Gastech2019, Houston TXGLOBAL POWER CAPACITY MIX AND ADDITIONS 24 September 2019 Wärtsilä Energy Business -Engine Power Plants Wind and Solar grow, Inflexible Baseload declines Source:

© Wärtsilä Document ID DBAE311535 Revision -PUBLIC

Gastech 2019, Houston TX17.9.2019 T3.2 Power Generation - LNG to Power, CoGen Technologies & CHP

EVERY LNG TERMINALDESERVES A GOOD ENGINE

Raymond WalshGeneral Manager,Process Design & LNG Technology

24 September 2019 Wärtsilä Energy Business - Engine Power Plants 1

m-files://show/09A71704-7183-41DF-AB4E-40E31D17A663/0-2508?property=PG6921D66411D44654B071A1413F031A1E

m-files://show/09A71704-7183-41DF-AB4E-40E31D17A663/0-2508?property=PG80BE608AC70B407D90E36C17A22F186B

m-files://show/09A71704-7183-41DF-AB4E-40E31D17A663/0-2508?property=PG1F4A4DDE8CED4EDB982CC0C9D7C226E5

© Wärtsilä PUBLIC2

The information and conclusions in this presentation are based upon calculations (including software built-in assumptions), observations, assumptions, publicly available competitor information, and other information obtained by Wärtsilä or provided to Wärtsilä by its customers, prospective customers or other third parties (the ”information”) and is not intended to substitute independent evaluation. No representation or warranty of any kind is made in respect of any such information. Wärtsilä expressly disclaims any responsibility for, and does not guarantee, the correctness or the completeness of the information. The calculations and assumptions included in the information do not necessarily take into account all the factors that could be relevant. Nothing in this presentation shall be construed as a guarantee or warranty of the performance of any Wärtsilä equipment or installation or the savings or other benefits that could be achieved by using Wärtsilä technology, equipment or installations instead of any or other technology.

DISCLAIMER

24 September 2019 Wärtsilä Energy Business - Engine Power Plants


Document ID DBAE311535 Revision -

CONTENTS

1. Introduction 2. Challenges for Small- & Medium-Scale LNG3. Modular & Integrated Solutions4. Gas Power Generation5. References



© Wärtsilä PUBLIC Document ID DBAE311535 Revision -

WÄRTSILÄ 31

( )

INTRODUCTION




© Wärtsilä PUBLIC Document ID DBAE311535 Revision -24 September 2019 Wärtsilä Energy Business - Engine Power Plants 5

WÄRTSILÄ IN BRIEF

Net sales bybusiness 2018

Comparison figures for 2017 have been restated due to the internal reorganisation of service activities and the adoption of IFRS 15.

MarineSolutions24% (22)

EnergySolutions29% (29)

Services47% (49)

Solutions forPOWER GENERATION & MARINE

Established1834Headquartersin FinlandOrder intakeEUR 6,307 millionNet salesEUR 5,174 million

Our Values

Do things betterthan anyoneelse in ourindustry

Capture opportunitiesand make things

happen

Foster opennessrespect and trust

to create excitement

19,000 professionalsin more than 80 countries




WÄRTSILÄ ENERGY

Installed power plant capacity70 GW in 177 countries around the world

Utilities

IPP’s (IndependentPower Producers)

Industrials

Municipalities, co-ops,Oil & Gas etc.

Americas,output:

14 GW

Africa,output:

7.4 GW

Europe,output:

17.6 GW

Asia &Middle East,

output:29.2 GW

4889MW

5472MW

1095MW

2546MW

6849MW

5139MW

1854MW

3771MW

10 115MW

8258MW

1827MW

9067MW

3370MW

1216MW

1111MW

1706MW



ENERGY BUSINESS - OUR VISION

TOWARDS A 100% RENEWABLE ENERGY FUTUREThe energy landscape is in transition towards more flexibleand sustainable energy systems. We envision a 100% renewable energy future.Wärtsilä is leading the transition as the Energy System Integrator – we understand, design, build and serve optimal power systems for future generations.Engines and storage will provide the needed flexibilityto integrate renewables and secure reliability.We develop and deliver solutions and services to help our customers maximize performance and profitability throughout the asset lifecycle.






CHALLENGES FOR SMALL-AND MEDIUM-SCALE LNG



© Wärtsilä9

BEFORE: CONVENTIONAL LNG


© Wärtsilä10

VISION: CONVENTIONAL + SMALL-SCALE LNG


© Wärtsilä11

SO WHY ISN’T SMALLER SCALE LNG HAPPENING?


