Quality of life. We are committed to sustainable management – for people, society and the environment.
Sustainability Report 2012
Design concept for charts and tables
The depiction of charts and tables corresponds to the concept of “SIMPLE, UNIFORM, CLEAR” from Roman Griesfelder (aspektum gmbh). They are prepared according to the recommendations of Prof. Rolf Hichert.
Column/bar width
Wide columns or bars represent measurement parameters that can be physically counted. Examples: MW, GWh, employees
Medium columns or bars represent aggregated values. Examples: €k, €m, €bn
Narrow columns or bars represent values in euros per unit. Examples: €/share, €/MWh
Lines or dotted lines represent shares, quotients or indices. Examples: Dividend yield in %, indexed share price, GDP growth in %
Colours Current year Neutral Previous years Targets VERBUND
VERBUND Sustainability Report 2012
Contents
Letter to stakeholders ...... 4 Core key figures ...... 6 Important events during 2012 ...... 8 VERBUND corporate strategy ...... 10 VERBUND sustainability strategy ...... 12
VERBUND: the company ...... 13 VERBUND corporate structure ...... 13 Products and services ...... 14 Power grid ...... 16 Trading and sales ...... 16 International ...... 17 Corporate Governance...... 18
Key figures: economy – business performance...... 22 Key figures: environment ...... 36 Key figures: innovation, research and development ...... 50 Key figures: social aspects ...... 55
Economic targets ...... 68 Environmental targets ...... 70 Social targets ...... 74
Information about the report...... 78 Ernst & Young Independent Assurance Report ...... 79
4
Letter to stakeholders
Dear Reader, Not only was 2012 VERBUND’s 65th anniversary, but it was also a year which saw fundamental changes in the European energy market: subsidies for new renewables are distorting competition, delayed expansion of the grid infrastructure is endangering the quality of supply and gas power plants can currently not be operated profitably. Responding to this situation, we streamlined our strategy to prepare for the future: • In the future, we will only invest in the carbon-free energy sources of water and wind and in the transmission grid, the backbone of a secure power supply. In addition, we will also make resources available for innovation and broadening our range of services for electric vehicles, energy management and plant operation. • We are concentrating on the core markets of Austria and Germany, taking in South-East Europe in the long term. We are also still committed to our existing projects in France and Italy. • When it comes to future strategic equity interests, we aim for majorities in order to show our commitment to sustainability even more consistently.
This strategy is reflected in concrete projects: in 2012, for example, we opened the Gössendorf/Styria power plant on the Mur River and the first phase of the Ashta/Albania run-of-river power plant. We also improved efficiency at the existing power plant sites in Gralla on the Mur and Gars on the Inn/Bavaria. In addition, we have increased our wind capacity: in Lower Austria we held the ground-breaking ceremony for doubling our wind farms’ output in Petronell-Carnuntum and Hollern, in Germany we acquired 5 wind farms in Rhineland-Palatinate (86 MW), and in Romania the Casimcea I wind farm (99 MW) went into operation. Following construction that started back in 2009, we unveiled Austria’s most modern combined cycle gas turbine power plant in Mellach/Styria with an output of 848 MW.
In April 2013, we completed an asset swap with E.ON and took over its shares in 8 hydropower plants on the Inn and the Danube. These power plants are now wholly owned by VERBUND. The deal means we have doubled our average annual output from hydropower plants in Germany to some 4 TWh. In exchange, E.ON assumed VERBUND’s 50% share in the Turkish joint venture Enerjisa Enerji A.S. This is another step in implementing our strategy that focuses on the markets in Austria and Germany as well as on majority interests.
In autumn 2012, we established E-Mobility Provider Austria together with Siemens, a company that will provide the infrastructure for vehicles powered by eco-friendly electricity on Austria’s roads by 2020. VERBUND SUSTAINABILITY REPORT Letter to stakeholders 5
Our broad commitment to climate protection also received external recognition in 2012: the Carbon Disclosure Project honoured VERBUND as one of Europe’s most climate-friendly electric utilities, and we won the Austrian Supply Excellence Award for our sustainable supplier management. Since it was established in 2010, the VERBUND climate school in the Hohe Tauern National Park has taught some 4,500 pupils about climate and climate protection. UNESCO honoured it as a UN Decade of Education for Sustainable Development project. Last year we renewed the Work and Family Audit. As a result, we have planned several measures to achieve an even better work-life balance for our people over the next 3 years. Given all these aspects of sustainable management, we also feel confident in our 65th anniversary year that VERBUND has the right tools to meet the challenges of the future successfully.
6
Core key figures
Economy - business performance Cash flow from operating Return on capital employed Revenue1 €m activities €m (ROCE) %
3,308 3,028 3,174
8.2 % 6.9 % 6.3 % 1,034.7 778.2 829.9
2010 2011 2012 2010 2011 2012 2010 2011 2012
Enviroment Proportion of ISO 14001 certified Hydropower generation2 GWh Thermal power generation GWh facilities % 30,485 26,708 73.0 % 24,216 69.0 % 67.0 %
5,410 4,258 4,500
2010 2011 2012 2010 2011 2012 2010 2011 2012
Social Training and development Employees3 Number per employee Hours Accident rate5 ‰
48.24 3,096 3,139 3,200 41.6 13.5 ‰ 36.8 11.9 ‰
8.6 ‰
2010 2011 2012 2010 2011 2012 2010 2011 2012
1 The key figures were adjusted to reflect changes in accounting treatment for energy derivatives in the wholesale portfolio. The change was implemented retrospectively with effect from 1 January 2011 in accordance with IAS 8. The figure for 2010 was not adjusted. // 2 Including purchase rights // 3 Number of employees under labour law as at 31 December 2012, not including members of the Executive Board and employees in early retirement // 4 Including a one-off, one-day IT course due to a system changeover // 5 Number of work-related accidents per 1,000 employees at VERBUND sites in Austria
VERBUND SUSTAINABILITY REPORT Core key figures 7
Economy - Business performance Unit 2010 2011 2012 Revenue1 €m 3,307.9 3,027.7 3,174.3 Cash flow from operating activities €m 778.2 829.9 1,034.7 ROCE % 8.2 6.9 6.3 Gearing % 96.8 82.3 64.9
Environment Unit 2010 2011 2012 Hydropower generation (incl. purchase rights)2 GWh 26,708 24,216 30,485 Thermal power generation GWh 4,258 5,410 4,500 Specific GHG emissions
(scope 1–3, relative to total generation) t CO2e/GWh 127 151 118 Emissions avoided with renewable generation kt 21,724 19,718 24,890 Plants certified to ISO 14001 % 73 69 67 Waste volume t 18,082 13,165 19,206
Social aspects Unit 2010 2011 2012 Employees3 Number 3,096 3,139 3,200 Training and development per employee4 Hours 41.6 48.2 36.8 Accident rate5 ‰ 13.5 11.9 8.6 Proportion of women % 18.3 18.3 19.0 Duration of employment Years 19.2 19.0 17.3 Fluctuation rate % 1.6 1.6 2.0
1 The key figures were adjusted to reflect changes in accounting policies for energy derivatives in the wholesale portfolio. The change was implemented retrospectively with effect from 1 January 2011 in accordance with IAS 8. The figure for 2010 was not adjusted. // 2 Including purchase rights // 3 Number of employees under labour law as at 31 December 2012, not including members of the Executive Board and employees in early retirement // 4 Including a one-off, one-day IT course due to a system changeover // 5 Number of work-related accidents per 1,000 employees at VERBUND sites in Austria
8
Important events during 2012
January March May
12 January The new VERBUND 12 March E-Control Austria officially 10 May The VERBUND Casimcea I Hollern II wind farm receives official recognises Austrian Power Grid AG wind farm in Romania feeds the first notice of passing the EIA. The notice for (APG) as an independent transmission kWh of electricity through the newly Petronell-Carnuntum II (21 MW) was system operator. APG complies with all built 400 kV substation into the issued in 2011. the Austrian and Brussels authorities’ transmission grid. Together with the Bruck-Göttlesbrunn unbundling requirements. wind farm (21 MW) currently being 17 May Aprilia (800 MW), the fourth planned, a total of 57 MW additional 23 March The VERBUND E-Novation large CCGT of Sorgenia, our Italian capacity will be created over the next Award (VERENA) is presented at the equity interest, goes into commercial few years. Austrian Innovation Awards for the first operation. time. The prize goes to BRP-Powertrain 16 January By using low-energy GmbH & Co KG for its outstanding 21 May The second wind farm of notebooks, changing over to the solution aimed at further developing Enerjisa Enerji A.S., the Dagpazari wind resource-efficient Windows 7 operating electric vehicles. farm (39 MW), is connected to the grid system and server virtualisation, in the south of Turkey. It will supply VERBUND saves nearly 600,000 kWh of April around 129 million kWh of electricity electricity annually. annually.
11 April VERBUND launches a book on VERBUND presents The LIFE+ Traisen rehabilitation 19 January the research project: Hydropower. 25 May Diakonie, an aid organisation, with a Electricity. Society. Power plant projects project receives notice of passing the €30,000 Christmas donation to the EIA at first instance. In the coming years from 1880 in the focus of at-“tension”. VERBUND Empowerment Fund it runs. an eco-friendly alluvial landscape will be
19 April At the TUday12 job fair created in the lower stretches of the The Menge storage power Traisen, downstream from the 28 January VERBUND awards women’s plant (89 MW) on the Seyhan River in Altenwörth plant on the Danube. scholarships for the fourth time to three southern Turkey is the Enerjisa Enerji outstanding students at the Vienna A.S. joint venture’s sixth hydropower University of Technology. June plant to go into full operation.
26 April VERBUND takes part in Take 12 June Construction of the Hollern II February Your Daughter to Work Day for the ninth and Petronell-Carnuntum II wind farms time. Showing an interest in technology, starts with a ground-breaking ceremony. 22 February A quadrature booster for 23 VERBUND employees’ daughters and With a total capacity of 36 MW annually, the Lienz substation is delivered in their friends visit the Melk power plant they will supply electricity to some several sections from 22 February to on the Danube. 25,000 households. 7 March 2012. It enables wind energy to be integrated and increases security of supply.
VERBUND SUSTAINABILITY REPORT Important events during 2012 9
June September November
22 June VERBUND inaugurates the 1 September A total of 48 apprentices 14 November At the Carinthian Mellach/Styria CCGT. The highly efficient start with a dual-profession training in Tourism Day, the Malta high alpine road, facility will replace 5 old thermal power electrical and mechanical engineering at Reisseck funicular railway and Berghotel plants, thus saving up to 2 million the VERBUND apprenticeship Malta receive the Carinthian quality tonnes of CO2 per year. workshops in Ybbs-Persenbeug/Lower certificate at Velden’s Casineum. Austria, Kaprun/Salzburg and 29 June VERBUND, Wien Energie and Töging/Bavaria. 28 November The VERBUND EVN start testing a new, innovative Sustainability Report 2011 wins second turbine model at the Nussdorf power 10 September VERBUND puts the prize at the Austrian Sustainability plant on the Danube canal. The eco- 99 MW Casimcea I wind farm into Reporting Awards (ASRA). friendly StreamDiver© turbine is operation near Romania’s Black Sea intended to pave the way for smaller coast. Another wind farm with some December hydropower plants. 102 MW is under construction. 3 December VERBUND signs contracts VERBUND and EVN July 18 September to acquire E.ON shares in 8 hydropower open the first phase of the Ashta plants in Bavaria. In exchange, E.ON 2 July VERBUND receives notice of hydropower plant in Albania. assumes VERBUND’s 50% share in the The matrix turbines use hydropower passing the EIA for the Bruck- Turkish company Enerjisa Enerji A.S. particularly efficiently and can supply Göttlesbrunn wind farm (21 MW). Construction is scheduled to start in 100,000 Albanian households with 5 December Half-time at Austria’s renewable energy. 2014. highest altitude power plant
construction site: mining work for the 27 July VERBUND opens a new office 28 September The Gössendorf/Styria Reisseck II/Carinthia pumped storage power plant on the Mur is opened. The in Bucharest, strengthening the Group’s power plant is completed. Installation of VERBUND and Energie Steiermark joint position in Romania’s wind energy the generator sets can now start. market. venture supplies clean power to 23,000 households. 11 December ISO 14001 certification August is successfully completed at October VERBUND’s headquarters in Vienna, 5 August The first 5 of 52 turbines in where some 600 employees work. VERBUND wins the the Bares wind farm go into commercial 16 October Austrian Supply Excellence Award 2012. The Toul CCGT (422 MW) operation for Enerjisa Enerji A.S. It is 20 December one of the largest wind farms to be built built by VERBUND subsidiary Poweo The 2012 Carbon Toul Production SAS in France goes into in Turkey. 30 October Disclosure Project rates VERBUND as commercial operation.
10 August VERBUND acquires 5 wind one of the top companies in the area of transparent emissions data reporting farm projects with a total of 86 MW in and climate protection services. Rhineland-Palatinate in Germany. The 21 wind turbines will generate about 255 million kWh of electricity annually to supply some 70,000 households. 10
VERBUND corporate strategy
By generating and marketing electricity from renewable energy, we preserve and create sustainable value for the future. The strategy of VERBUND is geared toward hydro and wind power technologies in our key markets of Austria and Germany. Moreover, VERBUND has made a clear commitment to value-based management and is striving for a stable credit rating in the single-A range.
Cost-effectiveness and profitability Cost-effective, profitable action, financial stability and sustainability: these are the pillars of our strategy for overcoming the challenges of today and tomorrow. We make targeted investments in innovations to create a basis for future earnings. We ensure the sustainability of our economic performance through consistent implementation of our initiative to increase efficiency in all corporate sectors and realise cost savings potentials.
Hydropower and wind power VERBUND is one of the leading hydropower groups in Europe. Electricity generation from hydropower is our core competency and forms the basis of our generation portfolio. The planned acquisition of shares in Bavarian hydropower plants underlines the significance of this renewable resource for VERBUND. In the future, we will continue to focus on developing hydropower. Priority will be given to capital expenditure in our key markets of Austria and Germany. In addition to constructing new hydropower plants, we will increase the efficiency of our existing plants. Having a flexible power plant portfolio will allow us to compensate for weather-related fluctuations in wind power and solar energy in the best manner possible and therefore support the transition to new sources of energy. In past years, we have continuously developed electricity generation from wind power. We have a portfolio of wind power plants located in Austria, Germany, Romania and Bulgaria. In Romania, the Casimcea I wind farm went into operation in quarter 3/2012 and construction of Casimcea II is proceeding as planned. Just recently, we purchased 5 wind farms in Germany, thus underlining the significance of wind power for VERBUND as a sustainable generator of electricity.
Regional focus The underlying conditions in the energy sector and the general economy have changed fundamentally in recent years. As a result, VERBUND has gradually fine-tuned its strategic direction to focus on Austria and Germany. Our home market of Austria remains extremely important for us. The domestic resource of water allows for environmentally-friendly and sustainable energy generation. We reinforce our position as a leading hydropower group in the heart of Europe by using run-of-river power plants in the Austrian-Bavarian border regions to supplement capacities. We already sell approximately 94% of our electricity in Austria and Germany alone. In addition to these countries, the Southeast European economic area is one of VERBUND’s medium to long-term target regions. We are already active in generation in Albania, Romania and Bulgaria and are paying very close attention to market developments in these regions. France and Italy can no longer be seen as growth markets. VERBUND will honour its existing commitments, but does not plan to make any new investments in the medium term. VERBUND SUSTAINABILITY REPORT VERBUND corporate strategy 11
Supplementing generation with gas power
VERBUND’s ultra-modern and CO2-low CCGTs supplement renewable energy. They also ensure a balanced mix in terms of generation and are able to balance out volatile electricity generation from renewable energy. The general situation for gas power plants is difficult at present. We are working to optimise our existing portfolio and to (re-)negotiate our gas supply agreements. At the moment, we are not considering expanding our thermal portfolio.
Additional potential in trading and sales Energy trading forms the hub of VERBUND’s domestic and international activities. It ensures optimal daily power plant utilisation, access to the energy markets for our power plants and the best possible marketing of the energy we generate. In addition to marketing our energy via traditional stock market transactions and off-exchange, OTC trading in numerous countries, we also sell our electricity directly to resellers and consumers. We are also a leading trader of green electricity products in the European market with our H2Ö brand. VERBUND is thus positioning itself as an active competitor, attractive service provider and reliable partner in electricity sales. In addition, having direct access to consumers ensures that sales risks are diversified, especially in times of crisis with fluctuating wholesale prices. Changing energy policies and the rapid development of new renewable energy are posing new challenges for trading and sales. VERBUND took preparatory measures for this well in advance. In this dynamic market environment, we are ensuring optimum marketing of our own generation through conversion of our power plant utilisation centre, establishment of an intraday trading team and development of new and innovative services. Our trading and sales strategy will focus on developing additional innovative energy products and services.
Power grid – the backbone of power supply As the link between electricity generation and electricity consumption, the transmission grid represents the backbone of power supply. It ensures the supply of electricity to the population and to industry. In past years, the share of new renewable energy such as wind power and solar power has risen sharply. This energy is weather dependent and therefore subject to natural fluctuations, a situation that entails enormous challenges for grid operation. The grid must ensure a balance between generation and consumption at all times. VERBUND is committed to expanding the Austrian transmission grid using a forward-looking grid development plan. Moreover, we see ourselves as a reliable partner with respect to maintaining Europe’s electricity supply.
Strategic equity interests In its strategic partnerships, VERBUND’s policy is to pursue majority interests. VERBUND began last year to divest itself of interests that are of no strategic added value and will continue to do so.
