The Build-Own-Operate (BOO)

approach: Advantages and Challenges

Rational Behind the Choice BOO Project in Akkuyu Role of the Government and Role of the Owner/Operator

Advantages and Challenges in Implementing BOO Model

The country’s role in the BOO Model Conclusion

History of Akkkuyu

1956 Atomic Energy Commission was established

1957 IAEA was set up as the world’s “Atoms for peace” organization. (Turkey was a founding members of IAEA)

1976 Akkuyu Site was licensed for 1st NPP

1977-79 1st Attempt

1982 Turkish Atomic Energy Agency was established

1983-85 2nd Attempt

1996-2000

3rd Attempt

2008-09 4th Attempt

2010 The Intergovernmental Agreement with Russia 3

4

46% Natural Gas

25 % Hydro

24 % Coal (Hard

Coal+Lignite)

3 % Fuel-Oil 2 % Other Renewables (Wind+Jeothermal)

Electricity generation distribution in 2012

Installed Capacity: 57 GW Electricity Generation: 239 TWh/yr

239 TWh/yr

500 TWh/yr

0

100

200

300

400

500

600

2012 2023

Forecast Electricity Demand in 2023

98 % 92 %

30 %

0

20

40

60

80

100

Natural Gas Fuel-Oil Coal

Import Dependency in 2012

Total dependency: 73%

Rational Behind the Choice

Energy Strategy Paper was approved by High Planning Council in 2009

By the Strategy Paper, targeted energy mix in 2023:

5

Hydro and Other

Renewables At least 30%

Natural Gas At most 30%

Coal and Fuel-oil

30%

Nuclear Approx.10 %

Rational Behind the Choice

There is still big misunderstanding in the international community on what the

BOO scheme means

Rational Behind the Choice

Is BOO means like giving Russia a piece

of our territory to build a NPP?

There is still big misunderstanding in the international community on what the

BOO scheme means

BOO Project in Akkuyu

Signature of IGA : with Russian Federation on May 12th, 2010

General Contractor : ROSATOM-Atomstroyexport

Reactor Type : VVER-1200 (AES-2006) - 60 years lifetime

Capacity : 4800 MW (4 Units)

Implementation Model: Build-Own-Operate (BOO)

Akkuyu Project Company

(owner & operator)

Rosenergoatom

92.85 %

Operator

Atomstroyexport

3.47 %

EPC contractor

InterRAO

3.47 %

Electricity trading company

Atomenergoremont

0.1 %

Atomtekhenergo

0.1 %

Shareholders

Established as a JSC by Rosatom in Turkey on Dec 13th, 2010

BOO Project in Akkuyu

Project Company

• Owner of the NPP •Contracting Party for PPA •Licensed entity for operation

Rosatom Affiliates

Project Support

Site PPA

GOVERNMENT

Operation Experience

Technology Financing

Akkuyu NPP JSC

Inter Rao UEs

TETAS

Atomstroyexport JSC

Rosenergoatom TVEL

O&M-contract

EPC contract

Nuclear fuel

supply contract

PPA (15 years)

9

Project will be subject to all applicable laws, regulations and codes in Turkey. All necessary licenses, permits and approvals from related governmental organizations shall be obtained by APC.

11

Ministry of Energy & Natural Resources

(MENR)

Turkish Electricity Transmission

Company

Turkish Electricity Trading and

Contracting Company

Energy Market Regulatory Authority

Turkish Atomic Energy Authority (TAEK)

Ministry of Environment &

Urbanism

Project Company

Owner & Operator

Owner of Electricity

Monthly coordinating meetings of TAEK, MENR and APC

Turkish Electricity Generation Company

PPA

Grid Connection

Allocation of NPP site

EIA permission

Site, construction and operation licenses

Electricity Generation License

AFAD Desaster&Emergency

Managment Presidency

Emergency Planing and Preperadness

BOO Project in Akkuyu

- engineering surveys - rules, standards and regulations - quality management systems - long-lead items - construction license application - physical protection - emergency preparedness, radiation

protection and wastes management - system engineering - EIA

• Turkish party will respectively take all the necessary measures ,as permitted by the applicable laws and regulations of the Republic of Turkey to assure for timely issuance of all the necessary permits and licenses in accordance with laws and regulation of Republic of Turkey.

13

According to PPA: 15-years, «weighted average» price of 12.35

cents/kWh

TETAS will purchase:

70% of electricity from Unit 1 and 2

30% of electricity from Unit 3 and 4

In the case of less generation than the volume stipulated in the PPA,

Project Company will provide lacking volume of electricity.

After the expiry of the PPA, Project Company will transfer 20% of its net

profit to Turkish Treasuty until the end of decommissioning.

14

BOO models may present several advantages for newcomer nations

It all comes down to: what do you want from a first nuclear

plant? .

If a country wants to start developing its own nuclear industry from day one out of it, a model that allows the host country to develop its own plant may be better

.

If it is mainly electricity, the BOO model that Russia is providing to Turkey is a good option.

Speed is also a factor. • There’s an element in the project of: we need electricity and

we need it quickly so how do we do it – build, own, operate and finance the plant,” -

Hydro and Other

Renewables At least 30%

Natural Gas At most 30%

Coal and Fuel-oil

30%

Nuclear Approx.10 %

Financial benefits.. A guaranteed fixed price compensates the APC for 15 years.

Meanwhile, the APC is due to provide a majority portion of

the capital investment required.

It could otherwise be a slower process for Turkey for its first

plant, putting together a deal with a consortium that would potentially bring in financing from various sources.

Unusual because..

• the Russian power company will both build it, act as major operator and benefit from at least a 51% share in the long

term.

• This is a much greater share than most vendors.

• Ownership of strategic assets including nuclear power plant?

The country’s role in the BOO Model Strong governmental support, (IGA, Prime Minister’s Decree, Development Plans etc)..

Rapidly established effective coordination mechanisms with relevant organizations through a large number of meetings and other communication channels, and documentation the results

A national policy for the nuclear power programme Enacted comprehensive nuclear energy law Adhered to and implemented relevant international legal

instruments Strengthened Regulatory Framework

Financing

+ Allocating all risks - Fixed price of electricity ?

+ No treasury guarantee

Tecnical issues

+sustainable operation - less localization opportunity

(availability of fuel, parts, services)

+Decommissining

+Spent fuel

(take -back option)

Legislative Framework

Others

+Cooperation in -insufficient legislation risk

the field of licencing may effect the process

+NPP training, education - less opportunity to utialize local

education system

- No lesson-learned

Conclusion

• The mission team acknowledged that this is the first time a country is using a BOO approach for a nuclear power project. Turkey found advantages in

conducting direct negotiations for the IGA and the BOO approach, to both initiate the project without having to go through a bidding process and to secure financing. The mission team found that strong support from the

Government of Turkey is evident.

• local hydrocarbon assets affect a national decision on nuclear funding. “The BOO model provides potential access to investment from the supplier’s side

which is attractive.. • It does however depend on the suppliers being able to raise the finance, and

government support to the supplier