Power in China - Alstom docu… · ALSTOM Hydro is the world leader with No.1 market share in hydro power • Tianjin ... Air Preheater – SBW JV Headcount: 50 Hydro – TAH Headcount:

George GEH

12/03/2007

Power in China

Agenda

1. Market overview- The market- Key drivers-

Key customers

-

Competition

Page 3

2. ALSTOM Power’s positioning Page 10

3. ALSTOM Power’s strategy Page 21

Installed power capacity

• China has the 2nd

largest installed base in the world and is growing fast

• Thermal/Coal will remain dominant in the foreseeable future

Wind 1GWHydro

117MW 23%

Thermal 391GW

76%

Nuclear 6.8GW

Installed capacity by fuel type 2005

860

622

319

2001 2006 2010f

Total installed capacity in ChinaGW

10%

CAGR

Source: ALSTOM, EIA-DOE, Worldbank, government reports3

0

20

40

6080

100

120

140

160

01 02 03 04 05 06f 07f 08f 09f 10f

Hydro

Nuclear

ST Large Conv

ST CC

GT CC >=40MW

GT SC >=40MW

Av. 01-05: 70 GW/y Av. 06-10: ~40 GW/y

GW

• China accounts for 50% of world Hydro market growth with mega projects• Nuclear market in China will account for 40% of the world growth

(for the next 5 years)

• It’s the largest coal market already and a strong coal will restart after 2008

Market for new power plants

Source: ALSTOM, EIA-DOE, Worldbank, government reports

Demand for new power plants in China

4

Market for environmental control systems (ECS)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2006 2007 2008 2009 2010

IndustryPM

NOxSOx

€ Bn

• China will account for 30% of global ECS market

(for the

next 5 years)

• FGD is still the largest market while DeNox is developing

• Power ECS market remains very competitive

Source: ALSTOM, EIA-DOE, Worldbank, government reports

ECS demand in China, Bn€

5

Key market drivers

Key drivers Impact on power market

Strong GDP growth

(target: 8% p.a., 2006: 10.5%)

Electricity demand growth expected to be 6% p.a. (objective of 20% improvement in energy efficiency) but growth for 2006 first 9 months was 13.5%!

• Allow private/foreign utilities/IPP to invest in power with an improved government approval process

• Electricity price reform may make market more attractive for private/foreign players

Tighter control on air pollution and stricter enforcement of environmental regulations will lead to customer behavior change and a strong ECS market growth

Power sector deregulation

Tightening environmental requirements

6

Purchasing criteria by key customers

Source: ALSTOM, customer discussions7

Big 5 (Hydro+ Nuclear+Coal)

Others

Nuclear

Hydro

HuanengDatangHuadianGuodianCPICGNPCCNNCCTGPCErtanSGCCCSGC

Luneng

China Res.Guohua

• Local content (to have political and customer access)

• Mainly component market

• Price

• Lead time

• Equipment efficiency (due to fuel cost increases)

• After sales services

Key purchasing criteria

Key customers

Coal market and supply

Source: ALSTOM, various reports8

Coal demand in China, average 2001-05

GW

Supercriticalboilers

Subcriticalboilers

CFBs

<150

STsCFBs

>150

14

32

50

2 2

• Supply in coal dominated by the Big3 players (Dongfang, Harbin, & Shanghai Electric)

Highly fragmented with more than 100 Competitors

Competition: Market share (F&S, 2003)

Domestic OEMs23%

Utility affiliates and

service companies

50%

Local contractors

15%

Multinational OEMs 12%

Power service market competition

9

• Multinational Companies-

Alstom, GE, Siemens, Mitsubishi, IHI, Toshiba Babcock & Wilcox, Foster Wheeler, Doosan

Babcock

• Domestic OEMs-

Shanghai, Dongfang, Harbin, Wuhan

• Service Subsidiaries, Component Suppliers

• Local Contractors

• Participating in the industry consolidation down the road…

Agenda

1. Market overview Page 3

2. ALSTOM Power’s positioning- Hydro- Coal-

Nuclear

Page 10

3. ALSTOM Power Systems’ strategy Page 21

Tracy

Hydro in Canada•

Activity: Gen + Turb

Taubate

Hydro in Brazil•

Activity: Gen + Turb + Control

Hydro Europe

(Birr, Grenoble, Bilbao)•

Activity: Gen + Turb + control

Baroda

Hydro in India•


ALSTOM Power in Hydro –

global footprint

• ALSTOM Hydro is the world leader with No.1 market share in hydro power

• Tianjin

is the largest unit of ALSTOM Hydro with full capabilities

11

Tianjin

Hydro in China•


Harbin

ALSTOM

Dongfang

Other25%

23% 25%

27%

Three Gorges orders won: -

Left bank: 8 x 700 MW-

Right bank: 4 x 700 MW


market leadership in China

Maintain market leadership through differentiation and partnerships

Market share, 2006

Major future projects:

-

Xiluodu, 18 x 700 MW

-

Linping

II, 8 x 600 MW

• In the large (>700 MW) segment:

Product differentiation with very large (e.g., 900 MW) Francis turbines

• In the PSP segment:

Maintain No.1 position through scope-sharing partnerships

12

06/07 07/08 08/09 09/10

5S / EHS

Lean hydro manufacturing concept

Design to manufacture

Design to constructability


local operational excellence

Achieve operational excellence locally

Tianjin factory potential savings

Mechanical plant

-

Lead time reduction/WIP (35%)

-

Release capacity VTL /B&M (20%)

-

Cost reduction (process hours)

(15%)

Electrical plant

-

Lead time reduction/WIP (20%)

13

•

Achieving the next phase of strategy –

exporting from

Tianjin

to the rest

of Asia:

VietnamS.E. AsiaPakistanIndiaOther

Tianjin

Hydro

India•

Support ALSTOM Hydro India as needed

Vietnam•

Won project Sesan•

Target projects Srepok, Son La, etc.

