FORTUM a Leading Power and Heat Company in the Nordic Area
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FORTUM Experiences in district heating and CHP business operations EPHA 15: District Heating For the Cleaner Future 12th of May 2010 Disclaimer This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any Fortum shares. Past performance is no guide to future performance, and persons needing advice should consult an independent financial adviser. 2 Content Fortum today European power markets Russia Baltic Rim Heat service at competitive conditions What makes investors to invest: ... legal framework, credibility of the local policy, price regulations, subsidies, EU targets, market conditions, ...? Our geographical presence today Total Nr 1 Heat Nordic countries Electricity 77 TWh/a Nr 1 Distribution Generation 48.1 TWh Heat 53 TWh/a Electricity sales 54.9 TWh Nr 2 Electricity Heat sales 18.0 TWh sales Distribution cust. 1.6 million Nr 3 Power Electricity cust. 1.2 million generation Russia TGC-1 (~25%) Power generation ~6 TWh Heat sales ~8 TWh Poland Heat sales 3.7 TWh OAO Fortum Electricity sales 20 GWh Power generation 16.0 TWh Heat sales 25.6 TWh Baltic countries Heat sales 1.3 TWh Electricity sales 0.1 TWh Distribution cust. 24,100 4 A power and heat company • Listed at the Helsinki Stock Exchange 1998 • Approximately 90,000 shareholders • Among the most traded shares in Helsinki stock exchange • Market cap ~17 billion euros Households 7.1% Financial and insurance institutions 2.7% Other Finnish investors 8.9% Finnish State 50.8% Foreign investors 30.5% 28 February 2010 5 Climate change is the most imminent challenge of our planet We, at Fortum, don't want to be part of the problem, but part of the solution 6 7 Fortum's carbon exposure amongthelowestinEurope carbon exposure Fortum's 1000 1200 g CO 200 400 600 800 0 2 /kWh electricity, 2008 electricity, /kWh Changement climatique Électricité et PWC& Enerpresse , 2009 Source: DEI Drax RWE CEZ Nuon EDP Scottish&Southern Vattenfall Enel Union Fenosa E.ON Dong Energy GDF Suez Europe Iberdrola PVO British Energy Average 350g/kWh EDF Verbund 41 Fortum Statkraft Fortum’s investment programme – Nordic region, Poland and Baltic countries Project Electricity, MW Heat, MW Commissioned Olkiluoto 3, Finland 400 2012 Swedish nuclear upgrades 260 by 2013 - Forsmark 3 upgrade (to be decided) 30 post 2013 Refurbishing of hydro power 20-30 annually Częstochowa, Poland 65 120 Q3/2010 (coal/biomass CHP) Pärnu, Estonia 20 45 Q4/2010 (coal/biomass CHP) Brista, Sweden (to be decided) 20 60 2013? (waste CHP) Klaipeda, Lithuania 20 50 2013 (biofuel/waste CHP) Total by ~2013 >900 ~300 Electricity capacity over 900 MW ~95% CO2-free 8 Fortum today European power markets Russia Baltic Rim Heat service at competitive conditions Key EU objectives by 2020 • Minimum reduction of EU • Implementation of CO2 emissions 20% (2020) internal energy markets • Renewables 20% (2020) • Energy efficiency +20% • Development of CO2 (2020) Competitiveness Sustainability capture and storage • Increased resources for technology development Security of supply • Development of cross-border transmission • Increase in own production • Enhancement of external energy relations 10 New capacity, except nuclear, will require over 60 EUR/MWh power price EUR/MWh EUR/MWh 110 110 CO2 cost 100 100 Other costs ( variation) 90 90 80 80 70 70 60 60 Futures 50 28 April 2010 50 40 40 30 30 20 20 10 10 0 0 1995 -97 -99 -01 -03 -05 -07 -09 -11 -13 -15 Coal Gas Nuclear Hydro Wind Clean coal Source: Nord Pool Estimated lifetime average cost in nominal 2014 terms. Large variations in cost of new hydro and wind due to location and conditions. 11 Nordic and Continental markets are integrating – interconnection capacity could double by 2020 1400 MW link to the UK could connect offshore New interconnections could wind, too; North Seas Countries’ Offshore Grid double the capacity to over Initiative launched for supergrid development 8000 MW by 2020 Additional 700 MW cable New internal Nordic grid NO-NL, as well 1400 MW investments provide for NO-DE links studied increased available capacity for export to the Continent and Baltics EU financial support for 700 MW DK-NL link to connect EU’s European Energy offshore wind, too Programme for Recovery to cofinance to Estlink 2 and Jylland – DE capacity to be NordBalt increased by 500 MW in 2012 and by further 500 MW by 2018 LitPol Link of 1000 MW to connect the Baltic In the EU's Second Strategic Energy market to Poland by EU support to connect Kriegers Review the Commission focuses 2015/18. It would open Flak offshore wind area to strongly on interconnecting the Baltic a new transmission DK&DE; new 400 kV AC cable states and Poland to form an electricity route from the Nordic SE-DK by 2017 market around the Baltic