Nuon We get more out of energy

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1 Nuon We get more out of energy Nuon is an ambitious energy company that has over employees serving more than 3 million consumers and organisations in the Netherlands, Belgium and Germany with a central commitment to an energy supply that is reliable and as clean as possible. With a turnover of EUR 6.1 billion in 2008, Nuon produces and supplies gas, electricity, heating and cooling and engages in energy trading in the major markets. Nuon gets more out of energy through the efficient decentralised generation of energy and by helping customers to reduce their energy use. Nuon s shares are held by local and regional authorities. Nuon operates as an economically independent production and supply company under a financial holding company, in which Nuon s results and those of network company Alliander are consolidated. Nuon s roots date back to 1845, when the first Stedelijke Gasfabriek was set up in Leiden. Nuon was created in 1994 from a merger between four electricity and utility companies, namely Elektriciteitsbedrijf Friesland (PEB), Geldersche Elektriciteit Maatschappij (PGEM), Zuid Gelderse Nutsbedrijven (ZGN) and Veluws Nuts Bedrijf (VNB). In 1999 Nuon went on to merge with Energie Noord West (ENW), itself the product of a merger between various energy companies in e.g. the province of North Holland and the cities of Amsterdam and Haarlem. Key Data Net turnover EUR 6.1 billion Net profit EUR 765 million Total operational production capacity 3,735 MW Of which renewable: 410 MW (solar, wind, water and biomass) District heating for various regions including Utrecht, Nieuwegein, Amsterdam South-East Number of employees: 6,209 Number of customers: 3 million Number of power stations: 11 power stations divided over 5 locations (Buggenum, Velsen, Utrecht, Diemen and Amsterdam) *2008 figures Unbundling into production company and network company The Independent Network Operation Act (WON) obliges all integrated Dutch energy companies to unbundle before 1 January The WON also stipulates that the grid manager must be a broad grid manager with effect from 1 July This means that, alongside the economic ownership of the gas and electricity networks, this manager must also carry out all grid management tasks itself. Ahead of the implementation of the unbundling act, Nuon created two new companies with effect from 1 July These two companies are, respectively, a network company comprising a newly-formed broad grid manager and a production and supply company. Until the actual unbundling, both companies will operate under a single financial holding company within which, among other things, the results will be consolidated and reported. The network company is called Alliander. The Nuon production and supply company will engage in the production, trade and supply of energy and heating to both large and small users, whilst also offering them supplementary services and technical innovations.

2 Nuon s vision and ambitions Nuon s strategy is aimed at creating added value for our customers, shareholders and employees. A strong commitment to the environment and society is an integral part of this ambition. Nuon fully realises that an energy company caters to an important basic need of society. Nuon is an inspiring energy company that creates sustainable value and growth by setting new standards. And aims to be an international integrated energy company that: achieves financial results that put us in the top segment is a reliable energy adviser for our customers leads the way in reducing CO 2 emissions is an attractive employer Four values together with the ambitions constitute the guideline for Nuon s actions and conduct. Formulated with a keen eye for the interests of all of the company s stakeholders - customers, employees, shareholders and society - these are: We stand for care, respect, entrepreneurship and ongoing improvement. Board of Management The chairman of the Board of Management is the Norwegian Øystein Løseth. Løseth has been a member of the Board of Management since 2006 and chairman since 23 April His ambition for Nuon is to secure reliable, affordable and clean energy for the future. Gas and electricity must remain available to everyone. People are counting on this and we must live up to these expectations. Another priority he sees for Nuon involves focusing on the entire energy supply chain. Before joining Nuon in 2003, he worked at the Norwegian energy company Statkraft where he also sat on the Board of Management. Supervisory Board memberships/other positions: Member Supervisory Board Sweco Grøner AS Member Supervisory Board Eidsiva Produksjan AS Member Supervisory Board ENDEX European Energy Derivatives Exchange N.V. Doede Vierstra is Chief Financial Officer (CFO). He is responsible for the company s financial management. Vierstra has been in the Board of Management since 2006 and has set himself the task of reducing the costs by making Nuon a lean, flexible and efficient organisation. Before joining Nuon, he worked as CFO for Koninklijke Wessanen.

