Market Research Finland - Nuclear Energy Market in Finland 2009

1. Nuclear Energy ‐ Nuclear Energy Finland September 2009

2. Executive Summary  In 2008, 30% of electricity was generated through nuclear power  Finland has four nuclear power plant units with a total net capacity of 2,656 MW Overview  It is estimated that 4,800 MW of new nuclear generating capacity is required by 2030 to meet domestic demands meet domestic demands  A new nuclear plant is under construction and three more are expected by 2020  Growth in energy intensive industries Market  Rise in net electricity imports Characteristics  Credit issues faced by players in the market  Rising electricity price and cost effective electricity generation  Legislations governing nuclear activity Legislations governing nuclear activity  Procedure for establishing a nuclear facility in Finland Regulations  Guidelines for obtaining a construction license for a nuclear power plant  Guidelines for obtaining an operation license for a nuclear power plant  The market is dominated by a few players which include – Elektrobudowa Major Players – Teollisuuden Voima Oy – Fennovoima Oy – Fortum Power & Heat Oy NUCLEAR ENERGY – FINLAND.PPT 2

3. •Market Overview •Market Overview •Market Characteristics •Regulations R l ti •Government Policies and Initiatives •Nuclear Waste Management N l W M •Major Players •Appendix d NUCLEAR ENERGY – FINLAND.PPT 3

4. Nuclear Energy in Finland is the primary source of electricity generation Overview Electricity Production TWh •Nuclear energy accounted for 30% of total Nuclear power 90 electricity generated in 2008 80 82 79 78 74 Hydro power •Finland's four nuclear power plant units have a 70 27% 68 28% 29% Natural gas 30% total net capacity of 2,656 MW 60 33% Coal 18% 14% Biofuel  The annual load factors of all the units have 50 18% 23% 40 12% 20% 12% Peat averaged at ~ 90% since its inception 13% 30 9% 19% 3% 13% 20% 15% Others •Major uranium mining areas include M j i i i i l d 20 10% 17% 11% 12% 13% 7% 13%  Eno in eastern Finland, Askola in southern Finland 10 8% 4% 13% 12% 4% 8% 4% 8% 2% 8% 2% as well as in the Uusimaa, Northern Karelia and 0 Lapland provinces 2004 2005 2006 2007 2008 •It has been projected 4,800 MW of new It has been projected 4,800 MW of new Growth in Nuclear Generation generating capacity is required by 2030  Finland needs new capacity both to meet new TWh demand growth and to replace old capacity, 69.2 70 primarily coal‐fired plants +5% 60 •Nuclear power development is expected to be 50 the primary measure to cut the CO2 emissions 40 30 towards meeting the countries emission 22.2 20 targets 10 0 2008 2030e NUCLEAR ENERGY – FINLAND.PPT 4

5. The country currently hosts four nuclear plants while another facility is under construction Existing Nuclear Power Plants Upcoming Nuclear Power Plant •A fifth nuclear power plant – Olkiluoto 3 – is Plant Olkiluoto 1 & 2 Loviisa 1 & 2 under construction Teollisuuden Fortum Power & •The plant will have a 1,600 MW European Operator Voima Oy (TVO) Heat Oy pressurized reactor Commercial •Areva in collaboration with Germany's Siemens 1979 & 1982 1977 & 1981 Operation is building the plant for electricity firm TVO is building the plant for electricity firm TVO Licensed Till 2039 & 2042 2027 & 2030 •It is expected to go online in mid 2012 Boiling Water Pressurized •The plant was initially expected to be Type Reactor Water Reactor functional by mid 2009 but has been stalled Power (MWe) P (MW ) 2 x 860 2 860 2 x 488 2 488 due to operational delays d i ld l Production  Areva has invested USD 810 mn on the Olkiluoto 14.4 TWh 8.1 TWh project in the first half of 2009 (’07) Load Factor  The delay of the project is estimated to lead to an 95.6% 95 6% 95.4% 95 4% additional costs of USD 3.4 bn dditi l t f USD 3 4 b ('07) NUCLEAR ENERGY – FINLAND.PPT 5