Approach and Implementation• Small- and medium-size terminal projects are

treated the same way as large terminals

• Bespoke solutions, specified according to precedent and wishes, not actual requirements

• No balancing of cost v performance

• Proportionally higher costs and longer schedule for smaller sized terminal

Establishing the Business• Difficulties to secure gas off-takers

• Impractical to expect off-takers to accept gas when terminal is being commissioned or even soon after

• Increases risk and lengthens payback time

Technical Limitations

• Regasification requires a heat source, space for AAVs, or burning of gas

• Boil-off gas handling is wasteful if there is no low pressure sendout

• Smaller terminals need full auxiliary systems

• Minimum manning requirements prevent savingsdue to automation, reliability and scale


• Choose an engineering company• Conceptual design, feasibility studies and FEED• Evaluate potential contractors• Bidding process, supplier selection and delivery contracts• Manage construction of LNG terminal and power plant• Arrange for operation maintenance and training

TRADITIONAL OIL & GAS PROJECT INVESTMENT PHASES


Long process to Final Investment Decision, more time spent on administration, legal consultations and contractual setup...(20-30 months)

Customer Strategy

Opportunity Identification

Pre-feasibility Study

FeasibilityStudy

Project Start

Basic Process FEED ITTs EPC-M Operation

FIDPre-FID ITT = Invitation to tenders


PROJECT COLLABORATION WITH WÄRTSILÄ


Your shorter & quicker route to commercial operations!(10-20 months)

• Design, engineering, cost evaluations, constructability reviews and safety studies

• Project execution and commissioning• Asset management and maintenance agreements

reimbursible

Conversion to Lumpsum EPC

Customer Strategy

Opportunity Identification

Development &Financial Advisory

Wärtsilä Front End Studies

Lump sum EPC Operation

FIDPre-FID


MODULARISATION

INTEGRATED SOLUTIONS

MODULAR & INTEGRATED SOLUTIONS




© Wärtsilä15

INTEGRATION OF LNG TERMINAL TO POWER PLANT PROCESS SYSTEMS


Boil-off gas and all vented gas can be sent to the engines instead of being vented or flared, greatly reducing greenhouse gas emissions

LNG storage tank

BOG Compressor

Truck loading

Fuel Gas Supply Unit

Regas modules

Air compressor and dryer

Standby heater

Dynamic matching enables rapid ramping of power to match the grid load

Engine-Generator sets

Engine cooling radiators

© Wärtsilä16

MODULARISATION AND STANDARDISATION


Wärtsilä modular plants are custom solutions

built using proven modules and components• Proven functionality and pre-designed integration

to the other plant systems

• Reduced project design time

• Secured schedule and cost

• Prefabrication under repeatable controlled conditions ensures consistent high quality

• Compact design for containerised transportation and storage, and a smaller plant footprint

• Rapid installation time on site

• Minimised technical and construction risks

• Simply add modules to extend the facility

Regasification Module, fits to 20’ container

Modular Power Plant Engine Hall

© Wärtsilä17

INTEGRATION OF LNG TERMINAL TO POWER PLANT ELECTRICAL AND AUTOMATION SYSTEMS


Control and Safety system optimised to operate the combined system instead of two separate systems which would need safety interlocking

LNG storage tank

BOG Compressor

Truck loading

Regas modules

Engine-Generator sets

Engine cooling radiators

Control room LV switchgear

Switchyard

MV switchgear

© Wärtsilä18

OPTIMISED OPERATION & MAINTENANCE


• Safety in design and automated systems minimise the need for operators in a small LNG terminal

• Specialist skills can be shared across the integrated power plant and terminal.

Small LNG terminal Engine Power Plant

10+10=11

© Wärtsilä

HP BOG Compressor

Recondenser

Flare

Power Plantwith Regas unit

19

LNG TERMINAL INTEGRATION WITH POWER PLANT


Technical Limitations

• Heat needed for the regasification process is supplied from the power plant instead of burning LNG

• Boil-off gas is monetised - the engine is your flare!

• Power plant systems are extended to the terminal

• Combined O&M for power plant and terminal for lowest possible lifecycle cost

Approach and Implementation• Collaboration in development ensures that the

actual terminal requirements are met• Power plant integration allows LNG process

standardisation with proven modularised solutions minimised cost, maximised performance

• Optimised project planning for power plant and terminal controls schedule & cost and reduces risk

Establishing the Business• The power plant is the anchor tenant for a small-

and medium-scale LNG terminal, guaranteeing thefeasibility of the LNG project

• Sales of gas and power start already duringcommissioning

• Dual Fuel engines can generate electricity before the LNG chain is ready

• Payback time starts early

© Wärtsilä20

SPLIT OWNERSHIP


Split business model can be developed any time from project inception:

• Media and energy transfers are metered and invoiced: Gas, heat, compressed air, nitrogen, electricity, water

• BOG handling can be a sale of service or purchase of gas, or both, same for selling heating and cooling

• O&M staffing, monitoring, gas & fire safety, facility management services, are provided from one to the other, or from Wärtsilä to both

If Ownership of LNG/Gas AND Power Generation is not Allowed?

