© 2017 SE NNEGC Energoatom

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INVESTMENT PROJECTS

Tetiana Amosova,
Director for Investment and Future Growth, SE NNEGC Energoatom

Judging the performance in 2016, we can see that the energy sector has been leading the way in reforms. This leadership is also driven by investment projects that contribute to strengthening Ukraine's energy independence.


Experts recognise that all branches of the energy industry need advanced, energy-efficient and environmentally friendly technologies. The nuclear power is no exception.


Presently, SE NNEGC Energoatom is implementing eleven priority investment projects with a total approved value of UAH 66.724 billion. According to expert estimates, a new provisional value was updated because of the inflation to reach UAH 114.883 billion at the end of 2016.


These projects seek to improve the safety level, boost electricity generation, increase the Company's export capacity and maintain safe and efficient operations of existing nuclear power plants.


As part of our investment operations, SE NNEGC Energoatom cooperates with the global leaders, as we understand that such projects play an important role to strengthen the energy security of Ukraine and boost the country’s economic development.


Among the recent achievements of the Company is the Ukrainian energy sector’s largest loan raised from European institutions (the European Bank for Reconstruction and Development and the European Atomic Energy Community). The company borrowed €600 million to roll out Complex (Consolidated) Safety Upgrade Programme of Power Units of Ukrainian NPPs38 Complex (Consolidated) Safety Upgrade Programme of Power Units of Ukrainian NPPs (CCSUP) was approved by the Cabinet of Ministers of Ukraine, Resolution No. 1270 dd. 7 December 2011. In 2012, the initiative was updated to include additional post-Fukushima safety measures based on results of stress tests. The initiative will continue until 2020, costing UAH 20.1 billion. For more information about the Programme, please go http://zakon5.rada.gov.ua/laws/show/1270-2011-п . The initiative is designed to increase the safety level of power units at Ukrainian NPPs to the highest European standards. Moreover, SE NNEGC Energoatom is the world’s only operator of nuclear power plants that has managed to take out EBRD loans to improve the safety of nuclear power plants.


In its investment operations, SE NNEGC Energoatom focuses on continuation of existing investment projects, preparation for new ones and cooperation with international partners. This helps achieve the major goal, which is to generate a safe clean energy of the future.

APPROACHES TO INVESTMENT ACTIVITIES

Over the past years, the nuclear energy sector has proven that it has been and will continue to be a major electricity generation industry in Ukraine in the upcoming decades. The sector covers about 60% of the nation’s electric power needs. This is why the industry’s performance has an impact on the entire national economy, thus making investments in the sector so vital.

Key investment projects of SE NNEGC Energoatom

Complex (Consolidated) Safety Upgrade Programme of Power Units of Ukrainian NPPs

Reconstructing a service water supply system at South-Ukraine NPP

Building complex lines for solid radioactive waste treatment

Creating a training centre at Zaporizhzhya NPP

Completing power units No.3 and No.4 at Khmelnytska NPP

Constructing the Central Spent Fuel Storage Facility

Ukraine-EU Energy Bridge

Completing Tashlyk Hydroelectric Pumped Storage Power Plant

Reconstructing 750 kV outdoor switch gears


Our investment projects seek to boost electricity production, strengthen Ukraine’s energy independence, increase the Company’s export capacity, maintain safe and efficient operations of NPPs, extend the equipment’s lifecycle and replace gradually the existing power units with modern facilities.

Investment project map, 2016-2022

2016


Reconstructing a 750 kV outdoor switch gear at Rivne NPP


Reconstructing a 750 kV outdoor switch gear at Khmelnytska NPP


2017


Training Centre Building G


Expanding a 750 kV outdoor switch gear to connect a 750 kV Zaporizhzhya NPP – Kakhovka overhead line


Building and testing complex lines for solid radioactive waste treatment (Rivne NPP and Zaporizhzhya NPP)


2018-2019


Designing and constructing the Central Spent Fuel Storage Facility (a start-up facility)


Reconstructing the service water supply system at South-Ukraine NPP


Ukraine-EU Energy Bridge


Completing hydroelectric unit No.3 at Tashlyk Hydroelectric Pumped Storage Power Plant


2020


Complex (Consolidated) Safety Upgrade Programme of Power Units of Ukrainian NPPs


Completing hydroelectric unit No.4 at Tashlyk Hydroelectric Pumped Storage Power Plant


2021-2022


Completing Tashlyk Hydroelectric Pumped Storage Power Plant


Building complex lines for solid radioactive waste treatment (Khmelnytska NPP)


