Wärtsilä expands into biopower and Acquires an established company in the market

Wartsila Corporation, Trade press release, 18 October 2001 at 03:01 UTC+2

Wärtsilä Corporation, Trade Press 18 October 2001

Wärtsilä will expand its power plant range to include biomass fuelled plants. The company has signed an agreement to acquire Finnish company Sermet Oy, which specialises in small and medium-sized boiler plants running on biofuels, oil and gas.

Sermet's net sales in 2001 is expected to total approx. EUR 20 million and the result to be on a good level.

By acquiring Sermet, Wärtsilä strengthens its position as a supplier of decentralised power plant solutions.

Demand for power plants running on fuels from renewable energy sources is growing strongly. The combined output of biomass fuelled power plants currently under construction in Europe totals approximately 1,000 MW. There is a large market potential in the developing countries. In the market sector there are several local equipment suppliers, but not yet companies that supply small power plants globally. In this field Sermet is the leading company supplying boilers for bio fuels in the Nordic countries and Finland is a front-line biomass combustion know-how base in the market.

"With Sermet's combustion technology supported by Wärtsilä's project management expertise and worldwide sales network we expect this business to grow substantially," stated Mr Pekka Ahlqvist, Group Vice President, Power Plants.

"The market for small combined heat and power plants is growing rapidly. Wärtsilä offers an international network and strong capabilities in product modularisation and standardisation and project management. Sermet is a technology leader in this size of power plants and in its market segment. Pooling our resources will open up outstanding growth opportunities for Sermet's technology within Wärtsilä's product range," commented Mr Juha Huotari, President of Sermet Oy.

Sermet Oy

Sermet Oy, founded in Kiuruvesi, Finland in 1975, is owned by its operative management and Forenvia Venture I Ky Fund managed by 3i Finland Oy. The company had net sales of EUR 18 million in 2000 and 82 employees. The company supplies small and medium-sized boiler plants burning biomass, oil and gas. Sermet has supplied more than 1,100 stationary or portable boiler plants around the world. Its Sermet BioGrate rotating grate combustion technology is patented.

Sermet's customers are the mechanical forest industry, municipalities, energy companies and other sectors of industry. Exports has varied between 40% and 90% of total sales during the last years. The company's most important markets are Finland, Russia, the Nordic countries, the Baltic countries and Canada. Sermet has also supplied 1MWe/6 MWth combined heat and power plants running on biomass.

Sermet Oy's products:

-Biomass fuelled boiler plants (2-50 MW)
-Oil- and gas-fired medium-sized boiler plants (1-70 MW)
-Biomass fuelled small power plants (1-5Mwe/6-15MWth).

The patented Sermet BioGrate combustion technology is especially suitable for burning wood waste, bark and sawdust. Sermet BioPower small power plant technology is based on Sermet BioGrate combustion technology. Sermet also has special expertise in demanding environmental conditions (e.g. arctic power plants).

Wärtsilä Corporation

Wärtsilä is the leading global ship power supplier and a major provider of solutions for decentralised power generation and of supporting services. Wärtsilä also has a Nordic engineering steel company and manages holdings to support the development of its core business. Wärtsilä's net sales in 2000 totalled EUR 2.7 billion and the Group has 10,500 employees.

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Notes to the Editor

Wärtsilä Corporation

Wärtsilä is the leading global ship power supplier and a major provider of solutions for decentralised power generation and of supporting services. Wärtsilä also has a Nordic engineering steel company and manages holdings to support the development of its core business. Wärtsilä's net sales in 2000 totalled EUR 2.7 billion and the Group has 10,500 employees.


Founded in 1975 and based in Kiuruvesi, Finland, Sermet has been supplying boilers and small bio power plants to local markets. The company has good core technologies for sawmills and its traditional markets have been forest industries in Finland, Russia, Estonia and Sweden.

Sermet has excellent manufacturing capabilities and maintains good delivery times. It is a turnkey supplier of plant and with some 1,100 references has a strong reputation in the market. As a major player in their local markets Sermet has developed world class combustion technologies and capabilities. However, their small size would not allow them to expand internationally and capitalise on the new potential of bio-fuels in the global energy market of tomorrow - a partner was needed.

