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Renewables driving energy system change
Per Langer, Executive Vice President , Hydro Power & Technology
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Our current geographical presence
Nordic countries
Power generation* 49.2 TWh
Heat sales* 10.9 TWh
Electricity customers 1.3 million
Power generation
Electricity sales
Heat
PolandPower generation 0.7 TWhHeat sales 3.4 TWh
Baltic countriesPower generation 0.7 TWhHeat sales 1.2 TWh
IndiaPower generation 9 GWh
Key figures 2014Sales EUR 4.1 bnComparable operating profit EUR 1.1 bnBalance sheet EUR 21 bn Personnel 8,200
* In addition, Fortum has a 29.5% share in TGC-1* Including Fortum’s associated company Fortum Värme; power generation 1.2 TWh and heat sales 7.6 TWh.
OAO Fortum Power generation 23.3 TWhHeat sales 26.0 TWh
Russia*
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DEI
RW
E
Dra
x
SSE
CEZ
E.O
N
Vatte
nfal
l
EDP
Enel
Edip
ower
EnBW
Gas
Nat
ural
Fen
osa
GD
F SU
EZ
Don
g En
ergy
Fortu
m to
tal
Iber
drol
a
PVO
EDF
Verb
und
Fortu
m E
U
Stat
kraf
t0
200
400
600
800
1,000
1,200
64
g CO2/kWh electricity, 2013
201464% of Fortum's total power generation CO2-free94% of Fortum’s power generation in the EU CO2-free
Close to 100% of the ongoing investment programme in the EU CO2-free
Average 328 g/kWh
200
Fortum's carbon exposure among the lowest in Europe
Note: : Fortum’s specific emissions of the power generation in 2014 in the EU were 39 g/kWh and in total 177 g/kWh.Only European generation except “Fortum total“ which includes Russia.
Source: PWC & Enerpresse, December 2014Climate Change and Electricity, Fortum
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Solar EconomySolar based production with high overall system efficiency
Geothermal
Hydro
Wind
Sun
Ocean
Traditionalenergy production Exhaustible fuels that
burden the environment
Coal GasOil
Advancedenergy productionEnergy efficient and/or
low-emission production
Nuclear today
Nucleartomorrow
CHP
CCS
Bio
Copyright © Fortum Corporation
All rights reserved by Fortum Corporation and shall be deemed the sole property of Fortum Corporation and nothing in this slide or otherwise shall be construed as granting or conferring any rights, in particular any intellectual property rights
Energy is an enabler
Storage
Active ConsumerDemand
Response
Low
Effi
cien
cy
Hig
h E
ffici
ency
High Emissions Emission free
Interconnectors
Smart applications
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Declining technology costs and more efficient technologies
2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q140.50
0.70
0.90
1.10
1.30
1.50
1.70
Solar module average selling price$/W
The curve represents an average of the selling prices reported by the following companies: Canadian Solar, Yingli Solar, Hanwha Solar, China Sunergy, Jinko Solar, Renesola, Trina Solar
-60% in selling prices in 11 quarters
H2 2007
H1 2008
H2 2008
H1 2009
H2 2009
H1 2010
H2 2010
H1 2011
H2 2011
H1 2012
H2 2012
H1 2013
0.70
0.80
0.90
1.00
1.10
1.20
1.30
Cost trend of onshore wind turbine prices, by contract date
€/W
Data exclude Asian turbines.
Battery storage costs are also decreasing
Value creation in electricity value chain will change dramatically
Future
Now
Energy
Flexibility/Capacity
Environmental/CO2-free
Consumer market
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7
Nordic (hourly Nord Pool spot system price)
German (hourly EPEX spot price)
Average power prices in Nordics and Germanywere very close in December 2014 …
Source: Nord Pool Spot, Bloomberg Finance LP
Nordic (monthly Nord Pool spot system price)
German (monthly EPEX spot price)
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… but hourly prices were very different !Price pattern is getting more important than average price
Source: Nord Pool Spot, Bloomberg Finance LP
Nordic (hourly Nord Pool spot system price)
German (hourly EPEX spot price) December 2014
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Reality in Germany – and it is not getting easierMarch 2014
Source: Electricity generation graph: Bruno Burger, Fraunhofer ISE, price curve: Bloomberg Finance LP, Wind capacity: EWEA
-60
-40
-20
0
20
40
60
80Hourly power market price in Germany in March 2014€/MWh
Electricity generation in Germany in March 2014
WindSolar Conventional
MW
Installed capacity31 Dec ‘14
AverageGenerationin March ‘14
Solar 38 500 4 450
Wind 39 200 6 170
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To keep the power system supply-demand balance every moment, several markets are needed
Financial Intra Day Day Ahead
Managed by Nasdaq
CommoditiesManaged by
Nord Pool Spot
ELBASElspot
Managed byNord Pool Spot
Managed by TSOs
Balancingmarket
Balancesettlement,Imbalance
Power
Managedby TSOs
Forwards
36...12 h 33...1 hEnergy 12h ...0.5h
10 years...1d
Markets for energy Markets for flexibility
Capacity 10a...1d
More renewables
First steps in India – 15 MW solar power
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• December 2014, 10 MW solar PV plant in Madhya Pradesh commissioned– 70 acres – the first project to be commissioned under the Jawaharlal Nehru National Solar Mission
(JNNSM) Phase II Batch I.
