Hydropower. Limitless energy.

Hydropower. Limitless energy.

With one hundred years of experience, our focus is on the future Skellefteå Kraft's history started with a hydropower plant in Finnforsfallet outside Skellefteå, northern Sweden. It was the first big power plant construction along the River Skellefte, uniting beautiful architecture and lovely surroundings with a fantastic new technology that caused the town and industry in Skellefteå to flourish. The power plant was ready in 1908, and by 1936 Skellefteå was the most electrified town in Sweden. Throughout the history of the company, Skellefteå Kraft's strategy has included the construction, development and management of hydropower. This has given us over one hundred years of experience and expertise, enabling us to push the development of hydropower towards the energy production of the future.

One of Sweden's largest producers of Hydropower Skellefteå Kraft is currently Sweden's fifth largest power producer, and 70 % of our production comes from hydropower. The company runs 14 major hydroelectric plants with annual production of between 30 and 300 GWh, plus a number of smaller plants producing a total of 84 GWh annually. In total, our hydropower yielded 2,602 GWh during 2010. Owning and producing Skellefteå Kraft's long-term strategy is to have the lowest flexible electricity production costs in Europe. One key to achieving this is a large proportion of hydroelectric and wind power, energy types for which there are no direct fuel costs. Our energy portfolio is well suited to this strategic goal. We mainly produce hydropower and supplement it with bioenergy and a rapidly growing share of wind power. PREVENTIVE MAINTENANCE Thanks to long-term thinking and preventive initiatives, it is possible to reduce the costs of hydropower and run energy production efficiently. Well-planned maintenance is also a requirement for high reliability. The aim is for plants to function well during the 40-year periods that are calculated to pass between major renovations of equipment and machinery. Part of society The majority of Skellefteå Kraft's hydropower plants are in northern Västerbotten, in the north of Sweden. The region is largely rural and the towns and villages have a significant need for industrial development and increased employment. Skellefteå Kraft's aim is to develop operations, where possible, so that they have a positive effect on the region. Hydropower, among other things, plays an important role in this, as the gains generated bear our major investments in other renewable sources of energy. This is a development that contributes to developing both jobs and economic growth in the region. DISTRIBUTION OF SKELLEFTEÅ KRAFT'S ELECTRICITY PRODUCTION 2010 2020 Hydropower Wind power Thermal power Nuclear power During 2010, hydropower accounted for 70 % of the company's electricity production. As other renewable sources of energy expand, hydropower will account for a smaller proportion of Skellefteå Kraft's total electricity production. However, the amount of electricity produced through hydropower will continue to be as much as it is now.

A responsible energy choice Skellefteå Kraft is investing significantly to increase production of renewable energy. Wind power and hydropower are entirely renewable sources and the energy comes from naturally flowing sources. The environmental impact from production of electricity from wind, water and biofuel is low compared with fossil fuels. The environmental impact is largely from manufacture of equipment and construction of the plants. Overall, this is compensated for through the increased production of renewable energy. Responsible power production Hydropower is fully renewable and is part of a natural, unending ecocycle. The building of a hydropower plant places huge demands on the power company responsible. Skellefteå Kraft adheres to these requirements and makes significant investments to maintain a good environment in its watercourses. What has to be done depends on the water rights that have to be observed. Sometimes, water is drawn off into old river furrows and combined with submerged weirs, which helps to ensure that some of the natural animal and plant life can continue to thrive. Artificial spawning grounds and fish ladders can be created, making it easier for the fish to migrate and reproduce. In several cases, large quantities of fish are raised and reintroduced every year. Along with the rest of the industry, Skellefteå Kraft runs a number of research projects regarding the environmental issues associated with hydropower. These projects study environmental effects and measures to reduce environmental impact, among other things. Creating opportunities Skellefteå Kraft has its own production within hydroelectric and wind power, as well as bioenergy. Together, these types of energy form an electricity production system with beneficial effects on both electricity prices and carbon dioxide emissions. Thanks to the extension of production of these types of energy, the need for electricity from more expensive and environmentally-damaging sources of production can be reduced. In addition, the ability to store and regulate hydroelectricity is an important requirement for the production of electricity from wind power, which can only be produced when the wind is blowing. In other words, when Skellefteå Kraft chooses to invest in wind power, hydropower is essential. A positive factor in the work to counter climate change Skellefteå Kraft applies a systematic working method to achieve the environmental goals set by the company, with climate impact currently being of huge importance. Thanks to our energy portfolio, we are part of the fight against carbon dioxide emissions and global warming. Possibly the greatest challenge of our time.

