POWER PLANTS FOCUS ON GAS VESA RIIHIMÄKI President, Power Plants & Executive Vice President 1 Wärtsilä 14 November 2013 VESA RIIHIMÄKI
Wind, solar and gas expected to grow strongly 2010 Hydro 20% Bioenergy 1% Wind 4% Solar PV 1% Other (Geothermal, CSP, Marine) 0% Coal 32% 2030 Bioenergy 2% Wind 11% +726 GW +453 GW Solar PV 6% Other (Geothermal, CSP, Marine) 1% Coal 26% Nuclear 8% 5,183 GW 8,588 GW Oil 8% Hydro 19% +883 GW Oil 3% Gas 26% Nuclear 6% Gas 26% Source: World Energy Outlook 2012 IEA, New Policies Scenario 2 1 Wärtsilä November 14, 2013 Wärtsilä Capital Markets Day 2013 / Vesa Riihimäki
Market for gas and liquid fuelled power plants Overall market size GW 140 120 100 80 60 40 20 0 H1 H2 H1 2013 Top 15 countries Total 18.8 GW 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. China USA Algeria Malaysia Thailand Kuwait Japan Bangladesh Egypt Saudi Arabia Uruguay Tunisia Russia Australia UAE Other 3 Wärtsilä 14 November 2013 VESA RIIHIMÄKI
Market for gas and liquid fuelled power plants 2012 Total market 75.4 GW H1 2013 Total market 18.8 GW 4.2% 3.8% 3.6% 4.8% 20.6% 28.8% 34.2% GE Siemens MHI Alstom Wärtsilä Ansaldo Other GTs 8.0% 5.9% 5.9% 6.4% 12.8% 26.1% 34.6% Siemens GE MHI Alstom Wärtsilä Ansaldo Other GTs 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. 4 Wärtsilä 14 November 2013 VESA RIIHIMÄKI
2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009 2010 2011 2012 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009 2010 2011 2012 Market for liquid and gas engines, >5MW units MW Liquid, gas and dual-fuel MW Gas and dual-fuel 6 000 3000 5 000 2500 4 000 2000 3 000 1500 2 000 1000 1 000 500 0 0 Wärtsilä Other manufacturers Source: DGTWW Power Generation Survey & Wärtsilä 5 Wärtsilä 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 6 Wärtsilä 14 November 2013 VESA RIIHIMÄKI
Our customer segments Utilities Entities supplying electricity to residential, commercial & industrial end users IPPs* Financial investors investing in power plants and selling power to utilities Industrial Customers Industries such as mining, cement and oil & gas investing in captive power plants. South Texas Electric Cooperative, USA GERA, Brazil Barrick Gold Corporation, Canada Azerenerji, Azerbaijan Cakmaktepe Energy, Turkey Sasol New Energy Holdings, South Africa *) Independent Power Producers 7 Wärtsilä 14 November 2013 VESA RIIHIMÄKI
Customer segments and fuel development OI by customer segment 2009 - Q3/2013 Total EUR 6,462 million MW 2500 NG and fuel oil share of OI 2009 - Q3/2013 2000 24% 37% 1500 1000 39 % 500 0 2009 2010 2011 2012 2013 (Q3) Utilities IPP's Industrial Oil NG 8 Wärtsilä 14 November 2013 VESA RIIHIMÄKI
Approach markets with Smart Power Generation Energy efficiency Smart Power Generation Fuel flexibility Operational flexibility 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. All in one! 9 Wärtsilä 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 10 Wärtsilä 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 50-1,000MW th flow is typically considered Medium size 10,000-160,000 m 3 tank sizes Tank size to match ship size 11 Wärtsilä 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 12 Wärtsilä 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 13 Wärtsilä 14 November 2013 VESA RIIHIMÄKI
NG as balancer: a need for balancing in the EU 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 Energy Infrastructure Package: Implementation progress and expected outcome Catharina Sikow-Magny European Commission, Director General for Energy 23-24 May,2013 14 Wärtsilä 14 November 2013 VESA RIIHIMÄKI
NG as balancer: system changes are a reality 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 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 15 Wärtsilä 14 November 2013 VESA RIIHIMÄKI
Wärtsilä is the leader in Smart Power Generation TECHNOLOGY SOLUTIONS REFERENCES 16 Wärtsilä 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 Scope EPC Options for all scopes Process EPC Extended EEQ EPC Option s Emission Control Full HRC / CC Substation/El. Interconnection Admin and Service buildings Site Preparation/Soil improvement Site Investigations Package Foundations &Site Infra EPC above 0-level Installation /Power Generation EPCM (Construction Mgmt Service ) Basic EEQ BOP Eq and Materials, Detailed Plant Engineering Basic Eq and Process engineering /Power Generation Delivery Value proposition 17 Wärtsilä 14 November 2013 VESA RIIHIMÄKI
Quisqueya I&II 430MW, dual-fuel flexicycle November 2011 February 2012 May 2012 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 18 Wärtsilä 14 November 2013 VESA RIIHIMÄKI
Quisqueya I&II 430MW, dual-fuel flexicycle September 2013 19 Wärtsilä 14 November 2013 VESA RIIHIMÄKI