$

$

$

$

$

LNG TerminalBusiness

Power PlantBusiness


GAS POWER GENERATION



© Wärtsilä22

BEFORE: CONVENTIONAL LNG


© Wärtsilä23

BEFORE: CONVENTIONAL LNG & POWER


© Wärtsilä24

TODAY: CONVENTIONAL LNG & CONVENTIONAL + RENEWABLE POWER


© Wärtsilä25

THE ENERGY TRANSITION – INFLEXIBLE COAL AND CCGT LOSING


Ohio, USA, 2018

Colorado, USA, 2018

”... the fourth major coal company to file for bankruptcy in the past three years… as demand drops due to a glut of cheap natural gas, the rise of renewable energy sources and plans by some states to reduce or eliminate coal from their energy portfolios…”

Germany, 2018

”... Uniper and the other owners […] see no way to ensure the Bavarian plant’s commercial viability…”

Sources : The Wall Street Journal, The Associated Press, Power Engineering International

© Wärtsilä26

GLOBAL POWER CAPACITY MIX AND ADDITIONS


Wind and Solar grow, Inflexible Baseload declines

Source: Bloomberg New Energy Outlook 2019

Annual Gross Capacity Additions 2018-2040 (GW)

Capacity mix 20187.0 TW

Capacity mix 204015.5 TW

© Wärtsilä27

GLOBAL GAS CAPACITY ADDITIONS AND CAPACITY FACTORS


Gas will remain of significant importance, but its role will change

0%

10%

20%

30%

40%

50%

60%

0

10

20

30

40

50

60

70

80

90

100

2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040

Cap

acity

fact

or

GW

Gas Peaker gas Gas capacity factor Peaker gas capacity factor Oil capacity factorSource: Bloomberg New Energy Outlook 2019

Note: Includes only large electricitysystems, so for example industrialapplications not represented

Annual Gas Gross Capacity Additions 2018-2040 (GW)By 2030, CCGTs will be operating atsuboptimal capacity factors rangingfrom 30-60%, as low cost renewablesand storage impact running hours

The role of peaker gas will be growingsignificantly, as in a high RE world theywill help to provide backup duringprolonged low supply periods inrenewable generation and provide helpin seasonal peaks

© Wärtsilä

0

20

40

60

80

100

28

AN ALL-IN-ONE POWER PLANT FROM WÄRTSILÄ FOR THE POWER SYSTEM OF THE FUTURE


1

23

4

5

VALUE• Grid stability support• Ancillary Service market

VALUE• Competitive life cycle

generation cost• Any output, same

generation cost

1 FAST START 2 BASELOAD 3 LOAD FOLLOWING 4 LOW-LOAD OPERATION

5 FAST STOP

FEATURES• Power to grid in 30s• 2-5 min to full power• Start up efficiency

FEATURES• Highest simple cycle

efficiency• Multi unit → high firm

capacity• Flexicycle ™

VALUE• Wind and solar

balancing• Ancillary Service market

FEATURES• Part load efficiency

unaffected • No EOH cost for cycling

VALUE• ”low load” = No load• Not running when no

revenue

FEATURES• 1min shutdown• No minimum down time• Zero fuel cost• Zero emissions

VALUE• Not running when no

revenue• PV enabler

FEATURES• 1min shutdown• No minimum up time• No EOH calculation

ALL INONE!

OUTPUT (%)

© Wärtsilä29

TODAY: CONVENTIONAL LNG & CONVENTIONAL + RENEWABLE POWER


© Wärtsilä30

FUTURE: RENEWABLE ”BASELOAD” + FLEXIBLE GAS POWER


© Wärtsilä31

FUTURE: FULL SCALE LNG & FLEXIBLE GAS POWER



REFERENCES





MMPA Shakopee Energy Park

REFERENCES - AMERICA

"Shakopee Energy Park is good forevery MMPA community because itprovides power supply flexibility andprotects our members against pricevolatility in the marketplace.”

Derick Dahlen, President and CEO, Avant Energy

Customer Avant Energy for MMPA (utility)Type Wärtsilä 34SG gas power plantOperating mode Peaking & Flexible baseloadGensets 5 x Wärtsilä 20V34SGTotal output 46 MWFuel Natural gas with LNG backupScope Engineered equipment delivery (EEQ)Delivery 2017





Tornio Manga LNG receiving terminal, Finland

REFERENCES - EUROPE

"The Tornio Manga LNG terminal represents a long-term infrastructure investment programme. The beneficiaries include shipping and road transportation companies, power and heat utilities, as well as numerous industrial and mining companies in the region. We appreciate Wärtsilä’s participation as a valued partner in this project; notably their special value-adding capabilities in LNG related operations.””Pekka Erkkilä, Chairman of the Board, Manga LNG Oy

