Empaquetadura de fibra de vidrio

Electricity on the Grid 4,605 4,731 754 966 4,319 3,623 System Operator Electricity 4,377 5,066 -136 -180 - - Telecommunications – external 73 75 26 27 - - Telecommunications – internal 58 51 10 3 12 16

System Operator Gas5 _{- 31 - 1 - -}

Chargeable Activities 16 13 4 -5 - 1 Power Contingency Planning 254 202 -2 0 - - Segment elimination -58 -51 - - - - Total 9,325 10,118 656 812 4,321 3,640

Illustration: The Nordic power grid in 2014

TRANSMISSION OF ELECTRICITY ON THE GRID

Network operations comprise the expansion, operation and maintenance of the national grid in Sweden. Svenska kraftnät’s network customers are large electricity generating facilities, regional networks and certain consumption facilities that are connected to the grid. The company concludes a contract of use with customers for access and use of the grid. The grid tariff is a service-dependent tariff, which means

4 _{Final settlement was made in the third quarter of 2013.} 5 _{Final settlement was made in the third quarter of 2013.}

that a subscriber is given access to the whole electricity market, regardless of where in the country the feed-in point is, at the agreed power level.

The grid tariff consists of two charges:

> The capacity charge covers operation, maintenance, depreciation and capital

costs for the network. The charge is based on the customer’s annual capacity subscription for supply or consumption at each connection point. Feed-in fees are lowest in the south and increase linearly with latitude, being highest in the north. For withdrawal fees the opposite applies. This geographical

differentiation is designed to provide long-term price signals on the siting of generating and consumption facilities.

> The usage fee is intended to cover costs for transmission losses on the grid.

The fee is designed to cover the cost of losses in the grid caused by supply or consumption at individual connection points. Supply or consumption that results in reduced grid losses reduces the usage fee. This is known as energy compensation. Transmission of Electricity on the Grid Group (SEKm) 2014 2013 Grid tariff Capacity charge 2,327 2,350 Usage fee 1,561 1,870 Total 3,888 4,220 Transit revenue 417 167 Total 4,305 ,4,387,

Grid tariff revenues were SEK 3,888 (4,220) million. Of the total amount, 60 (56) per cent refers to capacity charges and 40 (44) per cent to usage fees.

For 2014 usage fees were reduced by 13 per cent for all bidding areas because the procurement of energy losses was made at a lower price.

Transit revenues, which are earned when the grid is used for transmission of power through Sweden to other countries, were significantly higher than in the previous year, at SEK 417 (167) million. Out of total revenues for the year, SEK 119 million and SEK 11 million refer to revenues attributable to 2013 and 2012, respectively, which means that the actual outcome for 2014 was SEK 287 million.

Power subscription national grid

Supply, MW 20,781 21,461

Consumption, MW 19,584 19,342

Number of customers 24 29

Feed-in subscriptions decreased while consumption subscriptions increased somewhat compared with 2013. The number of customers connected to the grid decreased, to 24 (29). The decrease was due to corporate mergers.

Transmission of Electricity

on the Grid 2014 2013

Energy supplied to the grid, TWh 116.6 119.3

Energy consumed from the grid,

TWh 113.6 116.5

Max power consumption, MWh/h (hour with highest power

consumption)

19,558 20,003

Energy supplied in 2014 was 116.6 (119.3) TWh and energy consumed 113.6 (116.5) TWh. The supply of energy to the grid decreased compared with the previous year, despite marginally higher electricity production in the country. The reason is that some of the generated electricity is fed into the underlying regional networks. The reduced consumption is explained by slightly lower electricity use, as 2014 was a year with an above-normal average temperature.

