V. Yu.

Sinyugin, Chairman of the Board Federal Hydrogeneration Company Energy and Climate Change Conference

Prospects for the power industry in Russia

amidst the global fight against climate change

Montreal, May 31, 20

Key trends affecting the development of the power industry in Russia

Liberalization of power markets power industry reform

Russian power industry

World fight against climate change

Increased prices of hydrocarbon fuel

Russias electricity industry (~ 210 GW): current structure of the Russian power market
Government RosEnergoAtom 10 Nuclear Power Stations 100% 100% Russian Federation 52% Minority shareholders of the Parent Company 48% Independent 4 AO-Energos

RAO UES of RUSSIA (~ 156,2 GW) :

from 50% to 100% from 49% to 100%

System Operator

FGC

73 AO-energos 44 Federal Power Dispatch Transmission Distribution Stations ing (220 KW (110 KW Supply Generation (including Services and higher) and lower) 8 under 6 thermal WGC construction) ITC IDC 1 hydro WGC (HydroOGK)

Trading: ATS

TGC
ATS Administrator of Trade System FGC Federal Grid Company ITC Interregional Transmission Company IDC Interregional Distribution Company WGC Wholesale Generation Company TGC Territorial Generation Company

Liberalization of the power markets substance of the RAO UES of Russia reform
Generation

OBJECTIVES: Create market players Move to market pricing principles

Competitive sectors

Power distribution

Market rules

The Government as regulator

Dispatching Trunk networks OBJECTIVES: Reorganize infrastructure for market functioning Secure non-discriminatory access to networks Distribution networks Regulated tariffs

Natural monopolies

December 24, 2004: The Russian Government decided: the RAO UES reorganization is to be completed in 2006

Target model

Market infrastructure
<25% System Operator >75%

Generation capacity
Private shareholders Government
75-100% Thermal WGC (6) 0-25% <49% Hydro WGC (1) >51% 75-100%

ATS
50% votes

GC (14)
0-25%

<25% FGC >75%

<48% ITC (4) >52%

Competitive market

Other generation companies

Formed from the Independent AO-energos Nuclear power generation company

ATS Administrator of Trade System FGC Federal Grid Company ITC Interregional Transmission Company

IDC Interregional Distribution Company WGC Wholesale Generation Company TGC Territorial Generation Company

Fight against climate change development of renewable energy sources. The foundation of RES in Russia
Russias energy strategy until 2020 (approved by the Russian Government, decision # 1234-r of August 28, 2003) Envisages development and intense use of RES Russias Federal Law on Energy Saving, # 28-FZ (approved by the State Duma on April 3, 1996) Defines energy saving principles, areas and tools Federal Targeted Program Energy Efficient Economy until 2010 (approved by the Russian Government on November 17, 2001) Developed and implemented under the Federal Law on Energy Saving Kyoto Protocol (ratified by the State Duma on October 22, 2004) The signing of the Kyoto Protocol will enable Russia to use the international mechanism of discharge quota trading and use the earnings to develop RES technology

No law on renewable energy sources has yet been developed

HydroOGK a tool to harness RES Company configuration

Approved by the Chairman of the Russian Government, Mikhail E. Fradkov, on October 25, 2004.
Zagorskaya HPSP, 1,200 MW Volga-Kama Chain of Power Plants, 9 HPP, 10,058 MW

Development results, 2006

Stations Staff Installed capacity

49 3,665 22.6 GW

North Caucasus HPP, 34 HPP, 2,516 MW

Siberian and Far Eastern HPP, 5 HPP, 8,876 MW

HydroOGK Holding Company relative position in Russia and the world

Installed capacity in RUSSIA, GW
Rosenergoatom HydroOGK TGK 3 OGK 1 OGK 6 OGK 2 OGK 5 10,6 9,8 9 8,7 8,6 23,2 22,6

Installed hydraulic capacity in the WORLD, GW

Hydro Quebec HydroOGK EDF (group) Enel Statkraft CHESF Furna CE IBERDROLA Vattenfall CESP 22,6 21 14 (45) 11 11 10 9 8 (15) 7 31

