Wärtsilä Coffee Talk

[Music] good morning americas uh welcome to our coffee talk uh with raul carrall alejandro alle and myself francisco picasso we're going to be discussing uh the interesting topics that we discussed last week in our plat conference uh so raul how did you see uh from mexico the the plat conference now we are in a you know where in our era so how how was it well it's very exciting to see the the the event uh the virtual uh platform and uh very well organized and we are very happy of course at barcelona be part of that event and uh well a lot going on as we can see everywhere and uh in the caribbean and in central america definitively very interesting uh to to catch up with so many people and uh and and great too to be part of that i i agree i agree so alejandro how do you see it from from el salvador perfectly perfectly and very interesting as usual the platz event this year it had to be virtual but it really didn't lose any quality because it was very complete very interesting presentations discussions so we are used to to see very good blast events for central america and the caribbean and this year was no exception at all so very happy and congratulations to artsila because as always you have been sponsoring this event that's right that's right that's right alejandro no it it was great and and and for first time i think they combined the caribbean and central america used to be one uh middle at the beginning of the year and the other one at the middle of the year and and now they combine both both uh central america and caribbean and and the first day was more caribbean i would say roll and and the second day was central america with with two great panels maybe we can focus on on on the central america part sure well i i think that that that reflects very much the integration of the area and uh the role that uh that lots of developments are playing and i would say that for example natural gas lng is playing a major a major role in the both the caribbean and central america and there are lots of synergies and complementarities and we see lots of exciting new new projects and and developments that is always very interesting to to catch up and see what is the update that's right that's right i i agree i second all that uh what about you alejandro yes one interesting thing is that this event is closed following the evolution of the energy market in the area five years ago we were not discussing at all about or very very small discussions about the impact of renewables the impact of intermittencies and how the rest of the market how storage how uh engines have to be adapted to the new reality and it was very it was fantastic to hear discussions about the coming impact of power fuels the the usage of ammonia uh of methanol in the engines and how everybody is thinking ahead because in the coming five ten years the reality will keep on evolving at a very fast speed and this event address very well that reality that's that's right that's right um i i i particularly was part of the first panel of the second day and we talk a lot about flexibility we talk a lot about transitional fuels the future fuels i i think uh we're talking about the right subjects and uh it will take a little bit what do you think it will take a little bit to get to those uh renewable fuels but but i think we are in the right path uh you know we talk about also some some some tenders in guatemala to beg for um what what do you think uh raul uh well i think uh the the the area is very vibrant and uh and when i say the area we we talk about the overall caribbean and central america and for instance in in central america we have uh on the southern part of central america we have a lot of hydro and it's interesting that uh that plays also a different role than in other countries with less hydro and different matrixes and and and how that that plays into into how the the different power plants are are dispatched and definitely we see the role of natural gas also blending into these uh different uh grids like for example in in various ways and and for example when when we see also new solar especially solar projects uh also wind of course but with solar power uh also the the role of gas also changes quite a lot and that's how my colleague talking about flexibility that's very important and and and we see that natural gas making the best out of the different renewable resources and let's also keep in mind that when you talk about hydro then uh also the climate change also plays a role so we will see that that affects uh definitively the the hydro the uh how it operates uh with the uh drought seasons and then the the very wet seasons it becomes also less predictable because of the the climate changes so then the natural gas plays a key role in in really making the whole grid uh more functional and and and better with with more reliability and and and less costs so i think it's very interesting to see how how things are developing and changing yeah that's right raul actually um you know hydro it's it's it's a balancing technology as well as energy storage and as well as flexi cycles or or flexible gas technology um i i agree with with your point of view and we don't have to forget that the hydra is also renewable as well so um so yeah completely understandable what do you think uh alejandro i agree with you guys and i would add that we should not forget that the natural gas is playing a very big role already in central america which was not the case just a few years ago we have a big power plant already operating in panama in the atlantic side here in el salvador energy pacifico is working very well in the construction of the power plant 380 megawatts powered by barcelona bartilla played a key role in the development of that of the salvadorian project there is another project announced at least in nicaragua 300 megawatts power plants to be supplied with natural gas there has been announces in panama about a big power plant of around 600 megawatts besides central america is not only following the core of the increasing usage of renewables but also is i would say moving faster than the rest of the world in many regards because if it is adopting natural gas which was not the case up to two years ago and natural gas is called play a big role to solve the problems of intermittencies in going to the caribbean but not only to the caribbean also in central america i think there is a lot of room for small scale lng because of the small size of the islands but based on the big projects that i have mentioned in central america i think there is room for small scale lng from those halves to other locations so natural gas is and will keep on playing a big role in central america and that is very good yeah