NuclearEnergy Nuclear Energy Finland

September2009

ExecutiveSummary
In2008,30%ofelectricitywasgeneratedthroughnuclearpower Finlandhasfournuclearpowerplantunitswithatotalnetcapacityof2,656MW Itisestimatedthat4,800MWofnewnucleargeneratingcapacityisrequiredby2030to meetdomesticdemands meet domestic demands Anewnuclearplantisunderconstructionandthreemoreareexpectedby2020 Growthinenergyintensiveindustries Riseinnetelectricityimports Creditissuesfacedbyplayersinthemarket Risingelectricitypriceandcosteffectiveelectricitygeneration Legislations governing nuclear activity Legislationsgoverningnuclearactivity ProcedureforestablishinganuclearfacilityinFinland Guidelinesforobtainingaconstructionlicenseforanuclearpowerplant Guidelinesforobtaininganoperationlicenseforanuclearpowerplant Themarketisdominatedbyafewplayerswhichinclude

Overview

Market Characteristics

Regulations

MajorPlayers

Elektrobudowa TeollisuudenVoimaOy FennovoimaOy FortumPower&HeatOy

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MarketOverview Market Overview MarketCharacteristics Regulations R l ti GovernmentPoliciesandInitiatives NuclearWasteManagement N l W M MajorPlayers Appendix d

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NuclearEnergyinFinlandistheprimarysourceofelectricity generation
Overview
Nuclearenergyaccountedfor30%oftotal electricitygeneratedin2008 Finland'sfournuclearpowerplantunitshavea totalnetcapacityof2,656MW
Theannualloadfactorsofalltheunitshave averagedat~90%sinceitsinception

ElectricityProduction
TWh
90 80 70 60 50 40 30 20 10 0

Nuclearpower 82 27% 18% 12% 68 33% 20% 79 28% 14% 12% 78 29% 18% 13% 74 30% 23% Hydropower Naturalgas Coal Biofuel Peat Others

Majoruraniumminingareasinclude M j i i i i l d
EnoineasternFinland,AskolainsouthernFinland aswellasintheUusimaa,NorthernKareliaand Laplandprovinces

15% 9% 3% 13% 19% 20% 17% 11% 10% 12% 13% 13% 7% 13% 12% 8% 4% 4% 8% 4% 8% 2% 8% 2% 2004 2005 2006 2007 2008

It has been projected 4,800 MW of new Ithasbeenprojected4,800MWofnew generatingcapacityisrequiredby2030

Finlandneedsnewcapacitybothtomeetnew demandgrowthandtoreplaceoldcapacity, primarilycoalfiredplants

GrowthinNuclearGeneration
TWh
70 60 50 40 30 20 10 0 22.2 69.2

+5%

Nuclearpowerdevelopmentisexpectedtobe theprimarymeasuretocuttheCO2emissions towardsmeetingthecountriesemission targets

2008

2030e

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Thecountrycurrentlyhostsfour nuclearplantswhile anotherfacilityisunderconstruction

ExistingNuclearPowerPlants
Plant Operator Commercial Operation LicensedTill Type Power(MWe) P (MW ) Production (07) LoadFactor ('07) Olkiluoto1&2 Teollisuuden VoimaOy(TVO) 1979&1982 2039&2042 BoilingWater Reactor 2x860 2 860 14.4TWh 95.6% 95 6% Loviisa1&2 FortumPower& HeatOy 1977&1981 2027&2030 Pressurized WaterReactor 2x488 2 488 8.1TWh 95.4% 95 4%

UpcomingNuclearPowerPlant
Afifthnuclearpowerplant Olkiluoto3 is underconstruction Theplantwillhavea1,600MWEuropean pressurizedreactor ArevaincollaborationwithGermany'sSiemens isbuildingtheplantforelectricityfirmTVO is building the plant for electricity firm TVO Itisexpectedtogoonlineinmid2012 Theplantwasinitiallyexpectedtobe functionalbymid2009buthasbeenstalled duetooperationaldelays d i ld l
ArevahasinvestedUSD810mnontheOlkiluoto projectinthefirsthalfof2009 Thedelayoftheprojectisestimatedtoleadtoan additionalcostsofUSD3.4bn dditi l t f USD 3 4 b

