FORTUM and NUCLEAR POWER - 7pr.kpk.gov.pl7pr.kpk.gov.pl/pliki/9326/Arvo_Vuorenmaa_09_12_2008.pdf ·...

GenerationArvo Vuorenmaa10&11 March 2008 1

FORTUM and NUCLEAR POWER

Arvo Vuorenmaa Vice PresidentNuclear Asset Management and Engineering

Fortum GenerationNuclear Energy-Part of Poland´s Low-Carbon Energy F uture

December 9 , 2008 Bedlewo Poland


Fortum - A listed company

• A company listed on theHelsinki StockExchange

• More than 50,000 shareholders

• 2006 turnover of approx. EUR 4.5 billion

Foreigninvestors35.4%

The Finnishstate50.8%

Other Finnishinvestors 7.1%

Households 4.8%Financial institutionsand insurance companies 1.9%

Shareholders 31 Dec. 2006


A leading Nordic energy company

• The Nordic andBaltic countries,Poland and Russia infocus

• Operations in12 countries

• Approx. 16,000employees in theFortum Group

• 1.3 million electricity retail customers

• 1.6 million electricity distribution customers

• District heating for 80 cities, in seven countries

• Second largest in power generation


Fortum at a glance

Baltic countriesHeat sales 1.2 TWhDistribution cust. 24,000

Russia – acquisition TGC-10 Power generation 18 TWhHeat sales 27 TWh

Nordic countriesGeneration 51.1 TWhElectricity sales 58.5 TWhHeat sales 20.4 TWhDistribution cust. 1.6 millionElectricity cust. 1.3 million

*Fortum’s sharePolandHeat sales 3.5 TWhElectricity sales 7 GWh

Nr 1

Nr 2

Heat

Electricity sales

Distribution

Power generation

Russia – existingTGC-1 (~25% minority stake)*Power generation ~6 TWhHeat production ~8 TWh

Key figures Q1/2008, last 12 months

Sales 4,579 MEUROperating profit 1,966 MEUREmployees 15,689


Fortum's power generation 2007

Fortum’s power generation by plant type

Total power generation 52.2 TWh89% CO2 free

Total generation capacity at the end of the year 10,920 MW

Hydro 39%Thermal 12%

Nuclear 49%


Fortum Nuclear

24.73097/3205TOTAL5.6703Forsmark7.5961/1069Oskarshamn

Sweden3.8457Olkiluoto (TVO)7.8976Loviisa

Finland

production (TWh/year)share (MW)

Average F's Fortum'sNuclear power


Fortum Generation - Nuclear power (Loviisa and shares)

Loviisa includes two PWR units (VVER-440, 2 x 488 MWe(net)).

Fortum has the following participations– 27 % of Olkiluoto I and II (BWR, 1 700

MWe(net))– 43 % of Oskarshamn I, II and III (BWR, 2

219 MWe(net))– 22 % of Forsmark I, II and III (BWR, 3 154

MWe(net)).

Fortum's nuclear power capacity is 3 106 MWe(net) in total, of which 54% is in Sweden.


Loviisa Power Plant

• Fortum Power and Heat Ltd.Fortum Generation

• Units started their operation– Loviisa 1 in February 1977– Loviisa 2 in November

1980

• Electric power, gross 510 MW(net 488 MW) / unit

• Annual electricity generation8 TWh (ca. 10 %)

• 313 fuel bundles / reactor


Fortum is committed to sustainability

• Enhanced carbon competitiveness

• Promotion of renewable energy

• Efficient use of resources

• Mitigation of local environmental impacts

• 100% environmental certification

Our energy improveslife for present and future generations

Fortum’s CorePurpose:


Fortum is increasing it's Co 2-free production

Other(peat, gas, coal, other)

CO2 -free production (nuclear power, hydro power, bio fuels)