6. Players are capitalizing on the opportunities in the market and developing new nuclear plants Other Nuclear Project Expected to be Established Operator TVO Fennovoima Fortum Municipalities of Pyhaejoki, p y j , Site Sit Olkiluoto Olkil t Hastholmen in Loviisa H th l i L ii Ruotsinpyhtaeae and Simo Capacity (MW) 1,000‐1,800 1,500‐2,500 1,000‐1,800 Pressurized water reactors European Pressurized reactor, Pressurized water reactors (VVER‐ Reactor Type (PWR) and Boiling Water Boiling Water Reactor (SWR‐ 1000), ABWR, Economic Simplified Reactor (BWR) 1000) or Advanced BWR (ABWR) BWR Toshiba, GE‐Hitachi, Mitsubishi Toshiba, GEHitachi or a Russian Supplier alternatives Areva and Toshiba or a Korean supplier supplier Construction date 2010 2012 NA Application for Apr‐08 Jan‐09 Feb‐09 Decision‐in‐Principle Operational Date 2020 2020 2020 Cost USD 4.4‐5.9 bn NA USD 5.9‐8.8 bn • The existing infrastructure at • Plant will provide electricity for • Facility will be used for combined Olkiluoto which includes its owners at production cost, heat and power production nuclear waste management with each partner getting a • The spent nuclear fuel will be Other Facts and the basic organization share of output in proportion to disposed of at Olkiluoto in Eurajoki will benefit the operator its share of ownership • Electricity generated will be to all electricity users l i i NUCLEAR ENERGY – FINLAND.PPT 6

8. Market Characteristics Rising electricity price and cost Growth in energy intensive effective electricity generation industries Market Characteristics Credit issues faced by players in the market Rise in net electricity imports NUCLEAR ENERGY – FINLAND.PPT 8

9. The country comprises of major industries with large energy requirements forwarding growth in nuclear power Major energy intensive industries Segmentation of electricity consumption •Majority of the power consumed in Finland is Industry by the industrial sector 25.8% 19.8% Household & Agriculture •The country comprises of industries which are Services & Construction major consumers of power such as pulp and 3.3% Losses paper, metal and engineering industry, and shipbuilding p g •According to a survey by TNS Gallup, for 51.0% Finnish power company TVO, it has been inferred that electricity demanded will increase in Finland in the next 10 30 years increase in Finland in the next 10‐30 years •The main reasons for the increase in electricity consumption are expected to be the growth of 11.0% Forest industrial production, the increase in Meat Processing 15.3% Chemicals automation, the electrification of traffic, and a automation the electrification of traffic and a 55.8% Others general increase in the standard of living 17.9% NUCLEAR ENERGY – FINLAND.PPT 9

10. Shortfall of domestically produced electricity will drive the market; players face major credit issues Rise in net electricity imports • The shortfall in electricity generation has led to an increase in net electricity imports • Furthermore, net electricity imports accounted for approximately 15% of energy consumption in 2008 Net Electricity Imported +27% TWh +11% 20 16.9 17.0 15 11.4 12.6 10 +252% 4.8 5 0 2004 2005 2006 2007 2008 Credit issues faced by players in the market • The market has been seen to be risky as many issues crop up affecting credit including h k h b b ik i ff i di i l di  Construction cost overruns,  Negative public reaction to potential safety and security problems at nuclear plants  Lack of experience with new plant design  Lack of a long‐term solution for storage of radioactive waste leading to long‐term cost uncertainty Lack of a long term solution for storage of radioactive waste leading to long term cost uncertainty NUCLEAR ENERGY – FINLAND.PPT 10

11. Rising electricity prices and the cost advantages of nuclear power is expected to lead to a growing market Rising electricity price and cost effective electricity generation • The price of market electricity has been on the rise due to rising demand and shortfall in production • This creates strong opportunities for players to enter the energy market Averaged Monthly Mean Price USD Cents/KWh Since 2007, the average 10 7.5 monthly mean price of 4.4 44 electricity has risen by electricity has risen by 5 70% 0 2007 2008 • It has been estimated that electricity generated via nuclear power is most cost efficient in comparison with other It has been estimated that electricity generated via nuclear power is most cost efficient in comparison with other sources in Finland nuclear energy Price of electricity generated by various sources (2003) +17% USD cents/KWh 4.10 4 10 4.80 4 80 5 3.50 0 Nuclear Coal Natural Gas • Furthermore with emission trading at USD 29 5/t CO2 the electricity prices for coal and gas increase to USD 6 5 Furthermore, with emission trading at USD 29.5/t CO2, the electricity prices for coal and gas increase to USD 6.5 c/kWh and USD 5.8 c/kWh respectively NUCLEAR ENERGY – FINLAND.PPT 11

