Polish NPP new build project February 2016 Project Overview PGE and PGE EJ 1
Polish NPP new build project
February 2016
Project Overview
PGE and PGE EJ 1
2
This Presentation has been prepared by PGE S.A. (“ PGE”) and PGE EJ 1 Sp. z o.o. (“ PGE EJ 1”) (the “Company”) on the basis of information received from different sources, including not independently audited and publicly available information. The Company is not responsible for the accuracy, reliability and consistency of information contained in this Presentation (“ Presentation”).
This Presentation includes results of preliminary analyses considered by PGE and PGE EJ 1. PGE and PGE EJ 1 reserve the right to introduce changes and modifications as well as to complement this information at any given stage and are not under obligation to explain reasons for these changes, modifications and complementation.
The information included in this Presentation cannot form the basis for any claims or civil law suits against PGE, PGE EJ 1 or any other entity from within PGE Capital Group, in particular with regards to damages or indemnities to be paid in case of negligence in contracting.
PGE and PGE EJ 1 wish to inform that all responsibilities and risks pertaining to and resulting from any decisions taken on the basis of or in relation to the information provided in the Presentation shall be borne by makers of these decisions. As a result, PGE and PGE EJ 1 on their own behalf and on behalf of all their directors, partners, employees and agents, declare that none of the entities listed herein will incur any liability towards any person in connection with any consequences of the decisions and/or actions taken in reliance on this Presentation and information provided.
This Presentation reflects prevailing conditions, and PGE and PGE EJ 1’s understanding of the current situation, all of which are accordingly subject to change after this date upon obtaining new information or occurrence of new events.
For internal distribution only.
Disclaimer
Polish NPP new build project
Project Overview – February 2016
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NPP Project stages
Site selection
Site infrastructure
Agenda
Main Investor
Business and financing models
Purpose of NPP new build project
Stakeholder Management
Integrated Proceedings
Polish NPP new build project
Project Overview – February 2016
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NPP Project stages
Site selection
Site infrastructure
Agenda
Main Investor
Business and financing models
Purpose of NPP new build project
Stakeholder Management
Integrated Proceedings
Polish NPP new build project
Project Overview – February 2016
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Unchanged country imperatives driving nuclear power introduction to Poland – security of supply (aging generation fleet, EU climate change policies)
– Electricity supply shortage (near blackout) in August 2015, State Grid Operator forced strong electricity supply reductions on large and industrial customers for the first time since 1989
Continued Polish government commitment to the implementation of the Polish Nuclear Power Programme
Nuclear power in future fuel mix according to the Polish Energy Policy until 2050 (each of three reference scenarios defined includes nuclear in the national energy fuel mix)
Increase of Poland’s industrial capabilities with a number of Polish companies having potential to join the nuclear supply chain
Diversification of Poland’s generation portfolio in order to lower CO2
emission (currently approx. 90% based on coal and lignite)
PGE as the leader continues NPP build project development activities with important milestones achieved
Business purpose of NPP new build project NPP Project
Polish NPP new build project
Project Overview – February 2016
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NPP Project stages
Site selection
Site infrastructure
Agenda
Main Investor
Business and financing
Purpose of NPP new build project
Stakeholder Management
Integrated Proceedings
Polish NPP new build project
Project Overview – February 2016
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Mining
Power
generation
Transmission
Distribution
Wholesale &
Supply
• 2 open pit lignite mines (Bełchatów and
Turów)
• Lignite output 50 million tons p.a.
• Production net ca. 55 TWh
• Installed capacity ca. 12.6 GW
• Sales of heat ca. 18 million GJ
• 2 Lignite-fired power plants (Bełchatów and
Turów)
• 2 Hard coal-fired power plants (Opole and
Dolna Odra)
• Combined heat and power plants –
8 sites (Szczecin, Pomorzany, Gorzów,
Bydgoszcz, Zgierz, Kielce, Rzeszów and
Lublin-Wrotków)
• Hydroelectric power plants (Hydro
ca. 97 MW, Pumped-storage ca. 1.5 GW),
Wind farms 311 MW
• Activity of PSE S.A.