Wärtsilä and Sermet

Combining the two company's strengths is a natural extension of both company's philosophy of supplying the best possible energy solutions for their customers. The energy markets are changing, the traditional large-scale energy solutions, in many cases, are no longer the best options. The drivers of the new markets are and will be economics, fuels and the environment.

Now, more than ever before, effective energy solutions are key to the profitability of a company's or organisation's planning process. The ability to identify and utilise the best fuel options whilst at the same time bearing in mind the environment is the way of the future.

Bio-fuels are becoming serious contenders in the energy fuel supply chain. From wood and forest biomass through to industrial and municipal wastes, bio-fuels are widely available and biopower is becoming a logical energy choice for many energy users and producers.

Wärtsilä's extensive global sales and service facilities plus their access to major customers will now be made available to Sermet's own core technologies. In addition to this Wärtsilä's contracting capabilities, their serial production approach and high purchasing volume will now be utilised in building the new business.

This development will enable Wärtsilä to offer the market a wide range of energy options based on the best fuel choices for the customer's energy needs. From fuel oils and gas for both engines and boilers through to the future use of bio-fuels, this new development will provide Wärtsilä with an effective portfolio of energy options for their customers.

Towards tomorrow - Bio-Energy

In today's world wherever human beings settle huge amounts of waste materials are produced, this will increase in the future. New combustion technologies mean that many wastes can now be used as a fuel (bio-fuel). Power generation, district heating and industrial processes can now use biopower as a viable energy option. Biopower uses bio-fuels as an energy source for supplying the energy needs of many industries and municipalities.

Utilising waste makes good environmental sense as waste disposal methods currently in use can harm the environment and are expensive to manage. Burning waste immediately avoids waste disposal costs and more importantly avoids waste being disposed of in landfill schemes. Due to their environmental impact, landfill schemes are becoming illegal in many parts of Europe.

Legislation against landfill schemes means that the need for effective 'waste to energy' schemes is increasing, year on year, throughout Europe. This is especially true for smaller communities that do not have a viable power option for turning their waste into energy as currently only large scale plants are available. Wärtsilä intends to offer small-scale biopower options to the market.

In addition to bio-fuels being used as a combustion fuel, emerging technologies being developed today will mean that bio-fuels may be used, in the future, to produce both oil and gas. Wärtsilä will extend its own considerable R&D resources towards the development of new or improved 'green' bio-fuel based combustion technologies.
- Gasification - produces fuel gas from the bio fuel for heat and power generation. This is a relatively new technology and Finnish companies are global market leaders.
- Pyrolysis - produces fuel oil which is combustible in diesel engines. This is still in R&D stage, pilot plant projects exist, Wärtsilä has already performed engine tests with VTT in Finland with promising results. This oil will become commercially available in 3 to 5 years in local markets.

These future developments in combustion technology may prove to offer viable fuel sources for supplying energy needs.

Renewables - Biomass - Biopower

There are many driving forces behind the trend towards renewable energy sources. In the main these are environmental and political, due to current and future legislation. Bio-fuels are considered renewables; therefore biopower is viewed as a 'clean' technology.

Bio-fuels represent a large and relatively unexplored global fuel potential. Many industrial, agricultural and municipal wastes make up what today are considered bio-fuels, these include:
- Wood and forest biomass - bark and forest residues, sawdust, shavings, plywood and furniture residues.
- Agricultural residues - straw, sugar cane residues, rice husks, cotton stalks, olive residues and animal manure.
- Municipal and industrial - municipal waste, waste wood (building industry) and industrial sludges.

The trend towards bio-fuels is being encouraged by political subsidies from governments across Europe. Currently under construction in Europe are some 1000 MWe of power generation, which is based on bio-fuel combustion; this is forecasted to rise dramatically in the future.


Pekka Ahlqvist
Group Vice President, Power Plants
Wärtsilä Corporation
Direct tel: 358 40 763 8857