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OMV Gas & Power
Move & More.
OMV Business Unit Power Strategy and Role of Desertec Industrial Initiative Dii
G. MaierOMV Power International GmbH
Vienna, November 11th 2010
2 |OMV Gas & Power
Gas & Power: Long-term growth is expected
Sources: OMV analysis based on KBCScope ITA & GER: gas – South Germany & North Italy; power – Germany
Key drivers
Further electrification especially in OMV markets
Need for flexible gas-fired power generation units
Development of gas and power markets into traded markets
-5 % 1 1 % 4 %-2 4 % 2 5 % 1 1 %
o il g a s p o w e r
Growth 2010-15
Growth 2010-30
4%14% 11%
33%
gas power
40%46%
gas power
22%16%
61% 56%
gas power
109% 218%
OMV core markets
3 |OMV Gas & Power
From Gas to Power along OMV gas supply routes
HR Weitendorf/AT
CCPP Haiming/D
CCPP Brazi/RO
Zero Emission AT/RO
CCPP Samsun/TR
CO2 free CCPP´s
CCPP (Combined Cycle Power Plant)HR (Heat Recovery) = Wärmerückgewinnung
Strategic rationale
Power generation drives gas demand
Strong position of in gas business
Strategic thrust
Expanding gas value chain to power
Power strategy
Build up asset portfolio with gas-fired power plants and renewable energy
Set-up integrated asset backed wholesale and tradingHydro
CSP
Wind RO
4 |OMV Gas & Power
Renewable power plants require flexible CCPPs
Flexibility “on demand”
Additional outlet for gas sales (secure demand)
Low investment costs per capacity
Ability to operate on balancing market (incl. intra-day market)
Hedging of decreasing gas prices
High variable costs
Exposure to spark spread and CO2 price, risk of being price-setting plants in merit order
Reduced competitiveness in base load on forward market
Gas-fired CCGT
Low/zero variable costs
Low carbon footprint reducing Group’s carbon intensity, no exposure to carbon price
Growing market potential due to changing energy map
Favourable regulatory setting
High investment costs per capacity
Inflexible, to certain extent uncontrollable power generation
Economics influenced by geographic factors (“geographic monopoly”)
Renewable power
Ability to operate anytime on all different markets and optimise sales portfolio (base, peak, intra-day)
Ability to meet changing demand requirements
Stable cash flows, sustainable profitability / growth options
Risk diversification
Synergies
5 |OMV Gas & Power
Renewable Power - Focus on wind, hydro and solar while also supporting new technologies
Focus and Strategy
Development of hydro power projects as Early Follower with lowest possible environmental and socio-economic impactFocus areas: Romania, Turkey
Solar
Key technology for capacity growthFocus on organic growth as Early Follower, acquisitions opportunistically Focus markets: Romania, Turkey
WindBusinessArea
Overview
Development of Concentrated Solar Thermal Power Plants (CSP) as leader at superior locationsFocus areas: Turkey, MENA
Hydro
Business Unit Power – Renewable Projects bundles renewable power activities of OMV GroupFocus on renewable power from feedstock free of charge and without any alternative usage
-Focus on capacity growth in commercially mature renewable technologies, i.e. hydro and wind-Development of solar power as business opportunity and supporting new technologies
Geothermal power (in cooperation with OMV E&P); Biomass to heat and power opportunistically Photovoltaics, Electricity storage systemsElectric drive concepts: Plug-in hybrid/electric vehicles
Monitoring of new opportunities/ technology trends
6 |OMV Gas & Power
2009: Start of construction 2011: Start of commercial operation
Romania: CCPP in Brazi
Capacity860 MW net
Generation5 TWh p.a.
TypeCombined cycle gas-fired power plant (CCPP)
StatusFirst brick June 2009Plant and electrical overhead line construction ongoingGas pipeline (30 kms) construction ongoing
7 |OMV Gas & Power
CCPP Brazi, Romania - Construction Progresses
Cooling Tower HRSG & Turbine hall
Admin BuildingEOHL
8 |OMV Gas & Power
Turkey: CCPP Samsun
Capacity870 MW net
Generation6 TWh p.a.
