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POWER PLANTS FOCUS ON GAS

VESA RIIHIMKI President, Power Plants & Executive Vice President

Wrtsil

14 November 2013

VESA RIIHIMKI

Wind, solar and gas expected to grow strongly

Solar PV 6% Wind 4% Solar PV 1% Other (Geothermal , CSP, Marine) 0% Coal 32%

2010
Hydro 20%

2030

Bioenergy 1%

Wind 11%

Other (Geothermal, CSP, Marine) 1% Coal 26%

+453 GW

+726 GW
Bioenergy 2%

5,183 GW
Nuclear 8% Oil 8% Gas 26% Nuclear 6% Hydro 19%

8,588 GW
Oil 3%

+883 GW

Gas 26%

Source: World Energy Outlook 2012 IEA, New Policies Scenario


2 1 Wrtsil November 14, 2013 Wrtsil Capital Markets Day 2013 / Vesa Riihimki

Market for gas and liquid fuelled power plants


Overall market size
GW 140 120 100

H1 2013 Top 15 countries


Total 18.8 GW

China USA Algeria

Malaysia
Thailand Kuwait Japan

80
60 40 20 0

Bangladesh
Egypt Saudi Arabia Uruguay Tunisia Russia Australia H1 H2 UAE Other

Includes all Wrtsil 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 Wrtsil has a leading position.

Wrtsil

14 November 2013

VESA RIIHIMKI

Market for gas and liquid fuelled power plants

2012 Total market 75.4 GW


4.2% 3.8% 3.6%

H1 2013 Total market 18.8 GW


GE Siemens GE
34.6%

8.0%

4.8% 34.2% 20.6%

Siemens MHI Alstom

5.9%
5.9% 6.4%

MHI Alstom

Wrtsil
12.8%

Wrtsil
Ansaldo
26.1%

Ansaldo
28.8%

Other GTs

Other GTs

Includes all Wrtsil 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 Wrtsil has a leading position.

Wrtsil

14 November 2013

VESA RIIHIMKI

Market for liquid and gas engines, >5MW units


MW 6 000

Liquid, gas and dual-fuel

MW 3000

Gas and dual-fuel

5 000

2500

4 000

2000

3 000

1500

2 000

1000

1 000

500

2000-2001

2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

2008-2009

2009

2010

2011

2012

0 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009 2010 2011 2012

Wrtsil
Source: DGTWW Power Generation Survey & Wrtsil

Other manufacturers

Wrtsil

14 November 2013

VESA RIIHIMKI

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

Wrtsil

14 November 2013

VESA RIIHIMKI

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

Wrtsil

14 November 2013

VESA RIIHIMKI

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

500

39 %
0 2009 Utilities IPP's Industrial 2010 Oil 2011 NG 2012 2013 (Q3)

Wrtsil

14 November 2013

VESA RIIHIMKI

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!

Wrtsil

14 November 2013

VESA RIIHIMKI

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

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Wrtsil

14 November 2013

VESA RIIHIMKI

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

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Wrtsil

14 November 2013

VESA RIIHIMKI

Transition to NG: Smart Power Generation meets LNG

Wrtsil Power Plants has developed capabilities to become an EPC supplier for medium scale LNG storage and regasification terminals Wrtsil can support and enable transition to gas infrastructure by providing a one stop shop for the investments related to power generation and LNG infrastructure Wrtsils offering is based on strong EPC capability for power plants combined with regasification solution from Wrtsil Flow & Gas

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Wrtsil

14 November 2013

VESA RIIHIMKI

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

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

Long-term power purchase agreement


Static world

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Wrtsil

14 November 2013

VESA RIIHIMKI

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

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Wrtsil

14 November 2013

VESA RIIHIMKI

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 ISOs 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

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Wrtsil

14 November 2013

VESA RIIHIMKI

Wrtsil is the leader in Smart Power Generation

TECHNOLOGY

SOLUTIONS

REFERENCES

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Wrtsil

14 November 2013

VESA RIIHIMKI

Wrtsil Power Plants as EPC supplier

Wrtsil Power Plants has extensive experience in turnkey power solutions since early 90s
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 Options for all scopes

Emission Control Full HRC / CC Substation/El. Interconnection Admin and Service buildings Site Preparation/Soil improvement

EPC

EPC Option s

Site Investigations Package

Foundations &Site Infra


Process EPC

EPC above 0-level Installation /Power Generation EPCM (Construction Mgmt Service )

Extended EEQ

Basic EEQ

BOP Eq and Materials, Detailed Plant Engineering Basic Eq and Process engineering /Power Generation

Delivery Value proposition

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Wrtsil

14 November 2013

VESA RIIHIMKI

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 Wrtsil EPC delivery
18 Wrtsil 14 November 2013 VESA RIIHIMKI

Quisqueya I&II 430MW, dual-fuel flexicycle

September 2013

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Wrtsil

14 November 2013

VESA RIIHIMKI