POWER PLANTS’ FOCUS ON GAS VESA RIIHIMÄKI
President, Power Plants & Executive Vice President
© Wärtsilä 1 14 November 2013 VESA RIIHIMÄKI
Wind, solar and gas expected to grow strongly
Source: World Energy Outlook 2012 IEA, New Policies Scenario
Coal 32%
Oil 8%
Gas 26%
Nuclear 8%
Hydro 20%
Bioenergy 1%
Wind 4%
Solar PV 1%
Other (Geothermal
, CSP, Marine)
0%
2010 Coal 26%
Oil 3%
Gas 26%
Nuclear 6%
Hydro 19%
Bioenergy 2%
Wind 11%
Solar PV 6%
Other (Geothermal, CSP, Marine)
1%
2030
5,183 GW 8,588 GW
+453 GW
+726 GW
+883 GW
2 © Wärtsilä 1 Wärtsilä Capital Markets Day 2013 / Vesa Riihimäki November 14, 2013
Market for gas and liquid fuelled power plants
0
20
40
60
80
100
120
140
H1 H2
Includes all Wärtsilä power plants and gas turbine manufacturers’ gas and liquid fuelled power plants with prime movers
above 5 MW, as well as estimated output of steam turbines for combined cycles.
The gas turbine data is gathered from the McCoy Power Report.
Other combustion engines not included. In engine technology Wärtsilä has a leading position.
Overall market size
GW
H1 2013 Top 15 countries
Total 18.8 GW
China
USA
Algeria
Malaysia
Thailand
Kuwait
Japan
Bangladesh
Egypt
Saudi Arabia
Uruguay
Tunisia
Russia
Australia
UAE
Other
© Wärtsilä 3 14 November 2013 VESA RIIHIMÄKI
Market for gas and liquid fuelled power plants
6.4%
H1 2013
34.6%
26.1%
5.9%
12.8%
Total market 18.8 GW
5.9%
8.0%
Includes all Wärtsilä power plants and gas turbine manufacturers’ gas and liquid fuelled power plants with prime
movers above 5 MW, as well as estimated output of steam turbines for combined cycles.
The gas turbine data is gathered from the McCoy Power Report.
Other combustion engines not included. In engine technology Wärtsilä has a leading position.
GE
Siemens
MHI
Wärtsilä
Alstom
4.8%
2012
28.8%
34.2%
3.8%
20.6%
Total market 75.4 GW
4.2% 3.6%
Other GTs
Ansaldo
Siemens
GE
MHI
Wärtsilä
Alstom
Other GTs
Ansaldo
© Wärtsilä 4 14 November 2013 VESA RIIHIMÄKI
Other manufacturers
Market for liquid and gas engines, >5MW units
Source: DGTWW Power Generation Survey & Wärtsilä
Gas and dual-fuel Liquid, gas and dual-fuel MW
Wärtsilä
MW
0
1 000
2 000
3 000
4 000
5 000
6 000 2
00
0-2
00
1
20
01
-20
02
20
02
-20
03
20
03
-20
04
20
04
-20
05
20
05
-20
06
20
06
-20
07
20
07
-20
08
20
08
-20
09
20
09
20
10
20
11
20
12
0
500
1000
1500
2000
2500
3000
19
99
-20
00
20
00
-20
01
20
01
-20
02
20
02
-20
03
20
03
-20
04
20
04
-20
05
20
05
-20
06
20
06
-20
07
20
07
-20
08
20
08
-20
09
20
09
20
10
20
11
20
12
© Wärtsilä 5 14 November 2013 VESA RIIHIMÄKI
Power Plants strategy
• Maintain our leading position in HFO & dual-fuel power plants by
enhancing our value proposition
• Grow strongly in large utility gas power plants by capturing market share
from combustion turbines
• Grow in biofuel power plants by enabling a wide fuel range
• Grow in special applications - nuclear emergency power, CHP, oil & gas
and LNG infrastructure - by introducing our value proposition to the
selected customer segments
Strong growth focus on large gas plants in broad utility markets
© Wärtsilä 6 14 November 2013 VESA RIIHIMÄKI
Our customer segments
Industrial Customers
Industries such as mining, cement
and oil & gas investing in captive
power plants.
Utilities
Entities supplying electricity to
residential, commercial & industrial
end users
IPPs*
Financial investors investing in
power plants and selling power to
utilities
Azerenerji, Azerbaijan Cakmaktepe Energy, Turkey Sasol New Energy Holdings, South Africa
South Texas Electric Cooperative, USA GERA, Brazil Barrick Gold Corporation, Canada
*) Independent Power Producers
© Wärtsilä 7 14 November 2013 VESA RIIHIMÄKI
Customer segments and fuel development
37%
39 %
24%
OI by customer segment 2009 - Q3/2013
Total EUR 6,462 million
Utilities IPP's Industrial
0
500
1000
1500
2000
2500
2009 2010 2011 2012 2013 (Q3)
NG and fuel oil share of OI 2009 - Q3/2013
Oil NG
MW
© Wärtsilä 8 14 November 2013 VESA RIIHIMÄKI
Energy
efficiency
Operational
flexibility
Fuel
flexibility
Smart
Power
Generation
Approach markets with Smart Power Generation
All in one!
