04/10/23

Power exchange for electricity

Opportunities or constraints?Practical experiences with spot and intra-day trading linked to

the Nord Pool markets.purpose and opportunities

Conny ArnfeldtMälarenergi AB

04/10/23

Agenda

1. Company presentation

2. How do we work with production planning and what systems do we use

3. Physical contracts with spot and ELBAS trading

4. Financial contracts and how to use it for securing production prices

5. Questions

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Company presentation

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Quick facts

• Mälarenergi is a public owned company

• We are approx. 544 staff

• In 2007 our turnover was over 250 M€

• We have the largest cogeneration plant in Sweden

• Our district heating network is one of the biggest in Sweden

• We had the first district cooling network in Sweden

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What do we provide to our customers

• District heating

• Electric power

• Water and sewage

• Services (internal and external)

• Electricity distribution (local grid)

• Urban data communication Network (fiber based)

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Production numbers

• Electricity production- cogeneration 1 000 GWh- hydro power 200 GWh (41 stations)

• Electricity distribution (grid) 1 940 GWh

• Electricity trading 3 000 GWh

• District heating 1 700 GWh

• District cooling 17 GWh

• Domestic water 10 Mm3

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Production planning

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How do we work with production planning?

• Our base load electric production is based on our district heating load. And that load varies with:- climate- social patterns- industrial customers

• We also have the possibility to run our production in partial or full condensing mode. (cooling with seawater)

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What tools do we use for production planning?

• Production planning (excel based tool)

• Nestor (heat load prediction)

• Pomax (database and communication system)

• Aiolos (electric load prediction)

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How does it work?

Production planning

excel

Pomax

Nordpoolspot

Aiolos

TSOSvenska Kraftnät

NordpoolELBAS

Nestor

supplier of weather forecast

(SMHI)

Process database

(AEH)

Encore+

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Weather forecast (SMHI)

0

50

100

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200

250

300

-1

-0

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Wed 6Feb 2008

Thu 7 Fri 8 Sat 9 Sun 10 Mon 11 Tue 12 Wed 13

V:\Nestor\Data\Smhiprog.wp0

W/m

2°C

& m

/s

Globalstrålning Vind Temperatur

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Nestor – heat load prediction

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Pomax – production plan

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Pomax – electric consumption

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Pomax – balance planning

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Physical contracts with spot and ELBAS trading

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Physical contracts with Nordpool spot

• Our base load production is made as a single bid on NP spot for the next day.

• And the condensing production is made as block bid on NP spot.

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Example on single and block bidexample of single bid on Nordpool spot 2008-02-06

Hour 1 180001 146,7 146,72 141,3 141,33 141,3 141,34 144,3 144,35 142,6 142,66 156,7 156,77 202,1 202,18 245,4 245,49 275,7 275,7

10 243,6 243,611 268,5 268,512 285,1 285,113 248,6 248,614 252,6 252,615 244,1 244,116 255,2 255,217 279,7 279,718 278,5 278,519 262,7 262,720 245,5 245,521 235,3 235,322 224,3 224,323 192,1 192,124 160,3 160,3

Block bid exampletime volume price

00:00-24:00 -30 1100

positive number is buy

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BUT THE WORLD IS NOT PERFECT!

Deviations from plan will happen

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What type of deviations is common for us?

• Failure on production plant

• Change in weather or error in weather forecast

• Errors in consumption forecast

• Depending on the sign of the deviation we then have to buy or sell to get into balance again

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District heating balancing

Production plant

district heatingaccumulator20.000 m31000 MWh

District heating network

Electricity network 220 & 130 kV

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How to solve deviations from plan during intra-day?

• We must stay in balance with the plan we sent to our TSO the day before.

• To solve the deviation, we have some options:- Regulate it internally- ELBAS trading- Bilateral trading with other companies- Run with imbalance (not an option!)

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ELBAS trading

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But ELBAS is not only used for deviations

• If prices on ELBAS is lower than our own production cost then its better to buy than to produce it our self.

• And if prices on ELBAS is higher than our cost for condense mode production or more expensive production plants then its better to sell more.

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Why do we prefer to use ELBAS?

• It gives us a secure and anonymous way to trade with many counterparts if needed which gives us:- lower cost to find counterpart- a fast way to get into balance again- economical and structural safety- less dependency on the few big companies

• It contributes to an optimal usage of our own and others production facilities.

• Because the coupling between cost and environment load is strong, lower cost -> lower environment load

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Financial contracts and how to use it for securing production

prices

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Financial contracts

• Financial products are handled by the trading department at Mälarenergi

• And we use our trading department to secure production prices to some extent.

• We also secure CO2, fuel prices and currency with financial contracts.

today 25 50 25Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2008 2009 2010

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Questions?conny.arnfeldt@malarenergi.se

Phone +46-21-395354