Transmission losses on the

grid 2014 2013

Energy losses, TWh _{3.0 2.8}

Share of energy consumed, % _{2.6 2.4}

Max power losses, MWh/h (hour with highest energy losses)

881 884

Energy losses in the grid were 3.0 (2.8) TWh, which was slightly higher than in the previous year. The increased losses are explained by the fact that 2014 was a year with higher hydropower production in northern Sweden and in Norway than in 2013. This led to an increase in the transfer of electricity from north to south, which normally involves long transports from generator to consumer. As transmission losses depend on distance, this meant that transmission losses were higher in 2014.

Transmission of Electricity on the Grid (SEKm)

2014 2013

Operating revenue 4,600 4,724

Operating expenses -3,836 -3,727

The operating profit for the business segment Transmission of Electricity on the Grid was SEK 764 (997) million. Operating revenues decreased by SEK 124 million compared with the previous year. The lower revenue is due principally to a reduced usage fee for 2014 and reduced supply and consumption of electricity in the grid. The reduction in the fee was due to the fact that the procurement of energy losses was made at a lower price than in 2013. Expenses for energy compensation also declined, again due mainly to the reduced usage fee. Supply and consumption of electricity in the grid were both lower than in 2013, which has a certain impact on revenue and expenses. Energy revenues and energy compensation depend on where in the grid the energy is supplied and consumed. Supply is to a large extent influenced by generating capacity at nuclear power plants and by water levels in reservoirs. Electricity prices in neighbouring countries also affect the use and supply of electricity through exports and imports, respectively.

Power revenues declined by SEK 23 million, which was mainly due to reduced

revenues form temporary subscriptions, which were SEK 47 million in 2014 compared with SEK 75 million in 2013.

Svenska kraftnät has both revenues and costs for transit. The compensation agreement for transit, Inter TSO Compensation, is an agreement among 35 European

transmission system operators and is governed by Regulation (EU) No 838/2010. The object of the agreement and its calculation mechanism are to ensure that each party receives and provides economic compensation for the use of networks for transmission of energy through one country to another. In theory, the compensation consists of two parts: compensation for infrastructure and compensation for losses. Every month each party to the agreement submits six snapshot views of flows in each network as well as the measured values of exchanges through cross-border transmission lines. These are then calculated centrally and netted to minimise payment flows among the parties. The compensation which Svenska kraftnät receives and pays is related to the flows of all participating transmission system operators. There is therefore no or a very weak correlation between, for instance, Svenska kraftnät’s costs for losses and the

compensation received by the company. The same applies to compensation for infrastructure. The very weak correlation is explained by the fact that the economic outcome is not solely dependent on Sweden’s transmission losses, net export situation and reservoir levels, but depends on the values reported by all European countries. Transit revenues in 2014 were significantly higher than in 2013, totalling SEK 417 (167) million. Out of total revenues for the year, SEK 119 million and SEK 11 million refer to revenues attributable to 2013 and 2012, respectively, which means that the actual outcome for 2014 was SEK 287 million. Costs were also higher, at SEK 183 (104) million. Out of the total transit costs, SEK 27 million refers to 2013 and SEK 10 million

to 2012, which means that the actual outcome was SEK 146 million. The increase in revenues and costs was due to the fact that ENTSO-ITC6 _{invoiced for the period July –}

December 2013 in 2014 and that the previous year’s provisions for these revenues and costs were too low. The difficulty of predicting the economic outcome for the right period is due to the complexity of the allocation mechanism in the agreement with ENTSO as well as the long time lag before invoicing and corrections are made. The profit for the year is partly based on estimated revenues and expenses.

Revenue from capacity charges and investment grants in 2014 were SEK 149 (136) million. Of this, SEK 137 (114) million refers to revenues for the year through grants for grid investment and SEK 12 (22) million to counter-trade costs for the year. The increase in grants for grid investments is due to the inflow of capacity charges in 2014, which were used for investments and thus affected the income statement in the form of settlement of capitalised investment grants.

