XIV CBE - MESA 4 - Yves Crommelynck - 24 outubro 2012

International IPP view on main prerequisite issues when considering an investment in nuclear new build

Yves Crommelynck, Vice President Strategy, Partnerships & International

Associations - Nuclear Development Division

Rio, Brazil

October 24, 2012

CONFIDENTIAL

L

XIV Congresso Brasileiro de Energia Elétrica

COPPE

2012 10 24_GDFSUEZ_CBEE_Rio_YC

International IPP view on main

prerequisite issues when

considering an investment in NNB

Rio, Brasil

October 24, 2012

GDF SUEZ profile

and presence in Brazil

Stress Tests and Long Term

Operation of Belgian NPPs

GDF SUEZ landscape for nuclear

investment

Conclusions

TABLE OF CONTENTS


GDF SUEZ, a world leader in the energy sector

No.1 Independent Power Producer (IPP) in the world

Active across the entire Energy value chain

Answering the great challenges

• responding to energy needs

• fighting against climate change

• maximizing the use of resources

Diversified supply sources

Flexible and highly efficient power generation

Innovative energy solutions to individuals,

cities and businesses

Our History began in 1822

3


€90.7 billion in 2011

revenues

218,900 employees

Capacity: 117.3 GW installed

14.8 GW under

construction

Key figures and breakdown of power generation

* Including 100% of the capacity of GDF SUEZ assets

regardless of the actual holding rate, exc. International Power.

** Including pumped storage.

Breakdown by region at December 31, 2011*

Breakdown by fuel at December 31, 2011 (in TWh)*

44.5

Nuclear 59.4

Hydro power**

254.7

Natural gas

73,8

Coal

Biomass

and biogas 2.6

Wind power 7

Other 8.7

464.7

TWh

Europe

Middle East

North

America

Latin

America

Asia

12.3%

11%

41.2%

10.4% 20.1%

Australia

5%

€11 billion in

gross investments

in 2012

4


GDF SUEZ is the largest private energy player in Brazil…

… through Tractebel Energia…

…and is well positioned to play a consolidating role

Present in Brazil since 1998

8.630 MW of total installed capacity managed, being 6,908 MW own • 83% hydro or other renewable sources, 22(1) plants in operation all around the country;

2.024 MW under construction

• 3,750 MW Jirau HPP (1,879 MW group’s share) and 145 MW from wind farms 100% own;

(1) 20, being one thermo power plant complex with 3 plants


http://www.brasil-intenso.sitew.com/files/users/4/4/6/9/0/9/bandeira_do_brasil.gif

GDF SUEZ in Brazil A continental country…

… and a diversified portfolio of assets, with strategic location:


http://www.brasil-intenso.sitew.com/files/users/4/4/6/9/0/9/bandeira_do_brasil.gif

Estreito hydro power plant

1,087MW hydroelectric power plant at Estreito was inaugurated on

October 17th, 2012 by the President of Brazil, Dilma Rousseff and the

Chairman and CEO of GDF SUEZ, Gerard Mestrallet.

50 years of expertise in nuclear energy mastering the whole nuclear value chain

Stakeholder in Europe first commercial PWRs BR 3 (1962-1987)

Chooz A (1967-1991)

Operator of 7 reactors in Belgium (3 at Tihange and 4 at Doel)

The Group capacities : 6 134 MW Belgium 4 226 MW

France 1 208 MW (Chooz B and Tricastin)

Germany 700 MW (Unterweser, Gundremmingen B&C, Grohnde)

Strengths Independent from suppliers & vendors

Reactors from several vendors (all of PWR design)

Participations in Georges Besse II (Uranium enrichment plant)

Tihange

Doel

Nuclear Safety and Nuclear Security

are our overriding priorities

8


Our ambition in nuclear projects

United Kingdom

• Ambition: 3 600 MW – COD 2023

• NuGeneration Ltd - Joint venture GDF SUEZ – Iberdrola

• Option on Moorside, nuclear land adjacent to Sellafield

• Preparing for selection of technology : AP1000 or EPR

Other considered countries

• Europe : Poland, Turkey , The Netherlands,…

• Middle East : Saudi Arabia, UAE

• Asia : Thailand, …

• Americas : Brazil, USA/Canada

GDF SUEZ to develop Nuclear capacities

Based on international IPP developer experience, as co-Owner and co-Operator of highest nuclear safety level nuclear reactors

