NUCLEAR CONSULTING SERVICES

NUCLEAR CONSULTING SERVICES AN EXPERIENCED DEVELOPER OF NEW NUCLEAR POWER PLANTS

ABOUT US Brief history Lithuania has more than 30 years of experience operating and decommissioning the Ignalina NPP and related nuclear facilities. VAE SPB's (hereinafter referred to a VAE) team possesses a wide number of skills in the nuclear field, including operation, maintenance and decommissioning of the existing Ignalina Nuclear Power Plant and developing the initial activities for the new Visaginas Nuclear Power Plant project. This will ensure the country's safe transition from Soviet technologies to modern generation III or III+ technologies. In 2006, when the team was first put assembled, representatives with expertise in a number of industrial fields as well as those research or scientific institutions came together. Since then, VAE has been the lead developer on the new regional Visaginas NPP project. VAE is now part of the major energy group in Lithuania - Lietuvos energija, UAB (Lithuanian energy). According to the Lithuanian law, the state must hold 34% of Visaginas NPP's shares. The remaining shares are to be distributed among other participants in the project. The new NPP project is being developed according to the the Mancala model in which the project's investors will get electricity at cost price in proportion to the amount of shares they hold. Our commitments and responsibilities We are committed to the development of nuclear power development in Lithuania from scratch preparing the way for the decision on investment and the EPC contract. We are responsible for the large-scale development of the entire VAE project environment (i.e. NEPIO role) as well as cooperating and working with other nuclear industry contractors and international bodies from the nuclear energy field. PRACTICAL EXPERIENCE VAE SPB'S experience: more than 70 prepared and implemented legal documents, a commercial model of the project, approval for the construction of new power plants and many other successful projects. Our success is the result of continued cooperation with a variety of institutions, authorities and experts. Rimvydas Štilinis CEO, VAE SPB 2

COMPLETED WORK Selection of business and financial advisor Local supply chain study Radioactive waste management strategy Selection of Strategic Investor and technology vendor Technical preconcession projects with EPC Contractor Regulatory and licensing reform Owner s engineer contracting Information to the European Commission in accordance with EURATOM Treaty EPC and nuclear fuel contracts negotiations NEW LITHUANIAN NUCLEAR PLANT The Visaginas Nuclear Power Plant project is comprised of the construction of a new nuclear power plant and related infrastructure. Upon implementation of the project, the decommissioned Ignalina Nuclear Power Plant reactors will be replaced with modern, safe, and environmentally-friendly power generation technology. Having chosen Hitachi as the Strategic Investor, the Visaginas NPP will have a 1358 MWe advanced boiling water reactor (AWBR). 3

COMPLETED WORK Thermal balance study on lake Environmental impact assessment Site geotechnical investigations for ABWR design Site evaluation against safety standards Sites environmental due-diligence Ignalina NPP infrastructure utilization study Territorial planning procedures Selection of Main Haul route from sea port NEW LITHUANIAN NUCLEAR PLANT The Visaginas NPP will be constructed next to the existing Ignalina NPP, which is located on the south bank of Drūkšiai Lake, six kilometers from the town of Visaginas and close to the border with Latvia and Belarus. Two possible sites have been confirmed for the new plant following completion of all of the preparatory activities and relevant site studies. Due to geographic location of the sites, exhaustive studies were carried out to select a 550km route for the transportation of super heavy cargo from the sea port to the new plant. 4

OUR SERVICES Assessment and Improvement Assessment and improvement of existing nuclear infrastructure and assistance in the development of nuclear infrastructure and the regulatory environment, its legal basis, nuclear licensing and a radioactive waste management strategy; Design and Planning Thanks to our extensive experience, we are able to provide support with the planning and initiation of preparatory activities for nuclear facilities such as environmental studies, radiation safety, site surveys and site evaluation, assigning land plots for new builds, security measures for nuclear facilities and co-operation with international bodies; Management Assistance on monitoring, scheduling and management of preparatory or licensing activities for new nuclear facilities as well as for decommissioning of existing ones; Reviews We can carry out independent peer reviews of environmental, site evaluation, design investigation and other existing studies; Transfer of know-how We can provide seminars on the various areas as our team has participated in during several IAEA missions. We already provide this to a wide number of professionals in the nuclear energy field; Project Planning Schedules Dev. & Control Stakeholder Management Risk Management Commercial Negotiations Procurement Contractor Management Legal & Regulatory Nuclear Safety & Licensing Environmental & Licensing Radiation Protection & Licensing Infrastructure Planning & Assessment Geology and Hydrogeology Geotechnics Siting Territorial Planning Nuclear Fuel & Core Physics Radioactive Waste Management Heat and Power Nuclear Security Plant Operation & Maintenance Decommissioning Nuclear Safety Surveillance Inspections Quality Assurance & Audit CONTACTS & MORE INFORMATION Mr. Vytautas Bitinas Project Coordinator Cell. +370 650 82562 E-mail: vytautas.bitinas@vae.lt Smolensko str. 5, LT-03202 Vilnius, Lithuania 5