Innovation – a key area for the future As Austria’s leading power company, development of the domestic energy supply is especially important to us. This is why we are active in designing new products in the energy area. The focus is on intelligent storage technologies, energy management and electromobility. 12
VERBUND sustainability strategy
Environment Economy Social aspects Our aim is to build and Our aim is to increase Our aim is to strike a operate all our plants with enterprise value through social balance when as little environmental long-term, profitable carrying out Group impact as possible and growth. activities. supply our customers with eco-friendly products. Climate and eco-friendly electricity We assume responsibility towards people generation – above all from renewable and society for whom electricity is an sources – is the backbone of our economic important factor in their quality of life. We In Austria and internationally, we primarily rely on hydropower, supplemented with success. We are growing in Austria and communicate actively, openly and Europe on the basis of our core respectfully with interest groups from all wind power, for generating electricity. We competency: electricity at all levels of value areas of society. We listen and give constantly work on reducing our emissions – coal will not be of strategic importance in added. With our activities, we increase extensive information. Our success lies in productivity in many areas of life and providing customer-oriented services with the future. Our high-capacity transmission contribute to regional value added. ecological direction and competent, grid and pumped storage power plants enable us to integrate new renewable friendly advice. Careful management and pro-active cost energy sources. management in our projects and processes We give our employees attractive, secure
We prevent or at least reduce the enable us to improve efficiency and jobs and attach great importance to maintain our competitiveness. Fair maintaining and developing their expertise. ecological impact of our operations and business practices and the principles of It goes without saying that the workforce optimise environmental management at all our sites. Standardised environmental data sustainability are a matter of course for us. is entitled to co-determination rights under We also look for them in our suppliers and the law and that we adhere to the management throughout the Group other business partners. International Labour Organisation’s creates a sound basis for making decisions regarding our projects. standards. Occupational health and safety are also extremely important to us. Our
comprehensive apprentice training ensures We do everything we can to conserve energy and use electricity efficiently, not that we will have skilled workers in the future. By fostering employee diversity, we only within the company, but also in the bring different points of view to the Group. wider community by providing information and innovative solutions. Our climate We also assume social responsibility by strategy is defined by way of concrete supporting charitable organisations and performance indicators and targets. passing on our knowledge to schools and universities. In our research, we focus on helping to shape the energy systems of the future by developing innovative and forward-looking solutions.
VERBUND SUSTAINABILITY REPORT VERBUND: the company 13
VERBUND: the company
VERBUND is Austria’s leading utility and one of the largest producers of hydroelectricity in Europe. More VERBUND AG than four-fifths of our annual generation comes from hydropower. Headquarters: Am Hof 6a, 1010 Vienna, VERBUND operates 125 hydropower plants in Austria and Germany. The Group has strengthened its Austria, commitment to renewables through a focus on wind power. Combined cycle gas turbine power plants www.verbund.com are an efficient and eco-friendly bridging technology on the path to a renewable energy system, and will [email protected] replace existing coal-fired plants over the medium term. Our equity interests in Turkey and Italy and our Business objective: subsidiaries in France together operate 58 power plants, 43 of which generate electricity from renewable generation, transmission, energy sources. trading, and sales of electricity in Europe
VERBUND corporate structure
Electricity generation Electricity trading and sales Shareholder structure %
Free float Republic VERBUND Hydro Power AG VERBUND Trading AG of Austria TIWAG VERBUND Thermal Power GmbH & Co KG VERBUND Sales GmbH < 20 VERBUND Renewable Power GmbH VERBUND Trading & Sales Deutschland GmbH VERBUND Innkraftwerke GmbH > 5 51 Energji Ashta Shpk VERBUND is one of the most successful
POWEO Toul Production S.A.S. electricity traders in Europe. The Group has > 25 POWEO Pont-sur-Sambre Production S.A.S. also been supplying consumers in Austria
since 2005. In Germany, VERBUND has EVN and Wiener VERBUND’s success is based upon eco-friendly positioned itself as a supplier of green Stadtwerke syndicate and cost-effective electricity generation. electricity to resellers and industrial customers.
Electricity transmission
Austrian Power Grid AG
The independent grid subsidiary of VERBUND, Austrian Power Grid AG, operates the high- voltage grid in Austria and is an important hub for electricity transmission in Europe.
Details of our corporate structure with all equity interests can be found on the inside back cover of the VERBUND Annual Report 2012.
14
Products and services
Electricity generation More than 70 billion kWh of electricity are consumed in Austria each year. VERBUND power plants cover approximately half of this demand. We attach great importance to sustainability in the generation of electricity. In 2012, the water supply was 11% above the average of many years, and 22% above the level of the previous year. As a result, 87% of VERBUND's own generation of 35 billion kWh was obtained from hydropower. Just under 1% came from wind power, and 13% from thermal power.
Hydropower With the commissioning of the Gössendorf/Styria power plant on the Mur and the small Hirzbach/Salzburg power plant, VERBUND owns 84 run-of-river power plants and 21 storage power plants. Own electricity generation is supplemented by purchase rights for a total of 20 run-of-river power plants owned by Ennskraftwerke AG, Österreichisch-Bayerische Kraftwerke AG, Donaukraftwerke Jochenstein AG, and E.ON Wasserkraft GmbH. This provides VERBUND with a maximum electrical capacity of 7,375 MW from hydropower. The average annual generation (mean energy capability) amounts to 26,671 million kWh. As an EU member, Austria is committed to increasing its share of renewables for consumers to 34% by 2020. Energy generation from hydropower can make a significant contribution to this goal. Renovation and new construction of power plants would enable the generation of another 7 billion kWh of electricity by 2020. By comparison, the national energy strategy foresees a 3.5 million kWh expansion of hydropower by 2015. Based solely upon the hydropower projects currently being planned and implemented, VERBUND could achieve a 20% share by 2020. Moreover, electricity generated from hydropower is important for the balancing and regulation of the electricity market in Austria and in interaction with neighbouring countries.
Wind power Additional information VERBUND relies upon wind power as a supplement to hydropower. Wind power was significantly about electricity expanded in 2012. We are currently operating three wind farms in Austria with a total capacity of 49 MW. generation is available at Two additional wind farms with a combined capacity of 36 MW are currently under construction, and www.VERBUND.com under “Our Business construction will begin soon on a third wind farm with a capacity of 21 MW. When these plants are Divisions”. completed, VERBUND's installed wind power capacity in Austria will more than double. VERBUND is also involved in wind power internationally. In Germany, we are building 5 wind farms with a combined capacity of 86 MW. Some of these already began operations in 2012. In Romania, the Casimcea I wind farm (99 MW) was opened and the second phase of Casimcea II (102 MW) is currently under construction. In Bulgaria, VERBUND operates the Haos wind farm (16 MW). We also operate other wind farms in Europe through our equity interests.
Thermal power 6 thermal power plants in commercial operation with a combined output of 2,505 MW complete VERBUND’s electricity generation portfolio. The Graz district heating plant (57 MW) has been leased out, and the Korneuburg steam power plant (277 MW) has been decommissioned. The modern, high- efficiency CCGT in Mellach/Styria (848 MW) was completed in May. The power plant companies VERBUND SUSTAINABILITY REPORT VERBUND: the company 15
POWEO Pont-sur-Sambre S.A.S. and POWEO Toul Production S.A.S. in France, which have been consolidated since 31 October 2012, have a combined installed capacity of 842 MW.
Electricity generation Number Maximum Mean energy 2010 2011 2012 electrical capability GWh GWh GWh capacity as at as at 31/12/2012 31/12/2012 GWh MW Hydropower 105 6,784 23,640 23,825 21,648 27,022 Hydropower purchase rights 20 591 3,031 2,883 2,569 3,463 Wind/solar power1 8 175 112 127 242 Thermal power 8 2,839 4,258 5,410 4,500 Total 141 10,389 26,671 31,078 29,753 35,228
1 3 wind farms in Lower Austria (Bruck an der Leitha, Hollern, Petronell-Carnuntum) with a total of 49 MW, 1 wind farm in Romania with 99 MW, and 1 wind farm in Bulgaria with 16 MW, 1 wind farm in Germany with 7.5 MW, and 2 photovoltaic power plants in Spain totalling 3 MW
Electricity supply Verbund-generated electricity made up 70% of the Group electricity supply, and 30% originated from purchased electricity, so-called “electricity of unknown origin”. Thanks to the expansion of our production capacities and the good water supply, the share of purchased electricity declined sharply in 2012, and thus so did the minor share of nuclear power that this includes on a purely computational basis. The European generation mix can be used for a computational estimation of the composition of the electrical energy of unknown origin in electricity trading. The so-called “ENTSO-E” mix is established by the European Network of Transmission System Operators. According to preliminary data (December 2011 to November 2012), it consists of 16% hydropower, 10% other renewables, 48% fossil fuels, and 26% nuclear power.
Group electricity supply GWh 2011 2012 Change
1 Hydropower 24,216 30,485 25.9 %
Wind power/solar power 127 242 90.9 %
Thermal power 5,410 4,500 – 16.8 %
Own generation 29,753 35,228 18.4 %
2 Electricity purchased from third parties 16,586 12,029 – 27.5 %
3 Electricity purchased for grid loss and control energy volumes 2,883 3,142 9.0 %
Electricity supply 49,222 50,398 2.4 %
1 Including purchase rights// 2 The quantities of electricity purchased from third parties represent the marketing and securing of VERBUND’s own generation and the hedging of wholesale transactions (power exchange/OTC). They do not permit any assumptions regarding the actual physical flow of electricity volumes in 2012. The only relevant electricity volumes are those that were supplied directly and indirectly (via resellers) to consumers. //3 Since 1 January 2011, Austrian Power Grid AG (APG) has purchased the grid loss energy for participating grid operators. 16
Power grid
Additional information The transmission grid operated by Austrian Power Grid AG (APG), our independently operated about the power grid is subsidiary, forms the backbone of Austria’s electricity supply. It is also part of the pan-European available at www.apg.at transmission grid run by ENTSO-E’s Regional Group Continental Europe, formerly UCTE. The grid comprises approximately 3,500 km of lines, with voltage levels of 380, 220, and 110 kV. A powerful transmission grid is the basic prerequisite for the further expansion of renewable energy and for fulfilling Austrian and European climate protection goals. In its Master Plan 2020, APG defines its long-term strategic grid expansion plan, which is based upon the trends in the European energy sector. A significant number of the projects defined in this plan has been categorised as particularly urgent by the European Commission and is part of ENTSO-E’s 10-year grid expansion plan. Particular attention is being paid to sustainably ensure security of supply. The completion of the 380 kV ring, the strengthening of important transmission lines, and a comprehensive investment program for new construction and expansion of substations will enable the ongoing and additional expansion of renewable energy.
Power grid data Voltage level Power lines Power lines Substations/ Route length/km System length/km Grid control systems 380 kV 1,150 2,373 220 kV 1,614 3,219 110 kV 660 1,184 Total 3,424 6,776 61
Trading and sales
Additional information VERBUND is the largest supplier of electricity from renewables in Austria. At the end of 2012, the Group about trading and sales had approximately 260,000 customers in the household/agriculture and commercial segment. The is available at product mix ranges from the low-priced online H2Ö-direct product to products with supplemental www.verbund.com under “Our Business services such as free energy consulting or insurance services. All H2Ö products offer electricity from Divisions”. 100% Austrian hydropower (see E-Control Electricity Labelling Report 2012).
Electricity labelling for consumers In Austria and Germany, VERBUND has positioned itself as an innovative and service-oriented vendor for business and industrial customers. Customers can choose between 100% hydroelectricity and a mix of green and grey electricity. Electricity labelling for Austria is specified on the consumer's electricity bill (using the new calculation method pursuant to the Electricity Labelling Regulation (Stromkennzeichnungsverordnung) announced by E-Control on 14 September 2011; Electricity Labelling Report 2012 available at www.e-control.at). In 2011, the electricity labelling for the business and industrial customers segment in Austria was structured as follows: 14.0% known renewable energy sources and 86.0% electricity of unknown origin (E-Control Electricity Labelling Report 2012). In Germany, the labelling was as follows: 11.1% renewable energy subsidised in accordance with the Renewable Energy Sources Act (Erneubare-Energien- VERBUND SUSTAINABILITY REPORT VERBUND: the company 17
Gesetz, EEG), 14.0% renewable energy with certificates of origin, 4.1% other fossil fuels, 12.7% natural gas, 40.7% coal, 17.4% nuclear energy. In Germany, our most important foreign market, we were able to acquire additional customers and increase sales volumes, primarily with our premium brand H2Ö, high-quality electricity from renewable resources produced by TÜV SÜD certified VERBUND hydropower plants, and were also able to expand our market position as a leading supplier of green electricity. Sales activities in Germany are conducted from our Munich and Düsseldorf locations.
Electricity trading ensures stable market access VERBUND’s focus in electricity trading (asset-based trading) is to achieve the best marketing of Group- generated electricity. We are also strengthening our trading activities through proprietary trading, while observing strict risk guidelines. With its electricity trading, VERBUND has created a strong presence on the most important OTC markets and exchanges in Europe. This is key to our core business of electricity generation. The know-how gained in this process has strengthened VERBUND’s position on the electricity market and allows us to respond directly to changes in the market. As European electricity markets continue to become more integrated and the proportion of renewable electricity generation rises, electricity trading is becoming increasingly important. The spot market, and particularly short-term intraday trading and the balancing energy market, are becoming increasingly dynamic. VERBUND identified this trend at an early stage and has further optimised the marketing of its own generation. Trade in guarantees of origin for electricity is also becoming more important. On 11 December 2012, the Electricity Exchange Austria EXAA began its green electricity trading with 12 licensed trading participants, including VERBUND at the top of the list. VERBUND is already one of the leading green electricity suppliers in Europe.
International
The Italian VERBUND equity interest Sorgenia S.p.A completed its combined cycle gas turbine power Download information plant park in the spring of 2012 with the commissioning of the Aprilia plant (800 MW). The Campagna about Sorgenia at www.sorgenia.it (20 MW) and Ricigliano (11.5 MW) wind farms in southern Italy, as well as the Longville-sur-Mer (12.5 MW) wind farm of Sorgenia France, went into operation in October and December 2012, respectively. The Italian market is continuing to develop measures and tools for greater energy efficiency. In Turkey, the 89 MW Menge storage power plant of the Turkish equity interest Enerjisa Enerji A.S. Download information began full operation at the end of January 2012. Additional hydropower plants with a total capacity of about Enerjisa A.S. at www.enerjisa.com approximately 1,100 MW were under construction in 2012. The second Enerjisa Enerji A.S. wind farm at Dagpazari (39 MW) went into operation in May. Work on Bares, one of the largest wind farms in Turkey, progressed rapidly. Its 52 turbines, with a combined capacity of 143 MW, will generate approximately 500 GWh of electricity. Thanks to financial support of Sabanci University and the Vaska Foundation, VERBUND and Enerjisa Enerji A.S. continued to promote education and environmental projects in Turkey as in previous years. In France, POWEO Toul Production S.A.S., a fully-owned VERBUND subsidiary, began operations of its ultramodern Toul combined cycle gas turbine power plant in December. With a capacity of 442 MW, the facility can supply electricity to approximately 400,000 households. 18
Corporate governance
Board members Executive Board Name Year of birth Date of initial End of current appointment term of office Dipl.-Ing. Wolfgang Anzengruber CEO 1956 1/1/2009 31/12/2013 Dr. Johann Sereinig Deputy CEO 1952 1/1/1994 31/12/2013 Dr. Ulrike Baumgartner-Gabitzer Member of the Executive Board 1957 1/1/2007 31/12/2013 Dipl.-Ing. Dr. Günther Rabensteiner Member of the Executive Board 1953 1/4/2011 31/12/2013
The variable remuneration of the Group Executive Board depends on performance and is limited to a certain percentage of fixed remuneration. This percentage rate was between 50% and 70% for financial year 2012. The level of performance-dependent remuneration components is based on the extent to which the targets agreed for the financial year are reached. 50% of the target agreement for 2012 related to attainment of the planned Group result, and 50% related to the attainment of qualitative (and, in part, medium-term) targets. This also includes activities in the area of "Innovation, Research, and Development" for the expansion of business activity into the area of energy services, the continuation of innovation activities in renewable electricity generation, and activities such as the roll-out of Smart Home and Electromobility. The principles underlying the Executive Board’s share of profit were unchanged from the previous year.
Supervisory Board Name Date of initial End of current appointment term of office Dr. Gilbert Frizberg Chairman 16/3/2000 AGM 2015 Dkfm. Peter Püspök 1st Vice-Chairman 16/3/2000 AGM 2015 Mag. Dr. Reinhold Süßenbacher 2nd Vice-Chairman 7/4/2010 AGM 2015 Dipl.-Betriebswirt Alfred H. Heinzel 16/3/2000 AGM 2015 Mag. Harald Kaszanits 7/4/2010 AGM 2015 Mag. Herbert Kaufmann 26/3/2008 AGM 2015 Dipl.-Ing. Dr. Peter Layr 13/4/2011 AGM 2015 Dr. Gabriele Payr 13/4/2011 AGM 2015 Christa Wagner 7/4/2010 AGM 2015 Ing. Siegfried Wolf 16/3/2000 AGM 2015
VERBUND SUSTAINABILITY REPORT VERBUND: the company 19
Employee representatives Name Date of initial Appointed by appointment Anton Aichinger Chairman of the Group’s employee representatives since 25/10/2006 Employee representatives Kurt Christof Chairman of the Central Works Council since 8/3/2004 Employee representatives Harald Novak 27/9/1991 to 9/5/1993, Chairman of the Central Works Council since 15/12/2000 Employee representatives Dipl.-Ing. Ingeborg Oberreiner Chairwoman of the Works Council since 29/8/2006 Employee representatives Ing. Joachim Salamon Member of the Central Works Council since 25/10/2006 Employee representatives
Independence of members of the Supervisory Board In its meeting on 23 February 2010, the Supervisory Board of VERBUND AG established the guidelines listed in the Annex to the Austrian Code of Corporate Governance as criteria for its independence (pursuant to C Rule 53 of the Austrian Code of Corporate Governance). The main contents are as follows:
• The Supervisory Board member shall not have served as a member of the Executive Board or as a member of the senior management staff of the Company or the Group in the past 5 years, and shall not have been an auditor in the past 3 years. The Supervisory Board member shall also not be a close relative of a member of the Executive Board or an auditor. • The Supervisory Board member shall not maintain any significant business relationship with the Group. This shall also apply to companies in which the Supervisory Board member has a considerable economic interest. • The Supervisory Board member shall not be in the managing board of another company in which a member of the Executive Board of the Company is a supervisory board member. As a rule, the Supervisory Board member may not remain on the Supervisory Board for more than 15 years.
Details can be found in the Corporate Governance Report 2012, in the section entitled "Supervisory Board". Information on compensation for the Supervisory Board is provided there. There are no plans for variable compensation for the Supervisory Board. Based upon these guidelines, all ten shareholder representatives have issued a written declaration of their independence. Eight of them have declared their independence, and two members of the Supervisory Board (Layr, Payr) have classified themselves as being not independent (with respect to one criterion in each case). In addition, the following shareholder representatives meet the criteria for independence contained in C Rule 54 (not representing the interests of a shareholder with a stake of more than 10%): Frizberg, Püspök, Süssenbacher, Heinzel, Kaufmann, Wagner and Wolf.
