Follow-on Phases by HC120519125523


									Baltic NPP Project
Specifics and Current Status
2 June 2011

                               By courtesy of SC Rosatom
                                                                  Baltic NPP Project

                                               Project Overview

   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
      Foreign investors may acquire up to 49% share
      Cross-border transmission lines developed under
        separate project with participation of foreign
                                                        Baltic NPP Project

                  Major Stakeholders and Participants

 State Corporation “Rosatom” – PRINCIPAL

 OJSC “Concern Rosenergoatom” – DEVELOPER





                                                                                 Baltic NPP Project

                                         Consultant’s Roles

   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
                                                              Baltic NPP Project

                                Current Status

 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
                                        Baltic NPP Project

Current Main Activities on Site

                      Construction and rehabilitation of auto
                      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
                                                                                                                        Baltic NPP Project

                                       Project Implementation Schedule

                                                   Construction Unit 1
                                                                                                           Unit 1              Commissioning
                                                                                                                                  Unit 2

                                                                                  Construction Unit 2

                                              Design and construction of Power Output Scheme Facilities

           Feasibility Study

               Negotiation and Execution of
                Agreements with Investors

                                        Power Purchase
                                       Agreements (PPA)

             Trade Negotiations

    2010         2011               2012              2013               2014            2015                2016       2017            2018

                                                                                                Baltic NPP Project

                   Negotiations with Potential Investors’ Schedule

                          Sending a teaser
                                                           Preliminary negotiations with potential investors and
                                                           conclusion of confidentiality agreements
                                                                         BFS submission

                                                                              Receiving first signs of the
                                                                              potential investors’ interest
                                                                                     Potential investors’
                                                                                     shortlist preparation
                                                          Data room opening and
                                                          conducting due diligence

                                                          Management presentations
                                                          and negotiations

                                                                                      Selection of investors for
                                                                                      final negotiations

    May 2011   Jun 2011             Jul 2011   Aug 2011   Sep 2011           Oct 2011              Nov 2011        Dec 2011
                                                                         Baltic NPP Project

                          Strategy of Project Implementation

                                           Project Organization Structure during Preparation Phase

   According to the Russian legislation
    and other statutory documents, the                            State Customer
    process of NPP construction is                                SC “Rosatom”
    divided into two main phases:
    preparation phase and construction
   The Operating organization                                   Owner-Developer
    “Concern Rosenergoatom” has                                  OJSC “Concern
    established a structural subdivision                         Rosenergoatom”
    to perform the functions of
    Owner/Developer – a branch of
    «Concern Rosenergoatom», Baltic
                                                                               Preliminary Works
    NPP Construction Directorate.                  General Designer
                                                                           Contractor OJSC “Northern
                                                    “SPBAEP” JSC
                                                                           Construction Management”
                                                                                     Baltic NPP Project

                      Strategy of Project Implementation

 In order to attract foreign               Planned Organization Structure during construction and
  investments, “Concern                                    commissioning phase

  Rosenergoatom” is the                                          Owner/Developer
                                                                 OJSC”Baltic NPP”
  founder and sole                                              (Joint stock company
                                                                 with participation of
  shareholder (at present) of                                       foreign capital)

  OJSC “Baltic NPP”
 A principle decision was
  made on the readiness to                                       General Contractor
  give the foreign investors a                                  (selected by tender)

  stake in the plant up to 49%
 OJSC “Baltic NPP” shall be
  Owner/Developer during the
                                                                                 Construction &     Start-up &
  construction and               General Designer   Equipment suppliers           Installation    Commissioning
                                                                                  Contractors      Contractors
  commissioning phase
                                                                      Baltic NPP Project

         Technical Consultant Feasibility Study Objectives and Content

   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
                          Baltic NPP Project

Feasibility Study Phase 1 Outcomes
                                                      Baltic NPP Feasibility Study Phase I

                                   Technological Process

 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
                 Baltic NPP Feasibility Study Phase I

AES-2006 Sectional View
                 Baltic NPP Feasibility Study Phase I

Reactor Plant – General Layout
                                                                  Baltic NPP Feasibility Study Phase I

                                  High Safety and Performance Indicators


                                      AS-91 (В-428)        AS-92              AES-2006           AP1000
                                        Tianwan          Kudankulam            BaNPP           Westinghouse

     Thermal power, MWth                   3000               3000               3200                3415

     Electrical power,
                                        1060 / 995         1060 / 995       1181 / 1096.5        1154 / 1117
     gross/net, MWe

     Specific Efficiency
                                           33.5               33.5               34.2                32.7
     Coefficient, net, %

     Availability factor, %                 ≥90              ≥90.4                92                  93

     Probability indices of:
                                      ≤ 10 -6 per year   ≤ 10 -6 per year   ≤ 10 -6 per year
     1) cumulative frequency of                                                                ≤ 5·10 -7 per year
     core damage
     2) frequency of limiting                                                                  ≤ 6·10 -8 per year
                                      ≤ 10 -7 per year   ≤ 10 -7 per year   ≤ 10 -7 per year
     emergency release

