OAO MOSENERGO and the security of the energy supply in the Moscow

region

Founded in 1886

Anatoly KOPSOV OAO MOSENERGO

General director

MOSENERGO – 120 years of development

The status of OAO Mosenergo during the120 years of its history -• Joint stock company in the early days of the

Russian capitalism• State enterprise in the period of centrally planned economy• Joint stock company from 1993.

The technical personnel of CEL – MOGES – Mosenergo were the first in the Russian energy supply industry to implement the principle of back-up generating capacities, they developed the GOELRO plan and engineered the UES of Central Russia.

The Moscow Branch of the«Company for Electric Lighting of 1886» was established in 1887. In 1922-1932 - MOGES,From 1932 till the present time - Mosenergo.

1

1888 – commissioning of CENTRAL power plant

1897 – commissioning of RAUCHSKAYA MCPP

1907 – commissioning of TRAMVAYNAYA MCPPDevelopment of power stations in the immediate

proximity to the electric power consumers.

1913 – commissioning of ELECTROPEREDACHA power station.

For the first time in the history of the Russian power industry the generating facilities had been located nearthe sources of the organic fuel.

For the first time the subsidiaries and affiliatesmodel had been used for the financing of the power plant construction.

1914 – connection of the ELECTROPEREDACHA power station and the RAUCHSKAYA MCPP with 35 kV power transmission lines, later – with 70 кV PTL.

THE FIRST BACKING UP OF GENERATING CAPACITIES IN THE RUSSIAN POWER INDUSTRY – PROTOTYPE OF THE UNITED ENERGY SYSTEM

CEL : 1886 – 1920sFirst power stations and power transmission lines

2

The management of MOGES with the participation of the leading scientists develops the GOELRO plan and starts its implementation.

The following facilities aredeveloped within the MOGES system:

• Kashirskaya TPP• Shaturskaya TPP• Novomoskovskaya TPP-10 • Ivankovskaya HPP• Skhodnenskaya HPP• Uglichskaya HPP-13

The Moscow energy system finally expands outside the borders of the City of Moscow.

In Moscow, the 115 kV PTL is developed. For the first time in the Russian power industry the possibility to back up the power

station capacities has been implemented on a scale of the power grid.

The first central control service in the national power industry has been developed in Mosenergo.

MOGES - MOSENERGO : 1920s – 1930sGOELRO Plan

3

~

500220110Ц

П

ОАО«Mosteploset»ПНС УТП

Boilers

TEPS of OAO«Mosenergo»

Electric power10,600 MWt

Thermal power39,800 MWt

1930s : Centralized heating system in MOGES, construction of first CHPs

Fundamental advantages of Mosenergo– ability to utilise the power production facilities and reduce the costs.

FK «Uralsib» 26.04.2007

Today, OAO Mosenergo is the biggestthermal power generator in the world

Combined heat and power plants of Mosenergo consume 15% less fuel and are utilised 10% more than comparable Russian power producers.

FK «Uralsib» 24.01.2006

The following facilities are developed in the MOGES - Mosenergo network:

CHP-6

CHP-7

CHP-8

CHP-9

CHP-11

4

Mosenergo starts the intensive development of the Moscow generation sector, bringing large power plants close to the consumers.The following large district heating power stations are developed in the territory of Moscow:

CHP-9CHP-12CHP-16CHP-17CHP-20

For the first time in the history of the Russian power industry natural gas has been used for the production of electric power.

MOSENERGO : 1940s – 1950sdevelopment of combined heat and power plants

The 400 kV power transmission line from Volzhskaya TEPS to the Mosenergo’s 220 kV ring is constructed.

The connection of Volzhskaya TEPS and the power plants of Mosenergo has laid the foundation for the development of UES Center.

5

Mosenergo steps up the development of the Moscow region combined heat and power generation to make it adequate to the demand of the region’s economy and the UES Center.

TEPSs with a single plant power rating of more than 1 million kWt are developed in the 220 kV ring.

CHP-21

CHP-22

CHP-23

CHP-25

CHP-26

By the end of 1980s, with the commissioning of the peak capacities of ZaGAES andgas turbine units in TPP-3, the Moscow energy supply system obtained its current configuration.