13. Regulations Guidelines for obtaining an Legislations governing nuclear operation license for a nuclear power plant activity Key Regulation s Guidelines for obtaining a Procedure for establishing a construction license for a nuclear power plant nuclear facility in Finland NUCLEAR ENERGY – FINLAND.PPT 13

14. Legislations governing nuclear activity • It establishes general principles governing the regulation of the use of nuclear energy, the establishment of a licensing procedure and nuclear waste management • States that a license is required for the manufacturing, production, handling, use and storage of nuclear materials The Nuclear Energy Act, 1987 • Radioactive waste management is regulated by this act. It allocates responsibilities between waste producers and government authorities, incorporates waste management criteria into the licensing procedure and provides the basis for financing the waste management system • A license must be procured under this act for the transportation of nuclear materials and waste issued by the STUK • Aims to protect human health from the adverse effects of radiation • Regulates all activities that cause or may cause exposure to radiation The Radiation The Radiation t as d e e t e e s o ce s g equ e e ts a d app es to o s g, o o s g a d atu a • It has different levels of licensing requirements and applies to ionising, non‐ionising and natural Protection Act, radiation 1991 • To obtain a license under this act an application is given to the STUK with information regarding the equipment and protective shields used in the activities, quality of personnel and work standards, and the system followed for the disposal of radioactive waste • All mining activities are regulated by this act • The act forwards that in order to execute mining or enrichment operations for producing uranium or The Mining Act thorium requires a license by the Government which may be granted to Finnish citizens, corporations or foundations as well as to individuals, entities or authorities residing within the member states of the European Union NUCLEAR ENERGY – FINLAND.PPT 14

15. Legislations governing nuclear activity • It makes the operators of nuclear power plants responsible for damages caused to third parties The Nuclear • The total liability of a nuclear power plant situated in Finland has been limited such that the plant Liability Act, 1972 must compensate for damages to a maximum of 175 mn Special Drawing Rights • Finland’s international agreements makes contracting countries compensate the injured Finland s international agreements makes contracting countries compensate the injured Transportation • Regulates all modes of transportation of radioactive substances of Dangerous Substances Act • Applies to international and domestic transport Electricity y Market Act • Opened up access to distribution networks and allows foreign ownership in electricity supply Opened up access to distribution networks and allows foreign ownership in electricity supply Act on Competition • Activities must be compatible with the European Community law on competition Restrictions Land Use and • Requires a land use plan for power plants and other facilities to be built on plant sites, and provides l d l f l d h f l b b l l d d Building Act guidelines for their planning Environmental Protection Act • Lays down various requirements relating to environmental protection Law on Water L W t Resources • Permits are required from environmental authorities for the use of cooling water in power plants Law on Air Protection • States the limits that the government must impose for non‐radioactive atmospheric emissions Law on Law on •S States the measures that operators must take while building the facility in the event of a nuclear h h k hil b ildi h f ili i h f l emergency preparedness emergency NUCLEAR ENERGY – FINLAND.PPT 15

16. The procedure for establishing a nuclear facility in Finland Developing a nuclear power plant • There are primarily 4 stages towards the development of a nuclear facility Environmental Decision in Construction Operation Impact Principle License License Assessment • Operator files an fl application to the Government for a • Before the • Coordinated by the • Once the DiP is Decision‐in‐Principle construction of the Ministry of affirmed the ( ) (DiP) p plant is on the verge g Employment and l d operator applies for t li f • EIA report is of completion, the Labor a construction attached to the operator applies for • Operator carries out license application an operating license an environmental • This license is issued • Government carries for the facility impact assessment p by the Government y out a safety out a safety • The Government The Government on the construction after a rigorous appraisal from STUK issues this license and operation of the assessment and a statement based on various nuclear facility procedure from the considerations municipality in the area NUCLEAR ENERGY – FINLAND.PPT 16

