1 © Wärtsilä 22 August 2015 WÄRTSILÄ CORPORATION Rodney P. George, VP Power Plants Wartsila Caribbean Inc. An Alternative Power Generation Strategy for

1 © Wärtsilä 19 April 2023 WÄRTSILÄ CORPORATION

Rodney P. George, VP Power PlantsWartsila Caribbean Inc.

An Alternative Power Generation Strategy for

The USVI

Focus on Dual Fuel Reciprocating Engine Technology Utilizing LNG/Natural Gas and Diesel (LFO)

Current Generating Assets in USVI


St. Thomas Output Fuel Inst Date Simp. Cycle EffUnit 11 - Residual Fuel fired ST 20 MW HFO - 0.33% S > 30 Yrs Approx 20%

Unit 13 – Residual Fuel fired ST 36 MW HFO - 0.33% S > 30 YrsApprox 23%

Unit 14 – CT-Aero-derivative ?? 15 MW LFO - 0.20% S + Approx 22%Unit 15 – CT-GE Frame 5* 23 MW LFO - 0.20% S + Approx 22%Unit 18 – CT-GE Frame 5* 23 MW LFO - 0.20% S + Approx 22%Unit 22 – CT-Pratt & Whitney 22 MW LFO - 0.20% S + Approx 22% Unit 23 – CT-GE Frame 6 39 MW LFO - 0.15% S 2004 (8 Yrs) Approx 25%Total 178 MW

(Peak 70 MW)St. CroixUnit 10 – Residual Fuel fired ST 10 MW HFO – 0.33% S >30Yrs Approx 22%Unit 11 – Residual Fuel Fired ST 20 MW HFO- 0.33% S >30 Yrs Approx 23%Unit 16 – CT-GE Frame 5 * 23 MW LFO - 0.20% S 1981 (31 Yrs) Approx 22%Unit 17 – CT-Alstom MS 5001 * 20 MW LFO - 0.20% S 1988 (24 Yrs) Approx 20%Unit 19 – CT-GE Frame 5 20 MW LFO - 0.20% S 1993 (19 Yrs) Approx 22%Unit 20 – CT- GE Frame 5 24.5 MW LFO - 0.20% S 1994 (18 Yrs) Approx 22%Total 117.5 MW

(Peak 55 MW)Expensive Old Low efficiency

System Total 295.5 MW Fuel

+ Estimate older than 20 Yrs* Either unit can be connected to an HRSG for Combined Cycle operation. All other CT Units are simple cycle


Current Situation

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Electric Power Generation in USVI is with:

A) Combustion Turbines operating in simple cycle mode using LFO as fuel(1-2 units operate in combined cycle)

Combustion turbines are only about 25-35% efficient in simple cycle modeand about 55-65% in combined cycle mode (USVI 22-25% simple cycle)

By comparison, reciprocating diesel engines are about 43-45% efficient in Simple cycle mode and about 60% in combined cycle mode

B) Oil fired steam turbine generator (fired with HFO)

Only about 20-23% efficient (overall efficiency may be higher as some steam used for desalination process)

Bottom line: Expensive Fuel paired with Inefficient Generation Technology

Difference in Plant Efficiencies – What does it translate to?


• As an example for a plant producing a total of around 898,000 MWh the fuel savings alone by utilizing reciprocating diesel engines compared to combustion turbines amounts to USD 122 M per year (based on an LFO fuel price of USD 21 /MMBTU)

• The comparative savings using LNG/natural gas as a fuel will be aboutUSD 184 M per year!! (based on an LNG delivered price of USD 14/ MMBTU)

USD 21/MMBTU is approx. USD 2.93/USG


USVI Calculation - St. Thomas/St. Croix/St. John Combined


Annual Production : 898,818 MWh (based on 2008 energy sales data in Draft US Virgin Islands Comprehensive Strategy May 5, 2009 by SSEB)

New Recip plant: Assume average Heat Rate at 8500 Btu/kWh on LFO and 7866 Btu/kWh on gasTotal fuel (LFO) consumption: 7,639,953 MMBTUTotal fuel (Gas) consumption : 7,070,102 MMBTU

