Energy Efficiency Distributed Generation and CHP: Wärtsilä s way

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CONVEGNO EFFICIENZA ENERGETICA Energy Efficiency Distributed Generation and CHP: Wärtsilä s way Dr.Marco Golinelli Vice President Wärtsilä Italia S.p.A. Rome 5 November 2009 1 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

AGENDA Wärtsilä The Challenge The Science The Solutions Conclusions 2 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

This is Wärtsilä SHIP POWER POWER PLANTS SERVICES 3 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Our Mission and Vision Mission We provide lifecycle power solutions to enhance the business of our customers, whilst creating better technologies that benefit both the customer and the environment. Vision We will be the most valued business partner of all our customers. 4 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Sustainability plays a central role in our business Wärtsilä s Stakeholders Continuous improvement and reporting Economic responsibility Environmental responsibility Social responsibility Values Energy Excellence Excitement Profitable, competitive and efficient business operations Creation of financial added value to direct stakeholders Greater wellbeing in local communications Sustainable use of natural resources Prevention of pollution Environmentally sound products and services Certified environmental management systems Responsible corporate citizenship Well-being at work and personnel development Safe working environment Product safety Principles Operating principles Corporate policies Corporate manual Wärtsilä s sustainable development programme Wärtsilä s Vision, Mission, Strategy and Goals 5 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

6 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli The Challenge

7 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Transatlantic trends 2008 Fonte: Transatlantic trends 2008 8 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Availability of fuels Three hard truths by Shell 1. Energy consumption is not only rising, but the rate of change is accelerating 2. The times for easy oil are over. Conventional resources will be soon used and non conventional resources are difficult/costly to utilise 3. The CO2 emissions are rising as a result of fossil fuels dominance as well as increased use of coal Source: Shell, CEO J vd Veer 31.5.2007 in St Gallens 9 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Trends in Energy Use (data 2030 from IEA) May 2, 2008: Oil production ExxonMobil 10% lower Oil: 2.5 Mbarrels/day Gas: 1,7 Mbarrels/day eq. + 450 Global energy supply (exajoule) 400 350 300 250 200 150 100 50 0 oil gas coal nuclear + renew. trend oil trend gas trend coal trend renew.? year 2005 year 2030 year 2055 year 2080 10 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Fuel Resources: Another Way of Plotting 20000 18000 Life central plant oil gas 16000 coal Fuel resources (EJ) 14000 12000 10000 8000 6000 incl. gas to liquids incl. coal to liquids 4000 2000 0 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 11 Wärtsilä 5 Novembre November 2009 AMICI Presentation DELLA name TERRA / Author / Dr. Marco Golinelli

40% of global fuel use: electricity The Impact of Electricity Use on Fuel needs 400 TPES and Electrcity expressed in GJ/person 350 300 250 200 150 100 50 0 0 5 10 15 20 25 30 35 Gross Domestic Product PPP (k$/person) TPES Fuel for electricity use Electricity use 12 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

The reality: development in generation efficiency (IEA) gross and net efficiency electricity supply % 45 40 35 30 25 20 15 10 5 0 Gross efficiency Net efficiency 1960 1970 1980 1990 2000 2010 2020 2030 2040 13 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Expected Growth in Global Electricity Use 1980-2030 Prediction IEA 2007 14 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

15 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli The Science

16 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

17 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Past Emissions 14 Billion of Tons of Carbon Emitted per Year 7 Historical emissions 0 1955 2005 2055 2105 Robert Socolow - Princeton University 18 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

The Stabilization Triangle 14 7 Billion of Tons of Carbon Emitted per Year Historical emissions Stabilization Triangle Currently projected path = ramp Flat path O Interim Goal 1.9 0 1955 2005 2055 2105 Robert Socolow - Princeton University 19 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Wedges 14 7 Billion of Tons of Carbon Emitted per Year Historical emissions Currently projected path Flat path O 14 GtC/y Seven wedges 7 GtC/y 0 1955 2005 2055 2105 Robert Socolow - Princeton University 20 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

The Seven Wedges Energy Efficiency Methane Management 14 GtC/y Decarbonized Electricity Forests & Soils Stabilization Triangle 2004 2054 7 GtC/y Decarbonized Fuels Fuel Displacement by Low-Carbon Electricity Robert Socolow - Princeton University 21 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

22 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli The Solutions

23 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Decentralized power 24 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli Capstone Turbines Corporation, USA Centrax Gas Turbines, UK COGEN Europe, Belgium COGEN India, India COGEN Portugal, Portugal Cogeneration Study Committee, China Cummins Power Generation, USA Delta State Government, Nigeria Enercon Engineering, USA Energy Capital, Singapore FuelCell Energy, USA InterWorld Technologies, LLC, USA MAN TURBO AG, Germany Marubeni Power International, Japan Mitcon Consultancy Services ltd., India MTU CFC Solutions, Germany NewEra, Canada Peter Brotherhood Ltd, UK Primary Energy, USA PT. Kaltimex Energi, Indonesia Rolls-Royce Marine Engines, Norway Siemens, Germany Solar Turbines, USA Thermax, India Turbomeca, France US CHP Association, USA Wärtsilä, Finland