that that there is no doubt that natural gas is a transition fuel and and and the good thing about natural gas is that you can use that infrastructure in the future whenever uh renewable fuels come into the picture or or synthetic methane comes into the picture um so so yeah do we hear uh eagle energy and ies uh talking exactly about that actually was was a was a good one what is your take bro yeah well i i remember those days when uh they were talking about the chicken or egg problem that there is no gas and there is no projects and and and now we we are seeing that these projects are are developing quite a lot and this concept of course of the hoban spock and there are definitively large uh projects already working now with lng or very close to be operational and therefore you know uh more opportunities for uh larger distribution with uh as you said alejandro uh you have smaller terminals or smaller supply of the very large uh natural gas terminals and that definitively is is is making a gas ecosystem in the region that is very interesting to to see developing that's right that's right yeah we see that the big tanks in dominican republic panama now we are having uh new fortresses bringing uh the gas to nicaragua then we have uh acacla and argia pacifico so yeah how do we bring those big tanks into small small scale it's important to to uh to distribute in in central america we can use the same the same model that we use in el cari in the caribbean and move it back to central america i think it will be it will be great um what are what is your take alejandro on on on flexibility and technologies that they can utilize uh gas it's very positive uh we have to take into account where we are coming from all the thermal power in central america has been up to a few years ago and it's for the time being it's still working but will soon be displaced uh has been the other thermal with heavy fuel oil three percent sulfur and that was a reality and that those were the conditions there was no possibility uh let's say 10 years ago for natural gas in the region so in order not to have blackouts it had to be used the heavy fuel oil but now already increasing speed the thermal our plant will only be a natural gas and probably in the future also as mentioned by francisco with other power fuels so it's very positive because we are removing three percent sulfur fuel and changing it by a very clean fuel a transition fuel yes but much cleaner than the fuel that it was used and i would add to this that the gas cap arrives to a country with an anchor project power plant but also once the gas is in country it is consumed by industrial it is consumed by transportation or can be used by transportation so it helps not only to clean the electric uh matrix but the energy matrix in general it becomes much cleaner thanks to the natural gas and again taking into account the flexibility that can be provided by engines like like yours uh it helps it promotes the increase the increasing use of renewables because the flexibility allows that the historical limit of 10 20 percent or 30 renewables is not valid anymore you can have much more renewals than those small percentages if you have a good backup of uh flexi cycles for instance yeah no that uh that that's right that's right uh you know natural gas is also a cleaner fuel i mean it's it's setting up the tone for the carbonization and and i think uh not only that we have a lot of customers actually uh i don't know if if they ask europe but they asked me a lot of a lot of questions regarding like what should i do we are in an island we are in a remote area should i still have dual fuel and the answer is if you have a reliable source of gas i mean just just go with gas i mean it's it's it's cleaner it's cheaper it has more efficient it's our power plants are more efficient if they run on on on on natural gas only so we see a lot of a lot of questions like that and and as you said alejandro coming into a country is not only for the for the for the power grid also for the industry for mobility um it has other uh benefits as well what do you think wrote yeah i think uh natural gas uh has really changed the the picture you know and uh and for the good you know as uh we have been talking about uh definitively the the it's a cleaner fuel and um we see that uh hfo uh or or uh combustoria or bunker how how it's uh is is known in in various areas well the uh the role of of of hfo is every time less and less is it's more difficult to finance a project with hfo and uh and also the plans running on hfo uh uh well uh have uh larger and larger restrictions and that goes from the marine side also for for for marine power but also on the on the land-based uh power so we see a transition also from from hfo to natural gas and uh and then also we see a great transition also to renewable and more renewable power so you see a lot more uh for example solar power coming in in central america in in a very major way and that definitely needs uh the i would say the balancing power balancing is the right word of the new role of gas so what does that mean that means that it's not running all the time 100 percent base load as we know it and together with hydro power uh then that requires even more that that it runs in a very flexible manner the the gas power uh power station and and and basically uh that uh really is the ideal complement and and then also the the the setup on which you can go into the future with the new fuels the fuels of the future of course um and we we were talking about feels like hydrogen in in a very major way way that is being developed in many countries around the world and uh and we see also that happening in in central america and the caribbean it's very exciting the future is is definitely very exciting because it's a cleaner future and uh and it's a a future also with the uh lower costs and with a lot more exciting developments happening that's right uh i i agree i i think we're we're in a transition era i think the future is clear has to be renewable we need to lower the the global warming the the two degrees we still have countries that they haven't uh haven't got there they haven't committed yet but uh but we're seeing that that in central america more and more countries also in the in the caribbean they're they're pledging and committing to to this uh carbon neutral uh future world um so so we we talked about about about gas what about the existing assets we have uh some panelists from nicaragua mentioning well we have our hfo power plant uh they are they are thinking and converting and converting into natural gas right so we in warsila we also seen a lot of projects like that so there is no doubt that is a i would say it's another testimony of of the