Constructing power units No.3 and No.4 at Khmelnytska NPP


Energoatom’s investment operations are in line with investment programmes approved by the National Energy and Utilities Regulatory Commission, namely:

  • Investment programme of electricity production for nuclear power plants39 For more information about the Investment Programme of Electricity Production for Nuclear Power Plants, please go to http://www.atom.gov.ua/en/
  • Investment programme of electricity production for Tashlyk Hydroelectric Pumped Storage Power Plant and Olexandrivska Hydro Power Plant40 For more information about the Investment Programme of Electricity Production for Tashlyk Hydroelectric Pumped Storage Power Plant and Olexandrivska Hydro Power Plant, please go to the Company’s web site http://www.atom.gov.ua/en/
  • Investment programme in heat supply41 For more information about the Investment Programme in Heat Supply, please go to the Company’s web site http://www.atom.gov.ua/en/
  • Investment programme in water supply and drainage42 For more information about the Investment Programme in Heat Supply, please go to the Company’s web site http://www.atom.gov.ua/en/ .

Setting investment priorities, Energoatom takes into account the following criteria:

  • Safe and efficient operations of NPPs and efforts to extend the equipment’s lifecycle
  • The enabling environment for Ukraine’s energy independence
  • Project implementation period of three to five years and moderate costs, an approach that helps implement projects at the expense of electricity and heat supply tariffs
  • Higher electric power generation driven by more efficient use of capacities in place
  • Higher export potential of the Company.

INTERNATIONAL COOPERATION IN INVESTMENT PROJECTS

Energoatom is implementing some of its investment initiatives in cooperation with international partners. This helps receive not only funding, but also research and technical assistance, as well as facilitates adoption of the world’s best practices across the Company. Energoatom has partnered with such international organisations as the International Agency of Atomic Energy (IAEA43 For more about IAEA, please go to https://www.iaea.org/ ), European Bank for Reconstruction and Development (EBRD44 For more about EBRD, please go to http://www.ebrd.com/ukraine.html ), European Commission45 For more about European Commission, please go to https://ec.europa.eu/ , Euratom46 For more about European Atomic Energy Community, Euratom, please go to https://ec.europa.eu/programmes/horizon2020/en/h2020-section/euratom , European Utility Requirements international group (EUR47 For more about EUR, please go to http://www.europeanutilityrequirements.org/ . The Company also cooperates with leading international companies that represent nations with the developed nuclear potential. For more information about this cooperation, please see this section below and the International Operations and International Technical Assistance section.


This Report presents key investment projects of the Company.


KEY INVESTMENT PROJECTS

Complex (Consolidated) Safety Upgrade Programme of Power Units of Ukrainian NPPs

About the programme

A powerful earthquake followed by tsunami in 2011 triggered an accident at Fukushima Daiichi Nuclear Power Plant in Japan. This disaster challenged the global atomic energy — either to improve or to disappear. This accident has become a reference point for many leading nations, including Ukraine, and drastically changed the attitude to safety at NPPs across the globe. In response, our country adopted the Complex (Consolidated) Safety Upgrade Programme of Power Units of Ukrainian NPPs, which covers all actions of the previous safety enhancement programme and additional post-Fukushima measures developed on the basis of stress tests taken by Ukrainian nuclear power plants with due regard to lessons learned from the Fukushima accident. The programme establishes mandatory safety enhancement measures to be in place at each power unit of NPPs.

Programme goals:
  • increase the safety level at Ukrainian nuclear power units in accordance with the new international standards of the IAEA and the EU;
  • reduce risks of damage to the reactor core and accidental releases of radioactive substances, including severe accidents;
  • reduce the number of equipment failures at nuclear power plants and of their unplanned shutdowns;
  • create necessary conditions to make decisions on extension of nuclear power units’ lifecycle.
Programme implementation period

2012–2020




Areas of focus

Replacing the equipment with advanced, more reliable and safe facilities.



Effect

Increased safety level of power units at Ukrainian NPPs to the highest European standards.



Funding

Provisional size of financing: UAH 20.1 billion.
Funded predominantly by Energoatom, the programme has been co-financed with credit funds from EBRD/Euratom since 2015.
In 2014, the Company raised €600 million48 The loan agreement with EBRD took effect on 19 December 2014, and the loan agreement with Euratom became effective on 28 May 2015, with a total loan amount being €600 million. For more about the agreements, please go to http://zakon2.rada.gov.ua/laws/show/985_032 in loans from European institutions (the European Bank for Reconstruction and Development and the European Community of Atomic Energy) to implement the programme.

