Capital Markets DayStockholm, 4 June 2007

District heating and cooling- Case Fortum Värme

Anders EgelrudBusiness unit head

Fortum Värme

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Disclaimer

This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any Fortum shares.

Past performance is no guide to future performance, and persons needing advice should consult an independent financial adviser.

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Contents

• District Heating• District Cooling• Market and CHP Potential• Planned projects

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• District Heating• District Cooling• Market and CHP Potential• Planned projects

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District heating an environmental success story

Fortum Värme's reduced emissions in Stockholm since 1980:

-60% of CO2 >95% of SO2 >80% of NOx

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Main advantages

• Enables flexible production based on optimal fuel mix• Enables combined heat and power (CHP) production• Environmentally friendly• An optimal solution within cities• Centralised production• An easy, clean and safe product

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District Heating enables CHP production

CHP potentialHeat ~70%Electricity ~30%Efficiency ~100%

Steam

Turbine

Generator

Combined Heat and Power

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CHP benefits

• Environmentally friendly• High fuel efficiency• High fuel flexibility• A key solution meeting increasing demand for Heat and Power in

urban environments• Politically uncontroversial solution for sustainability• Subsidies from power production (Green certificates)• Competitive• Still unexploited potential

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District Heating combined with CHP-The most efficient way to produce heat and electricity

Energy efficiency throughout the whole value chain from fuel suppliers to end users

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Fortum Värmes production of heat and electricity in Stockholm and emissions

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Heat production, GWh Electricity, GWh Nitrogen dioxide, t Sulphur, t CO2, Kt

More production less emissions

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CHP lowers CO2 emission

Grams of CO2 per produced kWh

Heat

CHP

Source, Professor Björn Karlsson, Linköpings Universitet

-600 -400 -200 0 200 400

Natural gasBio fuel

OilCoal

Bio fuelNatural gas

OilHeat pump

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Fuel mix 1986 and 2006 in Stockholm

Production 5202 GWh (4432 heat, 771 electricity)CO2 1200 KtRenewable 20 % (EU's goal 2020!)

Production 10200 GWh ( 8565 heat, 1635 electricity )CO2 400 KtRenewable > 70 %

Fossil oil 44%

Electricity 12%

Waste 10%Sea water 12%

Coal 22%

Coal 14%

Fossil oil 3%Electricity 11%

Bio oil 13%

Waste 12%Seawater 16%

Industrial waste 9%

Bio fuel 22%

1986 2006

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District heating is competitive

Source: Oil prices SCB, Electricity prices Nordpool, Woodchips STEM

SEK/MWh

1 200

1 000

800

600

4001996 1998 2000 2002 2004

Electric boiler

Oil

Woodchips

Heat pump

District heating

2006

Total heating cost, normal building with new installation (193 MWh)

Price development district heating Stockholm

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• District Heating• District Cooling• Market and CHP Potential• Planned projects

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050

100150200250300350400

1994

1996

1998

2000

2002

2004

2006

District Cooling

GWh

The largest system in the world for districtcooling with 7 000 000 m2 connected

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Benefits of district cooling

• Same basic principles as district heating• Enables centralised and flexible production• Environmentally friendly• 80% free cooling from seawater

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• District Heating• District Cooling• Market and CHP Potential• Planned projects

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Fortum Värme - district heat and CHP:s

District heatCHPIndustrial co-op.City gasDistrict cooling

Igelstaverket

HMC

HögdalenverketHammarbyverket

SkogåsFarsta

VärtaverketHässelbyverket Lidingö

Järfälla

Sundbyberg Solna

Bollmora

Drevviken

Fittja

Akalla

BristaverketValsta

Vilunda

Rotebro

80 percent of business in the great Stockholm area but other areas increase in significance.

Delsbo Näsviken Sörforsa

Hudiksvall IdenorIggesund

Hofors

Torsby

ArvikaAvesta

Kopparberg/BångbroHällefors/Grythyttan

Stockholm

Nynäshamn

Örebro

LaxåGullspång

Grums/Gruvön

Säffle/NPKristinehamn

Karlskoga

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"At present the district heating capacity in Stockholm is sufficient, but it won't be in the near future. Plants for heat production have to be situated relatively close to the buildings in order to avoid lost of heat caused by transports. New sites for heat production in order to both replace old plants and to support new buildings are needed."(Soruce, Vision Stockholm 2030)

The population in Stockholm is growing

Population growth in the Stockholm area for the period 1900-2000 with estimate for year 2030. (Source, Vision Stockholm 2030)

Year

Inhabitants

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Stockholm Vision and the CHP Potential

Igelstaverket

HMC

Högdalenverket

Hammarbyverket

SkogåsFarsta

VärtaverketHässelbyverket

Lidingö

Järfälla

Sundbyberg

Solna

Bollmora

Drevviken

Fittja

Akalla

Bristaverket

Valsta

Vilunda

Rotebro

Power potentials 2007 2015Heat sales: 12 TWh 15 TWhPower sales today, 12%: 1.7 TWhPower potential, 30%: 3.5 TWh 4.5 TWh

The Stockholm area has Sweden's largest CHP potential.

The demand for new capacity increases the need to find new sites and develop existing sites.

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• District Heating• District Cooling• Market and CHP Potential• Planned projects

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Värtaverket

New bio fuelled CHP-plant at Värtan

Heat capacity 300 MWElectricity capacity 140 MW

Fuel-flexible plant allows a wide range of fuels,from 100% biomass to 100% coal

Reduced CO²-emmissions800 000 tons/year

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New waste to energy CHP-plant at Brista

• Fuel 240 000 ton waste

• 57 MW heat

• 20 MW electricity

Bristaverket"Waste to energy a win win solution for business and society"

District Heating and CoolingEnvironmental and business

intelligence in urban societies

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