energy transition moving into gas i i think i think it's it's very important and the the second thing that you were mentioning that i i agree a lot it's uh more energy is being dumped into the system and uh and and it's the new base load now now renewables are are gonna be the new base load and and and that has some some uh implications in the in the grid right like so the system operators are having i would say a harder time than than what they used to in the past and uh uh but but but we're seeing that with proper modeling we can do right right uh we we have done a lot of modeling in the world like i think over 180 models and and it's been great it's been great uh so alejandro how how how do you see uh from the from the commercial point of view how how do you see the levelized cost of the energy in in central america and how do you see it um going down with with with a let's say with a hybrid more renewables backed up with with flexible technology yes uh very very interesting to to hear what was you guys were discussing francisco and some thoughts a conversion of of [Music] heavy fuel power plants and the hydrogen that has been addressed by by raul the hydrogen economy i would say and another the complexity of increasing complexity of the system operators because the variability doesn't only come from demand but also from supply because supply is intermittent uh and it's full of renewable energy so it's much more difficult now to balance the system but of course there are many many new tools such as storage or coming new tools etc i would like to discuss a little bit about conversions i think that in some countries there is room for conversions but conversions should be a paid i think that the same way that the ppa there are there has been a bpas that are paid not only the capacity but some uh price fixed price such as the case here in el salvador but it depends on every country but it has to be an incentive for the existing power plants to be converted otherwise they we they could have no guarantee that they will improve their competitiveness or in the marital dispatch which is the typical in these countries so for instance here in salvador you will have a big power plant here pacifico with by far the the best cost uh variable cost fuel cost and o m cost but probably there is going to be room for other power plants and the incentive should be to sign with them a ppa but i would name them conversion ppa why because it should be only to pay the conversion and not necessarily for 20 years it could be for 10 years five years and not necessarily not necessarily 50 dollars per megabyte hour maybe much less because conversion costs you know you guys know much better than me but could be i don't know in the order of half a million dollars per megawatt or hopefully less so to convert a 100 mega megawatts power plants are they the owner would have to have but would have to be sure that that investment will be repaid that is regarding conversion conversions should be promoted by the regulatory system otherwise it's going to be very risky business and uh financiers will not go together another i i briefly mentioned about the complexities that uh that are coming with the renewables but the world is solving that and finally i would like to mention about hydrogen because although this conversation and the events the flat event was focused on uh the power generation the the generation of energy to be used as power locally i think that this region central america and caribbean has a very good potential to try to replicate what chile for instance is doing in the hydrogen economy hydrogen eye lotion we should there is no room in this area for blue hydrogen which is the one produced with natural gas and carbon capture and storage because there is really no much gas production but there is a good opportunity for these countries to become an exporting countries of power fuels we know that dehydration is very difficult to transport but following the big idea that chile is promoting the power fuels ammonia and all those fuels that are built let's say from hydrogen adding nitrogen to ammonia or other components or to have methanol etc so there is from an investment point of view there is a very good opportunity for these countries to become big exporters of power fields having in mind that europe is becoming a big of taker of those products so i think we should take a deep look at that yeah you you you mentioned a lot of valid points uh i mean where to start i mean we we have regarding conversions i recall a few years ago the dominican republic had an incentive for conversion power plants with bpas i i remember that happened not that long ago but but we also need to i think you were talking about a little bit of legislation and and we need to we need to pay not only conversions we need to pay flexibility and energy storage is a it's a great contender but in central america and caribbean we see that that the rules are are getting there but they are not there yet so um whenever you have to make an investment in technologies like like energy storage it's a little bit behind but but but not completely rule out because with the with all these renewables we have a lot of congestions in the in the grid and and where are you going to put that energy i mean and you put it in storage and then you shift it for a later time so we're seeing a lot of stuff but legislation no doubt as alejandro mentioned it it's needed what do you think rob well uh i think that two two two interesting points uh here is uh first about conversions uh yes definitely there should be an incentive uh as a capacity payment in order to make these projects viable uh because then it of course uh incentivizes uh the existing infrastructure to be transformed into a cleaner infrastructure you know and uh and if there is a gas available then definitively it will be very good for the country so that that is that is a very good point and then the the second point about renewable power i think that more and more we see that there is no limit of how much percentage a country can have 100 percent renewable well that's something that we have been talking about path to 100 percent renewable power and the more and more we we learn about how countries you know with a lot of renewables are making the best out of that infrastructure it is incredible so for example the excess power can be used to generate new fuels you know that so you have green hydrogen green ammonia you know coming from solar power for example and uh and and we see that more and more on the plants on the inc you know the developers and uh looking at the future of course and we see also interest in doing uh pilot projects regarding hydrogen as uh for example the economics uh