Existing USVI plants average 25% efficient = 14,984 Btu/kWhTotal fuel consumption: 13,467,889 MMBTU

Comparative Annual Fuel Expense

Existing USVI (US$21/MMBTU): US$282,825,669 (US$0.3146/kWh)

New Recip on LFO (US$21/MMBTU): US$160,439,013 (US$0.1785/kWh)

New Recip on LNG (US$14/MMBTU): US$ 98,981,428 (US$0.1101/kWh)

US$122,386,656/Yr LFO CaseSavings:

US$183,844,241/Yr LNG Case


WAPA WEB LUCELEC BVIEC BELCO APUA GRENLECUSVI Aruba St. Lucia BVI Bermuda Antigua Grenada

400 kWh/Month Consumption US$ 184.75 97.46 115.79 90.90 127.80 151.29 136.61

Total No. of Consumers 55,000 40,238 59,859 15,157 35,668 31,356 43,699

Peak Demand MW 125 122 59 29 123 51 29(70+55)

Fuel for Generation LFO HFO LFO LFO HFO HFO LFO

Generation Technology CT&ST RDE&ST RDE RDE RDE RDE RDE

Fuel Surcharge* (US$/kWh) 0.36076 0.15 0.10 0.1524 0.135 0.23 0.18

Electric Cost/Fuel Surcharge Comparison- Selected Caribbean Utilities as of December 2010

Source: CARILEC 2010 Tariff Survey (except for WAPA)

CT = Combustion Turbine

RDE = Reciprocating Diesel Engine

Monthly Electric Cost/Fuel Surcharge Comparison

ST = Steam Turbine

*LEAC for WAPA


What are the issues related to current generation strategy?


Main Driver: Environmental RegulationsStringent Emission limits (EPA Region 2 - NY)

“How that affects our study is that WAPA says they will never be able to get permits for diesels on the USVI; on the other hand our preliminary heat balance indicates there is a definite advantage from a plant heat rate standpoint to incorporate diesel engines.”

Carlos Rollan, P.E.Harris Group, Inc.Energy Services, Southeast

Excerpt from email to Rodney George August 10, 2004:

Emissions: NOx Reduction : Related to Generation Technology & BACT*

LFO/HFO - Expensive low sulfur distillate fuel - SOx/PM minimization

EPA - Prevention of Significant Deterioration of Air Quality (PSD) – Limits in tons/yr and BACT

(0.15-0.20% Sulfur)

*BACT- Best Available Control Technology for reducing emissions

Missed Opportunity in 2004 to install diesels?

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What are the issues related to current generation strategy?


OTHER DRIVER: Water Production: from waste heat (steam production) – CT being less efficient produces more steam than diesel engine

Excerpt from an email to R.George Aug 10, 2004

“The installation of a SCR on a gas turbine is complicated and expensive, because there is no natural location for the SCR. After a diesel engine, the installation is less expensive and complicated….”

Jan TorrkullaSenior Development EngineerDevelopment & Technology, EnvironmentWartsila Finland Oy

Continuing the discussion…

Emission Rates


GAS MODE CONTROLLED per engine per engine per plant Units 16,17&19 g/kWh lb/h T/y T/y T/y

NOx 0.07 2.63 10.53 42.13 CO 0.10 3.76 15.04 60.18

VOC 0.10 3.76 15.04 60.18 pm 10 total 0.133 5.00 20.01 80.04

SO2 0.03 1.13 4.51 18.05

DIESEL MODE CONTROLLED g/kWh lb/h T/y T/y

NOx 0.5 18.81 75.22 300.90 832.7*CO 0.11 4.14 16.55 66.20 1705*

VOC 0.15 5.64 22.57 90.27 365.3*pm 10 total 0.28 10.53 42.13 168.50 184.3*

SO2 0.6 22.57 90.27 361.08 869.7*

*Source - from PSD Final Permit for North Shore, St. Croix Facility -November 27, 2000 - Page 3

Emission Rate Comparison – 66 MW Recip. Dual Fuel Plant and St. Croix Units 16,17 and 19 Combined

Recip. 66 MW Dual Fuel Plant equipped with SCR and Oxidation Catalyst (8,000 hrs/yr)

(63 MW)

Bottom Line: Lower annual emissions, higher efficiency for Recip. Plantand application of BACT for emission abatement - Should be able to get EPA to permit

WAPA

What are the solutions taking into account environmental realities ?