Distributed Energy production in Decentralised network Energy production close to the point of consumption Multifuel plant CHP plant Hydro power Energy storage Multifuel plant Solar power Wind power Micro turbines Source VTT Fuel cells 25 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Distributed Generation What is Distributed Generation? Relatively small plant size (typically) Typical range 30kW 15MW ( 100MW) Not a strict definition Power is generated close to the load Eliminate voltage step-up losses Eliminate transmission losses Eliminate step-down losses (best case, generation at same voltage as consumption) Eliminate distribution losses Power generation is connected to the utility (grid) Normal operating mode is to run in parallel with the utility Island mode operation is sometimes applied in special conditions to provide higher reliability for the consumer 35.7% Transmission and Distribution (T&D) system average technical efficiency is above 90%. In USA the T&D efficiency is calculated to be 92.8% The losses are resistive losses in transformers, transmission lines and distribution cabling Generation loss Average power generation electrical efficiency for example in USA and in UK is about 38.5% 43.2% Distributed generation with Wärtsilä solutions No transmission loss T&D loss Generation loss High simple cycle net efficiency for example 9MW GasCube 43.2% plant net (zero tolerance). 26 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

The grid GRTN 2006 27 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Cogeneration by IEA 28 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

IEA on CHP CHP can reduce CO2 emissions arising from new generation in 2015 by more than 4% (170 Mt /year), while in 2030 this saving increases to more than 10% (950 Mt / year) equivalent to one and half times India s total annual emissions of CO2 from power generation. CHP can therefore make a meaningful contribution towards the achievement of emissions stabilisation necessary to avoid major climate disruption. Importantly, the near-term reductions from CHP can be realised starting today offering important opportunities for low- and zerocost GHG emissions reductions. 29 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Natural gas Oil Coal and CHP: CO2 comparison Greenhouse emissions Burning fuel releases energy through the breaking of chemical bonds when fuels react with oxygen. In fossil fuels CO2 intensity depends on hydrogen carbon ratio The more hydrogen, the better Methane (NG) C:H = 1 : 4 HFO C:H = 1 : 2.1 Coal C:H = 1 : ~1 Oil & Gas benefit from higher conversion efficiency in pure electricity production Coal is turned to electricity through steam cycle which typically yields 36-38% efficiency Reciprocating engines typically yield 43-45% net electrical efficiency with oil or gas Coal:974kg CO2 / MWh HFO:662kg CO2 / MWh NG:469kg CO2 / MWh CO2 intensity in pure electricity production NG:220kg CO2 / MWh CHP 30 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

31 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

32 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

33 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

34 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

35 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

36 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

37 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Italy Associazione dei costruttori e distributori di impianti di cogenerazione Federazione delle Associazioni Nazionali dell'industria Meccanica Varia ed Affine 38 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Sales Mio euro 140 120 100 80 60 40 Italian market value related to cogeneration year 2007 Total 280 Mio 20 0 cogenerators other products plants service energy 37% 43% 5% 13% 2% Percentage on the total business of 280 ML The main companies in the cogeneration sector create a total business of 280 ML More than 40% of this total business is represented by other products, mainly electric generators The third component is the service (as indicated in the budget); maybe there would be a not-declared part included in the component other products 39 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

INCREASE AT 2014 Micro and small cogeneration (< 1 MWe) Residential and service sector Cogeneration 1-10 MWe Industrial sector Forecast power usage (MWe) 3200 550 Saved primary energy (Mtep/anno) 0,7 0,87 Spared Co2 emissions (Mt/year) 2,2 2,9 Incentives (M /year) 208 87 INCREASE AT 2020 Micro and small cogeneration (< 1 MWe) Residential and service sector Cogeneration 1-10 MWe Industrial sector Forecast power usage (MWe) 6200 950 Saved primary energy (Mtep/anno) 1,3 0,87 Spared Co2 emissions (Mt/year) 4,3 2,9 Incentives (M /year) 208 87 Reference: Confindustria (Energy task-force 2007) data processing COGENERATION IN SERVICE, RESIDENTIAL AND INDUSTRIAL SECTORS REPRESENTS THE REAL CHALLENGE/OPPORTUNITY OF COGENERATION DEVELOPMENT IN ITALY 40 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Europe March 2007 20-20-20 41 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Wärtsilä for Europe EU Targets Wärtsilä solutions Renewable Efficiency CO2 reduction Gas Power Plants CHP Plants DH Plants TRIGEN Plants Bio Fuels Power Plants CHP Bio Fuels Bio Power Fuel Cells 42 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

