Case Alberta, Canada:


YES, INVESTING NOW

MAKES SENSE




































HOW CAN IPPs AND UTILITIES MAKE MONEY
NOW IN ALBERTA?

The Alberta electricity market is going through a major transition. Plans to phase out coal energy, to introduce carbon tax, and to significantly increase wind and solar power have made IPPs and utilities nervous. The uncertainty has blocked investments in new generation assets – despite the predicted 2.5 percent annual growth in electricity demand for the next 20 years (AESO; Alberta Electric System Operator).

One thing is for sure: the volatility of electricity prices will increase in Alberta. Although largely unknown, this can be an opportunity for IPPs and utilities. If the generation technology is right, price volatility can actually be a trigger to invest.



2016-10-31




CASE STUDY



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“Since the real time marketplace came into play,
we have seen our running hours of our 170 MW
Smart Power Generation plant growing 10-fold.
That’s due to the flexibility of the engines.”

GEORGE HESS, VICE PRESIDENT OF PRODUCTION, GOLDEN SPREAD ELECTRIC COOPERATIVE. TEXAS, USA. 








RETURN OF EQUITY

Power plants based on large gas-fired reciprocating engines, can extract value from the volatile prices. These ultra-flexible engines can start to full load in less than 2 minutes. They are capable of following the fast price spikes in almost real time. As proven in the SPP market in the USA, this can be a major source of revenue. In addition the engine power plants can contribute to the ancillary services.



Return_on_equity–LM6000_comparison







The analysis shows 17.7 percent IRR for a 74 MW engine power plant.

An in-depth analysis by Wärtsilä shows that an engine-based power plant can indeed be an attractive investment in Alberta – despite the turbulent business environment. The 20-year future analysis shows 17.7 percent median IRR for a 74 MW engine power plant. The industry standard, open cycle gas turbine receives only 11.3 percent median IRR. Hence, the engine option provides a remarkably better business case. The modelling was done with a conservative price forecast (Urica).





LET’S TALK

The increasing price volatility and fast-reacting, efficient engine power plants seem to be a perfect match, offering an unconventional and best business case for IPPs and utilities in Alberta. There is an early-bird advantage: first movers in the market make the most profit. Please contact us for more information.


spp-lets-talk-4

MATTI RAUTKIVI
Origination, Americas


HOW DO YOU OPERATE AND MAINTAIN AN ENGINE-BASED POWER PLANT?

O&M-med5

O&M

Engine power plant operation and maintenance








SMART POWER
GENERATION
Power at the push of a button

















WÄRTSILÄ
ENERGY SOLUTIONS
The right amount of power at the right time