Belén Gallego 0:31
Good morning. Good afternoon ladies and gentlemen, I just wanted to let you know that you’re in the right place. We’re going to do this online session about optimizing our system performance in the Middle East. We’re just going to wait one more minute for more people to come into the room and then we will begin. I would like to invite you to use the chat on the right hand side of your screen, to introduce yourselves your company and where you’re joining us from today. And just make sure you tag us All attendees so we can all read it as well as here in the panel. So, please start introducing yourself and we will take one more minute and then we’ll start. Thank you

Well, good morning, everyone. And I’m glad to see already a lot of comments in the panel. You know, we have people from Oman, from of course the UAE. We have people from India, in Jordan, Lebanon. So welcome everyone, please keep sharing. So here we’re going to talk about optimized power system performance in the Middle East today. And I have four leading experts, from word Zilla who are going to be giving us a presentation about this topic, and I’d like to ask them to introduce themselves. So each in turn, please, if you could unmute your microphone and introduce yourself shortly. Alexandra, can you go first?

Unknown Speaker 2:40
It’s good afternoon, Alexandre de man. So I’m the energy business director in the Middle East. I’m based in the paradise of Dubai. Welcome to all of you.

Belén Gallego 2:49
Thank you very much, Alexander. And Next I’d like to ask Marty, Please, could you could you introduce yourself?

Unknown Speaker 2:55
Of course. Good afternoon. Also from my side, my throat give a bye in Helsinki, I’m heading out in our

Unknown Speaker 3:04
strategy business development.

Belén Gallego 3:06
Welcome. Thank you very much, Matty. I think I’ll stick to your name because your surname is going to be a bit complicated for me to pronounce. So we have people in Dubai, we have people in Finland, Geeta Raj, I’d like to also ask you to introduce yourself so you can take your microphone off, please.

Unknown Speaker 3:25
Good afternoon, everyone. My name is garage door and I’m based in what Silla Dubai. What’s the Middle East? I handle the energy storage and optimization portfolio at what’s it on Middle East. Good to be here.

Belén Gallego 3:39
Thank you very much garage and last but most certainly not least, Patrick, could you please introduce yourself?

Unknown Speaker 3:45
Yes. Good afternoon, everyone. My name is Patrick farkash Market Development Manager for what’s the Middle East based in Dubai, but now I’m signing in from from the Netherlands. So Hello, everyone.

Belén Gallego 3:58
Thank you. As you can see a very truly international panel here today. Partly because you know what’s going on with COVID. Some people are stuck in their home countries at times or elsewhere where they work. But I’m glad to see as well that there are many people here also from Saudi. I’ve seen people from Spain. Many people from India, Germany, Nigeria, anyway, Pakistan. Welcome, everyone. So I’d like to ask a manual, if you can stop sharing that slide, please. And I will ask Alex to share your your your, your screen so that we can get ready essentially. And also they you mute off. And whilst Alexander prepares the screen, I just like to let you know how the structure is going to go today. And it’s very, very easy. We’re going to have a presentation from these four speakers, and then we’re going to take questions from the audience. I’d like to ask you please to send your questions through the q&a box, which is a little box that is at the bottom of your toolbar. Just use that because if you send them through the chat, they get lost in the chatter and that way We can actually go through them more systematically. So Alexander, can I ask you to put that on a large screen, please? You know, actually, it was before but now I can see like three different screens. So

Unknown Speaker 5:20
arrow long, maybe better that way. Let me see.

Belén Gallego 5:24
Yes. Perfect. That’s perfect. Yes, go ahead, then.

Unknown Speaker 5:29
Oh, thank you very much. So defend your guest partner, friend, friend, ladies and around so I think if it’s my pleasure to welcome you to Bakula, Middle East Ribena. I mean, as we speak, I think we all agree that the Middle East is gradually opening up from the COVID-19 pandemic and, and focusing obviously, intensively on the economic recovery but, but I think today what we want to see is let’s be aware of any possible fourth step in this restart and definitely around the interview. development. And I think that’s what we want to bring today with the panel that I have with me. And so what was your energy business today? Well, we help our customer in in solving the value of the energy transitions in a by optimizing their energy system, right. So our offering today has been internal combustion engine base. So basically, Bill or plants, and today we have around 72 gigawatts of capacity installed around the world. At the same time, we developed and dispatch a lot of energy storage and management system. And I think today we also have 70 installation globally. But nevertheless, all of that is also a huge lifecycle support team that is basically supporting this entire capacity. So we have in our global cities of vital energy business 5500 people, I think we are probably locating in about 70 countries. And probably have more than 180 locations. So as only No, that’s what what energy business is all about. So looking briefly at where we are so Middle East and Asia is the largest install base that we have with close to 39 gigawatt, and followed by the Americas, Europe and Africa. But I think what I would like to do is bring you to that then since that our core business is not just supporting utilities or developing with IPS or Israel, I think we have a very nice mix of probably 60% of activities is been actually around utilities and some of the IPP have been supporting that. And then the industrial market where maybe in this region have been we’re being maybe more known, is only actually a 30% fraction of all our activities, including the oil and gas. But let’s have a sharp snapshot on actually what our DNA is. On the left side we can see one of our big babies we Call them babies here. They actually g Qantas engines. And on the right side is basically the largest IPP that we have actually developed and also the largest IPP today installed and you know, perishing, which is this 573 kilo megawatts in Jordan. I think what I would like just to picture you is that even though as big as he looks, engine provide today with energy storage, probably the best answer to fast start, stop and then go configurations. As big as they look. They’re still the fastest. So the plan as you see in Jordan, in capabilities, right in five minutes is about to be online. And but looking at old brother development that our DNA brought us is obviously linked to the gas development and our legacy or on gas technology. We have been one of the first trying to introduce the gas into the industry out there in the Marine either in the energy sector and and and we believe Again that this his legacy is going to move forwards as soon as we enter into the scientific gas future looking at the energy storage, and we made the strategic decisions in in 2017, and energy storage is becoming for us increasingly critical to help with strengthening the reliability and flexibility of the grid. I think today deploying advanced energy storage system for were developing for grid scale to behind the meter and micro grid solutions. But again, I’m not going to go too much in detail there. I think you’re a we carry much more detailed overview of the capabilities that we have.

Unknown Speaker 9:44
Now looking at where we are in the Middle East so today we’re a little bit slightly over seven gigawatts installed power with about 300 installations our headquarter or is in Dubai, where the center of University and I say have a lot of Our experiment and a digital expertise is basically based in Dubai. But in theory, we have actually positions and branch pretty much in the entire Middle East. So Pakistan will allow over 400 engineers to support the 2.1 Giga that we have installed jayda we have also about 250 local guys to support our 1.3 gigawatt and obviously we have positions in Iraq Yemen, or man of course cut off Jordan. So we were straight pretty well we We always love to be as much as possible close to the customer. But then, if I look briefly just look into other energy sceneries, Middle East countries are gradually transforming their forces base power generation feed into sustainable and diversified energy supply. And I think we have seen it very clearly in the recent increase of solar activities and at the same time, so question for us today is that we expect Not for these to reach the most affordable, the most sustainable energy. And yet, how we navigate the past to the future is something probably less and clear. And again, I think during the seminar, so it’ll be in the webinar, we’re going to try to walk you through that idea. So we want to help you to understand better how the energy transition will unfold. with renewable becoming basically the base load. We believe that we can help in designing and building the transitions with proper planning and we are ready to provide design and we’re prepared to provide you with the best service that we can but I think with this you were I would be pleased to welcome Maddy to walk us through the energy transitions. I hope that you will get a new perspective during the rest of the webinar. And again, thank you for your attention. And I think without any delay, Marty, let’s rock and roll.

Unknown Speaker 11:57
Thanks, Alex. Alex on

Unknown Speaker 12:01
Let’s see if I managed to do this.

Unknown Speaker 12:05
Do this and hopefully you can see my screen right now. And I’m, as mentioned, I’m looking looking after the bachelor’s energy business and the global level level from a strategic point of view and try to understand that as a technology company like volatile is that how does the world look like in 1015 years and what is the situation right now and where we are heading and as a technology company, we need to try to understand the future and what is creating value in the future systems and of course, we are focusing on the energy system so that we have enough time and we have understanding that what type of services what type of offering is there that the customers are are receiving the value then, but let’s look at how does the energy transition look like right now and what is the kind of situation situation right now. And of course, the one thing that has been driving the global energy trends is that really rapid change in them in their in renewable prices, and lately in them in the energy storage, but if we look at solar PV prices since 2010, so in 10 years time, or 85% reduction in the costs, while at the same same time for the wind, around half from 50% 50% reduction in them, the cost levels level. So there’s renewable the cost of renewable energy, mercy has decreased and that we have witnesses by our own eyes. I have been buying wind ppas in the United States, less than $20 per megawatt hour. Now in the European European Union in Finland, those are less than 30 euros per megawatt hour. Solar PV solar PV we see less than 20 bucks per megawatt hour so really competitive pricing for them for the renewable energy then then then the energy storage that has come a little bit later later to the picture but, but this is also i’m also now seeing significant price reduction reduction since 2010 to 85% reduction in them the costs. And where this is heading is that then if you look already now, so and how fast and I like to talk about the tape, everybody talks about the energy transition in the bending Germany and we know that this is going on, but how rapid and fundamental change has been. And if you look the world in 2014, so just in six years ago, there were only three places on earth, where renewable energy was the cheapest option if you build some new, new new source of public energy, Germany, Denmark and total life. Now in 2019, two thirds of the world renewable energy is achieved. First new option for energy. So extremely rapid change in five years from basically nothing to two thirds of the world. And what Bloomberg, New Energy Finance predicts that by 20 3030, this will be the case, globally, everywhere that we’re renewable energy is the cheapest option. So I’m really fundamental, fundamental and an interesting, interesting change. And this is I think, the the most most important thing for everybody to do have a debate and understanding that this is not driven by the politics anymore, the renewal them that why renewables are put into the system, but it’s because of the economics and when the economic start to play the game. things start to happen way faster. And this transition we have witnesses witness already in the in the countries like United States, Australia, Europe, and of course now and also in the Middle East. Heavily come into the game when when we see so cheap solar PV coming to them marked. By going forward, it will look a little bit cooler. Then what does it mean in them from the installed capacity perspective and how fast this will change the landscape by 2040. So, if we have now what what calls, new deck launches, so renewables and flexibility represent around 17% of the overall capacity mixing 2018 by 2040. So in 20 years time, these will represent 57% of the, of the capacity. So a massive shift towards the renewables and flexibility. And at the same time, good to notice that, while the overall capacity totally in the world was around seven terawatts, so seven 7000 gigawatts of capacity in 2018, by 2014, by 15.5 terawatts. So of course, because of the nature of renewable energy, we will need more capacity and there is a lot of investments required. So in that sense them one of the key things here to ensure that energy available, that’s We are able to finance these and get these, these, these investments moving.

