Fortum Corporation Supplying power for large scale businesses Ann Boije af Gennäs, Sales Manager, Origination Saara Rantanen, Originator, Origination
Content I. Fortum s competitive edge as Power Counterparty II. Key Market Drivers III. Origination s Power Offering IV. Contact information 2
Power producers in Nordic are operating in physical and financial market places Nord Pool Spot for physical trading Day-ahead spot market Balance adjustment market Regulating market NASDAQ, EEX, ICE for financial trading Standard contracts Derivatives market: futures, forwards, options, structured deals 3 Source: http://www.nordpoolspot.com/tas/
What You Get When You Choose Fortum One of the leading utility companies in Europe BBB+ 50 Corporate credit rating by Standard & Poor s and Fitch TWh portfolio owner - expertise at your service 60 dedicated power traders Top notch Environmental value expertise Advanced risk mitigation tools 4
Our Competitive Edge As A Nordic Power Counterparty Fortum is a leading key player on the Nord Pool Power Markets with its own power assets Fortum s main production assets are hydro power and nuclear power Fortum is partner in one of Europe s biggest onshore wind farm projects with 40% holding in Blaiken Vind Fortum has extensive power and energy market knowledge with valuable production management experience Fortum has 24/7/365 availability at the trading desks in Espoo, Finland and Stockholm, Sweden 5
Fortum's European power and heat production Fortum's European power generation in 2014 Fortum's European heat production in 2014 Nuclear power 48% Coal 38% Biomass 2% Natural gas 2% Coal 4% Oil 1% Heat pumps, electricity 1% Waste 3% Peat 3% Natural gas 29% Hydro power 44% Biomass 25% European generation 50.1TWh (Generation capacity 9,851 MW) European production 8.2 TWh (Production capacity 3,936 MW) 6
Fortum's carbon exposure among the lowest in Europe g CO 2 /kwh electricity, 2013 1 200 1 000 800 600 400 2014 64% of Fortum's total power generation CO 2 -free 94% of Fortum s power generation in the EU CO 2 -free Close to 100% of the ongoing investment programme in the EU is CO 2 -free. Average 328 g/kwh 200 0 200 64 DEI RWE Drax SSE CEZ Note: Fortum s specific emissions of the power generation in 2014 in the EU were 39 g/kwh and in total 177 g/kwh. Only European generation except Fortum total which includes Russia. E.ON Vattenfall EDP Enel Edipower EnBW Gas Natural Fenosa GDF SUEZ Dong Energy Fortum total Iberdrola PVO EDF Verbund Fortum EU Statkraft Source: PWC & Enerpresse, December 2014 Climate Change and Electricity, Fortum 7
Content I. Fortum s competitive edge as Power Counterparty II. Key Market Drivers III. Origination s Power Offering IV. Contact information 8
Fuel and CO 2 allowance prices 150 Crude oil price (ICE Brent) 35 CO 2 price (ICE ECX EUA) 120 28 USD / bbl 90 60 30 EUR / tco 2 21 14 7 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 250 Coal price (ICE Rotterdam) 100 Gas price (ICE NBP) 200 80 USD / t 150 100 50 GBp / therm 60 40 20 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 9 Source: ICE Market prices 5 August 2015; 2015-2016 future quotations
Nordic year forwards Year10 Year11 Year12 Year13 Year14 Year15 Year16 Year17 Year18 Year19 Year20 70 60 50 40 30 20 10 /MWh 10 August 2015 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2008 2009 2010 2011 2012 2013 2014 2015 10 Source: Nasdaq Commodities
Content I. Fortum s competitive edge as Power Counterparty II. Key Market Drivers III. Origination s Power Offering IV. Contact information 11
What Fortum can offer to data centers? Physical electricity Long Term Power Purchase Agreements Green energy sources Optimisation of used electricity Demand Side Management (UPS systems and backup generators) Secure of financial result Structured and Non-standard financial products e.g. Peak Load contract and Asian options Heat/Cooling Option Data house cooling system, connected to district heating 12
Fortum s Data Center Business Offering Heat utilization in dh network & Cooling Possible in areas where Fortum district heating network is located. Fortum could act as intermediate between local district heating network and company. Back-power solutions, integration to CHP plant Different back-up power solutions connected with electricity portfolio management or without management Electricity sales and hedging services Electricity sales with green energy sources. Various products and services related to electricity sourcing and price risk mitigation Real estate development Opportunity to use real estate owned by Fortum for datacenter project development Fortum district heating networks are located in Espoo, Keski-Uusimaa and Joensuu area 13