High electrical efficiency Electrical efficiency (%) 100 50 40 30 20 10 Stirling Microturbine Fuel cell High speed engine Medium speed engine Simple cycle gas turbine Steam turbine World average fossil generation efficiency Steam engine 1 0,01 0,1 1 10 100 1000 Engine refers to internal combustion engine (diesel or gas) Power Output (MWe) 43 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Wärtsilä means Fuel Flexibility Solid Biomass Wood based - steam cycle Liquid Biofuels (LBF) Natural gas (NG) Associated gas (AG) Light Fuel Oil (LFO) Crude Oil (CRO) Heavy Fuel Oil (HFO) Fuel Water Emulsions (FEW) Renewable power, Europe/Kyoto Baseload power, Europe/Kyoto Baseload power, power islands, grid stability services, compressor drives Oil field power, eliminates the need for flaring in oil fields Stand by & emergency power Oil field power, Oil pipeline pumpsets Baseload plants, Power Islands, Back-up power Oil sands, Oil refinery power based on process residue 44 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Wärtsilä means Fuel Flexibility Wood EtOH (Hydrol.) Beet EtOH Rapeseed Methyl Ester (RME) Wheat Straw EtOH Cereal EtOH Wood H2 (Gasif) Waste Oil VME Crude Vegetable Oil Wood FT Biodiesel Wood MeOH (Gasif) Wind BAD GOOD Diesel Petrol CNG 0.1 1 10 100 Energy in the fuel Energy balance Energy used for producing the fuel 45 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Wärtsilä means Fuel Flexibility Wood EtOH (Hydrol.) Beet EtOH Rapeseed Methyl Ester (RME) Wheat Straw EtOH Cereal EtOH Wood H2 (Gasif) Waste Oil VME Crude Vegetable Oil Wood FT Biodiesel Wood MeOH (Gasif) Wind GOOD BAD Diesel Petrol CNG Data not available 0 20 40 60 80 100 kg CO 2 equivalent per GJ fuel 46 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

An efficient CHP portfolio Genset W20 W32 W34 W46 W50DF El. Power 1026 2636 3888 8512 16621 (kw) 1539 8924 8730 22380 El. 42% 45,5% 46,5% 47% 47,3% Efficiency 47 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Efficiency in all key power segments Flexible Baseload Power Generation Grid Stability and Peaking Industrial Self- Generation Oil and gas industry applications 23400 MW, 4900 MW, 12100 MW, 1200 MW, 1600 plants 1020 plants 1740 plants 80 plants 48 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

And water will be more and more precious Typical water use of central power plants Plant type specific water consumption litres/kwh Coal/steam 2.3 Nuclear/steam 1.9 Gas turbine combined cycle 0.95 Reciprocating engine < 0.00 49 Wärtsilä 5 Novembre November 2009 AMICI Presentation DELLA name TERRA / Author / Dr. Marco Golinelli

We are Renewable s Facilitator Electricity production from wind energy and photovoltaics depends on the local weather conditions and is largely not controllable (non dispatchable). The real economic value of the electricity produced depends on the extent to which the network operator can use it to match demand. 50 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Case Study: Wärtsilä s CHP solutions Tri-Generation Typical Variation Curve for Tri-Generation kw 25000 20000 15000 10000 Power gen Heat gen of engine Chill dem Gas boiler for heating Power to chiller Power for sale/purchase Extended running hours for the plant, full CHP the year around 5000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 51 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Wärtsilä s CHP solutions Linate Airport Tri-generation 52 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Wärtsilä 20V34SG generator set with auxiliary modules Inlet air/ exhaust gas module Auxiliary moduls Engine genset 53 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Wärtsilä s CHP solutions Linate Airport Tri-generation 54 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Wärtsilä s CHP solutions Linate Airport Tri-generation Prime movers Electrical output Thermal Output Electrical Efficiency Total Efficiency CO2 saved NOx Emission 3 x 20V34SG 24.129 kwe 19.082 kwth 46,2% 82,7% 35000 ton/yr 40 mg/nm 3 (5% 0 2 ) 55 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

LBF Background Clean Energy Energy without measurable impact locally or globally Sustainable source of energy Available or Renewable source of energy High efficiency 56 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Wärtsilä s Liquid Bio Fuels (LBF) solutions - Monopoli Prime movers Electrical output Thermal Output Steam turbine combined cycle Total Efficiency 6x 18V46 102.457 kwe 41.796 kwth 12.653 kwe 50% 57 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

58 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli CONCLUSIONS

The Italian Job Distributed generation Cogeneration Trigeneration Peaking plants Renewable plants More than 1000 MW installed in Italy CO 2 saved >0,55 MTon/yr 59 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Major Challenges in Energy Business Public opinion recognizes climate change as a fact. Greenhouse gases perceived as the main cause. Strong political will and push for CO 2 reduction. Emission limits and trading mechanisms CCS (Carbon Capture System) Tough targets and subsidies for renewables Introduction of new renewable fuels Rapid growth in wind power capacity Nuclear renaissance Energy price volatility Fuel prices vary based on demand Emission costs added to electricity prices Generally increasing raw material prices Challenging environment for new investments 60 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

A vision based on reality Renewable capacity Solar and wind Nuclear Decentral on gas central turning into back-up capacity with bio fuels 2008 2020 2030 2040 61 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Power Plants Mission We provide superior value to our customers with our distributed, flexible, efficient and environmentally advanced energy solutions, which enable a global transition to a more sustainable and modern energy infrastructure. 62 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli

Grazie! 63 Wärtsilä 5 Novembre 2009 AMICI DELLA TERRA / Dr. Marco Golinelli