Complex (Consolidated) Safety Upgrade Programme of Power Units of Ukrainian NPPs is an overarching initiative to improve the reliability and safety level of domestic power units.

Designing and constructing power units No.3 and No.4 at Khmelnytska NPP

About the project

Launched in 1986, the construction of power units No. 3 and No. 4 at Khmelnytska NPP (with a capacity of 1,000 MW each) was suspended in 1990 by a nuclear power plant construction moratorium. At present, the operational readiness of power unit No. 3 is estimated at 75% and that of power unit No. 4 is 28%. We are set to engage companies that have an extensive expertise in the manufacture and maintenance of power units with VVER-1000 type reactors. We consider Skoda J.S., Korea Hydro & Nuclear Power, Westinghouse, AREVA and others as equipment suppliers.

Goal

Generate additional electricity to strengthen Ukraine’s energy independence, meet the nation’s social and economic development targets and gain stronger position in the international electricity market.



Project implementation period

Khmelnytska NPP, power unit No.3 — 2023

Khmelnytska NPP, power unit No.4 — 2025


Areas of focus

Installation of reactor vessels and completion of existing structures of power units No. 3 and No. 4.


Effect

Completion of the power units at Khmelnytska NPP will help preserve the production potential in the nuclear power sector, which accounts for more than 50% of the electricity consumed in Ukraine.
After commissioning, power units No. 3 and No. 4 will generate additional 15 billion kWh a year.

Costs

Total approved construction costs: UAH 36.8 billion49 Total costs of power units No.3 and No.4 at Khmelnytska NPP are in the 2012 prices in line with the feasibility study approved by the Cabinet of Ministers of Ukraine, Order No. 498-p dd. 4 July 2012. .


Potential sources of funding:

  • Skoda JS a.s. is in talks with the Czech Republic Export-Import Bank to raise investments for the project. The funding is to cover the cost of the main equipment of VVER-1000 by Skoda JS a.s. and supplies, works and services that will be performed by the Czech side;
  • Energoatom’s own funds;
  • Additional foreign investment, in particular from interested European and Chinese investors;
  • One of the funding options may be the Ukraine-EU Energy Bridge investment project.

Ukraine-EU Energy Bridge50 The project was approved by the Cabinet of Ministers of Ukraine, Order No. 671-p Launch of the Ukraine-EU Energy Bridge Pilot Project dd. 15 June 2015.

About the project

This is a pilot project for the strategic synchronisation of Ukrainian and EU energy systems and expansion of Ukraine’s energy system capacity. The initiative involves funds to be raised for the completion of power units No. 3 and No. 4 at Khmelnytska NPP on account of electricity exports from Khmelnytska NPP’s power unit No. 2 to the EU countries.


Goal

Export Ukrainian electricity, ensure the energy independence of Ukraine and integration into the European electric power system.


Project implementation period

2019


Areas of focus

In this project, Energoatom is responsible for the upgrade of power unit No. 2 at Khmelnytska NPP and re-connection of the unit to Burshtyn Energy Island. Moreover, the Company seeks to provide for a reserve to cover internal needs of power unit No. 2 when the electricity is generated for the ENTSO-E51 ENTSO-E is the European network of transmission system operators for electricity. For more information, please go to https://www.entsoe.eu power system.


Costs

Provisional project costs: UAH 1.4 billion.
The investment project places no burden on the national budget, and investments will be repaid with electricity sales in the European market. Therefore, the country can allocate the raised funds to develop and modernise its electricity infrastructure, boost the efficiency and capacity of Ukrainian power units and complete the two units at Khmelnytska NPP, which today are mothballed with a high extent of operational readiness.


Effect

Energoatom will enter the EU energy market, and Ukrainian energy system will integrate into ENTSO-E. A long-term export contract for electricity from power unit No.2 at Khmelnytska NPP will be a financial instrument helping complete power units No. 3 and No. 4 at the nuclear power plant "as a pledge to raise loans without sovereign guarantees".


Constructing the Central Spent Fuel Storage Facility (CSFSF)

About the project

The project covers construction of the Central Spent Fuel Storage Facility in the Chernobyl Exclusion Zone52 The central facility to store spent fuel of VVER-type reactors operating at domestic nuclear power plants is being built in the Chernobyl Exclusion Zone (Kyiv Oblast) in accordance with the Law of Ukraine on the Central Spent Fuel Storage Facility, No. 4384 dated 9 February 2012. . Until recently, domestic nuclear power plants operated exclusively with the fuel from a Russian supplier, TVEL. Since 2005, however, Ukrainian NPPs have started using fuel assemblies made by a Japanese-American company, Westinghouse. Today, we deliver TVEL’s spent fuel from our power plants (except Zaporizhzhya NPP) to Russia for storage and treatment. The CSFSF will become a domestic facility for long-term and safe storage of spent fuel of both TVEL and Westinghouse in Ukraine.


