Fortum Business Model Canvas

Fortum actively collaborates with transmission system operators (TSOs) and other grid stakeholders to ensure the stable and reliable delivery of electricity. This partnership is essential for managing the complexities of integrating diverse energy sources and optimizing the entire energy system. For instance, in 2024, Fortum continued its work with Fingrid, Finland's TSO, on grid balancing services, contributing to the overall resilience of the Nordic power market.

Fortum's key partnerships are vital for its decarbonization strategy, focusing on industrial clients, technology innovators, and grid operators.

Collaborations with industrial giants like SSAB for steel electrification, and with technology firms for SMRs and hydrogen, are central to Fortum's innovation and market positioning.

These alliances are crucial for co-creating solutions, managing large-scale energy infrastructure investments, and ensuring reliable energy delivery.

Fortum's supplier network provides essential equipment and services, underpinning its diverse energy generation and grid operations.

Fortum's core activities include the comprehensive development and strategic investment in a diverse portfolio of clean energy projects. This encompasses expanding renewable energy sources like wind and solar power, alongside exploring and investing in advanced nuclear technologies such as Small Modular Reactors (SMRs). The company is also actively involved in the production of hydrogen, a key component in future decarbonization efforts.

These development initiatives are crucial for Fortum's long-term strategy, directly supporting its commitment to a low-carbon future and driving future business growth. For instance, in 2023, Fortum continued to advance its renewable energy pipeline, aiming to significantly increase its installed capacity in the coming years, contributing to the broader European energy transition.

Fortum's key activities revolve around generating clean electricity and heat, a mission strongly supported by its substantial investments in renewable and nuclear energy. The company actively optimizes its power generation assets, ensuring efficient operation and responsiveness to market demands.

Furthermore, Fortum engages in energy trading to capitalize on market price fluctuations, a strategy that proved beneficial in 2023. The company also focuses on developing new clean energy projects, including wind, solar, and hydrogen production, aiming to expand its low-carbon portfolio.

In 2024, approximately 99% of Fortum's power generation came from CO2-free sources, highlighting its commitment to sustainability. The company also provides energy efficiency services and industrial decarbonization support, helping clients reduce their environmental impact.

Operational excellence is pursued through cost reduction programs and strategic divestments of non-core assets, enhancing financial health and strategic focus. Fortum reported progress in its efficiency programs in 2023, positively impacting its financial results.

Fortum's financial capital is a cornerstone of its business model, enabling sustained operations and strategic expansion. The company’s commitment to a strong balance sheet, evidenced by low financial net debt, ensures resilience and capacity for future investments.

In 2024, Fortum's financial strength is projected to be supported by robust cash flow generation, a critical factor for funding both day-to-day activities and ambitious growth initiatives. This financial stability is key to pursuing strategic acquisitions and capital expenditures that align with its long-term vision.

Fortum's intellectual property, particularly its expertise in nuclear power operations and its extensive knowledge of Nordic energy markets, forms a crucial intangible asset. This deep understanding allows for efficient management of complex energy systems and the development of new, sustainable solutions.

The company’s proprietary technologies and operational know-how are key differentiators, enabling it to maintain high standards of safety and efficiency. In 2024, Fortum continued to refine its operational processes, drawing on decades of experience in managing diverse energy generation assets.

Fortum's brand reputation is another vital resource, built on a long history of reliable energy supply and a growing commitment to sustainability. This strong brand image fosters trust among customers, investors, and regulatory bodies, supporting its market position.

This reputation is particularly important as Fortum expands its focus on renewable energy and circular economy solutions. The company's consistent performance and transparent communication in 2024 reinforced its standing as a trusted energy provider.

Fortum partners with industrial clients to guide their decarbonization efforts, providing customized energy solutions and facilitating the shift from fossil fuels. This includes developing new clean energy generation through collaborations and investigating the potential of green hydrogen.

In 2024, Fortum's commitment to sustainable solutions is evident in its ongoing investments in renewable energy sources and its focus on circular economy principles. The company aims to significantly reduce its own emissions and those of its customers, contributing to a greener industrial landscape.

Fortum provides reliable electricity and heat, a fundamental service for both industry and daily life, especially within the stable Nordic energy system.

In 2023, Fortum's Swedish nuclear plants maintained an operational availability exceeding 92%, showcasing their dedication to consistent energy output. Their combined heat and power (CHP) facilities also demonstrated high uptime, crucial for maintaining district heating services.

Fortum's clean energy commitment is a key advantage, with 99% of its 2024 power generation coming from CO2-free sources. This clean profile strongly appeals to environmentally conscious customers and businesses aiming to reduce their carbon footprint.

The company actively assists industrial clients in their decarbonization journeys by offering tailored energy solutions and supporting the transition away from fossil fuels, including exploring green hydrogen potential.