VERBUND SUSTAINABILITY REPORT Economy - business performance 21
Key figures: economy – business performance 22
Economy - business performance
Contact Key figure Unit 2010 2011 2012 Comment Investor Relations: Revenue1 €m 3,307.9 3,027.7 3,174.3 Higher electricity revenue (positive price Andreas Wollein trend) and higher grid revenue (increase Tel.: +43(0)50313-52604 in international revenue) [email protected] Operating result (EBIT)2 €m 828.5 1,030.0 900.2 The operating result before effects from impairment tests increased by 15.5% Group result2 €m 400.8 355.8 389.3 Increase based upon significant improvement in the financial result Gearing % 96.8 82.3 64.9 Improvement due primarily to the planned sale of the Turkish equity interest Cash flow from €m 778.2 829.9 1,034.7 Increase due to improved EBITDA operating activities
Economic Value Added €m 62.3 – 9.3 – 39.4 NOPAT 2012: €594.3m (EVA®)2 (2011: €613.0m); capital employed 2012: €9,388.5m (2011: €8,889.3m) ROCE2,3 % 8.20 6.90 6.30 Deterioration due to higher capital employed Gross debt coverage % 17.60 19.46 20.58 Increase due to improved FFO (FFO)2 (Proposed) dividend € 0.55 0.55 0.60 Slight rise due to increase in Group per share result Payout ratio2 % 47.67 53.71 53.54 Payout ratio in accordance with VERBUND’s dividend policy Dividend yield % 1.97 2.65 3.20 Somewhat higher dividend with lower quoted price Closing price € 27.88 20.74 18.76 Uncertainties related to future VERBUND share developments in the European 31/12/ electricity market and relatively low wholesale prices for electricity Electricity sales GWh 55,729 46,887 47,483 Higher electricity sales volume to volume1 consumers
1 The key figures were adjusted to reflect changes in accounting treatment for energy derivatives in the wholesale portfolio. The change was implemented retrospectively with effect from 1 January 2011 in accordance with IAS 8. The value for 2010 was not adjusted. //2 The key figures were adjusted to reflect the (early application of) changes in accounting treatment for employee benefits in accordance with IAS 19 (2011). The change was implemented retrospectively with effect from 1 January 2011 in accordance with IAS 8. The value for 2010 was not adjusted. //3 The key figure was revised. The previous year’s values were adjusted.
VERBUND SUSTAINABILITY REPORT Economy - business performance 23
Income trend
Solid result Despite the difficult situation on the energy markets and in the general economy, VERBUND’s business has performed well. EBITDA rose by 15.4% as a result of an above-average water supply (22 percentage points over 2011). The operating result decreased by 12.6% compared to 2011. The decline was primarily due to impairment tests performed on VERBUND power plants in the previous year. These had a net effect of €+202.2m on the operating result for 2011. Taking the operating result before effects from impairment tests, however, results in an increase of 15.5% in 2012. The Group result increased by 9.4% due to a significant improvement in the financial result. We also succeeded in reducing gearing and maintaining profitability in financial year 2012: gearing declined to 64.9% and the EBITDA margin reached an outstanding level of 38.9%.
Dividends and outlook for 2013 At the Annual General Meeting on 17 April 2013, we will propose a dividend of €0.60 per share. This corresponds to an increase of approximately 9% compared with the prior year. The payout ratio for 2012 will therefore be 53.5%. We plan to increase the dividend for financial year 2013, distributing a total of €1/share to our shareholders. This will require the successful completion of the asset swap with E.ON announced in December 2012, as we will be allowing our shareholders to participate in the value realised through this swap. Based upon average own generation from hydropower, we expect EBITDA to be approximately €1bn for financial year 2013.
Remarks on the trend of key business performance indicators
The expenses for current and former employees contained in the operating result increased by 5.7% to €319.6m. Economic Value Added (EVA®), the key figure for value creation for the VERBUND Group, declined from €–9.3m to €–39.4m. The gearing ratio was 64.9%, falling from 82.3% in the previous year. Equity rose to €5,099.4m (previous year: €4,919.14m). Cash flow from operating activities grew from €829.9 to €1,034.7m. 24
Group electricity sales volume and own requirements GWh 2011 2012 Change
Consumers 8,421 9,568 13.6 %
Resellers 20,702 20,506 – 0.9 %
Traders 17,764 17,409 – 2.0 %
Electricity sales volume 46,887 47,483 1.3 %
Own requirements 2,044 2,457 20.2 %
Control energy volumes 292 459 57.3 %
Electricity sales volume and own requirements 49,222 50,398 2.4 %
Electricity sales volume by country GWh 2011 2012 Change
Austria 23,873 24,316 1.9 %
Germany 17,767 20,211 13.8 %
France 3,805 2,179 – 42.7 %
Italy 425 288 – 32.3 %
Other 1,016 489 – 51.9 %
Total electricity sales volume by country 46,887 47,483 1.3 %
Source and use of funds €m
Source of funds Intended use Recipients 2,411 2,411 2,411
Net interest payments 137 180 Society (taxes)
Borrowings and Other 184 570 liquidity 303 Employees Payment of taxes on 180 income Cash inflows from Dividends and financial investments 100 transfer from 259 and equity interests reserves 204 Contribution 693 Investors margin grid HR-related payments 303
Repayment of 297 borrowings
Contribution margin 1,537 electricity 1,236 Suppliers Investments 1,051
2012 2012 2012
Source of funds shows all cash flows that VERBUND receives from its operating activities or from lenders and equity investors. Use of funds is broken down according to both intended use and recipient groups. VERBUND SUSTAINABILITY REPORT Economy - business performance 25
The contribution margin from the Electricity segment rose from €1,339m in 2011 to €1,537m in 2012. Investments increased from €829m to €1,051m. Additional information is available in the VERBUND Annual Report 2012, beginning on page 22.
Pension obligations VERBUND is committed to its employees even after they retire, and pays pension benefits. Some of these benefits are paid based upon labour-management agreements and individual contracts in accordance with a performance-related benefit plan. Benefits for the remaining employees are based upon a defined contribution plan.
Pension obligations €m 2010 2011 2012 Present value (DBO) of obligations covered by plan assets 174.4 171.8 190.4
Fair value of plan assets – 158.6 – 147.8 – 155.7 Net value of obligations covered by plan assets 15.8 24 34.7 Present value (DBO) of obligations not covered by plan assets 215 201.2 204.5 Total pension obligations 230.8 225.2 239.2 Obligations similar to pensions Present value (DBO) of obligations not covered by plan assets 122.5 119.3 120.5 Obligations not covered by plan assets 353.3 344.5 359.7
VERBUND’s performance-related benefit obligations are partially covered by pension plan assets earmarked for this purpose. VERBUND holds securities for the portion of the obligations that are not covered by plan assets. The employer is obligated to provide additional funding to the extent that these obligations are to be fulfilled by the pension fund. Employees also benefit from supplementary health insurance, for which both employers and employees pay premiums. The employer’s contributions to be paid after the onset of retirement are recognised on the balance sheet by VERBUND as obligations similar to pension obligations.
26
Share price and performance
International stock markets 2012 was marked by a surprisingly strong upward trend. While the stock markets closed on a consistently positive note at the end of March, the difficult situation involving the national budgets in several southern European countries caused growing concerns on international markets and sharp adjustments in April and May. Additional EU decisions aimed at boosting the economy had a positive effect on the markets, however. In the second half of the year, the central banks’ expansive monetary policy measures resulted in a significant price recovery, which was sustained on most stock exchanges until the end of the year. By contrast, the upward trend in the US was interrupted after the presidential elections at the start of November due to fears of recession resulting from political discord over the restructuring of the budget. For instance, the US stock index Dow Jones Industrial closed trading on 31 December 2012 at 7.3% over the closing value at the end of 2011. It therefore experienced significantly weaker growth than the Nikkei 225, which improved by 22.9%, and the Euro Stoxx 50, which added 13.8%.
VERBUND shares VERBUND shares increased significantly in value at the start of 2012, a trend that was in line with international share prices. By the end of July, ongoing uncertainty about the future performance of the European electricity market and low wholesale prices for electricity had resulted in massive price losses and an annual low of €14.5. VERBUND shares had recovered significantly by the end of the year, however, thanks to the generally good mood on the stock markets in the second half of the year, and positive company news. VERBUND shares closed at €18.8 on 31 December 2012, down 9.5% from the price on 31 December 2011. The industry index DJ STOXX Utilities remained nearly stable with a decline of 0.7%. By contrast, the ATX rose by 26.9% on the back of the recovery in bank share prices and real estate values. What is noticeable, however, is that the rise in share prices was not adequately accompanied by growing sales volumes. Therefore, a typical recovery phase has not yet set in.
Share price 2012 (indexed)
160
140 ATX +26.9% 120
100 –0.7% –9.5% 80 DJ STOXX Utilities
60 VERBUND
40 1/1/ 1/2/ 1/3/ 1/4/ 1/5/ 1/6/ 1/7/ 1/8/ 1/9/ 1/10/ 1/11/ 1/12/
VERBUND SUSTAINABILITY REPORT Economy - business performance 27
Sustainability indices VERBUND was listed in the following sustainability indices in 2012, for example: VÖNIX Österreichischer Nachhaltigkeits-Index, FTSE4good Index Series of the London Stock Exchange, and STOXX® Global ESG Leaders indices.
Selected projects with an economic focus
Strengthened focus on hydropower VERBUND becomes the second-largest producer of hydroelectricity in Germany VERBUND is taking over shares in 8 hydropower plants in the border region of the Inn and the Danube. These were previously held by E.ON on Bavarian territory. This increases the average electricity generation from hydropower to approximately 2 billion kWh per year. VERBUND had previously held direct or indirect equity interests in the run-of-river plants acquired, as well as electricity purchase rights. This will make VERBUND the second-largest producer of hydroelectricity in Germany and the largest in Bavaria. In exchange, E.ON is acquiring VERBUND’s 50% share in the Turkish Enerjisa Enerji A.S. The contracts were signed on 3 December 2012 and the transaction is expected to be finalised in the first half of 2013.
Efficiency increases in Austria Efficiency is being further increased at the Austrian power plant sites: in the Pernegg/Styria power plant on the Mur River, the second revitalised generator set was connected to the grid mid-April 2012 following 9 months of conversion work. Conversion of the third turbine began in the autumn of 2012 and the modernisation of all generator sets will be completed in mid-2013 following a three-year conversion phase. The efficiency-increasing measures for the turbines and generators at the Gralla/Styria power plant on the Mur River were completed in mid-July 2012 after almost 50 years of operation and a three-year renovation phase. The "Ybbs 2020" project began in October 2012: by the end of the decade, €144m will have been invested to modernise and increase the efficiency of Austria's oldest Danube power plant at Ybbs-Persenbeug/Lower Austria.
Construction of run-of-river and storage power plants in Austria The construction of new plants is also proceeding quickly. At the end of August, VERBUND and Energie Steiermark received positive notices of approval in the first instance from the state of Styria for the construction of the power plants on the Mur River in Graz and Gratkorn. At the end of September, opening ceremonies for the Gössendorf power plant on the Mur River were held after a three-year construction phase. This joint venture with Energie Steiermark will generate hydroelectricity for 23,000 households. Excavation work was completed in 2012 for the Reisseck II/Carinthia pumped storage power plant, and the next step is the installation of the generator sets. In early December, the second half of the construction phase began on Austria’s highest power plant construction site.
Construction of run-of-river and storage power plants abroad In January, Enerjisa Enerji A.S. put the 89 MW Menge storage power plant on the Seyhan River in southern Turkey into full operation. This is the sixth hydropower plant built by the VERBUND-Sabanci joint venture. Additional hydropower plants with a total capacity of approximately 1,100 MW were under construction in 2012. 28
VERBUND and EVN, the partners in the project company Energji Ashta, are opening the first phase of the Ashta/Albania hydropower plant. This plant will be a world's first. Ashta will be the largest matrix hydropower plant, with 90 Hydromatrix small turbines. As the first large concession holder in Albania, VERBUND and EVN are therefore contributing to the country's security of supply.
Expansion of wind power More wind farms in Austria Average annual generation of the 3 existing VERBUND wind farms in the district of Bruck an der Leitha totals 100 million kWh. The expansion of these successful sites is supported by strong roots in this region. The Hollern II and Petronell-Carnuntum II wind farms, with a total capacity of 36 MW, are currently under construction, and construction will begin soon on a third wind farm with a capacity of 21 MW. When completed, the VERBUND wind turbines in this region will supply clean electricity generated from wind power for some 70,000 households.
Acquisition of 5 wind farms in Germany In 2012, VERBUND acquired 5 wind farms in Rhineland-Palatinate in Germany with a total capacity of 86 MW. The 21 wind power plants will generate approximately 255 million kWh of electricity annually and will supply some 70,000 households. Some of the plants (7.5 MW) already went into operation in quarter 4/2012, and the rest will follow gradually in 2013.
Wind farms in Turkey, Italy, and France With the wind farm in Dagpazari (39 MW), Enerjisa Enerji A.S. brought its second wind farm online in the Mut region in southern Turkey. This wind farm will generate approximately 129 million kWh of electricity per year. At the end of the year, 41 of 52 turbines in the Bares wind farm (113 of 143 MW) of Enerjisa Enerji A.S. were in operation. Bares is one of the largest wind farms being built in Turkey. The Campagna (20 MW) and Ricigliano (11.5 MW) wind farms in southern Italy went into operation in 2012, as did the Longville-sur-Mer (12.5 MW) wind farm on France's Atlantic coast.
Wind farms in Romania After a development phase of more than four years and a one-year construction phase, VERBUND is putting the 99 MW Casimcea I wind farm near the Romanian Black Sea coast online. Another 102 MW wind farm is under construction. To strengthen its position on the wind energy market in Romania, VERBUND is also opening an office in Bucharest.
Current thermal power projects Mellach combined cycle gas turbine power plant opened The Mellach/Styria combined cycle gas turbine power plant is currently the largest and most modern thermal power plant in Austria. The plant, whose construction began in 2009, was completed on 12 May 2012 after a construction phase of approximately 40 months. In the final acceptance tests, all guaranteed values were reached or exceeded, and thus a highly efficient and flexible plant for the generation of electricity and district heating is now available. The final review negotiations in November 2012 were completed with a positive notice of approval for operation pursuant to the EIA Act (Umweltverträglichkeitsprüfungsgesetz, UVP-Gesetz) 2000.
VERBUND SUSTAINABILITY REPORT Economy - business performance 29
Klagenfurt combined cycle gas turbine power plant project halted A rejection notice from the court of second instance was issued in April 2012 for the Klagenfurt/Carinthia combined cycle gas turbine power plant. VERBUND subsequently withdrew from the project.
Pump stations to increase district heating capacity In 2012, the Styrian state capital Graz began an ambitious program to increase the number of its district heating connections. The line from Mellach to Graz was already operating at full strength, with a capacity of 230 MW. As the operator of the district heating line, Energie Steiermark invested in measures to increase capacity. It built 2 new pump stations, one of these in collaboration with VERBUND, directly on the grounds of the Mellach power plant. Since December 2012, up to 350 MW of heat can now be delivered to Graz at peak capacity.
Commissioning of the Toul/France combined cycle gas turbine power plant In December 2012, following a construction phase of approximately 30 months after Pont-sur-Sambre, VERBUND put its Toul combined cycle gas turbine power plant online. This is the second such plant in France. The ultramodern plant, which was built by Siemens as the general contractor, has a capacity of 422 MW. In the final acceptance tests, all guaranteed values were achieved or exceeded.
Commissioning of the Aprilia/Italy combined cycle gas turbine power plant The Italian equity interest Sorgenia put its fourth large combined cycle gas turbine power plant into operation in Aprilia during the first half of 2012. The plant was built south of Rome in a 32-month construction phase and has a capacity of 800 MW.
Continuous expansion of the transmission grid APG, the independent grid subsidiary of VERBUND, is responsible for the safe operation of the entire Austrian transmission grid. One of its tasks is the ongoing adaptation of the grid in response to changing requirements in the energy market.
380 kV ring is nearing completion Given the enormous increase in electricity production from wind and solar power as well as the ambitious climate goals, the completion of the 380 kV ring in the Austrian transmission grid is of decisive importance. The integration of electricity from renewables can continue only when the 380 kV ring is fully completed. This will secure the energy supply for coming generations. One important step is the implementation of the 380 kV Salzburg line by APG, VERBUND’s independent grid subsidiary, which should complete the ring in the West. The first section from the St. Peter grid hub to the Salzburg substation with a length of 46 km has been in operation since January 2011. The environmental impact statement (EIS) for the second section, from the Salzburg substation to the Tauern grid hub, was submitted to the state governments of Upper Austria and Salzburg on 28 September 2012 for environmental impact assessment. 30
APG invests in substations for the integration of wind power APG has planned investments of approximately €170m by 2020 for the expansion and new construction of substations for the integration of wind power. It is also planning an additional €70m during the same period for strengthening important APG lines. Some of the projects have already been implemented, such as the construction and expansion of the Sarasdorf/Lower Austria substation, as well as the expansion of the substations at Bisamberg in Lower Austria, and in Southeast Vienna and Southern Burgenland. Additional projects are in the planning stages for subsequent years, including the construction of additional transformers in the substations at Zurndorf/Burgenland, Sarasdorf, and Bisamberg, as well as investments of approximately €40m for wind integration in the Lower Austrian region Weinviertel by 2016. A strong transmission grid with powerful grid hubs is essential to ensuring the sustainable integration of wind power, hydropower, and solar power into the energy supply system and to bringing Austria closer to its climate goals.
Modern power plant management and intraday trading Opening of new Dispatching Centre The new Dispatching Centre was opened on the ground floor of VERBUND headquarters in Vienna on 13 November 2012. The old "control room," from which the utilisation of VERBUND power plants had been managed for more than 20 years, was no longer technically up-to-date. There was also a need to create ergonomically appropriate working conditions for employees. Dispatchers and intraday traders working in shifts must be able to perform their demanding and important tasks, even in critical situations. Thanks to the latest technology, efficient organisational structures, and enthusiastic and committed employees, we can now ensure the smooth use of our power plants and optimal marketing of our own generated electricity in the future. Through their efforts, the employees in Dispatching and Intraday Trading make an important contribution to the Group.
