Ginta Cimdiņa

Chairperson of the Board, Fortum Jelgava

„Innovative Sustainable Energy Solutions for Smart Cities and Communities”

Riga, October 18, 2013

Biomass CHP – a sustainable

solution for Jelgava heat supply

What is Fortum?

2

TGC-1 (~25%)

Power generation ~7 TWh

Heat sales ~8 TWh

OAO Fortum

Power generation 19.2 TWh

Heat sales 26.4 TWh

Russia

Poland Power generation 0.8 TWh

Heat sales 4.3 TWh

Baltic countries Power generation 0.4 TWh

Heat sales 0.9 TWh

Nordic countries

Power generation 51.6 TWh

Heat sales 14.5 TWh

Distribution customers 1.6 million

Electricity customers 1.2 million

Nr 3 Power

generation

Electricity

sales

Nr 2

Nr 1 Heat

Distribution

Nr 1

Key figures 2012 Sales EUR 6.2 bn

Operating profit EUR 1.9 bn

Balance sheet EUR 25 bn

Personnel 10,400

Great Britain Power generation 1.1 TWh

Heat sales 1.8 TWh

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Fortum is the world’s 4th largest heat producer with operations in 8 countries

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• Listed at the Helsinki Stock Exchange since 1998

• Over 90,000 shareholders

• CHP/condensing production in over 30 plants

Small scale heat production in over 700 heat-only boilers

Operations in over 200 district heating networks located in 80

cities

• Industrial heat and steam supply for over 250 industrial customers

• Management model under two divisions

Heat: Sweden, Finland, Norway, Poland and Baltic countries

Russia: OAO Fortum (former TGC-10) and ~25% in TGC-1

Foreign

investors

30.5% The Finnish

state

50.8%

Other Finnish

investors 8.9%

Households 7.1%

Financial and insurance

institutions 2.7%

Heat Market in Latvia / Top 9 cities

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Territorial

unit

Heat

production

(GWh)

Market

share

LATVIA 6 944

Rīga 3 484 50%

Daugavpils 467 7%

Jelgava 213 3%

Jēkabpils 89 1%

Jūrmala 164 2%

Liepāja 288 4%

Rēzekne 163 2%

Valmiera 106 2%

Ventspils 217 3%

Source: CSB

3 484

467

106

163 288

217

213

164

89

Next generation energy company: mission and strategy

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Strategy

Fortum’s purpose is to create energy that improves life for present and future

generations. We provide sustainable solutions to the society and deliver

excellent value to our shareholders

Mission

Build on the strong

Nordic core

Create solid earnings growth in Russia

Build platform for future growth

Competence in CO2-free hydro and nuclear,

efficient CHP production and energy markets

Fortum Jelgava

• Shareholders: 100% owned by Finnish energy corporation Fortum

• DH operator in Jelgava since 2008

• Concession of DH assets for 30 years from the city of Jelgava

In 2012:

• Heat sales: 200 GWh

• Heat losses: 15.6%

• Length of network: 72.4 km

• Heat customers: 388 contracts

residential customers: 78%

business customers: 22%

• Electricity produced per annum:

from natural gas 33 GW

from biomass 110 GW

• Employees 93

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Jelgava district heating system in 2008 - 2009

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Filozofu

0.8MW

Ganību II

4,6 MWth/3,9 MWel

Ganību I

113MW Skautu

0.3MW

Instituta

0.9MW

Kalnciema

2.5MW

Aviacijas

28MW

Neretas

1MW

Rupniecibas

53MW

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Investments in Jelgava DH system in 2008 - 2009

• CHP plant at Ganību iela

• Installed capacity : 4,6 MWth/3,9 MWel

• In operation since 2009

• Fuel – natural gas

• 4 gas engines

• Boiler palnt at Aviācijas iela

• Installed capacity: 28MW

• In operation since 2008

• Fuel – natural gas

• 3 HOBs

• DH network

• 9 km constructed

Total investments – 12,3 MEUR

What has changed since 2005?

• The price of natural gas has increased by

300%

• Excise tax for natural gas that is used as

fuel has been implemented

• Electricity price has increased 2 times

• VAT for heat energy for residential

consumers has been implemented

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During the time period from January 2005 till July 2012

Importētās Krievijas gāzes cenu procentuālāssvārstības (%) *

Latvijas koksnes enerģētiskās šķeldas cenuprocentuālās svārstības (%)

Gāzes cenu tendence

Šķeldas cenu tendence

Gas and biomass price development

+300 %

* Source: Latvijas gāze (tariffs for industrial customers the largest group)

+85 %

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Heat energy tarrifs in Jelgava 2005 – 2013

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21,51

54,33

47,51

43,01

Jelgava biomass CHP Plant

• Jelgava biomass CHP plant will provide up to

85% percent of Jelgava district heating load

• Installed capacity - 23MW for electricity and -

45MW for heat. The plant will generate 230

GWh of heat and 110 GWh of electricity per

year

• Fuel – biomass (woodchips)

• Total investment in Jelgava CHP plant –

70 million Euros in plant and associated

infrastructure constructions, added 6 million

Euros have been allocated from the EU funds

• Commissioned – September 2013

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Site at Rūpniecības iela, Jelgava, in 2008