Southeast Asia•

Target various projects


export from Tianjin

14

ALSTOM Power in Coal –

building local presence in STs

Build a local presence in manufacturing for STs

and

Generators through the ALSTOM Beizhong

Power JV (ABP)

0

100

200

300

400

500

05/06 06/07 07/08 08/09 09/10

Factory ramp-up, 1,000 hours

…

September 2005 …

March 2005 …

...

March

2006

45%CAGR

15

•

•

•

• Tailor 600 and 1,000 MW ST product designs and improve the cost level

• Build local engineering capabilities through ALSTOM’s Turbomachines Wuhan

Engineering Centre (TWE)

• Ramp up TWE:


local technical capabilities

Develop tailored product offerings and local technical capabilities

ABP mastering 600 MW supercritical technology

TWE integrated into ALSTOM Power global system

Key project references: -

Pingwei

(4x600 MW) -

Longshan

(2x600 MW)

16

40% CAGR

Mar. 07 Mar. 09

Headcount

80

115

30

Mar. 05

• To produce 600 & 1,000 MW PC boilers and large CFBs

• Build a new factory to gain productivity improvement

• Up to 40% of the capacity for export after 2009


Wuhan

Boiler Company acquisition

Wuhan Boiler Company (WBC)

No. 4 player in China

On-going process

Subject to Chinese State’s approval

The acquisition

Wuhan

17


environmental control systems

18

Strategy

• Build up local capacity organically for specific niche applications

• Target selected local companies for JV or acquisitions to accelerate the development

A large market with a highly fragmented supply industry

FGD market share in China 2004-05

ALSTOM + Partners

86%

More than 20 other players

14%

New

nuclear projects approved for

2006-2010Hongyanhe

(2+2) x 1,000 MWOwner: CGNPC/CPIConstructor: CNPECEst. NTP:

2007Reactor: CPR 1000

Yang Jiang

2 x 1,700 MWOwner:

CGNPCConstructor: CNPECEst. NTP:

2008 (?)Reactor: EPR

Haiyang

2 x 1,200 MWOwner:

CPIConstructor: CNNCEst. NTP:

2007/08Reactor: AP 1000Tianwan

2 x 1,000 MWOwner:

CNNCConstructor: CNNCEst. NTP:

2008 (?)Sanmen 2 x 1,200 MWOwner:


2007Reactor: AP 1000

Ningde 2 x 1,000 MWOwner: CGNPC/DatangConstructor:CNPECEst. NTP:

2007Reactor: CPR 1000

Fangjiashan 2 x >1,000 MWOwner:


2007/08

ALSTOM Power in Nuclear –

market opportunities in China

19

• Establish ‘Arabelle’ as preferred third generation (3G) technology

• Target full Conventional Island scope

• Further develop cooperation with Dongfang

and CNPEC

• Continue localization

Achievements

Strategy• > 50% installed base• Partnering with Dongfang• Key references:

-

Daya

Bay and Ling Ao, 4 x 1,000MW

-

Ling Ao II, 2 x 1,000MW

ALSTOM Power in Nuclear –

market leadership in China

20

Agenda

1. Market overview Page 3

2. ALSTOM Power’s positioning Page 10

3. ALSTOM Power’s strategy-

Adopt a 3-phased strategic approach Page 21

Export from Europe to China

ALSTOM Power strategy –

a three phased approach

Gas Example• Shanghai Bao

Shan• 1 x GT11, 150 MW• Operation: 1997

• Da

Ya

Bay & Ling Ao I • 4 x 1,000 MW• Operation: 2001

Nuclear Example

Export from

Europe1

Build up capacity in China to meet the local market needs



Wuhan

Boilers – WBCHeadcount: 2,500

Engineering – TWE

Headcount: 80

ECS –

local targets for JV or acquisition

Beijing Tianjin

Shanghai

Air Preheater – SBW JV

Headcount: 50

Hydro – TAH

Headcount: 1,200

Steam Turbines – ABPHeadcount: 470

Sales – GPS and CountryHeadcount: 37

Nuclear –

further local cooperation

JV withChinesepartners2



Integrate China footprint into ALSTOM’s global network and operations for China and export to the rest of the world

Tianjin ALSTOM Hydro-

Export to Vietnam now-

Export to rest of Asia-

25% export ratio

International Purchasing Office (IPO) -

Build and ramp up the IPO -

Sourcing for global operations-

20% of total sourcing from China

WBC, ABP and TWE-

Boiler export starting 2009-

TWE 100% global engineering-

ST and generator export

Chinesebase for

local & export 3

www.alstom.com

Documents

Power in China - Alstom docu… · ALSTOM Hydro is the world leader with No.1 market share in hydro power • Tianjin ... Air Preheater – SBW JV Headcount: 50 Hydro – TAH Headcount: