“In five years’ time, it will be a half a billion-dollar business for Wartsila,” says Frederic Carron, regional director of sales for Southeast Asia & Australia.
He’s talking about the Wartsila’s LNG-to-power concept, an initiative which marks the first time that the company has brought together its renowned marine business and its equally well-established power divisions.
The idea is simple but ambitious: Wartsila will provide a power plant that can run on LNG: it will provide the infrastructure for the ships delivering the fuel – and it will also design those vessels.
It’s a completely bespoke service, because those LNG vessels will need to be designed to be able to berth in potentially quite shallow waters.
Having started to put the LNG-to-power plan together in 2013, Wartsila first rolled out the initiative in its home country of Finland.
Now it is ready to take it to an international market, and a region that Wartsila believes is ripe with opportunities is Asia.
“It’s a solution that is particularly suitable for the Asia market,” says Carron. “In that region, a lot of heavy fuel is being burnt and everyone is looking for options to turn to gas.
“Or in many places gas is not available, so companies are looking for LNG. This is the transition in Asia.”
And even if gas – LNG or natural – is not available in a particular area, Carron says a customer can still push ahead with the project by utilizing one of Wartsila’s engines that can run on diesel or dual fuel.
“The dual fuel solutions are perfect for those who want to get into it, but they are waiting, so they have the possibility of going with dual fuel first until gas is available.”
Carron says there is “a lot of interest” in the LNG-to-power solution in Asia: “People want to be prepared for the day when LNG is available.”
But why opt for LNG? “It’s the environmental aspect,” says Carron. “Nox, sox, particles – they are all reduced. CO2 is also reduced. You also get less maintenance costs from a gas engine than from a heavy fuel oil engine. It runs cleaner. It requires less maintenance. Efficiency is improved – you use less fuel. When you add all those up, LNG will be a clear leader.”
Carron says that although Asia is the biggest importer of LNG today, the dynamics of energy in the region are changing and this is true of the way LNG is distributed and utilized. In the past, this would have involved floating storage and regasification unit vessels, but he explains these ships “are huge so they need a minimum of 1 GW plant behind it”.
“Gone are the days in Asia when you have these 1000 MW CCGTs. Now you have distributed generation across small islands.
“And in Asia people are taking a cautious approach to new investments – they think, ‘let’s start with 50 MW or 100 MW’.”
Carron says a challenge of the LNG-to-power concept in Asia is that in many cases Wartsila is contracted to use local contractors for some of the work, particularly on the shipbuilding side of a project. But with that challenge comes an opportunity to extend the local value chain.
“Shipyards are hungry for business,” says Carron.
This is an extract of a feature in the March issue of PEi magazine. To read the full article click here