17. Guidelines for obtaining a construction license for a nuclear power plant Environmental Government Parliament Impact Assessment Ministry of Trade and Submits the Government a Application moves to the pp Environment (KTM) Environment (KTM) review addressing issues of Parliament for approval waste management including methods proposed, safety and Preliminary safety environmental aspects, cost and Grant of the license is Application for assessment from suitability to Finnish conditions still contingent upon a construction t ti STUK public safety, workforce license protection, forwarded by environmental the operator protection, town planning and building Safety assessment by the y y Application is approved pp pp requirement, technical i t t h i l areas and neighboring or disapproved by the expertise, financial municipal councils Government resources and final decommissioning Applicant provides pp p Consultation with government agencies such as the Ministry of Defense, concerned State Provincial Office, C lt ti ith t i h th Mi i t fD f d St t P i i l Offi information for Regional Council and Regional environment Centre and Advisory Committee on Nuclear Energy public consultation • Construction and operation of nuclear facilities is prohibited without a license • Licenses are granted to those entities under the jurisdiction of the EU member status Licenses are granted to those entities under the jurisdiction of the EU member status • The Government must reject the proposal if the municipal council responsible for the proposed site opposes the application NUCLEAR ENERGY – FINLAND.PPT 17

18. Guidelines for obtaining an operation license for a nuclear power plant Intermediate Government Authorities KTM assess the financial security requirements based on the act b d h related to waste management Application for operational Application moves to the license license government for approval f l forwarded by STUK assess the safety, physical protection, emergency planning, the operator non‐proliferation requirements and the financial guarantee that the operator can cover the possibility of a nuclear damage ibili f l d caused by the facility • Operating licenses are granted for a fixed period of time • License period is subject to change during the period of its validity by the Government • The license can be revoked if it undermines any of the acts basic principles, if it dies, loses legal capacity or if the institution becomes y p p , , g p y bankrupt or ceases to operate the facility for any other reason • License requirements of the Nuclear Energy Act are reinforced by provisions for criminal offences  Offences include use of nuclear energy without the appropriate license, infringement of particular provisions of the act, failure to observe license conditions, failure to comply with safety, physical protection or emergency planning requirements, or interference with equipment installed by STUK to monitor nuclear power facilities  The STUK has the authority for search and entry, to access records, take samples and install monitoring devices. It require the operator to submit reports and provide information regarding the method of production of fuel or the manufacture of equipment to be used NUCLEAR ENERGY – FINLAND.PPT 18

20. Government Policies & Initiatives Policies towards reducing CO2 emission CO2 emission Key Policies P li i Introduction of a windfall Major research and profits tax fi development activities d l i ii NUCLEAR ENERGY – FINLAND.PPT 20

21. The governments targets to reduce carbon dioxide emissions will benefit the nuclear power industry Policies towards reducing CO2 emission • The government has two major targets to be met due to international agreements  The European Union has forwarded directives to cut CO2 emissions by at least 20% by 2020, compared to 1990 levels  Under the Kyoto Protocol, the country must reduce their greenhouse gas emissions by a total of 8% from the 1990 level by the first commitment period of 2008–2012 – The most significant greenhouse gas, carbon dioxide, accounts for over 80% of all greenhouse gas emissions in Finland • The State of Finland will contribute to this goal by acquiring on average 2 mn tons of emission reductions per year with the help of the Kyoto flexible mechanisms • It has been estimated that the government shall forward initiatives to develop 4,800 MW of new nuclear power capacity by 2030 in order to meet the targets Electricity Procurement by Source of Energy in Finland 2005 2011 The share of emission‐ Gas free energy sources is Gas 11% Nuclear expected to grow from Coal, Oil 16% 26% 54% to 66% Nuclear 10% Coal, Oil Coal Oil 34% 7% Imports 7% 20% 12% Imports Wood Waste 15% 5% 17% 16% y , Hydro, Wind 4% Peat P Hydro, Wind Wood Waste Peat NUCLEAR ENERGY – FINLAND.PPT 21

