Catch a recording of the webinar here: http://www.energycentral.com/events/26390/Smart-Power-Generation Slides by Joseph Ferrari, MSEng, MS-NR, Business Development Analyst, Wärtsilä North America Inc., and Alan Roark, Manager of Risk Assessments, DNV KEMA Energy & Sustainability. Presented on October 17th, 2012.

1. Flexible Capability for
System Optimization
© Wärtsilä October 17, 2012 Joe Ferrari

2. Wärtsilä Corporation
 Established 1834, based in Finland
 Publicly traded $6 Billion company
 18,000+ employees
 World leader in
 Decentralized power plants 1-500 MW
 Marine Propulsion
 O&M services for power plants and ships
© Wärtsilä October 17, 2012 Joe Ferrari

3. Wärtsilä Power Plants Installed Base
Europe:
Output: 11,8 GW Asia:
Plants: 1783 Output: 17,2 GW
Engines: 3336 Plants: 1619
Engines: 3487
Americas:
Output: 9,5 GW
Plants: 367
Engines: 1220 Total: 48,8 GW
Plants: 4599
Engines: 10159
Countries: 169
Africa & Middle East:
Output: 10,4 GW
Plants: 830
Engines: 2116
Industrial self-generation
* December 2011
Flexible baseload
Grid stability & peaking
Oil & gas
© Wärtsilä October 17, 2012 Joe Ferrari

4. Smart Power Generation
• Fast, Dynamic and Efficient Generation
• Improves system efficiency, enables renewables, lowers cost.
Efficient Affordable
Enables!
Smart Smart
Power Power
Generation System
Fast Clean
Reliable Sustainable
Smart Power Generation Desired future!
© Wärtsilä October 17, 2012 Joe Ferrari

5. Balancing Challenge
Influx of Renewables and the “balancing challenge”
Uncertainty increases: uncertainty in forecasts
Variability increases: System responds to “Net Load”, not Load
© Wärtsilä October 17, 2012 Joe Ferrari

6. Net Load as a Driver
Load
Renewable
Generation
Net
Load
NREL, Lew et al., 2011
- More cycling of thermal plants
- Lower capacity factors for thermal plants
- Baseload?
- Greater reliance on sub-hourly schedule/dispatch
© Wärtsilä October 17, 2012 Joe Ferrari

7. Impact on Thermal Dispatch
Most volatile (Low load) 20% Wind
Wind
GTCC
1 week
Coal cycling
GTCC deep turndown, cycling
New England Wind Integration Study
http://www.iso-ne.com/committees/comm_wkgrps/prtcpnts_comm/pac/reports/2010/newis_report.pdf

8. Uncertainty, Day Ahead vs. Real Time
Real Time Wind
Day Ahead Wind
Difference
Source: IMM Quarterly Report Summer 2011:
https://www.midwestiso.org/Library/Repository/Report/IMM/2011%20IMM%20Quarterly%20Report%20Summer%20Final
.pdf

9. What do Grid Operators Say they Need?
Survey of 33 grid operators, 72% of global wind capacity
0% 20% 40% 60% 80% 100%
From Figure 38, Jones, LE (2012)
Smart Power http://www1.eere.energy.gov/wind/pdfs/do
e_wind_integration_report.pdf
Generation
© Wärtsilä October 17, 2012 Joe Ferrari

10. Smart Power Generation, features
Low Generation Costs
– High Efficiency (across whole load spectrum)
Efficient – Low CO2
– Low Maintenance Costs (VOM)
– No penalties for starts/stops/cycling
– Minimal derating due to temperature or altitude
– Low gas pressure requirements
Cost Effective, Optimal Plant Sizing
– Technology should be scalable, competitive
– Match generation with load
Smart
Power – Ability to expand
Generation
Fast Clean
Agility of dispatch CLEAN: Low environmental impact
Fast Start (minutes, not hours) Low CO2 and local emissions even when ramping
Fast ramp rates up & down and on part load
Unrestricted up/down times Minimize water consumption
Low minimum loads (wide range of capacity
available)
High starting reliability and availability
© Wärtsilä October 17, 2012 Joe Ferrari

