANAGEMENT SEGMENTTHE WATER SEGMENTCONSOLIDATED FINANCIAL STATEMENTS38Electricity Trading MarketAt the beginning of the 2007/2008 business yearfutures markets for electricity on average quoted frontyearprices of about EUR 55 per MWh. Following thethrust of crude-oil prices, electricity prices for yearbasedcontracts rose to a new all-time high of morethan EUR 88 per MWh by the end of June 2008.EEX – SPOT MARKET VS. FUTURES MARKET140120100806040200Spot market pricesdaily baseWhen prices on primary energy markets declined, thetrend on the electricity trading market also reversed.At the end of November annual contracts for the frontyear 2009 were quoted at a level of below EUR 60per MWh – however, with a very high spread.Futures market pricesannual base 200901/10/0715/10/0729/10/0712/11/0726/11/0710/12/0724/12/0707/01/0821/01/0804/02/0818/02/0803/03/0817/03/0831/03/0814/04/0828/04/0812/05/0826/05/0809/06/0823/06/0807/07/0821/07/0804/08/0818/08/0801/09/0815/09/0829/09/08CO 2 -Certificates MarketNext to the prices for primary energy (coal, oil, naturalgas), CO 2 prices exert another clear influence uponelectricity prices. At the end of 2007 prices for CO 2certificates for the second trading period oscillatedaround EUR 23 per ton of CO 2 . At the beginning of theyear 2008 the price temporarily decreased to EUR 19.This was then followed by a clear increase in CO 2CO 2 -CERTIFICATES MARKET VS. FUTURES MARKET302826242220181601/10/0715/10/0729/10/0712/11/0726/11/0710/12/0724/12/0707/01/0821/01/0804/02/0818/02/0803/03/0817/03/0831/03/0814/04/0828/04/0812/05/0826/05/0809/06/0823/06/0807/07/0821/07/0804/08/0818/08/0801/09/0815/09/0829/09/08100prices. In early July 2008 they reached the highest valueto date, i.e. EUR 29 per ton of CO 2 .In the subsequent phase, when prices on the electricitymarkets eased, the CO 2 trading price dropped fasterthan the electricity market, and at the end of November2008 it was less than EUR 16 per ton.NAPII prices2009 in EUR/ton of CO 2Futures market pricesannual base 2009 in EUR/MWh9080706050403010090807060504030BUSINESS DEVELOPMENTIN THE ENERGY SEGMENTDuring the expired 2007/2008 business year twomajor growth steps were successfully completed inthe energy segment. By taking over the majority ofshares in OÖ. Ferngas AG, the new business areanatural gas was established. With the beginning ofthe test phase at the 400 MW combined-cycle gasturbine power station at Timelkam the Group’s rateof own generation will rise significantly.During the 2007/2008 business year the energy segmentearned sales of EUR 1,124.6 million and anEBIT of EUR 140.6 million.This massive increase of sales over the value for theprevious year (EUR 826.1 million) by EUR 298.5 millionor 36.1% can be explained by the further expansionin proprietary trading, high electricity marketprices, which were passed on to business and indus -trial customers in the case of new contracts, and thefirst consolidation of OÖ. Ferngas AG and CMOÖ asof 01 July 2008.It was possible to surpass the excellent EBIT of the previousyear (EUR 132.5 million) during the 2007/2008business year where it amounted to EUR 140.6 million,which is an increase of EUR 8.1 million or 6.1%.Concerning operations, the EBIT resulted primarily fromthe optimum overall conditions for own electricitygeneration. While the hydraulic power stations benefitedfrom the good water levels of the rivers, thethermal power stations could be utilized optimallyon account of the high electricity market prices.The EBIT of the 2007/2008 business year also containsa one-off effect, i.e. the first consolidation ofOÖ. Ferngas AG, in the amount of EUR 25.2 million.This effect is the result of a negative goodwill accordingto IFRS 3.When taking account of this one-off effect, the ad -justed EBIT amounts to EUR 115.4 million. It wasthus possible to increase it by EUR 32.9 million or39.9% over the value for the previous year (EUR82.5 million).Investments into intangible assets and tangible fixedassets by the energy segment amounted to EUR 110.1million, which is almost half the amount of the previousyear (EUR 208.7 million). Also when con -sidering two accounting effects, which clearly in -fluenced last year’s value, there was an actual reductionof investments. On the liabilities side slightly morethan EUR 30.0 million of contributions to construc -tion costs from customers and investment grants offsetthe investments.THE GROUP’S OWNELECTRICITY GENERATIONThe volatile price development on internationalenergy markets has shown that a balanced and riskoptimized electricity generation portfolio and internalhedging are among the most important strategicpotentials for the success of a vertically integratedelectricity group. At Energie AG, the genera tion portfolioconsists of electricity generated at own powerstations, electricity from long-term procurement rights,as well as electricity from third-party sources.We generate our own electricity at 35 hydro powerstations and 8 thermal power stations, which principallybelong to the energy segment. With its thermalwaste incineration plants, the waste management segmentalso contributes to our own electricity generation.All thermal power stations have been constructed ascombined heat and power plants and contributeessentially towards implementing the objectives ofan efficient energy utilization and emission reductionby the combined production of electricity and heat.The own electricity generation of Energie AG is alsosecured on a long-term basis by way of procurementrights concerning 10 hydro power stations belongingto Ennskraftwerke AG, as well as power stations ofVERBUND-Austrian Hydro Power AG (AHP) – fourDanube power stations and the storage power stationat Malta.During the year under review we recorded an aboveaverageproduction of electricity from hydro power –our own power stations and procurement rights. Theproduction volume of 2,561 GWh exceeded the valueof the previous year by 19%. Over the seasons, productionvaried in the months from October 2007 toMarch 2008 (production coefficient: 1.22), where itwas clearly above the long-term mean value. It correspondedlargely to the mean value from April toSeptember.Electricity generation at thermal power stations reacheda new top value of 1,665 GWh. The increase over39