MOSENERGO : 1960s – 1970sdevelopment of over 1 million kWt CHPs

6

Тверьэнерго Ярэнерго Владимирэнерго Смоленскэнерго Калугаэнерго Тулэнерго Рязаньэнерго

• Area of Moscow region 47,000 sq km• Population of Moscow and

Moscow region - 17 million• GDP of Moscow region - 20% of Russia’s GDP

OAO Mosenergo produces10% of the electric power and 15 % of the thermal power produced by OAO «RAO UES of Russia».

The generation of ОАО Mosenergoprovides for 72 % of the energy consumption in the Moscow region and about 70% of the heat consumption in Moscow.

In 2006, the power consumption rose up to 89.6 billion kWh, which is a 5.2% growth compare to the last year level and is 17% higher than in 1990

The installed capacity of the 17 CHPs of ОАО Mosenergo totals 50,500 MWt:• electric power - 10,700 MWt ,• thermal power - 39,800 MWt ( 34,300 Gcal/h).By its total installed capacity, Mosenergo surpasses all WGCs and TGCs in Russia

•Note: the installed capacity of HydroBGC is 22,950 MWt

Moscow region and Mosenergo

7

1. SUPPLY OF THERMAL AND ELECTRIC POWER TO MOSCOW:― The state capital, where the state authorities and executive bodies (the

President’s office, Government, State Duma, Federation Council) as well as the defence and law enforcement agencies (Ministry of Defence with the GeneralStaff) are situated

― Major business, financial and cultural centre― Place with unique sites and facilities: subway, high-rise buildings, television and

radio stations, housing and official building compounds

2. DISTRICT HEATING SITUATION:― Thermal power consumption exceeds the electric power consumption― The production processes of thermal power and electric power are strongly

interconnected― In case of thermal power supply failure the electric power consumption rises

uncontrollably

3. TRANSIT NATURE OF THE INDUSTRY:― Considerable volumes of the electric power and capacity flow to the

neighbouring regions

4. LEVEL OF CENTRALISATION of the production, transmission and distribution— Electric power 98%— Thermal power 75%

FEATURES OF THEMOSCOW ENERGY SYSTEM

8

MOSENERGO is the core company of the UES Center

MOSENERGOMOSENERGO

TVERENERGOTVERENERGOYARENERGOYARENERGO

KOSTROMA-ENERGO

KOSTROMA-ENERGO

VLADIMIR-ENERGOVLADIMIR-ENERGO

RYAZAN-ENERGORYAZAN-ENERGOKALUGA-ENERGOKALUGA-ENERGO

SMOLENSK-ENERGO

SMOLENSK-ENERGO

2 HVLs 220 kV1 HVL 500 kV

2 HVLs 500 kV1 HVL 220 kV7 HVLs 110 kV

1 HVL 500 kV(dim. 750 kV)2 HVLs 220 kV1 HVL 110 kV

1 HVL 750 kV2 HVLs 500 kV4 HVLs 220 kV6 HVLs 110 kV

TULENERGOTULENERGO

3 HVLs 110 kV

5 HVLs 220 kV1 HVL 110 kV

2 HVLs 500 kV1 HVL 220 kV6 HVLs 110 kV

The power stations of Mosenergo supply the energy system of Central Russia with electric power via 110 – 750 kV mainlines.

The Moscow energy system is part of the country’s unified energy system and the core of the UES Center.

Diagram of the inter-system connections in the energy system of Central Russia

9

ОБЗОР СИСТЕМНЫХ АВАРИЙThree accidents in the Moscow energy system1948 – 1978 – 2005

The 18th of December, 1948:Blackout in Central Moscow, including Kremlin and the

government building compound, following the emergency in the fuel feeding of the Shaturskaya TPPand the blackout of the power transmission line from

the Uglichskaya HPP.

Open air temperatures below - 30С.

The 30th-31st December, 1978 The 1st-3rd January, 1979:

Rapid temperature fall, low on fuel (low pressure in the gas supply line, freeze up of coal). Shutdown of the equipment at CHP-1, CHP-12, CHP-21, CHP-22 followed by partial loss of heating supply (non-fulfillment of the

temperature schedule) in some areas of Moscow (about 600,000 people).

Open air temperatures below - 30С.

The 25th May, 2005:

System-wide energy supply emergency, affecting 8 neighbouring regions with the

blackout of their consumers.

Open air temperature + 30С.

10

ОБЗОР СИСТЕМНЫХ АВАРИЙOperating situation in ОАО «Mosenergo» by 2005

The system-wide energy supply emergency in on the 25th of May, 2005 brought to light a number of major equipment and process shortages as well as deficiencies in the management as regards the security of energy supply for the Moscow region, while

the insufficient generating capacities proved to be the main problem. *

The accident became the starting point for the fundamental revision of the traditional approaches to the development of the power supply industry in the Moscow region

and the development of new ones.

