Enabling DSOs to Adapt Europe’s Rapidly Changing Electricity Market The Annual European POWER GENERATION STRATEGY SUMMIT Wednesday 26 November 2014 Enabling DSOs to Adapt Europe’s Rapidly Changing Electricity Market CEO Tapani Liuhala Elenia – Finland

The future in our hands in the regulated business ELENIA’S PATH WHY AND WHAT NEXT? The future in our hands in the regulated business Link

293.7 M€ 377 412,000 12% Elenia today Elenia Group Elenia Oy, electricity distribution company, DSO Elenia Lämpö Oy, heating company Elenia Finance Oyj, financial company Owned by Ilmarinen, Goldman Sachs and 3i. Turnover 293.7 M€ Employees 377 Customers 412,000 Market share 12% Partnerships and partners’ personnel Electricity network services Electricity metering Data transfer services Administrative services 700–800 person-years 160 meters of lines/customer Total power lines of 60,000 km Cable stretch 1.5 times around the world Electricity network management ISO 55001 and PAS 55 certification Occupational Health and Safety Management System OHSAS 18001 Environmental Management System SS-EN ISO 14001 Tekijä, esitys, pvm

Business- and customer-driven distribution services Energy, in its various forms, is a prerequisite for modern everyday life As a DSO we help our customers’ everyday life to flow smoothly A modern DSO runs its services and business like any company in a competitive market enabled by modern regulation The Energy Authority is using the customer’s voice in Finnish distribution markets Regulation enables capital-intensive distribution services

Market development from liberalization to transparency After the energy market liberalization in Finland 1995 the role of energy companies has been changing In the beginning focus was on the sales companies and sales competition Now the focus has turned towards enabling transparent and competitive electricity markets As market enablers DSOs are strengthening their role Growing demands of the society consolidate the markets

WIN Elenia and regulation CUSTOMER SOCIETY ELENIA BETTER SERVICES SECURITY OF SUPPLY BUSINESS OPPORTUNITY Elenia Operational efficiency in both opex and capex Customer-oriented business processes with new smart services Service production based on a flexible business network Regulation DSO having a clear role enabling the electricity market Finland having a strong role as one of the forerunners in the electricity markets Reasonable prices and security of supply

ELENIA’S PATH From then to now

Elenia’s path 1997 2001 2006 2013 2028 Establishment of contracting markets Information services during outages Smart metering Weatherproof networks

Elenia’s path 1997 2001 2006 2013 2028 Establishment of contracting markets First step 1997, next steps 2002 and 2007 In the beginning only a few service providers Today fully functioning markets with several actors Establishment of contracting markets Information services during outages Smart metering Weatherproof networks

Elenia’s path 1997 2001 2006 2013 2028 Establishment of contracting markets Information services during outages Smart metering Weatherproof networks

Elenia’s path 1997 2001 2006 2013 2028 Establishment of contracting markets Information services during outages Automatic information services during outages Customers’ growing demands towards transparency and trust since Janika storm 2001 Over 100 000 customers without electricity in Finland Elenia established web map service 2007 and SMS service for customers 2008 Demands for proactive outage information into the Finnish Electricity Market Act 2013 Smart metering Weatherproof networks

Elenia’s path 1997 2001 2006 2013 2028 Establishment of contracting markets Information services during outages Smart metering Weatherproof networks

1997 2001 2006 2013 2028 Elenia’s path Smart metering Our pilot for smart meters 2002 Smart meters also enable a more real-time electricity market Mass roll-out 2004–2008 to install smart meters for all customers Hourly-based measuring enables a better electricity market Consumption-based invoicing started The Electricity Market Act demands for smart meters from 2009. Consumption-based invoicing Network losses are measured hourly and purchased based on measurements. Today 97% of all customers in Finland have smart meters Remote disconnecting and reconnecting to improve market efficiency Smart metering systems enable smart services for customers like Elenia Mukana mobile application Quality monitoring also at a level of 0.4 kV 1997 2001 2006 2013 2028 Establishment of contracting markets Information services during outages Smart metering Weatherproof networks

Elenia’s path 1997 2001 2006 2013 2028 Establishment of contracting markets Information services during outages Smart metering Weatherproof networks

1997 2001 2006 2013 2028 Elenia’s path Weatherproof networks Establishment of contracting markets Information services during outages Weatherproof networks Research project for “weatherproof networks” 2006–2009 Decision to build only cable network in 2009 Large investment program for the period 2013–2028 Cabling rate in 2009 20%, today 30%. Target in 2028 is 70% Growing demands of the security of supply changed the Electricity Market Act in 2013 Smart metering Weatherproof networks

WHAT NEXT? Role of DSO

DSO as market facilitator CUSTOMER Security of supply Weatherproof network Self-healing network Demand response Smart grids Energy efficiency and renewables Customer awareness Improving energy efficiency Enabling renewables to markets Electrical vehicles Energy Markets Services improving market activity Innovative services for customers WHY? Requirements of modern society WHY? Reductions in fossil fuels as energy source WHY? Effective use of resources By enabling the functional electricity markets, DSOs have a key position in fighting against climate change

Thank you for your interest! Tapani Liuhala Role of DSO SMART ENERGY MARKET Thank you for your interest! Tapani Liuhala