ATOMEXPO 2009

Россия, Москва
26-28 Мая 2009
EPC Contracting Strategy
balancing Risk & Rewards
for Customers and Contractors

Juan Ccahuana Tito, Director Fossil Power

Sector Energy, OOO Siemens Moscow

Москва, 2006
 Historic Development of
World Power Plant Market Since 1950

GW/a
Extraordinary growth in
300 Europe, Russia, China,
Middle East and RSA
Slow down due to
Drivers,
lower consumption
250 growth, high uncertainties
Market boom in
S/E Asia backlog? • Economic growth
replaced by US- • Energy prices
200 boom • Ecology awareness
Penetration of Overestimation • Power plant types
nuclear power of demand, • Commodity prices
150 impacts of oil
price crises • Liberalization
• Customer behavior
100 Steep rise in • Replacements
power demand Fossil Market >100MW
• Regional markets
Renewables
• Grid extension
50 Renewables • Production
All Types Hydro
Hydro
Unit Size > 1 MW capacity
Nuclear
0
Source: Siemens Energy GS4
1950 1960 1970 1980 1990 2000 2010 2020 Base Case scenario
Status: April 2008

Short term is characterized by stagnating market after extraordinary high growth

Москва, 2006
 Strong market demand led to bottlenecks
in the entire supply chain

Sub-supplier Power Plant Manufacturers Customer / Market

Steep Market Increase
 Limited capacities at 203
178 GW/a
sub-suppliers 144
 Presently no capacity
extension in the market
Ø 05-07 Ø 08-10 Ø 11-13
available
 Long lead times for key Volatile Market Prices
135%
components 125%
 High price level for supplies 112%
 Engineering 100% 105%
e.g.:  Procurement
– Forging  Manufacturing
– Civil
 Construction Feb Oct Aug Jul Feb
– Casting
– HRSG
 Erection/Commissioning • • • • •
Source:Thermoflow, e.g.Iberian peninsular CCPP
200 200 200 200 200
- Lead times and cost have increased significantly (+35%) within4last 34years
5 6 7

- Current EPC business models need to be rethought by industry e.g. -> EPC-M
- Develop alternative business models - Siemens is strengthening it’s product business by
providing pre-engineered product packages to the market.

Москва, 2006
%

Reference sales models structure

the Siemens offerings to our customers

General model: Customer request vs. Siemens offering

Siemens offering
1 Entire Power Plant as Turnkey

Extended
business from Siemens

Power
Power

Power

Power
Island
Entire

Block

Train
Plant

xa -Models:
Customer award for an EPC full
Entire PP

1 2a 3a 4a
scope delivery will be served
Partner needed from Siemens and a partner
(e.g. EPC Consortium).

2b
xb - Models:
Customer awards reduced
3b scope. Integration to complete
Reduced scope

Power Plant is under

responsibility of customer or a 3rd
t se uqer r e mot s u C

party contracted by the customer

4b
(e.g. EPC-M, Architect Engineer)

Scope of service and deliveries

Source: New Business Mix Initiative

Москва, 2006
%

Reference sales models cover

the full range of solution business

Reference sales models - Overview

Priority Model Scope of delivery Applied principle
20-30% 50-60% 70-80% 100%
Limited volume
depending on  Entire power plant as General Contractor
resources and 1 Turnkey
 Appropriate rebalance risk tools to be applied
project risk
 Control over Power Block design (incl. 3D model)
Consortium
3 2a Power Block
Partner
 Model to cooperate with construction companies
 Carve-out of civil & erection to ensure ~40% partner scope

Customer  Control over Power Block design (incl. 3D model)

1 2b Power Block
scope  Customer is responsible for scope outside power block

 Control over process: Min. scope for gross perf. guarantee

4 3a Power Island Consortium Partner  Model to cooperate with AE/EPC capable of power plant eng.
 Consortium partner responsible for plant integration
 Control over process: Min. scope for gross perf. guarantee
2 3b Power Island Customer scope
 Customer responsible for plant integration

Ext.  No Siemens plant design

4a Power Consortium Partner  Model to cooperate with EPCs in multi block projects
For equipment Train  Min. scope for SAG (~40%) only in case of multi block projects
supply only Ext.  No Siemens plant design
4b Power Customer scope  Delivery of components (GTs, STs plus e.g. electrical
Train equipment, I&C, etc.)

