Wärtsilä
Shaping the decarbonisation of marine and energy Roadshow presentation
January 2024
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Wärtsilä - Shaping the decarbonisation of marine and energy
Wärtsilä simplifies the | Marine | Energy |
Group structure from 1st | Our offering of engines, propulsion | We support the change towards a |
January 2024 onwards | systems, hybrid technologies and | future where electricity is produced |
with two main | integrated power transmission | with 100% renewable energy by |
businesses: | systems and related services | offering grid-balancing power plants, |
support our customers in moving | hybrid solutions, energy storage and | |
towards carbon neutrality. | optimisation technology. | |
MEUR | % | Key growth opportunities | |||||
8,000 | 12% | Energy Storage & Optimisation: Fast | |||||
7,000 | growing demand for power system | ||||||
optimisation solutions | |||||||
6,000 | 9% | ||||||
Marine newbuild driven by | |||||||
5,000 | |||||||
decarbonisation: Uptake of solutions ready | |||||||
4,000 | 6% | ||||||
for sustainable fuels and recovery in | |||||||
3,000 | passenger and offshore segments | ||||||
2,000 | 3% | Moving up the service value ladder in | |||||
1,000 | Marine and Energy: Continuous growth in | ||||||
agreement coverage | |||||||
0 | 0% | ||||||
Energy Engine Power Plants new build | |||||||
2018 | 2019 | 2020 | 2021 | 2022 | LTM | ||
Net sales | Q3/2023 | driven by balancing and baseload: | |||||
Gradual shift to renewables | |||||||
Order intake | Portfolio Business divestments | ||||||
Comparable operating result, % of net sales | |||||||
Committed to financial targets
Net sales
5% annual organic growth
Profitability
12% operating margin
Capital structure
Gearing below 0.50
Dividend
Distribute a dividend of at least 50% of earnings
Strong track record in innovations
Investing ~4% of net sales on R&D yearly
Today: engines run on biofuels, methanol, up to 25% hydrogen blends, pure ammonia fuel engine concept
By 2025: pure hydrogen fuel engine concept ready
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Market fundamentals
Marine will move with unprecedented speed towards decarbonisation
Policies & regulations | Technology | Connectivity & data | |||
▪ | IMO target/ EU Regulations | ▪ Carbon neutral and zero | ▪ Vessels as data pools | ||
▪ | Access to capital | carbon fuels | ▪ | Optimisation solutions | |
▪ | Cost of carbon | ▪ Carbon fuels for many years, | ▪ | Performance-based | |
▪ Demand for green sea | still | agreements | |||
transport | ▪ | Abatement technologies | ▪ | Cyber security | |
▪ | Battery systems, hybrids | ||||
& energy saving devices | |||||
▪ Fuel efficiency & flexibility |
Energy is moving towards a 100% renewables future
Policies & regulations | Technology | Growing demand | |||
▪ EU: Carbon neutral by | ▪ Wind and solar growing | ▪ By 2050, electricity generation | |||
2050 | rapidly | needs to grow by 3X, renewables | |||
▪ | USA: carbon free electricity | ▪ | Intermittent sources | by 8X to reach Net Zero targets 1) | |
production by 2035, net | requiring | ▪ Gradual replacement of coal | |||
zero emissions by 2050 | balancing power | ▪ Renewables expected to become | |||
▪ China: Carbon neutral by | ▪ | Sustainable fuels for | the largest source of global | ||
2060 | thermal balancing | electricity by early 2025 2) | |||
▪ | RePower EU, Inflation | ▪ | Digitalisation and cyber | ▪ Power systems becoming | |
Reduction Act | security | increasingly complex | |||
3 | © | 1) IEA World Energy Outlook 2022 (Net Zero Emissions Scenario) | |||
2) IEA Renewables 2022 report | |||||
Our value creation potential is based on two strategic themes
Transform - | Perform - |
attractive growth | clear path for |
opportunities at | operational |
the center of the | improvements |
decarbonisation | and increased |
transformation | profitability |
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Significant milestones reached in strategy execution
1) LTM Q3/2023 vs. 2021 net sales
Transform
- Market leader in:
- 4-strokemedium speed main engines
- Engine power plants
- Marine hybrid solutions
- Technology leader in green fuels
- Pioneer in marine carbon capture & storage
- Significant growth since 2021:
- 25%1) in services
- +17% in thermal balancing installed base
- 3X1) in Energy Storage & Optimisation
Perform
- Good growth in service agreements by leveraging digital solutions
- Improved quality of new build order book margins
- Turned Energy Storage & Optimisation to profit
- Divested businesses and optimised footprint
- Revitalised team and organisation
Clear path to 12% operating margin
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Transform -
attractive growth opportunities at the center of the decarbonisation transformation
