The energy-world in transition:

Changing customer needs and new products

Dr.-Ing. Leonhard Birnbaum

Vice-President of Eurogas / Member of the Board of Management, E.ON

Eurogas Annual Conference

Brussels, 3 March 2015

Outline

1. The energy system – status quo and changes to come

2. Two energy worlds

Central energy world: Contribution to security of supply

Decentral energy world: Focus on customer needs

3. Technical solutions

To meet customer needs

On the supply side

4. What does all that mean for gas?

2

The energy system has changed considerably over the

last decade

3

Market liberalization

Market integration Unbundling

European markets &

global interlinkages

Short-term trading Decentralization

Technological innovation

Renewable energy sources

Renewable energy sources form a considerable share

of our energy portfolio today…

4

Share of renewables*

32 % in Germany

26 % in Italy

21 % in France

14 % in Spain

11 % in Sweden

…

5 % renewables in EU 28 in total

Ad *: Not including hydro

Source: Figures from Eurogas Statistical Report 2014

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3

MW

Daily peak solar

Average daily peak solar

Source: E.ON Analysis

Solar power production in January 2013

…but intermittency is still a challenge

MW

Megatrends will guide future innovation

6

Renewables

Decentralization

Shale Gas

Energy Storage

Digitalization

Rising efficiency

Further

developments

Will come Already realized Unknown future

Megatrends

Outline

1. The energy system – changes over the last decade

2. Two energy worlds

Central energy world: Contribution to security of supply

Decentral energy world: Focus on customer needs

3. Technical solutions

To meet customer needs

On the supply side

4. What does all that mean for gas?

7

Two energy worlds have emerged

8

Global technologies with local adaptions

(glocalization):

Distributed generation (PV)

Distributed / mobile IT

Distributed flexibility (batteries)

Combined with services

Individual sales channels

New energy system

Centralized power production

Flexibility providers (peak plants, storage)

Large scale gas imports

Reliability of supply & environmental

standards driven by government

Significant economies of scale regarding

efficiency leading to large scale assets

Conventional energy system

Source: E.ON Technology & Innovation; E.ON Capital Market Story, Jan 2015

Decentral energy world

Customer-centric

Sustainability

Local proximity

Small scale, distributed

Central energy world

Efficiency-centric

Security of Supply

Global/ regional perspective

Large scale, central

E.ON to split into two publicly listed companies

9

New Company Generation

Hydro

E&P

Global Commodities

Russia

Wind/Solar/Other

Brazil

Germany

Other EU Countries

Turkey

Renewables

Distribution

Customer

Solutions Power Generation

Upstream

Global Commodities

Both companies will have a focused strategy and solid financing

Empowering customers Shaping markets

Focus on

customer needs

Contribution to

Security of Supply

Customer needs are not static – they are part of a very

dynamic process

10

Changing lifestyle

Changing

customer needs

Changing

technology

Digitization

Individualism

Focus on

sustainability

New middle class

…

Be more energy

efficient

Self-generated

electricity

Be connected

everywhere anytime

…

Innovation

New Products &

Services

…

From customer expectations to retail solutions

Customer expectations

11

New products & services

Flexible & individual

solutions

Answers when they are

needed

Feeling of having control

& being able to take part

Partnering

Feeling of being valued

Constant secure energy

supply without any effort

We think about

customer needs

We understand our

customers

We get customer

feedback

We allow customers

to get involved with

their ideas

Self configuration of

services

Self Care with intelligent

FAQs and Co-Browsing

Real-time control of

energy consumption

Form of communication

and Best Agent Routing

Bonus-program

Smooth & seamless

operations

understand create implement

DOUBLE-CHECK and LEARN

Source: Customer Insight and Innovation, E.ON Energie Deutschland

Outline

1. The energy system – changes over the last decade

2. Two energy worlds

Central energy world: Contribution to security of supply

Decentral energy world: Focus on customer needs

3. Technical solutions

To meet customer needs

On the supply side

4. What does all that mean for gas?

12

A Connected Home provides consumers the opportunity

to take active part and control in the consumption cycle

13

What is a Connected Home?

Heating & air

condition control

“A connected

home improves my

life”

E-mobility

PV optimization

Blinds and

light control

Entertainment

Home

security

Home appliances

management

Assisted

living

Automation &

interconnection

Source: E.ON T&I, Innovation Center Customer Solutions

Consumers become „prosumers“: Integrated systems

combine PV & electricity storage solutions for later use

Source: E.ON Innovation Center Distribution 14

Photovoltaic

Air conditioning

E-mobility

Smart metering

Transparent energy consumption

Intelligent local distribution system

Battery storage

“e-Home Energieprojekt 2020”

Interdisciplinary field of research with technical & customer oriented questions: main

research on VRDT* / batteries / customer satisfaction / eVehicles

Ad *: VRDT = Voltage regulated distribution transformer

Condensing boiler & Solar

Fuel cells Micro-CHP

(Heat & Power)

Higher efficiency and climate protection

Decentralized power generation options with gas have

developed considerably over the last years

Up to now Today In the Future

Gas Heat Pump

Biogas

15

Smart grids: More decentral generation leads to new forms

of energy management & integration of energy carriers

Decentralisation of Energy Mgmt.

and Power Production

En

erg

y m

gm

t.

Transmission HV

Distribution

MV/LV

Large central production

PV

Po

we

r G

en

era

tio

n

Storage

Industry

Industry

Integration of Energy carriers

Heat pump

Power Grid Heat Grid Gas Grid

Micro-/

Mini CHP

CHP

Customer centric

Source: based on E.ON Innovation Center Distribution 16

Storage

DVGW-Project G1-07-10 „Energiespeicherkonzepte“

in h

10000

1000

100

10

1

0,1

0,01

0,001

1kWh 10kWh 100kWh 1MWh 10MWh 100MWh 1GWh 10GWh 100GWh 1TWh 100TWh

Batteries

PSP

CAES

Power to Gas

H2

CH4

Fly- wheel

Energy Storage will be available both for central and

decentral energy systems

Time

Energy

Power to Gas = Handling small to high energy volumes

Source: E.ON Centre of Competence Energy Storage

H2

Electrolysis Power Grid

Power to Gas connects markets and energy sources

Power Industry Mobility Heating Power

3 Industry Mobility Heating

CO2 SNG

CH4,Bio

Certificate Power

Certificate Gas

Natural Gas & Renewable Gas Renewable Hydrogen

Source: E.ON Centre of Competence Energy Storage

(Source: dena

Deutsche Energie-Agentur 02/2015)

Power to Gas

projects

in Germany

Comparison of 1 GW transport capacity – corresponding to the power

of a large scale power plant or peak power of 200 wind turbines

Transmission grid Pipeline (0,6 m of diameter)

Power to Gas = Transport option

Source: E.ON Centre of Competence Energy Storage

Gas pipelines can transport much higher energy

volumes than electricity transmission lines

Outline

1. The energy system – changes over the last decade

2. Two energy worlds

Central energy world: Contribution to security of supply

Decentral energy world: Focus on customer needs

3. Technical solutions

To meet customer needs

On the supply side

4. What does all that mean for gas?

21

Gas can play a role in both worlds – and even form a link

Central energy world:

Gas-to-Power will continue to

be an important electricity-

source

Power-to-Gas opens

opportunities to link the old and

the new world

22

Decentral energy world:

Gas can be part of innovative

customer-solutions

Gas can be a means to store

energy

Gas is the cleanest fossil fuel

…but the gas-industry needs to actively pursue and push those

opportunities to ensure that gas also will play a role!