Solutions:

1) St. Thomas: New 66 MW (4 x16.5 MW) dual fuel reciprocating engine plant which will burn LFO initially until LNG becomes available. Existing gas turbines could be used for peaking. Approx. 12-14 months for commercial operation from permit approval

2) St. Croix: New 33 MW (2 x16.5 MW) dual fuel reciprocating engine plant which will burn LFO initially until LNG becomes available. Existing Simple cycle gas turbines could be used for peaking. Approx. 12-14 months for commercial operation from permit approval

To successfully permit a reciprocating engine plant (fired on natural gasor diesel) in the USVI, the use of a) SCR for NOx abatement and, b) Oxidation Catalyst for CO reduction HAS TO BE CONSIDERED

What are the solutions taking into account environmental realities ?


3) Phase out flash distillation system for water production and employ Reverse Osmosis(RO)Technology since older steam and gas turbine plant will be phased out for base load power generation

This is the strategy that Aruba and Curacao begun adapting in 2005

Aruba started installation of base load reciprocating diesel plants in 2006. Today a total of 98 MW installed – the last 44 MW was commissioned in last quarter of 2011 and are “gas prepared”.

All remaining oil fired steam plants will be eventually phased out

Advantages – Diesel Engines vs. Combustion Turbines


• High efficiency (43-45%) compared to latest combustion turbine (30-35%)

• Reliability – Recip Dual fuel plant will consist of four discrete units of approx 16.5 MW each – if one out of service , still have around 50 MW operational. With gas turbine more efficient units will be of a higher unit size - 30MW and above

• Ability to load follow (reduced output) without significant loss of efficiency

• Low operation and maintenance cost

• Negligible derating (output and efficiency) due to high ambient temperatures


Investment and Simple Payback


Budgetary EPC Price: Assume USD 1400/kW –US$1450/KW

Based on fuel savings, payback just slightly over one year!

No LNG Available (Fuel savings: U$122 M)

With LNG Available (Fuel savings: US$185 M)

Based on fuel savings, payback less than1 year!

Investment

St. Thomas 66 MW: EPC price: About US$93 M

St. Croix 33 MW: EPC price: About US$48 M

Total: US$141 M

Simple Payback

Why LNG?


• LNG is good quality natural gas• High methane content and free of impurities (cleaned during

liquefaction phase)• Non toxic and non corrosive• Lighter than air (good for safety) and not highly flammable (oxygen

ratio has to be between 5 and 15%) and too cold to ignite as liquid

• Transportation – well established activity• Transported and stored in low pressure insulated tanks at -164 °C• Occupies only 1/600th of the volume of gas• Phase change to gas relatively easy to accomplish

• Long term price outlook- by all accounts favourable vs. HFO/LFO

• Environmental Benefits – Lower Emissions


Liquid Fuels and LNG Historical Price Trends


Positive Outlook for gas vs. liquid fuelsHistorical pricing trend

LNG Price Assumptions


In our calculations we have used US$14/MMBTU as the deliveredprice of LNG to USVI

This price is on par with what Gasfin has estimated for a mid-sized LNG facility

Assumption is that Gasfin as a full service provider will:

• Source the LNG and transport it to USVI

• Construct storage and re-gasification facilities, likely in the form of Floating Storage and Re-gasification Units (FSRUs)

• Enter into a long term contract where off-taker pays a USD/MMBTU price

LNG - Making it happen


What does it take to get LNG to your power plant site, hopefullyat a competitive price (compared to LFO/HFO) ?

SMALL-MEDIUM SCALE LNG MODEL

GASFIN will answer and elaborate!