Hydropower. How does it work? It is actually the sun that is the main source of hydropower. When the sun heats the surface water of lakes and seas, it evaporates to form clouds which then release precipitation in the form of snow and rain at higher altitudes. On its way back down towards the lakes and seas, the precipitation runs via streams and rivers to the reservoirs next to the power plants that produce electricity. The hydroelectric plants exploit the drop in height and the water flow in our rivers. This is called potential energy, and is created when the water moves from a higher level (1) to a lower one (4). In order to increase the difference in level and control the process better, dams (1) are often built alongside hydroelectric plants. In order to get potential energy, the water has to pass through a turbine (2) in the hydroelectric plant. The water streams towards the blade wheel in the turbine, which then rotates, creating kinetic energy, which in turn is converted into electrical current in a generator (3). The current runs from the generator to a transformer (5), which increases the voltage and then sends the current out into the power grid. 1. The water is at its highest level at the hydroelectric plant's dam. 2. The water passes through the plant's turbine. 3. The generator converts the turbine's rotation into electrical current. 4. The water is at its lowest level at the hydroelectric plant's outflow. 5. The transformer increases the voltage of the current so that it can be sent a long way through the power grid. 1 5 3 2 4

Operating centre The heart of Skellefteå Kraft's production of hydropower is the operating centre that is also physically located in the heart of the company's head office in Skellefteå. From there, the operating centre has total control of all of the company's hydropower stations. The purpose of the operating centre is to optimise electricity production. This is done in a safe way, round the clock. Tasked to optimise The operating centre is a good example of the way in which Skellefteå Kraft places huge importance on competent personnel. The company's optimisation group creates production plans in both the long and the short term. The personnel who stand at the controls and screens day and night work from these plans, but have to fine tune them based on the actual situation. The major challenge is taking decisions based on the trend in the price of electricity and access to water. This requires knowledge and experience, as well as systems and methods constantly being developed and improved. Safety above all The most important responsibility of the operating centre is to observe any water rights in force. Water rights consist of various permits issued in accordance with the Swedish Environmental Code that determine how dams and equipment can be handled. The water must flow in a safe way through the system of dams and power plants in the river. The operating centre ensures that electricity is produced when it is required, but also that this is achieved in a safe way for both humans and the environment.

A selection of our plants 1. Sällsjö Construction of Sällsjö power station commenced in 1962, and the two plants went into operation in 1966 and 1967. Electrical output: 160 MW. Normal annual production: 350 GWh. 2. Krångfors When valuable ore was discovered in Boliden, only Finnforsfallet power station could offer electricity. The mine required more, and in 1928 the River Skellefte's second power station was ready in Krångfors. Electrical output: 62 MW. Normal annual production: 350 GWh. 3. Selsfors Competition for the stretch of rapids in the 1930s led to Skellefteå Kraft purchasing Selsfors in 1937. Construction of the power station commenced in 1941, and it was ready for use in 1944. Electrical output: 61 MW. Normal annual production: 265 GWh. 4. Finnfors Construction on the River Skellefte's first power station commenced in 1906, and it was in operation by 1908. Fifty years later, a new power plant was built in Finnfors, this time on the southern side of the river. Electrical output: 54 MW. Normal annual production: 237 GWh. 5. Granfors Granfors power station was constructed in 1948, and at that time had one plant with space for one more. In 1962, the station was expanded and a further plant was commissioned in 1965. Electrical output: 40 MW. Normal annual production: 207 GWh. 6. Båtfors When Båtfors was to be expanded in 1955, the City of Skellefteå, along with Gumboda Elektriska AB, formed the company Skellefteå Kraftaktiebolag in order to be able to raise an ordinary bank loan. The two turbines in Båtfors were commissioned in 1961 and 1962 respectively. Electrical output: 42 MW. Normal annual production: 201 GWh. 7. Klippen Construction of the power station at Klippen, 10 km west of Hemavan, started in 1990 and was commissioned in 1994. For the construction of the inflow and outflow tunnels, a new technology was used that involved drilling rather than blasting. One advantage is that the tunnel area is reduced without loss of power. Electrical output: 27 MW. Normal annual production: 100 GWh. 8. Storforsen In 2007, Skellefteå Kraft inaugurated its latest power plant, the Storforsen plant in Örån. It was built with a focus on environmental thinking and the station is located wholly underground. Electrical output: 4.4 MW. Normal annual production: 23 GWh. Other large plants Sädva (9), Rebnis (10), Bergnäs (11), Slagnäs (12), Grytfors (13), Rengård (14), Sikfors (15). Around 15 smaller plants complement the larger hydroelectric plants. 10 9 PITEÄLVEN LULEÄLVEN 7 11 12 SKELLEFTEÄLVEN 15 Piteå Luleå UMEÄLVEN 8 13 VINDELÄLVEN 14 6 3 5 4 2 Skellefteå Umeå 1 INDALSÄLVEN Sundsvall

Skellefteå Kraft is one of Sweden's largest power producers with its own production plants for wind power, hydropower and bioenergy. Its work consists of technical development, sales and delivery. With extensive investments in renewable energy production, the company is the driving force in development of environmental energy in Sweden. Skellefteå Kraft has its own power grids and offers energy and maintenance services. In addition, it is also active within property leasing and broadband provision. The company is wholly owned by Skellefteå Municipality and in 2010 it had 640 or so employees and turnover of SEK 4.5 billion. Skellefteå Kraft SE-931 80 Skellefteå Street address Kanalgatan 71 Tel +46 (0)910-77 25 00 Fax +46 (0)910-77 28 82 www.skekraft.se APRIL 2011