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Tomorrow's Sustainable Energy Solutions and Urban LivingAnne Brunila

Executive Vice President, Corporate Relations and Sustainability

Fortum Corporation

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Contents- Fortum today- Sustainability challenges- Tomorrow's energy system- Smart energy solutions and urban living

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Foreign investors 30.1%Finnish State 50.8%

Other Finnish investors 9.0%

Households 7.5% Financial and insurance institutions 2.6%

• Listed at the Helsinki Stock Exchange 1998

• Approximately 100,000 shareholders

• Among the most traded shares in Helsinki stock exchange

• Market cap ~19 billion euros

Fortum today a leading Nordic power and heat company

31 January 2011

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Fortum’s geographical presence

TGC-1 (~25%)Power generation ~6 TWhHeat sales ~8 TWh

OAO Fortum Power generation 16.1 TWhHeat sales 26.8 TWh

RussiaRussia

PolandHeat sales 4.0 TWh Electricity sales 0.1 TWh

Baltic countriesHeat sales 1.4 TWhElectricity sales 0.3 TWhDistribution cust. ~24,000

Nordic countriesPower generation 52.3 TWh

Heat sales 20.7 TWh

Distribution cust. 1.6 million

Electricity cust. 1.2 million

Nr 2 Power generation

Electricity sales

Nr 2

Nr 1 Heat

Distribution Nr 1

Key figures 2010Sales EUR 6.3 bnOperating profit EUR 1.7 bn Personnel 10,600

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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.

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.

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-to-business heating solutions.

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Sustainability embedded in the strategy

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Fortum's carbon exposure among the lowest in Europe

Source: PWC & Enerpresse, Novembre 2010Changement climatique et Électricité, Fortum

g CO2/kWh electricity, 2009

Average 346 g/kWh

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The share of CO2-free power generation was 69% ofFortum's total power generation.

In the EU, the share was 91% of the power generation and ~100% of the capacity of the ongoing investment programme.

Note:Fortum’s specific emission of the power generation in 2010 in the EU were 84 g/kWh and in total 189 g/kWh, 86 % (91 %) emission free in EU and 66 % (69 %) emission free overall.Figures for all other companies include only European generation.

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Sustainability challenges

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The need to mitigate climate change What efforts are necessary?

* International Energy Agency

GTCO2

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20

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Zero growth of global CO2 emissions

Estimated requirement to limit temperature increase to 2 ˚C

1950 20502000

Global CO2 emissions

Emissions

IEA* baseline scenario

8 wedges

6 additional wedges

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Each single wedge equals for example…

2 million 1 MW wind power plants

CCS in 800 large coal-fired power plants

Doubling the efficiency of world’s coal-fired power plants

Halving car mileage (or halving emissions from all

passenger vehicles)

500 Olkiluoto 3 nuclear power plants (1600 MW)

A bio crops plantation equaling the total area of India

More than 3 200 000 km2

Source: Fortum

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Tomorrow’s energy system –

Solar Economy

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Our view of the future:Towards Solar Economy

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Finite resources Large CO2 emissionsFinite resources Large CO2 emissions Infinite resources Emissions free productionInfinite resources Emissions free production

Traditional energy production

Exchaustible fuels and production that burdens the environment

Transition phaseEnergy efficient, low-emission

production forms

Solar economy

Inexhaustible and emissions-free, solar-based production forms

CHP

Fossile CCS

Nuclear power

Bio-CHPCCS + bio-CHP

GeothermalWater

Wind

Sun

Wave

Nuclear+ CHP

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Ongoing solar energy projects

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Ongoing wave power projects

Seabased 10MW

WaveRoller 300kW

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Increased renewable energy require “smarter” grids and “smarter” consumption

Future customers

• Consumers become producers

• Energy flows in both directions

• Intelligent customer gateway enables buying and selling

Source: LUT Energy

Traditional electricity grids

• Centralised power production

• Energy flows in one direction

• Production adapts to usage

• Power production based on historical experience

• Limited opportunities to connect new power production

Source: Fortum

• Centralised and dispersed power production

• The share of non-adjustable renewable power production increases

• Production based on real time data

Future electricity grids

Source: Fortum

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Wide areafleet managent

Transmission

Environmental constraints

Deregulation

Distribution into cables

Digitalizingcontact centreand services

On-linemeasurements

Rapidly increasinginformation management

Wirelesseverywhere

Distribution

Consumption

Market places

Green certificates

Branding

Distributedgeneration

Internet

Electric transportation

Smart homes

Smart grids

Heat pumps

District heating

Production

Source: Fortum Foundation

Energy business has changed and keeps on changing….