TypeCombined cycle gas-fired power plant (CCPP)
StatusLand and site preparation finalizedGas pipeline (50 kms) and electrical overhead line (34 kms) construction being prepared
2010: Start of construction 2012: Start of commercial operation
More info: www.omvsamsunelektrik.com
9 |OMV Gas & Power
CCPP Samsun, Turkey - Construction Progresses
Piling Machines in Operation Gas Turbine Transport
Installation of Samsun BoardElectrical Preparation
10 |OMV Gas & Power
Germany: CCPP Haiming
Capacity850 MW net
Generation5 TWh p.a.
TypeCombined cycle gas-fired power plant (CCPP)
StatusLand securedPlant construction permit expected 2010Overhead line permitting process startedBürgerratsbegehren: 61% voted pro powerplant
2012: Start of construction 2014: Start of commercial operation
(planned)
More info:www. kraftwerkhaiming.com
11 |OMV Gas & Power
Austria: Heat Recovery Weitendorf
Capacity16 MW
Generation75 GWh p.a. (~ 28,000 households)
TypeHeat recovery system with boiler and steam turbine
StatusAll permits grantedConstruction startedElectrical connection line construction started
2009: Start of construction 2011: Start of commercial operation
12 |OMV Gas & Power
Wind Romania – first renewable asset
Capacity45 MW
Generation113 GWh p.a. (~ 50,000 households)
Type15 Vestas turbines, 3 MW each
StatusAll contracts signedAll permits and land securedSite mobilisation June 2010
2010: Start of construction 2011: Start of commercial operation
13 |OMV Gas & Power
Some thoughts on the State of the World…
Astonishing news and possible conclusion
IEA World Energy Outlook 2010
Spain: In the first 10 months of 2010, ~35% of electricity demand met by Renewable Power*
Germany: Wind- and solar power capacity of 62 GW by 2015 (36% of installed capacity)**
Renewable Energy business develops faster than even expected by promoters
Hydrocarbon resources are limited and too precious to be just burned, apart from the impact of their carbon emissions
Fatih Birol: Limitation of global warming to +2 °C not feasible with current measures; CO2 emissions expected to increase by 22% to 35 bn t CO2e until 2035 despite implementation of counter measures
Birol: The world needs higher oil prices to change consumption habits
Subsidies Renewable Energy 2009: US$ 57 bn
Subsidies Oil & Gas 2009: US$ 312 bn expected to increase to US$ 600 bn until 2015 (Base scenario)
Source: Anni Podimata, Vice Chair Committee on Industry, Research and Energy, European Parliament* 16-17% hydro, 15% wind, 3-4% solar; Antonio Hernández, Director-General for Energy Policy and Mining, Spain** Boston Consulting Group 2010
Solar Power
14 |OMV Gas & Power
Solar Energy compared to other Energy Resources
Source: Richard Perez, Atmospheric Sciences Research Center (ASRC), State University of New YorkUnit: TWyrYearly potential is shown for the renewable energies; total reserves are shown for the fossil and nuclear “use-them, lose-them” resources; world energy use is annual
Available solar energy exceeds the world’s energy consumption by a factor of 150010Solar energy received by continents, assuming 65% losses by the atmosphere and clouds8BP Statistical Review of World Energy 2007210 x 210 km2
(=0.13% of desert area)receive solar energyequal to global energy consumption
15 |OMV Gas & Power
The Convenient Truth!Large potential of Renewables in EUMENA
Source: Gerhard Knies, Founder of Desertec Foundation, ISES-Rome, CSP Workshop 2007
16 |OMV Gas & Power
Desertec Industrial Initiative Dii – Energy from Deserts
Dii 2050 Vision
Background and Concept
15% of the European power demand by 2050
700 TWh/a transferred from MENA to various centres of demand in Europe; Total production in MENA: 4000 TWh/a
Installations in MENA: 400 GW CSP, 130 GW wind energy, 120 GW PV, 40 GW geothermal