Unknown Speaker 17:06
Looking this out a little bit closer I this is what gets the eye every time is that the how much wind, wind, which light blue here will be installed or solar home aesthetic boo boo put there. But the focus where we are focusing on what Alex Alex mentioned also there with our portfolio today

Unknown Speaker 17:27
is that we talk about flexibility,

Unknown Speaker 17:29
that how you integrate these, these renewables, affordable renewables in the power system in the future. And here we see that exactly the same kind of development. So actually, if you look at from the capacity perspective, that flexibility, flexible gas and energy storage are the fastest growing markets in the next 20 years that we’re gonna see investments. And looking on the left hand side here you can see the light, light gray there which is the base load gas traditional combined side gasps that that is actually declining or declining over time demand and and that’s driven by once again that renewables that the operational profile of this combined cycles, combined cycle will change we have less running hours more starts and and and the systems and the system modeling starts to favor heavily, heavily more intermittent or intermediate intermediate competing type of application which is the orange bar here. So, the market for the gas engines and flexible engines will grow according to Bloomberg analysis that from xR on five gigahertz market that has been the bigger market to up to 40 gigawatts by 2040. So massive, massive change there as well in the energy storage which is also heavily and fastest growing markets. So if we look at energy trends and, and and it’s obvious now that that that when people start to understand That’s how fundamentally renewable energy is changing the landscape. There is no room for baseload anymore. We need more begging capacity. And when you go beyond certain thresholds, depending on them on them, energy, energy system, energy storage start to start to play a key role there. In a massive scale. I would say that in every power system, there’s a value already today for energy storage, but when we start talking about massive scale, energy storage, installation, installation, then we are talking about a lot of cheap renewable energy and access to renewable energy available. But by 2040, so at the same time period, in 2020 years, 20 years roughly, we’re gonna see 122 fold growth in the energy storage. So even though they it’s a hot topic now, when we talk about talk about a lot, a lot about those we celebrate the newest deals and the biggest deals. This is just the beginning in that sense of how the crowd is grow. This is coming. And one one thing here If If you saw that, that thought that 85% reduction since 2010, for the energy storage installation, by 2019, these will actually just continue and the price levels what we can expect for their energy storage, energy storage will decline, decline are in the in the future. And of course, this is a dilemma dilemma in the many persistent when we invest and I recommend that when I say that in every power system, we can, we can find value for energy storage already today. And the role role and the need for that energy storage and flexibility in general will increase when we move forward.

Unknown Speaker 20:42
So, a lot of renewables, a lot of flexibility come into the power systems. And then now even though we are in the middle of the in the middle of the crisis during the COVID-19 situation globally, and this is a definitely a new situation forum for the whole world. But it’s something interesting That has happened also during during this from the energy transition and energy system perspective. And this spring, what we have found out is that, that we do elope tool, you can Google that and here’s the source energy parentheses. It’s a really cool tool that gathers all the information of the European electricity system, we can put any power system basically there, but the information from the European Union is easily available. And we can look at what has been the impact of how the system is operating, what is the price levels, what is generating, what are the transmission flows, and how the systems are performing now, and now what has happened in in and this graph is April 2020. In Germany, is that when we have COVID-19 situation and the lock downs that electricity demand is down around 10% but at the same time renewables are still generating. So sunny assigning wind is blowing, they don’t care about this virus, they are still still generating, generating as as last year. So, this has led to us to a situation that we have higher share of renewables than ever before, in globally, I would, I would say, but especially the Europe now that that, that we we see the levels in the European level of 55% renewables the whole European level was much met in in May, and there are days when Germany for example, is generating around 80% of its energy with renewable energy. So, countries are seeing and experiencing massive amount of renewable energy that we were expecting to see by 2030 levels that when we continue to do the installation, and this is why this is so crucial and important thing is that now when we have hydro renewables in this in the power systems like in Europe, we can learn from this we can see that what are the implications what we happen, what has happened now, where to invest how to develop the system and for example, one finding from the Germany is that that, that the prices will go negative when there is excess generation, it is really, really challenging time for coal, coal plants for the combined cycle plants and they are really suffering in this market while at the same time even though the prices are down now in the in the Europe, energy storage is making more money than ever and flexible gas is making more money than ever. That’s the flexibility is recognized in this this high renewable power system. So, really interesting findings that we can see now and i i recommend that go and check it out. And see there is a lot of webinars or webcasts also about these analyses that what has happened to the energy storage, what has happened to the flexible, flexible gas, what will happen to the flexible baseload. So super interesting analysis and as humankind as the energy industry. We can really learn a lot from this situation when we crunch that data and understand this as a summary, can they say that before moving to Patrick, that we are, we are, energy transition is going on, driven by cheap, renewable energy, Riven by economics. And that is opening a new a new, totally new era, an increasing market for flexible, flexible gas and energy storage, and go and check it out what has happened in the Europe this this spring. And that’s just a glimpse to the future and evidence that this will make sense in a lot of sense in the future power system. So thank you for my side and I hand over to Patrick to continue the show from here. Thanks.

Unknown Speaker 24:55
me know if you can see my screen.

Belén Gallego 24:58
We can’t yet Was Patrick. He shares his screen, I just wanted to remind you to please send your questions through the q&a box and that we are recording the session and we will send you both the recording and this presentation that so many of you are asking about in the email in a couple of days so that you can actually go through the material again. Could you make this into a large screen, Patrick? Yes, I’m

Unknown Speaker 25:24
trying my best. Perfect.

Belén Gallego 25:26
Yeah, now we can see it perfectly.

