Analyst day – Russia & CIS Power market › sites › alstom.com › files › 2018... · export demand • Huge investments underway to develop new gas fields in northern Siberia

Analyst day – Russia & CIS

Power market

Denis Cochet

15/03/2012

90

95

100

105

110

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130Ju

n-08

Aug-

08

Oct

-08

Dec

-08

Feb-

09

Apr

-09

Jun-

09

Aug-

09

Oct

-09

Dec

-09

Feb-

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-10

Jun-

10

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10

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-10

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-10

Feb-

11

Apr

-11

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11

Aug-

11

Oct

-11

Impact of crisis on electricity consumption by region

Unlike most industrialised regions, BRIC have over passed pre-crisis consumption levels

China

India

Brazil

Russia

USA

EUJapan

Electricity consumption (Twh 12 months moving average)

E-cons (index 1 June 2008)

20092008 2010

Financial crisis

2011

Australia

2

Russia & CISMain drivers

Most drivers turning positive and translating in investment rebound

• GDP and electricity consumption back to growth

• Electricity export plans: Russia and Central Asia to China, Georgia and Azerbaijan to Turkey

• Ageing and inefficient installed base driving needs for new build & retrofit

• Pockets of electricity deficits driven by obsolete installed base and grid + weak interconnection

• Power equipment demand also driven by district heating plants (CHP)

• High export Oil & Gas prices outlook supporting investment capability

Macro-economics

• Strong political push of Russian authorities for investment in Power

• Russian new renewable target: 4% of national power generation mix by 2020

• Localisation of production in Russia – mandatory for foreign OEM

• CIS: desire to reduce fuel dependency when importing

• Ukraine: high wind tariff in place with local content requirement

Policies

3

0%

5%

10%

15%

20%

25%

30%

2008 2009 2010 2011 2012 2013 2014 2015

Reserve margin evolution withplanned retirement and plantsunder construction

Reserve margin absorption

Plants under construction

Plant retirement

Russia & CISKey drivers evolution

GDP & Electricity consumption growth

Despite significant number of plants under construction, reserve margin will soon be absorbed: new build investment needed now

Target

GW/y

-5

-4

-3

-2

-1

0

1

2

3

4

5

11-15 16-20

Hydro

Nuclear

Gas -8%

-6%

-4%

-2%

0%

2%

4%

6%

2008 2009 2010 2011 2012 2013 2014 2015

GDP growth

e-cons growth

Source Alstom 2011

4

Steam

Russia & CIS Coal: “Most production growth targeted for export”

• Hard coal production at 248 million tons and lignite at 76 million tons

• Hard coal use dominated by exports and industrial applications (steel)

• Only 30 million tons of hard coal used for power generation (12%)

• Difficult for hard coal to compete with gas due to high mining and rail transport costs

• More coal exports being targeted for Asia

Russia Coal Production by Market

• Hard coal prices now at US$120/ton at Baltic ports, well above mining/transport costs

• Price determined by global market and mine-consumer distances (high transport costs)

• Transportation capacity limited and slow to expand

• Coal sellers get better prices in export markets than from domestic customers

Russia Baltic Export Price

Supply

Price

-

50

100

150

200

250

300

350

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

mmtonnes

Power - Hard Coal

Power - Lignite

Steel - Hard Coal

Other - Hard Coal

Export - Hard Coal

0

25

50

75

100

125

150

175

200

US$/ Tonne

Russian CoalFOB Baltic

Cost Range FOB Port

5% of WW production, 16% of WW reserves

5

Russia & CIS Natural Gas: “Price reform is critical issue”

• Gas production on steady rise until 2009 economic slowdown

• Economic slowdown caused− 7% decrease in gas consumption− 28% decrease in gas exports

• Production growth resuming, with rising domestic and export demand

• Huge investments underway to develop new gas fields in northern Siberia

• New pipelines (Nord Stream and proposed South Stream) to facilitate delivery to export markets

• Gas price in Russia & gas producing CIS countries very low ($1,5-4/mmBtu) due to high domestic subsidies=> hinder investment in higher efficient gas power generation and for more coal use

• Date to equalise domestic gas price with that for exports keeps getting pushed-back (now 2013-2014)

• Higher gas price for gas importing countries

Russia Gas Production and Consumption

GazProm Sales Price to Domestic and CIS market

Supply

Price

-

1

2

3

4

5

6

7

8

9$/mmBtu

Russia CIS

$5.64 Gap

18% of WW production, 24% of WW reserves

6

Russia Levelised cost of electricity – new power plants

Subsidised gas prices make gas plant most competitive, but price reform may change the picture: balanced portfolio remains the safest long term strategy for States & Power companies

0

2

4

6

CC GT Plant Coal Plant Nuclear Hydro Newdam

Hydro newunit on

existing dam

CO2 cost

Fuel

O&M

Capital

€ Cents/KWh

Fuel price assumption: • Domestic coal € 67.3/ton• Subsidised gas € 1.52/mbtu• Export gas (CIS) € 4.74/mbtu• Export gas (Europe) € 6.40/mbtu• CO2 € 0/ton