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Playersarecapitalizingontheopportunitiesinthemarket anddevelopingnewnuclearplants
OtherNuclearProjectExpectedtobeEstablished
Operator Site Sit Capacity(MW) ReactorType TVO Olkiluoto Olkil t 1,0001,800 Pressurizedwaterreactors (PWR)andBoilingWater Reactor(BWR) Toshiba,GEHitachi,Mitsubishi oraKoreansupplier 2010 Apr08 2020 USD4.45.9bn Theexistinginfrastructureat Olkiluotowhichincludes nuclearwastemanagement andthebasicorganization willbenefittheoperator Fennovoima MunicipalitiesofPyhaejoki, p y j , RuotsinpyhtaeaeandSimo 1,5002,500 EuropeanPressurizedreactor, BoilingWaterReactor(SWR 1000)orAdvancedBWR(ABWR) ArevaandToshiba 2012 Jan09 2020 NA Plantwillprovideelectricityfor itsownersatproductioncost, witheachpartnergettinga shareofoutputinproportionto itsshareofownership Fortum HastholmeninLoviisa H th l i L ii 1,0001,800 Pressurizedwaterreactors(VVER 1000),ABWR,EconomicSimplified BWR Toshiba,GEHitachioraRussian supplier NA Feb09 2020 USD5.98.8bn Facilitywillbeusedforcombined heatandpowerproduction Thespentnuclearfuelwillbe disposedofatOlkiluotoinEurajoki Electricitygeneratedwillbetoall electricityusers l i i

Supplieralternatives Constructiondate Applicationfor DecisioninPrinciple OperationalDate Cost

OtherFacts

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MarketOverview Market Overview MarketCharacteristics Regulations R l ti GovernmentPoliciesandInitiatives NuclearWasteManagement N l W M MajorPlayers Appendix d

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MarketCharacteristics

Risingelectricitypriceandcost effectiveelectricitygeneration

Growthinenergyintensive industries

Market Characteristics

Creditissuesfacedbyplayersin themarket

Riseinnetelectricityimports

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Thecountrycomprisesofmajorindustrieswithlargeenergy requirementsforwardinggrowthinnuclearpower
Majorenergyintensiveindustries
MajorityofthepowerconsumedinFinlandis bytheindustrialsector Thecountrycomprisesofindustrieswhichare majorconsumersofpowersuchaspulpand paper,metalandengineeringindustry,and shipbuilding p g AccordingtoasurveybyTNSGallup,for FinnishpowercompanyTVO,ithasbeen inferredthatelectricitydemandedwill increaseinFinlandinthenext10 30years increase in Finland in the next 1030 years Themainreasonsfortheincreaseinelectricity consumptionareexpectedtobethegrowthof industrialproduction,theincreasein automation,theelectrificationoftraffic,anda automation the electrification of traffic and a generalincreaseinthestandardofliving

Segmentationofelectricityconsumption
Industry 25.8% 19.8% 3.3% Household&Agriculture Services&Construction Losses

51.0%

11.0% 15.3% 55.8% 17.9%

Forest MeatProcessing Chemicals Others

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Shortfallofdomesticallyproducedelectricitywilldrivethe market;playersfacemajorcreditissues
Riseinnetelectricityimports
Theshortfallinelectricitygenerationhasledtoanincreaseinnetelectricityimports Furthermore,netelectricityimportsaccountedforapproximately15%ofenergyconsumptionin2008
NetElectricityImported
+27%

TWh
20 15 10 5 0 2004 2005 16.9

+11%

17.0 11.4 12.6

+252% 4.8

2006

2007

2008

Creditissuesfacedbyplayersinthemarket
Themarkethasbeenseentoberiskyasmanyissuescropupaffectingcreditincluding h k h b b ik i ff i di i l di
Constructioncostoverruns, Negativepublicreactiontopotentialsafetyandsecurityproblemsatnuclearplants Lackofexperiencewithnewplantdesign Lack of a longterm solution for storage of radioactive waste leading to longterm cost uncertainty Lackofalong termsolutionforstorageofradioactivewasteleadingtolong termcostuncertainty

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Risingelectricitypricesandthecostadvantagesofnuclear powerisexpectedtoleadtoagrowingmarket
Risingelectricitypriceandcosteffectiveelectricitygeneration
Thepriceofmarketelectricityhasbeenontheriseduetorisingdemandandshortfallinproduction Thiscreatesstrongopportunitiesforplayerstoentertheenergymarket
AveragedMonthlyMeanPrice USD Cents/KWh
10 5 4.4 44 7.5

Since2007,theaverage monthlymeanpriceof electricityhasrisenby electricity has risen by 70%

0 2007

2008

It has been estimated that electricity generated via nuclear power is most cost efficient in comparison with other Ithasbeenestimatedthatelectricitygeneratedvianuclearpowerismostcostefficientincomparisonwithother sourcesinFinlandnuclearenergy
Priceofelectricitygeneratedbyvarioussources(2003) USD cents/KWh
5 0 3.50