Legal and regulatory environment improvement Lithuania has experience in operating and decommissioning existing nuclear power plants and is the only Baltic State with capacity so an extensive legal framework has been developed for both existing nuclear facilities (Ignalina NPP) and the new one (Visaginas NPP). So, a clear licensing and regulatory regime for new projects was implemented with the participation of the VAE team. After identifying the relevant legal challenges prior to the start of the new NPP project, the reform of the existing legal and regulatory environment for nuclear power generation was undertaken. Based on a comprehensive review of existing laws and regulations, the necessary reforms were introduced and existing laws amended or new ones implemented when the Lithuanian Parliament passed a package of relevant legislation. The VAE team's main responsibility was to draft proposals aimed at developing a clear and streamlined nuclear legal and regulatory regime. The new edition of the Law on Nuclear Energy was adopted and this is of the utmost importance in the nuclear energy sector. Specific legal and regulatory provisions in the fields of nuclear safety, radiation protection and radioactive waste management were further developed in specific laws (The Law on Nuclear Safety (new law), The Law on Management of Radioactive Waste (new edition), The Law on Radiation Protection and secondary legislation. Furthermore, in order to address other legal challenges affecting the new Visaginas NPP project, a package of concession-related laws was also adopted. Selection of advisors and development of business plan VAE initiated and managed a tender for the selection of a consultant to assist in the preparation of a new NPP business model and financing plan. The selection of a consultant and procurement of services were coordinated by a specially created inter-institutional committee for public procurement consisting of representatives from the Ministry of Energy, Office of the Government and energy companies. An international consortium led by one of the largest investment banks won the tender. A business plan for the new nuclear power plant was also developed as a result of successful cooperation between the business advisor and VAE's team. Lithuania s existing nuclear legislation adopts the best European and international practices, regulation of nuclear sector-related activities, including nuclear safety and security, radiation protection, radioactive waste management, the continuous control of the nuclear fuel cycle as well as sustainable development, transparency and international cooperation. 6

Selection of strategic investor / technology vendor The Strategic Investor selection process was organized as an open public tender for a concession in relation to the design, development, construction, operation and decommissioning of the new nuclear power plant. The selection of the Strategic Investor itself was performed by the Lithuanian Government represented by the Ministry of Energy, which set up a dedicated Tender Commission. VAE's team and a specially selected group of business and legal advisers provided the necessary assistance. The evaluation of the proposals to determine the most economically advantageous option comprised analysis of the project's economic, legal and technical aspects and also included consideration of the level of equity commitment offered, commitment to undertake activities to advance the VAE project prior to signing the concession agreement, evidence of ability to deliver the VAE project on time and on budget and evidence of the ability to manage the development, construction, operation and decommissioning of NPP. Hitachi Ltd was selected as a Strategic Investor and was granted the right to negotiate the terms of the concession agreement. As part of its proposal, Hitachi offered Advanced Boiling Water Reactor (ABWR) technology and Hitachi-GE Nuclear Energy as the EPC contractor. Local supply chain study VAE has implemented a project on to evaluate and strengthen the regional supply chain for the construction of the new NPP. Over the course of the project, VAE has performed an evaluation of Lithuania's human resources capability and ability to participate in the project. With the support of an audit firm, a detailed evaluation of the supply chains in Lithuania, Latvia and Estonia was also carried out. Measures to strengthen the supply chain in the region were identified and a manual for the companies willing to participate in the VAE Project supply chain was developed. VAE has organized a number of seminars for the industry in the Baltic Countries which highlight the potential for participating in the supply chain and as well as providing the right advice for companies interested in taking part. In July 2011, the Concession Tender Commission for the Visaginas Nuclear Power Plant Project selected Hitachi Ltd. As Strategic Investor and ABWR as preferred technology for the new plant. The selection was made on the basis of a technology that had been proven both in construction and operation along with a vendor with a track record of delivering on time and on budget with minimal technical risk. 7