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Fortum biomass CHP in Jelgava, June 2012

Fortum biomass CHP in Jelgava, June 2013

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Ganību HOB

110 MW

Ganību CHP

4.6 MWth/4 MWel

Kalnciema

2.5 MW

Aviācijas

28 MW

Neretas

1MW

Skautu

0.3 MW

Rūpniecības BIO CHP

45 MWth/23 MWel Rūpniecības

HOB 23 MW

Vapor 8 MW

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Jelgava DH system and heat sources from autumn 2013

The first interconnection of DH systems in Latvia under the river

• Aim of the project – to connect the right

bank and the left bank district heating

systems in order to provide district heating

from the new biomass CHP plant

• Total length – 1408 m, from which 380 m are

under the river

• Construction finalized in Q4, 2012

• Total costs – around 2 million Euro

Existing production and new heat supply after Bio CHP start-up

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Gas boilers

Gas CHP > 4MW

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New MW

Days

Bio CHP capacity is almost fully utilized during the heating season/

Gas boilers (only for peak hours)

Bio CHP 23MW ( working hours ~ 5200 h)

Gas CHP < 4MW (working hours ~ 8050 h)

Existing District

heating gas boilers

where from 70`s and

needed replacement.

Time schedule

• Environmental impact assessment 27.04.2011.

• Investment decision 14.06.2011.

• Civil works started 03.08.2011.

• Construction works started 25.06.2012.

• First firing with gas 16.04.2013.

• First firing with biomass 17.05.2013.

• Synchronization with the grid 13.06.2013.

• Start of trial run 15.07.2013.

• Commissioning 11.09.2013.

Key indicators

– Fuel power – 77 MWfuel

– District capacity – 45 MWdh

– Electricity capacity – 23 MWe

– Condensing capacity – 30 MWth

– Estimated DH produced – 230 GWh

– Generated backpressure electricity – 110 GWh

– Plant efficiency – 88%

– 7 local fuel suppliers

– Fuel supply in summer 10 – 12 trucks/day

– Fuel supply in winter 25 – 30 trucks/day

– Staff – 30 engineers and operators; 5 shifts each 12h

Bubbling Fluidized Bed Boiler

Fuel tanks

Furnice

Stack

Flue gas filters

Fuel feeding

openings

Superheater

Boiler parameters:

Input capacity: 76 MW

Minimum load: 35%

Steam capacity: 26 kg/s

Steam temperature: 527 C

Steam pressure: 117 bar

Temp.in the furnice: 850C – 1000C

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Fuel Supply

weights Fuel receiving in

a storage Fuel feeding to

the boiler

Samples for the

laboratory to test heat

capacity (MWh/t)

Paying for the

fuel (LVL/MWh)

10-12 trucks/day in summer

25-30 trukcs/day in winter 500 000 m3/year or 400 000 MWh

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Benefits for Jelgava

• Previous production was 100% natural gas based, using boiler houses from 70`s

• Imported fossil fuel replaced by renewable, local

• Fortum’s total investment during 2008-2013 totals ~ 90 M€, including DH network renovation;

interconnection of two DH systems under river and replacement of all heat production units, including

BioCHP CO2 emissions will reduce by 75% .. 90%

• Fuel efficiency – 90 %

• More competitive and predictable district heating price

CO2 emissions from heat production CO2/kWh

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Heat energy tariffs, Ls/MWh

Current

From

December 1st

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.98

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(Tariff is set at sales price of natural gas up to 205 Ls/thous.nm3) (green- wood chips, red - CHP, natural gas- HOBs)

Tartu, Estonia bio/peat CHP 25 MWel/50 MWth in

operation since 2009

Total investment 75 MEUR

Pärnu, Estonia bio/peat CHP 23 MWel/45 MWth

in operation since 2010

Total investment 80 MEUR

Klaipeda, Lithuania WtoE CHP 20 MWel/50 MWth

in operation since May 2013

Total investment 130 MEUR

Jelgava, Latvia bio CHP 23 MWel/45 MWth

in operation since September 2013

Total investment 70 MEUR

Fortum’s recent investments in the Baltics in local fuel based CHPs

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CHP-integrated pyrolysis oil production

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Next generation CHP with integrated concepts

Why is this important?

•Aim for higher power/heat ratio

•Competition in fuels -> fuel flexibility

•Slow growth or decrease of heat loads

•Load factor (4000 -> 8000 hours/a)

•Integrated concepts could provide new

business opportunities and products

CHP plant

“Biorefinery”

Industry

District

heating, cooling

Examples of integrated concepts

Pyrolysis oil

Torrefaction (bio coal)

Gasification (SNG, traffic fuels, green

chemicals)

Ethanol (1st and 2nd generation)

Heat driven cooling

Desalination

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Pyrolysis oil – a domestic alternative for fossil oils

• Bio oil is produced from biomass like forest residues and

other forest industry by-products

• Energy density of bio oil is high compared to unprocessed

biomass

– Bio oil can be economically transported longer distances to be

utilised in heat and steam production

– Heating value of bio oil is about half compared to fossil oils

• Bio oil can be used for replacing heavy fuel oil

• In the future bio oil can be a raw material for carbon lean

chemicals and traffic fuels

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Thank you!

www.fortum.com & www.fortum.lv