Smart Power Generation is a new concept which enables an existing power
system to operate at its maximum efficiency by most effectively absorbing
current and future system load variations, hence providing dramatic savings.
© Wärtsilä 9 14 November 2013 VESA RIIHIMÄKI
SPG supports most energy infrastructure types
Liquid fuel
infrastructure
only
Transition to
NG (LNG
infrastructure)
NG as
mainstream
energy
NG as
balancer for
renewable
energy
© Wärtsilä 10 14 November 2013 VESA RIIHIMÄKI
Transition to NG: Smart Power Generation meets LNG
Dual-fuel power plant Medium scale LNG terminal
• Initial operation using HFO
15-16$/MMBtu
• Provides base gas consumption for NG,
enabling investment for the LNG terminal
• NG cost using LNG 11-17 $/MMBtu
• Plant feasibility typically improves with
NG, which is a strong driver for investment
• Economic feasibility depends on scale
• larger terminals can receive larger
tankers which lowers LNG price
• ship size is a key factor
• 50-1,000MWth flow is typically
considered Medium size
• 10,000-160,000 m3 tank sizes
• Tank size to match ship size
© Wärtsilä 11 14 November 2013 VESA RIIHIMÄKI
Transition to NG: Smart Power Generation meets LNG
• Wärtsilä Power Plants has developed
capabilities to become an EPC supplier
for medium scale LNG storage and
regasification terminals
• Wärtsilä can support and enable transition
to gas infrastructure by providing a one
stop shop for the investments related to
power generation and LNG infrastructure
• Wärtsilä’s offering is based on strong EPC
capability for power plants combined with
regasification solution from Wärtsilä
Flow & Gas
© Wärtsilä 12 14 November 2013 VESA RIIHIMÄKI
NG as balancer: changing business model
Traditional world
• Fossil fuels provide baseload energy
• Business model is based on
producing energy (MWh) and getting
a small margin sale
• Solution parameters:
– Electrical efficiency
– Investment cost
– Long-term power purchase
agreement
• Static world
World of renewable energy
• Wind and solar provide increasing
share of energy
• Business model for fossil fuels is to
generate power when renewable
energy is not available
• Solution parameters:
– Operational flexibility
– Energy efficiency
– Remuneration based on
balancing services
• Dynamic world
© Wärtsilä 13 14 November 2013 VESA RIIHIMÄKI
Energy Infrastructure Package:
Implementation progress and expected outcome
Catharina Sikow-Magny
European Commission, Director General for Energy
23-24 May,2013
• Large scale deployment of solar and
wind truncates thermal plants to a
narrow operating window
• CCGT load factors are consistently
going down, but the day vs. night gap
is increasing, causing technology to
operate at its most suboptimal
conditions, low load and cyclic
operation
• System needs SPG – OFF at night,
ON at peaks
• Energy only market does not support
investment for balancing power
• EU is striving towards harmonic
capacity/flexibility markets to support
investment for balancing power
NG as balancer: a need for balancing in the EU
© Wärtsilä 14 14 November 2013 VESA RIIHIMÄKI
California: Net load patterns changing rapidly due to wind & solar
– 2020 expectation is 14GW in 4 hours during non summer months
NET LOAD = LOAD – wind & solar generation
Source: California ISO, Karl Meeusen
California: Solar generation is effectively
turning the daily peak to a daily low
Massive up/down ramps expected,
up to 14GW in 4 hours in 2020
• Fossil generation more than doubled
in 4 hours
• 14GW is the approximate peak load of
Finland
Market opportunity is emerging as ISO’s
are recognizing the value of flexibility
• STEC & Portland projects
NG as balancer: system changes are a reality
© Wärtsilä 15 14 November 2013 VESA RIIHIMÄKI
Wärtsilä is the leader in Smart Power Generation
TECHNOLOGY SOLUTIONS REFERENCES
© Wärtsilä 16 14 November 2013 VESA RIIHIMÄKI
Wärtsilä Power Plants as EPC supplier
• Wärtsilä Power Plants has extensive
experience in turnkey power
solutions since early 90’s
• Approximately 25% of the projects
are executed on an EPC basis
• The turnkey supplier role provides
visibility on the overall economics of
investments and the potential
challenges that our customers have
– key knowledge for solution
development
Basic EEQ
Site Preparation/Soil improvement
Site Investigations Package
EPCM (Construction Mgmt Service )
Extended EEQ
Delivery Value proposition
Basic Eq and Process engineering /Power
Generation
BOP Eq and Materials, Detailed Plant
Engineering
Installation /Power Generation
Foundations &Site Infra
Admin and Service buildings
Substation/El. Interconnection
Full HRC / CC
Emission Control
Options for
all scopes
EPC
Option
s
Scope
Process EPC
EPC
EPC above 0-level
© Wärtsilä 17 14 November 2013 VESA RIIHIMÄKI
Quisqueya I&II 430MW, dual-fuel flexicycle
May 2012 February 2012 November 2011
August 2012 November 2012 March 2013
Quisqueya I&II, Dominican Republic 430MW / dual-fuel flexicycle
Power supply to a gold mine and peaking power to the utility
Wärtsilä EPC delivery
© Wärtsilä 18 14 November 2013 VESA RIIHIMÄKI
Quisqueya I&II 430MW, dual-fuel flexicycle
September 2013
© Wärtsilä 19 14 November 2013 VESA RIIHIMÄKI