3 Supervisory Board memberships/other positions Chairman WENb (Employers Association for the Energy, Waste & Environment and Cable & Telecom companies) Member Supervisory Board Alliander N.V. Society and climate When it comes to themes like society and climate Nuon clearly takes responsibility and is continually making important strides forwards. One example concerns our efforts to help customers save as much energy as possible and achieve optimal energy efficiency. Customers can ask for advice themselves or check on the Nuon site whether they use energy efficiently, for instance by filling in the online energy squandering check. In order to offer the customer a comprehensive package of energy-saving products and services, Nuon took over the Rogro Group in The Rogro Group consists of several insulation companies. Insulation is one of the most cost-efficient ways to save energy. In addition, Nuon offers a full range of services to buyers of e.g. central heating boilers via the Feenstra installation company. Furthermore, Nuon researches and invests in ways to generate energy as cleanly as possible the ultimate aim being to maximise the production of energy from natural resources such as wind, sun, water, heating and cooling. In line with these efforts Nuon acquired a subsidiary named Helianthos in This company develops solar foil, a flexible material containing ultra-thin active layers (30 to 50 times thinner than a human hair) which converts light into electricity. Apart from solar cell foil, a process is also being developed for producing foil on the roll. This offers substantial advantages for large-scale production. The application of solar cell foil on a large scale should make solar energy a lot cheaper. Reducing CO 2 emissions is a compelling necessity for Nuon and a key factor in a strategy aimed at energy transition towards renewable sources and methods. Nuon is knowledge leader in CO 2 capture, solar foil, coal gasification and marine wind. Our own innovations as well as our participation in innovations of other parties are playing an increasingly prominent role within the strategy for energy transition towards renewable sources and generation methods. This varies from a CO 2 capture demonstration installation and the financing of PhD research to the conclusion of an Energy Agreement with our industry peers and the government. CO capture and storage 2 In 2007 we decided to invest in a CO 2 capture pilot at the Willem-Alexander power station in Buggenum. The intention is to use the experiences acquired during the pilot on a large scale in the Nuon Magnum power station that is being built at the Eemshaven. The Buggenum pilot is designed to test the capture technology itself. Capture and storage also known as CCS (carbon capture and storage) will only become possible at the Magnum power station. To our knowledge, Nuon is the first company in the world to trial CO 2 capture with coal gasification before burning. The pilot gives tangible shape to Nuon s statement of intent for Nuon Magnum. The ministries of Housing, Spatial Planning and the Environment (VROM) and Economic Affairs have underlined the importance of this pilot by granting a specific subsidy of EUR 10 million via the UKR (Unique Opportunities Scheme).

4 The Fuel Mix The total amount of electricity that is generated by Nuon in the Netherlands can be broken down by fuel type. The resulting production fuel mix shows in percentages the fuels used by Nuon to produce power. Nuon generates power from renewable sources (wind, water, solar and biomass), fossil sources (coal and natural gas) and process gases (blast furnace gas). The energy production fuel mix is as follows: 36.5% coal 25.1% natural gas Combined Heat Power Stations (CHP) 15.7% natural gas power stations 19.2% Blast Furnace gas 2.8% Wind 0.4% Hydropower 0.3% Biomass 0.003% Solar * Figures 2007 Nuon operates its power stations on economic principles: depending on energy demand and fuel prices, production takes place in the first instance at the most energy-efficient units, starting with wind farms, hydropower stations and power stations that also supply district heating. Power stations Nuon has 11 power stations and produces heating for business and retail customers at a large number of locations. The three largest locations are Purmerend, Diemen and Utrecht. Nuon remains intensively engaged in the development of new power stations. Current plans include the construction of two gas-fired power stations in Germany and Belgium. In addition, Nuon is developing a multi-fuel power station at the Eemshaven. This is expected to come into service in Gas storage In the German town of Epe, just across the border at Enschede, Nuon stores gas in caverns of disused salt mines. Now that its gas fields are becoming exhausted, the Netherlands is becoming increasingly dependent on other countries. Gas storage enables Nuon to respond flexibly to fluctuations in the supply and demand of gas, thus increasing the security of supply for customers. Gas production In 2008, Nuon strengthened its gasposition by becoming shareholder in 35 gasfields in the Dutch North Sea. The acquisition fits Nuon s strategy to diversity and strengthen its gas sourcing. It adds the essential gas production capabilities to Nuon s already existing gas trading, wholesale and retail activities. Wind energy Nuon also puts a large quantity of wind onto the electricity grid in the Netherlands. Not all wind energy comes from wind farms that are wholly owned by Nuon. One prime example concerns the offshore wind farm near Egmond; this is owned by Nuon and Shell. Nuon is responsible for the electricity production programme at this wind farm.