Selection of Owner Engineer All the parties involved recognized the need to have an Owner Engineer (OE) which would work on behalf of the Lithuanian investor and Regional partners and so deliver knowledge and better confidence in decision making. OE was selected from list of pre-approved candidates avoiding conflicts of interest and being independent from other technology vendors. A subsidiary of a USA-based utility company with the largest number of BWR type plants in its fleet and with particular knowledge of ABWRs was contracted as a result of the VAE public procurement tender. The OE and VAE teams successfully moved forward on a variety of commercial and technical matters including negotiations on terms and conditions for EPC and nuclear fuel supply contracts, division of responsibilities between the technology vendor and plant owner, drafting and negotiations of the functional technical specification for Visaginas NPP ABWR Unit (i.e. owner s requirements) as well as dealing with a host of technical issues. EPC and nuclear fuel contract negotiations VAE prepared the strategy for the nuclear fuel supply security while preparing the way for the technologies procurement tender for the Visaginas nuclear power plant. A comprehensive description of the fuel supply strategy enabled VAE to evaluate more precisely the possible alternatives of the fuel cycle and the risks to the Visaginas NPP project implementation. The nuclear fuel supply strategy was used for further negotiations with potential technology vendors and nuclear fuel suppliers. After the winner of concession tender was announced and potential investors as well as the reactor technology supplier were chosen, VAE started the detailed process of EPC and Fuel Supply contracts negotiation. The fuel supply contract negotiations with the reactor technology provider and nuclear fuel manufacturer were undertaken. Eventually, the initial core supply contract was included in the EPC contract and and a term sheet for the reloading of the reactor with new fuel was was prepared. VAE team is experienced in nuclear fuel supply negotiation and contracts as well as the preparation of term sheets preparation and as been carrying out a number of fuel supply negotiations with potential investors and reactor technology providers since 2010. On December 9, 2011, VAE signed a contract with Exelon Nuclear Partners which performed role of Owner s Engineer at the current stage of the project development. The selection of this experienced partner, who has wide experience of ABWR technology and of working with the vendor, allowed the commercial negotiations on EPC and nuclear fuel supply to be conducted efficiently. 8

Cooperation with International Atomic Energy Agency The NPP Project consists of a number of aspects that need to comply with international standards and recommendations. Since the start of the project, the VAE team has initiated co-operation with international institutions and organizations (International Atomic Energy Agency [IAEA], World Nuclear Association [WNA] and others). In the area of technical co-operation among countries developing nuclear power, VAE has gained experience in organizing training activities, workshops and seminars, as well as dealing with various aspects related to the organizing of support services (IAEA missions, finding relevant experts etc.). VAE team members are also active lecturers in IAEA activities and contributors to several IAEA technical documents. VAE has also been heavily involved in the preparation for the IAEA expert mission to evaluate the Visaginas NPP sites. The mission was completed with a positive outcome as well as some very useful comments from the IAEA experts. European Commission VAE has successfully communicated with the European Commission on the NPP project. The VAE project was included in the Baltic Energy Market Interconnection Plan (BEMIP) sponsored by European Commission and implemented by a number of countries in the region including Denmark, Poland, Lithuania, Latvia, Estonia, Finland, Sweden and Germany. The information on the Project was communicated to the European Commission and resulted in positive opinion from the Commission. This opened a way for the project to apply for financing from EURATOM as well as European Investment Bank loans. Co-operation activities both at international and regional levels are very important as they are will help to ensure that the project is completed according to best practice. Significant experience gained in this field can be then shared with other interested parties. In October 2011, information about the Project was communicated to the European Commission under the Article 41 of the EURATOM Treaty. A thorough evaluation of VAE by the European Commission expert team took 8 months and the process was completed in June 2012 with the European Commission expressing a positive opinion on the Visaginas NPP project. 9

Environmental studies and procedures Being committed to environmental protection and social responsibility, VAE initiated and completed a range of environmental studies most importantly an environmental impact assessment (EIA), site due-diligence, thermal balance of the lake that serves as the ultimate heat sink and ground water monitoring system. The relevant parties that reviewed the EIA Report included the State Nuclear Power Safety Inspectorate and other state authorities as well as administrations from local and surrounding municipalities. The Environmental Impact Assessment is regulated by the Law on the Assessment of the Impact on the Environment of Planned Economic Activities and by the United Nations Convention on Environmental Impact Assessment in a Transboundary Context (Espoo Convention). The respective authorities of Latvia, Estonia, Poland, Belarus, Finland, Sweden and Russia were informed of the reviews. Territorial planning Territorial planning is a set of procedures for the spatial concept of developing a particular area: regulating land use priorities, environmental and historical monument protection as well as other conditions; forming the system of land, forest, water, residential areas, industry and infrastructure, regulating employment and determining the rights of natural and legal entities in the development of the area. Based on the proposals for the alternative sites of Visaginas NPP, as well as their solutions, the formation of the land plots necessary for the construction of Visaginas NPP and the initiation of the preparation processes of the relevant territorial planning documents were undertaken. As a result of these activities in order to successfully manage simultaneous large-scale projects and to avoid interaction between them separate land plots were assigned for the decommissioning of the Ignalina Nuclear Power Plant and for the construction of the Visaginas Nuclear Power Plant. On April 21, 2009 the Ministry of Environment of the Republic of Lithuania decided to permit the construction of the new Visaginas nuclear power plant in terms of environmental impact and that the NPP may be constructed in the vicinity of the existing Ignalina Nuclear Power Plant at Drūkšiai Lake. 10

