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Baltic NPP Project Specifics and Current Status

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

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Baltic NPP Project Specifics and Current Status

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  1. Baltic NPP ProjectSpecifics and Current Status 2 June 2011 By courtesy of SC Rosatom

  2. 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 investors • Foreign investors may acquire up to 49% share • Cross-border transmission lines developed under separate project with participation of foreign investors

  3. Baltic NPP Project Major Stakeholders and Participants • 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

  4. 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

  5. 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

  6. Baltic NPP Project Current Main Activities on Site • 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

  7. Baltic NPP Project Project Implementation Schedule Commissioning Unit 2 7

  8. Baltic NPP Project Negotiations with Potential Investors’ Schedule 8

  9. Baltic NPP Project Strategy of Project Implementation • 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. Project Organization Structureduring Preparation Phase

  10. Baltic NPP Project Strategy of Project Implementation • 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 Planned Organization Structure during construction and commissioning phase

  11. 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

  12. Baltic NPP Project Feasibility Study Phase 1 Outcomes

  13. 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

  14. Baltic NPP Feasibility Study Phase I AES-2006 Sectional View

  15. Baltic NPP Feasibility Study Phase I Reactor Plant – General Layout

  16. Baltic NPP Feasibility Study Phase I High Safety and Performance Indicators 16

  17. 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 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) 17

  18. Seismic loads NPP is developed with stability to earthquake Aircraft Protection from the fall of an aircraft Wind loads Whirlwind and tornado protection External explosion NPP components responsible for the safety are developed with ensuring the security of percussion coursed by the external explosion. Snow and ice load Extreme snow and ice protection Baltic NPP Feasibility Study Phase I Protection Against External Impacts

  19. 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 background

  20. 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

  21. 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 Regionwithout using the territory of other states • Radioactive Releases and Waste Management Strategy Basis • Radioactive releasesinto the atmosphere -annual effective dose for the public less than0.01 mSvfor Normal Operation (NO) • LiquidRadioactive releases – activity of liquid releases is lower than thedrinking water intervention level; annual effective dose for the public far bellow0.01 mSvfor NO • Liquid Radioactive waste – solidification; Solid waste – Conditioning • The RAW storage capacity is calculated for 10 years of operation; Further transportation out of Kaliningrad Regionwithout 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

  22. 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

  23. 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; 23

  24. Baltic NPP Feasibility Study Phase IPower Output Kaliningrad Region Power Sector • Diagram of Baltic NPP connection to the network after second unit commissioning

  25. Baltic NPP Feasibility Study Phase IPower 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.

  26. Baltic NPP Feasibility Study Phase IPower Output Baltic Region Energy Balance • The energy analyses shows a negative balance for the Baltic countries.

  27. Total Installed Costs Base Costs Supplementary Costs Financial Costs Owner’s Costs Direct Costs Indirect Costs Baltic NPP Feasibility Study Phase IFinancial 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 • 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 27

  28. Baltic NPP Feasibility Study Phase IFinancial 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 28

  29. Baltic NPP Feasibility Study Phase IFinancial 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 29

  30. Baltic NPP Feasibility Study Phase IFinancial 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 30

  31. Baltic NPP Feasibility Study Phase IFinancial 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

  32. Baltic NPP Feasibility Study Phase IFinancial and Economic Evaluation Operating Costs / Risk Analysis CONCLUSIONS • 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.

  33. Baltic NPP Feasibility Study Phase IFinancial 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

  34. Baltic NPP Feasibility Study Phase IFinancial 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

  35. Baltic NPP Feasibility Study Phase IFinancial and Economic Evaluation Conclusions • CAPEX is within international publicly announced price levels • At the selected set of assumptions, the project is financially feasible in all scenarios

  36. Thank you

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