22. Major research and development activities carried out by the State towards developing this segment Overview Sources of Funding •R&D activities have largely focused on safety and operational performance of the power 4.0% Power Companies 3.0% 3 0% plants, and the management and disposal of l d h d di l f 4.0% Research Funds waste 11.0% VTT Tekes •Annual funding for national nuclear energy 8.0% EU research is ~USD 69.2 mn Others  Additi Additional funding is received from Tekes, the l f di i i df T k th 70.0% 70 0% Finnish Funding Agency for Technology and Innovation •The country has no institutes dedicated to nuclear research Research Areas  Most research takes place at the VTT Technical Research Centre of Finland 10.0% •National research programmes on nuclear 0.4% Nuclear Waste energy Management  Nuclear Power Plant Safety (SAFIR2010), 2007– Reactor Safety 28.4% Fusion 2010 61.2% Others  Research Programme on Nuclear Waste Management (KYT2010), 2006–2010  Euratom – Tekes Fusion Energy Cooperation Euratom Tekes Fusion Energy Cooperation, 2007–2011 NUCLEAR ENERGY – FINLAND.PPT 22

23. The State plans on implementing a windfall profit tax for The State plans on implementing a windfall profit tax for nuclear and hydro power facilities Introduction of a windfall profits tax on nuclear and hydro power plants • The Finnish government plans on implementing a windfall profit tax on the existing nuclear and hydro power facilities by 2011 and hydro power facilities by 2011 Overview • The Ministry of Employment and the Economy has instated a working group which will look into the specifics of the tax • The tax is intended to offset windfall profits that utilities with nuclear and hydropower Purpose generation make selling their free CO2 allocations generation make selling their free CO2 allocations Application • The tax would apply to nuclear and hydropower plants built before 1997 • The tax levied conforms to EU regulations Major • It should not hamper the competitiveness of Finland's energy intensive industry Considerations • Outcome of the tax should not lead to an increase in electricity prices for consumers and industry Expected Tax • The tax rates is expected to range from USD 1.5 to USD 14.7 per MWh Structure • Depending on the level, the government has estimated that it will generate between USD 48.6 Financial mn and USD 486 mn in annual revenue Benefits • This tax is expected to add to the state funds which can be implemented to further the energy sector in Finland NUCLEAR ENERGY – FINLAND.PPT 23

25. Nuclear Waste Management Developments in nuclear waste Current scenario management Nuclear Waste Managemen t Provisions of nuclear waste management Classification of nuclear waste NUCLEAR ENERGY – FINLAND.PPT 25

26. Developments in nuclear waste management 2004‐2009: Ground‐level service and monitoring buildings for ONKALO under construction. Excavation of the access tunnel to reach a depth of 420 metres at an investment of USD 103 mn 1983: The Finnish Government set the overall schedule on the 2009‐2011: Research on the mechanical characteristics of the Finnish nuclear waste management programme and began Finnish nuclear waste management programme and began bedrock, and layout adaptation of the repository bedrock, and layout adaptation of the repository scanning potential sites for final disposal of spent fuel 2012: Posiva plans on submitting an application for a construction 1987: Interim storage of spent nuclear fuel started in Olkiluoto license for the final disposal facility with wide scale field research in 5 municipalities for the final 2015: Construction of the final disposal facility to begin disposable site 1970 1980 1990 1995 2000 2005 2020 • 2003: • 1970: Plans • 1988: • 2000: • 1994: Municipality for nuclear • 1977‐1978: 1977‐1978: Construction Construction Olkiluoto Olkiluoto Parliament of Eurajoki waste Operation of of low and was selected • 2020: Final banned the issued a management reactors intermediate as the site disposal is import and permit for began with started in level waste for final expected to export of ONKALO ‐ an construction Loviisa and repository in disposal of begin nuclear underground of the plants Olkiluoto Olkiluoto spent waste characterizat began b nuclear fuel l f l ion facility Interim storage 1992: Final disposal of low and intermediate level waste started in Olkiluoto began in began in 1993: Construction of low and intermediate level waste repository started in Loviisa 1993: Construction of low and intermediate level waste repository started in Loviisa Loviisa 1995: Posiva Oy was established to manage the final disposal of spent nuclear fuel NUCLEAR ENERGY – FINLAND.PPT 26

