THE LEADING POWER MARKET

May 29th 2013

/

Special Thanks

Author of main presentation: Hans Randen, Director

European Integration, Nord Pool Spot

Presented by David Elzinga, Analyst, IEA

Contributors:

– Lars Audun Fodstad, SvP at Statkraft Energy AS

– Stig Goethe, President, Power Circle

Publications and resources :

– Cross-border Trade In Electricity And The Development Of

Renewables Based Electric Power: Lessons From Europe, OECD

– Nordic Market report 2012, NordREG, Nordic Energy Regulators

/

Nordic Interconnections

One synchronous

market covers most of

the region (except

western Denmark is

synchronous with

continental Europe)

Additional links are

being added.

Physical connections

combined with a

market structure

/

Main participants annual production

Figure Source: Cross-border Trade In Electricity And The Development Of Renewables Based Electric Power: Lessons From

Europe, OECD

/

Main participants installed capacity

Figure source: Nordic Market Report 2012, NordREG

/ Nord Pool Spot company presentation6

Europe’s leading energy exchange since 1996

Run the Elspot day-ahead and the Elbas intraday markets in the

Nordic and Baltic regions

The N2EX market in the UK

Covers 77 % of the consumption in the Nordic region

370 companies from 20 countries trade on Nord Pool Spot’s

markets

In 2012 Nord Pool Spot had a turnover of 432 TWh, including the

N2EX day-ahead auction volume in the UK

About Nord Pool Spot

/ Nord Pool Spot company presentation7

History1991: The Norwegian power market is deregulated

1993: Nord Pool Spot is established by the Norwegian TSO under the name ‘Statnett – Marked’

1996: Rebranded to Nord Pool when Sweden joins; the world’s first international power exchange is created

1998: Finland joins the Nord Pool market and Elbas becomes the world’s first international intraday market

2002: Nord Pool Spot is established as a separate company for the short term trading of physical power

2005: Nord Pool Spot opens the Kontek bidding area in Germany for both day-ahead and intraday

2008: The financial part of Nord Pool is sold by the TSOs to NASDAQ OMX Commodities

2009: Market coupling of 11 European countries is launched through EMCC by Nord Pool Spot and EPEX

2010: N2EX, the UK power market, is successfully launched by Nord Pool Spot and NASDAQ OMX Commodities

Nord Pool Spot opens a bidding area in Estonia and delivers the technical solution for a

new Lithuanian power market. Price coupling established between PolPx and NPS on SwePol-link

2011: Elbas is licenced to APX-Belpex as the new intraday market in both Belgium and the Netherlands.

Nord Pool Spot and EPEX SPOT sign a letter of intent to create a joint venture. The goal is to develop an

optimal joint system platform for both day-ahead and intraday trading to meet customers’ expectations

2012 : Elbas opened on NorNed with SOB/CMM together with APX-Belpex

Opening of Lithuanian bidding area 18th June 2012

/ Nord Pool Spot company presentation8

Ownership

Nord Pool Spot is owned by the Nordic and Baltic transmission system operators

Nord Pool Spot AS

Statnett

(Norway)

28.2%

Fingrid

(Finland)

18.8%

Energinet.dk

(Denmark)

18.8%

Svenska Kraftnät

(Sweden)

28.2%

Elering (Estonia)

2%

Litgrid (Lithuania)

2%

AST (Latvia) *)

2%

Regulated by the Norwegian Water Resources and Energy Directorate

(NVE)

Regulatory Council: representatives from regulators in the Nord Pool Spot

area and Nord Pool Spot executive management

*) Latvian TSO has an agreement in place to acquire 2% of Nord Pool Spot

once the Latvian market is opened for trading.

/

High degree of transparency – one of the keys to the Nordic success

Nord Pool Spot has historically been at the forefront when it comes to

publishing relevant information that the market participants need.

A prerequisite for a well functioning, competitive and efficient market is

that all players have access to relevant and equal information.

NPS ensures high degree of market transparency through

rules, regulations and agreements connected to operation the exchange.

Presentation footer9

/ Nord Pool Spot company presentation10

The Nordic power exchange concept

Financial market

Elspot market

Elbas market

Balancing market

Time

6 Years 24 Hours 0

Physical delivery

Reference price

Cash settled

Elspot market

Day-ahead auction for all price areas.

Equilibrium between supply and demand is

established for delivery the following day.

Average price - System price.

Elbas market

Intraday market with continuous trading up to

one hour before delivery. Approximately 34

hours.

Balancing market

Operated by the respective TSOs where final

adjustments are made to achieve balance

between supply and demand. Price set after

delivery by TSO, participant is price taker.

Financial market

Cash settled futures, forwards and options.

Clearing services.

/ Nord Pool Spot company presentation11

The Elspot market

Elspot bidding areas in the Nordic and Baltic regions

Interconnectors to adjoining markets

The spot market for electrical energy –and the cornerstone of Nordic trading

Auction-based market for trading of electrical energy for delivery the next day

Prices calculated based on supply, demand and transmission capacity (how much power can be moved from one area to another)

Covers Norway, Sweden, Finland, Denmark, Estonia and Lithuania

77 per cent of the total consumption of electrical energy in the Nordic countries is traded on the Elspot-market

Elspot is Europe’s mostliquid day-ahead market, producing arobust and credible reference price

/ Nord Pool Spot company presentation12

NPS and Market Coupling

Using the Day Ahead market to have an efficient use of

the main grid has been a corner stone since the Nord

Pool market started up in 1993

Today the Nordic/Baltic market is covering Norway 5 areas

Sweden 4 areas

Denmark 2 areas

Finland 1 area

Estonia 1 area

Lithuania 1 area

Latvia 1 area

/ Nord Pool Spot company presentation13

0

50

100

150

200

250

300

350

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

EPEX FRA EPEX GER-AUT Nord Pool Spot APX NL N2EX

European power exchangesYearly turnover in TWh

Day Ahead Auction Volumes

/ Nord Pool Spot company presentation14

Elbas is a continuous market where power

trading takes place until one hour before the

power is delivered

Members can adjust their power production or

consumption plans close to delivery

Every day, transmission system operators

publish their power transmission capacity to

Elbas

Members ‘offer’ how much power they want

to sell and buy and at what price. Trading is

then set based on a first-come, first-served

basis between a seller and a buyer

If transmission capacity is

available, neighbouring countries can trade

on the Elbas market

The Elbas market

Elbas areas, including licenced areas

Additional countries with Elbas members

May 29th 2012

Thank you for

your attention!