PGE Polish Energy Group – Main Investor
• Distribution of energy 32.54 TWh
• Distribution grid: 281,290 km
• Number of substations: 91,374
• Final consumers 39.60 TWh
• Wholesale market 62.44 TWh
• Balancing market 1.10 TWh
Nuclear potential locations
Polish NPP new build project
Project Overview – February 2016
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NPP Project stages
Site selection
Site infrastructure
Agenda
Main Investor
Business and financing models
Purpose of NPP new build project
Stakeholder Management
Integrated Proceedings
Polish NPP new build project
Project Overview – February 2016
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Stage II Stage III Stage IV Stage I
Pre-development Development Construction Start-up
and commissioning
Site selection – site investigation and environmental surveys – obtaining the decision on environmental conditions and site permit
Development and execution of Integrated Proceedings (amongst others selection of technology)
Business and financing model development (incl. support mechanisms)
National and site infrastructure planning (incl. transmission system)
Communication and Education (public support)
Preparation and implementation of Integrated Management Systems
Building nuclear and other specific competences (Capacity Building)
Obtaining the Decision in Principle
Preparation of a detailed technical plan of a nuclear power plant (FEED)
Prep. of a preliminary safety report
Obtaining key decisions, permits and licences:
– Licence issued by the PAA (Polish National Atomic Energy Agency)
– Construction permit for NPP and environmental permit
Signing a contract regarding the connection to the transmission grid
Development of associated infrastructure for the NPP construction
Communication (public support)
Building of key competences and human resources development
Financial close and Final Investment Decision
Site preparation and initiation of the final stage of the process
First concrete
NPP construction process
Delivery of long lead equipment
System tests
Development of national and site infrastructure for the NPP operations
Connection to the transmission grid
Simulator installation
Further expertise development and building site operator structure
Fuel Loading Permit
Power tests
Start-up Licence
Integration of the NPP with the National Grid
Operating licence
Concession for power production
Commercial operation (COD)
Daily operations of the NPP
Maintenance of the NPP
Fuel management
Waste management
Decision in Principle
Final Investment Decision Fuel Loading
MAEA (Phase 2) MAEA (Phase 3)
Source: own materials
Preparation of the investment process and construction of Poland’s first nuclear power plant is divided into four key stages (in line with MAEA recommended approach)
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Decision in Principle
Source: own materials
Polish NPP new build project
Project Overview – February 2016
National and site
infrastructure planning and preparation
Feasibility Study
Site selection (EIA, Site Permit)
based on site characterization
Stakeholder Management and Communication
(local communities
focus)
Integrated Proceedings
Implementation of Integrated Management
System
Capacity Building
Support mechanisms and business
model
Legislation and relations with
European Commission
Decision in Principle
Organization of Polish Nuclear
Program – 10 main projects
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NPP Project stages
Site selection
Site infrastructure
Agenda
Main Investor
Business and financing models
Purpose of NPP new build project
Stakeholder Management
Integrated Proceedings
Polish NPP new build project
Project Overview – February 2016
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Site selection
Full environmental studies and site characterization works to be started in 2016 (seismic already ongoing, meteo equipment under installation)
Preliminary national and site infrastructure plan developed in cooperation with local communities and Pomerania voivodeship
First stage of transmission grid and transmission infrastructure analyses completed for candidate sites in cooperation with PSE – Polish National Grid
So far studies and analyses were conducted in three considered sites of a nuclear power plant: "Choczewo ", "Lubiatowo-Kopalino" (Choczewo) and "Żarnowiec" (Gniewino and Krokowa). Based on their results, in January
2016, two sites were selected for the full program of site characterization and the environmental impact assessment - "Lubiatowo-Kopalino" and
"Żarnowiec".
Polish NPP new build project
Project Overview – February 2016
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Environmental assessment
The purpose of environmental assessment is to provide data necessary for a decision whether a given site is suitable for the
construction of a nuclear power plant in terms of environmental protection.
Start – 2016 Duration – 12 months
Site investigation
The objective of site investigation is to confirm that a given site is suitable for a nuclear power plant in terms of nuclear safety.
Start –2016 Duration – 24 months
Site characterization and environmental assessment
Preparations are underway to launch full environmental assessment and
site investigation by PGE EJ 1
The Environmental Scoping Report (ESR) has been prepared and, on the 5th of August 2015, the first stage of the environmental impact assessment (EIA) procedure
was launched.
