Platts European Power Summit Emerging market drivers for conventional energy services and how utility companies can respond

Transcription

1 Platts European Power Summit Emerging market drivers for conventional energy services and how utility companies can respond Presenter: Dr Sopna Sury COO Third Party Services & Infrastructure, Uniper 26 April 2016

2 Agenda 1 How the power market is changing 2 What emerging markets growth means for service providers 3 How integrated utilities can differentiate themselves 4 What we have done to respond to market pressure (some examples)

3 Carbon price Fuel price 1 Rapidly evolving power market puts pressure on power plants from various dimensions Factors influencing a power plant Market, economic situation Alternative energy sources Energy policy New technologies Regulations Competitors Demand Capital availability What is happening in Europe 1. Reduction in Demand Global recession destroyed power demand across Europe 2. Global Commodity Prices CO 2 prices have dramatically fallen caused by oversupply attempts to reform have failed to date US shale gas increased US coal exports making coal generation cheaper than gas 3. Renewables Growth Incentive schemes designed to deliver European 2020 targets Renewable growth has displaced conventional growth in Europe 4. Political Intervention 3

4 1 While EU market trends threaten asset owners, they create opportunities for service providers Implication for asset owners Increased decision complexity and economic uncertainty for asset owners Declining competitiveness of conventional generation vis-à-vis other technologies Shortening technological innovation cycles create complexity of choices Traditional asset owners with limited capital, raising bar for investment and pay-back decisions Asset owner needs Risk mitigation measures Cost management programs Experience & learnings Tailored solutions 4

5 2 Growth in emerging markets is creating opportunities for European utilities Cumulative new build gas-fired gen. capacity [GW] Opportunities for service providers Asia Pacific 194 Growth Africa Middle East Latin America New build project development Europe North America +43% Competition Capability and skill gaps in new markets (e.g. plant flexibility) Ownership Detailed in next slide 33 New class of asset owners emerging with varied set of requirements and expectations Increased need of newer ways of financing projects Source: IHS, annual new built gas fired generation capacity 5

6 2 New structure of energy markets and economic developments attract new class of owners Capital intensity of new projects attract new entrants Traditional utilities balance sheets are getting tighter High complexity of new projects requires alternative financing models to meet high capital needs (e.g. project financing) Financial & industrial investors join race for financing projects pre & post COD* with equity New entrants with specific demands Third party investors are less experienced with managing industry specific risks including construction, technology, power price and O&AM Backing projects with long-term full service O&AM contracts reduces project risks over the lifetime Growing demand for customer-tailored and competence-based solutions for third party services *Commercial Operation Date 6

7 3 As one stop shop, utilities can offer capabilities with flexible contracting and risk positions Typical market offering; By OEMs and competent Third Party providers Offered by OEMs Proposition from integrated utilities Typical service offer components Major Overhauls Engineering & Maintenance Operations Asset management Long term service agreement Full O&M package Bundled offer covering the full value chain 7

8 4 Uniper offers full range of services Bundled offer covering the full value chain Project Development Construction and Implementation Asset Operation Energy Trading Decommissioning Early Project Development Participation Owners Engineer EPC Tendering Planning, permitting and Impact Assessment Conceptual and Basic Design External Stakeholder Management Owners Engineering Activity Construction Management Commercial Management Site Management & Inspections Planning & Execution Commissioning Asset Strategy & Management Business Planning O&M Strategy and Execution Asset Improvement Performance Management Risk Management Training, Learning and Development Fuel Supply Coal LNG Natural Gas Market Access Offtakes Market Analysis Plant Decommissioning Residual Waste Treatment Centre Plant Demolition HSSE Biomass CCGT Full Technology Coverage Coal Hydro 8

9 4 Uniper has developed several inhouse strategies to adapt to dynamic market forces Benchmarking Plant preservation Project prioritisation Baseline Actual & Plan Rigorous, annual benchmarking to understand and assess plant situation Inhouse developed benchmarking methodology uses internal & external data for validation Enables identification of improvement areas and development of improvement plan Plans continuous improvement Preservation strategies in-house relevant to each plant Units range from fully mothballed to preservation with shortened RTS 1 time Risk based preservation methodology rolled out across Uniper s Fleet Strategies implemented to ensure staff competency is maintained Robust process to challenge trends and forecasts and perform peer reviews Own risk management process and tool AERO Projects prioritised using the output from AERO Enables optimised investment decisions and optimised budget spend (e.g. across ~13GW of CCGT at Uniper) 1 Return To Start 9

10 Asset owners can benefit utilities experience & learnings Markets are continuously evolving putting a lot of pressure on the power plants. Power plants being built today have to be continually adapted to meet future market dynamics Traditional integrated utilities have years of experience and have developed resilient methodologies and tools to adapt, survive and grow New build generation capacity growth expected in the emerging markets especially in Asia and Africa, creating opportunities for experienced players to fill the capability and skills gaps 10

11 Third Party Services Uniper Kraftwerke GmbH Holzstraße Düsseldorf Germany 11