Successful start: intraday trading in shifts The changed market environment has a defining impact on the daily work schedules at VERBUND. Electricity trading ensures the optimal marketing of the Group's own generated electricity. The rapidly growing share of renewable energy in Europe is having an ever greater influence on market events. The spot market, and particularly short-term intraday trading, are becoming increasingly dynamic. Until early 2012, the dispatchers in the VERBUND control room were simultaneously responsible for power plant utilisation and short-term trading. Increased demands in short-term optimisation of power plant utilisation and marketing of the electricity generated by power plants have made it necessary to create an independent team of intraday traders. This team now works side-by-side with the dispatchers – 24 hours a day, 7 days a week. VERBUND SUSTAINABILITY REPORT Economy - business performance 31
Prevention of corruption Corruption can cause enormous damage to a company, not only in terms of image, but also by causing drastic and economically measurable negative effects. For this reason, it has always been one of VERBUND's important goal to use fair, transparent, and sustainable business practices and to prevent corruption. This applies not only in-house, but also in our collaborations with all stakeholders.
Group-wide compliance system A Group-wide compliance system was established several years ago. This system governs the reporting and handling of violations, and is designed to help prevent misconduct. It provides sources of information, reporting channels and procedures, and is handled by a Group-wide compliance team led by a Group compliance officer. One compliance-relevant incident occurred in 2012 and was thoroughly investigated. It did not cause any losses, and the necessary steps were implemented to prevent similar incidents. Other than this, no cases of corruption or violations of the internal anti-corruption rules were identified or reported.
Training for employees In the past year, the activities of the compliance officer were focused on conducting training sessions and making presentations, as well as providing advice and information on a case-by-case basis for a number of issues. This shows the level of sensitivity among employees and executives on the topic of corruption. In order to further strengthen safety measures for dealing with corruption, the compliance rules were communicated in a comprehensive training program throughout the Group. Special events were organised for certain target groups, particularly executives, and for areas that are particularly affected such as the purchasing department and sales personnel, as well as employees of foreign investees. Particular emphasis is being paid in these areas to compliance with internal rules of conduct. A customised e-learning program was implemented to support these efforts. With this program, every employee of the Group can obtain information about the VERBUND code of conduct and anti-corruption policy at any time, as well as rules on preventing insider trading.
Exchange and network against corruption As part of our compliance system, we are also ensuring the implementation of statutory requirements for transparency in other areas. In addition to the Media Transparency Act (Medientransparenz- gesetz), this primarily involves the provisions of the Austrian Lobbying Act (Lobbying- und Interessenvertretungs-Transparenzgesetz). In a networked economy, joint efforts are essential for successfully overcoming corruption. With this in mind, VERBUND 's compliance system and anti-corruption policy has therefore been shaped by means of an intensive exchange with a number of other companies. VERBUND communicates its anti- corruption principles to its suppliers primarily through its website and in its purchase order terms and conditions. In addition, suppliers have been required for several years to use an electronic supplier portal to provide information about their principles and measures for preventing corruption, as well as information on any relevant proceedings. 32
In the autumn of 2012, VERBUND organised a panel discussion together with the Compliance Network of Austria at the Group headquarters in Vienna. Under the title “Representing interests requires responsibility,” well-known experts discussed the current topic of lobbying with CEO Wolfgang Anzengruber in front of 150 guests. In the discussion, VERBUND’s principles for responsible and transparent lobbying work were explained.
Sustainable procurement Outstanding electronic supplier registration VERBUND procurement began a large project in 2012 for the further integration of sustainability aspects into the awarding of contracts. As part of an electronic registration process, all suppliers are asked to provide specific information about their sustainability efforts. This includes in particular environmental certificates, environmental product responsibility, compliance with environmental laws, and related objectives and activities. Information is also collected about anti-corruption measures, appropriate guidelines and authorised representatives, as well as any penal proceedings. Occupational health and safety is another important topic. Suppliers must specify certifications, measures and authorised representatives, as well as the number of workplace accidents per 1,000 employees. Compliance with human rights and compensation in accordance with collective bargaining agreements are primary requirements for inclusion in our pool of suppliers. As of the reporting date of 31 December 2012, 22% of VERBUND’s suppliers had already submitted their data. For this project, VERBUND received the “Austrian Supply Excellence Award 2012” in the category of e-Procurement. This award recognises business excellence solutions throughout the value chain, taking sustainability and corporate social responsibility into account.
Raising awareness among suppliers Our goals for 2013 include raising sustainability awareness among our suppliers and analysing procurement risks. In addition, we will establish relevant performance indicators, e.g. data on accidents of employees working for suppliers at VERBUND sites and the percentage of suppliers with environmental and/or safety certificates. As an additional measure, companies that do not have sustainability or compliance guidelines according to the online tender tool must sign the corresponding VERBUND guidelines, such as the code of conduct, environmental guidelines and an excerpt of the anti-corruption guideline.
Customer relationship management Benefits for VERBUND customers The “Customer Referral Program” gives VERBUND customers the opportunity to reduce their electricity bills. At www.verbund.at, new customers can be recruited via e-mail, Facebook, or by post. If the new customer makes a purchase at a later date, the “recruiter” receives a credit (“Goody”) of €15 on their billing statement as a bonus. The referral credit was even doubled for a limited period of time during a marketing campaign. VERBUND customers received €30 for each of the first two people recruited. The credit was increased to €50 for each additional person. VERBUND SUSTAINABILITY REPORT Economy - business performance 33
Under the heading “Experience Bonus,” the online portal “My Online Services” offers an integrated discount shop in collaboration with Jollydays. VERBUND customers who are registered on the online portal can utilise Jollydays offerings and benefit from a 10% discount on all products offered at www.jollydays.at. They can also receive a 20% discount on selected events at the Wiener Konzerthaus.
Online service platform For maintaining contracts, invoices, and payments, VERBUND offers its customers its own online service platform, which can be accessed through a log-in area on the website. This virtual “Customer Service Centre” gives customers a direct, flexible, and easy way to communicate with their electrical utility around the clock.
VERBUND SUSTAINABILITY REPORT Environment 35
Key figures: environment 36
Environment
Contact Key figure Unit 2010 2011 2012 Comment Environment: Electricity generation GWh 31,078 29,753 35,228 Jan Cupal (net, total) Tel: +43 50313-53921 [email protected] from hydropower GWh 26,708 24,216 30,485 (including purchase rights) from wind/solar GWh 112 127 242 power from biomass GWh 2 2 2 Sewage sludge cofired at Mellach district heating plant from hard coal1 GWh 3,074 3,136 2,568 from natural gas2 GWh 1,012 2,171 1,927 CCGTs Mellach, Pont-sur-Sambre and, as of 1 November 2012, Toul from oil GWh 171 102 5 Percentage of generation % 86 82 87 from renewables (hydro, wind, solar power and sewage sludge)
Generation of district GWh 825 823 882 heating
Electricity transmitted GWh 37,218 39,830 42,144 APG grid level 1 through the grid Grid loss GWh 475 518 615 APG grid level 1 Percentage of grid loss % 1.3 1.3 1.5 in total electricity transmitted
Direct use of power3 Hard coal t 1,078,808 1,079,238 907,990 2012: Turbine overhaul at Mellach district heating plant Lignite t 0 0 0 Power plants shut down and sold Oil t 45,588 28,723 1,110 Heavy heating oil Natural gas 1,000 m3 10,007 107,001 246,472 2011: Mellach CCGT commissioning phase, 1 November 2012: Pont-sur- Sambre and Toul CCGTs consolidated Biomass and solid t 14,250 15,303 17,256 Sewage sludge cofired recovered fuels Electricity (grid GWh 1,677 2,044 2,455 For pumping, compensating for grid purchase) loss4, own consumption
1 Small amounts of natural gas are also used for commissioning plants. // 2 The CCGTs Pont-sur-Sambre (PSS) and Toul were consolidated as at 1 November 2012. Since that date, the generation from PSS is regarded as own generation and prior to that as electricity purchase rights. // 3 Own power use in all business areas. Power used for generation that is available with purchase rights is not reported. The Pont-sur-Sambre and Toul CCGTs were consolidated as at 1 November 2012. The amounts stated relate to the condition on delivery, i.e. damp material in the case of biomass. // 4 Electricity purchased by Austrian Power Grid (APG) for the entire transmission grid operated by APG (all grid levels) VERBUND SUSTAINABILITY REPORT Environment 37
Key figure Unit 2010 2011 2012 Comment Airborne emissions (absolute)5
SO2 t 634 610 460
NOX t 1,614 1,630 1,373 Dust t 132 122 89 Greenhouse gas Under the Greenhouse Gas Protocol emissions (absolute)5
Scope 1–3 (total) kt CO2e 3,952 4,504 4,141
Scope 1 kt CO2e 3,246 3,658 3,087 Direct emissions (from activities controlled by the Group)
Emissions from direct kt CO2e 2,887 3,049 2,859 As of 1 November 2012 including combustion: own consolidated Pont-sur-Sambre and Toul power plants CCGTs
Emissions from direct kt CO2e 354 609 228 Until 1 November 2012: Pont-sur- combustion: Sambre CCGT purchase rights
Volatile emissions kt CO2e 5 <1 <1 SF6 (refilled amounts); 2010: increase due to major overhaul
Scope 2 kt CO2e 705 845 1,053 Indirect emissions (from own consumption of electricity and heat)
Emissions from own kt CO2e 439 575 736 Electricity consumption, e.g. from consumption pump and power plant operation
Emissions from grid kt CO2e 266 270 317 Emissions from compensation for line loss loss in the APG grid
Scope 3 kt CO2e 1 1 1 Other indirect emissions from outsourced activities (flights, other emission sources being prepared for inclusion) Greenhouse gas emissions (specific)6 Scope 1 emissions t/GWh 104 123 88 relative to total generation Scope 1 emissions t/GWh 761 676 686 1 November 2012: purchase rights no relative to thermal longer apply (due to consolidation of generation (including Pont-sur-Sambre) purchase rights) Scope 1–3, relative to t/GWh 127 151 118 total generation
5 As of 1 November 2012 including consolidated Pont-sur-Sambre and Toul CCGTs // 6 Emissions are reported for both own generation and purchase rights. 2011 and 2012: data verified pursuant to ISAE 3000 as part of the Sustainability Report audit by Ernst&Young Wirtschaftsprüfungsgesellschaft m.b.H. For editorial reasons the Annual Report for 2012 contains the preliminary figures before the audit. 38
Key figure Unit 2010 2011 2012 Comment Carbon emission rights Allocation of carbon kt 2,124 2,124 2,318 Only for own power plants (excluding emission rights purchase rights, as of 1 November 2012 including Pont-sur-Sambre and Toul)
Emissions avoided through renewable generation7
SO2 t 4,559 4,138 5,224 Factor 0.17 g/kWh
NOX t 12,069 10,954 13,828 Factor 0.45 g/kWh Dust t 1,341 1,217 1,536 Factor 0.05 g/kWh
CO2 kt 21,724 19,718 24,890 Factor 810 g/kWh
Waste and by-products Hazardous waste8 t 11,687 1,153 767 from ongoing t 432 702 465 operations from large-scale t 11,255 451 302 2012: transformer oil, oil trap contents, measures cables Non-hazardous waste t 6,395 12,013 18,439 from ongoing t 5,166 4,401 4,681 operations from large-scale t 1,229 7,612 13,758 2012: due to extensive renovation work, measures particularly at administrative sites9 Screened debris – t 25,457 15,910 29,865 2012: major floods in the south of hydropower plants10 Austria By-products – thermal t 183,264 162,891 125,282 Bottom ash and fly ash, power plants11 desulphurisation products
Water input and output Hydropower plants and 1,000 m3 438 440 470 Potable water administrative sites 1,000 m3 18,318 11,680 12,334 Process water (including cooling water) 1,000 m3 112 102 123 Wastewater Thermal power plants12 1,000 m3 24 31 28 Potable water 1,000 m3 484,561 480,310 449,945 River and process water (cooling water) 1,000 m3 174 161 240 Well water Grid facilities 1,000 m3 10 9 10 Potable water 1,000 m3 1 1 1 Process water 1,000 m3 11 10 11 Wastewater
7 Calculations based on the emissions from a modern hard coal power plant (Dürnrohr type). // 8 2010: of which 11,255 from large-scale measures at hydropower plants (major repairs at Brandstatt balancing reservoir, Garsten overhaul, Kaprun construction work) and the grid (transformer disposal) // 9 Excavated soil, building rubble, construction timber, demolition wood, metal waste, electric and electronic equipment due to maintenance, conversion and renovations, dredging and upkeep to maintain bodies of water // 10 Primarily depends on the water supply during the reporting period; not caused by plant operation and cannot therefore be affected or prevented by the operator // 11 Depends on fuels used and amount of electricity generated; majority of by-products recycled (over 99% since 2010) // 12 As of 1 November 2012 including consolidated Pont-sur-Sambre and Toul CCGTs VERBUND SUSTAINABILITY REPORT Environment 39
Key figure Unit 2010 2011 2012 Comment Biodiversity Sites in/near protected ha 4,449 4,870 4,876 areas13 Of which hydropower ha 3,362 3,783 3,789 Of which grid ha 1,087 1,087 1,087
Environmental fines €k 0 0 0
Environmental costs (total) €m 65.5 57.4 71.2 Of which hydropower €m 46.0 43.8 57.4 2012: including environmental costs at VERBUND Innkraftwerke GmbH for the first time Of which thermal power €m 13.6 6.5 6.0 Of which grid €m 5.9 7.1 7.8
13 In 2011, 24 hectares were purchased in Styria (Kalsdorf and Gössendorf power plants) and the areas belonging to Österreichisch-Bayerische Kraftwerke AG and Donaukraftwerk Jochenstein AG were included for the first time. In 2012, 6 hectares were purchased from the Styria power plant group (Teigitschmühle and Gössendorf plants).
Remarks on the trend in key environmental indicators
Greenhouse gas emissions Reduction in emissions from generation In 2012, VERBUND generated 87% of electricity from hydropower. Given this high percentage, we are More information continuing to develop hydropower and wind power in pursuing our strategy of highly energy-efficient, about the Greenhouse Gas Protocol at eco-friendly generation. www.ghgprotocol.org In 2012, we succeeded in further reducing greenhouse gas emissions, which primarily occur at thermal power plants. Absolute emissions totalled around 4.1 million tonnes CO2e (2011: 4.5 million Details of the Carbon tonnes CO2e). Modernising our thermal generation portfolio and expanding hydro and wind power Disclosure Project and the latest report resulted in total specific emissions dropping to 118 tonnes CO2e/GWh (2011: 151 tonnes CO2e/GWh) are available at and direct emissions to 88 tonnes CO2e/GWh. www.verbund.com and We thus exceeded the reduction targets set in recent years that were also published in the Carbon www.cdproject.net.
Disclosure Project (CDP) climate reports for 2011: in 2012, 88 tonnes CO2e/GWh of greenhouse gases were emitted relative to total generation (2011: 123 tonnes CO2e/GWh). A limit of 150 t/CO2e/GWh by 2015 was the target defined. The trends in emissions will however depend to a great extent on changes in the power plant portfolio and water supply. In 2009, for example, the Pont-sur-Sambre/France combined cycle turbine power plant went online and in late 2011 the Limberg II/Salzburg pumped storage power plant. Since 2012, the Mellach/Styria and Toul/France combined cycle gas turbine power plants and the Hirzbach/Styria and Gössendorf/Styria hydropower plants have been added to our power plant portfolio. The share of thermal in our own generation also fell to 13% due to market conditions (2011: 18%). In view of the strategy defined at the end of 2012, the specific greenhouse gas emissions from overall generation will be reduced. Over the next few years, they can be expected to stabilise at 130 tonnes CO2/GWh. 40
In generation from thermal power, each gigawatt hour caused 686 tonnes CO2 in 2012
(2011: 676 tonnes CO2e/GWh). As we have commissioned state-of-the-art combined cycle gas turbine power plants, specific emissions from thermal facilities will continue to fall. The Mellach/Styria combined cycle gas turbine power plant complies with EU guidelines for a highly efficient combined cycle power plant. Compared with separate electricity and heat generation facilities, it even saves over 20% in primary energy. 2012 was a particularly good hydro year. At 1.11, the hydro coefficient for the water supply was 11% above the long-term average and 22%-points above the previous year’s level. The amount of electricity generated by VERBUND run-of-river power plants (+24.5%) and annual storage power plants (+34.2%) rose sharply. While electricity from hydropower was up 25.9% in total to 30,485 GWh, that from thermal power was down 16.8% to 4,500 GWh due to market conditions. Another key pillar of electricity generation is wind power. For details, see page 28.
Excellent reporting, regular disclosure VERBUND is a pioneer We have published our data in the Carbon Disclosure Project (CDP), the world’s largest climate in climate protection: database, since 2006. Benchmarking in the German-speaking countries and the Utilities peer group in Country, Industry Group particular again identifies us as one of the best companies in 2012 regarding greenhouse gas emissions, and Index Leader according to the the management of potential climate risks and opportunities and achieving reduction targets. In 2012, Carbon Disclosure Project VERBUND was again included in the Carbon Disclosure Leadership Index of the 350 largest companies in Germany, Austria and Switzerland. VERBUND gained recognition for its excellent reporting for the first time and also ranked as Country Leader (Austria), Industry Group Leader (of utilities in the region of Germany-Austria-Switzerland) and Index Leader (ATX). We disclose the trends in greenhouse gas emissions in our internal quarterly reports and integrate the data into corporate management. In 2011, we improved Group-wide greenhouse gas accounting and reporting. The data published includes direct emissions from sources controlled by the company (Scope 1), indirect greenhouse gas emissions from consumption of purchased electricity, heat or steam (Scope 2) and other indirect emissions from outsourced activities (Scope 3; other emissions sources being prepared for inclusion). Since the 2011 reporting year, the figures for VERBUND greenhouse gas emissions have been audited and certified externally.