Polish NPP new build project
Project Overview – February 2016
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NPP Project stages
Site selection
Site infrastructure
Agenda
Main Investor
Business and financing models
Purpose of NPP new build project
Stakeholder Management
Integrated Proceedings
Polish NPP new build project
Project Overview – February 2016
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Plant Vendor EPC Contractor
Fuel supplier O&M support provider
Equity investor / Strategic Partner
Integrated Proceedings
Export Credit Agencies Commercial financing
Under the Integrated Proceedings, potential bidders will be requested to include in their offers all of the following elements:
Provision of technologies for the NPP as well as the general implementation of the investment (EPC)
Nuclear fuel supply and related services
Provision of O&M support services for the NPP together with capacity building program for PGE EJ1
Proposed rules and conditions for the capital engagement by strategic investor/business partner
Concept of how to finance the Investment, together with written confirmation of interest in supporting the project from relevant ECAs, financing institutions or commercial banks (at best offer(s) selection stage; these are construed as Letters of Intent and potentially also the preliminary proposed financing conditions)
All elements of the IP scope are obtained in one procedure
The financing closure takes place after the above mentioned elements are obtained, but its initial terms and conditions are the subject of the IP scope
Integrated Proceedings are to be conducted as a competitive procedure based on the Contracting Authority’s Regulations, outside of the regime of the PPL
Integrated Proceedings (IP) framework
Polish NPP new build project
Project Overview – February 2016
IP Participants Companies which have submitted declarations of
participation and took part in preliminary dialogue between 2012 - 2015
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Reactor Technology
EPR AREVA NP
PWR 1650 MWe
AP1000 Westinghouse /
Toshiba PWR
1100 MWe
ESBWR GE-Hitachi
BWR 1535 MWe
ABWR GE-Hitachi
BWR 1350 MWe
APR1400 KEPCO PWR
1400 MWe
EC6 Candu Energy
PHWR 700 MWe
Received declarations determine the potential reactor technologies for the first Polish NPP
Polish NPP new build project
Project Overview – February 2016
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NPP Project stages
Site selection
Site infrastructure
Agenda
Main Investor
Business and financing models
Purpose of NPP new build project
Stakeholder Management
Integrated Proceedings
Polish NPP new build project
Project Overview – February 2016
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Planning and development of site infrastructure
Define the scope of investments and the preliminary schedule for their preparation and implementation
Consultation and agreement with the
municipalities and the Marshal Office of the
Pomeranian Voivodeship
Finalization of the first stage of network
analyses for specific sites and considered
NPP reactor technologies in
cooperation with PSE SA (Polish National Grid)
Development of the site development study, transport
study, and permit plan
Polish NPP new build project
Project Overview – February 2016
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NPP Project stages
Site selection
Site infrastructure
Agenda
Main Investor
Business and financing models
Purpose of NPP new build project
Stakeholder Management
Integrated Proceedings
Polish NPP new build project
Project Overview – February 2016
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Business and Financing model development (incl. support mechanisms)
In April 2015, PGE and National Business Partners (KGHM Polska Miedź SA, Tauron Polska Energia SA and Enea SA ) signed a shareholding agreement giving each of the partners 10% share in PGE EJ 1
Business model, investment, support mechanisms, electricity market
Polish NPP new build project
Project Overview – February 2016
PGE EJ 1 shareholding structure (since April 2015)
Ongoing work on financing model for the investment. Involvement of Export Credit Agency considered. Need of support scheme to be established
Necessary support system for the Project including Contract for Difference (CfD) and National Treasury guarantees
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NPP Project stages
Site selection
Site infrastructure
Agenda
Main Investor
Business and financing models
Purpose of NPP new build project
Stakeholder Management
Integrated Proceedings
Polish NPP new build project
Project Overview – February 2016
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STAKEHOLDER MANAGEMENT AND COMMUNICATION
Activities on national level
Activities on local level Development of long-term cooperation program with the local communities
3 Local Information Centers – 1 in each of the 3 adjacent communities hosting 3 candidate sites
Dedicated communication regarding site characterization activities – workshops, printed publications, public exhibitions
Ongoing education for local schools – dedicated classes, trips to science centers
Seasonal educational events on nuclear power during major local events
Focused projects – study tours to European NPPs, conferences, seminars
Świadomieoatomie.pl – website presenting various information on nuclear power as well as news on the NPP project in Poland
Atom dla Nauki (Atom for Science) – promoting nuclear-related knowledge among students and cooperation with universities (3rd edition)
Pandora’s Promise – organization of the official premiere and several special screenings of the documentary by Robert Stone
Polish NPP new build project
Polish NPP new build project
Project Overview – February 2016
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HIGH LOCAL SUPPORT FOR NPP CONSTRUCTION IN THE NEIGHBORHOOD Polish NPP new build project
Regular public opinion polls (every 6 months since 2011) to monitor local and national levels of support for the NPP.
Recent opinion polls (Autumn 2015) show strong support for the NPP in all three communities, with support levels ranging from
66% (Krokowa) up to 71-72% (Gniewino and Choczewo)
% of supporters
CHOCZEWO GNIEWINO KROKOWA
Polish NPP new build project
Project Overview – February 2016
Thank you