In October, 2005 the design of the OAO Mosenergo Development Programme for the period from 2006 to 2020 on the basis of the Moscow Energy Supply System

Development Concept for the period from 2005 to 2020, prepared by the RAS, was complete.

The analysis of the historical load maximum in the period of autumn and winter load maximum of 2005/2006 and the following absolute growth of the load maximums in the AWM period of 2006/2007 has proved that Mosenergo chose the right trend of stepping

up the commissioning of new generating capacities and eliminating the developed shortage of supply.

* From the RAS Concept, 2005 11

Business development potential – Moscow demand for the development of generating capacities

«Operation in the most attractive market. The high level of averaged population incomes in Moscow allows Mosenergo to increase the sales of electric energy».FC «Uralsib» 24.01.2006

Energy supply demand rose by 5% in 2006

The demand forecast is based on the RAS Concept

12

13,3311,97

14,27

27,8

16,7

24,5

21,0

13,8113,89

13,4114,16 14,1614,16 14,16

23,7

19,0

27,7

31,4

10

12

14

16

18

20

22

24

26

28

30

32

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

Load (actual) (rated at -26 С)

Load (forecast) (rated at -26 С)

Power available (actual)

Power available (as of 01.01.2005)

Load with 13% reserve power

Thou. MW

+ 4,4 % a year

+ 2,9 % a year

+ 2,5 % a year

year

Extra powerdemand

13.6 thou. MW

Commissioning of capacities in the areas of electric and thermal power shortage

In many areas of Moscow and some areas of the Moscow region the capacity shortage affects the availability of specifications for the connection of new consumers.

Rate of the operating capacity utilization at CHP-9, CHP-12, CHP-20 exceeds 90%.

OAO «Mosenergo» plans commissioning new capacities in the areas of long-term urbandevelopment, in the centre of Moscow and the areas of important energy loads.

CHP-26

CHP-20

CHP-12

CHP-9

CHP-16

CHP-25

CHP-27CHP-21

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MOSENERGO development strategy

IN THE NEXT 10 YEARSPROVIDING FOR the elimination of the existing capacity shortages in the Moscow

region on the basis of advanced technologies andESTABLISHING a modern high-tech, energy saving and competitive WORLD LEVEL

COMPANY .

FOR THIS PURPOSE:

Providing for the development of company’s own generation as the most reliable and feasible way of power supply, taking into account the high concentration and growth rate of the electric

loads in the region.Carrying out the replacement of the outdated equipment and decommissioning of inefficient

capacities beyond their service life limit, with simultaneous addition of new capacities using state-of-the-art equipment and most advanced technologies.

The OAO Mosenergo technical development strategy is based on the introduction of high efficiency district heating steam and gas units (SGU) with a performance factor of 57-59% in

the condensation cycle (the performance factor at power plants with steam turbine units does not exceed 38%) as well as the replacement of the district heating equipment beyond its service life limit rated at 90 atmospheres or lower with steam and gas cycle equipment.

Highly efficient steam and gas units allow saving up to 25% of gas and reduce by one third the emissions to the atmosphere.

14

«It is expected that the advantage of Mosenergo will strengthen as the company will increase the capacity by the construction of state-of-the-art power units. As regards the efficiency of fuel utilisation, they surpass the district heating power stations, operating currently throughout Russia, by about 34%». FC «Uralsib» 24.01.2006

1st half of 2009

1st half of 2008

2nd half of 2008

PUT INTO OPERATION on

the 22nd of November, 2007

Time of putting intooperation (shortened term)

4th quarter of 2009

4th quarter of 2008

2010

2008

Time of putting intooperation (planned)

27th of April, 2007420CHP-26Unit no. 8 (SGU-400)

16th of March, 2006

15th of December,2006

22nd of December,2005

Construction commencement date

1 770TOTAL:

450CHP-21Unit no. 11(SGU- 450)

450CHP-27Unit no. 4 (SGU- 450)

450CHP-27

Unit no. 3 (SGU- 450)

New capacity, MWtFACILITY

Phase I – construction of SGUs at system core stations, located within the 220 kV ring

15

Phase II – conversion to steam and gas cycle of power plants,supplying the centre of Moscow and the government buildings

231.5TOTAL:

2009170CHP-12 (SGU-170)

200861.5CHP-9 (GTU-65)

Time of putting intooperation

New capacity, MWt

FACILITY

The operating capacity utilisation rate of central TEPS exceeds 90%.

