Modernization of district heating in North Kazakhstan region

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3 Country background Republic of Kazakhstan Gross area 2,724,900 square kilometers (area size takes 9th place among all states of the world) Climate Sharp continental, dry Population 16.7 million people Average winter temperature Duration of heating season Specifics o - north -19 С o - south -5 С - north more than 208 days with average o temperature of -8 С - south days with average o temperature of -2 С Significant energy consumption with purposes of heat supply Severe power affordability constraints for large part of population 2

4 Sector background Heat supply specifics General heat supply need - 60% of total power consumption (heat and electricity) Consumption by cities - 60%, including - housing sector - 80% District heating - 50% of cities needs District heating fuel balance: - 70% - coal - 10% - oil - 20% - gas Total lenght of district heating networks km, incl.: - transmission networks (D>300 mm) km (25%) - distribution networks (D<300 mm) km (75%) Problems of current state Severe depreciation - about 70% of heat pipelines have been working for more than 30 years Rate of equipment with building-wide metering devices of heat consumption as of January 1, 2008 amounts to 13.95%, and of hot water usage to % 3

5 Sector background Barriers for development of efficient heat supply Lack of legislative rules for operation of District Heating system Lack of sources of investment and project pay-off due to strict state regulation of tariffs Lack of financial mechanisms for implementing the energy efficient technologies Insufficient awareness of consumers on opportunities and advantages of energy efficient heating system 4

6 Company background Central-Asian Electric Power Corporation, JSC - Private vertically integrated power holding with all chains of energy generation, transmission and sales - Generates 7 % of power within the country - Established on August 8, 2008 Shareholders - 62,12% - 24,99% Islamic Infrastructure Fund -12,89% Summary of assets Installed electric capacity Installed heat capacity District heating networks Electricity networks Number of employees MWt GCal/h km km people 5

7 Company background Petropavlovsk Pavlodar region Pavlodar region Regions of presence Astana Akmola region Pavlodar Akmola region Astana city Client base Almaty consumers of electricity consumers of heat energy 673 th 384 th Total number of consumers up to 2 million people 6

8 Company background Technical data of district heating networks Pavlodar Ekibastuz Petropavlovsk Total Total network length km Lenght of transmission pipelines (D>300 mm) Lenght of distribution pipelines (D<300 mm) km km Connected load Gcal/h Number of connected consumers th. pcs

9 Project description Project goal 1) Increasing the efficiency of energy use 2) Reduction of distribution losses and energy efficiency use improvement 3) Reduction of СО2 emissions through the economy of coal consumption Essence of the project 1) Modernization and recovery of heating networks in the cities: - Pavlodar (331 th citizens) - Еkibastuz (146 th citizens) - Petropavlovsk (206 th citizens) Measures of the project USD mln. - Reconstruction of heat distribution networks using pre-insulated pipes (23 km) 26,0 - Replacement of old damaged mineral wool insulation with new insulation techique (29 km) - Installation of automated system of heating consumption control and registration - Modernization of central heating substations, including automation and replacement of pumps - Reconstruction of drainage system 1,0 Total 50,0 14,0 7,0 2,0 8

10 Project description Pipeline with overrun useful life Assembling the foam polyurethane pipeline D800 mm 9

11 Financing structure European Bank for Reconstruction and Development (EBRD) - tenor of loan USD 30 mln. Clean Technologies Fund (CTF) - tenor of loan USD 10 mln. Central - Asian Electric Power Corporation JSC (CAEPCO JSC) USD 10 mln. Total cost of the Project USD 50 mln. 10

12 Project benefits Major planned achievements Title Fact 2011 Expected 2015 Growth of heat transmission for 18% 4,4 mln. Gcal 5,2 mln. Gcal Reduction of heat loses for 7% 32% (2,1 mln. Gcal) 25% (1,8 mln. Gcal) Coal savings will amount to mln. tons per year by 2015 in compare with non-investment period Reduction of greenhouse gasses (GHG) emissions by the year 2015 by 3.4% (333 thousand tons of CO2) in compare with non-investment period, in averagee reduction per year - 66 thousand tons Reduction of microparticulates emissions (coal ash, NOx, SOx) for 20% Expansion of access and connection to the district heating networks by the year new consumers, growth rate of up to 3.5% in comparison to

13 Current status Project signed on 26 March 2011 Currently achieved - 95% of funds invested km of pipes renewed (86% of plan for ) Other works (45% of completion of plan for ) Effect will be achieved gradually by 2015 Expected to be accomplished in 2015 Логотип. Дополнительный вариант использования 12

14 Next steps Modernization of generation assets and heating networks Cost - USD 970 mln. (over the period of ) Potential impact - Improvement of energy efficiency from 36% to 44% by Reduction of heat distribution losses for 6% by 2020 comparing with 2015 losses - Reduction of microparticulates emissions (coal ash, NOx) for 70-80% - Annual reduction of CO2 emissions for 7% by 2020, total reduction of CO2 emissions for 1,5 mln. tons by Expansion of access and connection to the district heating networks by the year new consumers 13

15 THANK YOU!