© Wärtsilä

FUEL OPTIONSNATURAL GAS VS. LPG VS. COAL

Sampo Suvisaari

Regional Director, Wärtsilä Energy Solutions

20th Annual S&P Global Platts Central American Energy Conference

Panama City, Panama, June 15-16, 2017

© Wärtsilä

Best is not to use any fuel at all…

Renewables are quickly becoming the new baseload.

Characteristic of renewables Variable, non-dispatchable generation Reduce load of other power plants & distort the net load curve Forecast errors on generation side

Wind power

Follows weather patterns, not human daily life cycles

Minute-to-hourly output fluctuations ramping constraints

Accurately forecastable only 1...n hours ahead

Solar power Follows the human daily life & load pattern, except evening peak

Second-to-minute output fluctuations Rapid frequency deviations

Easier to forecast than wind power

NEED FOR FLEXIBILITY IN POWER SYSTEMS

© Wärtsilä

Practical impacts on power systems

• CCGT´s – first to suffer!

• Running hours drop from base load to intermittent.

• Average load drops. Inreasing number of (daily) starts and stops.

• Pulse-operation (uneconomical for CCGT).

• Forecasting operation cycles (planning) gets increasingly difficult.

• Coal and nuclear power plants – next in line to suffer...

• Not able to stop and start loss-making minimum load operation to

”hang on”.

• Main reason for renewable curtailment.

VALUE OF FLEXIBILITY IN POWER SYSTEMS

© Wärtsilä

INTERMITTENT

RENEWABLESSMART POWER

GENERATION

STORAGE

SYSTEMS

FUTURE POWER SYSTEMS

FLEXIBILITY

AFFORDABILITY

COAL

© Wärtsilä

A REMNANT FROM LAST CENTURY

• Coal on its own is a value proposition “from the last century” because:• More polluting than other alternatives• Higher CO2 production per MWh generated • Low efficiency Rankine cycle• Not a flexible technology• Not suitable for cycling• Does not combine well with increasing intermittent renewable generation

• Coal power plants are expensive to build:• High capex (4-6 times more than simple cycle gas engines)• Each power plant designed case by case, no standard solutions• Very long and unpredictable construction times

• Difficult to finance in today’s world

• Coal with biomass is a better proposition• Burn waste from sugar production (bagasse)• Emissions still a concern

© Wärtsilä

DENTON CASE

• City of Denton in Texas is closing down their coal power plant and replacing the capacity with quick starting gas engine power plant

• kWh generated by intermittent wind power are cheaper than coal

• Gas power plant will enable more renewables (from 41% to 70%) and decrease electricity rate for consumers

• For details see http://www.renewabledentonplan.com

© Wärtsilä

CITY OF DENTON CASE

Current mix After new gas power plant is installed

and coal plant closed down

© Wärtsilä

CITY OF DENTON CASE

• Ultra-flexible Smart Power Generationbased on Wärtsilä gas engines

• Simple cycle 225 MW

• Full load in less than 5 minutes

• Enables Denton to buy 70% renewableenergy

• Electricity costs go down

EXAMPLE DISPATCH CASES

© Wärtsilä

5 GW of wind power 8% of total peak load2007

GIBBONS CREEK COAL PLANT OPERATION PROFILE – ERCOT, TEXAS

GIBBONS CREEK COAL PLANT OPERATION PROFILE – ERCOT, TEXAS

16 GW of wind power 23% of total peak load2015

500 MW plant operating inefficiently at 200 MW and suffering from cycling

19 GW of wind power 27% of total peak load2016

GIBBONS CREEK COAL PLANT OPERATION PROFILE – ERCOT, TEXAS

COAL PLANT OPERATION PROFILE – SPP, NEBRASKA2007

2015

1.7 GW of wind power / 4% of peak load

6 GW of wind power / 11% of peak load

Rule of thumb: > 5 % renewables problems for non-flexible generation assets

LPGLiquefied Petroleum Gas

© Wärtsilä

© Wärtsilä

ROATAN ELECTRIC RUNNING ON PROPANE

© Wärtsilä

ROATAN ELECTRIC RUNNING ON PROPANE

Smart Power Generation

© Wärtsilä

U.S. VIRGIN ISLANDS – GAS ENGINES ON PROPANE

Wärtsilä press release April 4, 2017

© Wärtsilä

0.608 USD/gal / 0.091 MMBtu/gal = 6.68 USD/MMBtu (FOB)

PROPANE SPOT PRICES UP OVER THE LAST 12-24 MONTHS

Source: www.eia.gov

© Wärtsilä

PROPANE VS BRENT

Source: BW LPG Annual Report

LNGLiquefied Natural Gas

© Wärtsilä

World LNG Report 2017 2016 2015

© Wärtsilä

LNG SUPPLY ALTERNATIVES FOR CENTRAL AMERICA

1. Supply agreement with a portfolio player

• Example Energia del Pacífico’s agreement with Shell

• More interest in smaller scale agreements

2. Reload from existing LNG terminals

• SPEC FSRU in Cartagena, Colombia

• AES Dominican Republic, later also AES Panama

3. Supply agreement with smaller scale regional liquefaction

facilities, such as Eagle LNG (Jacksonville, Florida)

• Direct supply from source

Smaller scale LNG deliveries are now possible and multiple options available.