heli antila - fortum oyj

Co-Creating Inclusive Business Ecosystems Tue, 17th June Dr Heli Antila, Chief Technology Officer

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•  Fortum today •  Energy markets in transition •  Fortum R&D examples

Our geographical presence today

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TGC-1 (~25%) Power generation ~7 TWh Heat sales ~8 TWh

OAO Fortum Power generation 20.0 TWh Heat sales 24.2 TWh

Russia

Poland Power generation 0.6 TWh Heat sales 4.0 TWh

Baltic countries Power generation 0.5 TWh Heat sales 1.1 TWh

Nordic countries Power generation 46.5 TWh Heat sales 13.9 TWh Distribution customers 1.6 million Electricity customers 1.2 million

Nr 3 Power generation

Electricity sales

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Distribution

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Key figures 2013 Sales EUR 6.1 bn Operating profit EUR 1.7 bn Balance sheet EUR 24 bn Personnel 9,900

Great Britain Power generation 1.0 TWh Heat sales 1.8 TWh

Fortum's carbon exposure among the lowest in Europe

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Note: Only European generation except “Fortum total“ which includes Russia.

Source: PWC & Enerpresse, November 2013 Climate Change and Electricity, Fortum

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g CO2/kWh electricity, 2012

2012 68% of Fortum's total power generation CO2-free 93% of Fortum’s power generation in the EU CO2-free Close to 100% of the ongoing investment programme in the EU CO2-free

Average 350 g/kWh

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Fortum’s investment programme – Nordic region and Baltic countries

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Already commissioned in 2013

Blaiken, Sweden, wind power 30 Q1 2013

Klaipeda, Lithuania, waste CHP 20 60 Q2 2013

Järvenpää, Finland, biomass CHP 23 63 Q2 2013

Jelgava, Latvia, biomass CHP 23 45 Q2 2013

Brista, Sweden, waste CHP 20 57 Q4 2013

Additional electricity capacity around 830 MW, 100% CO2-free

Project Electricity, MW Heat, MW Commissioned

Olkiluoto 3, Finland 400

Swedish nuclear upgrades 290

Refurbishing of hydro power 10 Annually

Värtan, Sweden, biomass CHP 130 280 Q2 2016

Total ~ 830 ~ 280

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•  Fortum today •  Energy markets in transition •  Fortum R&D examples

Transition towards Solar Economy

Solar Economy Solar based production with

high overall system efficiency

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Finite fuel resources Large CO2 emissions Infinite fuel resources Emissions free production

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Geothermal

Hydro

Wind

Sun

Ocean

Bio

Coal Gas Oil Nuclear

today

Nuclear tomorrow

CHP

CCS

Traditional energy production

Exhaustible fuels that burden the environment

Advanced energy production Energy efficient and/or

low-emission production

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

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Forecasted PV system price development going forward

Source: EPIA: Connecting the Sun, 2012 September, Nominal price development of PV system prices / Right hand figure continues EPIA 2022 scenario with 3% nominal system price degradation

€/W nominal

Utility scale system price 2012 on efficient PV markets

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PV has already reached retail grid parity except for Nordics •  Retail grid parity means that self-generated PV electricity cost is lower for the end customer than

variable part of the electricity retail price*. This is the case already in many countries, Fortum home markets (Nordics, Poland, Russia) are exceptions because of the low retail price.

*) Retail price here = energy + grid + taxes, fixed costs are excluded

PV Investment cost 2013 rooftop averages: Germany and India 1.5, Italy and Turkey 2.1, Nordic and Australia 2.4 €/Wp + VAT VAT: Nordic 25%, Italy 22%, Germany 19%, Turkey 18%, India 13.5%, California 10%; O&M cost: 10 €/kWp Real interest rates: Nordic, Germany and Australia 3%, Italy 5%, Turkey 5.5%, India 7.5%; System lifetime 25 years Yearly electricity production: Nordic 810, Germany 900, Italy 1350, Turkey 1440, India 1620, Australia 1800 Wh/Wp

Nordics Germany Turkey Italy India Australia (Queensland)

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Taxes Grid Energy PV LCOE

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•  Fortum today •  Energy markets in transition •  Fortum R&D examples

Solar energy

First steps in India - Amrit 5,4 MW solar power plant

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•  Operation begun in March 2012 •  Fortum acquired the plant in June 2013 •  Production 1760 kWh/kW/a

Wave power

Wave power is progressing to demonstration project phase in Sweden •  Full-scale demonstration project launched in west

coast of Sweden in co-operation and using technology by Seabased

•  Once completed, the wave power site would be the world’s largest wave power plant with a power generation capacity of 10 MW with 420 units.

–  Installation of first phase 42 buoys (1 MW) has started and power generation is planned to begin early 2014

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AW-Energy Oy has great potential to become industry leader in near-shore technology Technology •  AWE’s 3 x 100 kW WaveRoller demonstration

plant launched in Portugal in August, promising results so far.

•  AWE has commenced engineering and industrialization work for 500 kW WaveRoller device.

Future projects •  Fortum has formed a partnership with French

naval company DCNS to develop and test wave power in France – AWE’s technology is one technology option.

•  Fortum is one of the AW-Energy shareholders.

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WaveRoller in operation

Wello Penguin demonstration

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The technology is developed by the Finnish company Wello. The vessels movement in the waves makes the concentric weight and the generator rotor rotate.

Fortum have made an agreement with Wave Hub to lease a part of the test bed off Cornwall. The plan is to start the demonstration with one Penguin unit with the capacity of 1MW during 2015. Depending on the results the installation can be scaled up to 10 MW.

Combined heat and power +

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Sustainable district solution in Espoo

District heating network

Heat pump facility

District cooling network

Server centre

CHP plant

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 utilised

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Solving traditional biomass dilemma on India

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•  Benefits if traditional biomass in households would be replaced with solar ovens and solar heating systems : –  No indoor air pollution –  Safety increase –  Biomass could be sold to CHP-plants , whcih

would bring business for the low-income people both in biomass collection and in biomass logistics

CO2 emissions in India could be reduced 45 % by replacing coal with

biomass based CHP production.

One CHP-plant could bring employment to thousands of the

poorest

1433TWh

428 TWh Traditional biomass for cooking and heating Other energy consumption

RESIDENTIAL ENERGY CONSUMPTION IN INDIA

Source: ITP 2012, Year 2009 data

Power 406 TWh

Heat 812 TWh

Combined heat and power plant (CHP)

Zero CO2 emissions

Fuel 1433 TWh

BIOMASS, CHP

Electricity solutions

Environmentally-benign R&D electricity solutions •  Advancing fast adoption of electric vehicles

–  Projects on continuous basis in Finland, Sweden and Estonia

–  Development of fast and slow charging business models

•  Decentralised energy production and smart grids enable energy efficiency and demand management –  Stockholm Royal Seaport (SRS) – a sustainable

urban district with world class aspirations –  Smart home products in Sweden and Finland

•  Smart home product “Fortum Fiksu” launched at first in September 2012

–  Solar package launched 2012 in Sweden and Finland for residential customers

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