HydroOGKs mission and objectives

HydroOGKs mission

Effectively use Russias hydraulic resources, maintain the reliability of the United Energy System of the Russian Federation, and extend the use of renewable new energy sources for the good of the shareholders and society

1. Increase the companys value HydroOGKs objectives 2. Ensure the system reliability of the United Energy System of Russia 3. Ensure sustainable development of RES and environmental safety

Russias hydraulic potential, degree of its development, and key current projects

All current major projects are planned to be finished by 2010:

Installed capacity, MW 320 800 2000 3000 Launch year (plan) 2007 2007 2009 2010

Zelenchukskaya HPP 320 MW

Bureiskaya HPP 2000 MW

Station

European Russia 48.2%

Siberia 24.8%

Far East 3%

Zelenchuskaya HPP

rganaiskaya HPP

Bureiskaya HPP

Boguchanskaya HPP

Irganaiskaya HPP 800 MW

Boguchanskaya HPP 3000 MW

HydroOGK specialists have designed a program to build mini hydro power plants with a total installed capacity of 1,230 MW in difficult-to-reach areas of eastern Russia

Priority projects: Bureiskaya Hydropower Plant

By 2009, Bureiskaya should become the largest power station in Russias Far East. Its rated capacity is 2,000 MW, with three out of six generators with a combined capacity of 670 MW already in operation. The fourth hydraulic generator is to be launched in late 2005.

Priority projects: Boguchanskaya Hydropower Plant

Efforts are current underway to identify potential sources of funds to build up the Boguchanskaya Hydropower Station (rated capacity: 3,000 MW). The total amount of investment needed to complete the project is estimated at USD 1.8-2.0 billion

RES prospects in Russia: Wind farms

(All operating wind Power Plant ~ 14 MW) Sea-based Kaliningradskaya Wind Power Plant (50 MW) Kulikovskaya Wind Power Plant (2.1 MW) Leningradskaya Wind Power Plant (75 MW) Vorkuta (1.5 MW)

Average annual wind velocity

less 3 m/s from 3 to 5 m/s over 5 m/s

Bashkiria (2.2 MW)

Chukotka (2.5 MW) Bering Island (500 MW)

Elista (2 MW) Rostovenergo (370 MW ) Chuvashenergo (214 MW ) Operating wind farms < 1 MW

Primorskaya Wind Power Plant (Nakhodka, Vostochni Port) (10 MW) New projects

Operating wind farms > 1 MW

RES prospects in Russia: Tidal power

Kislogubskaya Tidal Power Plant with an installed capacity of 400 kW ( Barents Sea Coast, 90 km from Murmansk) is a tidal power research base

Current projects
Mezenskaya
Location: Mezenski Bay (White Sea). Tides are 10.3 m. Relatively close is Sevmash, a producer of tidal generating units. Proposed capacity: 15 GW, proposed annual output: 40b kWh. Potential users: diamond mining companies in the Belomorsko-Kuloiskoe Plateau; potential exports of surplus power to Western Europe.

Tidal Power Plant

Location: Tugurski Bay (in the south of the Sea of Okhotsk). Average tidal size a the entrance to the bay is 4.74 m.

Tugurskaya

Tidal Power Plant

Proposed installed capacity: 7.98 GW, proposed annual output: 20b kWh. The aim of the project is to help reduce the production, transportation and burning o fuel by Far Eastern thermal power plants by 7m tons of equivalent fuel; provide renewable power to the entire region , including South Korea, Japan and China. Investment is estimated at USD 1,055 per 1 kWh of installed capacity.

Next steps to develop renewable power: 2005 2006

Participate in drafting a law on RES for submission to the State Duma of the Russian Federation Draft amendments and changes for the Law on Energy Saving, the Law on the Electric Power Industry, and laws that regulate the electricity reform in Russia Develop laws and regulations to implement renewable energy projects Work through the issue of launching a green certificate system Put into place a regulatory framework to launch a 2 discharge trade mechanism Develop new renewable energy projects: Conventional hydropower stations of various sizes Wind farms Tidal plants Other kinds of RES

THANK YOU