5 Wind is one of the most important renewable energy sources. One fifth of Dutch renewable energy is generated by wind turbines. Nuon has been an active player in wind energy for many years and supplies 22.5% of the Netherlands total wind energy. Nuon s wind farms in the Netherlands vary in size from 3 to 36 turbines. The amount of electricity produced at each farm depends on the generator capacity and location of the wind turbines. Most wind turbines are located in the wind-rich coastal provinces. Land inwards, they are placed on elevated sites to capture more wind. Heating Residual heating is captured at locations where a lot of residual heating is released, such as electricity production and waste incineration plants. Nuon harnesses this residual heating to provide district heating: we heat the water that reaches homes and businesses via an underground pipeline network. The residual heating that is currently used instead of fossil fuels yields an annual saving of more than 100 million m 3 of natural gas and a reduction in CO 2 emissions equivalent to the emissions from 50,000 passenger cars! Nuon supplies district heating to some 95,000 households in such cities as Amsterdam, Almere, Arnhem, Leiden and Lelystad. Cooling on the Amsterdam South Axis Thanks to the generation of cooling, buildings and computer rooms can be cooled without requiring energy-guzzling equipment. This is mainly realised by extracting cool water from a lake. One such cooling source is sufficient to provide cooling to an entire area. Cooling is exceptionally environmentally-friendly and easily yields a CO2 reduction of 75% compared to air-conditioning. Nuon is the first supplier of cooling in the Netherlands. We produce cooling by making use of the low temperature of the deep water in the Nieuwe Meer, a lake near Amsterdam. [Deep lake, cooling station, heat exchanger, office building]

6 Solar energy Nuon runs various solar energy projects in the Netherlands, varying from solar panels on the roof of the DNB (Dutch Central Bank) building in Amsterdam and a large roof overarching the former Floriade festival site (Haarlemmermeer Polder) to solar panels on a noise reduction screen along the A9 motorway. All projects jointly have a capacity of some 7,500 kwp. Nuon can thus produce 4,800,000 KWh, which is equal to the annual electricity requirement of 1,400 households. Hydropower Dams have been constructed at Hagestein and Amerongen in the Lower Rhine and at various locations in the Meuse to retain sufficient water for shipping when the water supply is low. The vessels can then pass the dams via the locks. The difference in the water levels is used to produce electricity in hydropower stations. Nuon has hydropower stations at three locations. At the Maurik hydropower station, four identical hydropower installations are placed alongside each other. Together, the four generators produce an average of 25 million kwh per year, which is sufficient for over 8000 households. The hydropower stations at Alphen - Lith and Hagestein supply power to 15,000 and 1500 households respectively. Solar and residual heating at Almere reduce CO 2 emissions by 50% Solar energy is a very environmentally-friendly source of heating. To make optimal use of this option, Nuon has started the construction of the Netherlands first-ever solar island in Almere. The solar island will supply 2700 homes with 10% of their total heating requirement (enough for one million showers a year). The remaining 90% consists of district heating from the nearby power station. This project will reduce the CO 2 emissions by 50%.