ADDRESS BY ENERGOATOM PRESIDENT

DEAR COLLEAGUES,
PARTNERS, AND FRIENDS!

Ukraine’s energy sector is key to the economic stability and sustainable development of our country, and SE NNEGC Energoatom is a core element of the domestic electricity production. According to the 2018 data, nuclear power plants generated 53.1% of the electricity used by Ukrainian consumers. The United Energy Systems of Ukraine operated stably thanks to the persistent and dedicated work of our specialists.

We are delighted to present Energoatom’s third non-financial report. Here you can see the results of our efforts to implement the Company’s development strategy and contribute to the United Nations Sustainable Development Goals. In 2018, we worked to secure the country’s stable energy future in accordance with Ukraine Energy Strategy 2035, which maintains the dominant role of the nuclear power sector in the country’s energy mix.

We worked hard to extend the lifecycle of operating power units and at the same prepared for launching new power generating facilities. Our efforts delivered positive results. Our most significant achievements in 2018 were the extension of the lifecycle of power unit No. 3 at Rivne NPP and power unit No. 4 at Zaporizhzhya NPP and the approval by the Cabinet of Ministers of Ukraine of a feasibility study for the construction of power units No. 3 and No. 4 at Khmelnytska NPP.

In 2018, we embarked on a new stage of diversification of fresh nuclear fuel supplies for domestic nuclear power plants. This is one of the most challenging and strategically important processes to strengthen the energy security of our nation. Power unit No. 3 at South-Ukraine NPP became Ukraine’s first power generating facility that ran exclusively on the fuel produced by Westinghouse. In addition, we have deepened our cooperation with the U.S. partner by signing a side agreement to our contract with Westinghouse to expand our cooperation and extend the validity of the contract till 2025.

Power unit No. 3 at South-Ukraine NPP will be the first of six pilot power units that will undergo power ramp-up programmes to compensate for the electricity to be produced by power unit No. 2 at Khmelnytska NPP for exports under a crucial initiative, Ukraine-EU Energy Bridge. Our strategic goal is to integrate with the European Network of Transmission System Operators for Electricity, ENTSO-E. The Energy Bridge will contribute to the rapid and effective development of Ukraine’s energy export potential. We expect to select a private partner for the public-private partnership under the Ukraine-EU Energy Bridge project through a transparent tender in 2019.

High skills and competences of Energoatom’s personnel enable us to be involved in the development and expansion of advanced technologies. In particular, Energoatom and US-based Holtec International signed a Memorandum of Understanding in 2018 to cooperate in the use of SMR-160, small modular reactors, in Ukraine. After 2026, we plan to build six reactors of this type at Rivne NPP and subsequently use them at other Ukrainian nuclear power plants. Collaboration with Holtec International suggests that Ukraine will become a European hub for the SMR-160 technology and will produce some components. This will create new jobs and develop high-tech manufacturing in our country.

We care not only about the nuclear power, but also about renewables. For example, the Company continued its investment project in 2018 to complete Tashlyk Hydroelectric Pumped Storage Power Plant. We reconstructed a DC system at Olexandrivska HPP. Olexandrivska HPP and Tashlyk Hydroelectric Pumped Storage Power Plant generated additional 7,641 million kWh last year, with commodity products of UAH 37.90 million received additionally. In an effort to minimise greenhouse gas emissions and contribute to the low carbon future, we also started building a solar power plant at Zaporizhzhya NPP. This is a pilot project, so our experience and lessons learnt will be useful for further advancement of renewables.

NON-FINANCIAL REPORT 2018

Significantly, Energoatom became the first Ukrainian power generating company to conduct a transboundary environmental impact assessment in accordance with the requirements of the Espoo Convention. Therefore, our environmental efforts won international recognition: we were pleased to see the Company in the top five of the Top Green Power Generators: Carbon- Free Generation Capacity rankings. This confirms the alignment of Energoatom’s operations with global environmental aspirations and United Nations Sustainable Development Goals.

With the commissioning of complex lines for radioactive waste treatment at Zaporizhzhya NPP, we started a new era of the radioactive waste management in 2018. The new technology involves a complete cycle, from the waste build-up to deep treatment and production of the final product suitable for final storage or burial.

Energoatom demonstrates its willingness to harmonise its operations with the expectations of communities, adheres to the principles of transparency and accountability, and openly informs about the company’s performance, as well as socioeconomic and environmental impact on the society. In 2018, this was proven with the first place taken by our Company in the transparency index among state-owned enterprises of Ukraine and the third rank among enterprises of all forms of ownership. We are happy to share our practices and are ready to discuss urgent issues. In November 2018, Energoatom became a general partner of the 9th International Forum of Energy for Sustainable Development organised in Kyiv with the support of the United Nations Development Program.

We are grateful to everyone who supported our struggle to implement one of the most ambitious projects of the independent Ukraine, the construction of the Central Spent Fuel Storage Facility. The results of the joint efforts have already given us cause for optimism: the construction readiness was over 72% in early 2019. The storage facility will be commissioned in 2020. Coupled with a successful diversification of nuclear fuel supplies, this will ultimately eliminate the dependence of our nuclear power industry on the Russian Federation.

Ukrainian nuclear power engineers look into global trends, as we know well that nuclear power generation should become a powerful tool to develop a carbon-free energy sector. Recent studies by the Nuclear Energy Agency of the Organisation for Economic Cooperation and Development (OECD/NEA) show the need to preserve nuclear power plants, as they are reliable, cost-effective and environmentally friendly sources of future energy.

We are convinced that the strong nuclear power sector will help Ukraine meet the Paris Agreement commitments to stop global warming by reducing carbon dioxide emissions. Over the entire period of their operations, Ukrainian NPPs prevented CO2 emissions of 2.7 billion tonnes. If nuclear power plants would stopped in Ukraine, additional annual emissions would be 70 million tonnes of carbon dioxide.

Effective cooperation with all stakeholders, maximum transparency in strategic decisions, and absolute responsibility towards the society and employees will enable Energoatom to continue to drive Ukraine’s social and economic growth by generating safe energy for sustainable development.

Yuriy Nedashkovsky,

President of SE NNEGC Energoatom

GENERATING ENERGY FOR SUSTAINABLE DEVELOPMENT