Fortum's value proposition centers on delivering dependable energy, fostering decarbonization, and offering competitive pricing through efficient operations and strategic market management.

Fortum prioritizes proactive customer service, offering multiple channels like phone, email, and online portals to handle inquiries and provide support. This commitment ensures a seamless customer journey, fostering satisfaction and loyalty.

In 2024, Fortum reported a significant increase in digital service adoption, with over 75% of customer interactions handled through online platforms. This efficiency not only streamlines support but also allows for quicker resolution of issues, reinforcing their dedication to customer retention.

Fortum's customer relationships are built on a foundation of tailored solutions and proactive engagement, especially for its industrial clients. Specialized sales teams and key account managers work closely with businesses to develop energy strategies that align with their decarbonization goals, fostering long-term partnerships. In 2024, this collaborative approach led to a notable increase in joint projects focused on reducing carbon footprints.

Digital self-service platforms are also crucial, offering residential and business customers convenient ways to manage accounts and track energy use. By 2024, over 75% of customer interactions were happening through these digital channels, highlighting Fortum's commitment to efficient and accessible customer support.

Fortum’s reputation for reliable, clean energy is a key factor in building customer trust and loyalty. Industry recognition for sustainability, such as awards received in 2023, further solidifies this positive brand image and encourages enduring customer relationships.

Fortum actively participates in wholesale electricity markets, notably Nord Pool Spot, to efficiently trade its generated power. This engagement is crucial for managing its diverse generation portfolio, which includes nuclear, hydro, and wind power, and for optimizing sales of surplus energy.

In 2024, the European wholesale electricity market experienced significant price volatility driven by factors such as gas prices, renewable energy output, and geopolitical events. Fortum's ability to navigate these fluctuations through its trading activities directly impacts its revenue streams and profitability.

Fortum utilizes a multi-channel approach to reach its diverse customer base. Direct sales teams engage major industrial clients, while digital platforms like its website and mobile apps serve retail customers. Wholesale market participation, primarily through Nord Pool Spot, is key for energy trading.

Customer service centers and helplines provide essential support across all segments. Strategic partnerships and collaborations, including joint ventures and municipal cooperation, are also vital for expanding market reach and developing specialized energy solutions.

Small and Medium-Sized Businesses (SMBs) represent a crucial customer segment for Fortum, seeking dependable and economical energy. These enterprises, from local shops to manufacturing firms, require energy solutions that align with their operational needs and increasingly, their commitment to environmental responsibility.

Fortum's offerings for SMBs are designed to be flexible, catering to diverse consumption patterns and supporting their sustainability objectives. For instance, in 2024, the European Union continued to emphasize energy efficiency for businesses, with many SMBs actively seeking ways to reduce their carbon footprint and operational costs.

Fortum's customer base is diverse, spanning large industrial clients, residential households, small and medium-sized businesses (SMBs), and public sector entities. Each segment has unique energy needs and priorities, from decarbonization for industries to affordability for households.

The company also engages significantly with other energy companies and grid operators, participating in wholesale power trading and providing essential grid balancing services. These B2B relationships are vital for market stability and operational efficiency, especially as the energy landscape evolves with more renewables. In 2024, the European energy market continued to see significant investment in grid modernization to support the energy transition.

Fortum incurs costs for procuring fuel for its remaining thermal power plants and for purchasing electricity and natural gas to supply its customers. Despite a significant portion of its generation being CO2-free, these procurement costs are a key element of its cost structure. For instance, in 2023, Fortum's Cost of Goods Sold, which includes energy procurement, was €7.5 billion, reflecting the impact of market prices.

Fortum's cost structure is dominated by the operation and maintenance of its diverse energy generation assets, including significant investments in clean energy infrastructure. Fuel procurement for thermal plants and electricity purchases also represent substantial ongoing expenses.

The company's commitment to future growth is evident in its capital expenditures, particularly those directed towards renewable energy development and emerging clean technologies like hydrogen. Personnel and administrative costs, alongside research and development for new energy solutions, further shape its cost base.

Fortum generates revenue by providing a range of energy services and solutions to its industrial and business clients. These offerings go beyond simple energy provision, focusing on areas like decarbonization support, energy efficiency improvements, and comprehensive energy management.

In 2024, Fortum continued to emphasize these value-added services, recognizing their growing importance for customers seeking to reduce their environmental impact and operational costs. For instance, their energy efficiency solutions aim to optimize energy consumption for businesses, leading to direct cost savings and contributing to sustainability goals.

Fortum's revenue streams are diverse, encompassing electricity sales, heat and cooling, energy services, optimization premiums, and the sale of environmental attributes like Guarantees of Origin (GOs). These diverse income sources reflect the company's integrated approach to energy provision and its strategic positioning in evolving energy markets.