350 bn EUR until 2050 for power plant infrastructure, 50 bn EUR until 2050 for High-Voltage Direct-Current (HVDC) transmission lines
Desertec concept (started 2003) focuses on solar power, but also on wind and other renewables
Dii brings the technology to the best resources and not to the best subsidy schemes to produce sustainable electricity for EU and MENA
EU has to import Renewable Energy to fulfill 80% RE target 2050*
Incentives (e.g. feed-in tariffs) for Renewable Power projects in MENA will be possible by applying Article 9 of the EU Renewable Energy Directive
EU Member States can act as “Off-taker” of Renewable Power from third countries to close the gap of their Renewable Energy targets (NREAP) buy purchasing of Renewable Power and by a statistical (“booked”) transfer of the electricity under a cooperative flexible mechanism (no physical transfer necessary according to Article 9)
Source: Dii* Jochen Homann, State Secretary Ministry of Economics and Technology, Germany
17 |OMV Gas & Power
Making the vision a reality – planning phase until 2012
Source: Dii
18 |OMV Gas & Power
Five work areas derived from Dii‘s mission and objectives
Source: Dii
19 |OMV Gas & Power
Dii and OMV
OMV joined Desertec Industrial Initiative (Dii) as an Associate Partner in March 2010First Austrian company to join Dii
Objectives:Join Dii working groups during feasibility phaseObtain and evaluate results from feasibility studiesBring in OMV experience of realizing large international energy projectsOMV has regional footprint in MENA region for many years and can leverage contactsExtend renewable portfolio in MENABring in experience in developing wind and CSP projectsBuild up know how (technology, organisation, processes)Fortify our strong partnership with the region(s)
Sketch of a possible infrastructure (“Super Grid”) for a sustainable supply of power to Europe, the Middle East and North Africa (EU-MENA)Source: Dii
20 |OMV Gas & Power
Status, outlook and challenges
ChallengesStatus and outlook
Implementation of the framework of the EU Renewable Energy Directive into national legislation to provide incentives at the optimal locations with the optimal technologies to minimize costs
MENA footprint still very modest
Diverse interests and agendas of both Dii SHs and EU Member States
Dependence of Europe on MENA states and negotiations on long-term PPA between Europe and MENA states
Ambitious Dii goals are seen as unrealistic by some experts, e.g. the expected low solar electricity generation costs
Political stability in North African countries and impact on security of investment
Political process to achieve permission to extend transmission lines through southern European countries
Grid connection between Morocco-Spain (limited to 500 MW free capacity) is the starting point for the first reference projects (cluster) of 500 MW in Morocco
Timeline until 2012: Ready for Tender and Financing of these reference projects
Grid connection limit of 500 MW Morocco-Spain will be increased by 2017
Next reference projects will be probably started in Tunisia (Grid connection Tunisia-Italy expected by 2017 as second path)
As Turkey has been synchronized to the EU already, the MENA-Turkey-EU grid connection will be the third path from MENA to EU
New interconnection between Spain and France by 2014 will be realized as achievement in the frame of the Mediterranean Solar Plan (French initiative started in 2008 with the objective of 20 GW in 2020)
Electricity from North Africa (“Desertec”) part of the German “Energiekonzept” and strong signals in support of Dii by Mr. Oettinger, EU Commissioner
Source: Dii
21 |OMV Gas & Power
Dii: 51 Partners from over 12 countries
Source: Dii
22 |OMV Gas & Power
OMV Power – Pioneers, Professionals, Partners
OMV Power International GmbHOMV Power International GmbHTrabrennstrasseTrabrennstrasse 66--8, 1020 Wien8, 1020 WienTel: +43 (1) 40440Tel: +43 (1) 40440--00EE--Mail: Mail: [email protected]@omv.comwww.omv.com/powerwww.omv.com/power
23 |OMV Gas & Power
Back Up
24 |OMV Gas & Power
Six Key Solar Technologies Exist
Para-bolictrough*
Dish-stirling
Power tower
Con-cen-tratingPV
Thin film
2
3
4
5
6
Key technologies
Without storage or hybrid fossilWith storageWith storage and hybrid fossil
Various dish designs
N/A
Amorphus silicon (a -Si)Cadmium telluride (CdTe)Copper indium gallium selenide (CIGS)Nano
Organic dye
Parabolic mirrors concentrate sunlight on a tube filled with heat transfer fluidHeated fluid powers steam turbine
Solar energy converted to heat in a dish collector drives Stirling engine, a heat engine that does not require water supply
Sun-tracking mirrors focus sunlight on a receiver at the top of a tower which heats water to produce electricity
Mirrors used to concentrate light onto cells to increase effectivenessNeeds direct solar radiation and there-fore sun-tracking
Thin layer of glass, steel, and semiconductor material used to convert light directly into electricity
Mixture of flexible polymer substrates with nanomaterialsFlexible PV using plastic as substrate
Description
Commercial since 1980s
Pilot
Pilot
Pilot(close to commercial)
Commercial
Laboratory phase
Sub technologies Development
Solar thermal
Photo Voltaics(PV)
1 Mono-crystallinePoly-crystalline
Uses solar cells combined to modules to generate electricity
CommercialWafer-based PV
Without storage or hybrid fossilWith storageWith storage and hybrid fossil
* incl. Linear Fresnel technology
25 |OMV Gas & Power
CSP - Parabolic Trough Systems
Large parabolic mirrors concentrate the solar irradiationin a focus-lineAbsorber tubes in the focus-line heat up a heat transferfluid to almost 400°C The heat transfer fluid is pumped to a heat exchanger, where it produces steam from waterThe steam is used to produce electricity in a steam turbineSpace requirement: ~1 km2
for 50 MW (without storage)CSP plants are feasible for DNI > 2000 kWh/m2/yr
26 |OMV Gas & Power
CSP – Nevada Solar 1 in the US
64 MW (without storage)357,200 m2 of solar fieldAnnual production > 130 GWhConstruction: < 18 monthsCAPEX: ~ 167 Mill. USDOperating since 2007Built and operated by AccionaLocation: near Las Vegas
27 |OMV Gas & Power
CSP - Standard parabolic trough plant with molten salt thermal storage
SB
SB: Solar booster burner (fueled by natural gas or oil) to raise steam parameters of turbine and raise efficiency of Rankine cycle.
Fossil fraction of standard CSP plants typically <20%
NG: Heat-transfer-fluid (HTF) heater fueled by natural gas for freezing protection
28 |OMV Gas & Power
Electricity Generation Cost Comparison of CSP to CCGT and other Renewables (€/MWh)
Source: EER, 2007
* Solar Electricity Generation System** Levelized Electricity Cost
17-year old SEGS* in California produce electricity at approx. 170 €/MWhIn Spain, LEC** is about 230 €/MWhIncreasing the size of plants, costs will decrease by as much as 40%Increased supply chains to standard components will drive costs down by further 20% in the near termTherefore, 100 €/MWh seem realistic in the mid-term
29 |OMV Gas & Power
High-Voltage Direct-Current (HVDC) Transmission2-3% transmission losses per 1000 km, which results in 10-15% losses from North Africa to Europe
Investment cost assumption for HVDC infrastructureStations: 120 €/kWSea cables: 1.2 mn€/kmOverhead lines: 270,000 €/km
Assumptions600 kV HVDC corridor3200 MW capacity3000 km of land and 200 km sea line6500 full load hoursDiscount rate: 6%
This results in transmission costs of < 0.02 €/kWh
Source: DLR (2009), CSP Today (2008)
Comparison:Gas pipeline investment cost are1.5-2.0 mn€/km (on land)
Source: OMV Gas
30 |OMV Gas & Power
