General market drivers in the Energy Solutions business
The main drivers for Wärtsilä's Energy Solutions business are:
- Growth in electricity consumption
- Ageing generation capacity
- Renewable energy investments & an increased need for flexibility in power systems
- Increase in the use of gas as a power plant fuel
Population and economic growth jointly drive increases in electricity consumption. Looking ahead, growth is expected to be higher in non-OECD countries because of increasing industrialisation and improving living standards.
In the emerging markets, the demand for flexible base load power plants, as well as for industrial self-generation, is driven by the price of electricity purchased from the grid, and by fuel price developments. With the introduction of gas supply networks to the emerging markets, the demand for gas and dual-fuel driven power plants increases. Wärtsilä has a leading position in these markets.
In the OECD countries, tightening emission legislation is forcing the closure of ageing capacity, which in turn drives the demand for new investments. Another driver is the political emphasis towards low carbon power systems, which means rapidly increasing levels of renewable generation. This has already created a substantial need to add flexibility to power systems. Wärtsilä’s Smart Power Generation power plants are the most efficient solution for backing up variable renewable generation, and enabling the transition to a sustainable, reliable, and affordable low carbon power system.
The demand for gas is driven by environmental issues, which are making the use of coal more and more difficult in many markets. Gas resources are abundant and, through expansions to the infrastructure, LNG is being introduced to energy intensive areas where pipeline gas is not viable. The share of gas in the global energy mix will continue to grow and most of this growth will occur in non-OECD countries. Wärtsilä offers a broad range of solutions to support customers in their transition to gas:
- Dual-fuel power plants, capable of using the most inexpensive liquid fuels until gas becomes available
- LNG terminals and distribution infrastructures
- Fuel conversion packages
- Flexible and highly efficient gas power plants that enable power system optimisation.
Energy Solutions’ competition
In larger gas-fired projects, Wärtsilä is creating increased competition for gas turbine manufacturers, such as GE and Siemens. In smaller gas power plant projects, and in the heavy fuel oil power plant market, the competitors are mainly other engine suppliers, such as MAN Diesel, GE Jenbacher, Caterpillar (MAK), and Rolls-Royce.
In competing against gas turbines, the main value elements are crystallised in the Smart Power Generation triangle. The combination of competitive efficiency, better fuel flexibility, and superior operational flexibility enables Wärtsilä to present better value propositions and business cases to many customers and projects. As the industry is quite conservative, the need is to shape this market utilising a value based market approach.
Wärtsilä’s advanced gas and dual-fuel engine technology, modular power plants, project management capabilities, and the service support provided throughout the lifecycle of installations, have led to Wärtsilä’s position as market leader in the gas and liquid fuel engine power plant markets.