With gas export price (GazProm to CIS)

With Europe gas export price

Source Alstom 2011

7

0

5

av 9-11e av 12-15f

Geothermal

BiomassWind

Hydro

NuclearSteam

CCGT SC

GW p.a

Russia & CISNew build order forecast per technology*

Forecast

Market to rebound with diversified mix

Source Alstom 2011

*Note:Excluding industrial turbine size (GT <40MW & Conv Fossil ST <100MW)

8

Russia & CISMain customers - new build

Strong customer investment plans

9

Gas plants Nuclear Steam plants Hydro

• Gazprom• KES Holding• Basic Element• INTER RAO• Tatenergo• Fortum

• Rosatom• Energoatom

• INTER RAO• Rushydro

• Rushydro

Russia & CISCompetition in Utility Power generation

Significant Alstom market share - with growing portfolio offering

SIEMENS

POWER MACHINES

ALSTOM

GE

MHI

OthersChinese OEM

0%

100%

2009- 9m2011

All turbine orders in GW* (GT, ST, Hydro, Wind but strong GT

dominance in that period)

• Power Machine competing in all fuels: steam, nuclear, hydro

• GE, Siemens & MHI in gas plant only

• Chinese present through few subcritical steam & hydro import orders

• Alstom already strong in gas & AQCS - building positions with domestic partners in nuclear, hydro and steam

*Note:Excluding Industrial Turbine size (GT <40MW & Conv Fossil ST <100MW)

10

Russia & CISInstalled capacity by age and technology

70% of installed fleet is more than 30 years oldHalf of steam plants running on gas with low efficiency driving repowering potential

Total Installed Base 355 GW

11

0 5 10 15 20 25

1

5

9

13

17

21

25

29

33

37

41

45

49

1%

36%

8%

55%

2010 GW

2000

1990

1970

AgeYear

1980

Source: Alstom & UDI

1%

21%

3%1%

10%

63%

Status end 2010

Total Installed Base 355 GWTotal installed base 355 GW

Nuclear PlantsSteam Plants

CC GT PlantsHydro Plants

Others

Wind Plants

SC GT Plants

Solar PV

Nuclear PlantsSteam Plants

CC GT PlantsHydro Plants

Others

Wind Plants

SC GT Plants

Solar PV

In which Steam Plant By Fuel

Coal

GasBiomass

OthersSolar CSP

Oil

Geothermal

Coal

GasBiomass

OthersSolar CSP

Oil

Geothermal

Steam plant : 224 GW

IB by country > 30 years : 219 GW

Russia & CISInstalled base by country

Fuel exporters versus fuel importers is driving the mix

RussiaLarge oil & gas exporterIB: 238GW

KazakhstanOil & gas exporterIB: 18GW

AzerbaijanOil & gas exporterIB: 7GW

KyrgyzstanFuel importerIB: 4GW

TajikistanFuel importerIB: 5GW

UzbekistanGas exporterIB: 13GW

TurkmenistanGas exporterIB: 3GW

GeorgiaFuel importerIB : 4GW

ArmeniaFuel importerIB: 4GW

BelarusFuel importerIB: 8GW

UkraineFuel importerIB: 50GW

RussiaLarge oil & gas exporterIB: 238GW

KazakhstanOil & gas exporterIB: 18GW

AzerbaijanOil & gas exporterIB: 7GW

KyrgyzstanFuel importerIB: 4GW

TajikistanFuel importerIB: 5GW

UzbekistanGas exporterIB: 13GW

TurkmenistanGas exporterIB: 3GW

GeorgiaFuel importerIB : 4GW

ArmeniaFuel importerIB: 4GW

BelarusFuel importerIB: 8GW

UkraineFuel importerIB: 50GW

12

Russia & CIS Service & retrofit market

Ageing installed base driving needs for retrofit & services

• Ageing fossil fleet: ~15% of capacity not available

• Steam: - more stringent emissions standards to drive Particulate Matters (PM) upgrade and Sox retrofit longer term

- Efficiency improvement retrofit opportunities as an alternative to replacement

- Ageing district heating driving steam turbines rehabilitation needs

• Nuclear: reactor uprate, reliability & life time extension driving demand for steam turbines retrofit

• Gas:- Strong Service growth outlook supported by on-going new build

- Repowering

• Hydro: 3 out of 4 plants (55 GW) above 30 years old, driving solid long term retrofit potential with clearly identified projects short term

13

Russia & CISMarket take away

Alstom well positioned to benefit from investment rebound

• Market drivers turning positive

• Investment rebound in new build & retrofit

• Diversified mix outlook translating in solid opportunities for Thermal & Renewable Sectors

• Alstom market share expected to grow with offering across the spectrum

14

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