Maximizing production efficiency for existing and new power infrastructure:Enel experience in Russia and technologies

Enrico VialeChief Executive Officer, Enel OGK-5

Moscow, 19 September 2011

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Efficiency improvements in Russia: focus both on new construction and existing equipment (MW)

Major ways of efficiency improvements in Russia

• Expected construction of substantial number of CCGTs (efficiency ~ 50-58%)

• Still old gas and coal generation (efficiency ~ 30-40%) remain dominating with additional potential for improvement: o Modernizationo Environmental improvements,

especially for coalo Operational efficiency

Source: EOGK-5 company outlook

2011 2015 2020

24 28 3018 20 2014 15 148

18 19

9295 94

Gas/oil

CCGTCoal

Hydro

Nuclear

158175 177

Enel OGK-5 strategy for efficiency improvements

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Gas – fired power plantsCoal-fired power plants

Reftinskaya GRES (3,8 GW):• Important base load plant• Reliability issues• Substantial environmental

impact

Konakovskaya GRES (2,5 GW):• Relatively new plant• Half capacity utilized due

to competitive market and gas supply limitations

Sredneuralskaya GRES (1,2 + 0,4 GW CCGT):• Oldest plant in the portfolio • Worn-out equipment• Good market positionNevinnomysskaya

GRES (1,3 + 0,4GW CCGT):• Relatively old plant • Good market position

Enel OGK-5 focus on efficiency

1. Construction of new CCGTs (Sredneuralskaya and Nevinnomysskaya PPs)

2. Modernization (Reftinskaya PP)

3. Environmental investments (Reftinskaya PP)

4. Operational improvements (all PPs)

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1. Construction of new CCGTs: Sredneuralskaya Power Plant

New CCGT 410 MW:

• Efficiency ~ 57%• NOx emissions: ≤ 50

mg/Nm3• Commisioning: Q3

2011• Cost ~ 380 mln EUR

Initial situation:

• Oldest plant in the portfolio – first unit commissioned in 1936

• Location – Sverdlovsk region, solid demand and good market position

• Mandatory investment in CCGT supported by high capacity tariff from DPM scheme

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1. Construction of new CCGTs: Nevinnomysskaya Power Plant

New CCGT 410 MW:

• Efficiency ~ 57%• NOx emissions: ≤ 50

mg/Nm3• Commissioning: Q3

2011• Cost ~ 400 mln EUR

Initial situation:

• Relatively old plant– first unit commissioned in 1960

• Location – Stavropol region, good market position

• Mandatory investment in CCGT supported by high capacity tariff from DPM scheme

2. Modernization: Reftinskaya Power Plant

Reconstruction and modernization of 5 units of 300 MW:• Investment rationale:o availability increase

around 10% o Capacity increase

by 8% (from 300 to 325 MW)

o Specific heat consumption decrease of 15 g/kWh

• Implementation: 2010 - 2021 years

• Cost ~ 500-750 mln EUR

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Initial situation:

• Largest coal power plant in Russia

• Location - Sverdlovsk region, base load, high importance for Urals market, competitive fuel

• Substantial problems for availability and environment

RGRES unavailability,%

2011 2015 2020

2014 11

3. Environmental investments: Bag filters installation at Reftinskaya Power Plant

Replacement of electrostatic precipitators with bag filters: • First time in Russia• NOx emissions

reduction by 30%• Ash emissions

reduction of 98%• Implementation: 2010

- 2021 years• Cost included in the

cost of modernization

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3. Environmental investments: Dry Ash Removal System at Reftinskaya Power Plant

Construction of a Dry Ash Removal

System• First time in Russia• Modern automated

and environmentally friendly system for collection, transportation, storage and reutilization of ash

• Implementation: 2010 – 2012

• Cost ~ 250 mln EUR

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Initial situation:

• Serious pollution problems with current wet ash removal system

• Substantial problems with ash storage as current ash lagoon capacity is almost exhausted

Use: Confidential

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4. Constant improvement of operations contribute to overall efficiency improvements relevant for all PP

Heat rate reduction

Water consumption

reduction

Increasing of availability

Achieved improvements (2010 vs. 2008)

~ 0,5% (1,4 gce/kWh)*

~ 10% (20 m3/MWh)*

~ 5%*

Examples of measures implemented

• Ball cleaning system• More precise O2

meters• Energy saving lamps

• Water meters

• Replacement of heating surfaces

• SMED planning for planned outages

• Project office to track existing and scan for additional initiatives

• “Zenith” brand and quality program introduced for all efficiency improvements

• Improvement ideas coming also from sharing “best practice” with other Enel assets

* best result among all power plants

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• Become the benchmark in terms of operating excellence in the power

and gas industryMaximum

performance

Across all levers

• Leveraging all possible levers (Margin, Opex, Capex, Working Capital)

• Maximizing pre-tax cash flow generation

Developing our people, skills and

knowledge

• Creating a top performance culture• Developing a group of people in

charge to drive change• Fostering experience sharing,

through dissemination of knowledge and of management best practices

across the group

In all the Group

• In all geographies (Italia, Spain, Slovak Rep., Romania, Russia, …)• In all the divisions and staff

functions

4. Enel introduced a “Zenith” brand for operational improvements worldwide

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Future projects: Smart Grids

Central and distributed resources integration Smart equipments and

power electronics

Central and distributedIntelligence

Electric Vehicles

End user real timeinformation and participation

Multi-directional ‘flows’ management

Storage and Plug & Playtechnologies

LED Public Lighting

• Key technology effectively matching supply and demand

• Already tested and/or launched in Europe by Enel

• Russia – an important potential markets