                                                                 Baltic NPP Feasibility Study Phase I

                               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
            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
                                  Baltic NPP Feasibility Study Phase I

               Protection Against External Impacts

    Seismic loads
 NPP is developed with                          Protection from the fall
 stability to earthquake                             of an aircraft

    Wind loads
Whirlwind and tornado
                                                  External explosion
                                                    NPP components
                                                responsible for the safety
                                                   are developed with
                                                 ensuring the security of
 Snow and ice load                               percussion coursed by
Extreme snow and ice                             the external explosion.
                                                           Baltic NPP Feasibility Study Phase I

                             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
                                                                 Baltic NPP Feasibility Study Phase I

                                    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
                                                     Baltic NPP Feasibility Study Phase I

                              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
                                                 Baltic NPP Feasibility Study Phase I

               Project Implementation – Contractual Approach

 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
                                                               Baltic NPP Feasibility Study Phase I

                                         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;

                                                                          Baltic NPP Feasibility Study Phase I
                                                                                                 Power Output

                                            Kaliningrad Region Power Sector

 Diagram of Baltic NPP connection                                                                                    Cross-
  to the network after second unit                                         #        Title      Voltage/kV/
  commissioning                                                            1   BaNPP-Sovetsk      330          18     2×600

                                                                           2   BaNPP-Bitenai      330          19     2×300

                                                                           3   BaNPP-Sovetsk      330          77     2×600
                                                           Круонио ГАЭС
                                                                           4   BaNPP-Kruoni       330         160     2×300

                                              Балтийская                   5   BaNPP-Sovetsk      330          34     2×600
       Калининградская ГРЭС-2                  2 блока
                                                                               BaNPP-PS PT
                                                                           6                      330         190     2×600
                                                                           7                      330          40     2×600
        Центральная О-1
                                                                           8                      330         135     2×600
                                                                                                     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.
                              Internal Demand & Export Potential

                                                                                                                 Year           2011   2017   2020

         2500                                                                                             Available Capacity
                                                                                                                                950    2050   3280

         1500                                                                                             Optimistic Internal
                                                                                                                                660    1000   1400
                                                                                                          Demand (MW)

          500                                                                                             Minimum Export
                                                                                                                                200    1050   1880
                                                                                                          Potential (MW)
                           2011                       2017                       2020

         Available Capacity (MW)   Optimistic Internal Demand (MW)   Minimum Export Potential (MW)
                                                 Baltic NPP Feasibility Study Phase I
                                                                        Power Output

                                 Baltic Region Energy Balance

   The energy analyses shows
    a negative balance for the
    Baltic countries.
                                                              Baltic NPP Feasibility Study Phase I
                                                              Financial and Economic Evaluation

                                         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
                                                                                                           Total Installed Costs
          Base date    4th   Quarter of 2010
          Currency – Euro
                                                                                                   Supplementar            Owner’s   Financial
                                                                                  Base Costs
          Unit 1 COD – 30 October 2016                                                              y Costs                Costs      Costs

          Unit 2 COD – 30 April 2018
          Exchange Rate – 40 Russian Ruble / 1 Euro                   Direct Costs       Indirect Costs

          Expected accuracy – ±25%

      Breakdown as per IAEA accounting system
                                                         Baltic NPP Feasibility Study Phase I
                                                         Financial and Economic Evaluation

                                      Capital Cost Estimate

      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
                                                         Baltic NPP Feasibility Study Phase I
                                                         Financial and Economic Evaluation

                                      Capital Cost Estimate

      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
                                                Baltic NPP Feasibility Study Phase I
                                                Financial and Economic Evaluation

                            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

                                                    Baltic NPP Feasibility Study Phase I
                                                    Financial and Economic Evaluation

                                      Operating Costs

 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
                                                                                             Baltic NPP Feasibility Study Phase I
                                                                                             Financial and Economic Evaluation

                                                Operating Costs / Risk Analysis

                                                                                               Range of                  Ability to
                  O&M cost risk                                 Reason                                      Likelihood
                                                                                             Consequences                influence

            Fuel costs. International         Price of natural uranium could increase,            Low          High         Low
            market of energy resources        following price increase of other energy
            O&M costs for personnel           Personnel costs might increase following the        Low          High         Low
                                              inflation processes and approximation of
                                              salaries in Russia to EU levels
            O&M costs for repair and          O&M costs for repair and maintenance could          Low          Low          Low
            maintenance                       be higher than predicted

            O&M costs for nuclear liability   Nuclear liability insurance might become          Very Low       Mid          Low
            insurance                         more expensive due to either increased
                                              limits or increased premiums

• 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.
                                                Baltic NPP Feasibility Study Phase I
                                                Financial and Economic Evaluation

                   Basic Financial Model / Technical Inputs

 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
                                                Baltic NPP Feasibility Study Phase I
                                                Financial and Economic Evaluation

                  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
                                   Baltic NPP Feasibility Study Phase I
                                   Financial and Economic Evaluation


 CAPEX is within international publicly announced price
 At the selected set of assumptions, the project is financially
  feasible in all scenarios
Thank you

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