Baltic NPP Project Specifics and Current Status 2 June 2011 By courtesy of SC Rosatom

Baltic NPP ProjectSpecifics and Current Status2 June 2011

By courtesy of SC Rosatom

Baltic NPP Project

2 x 1194 MW Units (AES-2006 series)

Location in Kaliningrad region of the Russian Federation

Operation dates Unit 1 – Oct 2016

Unit 2 – Apr 2018

Site preparatory works ongoing

Unique Project First NPP project in the Russian Federation

providing opportunity for participation of foreign investors

Foreign investors may acquire up to 49% share

Cross-border transmission lines developed under separate project with participation of foreign investors

Project Overview

Baltic NPP Project

State Corporation “Rosatom” – PRINCIPAL

OJSC “Concern Rosenergoatom” – DEVELOPER

OJSC “SPbAEP” – GENERAL DESIGNER

OJSC “Inter RAO UES” – ORGANIZATION OF FINANCING AND ENERGY

SALES

WorleyParsons – TECHNICAL CONSULTANT

Societe Generale – INVESTMENT CONSULTANT

Norton Rose – LEGAL CONSULTANT

Major Stakeholders and Participants

Baltic NPP Project

Acting as the Agent of OJSC “Concern Rosenergoatom”, OJSC “Inter RAO UES” have assigned professional consultants for the development of Bankable Feasibility Study

Technical Consultant – WorleyParsons Analysis of Baltic NPP technical aspects

Analysis of Baltic NPP design compliance to IAEA and EUR requirements

CAPEX, OPEX, Basic Financial Model

Power Output Scheme

Investment Consultant - Societe Generale DCF model preparation

Financing sources and structure development

Marketing activities

Due diligence

Legal Consultant - Norton Rose Analysis of the current legal status of the project

Integrated legal assessment of the project

Risks identification and mitigation strategy development

Consultant’s Roles

Baltic NPP Project

The project has started in 2008 when a cooperation agreement was signed

between State Corporation “Rosatom” and the local government of the

Kaliningrad region

A site permit for the project was issued in February 2010

At present site preparatory works are ongoing

The design documentation have been developed, and a positive opinion of

state review body (Glavgosexpertiza) was obtained on 30 Mar 2011

Application for construction license for Unit 1 was submitted

Bankable Feasibility Study is under development

Current Status

Baltic NPP Project

Construction and rehabilitation of auto roads

Construction of concrete batch plant

Construction of reinforcing factory

Construction of water intake facilities

Construction of temporary electricity supply networks

Development of the pit of the main building (soil removal and management, vertical leveling)

Arrangement of drainage systems, concrete basement and waterproofing

Construction of housing for the construction workforce

Current Main Activities on Site

7

Project Implementation Schedule

Baltic NPP Project

Construction Unit 2

BankableFeasibility Study

Negotiation and Execution of Agreements with Investors

Power PurchaseAgreements (PPA)

Trade Negotiations

Construction Unit 1

Design and construction of Power Output Scheme Facilities

2011 2012 2013 20152014 2016 2017 20182010

CommissioningUnit 1 Commissioning

Unit 2

8

Negotiations with Potential Investors’ Schedule

Baltic NPP Project

Selection of investors for final negotiations

Jun 2011 Jul 2011 Aug 2011 Oct 2011Sep 2011 Nov 2011 Dec 2011May 2011

Management presentations and negotiations

Data room opening and conducting due diligence

Potential investors’ shortlist preparation

Receiving first signs of the potential investors’ interest

BFS submission

Preliminary negotiations with potential investors and conclusion of confidentiality agreements

Sending a teaser

According to the Russian legislation and other statutory documents, the process of NPP construction is divided into two main phases: preparation phase and construction phase

The Operating organization “Concern Rosenergoatom” has established a structural subdivision to perform the functions of Owner/Developer – a branch of «Concern Rosenergoatom», Baltic NPP Construction Directorate.