11. Engines for Power
20V34SG
10 to 200+ MW Efficiency 47%**, 5 min start
(9.34 MW* / unit)
18V50SG Efficiency 48.6%**,
(18.76 MW* / unit) 50 to 400+ MW 10 min start
Efficiency
18V50SG 52.6%**,
50 to 500+ MW
(Flexicycle™) 10/45 min
20.32 MW*/unit start
* Generator Terminals, sea level, radiator cooled, 25C(77F)
PLANT SIZE
** Generator Terminals, 5% tolerance, LHV , sea level, radiator cooled, 25C(77F)
© Wärtsilä October 17, 2012 Joe Ferrari

12. Wärtsilä Flexicycle(TM)
~90% of MW
~10% of MW
12

13. Wärtsilä Modular Solution
- scale plant size to match need
- Allows for future expansion
325
300
188
113 MW
16 x 18V50SG
16 x 18V50SG 10 x 18V50SG 18V50SG
Flexicycle™ x
6 Flexicycle™
Simple
Cycle
© Wärtsilä October 17, 2012 Joe Ferrari

14. Plant Efficiency (Example, 10 x 18V50SG)
10 x 18V50SG, Plant Output = 188 MW
5 units 6 units 7 units 8 units 9 units 10 units
Min stable plant load = 5.6 MW
50%
Performance Basis: 25C (77F), sea level, radiator cooling, generator terminals (Lower Heating Value),
Methane Number > 80, 5% Tolerance
© Wärtsilä October 17, 2012 Joe Ferrari

15. Start / Stop Profile (20V34SG)
Run Stop Gas purge
5 min from start to full load time
Full load again in 5 min
1min cycle
Load
100%
90%
80%
70%
60%
50%
40%
30% 40% Load in 2 min
20%
10%
1 2 3 4 5 6 7 min 12 13 14 15 16 17 min
Prelubrication &
Gas Purge Cycle
Synchronization
5 min
© Wärtsilä October 17, 2012 Joe Ferrari

16. WHAT DOES ALL THIS MEAN (BIG PICTURE)?
Power Systems Need Flexible
thermal assets.
Wärtsilä Smart Power Generation: Fast,
Efficient, Clean
How to Quantify the Value of Smart Power
Generation?
© Wärtsilä October 17, 2012 Joe Ferrari

17. Quantifying the Value of SPG (system level)
Spanish 2020 renewable target = 42%
Simulation year 2020
Over 120 power plants simulated (plus additional renewables)
Base Case: The envisioned capacity mix
Alternative: Same as above but add 9 GW of Wärtsilä Flexicycle™
Time scale/Platform: 10 minute time scale, PLEXOS™
© Wärtsilä October 17, 2012 Joe Ferrari

18. Smart Power Generation Delivers Savings
BASE CASE (2020) 9 GW OF FLEXICYCLE™ ADDED
SMART POWER GENERATION: 422 GWh/week,
633 MUSD/year in savings.
4.3% reduction in production cost for the system!
© Wärtsilä October 17, 2012 Joe Ferrari

19. Summary
Adding intermittent generation (wind, solar) should not push
assets into regimes of operation they are not optimized for
Wärtsilä SPG is the most appropriate technology for efficient
energy production, load following, cycling, daily starts/stops.
• Highest simple cycle efficiency commercially available (47-48+%)
• Combined Cycle (Flexicycle™) efficiency 53%
• Plant sizes from 10 to 500+ MW
• When included in a diverse portfolio, reduces costly cycling of
other technologies (optimizes dispatch of other assets)
• Enables integration of renewable energy while minimizing cost
© Wärtsilä October 17, 2012 Joe Ferrari

20. Thank You!
www.smartpowergeneration.com
Joseph Ferrari
Market Development Analyst
Wärtsilä North America, Inc.
Q&A 900 Bestgate Road, Suite 400
Annapolis MD 21401
410-573-2100
Joseph.Ferrari@Wartsila.com
© Wärtsilä October 17, 2012 Joe Ferrari

21. Quantifying Smart Power Generation Benefits
DNV KEMA Energy & Sustainability
October 17, 2012

22. Our Global Experience of Professionals in Energy and Sustainability
provide Insight across the Energy Value Chain
Policy & Transport &
Production Trading Use
Strategy Distribution
 Our passionate professionals work in multidisciplinary teams to enable our
customers in finding the optimal solutions.
 Their impartiality, high-level expertise, and experience are widely recognized.
 They understand the business consequences of a technical decision and the
technical consequences of a business decision.
 They are present at major conferences and seminars and participate in
international advisory boards, associations, and standardization bodies to share
knowledge and stimulate innovative thinking.
Enabling the energy transition
22