Getting LNG there - Fitting the pieces together


LNG Sourcing

Transport&

Logistics

LNG StorageRegasification

GenerationTechnology




Contracted Price

1

2

3

4

US TerminalsGulf of Mexico

LNG supply direct from T&T or re-export via regional LNG Terminal

Local Shuttle

Possibility in the future


Cove 64/67 MW Dual Fired Generating Plant

First Dual Fuel Power Plant in Caribbean

In Commercial Operation Since September 2009

New Power Plant Order for the Dominican Republic


Quisqueya I and II Generating Complex: Total output 430 MW

Quisqueya I Owner: Barrick Gold Quisqueya II Owner: EGE Haina

Fuel: LNG/Natural gas with HFO as back-up fuel

Expected operation date 2013-2014

Estrella Del Mar II Power Barge for Dominican Republic


Fuel: LNG/Natural gas with HFO as back-up fuel

Output (combined Cycle): 106 MW (6 X 18V50DF + ST)

Arriving in DR this week!


Wärtsilä in The Caribbean

COLOMBIA

ARUBA

VENEZUELA

NETHERLANDSANTILLES TRINIDAD

TOBAGO

GUYANA

GRENADA

BARBADOS

ST. LUCIA

ST. VINCENT ANDTHE GRENADINES

MARTINIQUE

DOMINICA

GUADELOUPE

ANTIGUA ANDBARBUDA

ST. KITTSAND NEVIS

PUERTO RICO

DOMINICAN

REPUBLIC

HAITI

JAMAICA

CAYMAN ISLANDS

CUBA

Caribbean Sea

THE

BAHAMAS

TURKS &CAICOS. (U.K.)

ANGUILLA (U.K.)St. Martin (FR)

St. Maarten (NA)

BONAIRE

CURACAO

Virgin Islands

2657 MW Total Capacity

COUNTRY

Anguilla 19 MW

Antigua 81 MW

Aruba 98 MW

Bahamas 49 MW

Belize 24 MW

Bermuda 45 MW

Bonaire 8 MW

BVI 33 MW

Cayman Island 21 MW

Curacao 49 MW

Dominica 9 MW

Dominican Republic 1365 MW

Grenada 21 MW

Guyana 118 MW

COUNTRY

Haiti 19 MW

Jamaica 244 MW

Martinique 95 MW

Nevis 3 MW

Puerto Rico 10 MW

St. Kitts 7 MW

St. Lucia 78 MW

St. Maarten 114 MW

St. Martin 15 MW

St. Vincent 17 MW

Suriname 23 MW

Trinidad 11 MW

Tobago 64 MW

Turks & Caicos 17 MW

Consistency with SSEB Report of May 5, 2009


Goal 1: Reduce Energy Cost

Goal 2: Increase efficiency of energy use and production

Goal 3: Increase fuel diversity and reliability

From page 49 of US Virgin Islands Comprehensive Energy Strategy (Draft)Prepared by Southern States Energy Board (SSEB). May 5, 2009

Goal 4: Promote clean energy

(More efficient generation technology)

(More efficient generation technology)

(Use of LNG as a fuel with LFO as a back-up)

(Use of LNG – cleaner fuel)


Summary


• Reality is that current power generation production in USVI is veryexpensive and does not need to be that way. Lower production cost will have a positive effect on overall retail electric rates

• Reciprocating Engine Dual Fuel Plant will generate tremendous savingswhen burning diesel fuel and confident that it can be permitted (with SCR and oxidation catalyst). Even greater savings will accrue coupled with even lower emissions when natural gas becomes available in the form of LNG (LFO always available as a back-up fuel). Existing CTs used for peaking • Environmental issues with reciprocating engine plant can easily be overcome by use of SCR (Global experience, good example: PG&E 167 MW Humboldt plant in California) • LNG is a real fuel option that should be considered for reasons of the long term outlook on price/price stability and environmental benefits • There are real players in the market who will step-up as an integrated LNG supplier



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Thank You

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Documents

1 © Wärtsilä 22 August 2015 WÄRTSILÄ CORPORATION Rodney P. George, VP Power Plants Wartsila Caribbean Inc. An Alternative Power Generation Strategy for