Unknown Speaker 25:27
All right, perfect. So good afternoon, everyone. So what it’s all about energy trends, but why is it important? Because energy is one of the key enablers of economic growth. As a matter of fact, the export of energy products enabled a great deal. The economic growth of the Middle Eastern countries over the past 40 years, and it still represents the backbone of the of the economy of many GCC countries. But it also creates single sided exposure for the government’s as their as their revenues are heavily dependent on oil. And the end and the fluctuation and oil price have an immediate and severe impact on the government budgets. And it was clearly visible over the past couple past couple of months when the OPEC plus production dispute together with the global demand collapse driven by the corona situation basically sent global oil prices down to historic low sub $30 region. And, as a result, Saudi Arabia backline the UAE immediately had to slash its government spendings and credit ratings of Oman and Kuwait were also downgraded almost immediately. So most of the Middle Eastern countries have long realized the need for economic diversification. And this intention is very well represented in their vision 2030 strategies Although making this transformation from from molecule based economic structures to higher value economics is a challenging task. And we believe that the Middle East is a unique but is in a unique position and cheap and sustainable power supply can be actually the new foundation of future roles. Strategically working on this initiative can create a second economic pillar, which which basically can open the door for for other industries such as as energy intensive Heavy Industries, to further expand in the region. And the Gulf countries are perfectly positioned geographically they are between three continents, their their logistic infrastructure is excellent, there is sufficient workforce favorable investment climate so basically everything is given the last missing piece is the cheap and sustainable power supply. And I have to make a note here that that allowing energy intensive industries to expand in the region will also attract other industries to go around them, which will also contribute to this goal to diversify the economic. So, leadership on a low cost, economic can can play a crucial role for for the countries to reach their vision 2030 targets, although there are some changes in the energy mix, which can also contribute this transition. So, so let’s see what what changes we will see in the Middle East. The first one is is is what what might be described very well that renewables are becoming the cheapest source of electricity. This is especially true for the Middle East. The region has excellent renewable potential, a solar panel in the Gulf produces twice as much energy than the same unit does in Germany. And let’s not forget about the wind potential that the region holds Saudi certain parts of Oman, Hawaii are all blessed, very consistent. In strong greens. So if you take a look at the screen, you will see that, that solar PPA prices today in the Middle East are already below the price level where solar PPA prices are expected from other other regions are expected to be in 10 years. So it’s no surprise that that this this makes solar PV generation the cheapest source of electricity places it first in the merit order and also it holds a huge upside potential to further reduce the blended cost of electricity in the region. This is this is this is a global trend but moving to the to the second driver This is very specific for the Middle East.

Unknown Speaker 29:45
And that’s basically the decoupling of power and water generation. The Middle East is is the largest market for for water treatment, and nearly half of the global desalination capacity is located there. But while the rest of the world membrane based desalination. The Middle East is still dominated by thermal distillation, which basically requires heat therefore, it ties fossil fuels into water to the water generation. But now, we see more and more countries committing themselves to phase out this old fashioned dannimal distillation and it will have a very important consequence it will lead to structural shift the traditional IWC p model will will come to an end and power has to be a separate standalone and competitive product. It will encourage competition between various power producers to generate power at the lowest cost and also it will let a great portion of inflexible and and and inefficient generation to leave the market and then the gap could be filled with renewables or other smart and more sustainable technologies. The search engine driver is related to oil economics, no surprise however, The long term consequences of this are still a little bit uncertain. On one hand side, we see that that the current depressed oil price environment already puts a great fiscal pressure on governments and government organizations and and enhances them or encourages them to increase their operational efficiency and and reduce their subsidies. And we expect that this this will this will also happen in the in the energy space improving and improvements in transmission and distribution and in generations will be will be introduced. On the other hand, this low cost oil price environment also somehow conserves the current situation and sustains the, the low cost fuel supply of thermal generation making them a little bit more challenging to replace by by other sources. Speaking of replacement that takes us to our last, last change, change drivers. Robert in QA asked whether we have any any speculation on how global energy demand is going to increase in the future? Well, this is this is hard to tell in this current situation. But if we if we take a look at the installed base in the Middle East that we see that one third of the generation is actually near retirement age, there is four to three gigawatts installed capacity that exceeded the 30 year mark. Therefore, the replacement of these assets will be quite a big task and and already a big challenge. So as a result of all this changes, I think that the way we see our generation in the Middle East has to fundamentally change. The GCC countries arrived at the crossroads where they need to make a giant decision, which would stand 30 year time horizon. countries and utilities have to make the right capacity right bets on future Capacity Development today, which will ensure the long term sustainable, long term competitiveness success, sustainability of their power system as well as the resiliency of the grid. The good news that the Middle East is, is twice blessed said there is an abundance of cheap fossil fuels and excellent renewable conditions.

Unknown Speaker 33:24
However, it’s unfortunately still not enough

Unknown Speaker 33:28
10 power plants with the lowest generation cost will not necessarily lead to the lowest system level electricity. And the reason why why it won’t be because you still need one one component as Marty highlighted already, flexibility is the key word here. dispatchable flexibility will be will be the enabler to really unlock this potential and will be responsible for seamlessly integrate various cheap energy sources into one well working grid. And probably this is the one This topic nowadays in the energy industry, the role and value of flexibility is being analyzed by by all of the major energy companies and energy agencies like arena, International Energy Agency and Bloomberg. They all publish their their report adopting slightly different mindset. However, there is a consensus building in the industry, that due to the the price drop in renewables, the cost of electricity is expected to decrease, although the role of balancing and ancillary services will be will be more important than ever. And I have to make a note here that it can only happen happen if there is a well working modern regulatory framework in place that properly values, the system level benefits that flexibility can provide for the whole grid. So for the for the for the for the Middle East. I believe that the biggest biggest challenge To have a strong and dedicated leadership that facilitates a mindset change. And that mindset change basically should based on the on a true commitment to become a world class leader in low cost sustainable electricity in the Gulf. And this may also assist to the establishment of a second economic pillar. So, Marty talked about energy trends I talked about the energy changes in the in the in, in the energy sector in the Middle East. But now I would like to demonstrate quickly how the utilities can adapt to this new environment. And then, together with my colleague Giri rush, we will briefly introduce some tools that can make this transmission smooth and easy. So let’s imagine a future power system where the pendant of renewables already reaches 50%. I know it sounds a little bit futuristic, for the Middle East as of today, but this is very much represents the situation in in several European countries today. And also I think, well, well it shows the direction where the GCC is, is heading to. So let’s take an example week, we have solar generation, we have some wind generation. See, we see the combined production of these better dependent renewables and obviously, they all contribute to cover some parts of the load. So the load was is shown with the black curve. In the past 10 years ago in the Middle East, that load was only satisfied with the generation of thermal traditional fossil fuel power plants. But as more renewables are feeding into the system, the thermal assets the traditional fossil fuel generators, Roll is changing a little bit and they are, they are being dispatched against the net load, which we get if we deduct the production of renewables from the total load. And the point of this picture is just to illustrate the key changes that that utilities are facing. So, first of all, that the traditional baseload as a notion is, is disappearing. This was a very big chunk and a predictable piece of power supply. But with the advent of renewables, this this will be again the fossil fuel power plants that the traditional baseload or dispatchable power plants will see much much more ramp ups and ramp downs they’re the gradient will increase and their magnitude of the of the ramping requirement will increase. They register much more Park load operation or low load operation more frequent load changes and on on low demand. And good renewable conditions they the thermal generation needs to be completely shut down and then it has to come back immediately once the demand picks up or or or the sun goes down.

Unknown Speaker 38:12
So why is it important? Why do we talk about that? Well, the main reason is that traditional baseload large scale power plants, especially power plants with the steam cycles are not designed for this, this kind of operation. And that’s, it’s very important to know that that that, that those those assets are are highly efficient units, when they run at full load flat out, but once they have to more load following and more cycling and an operation like like this, their production cost starts to shoot up to the air starts to increase. Furthermore, this can also lead to system reliability issues. These large baseload power plants have a have a quite limited operational threshold. Which can also which can lead which can lead to either unnecessary curtailment of renewables or even worse to some reliability issues. So, all in all this graph illustrates the requirements that that the requirements are changing for dispatchable power plants and a bigger portion of the traditional fleet has to has to handle the load volatility or at least variable load without having significant cost consequences.

Unknown Speaker 39:34
So,

Unknown Speaker 39:36
a modern a modern utility will have much more diversified portfolio than then than most of the utilities have today. But then, the share of flexibility in these in these portfolios will be will be will be much higher than it is today. We think that this trend will Be also reflected in the capacity selection criteria or resource planners. Therefore, flexible power plant properties such as ramping radiant starting cost minimum up and down downtime are becoming increasingly important and becoming important factors. So, seeing all the solar projects being announced in the Middle East, we see a big room for additional flexibility in the Middle East, which can be provided by by by flexible flexible thermal plants by energy storage or even by by demand side management to some extent. And I had a I had some discussions with we local players and I was surprised that when it came to meet the merits of peaking operation, their first idea or first first choice was open cycle gas turbines and and when we started to talk about guests, guests getting engines and generators, they, they were thinking about the small kilowatt scale industrial application. Well, the reality is that is that flexible engine based power plants come in much higher high higher units, bigger units, 10 to 20 megawatt units and selected number of gensets can be deployed next to each other. They provide higher efficiency than open cycle gas turbines even in high temperature conditions. And what really distinguishes them from the rest is that that fast ramping capability, these these gensets can be up at full load in two minutes. And having 10 of these assets next to each other can allow the operator to inject 200 megawatts of power into the grid in in in two minutes or also the other way to drop the load. For example, if if sun suddenly comes up. Unfortunately, in this webinar, we don’t have the time to go More into the details of, of engine technology. But this webinar will be followed by webcast series, focusing on Middle East energy issues and we will dedicate one episode specifically for this. So now I would like to invite all of you to, to join that. And also would like to pass the microphone to to my colleague Giri rush to talk about solutions when when even faster flexibility is needed. And tell us the secret that what’s what’s that? What’s that? What’s the what’s the magic glue that holds these complex energy systems together and enables the seamless operation of these assets. So give me your

Unknown Speaker 42:41
floor is yours. Thank you.

Belén Gallego 42:55
So give me rush was he was he You prepare your screen. Perhaps I could remind people that we’re, as soon as Raj finishes, we’re going to take the questions. So please send them through. They’re been answered already by texts. So if you send them now you get a text answer right away. And also get a rush. Are you okay with your with your screen?

Unknown Speaker 43:27
Do you have any issues? Yeah, I’m just trying to see if

Unknown Speaker 43:31
you give me a moment, please. Yeah,

Belén Gallego 43:32
because otherwise perhaps I can answer. can ask a question.

Unknown Speaker 43:36
No, it should be okay. Give me a moment. Sure.

Unknown Speaker 43:43
Please let me know if you see my screen.

Belén Gallego 43:45
It’s sharing. Yes, we can see your screen perfect.

Unknown Speaker 43:48
And you can see the display

Belén Gallego 43:51
grid large scale energy storage and has like a like a quote. Yeah.

Unknown Speaker 43:57
Perfect.

Unknown Speaker 44:02
So, good afternoon. Thank you, Patrick. Good afternoon or morning depending on where you are. I will briefly be talking about energy storage, and why it is such a talked about concept in in a modern grid. And then I’ll quickly touch upon the need for optimization using energy storage. So on this slide, I’ve talked about the concept of grid scale energy storage. And I think it’s important to understand that electricity grids that were designed decades ago, were very different from the smart grids we see in the region today. Back then electricity had to be produced the instant it was needed and consume just as fast because there was no economical way to store it right. But today, we have many ways to store excess energy like flywheels, pumped hydro, thermal, and batteries. All these storage devices serve different applications. But for the purpose of this discussion, I think we’ll we’ll talk only grid scale battery energy storage systems or BSS best as we call it. Storage is a very important tool to have on the grid. And if we had to sum up the role of grid scale BSS the flexibility and reliability, it adds to the grid would be right at top of the list. The option to have storage on the grid is important for many reasons. The first four is the that BSS allows matching grid supply to demand not on an hourly or minute basis but right down to seconds and much more efficiently than any other source. Right? flexibility. One of the reasons utilities can now integrate Giga watt level VR is because BSS can compensate for the intermittence from PV and wind and we can see that there is a lot of intermittence which comes in As we keep on adding PV having BSS reduces the need for frequent start and stop of the existing thermal fleet, which helps in better use of the generation as well as the tnd. infrastructure, right? prices, I’m not going to go into the details on how low and when we, you know, maybe we can talk about that in the q&a, but the falling cost of storage is now the new reality. And, and the use of affordable storage in combination with renewables is honestly the real game changer of our time, right? If you look at the LCS of more, the more recent projects for grid scale opportunities, we can safely say that PV plus BSS has already reached grid parity with gas gas based power plants, at least in some regions, right. Also, from an optics perspective, batteries have substantially low standby costs compared to The rotating equipment. So overall, capex OPEX. I think the use of BSS makes absolute economic sense in that sense, right. ancillary services, I think this is something that not many people talk about. But this is something which is becoming more and more talked about in you know, as renewables are getting added onto the grid, and the thermal fleet is acting a little differently. So the name storage can be a little misleading because storing energy for shifting is not all that the typical BSS does right? The same battery that can do energy arbitrage can also meet ancillary services needed for the grid.

Unknown Speaker 47:45
So on this chart, you can see what really sets the battery apart is the ability to serve multiple needs for multiple consumers. So in the Middle East, especially BSS adds value most In vre, plus BSS projects rather than as a standalone unit. And the way BSS is sized depends on what specific needs it is required to cater to. So the chart that you see here is is meant to show the typical sizing of BSS for various applications. Leading utilities have conducted studies and they found that using BSS to provide a range of ancillary services, like frequency response. In the case of PV, it’s PV ramping PV smoothing, etc. It really allows them to free up the existing thermal assets and it’s much more economical on a revenue per service basis. So these are all services and they have a certain revenue, and in that sense it the revenue per service basis, there’s a huge economic impact on that. What this basically means is that if you had a utility or an IPP, under the current operation philosophy, it would be required to reserve a certain portion So about 10 to 15% of our turbines nominal capacity to meet the primary frequency response right. Now, if secondary frequency response is also required, it would again be taken off the same thermal asset, meaning that a typical thermal asset would never be able to operate at its potential. And then you can add on to this the intermittence from New vre deployment. And in the case of Abu Dhabi, you can also talk about nuclear. And you can see that existing thermal assets will be required to run in a manner that they were not designed for. So for a grid operator, and I think this is one of the questions that was asked in the q&a. For for a grid operator, the speed of response will be a key factor to manage this intermittence. And, honestly, nobody or no other asset can do this better than batteries.

Unknown Speaker 49:54
So now that it’s clear that more renewables on the grid bring down the cost of generation And also significantly reducing the carbon emissions. But on the what’s on the flip side, if you look at the flip side, it does add tremendous intermittency to the grid, right. So this is something we’ve already established. So a solar plant could cater to, let’s say, a gigawatt of demand at peak hours of the day. But it also means that in case of a cloud cover, the sudden drop in generation, which can run into a couple of hundred megawatts must be met by other assets. So this sudden ramping is not easy. And the ability of the power system to respond instantly to two signals from the grid operator become a very key factor here. So this sort of flexibility requires a very efficient energy management system. And that brings me to the most critical element in what sillas value chain gems as we call it, the energy management software that is really the backbone of our energy transition.

Unknown Speaker 51:02
So, gems not only works as an MS for the integrating for for integrating energy storage with the other grid assets, but it also serves as an integrated software platform itself for operating power plants and the grids intelligently. So you have grids operating in a certain manner, by introduction of gems, you can make them function in a very, very intelligent manner. So, if you look at energy optimization, what does it really mean for a country right at the country level, energy optimization is all about being able to benefit from the diverse portfolio of assets that a country has by ensuring that the least expensive asset is always available for dispatch. And that’s all that’s really at the heart of what James really does. So we don’t really have the time to go into the architecture details, but let me just give you a brief aerial view of how gyms works. If you look at this diagram. You could see That we have multiple generating assets at the grid level controlled by a local power plant controller, it could be gems or a power plant controller from one of the existing assets. And this is meant monitored on on by by an on site operator for alarms and signals. This platform is then connected to the cloud through fleet director managing multiple power plant controllers. And this data that is available there this can be analyzed by data analysts and they can remotely make optimizations at an asset level and thereby maximizing the renewable penetration. So, let me show you this the same concept with an example.

Unknown Speaker 52:50
So, so we have success stories around the world and the and the one that we are particularly proud of is this island called grazioso. It’s in the northern Atlantic and here Receive a combination of best and Jim’s helps in integrating renewables while simultaneously optimizing the multiple generating assets on sites. And we have multiple assets ranging from solar PV, wind and engines. Now as of today, this island is capable of running on 100% renewables for several days without the need of for switching the engines on at all. And if the engines need to be switched on at all gems will help with the transition from renewables to engines and vice versa. We have been operating this plant for the last two years now, and by using load and renewable forecasting, as well as dispatch cost optimization. Our team there has been able to increase the renewable penetration way beyond the initial 65% target that was set and that was assigned to us. So and really, that is a perfect day. example which involves essentially all the benefits that can be achieved in a, you know, hybrid renewable power plant, like maximizing renewables, minimizing fuel costs and and improving overall grid reliability.

Unknown Speaker 54:18
So, the previous example was more about the complexity of operations rather than the size of the assets involved because it was a it was a much smaller site, but the same philosophy can easily be scaled up for bigger installations also. These are a few of our references. You can see there all over the world. Primarily the initial installations were in the US because that’s where we started from. But I think now we’re going all over the world. And what’s the law you know, in the energy storage field, it has been there, it has been around for the last 15 years and and we are currently rated as the fourth largest energy storage company. In terms of deployed capacity we have installed over 70 facilities globally and and building on the success we’ve had in the US, we are now growing of the storage business worldwide with more recent successes in Europe and Asia we’ve signed I think about five deals in the last five years in the in the last year. And the last one the latest one being the hundred megawatt hundred megawatt or BSS with pivot power in UK. So I so this is it, I think this talks about battery this talks about our software and they talks about the overall integration. And I really hope this makes you think a little differently when when you think of what Silla as only an engine powerplant manufacturer because we do storage and optimization as well. And, and we do it very, very well. So that’s, that’s it from me. I hope you found this useful. Thank you very much.

Belén Gallego 55:58
Thank you very much Iran. May I ask you please to stop sharing your screen so that we can see you all in a large screen? And I have a few questions. I know that you guys have been furiously answering some of the questions that we’ll have some for you, from what I’ve gathered from the audience as well. And we don’t have a lot of time. So I’m going to direct each question to you in turn, and then you know, if you want add anything from the other side, please feel free.

Unknown Speaker 56:25
So one of the questions for sharing my screen by the way, sorry,

Belén Gallego 56:28
no, you’re fine now? No, okay. So good. So good. Perfect. All right. So Alex, there was a question about the impact of the COVID-19 crisis on the energy plants of the Middle East. And I’d like please see if you could answer that live as well.

Unknown Speaker 56:45
So I think we have not seen or we have not forcing me to artistic changes. And I think if we look at the other regions as we speak now know if I talked about behavior, watch, I mean, I think we have actually been as active as ever. So I think that didn’t have any effect. But if we look at the transitions that were that were foreseen, I think we may see some slow delay, but I don’t think we see any change of mine, the market in the Middle East is moving towards renewable, and therefore, moving towards energy storage, and therefore looking at more flexibility in order to get the cheapest and most affordable energy. So no big change I don’t foresee.

Belén Gallego 57:24
Thank you very much. And Matty, you talked about energy trends, but you didn’t mention hydrogen or, for example, concentrated solar power, other technologies of the like, do you think any of this may also be important in the future?

Unknown Speaker 57:39
Well, absolutely. Hydrogen is this is the hot topic now that if you asked this question two years ago, I think that we were the only one who were talking about the hydrogen and the importance of the of the synthetic fuels and, and it’s a it’s actually a it’s a next step consequence of this energy transition when we start to have cheap, renewable electricity, the excess electricity available Electricity becomes a raw material for something else and that enables hydrogen economy then it is it then synthetic fuels so hydrogen as a plant or however that is used but here for example that that’s our mission is hundred percent renewable future future We aren’t we are already doing today synthetic fuel projects we just announced one couple of weeks ago in Finland where we are building building together with the local utility utility, synthetic methane, methane production. So this is reality already today and it will come industry standard in the in the future for sure.

Belén Gallego 58:36
You know, I found very interesting that where you show you know that actually Germany ended up paying people to take the green energy which I thought it was great any yet you’re right you know, that is an inflexible system, which unless it adapts and the changes then you know, you end up with problems. So what is the theoretical maximum today the fluctuation of renewables in the power system?

Unknown Speaker 58:56
Well, the drum for example, a German case, they didn’t They, they paid for them for their for them somebody to take their electricity because of them inflexibility. So I think that the highest what we have seen momentarily now in Germany during this COVID-19 situations around 84% renewables and the prices go negative, but they at the same time they are exporting 14 gigabytes of electricity. While there have been nuclear plants and coal plants still running. So theoretically, there is nothing to prevent Germany to be 100% renewable, they could have been hundred percent renewable and already right now, but it’s just the inflexibility of the existing system that is preventing preventing them to do so. But the more we see this kind of development more these kind of these kind of negative prices start to hit, hit, there’s more economic reason there is to to get rid of them. The base load generation just a matter of time. But theoretically,

Belén Gallego 59:52
hundred percent, hundred percent. That’s That’s great. We’ll like to see it as soon as possible. I think by 2050. Most of Europe is going to be there. The question is, you know, just how long because I suppose as you approach more than hundred percent he gets harder and harder, no, not easier and more expensive.

Unknown Speaker 1:00:08
Yeah. But on the other hand, on the other hand, we have not proven that we can be on the European level we can be easily 60% renewables we can go to 80%. We have we have innovated Scylla modified our customer systems to at 85% renewable today. So and now these examples that I mentioned that what we are doing in Finland, it’s exactly that they’re going to decarbonize by 2020 to 200%, but you need this technology, you need this solution. So I say that, be ready people this will come faster than then than you think everybody knew that it will take decades before renewable energy is affordable. But here we are.

Belén Gallego 1:00:41
Here we are indeed. Getting Raj can the European of the US energy storage business model be implemented in the Middle East as well?

Unknown Speaker 1:00:51
Ah, interesting question.

Unknown Speaker 1:00:55
Series UK and US markets are deregulated markets, right? They’re not the Kind of markets that we have here. So, so, the same markets can be used for multiple the same batteries can be used for multiple applications and increase their revenue stream right. So, there you have the concept of of an entity owning the batteries and you know there is a triadic structure they can trade in the capacity merchant market and they can gain revenue right in the middle east, the existing thermal power plants have to provide the answer services so, so there is no revenue making mechanism as such. So, with the new tenders, I think the tariff structure for PV plus v SS defines the the monetary value that can be gained from a PV plus BSS combination. And then the prices are quite lucrative as well. I mean, you’re already seeing price levels of I think, what if solar is maybe 1.35 cents, you’re looking at it, it’s something like maybe about three or four or five cents coming from PV plus B is is so in that Since Yes, I think the market is beginning to catch up. But going back to your initial question, I think there is a fundamental difference in the way the markets are structured and unless that there is a revenue stream for battery as a standalone unit, I think it will be a while before you know we can call both the markets similar.