Sea market to the Continent 12 Fortum today European power markets Russia Baltic Rim Heat service at competitive conditions Russian power industry reform has progressed well Key steps in the reform Time "Power industry law" approved 2003 Establishment of Russian power exchange (ATS) 2001 Launch of the free-trade sector of the wholesale market in European & Urals 2003 in Siberia 2005 Launch of balancing power segment 2006 Launch of new wholesale market model 2006 Restructuring of regional "energos" (P&H companies) complete Formation of new companies complete Capacity market – transitional model 2008 Long term capacity market model 2010 Competitive market of ancillary services 2010 Financial derivatives market 2010 Full liberalisation of the wholesale market 2011 onwards 14 Power market liberalisation – wholesale power market will be 100% liberalised in 8 months Share of liberalised trade for existing capacity • Further liberalisation of energy 100 % 90 % 100100 %% market increased to 60% in 80 % January 2010 80 % 70 % 60 % 60 % • 80% in 1 July 2010 50 % 50 % • 100% in 1 January 2011 40 % 30 % 30 % 25 % • The sales to households will 20 % 15 % 10 % remain regulated still after 10 % 5 % 2011 0 % Jan July Jan July Jan July Jan July Jan 2007 2007 2008 2008 2009 2009 2010 2010 2011 15 .... major foreign investments in Russia as a result Fortum in Russia OAO Fortum (former TGC-10) • OAO Fortum operates in the heart of Russia’s oil and gas producing region TGC-1 • OAO Fortum’s power generation ~16 TWh/a and heat generation ~26 TWh/a OAOTGC-10 Fortum St. Petersburg Nyagan TGC-1 Khanty-Mansisk Surgut Tobolsk Moscow • Slightly over 25% of territorial generating company TGC-1 Tyumen operating in north-west Russia Chelyabinsk • ~6,250 MW electricity production capacity (appr. 50% hydro), ~24 TWh/a electricity, ~30 TWh/a heat 16 Over 80% increase in power generation capacity by 2015 through the investment programme Power generation capacity (MW) Plant Fuel type Existing Planned Total MW Tyumen CHP-2 Gas 755 450 (Condensing) 1,205 6,000 Tyumen CHP-1, Q3/2010 Gas 472 190 (CHP/Condensing) 662 5,000 Tobolsk CHP, Q3/2010 Gas 452 210 (Condensing) 662 4,000 +82% Chelyabinsk CHP-3, Q4/2010 Gas 360 220 (CHP/Condensing) 580 +2,270 MW Chelyabinsk CHP-2 Coal, gas 320 320 3,000 Argayash CHP Coal, gas 195 195 2,000 5,055 Chelyabinsk CHP-1 Coal, gas 149 149 2,785 1,000 Chelyabinsk GRES Gas 82 82 0 Nyagan GRES Gas 3x400 (Condensing) 1,200 2007 2015 Boilers - Total 2,785 2,270 5,055 17 Fortum today European power markets Russia Baltic Rim Heat service at competitive conditions Fortum's heat business in the Baltic countries Outsourced energy service (BtoB) and district heating • Customers • Production capacity – industry – 144 heating plants – services and commerce – Fuels: natural gas, oil, biomass, – public buildings peat – real estates – CHP power plant of 25 MWel/ 50 MWth in operation in Tartu, • Energy sales in Estonia Estonia, by peat and bio fuels – heat 1.1 TWh/a – CHP power plant of 4 MWel/ 4,8 – electricity 140 GWh/a MWth in operation in Jelgava, Latvia, by natural gas – gas 200 GWh/a – CHP power plant under construction in Pärnu, Estonia, 23 • Energy sales in Lithuania MWel/45 MWth by bio fuels and – heat 64 GWh/a peat – fuels 50 GWh/a – CHP power plant under construction in Klaipeda, • Energy sales in Latvia Lithuania, 20 MWel/50 MWth by – heat 210 GWh/a municipal and industrial wastes – electricity 32 GWh/a – CHP development in Jelgava, Latvia, 23 MWel/ 45 MWth by bio fuels and peat – CHP development ... • Personnel: 400 19 Fortum's heat business in Poland District heat to 30 cities and towns • Heat sales volume 3.6 TWh • Heat and electricity production in • 100 heating plants • One gas engine CHP power plant • Fuels: coal, natural gas, oil • Personnel: 800 • Past acquisitions: Płock • DZT, a privately owned DH company in 2004 • Czestochowa, a state owned DH company in 2005 • Wroclaw, a stock listed DH company in 2006 • Plock, a municipal DH company in 2006 • CHP plant of 65 MWel/130 MWth under construction in Czestochowa Fortum DZT and Fortum Czestochowa Fortum Wrocław Fortum Płock 20 Fortum's heat business in Finland • Energy sales – heat 10.7 TWh – electricity 3.2 TWh – industrial cooling 0.05 TWh – gas 0.9 TWh • Personnel around 400 • Production capacity – 199 heating plants – 9 CHP plants 21 Fortum's heat business in Sweden District heat CHP Delsbo Näsviken Sörforsa Industrial co-op. 80 percent of business in the great Stockholm area City gas District cooling Hudiksvall Idenor Iggesund Valsta Hofors Bristaverket Torsby Avesta Vilunda Arvika Kopparberg/Bångbro Hällefors/Grythyttan Rotebro Karlskoga Grums/Gruvön Stockholm Järfälla Örebro Akalla Gullspång Värtaverket Laxå Hässelbyverket Sundbyberg Säffle/NP Nynäshamn Solna Kristinehamn Lidingö Hammarbyverket