Fuel use at thermal power plants More details on the In 2012, heating oil consumption in thermal generation decreased due to reduced use (-30%) of the use of carbon-neutral district heating power plant in Neudorf-Werndorf/Styria. It is now only used for minor operation and in fuels in thermal power particular to support the grid. In 2012, gas consumption was higher and generation from natural gas plants are to be found in the section “Selected slightly lower, as only gas consumption from own generation, without purchase rights, can be reported. projects with focus There are two reasons for the increase: higher generation at the Mellach/Styria combined cycle gas on ecology”. turbine power plant, which went into full operation in 2012, and consolidation of the Pont-sur-Sambre and Toul combined cycle gas turbine power plants since 1 November 2012. As a result, there was a shift in generation from gas from purchase rights to own generation. The solid recovered fuels (sewage sludge) used by VERBUND are 100% biogenic. We regularly evaluate the use of such carbon-neutral fuels. VERBUND SUSTAINABILITY REPORT Environment 41
Water input and output The use of water in operations is of relevance to our thermal power plants. It is primarily used for cooling and is returned to the water bodies chemically unchanged. Water is also used in small amounts in the process. At the Mellach/Styria hard coal-fired district heating plant, for example, bottom ash collects in the ash sluice at the bottom of the furnace and is cooled. Salts in the ash dissolve in the process. Before being discharged into the outfall, the effluent from this process is purified in the plant’s own wastewater treatment system where the cycle was introduced at the beginning of 2011. As a result, less water is removed from the river, and the slag particles that would otherwise be discharged with the water can settle during the cycle and be washed out with the bottom ash. This reduces the filter cake in the wastewater treatment system and enables more bottom ash to be recycled. Another positive environmental aspect is the saving on chemicals for treating the wastewater. Before disposal, the solids filtered out undergo chemical analysis in accordance with landfill legislation.
Promoting biodiversity Accompanying environmental activities are an important element of our projects. In recent years, More details on previous investments have focused on sustainable line management, making rivers passable by installing the measures and targets at www.verbund.com/ latest fishways, restoring stretches of rivers, creating wetlands and providing on-site ecological support responsibility > when building power plants in mountainous regions. Examples are the current projects Reisseck Environment, and II/Carinthia and Traisen confluence restoration in Lower Austria. Key Figures and Reports. 42
Our environmental management system
An environmental management system at our plant sites ensures continuous improvement of our environmental performance. This prevents or reduces the direct and indirect impact on the environ- ment as far as possible. In 1995, an environmental management system was introduced at VERBUND for the first time. Since then, our environmental officers have become internally and externally recognised experts on all aspects of the environmental standards EMAS and ISO 14001. External evaluation and certification to EMAS III and ISO 14001 proves our commitment and the professional management on the part of our environmental officers and employees at the various sites.
Audits and certifications 100% of generation and At the end of 2012, 64% of our power plant capacity and 100% of grid facilities were certified to EMAS or grid facilities will be ISO 14001. certified to ISO 14001 or 92 out of 125 hydropower sites were certified to EMAS or ISO 14001. Certification of the 8 sites in the EMAS by 2015. Zillertal power plant group to ISO 14001 was completed in January 2013 and the 13 run-of-river power plants on the Inn in Bavaria were prepared for certification in 2013. As a result, there is an environmental management system at almost 100% of the run-of-river and storage power plants. In generation from thermal power, 3 of the 4 Austrian sites were certified to EMAS III and ISO 14001 at the end of 2012. The Mellach/Styria CCGT power plant that went into operation in 2012 will also be included in the external reporting to EMAS in 2013. Austrian Power Grid AG, the grid company, has been certified in its entirety since 2008. It comprises 61 substations and grid switching stations, some 3,500 kilometres of transmission lines, headquarters and Power Grid Control, the control centre for Austria. In addition to the EMAS and ISO 14001 environmental standards, quality, information security, health and safety standards also apply (ISO 9001, ISO 27001 and OHSAS 18001). Furthermore, we prepared for other administrative sites to meet the ISO 14001 requirements: the headquarters in Vienna with over 600 employees was certified successfully for the first time at the end of 2012. VERBUND Umwelttechnik GmbH is going to supplement its quality management system to ISO 9001 with an environmental management system to ISO 14001 at the beginning of 2013. Our aim is to implement environmental management systems in all our generation and grid facilities in Austria and abroad and have them certified to ISO 14001 by 2015.1 This ensures the maintainance of our high standards for environmental protection in existing and new plants in Austria and abroad as well as for activities along the entire value chain.
1 The goal covers all consolidated companies (also Pont-sur-Sambre and Toul since the end of 2012) and will correspond to over 95% of all power plant capacity by 2015. It does not include solar, wind and small hydropower plants under 20 MW. New facilities will be incorporated into the environmental management system in the first or second year after commissioning. VERBUND SUSTAINABILITY REPORT Environment 43
Percentage of certified plants and sites at VERBUND in % 2010 2011 2012 Comment 38 24 23 Excluding thermal power plants Percentage of EMAS-certified sites placed on reserve status Hydropower plants 37 22 22 Thermal power plants1 100 100 50 Wind and solar power plants 0 0 0 Office sites 29 29 29 APG Vienna headquarters, Power Grid Control Percentage of ISO 14001-certified sites 73 69 67 Excluding thermal power plants placed on reserve status Hydropower plants 72 72 73 Thermal power plants1 100 100 50 Wind and solar power plants 0 0 0 Office sites 29 29 43 VERBUND and APG Vienna headquarters, Power Grid Control Percentage of APG grid facilities certified to EMAS and ISO 14001 100 100 100 ISO 9001 100 100 100 OHSAS 18001 100 100 100 Occupational health and safety ISO 27001 100 100 100 Information security
1 2012: low percentage because the Pont-sur-Sambre and Toul CCGTs were consolidated on 1 November 2012 and the Mellach CCGT had not yet been fully integrated into the environmental management system at the Mellach site. In 2013, the Austrian facilities in the thermal sector will be 100% certified to EMAS and ISO 14001.
44
Certified plants and sites at VERBUND Certification Type of plant/site Number of Maximum Mean Line length plants/ electrical energy in km sites capacity capability in MW in GWh/a EMAS Power plants 31 3,432 6,551 Substations/grid switching stations 61 3,424 APG Vienna headquarters, Power Grid Control 2 ISO 14001 Power plants 95 6,515 23,582 Substations/grid switching stations 61 3,424 VERBUND and APG Vienna head- 3 quarters, Power Grid Control ISO 9001 Substations/grid switching stations 61 3,424 APG Vienna headquarters, Power Grid Control 2 ISO 27001 Substations/grid switching stations 61 3,424 APG Vienna headquarters, Power Grid Control 2 OHSAS 18001 Substations/grid switching stations 61 3,424 APG Vienna headquarters, Power Grid Control 2
VERBUND is a pioneer in certifying the origin of electricity www.tuvsud.com In 1999, VERBUND was the first Austrian utility to have all the hydroelectricity generated certified by the Details of energy- TÜV SÜD inspection authority. We thus played a key role in developing the guarantee of origin scheme efficient certification for for electricity in Austria. As a neutral institution, TÜV SÜD uses the seal of approval to certify that plants and systems by TÜV SÜD. VERBUND hydropower plants generate green electricity and feed it into the grid in appropriate quantities and of the quality required by consumers. A total of 112 power plants in Austria and 13 in Bavaria meet the EE and EE+ criteria. TÜV SÜD’s guarantee of origin certification refers to specific generation sources. It tells the customer – generally the trade, but also large-scale consumers – that the electricity is from renewable sources. The Generation EE standard is divided into “general requirements” concerning the organisation to be certified, “special requirements” addressing generation and recording generation at the individual plants and “optional requirements”. Optional requirements are defined for electrical work and power guarantees (Generation EE+ module) and for proof as a new plant (Generation EEnew module). TÜV SÜD’s generation and origin certification is a guarantee of origin commonly used in many countries and also recognised by E-Control for electricity labelling.
VERBUND SUSTAINABILITY REPORT Environment 45
Energy certification at VERBUND Certification Type of facility Number of Maximum Generation available facilities electrical capacity for sale in 2012 in in MW GWh
TÜV SÜD 100 % Hydropower plants 125 24,687 hydropower TÜV SÜD guarantee of Thermal power 4 1,663 origin plants
In 2012, 24,687 GWh of TÜV SÜD-certified hydroelectricity was available to VERBUND.1 We supply this green electricity under the premium brand H2Ö above all in Germany and enable our trading partners to pass on the “environmental bonus” to their customers. Since 2004, TÜV SÜD has certified the VERBUND thermal power plants in Austria with regard to guarantee of origin, and since 2011 also the electricity generated at the highly efficient VERBUND combined cycle power plants in accordance with the Energy Efficiency Directive (2012/27/EU) and provided it with a guarantee of origin.
1 Preliminary figure based on fast close data in the 2012 Annual Report, since TÜV SÜD always performs calculations retrospectively (quarter 2 of the following year). Figure using net calculations: gross hydropower output less own consumption less easement agreements less supply to plant shareholders less power for pumping and circulating. 46
Selected projects with the focus on ecology
Expansion of wind power portfolio in Europe As a result of continuously expanding our wind power portfolio, generation from wind power in 2012 was up 91% on the previous year. VERBUND thus plays a key role in helping to achieve climate protection goals and makes an important contribution to the overall generation mix.
Use of carbon-neutral fuels Converting to more eco-friendly natural gas is successively reducing the percentage of hard coal in our fuels. Despite this, we are looking for carbon-neutral fuels to further cut the proportion of coal – also because carbon credits for fossil emissions are a cost factor. In addition to cofiring sewage sludge at the Mellach/Styria district heating power plant, we are also considering using torrefied, i.e. thermochemically treated, biomass. As a result of torrefaction (pyrolysis), the combustion properties of the biomass become more similar to hard coal. We are planning initial additional combustion tests with material made into briquettes up to mid-2013 (first step: mechanical conveying tests; second step: cofiring around 5%, relative to the total throughput of a hard coal pulveriser).
Electric cars put to the test VERBUND customers To promote carbon-free driving, VERBUND has been offering all customers free test drives with electric can register for free test cars since autumn 2011. They can use an online calendar to reserve a demonstration model for testing. drives here: Interest is high and the cars are in general fully booked months in advance. The campaign is aimed at https://verbund.socialme diaapps.at/ (German further rooting electric vehicles in the public mind. More details on VERBUND’s various activities in the only) field of electric vehicles are to be found in the Research section under “Selected research projects”.
VERBUND solar electricity package Information about Installing a photovoltaic system with VERBUND has many benefits. A package is available for every phase the VERBUND solar of the project: from planning and building the system to feeding the surplus solar electricity into the electricity package is grid and getting hydroelectricity when there is no sunshine. Over 2,000 photovoltaic installations available at www.verbund.at under currently supply 7 million kWh of excess electricity annually to the VERBUND balancing group. As of 2013, Haushalte/Fotovoltaik there will also be the option of using a battery to store the surplus electricity generated by the (German only) photovoltaic system for times of higher demand.
VERBUND SUSTAINABILITY REPORT Environment 47
Energy efficiency improvements for domestic customers As part of demand side management, we offer our customers personal energy advice in such areas as Information on thermal insulation, heat generation (heating), heating water, ventilation and renewable energy home energy advice is available at (e.g. solar heating systems, photovoltaic installations, electric vehicles). The costs involved depend on www.verbund.at the scope and duration of the service. Energy advice is free of charge for all VERBUND customers who Haushalte/Energie- have opted for H2Ö-plus or H2Ö-fix. Advice can be obtained via telephone by calling the service line on beratung (German only) 0800 210210, or in person at the shop in the Vienna headquarters. There is also the option of registering for advice online. VERBUND has an online service at www.verbund.com for detecting the biggest electricity consuming Details on checking appliances in households. Questions have to be answered on appliances in 15 household areas (cooling, electricity consumption online at freezing, cooking, washing dishes etc.) breaking down the consumption both as a whole and for the www.verbund.at under various areas. Biggest electricity consuming appliances are revealed immediately helping our Haushalte/Energie- consumers to reduce electricity consumption and save costs. beratung (German only).
VERBUND SUSTAINABILITY REPORT Environment 49
Key figures: innovation, research and development 50
Innovation, research and development
Contact Key figure 2010 2011 2012 Research: Number of completed projects 23 22 25 Wolfgang Pell Tel: +43 50313-53920 Number of ongoing projects 50 61 56 wolfgang.pell@ Total project volume in €m1 74.3 74.6 149.8 verbund.com Of which EU projects in €m1 24.4 18 93.3 VERBUND’s total share in €m1 20 18.9 14.3 Annual VERBUND expenses in €m 4.8 4.2 5.2
1 Over the entire duration of the projects
The “Competence Center Innovation” has consolidated and expanded the coordination of innovation, research and development activities across companies and the Group. It ensures that future technologies are identified at an early stage and new market opportunities are developed effectively. The competence centre also supports VERBUND companies that carry out research projects in their areas of focus – for instance in the fields of hydropower, thermal power, new renewables, transmission, trading and sales. Last year, we adapted the organisational structure to the new tasks and defined it in internal guidelines. We saw initial success in achieving our goal of bringing our developments to the market: for example establishing E-Mobility Provider Austria, a joint venture between VERBUND and Siemens.
Selected research projects
Smart Energy – the future energy system As part of our “Energy management: new topics – friendly customer” project, we ran the VERBUND Smart Home pilot project. It gave some 200 participants an insight into the opportunities open to consumers in a future energy system. Using various topics as examples, such as smart metering, we explained to the pilot consumers what active role they will play in a future energy system and what value added it will have for them. Customers with photovoltaic systems are pioneers in this respect, as they are already capable of affecting the distribution grid. In the future, we will be able to offer them a wide range of services in connection with displaying current electricity consumption and generation, switching and control commands. Based on these, VERBUND will develop other technologies and services – for example storage and demand side management – to build an attractive future for everyone.
Electric vehicles using 100% renewable energy take priority Austria is in an ideal position here because even today electricity is mainly generated from renewable sources. As the country’s leading utility and one of the largest producers of hydroelectricity in Europe, VERBUND has become involved in many activities focusing on electric vehicles and charging: for example emporA, Austria’s largest research and development project, the VIBRATe cross-border charging network and Greening European Transportation Infrastructure for Electric Vehicles, an EU project. Establishing Austrian Mobile Power was also a VERBUND initiative. Over 30 leading Austrian companies have joined this alliance to date. Together with Siemens, VERBUND founded E-Mobility Provider Austria in 2012. VERBUND SUSTAINABILITY REPORT Innovation, research and development 51
Following many years of research and development, it is time for the whole area of electric vehicles to step up a gear. The Group is planning to develop an extensive network of charging stations and offer a new, all-inclusive package for business and domestic consumers in the next few years. Electric vehicles are the key to reducing fuel consumption and carbon emissions in private transport in the long term. By 2050, electric vehicles could cut carbon emissions from cars by 80%. They would help Austria to meet its energy and climate targets by 2020. From VERBUND’s perspective, however, a coordinated national roadmap, the guarantee of ecological benefit with electricity exclusively from renewable sources and transparent market rules are essential if Austria is to take a pioneering role in introducing electric mobility.
Hydropower: projects for the future New directions for new sites After completing the initial test phase in summer 2012, the new, innovative StreamDiver© compact turbine at the Nussdorf power plant on Vienna’s Danube canal was improved by modifying the bearing design. It then started fatigue testing to determine performance under various hydrological conditions. What is new about the turbine is that both the bearings and the generator are cooled and lubricated with Danube water. It will therefore not require any oil at all in the future. In addition, the planning of a demonstration model for an innovative, moveable power plant was completed. At the Peggau/Styria power plant on the Mur, a part of the weir is to be used for the powerhouse. In the event of flooding, it can be raised to increase the river cross-section, allowing larger volumes of water and sediment to pass unhindered.
Hydropower and climate change For VERBUND as a hydropower company, scientifically based research into climate development is of great economic and socio-political significance. Important issues are possible changes in climate, their impact on the water supply, extreme temperatures and the resultant potential for generation and marketing. The VERBUND POWERCLIM project takes these demands into account. It will be carried out as part of a COMET K1 centre together with the University of Natural Resources and Applied Life Sciences/Vienna and alpS GmbH/Innsbruck. The project simulates the potential for electricity generation from hydropower under the effect of climate change for catchment areas relevant to VERBUND in Austria and Bavaria. POWERCLIM started in October 2010 and will run for a total of 3 years. Initial model calculations have led to expectations of at least a change in distribution of future monthly flows. The models show a decrease in flow in the summer and an increase in the winter months, starting after 2020 and becoming greater after 2050. In the summers there will be more days with lower water levels in the rivers than to date and in the winters fewer. Snowmelt will set in earlier in the year and the volume will be lower as a whole. These hydrological changes will also require the marketing strategy to be adjusted accordingly. 52
Wind power: green electricity on the market In the EU, over 100 GW of wind power is already on the grid that can technically supply more than 57 million households with electricity. As installed capacity rises – it has increased tenfold since 1999 – secure, economic operation can only be guaranteed with new, efficient and accurate prediction models. For this reason, VERBUND together with meteorologists has developed and installed a system for marketing electricity from wind power efficiently. It involves converting meteorological forecasts from numerical weather models into generation using a method developed by VERBUND and weighting the results, depending on the weather. Current availabilities are uploaded from a maintenance database and taken into account in the schedules. Since live operating data is used to continuously improve forecasts, the system is “self-learning”. We thus contribute towards improving electricity generation from wind power in the long term and help to integrate it better into the energy market. The system has been in use since May 2012.
Thermal power: volatile electricity market calls for flexibility In the area of thermal power, extreme fluctuations on the electricity market require flexible power plant operation. To this end, VERBUND is also examining minimum load reductions and load gradient increases. Another challenge is separating electricity and heat generation for specific periods in cogeneration facilities (district heating storage). Research also focuses on the fatigue life of components subject to severe stress, preventing damage through structured component analysis and continuous improvements in power plant use.
Power grid: ensuring efficient transmission For Austrian Power Grid AG, research is an important step towards handling all tasks sustainably and efficiently. In 2012, APG worked on 26 research projects, many in cooperation with science and industry. Some of them run over several years and are primarily application-oriented. In the area of grid expansion and energy market scenarios, the company analyses the effects of new trends on the grid and the market, especially the integration of renewable energy. Besides grid expansion, issues such as the super grid and demand side management play a central role. For efficient electricity transmission, monitoring systems (thermal rating, iced-line monitoring, wide area measurement) have been scientifically developed and some of them prepared for operation. In 2012, for instance, final preparations were made for using thermal rating on a pilot line in quarter 1/2013.