ANNUAL REPORT2007/2008THE GROUPGROUP MANAGEMENT REPORTTHE ENERGY SEGMENTTHE WASTE MANAGEMENT SEGMENTTHE WATER SEGMENTCONSOLIDATED FINANCIAL STATEMENTSthe previous year amounts to about 400 GWh or31%. It is mainly due to two reasons, namely thetake-over of the CMOÖ power station, as well as theoptimized use of thermal power stations, which be -came possible on account of the high electricity marketprices. By fully taking over CMOÖ, which had beena 50% subsidiary, the production portfolio of EnergieAG for electricity and heat has been expandedsince 01 July 2008. CMOÖ operates a heat-drivencombined heat and power unit at the Laakirchenlocation and supplies industry with electricity andheat. With the end of the test phase of the 400 MWcombined-cycle gas turbine power station at Timelkam,additional minor electricity volumes were obtainedas of August 2008.During the 2007/2008 business year the total consolidated electricity generation amounted to 12,364GWh, which is an increase of 1,982 GWh or 19%over the previous year.In relation to electricity sold without proprietary trad -ing volumes, 39% of electricity generation came fromown generation during the expired business year,19% from procurement rights, and 42% from thirdpartysources. The rate of own generation thus wentup from 48% to 58%, i.e. by one fifth, since last year.MASSIVE EXPANSION OFELECTRICITY PRODUCTION CAPACITIESELECTRICITY PROCUREMENT STRUCTURE WITHOUT PROPRIETARY TRADING IN %2007/2008Rate of own coverage: 58%third-party sources43%16%23%19%hydraulicproductionprocurementrightsthermalgeneration2006/2007Rate of own coverage: 48%third-party sources52%14%18%16%hydraulicproductionprocurementrightsthermalgeneration40Own electricity generation of Energie AG amountedto a volume of 4,227 GWh during the expired businessyear, which corresponds to an increase over theprevious year of about 800 GWh or 23%.Further electricity quantities of more than 8,137 GWhwere obtained from third parties, mainly from electricitytrading markets (OTC, stock exchanges). The17% increase in external electricity volumes is mainlythe result of expanded proprietary trading.CONSOLIDATED ELECTRICITY PROCURED BY THE GROUP9,0008,0007,0006,0005,0004,0003,0002,0001,0002,2542006/2007Own generation2007/20082,8001,1782006/20072007/2008Electricity fromprocurement rightsConstruction work and the beginning of the test phaseof the 400 MW combined-cycle gas turbine (CCGT)power station at the thermal production site at Timelkamproceeded according to schedule. The gas turbinewas first ignited at the beginning of August 2008, andthe first steam production was successfully initiatedin September 2008.In November 2008 the new CCGT power station beganits test operation.1,4272006/20076,950 8,1372007/2008Electricity fromthird-party sourcesIN GWhOn account of the infrastructure available at thelocation, as well as the fact that the plant is close tothe national gas pipeline network (particularly to thenatural gas storage tank at Puchkirchen), and thepossibility to take off electric energy via the grid ofEnergie AG, Timelkam is an ideal location for build -ing this power station.The power station was built by Gas- und DampfkraftwerkTimelkam GmbH (GuD Timelkam GmbH).This company is a joint venture of Groupe E AG,Fribourg, Switzerland, and Energie AG OberösterreichKraftwerke GmbH (Kraftwerke GmbH). The latteris responsible for operating the new CCGT powerstation.The new CCGT power station promises an absolutepeak value of about 60% in energy efficiency duringelectricity production, as it uses state-of-the-art technologies,as well as natural gas as a fuel. It is possibleto lower the specific CO 2 emissions by 65% andthe specific NO x emissions even by 90%, as com paredto the existing plant.Once the CCGT power station has been taken into fulloperation, the existing power stations, i.e. the coalfiredblock Timelkam II and the gas turbine plantTimelkam III, will be put on stand-by.With the full operation of the new plant, the owncoverage rate of the Energie AG Group will go up toabout 70%.In addition to completing the CCGT power station atTimelkam further locations are being in-vestigatedand secured as own electricity production sites. Theavailable infrastructure facilities, as well as the overallconditions offer potential for further highly efficientplants.Due to the ambitious targets set by the EU concern -ing the expansion of eco-electricity production, as wellas higher market prices, efforts to expand hydro powergeneration are also being stepped up.The approval procedure is currently pending for thehydro power station at Oflek along the GroßarlerArche River in the province of Salzburg.A technical reconnaissance analysis was prepared forthe Kleinarl power station, and first coordination talkswere positively completed. It is planned to initiate theof ficial procedure in 2009. For the Bad Goisern powerstation the approval procedure will also be launchedin 2009.The application to initiate the preliminary procedurehas been submitted for the expansion of the hydropower station at Stadl-Paura, for which an approval isrequired under the environmental compatibility legislation.Energie AG is vigorously pursuing projects to furtherdevelop the technology and economics of electricitygeneration, while taking account of efficiency and41
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