+17%
4.10 4 10 4.80 4 80

Nuclear

Coal

Natural Gas

Furthermore with emission trading at USD 29 5/t CO2 the electricity prices for coal and gas increase to USD 6 5 Furthermore,withemissiontradingatUSD29.5/tCO2,theelectricitypricesforcoalandgasincreasetoUSD6.5 c/kWhandUSD5.8c/kWhrespectively
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MarketOverview Market Overview MarketCharacteristics Regulations R l ti GovernmentPoliciesandInitiatives NuclearWasteManagement N l W M MajorPlayers Appendix d

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Regulations

Guidelinesforobtainingan operationlicenseforanuclear powerplant

Legislationsgoverningnuclear activity

Key Regulation s Guidelinesforobtaininga constructionlicenseforanuclear powerplant Procedureforestablishinga nuclearfacilityinFinland

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Legislationsgoverningnuclearactivity
Itestablishesgeneralprinciplesgoverningtheregulationoftheuseofnuclearenergy,the establishmentofalicensingprocedureandnuclearwastemanagement Statesthatalicenseisrequiredforthemanufacturing,production,handling,useandstorageof nuclearmaterials Radioactivewastemanagementisregulatedbythisact.Itallocatesresponsibilitiesbetweenwaste producersandgovernmentauthorities,incorporateswastemanagementcriteriaintothelicensing procedureandprovidesthebasisforfinancingthewastemanagementsystem Alicensemustbeprocuredunderthisactforthetransportationofnuclearmaterialsandwaste issuedbytheSTUK Aimstoprotecthumanhealthfromtheadverseeffectsofradiation Regulatesallactivitiesthatcauseormaycauseexposuretoradiation t as d e e t e e s o ce s g equ e e ts a d app es to o s g, o o s g a d atu a Ithasdifferentlevelsoflicensingrequirementsandappliestoionising,nonionisingandnatural radiation ToobtainalicenseunderthisactanapplicationisgiventotheSTUKwithinformationregardingthe equipmentandprotectiveshieldsusedintheactivities,qualityofpersonnelandworkstandards,and thesystemfollowedforthedisposalofradioactivewaste Allminingactivitiesareregulatedbythisact Theactforwardsthatinordertoexecuteminingorenrichmentoperationsforproducinguraniumor thoriumrequiresalicensebytheGovernmentwhichmaybegrantedtoFinnishcitizens,corporations orfoundationsaswellastoindividuals,entitiesorauthoritiesresidingwithinthememberstatesof theEuropeanUnion

TheNuclear EnergyAct,1987

The Radiation TheRadiation ProtectionAct, 1991

TheMiningAct

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Legislationsgoverningnuclearactivity
TheNuclear LiabilityAct, 1972 Transportation ofDangerous SubstancesAct Electricity y MarketAct Acton Competition Restrictions LandUseand BuildingAct Environmental ProtectionAct LawonWater L W t Resources LawonAir Protection Lawon Law on emergency preparedness

Itmakestheoperatorsofnuclearpowerplantsresponsiblefordamagescausedtothirdparties ThetotalliabilityofanuclearpowerplantsituatedinFinlandhasbeenlimitedsuchthattheplant mustcompensatefordamagestoamaximumof175mnSpecialDrawingRights Finlands international agreements makes contracting countries compensate the injured Finland sinternationalagreementsmakescontractingcountriescompensatetheinjured Regulatesallmodesoftransportationofradioactivesubstances Appliestointernationalanddomestictransport Opened up access to distribution networks and allows foreign ownership in electricity supply Openedupaccesstodistributionnetworksandallowsforeignownershipinelectricitysupply ActivitiesmustbecompatiblewiththeEuropeanCommunitylawoncompetition Requiresalanduseplanforpowerplantsandotherfacilitiestobebuiltonplantsites,andprovides l d l f l d h f l b b l l d d guidelinesfortheirplanning Laysdownvariousrequirementsrelatingtoenvironmentalprotection Permitsarerequiredfromenvironmentalauthoritiesfortheuseofcoolingwaterinpowerplants Statesthelimitsthatthegovernmentmustimposefornonradioactiveatmosphericemissions S Statesthemeasuresthatoperatorsmusttakewhilebuildingthefacilityintheeventofanuclear h h k hil b ildi h f ili i h f l emergency
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TheprocedureforestablishinganuclearfacilityinFinland
Developinganuclearpowerplant
Thereareprimarily4stagestowardsthedevelopmentofanuclearfacility Environmental Impact Assessment

Decisionin Principle Operatorfilesan fl applicationtothe Governmentfora DecisioninPrinciple ( ) (DiP) EIAreportis attachedtothe application Governmentcarries outasafety out a safety appraisalfromSTUK andastatement fromthe municipalityinthe area

Construction License

Operation License

Coordinatedbythe Ministryof Employmentand l d Labor Operatorcarriesout anenvironmental impactassessment p ontheconstruction andoperationofthe nuclearfacility