Strategy of Project Implementation

Baltic NPP Project

State CustomerSC “Rosatom”

Owner-DeveloperOJSC “Concern

Rosenergoatom”

General Designer“SPBAEP” JSC

Preliminary Works Contractor OJSC “Northern Construction Management”

Project Organization Structure during Preparation Phase

In order to attract foreign investments, “Concern Rosenergoatom” is the founder and sole shareholder (at present) of OJSC “Baltic NPP”

A principle decision was made on the readiness to give the foreign investors a stake in the plant up to 49%

OJSC “Baltic NPP” shall be Owner/Developer during the construction and commissioning phase

Strategy of Project Implementation

Baltic NPP Project

Planned Organization Structure during construction and commissioning phase

Owner/DeveloperOJSC”Baltic NPP”

(Joint stock company with participation of

foreign capital)

General Contractor(selected by tender)

General Designer Equipment suppliersConstruction &

Installation Contractors

Start-up & Commissioning

Contractors

Baltic NPP Project

Support the development of BFS substantiating the Project feasibility for potential investors and financial institutions

Present Baltic NPP Project Technical aspects and solutions Socio-economical aspects Environmental aspects Organization and implementation strategy Financial and economical aspects Grid infrastructure

Independent analysis for compliance with Russian standards and regulations IAEA Safety Standards EUR, Part II requirements

Financial and economic evaluation Risks Identification Development of possible power output schemes

Technical Consultant Feasibility Study Objectives and Content

Baltic NPP Project

Feasibility Study Phase 1 Outcomes

Baltic NPP Feasibility Study Phase I

Baltic NPP consists of two reactor units in an AES-2006 standard design

configuration, intended to operate under base operational conditions with ICUF

above 90% and under transient operation conditions

NPP reactor unit has a two-circuit design: The primary circuit is radioactive entailed by Reactor Coolant Piping System. This circuit

includes pressurized water reactor of VVER-1200 type, four main circulation loops, one

pressurizer, safety systems and primary-related auxiliary systems

Secondary circuit is non-radioactive. It entails steam generating portion of SG, steam pipework,

steam turbine, condenser units, main condensate system with condensate pumps and low

pressure heaters, deaerator, feedwater system with electric feedwater pumps and feedwater

high pressure heaters. Turbine condensers are cooled down by circulating water system with

heat discharged through wet cooling towers into atmosphere

Technological Process


AES-2006 Sectional View


Reactor Plant – General Layout

16

High Safety and Performance Indicators


COMPARATIVE TABLE OF MAIN TECHNICAL CHARACTERISTICS OF WWER/PWR NUCLEAR TECHNOLOGIES

CharacteristicAS-91 (В-428)

TianwanAS-92

KudankulamAES-2006

BaNPPAP1000

Westinghouse

Thermal power, MWth 3000 3000 3200 3415

Electrical power,gross/net, MWe

1060 / 995 1060 / 995 1181 / 1096.5 1154 / 1117

Specific Efficiency Coefficient, net, %

33.5 33.5 34.2 32.7

Availability factor, % ≥90 ≥90.4 92 93

Probability indices of: 1) cumulative frequency of core damage 2) frequency of limiting emergency release

≤ 10 -6 per year

≤ 10 -7 per year

≤ 10 -6 per year

≤ 10 -7 per year

≤ 10 -6 per year

≤ 10 -7 per year

≤ 5·10 -7 per year

≤ 6·10 -8 per year

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New Safety Features for DBA and BDBA

Active and passive safety systems for prevention and mitigation of Design Basis Accidents and Beyond Design Basis Accidents.

A four channels safety systems design is incorporated into the plant design:

The active component-based four channel’s safety system design provides the ability to respond to any DBAs scenario and provides a safe status of the reactor plant

Design allows a single safety channel to be out of service for maintenance or any other reasons for unlimited period of time during Unit operation.

