Fortum in Russia Finnish-Russian Energy Days 2014
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Fortum in Russia Finnish-Russian Energy Days 2014 Esa Hyvärinen Senior Vice President Corporate Relations Fortum Corporation 1 Our geographical presence Power Nordic countries Key figures 2013 generation Power generation* 46.5 TWh Sales EUR 5.3 bn Operating profit EUR 1.5 bn Heat Heat sales* 13.9 TWh Balance sheet EUR 23 bn Distribution customers Personnel 9,200 Distribution in Sweden 0.9 million Electricity Electricity customers 1.2 million Russia sales OAO Fortum Power generation 20.0 TWh Heat sales 24.2 TWh Great Britain (Sold in Oct ‘14) In addition, ~29% share in TGC-1 Power generation 1.0 TWh Heat sales 1.8 TWh Poland Baltic countries India Power generation 0.6 TWh Power generation 0.5 TWh Power generation ~9 GWh Heat sales 4.0 TWh Heat sales 1.1 TWh * incl. Fortum Värme; power generation 1.3 TWh and heat sales 8.2 TWh. 2 Fortum mid-sized European power generation player; globally major producer in heat Power generation Heat production Customers Largest producers in Europe and Russia, 2012 Largest global producers, 2012 Electricity customers in EU, 2012 TWh TWh Millions EDF *) Gazprom Enel E.ON ***) IES EDF Enel Dalkia E.ON RWE **) Inter RAO UES RWE Rosenergoatom Fortum Iberdrola *) Gazprom RusHydro Vattenfall DEI Vattenfall Centrica GDF SUEZ ****) Sibgenco **) CEZ Inter RAO UES EuroSibEnergo RusHydro EDP Quadra NNEGC Energoat. Vattenfall DTEK, Ukraine Iberdrola SSE EuroSibEnergo TGC-2 Lukoil EnBW Fortum GDF SUEZ CEZ Minskenergo KDHC, Korea Tauron EnBW PGE ***) IES Tatenergo Gas Natural Statkraft Dong Energy Fenosa PGE PGNiG Fortum DTEK *****) ELCEN. Dong Energy DEI TGC-14 Hafslund 0 100 200 300 400 500 600 0 20 40 60 80 100120 140 010 20 30 40 * incl. MOEK, ** incl. Bashkirenergo, *** incl. TGC-5, TGC-6, TGC-7, TGC-9, **** incl. TGC-12, TGC-13, ***** figure 2011, Fortum incl. Fortum Värme; power generation (1.2 TWh) and heat production (8 TWh). Source: Company information, Fortum analyses, 2012 figures pro forma, heat production of Beijing DH not available. 3 Appr. 110,000 shareholders • Power and heat company in the Nordic countries, Russia, Poland and the Baltics • Listed at the Helsinki Stock Exchange since 1998 • Among the most traded shares on the NASDAQ OMX Helsinki stock exchange • Market cap ~16 billion euros Households 8.3% Financial and insurance institutions 1.5% Other Finnish investors 7.2% Foreign investors 32.2% Finnish State 50.8% Rest of the world ~7% Rest of Europe: ~13% US ~44% Germany ~5% Luxembourg ~10% Switzerland ~6% 31.10.2014 UK ~19% 4 Russian energy resources and energy markets are one of the biggest in the world – Power market the 5 th largest in the world Oil reserves Natural gas reserves 17 %* 17 billion tons billion Trillion cubic metres cubic Trillion 5%* Coal reserves Power generation 18%* TWh billion tons billion 5%* Electricity generation Based on gross output. *) share of World reserves or power generation Source: BP Statistical Review of World Energy June 2014, figures at end 2013; **) eia 2011 coal reserves for Serbia 5 Fortum has long experience of co-operation with the Soviet Union and Russia Construction of hydro power Construction of Loviisa Construction of North-West CHP plants in Kola area nuclear power plant in St. Petersburg Electricity import to Finland Agreement on Joint Implementation of Kyoto Nuclear fuel import to Finland* Protocol with TGC-1 Automation & information system deliveries to thermal power plants Executing of 2400 MW CSA investments Permanent presence in Moscow & Safety improvements for in OAO Fortum St. Petersburg nuclear power plants (6 units ready out of 8) Co-operation Hydro refurbishments Ownerships Lenenergo shareholding Lenenergo split -TGC-1, Generation -Lenenergo, Distribution (divested in 2007) TGC-10 acquisition, today OAO Fortum *) Including single largest purchase agreement of uranium with TVEL 6 Extensive investment programme in ОАО Fortum nearly finished – 2 units still to be commissioned • Total amount of investments EUR 2.5 billion – Of which approximately EUR 0.3 billion still to be invested as of September 2014 • Increasing capacity by ~ 85% by the end of 2015 OAO Fortum – More than any other Russian generating company St. Petersburg Nyagan Tobolsk • Six units commissioned Moscow Tyumen • Nyagan 3 was commissioned in October 2014 and starts Chelyabinsk commercial operations in January 2015 • Two new units in Chelyabinsk during H1/2015 MW 6,000 Six units commissioned Units 5,000 under construction Mar/Dec 2013, Oct 2014 Feb 2011 Jun 2011 Oct 2011 4,000 +85% 3,000 + ~2,400 2,000 ~5,200 2,785 1,000 Nyagan 1 + 2 + 3 Tyumen Chelyabinsk Tobolsk Chelyabinsk 0 420 + 424 + 422 MW 209 MW 216 MW 213 MW 2 x 248 MW 2010 2015 256 MWth 169 MWth 2 x 175 MWth 7 Heat sector reform an important tool to improve energy efficiency in Russia Basic principles of the proposed Current status and further actions new heat market model •Basic principles were adopted by President •The price-cap is to be set up at the level of Putin in April 2014 the “alternative heat-only boiler” •Heat Roadmap was signed by Prime Minister •The heat tariffs are to be gradually Medvedev in October 2014. The Roadmap transitioned to reach “alternative HOB” level implies price liberalization from 2020/2023 within 5-8 years •The new regulation is to be effective from •Full liberalization within the price cap at the 2016 level of “alternative HOB” of the heat prices http:// publication.pravo.gov.ru/Document/View/0001201410070001?index=0&range takes place after the transitional period Size=1 CHP Plants Condensing (co-generation) plants Boiler house 8 Key takeaways • Power market reform in Russia has been a success – good precedent for the heat sector reform • When it comes to heat sector, it is important to create incentives for efficiency improvements: – In generation and CHP in particular – Investments in heat distribution – Housing sector investments to enable customers to capture benefits from the reform • Heat sector reform should enable increased investments opening business opportunities between Finnish and Russian companies 9 Next generation energy company 10.