Fortum Smart The World's first fully commercial market-tracking demand response product for consumers Timo Liiri Smart Metering and Billing 2012 1 Electricity Solutions and Distribution
Agenda New product concept Pilot information Pilot Results Learnings 2
Power Division consists of Fortum s power generation, physical operation and trading as well as expert services for power producers. Heat Division consists of combined heat and power generation (CHP), district heating and cooling activities and business-tobusiness heating solutions. Russia Division consists of power and heat generation and sales in Russia. It includes OAO Fortum and Fortum s slightly over 25% holding in TGC-1. Electricity Solutions and Distribution Division is responsible for Fortum's electricity sales and distribution activities. It consists of two business areas: Distribution and Electricity Sales. 3 2011
ESD Operations Operations in Leading player in the Nordic energy market Sweden Finland Norway 119 employees 672 employees 515 employees 1.305 employees in total Responsible for Fortum's electricity sales and distribution activities Owns and operates regional and distribution networks 1.6 million network customers Finland, Sweden, Norway and Estonia 1.2 million retail customers Finland, Sweden and Norway Develops and invests in future energy solutions Leading seller of eco-labelled and CO2 -free electricity 4 2011
Fortum Smart - new demand response product for consumers Fortum Smart -product consists of: Hourly priced electricity product Customers' heating load control based on: cheapest hourly price utilization outdoor temperature = heating need 5
Fortum Smart -components Customer Fortum Tarkka Hourly priced Electricity product + Control unit Heating load is controlled based on cheapest hourly prices and outdoor temp Customer interface 60,00 50,00 40,00 30,00 20,00 10,00 Electric central 0,00 heating boiler 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-00 6
Smart vs. traditional night time load and price control 24:00 24:00 22:00 Fortum Smart = chosen lowest hourly prices 22:00 Traditional = fixed hours 07:00 07:00 12:00 12:00 60,00 50,00 Hourly Spot -prices 40,00 30,00 20,00 10,00 Load transfer to lower prices 0,00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 7
Customer interface - web and mobile Realized controls Coming controls Temperature Sales hourly price Distribution price 8
Pilot New Fortum Smart -product is piloted with customers from april -> still ongoing Pilot group consists of customers, who have a large (3000-5000 litre) water boiler for heating their house (heating the house and warm water) The group was selected by their consumption volume and profile (a big share of night-time consumption) 9
Results so far Simulated cost saving potential is about 15 % compared with the traditional night-time product (= no hourly optimation) The saving potential was achieved in every pilot case In practise the savings were clearly hihgher due to the very low Spot prices during the pilot (compared to customers previous product) 10
Customer experience Customers were very interested in the pilot from the very beginning Their motivation and focus was clearly to reduce heating costs Within the pilot they started to pay attention also to their overall electricity consumption Hourly pricing and load controll is a difficult issue to digest They wish for this kind of automated control However they insist on some evidence that load control really happens Everything must be easy! 11
Main learnings so far Commercializing is everything Service includes quite a lot of technical components and details Are we able to package the service for customers in an understandable way? How to communicate fairly complicated service from customer perspective? It is easy to invent different features, but do they really meet customers needs? 12
Main learnings so far We tend to have too optimistic business case calculations Very important to reach a critical sales volume in order to cover the costs It's all about the sales - but how to find the most optimal sales channel To manage logistics and processes cost effectively, new systems and processes are needed (= investments) Follow up and reporting must be in place to support sales process: sales activities and the performance of sales persons customer service process quality financials 13
Next steps A public launch of the service took place 13.9.2012 Commercial sales activities have just been started, first deals have realized Now we have started a critical time period in order to learn and understand customer reactions and to make necessary changes in communication, sales concept and service set up Time will show 14
Thank you Timo Liiri timo.liiri@fortum.com +358 50 453 6461 15