Delivering Flexibility: A Utility View on How To Recognize True Value of Flexibility

Transcription

1 Delivering Flexibility: A Utility View on How To Recognize True Value of Flexibility, 3 November 2015 Simon-Erik Ollus, Chief Economist, Fortum

2 Fortum s current geographical presence Power generation Heat Electricity sales Nordic countries Power generation Heat sales Electricity customers 48.0 TWh 3.3 TWh 1.3 million Key figures 2014 Sales EUR 4.1 bn Comparable operating profit EUR 1.1 bn Balance sheet EUR 21 bn Personnel 8,200 Russia OAO Fortum Power generation Heat sales 23.3 TWh 26.0 TWh Poland Power generation 0.7 TWh Heat sales 3.4 TWh Baltic countries Power generation Heat sales 0.7 TWh 1.2 TWh India Power generation 9 GWh 2

3 Low Efficiency High Efficiency Energy is an enabler - Solar Economy is the direction Solar Economy Solar based production with high overall system efficiency Hydro Sun Oil Traditional energy production Exhaustible fuels that burden the environment Coal Gas CHP Advanced energy production Energy efficient and/or low-emission production CCS Geothermal Nuclear tomorrow Nuclear today Bio Ocean Storage Demand Response Wind Active Consumer Smart applications Tomorrow Interconnectors High Emissions Emission free 3 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 Fortum Corporation

4 Market integration inevitable to manage increasing share of intermittent RES generation in the power system Natural production areas of renewables: Hydro energy Wave energy Wind energy Bioenergy Solar energy Transmission needs: Source: Fortum 4

5 Continental Europe will benefit from Nordic flexibility through increasing transmission capacity and intra-day markets integration Nordic system is much more flexible compared to the German one - as seen e.g. from the day-ahead prices. Sources: Nord Pool Spot, Bloomberg Finance LP 5

6 Intra-day trading volumes have grown in the Nordics and Germany, and will grow further with RES Sources: Nord Pool Spot, Thomson Reuters 6

7 In the Nordics, we are going from market of energy towards a market of flexibility. Market places need to develop Nordic power market and various market places: Financial Forwards Managed by Nasdaq Commodities Day-ahead Elspot Managed by Nord Pool Spot ELBAS Intra-day Managed by Nord Pool Spot Balancing and reserve markets Managed by TSOs Balance settlement, Imbalance Power Managed by TSOs 10 years...1d h h Energy 1h...15min Capacity 10a...1d Market for energy Market for flexibility 7

8 60,00 50,00 40,00 30,00 20,00 10,00 0, Consumer is King - smart consumption is King Kong: The end-user needs to be empowered to appreciate demand-side flexibility Some examples of Fortum s offerings for end-users in the Nordics: Fortum Fiksu: online optimisation of heating systems Solutions to turn consumers into prosumers + = Turnkey solar kits to private customers Fortum buys excess power from prosumers with hourly market price of electricity Integrated solar power and battery storage pilot Demand-side management pilot Aurinkolaakso: Electrical heating of 1000 customers to develop virtual power plant Captured value of all flexibility products Dynamic real-time household DSM Interesting and motivating digital interface for the customer and community aspect 8

9 Also the district heating system is a valuable source of flexibility to the power system Better use of the district heating system provides flexibility to the electric power system CHP generation flexibility (incl. extraction condensing and by-pass turbines) Electric boilers Industrial size heat pumps Heat accumulators District heating customer demand management Open district heating to third parties Heat storages for both short-term and long-term Heat energy storage 800MWh in Espoo, Finland. Commissioning in December 2015 Heat energy storage 800MWh in Espoo, Finland. Commissioning in December

10 Power markets need to be developed to award flexibility and meet the decarbonisation target - Several non-regret options to be implemented urgently Focus on better grid development and more efficient use of infrastructure From national to regional system and adequacy planning Harmonize power market places and renewable investment incentives Completing integration of the intra-day and balancing markets Removal of (non-technical) price caps in all countries Shorter intra-day gate closure time Integrate mature renewable technologies into the power market Let CO2 price steer decarbonisation of power generation Consumer is King the consumer needs to appreciate volatility Liberalise retail markets and enable dynamic pricing for end consumers Roll out smart meters and grids Develop all sorts of energy storages (hydro, heat, cooling, electricity, EVs etc) 10

11 Thanks 11