After the new capacities are put into operation, TEPS-9 and TEPS-12 will not raise the gas consumption limits. The power production growth will be provided through the gas saving and high performance factor of the steam and gas cycle.

16

Phase III - construction of new steam and gas power units

IVth quarter, 2010450CHP-27 (construction of power unit SGU-450)

2 130TOTAL:

IVth quarter, 2011420CHP-25 (construction of power unit SGU-420)

IInd quarter, 2011420CHP-20(construction of power unit SGU-420)

IVth quarter, 2010420CHP-16 (construction of power unit SGU-420)

IInd quarter, 2010420CHP-12(construction of power unit SGU-420)

Time of putting intooperation

New capacity, MWt

FACILITY

17

Phase IV of the development, SGU and coal generation

2012120CHP-17(expansion with the installation of the coal

dust unit)

2015420CHP-23 (SGU-420)

4 960TOTAL:

2013420CHP-27 (unit no. 6, SGU 420)

2012 – 20165х800Petrovskaya TPP

(construction of coal power units)

Time of putting intooperationNew capacity, MWt

FACILITY

18

Programme of generation capacity introduction, 2007 – 2011

* The data include the putting into operation of power unit 5 at CHP-27 (SGU-450).

1070

1250

166

920

1111.5

546

0

200

400

600

800

1000

1200

2006 2007 2008 2009 2010 2011

MWt2007-2011 – 4,897.5 MWt

*

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• Performance factor of steam generation cycle – 38%this is the main thermal power generation technology, used currently in Russia

• Performance factor of steam and gas cycle (SGU-450) – 51%are to be installed at TEPS-27 and TEPS-21

• Performance factor of the last generation steam and gas cycle –58%SGU-420 manufactured by Alstom will be installed at TEPS-26

• The use of steam and gas technology provides for gas saving at a rate of 30%

• The gas saving due to the use of steam and gas technology by 2010 will amount to 1 billion 600 million m3

The energy efficiency is the basis of the OAO Mosenergo development programme

Technical characteristics of GT26

Total electric power capacity, MWt 288.3Electric performance factor (ISO), % 38.1Compression ratio of compressor 33.9:1Exhaust temperature, ºС 616Exhaust flow, kg/s 650

20

Specific consumption of fuel in the condensation mode at the TEPSs of OAO Mosenergo (g/kWh)

The weighted average specificconsumption of fuel in the condensation mode at the TEPSs ofMosenergo in general is currently equal to 383.7 g/kWh

For SGUs, operating in the condensation mode, the specificconsumption of fuel will be equal to:

– SGU – 420 - 214.9 g/kWh– SGU – 450 - 238.5 g/kWh0

50

100

150

200

250

300

350

400

steam generation equipment SGU-420

In one year of operation, in case of 100% conversion of the existing capacities in the condensation mode to the new technology, one SGU-420 will provide the saving of 326 million m3 of natural gas or 1,381 million roubles at the 2011 gas price. 21

The first construction experience –The first problems

Insufficient number of designers

Shortage of power-plantengineering capacities

Shortage of builders and setup personnel

Decision of MOSENERGO: to establish own design and construction and engineering integrated system

for the management of construction

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2005-2006 DESIGN:Institute Mosenergoproject (520 persons)

2005-2006 CONSTRUCTION:Mosenergospetsremont (1 299 persons)

2006-2007 ASSEMBLY OPERATIONS:Central repair and engineering works+ Mosenergonaladka (2 239 persons)

2007 ENGINEERING CENTRE:Plant for pilot production of automated systems and instruments (95 persons)

2005-2007 PRODUCTION AND TECHNOLOGY PROCUREMENT COMPANY (100 persons)

2005- 2007: MOSENERGO develops the design and construction integrated system

«The whole range of system development operations can be provided for from the own resources of OAO Mosenergo. None of the generation companies in Russia has such a design and construction integrated system». IK «Finam». 23.01.2007

- Weekly meetings on the issues of engineering management

- Operation of the command group with the participation of contractors and the management of the Design and Construction Company of OAO Mosenergo, including the inspection of building sites

- Operation of the Design and Construction Company Mosenergoas the main contractor

- Coordination of the future supply contracts with the equipment suppliers in order to secure place in their production plans.

