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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
GenerationArvo Vuorenmaa10&11 March 2008 2
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
GenerationArvo Vuorenmaa10&11 March 2008 3
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
GenerationArvo Vuorenmaa10&11 March 2008 4
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
GenerationArvo Vuorenmaa10&11 March 2008 5
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%
GenerationArvo Vuorenmaa10&11 March 2008 6
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
GenerationArvo Vuorenmaa10&11 March 2008 7
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.
GenerationArvo Vuorenmaa10&11 March 2008 8
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
GenerationArvo Vuorenmaa10&11 March 2008 9
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:
GenerationArvo Vuorenmaa10&11 March 2008 10
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
GenerationArvo Vuorenmaa10&11 March 2008 11
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
GenerationArvo Vuorenmaa10&11 March 2008 12
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
GenerationArvo Vuorenmaa10&11 March 2008 13
...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
GenerationArvo Vuorenmaa10&11 March 2008 14
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
GenerationArvo Vuorenmaa10&11 March 2008 15
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
GenerationArvo Vuorenmaa10&11 March 2008 16
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
GenerationArvo Vuorenmaa10&11 March 2008 17
EU GHG reduction targets
GHG Target:
-20% compared to 1990
-14% compared to 2005
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:
-20% compared to 1990
-14% compared to 2005
EU ETS-21% compared
to 2005
Non ETS sectors -10% compared to 2005
27 Member State targets, stretching from -20% to +2 0%
GenerationArvo Vuorenmaa10&11 March 2008 18
BKT/capita 2005 (1000 eur)
Reduction compared to 2005 (%)
CO2 burden sharing for member states/Commission Proposal 23.Jan 2008
GenerationArvo Vuorenmaa10&11 March 2008 19
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)
GenerationArvo Vuorenmaa10&11 March 2008 20
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
GenerationArvo Vuorenmaa10&11 March 2008 21
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
GenerationArvo Vuorenmaa10&11 March 2008 22
• 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
GenerationArvo Vuorenmaa10&11 March 2008 23
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
GenerationArvo Vuorenmaa10&11 March 2008 24
Olkiluoto 3 & 4
GenerationArvo Vuorenmaa10&11 March 2008 25
Loviisa 3
GenerationArvo Vuorenmaa10&11 March 2008 26
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.
GenerationArvo Vuorenmaa10&11 March 2008 27
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
GenerationArvo Vuorenmaa10&11 March 2008 28
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
GenerationArvo Vuorenmaa10&11 March 2008 29
THANK YOU FOR YOUR ATTENTION
Make the Nuclear Business attractiveto the
future generations