The systems to mitigate BDBAs are designed for long-term heat removal from the containment during beyond design-basis accidents (off-line mode is at least 24 hours without operator’s actions)


Protection Against External Impacts


AircraftProtection from the fall

of an aircraft

Snow and ice load

Extreme snow and ice protection

External explosion

NPP components responsible for the safety

are developed with ensuring the security of percussion coursed by

the external explosion.

Seismic loads

NPP is developed with stability to earthquake

Wind loads

Whirlwind and tornado protection

Environmental Impact Assessment

The Environmental Impact Assessment (EIA) was developed in 2009 There have been public hearings of EIA report – passed successfully Results and Conclusions

Presence of high anthropogenic pressure on the region The hydrological regime of the rivers and lakes in the region will not undergo any changes Non-radioactive releases to the surface waters with concentrations, exceeding the permissible for fishing

basins, are prevented by technical solutions Electromagnetic radiation, noise and harmful releases from the NPP facilities are in the range of permissible

values and have insignificant off-site impact Non-radioactive industrial and domestic waste will be treated and landfill disposed The liquid radioactive waste are subject of conditioning (solidification). The amount of waste is minimized by

the design During normal operation of Baltic NPP the airborne radioactive and chemical releases will have an

insignificant impact on the atmospheric air, public and environment. The radiological impact on the public and environment for design basis accidents does not exceed the

defined exposure doses for the public and is mitigated during BDBAs The risk of Baltic NPP operation is estimated to be significantly lower than the existing anthropogenic

background


Analysis of the NPP Design

Compliance to the Russian Standards and Regulations All necessary reviews have been performed in accordance with the Russian Legislation

Comparative Analysis of Russian Standards and Regulations to IAEA Safety Standards The analysis results indicate that the Russian rules and norms contain appropriate

requirements. The observed differences are due mainly to the formulation and terminology being in use

Russian documents are significantly more specific than IAEA safety standards, which have mainly conceptual character

Analysis of the design against EUR, Part II requirements A preliminary conclusion is that the Design in general will to a great extent comply with the

EUR requirements, based on the following: The main target indicators for safety, reliability and efficiency are directly incorporated in the design This is an evolutionary design utilizing the same conceptual approaches, practices and design standards as in the EUR

certificated AS-92 design

The expected differences will be related to those EUR requirements which differ from the Russian rules and standards


Analysis of the NPP Design

Spent Fuel Management Strategy Basis Initial storing for a few years in the spent fuel pool; Further transportation out of

Kaliningrad Region without using the territory of other states

Radioactive Releases and Waste Management Strategy Basis Radioactive releases into the atmosphere - annual effective dose for the public less

than 0.01 mSv for Normal Operation (NO)

Liquid Radioactive releases – activity of liquid releases is lower than the drinking water intervention level; annual effective dose for the public far bellow 0.01 mSv for NO

Liquid Radioactive waste – solidification; Solid waste – Conditioning

The RAW storage capacity is calculated for 10 years of operation; Further transportation out of Kaliningrad Region without using the territory of other states

Emergency Planning Management Strategy Basis In case of severe accident the radiation impact does not exceed the intervention levels

for the population in a distance more than 3 km from the NPP. That is why emergency planning is envisaged only for the NPP personnel


Contractual approach and possible NPP construction schemes Standard Form of Contract of OJSC "Concern Rosenergoatom" for construction of NPP units

is the basis for development of Feasibility Study Phase I

Comparative analysis The Standard Form of Contract of OJSC "Concern Rosenergoatom" has been compared with

the following internationally recognized contractual approaches:• EPC Lump Sum Turn Key with firm and fixed price

• EPC Lump Sum Turn Key with fixed price (subject to escalation)

• Split Package (Island) Approach

• Multiple Package Approach

Comparative Analysis Results Generally, the Standard Form of Contract of OJSC "Concern Rosenergoatom" is comparable

with the EPC Lump Sum Turn Key with fixed price (subject to escalation) contractual approach, with some differences, conditioned by the Russian legislation and the established NPP construction practice