OncetheDiPis affirmedthe operatorappliesfor t li f aconstruction license Thislicenseisissued bytheGovernment y afterarigorous assessment procedure

Beforethe constructionofthe p plantisontheverge g ofcompletion,the operatorappliesfor anoperatinglicense forthefacility The Government TheGovernment issuesthislicense basedonvarious considerations

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Guidelinesforobtainingaconstructionlicenseforanuclear powerplant
Environmental ImpactAssessment
MinistryofTradeand Environment(KTM) Environment (KTM)

Government
SubmitstheGovernmenta reviewaddressingissuesof wastemanagementincluding methodsproposed,safetyand environmentalaspects,costand suitabilitytoFinnishconditions

Parliament

Applicationmovestothe pp Parliamentforapproval

Applicationfor aconstruction t ti license forwardedby theoperator

Preliminarysafety assessmentfrom STUK

Safetyassessmentbythe y y areasandneighboring municipalcouncils

Applicationisapproved pp pp ordisapprovedbythe Government

Grantofthelicenseis stillcontingentupon publicsafety,workforce protection, environmental protection,town planningandbuilding requirement,technical i t t h i l expertise,financial resourcesandfinal decommissioning

Applicantprovides pp p informationfor publicconsultation

ConsultationwithgovernmentagenciessuchastheMinistryofDefense,concernedStateProvincialOffice, C lt ti ith t i h th Mi i t fD f d St t P i i l Offi RegionalCouncilandRegionalenvironmentCentreandAdvisoryCommitteeonNuclearEnergy

Constructionandoperationofnuclearfacilitiesisprohibitedwithoutalicense Licenses are granted to those entities under the jurisdiction of the EU member status LicensesaregrantedtothoseentitiesunderthejurisdictionoftheEUmemberstatus TheGovernmentmustrejecttheproposalifthemunicipalcouncilresponsiblefortheproposedsiteopposestheapplication

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Guidelinesforobtaininganoperationlicenseforanuclear powerplant
Intermediate Authorities
KTMassessthefinancialsecurity requirementsbasedontheact b d h relatedtowastemanagement

Government

Applicationfor operational license license forwardedby theoperator

STUKassessthesafety,physical protection,emergencyplanning, nonproliferationrequirements andthefinancialguaranteethat theoperatorcancoverthe possibilityofanucleardamage ibili f l d causedbythefacility

Applicationmovestothe governmentforapproval f l

Operatinglicensesaregrantedforafixedperiodoftime LicenseperiodissubjecttochangeduringtheperiodofitsvaliditybytheGovernment Thelicensecanberevokedifitunderminesanyoftheactsbasicprinciples,ifitdies,loseslegalcapacityoriftheinstitutionbecomes y p p , , g p y bankruptorceasestooperatethefacilityforanyotherreason LicenserequirementsoftheNuclearEnergyActarereinforcedbyprovisionsforcriminaloffences Offencesincludeuseofnuclearenergywithouttheappropriatelicense,infringementofparticularprovisionsoftheact,failureto observelicenseconditions,failuretocomplywithsafety,physicalprotectionoremergencyplanningrequirements,orinterference withequipmentinstalledbySTUKtomonitornuclearpowerfacilities TheSTUKhastheauthorityforsearchandentry,toaccessrecords,takesamplesandinstallmonitoringdevices.Itrequirethe operator tosubmitreportsandprovideinformationregardingthemethodofproductionoffuelorthemanufactureofequipmenttobeused

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MarketOverview Market Overview MarketCharacteristics Regulations R l ti GovernmentPoliciesandInitiatives NuclearWasteManagement N l W M MajorPlayers Appendix d

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GovernmentPolicies&Initiatives

Policiestowardsreducing CO2emission CO2 emission

Key Policies P li i
Introductionofawindfall profitstax fi Majorresearchand developmentactivities d l i ii

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Thegovernmentstargetstoreducecarbondioxide emissionswillbenefitthenuclearpowerindustry
PoliciestowardsreducingCO2emission
Thegovernmenthastwomajortargetstobemetduetointernationalagreements
TheEuropeanUnionhasforwardeddirectivestocutCO2emissionsbyatleast20%by2020,comparedto1990levels UndertheKyotoProtocol,thecountrymustreducetheirgreenhousegasemissionsbyatotalof8%fromthe1990levelbythe firstcommitmentperiodof20082012
Themostsignificantgreenhousegas,carbondioxide,accountsforover80%ofallgreenhousegasemissionsinFinland

TheStateofFinlandwillcontributetothisgoalbyacquiringonaverage2mntonsofemissionreductionsper yearwiththehelpoftheKyotoflexiblemechanisms Ithasbeenestimatedthatthegovernmentshallforwardinitiativestodevelop4,800MWofnewnuclearpower capacityby2030inordertomeetthetargets