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Strong market fundamentals and the decarbonisation transformation will support profitable growth in Marine business
Key target segments
Annual newbuild contracting of 4-stroke medium speed main engine- powered units (GW)1); CAGR
+11%
5.8
2.5
- IMO MEPC 80 has adopted a revised strategy to reduce GHG emissions by 20% by 2030, 70% by 2040 and to net-zeroby 2050
- In the EU, regulatory landscape will double fuel costs up to 20302)
- Small but growing market for green transport driven by corporate carbon reduction pledges
- Switch to carbon neutral and zero carbon fuels will be progressive
- Drop-infuels, hybrid solutions and abatement technologies will be key to reach short-termreduction targets
- Long-termreduction targets will require a fundamental shift towards sustainable fuels and abatement solutions
20222030
Source: Clarksons 1) cruise, ferries, offshore, merchant, and other (incl. fishing, dredgers, support units, yachts, navy, tugs etc.) 2) assuming 5,000 tons/year VLSFO consumption subject to Fit for 55, VLSFO at 550 EUR/ton; EU allowances from 100 EUR/ton today to 230 EUR/ton in 2050
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Wärtsilä is a global technology and service leader in shaping the decarbonisation of marine
#1 | #1 | Pioneer | ||
+60%
of net sales3)
Industry leading medium speed engine offering
Industry leading hybrid | Pioneer in carbon capture & |
solutions | storage |
Global services network to ensure maximum uptime & fuel efficiency
- Biofuels and methanol available already today
- Product industrialisation for ammonia ongoing
- Fuel conversion packages for both 4-stroke and 2- stroke engines available already today
- Hybrid-electricto challenge 2-stroke engines as prime- mover for LNG carriers
- 6% more cargo space, 10% lower fuel consumption1)
- Lower maintenance costs compared to 2-stroke
- Complementary technology to engines
- EUR ~10bn market opportunity in the next 10 years2)
- Commercial release in 2025, CCS-ready scrubbers available already today
▪ Transactional: spare parts & | |
field services | |
▪ | Enhanced support & |
technical management | |
agreements | |
▪ | Optimised maintenance & |
guaranteed asset | |
performance leveraging |
1) example on 174,000 cbm LNG carrier 2) estimated market size for newbuild and retrofit 3) LTM Q3/2023 (Marine Power)
digital solutions |
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The increasing share of renewables and need for balancing power will support profitable growth in Energy business
Thermal balancing | Energy storage |
Addressable market | Addressable market |
GW; CAGR | GWh; CAGR |
+19% | +17% |
22 | 83 |
▪ Thermal balancing market is expected to grow +4X by 2030 |
driven by accelerating intermittent baseload. US is an important |
market for thermal balancing |
▪ Power generation related regulatory changes support uptake of |
thermal balancing (US Federal and State bills, EU electricity |
market reform and China market reform) |
▪ Sustainable fuels together with flexible engine power plants |
balance grids in an affordable and sustainable way, also for |
longer shortages in intermittent renewable generation |
Energy storage incentives in the US (IRA1) investment and |
5
24
▪ |
production tax credits) support the energy storage market growth. |
Local regulatory changes in general support the uptake of energy |
storage |
2022 | 2030 | 2022 | 2030 |
Source: BNEF, Wärtsilä estimates 1) Inflation Reduction Act
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Wärtsilä is a global leader in engine power plants. Energy Storage &
Optimisation has grown ~3X since 2021 and is now profitable
#1 | #1-5 | |
~40%
of net sales2)
Industry leading engine power plants1) | Top 5 in energy storage | Global services network to ensure | |
maximum uptime & fuel efficiency | |||
▪ Superior operational flexibility | ▪ Focus on profitable growth | ▪ Transactional: spare parts & | |
through fast ramp-up/ramp-down | ▪ Reliable partner with high bankability | field services | |
compared to gas turbines | ▪ Highest safety standards (recent | ▪ Maintenance & operational support | |
▪ Fuel conversion packages available | milestone in passing UL 9540A | ▪ | Guaranteed performance services |
already today | requirements) | ▪ | Outcome-based agreements, |
▪ Hydrogen 25 vol% in pilot operation, | ▪ Leading software (GEMS) for power | including decarbonisation services, | |
full hydrogen technology readiness in | system optimisation | leveraging digital solutions | |
2025 |
3X growth in Energy Storage & Optimisation LTM Q3/2023 vs. 2021 net sales 1) units >5MW 2) LTM Q3/2023
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Wärtsilä Oyj published this content on 03 January 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 January 2024 10:17:46 UTC.