INTRODUCTION TO DONG ENERGY Green Ribbon Commission Middelgrunden visit Morten Melin, Vice President for EPC & Construction Management 16 June 2016
DONG Energy at a glance EBITDA 2015 DKK bn DONG ENERGY Oil & Gas WIND POWER Distribution & Customers Solutions Bioenergy & Thermal Power 18.5 9.8 6.2 2.2 0.3 Energy group operating in Northwestern Europe Employs 6,700 FTEs Exploration and production (>100 kboe/day) Development, construction and operation of offshore wind farms Private and commercial gas & power sales, and distribution Electricity and heat generation from power stations. 44% of Danish thermal capacity
Significant transformation of DONG Energy over the past decade CO 2 emissions halved g/kwh EBITDA 1 doubled DKK Bn Business transformed Share of capital employed 2 % International expansion Share of EBITDA % (46%) 2.0x International share >5x 613 18,5 9% 24% 16% 37% 334 9,3 88% 60% 75% 63% 16% 12% 2007 2015 2007 2015 2007 2015 2007 2015 1. Operating profit (EBIT) before depreciation, amortisation and impairment losses 2. Excluding unallocated capital employed on DONG Energy group level
Middelgrunden a pioneer project at time of construction, a small part of Danish offshore capacity today Current and planned Danish offshore wind capacity MW 1,000 Middelgrunden offshore wind farm Capacity: 40MW 1,231 Turbine size: 2.0MW Comm. year: 2001 40 Middelgrunden Other installed capacity Planned new capacity Anholt offshore wind farm Capacity: 400MW Turbine size: 3.6MW Comm. year: 2011 Anholt turbines Middelgrunden turbines Kriegers Flak offshore wind farm Capacity: 600MW Turbine size:? Comm. year: 2022 4
DONG Energy pioneered the offshore wind industry Total constructed capacity by DONG Energy, (MW) Gode Wind 1 330 MW Race Bank 573 MW Hornsea 1 1,200 MW Gode Wind 2 252 MW Burbo Bank Ext. 258 MW Walney Extension 660 MW 6,500 MW Horns Rev 2 209 MW London Array 315 MW Westermost Rough 210 MW Borkum Riffgrund 1 312 MW 5 MW Middelgrunden 40 MW Vindeby 5 MW Horns Rev 1 160 MW 50 MW Nysted 166 MW Barrow 45 MW Burbo 90 MW 476 MW Gunfleet Sands 173 MW 1,004 MW Walney I + II 367 MW 1,371 MW Anholt 400 MW 2,098 MW West of Duddon Sands 389 MW 2,487 MW 3,009 MW 1990 2000 2005 2010 2012 2013 2014 2016 2017 Pre-2009: Project by project Post-2009: Industrialised approach 2018 2019 2020 Vindeby Horns Rev 1 London Array Hornsea 1 Worlds first offshore wind farm Worlds first large scale offshore wind farm Words largest operational offshore wind farm The world s largest offshore wind farm once constructed 5 MW 160 MW 630 MW 1,200 MW Turbine capacity: 0.45 MW Turbine capacity: 2 MW Turbine capacity: 3.6 MW Turbine capacity: 7 MW Nr. of turbines 11 Nr. of turbines 80 Nr. of turbines 175 Nr. of turbines 174 Rotor diameter 35 m Rotor diameter 80 m Rotor diameter 120 m Rotor diameter 154 m Distance to shore 1.8 km Distance to shore 18 km Distance to shore 20 km Distance to shore 120 km
In 2009, DONG Energy commenced the industrialisation of offshore wind Element Pre-2009 Post-2009 1 Project Execution Model Planned and executed independently Planned, contracted and executed in parallel increases standardization Lessons learnt across portfolio captured and implemented In-house engineering expertise 2 Strategic Sourcing and Integration of Supply Chain Each project sourced individually Bottlenecks in markets caused challenges Framework agreements ensure attractive terms and access to manufacturing capacity A2SEA acquired to reduce installation vessel bottlenecks 3 Organizational Capabilities Org. structured around traditional power plant experiences Org structure redesigned around offshore wind experiences Wind Power as a separate business unit 6
