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VASSILIKO INDEPENDENT POWER PLANT

VASSILIKO INDEPENDENT POWER PLANT. Combined cycle power plant of 50+7 MW located in Limassol, Republic of Cyprus. | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |. Content. 1. Introduction to the project 1.1 VIPP project facts 1.2 Background of the project

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VASSILIKO INDEPENDENT POWER PLANT

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  1. VASSILIKO INDEPENDENTPOWER PLANT Combined cycle power plant of 50+7 MWlocated in Limassol, Republic of Cyprus | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  2. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS Content 1. Introduction to the project 1.1 VIPP project facts 1.2 Background of the project 1.3 Key data and assumptions 2. Project description 2.1 Technical analysis 2.2 Financial analysis 2.3 Activity plan and Ghant chart 3. Progress activities status 4. Contact | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  3. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 1. Introduction to the project 1.1 VIPP project facts • The idea of the VIPP project? Link between ESI and VIPP 1.2 Background of the project • Power environment in Cyprus, key stakeholders, events and policies 1.3 Key data and assumptions • Benchmarking and competitive advantage of VIPP in Cypriot power production market | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  4. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 1.1 VIPP Project facts (1/3) Vassiliko Independent Power Plant (VIPP) is an SPV* founded with the aim to lead preparation, construction, operation, maintenance and management of the first private power plant, integrated to the Cypriot electric power grid. The power plant would initially use HFO, as the main fuel and consequently be readily convertible to natural gas (NG), when available in Cyprus. It is foreseen to be designed as a Combine Cycle Power Plant (CCPP), based on a Gas turbine and Heat Recovery Steam Generator (HRSG), Steam Turbine and Generator with a total capacity of 50 MW electrical plus 7 MW internal combustion engine unit and 7 MW thermal energy available. *special purposes vehicle = legal entity/enterprise founded for the purpose of implementing a project/investment | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  5. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 1.1 VIPP Project facts (2/3) • Facility is located within the Vassilikos Cement Works ltd boundaries, Larnaca district | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  6. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 1.1 What is VIPP Project (3/3) Energy System Integrator, a company from Serbia, has a signed Letter of Authorization, fully authorizing them to conduct all negotiations related to the VIPP project completion. | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  7. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 1.2 Background of the project (1/2) Electricity Authority of Cyprus (EAC) is operating a pool of generation assets of which the major units show much less conversion efficiency than the new VIPP plant. EAC efficiency of about 32% in 2006, is the consequence of an old power plant pool based on HFO steam turbines and open cycle gas turbines fired by LFO/HFO. Cyprus electricity generation is experiencing substantial shortage of electrical power. Due to the explosion near Vassiliko Power Plant (in July 2011), over 60% of installed capacity of electrical energy was lost, and is planned to be recovered in 2013/14. As a result of this, large industrial and commercial consumers are paying comparatively high tariffs | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  8. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 1.3 Background of the project (2/2) VIPP on the other hand is not obliged to operate inefficient plants and its tariff is not regulated. EAC has only very limited options to maintain existing key customer groups via pricing policy, which opens room for private entity to pick those customers with a tailored pricing which yield the best specific revenues. Therefore, VIPP is expected to employ a state of the art CCGT power plant with a leaner, highly efficient organizational structure. VIPP project is already supported and backed-up by major industrial consumers in Cyprus, with Power Purchase (pre)Agreements. | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  9. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 1.3 Key data and assumptions (1/3) Cyprus Energy Regulatory Authority (CERA) indicated that if EAC Generation insufficiently supplies the the EAC Distribution customers, Cyprus Transmission System Operator (TSO) would act as an intermediate agent. TSO would buy the required energy from VIPP and sell it to EAC Distribution. This mechanism is an important instrument to reduce the risk of VIPP marketing efforts combined with price discounts. VIPP shall take into account that the tariff which the TSO is willing to pay as a intermediate agent, is probably significantly below the tariff VIPP could achieve by directly selling to end-consumers. | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  10. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 1.3 Key data and assumptions (2/3) It is important to note that EAC is applying an automatic tariff adjustment mechanism. This links the power tariff with the prices for heavy fuel oil. The base fuel prices are published on the EAC website monthly*. The consequence of this link is, that international crude oil prices, which determine the HFO, LFO and in NG prices, constitute not only a cost aspect for the project, but also a revenue aspect. * www.eac.com.cy/EN/ | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  11. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 1.3 Key data and assumptions (3/3) As long as the average efficiency of the VIPP project is higher than average EAC efficiency, this mechanism provides a sufficient protection for the project against variations of international fuel prices. Once NG is available in Cyprus, this clause is assumed to be adjusted to reflect the terms of the NG contract CERA indicated that in a situation were the capacity of EAC Generation is insufficient to supply all the customers of EAC Distribution, then TSO would act as an intermediate agent –i.e. TSO would buy the required energy from VIPP and sell it to EAC Distribution. This mechanism is an important instrument to reduce the risk of the event that VIPP marketing efforts combined with discounts are not sufficient to make enough customers switch from EAC to VIPP. | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  12. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 2. Project description 2.1 Technical analysis • Details on the technical aspects of the project: description of the combined cycle, equipment specifications guidelines 2.2 Financial analysis • Details on the financial aspects of the project: nature of the investment, cash flow dynamics, return rate… 2.3 Activity plan and Ghant chart • Activity plan, key steps, milestones and current accomplishments… | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  13. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 2.1 Technical analysis (1/7) The CCPP will be located in a piece of plot within the wider area of the Vasilikos Cement Plant (approx. coordinates 34°43’325” N, 33°18’937” E. Power will be generated in the gas and steam generators at 11.5 kV. The turbine generators will be connected to the existing VCW 11.5 kV sub-station. The project will provide generation capacity to the national grid by end of 2014, and will be an important component to the country’s power generation infrastructure. It is stressed that all solutions proposed aim at a high reliability in terms of functionality, safety and operability. | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  14. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 2.1 Technical analysis (2/7) | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  15. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 2.1 Technical analysis (3/7) The project will be an energy complex with the following primary components: • Power generation system; • High Voltage power distribution system; • Utility systems; • Process systems; • Fuel oil storage tanks; • LNG feeding system The CCPP is designed to use heavy fuel oil (HFO) and to be readily convertible to natural gas when it is available in the future. HFO will be stored at the fuel storage facilities of the plant. | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  16. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 2.1 Technical analysis (4/7) The plant configuration of the CCPP will be: • 1 Combined Cycle Power Plant (CCPP) based on the gas turbine and generator, Heat Recovery Steam Generator (HRSG) and Steam Turbine and generator; • 1 Cogeneration Unit (CHP) based on the machine with rated electric output around 8 MVA, to cover the needs for cold start reserve. The general arrangement of this option 1 CCPP (50MW) has been decided on for the following reasons: • optimal use of the available space; • integration with the location of existing services ; • minimal influence on the Vasilikos Cement Plant industrial area | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  17. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 2.1 Technical analysis (5/7) | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  18. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 2.1 Technical analysis (6/7) Vassiliko Independent Power Plant preliminary layout | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  19. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 2.1 Technical analysis (7/7) According to this plant layout, the gas turbine generator packages with the HRSG’s will be installed in open air. The steam turbine will be installed within an enclosure designed to limit noise. Water treatment plants and water storage tanks, as well as turbines and HRSG will be close together, enabling short runs for the water pipes. For security reasons, a fence will be considered around the power plant and the Vasilikos Cement plant. | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  20. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 2.2 Financial analysis (1/4) • Price of electricity in Cyprus is, for many years now, among the highest in the EU Source: Eurostat * prices are given in € per kWh | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  21. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 2.2 Financial analysis (2/4) | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  22. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 2.2 Financial analysis (3/4) Internal rate of return (IRR) and Net present value (NPV) analysis * minus 3 500 000 or HFO to NG conversion ** Plant decommissioning and land rehabilitation | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  23. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 2.2 Financial analysis (4/4) | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  24. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 2.3 Activity plan and Ghant chart (1/2) | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  25. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 2.3 Activity plan and Ghant chart (2/2) | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  26. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 3. Progress activities status (1/3) | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  27. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 3. Progress activities status (2/3) | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  28. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 3. Progress activities status (3/3) | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

  29. VASSILIKO INDEPENDENT POWER PLANT (VIPP), CYPRUS 4. Contact MrNikola Milutinović Project Manager (office in Limassol) Energy System Integratore: nikola.milutinovic@esi.co.rs c: (+357) 96 475 773 MrMiljanRadunović Project Manager (office in Belgrade) Energy System Integrator e: miljan.radunovic@esi.co.rs c: (+381) 64 873 1106 For further details and information feel free to contact responsible personnel of Energy System Integrator: Note: attached to this presentation is a technical questionnaire | Energy System Integrator, Serbia | www.esi.co.rs | office@esi.co.rs |

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