Belén Gallego 1:02:20
Thank you very much okay. Let me follow up with a question what conditions need to apply in order to make energy storage feasible, and you know, what is the main purpose of battery of battery energy storage really within this?

Unknown Speaker 1:02:34
Of course, the cost of batteries of course, you know, and that is going to happen anyway, you know, you and I, we don’t need to do anything special there. But other than that, I think there there also needs to be a regulatory framework in place which promotes the use use of Bri BSS for, for grid scale applications for CNI applications. So this is something that needs to happen. The The other thing is the multifaceted rule. We’ll have BSS both for arbitrage as well as ancillary services, it will have to be it will have to be defined more clearly if the trapped tariff structure takes that into account in the new specifications. Other than that, I would also like to see a case for standalone battery storage something which I talked about earlier, where system operators can benefit from from trading in merchant markets. Right now that is not the case and that’s the reason why you don’t see you know, the batteries being deployed in the in the same manner that that’s happening in other parts of the world. Here batteries are all about the combination of PV or wind. But But standalone batteries I think we still don’t have a real good case for that.

Belén Gallego 1:03:50
Okay, thank you very much. Question for Patrick and also being you know, someone asked also in the, in the in the q&a, most utilities jesuses have a large combined cycle gas fleets. And they serve them well. They’re still you know, they fully working and it kind of are you saying that this should be completely replaced and they should you know rethink the system as of now, we should they use them for the years they have sorry, we cannot hear you, Patrick. For

Unknown Speaker 1:04:28
up now.

Belén Gallego 1:04:29
Now you can hear Yes.

Unknown Speaker 1:04:30
So I didn’t mean to imply to do that all of the CCG to fleet

Unknown Speaker 1:04:37
should be replaced what I’m saying that we the the the introduction of more and more renewables in order to in order to in order to CCG to operate in inexpensively cheaply, there needs to be an enabler that enables that and what we see also in India The Bloomberg report that that actually baseload gas generation will, will play a role in the future, although they’re running ours are expected to also decrease and, and and see and and explore new new thresholds. So I personally, I don’t believe in extreme extreme situations rather well balanced portfolios, which really suit local conditions and also the global global tendencies and and, and I think the real art is finding that striking that balance is and orchestrating that system.

Belén Gallego 1:05:36
Thank you very much, Patrick. We don’t have a lot of time, you know, we’ve gone over a little bit. So I have just two more questions, please. And then I’m really sorry about the questions we haven’t answered from the q&a, but we’ll send them across to the team aware Silla and hopefully they’ll get back to you. Right to Alex or Patrick or you know, whomever wants to take it, maybe both of you just be short because of the time. What is the fuel of your flexible power solution, isn’t it fossil fuel as well.

Unknown Speaker 1:06:02
So from our side Yes, actually that was the beauty of the the era that we have created is that we are expected to burn crude on AB fuel light to up to natural gas and like Maddy said even Sandy gas. So, we have that flexibilities depending of the market. So ibp three for example, in Jordan has that capability to switch on and off depending on the market demand depending of the situation and if you look at the lockdown that we have HFO has become actually cheaper than gas and you can see a lot of market like in Pakistan that started to see the merit of order of the old Bob round in Asia for being actually on the higher level compared to a to a gas plant. So, this is the beauty of having a what we call a dual fuel engines is be able to be flexible on whatever is required when the market is in stress like it is today.

Belén Gallego 1:06:56
And last question, but certainly not least, Maddie Okay, so the UAE is building a 5.6 megawatt nuclear power plant. So the question is really how well does it contribute to the energy transition?

Unknown Speaker 1:07:12
Well, yeah, this is a this is a thing that I ask that all nuclear engineers want to highlight that that release frequent consider, and I know that it’s a it’s a bit of it’s from the environment perspective. For me some perspective, it’s a good thing and it’s a it’s a clean, clean bought from them from the future system flexibility, challenges point there, it will, it will increase the challenges with the integration with renewables. That’s we have evidence from the from the Europe same happening the United States where they’re closing nuclear power plants so on, it’s all about that coming back to the economics so um, so it’s, um, I know it’s a it’s a hot topic, but if you look purely that from them economic and energy transition perspective, and it is, it is a difficult, difficult call to build new nuclear power plants.

Belén Gallego 1:07:57
Yeah, indeed. I mean, some of the other plants The UAE are also building as a huge CSP project for nine times solar 700 megawatts as well. So there’s something a little bit of thinking, you know, in their way of, of building some different I suppose, technologies that come in at different times. But I agree, you know, the lack of system level, we need to be thinking more about creating capacity. So thank you very much, Alex. Thank you very much, Marty. Thank you very much getting Raj and Patrick, we’ve gone a little bit over time. So if you’d like to add something really quickly, otherwise?

Unknown Speaker 1:08:32
No, I think thank you very much for having us. It was you know, perfect session and I you know, just like to close on the on the little bit on what Maddie said, you know, during that lockdown is unbelievable how much we have seen in anything that was unflexible was shut down. And I think that’s why the market need to understand is all of this will take if we don’t have to fix it, it will happen by himself because it just become unflexible to the Why men that we’re trying to reach?

Belén Gallego 1:09:01
Yeah, indeed, we need to be thinking about things completely differently. Up until now, it was just a matter of when we need energy and creating it. Now we need to think of energy and resource. And those are the two axes that will move in. So thank you very much for your time. Again, Alex, Matty, Gary, Josh, and Patrick, and thank you very much, everyone who’s been there all along. We will send you a link with the recordings and the materials and see you next time. Bye.

Unknown Speaker 1:09:25
Thank you very much. Thank you. Thank you.

Transcribed by https://otter.ai