JSC Atomenergoprom Annual Report

BUSINESS STRATEGY JSC ATOMENERGOPROM / ANNUAL REPORT / 44 Overseas NPP servicing market JSC Atomenergoprom provides NPP maintenance services covering the entire life cycle: it assists in the development of nuclear infrastructure, provides personnel training and supplies equipment for training centres, provides engineering and technical support at the commissioning and operation stages, carries out maintenance, repairs and upgrades, supplies spare parts and equipment and extends the service life of NPPs. Key end markets in this segment include foreign countries where there are Russian-design power units in operation or under construction, namely Armenia, Bangladesh, Belarus, Bulgaria, Hungary, Egypt, India, China, Slovakia, Turkey, Finland and the Czech Republic. In the reporting year, the portfolio of power units serviced by the Company comprised 48 Russian-design NPP power units abroad. Furthermore, the Company is a market leader in China, Bulgaria and Armenia, acting as a general contractor for life extension, scheduled preventive maintenance and equipment modernisation at NPPs equipped with VVER reactors. JSC Atomenergoprom's rivals on this market include national operators and local service companies forming part of or partnered with local energy corporations, as well as large international companies (Framatome, Engie, Westinghouse, Afry, etc.). To consolidate its position on the NPP servicing market, the Company has initiated and continues its localisation efforts in key regions by creating partnerships and joint ventures with local market players or establishing subsidiaries. JSC Atomenergoprom is exploring localisation opportunities in other regions of operation (Turkey, Egypt, Bangladesh, etc.) and plans to develop a line of NPP servicing products by 2030 (taking into account ROSATOM's projects). For details, see the section 'International Business'. Market for the decommissioning of NPPs and facilities posing nuclear and radiation hazards By the end of 2022, about 210 power units had been shut down in the world. According to JSC Atomenergoprom's estimates, by 2030, the number of shut-down power units will reach 300 (the NPP construction activity peaked in the 1970s and 1980s, and in the 2030s the service life of many units will have reached 60 years). The service life of many of the NFC facilities supplying nuclear fuel to NPPs is also nearing its end. The market for the decommissioning of facilities posing nuclear and radiation hazards is growing steadily (with an average CAGR of 7.3%); the potential market size is estimated at more than USD 200 billion. The market growth is driven by the following factors: - - The continued trend towards NPP decommissioning in developed countries; The rising cost of projects; Stricter environmental requirements for projects and an increased focus on safety matters. Key market players include JSC Atomenergoprom, Energy Solutions (US), Westinghouse (US), Orano (France), Bechtel (US), Studsvik (Sweden), AECOM (US), GNS (Germany), Cavendish Nuclear (UK), North Star (US), Siempelkamp (Germany), Onet Tech (France) and Holtec (US). In 2022, JSC Atomenergoprom's operations on this market underwent major changes. Due to geopolitical constraints, the largest market segments (Europe, the US and Japan) became unavailable, and the size of the available market was reduced by more than 80%. Despite the above constraints, JSC Atomenergoprom continues to develop this business area. Its geographical focus has shifted to the CIS, Latin American and Asian markets. The Company focuses on RAW management projects, given their significant synergy with decommissioning operations. As part of these efforts, the Company is taking steps to enhance its product offer by establishing an engineering centre specialising in the decommissioning of facilities posing nuclear and radiation hazards and RAW management. The key task of this entity will be the transfer of foreign decommissioning technologies. In Russia, the Company is decommissioning power units No. 1, 2 and 3 of Novovoronezh NPP, power units No. 1 and 2 of Leningrad NPP, power units No. 1 and 2 of Beloyarsk NPPs, power unit No. 1 of Bilibino NPP and power unit No. 1 of Kursk NPP, which have been shut down. It is also participating in NPP decommissioning in a number of European countries and is decommissioning nuclear fuel cycle facilities, namely enrichment, conversion and fuel fabrication plants. In 2022, JSC Atomenergoprom continued to promote cooperation in the back-end segment among the CIS countries. This involved developing and approving a RAW Management Strategy in the Republic of Belarus and preparing for NPP decommissioning in Armenia and Kazakhstan. For details, see the section 'Fuel Division'. Electricity and capacity market in the Russian Federation Expansion on the electricity and capacity market in the Russian Federation remains one of JSC Atomenergoprom's top priorities. It is one of the key power generation companies in Russia. In addition, the local market is important in terms of obtaining references for new technological solutions for their subsequent global implementation. Nuclear power plants maintained their role in terms of meeting base load demand in the Unified Power System of Russia, with nuclear power generation reaching a new all-time high of 223.4 billion kWh in 2022 (as against 222.4 billion kWh in 2021). The increase in nuclear power generation was mainly driven by a reduced duration of scheduled repairs at power units. As a result, in the reporting year, the Company managed to remain a leader among power generation companies, with the share of nuclear power generation in the country's total electricity output (in the Unified Power System of Russia) totalling 19.9%. The Company's key goal remains to ensure safe and reliable operation of nuclear power plants and remain a leader in terms of its share in the country's energy mix. In addition, JSC Atomenergoprom builds and operates wind power plants in Russia. The portfolio of wind | power plants to be built by the Company by the end of 2027 totals 1.7 GW, with 780 MW already put into operation. In 2022, electricity output from the Company's WPPs totalled 1.9 billion kWh (2021: 1.2 billion kWh). - In early 2022, JSC Atomenergoprom became a major player on the thermal power market. As a result of the acquisition of PJSC Quadra Power Generation, the total power generation capacity of thermal power plants (TPPs) managed by JSC Atomenergoprom exceeded 4 GW, while their heat generation capacity totalled about 19,800 Gcal/h. Power and heat generation at the TPPs totalled 16.2 billion kWh and 30 million Gcal respectively (2021: 3.3 billion kWh and 7.5 million Gcal respectively). The TPPS supplied power and heat to regions of the Siberian and Ural Federal Districts (including the Udmurt Republic, the Tomsk Region, the Zabaykalsky Territory, the Sverdlovsk, Chelyabinsk and Ulyanovsk Regions) and the Central Federal District (the Belgorod, Voronezh, Kursk, Lipetsk, Oryol, Smolensk, Tambov, Tula, Kaluga and Ryazan Regions). In addition to NPP, TPP and WPP operation, JSC Atomenergoprom also sells electricity. In the reporting year, JSC Atom Energy Trade continued to operate as the power supplier of last resort in the Kursk, Tver, Smolensk and Murmansk Regions, while LLC REC continued to operate as the power supplier of last re- BUSINESS STRATEGY JSC ATOMENERGOPROM / ANNUAL REPORT / 45