ElectricityProcurementbySourceofEnergyinFinland

2005
Gas 11% Coal,Oil 10% 26% Nuclear

2011
Theshareofemission freeenergysourcesis expectedtogrowfrom 54%to66%
Gas 16% Nuclear Coal,Oil Coal Oil 7% 34%

Imports 7% Imports
20%

12% 5% 16% Hydro,Wind Peat P

WoodWaste y , Hydro,Wind

15% 4% Peat 17% WoodWaste

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Majorresearchanddevelopmentactivitiescarriedoutby theStatetowardsdevelopingthissegment
Overview
R&Dactivitieshavelargelyfocusedonsafety andoperationalperformanceofthepower plants,andthemanagementanddisposalof l d h d di l f waste Annualfundingfornationalnuclearenergy researchis~USD69.2mn
Additi AdditionalfundingisreceivedfromTekes,the l f di i i df T k th FinnishFundingAgencyforTechnologyand Innovation

SourcesofFunding
4.0% 3.0% 3 0% 4.0% 11.0% 8.0% 70.0% 70 0% PowerCompanies ResearchFunds VTT Tekes EU Others

Thecountryhasnoinstitutesdedicatedto nuclearresearch
MostresearchtakesplaceattheVTTTechnical ResearchCentreofFinland

ResearchAreas
10.0% 0.4%

Nationalresearchprogrammesonnuclear energy
NuclearPowerPlantSafety(SAFIR2010),2007 2010 ResearchProgrammeonNuclearWaste Management(KYT2010),20062010 Euratom Tekes Fusion Energy Cooperation Euratom TekesFusionEnergyCooperation, 20072011
28.4%

NuclearWaste Management ReactorSafety Fusion 61.2% Others

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TheStateplansonimplementingawindfallprofittaxfor TheStateplansonimplementingawindfallprofittaxfor nuclearandhydropowerfacilities

Introductionofawindfallprofitstaxonnuclearandhydropowerplants
TheFinnishgovernmentplansonimplementingawindfallprofittaxontheexistingnuclear andhydropowerfacilitiesby2011 and hydro power facilities by 2011 TheMinistryofEmploymentandtheEconomyhasinstatedaworkinggroupwhichwilllook intothespecificsofthetax Thetaxisintendedtooffsetwindfallprofitsthatutilitieswithnuclearandhydropower generationmakesellingtheirfreeCO2allocations generation make selling their free CO2 allocations Thetaxwouldapplytonuclearandhydropowerplantsbuiltbefore1997 ThetaxleviedconformstoEUregulations ItshouldnothamperthecompetitivenessofFinland'senergyintensiveindustry Outcomeofthetaxshouldnotleadtoanincreaseinelectricitypricesforconsumersand industry ThetaxratesisexpectedtorangefromUSD1.5toUSD14.7perMWh Dependingonthelevel,thegovernmenthasestimatedthatitwillgeneratebetweenUSD48.6 mnandUSD486mninannualrevenue Thistaxisexpectedtoaddtothestatefundswhichcanbeimplementedtofurthertheenergy sectorinFinland

Overview

Purpose Application Major Considerations ExpectedTax Structure Financial Benefits

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MarketOverview Market Overview MarketCharacteristics Regulations R l ti GovernmentPoliciesandInitiatives NuclearWasteManagement N l W M MajorPlayers Appendix d

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NuclearWasteManagement

Currentscenario

Developmentsinnuclearwaste management
NuclearWaste Managemen t

Provisionsofnuclearwaste management

Classificationofnuclearwaste

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Developmentsinnuclearwastemanagement
20042009:Groundlevelserviceandmonitoringbuildingsfor ONKALOunderconstruction.Excavationoftheaccesstunnelto reachadepthof420metresataninvestmentofUSD103mn 20092011:Researchonthemechanicalcharacteristicsofthe bedrock,andlayoutadaptationoftherepository bedrock, and layout adaptation of the repository 2012:Posivaplansonsubmittinganapplicationforaconstruction licenseforthefinaldisposalfacility 2015:Constructionofthefinaldisposalfacilitytobegin

1983:TheFinnishGovernmentsettheoverallscheduleonthe Finnishnuclearwastemanagementprogrammeandbegan Finnish nuclear waste management programme and began scanningpotentialsitesforfinaldisposalofspentfuel 1987:InterimstorageofspentnuclearfuelstartedinOlkiluoto withwidescalefieldresearchin5municipalitiesforthefinal disposablesite

1970

1980

1990
1988: Construction Construction oflowand intermediate levelwaste repositoryin Olkiluoto began b

1995

2000
2000: Olkiluoto Olkiluoto wasselected asthesite forfinal disposalof spent nuclearfuel l f l

2005
2003: Municipality ofEurajoki issueda permitfor
ONKALO an

2020

1970:Plans fornuclear waste management beganwith construction oftheplants

19771978: 19771978: Operationof reactors startedin Loviisaand Olkiluoto

1994: Parliament bannedthe importand exportof nuclear waste

underground characterizat ionfacility

2020:Final disposalis expectedto begin

Interimstorage beganin began in Loviisa

1992:FinaldisposaloflowandintermediatelevelwastestartedinOlkiluoto 1993:ConstructionoflowandintermediatelevelwasterepositorystartedinLoviisa 1993: Construction of low and intermediate level waste repository started in Loviisa 1995:PosivaOywasestablishedtomanagethefinaldisposalofspentnuclearfuel

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Classificationofnuclearwaste
TypesofnuclearwasteundertheNuclearEnergyAct

CurrentnuclearwastescenarioinFinland Current nuclear waste scenario in Finland

OperatingWaste p g

HighLevelWaste (includingspentnuclearfuel) (i l di t l f l)

DecommissioningWaste g

Operatingwasteconsists oflow(LLW)and of low (LLW) and intermediatelevel(ILW) waste

LLWincludesprotective plasticsheets,tools, protectiveclothingand protective clothing and towelsusedinservicework ILWconsistsoftheion exchangeresinusedto purifytheprocesswater

Operating Waste OperatingWaste

Olkiluoto150200m3/yr Loviisa100150m3/yr

The four nuclear power Thefournuclearpower plantsproduce~70 tonnesofspentfuelayear Spentnuclearfuelcanbe reprocessedbutthatisnot thecaseinFinland.Spent h i Fi l d S fuelisallowedtocoolina waterpoolforafewyears, afterwhichitistransferred tointerimstoragefacilities g ontheplantsite

Decommissioning refers to Decommissioningrefersto nuclearwaste managementactionstaken afteranuclearpower planthasbeenclosed S Someofthestructuresina f h i plantbecomeradioactive overtime.Oneofthemost importantstructuresin thisrespectisthereactor p pressurevessel

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Provisionsofnuclearwastemanagement
ProvisionsundertheNuclearEnergyAct Nuclearwastegeneratedinconnectionwithorasaresultoftheuseofnuclearenergyin Finlandshallbehandled,storedandpermanentlydisposedofinFinland

DisposalNorm Disposal Norm

Dumping

Th h dli Thehandling,storingandpermanentdisposalofnuclearwasteoriginatingfromothercountries t i d t di l f l t i i ti f th ti isforbidden

The nuclear power companies are responsible for all the costs related to nuclear waste Thenuclearpowercompaniesareresponsibleforallthecostsrelatedtonuclearwaste management,includingdecommissioning Roleofpower companies
Thepowercompaniesbearingthewastemanagementobligationshaveestablishedajointcompany,Posiva Oy,toexecutethenecessaryresearchandimplementationofspentfueldisposal

Thecostsofwastemanagementisfactoredinthepriceofelectricityproducedbythenuclear powerplants power plants Thepurposeofthisfundistocollect,storeandreliablyinvestthefundstowardsdeveloping facilitiesaswellascarryoutresearchprojectsforstoringnuclearwasteinthefuture The fund contains approximately USD 2 2 mn ThefundcontainsapproximatelyUSD2.2mn ThefundiscontrolledandadministeredbytheMinistryofTradeandIndustry
28

NuclearWaste Management Fund

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Nuclearwastemanagementisdominatedbyexisting companiesinthenuclearenergysegment
NuclearWasteManagementScenarioinFinland PosivaOy,establishedin1995,isanorganizationresponsiblefornuclearwastemanagement inFinland Thecompanyhadaturnoverof~USD81mnin2008 PosivaisownedbyTeollisuudenVoimaOyj(60%)andFortumPower&HeatOy(40%)which arethelargestcompaniesinnuclearpowergeneration Bothcompaniessharethecostofnuclearwastemanagement Itsactivitiesincludethefinaldisposalofspentnuclearfueloftheownersincludingthe construction,operationandeventualdecommissioninganddismantlingofthefinaldisposal facility y Itisresponsibleforresearchintothefinaldisposalofspentnuclearfuelandalsoprovides expertnuclearwastemanagementservices ThespentfuelwhichisstoredundergroundinLouviisaandOlkiluotoisexpectedtobe transferredfromexistingwaterpoolstoragefacilitiestoafinaldisposalareainOlkiluoto transferred from existing water pool storage facilities to a final disposal area in Olkiluoto Theplantshouldbefunctionalinaround2020 Thetwoplayersinthenuclearpowergenerationmarkethaveownershipoverthecompany whichmakesitdifficultfornewplayerstoenterthemarketconsideringtheimportance placedonnuclearwastemanagementbytheGovernmentofFinland l d l t t b th G t f Fi l d