DONG Energy is today a global leader Largest offshore wind player globally today Global offshore wind capacity MW 26% 11% 9% 11% 0% 0% 1% 3% 3% 1% 2% 6,282 1 3.273 DONG Energy s portfolio is larger than the three nearest competitors combined 3.009 1.941 668 1.692 1.625 695 400 1.064 1.273 997 1.225 600 472 399 311 111 336 280 161 288 159 121 257 3 Installed 2 Under construction % share of global installed capacity Source: BNEF 1. Excluding Borkum Riffgrund 2 which is pending FID 2. If a project is executed by a lead developer managing the construction, then 100% of capacity is allocated to the lead developer. If construction is executed by an integrated joint venture, capacity is allocated in proportion to the JV share 3. Statkraft has decided to scale down their activities in offshore wind. Current assets will be built and development projects will be brought forward to allow divestment before FID
DONG Energy Wind Power activity overview DONG Energy Wind Power geographical footprint Unparalleled experience and track record Bay State Wind Ocean Wind 25 years of experience and track 1991 2016 record in the offshore wind sector In operation Isle of Man Under construction Under development Walney Ext. West of Duddon Sands Barrow Burbo Bank Ext. Burbo Bank Walney 1 + 2 Gunfleet Sands 3 Westermost Rough Hornsea 1 Hornsea 2 + 3 + 4 Lincs Gunfleet Sands 1 + 2 Race Bank London Array 1 Horns Rev 1 + 2 German Cluster Anholt Gode Wind 2 Gode Wind 3 Gode Wind 1 Borkum Riffgrund 1 Borkum Riffgrund 2 Middelgrunden Avedøre Vindeby Nysted 19 offshore wind farms in operation 3,009 MW Constructed capacity 7.5 million Europeans with clean electricity 1,800 Dedicated employees 3,103 MW World's leading operator 6 offshore wind farms under construction 3,273 MW under construction 14 Partnerships 8
A solid integrated end-to-end business model DONG Energy Wind Power core competencies Develop Build Operate Own Identify and mature projects Perform FEED 1 + layout Carry out site surveys Manage consenting processes Bid preparation and delivery Mature project design Detailed design competence on selected systems/ components Manage sourcing and supply Manage logistics, installation and commissioning Ensure asset integrity over life-cycle Scheduled and unscheduled maintenance Collect data and perform diagnostics Highest yield at lowest cost Attract capital through partnerships Secure revenue and profit optimisation over life-cycle Ensure marketing of electricity and certificates ~90 ~1,040 ~590 ~80 Ability to design and optimize projects with a 'total life-cycle cost of wind farm' mindset Experience and expertise along the entire value chain allow for better understanding and management of risks End-to-end model reduces LCoE through fast feedback and learning across the entire organization ~1,800 Full-time employees 2 1. Front-end engineering design 2. Excluding A2SEA employees
10 From idea to realisation
Major institutional investors as partners Walney I & II (50.1%) 367 MW (2009 / 2010) Westermost Rough (50%) 210 MW (2014) Anholt (50%) 400 MW (2011) West of Duddon Sands (50%) 389 MW (2011) Horns Rev 1 (40%) 160 MW (2005) Burbo Bank Extension (50%) 258 MW (2016) Nysted (42.7%) 166 MW (2010) (KIRKBI) Lincs (25%) 270 MW (2009) Gode Wind 2 (50%) 252 MW (2014) Gunfleet Sands (50.1%) 173 MW (2011) London Array (25%) 630 MW (2009 / 2014) Borkum Riffgrund 1 (50%) 312 MW (2012) Gode Wind 1 (50%) 330 MW (2015) (KIRKBI) Note: private partnership in the Middelgrunden offshore wind farm not included in this chart
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