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Valtakunnalliset teknologiayrittäjyyspäivät Vaasassa 2014Patrik Holm CTO Mervento Oy 23.10.2014

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Mervento background and ownershipA well balanced ownership structure

Company Mervento Oty

Milestones

• Founded in December 2008

• Spin-off from engineering office Enmac which was established in 1983

• Employs approximately 20 people

• Located in Vaasa, Western Finland

• 2011 net sales 5.2 M€ from pilote turbine

• 2012 net sales 1.5 M€ from pilote turbine

• 2012 Q1: Turbine sold in 2011 erected and operational

• Financing up to now: 39 M€

2004-05 2006-07 2009-11 2012

Generator DD PM 3.5 MW - The Switch

Nacelle lay-out- ScanWind

Generator concepts- The Switch

Nacelle factory- Hollming Works

PMR 3150 D&E- The Switch

Tower base- The Switch

Generator 1.5 MW- The Switch

2008

Enmac Engineering Office Mervento Oy

Development of 3.6 MW wind turbine

Pilot turbine manufacturing, assembly and transport

2013

Q1:Erection of pilot turbine

Q2: Commercial operation

Ownership

6 MW pre-study- Enmac

Testing ofthe pilote turbine

Seeking growth financing

Preparation for Baltic Sea offshore

Partnership program initiatives

2014

Power Fund II Ky; 35.5%

Varma Mutual Pension Insurance Company; 19.9%Vaasan Sähkö; 13.3%

Martti Ala-Vainio; 8.9%

Ahlstrom Capital Cleantech Growth Fund I; 7.6%

EPV Energia Oy; 6.7%

Patrik Holm (CTO); 3.8%

Soldino Oy; 3.2% Personnel; 1.1%

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OPPORTUNITIES IN WIND BUSINESS Finland has one of the best education systems in the

world. Large machines and small volumes, typical Finnish

industry. In this cold country energy business is well developed

and close to our hearts. The way of working in Finland supports new

developments and innovations.

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BE OPEN-

MINDED

TRIAL AND ERROR

WORK HARDER AND

SMARTER

BE YOURSELF, BE HUMBLE

SISU

COMBINATION OF

COURAGE AND PERSISTANCE

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Miksi tuulivoimateknologiayrittäjyyttä:

1. Suomen koulutusjärjestelmä ja teollisuus soveluvat siihen

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Climate Change 2013 IPCCDrivers of climate change

Human influence on the climate system is clear.

23.10.2014Source: Intergovernmental Panel on Climate Change

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Climate Change 2013 IPCCFuture global and regional climate change

Global surface temperature change for the end of the 21st century is likely to exceed 1.5°C relative to 1850−1900 for all scenarios except RCP2.6.

23.10.2014Source: Intergovernmental Panel on Climate Change

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Wind power within European Union Installed power 2000 - 2013

23.10.2014In 2011 the global investments in renewables was 257 billion USD. Corresponding investments in nuclear power in 2011 was 16 billion USD.

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Wind power within European UnionInstalled power 2000 - 2013

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Wind power within European UnionWind power share of electricity end of 2013

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Miksi tuulivoimateknologiayrittäjyyttä:

1. Suomen koulutusjärjestelmä ja teollisuus soveluvat siihen

2. Ilmastonmuutoksen hidastuminen vaatii uusiutuvaa energiatuotantoa

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EP

CAPEX + OPEX

Energy Production

OPerational EXpendituresCAPital EXpenditures

=LCoELevelized Cost of Energy

Investment cost Capital cost

Power Curve Availability

Efficiency Own useenergy

Predictive maintenance

AccessibilityReliability

Site conditions

Wind speed Rotorblade icing

Weibulldistribution

Hub height

Maintenancecosts

AccessabilityFixed operationalcosts

Quality Reliability

Fuel costs

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Facts about wind powerEstimated LCoE for new generation, 2019

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Facts about wind power Enormous subsidies in energy production

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According to IEA (International Energy Agency) was the global subsidies in 2012 $544 billion to fossil fuels and $101 billion to renewables.

According to IMF (International Monetary Fund) was the global subsidies to fossil energy production in 2012 $2000 billion when tax reliefs and the cost of carbon are included.

Source: European Commision (subsidies in euros) and European Wind Energy Association (installed and cumulative capacity), the rest calculated

Statistics for 2011 Renewables Nuclear Fossil Total

Subsidies [billion €] 30 billion € 35 billion € 70 billion € 135 billion €

Subsidies [%] 22 % 26 % 52 % 100 %

Installed capacity [MW] 32 043 MW 331 MW 12 565 MW 44 939 MW

Installed capacity [%] 71 % 1 % 28 % 100 %

Cumulative capacity [MW] 357 993 MW 122 328 MW 419 933 MW 900 254 MW

Cumulative capacity [%] 40 % 13 % 47 % 100 %

Assumed capacity factor 45 % 85 % 85 % 69%

Subsidies [€/MWh] 21 €/MWh 38 €/MWh 22 €/MWh 25 €/MWh

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Facts about wind powerEnvironmental impact Different kind of emissions causes socio-environmental costs to the society:

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=TCoETotal Cost of Energy

Investment cost Capital cost

Power Curve Availability

Efficiency Own useenergy

Predictive maintenance

AccessibilityReliability

Site conditions

Wind speed Rotorblade icing

Weibulldistribution

Hub height

Maintenancecosts AccessabilityFixed operational

costs

Quality Reliability

Fuel costs

EmissionsPollutions

Waste Accidents

EcosystemClimate change

Human health

Buildings Crops

Mortality Morbidity

Investment support

Tax reductions

Feed-in Tariff

Direct support

EP

CAPEX + OPEX + DS + SEC - SEB

Energy Production

OPerational EXpendituresCAPital EXpenditures Direct Subcidies Socio-EnvironmentalCosts

Socio-Economic Benefit

Corporate income tax

Wagetax

AvoidedUnemploymentcompensation

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Facts about wind powerTotal costs for generated electricity

23.10.2014Source: Data collected from different sources by Patrik Holm, Mervento

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Miksi tuulivoimateknologiayrittäjyyttä:

1. Suomen koulutusjärjestelmä ja teollisuus soveluvat siihen

2. Ilmastonmuutoksen hidastuminen vaatii uusiutuvaa energiatuotantoa

3. Tuulivoima on kustannustehokas tapa tuottaa sähköä

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Wind power is a sustainable and renewable energy resource that reduces the usage of fossile fuels, that has an environmental and an economical impact through avoided socio-environmental damage.

Wind power gives additional Energy, with smallest possible Environmental impact, with a superior total Economy and with increased Employment. 4E

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Employment effect on TCoEThe benefit for the society

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2 M€/MW

20 y * 2500 MWh/MW/y= 40 €/MWh

4 M€/MW

25 y * 4000 MWh/MW/y= 40 €/MWh

In onshore the effect on employment is 20 my/MW Annual energy production is approximately 2500 MWh/MW The total investment cost is almost 2 M€/MW Economical life time is 20 years The Socio-Economic Benefit is:

In offshore the effect on employment is 40 my/MW Annual energy production is approximately 4000 MWh/MW The total investment cost is almost 4 M€/MW Economical life time is 25 years The Socio-Economic Benefit is:

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Miksi tuulivoimateknologiayrittäjyyttä:

1. Suomen koulutusjärjestelmä ja teollisuus soveluvat siihen

2. Ilmastonmuutoksen hidastuminen vaatii uusiutuvaa energiatuotantoa

3. Tuulivoima on kustannustehokas tapa tuottaa sähköä

4. Tuulivoima-ala luo uusia työpaikkoja

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Status in FinlandEconomy is not recovering

Finland is importing 20% of its electricity

Finland is importing 70% of its energy

Finlands import is larger than the export resulting in increased state debt

Industrial work places in Finland is decreasing continuously, less tax payers

Domestic services does not increase the GDP nor the export

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Miksi tuulivoimateknologiayrittäjyyttä:

1. Suomen koulutusjärjestelmä ja teollisuus soveluvat siihen

2. Ilmastonmuutoksen hidastuminen vaatii uusiutuvaa energiatuotantoa

3. Tuulivoima on kustannustehokas tapa tuottaa sähköä

4. Tuulivoima-ala luo uusia työpaikkoja

5. Suomen sähköntuontia tulisi vähentää

6. Suomen tulisi olla omavaraisempi energian tuotannossa

7. Suomen vientiä tulisi kasvattaa tuontia isommaksi

8. Sähkön kulutus kasvaa maailmanlaajuisesti

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Mervento turbine – Direct ReliabilityValue analysis

HIGHPERFORMANCE

ALL INCLUDED

• Best power curve in its class• Elevated hub height• High availability• Future proof grid compliance• Minimized own energy consumption• Designed for Cold Climate

• CMS / CBM / SCADA / Remote monitoring• Service winches (3 pcs), Service lift • Comprehensive operation and service training• Easy maintenance• State-of-the-art service contracts• Equipped for Cold Climate

LOWO&M COST

• Direct Drive Medium Voltage Permanent Magnet generator • Reliable and maintenance friendly Turbine Station concept• Designed and built for cold climate operation• Hydraulic actuators (Pitch, Yaw, Brake)• Preventive Condition Monitoring System • Manufactured for Cold Climate

SUBSTANTIALREVENUE

LOW TOTALCOST OF

OWNERSHIP

HIGHVALUEADDED

STRONG RETURN ON INVESTMENT

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Miksi tuulivoimateknologiayrittäjyyttä:

1. Suomen koulutusjärjestelmä ja teollisuus soveluvat siihen

2. Ilmastonmuutoksen hidastuminen vaatii uusiutuvaa energiatuotantoa

3. Tuulivoima on kustannustehokas tapa tuottaa sähköä

4. Tuulivoima-ala luo uusia työpaikkoja

5. Suomen sähköntuontia tulisi vähentää

6. Suomen tulisi olla omavaraisempi energian tuotannossa

7. Suomen vientiä tulisi kasvattaa tuontia isommaksi

8. Sähkön kulutus kasvaa maailmanlaajuisesti

9. Merventon turbiinilla saa parhaan tuoton sijoitetulle pääomalle

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Status in FinlandFinnish politics

High part of renewables through pulp and paper industry

Own fuel resources that are not utilized; wind, solar, geothermal, biomass, biogas etc

Forecasted continuous growth in electricity consumption

Only developed country in the world that is investing in nuclear power on the same time that many countries have decided to not invest in nuclear power anymore

Technologies are developed from strong home markets

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Why to be a wind power entreprenour?

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Oppurtunities Challenges

Sustainable energy production method Finland invest in nuclear power

Reduced amount of CO2 in energy production Nuclear has the second highest CO2 emission when considering the construction time and materials

No waste from energy productíon Need to store the waste for 100 000 years, no proven solution available yet

No water consumption Huge water consumption for cooling 65% of the produced energy

The Total Cost of Energy is lowest on market Wind power subsidies through Feed-in-Tariff, other energy production subsidies not presented

Domestic industry creates local work places Imported wind turbines gives 10 – 20% of the work places in Finland. Local content of nuclear power is less.

Strong home market enables future export Incentives for wind power started 20 years in the rest of the developed world and elevated FIT forces to import the technology. Constructing nuclear power in Finland does not result in any export.

Less independence on imported electricity, short construction time

Constructing nuclear power plants that will produce energy after 10 – 15 years

Less independence on energy from abroad by using domestic fuel

Importing nuclear fuel, oil and gas from Russia

An industrial investment of 100 million euro results in thousands of work places and thousands of millions of GDP

Difficult to find 100 million euro for an industrial investment in Finland but many are ready to invest 7000 – 9000 million euro in electricity production capacity by nuclear power without knowing when the production starts and to which cost.

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The energy consumption continues to increase

The days of cheap and abundantly energy are over

We now live in an era of change in energy production towards sustainable energy production methods

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The energy production will be increasingly with more renewables

The energy production will not increase in developed countries despite the higher living standard due to better energy efficiency

The energy production will be more distributed, even the consumers produces their own electricity

The electricity will be more important in the energy field including the traffic

The energy production, distribution and consumption will be more smart

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  "A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.“

  Sir Winston Churchill (1874-1965)

  Photo: Esa Siltaloppi