27. Classification of nuclear waste Types of nuclear waste under the Nuclear Energy Act Current nuclear waste scenario in Finland Current nuclear waste scenario in Finland High‐Level Waste Operating Waste p g Decommissioning Waste g (including spent nuclear fuel) (i l di t l f l) • Operating waste consists of low (LLW) and of low (LLW) and • The four nuclear power The four nuclear power • Decommissioning refers to Decommissioning refers to intermediate level (ILW) plants produce ~ 70 nuclear waste waste tonnes of spent fuel a year management actions taken  LLW includes protective • Spent nuclear fuel can be after a nuclear power plastic sheets, tools, reprocessed but that is not plant has been closed protective clothing and protective clothing and the case in Finland. Spent h i Fi l d S •SSome of the structures in a f h i towels used in service work fuel is allowed to cool in a plant become radioactive  ILW consists of the ion‐ exchange resin used to water pool for a few years, over time. One of the most purify the process water after which it is transferred important structures in • Operating Waste Operating Waste to interim storage facilities g this respect is the reactor p  Olkiluoto 150‐200 m3/yr on the plant site pressure vessel  Loviisa 100‐150 m3/yr NUCLEAR ENERGY – FINLAND.PPT 27

28. Provisions of nuclear waste management Provisions under the Nuclear Energy Act • ”Nuclear waste generated in connection with or as a result of the use of nuclear energy in Disposal Norm Disposal Norm Finland shall be handled, stored and permanently disposed of in Finland” • Th h dli The handling, storing and permanent disposal of nuclear waste originating from other countries t i d t di l f l t i i ti f th ti Dumping is forbidden • The nuclear power companies are responsible for all the costs related to nuclear waste The nuclear power companies are responsible for all the costs related to nuclear waste management, including decommissioning Role of power  The power companies bearing the waste management obligations have established a joint company, Posiva companies Oy, to execute the necessary research and implementation of spent fuel disposal • The costs of waste management is factored in the price of electricity produced by the nuclear power plants power plants • The purpose of this fund is to collect, store and reliably invest the funds towards developing Nuclear Waste facilities as well as carry out research projects for storing nuclear waste in the future Management • The fund contains approximately USD 2 2 mn The fund contains approximately USD 2.2 mn Fund • The fund is controlled and administered by the Ministry of Trade and Industry NUCLEAR ENERGY – FINLAND.PPT 28

29. Nuclear waste management is dominated by existing companies in the nuclear energy segment Nuclear Waste Management Scenario in Finland • Posiva Oy, established in 1995, is an organization responsible for nuclear waste management Overview in Finland • The company had a turnover of ~ USD 81 mn in 2008 • Posiva is owned by Teollisuuden Voima Oyj (60%) and Fortum Power & Heat Oy (40%) which Ownership p are the largest companies in nuclear power generation • Both companies share the cost of nuclear waste management • Its activities include the final disposal of spent nuclear fuel of the owners including the construction, operation and eventual decommissioning and dismantling of the final disposal Activities facility y • It is responsible for research into the final disposal of spent nuclear fuel and also provides expert nuclear waste management services • The spent fuel which is stored underground in Louviisa and Olkiluoto is expected to be New Facility New Facility transferred from existing water pool storage facilities to a final disposal area in Olkiluoto transferred from existing water pool storage facilities to a final disposal area in Olkiluoto • The plant should be functional in around 2020 • The two players in the nuclear power generation market have ownership over the company Monopolistic Nature which makes it difficult for new players to enter the market considering the importance placed on nuclear waste management by the Government of Finland l d l t t b th G t f Fi l d NUCLEAR ENERGY – FINLAND.PPT 29

30. •Market Overview •Market Overview •Market Characteristics •Regulations R l ti •Nuclear Waste Management •Government Policies and Initiatives G P li i dI i i i •Major Players •Appendix d NUCLEAR ENERGY – FINLAND.PPT 30