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Assessment of risks in connection with the growth of energy shortage in the UES Center

RISKS:

Growth of energy shortage in the UES CenterUnbalanced development of the Moscow energy system and the UES Center: capacity commissioning delays or shrinking volumes of commissioningStrengthening of the inter-system links, establishment of the excessive grid infrastructure with development rates outrunning those of the generation leads to the growth of negative net power flows and increase of energy shortage in the Moscow energy system

SOLUTIONS:

!!! Coordination of the generation capacity development in the Moscow energy system and the neighbouring regions, establishment of optimised and feasible structure of generation capacities

!!! Stepped-up development of power stations, connected with the Moscow energy system via 500 kV and 750 kV transmission lines and backing up the capacities of TEPSs of OAO Mosenergo

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Construction of Petrovskaya TPP will allow to close the 750 kV ring

На Курскую АЭСНа Курскую АЭС

Замыкание кольца750 кВ

Ввод ЦентральнойГАЭС

ВключениеПетровской ГРЭСна 750 кВ

Сооружение ПС 750 кВ Н. ЗарайскИсточник: Мосэнергопроект

The future development of the Moscow energy system is impossiblewithout boosting the energy supply to the Centre of Russia

PETROVSKAYA TPP

25

124065

79948

261889

233962 238399229778

166449150276 155458 155645

128951 133318 134600

68275

4057546439 51636

151335 146111 137400132128

11019999034

8854073480 73703 73320 72060 66804

3077323447

7451157143

70810 69784

4183337002

4656559096 36437 41157 47000 42708

1685469524216

25496 30558 30072 2760114153 14025 20066

2283817385 16541 14000 13090

3415 24240

50000

100000

150000

200000

250000

300000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 9 мес2007

Выбросы загрязняющих

веществ

, т

всего окислы азота диоксид серы твердые

0

5000

10000

15000

20000

25000

30000

35000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 9 мес2007

годы

Расход

топлива

, тыс. тут

всего газ жидкое топливо твердое топливо

Dynamics of the emissions by MOSENERGO

26

The Environment Management System of MOSENERGO has been certified to comply to the international quality standard ISO 14001:2004

In December, 2006 the environment management system of OAO Mosenergo had for the first time in the history of the Russian power industry been certified to comply to the international quality standard ISO 14001:2004.The certification was conducted within the framework of the Environmental policy implementation Programme of OAO Mosenergo for2006-2008, approved by the Board of Directors of the Company as of the 23rd of May, 2006.

The certification process included the analysis of the in-company regulating documents, company’s policy and the decisions by the management with respect to their compliance to the requirements of the standard.

On the basis of the accomplished audit, the report has been drawn up on the compliance of the environment management system of OAO Mosenergo to the international quality standard ISO 14001:2004.

The assessment has been carried out by the certification agency “Bureau Veritas Certification” after winning the respective open tender.

27

CONCLUSIONSThe generation capacities of Mosenergo are the most energy-efficient in Russia, due to the combined

production of electric and power and heat.

In case of heat supply failures the electric power consumption rises uncontrollably.

The Moscow region has been the FIRST in Russia to face the insufficiency of resources needed to meet the growing demand for energy, including both the own sources (generation) and the external links.

The problem of providing for the reliability of the Moscow energy system remains urgent not only in the WINTER LOAD MAXIMUM PERIOD, but in the SUMMER PERIOD as well during the maintenance operations.

The system-wide power grid emergency on the 25th of May, 2005 brought to light a number of major equipment and technology problems and management shortcomings as regards the secure energy supply to the Moscow region, while the major of these deficiencies is the shortage of generation capacity.

The emergency became the starting point for the fundamental revision of the traditional approaches to the development of the power supply industry in the Moscow region and the development of new ones: the development of the Moscow Energy Supply System Development Concept for the period from 2005 to 2020, prepared by the RAS.

Since 2005, Mosenergo has developed on the basis of the RAS Concept and been implementing the large-scale Investment Programme. The successful accomplishment of this programme is the main requirement for the secure supply of energy to consumers in the region in the years to come.

Mosenergo has been carrying out the engineering of state-of-the-art, last generation SGUs with a performance factor of 52-59% in the central points of electric loads, simultaneously replacing the outdated and low efficiency equipment.

The growth of the electric power output combined with the improvement of the process efficiencyis the basis of the company’s development strategy.

28