Nuclear is part of the solution to face Energy challenges

• Energetic independence & Fuel security of supply

• Stable, predictable and competitive generation costs

• Low greenhouse gas emissions

9


GDF SUEZ profile


Stress Tests and Long Term

Operation of Belgian NPPs


investment

Conclusions

TABLE OF CONTENTS




Rio, Brazil

October 24, 2012


Results of BElgian Stress Tests and main short term improvements on Belgian NPPs

Results have confirmed the robustness of Belgian NPPs thanks to

Double containment

Bunkerised 2nd level of protection including emergency diesels

Ultimate heat sink

Most issues related to oldest NPPs (Doel 1 & 2 and Tihange 1)

Some improvements have already been implemented at NPPs in order to increase the robustness of the installations with regard to extreme scenarios

to guarantee core cooling in case of total Station Black Out

to refill the Spent Fuel Pools in case of total Station Black Out of

long duration

Other improvements are in progress:

to ensure power supply and cooling capacity from dry places in

case of beyond design flooding

to guarantee correct operation in case of beyond design

earthquake

11


Long Term Operation of Belgian nuclear power plants

December 23, 2011

In parallel to the Stress Tests, Electrabel

submitted its Long Term Operation

reports

July 4, 2012

Belgium Government decided

o To phase out Doel 1 & 2 units in 2015 and to shutdown all units by 2025

o To allow Tihange 1 to operate for 10 more years

o To force Electrabel to sell the electricity generated by Tihange 1 to the market

at cost (including safety improvements) with a reasonable margin

o To slightly reduce the existing nuclear tax

July 3, 2012

The FANC concluded that Long Term

Operation of 3 oldest units

(Doel 1 & 2 and Tihange 1) beyond 2015

was technically feasible if appropriate

identified investments would be carried out

in order to manage ageing and upgrade

safety level

Further negotiations are on-going

12


Overview of the checks in progress at Doel 3 and Tihange 2

The facts

In addition to regulatory inspections, Electrabel and AFCN agreed to subject 7 active reactors to specific

additional inspections during ten-year review process

These additional checks carried out on the full thickness of the wall and the entire surface of the vessel

Inspections in Doel 3 and Tihange 2 revealed indications in the material of the reactor vessel

apparently “hydrogen-related defects” (HRD),

• Flake-type indications

• Said to occur during manufacture of the vessel

• In the metallic mass in the inner 120 mm of the wall (itself 200 mm thick)

Guaranteed safety

HRD not source of any radioactive release

Reactors Doel 3 and Tihange 2 shut down

Fuel removed from reactor

Next steps

Analysis process on-going, in close collaboration with Authorities,

international experts and experts from the Group (Laborelec, Tractebel Engineering, ECNSD)

Edition of justification file

Review of the justification file by FANC and its external experts.


GDF SUEZ profile


Stress Tests and Long Term Operation of

Belgian NPPs

GDF SUEZ landscape for

nuclear investment

Conclusions

TABLE OF CONTENTS




Rio, Brazil

October 24, 2012


Business Model and Partnership

Based on international IPP developer experience,

Focus on large, complex projects to create value in

Development & Operation

Co-Owner & Co-Operator for highest safety level PWR

technology (not designer-constructor)

Through sustainable partnerships to share risks

and costs

• to increase competition and reduce costs

• to meet clients requests/demands

• with adequate industrial scheme coping with local

situation

– At equity level : Utilities and/or giant Consumers

– At political level : local incumbent Utilities

– At contractual level : Suppliers

Through Plant delivery contractual schemes with

affordable risks

15


GDF SUEZ landscape for nuclear investment

Further to Partnership approach and General Nuclear requirements

Main prerequisite issues when considering an investment in a specific country are :

Stable long term political commitment

Clear and predictable long term legal and regulatory environment

A suitable electricity market and a reliable High Voltage grid

Site assessment

Technology assessment

Fuel cycle and radwaste management solutions

Economics & Financing

Local acceptance

Reinforcement of local nuclear competences

Risk mitigation measures

16


General Nuclear Requirements

Nuclear operator = unique counter-part of the Safety Authorities

during the licensing process, the operation, the decommissioning

Knowledge acquisition of targeted designs to facilitate build-up of the

“intelligent” Nuclear Operator

Pre-licensing phase before the signature of the main contract

Part of the detailed design before the signing of the main contract

master the construction schedule

minimize risk of delay

serious basis for the pre-licensing process

60 years 10 -15 years

1 century

17


AP1000 Westinghouse EPR Areva ATMEA1TM Areva-Mitsubishi

Internationally recognized Generation III Reactors

Characterized by high level of nuclear safety, more than ever after Fukushima

Pressurized Water Reactors (widespread worldwide & 50 year expertise)

Actions Build-up expertise and experience feedback

Assess competitiveness of the models (on technical and industrial point of view)