Goal

Improve the spent fuel treatment system for domestic nuclear power plants to strengthen the energy independence of Ukraine by forgoing the SF export services to the Russian Federation.


Areas of focus

The construction of the Central Spent Fuel Storage Facility, manufacture of equipment and special SF casks based on technologies of Holtec International (United States).


Project implementation period

Until 2050, including a start-up facility to be launched until 2019.


Effect

An annual $200 million saving. Ukraine pays this much for SF exports to Russia. The construction and operation of the CSFSF will create jobs for redundant employees from Chernobyl NPP and locals. This is a social investment in Ivankiv and Polisky districts, as well as Slavutych town in Kyiv Oblast.


Costs

The project cost of UAH 37.22 billion is indicated in the CSFSF design documentation approved by Resolution No.380-p issued by the Cabinet of Ministers of Ukraine on 7 June 2017. Of these funds, UAH 4.76 billion is needed to construct and commission the first start-up facility that will make the CSFSF operational.


Sources of funding

Electricity supply tariffs, credit funds.


Building complex lines for radioactive waste treatment

Facilities for radioactive waste (RAW) treatment is a way to improve the RAW management at nuclear power plants. The complex lines will use state-of-the-art equipment and proven technologies such as incineration, high-pressure compaction, decontamination.



Goals

Introduce RAW management technologies to prepare radioactive waste for the long-term storage and disposal.


Start of operational testing

Zaporizhzhya NPP: late 2018

Rivne NPP: late 2018

Khmelnytska NPP: 2021

South-Ukraine NPP: 2021.

Effect

The commissioning of complex RAW treatment lines at NPPs will help:

  • manage RAW generated in the course of current operation of power units, as well as RAW accumulated on the sites of nuclear power plants since the beginning of operation;
  • streamline temporary storage of RAW at NPPs;
  • prepare RAW for the long-term storage and disposal in specialised storage facilities of State Specialized Enterprise “Central Radioactive Waste Treatment Company”.

Costs

Constructions costs: UAH 2.456 billion.


Sources of funding

Electricity supply tariffs, TACIS programme (€21.4 million).


Completing Tashlyk Hydroelectric Pumped Storage Power Plant

Tashlyk Hydroelectric Pumped Storage Power Plant (ТHPSPP) is a part of South-Ukrainian Energy Complex. Tashlyk Plant is a kind of battery. The water raised to its upper reservoir can be used at any time to produce electricity during peak consumption, an opportunity very important for Ukraine amid coal shortage.



Goal

Bring Tashlyk Hydroelectric Pumped Storage Power Plant to a full designed capacity (now only two of six hydroelectric units are in operation).


Major works

Increasing the upper reservoir from 3.5 million m3 to 14.4 million m3 (usable volume); raising the level of Olexandrivske reservoir to 20.7 m; completing general construction works, purchasing and installing equipment.


Project implementation period

2021


Effect

The facility covers the shortage of highly flexible generation capacities, creates stand-by capacities for peak consumption, and addresses the water supply issues in Mykolaiv Oblast.


Costs

Provisional costs of works: UAH 14.182 billion.


Sources of funding

Electricity supply tariffs, raised funds, including borrowings from international financial institutions.

Reconstructing the service water supply system at South-Ukraine NPP

Goal

Remove electricity production restrictions at South-Ukraine NPP imposed because of high water temperature in cooling systems in summer.


Major works

Construction of five spray pools and a pumping station on the bank of the Southern Buh River.

Project implementation period

2018–2019


Effect

A 700 million kWh rise in the average annual electricity production without any new generating capacities, a move that will boost the Company's annual revenues by approximately UAH 391.8 million.


Costs

Approved construction costs: UAH 986 million.


Sources of funding

Energoatom’s electricity supply tariffs.


Creating Training Centre Building G at Zaporizhzhya NPP

About the project

The Training Centre Building G at Zaporizhzhya NPP53 Launched in 2009, the project “Creating a National Training Centre for Energoatom’s repair staff and senior managers on the site of Zaporizhzhya NPP” is a part of the international technical cooperation programme between the EU and Ukraine. Many European leaders in the nuclear sector have joined the project, in particular Germany-based AREVA NP GmbH and CA&R Engineering. is an unparalleled international project to train repair crews and senior managers. It is a one-of-a-kind initiative, as the facility located on the site of Zaporizhzhya NPP will host a full-featured reactor simulator, 23 laboratories and 159 other simulators. The Training Centre Building G will be the core facility of the National Staff Training Centre.


