Investments and research & development

In line with the company’s strategy, Fortum pursues growth in carbon dioxide-free hydro and nuclear power and in energy-efficient combined heat and power (CHP) production. In 2011, the investments to support Fortum’s long-term goals and financial targets continued according to the strategy. In research and development, Fortum is actively investigating the future Solar Economy production technologies, such as solar and wave power.

Most of Fortum’s growth investments in 2011 were implemented by the Russia, Heat and Power Divisions. In the Distribution business area, Fortum is investing in further improving the reliability of its grid and in the installation of new smart electricity meters in Finland.

Fortum pursues growth from energy-efficient CHP production 

In January 2011, Fortum finalised the acquisition of two Polish power and heat companies, Elektrociepłownia Zabrze S.A. and Zespół Elektrociepłowni Bytom S.A. from the Polish State. Fortum also inaugurated a new combined heat and power plant in Pärnu, Estonia. The plant uses local fuels, like woodchips, wood residues from industry and milled peat. The production capacity of the new CHP plant is 24 megawatts (MW) of electricity and 50 MW of heat. 

Furthermore, Fortum and the municipal energy company Sollentuna Energi signed a final agreement according to which Sollentuna Energi will participate with a 15% share in Fortum’s new waste-fired CHP unit, Brista 2, which is being built in the Stockholm area in Sweden. The new unit will be able to process a total of 240,000 tons of household and industrial waste per year. According to the plan, Brista 2 will be ready for production in 2013 and its capacity will be 57 MW heat and 20 MW electricity. 

In June 2011, Fortum decided to invest in two new biofuel-fired CHP plants in Järvenpää, Finland, and Jelgava, Latvia. The investments total around EUR 160 million and the plants are estimated to start commercial operation in 2013. The new plants replace oil and gas with biofuels.

In October, Fortum decided to approve the co-ownership agreement to consolidate Turku region energy production to the co-owned production company Turun Seudun Maakaasu ja Energiantuotanto Oy (TSME) in Finland. TSME shareholders are Fortum, Turku Energia and the municipalities of Naantali, Raisio and Kaarina. The arrangement was realised at the beginning of 2012. Fortum’s shareholding in TSME is 49.5%.

New plants taken into commercial use in Russia  

Fortum is committed to a EUR 2.5-billion investment programme in Russia, with the last new units scheduled for commissioning in 2014. Altogether, Fortum’s extensive investment programme consists of eight new units, and it will increase OAO Fortum’s power production capacity by approximately 2,400 MW and heat production capacity by 662 MW.

The first three units of Fortum's investment programme in Russia started commercial operation in 2011 in Tyumen, Chelyabinsk and Tobolsk. Also the construction of the new power plant in Nyagan in North Urals continued. Once completed, the plant will have three natural gas-fired units with a 418 MW production capacity each. The first two units, Nyagan 1 and Nyagan 2, will be commissioned in 2012. 

Growing investments in renewable energy 

In 2011, Fortum continued to develop its existing hydro assets. Fortum’s long-term hydropower refurbishment programme aims to improve the production, efficiency and safety of hydropower plants. The investment programme will increase Fortum’s hydropower capacity by about 100 MW by 2020. 

Fortum is also preparing to participate in the tender processes for hydropower concessions in France, which are expected to officially start in 2012. In the frame of the European directive, France is to open up the hydro concession renewal process for competition. The French Government is thus putting the first tranche of ten concessions with a total capacity of 5,300 MW into a tender process in 2012–2015.

In October, Fortum and the French DCNS signed a Letter of Intent on -co-operation in the field of wave power research and development in France. A joint feasibility study for a wave power demonstration project located in France was started in 2011.

Fortum and Seabased AB signed an agreement in the end of the year on the construction of a joint wave power park in Sotenäs, Sweden. The construction of the park will start in 2012. After completion, the wave power park will be the world’s largest full-scale demonstration project of this kind. The Swedish Energy Agency has decided to grant investment support for the project.

Fortum and the Swedish Skellefteå Kraft are also constructing an onshore wind farm in Blaiken, Sweden. The wind farm will be constructed in phases and is expected to be completed in 2015.

Investments in electricity network and smart metering 

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 made to renew, maintain and further improve network reliability. The severe storms at the end of 2011, among the strongest in 30 years in Finland, damaged Fortum’s network and caused power outages for hundreds of thousands of customers, and thus put additional focus on a more weather-proof network. 

The installations of smart metering for all customers in Finland continued in 2011. The installation of the new meters will begin in 2013 in Norway; altogether 100,000 households as well as small business customers in Fortum’s network area will be connected to the system by 2015.

  Plant Production/Fuel type Heat (MW) Electricity (MW) Supply starts ²)
Power Division ¹) Forsmark 1, Sweden Nuclear   25 Decision in 2013
  Forsmark 2, Sweden Nuclear   30 2012
  Forsmark 3, Sweden Nuclear   35 Decision in 2013
  Oskarshamn 2, Sweden Nuclear   95 2015
  Oskarshamn 3, Sweden Nuclear   110  
  Olkiluoto 3, Finland Nuclear   400 2014
  Nordic hydropower upgrades, Finland and Sweden Hydropower   10–20 MW annually by 2015
Heat Division Klaipeda CHP, Lithuania Waste 60 20 2013
  Brista CHP, Sweden Waste 57 20 2013
  Järvenpää CHP, Finland Biofuel 63 23 2013
  Jelgava CHP, Latvia Biofuel 45 23 2013
Total new capacity     225 ~800  
¹) Capacity increases reported under Power Division, represent Fortum’s share of increase.
²) Start of commercial operation preceeded by test runs, licencing etc.
Plant Fuel Existing capacity electricity, MW New capacity electricity, MW Total Supply starts ¹)
Argayash CHP   195   195  
Chelyabinsk CHP-1   149   149  
Chelyabinsk CHP-2   320   320  
Chelyabinsk CHP-3 Gas 360 216 576 2011
Chelyabinsk GRES   82   82  
Tyumen CHP-1 Gas 472 190;2x248 1.157 2011, 2014
Tyumen CHP-2 Gas 755   755  
Tobolsk CHP Gas 452 213 665 2011
Nyagan (1-3) Gas   1,254 1,254 2012-2013
Total capacity   2,785 2,368 5,153  
¹) Start of capacity sales, preceeded by test runs, licencing, etc.

Research and development 

The purpose of research and development (R&D) is to improve Fortum’s competitiveness and to create a foundation for new profitable business. The long-term aspiration of R&D is to enable a sustainable carbon dioxide-free future for Fortum. Each new development activity is assessed against the criteria of carbon dioxide emissions reduction and resource efficiency. R&D focus areas are performance excellence of current operations, enabling growth and contributing to an emissions-free energy system in the long-term. 

Fortum’s main 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. In 2011, a strong focus in R&D was on understanding the potential of various solar technologies. Fortum also teamed up with partners in large programmes to develop smart grid technologies, sustainable urban solutions, and new integrated CHP concepts. Nuclear R&D continued to be the largest and most valuable part of Fortum’s R&D portfolio. Furthermore, the work in the areas of pyrolysis, torrefaction, and the potential of integrating a CHP plant with bioethanol production continued actively.