Project Implementation – Contractual Approach

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Project Key Milestones

Achieved Milestones “Declaration of Intent” to Invest in the Construction of Power Units 1 & 2 of the Baltic NPP – approved

by State Corporation “Rosatom” on 11-Sep-2008;

The enactment of the Kaliningrad Region Duma about approval of the “Declaration of Intent to Invest in the construction of NPP 1&2 of the Baltic NPP” on 28-Oct-2008;

“AES-2006. Justification of investments in the construction of Baltic NPP”. Prepared by OJSC “SPbAEP” - approved by the Customer (OJSC “Rosenergoatom”) on 14-Dec-2009;

The Order No.169-r of the Russian Federation Government of 20-Feb-2010 about location of the Baltic nuclear power plant on the territory of the Neman municipal district of the Kaliningrad region;

Development of Design Documentation ongoing. Unit 1 Technical Design Package obtained positive State Examination conclusion on 31-March-2011;

Planned Milestones Unit 1 First Concrete (Reactor Building) – 30-Oct-2011;

Unit 2 First Concrete (Reactor Building) – 30-Oct-2013;

Unit 1 Commercial Operation – Y 2016;

Unit 2 Commercial Operation – Y 2018;


Калининградская ГРЭС-2

Северная-330

Центральная О-1

Советск-330

БитенайКлайпеда

Юрбаркас

Круонио ГАЭС

Балтийская АЭС

2 блока

Мамоново

# Title Voltage/kV/Length

/km/

Cross-section/mm2/

1 BaNPP-Sovetsk 330 18 2×600

2 BaNPP-Bitenai 330 19 2×300


4 BaNPP-Kruoni 330 160 2×300


6BaNPP-PS PT Mamonovo

330 190 2×600

7BaNPP-Yurbakas

330 40 2×600

8BaNPP-Central О-1

330 135 2×600

Kaliningrad Region Power Sector

Diagram of Baltic NPP connection to the network after second unit commissioning

Baltic NPP Feasibility Study Phase IPower Output

Internal Demand & Export Potential

0

500

1000

1500

2000

2500

3000

3500

2011 2017 2020

Year

MW

Available Capacity (MW) Optimistic Internal Demand (MW) Minimum Export Potential (MW)

Year 2011 2017 2020

Available Capacity (MW)

950 2050 3280

Optimistic Internal Demand (MW)

660 1000 1400

Minimum Export Potential (MW)

200 1050 1880

Baltic NPP Feasibility Study Phase I Power Output

Internal Forecasted Demand and Export Potential

After the launch of Unit 1 in 2016 and Unit 2 in 2018, a substantial export capacity will arise

The excess capacity after meeting initial demand in Kaliningrad Region can be exported to the energy deficit countries of the Baltic Region.

Baltic Region Energy Balance

Baltic NPP Feasibility Study Phase I Power Output

The energy analyses shows a negative balance for the Baltic countries.

SALATA Sergey N.

Правильно использовать термин "Baltic Sea region" как он трактуется в ENTSO-E

27

Capital Cost Estimate

Basis of the capital cost estimate Capital Cost Estimate developed by the General Designer (Chapter 11 of TD)

• Developed on the basis of Methodology for determination of the cost of construction production in Russian Federation (МДС 81-35.2004)

• Reference plant – Leningrad NPP 2

2 x 1194 MW Units

Base date 4th Quarter of 2010

Currency – Euro

Unit 1 COD – 30 October 2016

Unit 2 COD – 30 April 2018

Exchange Rate – 40 Russian Ruble / 1 Euro

Expected accuracy – ±25%

Breakdown as per IAEA accounting system

Baltic NPP Feasibility Study Phase I Financial and Economic Evaluation

Base Costs

Total Installed Costs

Supplementary Costs

Owner’s Costs

Financial Costs

Direct Costs Indirect Costs

28


General Approach to Capital Cost Estimate Analysis of the estimate developed by the General Designer

Communications with the Client to clarify unclear items

Verification of buildings, structures, systems, etc. against the General Plant Layout (phase B, sheet 2/2)