Customer Manga LNG Oy (industry)Type Medium-scale terminalTank net volume 50,000 m³Send-out Max 40 tonnes per hour at 6.0 bargScope of supply • Civil works and infrastructure

• Full containment storage tank• Regasification & gas metering• BOG system• Electrical and control system• Unloading system• Bunkering and truck loading

Scope Engineering, procurement & construction (EPC)

Delivery 2018





Raahen Voima LNG receiving terminal, Finland

REFERENCES - EUROPE

“We wanted a modern LNG-terminal that utilizes reliable technology. Wärtsilä’stechnology fits our need and they have experience as an EPC provider”Pekka Inkala, CEO,Raahen Voima

Customer SSAB Oy (industry)Type Small-scale terminalTank net volume 1,400 m³Send-out Max 11 tonnes per hour at 6.0 bargScope of supply • Civil works and infrastructure

• Vacuum insulated storage tanks• Regasification & gas metering• Electrical and control system• Truck unloading & reloading system

Scope Engineering, procurement & construction (EPC)

Delivery 2018





Engine-solar PV hybridIPP4, Jordan

REFERENCES – ASIA & MIDDLE EAST

“The idea of the hybrid is to let the solar PV unit produce electricity in the daytime, which will reduce the use of the engines. This will cut the carbon footprint of the power plant, and indeed the whole grid.”

Meftaur Rahman, President and CEO, AES Jordan

Customer AES JordanType Engine-solar hybridOperating mode Peaking / baseloadSolar PV output 46 MWdc, 40 MwacSolar PV field land area 81 hectaresFirst-year energy output 87 GWhGensets 16 x Wärtsilä 18V50DF Total output 250 MWFuel Natural gas from Aqaba FSRU, HFO,

LFO (tri-fuel plant)Delivery Engine unit in 2014, solar PV unit in

2019





January 5-11, 2014

0

500

1,000

1,500

2,000

2,500

3,000

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

MW

Amman GT

Risha

Rehab GT

Rehab CCGT

IPP2

Samra

IPP1

Zarqa

Aqaba

0

500

1,000

1,500

2,000

2,500

3,000


MW

Amman GT

Risha

Rehab GT

Rehab CCGT

IPP2

Samra

IPP1

Zarqa

Aqaba

0

500

1,000

1,500

2,000

2,500

3,000


MW

Amman GT

Risha

Rehab GT

Rehab CCGT

IPP2

Samra

IPP1

Zarqa

Aqaba

0

500

1,000

1,500

2,000

2,500

3,000


MW

Amman GT

Risha

Rehab GT

Rehab CCGT

IPP2

Samra

IPP1

Zarqa

Aqaba

GT

CCGT

Steam

November 2-8, 2014

0

500

1,000

1,500

2,000

2,500

3,000


MW

Amman GT

Risha

Rehab GT

IPP4

IPP3

IPP2

Samra

IPP1

Rehab CCGT

Zarqa

Aqaba

0

500

1,000

1,500

2,000

2,500

3,000

Su

nd

ay

Mo

nd

ay

Tu

esd

ay

We

dn

esd

ay

Th

urs

da

y

Fri

da

y

Sa

turd

ay

MW

System generation by technology type Sun-Sat January 5-11, 2014

GT

Engine

CCGT

ST

0

500

1,000

1,500

2,000

2,500

3,000


MW

Amman GT

Risha

Rehab GT

Rehab CCGT

IPP2

Samra

IPP1

Zarqa

Aqaba

0

500

1,000

1,500

2,000

2,500

3,000


MW

Amman GT

Risha

Rehab GT

Rehab CCGT

IPP2

Samra

IPP1

Zarqa

Aqaba

0

500

1,000

1,500

2,000

2,500

3,000


MW

Amman GT

Risha

Rehab GT

Rehab CCGT

IPP2

Samra

IPP1

Zarqa

Aqaba

GT

CCGT

Steam

Engine


REFERENCES – ASIA & MIDDLE EAST





Hamina LNG receiving terminal, Finland

REFERENCES - EUROPE

Working towards more flexible energy systems – connecting Hamina to the national gas network gives us the keys to a cleaner environment for future generations

Customer Hamina LNGType LNG receiving terminalTank net volume 30,000 m³Send-out rate 500,000 Nm3/day (low & high pressure)Scope Engineering, procurement &

construction (EPC)Delivery 2020




© Wärtsilä39

CONCLUSION


Collaborate in Development

Integrate the Technology

Monetise the Gas to Power

Documents

Gastech2019, Houston TXGLOBAL POWER CAPACITY MIX AND ADDITIONS 24 September 2019 Wärtsilä Energy Business -Engine Power Plants Wind and Solar grow, Inflexible Baseload declines Source: