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8/6/2019 EPC Contracting Strategy balancing Risk & Rewards for Customers and Contractors
1/10
, 2006
ATOMEXPO 2009, 26-28 2009
EPC Contracting Strategybalancing Risk & Rewards
for Customers and Contractors
Juan Ccahuana Tito, Director Fossil Power
Sector Energy, OOO Siemens Moscow
8/6/2019 EPC Contracting Strategy balancing Risk & Rewards for Customers and Contractors
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,
, 2006
Overestimationof demand,impacts of oilprice crises
Steep rise inpower demand
Market boom inS/E Asiareplaced by US-boom
Penetration ofnuclear power
Extraordinary growth inEurope, Russia, China,Middle East and RSA
Source: Siemens Energy GS4Base Case scenario
Status: April 2008
0
50
100
150
200
250
300
1950 1960 1970 1980 1990 2000 2010 2020
GW/a
All Types
Unit Size > 1 MW
Renewables
Hydro
Fossil Marke
t >100MW
Renewables
Nuclear
Hydro
Drivers,
uncertainties
Economic growth
Energy prices
Ecology awareness Power plant types
Commodity prices
Liberalization
Customer behavior
Replacements
Regional markets
Grid extension Production
capacity
Slow down due tolower consumptiongrowth, highbacklog?
Short term is characterized by stagnating market after extraordinary high growth
Historic Development ofWorld Power Plant Market Since 1950
8/6/2019 EPC Contracting Strategy balancing Risk & Rewards for Customers and Contractors
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Limited capacities at
sub-suppliers
Presently no capacity
extension in the market
available
Long lead times for keycomponents
High price level for supplies
e.g.: Forging Civil Casting
HRSG
Strong market demand led to bottlenecks
in the entire supply chain
Power Plant Manufacturers
Engineering
Procurement
Manufacturing
Construction
Erection/Commissioning
Sub-supplier Customer / MarketSteep Market Increase
Volatile Market Prices
100%
Feb
200
4
105%
Oct
200
4
112%
Aug
200
5
125%
Jul
200
6
135%
Feb
200
7
- Lead times and cost have increased significantly (+35%) within last 3 years
- Current EPC business models need to be rethought by industry e.g. -> EPC-M
- Develop alternative business models - Siemens is strengthening its product business by
providing pre-engineered product packages to the market.
Source:Thermoflow, e.g.Iberian peninsular CCPP
144
05-07
203
08-10
178
11-13
GW/a
8/6/2019 EPC Contracting Strategy balancing Risk & Rewards for Customers and Contractors
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Reference sales models structure
the Siemens offerings to our customers
General model: Customer request vs. Siemens offering
Scope of service and deliveries
Reduceds
cop
e
Entire
PP
Custom
erreque
st
Siemens offering
3b
4b
1
2b
Entire
Power
Plant
Power
Block
Power
Island
Extended
Power
Train
3a 4a2a
Partner needed
Source: New Business Mix Initiative
1 Entire Power Plant as Turnkeybusiness from Siemens
xa -Models:Customer award for an EPC full
scope delivery will be servedfrom Siemens and a partner(e.g. EPC Consortium).
xb - Models:Customer awards reduced
scope. Integration to complete
Power Plant is underresponsibility of customer or a 3rd
party contracted by the customer
(e.g. EPC-M, Architect Engineer)
%
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Scope of delivery
Source: New Business Mix Initiative
Reference sales models cover
the full range of solution business
Reference sales models - Overview
1
2b
3a
3b
4a
4b
SAG Customer Consortium Partner
100%70-80%20-30%
Model
50-60%
2a
Entire power plant as General Contractor Appropriate rebalance risk tools to be applied
Control over Power Block design (incl. 3D model) Model to cooperate with construction companies
Carve-out of civil & erection to ensure ~40% partner scope
Control over Power Block design (incl. 3D model) Customer is responsible for scope outside power block
Control over process: Min. scope for gross perf. guarantee Model to cooperate with AE/EPC capable of power plant eng. Consortium partner responsible for plant integration
Control over process: Min. scope for gross perf. guarantee Customer responsible for plant integration
No Siemens plant design Model to cooperate with EPCs in multi block projects Min. scope for SAG (~40%) only in case of multi block projects
No Siemens plant design Delivery of components (GTs, STs plus e.g. electrical
equipment, I&C, etc.)
Applied principle
Turnkey
ConsortiumPartner
Power Block
Customerscope
Power Block
Consortium PartnerPower Island
Customer scopePower Island
Consortium PartnerExt.
PowerTrain
Customer scopeExt.