31. Players in the Market (1/4) Company Snapshot: Elektrobudowa Corporate Information Financial Performance Headquarters Katowice Revenue Revenue Profit fi USD mn Profit / Loss USD mn Founded 1953 400 331.7 25 Construction and installation services; Area of Expertise 300 280.2 20 manufacturing electrical power equipment 191.0 15 Dariusz Manko – Ch i D i M k Chairman 200 118.7 141.0 10 Key People Jacek Faltynowicz – President 100 5 0 0 2004 2005 2006 2007 2008 Business Highlights Business Highlights • The company operates in various business segments  Power generation sector ‐ Technical consulting, engineering, procurement of materials and equipment, electrical works, testing, commissioning and start‐up, service of operated equipment  Power distribution sector ‐ Manufacture of medium voltage and low voltage switchgear assemblies Power distribution sector ‐ Manufacture of medium voltage and low voltage switchgear assemblies  Industrial automation sector ‐ Executes complex automation projects, data and communication systems for power generation plants, industrial facilities, civil, industrial and residential construction, public utility facilities • It signed a contract for the electrical works and the participation in the commissioning of the reactor section of a nuclear power plant in Finland which is under construction  The signed contract is estimated at USD 9.3 mn  Operations began in Mar 2008 and is expected to be completed by 2011 NUCLEAR ENERGY – FINLAND.PPT 31

32. Players in the Market (2/4) Company Snapshot: Teollisuuden Voima Oy Corporate Information Financial Performance Headquarters Eurajoki Revenue Revenue Profit fi USD mn Profit / Loss USD mn Founded 1969 400 360.5 0 334.0 331.1 Construction of power plants and electricity 319.3 292.8 Area of Expertise 300 ‐20 generation Timo Rajala – Ch i Ti R j l Chairman 200 40 ‐40 Key People Jarmo Tanhua – President and CEO 100 ‐60 0 ‐80 2004 2005 2006 2007 2008 Business Highlights Business Highlights • It is a company owned via a public‐private partnership; 43% ‐ government (including 27% by Fortum) and 57% private • The output of the plants are contracted to each owner based on their share in the company while any unwanted portion is sold by them to the Nordic market • The companies presence in the energy market  Owns and operates two nuclear power plant units, Olkiluoto 1 and Olkiluoto 2 at Eurajoki  The Meri‐Pori coal‐fired power plant; plans on developing a carbon capture system in association with Fortum  Operates a wind power plant of 1 MW plant capacity with an annual output of ~2 mn kWh • The company has been focusing on developing economical safe and environmentally friendly electricity for its The company has been focusing on developing economical, safe and environmentally friendly electricity for its shareholders NUCLEAR ENERGY – FINLAND.PPT 32

33. Players in the Market (3/4) Company Snapshot: Fennovoima Oy Corporate Information Company Ownership Headquarters Helsinki • Enterprises in industry trade and services hold Enterprises in industry, trade and services hold approximately 30% share, regional and local energy Founded 2007 companies own approximately 36% share in Area of Expertise Operate nuclear power plants Fennovoima 08’ Loss – USD 13.5 mn; ’07: Loss – USD 2.5 • Fennovoima has two owners Financials mn  Voimaosakeyhtio has a 66% stake Key People Juha Rantanen – Chairman  E.ON Nordic has a 34% stake • Altogether it has 64 shareholders including Business Highlights Business Highlights • It plans on constructing a 1500–2500 MW nuclear power plant in Finland • Fennovoima plans on producing electricity for its owners’ needs at production cost basis where each owner will receive the share of capacity proportional to its ownership in the company • It has begun drafting the required studies for constructing the new nuclear power plant. These include studies related to the site, safety, technical matters and nuclear waste management issues. Fennovoima is conducting the Environmental Impact Assessment procedure for three sites • The plant is expected to become operational by 2020 with construction beginning in 2012 NUCLEAR ENERGY – FINLAND.PPT 33