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CHP – sustainable and efficient use of resources

Losses 25Losses 25 Losses 48Losses 48

CHP production75% efficiencyCHP production75% efficiency

Separate production52% efficiencySeparate production52% efficiency

Fuel100Fuel100

Fuel100Fuel100

Electricity 25Electricity 25

Heat 50Heat 50

Electricity 17Electricity 17

Heat 35Heat 35

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Economically viable in

small scale

One plant – multiple products

Renewables competitive to

fossil fuels

Fuel flexibility Efficient use of resources

Large global potential

CHP’s advantages

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District heating has reduced emissions in Stockholm since 1980

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– 60 % CO2(carbon dioxide)

– 80 % NOx(nitrogen oxides)

– 95 % SOx (sulphur oxides)

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Smart energy solutions and urban living

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• Solar and wave power• Biomass pyrolysis• Advancing a rapid

adoption of electric vehicles

• New CHP, district heating and cooling solutions

• Distributed energy production and smart grids

• Increased nuclear safety and lifetime, nuclear CHP

Transport

Capture

Storage

Towards sustainable societies and urban living – Environmentally-benign R&D in Fortum

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New solutions launched by Fortum

Transport solutions

Grid management solutions

Smart buildings and metering solutions

New Business focus areas

Distributed electricity production

Distributed heat production

Microproduction

Energy services

Heat pumps and micro-CHP(1)

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Smart Heat – towards future sustainable energy system

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Electricity, heat, cooling, and gas in one integrated system where we always make use of surplus energy

The sustainable energy system of the future We use energy that would otherwise be

lost, and use it when it is needed

1. Enables more solar and wind power2.

Increased integration between the heating and electricity systems

3. Heat and cold storage

4. Increased share of local production in buildings

5. Smart grids

6. Electric vehicles and bio gas vehicles

We make use of all local energy

1. Recycling turns household waste into electricity, heat, and biogas

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Sustainable district solution in Espoo

District heating network

Heat pump facility

District cooling network

Server centre

CHP plant

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Royal Seaport of Stockholm – A prime example of sustainable urban development

Vision• Royal Seaport – an international benchmark

of sustainable urban development

Mission and goals• Build 10,000 new apartments, 30,000 work

spaces and a wide harbour in 2009-25

• Fossil fuel free-zone in 2030

• CO2-emissions less than 1.5 tonne/person

by 2009-2025 (currently 4.5 tonne/person)

Focus areas• Efficient use of energy• Climate-benign transport solutions• Life style -issues

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In future smart homes, the consumer can easily and effortlessly

– Monitor and manage selected devices remotely

– Steer the power source between utility grid, local generation and power storage or EV

– Automatically utilise dynamic pricing for cost optimisation

– Get individualised advice for energy efficiency improvements

New common requirement is real-time interactivity

Digitalization and smart homes provide real-time interactivity and efficiency

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Electricity in transport: several development projects ongoing

Toyota Prius (PHEV*)

VW Passat (BEV)

Fiat Doblo (BEV)

Th!nk City (BEV*)

Different car types Charging units already installed

Cooperation in Sweden and Finland

Stockholm(Slow)

Finland(Slow and fast)

Stockholm(Slow)

Stockholm(Payment)

Stockholm

Espoo

Karlstad

Kurikka

Cooperation with Mitsubishi, PREEM and Valmet Automotive

*PHEV Plug-in Hybrid Electric Vehicles, BEV Battery Electric Vehicles

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Thank you!