• June 2013, Fortum acquired a 5 MW solar power plant in the state of Rajasthan in north-western India.
13
Renewable CHP and DH investments of Fortum
Stockholm
JelgavaKlaipeda
Joensuu
JärvenpääEspoo
Częstochowa
JärvenpääBio-CHP
Bristaco-owned
waste-CHP
Värtanco-owned bio-CHP (ongoing)
JelgavaBio-CHP
KlaipedaWaste-CHP
CzestochowaCoal/bio-CHP
Espoosewage water
heat pump
Espooheat recovery from hospital
(ongoing)
Joensuu Pyrolysis oil production in
CHP plant
Naantalico-owned bio-CHP (ongoing)
Espoogeothermal
heat (ongoing)
ZabrzeCoal/waste-CHP
(ongoing)
14
Bio-oil CHP+ concept: Renewable Energy and Flexibility
• Globally first CHP-integrated pyrolysis plant in commercial size was inaugurated November 29th, 2013 in Joensuu
• Plant produces Fortum Otso® bio-oil, which can now replace heavy fuel oil and in the future target is to produce higher value traffic biofuels and green chemicals
• Integrated bio-oil production increases flexibility and operation hours of CHP-plant
• In addition several other resource efficient benefits:– Synergies in operation and maintenance as well as in raw material and fuel
supply– Charcoal and the non-condensed gases that are created as a result of bio-oil
production can be used as fuel for the plant, so all raw materials can be utilized
• Fortum is actively carrying out R&D for new sustainable CHP+ concepts to maintain and increase CHP and district heating flexibility and competitiveness
15
Wave power – three different technologies • Wave power has potential to cover 10 % of global power
consumption
• Wave power is now in demonstration phase
– Full-scale demonstration project in Sweden in co-operation and using technology by Seabased , power generation to grid is estimated to begin during 2015
– The plan is to start the demonstration with one Penguin unit with the capacity of 1MW during 2016 in Great Britain
– AW-Energy has been operating its pilot wave energy power plant in Portugal since 2012 and plans to deploy a full scale commercial power unit utilizing WaveRoller® near shore technology during 2016
Wello* Penguin
Seabased
AW Energy* Waveroller®
*Fortum is shareholder in the company
More flexibility
New solutions for electricity customers
• Electrical heating of 1000 customers to develop virtual power plant
• Captured value of all flexibility products• Dynamic real-time household DSM• Interesting and motivating digital interface for the customer
and community aspect
17
Fortum Fiksu: online optimisation of heating systems Customer solutions to become prosumers
• Turnkey solar kits to private customers
• Fortum buys excess power from prosumers with hourly market price of electricity
• Integrated solar power and battery storage pilot
Demand side management pilot “Aurinkolaakso:”
0,00
10,00
20,00
30,00
40,00
50,00
60,00
00 - 01
01 - 02
02 - 03
03 - 04
04 - 05
05 - 06
06 - 07
07 - 08
08 - 0 9
09 - 1 0
10 - 1 1
11 - 1 2
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13 - 1 4
14 - 1 5
15 - 1 6
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18 - 1 9
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22 - 23
23 - 00
+=
New solutions in district heating
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• The aim is to increase the flexibility in heat demand to increase combined heat and power plant flexibility and thus reduce consumers’ heating costs
• Fortum is carrying out pilots in commercial building and apartment houses to demonstrate technologies and building energy storage capacities
• Open district Heating allows customers that generate waste heat to sell recovered energy at market price to Fortum
• Waste heat from datacenters in Stockholm equals the heat demand for approx. 55,000 apartments.
Open district heating network
Demand side management
Next generation energy company
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