Overview

Ownership p

Activities

NewFacility New Facility

MonopolisticNature

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MarketOverview Market Overview MarketCharacteristics Regulations R l ti NuclearWasteManagement GovernmentPoliciesandInitiatives G P li i dI i i i MajorPlayers Appendix d

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PlayersintheMarket(1/4)
CompanySnapshot:Elektrobudowa
CorporateInformation
Headquarters Founded AreaofExpertise KeyPeople Katowice 1953 Constructionandinstallationservices; manufacturingelectricalpowerequipment DariuszManko Ch i D i M k Chairman JacekFaltynowicz President

FinancialPerformance
Revenue USDmn
400 300 200 100 0 191.0 118.7 141.0 280.2

Revenue Profit/Loss

Profit fi USDmn 331.7 25

20 15 10 5 0

2004

2005

2006

2007

2008

BusinessHighlights Business Highlights

Thecompanyoperatesinvariousbusinesssegments
Powergenerationsector Technicalconsulting,engineering,procurementofmaterialsandequipment,electricalworks,testing, commissioningandstartup,serviceofoperatedequipment Power distribution sector Manufacture of medium voltage and low voltage switchgear assemblies Powerdistributionsector Manufactureofmediumvoltageandlowvoltageswitchgearassemblies Industrialautomationsector Executescomplexautomationprojects,dataandcommunicationsystemsforpowergenerationplants, industrialfacilities,civil,industrialandresidentialconstruction,publicutilityfacilities

Itsignedacontractfortheelectricalworksandtheparticipationinthecommissioningofthereactorsectionofa nuclearpowerplantinFinlandwhichisunderconstruction
ThesignedcontractisestimatedatUSD9.3mn OperationsbeganinMar2008andisexpectedtobecompletedby2011
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PlayersintheMarket(2/4)
CompanySnapshot:TeollisuudenVoimaOy
CorporateInformation
Headquarters Founded AreaofExpertise KeyPeople Eurajoki 1969 Constructionofpowerplantsandelectricity generation TimoRajala Ch i Ti R j l Chairman JarmoTanhua PresidentandCEO

FinancialPerformance
Revenue USDmn
400 319.3 300 200 100 0 292.8

Revenue Profit/Loss
334.0 331.1

Profit fi USDmn
360.5 0 20 40 40 60 80

2004

2005

2006

2007

2008

BusinessHighlights Business Highlights

Itisacompanyownedviaapublicprivatepartnership;43% government(including27%byFortum)and57%private Theoutputoftheplantsarecontractedtoeachownerbasedontheirshareinthecompanywhileanyunwanted portionissoldbythemtotheNordicmarket Thecompaniespresenceintheenergymarket
Ownsandoperatestwonuclearpowerplantunits,Olkiluoto1andOlkiluoto2atEurajoki TheMeriPoricoalfiredpowerplant;plansondevelopingacarboncapturesysteminassociationwithFortum Operatesawindpowerplantof1MWplantcapacitywithanannualoutputof~2mnkWh

The company has been focusing on developing economical safe and environmentally friendly electricity for its Thecompanyhasbeenfocusingondevelopingeconomical,safeandenvironmentallyfriendlyelectricityforits shareholders
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PlayersintheMarket(3/4)
CompanySnapshot:FennovoimaOy
CorporateInformation
Headquarters Founded AreaofExpertise Financials KeyPeople Helsinki 2007 Operatenuclearpowerplants 08Loss USD13.5mn;07:Loss USD2.5 mn JuhaRantanen Chairman

CompanyOwnership
Enterprises in industry trade and services hold Enterprisesinindustry,tradeandserviceshold approximately30%share,regionalandlocalenergy companiesownapproximately36%sharein Fennovoima Fennovoimahastwoowners
Voimaosakeyhtiohasa66%stake E.ONNordichasa34%stake

Altogetherithas64shareholdersincluding

BusinessHighlights Business Highlights

Itplansonconstructinga15002500MWnuclearpowerplantinFinland Fennovoimaplansonproducingelectricityforitsownersneedsatproductioncostbasiswhereeachownerwill receivetheshareofcapacityproportionaltoitsownershipinthecompany Ithasbegundraftingtherequiredstudiesforconstructingthenewnuclearpowerplant.Theseincludestudiesrelated tothesite,safety,technicalmattersandnuclearwastemanagementissues.Fennovoimaisconductingthe EnvironmentalImpactAssessmentprocedureforthreesites Theplantisexpectedtobecomeoperationalby2020withconstructionbeginningin2012