• ~9 TWh increasein CO2 -freeproduction*

• ~10 TWh increasein total production*

0

10

20

30

40

50

60

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

TWh

2006 After theinvestmentprogramme

* compared to 2006

Includes Fortum's own generation and shares in Finland and Sweden


Fortum - Successful strategy delivery

Short term target, 5 year average < 80 g Co2 /kwh

Long term goal, CO2 free power and heat company

2007

630

200

400

600

800

1,000

1,200

For

tum

Average 372 g/kWh

g CO2/kWh electricity, 2006

107

Nr 1

Nr 2

Heat

Electricity sales

Distribution

Power generation

Other suppliers


Drivers behind new nuclear ,-grouth oh the markets

Globally ... ... European wide ... ... and in Russia

Source: IEA World Energy Outlook 2006, reference scenario for generation1 Production 2004: 17 408 TWh/IEA 2006

1 420

1 710

1 520

1 000

1 200

1 400

1 600

1 800

2000 2005 2010 2015 2020

500+ TWh

Source: RAO UES

Existing/remaining productionDemand

Source: Eurprog 2006; Europe, EU27; Fortum

1 300 TWh

0

1,000

2,000

3,000

4,000

2000 2005 2010E2015E2020E

TWh TWh

0

5,000

10,000

15,000

20,000

25,000

30,000

~10 000 TWh

20041 2010E 2020E

TWh


...also in the Nordic market

• Electricity demand is expected to increase by around 50 TWh by 2020 compared to 2005

• Estimated retirement approx. 30 TWh

• Total need for investments roughly 80 TWh– approximately 40 TWh already committed

– another 40 TWh still needed

(incl. upgrades )

Retiring capacity Committed new capacity~ 40 TWh

Old CHP

Old condense capacity (mainly coal)

~ 30 TWhCommitted new capacity~ 40 TWh

Old CHP

Old condense capacity(mainly coal)

Hydro

CHP

Wind

Nuclear

Cond.

)

Demand and capacity development in the Nordic market

Committed projects

Existing / remaining generationDemand

TWh

0

100

200

300

400

500

2000 2005 2010 2015 2020

80 TWh


0

50

100

150

200

250

300

350

400

450

500

2000 2001 2002 2003 2004 2005 2006 2007

Net imports

Wind

Other

Biomass fuels

Natural gas

Peat

Oil

Coal

Nuclear

Hydro

TWh/a

Source: NordelIn 2000 net import -1.8 TWh and in 2005 -0.9 TWh.

Power procurement in the Nordic region


The Nordic market is the only regional market in the EU

today

The Nordic market is a forerunner

Functional market design– independent TSOs– congestion management by implicit auctions– liquid and well-functioning regional power

exchange– regional day-ahead, intra-day and balancing

markets– high degree of market transparency

Commitment from all relevant parties


Challenging targets in EU and Finland

EU• 20 % reduction of CO2 or 30 % if global commitment• Long term goal reduction of CO2

releases with 60 - 80 % in developed countries• The improvement of energy efficiency with 20 % by 2020• 20 % renewable energy by 2020


EU GHG reduction targets

GHG Target:

-20% compared to 1990


EU ETS-21% compared

to 2005

Non ETS sectors -10% compared to 2005

27 Member State targets, stretching from -20% to +2 0%

GHG Target:



EU ETS-21% compared

to 2005

Non ETS sectors -10% compared to 2005

27 Member State targets, stretching from -20% to +2 0%


BKT/capita 2005 (1000 eur)

Reduction compared to 2005 (%)

CO2 burden sharing for member states/Commission Proposal 23.Jan 2008


Directive on renewable energy sources (RES)

• Sets legally binding national targets for the RES share in such a manner that the overall EU target 20% by 2020 will be achieved. Achieving the target means an average increase of 11,5 percentage points in about ten years, so it is evident that the targets are going to be very tough.

