The technology group Wärtsilä has signed a 5-year performance-based agreement for a 20 MW power plant combined with a 40 MW plant extension installation at a gold mine in Africa.
The agreement was signed in March and as normal with the company’s service agreements, Wärtsilä books expected net sales for the next 24 months to its order intake and order backlog.
By guaranteeing the availability of power, Wärtsilä delivers crucial support to the mine’s operations. Matching power availability with operational demand is required, monitored and incentivised on a daily basis. The agreement further covers the generating engines’ optimised usage and fuel consumption.
“This is an isolated mine with no grid connection, so a reliable source of electricity from the captive Wärtsilä power plant is essential for maintaining the mine’s productivity and operating revenue-earning capability. After analysing the customer’s needs and how we could meet them, we developed the performance guarantee as an assurance of plant availability, while minimising fuel consumption and running hours as important cost-saving benefits. We see performance-based agreements becoming widely utilised as an effective solution for our customers,” commented Marc Thiriet, Energy Business Director, Africa West, Wärtsilä.
The power plant featuring four Wärtsilä 32 engines commenced operations in 2016, after which the extension project with a further four Wärtsilä 32 engines was added and commissioned in 2021. Wärtsilä has had an earlier Operation and Maintenance (O&M) agreement with the customer since 2017, which has now evolved into becoming this performance-based agreement.
Long-term service agreements are an important element within Wärtsilä’s lifecycle services providing value-adding customer support. Performance-based service agreements include quantifiable targets, which are mutually agreed based on the customer’s business needs. The measurable indicators can include, for example, power availability, reliability, fuel consumption, and emissions. Furthermore, Wärtsilä shares the risks and rewards with the customer.
Globally, Wärtsilä currently has 14 GW of power plant capacity covered by long-term service agreements, of which 2 GW is in Africa.