Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Investor Day (September 2010)
25 slides from Fortum Oyj's investor day presentation, Sep 16, 2010
Slide 1: Capital Markets Day 2010
Capital Rye /10 2010/09/16
Slide 2: Fortum
@Fortum
Slide 3: Agenda
Agenda • Fortum today • Industry analysis • Summary 3
Slide 4: Fortum is today a mid-sized European power generator; Globally #4 in heat production
Fortum is today a mid-sized European power generator; Globally #4 in heat production Power generation Heat production Customers Largest producers in Europe and Russia, 2008 TWh Largest global producers, 2008 Electricity customers in EU, 2007 TWh millions *) IES EDF ****) Enel E.ON Gazprom Enel **) D
Slide 5: A solid track record of leveraging industry consolidation opportunities
A solid track record of leveraging industry consolidation opportunities Separation of Länsivoima Länsivoima Elnova oil businesses 45% → 65% →100% 50% → 100% E.ON Finland 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Neste IVO Divestment of Lenenergo Birka Energi Stora Birka Energi
Slide 6: Our geographical presence today
Our geographical presence today Nr 1 Heat Key figures 2009 Nordic countries Sales EUR 5.4 bn Generation 48.1 TWh Operating profit EUR 1.8 bn Nr 1 Distribution Personnel 11,500 Electricity sales 54.9 TWh Nr 2 Electricity Heat sales 18.0 TWh sales Distribution cust. 1.6 million Nr 3 Power Electricity
Slide 7: A portfolio of hydro, nuclear and energy efficient CHP
A portfolio of hydro, nuclear and energy efficient CHP* – CHP using mainly natural gas in Russia Fortum's power generation Fortum's heat production in 2009 in 2009 Hydro power 34% Nuclear power 33% Natural gas 61% Other 0% Peat 1% Other 3% Biomass 2% Peat 2% Coal 3% Oil 2% Waste 3% Heat pumps, Coal
Slide 8: Specific carbon emissions among the lowest in Europe
Specific carbon emissions among the lowest in Europe g CO2/kWh electricity, 2008 1200 1000 800 600 Industry average 350 g/kWh 400 200 134 41 0 Fortum EU GDF Suez Europe EDP E.ON DEI RWE EDF Fortum total Union Fenosa Dong Energy CEZ Enel Iberdrola Nuon Scottish&Southern British Energy PVO Drax Statkr
Slide 9: A strong platform for growth in heat
A strong platform for growth in heat Largest global heat producers, 2008 TWh IES • Potential to leverage Fortum’s position Gazprom as the 4th biggest global heat producer Dalkia – Core competences in sustainability, Fortum Vattenf local market insight and relationships, all RAO ES East and continuou
Slide 10: A major player in Russia
A major player in Russia OAO Fortum (former TGC-10) • Operates in the heart of Russia’s oil and gas producing region, fleet mainly gas-fired CHP capacity • 16 TWh power generation, 26 TWh heat production TGC -1 in 2009; more than Fortum’s Nordic heat sales • Investment programme to add 85%, almost 2
Slide 11: Efficiency gains and new capacity to drive earnings in Russia
Efficiency gains and new capacity to drive earnings in Russia • Efficiency improvement programme on TGC-1 track to deliver EUR 100 million EBITDA improvement in 2011 OAO Fortum St. Petersburg Nyagan • Relative to its size, Fortum will increase Surgut capacity more than any other Russian Moscow Tobol
Slide 12: Russian power demand is recovering fast after the economic crisis
Russian power demand is recovering fast after the economic crisis Russian electricity demand forecast to 2020 • Russia is the fastest growing TWh market area for Fortum 1400 • Power demand in Russia 1300 recovered close to pre-crisis level 1200 • Most recent forecast places the 1100 long term demand
Slide 13: Agenda: Industry analysis
• Fortum today • Industry analysis • Summary 13
Slide 14: New capacity needed for new demand and retiring capacity replacements
New capacity needed for new demand and retiring capacity replacements • Growing global energy demand will be increasingly fulfilled by electricity in the future • Substantial demand growth in the emerging markets • Retirements and moderate demand growth in the EU • Globally, 4,800 GW of new capacity
Slide 15: Modest demand growth and less potential for new green field generation in the Nordic region
Modest demand growth and less potential for new green field generation in the Nordic region Demand Supply • Continuing restructuring, • Wind and bio-CHP driven by gradually decreasing energy the EU RES targets intensity in industry • New Finnish nuclear and P upgrades in existing nuclear • Gradually
Slide 16: Power market liberalization is still in its infancy
Power market liberalization is still in its infancy, but will evolve driven by increasing need for private capital • Significant amounts of capital needed to meet the demand growth, Illustrative capacity retirement replacement needs and high cost renewables US targets (note: Some states, such as Cal
Slide 17: Even the most liberalized markets remain partially regulated
Even the most liberalized markets remain partially regulated – and new capacity incentive mechanisms are being discussed RU: Capacity tariff / market with different Free energy-only UK: obligations for price levels ”security of supply” market proposed EE: consumer market still Partial capacity IE: c
Slide 18: EU power market integration moves forward
EU power market integration moves forward • Physical transmission capacity investments are politically driven by the EU's RES, competition and security of supply interests 2011 – market integration will slowly lead to policy harmonization • Existing cross border investment plans will be realized Q3
Slide 19: Climate issue will continue to drive policy making
Climate issue will continue to drive policy making, but no global solution or price for CO2 • Global warming expected to stay at 3-4°C Fossil fuels continue to dominate based on voluntary pledges power supply – No global emission reduction deal foreseen that would limit warming to 2°C – In electrici
Slide 20: The electricity generation system will slowly develop towards a solar economy
The electricity generation system will slowly develop from a “Carnot world” towards a “solar economy” ”Solar economy” High efficiency Hydro Solar Photo- voltaic Osmosis Solar CSP Wind Wave CCGT CHP Coal Nuclear tomorrow** IGCC CHP Coal CHP CHP Bio fuels CHP CCS * Gas condensing Coal condensing Conde
Slide 21: Conventional technologies continue to play a key role for a long time to come
Conventional technologies continue to play a key role for a long time to come Illustrative Global <€1B €10B €100B >€100B market Nuclear 2010 2030 Global electricity generation, Selected technologies (volume) Nuclear Hydro 2030 2010 Wind 2010 2030 Waste to energy 2010 2030 Hydro Solar 2010 2030 Wave
Slide 22: The competitiveness of energy efficient CHP production will increase
The competitiveness of energy efficient CHP production will increase driven by fuel prices and need to reduce emissions • CHP is local, smaller scale production Global new CHP potential to 2020 about 1,350 TWhe* – Resource efficiency compensates scale – Possibility to use local fuels (bio, waste) Sm
Slide 23: Agenda: Summary
• Fortum today • Industry analysis • Summary 23
Slide 24: Strong Nordic core combined with Russian potential
Strong Nordic core combined with Russian potential – good fit to the market need = Market = Fortum • Competitive market model driven by the need for private capital globally • EU power market integration moving forward – new transmission capacity and market coupling • Less potential for new green fi
Slide 25: Capital Markets Day 2010
Capital Rye /10 2010/09/16