• Below the targets for each Member State and the respective share of RES in 2005 in brackets:– Belgium 13% (2,2)– Bulgaria 16% (9,4)– Czech 13% (6,1)– Denmark 30% (17)– Germany 18% (5,8)– Estonia 25% (18)– Ireland 16% (3,1)– Greece 18% (6,9)– Spain 20% (8,7)– France 23% (10,3)– Italy 17% (5,2)– Cyprus 13% (2,9)– Latvia 42% (34,9)– Lithuania 23 (15)

– Luxembourg 11% (0,9)– Hungary 13% (4,3)– Malta 10% (0,0)– Netherlands 14% (2,4)– Austria 34% (23,3)– Poland 15% (7,2)– Portugal 31% (20,5)– Romania 24% (17,8)– Slovenia 25% (16,0)– Slovakia 14% (6,7)– Finland 38% (28,5)– Sweden 49% (39,8)– UK 15% (1,3)


Fortum´s climate strategy

• Investments on non-emitting techniques

• Reduction of CO2 releases• The strategy includes:

– saving of energy– investments of renewable energy– development of carbon capture

technologies– building of new nuclear capacity


New capacity except nuclear will require a well ove r 60 EUR/MWh power price

1995 -97 -99 -01 -05 -07 -09 -11 -13-03

Estimated lifetime average cost in nominal 2013 terms.Large variations in cost of new hydro and wind due to location and conditions.

EUR/MWh

Coal Gas Nuclear Hydro Wind Cleancoal

0

10

20

30

40

50

60

70

80

90

100

110

Other costs ( variation)

CO2 cost 30 €/ton

Source: Nord Pool

EUR/MWh

Futures1 September 2008

0

10

20

30

40

50

60

70

80

90

100

110


• Olkiluoto 3 nuclear, Finland• Swedish nuclear upgrades• Suomenoja CHP, Finland• Värtan bio-CHP, Sweden• Järvenpää bio-CHP, Finland• Brista waste-CHP, Sweden• Refurbishing of existing hydro assets• Wind, Sweden

Fortum's accelerated investment programme– mainly CO 2-free

Value around EUR 3 billion10 TWh of which 90% CO 2-free

Total~ 1,300 MW


EIA program

Permit process for new nuclear unit in Finland

Other clarifications to be appended to the Government resolution application

EIA report

According to the Nuclear Energy ActGOVERNMENT RESOLUTION (Decision-in-Principle)• Preliminary safety assessment from STUK• Approval from the City of Loviisa• Decision-in-principle from the Government• Ratification from the Parliament

Environmental permits Construction license from the Government according to theNuclear Energy Act

Building permit Other possible permits

Construction of the power plant

Operational licence from the Government according to the Nuclear Energy Act


Olkiluoto 3 & 4


Loviisa 3


26

Both political and technical decision making

• Political decisions- Decision in principle by Government and Parliament- Statement from the town council in Loviisa.

• Technical decisions- Construction license by the Finnish Government- Building permit by the town of Loviisa- Environmental permits by environmental authorities- Operating license.


After Dicision In Principle application

Fortum's DIP application to the Ministry of Employment and the Economy (MEE)

Environmental Impact

Assessment (EIA)

completed

Safety assessment from STUK

Statement from the town of Loviisa

Decision in principle by Finnish Government

Application for construction license to Finnish Government

Decision in principle by Finnish Parliament

Building permit to town of Loviisa

Environmental permits to

environmental permit authority

The DIP application from the MEE to the Government

MEE = The Ministry of Employment and the Economy

2008 2009 2010 2011 2012 2013

Investment decision

Political process

Technical process


28

Fortum strengths

• Fortum’s nuclear competence and good track records• Fortum’s possibility to invest in renewable energy and nuclear energy• Regional political, employment and economical aspec ts• Situation regarding grid connection (reduced import from Russia)• The produced electricity is for the whole market, whi ch improves

competition and the function of the market• Fortum has a reliable plan for nuclear waste managemen t• Fortum has a strong economy and resources to build the new unit


THANK YOU FOR YOUR ATTENTION

Make the Nuclear Business attractiveto the

future generations

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