tend to work together with the economies of scale for example if today hydrogen or ammonia is still very expensive then as more and more products come alive then the economies of scale work very well and probably we'll see in a few years time that then the cost of hydrogen and ammonia and other fuels goes down quite a lot and that goes also along together with the excess capacity excess power and and definitely there is a lot of good use to to make out of that uh and today of course in battery storage that's an another point that that i would like to to make uh so there is practically no limit of the renewable energy and um and you can have absolutely you know projects with the energy uh batteries energy storage that can also help the power grids very much you know by using this excess power and releasing it at the most needed times and the times of course when this energy is most valued and uh and that of course then brings uh a lot of reliability to the grid and then also uh think about uh ancillary services you know how uh in regulation how ancillary services play a role in in these various countries in the caribbean and central america you know because definitively we all value um a reliable grid you know we don't like uh blackouts and and and and well uh battery storage is also a very good solution that you can implement today and and let's remember about the economies of scale that were mentioned today the cost of of batteries is 10 times the cost that we used to have seven eight years ago so the the prices today are are very attractive that's that's right that's right the economy of the scale pricing uh i i think fuels are a little bit too expensive for what you mentioned raul i mean you need uh over capacity install of renewables to create synthetic methane and then use it in in your power plants or or or your thermal generation flexible thermal generation when when you can now use renewables uh yeah that's uh that's exactly right and and another another subject that you were mentioning it's uh we are also going into a more uh decentralized type of type of grid so we we we see and that helps with the transmission line issues you know like because we have a lot of transmission line issues in countries um i'm not going to mention any but but we have good countries and not so good countries in central america with transition renewables storage all that could could be another way of of helping the the the electricity grid what what what do you think alejandro yes transmission is a key issue that it had to be mentioned thanks francisco for bringing it to the conversation because [Music] it's very difficult to get approvals for new transmission lines in general right of ways etc it doesn't mean that it's not going to be needed more transmission lines but and they will be built but their size and their the amount of those transmissions lines could be re-reduced the clever use of storage you can transmit the energy at times when there is no not a big demand so you can generate the electricity and transmit it to the neighborhood of a big consumption center and storage that energy there in order to allow uh for instance the early morning or two three a.m in the morning and that would decrease the congestion of the transmission line because the electricity we know that if it is not stored storage uh it has to be produced at the same moment it is it is a consume so definitely a good use of the storage capacity will reduce will heavily reduce the the the need of new transmission lines they will always always be needed but that is from that point of view and the decentralization concept in itself it's another factor that even reduces more the the need for transmission line in this case yes the decentralization that is a process that is evolving very fast it's changing the way in which we see the the systems that are ahead a big hub in which the energies produce big power plants and now probably that is not going to be needed anymore in the future i'm not saying in the near near future but probably the middle term i will have more much more decentralized energy product production which is very good from every point of view not only for the uh reduced need of transmission but also for the security and the reliability of the energy consumption yeah that's uh dozens are really good points alejandro um yes uh i i think we all agree that we need to have the right planning i think great ideas uh we need to do legislation look at technology look at the future with new fuels we we we are in the right track that's what i think we're talking about a transition and and what comes out of all these it depends on all of us i mean all the companies all the all the stakeholders so um i think we're in a great great great moment very exciting time and being part of of this market this is exciting and uh and well so i think we're we're getting to the to the end of this coffee talk uh i think it has been a lot of great discussions some final remarks raul yeah absolutely i i enjoyed the discussion thank you francisco thank you alejandro and everybody listening to to this conversation well a recap and and and last uh but not least right and uh definitively the future is very exciting so what we see is there is a lot of excitement in this sector and uh the future is new in terms of the fuels that we have so uh we see a lot of gaseous new fuels like natural gas but also we see methanol we see hydrogen and then the future will be electric as more and more uh electricity is needed and uh and then the future will be of course uh renewable so we we need to stay renewed you know uh as as we always do you know whatever is not renewed then tends to get old you know so the future is is renewable and renewed sounds good sounds good what about you alejandro any final remarks uh yeah first of all thanks to bartilla for inviting me to have these conversations again it's a very a big pleasure and an honor to discuss with you francisco and raul thanks to platz because we are discussing around the issues of that event and of course i agree with raul regarding the importance of the electrons in the coming economy and they i would remark the importance of the governments the energy producers and the energy consumers yeah very important well so thank you very much uh raul alejandro thank you very much platts without your confidence probably we wouldn't be having this coffee talk and uh and i'm sure that more coffee talks are happening in around the world regarding the energy transition as i will mention it's a very exciting time and uh and we're getting there so thank you very much and i see you in the next coffee talk stay renewable americas you

2021-09-25 19:37

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