ENERGY EFFICIENCY AND RESOURCE CONSERVATION

Energy Conservation and Energy Efficiency Improvement Program (ECEEIP)

Inter RAO Group is constantly optimizing business processes to manage energy conservation and improve energy efficiency at all its Russian and foreign generating assets.

Projects to improve energy efficiency are highly innovative and based on the best world practices. In addition to its own research and development, the Company also collaborates with Russian and foreign industry leaders.

The Energy Conservation and Energy Efficiency Improvement Program (ECEEIP) for 2019-2023, one of the Group’s targeted programs, was drafted to achieve the goals within the Energy Management System. The Commission on Energy Conservation and Energy Efficiency Improvement of the Company and its subsidiaries is involved in the process of establishing the program and reporting on its implementation.

Measures to enhance the energy efficiency of production and reduce specific fuel consumption as well as the introduction of new highly efficient equipment and the decommissioning of obsolete equipment are the main tools that Inter RAO uses to reduce the volume and intensity of greenhouse gas emissions. The measures of the ECEEIP are divided into two blocks:

• Measures with a ‘direct’ energy effect, which account for more than 80% of the total economic effect from the implementation of measures. These measures must be economically justified, and their economic efficiency must be calculated in accordance with the Methodology for Assessing the Economic Efficiency of Investment Projects in the Form of Capital Investments.
• Measures with a ‘concomitant’ energy effect.

In 2019, the following key measures were implemented to improve energy efficiency:

• Modernization of the vacuum system in the turbine of Steam Station No. 10 at the Verkhnetagilskaya TPP with the replacement of the ejector
• Upgrading of the turbine vacuum system with a ball cleaning system in Power Unit No. 3 at the Iriklinskaya TPP and the modernization of the TGMP-114 steam boiler of Power Unit No. 3
• Introduction of a variable frequency drive for the gas recirculation fans of Unit No. 2 at the Nizhnevartovskaya TPP
• Retooling of the water treatment plant with the introduction of a reverse osmosis plant at Ufimskaya CHPP3
• Installation of a ball cleaning system for the condenser of Station No. 8 at Ufimskaya CHPP4
• Installation of variable frequency drives at the Salavatskaya CHPP

Strategic objectives to enhance the efficiency of generating facilities:

• Implementing the main provisions of the Energy Strategy of Russia and the State Energy Efficiency and Energy Development Program
• Achieving the goals enshrined in the Inter RAO Strategy
• Achieving the targets for energy conservation and energy efficiency envisaged by the Inter RAO Innovative Development Program
• Ensuring the sustainable use of energy resources through the implementation of measures to conserve energy and improve energy efficiency
• Improving energy efficiency indicators of both individual energy-intensive production assets and the Group as a whole while minimizing operation and development costs
• Creating and improving a holistic and effective system to manage energy conservation and energy efficiency (development of an energy management system)
• Mitigating the Company’s negative environmental impact

Results of ECEEIP program measures [GRI 302-1, 302-4]

In 2019, the implementation of the ECEEIP at Inter RAO resulted in the following savings:

• Equivalent fuel – 46,877 tons
• Thermal power – 39,002 Gcal
• Electric power – 3.699 million kWh
• Water – 19.69 million m³

The economic effect from the implementation of the ECEEIP measures in 2019 amounted to RUB 224 mln, while expenses on implementing ECEEIP measures totaled RUB 4.044 bln, taking into account the commissioning of new capacities.

These results were achieved through ECEEIP measures that led to the following results:

• The fuel heat utilization factor (FHUF) increased by 0.06 p.p. to 49.54%
• Specific excess fuel consumption was reduced to 1.5 g/kWh
• Specific fuel consumption of electricity was slashed by 0.31 g/kWh to 295.22 g/kWh

Fuel consumption [GRI 302-1]

Natural gas and coal are the main non-renewable energy sources for the thermal power plants of Inter RAO’s generating assets. The share of coal in the energy balance has been steadily decreasing and edged down to 19.1% in 2019 from 20.1% in 2018. In 2020, another additional factor that will reduce coal consumption will be the sale of the coal-fired Ekibastuzskaya TPP2 with installed capacity of 1,000 MW in December 2019.