Hydro Annual Report 2011b

European extrusion consumption (total 3,030 Kmt)
By end-use
6%
6%
13%
6%
49%
Source: CRU January 2012, Estimate 2011
19%
Transport
Construction
(incl. solar sector)
Electrical
Consumer durables
Machinery &
Equipment
Other
Building systems
We offer extensive geographic coverage and superior products in
a European market that favors solutions linked to regional
building habits and local culture. Each of our brands – Technal,
Wicona and Domal/Alumafel – represents a distinct system that
permit our customers to tailor offerings to their market needs,
ranging from single window replacements to the complete
facades for major structures such as new airports and high-rise
buildings. Our solutions enable attractive designs, with a variety
of functional characteristics, while efficient distribution and
logistics operations ensure quick and accurate deliveries.
We are at the forefront of development within energy-neutral
buildings, including buildings that produce more energy than
they consume. We have research centers in france, Germany,
India, Italy and Spain, and have participated in the design and
construction of several showcase and commercial buildings.
We are a market leader within this segment, a position recognized
through industry awards at BAU 2011 and the INTER-
SOLAR Trade fair 2010, both in Germany, and at BATIMAT
2011 in Paris.
precision tubing
We produce and sell products used in heat transfer applications,
mainly for the automotive market, which represents
about 75 percent of the total market segment. We are also
active in the general heat transfer applications, a growing market
segment, and applications for transporting liquids and
gases. We operate globally and have leading market positions
in Europe, North America and South America, and a smaller,
developing market position in Asia.
Key customers for products such as air conditioning and cooling
systems, radiators, heat pumps, charge air coolers, transmission
oil coolers and evaporators include volkswagen,
Denso, BMW, Delphi, TI, valeo, Hutchinson, visteon, Parker
and Behr.
BusIness DesCrIptIon
Energy
43
European extrusion consumption (total 3,030 Kmt)
By region
31% 36%
5%
12% 11%
6%
Source: CRU January 2012, Estimate 2011
Germany
Italy
Spain
France
U.K.
Other Western
Europe
Energy
Industry overview
There has been a common Nordic electricity market since the
late 1990s. In 2011, the mix of power generation was comprised
of hydropower (54 percent), nuclear power (22 percent)
and other sources, mainly thermal power (24 percent). Power
generation in Norway is almost entirely based on hydropower.
Total annual Nordic consumption is approximately 400 TWh.
The Nordic system price and area prices are set in day-ahead
auctions at the Nord Pool Spot market. These prices provide
the main reference price for financial contracts, mainly traded
at an exchange operated by Nasdaq OMX. There are five price
areas in Norway, two in Denmark and one in finland. A division
of Sweden into four areas in November 2011 has improved
the energy supply to Mid-Norway where Hydro has a significant
share of its Norwegian smelter capacity, reducing the tendency
of high area price differentials. The main price drivers
are precipitation, temperature, fuel costs, emission allowance
costs and trading with adjoining markets on the European
continent. variations in hydrological conditions also have
caused significant annual and seasonal price variations
throughout the history of the market.
In April 2009, the EU approved an energy and climate package
aimed at reducing greenhouse gas emissions, increasing the
share of renewable energy and improving energy efficiency, all
by 20 percent, by 2020. Implementation has and will continue
to have a significant influence on energy prices and the energy
and climate policy in all EU/EEA countries.
Emission trading has increased electricity prices by up to 50 percent
in periods with high emission allowance cost in Europe,
including the Nordic market where electricity is predominantly
gene rated by non-emitting sources. Revised EU emission trading
legislation indicates that compensatory measures in the form
of state aid from national governments could be given to