1. In Solar Economy, the role of electricity grows.
A growing share of the world’s population will gain access to modern energy systems
Currently, 1.3 billion people live without electricity. In the future, access to reliable electricity will be a priority, as electricity is an essential part of good living standards. The increase in energy consumption is weighted against the scarcity of natural resources, so there is more emphasis on energy efficiency.
Electrification of transportation
Electric vehicles will become more common and replace fossil-based transportation. This will lead to lower emissions and higher energy efficiency.
Fortum is responding to the growing demand for electricity
Fortum is contributing to fulfilling the constantly growing global demand for energy and is pursuing solutions that also meet the needs for sustainable development. Fortum believes that sustainability is one of the success factors for its business – also when exploring and entering growing markets, such as Russia and India. Fortum’s growth platform in India, for example, is based on its special expertise in energy-efficient combined heat and power (CHP) production, in which the company can also use local biofuels. In Russia, Fortum is implementing its extensive investment programme of ~2,400 MW and has also put significant effort into reducing conventional environmental impacts. By increasing energy efficiency, the company also reduces specific CO2 emissions.
Regarding the electrification of transportation, Fortum is preparing for the mainstreaming of electric vehicles by designing and implementing the charging station network and payment system. Fortum has more than 100 public charging stations in Scandinavia. In 2011, the company continued the development of solutions for electric vehicles and introduced a new turnkey concept that provides recharging services of electric vehicles for companies and municipalities in Finland, Sweden and Norway. Fortum’s concept takes care of the whole process: installation of the charging poles, electricity, maintenance and outage service.
2. In Solar Economy, most of the energy is sourced directly or indirectly from the sun.
Many of Solar Economy’s production forms are still in the development phase and their commercialisation will take time and resources. Public acceptance and financial support are also needed for all the renewable energy production forms, in order to enable a smooth transition towards Solar Economy.
Change in consumer behaviour
The changing role of consumers and their energy choices are of significance in Solar Economy. Electricity consumers become active players by tracking and adjusting their consumption and its economic and ecological impacts, and even by being electricity producers themselves.
Fortum is responding to the development of the energy system
Fortum’s main research and development (R&D) themes cover the most advanced technologies in the current energy system and the technologies and system solutions that will be needed to enable future Solar Economy. For example, a strong focus in 2011 was on researching the potential of various solar technologies. Fortum also teamed up with partners to develop smart grid technologies, sustainable urban solutions, and new integrated combined heat and power (CHP) concepts.
At the same time, Fortum aims to satisfy customer needs by offering them environmentally-benign energy products that provide an opportunity to reduce the carbon footprint. More and more private customers and companies are demanding that the electricity they buy comes with a guarantee of origin, i.e., information about how the electricity is produced. The increased demand for origin-certified electricity is a competitive advantage for Fortum in Finland and Sweden.
3. In Solar Economy, resources can be utilized at the lowest possible cost.
Investments will be efficiently allocated based on supply and demand. In the long run, renewable energy production will not rely on government subsidies – it will be financially sound on its own merit.
In order to increase competition and decrease the total cost of the system, electricity needs to flow over national borders. This requires heavy investments in national electricity distribution networks as well as cross-border transmission lines.
Fortum is responding to the changing market
As an energy industry expert, Fortum engages in an active dialogue with authorities and decision-makers about key issues in the energy sector. For Fortum’s investments, the starting point is always an economically viable balance between increasing demand and emissions reduction targets. A strong balance sheet and good profitability are important to Fortum. They help to ensure that Fortum can implement its strategy with flexibility, carry out planned investments and seize new opportunities when they arise.
Fortum envisions good opportunities in the direct utilisation of solar power, among other sources of renewable energy, and believes that it has the potential to be commercially competitive.
The extensive increase in renewable energy, especially intermittent wind and solar energy, will create a major challenge for the operation of the present energy transmission infrastructure. Fortum owns, operates and develops regional and local electricity networks and supplies electricity to a total of 1.6 million customers in Finland, Sweden and Norway. Continuous investments are being made to renew, maintain and further improve network reliability. In 2011, EUR 289 million was invested in new power lines, isolating overhead lines, underground cables and automation of critical parts of the grid.
4. In Solar Economy, customers become active participants in the energy system.
Customers adjusting consumption
Customers can use real-time consumption and market information to adjust their own consumption from peak hour prices to hours when the price is lower. Software applications support customers in optimising their consumption.
Customers as producers of energy
Customers themselves can produce some of the electricity they use with, e.g., their own solar panels. Smart grids enable customers to sell surplus electricity to the grid.
Fortum is responding to the needs to activate customers
Fortum is installing smart meters for all its customers to offer better control of electricity usage. The advantage of smart meters is that customers can now see their actual household electricity consumption data via the internet. Fortum has also launched in-home displays – in Sweden in 2010 and in Finland in 2011 – to enable customers to track their own consumption in real time.
In addition, Fortum engages in several smart grid-related R&D and demonstration projects. In Finland, Fortum has participated in successful piloting activities on automation concepts to improve grid reliability and sustainable urban living solutions with partners such as ABB, Skanska and KONE. In Sweden, Fortum is contributing to the development of smart grids and smart heating and cooling solutions for the Royal Seaport of Stockholm. According to a pre-study conducted in 2011, the various parts of the energy system can be connected in a way that enables the consumer to participate more actively in the electricity market.