Already Existing Projects in MENA Region (not directly linked to Desertec)
Ain Beni Mathar470 MW ISCC (20 MW Solar)(Abengoa, under construction)
Kuraymat146 MW ISCC (40 MW Solar)(Iberdrola and Mitsui, under construction)Funded by World Bank
Shams 1100 MW in Abu Dhabi(open for tender)
Hassi R’Mel150 MW ISCC (20 MW Solar)(Abengoa, under construction)
Negev Desert250 MW(open for tender)
Other announced projects: Yazd ISCC (Iran, 430 MW), Naama (Algeria, 400 MW), Meghaier (Algeria, 400 MW), Hassi R’Mel 2nd Phase (400 MW)
Source: DLR, 2009
31 |OMV Gas & Power
Commercial CSP Plants in Operation
8 plants (~500MW) currently under construction or just before ground-breaking in Abu Dhabi, Algeria, Egypt, Morocco, Spain, US.In total 1022 MW CSP plants are in operation or under construction at the end of 2008.More than 80 CSP plants (6000-7000 MW) under development worldwide
Commissioning YearPeak CapacityPlant Name
200950 MWANDASOL 2 (ESP)
2008 / 200920 MWPS-20 (ESP)
Estimated 200850 MWANDASOL 1 (ESP)
20051 MWAPS Saguaro (US)
20041 MW combined cycleLiddell Power Station (AUS)
200711 MWPS-10 (ESP)
200764 MWNevada Solar One (US)
1985 … 1991364 MWSEGS I-IX (US)
Source: Lahmeyer, DLR, EER
32 |OMV Gas & Power
Desertec - Main Project Indicators
Source: DLR, TRANS-CSP, Final Report, 2006
33 |OMV Gas & Power
Area Restriction is not an Issue for Desertec
Due to sand dunes and shifting sands certain areas can not be used in the MENA regionRemaining usable area for CSP plants in MENA still very large (~4.6 mn km2), compared to2500 km2 that are necessary for the Desertec goal of 100 GW by 2050CONCLUSION: AREA RESTRICTION IS NOT AN ISSUE
Source: DLR, 2009
34 |OMV Gas & Power
Cooling Water Requirements in the Deserts also not an Issue
Solar-thermal power plants (like most conventional power plants) also require cooling water, which may be costly or scarce in desert areas.However, again like in conventional plants, alternatively dry cooling towers with air fan can be applied for cooling. Dry cooling systems significantly reduce plant water consumption, but it reduces the power plant efficiency and increases LEC by 5-10%.Another solution is to use a co-generation system for thermal sea water desalination as cooling device. In this case the plant would even generate water instead of consuming water, provided that salty water is available.On the coasts, direct cooling with sea water is also feasible.
CONCLUSION: WATER AVAILABILITY IS NOT A TECHNICAL ISSUE, BUT FOR DRY COOLING EFFICIENCY IS LOWERED AND ELECTRICITY GENERATION COSTS ARE INCREASED.
35 |OMV Gas & Power
Back of the Envelope - Solar Irradiation
Solar irradiation:Spain, Turkey: 2000 kWh/m2.a = 228 W/m2
MENA: 2800 kWh/m2.a = 320 W/m2
Land use efficiency CSP parabolic trough plant:3.5-5.6% (average: 4.5%)(source: DLR, 2009)
Solar power per unit area:Spain, Turkey: 228 W/m2*0.045 = 10 W/m2
MENA: 320 W/m2*0.045 = 15 W/m2
36 |OMV Gas & Power
Back of the Envelope –Solar power plants in the deserts for Austria
Andasol:50 MWel × 3400 h = 170 GWhel electricity production/yearArea: 2 km2 for 50 MWel (including 7.5 h thermal storage)
Austria:Population: 8×106
Area: 83800 km2
Electrical energy consumption: ~ 65 TWh/a
Solar Power plants in the deserts for 100% electricity for Austria:65 × 1012 Wh/0.9 = 72 TWh/a (taking into account 10% transmission losses from MENA to A)
72 × 1012 Wh/170 × 109 Wh = 424Corrected by a factor 1.5 (see previous slide), this means 283 times Andasol 50 MW type of CSP plant is needed to produce 100% electricity for Austria
This means a desert area of 283 × 2 km2 = 585 km2 is needed (= 0.7% of Austrian area)
37 |OMV Gas & Power
CSP Plant Performance Data
Source: Characterisation of Solar Electricity Import Corridors from MENA to Europe Potential, Infrastructure and Cost (DLR, 2009)