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Key figures: social aspects VERBUND SUSTAINABILITY REPORT Social aspects 55
Social aspects
Key figure Unit 2010 2011 2012 Comment Contact Social aspects: Number of employees 1 Number 3,096 3,139 3,200 Increase in number of employees Georg Westphal due to apprenticeship initiative, Tel.: +43(0)50313-54100 consolidation of POWEO Pont-sur- [email protected] Sambre S.A.S. and POWEO Toul Production S.A.S., as well as new recruits to cover additional tasks caused by unbundling of APG Thereof apprentices Number 161 172 184 Gradual increase in number of apprentices ensures power plant operation for the future Total percentage of % 18.3 18.3 19.0 Increase through greater recruitment women of women Percentage of university % 19.6 20.5 22.3 Rising level of employee qualification graduates New hires Number 164 172 190 Replacements for retirees and departing employees, new hires to cover additional tasks caused by unbundling of APG Thereof women % 21.3 15.7 28.9 Measures to promote women are having an effect, women are increasingly interested in VERBUND as an employer Thereof new apprentices Number 47 48 48 Continuation of apprenticeship initiative with maximum utilisation of our 3 apprentice workshops Fluctuation rate % 1.6 1.6 2.0 High level of loyalty among employees, continued low fluctuation rate Fluctuation rate, % 3.6 3.4 4.9 Rising number of retirements based including retirements, upon age structure early retirements, partial retirement, deaths Duration of employment Years 19.2 19.0 17.3 Retirement of long-term employees and recruitment of new employees Average age of Years 44.3 44.2 43.9 Retirement of long-term employees employees and recruitment of new employees Performance review ratio % 98.0 97.0 96.9 Performance review ratio maintained at high level Training and Hours 41.6 48.2 36.8 Focus on essential training, partial development per postponement of continuing education employee to 2013; 2011 included extraordinary Group-wide Standard Client training (1 day) Training and Hours 80.8 81.5 79.8 Intensive training and development of development per executives, primarily through individual executive training and development measures
1 Number of employees under labour law as at 31 December 2012, not including members of the Executive Board and employees in early retirement 56
Key figure Unit 2010 2011 2012 Comment Work-related accidents Number 38 34 27 Stable at very low level subject to reporting requirements Total sick days due to Number 1,000 967 1,319 Small number of accidents with work-related accidents protracted sick leave subject to reporting requirements Accident rate (No. of 13.5 11.9 9.0 Despite the high percentage of wage work-related accidents earners, figure is below the AUVA subject to reporting statistics figure for operations with requirements per 1,000 salaried staff only (17) employees) Severity of accidents Days 26.3 28.4 50.7 Increase due to small number of (days of sick leave per accidents with protracted sick leave work-related accident subject to reporting requirements)
Our responsibility as an employer
Employees play a decisive role in supporting VERBUND’s performance. They make a significant contribution to the profitability of the Group. Hiring the right employees, conducting dual apprenticeships in electrical and mechanical engineering, and making investments in continuing training and education ensure the high qualifications of our employees. Employee retention is a necessary prerequisite for sustainable productivity at VERBUND. In return, we strive to create a working environment that promotes fairness, transparency, commitment and thus individual performance. We support diversity within our Group, and this is evident not only by our signing of the Charter of Diversity. VERBUND currently has employees from more than 20 countries, as well as 182 employees who fall under Section 5 of the Disabled Persons Employment Act (Behinderteneinstellungsgesetz) – 55 employees more than the statutory requirement. Equal treatment for all employees is a matter of course for us. Every employee receives a performance-related, market-oriented compensation, and can make use of voluntary social benefits, such as a pension fund or supplementary health insurance. In addition, every employee is free to join a union.
Dedication to efficient work processes As a sustainable company, we place great emphasis on the ability to organise our work efficiently and thus ensure the successful future of VERBUND. In 2012, a number of innovations in the area of human resources contributed to enhanced efficiency. For example, we are now using an even more modern and easy-to-operate planning and reporting tool for personnel data. The integrated personnel and expense planning system significantly simplifies the planning process and increases transparency. It also greatly simplifies the analysis of key figures, which allows us to focus more on the interpretation of data. This means that we can detect trends at an early stage and undertake any necessary adaptations or implement countermeasures. VERBUND SUSTAINABILITY REPORT Social aspects 57
Consistent and tightly organised personnel planning also promotes the optimal use of resources. Human resource business partners within the companies facilitate contact between operating companies and central personnel management. Another step for increasing efficiency was taken with the new uniform travel regulations for all Group companies, which were negotiated with the employee representatives.
Personnel marketing strengthens employer brand A critical factor for the success of our company is having the most highly educated and trained employees and executive managers. VERBUND must continue to recruit such employees and ensure their long-term loyalty to the Group. This is the only way for us to remain competitive in the current market and in the future. It requires the proactive positioning of VERBUND as an attractive employer. The Employer Branding Process conducted in 2012 is an important supplement to the brand positioning of the entire Group. Unique selling propositions vis-a-vis the competition on the labour market were worked out based upon the corporate brand, and the employer brand profile was streamlined.
Satisfied employees Satisfied and enthusiastic employees are more productive and remain with the Company longer. We promote communication and involve our employees in the performance of the Group in order to reach our goal of an open, respectful and responsible relationship with one another. We conducted another Group-wide employee survey in September 2011 and analysed the responses in detail in 2012. The aspects of working at VERBUND rated most highly by the employees were the good work atmosphere, collaboration and working hour arrangements, as well as income and social benefits. These are only a few of the points that result in our employees registering a high degree of work satisfaction compared to those of other large companies headquartered in Austria, as well as above- average motivation and commitment. How satisfied employees are with their work and what level of dedication they show is mainly dependent on how they are managed. The results of the employee attitude survey likewise show that investments to develop our executive culture are worthwhile. For over 15 years, we have been working continuously on a refinement of our executive culture. In 2012, the division managers of the holding company developed efficient internal processes in workshops, as well as a joint understanding of their executive responsibility. This improves interdepartmental communication as well as collaboration with subsidiaries. In order to evaluate this shared understanding of executive responsibility for all VERBUND executives, in a further step, the existing executive values will be revised, adapted to current needs and recorded for all employees.
Employee loyalty: compatibility of work and family life Studies show that private problems can have a negative influence on work performance. Thus another central goal is to enable greater compatibility of work and family life, and in this way to create long-term employee loyalty. The Federal Ministry of Economy, Family and Youth honoured our commitment by awarding us the basic Work and Family Audit certificate in 2009. Since then, we have supplemented our activities each year with targeted measures, such as the introduction of an Employee Assistance Programme that helps employees in difficult family and work-related situations by offering independent 58
consulting and coaching. The consulting and coaching sessions are anonymous and free, and can be utilised by employees and their close family members. In 2012, we carried out a re-audit, analysed the current measures in a number of workshops, and agreed upon the implementation of additional activities for the coming 3 years. For example, we are planning to introduce standardised guidelines in order to simplify re-entry into the workforce following parental leave for women and men, and will provide more detailed information on this topic to executives. In 2012, we were awarded the full Work and Family Audit certificate by the Federal Ministry of Economy, Family and Youth.
Ongoing topics and projects 2012 Personnel marketing The first step towards a competitive company is to make qualified applicants aware of VERBUND. TUtheTOP Gifted students in technical fields of VERBUND was a partner in the TUtheTOP since 2007 study are invited to a dialogue with well- programme for the sixth time in the known companies. VERBUND offers 2012/13 academic year. them a varied programme with excursions, workshops, guided tours, and presentations. Promotion of women Women are an important target group on the labour market. They should be recruited for VERBUND through a targeted promotion. Women’s scholarship VERBUND promotes highly qualified The VERBUND women’s scholarship was since 2009 women in the technical professions. awarded for the fourth time in April 2012 VERBUND awards this scholarship to three outstanding female students at annually together with the Career the Vienna University of Technology. Each Center of Vienna University of award recipient received €5,000 to Technology. support her education. Women in Technology We try to generate enthusiasm among VERBUND set up an information stand at (“Frauen in die Technik”, girls for pursuing technical professions, the Vienna University of Technology to FIT) motivate female students to study inform interested students about different since 2009 technical disciplines, and present job opportunities within the Group, above successful women in the technical all in the technical professions. This year, professional as role models. In this way, 15 girls participated in an excursion to the we hope to break down inhibitions and Freudenau power plant. anxieties about technical or scientific education among girls. Take Your Daughter to VERBUND has been participating for VERBUND participated in Take Your Work Day years in Take Your Daughter to Work Day Daughter to Work in Vienna for the ninth since 2004 in Vienna. This campaign by the City of time in 2012. A total of 23 girls aged 11 to Vienna, the Vienna Economic Chamber 16 visited the Melk power plant and the and the Vienna School Board introduces fish ladder, and participated in a photo girls to technical professions. competition. VERBUND SUSTAINABILITY REPORT Social aspects 59
Ongoing topics and projects 2012 Employee loyalty In order to achieve sustained productivity, we provide ways for our employees to improve their day-to-day lives. This also strengthens their commitment to VERBUND. "Fit and Healthy" initiative The "Fit and Healthy" initiative at In 2012, the focus of the initiative was since 2008 VERBUND is designed to promote a "Nutrition". Presentations, a test for food healthy lifestyle. Employees are intolerances, and an extensive programme motivated to do something for their of seminars on health-related topics were health on a voluntary basis. well received by employees. Work and Family Audit The Work and Family Audit is an initiative In 2012, we carried out a re-audit, and since 2008 of the Federal Ministry of Economy, reviewed our measures in the area of Family and Youth. It is a management Work and Family in several workshops. tool for optimisation of a family-oriented Once further measures were established, corporate policy. VERBUND already we received the certificate until 2015. received the basic certificate in 2009. Maintenance and expansion of knowledge Our long-term focus on continued training and education ensures maintenance of knowledge among our highly qualified employees. Trainee programme The VERBUND trainee programme is In 2012, VERBUND accepted ten trainees. since 2000 directed towards graduates in technical 80% of the trainees have a technical and business studies. Participants education, and 50% are women. The undergo on-the-job training within the acceptance of two recipients of VERBUND Group. They receive an individual women's scholarships into the trainee development plan as well as programme emphasises the continuous comprehensive training in the energy promotion of women at VERBUND. industry. Apprenticeship training Since 1983, VERBUND has offered a 4- In 2012, 48 young people decided to enter since 1948 year dual apprenticeship for electrical into a technical apprenticeship at and mechanical engineering, an in- VERBUND. They are completing their demand profession with excellent future training in 3 apprentice workshops and at prospects; itwas one of the first more than 23 different power plant sites. companies to do so. Dual-profession training for With dual-profession training in In 2012, 60 employees participated in the master craftsmen and mechanical and electrical engineering, skilled worker training. Overall, VERBUND skilled workers VERBUND is supporting the additional has trained 157 individuals as skilled since 2009 training of master craftsmen, deputy workers and 91 as master craftsmen. master craftsmen and skilled workers. All have completed further training for the This training includes modules on dual profession of electrical and technology and management (leadership, mechanical engineering. meetings with employees, safety, documentation), and ends with an external examination. 60
Ongoing topics and projects 2012 Knowledge management Retaining employee knowledge for the A number of decentralised knowledge since 2011 Group is a key factor in securing the management initiatives at VERBUND have economic future of VERBUND. The produced best practice examples: the Group has been conducting a program meeting of controllers served as a model for efficient knowledge management for the meetings of risk managers and since 2011. human resources managers. The new "Intranet+" simplifies collaboration and knowledge exchange using Sharepoint. In addition, through the Enerjisa Young Energy Programme, we are enabling two talented individuals from our foreign joint ventures to participate in a 3-month knowledge exchange in various areas of VERBUND. Succession planning Structured succession planning is the Further efforts at systematisation were since 2009 basis for finding replacements for those undertaken in 2012. VERBUND creates leaving leadership positions at potential analyses for all nominated VERBUND. At the same time, it provides employees. Individual career development employees with the opportunity for measures are developed based upon continuous professional development. these analyses.
VERBUND SUSTAINABILITY REPORT Social aspects 61
Health and safety
VERBUND is continuously instituting preventive measures as part of its programme to prevent work- related accidents. The protective measures must reach all those affected, they must be accepted by employees and they must be fundable. The framework for such measures is established by the relevant laws and directives.
Safety experts for workplace safety Workplace safety is an important corporate goal for VERBUND. Safety experts with many years of experience provide advice to all employees and organise and monitor safety measures in power plants and grid facilities. Because they are responsible on behalf of the executives for the operational implementation of employer obligations, they can leverage synergies within the individual companies. VERBUND’s safety experts also participate in external bodies, which include the Standards Committee, the “Safety” Committee, as well as the working group “Safety engineers of Austrian electric utilities” from Oesterreichs Energie, an advocacy group for the Austrian electricity industry (formerly Association of Austrian Electricity Companies - Verband der Elektrizitätsunternehmen Österreichs, VEÖ). We also require our contractors to act in a safety-conscious manner and within the law, and we monitor their conduct. Both internal employees and workers from other companies are given safety instructions prior to beginning work.
Practice-oriented safety training Preventive measures are based upon the analysis of work-related accident statistics at VERBUND. In 2012, the focus of the annual training sessions was on "Ergonomics". Sessions included presentations by experts from the occupational health service (Arbeitsmedizinischer Dienst) and the Allgemeine Unfallversicherungsanstalt (AUVA) insurance company, as well as practical exercises. Training was held in approximately 45 locations, and 1,751 employees throughout the Group received a total of 6,982 hours of training. In the new Vienna office location near the Vienna West Station, an initial safety training session was conducted with almost 100% employee participation. The training programmes “Work materials” and “Transportation of hazardous materials” continued as scheduled in 2012. Special in-depth training sessions were scheduled, prepared and conducted for employees responsible for waste and hazardous materials.
Accidents The number of accidents at VERBUND has remained stable at a very low level, or has even declined, since accident statistics began to be collected in 2001. The accident statistics within the Group are significantly lower than the average figures at Austrian electric utilities. On a particularly positive note, in 2012 the Group was able to achieve the lowest level since the introduction of accident statistics, with only 27 work-related accidents. When interpreting accident statistics, the absolute accident figures must be considered in proportion to the accident rate and accident severity. The accident rate reflects accidents during 1 year relative to the number of employees and the accident severity describes the average severity per accident based on the number of days of sick leave. Accidents that occur while commuting are not recorded. Because of 62
differing national calculation methods, all data on accidents are based upon the number of employees at locations within Austria. The accident severity figure, which is based upon the average number of sick leave days per accident, has unfortunately risen due to several very severe accidents with long periods of sick leave. One fatal accident was also reported during the reporting year at the Limberg II/Salzburg power plant when an employee fell in steep terrain. No cause or responsibility for the accident could be established. One accident also occurred at the Köprü/Turkey power plant construction site of our joint venture Enerjisa Enerji A.S., in which ten employees of directly and indirectly contracted construction firms lost their lives. Even though a thorough analysis of the cause of the accident showed that there was no responsibility on the part of Enerjisa Enerji A.S., VERBUND or Sabanci, social recompense was provided to the affected families. Since Enerjisa Enerji A.S. is not fully consolidated, this accident has not been included in the Group statistics. Nevertheless, the accident rate, i.e. the number of accidents per 1,000 employees at VERBUND sites in Austria, has achieved its best absolute level. Comparisons with the accident rates in construction (47.6), the metal and electrical industry (37.3), and the chemical industry (30.6) show that the accident rate of 9 accidents per 1,000 employees within the VERBUND Group is far lower than comparative figures. Austrian utilities also have a higher accident rate on average (16.64; Source: Accident statistics published by Oesterreichs Energie). The statistics from the Allgemeine Unfallversicherungsanstalt (AUVA) insurance company can also be used as a benchmark. Among the 2,840,330 employees insured by AUVA throughout Austria, there were a total of 55,769 reportable accidents in 2011. This corresponds to an accident rate of 19.6 work-related accidents per 1,000 employees across all sectors of the labour force. Despite the high percentage of employees working in the operational sector, the VERBUND accident rate is far below the average AUVA figure across all business and industry categories. This is further evidence of the high level of workplace safety at VERBUND. As a result of organisational and technical safety measures, the number of falls and electrical accidents in particular have been at a very low level in the last 2 years. The fact that organisational shortcomings did not account for a single day of sick leave clearly shows how successfully workplace safety measures have been implemented.
VERBUND SUSTAINABILITY REPORT Social aspects 63
Sick leave days from work-related accidents Headcount1 subject to reporting Total work-related accidents Accident rate2 requirements4 subject to reporting Accident frequency3 Accident severity5 requirements6
Headcount 3,009 41 2,815 2,860 1,319 2,709 38 Sick leave days from 5 2,567 work-related accidents 3 subject to reporting 34 34 16 requirements Accident 10 5 5 rate 1,000 967 14 945 13 27 13 1 fatal 12 829 7 Accident 9 frequency 12 7 serious 11 10 9 9 7 moderate 8 26 22 22 20 Accident severity 50 12 minor 28 23 24 26
2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012
1 All figures are based upon the number of employees at VERBUND sites in Austria // 2 Number of work-related accidents per 1,000 employees // 3 Accidents with 1 or more sick leave days per 1 million work hours // 4 Calendar days // 5 Sick leave days per accident subject to reporting requirements // 6 Accidents with more than 3 sick leave days
The 6 most severe accidents in the Group together caused about 73% of all sick leave days. This included an accident caused by a fall that involved 279 sick leave days. The causes of the remaining accidents were slipping, tripping, bumping into objects, cutting, or stumbling. All accidents can be attributed to “carelessness” or “oversight, unfortunate circumstances”. The consequences of these accidents, namely protracted sick leave, had negative effects on accident severity (average sick leave days per accident). It is clear that both the preventive measures that have been taken and employees’ increased awareness of workplace safety, which has been encouraged by the Group, have had a very positive effect, as evidenced by the constantly declining number of work-related accidents. Nevertheless, every employee’s safety awareness and safety habits must be improved even more in the future. The Safety Group and its safety experts will carry out appropriate programmes, training courses, and employee information campaigns. This should strengthen the safety culture and the example set by executives in order to further reduce the accident figures. 64
Responsibility for society
As Austria’s largest Group and an important player in the international electricity market, we take our social responsibilities seriously. VERBUND supplies electricity to millions of people. We maintain a dialogue with our stakeholders, are committed to helping the disadvantaged and promote environ- mental awareness among children and young people. With our technical know-how, we are also actively committed to ensuring Austria’s energy future.
High security of supply The expansion of wind and solar power plants is increasingly resulting in critical timepoints when the level of available energy within the power grids is suddenly much higher or lower than consumption. In recent years, the VERBUND grid subsidiary Austrian Power Grid AG has had to intervene in grid operation with increasing frequency in order to secure supply. In 2012, the 110 kV APG grid experienced roughly a 5-minute interruption of supply. Interruptions of power supply generally occur only in individual regions and not throughout the entire service area. The effects of a power outage in the APG grid can therefore be compared only by measuring the “undelivered MWh”. In 2012, APG transported approximately 42,144 GWh at grid level 1; 0.83 MWh could not be delivered. This corresponds to around 0.000002% of the transported volume. In 2011, 0 MWh could not be delivered.
Flood management on the Drau Over the weekend of 4/5 November 2012, heavy rainfall triggered a 100-year flood on the Drau River. The powerplants on the Drau were staffed in accordance with the emergency plans. Given the force of a 100-year flood event, which could not have been foreseen in this magnitude, the options for protection through the utilisation of measures by the upstream power plants were exhausted after a certain point, however. The municipality of Lavamünd, which has no technical flood protection system, suffered severe damage. VERBUND did everything legally and technically possible to minimise the effects of this flood along the entire length of the Drau.
New quadrature booster for the Lienz substation The Lienz substation is one of the most important substations in the Austrian high-voltage grid. It is a hub for several 380 kV and 220 kV lines, and acts as a transfer point to the regional grids of TIWAG Netz and KELAG Netz. Because a large percentage of the pumped storage power plants in the central Alpine region feed into the Lienz substation, there are frequent bottlenecks. The new quadrature booster is a special technical device that will enable more efficient control of the power flow in the future. This new equipment represents a €14m investment by APG in security of supply for the region. VERBUND SUSTAINABILITY REPORT Social aspects 65
Social commitment VERBUND climate school and electricity school We are actively involved in teaching the next generation through the VERBUND climate school of the Hohe Tauern National Park and the VERBUND electricity school. The VERBUND climate school was awarded the title “UN Decade Project” in 2012 by UNESCO for the decade termed “Education for Sustainable Development”. As part of the VERBUND electricity school and in collaboration with the daily newspaper “Die Presse”, the Group launched the EDUARD school competition in 2012. A cash prize of €50,000 was offered to promote energy projects by school classes throughout Austria. The competition will be continued in 2013.
Electricity relief for those in need Since 2009, we have used the VERBUND Electricity Relief Fund in collaboration with the Catholic charity Caritas and the VERBUND Empowerment Fund run by Diakonie, a Protestant humanitarian assistance organisation, to support persons in difficult situations throughout Austria. Over the past 3 years, we have been able to use the Electricity Relief Fund to provide assistance to 1,500 low-income households with 4,000 inhabitants in Austria, helping them to cope with their energy expenses over the long term. Overall, more than 664 electrical household devices were exchanged or proposed for exchange, and 965 energy consulting sessions were conducted in households. The VERBUND Empowerment Fund has provided emergency assistance since 2009 to people with special needs, due to either congenital conditions or accidents, and has helped them lead more independent lives. This assistance includes expansion of the existing consulting network for people who require supportive communication technology and for their family members. The fund also supports early intervention for children and provides emergency assistance for purchases of assistive communication technologies. Overall, some 40,000 people are benefiting from this cooperation. As part of the “Light a Candle” Christmas campaign, VERBUND donated an additional €20,000 to the VERBUND Empowerment Fund in 2012 on behalf of VERBUND customers in Austria who helped create the online donation campaign.
Other social activities Since the 1950s, we have sponsored the Swallow’s Nest (Schwalbennest) House in the SOS Children’s Village in Hinterbrühl/Lower Austria. We continued this sponsorship in 2012, as well as the sponsorship of the Hans-Radl School for physically disabled children in Vienna. Approximately 50 people participated in the first VERBUND cycling excursion in August 2012 to the VERBUND wind farms at Bruck an der Leitha, Hollern, and Petronell-Carnuntum. During this outing, participants met VERBUND employees and learned about existing and planned power plants. After a two- and-a-half-hour tour, the group reached the wind farm at Bruck an der Leitha. The final event of the tour was a climb to the outlook platform at the top of wind power plant 1. Employees spoke about the construction of the wind farm, provided technical details, and answered questions. With this unique experience, VERBUND once again strengthened its local ties in the region. Each December, VERBUND organises a Christmas tour to the Romanian town of Casimcea. During the tour, VERBUND employees distribute school supplies to some 500 children in local kindergartens and schools. There is also an annual collection of used clothes for the approximately 4,000 inhabitants of the town. This region along the Black Sea coast is one of the most beautiful, and at the same time one of the poorest areas of Romania. Since 2010, we have been building one of Europe’s largest wind farms here. At the same time, we also want to expand our social involvement in this region. 66
Dialogue with stakeholders
"Energy breakfast" stimulates discussion The "Energy Breakfast" is a new format designed to strengthen and expand the dialogue between VERBUND and relevant stakeholders. Current energy management issues, studies, and projects are discussed during this event. A critical examination of each of these topics is encouraged in order to stimulate the discourse on energy policy and energy management, and thus make a contribution to the changes taking place in the energy market. Three of these breakfast events were held in 2012, with a total of some 300 participants and discussions on the following topics: • Study "100% Electricity from renewable sources for e-mobility. Effects, opportunities, and recommendations for action" • The energy market of tomorrow. How much to leave to the free market, and what to regulate? • Energy transition and industrial site: a contradiction?
Live simulation with students and stakeholders We conducted the project “Live Simulation – Shareholder Dialogues” in Vienna for the first time in May 2012. The purpose of this project was to create greater awareness of the complexity of the energy system in Austria among relevant stakeholders and students, and to position VERBUND on the labour market by providing topics for the future. In this simulation, students were divided into groups representing individual stakeholders and were coached in their roles by the respective stakeholders. The stakeholders invited by VERBUND also benefited, as the event gave them an opportunity to reflect upon their own argumentation. Based upon the huge success of this project, a second simulation with expansion into the European energy system was organised during the Alpbach economic symposium.
Stakeholder activities in Germany Dialogue with stakeholders and the creation of trusted relationships are also key factors in the success of our sites in Germany. Germany is VERBUND’s most important foreign market. Intensifying and expanding our contacts with stakeholders is an important means of strengthening and effectively representing our positions and interests in Germany. For this reason, we have worked together with entities such as the German Energy Agency (Deutsche Energie-Agentur GmbH, DENA) to develop common areas for collaboration in energy management between Germany and Austria. The goal is to further strengthen the shared energy market and to make an optimal economic contribution to the development of a sustained and secure supply of electricity in Europe.
VERBUND SUSTAINABILITY REPORT Social aspects 67
Targets 68
Economic targets
Target Subtarget Planned measures 20121 Achievement of operational targets Operating result Profit per share Return on capital employed (ROCE) Gearing Capital expenditure for property, plant and equipment Utilising growth opportunities in the European electricity market Value-generating investments and acquisitions Increasing efficiency in hydraulic power generation Gralla run-of-river power plant Commission generator set 2 Hirzbach run-of-river power Build and commission plant Hirzbach power plant Pernegg run-of-river power Renovate generator set 2 plant Expansion of hydropower generation capacity Construction of Reisseck II Continue excavation of pumped storage power plant underground facilities Gössendorf run-of-river power Commission generator set 2 plant Kalsdorf run-of-river power Commission generator set 1 plant Expansion of wind power use Wind farm Petronell- Ground-breaking ceremony Carnuntum II Hollern II wind farm Ground-breaking ceremony Bruck-Göttlesbrunn II wind Submit EIS farm Casimcea wind farm in Commissioning of 99 MW, Romania ground-breaking ceremony for additional 102 MW
Pegasus wind farm/Germany
Increased efficiency of thermal power generation Renovation of old power Commission power plant plants: Mellach CCGT Expansion of biogenic fuel use Cofiring of torrefied biomass in Conduct test series with Mellach district heating power torrefied biomass plant Utilisation of by-products Use of the calcareous mud Conclude supply agreement produced from the treatment and test use of supplemental water at the Mellach CCGT as a raw material additive for cement production. Maintain security of supply and reduce grid loss Construction of 380 kV Submit EIS Salzburg line St. Peter grid hub–Tauern grid hub Construction of 380 kV line Prepare EIS St. Peter–Germany Construction of substations Build Zurndorf substation and grid expansion for feed-in of wind power
1 Planned measures will be implemented according to current conditions. VERBUND SUSTAINABILITY REPORT Economic targets 69
Target 2012 Achieved target 2012 Status Planned measures 20131 Target 2013 To be continued To be continued To be continued
To be continued To be continued
Generator set 2 in operation Target achieved Hirzbach power plant in Target achieved operation Generator set 2 in operation Target achieved To be continued Renovate generator set 3 Generator set 3 in operation
Excavation work completed Target achieved To be continued Completion of armouring Armouring completed
Generator set 2 in trial Target achieved operation Generator set 1 in trial Target achieved To be continued Put generator set 2 into trial Generator set 2 in trial operation operation operation Construction begun Target achieved To be continued Complete power plants Power plants constructed
Construction begun Target achieved To be continued Complete power plants Power plants constructed EIS approval received Target achieved To be continued Prepare for construction of Preparation of construction of power plant power plant is completed 100 MW in operation, ground- Target achieved To be continued Construct power plants with Power plants constructed breaking was performed for 102 MW capacity and another additional 100 MW 25 MW
New Complete construction of Wind farm in operation power plants and begin operation Mellach CCGT in operation in Target achieved Completed mid-2012 Results of test series received Target partially achieved. To be continued Perform large-scale conveying Test performed Laboratory comparison tests and cofiring test with briquets completed instead of pellets Points were performed Target achieved To be continued Gather experiences on material Maintain 100% utilisation homogeneity
EIS submitted Target achieved To be continued Conduct public negotiations Public negotiations conducted
EIS in preparation Target partially achieved; EIS To be continued Submit EIS EIS submitted is mostly prepared. Zurndorf substation Target achieved To be continued Expand grid to prepare for Kronstorf grid switching station construction completed changeover of the Danube line in operation, and expansion of to 380 kV operation St. Peter substation completed
70
Environmental targets
Target Subtarget Planned measures 20121 Opportunities and risks of climate change Additional strategies to address Develop medium and long-term climate change targets and measures
Reporting pursuant to Greenhouse Collect all Scope 3 data and publish Gas Protocol greenhouse gas emissions, (Scope 1–3) including foreign interests
Reduction of specific CO2 Commission Mellach CCGT in emissions from thermal generation quarter 1/2012; continue construction of Toul/France CCGT
Stabilisation of specific GHG Expand generation from emissions relative to renewables, continue to convert total generation power plant portfolio to incorporate advanced technologies
New products for energy efficiency, distributed power supply Development of products and Test complete functional cross- and management services in the area of electric border system and roll out vehicles packages for consumers on market
Development of products and services in the area of distributed power supply
Environmental data management and reporting Reorganisation of Group-wide Select reporting tool and environmental reporting implement in initial business areas
Uniform collection of water data Integrate water data collection into reporting tool
Publication of environmental data Develop reporting tool interface online for web application
Publication of carbon footprint for Externally certify carbon footprint selected business areas in first half of 2012, prepare data collection in other business areas
Avoidance of environmental impact from power plants, grid facilities and Mobility management for Finalise transport concept and administrative sites employees at administrative and implement throughout Group selected power plant sites
Reduction of environmental impact from power plants, grid facilities and Improvement of energy efficiency Continue rehabilitation (e.g. administrative sites in power generation Pernegg hydropower plant), expansion of storage power plants (e.g. Reisseck II) and thermal power plants (e.g. CCGTs) Rottau fish passage at Malta power Issue tender, begin construction plant
1 Planned measures will beimplemented according to current conditions. VERBUND SUSTAINABILITY REPORT Environmental targets 71
Target for 2012 Achieved target 2012 Status Planned measures 20131 Target for 2013 Climate strategy with Target partially achieved: To be Develop medium and long-term Climate strategy with medium and medium and long-term climate strategy still being continued targets and measures long-term targets and measures targets and measures developed in place in place All greenhouse gas data is Target partially achieved; To be Extend Scope 3 data collection, All greenhouse gas data is collected, collected and reported in Scope 3 data collection continued publish and certify greenhouse reported and certified in accordance accordance with extended; Scope 1–3 gas data with Scope 1–3 Scope 1–3 reported and certified, excluding foreign interests Mellach CCGT in operation; Target achieved Completed specific CO2 emissions from thermal generation are stabilised at low level GHG emissions relative to Target partially achieved: To be Integrate new capacity from hydro Generation from hydro and wind total generation continue hydro and wind power continued and wind power into generation power is higher to be among lowest in expanded in renewable portfolio Europe generation; CCGTs added to power plant portfolio; specific emissions at 82 tonnes CO2/GWh Electric vehicle products Target partially achieved; To be Launch products for business and Products and services provided and services available for products and services for continued domestic customers onto market in area of electric vehicles consumers consumers tested in in quarter 3/2013 research project; company established: E-Mobility Provider Austria New Develop products and services for Offering for distributed power consumers in area of distributed supply is ready for use generation in combination with distributed storage Reporting tool selected and Target partially achieved: To be Finish implementation in second Reporting tool is completely implementation mostly reporting tool selected; continued half of year; prepare improved implemented; data of greater scope completed implementation 50% internal and external data reporting or better quality to be reported from completed 2014 Water data collected using Target partially achieved: To be Carry out project for standardised Water data will be collected in reporting tool water data defined in continued collection of water data by end of standard form using reporting tool reporting tool; project started year; adjust data collection in and reported in greater detail from aimed at standardised reporting tool 2014 collection of water data Environmental data Target not achieved To be Test visualising environmental data Visualisation successfully tested; go published in real time on continued on Group website with project to live scheduled for early 2014 Group website, in part be completed in second half of quarterly year; publish data via web application from 2014 Carbon footprint certified Target achieved To be Determine carbon footprint for Determination of carbon footprints for VERBUND-Trading continued other business areas, sites etc. for other business areas, sites etc. &Sales Deutschland sites; started preparations for other business areas started Mobility management Target achieved Completed implemented, including providing electric vehicles at selected power plant sites Projects for improving Target achieved To be Plan and carry out further Projects for improving energy energy efficiency in continued rehabilitation; carry out project for efficiency in progress; data to be progress standardised collection of energy collected in standard form using efficiency data by end of year; adjust reporting tool data collection in reporting tool Clearing completed, Targets achieved To be Complete fish passage and Fish passage in operation and construction work begun continued recultivation monitoring started
72
Environmental targets (continued)
Target Subtarget Planned measures 20121 Renovate and restore Rottau headwater Complete monitoring, perform clearing channel at Malta power plant Additional ecological measures at Rottau Implement measures balancing reservoir – Weinitzgraben standing water St. Martin fish passage at Rosegg power Negotiate water rights, begin construction plant Fish passage at Abwinden-Asten power Award contract for detailed plan, pre- plant monitor fish, submit project
Altenwörth power plant: restoration of Receive approval, make adjustments, begin Traisen confluence (LIFE+ project) construction in Dec. 2012
Altenwörth power plant: structural Put out to tender again, implement adaptation of fish passage measures Use of Realit, a desulphurisation by-product Continue recycling almost 100% of by- produced in Dürnrohr, as backfill material product Realit for a disused gypsum mine
Use of limestone powder produced at Conclude supply agreement and use on Mellach CCGT as raw material additive in industrial scale cement industry
Improvement of energy efficiency in grid Construct low-energy building for Kronstorf facilities grid switching station
Promotion of biodiversity along line routes Improve habitat for saker falcons, imperial eagles and ural owls by mounting nest boxes
Improvement of energy efficiency at Implement energy monitoring tool administrative sites
Improvement/safeguarding of terrestrial and aquatic Feistritz-Ludmannsdorf power plant: Excavate 100,000 m3 and use for habitats implementation of flooding and sediment landscaping management for several years Certification to EMAS and ISO 14001 Certification of all plant sites to ISO 14001 Develop phase plan for certifying all by 2015 facilities with companies affected
Certification of Am Hof 6a, 1010 Vienna, Conduct external audit and certification site to ISO 14001 to ISO 14001 by mid-2012
Certification of Inn power plants to Conduct external audit and certification ISO 14001 to ISO 14001 by mid-2012
Certification of Zillertal power plant group to Conduct external audit and certification ISO 14001 to ISO 14001 by mid-2012