SAG Customer Consortium Partner

Source: New Business Mix Initiative

Москва, 2006

including SGT5-PAC 4000F multi-shaft plants
SGT5-PAC 4000F
SGT-PAC
• Gas fuel and auxiliaries
• Air intake / exhaust system
• Gas fuel system Modules
– Connectiong lines
• Generator and auxiliary
systems
• Fire extinction system of GT
plant
• Electric and I&C equipment
• Options
Manufacturing and delivery
Standard scopes of supply
SCC5-4000F 2x1
Power Island
SCC SCC Power Island
Heat and power
equipment  SCC heat and power
 SGT-PAC
equipment
• Condenser with air exhaust
•SST-PAC without condenser
Steam turbine and system Feeding pumps of a
boiler
auxiliaries without piping
Generator and auxiliary • Condensate pupms
• Safety valves
systems • Fuel preheaterwith filters,
•Electric and I&C equipment counter unit etc.
• Heat recovery boiler • Power Island monitoring
• Options system
• Options
Cycle optimization / System inegration /
Manufacturing solution Optimized solution
Москва, 2006
SCC5-4000F 2x1
«Turn key»
SCC «Turn key»
 SCC Power island
• Building and structures
• Cranes and life support systems of the
turbine building
• Power plant cooling system
• Water treatment
• Initial and waste water system
• Tankage
• Piping and valves of the plant станции
• Electrical equipment
I&C of the power plant
Additional fire alarm and fire extinctions
systems
• Erection and commissioning
• Other options
Complete ЕРС turn key
delivery of the plant
 Flexible Approach
to balance Risk Sharing

Sales Model
(Customer Value) ee
lluu
g VVaa
c
c iinngisskk Full Scope EPC
l aannd RRi
e
e
a l
bba aannd Turnkey
RR

Power Block
Power Island

Extended Power Train

Shared Risk
Focus
Focus on
on Customer
Customer Value
Value and
and balanced
balanced risk
risk
Москва, 2006
 Partnering Initiative:
Selected EPC partners worldwide
Techint AE&E
Boiler Water Island
AE&E AE&E Enka
IHI Sidem AE&E
Duro Felguera Fluor SNC Enka
Doosan Babcock Doosan Water Gama
Iberinco Bilfinger Berger Gama Metka Enka
Burmeister & Wain Fisia Metka
Bilfinger Berger Kentz Bilfinger Bergar Metka
Hitachi Zoosen

GS E&C
Daewoo
Daelim
Posco E&C
Hanwah E&C
SK E&C

Aker Kaeverner
Kiewit
Worley Parsons
Fresh Meadow
BE&K Marubeni
Samsung
Al Ghanim Daewoo
ASTE GS E&C
ETA Sumitomo
Doosan Heavy YTL
Samsung CTCI
Daewoo
Orascom Marubeni
Fluor HHI
Duro Felguera YTL
Bilfinger Berger HDEC
Daewoo L&T
YTL SNC
SNC John Holland Daelim
Bilfinger Berger Techint Sumitomo Samsung
Partner with SAG experience Bold Strategic Partner
Iberinco Al Rahji
Partner w/o SAG experience Normal Project Partner NCC Saudi
Techint
Source: Partnering Initiative

Москва, 2006
 Partner co-operation program
covers full life cycle of partner relationship

Partner Development Process

Sign a partne- Build up of Successfully
Identification of Perform partner ring agreement relationship and implement
Partners workshop defining basis of bid projects in projects in
partnership consortium consortium

Step 1 Step 2 Step 3 Step 4 Step 5

 Identify Partners  Perform partner  Partner agree-  Execute executive  First project in
with sales for workshop, discuss ment signed and relationship mgt., implementation
regions and experience and projects identified projects deve- as per partnering
countries find common ways to bid together loped together, agreement,
 Collect feedback for future coope-  Co-operation first bids prepared regular feedbacks,
from existing ration, identify development on the basis of evaluation of the
projects with the co-operation plans detailed and partnering agreed co-
partners development plan tasks allocated agreement operation
and sign a MOU development
 Get partner  Dedicated Liaison
plans (1 p.a.)
consent in taking manager
part in program identified.

Source: Partnering Initiative

Москва, 2006
ATOMEXPO 2009
Россия, Москва
26-28 Мая 2009

Thank you
for your attention

Москва, 2006