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PlayersintheMarket(4/4)
CompanySnapshot:FortumPower&HeatOy
CorporateInformation
Headquarters Founded AreaofExpertise KeyPeople Espoo 1998 Constructionofpowerplantsandelectricity generation MattLehti Chairman M tt L hti Ch i TapioKuula PresidentandCEO

FinancialPerformance
Revenue USDbn
10 8 6 4 2 0 5.6 5.7 6.6 6.6

Revenue Profit/Loss
8.3

Profit fi USDbn
2.5 2.0 1.5 1.0 0.5 0.0

2004

2005

2006

2007

2008

BusinessHighlights Business Highlights

FortumisaleadingenergycompanyintheNordiccountriesandtheotherpartsoftheBalticRim TheFinnishgovernmenthasa51%stakeinthecompany Itsactivitiescoverthegeneration,distributionandsaleofelectricityandheat,theoperationandmaintenanceof powerplantsaswellasenergyrelatedservices FortumPowerandHeatOyaresubsidiariesengagedinnuclearenergyactivities ThecompanyownsandoperatesthenuclearplantatLoviisaandhasminoritysharesoftheOlkiluotonuclearpower plantandoftheSwedishForsmarkandOskarshamnnuclearpowerplants ItplansonconstructinganewnuclearpowerplantunitontheislandofHastholmeninLoviisawithacapacityof 1,0001,800MWatUSD5.9bn USD8.8bn
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MarketOverview Market Overview MarketCharacteristics Regulations R l ti NuclearWasteManagement GovernmentPoliciesandInitiatives G P li i dI i i i MajorPlayers Appendix di

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Appendix: GovernmentBodies
MinistryofEmploymentandtheEconomy

MinistryofSocialAffairsandHealth

MinistryofInterior y
MajorBodies
`

MinistryofEnvironment

MinistryofForeignAffairs

AdvisoryBodies

FinnishRadiationandNuclearSafetyAuthority
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GovernmentBodies(1/3)
MinistryofEmploymentandEconomy(previouslyknownasMinistryofTradeandIndustry) Responsible for the use of nuclear energy in Finland Plays a central role in the licensing system Supervises and coordinates the long and cumbersome application procedure which involves other ministries, national and local authorities and public hearings Supervises the implementation of the countries statutory provisions on waste management g and administers the State Nuclear Waste Management fund Supervises research and development work carried out in the field of nuclear safety Represents Finland within the European Atomic Energy Community, the International Atomic Energy Agency, the Nuclear Energy Agency of the OECD, and the Nordic Nuclear Safety Research Programme

KeyBodies

MinistryofSocialAffairsandHealth Developsandguidespoliciesrelatingtosocialprotection,socialwelfareandhealthcare p g p g p Draftslegislationandotherregulationsonradiationprotection,drawsupofficialstatements onradiationprotectionissues,monitorsandguidesthedevelopmentandimplementationof radiationissues IthasadministrativeandfinancialresponsibilitiesovertheRadiationandNuclearSafety Authoritywhichsupervisesbothprotectionandotherradiationlegislationissues

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GovernmentBodies(2/3)
MinistryofInterior Responsiblefortheprotectionofthegeneralpublicintheeventofanemergencysuchasa nuclearincident ItisconsultedduringvariousstagesofthelicensingprocessundertheNuclearEnergyAct MinistryofEnvironment The ministry is consulted on the regulation of various aspects of nuclear energy and radiation hazards Issues discussed include emergency planning and nuclear waste management International hearing of the EIA is executed by this ministry which acts as the contact point MinistryofForeignAffairs Licensingauthoritiesmustseektheiradviceoncertainapplicationstoexportnuclear material AdvisoryBodies AdvisoryCommitteeonNuclearEnergyandAdvisoryCommitteeonNuclearSafety
Permanentconsultativecommitteeonnuclearenergyissues gy ItisappointedbytheGovernmentandworksincollaborationwiththeMinistryofTradeandIndustry

KeyBodies

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GovernmentBodies(3/3)
FinnishRadiationandNuclearSafetyAuthority(STUK)

Functions
Primary functions include
Regulating the safe use of nuclear energy and radiation including radiation monitoring activities Executing research and development projects on radiation protection Providing training and information to required personnel Participates in the licensing process, imposes and enforces the licensing conditions Assists in safeguards and emergency planning in the nuclear context

KeyBodies

Controls the safety of the transportation of nuclear waste and radioactive materials for final disposal

Structure Str ct re
Board of Governors carries out the administrative supervision of the authority Reports to the Ministry of Social Affairs and Health and to the Ministry of Trade and Industry

Financial Aspect l
Its activities are funded by the annual state budget The nuclear power companies bear the costs of nuclear regulation and the authority is in a position to set the fee structure based on certain guidelines provided by the Ministry of T d and I d t f Trade d Industry

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Thankyouforyourtime
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