1 Planned measures will be implemented according to current conditions.
VERBUND SUSTAINABILITY REPORT Environmental targets (continued) 73
Target for 2012 Achieved target 2012 Status Planned measures 20131 Target for 2013 Monitoring completed, Target achieved To be Put out to tender, award contract Construction work started clearing performed continued and start construction Measure implemented Target partially achieved: To be Carry out remaining work and Measures completed construction work mostly continued recultivate completed Project approved, Target achieved To be Carry out construction work Construction completed and construction work begun continued monitoring started Project submitted Target partially achieved: To be Submit project and start Construction begun monitoring completed, continued construction work detailed plan adapted Construction begun Target partially achieved: To be Start construction work in west Construction begun approval received, continued section dimensions changed Structural adaption Target not achieved: redesign To be Replan project Replanning completed completed required continued Approx. 99% of Realit Target achieved To be Evaluate experience with 100% of Realit recycled recycled continued backfilling a disused underground gypsum mine
100% of limestone powder Target achieved To be Conclude supply agreement and 100% of limestone powder used used continued use on industrial scale, gain experience in using as raw mix constituent (e.g. homogeneity) Building with power Target achieved Completed consumption index < 30 kWh/m2 completed Nest boxes are mounted Target achieved: half of To be Improve habitat for saker falcons, Nest boxes are mounted on 380 kV in the area of the 220 kV Austria’s saker falcon continued imperial eagles and ural owls Dürnrohr-Sarasdorf line Bisamberg–Sokolnice line, population breeds in APG by mounting more nest boxes 110 kV Bisamberg–West nest boxes Vienna line and 380 kV South Burgenland– Southeast Vienna line Energy monitoring tools Target achieved Completed implemented in headquarters building Excavation and Target achieved To be Excavate 150,000 m³ and use Landscaping completed landscaping completed continued about half for landscaping
Certification programme to Target achieved Completed ISO 14001 developed for 2012–2015 Am Hof location certified Target achieved Completed to ISO 14001
All 13 Inn power plants Target not achieved: To be Carry out certification to ISO Certification completed certified to ISO 14001 certification postponed until continued 14001 2013 All 8 power plants certified Target partially achieved: To be Carry out certification to ISO Certification completed to ISO 14001 completion of certification continued 14001 in January 2013 postponed to January 2013 74
Social targets
Target Subtarget Planned measures 20121 Promotion of women Increase percentage of women Continued promotion of women's involvement in the technical professions Promotion of female students in Award of scholarships to female technical fields of study students at Vienna University of Technology Generate interest in the technical Participate in trans-regional professions among girls and young initiatives women
Employee loyalty Keep fluctuation rates low Conduct systematic work satisfaction surveys, devise and implement appropriate measures Increase the efficiency of internal workflows Continue “Fit and healthy at Conduct activities focused on VERBUND” campaign "Healthy nutrition"
Improvement of work-life balance Conduct new “Work and Family Audit” Retention and expansion of knowledge Trainee programme Recruit 10 trainees
Apprentice training Train apprentices in the workshops and directly in the power plants
Knowledge management Start project
Retention and expansion of occupational safety Stabilisation of accident rate Conduct specific training throughout the Group programmes based upon accident analyses
Product responsibility Online service offering Simplify usage of online services
Promote environmentally friendly Expand photovoltaic project technologies
Offer customers free test drives with VERBUND electric cars Customer service
Commitment to society VERBUND electricity relief fund Carry out energy consulting in together with the Catholic charity households Caritas VERBUND Empowerment Fund Hold consultations on assistive run by Diakonie, a Protestant technologies humanitarian assistance organisation Expansion of VERBUND climate Make educational offerings school of the Hohe Tauern available at no charge for all National Park schools in Carinthia, Salzburg, and Tyrol
VERBUND electricity school Conduct EDUARD school competition
1 Planned measures will be implemented according to current conditions. VERBUND SUSTAINABILITY REPORT Social targets 75
Achieved target Target for 2012 2012 Status Planned measures 20131 Target for 2013 19–20% Target achieved To be Continued promotion of women's 19–20% continued involvement in the technical professions 4th women’s scholarship awarded to Target achieved To be Award of scholarships to female 5th women’s scholarship awarded to 3 female students at the Vienna continued students at the Vienna University of 3 female students at the Vienna University of Technology Technology University of Technology Participation in Take Your Daughter Target achieved To be Participate in trans-regional Participation in Take Your Daughter to Work Day in Vienna and Women continued initiatives to Work Day in Vienna and Women in Technology (“Frauen in die in Technology (“Frauen in die Technik”, FIT) Technik”, FIT) Fluctuation rate less than 2% Target achieved To be Continue to maintain low fluctuation maximum 2% continued rate (not incl. retirements)
Reformulate leadership values Target achieved To be Implement one additional measure One additional measure has been continued on the topic of "Leadership values" implemented Presentation and individual Target achieved To be Conduct activities on the topic of 3 activities conducted. consultations on the topic of "Healthy continued "Mental fitness" nutrition" Full certificate received Target achieved To be Standardise re-entry process Uniform Group-wide re-entry continued following parental leave process created Recruit 10 trainees, of which 5 Target achieved To be Develop trainees into specialists Job rotations and educational women continued through job rotations and programme completed educational programme At least 45 new apprentices recruited Target achieved To be Train a total of 184 apprentices in At least 45 new apprentices continued the workshops and directly in the recruited. power plants Interdisciplinary project team Target achieved To be Develop concept Concept for Group-wide knowledge established continued management is available Low level of 12–15 accidents per Target achieved To be Conduct specific training Accident rate of less than 15 per 1,000 employees maintained continued programme on "Personal safety 1,000 employees equipment" based upon accident analysis New Develop programme to improve All employees are informed, safety culture and strengthen the executives are used as role models effect of executives as role models 3 videos explaining online services Target achieved New Refine customer platform – User ratio increased by 50% implemented improved structure, more personal, more user-friendly Number of photovoltaic feed-in Target achieved New Offer expanded photovoltaic Number of photovoltaic feed-in points increased by 60%. product with battery storage to points increased by 30 % increase the level of own use from 30% to approx. 60% 90% utilisation of VERBUND electric Target achieved To be Expand car fleet, change rental from 90% utilisation of VERBUND electric cars continued hourly to daily cars New Develop new discount and bonus Concept for new discount and systems for customers bonus systems for customers completed Additional 400–500 households Target achieved To be Continue consulting sessions Additional 500 households received received assistance continued assistance
Additional 1,200 consultations held Target achieved To be Continue consulting sessions Additional 1,200 consultations held continued
Offering can be used by all schools in Target achieved To be Train additional rangers, expand 2,300 participating pupils and the states with national parks, initial continued climate school based upon 187 teachers reached. steps taken to expand programme pedagogical insights, and as of 7 additional rangers available for throughout Austria 2013, offer it for 9th and 10th grade teaching, 9th and 10th grade as well included School competition conducted, Target achieved To be Conduct school competition on the Competitions conducted, additional 250 classes equipped with course continued topic "Climate and climate 200 schools equipped with course materials protection" and supplement with a materials primary school competition that includes a writing workshop on the topic of hydropower 76
Social targets (continued)
Target Subtarget Planned measures 20121 Increase sustainability awareness within the Group Increase sustainability awareness Include article on sustainability in among employees the employee magazine
Publish sustainability articles on the intranet
Anchor sustainability more firmly in Hold lectures at 2 power plant the Group groups Inform all new employees about sustainability at VERBUND
Provide sustainability information Prepare sustainability information for internal special target groups for safety experts
Operationalisation of VERBUND’s Code of Conduct Implement internal compliance Conduct training sessions with a system focus on financial market compliance, compliance team meetings, provide reports to members of the Group’s Boards, organise a compliance event
E-learning tool for teaching Establish basic concept, scope and compliance principles content, implement in intranet
Promote sustainability within the supply chain Sustainability analysis of supply Conduct sustainability screening chain for 11 largest suppliers (65% of supply volume) by 2013
Further consideration of ecological Evaluate and define indicators for and social criteria in purchasing selected product groups Optimisation of a Group-wide coordinated stakeholder dialogue Regular dialogue with relevant Development of new formats in stakeholder groups dialogue with stakeholders
Systematise information for rating queries
Further development of electronic Establish content principles for data management for VERBUND Group memberships, revise memberships guidelines for memberships
1 Planned measures will be implemented according to current conditions.
VERBUND SUSTAINABILITY REPORT Social targets (continued) 77
Target for 2012 Achieved target 2012 Status Planned measures 20131 Target for 2013 Place article on Target achieved: Green IT, Completed sustainability in 2 issues of EDUARD “Kontakt” magazine 3 sustainability articles in Target achieved: 3x Completed the TopNews section "TopNews" on waste, ASRA, Nespresso and stakeholder simulation Lectures on sustainability Target partially achieved Completed Hold lecture in a power plant group All hydropower plant groups held at 2 power plant groups personally informed All new employees have Target achieved Completed been informed about sustainability at VERBUND Instructions on work- Target achieved Completed Hold a lecture at VERBUND Employees of VERBUND related safety include a Innkraftwerke GmbH Innkraftwerke GmbH have been section on sustainability informed 10 compliance training Target achieved To be Conduct training sessions with a 10 compliance training sessions sessions held, 2 compliance continued focus on corruption prevention, hold held, 2 compliance team meetings team meetings held, compliance team meetings, provide held, 2 reports submitted to the 2 reports submitted to the reports to members of the Executive Executive Board and Supervisory Executive Board and Board and the Supervisory Board Board. Supervisory Board, 1 compliance event held E-learning program Target achieved To be Revise "Anti-corruption" course, "Anti-corruption" course has been available on the intranet continued require 100% of employees affected updated, group of persons to complete the courses required to attend has been specified and notified, 50% have completed the course Sustainability analysis of Target achieved To be Expand registration of supplier data Data for the 500 most important principal suppliers in continued with IT tool, incl. sustainability suppliers has been electronically progress aspects, to include all suppliers registered, including core sustainability indicators Indicators for additional Target achieved To be Evaluate and define indicators for 3 Indicators for 3 additional product product groups available continued additional product groups groups available "Energy breakfast" and Target achieved To be Conduct an additional simulation, 3 "Energy breakfasts" and 1 stakeholder simulation have continued continue "Energy breakfast" series stakeholder simulation have been been conducted conducted Database for rating queries Target achieved To be Continuously update database Database is current prepared continued New Conduct quantitative and Results of first survey available, and qualitative survey of all relevant initial measures developed based stakeholder groups upon these results Updated guideline in force Principles are To be Training sessions Training sessions have been incorporated, updated continued conducted for employees affected guideline is in force
78
Information about the report
The VERBUND Sustainability Report provides an overview of the impact our activities have on the economy, the environment and on society. What forms the basis of these activities are the VERBUND principles in the Code of Conduct and in the sustainability strategy. The report covers the activities of all the companies included in the consolidated Group financial statements. Important events at non- consolidated companies are also presented in order to provide a complete picture of the Group. This primarily applies to the equity interests in Turkey and Italy as well as our 2 subsidiaries in France. The reporting period is the last completed calendar year. We have also reported on special events at VERBUND that are of particular public interest and that occurred after this period in order to guarantee that all information is up-to-date.
GRI standard The report has been prepared in accordance with the guidelines of the Global Reporting Initiative (GRI) for the preparation of sustainability reports at the A+ application level. The G3.0 Guidelines were used for this report. The Electric Utilities Sector Supplement was also largely taken into account. Power plants where we have purchase rights are taken into account in the report with their generation and
CO2 data, but not with their other GRI figures. We also followed the GRI guidelines when selecting the topics: the multi-level process begins with the collection of content by the sustainability working group. This is supplemented by topics from the dialogue with stakeholders, the analysis of international trends and media reports. The Sustainability Board evaluates the content according to relevance, topicality and presence in public debate, and recommends to the Executive Board the topics that would serve to best represent VERBUND’s sustainability performance during the year under review.
Additional documents This report is based in part on the content of the Sustainability Reports for 2002 to 2010. In order to improve readability, the current projects and events are presented very briefly, and references to other sources are provided for details and background information. Our website www.verbund.com contains more extensive information on general topics related to sustainability and business performance, environmental and research data, project descriptions and background information. Information on the underlying circumstances relevant to our business segments – energy and market trends, raw material prices, regulatory framework – can be found in the current VERBUND Annual Report. The tables may contain rounding differences resulting from adding rounded amounts and calculating percentages.
VERBUND SUSTAINABILITY REPORT Ernst & Young Independent Assurance Report 79
Ernst & Young Independent Assurance Report Limited assurance over disclosures and data in the Sustainability Report 2012 of VERBUND AG.
Attention: This letter has been translated from German to English for referencing purposes only. Please refer to the officially legally binding version as written and signed in German. Only the German version is the legally binding version.
Engagement We were requested to perform a limited assurance engagement related to disclosures and data in the Sustainability Report 2012 (hereafter “Report”) of VERBUND AG. We performed an Application Level Check according to GRI (“GRI Third Party Application Level Check”), to confirm the declared Application Level in the report of VERBUND AG. Our procedures have been designed to obtain a limited level of assurance on which to base our conclusions. The extent of evidence gathering procedures performed is less than for that of a reasonable assurance engagement (such as a financial audit) and therefore a lower level of assurance is provided. The “General Conditions of Contract for the Public Accounting Professions”1, are binding for this engagement. According to that, our liability is limited and an accountant is only liable for violating intentionally or by gross negligence the contractual duties and obligations entered into. In cases of gross negligence the maximum liability towards VERBUND AG and any third party together is EUR 726,730 in the aggregate.
Limitations to our Review • We did not test data derived from external surveys, we only verified that relevant disclosures and data are correctly quoted in the Report. • We did not perform any assurance procedures on data, which were subject of the annual financial audit. We merely checked that data was presented in accordance with the GRI Guidelines. • The scope of our review procedures at operational level was limited to a sample of one site visit. • The scope of our review corresponded to the reporting limits of VERBUND AG and therefore covers the activities of all companies that are fully consolidated in the consolidated balance sheet. • Limited assurance over prospective information was not subject to our engagement.
Criteria The information included in the Report was based on the criteria applicable in the year 2012 (“The Criteria”), consisting of: • External guidelines consisting of G3.0 elaborated by the Global Reporting Initiative (GRI)2, application level A+
We assessed the information in the Report against these criteria. We believe that these criteria are suitable for our assurance engagement.
1 Version of February 21th 2011 (AAB 2011) issued by the Chamber of Public Accountants and Tax Advisors, section 8 http://www.kwt.or.at/de/PortalData/2/Resources/downloads/downloadcenter/AAB_2011_englische_Fassung.pdf // 2 http://www.globalreporting.org/ReportingFramework/G3Online/ 80
Management responsibilities VERBUND AG’s management is responsible for the preparation of the Report and the information therein in accordance with the criteria mentioned above. This responsibility includes designing, implementing and maintaining internal control. Those are relevant to the preparation of the Report to eliminate material misstatements.
Our responsibilities It is our responsibility to express a conclusion on the information included in the Report on the basis of the limited assurance engagement.
Our assurance engagement has been planned and performed in accordance with the International Federation of Accountants’ ISAE30001 and the Code of Ethics for Professional Accountants, issued by the International Federation of Accountants (IFAC), which includes requirements in relation to our independence.
What we did to form our conclusion We have performed all the procedures deemed necessary to obtain the evidence that is sufficient and appropriate to provide a basis for our conclusions. Our main procedures were:
• Obtaining insight into the industry and the characteristics of the organisation; • Interviewed a selection of Group and functional senior managers and executives to understand key expectations and identify systems, processes and internal controls processes to support them; • Reviewed Group level, Board and Executive documents to assess awareness and priority and to understand how progress is tracked; • Examined risk management and governance processes related to sustainability and critical evaluation of the representation in the report; • Performing analytical procedures at Group level; • Performance of site visits in selected Inn power plants to review progress and obtain evidence of performance. In addition we reviewed data samples at site level for completeness, reliability, accuracy and timeliness; • Reviewed data and processes on a sample basis to test whether they had been collected, consolidated and reported appropriately at Group level. This included reviewing data samples to test whether the data had been reported in an accurate, reliable and complete manner; • Reviewed the coverage of material issues against the key issues raised in the stakeholder dialogues, areas of performance covered in external media reports and the environmental and social reports of peers; • Challenged sample statements and claims in the Report against our worksteps and the GRI principles; • Reviewed whether the GRI G3 Guidelines were applied to a level consistent with the A+ application level.
1 International Federation of Accountants’ International Standard for Assurance Engagements Other than Audits or reviews of Historical Financial Information (ISAE3000). VERBUND SUSTAINABILITY REPORT Ernst & Young Independent Assurance Report 81
Our conclusion Based on the scope of our review nothing has come to our attention that causes us to believe that the disclosures and data in the Report were not prepared, in accordance with the criteria identified above. Nothing has come to our attention that causes us to believe that VERBUND AG’s sustainability reporting does not meet the GRI A+ application level.
Vienna, 14 March 2013 ERNST & YOUNG Wirtschaftsprüfungsgesellschaft m.b.H.
Brigitte Frey ppa. Christine Jasch
Storage power plants Malta upper station ** Malta main station ** Reisseck II Kaprun main station ** Kaprun upper station ** Rosshag * Reisseck-Kreuzeck **
on the Inn Run-of-river power plants Nussdorf on the Danube Run-of-river power plants on the Salzach Run-of-river power plants Nussdorf * on the Möll Run-of-river power plants on the Enns Run-of-river power plants on the Steyr Run-of-river power plants Malta lower station ** Grossraming * on the Mur Run-of-river power plants Kalsdor G össendorf f on the Drau Run-of-river power plants Thermal power plants Wind farms Neudorf-Werndorf ** Mellach 2 Mellach ** Petronell- H P Ho B etronell- ruck/Leitha o ll ll ern e rn II C C arnuntu arnuntum II m
Certified VERBUND power plants
Czech Republic
Danube
Germany Danube Slovakia
Hungary
Switzerland
Italy
Slovenia
Croatia
Storage power plant Thermal power plant
Storage power plant Thermal power plant planned/ under construction under construction
Run-of-river power plant Wind farm > 5 MW Wind farm under construction
Run-of-river power plant * Plant certified with under construction environmental management system to ISO 14001 Power plant joint venture with ** Plant certified with VERBUND Hydro Power AG environmental management VERBUND participation system to EMAS and ISO 14001 as at 31/1/2013
CZ Certified grid facilities Slavetice Sokolnice
Pleinting BISAM- Pirach BERG Altheim SK Simbach DÜRNROHR ST. PETER SARAS- DORF Wagenham WIEN- Ranshofen Ybbsfeld Györ Hausruck SÜDOST Györ Salzburg ERNSTHOFEN Neusiedl D Salzach Memmingen Leupolz Stromnetz Stromnetz Steiermark Weißenbach Steiermark GmbH Ternitz Oberösterreich GmbH Netz GmbH H TAUERN Zell am Hessenberg Ziller Pongau Bürs Südburgenland Oststeiermark WESTTIROL Stromnetz Steiermark Malta GmbH KAINACHTAL CH OBER- LIENZ SIELACH Pradella I
Maribor Soverzene Podlog SLO
Installations in the high and ultra-high voltage grid of Austrian Power Grid AG Integrated management system in 380 kV line accordance with EMAS, ISO 9001, 380 kV Salzburg line ISO 14001, ISO 27001 and OHSAS 18001
220 kV line West region
110-kV-Leitung North region
APG substation East region
APG grid hub South region
EDITORIAL DETAILS
Published by: VERBUND AG Am Hof 6a, 1010 Vienna, Austria
VERBUND’s sustainability officer: Renate Pretscher Editor: Karin Kichler
This Sustainability Report was produced in-house with FIRE.sys. Chart and table concept: Roman Griesfelder, aspektum gmbh Creative concept and design: Brainds Design and consulting: Grayling Translation and linguistic consulting: Austria Sprachendienst International Printing: Lindenau Productions
Contact: VERBUND AG Am Hof 6a, 1010 Vienna, Austria Tel.: +43(0)50313-0 Fax: +43(0)50313-54191 E-Mail: [email protected] Homepage: www.verbund.com
Group communication: Beate McGinn Tel.: +43(0)50313-53702 E-Mail: [email protected]
UW 790 – printed in accordance with the Printed Materials Guideline of the Austrian Environmental Label