Wärtsilä’s strategy for a sustainable future is often subject to various interpretations in investor discussions. As a pioneer in the marine and energy sectors, at the heart of our strategy is a balanced approach that combines technological advancement with a deep commitment to sustainability and customer-centric services. In this article, we aim to answer some common questions we receive related to our strategic vision, which is firmly rooted in decarbonisation and moving up the service value ladder.
Misconception 1: “Wärtsilä is just an engine manufacturer”
While Wärtsilä is renowned for our engines, we are far more than just an engine manufacturer. We are a technological leader in the marine and energy industries, providing a wide array of products and services, including power plants, marine propulsion systems, and energy storage systems. Wärtsilä is actively involved in the digitalisation of marine and energy industries, focusing on enhancing efficiency, sustainability and safety. Our offering extends to ship design, electrical and automation packages, smart vessel technologies such as predictive maintenance, energy saving technologies, and onboard carbon capture.
The service business is a large and important part of the business and a key element in reaching our financial targets. The existing installed base provides a strong foundation for service growth. Around 30% of the installed base of 4-stroke engine MW is currently under service agreements. Through Wärtsilä’s Expertise Centres globally, 90% of issues can be solved remotely and 80% during the same day due to constant remote operational support. The agreement coverage of the installed base has grown by approximately one percentage point annually. The order intake in services has grown 55% between 2020 and 2023 with a CAGR of 15.8%, and net sales in services have grown 40% between 2020 and 2023 with a CAGR of 11.8%.
Misconception 2: “Wärtsilä produces only diesel engines”
Wärtsilä is committed to sustainability. Our technologies are leading in fuel flexibility and fuel efficiency, with the industry’s most comprehensive offering for alternative fuel-capable engines. Wärtsilä’s engines have built-in upgradability to alternative fuels, with significant part commonality between different fuel versions and a modular design. Today, Wärtsilä has the most comprehensive development programme for sustainable fuel technologies in the industry, with proven 4-stroke technology for the use of LNG, methanol, bio- and synthetic fuels. In 2023, we introduced the marine sector’s first commercially available 4-stroke engine-based solution for ammonia fuel. We aim to deliver a technology concept for 100% hydrogen in 2025.
With the share of alternative fuel-capable engine orders steadily growing, standing at >60% MW from Wärtsilä’s orders in 2023. Wärtsilä’s engines are set to power maritime decarbonisation. Net zero targets will require a fundamental shift towards sustainable fuels. As this transition takes time, Wärtsilä’s multi-fuel engines provide the most flexible pathway.
Misconception 3: “Wärtsilä’s market views are not in line with Clarksons Research forecasts”
Wärtsilä follows Clarksons Research forecasts closely. Clarksons Research forecasts specialize in comprehensive data analysis of the overall maritime markets. Wärtsilä focuses on certain key segments that are relevant to the company, i.e. monitoring the entire shipping market does not directly describe Wärtsilä's opportunities. Wärtsilä’s key segments are cruise, ferry, and offshore. Also, the LNG carrier sector and containership sector are covered by Wärtsilä.
In addition, Clarksons Research focuses on the number of ships, while Wärtsilä has made estimates based on Clarksons data about what kind of ships will be ordered and translated this to MW, in order to better describe the opportunity for Wärtsilä. Wärtsilä uses MW estimates instead of the number of ships or values.
Misconception 4: “The marine industry is not yet capable of meeting the tightening regulation environment”
The International Maritime Organisation (IMO) has set ambitious targets to reduce maritime industry emissions, by achieving net-zero emissions by 2050. Also, the EU Emissions Trading System (EU ETS) extends carbon pricing to the maritime sector, creating financial incentives to reduce emissions. These targets drive innovation in sustainable fuels and energy-efficient technologies, essential for long-term environmental sustainability. Critics argue that, as the transition to low-carbon alternative fuels requires significant technological advancements and substantial financial investments, the current infrastructure and technology are not yet capable of meeting the ambitious emission targets. However, the marine industry has already made significant strides in developing and adopting new technologies to meet regulatory requirements. As the vessel lifetime can be 30 years, shipowners need to consider the decarbonisation pathways for their fleet already now.
Innovations in fuel efficiency, alternative fuels, and emission reduction technologies are being rapidly implemented. Companies like Wärtsilä are enabling the development with engines that can run on sustainable fuels like ammonia and methanol. Wärtsilä has a comprehensive development programme for sustainable fuel technologies, with proven 4-stroke technology for the use of methanol, and the first commercially available 4-stroke engine concept for ammonia fuel. We also aim to deliver a technology concept for 100% hydrogen in 2025. These technological developments indicate Wärtsilä’s strong commitment to meeting and exceeding regulatory requirements. The inclusion of the maritime industry in the EU Emissions Trading System (EU ETS) provides financial incentives for companies to reduce their emissions. These points collectively argue that the marine industry is not only capable but also actively progressing towards meeting the tightened requirements of the regulatory environment.
Misconception 5: “Wärtsilä’s Engine Power Plants are not competitive against Gas Turbines”
As the world shifts towards more sustainable energy solutions, the debate between engine power plants and gas turbines has become increasingly relevant. While both technologies have their merits, Wärtsilä’s engine power plants are proving to be a significant part of driving the energy transition.
One of the standout features of our engine power plants is their operational flexibility. Unlike gas turbines, which can struggle with efficiency at partial loads, our engines maintain high efficiency across a wide range of operating conditions. This makes them particularly well-suited for balancing the intermittent nature of renewable energy sources like wind and solar. The ability to quickly start up and shut down allows our engine power plants to respond rapidly to changes in energy demand, ensuring a stable and reliable power supply.
Wärtsilä’s engine power plants can operate on a variety of fuels, including natural gas, biogas, and synthetic fuels. This adaptability not only supports the transition to cleaner energy sources but also future-proofs these plants against changes in fuel availability and market conditions. As the energy landscape evolves, the ability to switch fuels seamlessly will be a significant advantage.
Summary
Wärtsilä is well-positioned to support customers on their decarbonisation journey and prepare for new regulatory requirements with a broad range of technologies and specialised services. The company’s R&D efforts focus on developing advanced environmental technologies and solutions, aiming to provide a product portfolio ready for zero-carbon fuels by 2030. Wärtsilä’s commitment to decarbonisation is evident in our advanced fuel-flexible engines for future fuels like methanol, ammonia, and hydrogen. Our focus on innovative solutions positions us well to meet the tightening environmental regulations and support the marine and energy industries in decarbonization.
More questions? Send an e-mail to investor.relations@wartsila.com.
