Responding to the changing energy market

Transcription

1 Valmet Customer Days Responding to the changing energy market Risto Penttinen - SVP Strategy, People and Performance October 4, 2018 Vienna

2 Temperature BC 2100 AD Temperature anomaly, C 3 Forecast 2100 AD Year (BC / AD) Rough Fortum illustration based on reconstruction of various external studies and forecasts; Shakun et al. (2012); Marcott et al. (2013); CMIP5 A1B; HadCRUT4

3 Impact of 3 C warming on crop yields Source: World Resource Institute, Petteri Taalas

4 European emissions need to decrease drastically beyond power and industry in order to reach the 2050 targets MtCO 2 (eqv.) Greenhouse gas emissions Coal Power (minimum targets from 1990 level) - 40 % Oil Transport 1-60 % Industry 2 Gas Buildings 3 Other Other 4 By source By sector - 80 % (2 C target level) - 95 % TODAY Source: IEA World Energy Outlook 2017, Eurostat, Fortum Industrial Intelligence 1 including international aviation and marine 2 iron & steel and chemicals are among the biggest contributors 3 residential and commercial heating & cooling 4 non-energy related emissions: industrial processes and product use, waste management, agriculture, fugitive emissions

5 Despite Energiewende, more than 40% of German electricity is produced by lignite and hard coal Hard coal 82 TWh, 15% Gas 49 TWh, 9% Biomass 47 TWh, 9% Lignite 134 TWh, 24% Wind 104 TWh, 19% Nuclear 72 TWh, 13% (to be shutdown by 2022) Solar 38 TWh, 7% Hydro 20 TWh, 4% 5 Source: Fraunhofer ISE All figures for full year

6 Solar and wind to account ~50% of global electricity mix by 2050 Solar module, $/W $90 Solar capacity installed, GW $80 $70 $60 $50 $40 $30 $20 $10 $79, $ $0, Sources: Module prices; PVInsight and Maycock Capacity installed; BP Statistical Review and BNEF

7 The energy transition will not happen overnight Case Germany Illustrative 900 Total power production includes exports No to nuclear decided closures No to highest emitters? coal and lignite phaseouts Gas ramp for flexibility output roughly doubled Tripling of solar and wind equals decades of buildout* ~ 600 TWh ~ 70 TWh > 200 TWh CHALLENGE: Time-shift required Used at production 300 > 400 TWh 200 ~ 60 TWh by 2022 Under review by 2030 by Sources: Bloomberg New Energy Finance NEO2017, BP Statistical Review 2017, BCG * Roughly equivalent of additional ~ 200 GW of solar and wind power. In the last five years, annual wind buildout ~ 5 GW/a and solar buildout ~ 1 GW/a in Germany

8

9 Energy markets are integrating 2 x 1,400 MW Norway-UK 1,400 MW Denmark-UK 1,400 MW Norway-Denmark New internal Nordic grid expansion Estonia-Latvia 700 MW Denmark-Netherlands ,000 MW Jutland-Germany 700 MW Sweden-Germany 400 MW Zealand-Germany 9 New interconnection lines New Nordic interconnection lines Existing interconnection lines

10 Fortum Spring virtual battery as one enabler of CO2-free energy system 2500 homes measured and controlled in real-time 6+ MW 7+ GWh flexibility on the Finnish fast frequency reserve markets 15 million measurements each hour

11 De-carbonization of energy and sustainable waste and materials management are needed to reach 2-degree path Global warming challenge Decarbonisation of energy system (power, heat, transportation) Sustainable waste management and material production 4 ⁰C 3 ⁰C 2 ⁰C Continuation trajectory Massive electrification Accelerated transition (Paris) Solar and Wind mainstream Electric vehicles mainstream Bio in power and heat Power to Hydrogen Biobased traffic fuels CCS* CCU* Bio2X Bio- Products and materials Landfilling Increasing material recycling Waste to Energy mainstream Value enhancing recycling Chemical recycling 11 * CCS = carbon capture and storage, CCU = carbon capture and utilization

12 Fortum s strategy and priorities were laid out in Feb

13 Industry transformation - Uniper is present across Europe and Russia Uniper has ~300 power plants, 200 of which are hydro power Uniper s geographic presence Total capacity: ~36 GW Power generation: ~121 TWh Power generation primarily driven by hydro, nuclear and thermal sources Integrated gas midstream assets Employees: ~12,000 Non-flexible Capacity split Flexible Flexible Non-flexible Hydro Gas Nuclear Coal Other Hydro power plants (area where located) Nuclear power plant Gas power plants (area where located) Coal / Lignite power plants (area where located) Other (area where located) Gas storage (area where located) Gas midstream assets Note: Capacity as per accounting view. Hydro and gas capacity categorized flexible.