PowerTrain
%
Priority
Limited volumedepending onresources and
project risk
3
1
4
2
For equipmentsupply only
8/6/2019 EPC Contracting Strategy balancing Risk & Rewards for Customers and Contractors
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Standard scopes of supply
including SGT5-PAC 4000F multi-shaft plants
SGT5-PAC 4000F SCC5-4000F 2x1
Power Island
SCC5-4000F 2x1
Turn key
SCC Power Island
Condenser with air exhaustsystemFeeding pumps of a
boiler Condensate pupms
Safety valves
Fuel preheaterwith filters,counter unit etc.
Power Island monitoringsystem
Options
SCCHeat and power
equipment
SST-PACwithout condenserSteam turbine and
auxiliaries without pipingGenerator and auxiliary
systemsElectric and I&C equipment Heat recovery boiler
Options
SCC Turn key
Building and structures Cranes and life support systems of the
turbine building Power plant cooling system
Water treatment Initial and waste water system
Tankage Piping and valves of the plant Electrical equipment
I&C of the power plant
Additional fire alarm and fire extinctions
systems Erection and commissioning
Other options
SCC Power island SCC heat and powerequipment
SGT-PAC
Complete turn key
delivery of the plantSystem inegration /Optimized solution
Cycle optimization /Manufacturing solution
SGT-PAC
Gas fuel and auxiliaries Air intake / exhaust system Gas fuel systemModules
Connectiong lines Generator and auxiliary
systems Fire extinction system of GT
plant
Electric and I&C equipment Options
Manufacturing and delivery
8/6/2019 EPC Contracting Strategy balancing Risk & Rewards for Customers and Contractors
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, 2006
Sales Model(Customer Value)
Shared Risk
Power BlockRe
balan
cingV
alue
and
Risk
Reb
alancing
Value
andR
isk Full Scope EPCTurnkey
Focus on Customer Value and balanced riskFocus on Customer Value and balanced risk
Power Island
Extended Power Train
Flexible ApproachFlexible Approach
to balance Risk Sharingto balance Risk Sharing
8/6/2019 EPC Contracting Strategy balancing Risk & Rewards for Customers and Contractors
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Partnering Initiative:
Selected EPC partners worldwide
Source: Partnering Initiative
KiewitWorley Parsons
Fresh MeadowBE&K
John HollandSumitomo
Orascom
YTLDaewoo
SNCBilfinger Berger
Iberinco
Techint
FluorBilfinger Berger
YTL
SamsungDaewoo
MarubeniHHI
HDECSNC
Techint
Al RahjiNCC Saudi
Al GhanimASTE
ETADoosan Heavy
L&TDaelim
Samsung
DaewooGS E&C
SumitomoYTLCTCI
MarubeniSamsung
EnkaMetka
AE&E
FluorGamaKentz
AE&EDuro FelgueraIberinco
Bilfinger Berger
Techint
AE&E
AE&E
EnkaSNC
Metka
Bilfinger Bergar
EnkaGamaMetka
DaewooDaelim
Posco E&C
Hanwah E&CSK E&C
Boiler
IHIDoosan Babcock
Burmeister & Wain
Water Island
SidemDoosan Water
Fisia
Hitachi Zoosen
GS E&C
Aker Kaeverner
Bilfinger Berger
Duro Felguera
Partner with SAG experience
Partner w/o SAG experience Project PartnerNormal
Strategic PartnerBold
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Step 1 Step 2 Step 3 Step 4 Step 5
Source: Partnering Initiative
Partner co-operation programcovers full life cycle of partner relationship
Partner Development Process
Identify Partners
with sales for
regions and
countries
Collect feedback
from existing
projects with the
partners
Get partnerconsent in taking
part in program
Perform partner
workshop, discuss
experience and
find common ways
for future coope-
ration, identify
co-operation
development plan
and sign a MOU
Partner agree-
ment signed and
projects identified
to bid together
Co-operation
development
plans detailed and
tasks allocated
Dedicated Liaisonmanager
identified.
Execute executive
relationship mgt.,
projects deve-
loped together,
first bids prepared
on the basis of
partnering
agreement
First project in
implementation
as per partnering
agreement,
regular feedbacks,
evaluation of the
agreed co-
operation
developmentplans (1 p.a.)
Identification ofPartners
Perform partnerworkshop
Sign a partne-ring agreement
defining basis ofpartnership
Build up ofrelationship andbid projects in
consortium
Successfullyimplementprojects inconsortium
8/6/2019 EPC Contracting Strategy balancing Risk & Rewards for Customers and Contractors
10/10
2006
ATOMEXPO 2009, 26-28 2009
Thank youfor your attention