Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Investor Day (September 2010)
23 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: Pirja Heiskanen
PIRJA Heiskanen 2010 09 16
Slide 3: Agenda
Agenda • TII – Trading and Industrial Intelligence • Nordic power market – Key drivers – Recent development • Conclusions 3
Slide 4: Trading and Industrial Intelligence (TII) – centralised portfolio management and trading
Trading and Industrial Intelligence (TII) – centralised portfolio management and trading Role: Divisions: TII – One market view covering all time horizons Power – Hedging of group level result (not only electricity price) Heat – proposal for mandates and references – development of hedging strategy
Slide 5: The right big picture – achieved power price is the prime goal
The right big picture – achieved power price is the prime goal Realised prices quarterly since 2000 Prices since 1998, annual level EUR/MWh EUR/MWh 80 60 70 50 60 40 50 40 30 30 20 20 10 10 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 98 99 00 01 02 03 04 05 06 07 08 09 19 19 20 20 20
Slide 6: Agenda: Nordic power market – Key drivers
• TII – Trading and Industrial Intelligence • Nordic power market – Key drivers – Recent development • Conclusions 6
Slide 7: Nordic power generation – dominated by hydro, but fossil needed
Nordic power generation – dominated by hydro, but fossil needed 140 Total Nordic generation 370 TWh in 2009 120 TWh % 100 Fossil fuels 61 16 TWh/a 80 Nuclear 73 20 60 Biomass 20 5 40 Wind 10 3 20 Hydro * 206 56 0 Denmark Norway Sweden Finland Net import in 2009: 5 TWh *) Source: ENTSO-E Memo 2009, w
Slide 8: The need for condensing power and import depends on hydrological situation
The need for condensing power and import depends on hydrological situation [TWh/a] 450 21.9 14.3 31.3 17.0 13.8 13.5 12.8 23.1 26.9 36.7 28.9 29.3 48.6 27.9 44.7 35.0 400 350 300 250 200 150 100 50 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Hydro+Wind Nuclear O
Slide 9: Hydro balance affects the Nordic spot
Hydro balance affects the Nordic spot Water + Snow compared to normal [TWh] 80 80 60 70 Nordic spot price [EUR/MWh] 60 40 50 20 40 0 30 -20 20 -40 10 -60 0 1/2000 1/2001 1/2002 1/2003 1/2004 1/2005 1/2006 1/2007 1/2008 1/2009 1/2010 9
Slide 10: Volatility in Nordic power price has increased after the start of European emissions trading
Volatility in Nordic power price has increased after the start of European emissions trading EUR/MWh Nord Pool System Price Forwards 110 EU ETS 100 90 80 70 60 50 40 30 20 10 6 September 2010 0 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Source: Nord Pool 10
Slide 11: Fuel and CO2 allowance prices
Fuel and CO2 allowance prices Crude oil price (ICE Brent) CO2 price (NP EUA) 160 35 140 30 120 25 EUR / tCO2 USD / bbl 100 20 80 15 60 40 10 20 5 0 0 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Coal price (ICE Rotterdam) Gas price (ICE NBP) 240 100 200 80 GBp / therm 160 60 USD / t 1
Slide 12: Nord Pool forwards have followed the (clean) SRMC for coal condensing power
Nord Pool forwards have followed the (clean) SRMC for coal condensing power EUR/MWh 80 70 60 50 40 30 20 2008 2009 2010 NP 1year fwd fwd marginal cost for coal fired condensing, including CO2 Note: Thermal efficiency 38%, hard coal with 7.1 MWh/ton energy intensity (25.6 GJ/ton) 12 0.9 tons of CO2 p
Slide 13: Nordic spot price deviates from SRMC for coal mainly due to changes in hydrological situation
Nordic spot price deviates from SRMC for coal mainly due to changes in hydrological situation 60 50 Hydro balance CDS 40 40 30 20 20 Hydro balance [TWh] 10 CDS [€/MWh] 0 0 -10 -20 -20 -30 -40 -40 -60 -50 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 13
Slide 14: After the cold and dry winter the weather fundamentals have developed towards normal conditions
After the cold and dry winter the weather fundamentals have developed towards normal conditions Nor+Swe Precipitation, TWh 12 10 After the coldest winter 8 since 1987, rather 6 normal temperatures excl. warmer than 4 normal July. 2 0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 25 Reference 75
Slide 15: Nordic reservoirs have less water than normally
Nordic reservoirs have less water than normally 100 90 80 70 60 [%] 50 40 30 20 10 0 1 5 9 13 17 21 25 29 33 37 41 45 49 53 MAX MIN 2009 2010 average 1975-2005 15
Slide 16: Nordic Year price has been volatile due to macro uncertainty, commodity prices and hydro balance
Nordic Year 11 price has been volatile due to macro uncertainty, commodity price variations and hydro balance development Nordic Year 2011 price during 2010 51 49 47 45 €/MWh 43 41 39 37 35 Jan Feb Mar April May June July Aug Sep 16
Slide 17: Nord Pool and German EEX forward year 2011 spread has decreased
Nord Pool and German EEX forward year 2011 spread has decreased due to low spot gas price and water deficit in Nordic 25 20 EUR / MWh 15 10 5 0 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 17
Slide 18: Market coupling has increased efficiency in cross-border capacity usage
Market coupling has increased efficiency in cross- border capacity usage - decreased price difference between Germany and DK West Daily price difference DK West - Phelix Explicit auctioning Tight volume coupling by EMCC €/MWh 30.0 20.0 10.0 0.0 -10.0 -20.0 -30.0 -40.0 11/08 12/08 02/09 04/09 05/09 0
Slide 19: Export capacity to Continental Europe will at least double by 2020
Export capacity to Continental Europe will at least double by 2020 Export capacity by exporting country Export capacity by importing country 12,000 60 12,000 60 Export volume (right axis) Export volume (right axis) 10,000 50 10,000 50 Finland 8,000 40 8,000 40 LT TWh Norway TWh MW MW 6,000 30 6,000
Slide 20: Demanding national RES-E targets – economics and actual outcome?
Demanding national RES-E targets – economics and actual outcome? Targeted RES-E production by 2020 compared to 2008 20 • Certificate scheme in Sweden aiming for 25 16 TWh RES-E additions 2002-2020 TWh/a 12 • Norway plans to join the 8 Swedish certificate system in 2012, with 4 equal ambitions as Swe
Slide 21: Agenda: Conclusions
• TII – Trading and Industrial Intelligence • Nordic power market – Key drivers – Recent development • Conclusions 21
Slide 22: Conclusions
Conclusions • Seasonally hydrology and temperature continue to have a significant impact in Nordic power price • Commodity prices (coal, CO2 and gas) have a big role especially in forward but also in spot pricing • Nordic electricity demand still growing and expected to reach pre- crisis level 2012-
Slide 23: Capital Markets Day 2010
Capital Rye /10 2010/09/16