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2Fortum Customer Value propositionNDL
Fortum is a $9B Finnish company currently operating in European countries and Russia
FORTUM IS A POWER AND HEAT COMPANY OPERATING OUT OF EUROPE AND RUSSIA
Fortum operations
• Amongst leading power producers in Europe and Russia; scale presence across 9 countries including Nordic region, Russia, Poland, Baltics
• World’s 4th largest heat producer
• Distributes electricity to a strong base of 1.6 million industrial and private consumers
• Deep experience in operating thermal, renewable, hydro and nuclear plants
• Frontrunner in environmental sustainability; has one of the lowest carbon exposures amongst European power generation companies
FORTUM IS PUBLICLY LISTED AND HAS CONSISTENTLY SHOWN STRONG FINANCIAL
PERFORMANCE
3Fortum Customer Value propositionNDL
Fortum operates across three industry verticals with leading market position in co-generation
business verticals
Power(Sales*: $3.6B)
Heat(Sales*: $2.4B)
Electricity solutions&distribution(Sales*: $3.7B)
*Segment revenues shown for 2010, using average exchange rate during 2010; Overall group revenue of $8.4B includes Russia division sales ($1.1B), and intersegment eliminations ($2.3B)
**Includes plants in Europe and plants operated in Russia by OAO Fortum (wholly owned subsidiary)
• Power generation, trading and expert services for power producers
• Operates more than 250 plants in Europe; hydro, nuclear, thermal
• Total generation capacity of ~20 GW; ~3GW capacity addition planned by 2014
• Second largest power producer in the Nordic countries
• Co-generation - providing B2B heating solutions, district cooling and heating
• Operates 31 plants** across 8 countries; 4 additional plants utilizing biofuels/waste under construction in Europe, 8 plants in Russia using gas
• Focuses on energy-efficient generation by operating co-generation plants for power and heat
• Significant focus on co-generation in R&D (total R&D spend ~$35M), focusing on combustion and alternative fuels (e.g. pyrolysis)
• Power sales to industrial, private consumers and other electricity retailers; Operation of local and regional distribution networks
• Leading operator in power distribution in the Nordics
• Second largest electricity sales company in the Nordics
• Heavily investing in a reliable and smarter grid in the Nordic region
4Fortum Customer Value propositionNDL
Fortum’s mission, strategy and values
Strategy
Fortum’s purpose is to create energy that improves life for present and future generations. We provide sustainable solutions that fulfill the needs for low
emissions, resource efficiency and energy supply security, and deliver excellent value to our shareholders.
Mission
Create solid earnings
growth in Russia
Leverage the strong
Nordic coreBuild platform for
future growth
Competence in CO2-free hydro, nuclear and energy efficient CHP production and energy markets
ACCOUNTABILITY CREATIVITY RESPECT HONESTY
Values
India growth platform
Established local presence
with immediate priority on power and heat supply to industrial
users(co-generation)
5Fortum Customer Value propositionNDL
Cogeneration is a cornerstone in Fortum’s strategy
• CHP is competitive; one plant, multiple products
• CHP is scalable; economically viable even in smaller scale
• CHP is resource efficient; high primary fuel efficiency, less emissions
• CHP has fuel flexibility; potential to use localfuels, e.g. biomass, municipal waste
• CHP has large potential for further growth
Fortum believes CHP will be an enabler of future sustainable society
6Fortum Customer Value propositionNDL
Cogeneration improves efficiency for power and steam generation
Overall process efficiency higher at up to90% compared to separate generation for power (~35%) and steam (~70%)
CustomersCustomersCustomersSteam using
industries
Industrial steam
Fuel
Boiler
High pressure
steamPowerTurbine Generator
Condenser
State grid
Efficient use of resources
One plant –multiple products
Close to use –Security of
supply
High-efficiency –less emissions
and wastes CO-GENERATION
7Fortum Customer Value propositionNDL
Fortum’s proposed model of consolidated cogeneration in an industrial cluster has multiple benefits
PROPOSED MODEL: CONSOLIDATED CO-GENERATION
CURRENT MODEL: MULTIPLE BOILERS AT CUSTOMER LOCATION
Paper & pulp Chemical
Food processingTextile Rubber
Pharma
State grid
Steam processing unit DG set
Paper & pulp Chemical
Food processingTextile
Pharma
State grid
Rubber
Reduceemissions and
wastes
Increase poweravailability
Optimizeinvestments on
equipment and land
FortumCHP
8Fortum Customer Value propositionNDL
Fortum’s solution offers four key customer advantages
ImprovedOp-ex
Fortum CHP
OptimizedCap-ex
EffectiveOrg.
Reliable supply of steam & power at competitive rates
Lower investments on
equipment
Better utilization of plant’s land area
Efficient deployment of
plant employees
A
B C
DSustainableprocesses
Optimal, consolidateduse of limited natural resources
(fuel, land and water)Improved waste
handling and lower
emissions
Avoid hassles in obtaining
emission, boiler clearances, etc.
Better focus oncore activities
of the organization
9Fortum Customer Value propositionNDL
Fortum’s solution saves money by reducing operating expenditure and initial capital investments
Competitive costs
24x7 reliability as per specifications
No need for expensive power backup options (DG sets)
Illustrative customer plant schematic marking equipment, and land that can
be freed
LOWER OPEX LOWER CAPEX
Lower investments on equipment- Boiler- Waste handling- DG sets
- Waste handling operations- Boiler operations
- Fuel procurement
Steam
Power
Organization
A B
Efficient deployment of employees currently in:
Competitive costs
Utilize freed up land area for core business, e.g. required capacity expansions in future
10Fortum Customer Value propositionNDL
Fortum’s solution also improves customer‘s’ organizational effectiveness and overall sustainability levels
D IMPROVED ENVIRONMENTAL SUSTAINABILITYIMPROVED ORGANIZATION EFFECTIVENESS
Easier procurement and commissioning process due to reduced number of equipment
Avoid hassles in obtaining clearances for power & steam generation (such as, boiler clearance)
Increased focus on core activities; better utilization of organization’s financial resources
Construction stage
Operationstage
C
Resource utilization
Emissionsand wastes
Less waste generation; handling & disposal away from plant
Lower emissions in cluster compared to aggregate of individual boilers
Better air quality in plant’s vicinity
Efficient, consolidated use of limited natural resources (land and water)
Optimal fuel usage due to higherfuel efficiency
Insulation from external factors (such as fuel price fluctuations)
11Fortum Customer Value propositionNDL
Consolidated cogeneration can provide several financial& strategic advantages for steam using industries in an industrial cluster
ADVANTAGESCOAL-
FIRED HOBGAS-FIRED
HOBOIL-FIRED
HOB
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