Goal

Train all categories of personnel to ensure reliable and safe operation of power units at NPPs.

Project implementation period

2017


Funding

Provisional construction costs: UAH 729 million.


The European component of the project amounts to €13 million, including:

  • Contract financing — €7.3 million
  • Service contract — €5.7 million

The European Commission has met its commitment to supply methodological materials, special-purpose training tools (fully featured simulators), general-purpose technical equipment (office furniture, computers and projection equipment) to the Training Centre.

INVESTMENT PERFORMANCE IN 2016

Investment projects completed in 2016

  • Completed reconstruction of the 750 kV outdoor switch gears at Rivne NPP and Khmelnytska NPP

This helped supply additional electricity to the central Ukraine, which often suffers shortages, and reduce dispatching limits twofold. A new 750 kV power line connecting Rivne NPP and Kyivska substation supplied 5.3 billion kWh in 2016. Khmelnytska NPP ended 2016 with a record output of almost 15 billion kWh and an 82.5% rate of the installed capacity utilisation.

  • Premises at AtomRemontService were reconstructed to place training facilities at a fuel inspection and repair stand. In addition, room No.138 was completed in a cantonment of National Guard unit No. 3045 to provide guard services for Rivne NPP.

During 2016, the Company spent UAH 6.049 billion across all investment programmes, which was 58% higher than in 2015.

Projects under implementation in 2016 and 2017

  • Measures outlined in the Complex (Consolidated) Safety Upgrade Programme of Power Units of Ukrainian NPPs have been underway.
  • In 2016, the project for construction of the Central Spent Fuel Storage Facility received a number of important regulatory permits. On 6 July 2017, Energoatom was granted a licence of the State Nuclear Regulatory Inspectorate of Ukraine to build and commission nuclear installations. Therefore, we completed the regulatory stage of the project and entered an active construction stage onsite.
  • Ukraine-EU Energy Bridge is underway. This is a pilot project for the strategic synchronisation of Ukrainian and EU energy systems and expansion of Ukraine’s energy system capacity.
  • A great deal of works were completed in 2016 to build a 750 kV outdoor switch gear at Zaporizhzhya NPP. If funded sufficiently, the project is expected to be completed in September 2017. It will connect a 750 kV Zaporizhzhya NPP – Kakhovka overhead line.
  • Works are underway to build complex lines for radioactive waste treatment at NPPs. The facilities will see operational testing at Rivne NPP and Zaporizhzhya NPP by the end of 2017.
  • The Company continues the construction of the Training Centre Building G at Zaporizhzhya NPP.
  • Over 2016, Energoatom covered several stages in the service water supply system reconstruction, from approval of the cost estimate by the Cabinet of Minister of Ukraine to resumption of construction works at the end of the year. Designed for 36 months, the project has been on schedule up to date.

Investment prospects

The Company has its 20 construction projects approved (with total costs of UAH 2.849 billion). Additional five initiatives costing a total of UAH 3.587 billion have their design and estimate documentations developed and positive expert opinions’ received. Currently, the approval process is underway.


The major initiative is the completion of hydroelectric unit No.3 at Tashlyk Hydroelectric Pumped Storage Power Plant. It is currently undergoing the government expert review. If funding is provided in 2017, the construction of the start-up facility can be completed in 2018.


In 2016, the National Energy and Utilities Regulatory Commission approved Energoatom’s medium-term investment programme for 2017-2021 with total investments of UAH 115.331 billion.

PLANS FOR 2017 AND A MEDIUM TERM

In 2017, Energoatom will continue to focus on priority investment projects:

  • Complex (Consolidated) Safety Upgrade Programme of Power Units of Ukrainian NPPs
  • Ukraine-EU Energy Bridge
  • reconstruction of the service water supply system at South-Ukraine NPP
  • completion of Tashlyk Hydroelectric Pumped Storage Power Plant
  • construction of the Central Spent Fuel Storage Facility.

Moreover, we plan to complete the 750 kV outdoor switch gear at Zaporizhzhya NPP, the Training Centre Building G at Zaporizhzhya NPP, build complex lines for radioactive waste at the Zaporizhzhya NPP and Rivne NPP, and start construction of a RAW treatment facility at Khmelnytska NPP.