Site evaluation against IAEA requirements VAE initiated, planned and carried out the evaluation of construction sites against IAEA and Lithuanian safety requirements. The goal was to assess the suitability of the potential Visaginas Nuclear Power Plant construction sites against IAEA Safety requirements and the Lithuanian State Nuclear Power Safety Inspectorate (VATESI) regulations. Based on the available information and newly acquired data, site-related hazards and design basis conditions for VNPP were defined. The completed site evaluation report was independently reviewed by the IAEA mission which commented that the site evaluation was conducted in line with IAEA requirements and guides, the volume of investigation was sufficient and the sites are suitable for construction of the Visaginas NPP. IAEA SSRM provided some technical detailed comments in order to improve compliance with IAEA SGs. Subsequently, the site evaluation report was improved accordingly and coordinated with the responsible local authorities and finally approved by the State Nuclear Power Safety Inspectorate. Geotechnical investigations for ABWR design In cooperation with the Strategic Investor and technology vendor, Hitachi GE, the VAE team has performed a number of the preparatory engineering work including engineering geological and geotechnical investigations necessary for the design of the new plant as well as for the analysis of interaction between the foundation of the facilities of the ABWR nuclear power plant and the soil. The responsibilities of the VAE team were to plan, coordinate with the technology vendor and supervise contractors' geotechnical investigations under the NQA-1 quality assurance program as well as managing the overall review and coordination of the acquired results with stakeholders. Visaginas Nuclear Power Plant cannot be designed, built and operated without a suitable site therefore the site evaluation project was one of the key activities when preparing for the project. The process incorporated geotechnical, geological, seismological, meteorological, human induced, hydrological and other hazard investigations. Two sites were evaluated and were ultimately approved as suitable for the construction of a new nuclear power plant in October 2014.

Ignalina NPP infrastructure study As the new power plant sites are located in close proximity to the decommissioned Ignalina NPP, VAE performed analysis of possible utilization of existing infrastructure that could be of benefit during the construction of the new Visaginas NPP to help reduce costs. Because the existing infrastructure and equipment was to be analyzed for age, interaction with Ignalina NPP decommissioning activities, certification requirements, efficiency and other aspects, VAE successfully analysed Ignalina NPP other infrastructure located in the Ignalina NPP industrial area. Following the analysis, the list of suitable infrastructure was prepared. Radioactive waste management strategy VAE possesses significant experience in radioactive waste management because it was responsible for the preparation of the Radioactive Waste Management Strategy for Visaginas NPP. A technical feasibility study was prepared into the possibility of using near-surface repositories for short-lived radioactive waste of very low, low and intermediate activities at the the Ignalina NPP. The Radioactive Waste Management Strategy for the new NPP describes the key provisions of the long-term strategy of radioactive waste management, offers proposals on how to manage radioactive waste and spent nuclear fuel generated during the operation of the new nuclear power plant. Furthermore, it provides proposals concerning the decommissioning, financing, operation and legal environment of the nuclear power plant. The strategy is necessary for the development of technical specifications of the new NPP. The existing infrastructure that could be used in the construction and installation stage of the new Visaginas NPP as well as the one to be employed in the exploitation stage will be preserved following the decommissioning of the Ignalina NPP. Operating infrastructure such as radioactive waste management facilities can also be shared among the both nuclear power plant companies.

VAE SPB experience unique knowledge built up through the professional implementation of complicated and complex projects. We would be glad to share our experience and knowledge with others. Dr. Gintautas Klevinskas Licensing department director VAE SPB mature, independent and well motivated team having extensive project management experience, unique technical skills and the capability to work with partners from the West as well as from the East. Valdas Ledzinskas Technology department director Mr. Vytautas Bitinas Project Coordinator Cell. +370 650 82562 E-mail: vytautas.bitinas@vae.lt Smolensko str. 5, LT-03202 Vilnius, Lithuania 13

Mr. Vytautas Bitinas Project Coordinator Cell. +370 650 82562 E-mail: vytautas.bitinas@vae.lt Smolensko str. 5, LT-03202 Vilnius, Lithuania 14

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