23. SPG Study Focus
 As the amount of renewable generation increases, the need for
Ancillary Services will increase:
- We focus on both generation cost and ancillary services
 We decided to use CAISO as a study system
- well-developed market that shares many features with other ISOs/RTOs-
increased renewable penetration, retirements of GW of capacity
- In CAISO Ancillary Services includes load following (up and down),
regulation (up and down) spinning and non-spinning
Enabling the energy transition
23

24. SPG Study Scenarios: CAISO 2020
 To analyze CAISO we used the WECC model (and isolated the impacts on
CAISO).
- We used CPUC and CAISO LTPP projections for the Base Case (Environmentally
constrained case + High Load scenario)
- We focus on comparing 5.5 GW of new and Once Through Cooling (OTC)
repowered with 5.5 GW of gas turbines in simple and combined cycle (scenario 1,
the “base case”). These are the “OTC replacement” units.
 We then explored several scenarios of changing out or adding to the new or
OTC replacement units with Wärtsilä SPG.
 Today we’ll focus on one of the scenarios (Scenario 4).
- In this scenario we added 3.2 GW of Flexicycle and 2.3 GW of Wärtsilä 34SGs in
addition to the already included 3.2 GW of GTCCs and 2.3 GW of simple cycle
GTs.
- We allowed the dispatch software to pick/choose the most appropriate dispatch
sequence to meet the load projections for CAISO 2020 with 33% renewable
penetration.
Enabling the energy transition
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25. Scenarios to Highlight SPG Benefits in 2020
 Scenario 1: Base Case
- Environmentally constrained generation asset assumptions
- Includes 5,517 MW of new and Once Through Cooling (OTC) re-powered assets
- High Load sensitivity case
 Scenario 2: SPG in Simple Cycle instead of new and OTC
- Base Case assumptions, except
- Instead of 5,517 MW of new and OTC re-powered assets use 5,500 MW of simple cycle SPG
 Scenario 3: SPG mix instead of new and OTC
- Base Case assumptions, except
- Instead of 5,517 MW of new and OTC re-powered assets use 3,300 MW of combined cycle SPG and
2,200 MW of simple cycle SPG
 Scenario 4: Optimal Mix of new and OTC with SPG
- Base Case assumptions, and
- Add 3,300 MW of combined cycle SPG and 2,200 MW of simple cycle SPG
Enabling the energy transition
25

26. Smart Power Generation – Deployed in concert with other energy
resources, enhances the grid and provides other benefits….
Peak Hour Supply
 Measuring benefits of Flexible Capacity in
70,000
Load + Flexibility = 64,254 MW
60,000
Load = 56,018 MW
North American RTO (CAISO) 50,000 Imports = 10,474 MW
Import(+)/Export(-)
- Net savings in generation costs are about 5% 40,000
New OTC = 4,157 MW New OTC Gens
Gas
- Reserve margins can be managed at lower costs
MW
Nat Gas = 14,764 MW Hydro
Wind
30,000
Solar
Hydro = 7,523 MW Other
20,000 Nuclear
Wind = 1,147 MW
 Minimizing cost of providing Ancillary Services
Load + Flexibility
Solar = 8,776 MW
10,000
Other = 4,575 MW
New OTC = re-
in an RTO (CAISO) 0
Nuclear = 4,486
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
powered Once-
Through-Cooling
capacity which is gas
fired.
- Regulation (Up and Down) Hour
- Load Following (Up and Down)
- Spinning
- Non-Spinning
 Determining how Smart Power Generation
plays in concert in a Resource Portfolio
- SPG competes in different markets against
different resources
- Resource adequacy improves
Enabling the energy transition
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27. Trends faced by North American RTOs
 Renewable Portfolio Standards
 Thermal plant retirements and additions
 Environmental restrictions on siting new plants and operations of existing
plants
 Increased demand response and distributed resources
 Changing Power Flows and High levels of import/export activity
Enabling the energy transition
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28. Time Domains for SPG Benefits in Frequency Control/Ancillary
Services in an Uncertain Portfolio
Seconds Inertia
Primary Governor Response
Control
SPG strengths
Secondary Minutes
Regulation
Control
Tertiary Minutes
Economic Dispatch
Control
Flex Ramp
Time Hours
Supply Stack
Control
10 minutes
Spinning Reserve Contingency
30 minutes Reserve
Non-Spinning Reserve
Minutes
Forecast Error
Load Following
Enabling the energy transition
28