Identify capital costs that are not included in the General Designer estimate on the basis of proprietary check list

Add the costs excluded from the General Designer estimate on the basis of in-house database, after appropriate adjustment to reflect the project time, location and specifics for Kaliningrad region

Cost distribution by IAEA major account codes

Develop Cost Risk Analysis and capital costs possible ranges were identified

Contingency Analysis based on the Cost Risk Analysis

Develop cash flows on the basis of the project implementation schedule and the standard EPC Contract payment conditions


29


Analysis of the estimate developed by the General Designer Factoring approach utilized at this stage (Technical Design) of the project

Estimating is iterative process – per project phases

General Designer experience indicates that increase of the capital costs is expected for the next iteration of the estimate (Detail Design phase of the project)

Contingency allowance of approx. 3% is applied on the base estimate on the basis of the adopted methodology (МДС 81-35.2004)

The international practice for contingency allowance at this phase of projects and level of project definition recommends over 10% (AACE International)

The following costs are not included in the General Designer estimate• First fills and special materials

• Utilities during construction (water, electricity, etc.)

• First core fuel

• Operating personnel (during construction)

• Licenses (nuclear regulator)

• Escalation

• Financial costs


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Capital Cost Estimate / Results

In 90% of the cases the construction of Baltic NPP will require capital costs in the range from € 6.63 Billion to € 8.15 Billion


O&M Cost Methodology: O&M costs are determined applying the IAEA accounting system and are presented as

personnel and non-personnel expenses Basis for the estimation is client’s data from Balakovo NPP Adjustments of the basic costs were made to reflect the specific conditions of the Baltic NPP Contributions to 3 funds (Decommissioning, Nuclear Safety & Physical protection) have been

added to the O&M costs

Decommissioning costs Based on the current Rosenergoatom rules (1.3% of revenue); Calculated as annual payments in the Decommissioning fund

Fuel costs Fresh fuel costs are estimated based on the prices on the international market Spent fuel costs are based on Balakovo NPP data

Operating Costs



Financial and Economic Evaluation

O&M cost risk ReasonRange of

ConsequencesLikelihood

Ability toinfluence

Fuel costs. Internationalmarket of energy resources

Price of natural uranium could increase,following price increase of other energyresources

Low High Low

O&M costs for personnel Personnel costs might increase following theinflation processes and approximation ofsalaries in Russia to EU levels

Low High Low

O&M costs for repair andmaintenance

O&M costs for repair and maintenance couldbe higher than predicted

Low Low Low

O&M costs for nuclear liabilityinsurance

Nuclear liability insurance might becomemore expensive due to either increasedlimits or increased premiums

Very Low Mid Low

• Increase of O&M costs will be mainly due to the inflation and escalation processes.

• Risk analysis demonstrates that the risk of O&M and fuel costs increase is low, with low expected impact on LCOE.

• There is no significant risk for the plant in terms of operation costs, if it is managed safely and reliably.

CONCLUSIONS

Operating Costs / Risk Analysis

Gross Power 1194 MW

Nominal Power 1181 MW

Net Power 1097 MW

Average Availability 92%

Lifetime 50 years

Construction schedule Unit 1 – commissioning on the 30th October 2016 Unit 2 – commissioning on the 30th April 2018

Basic Financial Model / Technical Inputs



Basic Financial Model / Major Assumptions



Ownership structure 51% Rosenergoatom 49% Strategic Investor

Financing structure Base Case – 100% equity (balance sheet financing) Second option – 50% equity & 50% debt financing

Discount rate – 6% Electricity sales

Russia – 300 MW Baltic region (Lithuania) – 1000 MW Germany and Poland – 1000 MW

Electricity Tariff in target markets Presented by the Client


CAPEX is within international publicly announced price levels

At the selected set of assumptions, the project is financially feasible in all scenarios

Conclusions

Thank you

Documents

Baltic NPP Project Specifics and Current Status 2 June 2011 By courtesy of SC Rosatom