34. Players in the Market (4/4) Company Snapshot: Fortum Power & Heat Oy Corporate Information Financial Performance Headquarters Espoo Revenue Revenue Profit fi USD bn Profit / Loss USD bn Founded 1998 10 8.3 2.5 Construction of power plants and electricity Area of Expertise 8 6.6 6.6 2.0 generation 5.6 5.7 6 1.5 Matt Lehti – Chairman M tt L hti Ch i 4 1.0 Key People Tapio Kuula – President and CEO 2 0.5 0 0.0 2004 2005 2006 2007 2008 Business Highlights Business Highlights • Fortum is a leading energy company in the Nordic countries and the other parts of the Baltic Rim • The Finnish government has a 51% stake in the company • Its activities cover the generation, distribution and sale of electricity and heat, the operation and maintenance of power plants as well as energy related services • Fortum Power and Heat Oy are subsidiaries engaged in nuclear energy activities • The company owns and operates the nuclear plant at Loviisa and has minority shares of the Olkiluoto nuclear power plant and of the Swedish Forsmark and Oskarshamn nuclear power plants • It plans on constructing a new nuclear power plant unit on the island of Hastholmen in Loviisa with a capacity of 1,000‐1,800 MW at USD 5.9 bn – USD 8.8 bn NUCLEAR ENERGY – FINLAND.PPT 34

35. •Market Overview •Market Overview •Market Characteristics •Regulations R l ti •Nuclear Waste Management •Government Policies and Initiatives G P li i dI i i i •Major Players •Appendix di NUCLEAR ENERGY – FINLAND.PPT 35

36. Appendix: Government Bodies Ministry of Employment and the Economy Ministry of Social Affairs and Health Ministry of Interior y Major Bodies ` Ministry of Environment Ministry of Foreign Affairs Advisory Bodies Finnish Radiation and Nuclear Safety Authority NUCLEAR ENERGY – FINLAND.PPT 36

37. Government Bodies (1/3) Ministry of Employment and Economy (previously known as Ministry of Trade and Industry) • Responsible for the use of nuclear energy in Finland • Plays a central role in the licensing system • Supervises and co‐ordinates the long and cumbersome application procedure which involves other ministries, national and local authorities and public hearings • Supervises the implementation of the countries statutory provisions on waste management and administers the State Nuclear Waste Management fund g • Supervises research and development work carried out in the field of nuclear safety Key Bodies • Represents Finland within the European Atomic Energy Community, the International Atomic Energy Agency, the Nuclear Energy Agency of the OECD, and the Nordic Nuclear Safety Research Programme Ministry of Social Affairs and Health • Develops and guides policies relating to social protection, social welfare and health care p g p g p • Drafts legislation and other regulations on radiation protection, draws up official statements on radiation protection issues, monitors and guides the development and implementation of radiation issues • It has administrative and financial responsibilities over the Radiation and Nuclear Safety Authority which supervises both protection and other radiation legislation issues NUCLEAR ENERGY – FINLAND.PPT 37

38. Government Bodies (2/3) Ministry of Interior • Responsible for the protection of the general public in the event of an emergency such as a nuclear incident • It is consulted during various stages of the licensing process under the Nuclear Energy Act Ministry of Environment • The ministry is consulted on the regulation of various aspects of nuclear energy and radiation hazards Key Bodies • Issues discussed include emergency planning and nuclear waste management • International hearing of the EIA is executed by this ministry which acts as the contact point Ministry of Foreign Affairs • Licensing authorities must seek their advice on certain applications to export nuclear material Advisory Bodies • Advisory Committee on Nuclear Energy and Advisory Committee on Nuclear Safety  Permanent consultative committee on nuclear energy issues gy  It is appointed by the Government and works in collaboration with the Ministry of Trade and Industry NUCLEAR ENERGY – FINLAND.PPT 38

39. Government Bodies (3/3) Finnish Radiation and Nuclear Safety Authority (STUK) •Functions  Primary functions include – Regulating the safe use of nuclear energy and radiation including radiation monitoring activities – Executing research and development projects on radiation protection – Providing training and information to required personnel – Participates in the licensing process, imposes and enforces the licensing conditions – Assists in safeguards and emergency planning in the nuclear context Key Bodies  Controls the safety of the transportation of nuclear waste and radioactive materials for final disposal •Structure Str ct re  Board of Governors carries out the administrative supervision of the authority  Reports to the Ministry of Social Affairs and Health and to the Ministry of Trade and Industry •Financial Aspect l  Its activities are funded by the annual state budget  The nuclear power companies bear the costs of nuclear regulation and the authority is in a position to set the fee structure based on certain guidelines provided by the Ministry of T d and I d t f Trade d Industry NUCLEAR ENERGY – FINLAND.PPT 39

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