29. Scenario 1: Base Case Capacity Mix to Meet Peak Load and
Flexibility in 2020
Peak Hour Supply
70,000
Load + Flexibility = 64,254 MW
60,000
Load = 56,018 MW Flexibility:
Spinning & Load
50,000 Imports = 10,474 MW Following Up:
Import(+)/Export(-) 49% supplied
New OTC = 4,157 MW New OTC Gens by existing CCGT
40,000 Gas
Regulation UP:
MW
Nat Gas = 14,764 MW Hydro
38% supplied by
Wind
30,000 hydro; 38% supplied
Solar by OTC CT
Hydro = 7,523 MW Other
20,000 Nuclear During peak hour,
Wind = 1,147 MW
Load + Flexibility Demand Response
Solar = 8,776 MW
Provided portions.
10,000
Other = 4,575 MW
New OTC = re-
Nuclear = 4,486 powered Once-
0 Through-Cooling
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 capacity which is gas
fired.
Hour
Enabling the energy transition
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30. Scenario 1: Base Case Has Substantial Increase in Energy and
Ancillary Services in 2020; SPG reduces Costs
2020 Base Case
2011 2020 Base
Ancillary Case + SPG
Ancillary + $158 Services =
Costs in Millions $
Services met by CT - $33 Ancillary
= $139 backstop* = Services
$381 = $348
Generation 5%
Cost = Generation Generation
$8,061 - $1,359 Cost = - $349 Cost =
$6,702 $6,351
Gas Gas Gas
OTC
60%
Ancillary Services
0%
target GWh and
Hydro CT Backstop
Hydro
suppliers
A/S = 45,687 GWh OTC
SPG
Hydro
A/S 72,662 GWh A/S 72,662 GWh
*Sources: 2011 State of Market Report, LTPP assumptions, simulation results. Using the Demand Response
backstop costing on average $17,500/MWh and with shortfall penalties the cost is $1,2 billion for the base case.
Enabling the energy transition
30

31. Scenario 1: Base Case with Demand Response supplying Ancillary
Service Shortfall at $17,500/MWh
2020 Base Case
2011 2020 Base
Ancillary
Case + SPG
Ancillary + $1,062 Services
Costs in Millions $
Services - $777 Ancillary
= $139 = $1,201 Services
= $348
Generation 15%
Cost = Generation Generation
$8,061 - $1,359 Cost = - $349 Cost =
$6,702 $6,351
Gas Gas Gas
OTC
60%
Ancillary Services
0%
target GWh and
Hydro Demand Response
Hydro
suppliers
A/S = 45,687 GWh OTC
SPG
Hydro
A/S 72,662 GWh A/S 72,662 GWh
*Sources: 2011 State of Market Report, LTPP assumptions, simulation results
Enabling the energy transition
31

32. SPG Cost Savings in RTD: Peak Hour Day
Scenario 1 RTD: Base Case Scenario 2 RTD: All Generators
8 41% savings
by:
7 • Reducing
high cost
6
Demand
$/MW for 5 minute interval
Response
5
• Cheaper
4
start/stop and
ramping
3
2
1
0
100
109
118
127
136
145
154
163
172
181
190
199
208
217
226
235
244
253
262
271
280
289
82
91
10
19
28
37
46
55
64
73
1
5 minute dispatch interval
Enabling the energy transition
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33. Resource Adequacy = Deliverability @ Risk
Base Case
Probability
Base Case + SPG
1 day in 10 Years Event
Capacity 364 MW
Resource Mix Delivery risk with:
1) Thermal units (35%) 1) Forced Outage
2) Demand Response (15%) 2) Start up Failure
3) Renewables – 33% 3) Ramping
4) Imports – 20% 4) Miss-forecast
Enabling the energy transition
33

34. For more information
Mikael Backman Joseph Ferrari
Market Development Director, Americas Market Development Analyst, Americas
Wartsila Power Plants Wartsila Power Plants
+1-410-573-2100, tel +1-410-573-2100, tel
Mikael.backman@wartsila.com Joseph.ferrari@wartsila.com
Alan Roark
Principal Consultant
Manager, Risk Assessments
+1-215-997-4500, tel
Alan.roark@dnvkema.com
www.smartpowergeneration.com
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