Operating expenses increased by SEK 109 million compared with 2013, which was mainly due to increased costs for transit and the recognition of accrued expenditure related to terminated projects. The increased costs for the purchase of energy losses, which totalled SEK 1,224 (1,200) million, were due to an increased loss volume. The price is hedged at the “system price” while the current spot price in each bidding area is used to determine the energy loss price. A certain portion of the energy loss price is thus unhedged and depends on the spot price. This cost increased compared with 2013. The hedged loss price was lower during the period than in the previous year, which partly offset the increased cost.

The Group’s revenues and expenses for primary control decreased. Overall, revenues declined from SEK 230 million in 2013 to SEK 166 million in 2014 while expenses declined from SEK 777 million in 2013 to SEK 737 million in 2014. Revenues and expenses for primary control attributable to the business segment declined. Revenues were SEK 28 (66) million and expenses SEK 155 (236) million. The decreased expenses are largely due to a reduced need for one of the components of primary control, frequency containment reserve - disturbance (FCR-D). The reason for this is that the audit at Oskarshamn 3 started earlier and took longer than expected. A frequency containment reserve is maintained as insurance to manage disturbances caused by the loss of the largest source of production. Oskarshamn 3 is the largest source of

production in the Swedish electricity system, and when this reactor is not in operation the need to maintain a frequency containment reserve is reduced.

When Svenska kraftnät was forced to cancel its contract with Alstom Grid for delivery of a new network monitoring system the accrued expenditure was charged to expense,

reducing earnings by SEK 173 million. Project planning expenditure of SEK 93 million for the Ekhyddan – Barkeryd transmission line project was also expensed. The project resulted from the need to handle an increase in power at the Oskarshamn nuclear power plant. However, new network studies conducted in autumn 2014 showed that it will be possible to handle both the increase in power at Oskarshamn and ensure the operational reliability of the future network that will come into being upon completion of the Gotland and NordBalt projects through the new Ekhyddan – Nybro – Hemsjö transmission line. The Ekhyddan – Barkeryd project has therefore been terminated. Earnings for the previous year include a charge of SEK 55 million related to the decision not to build the western branch to Norway in the SydVästlänken expansion project.

The operating margin for the business segment was 16.6 (21.1) per cent, which is 4.5 percentage points lower than in the previous year.

The business segment made investments of SEK 4,326 (3,624) million in 2014.

OPERATIONAL RELIABILITY IN 2014

Operational reliability was good in 2014, although disturbances and energy and power not supplied were higher than in 2013. The number of disturbances in the grid was 205 (177), of which most were handled through automatic disconnection of faults with no impact on electricity supply. A number of disturbances in the grid did result in energy not supplied (ENS), however.

The number of operational disturbances on the grid over the last five-year period is shown above. The number of disturbances resulting in supply interruptions for electricity customers was 22 (1). Energy not supplied (ENS) to electricity customers was 10.6 (0.2) MWh. The target is to keep ENS below 10 MWh/year. Power not supplied (PNS) was 84.3 (10.0) MW in 2014. The target is to keep PNS below 80 MW per year.

OPERATIONAL DISTURBANCES 2014 2013 2012 2011 2010

Operational disturbances in the grid, no.

205

177 202 192 224 Operational disturbances in the grid

resulting in outages, no.

22

1 3 9 10

Energy not supplied (ENS), MWh 10.6 0.2 6.9 42.3 4.9 Power not supplied (PNS), MW 84.3 10.0 23.0 235.0 43.0

Several metering transformers exploded during the hot summer of 2014. The failure of so many devices in such a brief space of time is very unusual, and it has not been possible to determine the cause of the explosions. All of the exploded metering transformers were of the same make and were manufactured in the same year, and have now been replaced. The relatively high number of disturbances is also explained by a season with more thunder disturbances than in any previous thunder season. Several strokes of lightning hit radial7 _{transmission lines and resulted in brief}

interruptions with less than 0.1 MWh of energy not supplied per fault. As several radial transmission lines were hit by lighting, this resulted in a high level of power not supplied. An instance of disturbance caused by thunder, leading to faults, resulted in 6.3 MWh of energy not supplied.