14 City Solutions CHP assets and district heating operations Current focus in Nordics, Poland and Baltic rim Bio-CHP Multifuel-CHP Waste-CHP Coal/gas-CHP Fortum s European heat production 16.6TWh* in 2017 Joensuu Woodchips, peat + pyrolysis plant Czestochowa Coal, woodchips Riihimäki Hazardous waste MSW+ ICW, material recovery Espoo Coal, natural gas Biomass 28% Waste 27% Järvenpää Woodchips, horse manure &SRF Jelgava Woodchips Pärnu Woodchips Zabrze New unit ready 2018: coal, waste Kumla Hazardous waste ICW + MSW Nyborg Hazardous waste Klaipėda MSW, RDF, woodchips Bytom Coal = hazardous waste Oil 1% Peat 2% Natural gas 4% Heat pumps, electricity 16% Coal 22% (Production capacity 8,513 MW*) Klemetsrud Brista Hässelby Kumla Värtan Högdalen Naantali Pärnu Joensuu Riihimäki Järvenpää Espoo Tartu Tartu Woodchips, peat Värtan KVV8, Brista 1 Woodchips Naantali Coal, woodchips Klemetsrud** MSW, ICW, RDF Högdalen MSW, ICW, RDF Co-owned and consolidated companies Associated companies Värtan, old units Coal, oil Nyborg CHP plant locations today Associated companies CHP plants District heat supply/networks w/o own production Jelgava Klaipėda Plock Wroclaw Częstochowa Hässelby Wood pellets Brista 2 MSW, ICW, RDF Zabrze Bytom 14 * Heat production incl. Fortum s associated company Stockholm Exergi; heat production 8.0 TWh (capacity 3,842 MW). Note: Fortum s total heat production 36.6 TWh in 2017 ** Waste-to-energy plant belonging to Fortum Oslo Värme, which is owned together with City of Oslo since August Fortum is responsible for operating the joint venture.

15 Oslo kommune and Fortum Fortum Oslo Varme Key figures 185 employees Waste to energy treatment of approx tons waste/year District heating production: 1,7 TWh/year Electricity production: Approx. 150 GWh/year (E) 600 kilometres of district heating network 30 million litres of water circulating in Oslo More than 5000 customers (buildings) connected Norway s largest player within waste to energy and district heating The City of Oslo s climate budget 2020: The City of Oslo will reduce greenhouse gas emissions by 50% Budget for 2018: Reduction of 36% by : Oslo's greenhouse gas emissions reduced by 95% 2050: Zero greenhouse gas emissions in Oslo Fortum is an important partner to Oslo kommune in reaching the city s climate goals Key common projects Oil boilers Fortum is a main partner for Oslo kommune in reducing emissions in all sectors CCS at Klemetsrud Tests show stable CO 2 purification with 90% catch Removes both fossil CO 2 biological CO 2, resulting in carbon negativity Can remove approximately tonnes of CO 2 per year Building expertise locally and nationally, great global transfer value Cutting global emissions also reduces local emissions Fossil fuel for heating will be prohibited in Oslo from 2020 Fortum Oslo Varme replace oil boilers with district heating (DH) Charge&Drive Frame agreement signed between the Oslo kommune and Fortum Fortum delivers back end system for Oslo kommune s own chargers Resource utilization Energy / building Mobility / transport CO2 emissions in Oslo by sector 15

16 Fortum participates in JV in India to build a biorefinery based on Chempolis fractionation technology Fortum has taken a step forward in its Bio2X programme and established a joint venture together with Numaligarh Refinery Limited (NRL) and Chempolis for building and operating a biorefinery in Assam, India. What will we learn from NRL fractionation plant? Prove Chempolis core process in ethanol production Bamboo sourcing and suitability for processing Working and project execution in India business environment The joint venture will own the biorefinery. Construction work will begin in the autumn of 2018, with the target date for beginning operations at the site set for the year 2020.

17 By 2040, EVs in Europe are set to increase electricity demand equal to size of France Fortum Charge & Drive: Market leader in Finland and Norway registered users chargers 700 fast chargers 16 countries Plugsurfing: Europe s leading charging service charging points EV driver users 200 charging networks 31 countries

18 Accelerating electric vehicle sales Time to sell amount of EVs First million 20 years Second million 18 months Third million 8 months Source: Bloomberg New Energy Finance

19 Fortum Leadership Principles the framework Believe the best IN our people We believe in our people, which empowers them to believe in themselves, grow and exceed their own expectations. Want the best FOR our people We create a work environment and company culture that help our people thrive. Expect the best FROM our people Because we believe in our people and secure a good work environment, we expect them to deliver results and are confident they will exceed our expectations.

20 THANK YOU

21 Our current geographical presence Power generation Heat Electricity sales Nordic countries* Power generation* Heat sales* Electricity customers 47.1 TWh 13.2 TWh 2.4 million Key figures 2017 Sales EUR 4.5 bn Comparable operating profit EUR 0.8 bn Balance sheet EUR 22 bn Personnel 8,800 Russia PAO Fortum Power generation Heat sales 26.3 TWh 19.8 TWh * Including Fortum s associated company Stockholm Exergi; power generation 1.7 TWh and heat sales 8.2 TWh. Poland Power generation 0.5 TWh Heat sales 3.7 TWh Baltic countries Power generation Heat sales 0.7 TWh 1.4 TWh India Power generation 0.3 TWh 21