Compare nuclear technologies to select the most suitable to the project, the country and Utilities’ needs

Keep open position versus other technologies

Technology : Highest safety level reactors

18 2012 10 24_GDFSUEZ_CBEE_Rio_YC

Financing Nuclear Projects

Financing issues different and more challenging

than for conventional thermal plants

Nuclear projects highly capital intensive: 2 to 4 times the cost of thermal plants

Construction period 2 to 4 times longer than thermal plants

Technical life time 2 to 3 times longer than thermal plants

High fixed costs and low variable costs make electricity price very sensitive to plant availability

and ability to operate in base load

Capex are more front loaded

Specific risks linked to nuclear : licensing, waste management, civil nuclear liability

Will a contractor accept a lumpsum, fixed price EPC contract ?

Extensive risk mitigation and allocation is necessary

19


Lenders :

• Are unlikely to assume licensing, development &

construction risk

– Governments and regulatory bodies to set adequate legal

framework

– Developers, Utilities and Contractors to assume construction

risks (delays, cost overruns)

• May take limited amount of market risk if coverage

ratios are robust

– Governments to offer clear environmental policy (Kyoto, CO2

allocation)

– Developers to opt for the most secure possible environment

(PPAs, regulated market, capacity fees, ...)

• Will require significant insurance before assuming

liability and safety risk

– National Energy Policies, International Conventions and National

Acts and Laws

• Unlikely to assume waste disposal costs and

decommissioning risk

– Government to commit to solutions for waste disposal

– Sharing of risk by industry players and/or Government

Financing Nuclear Projects : Risk allocation

20


The challenge of local acceptance

Nuclear energy image has been deeply damaged

More than ever, communication to the public is of paramount importance

and nuclear industry needs to improve communication

Need to meet public expectations : Main concerns: safety + proliferation + long-lived nuclear waste

Aim : reassure & explain

Tone : transparent, factual

Our Objectives More than ever proactively assume an educational mission

Promote nuclear energy as an acceptable and legitimate way of meeting energy

needs

Build up GDF SUEZ image as an legitimate stakeholder in nuclear energy

Examples of actions carried out in Belgium “Belgian Nuclear Forum” campaigns (2009, 2010, 2011)

Surveys, barometers (SCK-CEN, BNF,…)

21

Reason Feelings


NUCLEAR ENERGY.

ARE YOU FOR, ARE YOU AGAINST,

OR DON’T YOU USE ELECTRICITY?

2009: no image campaign, but an invitation to

think about nuclear energy

2012 10 24_GDFSUEZ_CBEE_Rio_YC 22

2010: Rock festival Werchter

• raise awareness

• invite to participate to the debate


2011: Transparency campaign after Fukushima

Invite public to ask questions


Reinforce local nuclear competences

Mobilization of local graduated and specialized people

Set up of local manpower competency

Concrete associations with research centres and Universities

Bilateral support agreements with other nuclear countries

Training programs

Typical staffing curve (COD 2023)

25


The Human Resources action plan

26

5.300 people with skills and

know-how in the nuclear energy

2013

Now Future

On the long term, we need:

> 2.000 people (460 engineers

500 technicians – 1.000 workers) for the on-going business

Nuclear Training Programs

NTP-J Nuclear Trainees Program for young engineers (J=Junior)

NTP-M Nuclear Trainees Program for experienced engineers (M=Major)

NTP-S Nuclear Trainees Program for support services (S=Support)

NTP-G Nuclear Trainees Program for generation key staff (G=Generation)

NTP-T Nuclear Trainees Program for technicians (T=Technicians)

Action plan: Recruitment+Training+Dévelopment


GDF SUEZ profile


Stress Tests and Long Term Operation of

Belgian NPPs


investment

Conclusion

TABLE OF CONTENTS




Rio, Brazil

October 24, 2012


Conclusion

GDF SUEZ to pursue operation of existing NPPs and to develop new Nuclear capacities

as co-Owner and co-Operator of highest nuclear safety level nuclear reactors

in key strategic countries, including Brazil

based on :

international IPP developer experience,

50 years expertise as Owner and Operator of NPPs

through :

developing sustainable partnerships to share risks and costs

opting for plant delivery contractual schemes with affordable risks

choosing the most secure possible environment (PPAs, regulated, capacity fees, etc.)

relying on Pressurized Water Reactors with the highest level of safety

28


We definitely believe Brazil will take advantage of the long term experience of international classic investors-operators, like GDF SUEZ, in partnership, in bankable schemes.

XIV CBE - MESA 4 - Yves Crommelynck - 24 outubro 2012

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