Datacenter Excess Heat Utilization Concept With Fortum Datacenter CHP plant Heat pump Data center cooling District heating network Heat utilization - Heat pump provides cooling for the datacenter and transfers the excess heat to the district heating network. - The investment for heat pumps are similar compared to chillers. - Requires a connection to Fortum dh network CHP-plant data center integration - Lowering costs energy infrastructure - Avoided cost for back-up power - Absorption cooling possible 14
Physical power structure Physical Deliveries Physical base load Long term power contracts Spot electricity Forecasting Balancing service MW Base load electricity Realized consumption Balance power Spot Base load Benefits for the client t + Management of risk exposure related to acquisition of energy + Market based and efficient + Simple for the client 15
Green claims in Finland Renewable electricity is divided to: Grey electricity Guarantee of Origin (GO) Electricity consumer that claims in its marketing using renewable energy has to use GOs to support the claim* Two options: Buy renewable electricity from the retailer Buy grey electricity and GOs separately Price of GO depends on volume, type and potential other labels associated with the power plant *Law on Guarantee of Origins and Disclosure (19.12.2003/1129) http://www.finlex.fi/fi/laki/ajantasa/2003/20031129 GO-market Electricity retailer Consumer Electricity market 16
Examples on structured products Helsinki Peak Effect: 10 MW Contract Period: Q1/2016 Peak definition: 8:00-20:00 EET Mo-Fri Reference price: Nord Pool Helsinki area Financial Settlement Price indication: 46.80 /MWh Indications based on 5 th of May 2015 Benefits for the client Asian Call Option Effect: 10 MW Contract Period: Q1/2016 Reference price: Nord Pool Helsinki area Strike: 42 EUR/MWh Monthly averaging (look back) Financial Settlement Price indication: 2.15 /MWh Indications based on 05th of May 2015 + Decreased risk of spot price volatility + Competent partner for financial markets 17
Typical data center energy solution The required level of availability hours and security sets requirements for energy solution and site selection. Cooling Main and back-up cooling systems required always. In Scandinavia free cooling option during the cold season (<+7-5 C) Power connection IT power sets requirements for grid connection Undisturbed electricity feed crucial for data center operations. Short (second fractions) disturbances and back up by the UPS systems. Back-up power Back-up power solution can be a doubled grid connection or own power generation. Back-up power is required for IT and separately for cooling process. Electricity sourcing Electricity hedging and buying organized. Back-up power units can be used to eliminate short electricity price peaks. 18
Data center cost structure examples Servers are around half of the data center life cycle costs. Energy infrastructure accounts around 25% of the total costs. Electricity costs account 20% Other infrastructure cost i.e. buildings etc are only 5%. Data center s life cycle costs 19% 23% 5% 53% The largest cost saving potential is in the energy infrastructure and energy efficiency these are Fortum s key area of expertise. Servers Power and cooling infrastructure Power Other infra 19
Content I. Fortum s competitive edge as Power Counterparty II. Key Market Drivers III. Origination s Power Offering IV. Contact information 20
We work in Origination Team Aleksi Nordlund Manager Origination + 358 50 453 62 90 aleksi.nordlund@fortum.com Ann Boije af Gennäs Manager Sales, Origination + 46 8 671 71 69 ann.boije.af.gennas@fortum.com Juha Ruokonen Manager Env. Values + 358 40 091 83 22 juha.ruokonen@fortum.com Martin Johansson Quantitative Analyst +46 72 713 62 12 martin.johansson@fortum.com Joni Vuorela Originator +358 40 509 49 06 joni.vuorela@fortum.com Saara Rantanen Originator +358 40 552 22 44 saara.rantanen@fortum.com Roosa Nieminen Project Developer +358 50 336 07 04 roosa.nieminen@fortum.com 21
For more information, please visit www.fortum.com/investors