Fortum is a $9B Finnish company currently operating in European countries and Russia

Transcription

1 DRAFT

2 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 IS PUBLICLY LISTED AND HAS CONSISTENTLY SHOWN STRONG FINANCIAL PERFORMANCE Amongst leading power producers in Europe and Russia; scale presence across 9 countries including Nordic region, Russia, Poland, Baltics World s 4 th 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 Fortum operations Frontrunner in environmental sustainability; has one of the lowest carbon exposures amongst European power generation companies Fortum Customer Value proposition 2

3 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) 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 *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) Fortum Customer Value proposition 3

4 Fortum s mission, strategy and values Mission Strategy Values 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. Leverage the strong Nordic core Create solid earnings growth in Russia Build platform for future growth Competence in CO 2 -free hydro, nuclear and energy efficient CHP production and energy markets India growth platform Established local presence with immediate priority on power and heat supply to industrial users (co-generation) ACCOUNTABILITY CREATIVITY RESPECT HONESTY Fortum Customer Value proposition 4

5 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 local fuels, e.g. biomass, municipal waste CHP has large potential for further growth Fortum believes CHP will be an enabler of future sustainable society Fortum Customer Value proposition 5

6 Cogeneration improves efficiency for power and steam generation High-efficiency less emissions and wastes CO-GENERATION One plant multiple products High pressure steam Turbine Generator Power Boiler Industrial steam State grid Fuel Customers Customers Steam Customers using industries Condenser Efficient use of resources Close to use Security of supply Overall process efficiency higher at up to90% compared to separate generation for power (~35%) and steam (~70%) Fortum Customer Value proposition 6

7 Fortum s proposed model of consolidated cogeneration in an industrial cluster has multiple benefits CURRENT MODEL: MULTIPLE BOILERS AT CUSTOMER LOCATION PROPOSED MODEL: CONSOLIDATED CO-GENERATION Paper & pulp Chemical Pharma Paper & pulp Chemical Pharma State grid State grid Fortum CHP Textile Food processing Rubber Textile Food processing Rubber Optimize investments on equipment and land Increase power availability Steam processing unit DG set Reduce emissions and wastes Fortum Customer Value proposition 7

8 Fortum s solution offers four key customer advantages Reliable supply of steam & power at competitive rates Efficient deployment of plant employees Improved Op-ex A Optimized Cap-ex Lower investments on equipment Better utilization of plant s land area Fortum CHP B C Effective Org. D Sustainable processes Avoid hassles in obtaining emission, boiler clearances, etc. Better focus on core activities of the organization Optimal, consolidated use of limited natural resources (fuel, land and water) Improved waste handling and lower emissions Fortum Customer Value proposition 8

9 Fortum s solution saves money by reducing operating expenditure and initial capital investments A LOWER OPEX B LOWER CAPEX 24x7 reliability as per specifications Steam Competitive costs No need for expensive power backup options (DG sets) Illustrative customer plant schematic marking equipment, and land that can be freed Power Organization Competitive costs Efficient deployment of employees currently in: - Boiler operations - Waste handling operations - Fuel procurement Lower investments on equipment - Boiler - Waste handling - DG sets Utilize freed up land area for core business, e.g. required capacity expansions in future Fortum Customer Value proposition 9

10 Fortum s solution also improves customer s organizational effectiveness and overall sustainability levels C IMPROVED ORGANIZATION EFFECTIVENESS D IMPROVED ENVIRONMENTAL SUSTAINABILITY Construction stage Avoid hassles in obtaining clearances for power & steam generation (such as, boiler clearance) Easier procurement and commissioning process due to reduced number of equipment Resource utilization Optimal fuel usage due to higher fuel efficiency Efficient, consolidated use of limited natural resources (land and water) Increased focus on core activities; better utilization of organization s financial resources Less waste generation; handling & disposal away from plant Operation stage Insulation from external factors (such as fuel price fluctuations) Emissions and wastes Lower emissions in cluster compared to aggregate of individual boilers Better air quality in plant s vicinity Fortum Customer Value proposition 10

11 Consolidated cogeneration can provide several financial& strategic advantages for steam using industries in an industrial cluster ADVANTAGES COAL- FIRED HOB GAS-FIRED HOB OIL-FIRED HOB Fortum Customer Value proposition 11